State Aid: good news for local schemes?

In seven recent cases, the European Commission has placed emphasis on real, rather than hypothetical, impact of aid on cross-border trade.  This may help local aid to be made without reference to the Commission where the authority can gather sufficient evidence to satisfy itself that there is no impact.

The European Commission has sent out a press release covering seven decisions by the Commission relating to  individual decisions approving as not aid a range of local schemes, on the basis that they do not affect trade between member states.

The press release places considerable emphasis on the linkage to the State aid modernisation programme and the need to reduce bureaucracy and the burdens on the national authorities. At this stage we have not seen the public versions of the full decision, but the press release does give an outline of the basis of the Commission's approach. The schemes are quite wide ranging and include some where the matter arose from complaints. The schemes covered are:

• Public funding for  emergency hospital services and equipment in the Czech republic
• Sub market rent for a local  health clinic in Germany
• Support for small business advisory services  in Kiel
• Underwriting losses in a rehabilitation  clinic in Germany
• Port development in a small fishing harbour and marina in Holland
• Support of certification  and other training  for mountain skills in Scotland
• Approval of  a beneficial tax regime for  member owned golf clubs in the UK

On the face of it, these decisions mark a welcome pragmatic approach to small scale aid in local areas. However there is a consistent theme in the decisions around not merely looking at where the enterprise itself trades (e.g. the German Rehabilitation clinic had only treated German residents in 2013), but also considering the extent to which the aid might have an impact on cross border investments in similar businesses.

In this context it is worth bearing in mind that in the past the European courts have tended to take a more hard line approach. Given that three of these decisions relate to healthcare it may be worth bearing in mind that in Heiser, C-172/03,  the  ECJ held that there was  scope for affecting trade between member states in a case involving a sole practitioner Dentist. Similarly in the recent (and ongoing) case of IRIS-H (SA.19864 (2014/C)  involving funding for Belgian hospitals  the commissions position in relation to this point  was that "health care in general and inpatient healthcare provided by hospitals in particular is subject to intra EU trade".

The key in these recent seven cases appears to be that (at least at the Commission stage) there was consideration of the impact on cross border trade, on a realistic rather than a  hypothetical basis. However, whilst this may facilitate local aid being made without reference to the Commission it does place a greater burden of gathering evidence and reviewing the risks on the public authority making the Grant. Does this industry have cross border trade – if so is there likely to be a problem in relying on these decisions to justify a 'no effect on trade' argument?

If you can demonstrate adequate investigation to satisfy the Commission, it is unlikely for a small scheme that any complainant would then invest further money in seeking to challenge a Commission ruling.

As State aid issues are becoming increasingly more important for local authorities we are holding a seminar to discuss them. The specific date for the seminar has not yet been announced but it will take place within October so if you find this article interesting please email events@bevanbrittan.com  to get more information about it.