Update State Aid December 2020

Decision practice of the EU Commission in the second half of 2020

Despite the numerous decisions on state aid to mitigate the effects of the COVID 19 pandemic under the Temporary Framework, the Commission has also taken decisions outside this topic. The following decisions concern broadband vouchers for Italian households, the rollout of a gigabit network infrastructure in Germany and aid for charging infrastructure for electric vehicles in Schleswig-Holstein. Finally, some news on consultations and revisions to state aid rules are presented below.

SA.57495 – Broadband vouchers for Italian households

The Commission decision in case SA.57495 dated 4 August 2020 deals with broadband vouchers for Italian households. The European Commission declared the planned state aid compatible with the internal market based on Article 107 (2) (a) TFEU as aid having a social character.

The measure approved by the European Commission aims to provide financially weak households with both a broadband internet connection and a tablet or PC. The Italian government has allocated EUR 200 million for this measure. The funds will cover the internet connection as well as the cost of an appropriate device such as a tablet or PC. The government has calculated that 5 million households out of 26 million Italian households are eligible. The budget allocated is sufficient for 400,000 households.

The COVID 19 pandemic has made it even more necessary to provide households with broadband Internet and to equip them with the devices necessary to use it. The measure aims to enable financially weak households with an "ISEE" of less than EUR 20,000 to learn and work from home. "ISEE" ("Indicatore della Situazione Economica Equivalente") is the indicator used to assess and compare the economic situation (income and assets) of households wishing to receive social benefits.

Beneficiaries will receive a voucher for EUR 500,-. The voucher can only be used to rent or lease a device if it is used in conjunction with signing up for broadband connection. If several network infrastructures are available, the beneficiary must choose the fastest infrastructure. The funding is technology-neutral.

The debate on providing pupils from lower-income households with a laptop or similar equipment has also arisen in Germany. Vouchers could be a way to pursue this goal in in line with state aid law.


SA.55201 – Charging infrastructure for electric vehicles

In its decision SA.55201, the European Commission has approved the funding of a charging infrastructure for electric vehicles in Schleswig-Holstein.

Previous federal regulations on the promotion of charging infrastructure have not led to a sufficient development of this infrastructure, at least in Schleswig-Holstein. According to the requirements of Directive 2014/94/EU on the development of infrastructure for alternative fuels, 3,500 normal charging points and 250 quick charging points are to be installed by 2022. In March 2020, the federal state had only 1,043 charging points. SMEs in particular do not have sufficient access to state aid to take part in the expansion of the infrastructure.

The scheme supports public and non-public charging infrastructure as well as charging infrastructure for electric buses for public transport. The budget of the scheme is EUR 18 million with a maximum support of 50% of the eligible costs. Eligible for funding are companies of all sizes as well as natural persons. The funding is granted on a "first come, first served" basis.

The European Commission sees the measure as the pursuit of a public interest objective of the EU - in this case the transition to sustainable mobility - which is also reflected in the so-called Green Deal. Due to the market failure, the aid measure is suitable to achieve the general interest objective. It gives companies an incentive to act which they would not do without funding. It is proportionate with regard to the funds provided and their effect on competition: Negative effects on competition are limited and outweighed by the positive effects of the measure.


SA.52732 – Funding for the expansion of gigabit networks in Germany

On 13 November 2020, the European Commission, by decision SA.52732, authorised the German aid scheme to support the deployment of high-speed broadband networks.

The scheme aims to create a publicly funded, very fast network infrastructure. The German government has provided EUR 6 billion for this purpose. The federal states and municipalities shall contribute a further EUR 6 billion. The new network infrastructure is to achieve speeds of 1 GBit/s both in upload and download.

Priority is to be given to expanding areas with poor Internet connections: In the first phase, the Gigabit network infrastructure will be used to supply households with access of less than 100 Mbit/s. Only in the second phase, starting in 2023, will households that already have an Internet speed of 100 Mbit/s or more be supplied with the Gigabit infrastructure. By the end of 2025, a Gigabit network should be available to all citizens.

The aid scheme is based on the Commission's 2016 Gigabit Communication. According to the Communication, state aid is possible in case the expansion goals have not yet been reached or where private investors do not plan sufficient infrastructure. As an incentive for private investors, the scheme provides for a transitional period to protect the investments.

In order to avoid duplication of infrastructure, no network development will be supported in areas where a fibre optic network (up to the households) or an appropriately equipped cable network is already in place.

The aid scheme is based on the Bavarian gigabit measures approved by the European Commission in December 2018 (pilot project) and November 2019 (state funding support). The state aid guidelines for broadband deployment allow public investment where there is a market failure and the investment leads to a "substantial improvement".


SA.58046 – Aid for single wagonload transport

With its decision in the procedure SA.58046 of 4 November 2020, the EU Commission approved a German scheme to fund single wagonload transport by rail.

The support programme has a budget of EUR 600 million over a five-year period. The support is in the form of a non-repayable grant with a maximum subsidy rate of 50% of the eligible costs. The Federal Railway Authority publishes a unified funding rate on its website.

The measure aims to encourage the transfer of freight traffic from road to rail. Part of the costs incurred when using rail rather than road are to be compensated, so that rail transport becomes less expensive.

25% of rail freight transport in Germany is made up of single wagonload traffic. In contrast to block train transport, single wagonload transport involves trains being composed of individual wagons from different freight carriers or transport companies with similar destinations. For this purpose, the single wagons are taken to marshalling yards and train formation facilities. The operators of these facilities receive a fee for their services.

The compatibility of the measure with State aid law is based on Art. 93 TFEU, which is a special provision in the section on transport in the TFEU. According to the Railway Guidelines, state aid, which meets the needs of transport coordination, is in principle compatible with state aid law if it is necessary and proportionate and does not conflict with the general interest of the EU. According to the European Commission's decision-making practice laid down in the Railway Guidelines, the duration of a scheme may not exceed five years.

In contrast to block train transport, which does not require any combination or marshalling yard and therefore has economies of scale, single wagonload transport competes directly with road transport – especially in Germany due to the dense motorway network. Art. 93 TFEU allows extensive state aid in the field of transport with little need for justification compared to state aid in other fields.


Consultation on state aid rules for broadband deployment

Already since September, it has been possible to comment on the current rules for promoting broadband development. The public consultation will run until 5 January 2021.


Extension and adaptation of the DAWI de minimis Regulation

The EU Commission extended on 13 October 2020 the DAWI de minimis Regulation until the end of 2023. For SGEIs, a de minimis aid of up to EUR 500,000 in three tax years applies. In addition, the EU Commission has adapted the term "company in difficulty" due to the COVID 19 pandemic: Companies entrusted with a SGEI that were financially sound until the end of 2019 but ran into financial difficulties in the first half of 2020 can receive de minimis aid.


Commission publishes the results of the evaluation of the main state aid schemes

On 30 October 2020, the European Commission published the results of the evaluation of the state aid rules, which started in January 2019. In addition to the GBER, the so-called "fitness check" also covered, for example, the de minimis Regulation, the regional aid guidelines, the environmental guidelines, the restructuring guidelines and several others. The European Commission has compiled the results of the evaluation in a comprehensive "Commission Staff Working Document". While the European Commission concludes that the state aid rules generally fulfil the objectives pursued, individual schemes have to be adapted due to the so-called Green Deal and the EU's industrial and digital strategy.

The European Commission intends to complete the revision of the most important state aid rules, such as the GBER, the regional aid guidelines and the environmental guidelines, by the end of 2021.

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