State aid update

A number of developments in the field of State aid could bring benefits to Irish businesses:

• Guidelines on rescuing and restructuring firms in difficulty
  The European Commission has extended the guidelines on State aid for rescuing and restructuring firms in difficulty, which were due to expire in October 2009, to October 2012.

  The decision to extend the current guidelines was made having regard to the difficult and unstable current economic situation and the need to ensure continuity and legal certainty in the treatment of State aid to enterprises in financial difficulty.

• Facilitating State support for aid to large investment projects
  The European Commission has published guidance on the criteria it uses in assessing the compatibility of regional aid to large investment projects with State aid rules.

  An in-depth assessment is carried out where the aid beneficiary’s market share reaches particular thresholds. The guidance paper sets out the kind of information the Commission requires for this assessment and the methodology it applies, namely balancing the positive and negative effects of the aid. It provides a non-exhaustive list of how the positive effects can be demonstrated, for instance, in terms of the number of direct and indirect jobs created or the training activities to be undertaken by the beneficiary. It also states that the two main indicators of potential negative effects arising from the aid are high market shares and potential overcapacity in a market in structural decline.

  This guidance is a useful tool to help public authorities and companies to understand how best to present regional aid projects involving large investments with a view to obtaining swifter decisions.

• Updated rules on State funding of public broadcasters
  The European Commission has updated the rules for State funding of public service broadcasters.

  The new rules require Member States act transparently in defining and imposing public service obligations. In addition, they introduce changes concerning:

  • the control of significant new services launched by public service broadcasters (including an obligation to consult on the impact of proposed new services on the market);
  • clarification concerning the inclusion of pay services in the public service remit;
  • control and supervision at a national level of overcompensation and the public service mission; and
  • increased financial flexibility for public service broadcasters.