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Key state aid exemptions extended by two years

16 January 2019
The European Commission has announced it is extending seven State aid Regulations and guidelines which would otherwise have expired on 31 December 2020. 

The exemptions, which include the commonly used General Block Exemption Regulation (GBER) and De Minimis will now expire on 31 December 2022.  The Commission has also opened a consultation exercise on whether to further prolong or refine the rules after 2022. 

Public sector bodies and businesses looking to obtain public funding in the UK will be interested in this announcement because it secures continuity in that essentially the same State aid rules will apply during the transition period envisaged under the Government's draft Withdrawal Agreement with the EU, if the same would be agreed prior to the UK's scheduled departure on 29 March 2019.  

The following Regulations and guidelines will be extended:

General Block Exemption Regulation (GBER)
De Minimis Regulation
Guidelines on regional State aid
Guidelines on State aid to promote risk finance investments
Guidelines on State aid for environmental protection and energy
Guidelines on State aid for rescuing and restructuring
Communication on important projects of common European interest (IPCEI).

The above Regulations and guidelines are used to provide State aid cover to the majority of publicly assisted projects and programmes across the EU.  Indeed, GBER alone has been used for 97% of recorded State aid measures since July 2014. 

The European Commission has also announced that as part of its "Better Regulation" policy it will be consulting on changes to the rules after 2022.  This process will cover the above guidelines and regulations as well as the Railways Guidelines from 2008 and the Short term export credit Communication from 2012.

The above news comes at a time of change for State aid law in the United Kingdom, with the Competition and Markets Authority lined up to take on responsibility for State aid enforcement and approval, either at 11pm on 29 March 2019 in the event of a "no deal Brexit" or at the end of the transitional period set out under the proposed UK-EU Withdrawal Agreement. In the event of a no deal Brexit, the Government has announced it will set up a UK State aid framework which will broadly aligned with the rules, Regulations and guidelines of the EU State aid regime, which is generally interpreted as meaning that the framework of exemptions set out in GBER and elsewhere will be carried across into UK law going forwards at that time.  

This suggests that either way (Withdrawal Agreement implemented and transitional regime through to end 2020, "no deal" and UK law as of 30 March 2019, or even an extension of the UK's membership of the EU), relevant stakeholders should expect a broad continuation of the current State aid rule book for the time being at least, even if the entities charged with enforcement are set to change.  

DWF's specialist Public Sector law team has extensive experience of advising on all aspects of State aid law.  Members of the team have successfully presented cases before the European Commission and the European Courts in Luxembourg as well as working at DG COMP in the European Commission and UK Central Government on State aid matters.