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PR(95)09: EFTA Surveillance Authority adopts rules on aid to employment and several other amendments to its State aid guidelines

18.10.2002

The EFTA Surveillance Authority today took a decision to amend its Procedural and Substantive Rules in the Field of State Aid (State Aid Guidelines), initially adopted on 19 January 1994. These rules set out in a comprehensive form the practices that the Authority will follow when exercising its competencies under the EEA Agreement.

The amendments, which are in line with practices recently adopted by the European Commission, cover new rules on aid to employment, a more stringent procedure in cases involving aid granted unlawfully and interest rates to be applied in such cases, criteria for assessing aid to shipbuilding granted as development assistance, and the Authority's policy with regard to aid to the aviation sector.

The rules on aid to employment clarify under which circumstances measures to promote employment fall under the state aid provisions of the EEA Agreement. They also provide criteria for ‑ assessing whether such measures qualify for exemption from the general prohibition on state aid.

Reaffirming the Authority's sympathetic view towards employment aid in principle, the guidelines seek to impose disciplines on such measures which are necessary, in order to prevent the spreading of operating aid likely to distort competition and trade in the European Economic Area.

The Authority will be favourably disposed towards aid to create new jobs in SMEs and in regions eligible for regional aid. Outside these two categories, it will also look favourably upon aid to encourage firms to take on certain groups of workers experiencing particular difficulties entering the labour market. On the other hand the Authority will, as a general rule, be negatively disposed towards aid only to maintain jobs, except when such measures can be justified on social grounds and have limited distorting effects on competition. The Authority will insist that employment aid is temporary.

The Authority will also take into account the aid level and whether new jobs offer permanent contracts to workers. If measures to promote employment are combined with the training of workers, this will contribute to a favourable assessment by the Authority.

The Authority's decision tightens up the procedure in cases where aid has been granted unlawfully. The State Aid Guidelines have so far provided that when aid is granted in breach of the obligation to notify in advance, the Authority may, by an interim decision, request the EFTA State concerned to suspend payment of the aid pending the outcome of a full investigation. The Authority considers that in some cases this will not be sufficient to counteract infringements of the procedural rules. It has therefore now decided that in appropriate cases it may ‑ after giving the EFTA State concerned the opportunity to comment and to consider alternatively the granting of rescue aid ‑ adopt a provisional decision ordering the EFTA State to recover funds disbursed in infringement of the notification requirements, even before the Authority has adopted a final position in substance.

Concerning interest rates to be used when aid granted unlawfully is to be recovered, the Authority's decision aims at securing that the interest rate applied under these circumstances reflects prevailing market rates, by prescribing the use of the reference rates of interest used in the calculation of the net grant equivalent of regional aid measures. This should ensure that the advantages of unlawful aid for aid recipients are cancelled.

With regard to shipbuilding development aid, the Council Directive on aid to shipbuilding (90/684/EEC) is, with the adaptations made by the EEA Joint Committee, fully applicable within the context of the EEA Agreement since 1 May 1995. Today's decision by the Authority lays down the detailed criteria to which the EFTA States must adhere when awarding aid to shipbuilding as development assistance under Article 4(7) of the Shipbuilding Directive.

With regard to the aviation sector, the Commission adopted guidelines for assessing such aid in the autumn of 1994. The EFTA Surveillance Authority has so far not been notified of any aid by the EFTA States to this sector. The Authority is therefore presently not adopting corresponding rules, but will apply criteria corresponding to those of the Commission, should the occasion arise.

For further information and copies of the State Aid Guidelines please contact Gudlaugur Steffansson (Competition and State Aid Directorate) on tel. 286 18 52.

 

 




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