New EU State aid exemptions clear the way for public investment in airports and ports

The European Commission has published for consultation proposed
additions to the General Block Exemption Regulation (GBER) which should make it
easier for public bodies to provide support for ports and airports under the EU
State aid rules.  Under the proposals, projects
designed to fit within the new criteria will be exempt from the obligation to seek
Commission approval before the support can be awarded.

EU Commissioner for competition policy, Margrethe Vestager,
encourages feedback from interested parties:

“Ports and
airports are key infrastructure for economic growth and regional development.
Our proposals aim at facilitating unproblematic public investments in ports and
airports that can create jobs, by exempting them from scrutiny under EU state
aid rules. I would like to encourage all public authorities, companies and
others that would benefit from this simplification of state aid rules to
participate in this consultation.”

The consultation closes on 30 May 2016.  Full details of the consultation can be found
on the Commission’s dedicated page.

The existing notification process for ports and airports

Under the EU State aid rules, state support (such as grants,
loans, guarantees and capital injections) that benefits a particular business,
cannot lawfully be granted unless it is:

• notified to, and cleared by, the European
  Commission; or
• covered by an aid scheme pre-approved by the
  Commission; or
• exempt under one of a number of block exemption regulations.  

At present, support for ports and airports is not covered by
any of the block exemption categories – meaning that it is invariably subject
to upfront European Commission scrutiny, either on a case by case basis, or as
part of a scheme, before the support could be granted.   

Whilst very much dependant on the complexity of the issues, the
notification process typically takes at least six to nine months, and thereby
has a significant impact on the project timetable.   A total of 33 on ports and 54 decisions on
airports have been considered under the existing upfront notification procedure
to date, including a recent capital injection into the ground handling services
managing company of Milan airport, which was approved earlier this year. 

In aviation cases, the Commission assesses funding against
published guidelines. Despite calls from industry in recent years, no such
guidelines exist for funding to ports.

The new proposed
exemption criteria for ports and airports

Under the new proposals, certain state funding to airports
and ports would be covered by the GBER. 
As a result, qualifying support would no longer be subject to the pre-notified
obligation and would no longer be subject to individual up-front scrutiny by
the Commission.  Instead, qualifying support
would be considered automatically compatible with the internal market.

Key qualification
criteria for public support for regional airports under the new proposal

• For airports with average annual traffic of up
  to 1m passengers during the two financial years preceding the year in which aid
  is granted, funding must not exceed 75% of the eligible project costs
  (increased by 20% for airports located in remote regions).
• For airports with average annual traffic of 1m
  to 3m passengers during the two financial years preceding the year in which aid
  is granted, funding must not exceed 50% of eligible project costs (increased by
  20% for airports located in remote regions).

Key qualification
criteria for public support for maritime ports under the new proposal

• The value of the support must not exceed €100m,
  or €120m for maritime ports included in the work plan of a “core network
  corridor”.
• Support is limited to:
  • where eligible costs do not exceed €20m, up to
    100% of the eligible costs.
  • where eligible costs are between €20m to €50m,
    up to 80% of the eligible costs (increased by up to 10% in “assisted
    areas”).
  • where eligible costs are between €50m to €120m,
    up to 50% of the eligible costs (increased by up to 10% in “assisted
    areas”).

In all cases, the new infrastructure must be made available
to interested users on an open, transparent and non-discriminatory basis, at
the market price.

How can we help?

The consequences of getting it wrong are severe – a
recipient of illegal State aid repay all illegal aid plus interest. Compliance
with GBER must be self-assessed by companies prior to receiving public support.
It should be robustly documented and supported by legal advice.

Please contact one of our experts if you are interested in
responding to the Commission consultation, or if you require support with
public funding for the benefit of an airport or port project.