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EFTA Surveillance Authority Decision No 190/09/COL of 22 April 2009 amending, for the sixty-ninth time, the procedural and substantive rules in the field of State aid by introducing a revised chapter on the temporary framework for State aid measures to support access to finance in the current financial and economic crisis

OJ L 15, 20/01/2011, p. 26–40 (BG, ES, CS, DA, DE, ET, EL, EN, FR, IT, LV, LT, HU, MT, NL, PL, PT, RO, SK, SL, FI, SV)

Legal status of the document No longer in force, Date of end of validity: 31/12/2010

ELI: http://data.europa.eu/eli/dec/2009/190(2)/oj

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Official Journal

20.1.2011

Official Journal of the European Union

L 15/26

EFTA SURVEILLANCE AUTHORITY DECISION

No 190/09/COL

of 22 April 2009

amending, for the sixty-ninth time, the procedural and substantive rules in the field of State aid by introducing a revised chapter on the temporary framework for State aid measures to support access to finance in the current financial and economic crisis

THE EFTA SURVEILLANCE AUTHORITY (1),

HAVING REGARD to the Agreement on the European Economic Area (2), in particular to Articles 61 to 63 and Protocol 26 thereof,

HAVING REGARD to the Agreement between the EFTA States on the Establishment of a Surveillance Authority and a Court of Justice (3), in particular to Article 24 and Article 5(2)(b) thereof,

WHEREAS under Article 24 of the Surveillance and Court Agreement, the Authority shall give effect to the provisions of the EEA Agreement concerning state aid,

WHEREAS under Article 5(2)(b) of the Surveillance and Court Agreement, the Authority shall issue notices or guidelines on matters dealt with in the EEA Agreement, if that Agreement or the Surveillance and Court Agreement expressly so provides or if the Authority considers it necessary,

RECALLING the Procedural and Substantive Rules in the Field of State Aid adopted on 19 January 1994 by the Authority (4),

WHEREAS, on 25 February 2009, the Commission of the European Communities (hereinafter EC Commission) adopted a Communication amending the temporary Community framework for State aid measures to support access to finance in the current financial and economic crisis (5),

WHEREAS this Communication is also of relevance for the European Economic Area,

WHEREAS uniform application of the EEA State aid rules is to be ensured throughout the European Economic Area,

WHEREAS, according to point II under the heading ‘GENERAL’ at the end of Annex XV to the EEA Agreement, the Authority, after consultation with the Commission, is to adopt acts corresponding to those adopted by the European Commission,

HAVING CONSULTED the European Commission,

RECALLING that the Authority has consulted the EFTA States on the subject by letter dated 31 March 2009,

HAS ADOPTED THIS DECISION:

Article 1

The Temporary Framework for State aid measures to support access to finance in the current financial and economic crisis (hereinafter the ‘Temporary Framework’) applies from 29 January 2009 until 31 December 2010.

The Temporary Framework foresees in its final provisions that where this would be helpful, the Authority may also provide further clarifications on its approach to particular issues.

The application of the Temporary Framework has shown the necessity of introducing additional clarifications as regards the applicability of Article 61(3)(b) of the EEA Agreement, the existing framework for setting the reference and discount rates and the application of the aid in the form of guarantees.

The State Aid Guidelines shall be amended by introducing amendments to the Chapter of the Guidelines entitled Temporary Framework for State aid measures to support access to finance in the current financial and economic crisis.

The following amendments to the Temporary Framework will take effect from the date of adoption of this Decision:

In point 4.1, the following paragraph is added:

a.	‘Therefore EFTA States have to show that the State aid measures notified to the Authority under this framework are necessary, appropriate and proportionate to remedy a serious disturbance in the economy of an EFTA State and that all the conditions are fully respected.’

Point 4.3.2 is amended as follows:

(a)

Letters (a) and (b) are replaced by the following:

‘(a)	for SMEs, EFTA States grant a reduction of up to 25 % of the annual premium to be paid for new guarantees granted in accordance with the safe-harbour provisions as set out in the Annex (*1).

(b)	for large companies, EFTA States also grant a reduction of up to 15 % of the annual premium for new guarantees calculated on the basis of the same safe-harbour provisions set out in the Annex.

(*1) The premiums in the Annex refine the safe-harbour provisions of the Guidelines on State aid in the form of guarantees by taking account of different levels of collateralisation. They may also be used as a benchmark to calculate the compatible aid element for guarantee measures falling under point 4.2 of this framework.

The calculation of the safe-harbour premiums is based on the margins provided by the Guidelines on reference and discount rates, taking account of an additional reduction of 20 basis points (see footnote 12 of the above Guidelines). For each rating category, however, the safe-harbour premium as set out in the Guidelines on State aid in the form of guarantees remained the upper premium limit for each rating category. As to the definition of the different levels of collateralisation see footnote 2, page 1 of the Guidelines on reference and discount rates.’

(b)

Letter (f) is replaced by the following:

‘(f)	The guarantee does not exceed 90 % of the loan for the duration of the loan.’

(c)

Letter (h) is replaced by the following:

‘(h)

The reduction of the guarantee premium is applied during a maximum period of two years following the granting of the guarantee. If the duration of the underlying loan exceeds two years, EFTA States may apply for an additional maximum period of eight years the safe-harbour premiums set out in the Annex without reduction.’

Point 4.4.1. is replaced by the following:

‘4.4.1

The Guidelines on reference and discount rates establish a method for calculation of the reference rate, based on the one-year inter-bank offered rate (IBOR) increased by margins ranging from 60 to 1 000 base points, depending on the creditworthiness of the company and the level of collateral offered. The method for calculation of the reference and discount rates may be amended by the Authority, in order to reflect the prevailing market conditions. If EFTA States apply the calculation method of the reference and discount rates established in the Guidelines in force at the moment of the grant of the loan and comply with the conditions set out in these Guidelines, the interest rate does, in principle, not contain State aid.’

Point 4.5.1. is replaced by the following:

‘4.5.1

The Authority’s Guidelines on reference and discount rates establish a method for calculation of the reference rate, based on the one-year inter-bank offered rate (IBOR) increased by margins ranging from 60 to 1 000 base points, depending on the creditworthiness of the company and the level of collateral offered. The method for calculation of the reference and discount rates may be amended by the Authority in order to reflect the prevailing market conditions. If EFTA States apply the calculation method of the reference and discount rates established in the Guidelines in force at the moment of the grant of the loan and comply with the conditions set out in these Guidelines, the interest rate does, in principle, not contain State aid.’

The following Annex is added:

‘ANNEX

Safe-harbours Temporary Framework in basis points (*2)
Rating category (Standard & Poor’s)	Collateralisation
Rating category (Standard & Poor’s)	High	Normal	Low
AAA	40	40	40
AA+ AA AA-	40	40	40
A+ A A-	40	55	55
BBB+ BBB BBB-	55	80	80
BB+ BB	80	200	200
BB- B+	200	380	380
B B-	200	380	630
CCC and below	380	630	980

The new chapter is contained in Annex to this Decision.

Article 2

This Decision is addressed to the Republic of Iceland, the Principality of Liechtenstein and the Kingdom of Norway.

Article 3

Only the English version is authentic.

Done at Brussels, 22 April 2009.

For the EFTA Surveillance Authority

Per SANDERUD

President

Kurt JÄGER

College Member

(1) Hereinafter referred to as ‘the Authority’.

(2) Hereinafter referred to as ‘the EEA Agreement’.

(3) Hereinafter referred to as ‘the Surveillance and Court Agreement’.

(4) Guidelines on the application and interpretation of Articles 61 and 62 of the EEA Agreement and Article 1 of Protocol 3 to the Surveillance and Court Agreement, adopted and issued by the Authority on 19 January 1994, published in the Official Journal of the European Union (hereinafter referred to as ‘OJ’) L 231, 3.9.1994, p. 1 and the EEA Supplement No 32 of 3.9.1994, p. 1. The Guidelines were last amended on 29 January 2009. Hereinafter referred to as ‘the State Aid Guidelines’. The updated version of the State Aid Guidelines is published on the Authority’s website: http://www.eftasurv.int/fieldsofwork/fieldstateaid/guidelines/

(5) The consolidated version was published in OJ C 83, 7.4.2009, p. 1.

(*2) For companies which do not have a credit history or a rating based on a balance sheet approach (such as certain special purpose companies or start-up companies), EFTA States may grant a reduction of up to 15 % (25 % for SMEs) on the specific safe-harbour premium set at 3,8 % in the Guidelines on State aid in the form of guarantees. However, the premium can never be lower than the premium which would be applicable to the parent company or companies.’

ANNEX

Temporary Framework for State aid measures to support access to finance in the current financial and economic crisis

1. THE FINANCIAL CRISIS, ITS IMPACT ON THE REAL ECONOMY AND THE NEED FOR TEMPORARY MEASURES

1.1. The financial crisis and its impact on the real economy

(1)

On 26 November 2008, the European Commission (hereinafter ‘the Commission’) adopted the Communication ‘A European Economic Recovery Plan’ (the ‘Recovery Plan’) to drive Europe’s recovery from the current financial crisis (1). The Recovery Plan is based on two mutually reinforcing main elements. Firstly, short-term measures to boost demand, save jobs and help restore confidence and secondly, ‘smart investment’ to yield higher growth and sustainable prosperity in the longer term. The Recovery Plan will intensify and accelerate reforms already underway under the Lisbon Strategy.

(2)

In this context, the challenge is to avoid public intervention which would undermine the objective of less and better targeted State aid. Nevertheless, under certain conditions, there is a need for new temporary State aid.

(3)

The EFTA Surveillance Authority (hereinafter ‘the Authority’) takes the view that new instruments must be put in place to enable the application of State aid rules in a way that achieves maximum flexibility for tackling the crisis while maintaining a level playing field and avoiding undue restrictions of competition. These Guidelines give details of a number of additional temporary openings for EFTA States to grant State aid.

(4)

First, the financial crisis has had a hard impact on the banking sector in the EEA and of unprecedented magnitude in Iceland. The European Council has stressed that although public intervention has to be decided at national level, this needs to be done within a coordinated framework and on the basis of a number of common Community principles (2). The Commission reacted immediately with various measures including the adoption of the Communication on the application of State aid rules to measures taken in relation to financial institutions in the context of the current global financial crisis (3) and of a number of decisions authorising rescue aid to financial institutions. The Authority has adopted corresponding measures (4).

(5)

Sufficient and affordable access to finance is a precondition for investment, growth and job creation by the private sector. EFTA States need to use the leverage they have acquired as a result of providing substantial financial support to the banking sector to ensure that this support does not lead merely to an improvement in the financial situation of the banks without any benefit to the economy at large. Support for the financial sector should therefore be well targeted to guarantee that banks resume their normal lending activities. The Authority will take this into account when reviewing State aid to banks.

(6)

While the situation on financial markets appears to be improving, the full impact of the financial crisis on the real economy is now being felt. A very serious downturn is affecting the wider economy and hitting households, businesses and jobs. In particular, as a consequence of the crisis on financial markets, banks are deleveraging and becoming much more risk-averse than in previous years, leading to a credit squeeze. This financial crisis could trigger credit rationing, a drop in demand and recession.

(7)

Such difficulties could affect not only weak companies without solvency buffers, but also healthy companies which will find themselves facing a sudden shortage or even unavailability of credit. This will be particularly true for small and medium-sized enterprises (SMEs), which in any event face greater difficulties with access to finance than larger companies. This situation could not only seriously affect the economic situation of many healthy companies and their employees in the short and medium term but also have longer-lasting negative effects since all EEA investments in the future — in particular, towards sustainable growth and other objectives of the Lisbon Strategy — could be delayed or even abandoned.

1.2. The need for close EEA coordination of national aid measures

(8)

In the current financial situation, EFTA States could be tempted to go it alone and, in particular, to wage a subsidy race to support their companies. Past experience shows that individual action of this kind cannot be effective and could seriously damage the internal market. When granting support, taking fully into consideration the specific prevailing economic situation, it is crucial to ensure a level playing field for EEA companies and to avoid EFTA States engaging in subsidy races which would be unsustainable and detrimental to the EEA as a whole. Competition policy is there to ensure this.

1.3. The need for temporary State aid measures

(9)

The temporary additional measures provided for in these Guidelines pursue two objectives: first, in the light of the exceptional and transitory financing problems linked to the banking crisis, to unblock bank lending to companies and thereby guarantee continuity in their access to finance. In this respect, SMEs are particularly important for the whole economy in the EEA and improving their financial situation will also have positive effects for large companies, thereby supporting overall economic growth and modernisation in the longer term.

(10)

The second objective is to encourage companies to continue investing in the future, in particular in a sustainable growth economy. There could indeed possibly be dramatic consequences, if, as a result of the current crisis, the significant progress that has been achieved in the environmental field were to be halted or even reversed. For this reason, it is necessary to provide temporary support to companies for investing in environmental projects (which could, inter alia, give a technological edge to EEA industry), thereby combining urgent and necessary financial support with long-term benefits for the EEA.

(11)

These Guidelines first recall the manifold opportunities for public support which are already at the disposal of EFTA States under existing State aid rules, before setting out additional State aid measures that EFTA States may grant temporarily in order to remedy the difficulties which some companies are currently encountering with access to finance and to promote investment pursuing environmental objectives.

(12)

The Authority considers that the proposed aid instruments are the most appropriate ones to achieve those objectives.

2. GENERAL ECONOMIC POLICY MEASURES

(13)

The Recovery Plan was adopted in response to the current economic situation. Given the scale of the crisis, the Community needs a coordinated approach, big enough and bold enough to restore consumer and business confidence. The same is true for recovery in the EFTA States.

(14)

The strategic aims of the Recovery Plan are to:

—	swiftly stimulate demand and boost consumer confidence,

—

lessen the human cost of the economic downturn and its impact on the most vulnerable. Many workers and their families are or will be hit by the crisis. Action can be taken to help stem the loss of jobs and then to help people return rapidly to the labour market, rather than face long-term unemployment,

—

help Europe to prepare to capitalise when growth returns, so that the European economy is in tune with the demands for competitiveness and sustainability and the needs of the future, as outlined in the Lisbon Strategy. That means supporting innovation, building a knowledge economy and speeding up the shift towards a low-carbon and resource efficient economy.

(15)

To achieve those objectives, EFTA States already have at their disposal a number of instruments which are not considered State aid. For instance, some companies may be experiencing even more acute difficulties with access to finance than others, thereby delaying or even jeopardising the financing necessary for their growth and the implementation of investments envisaged. For this purpose, EFTA States could adopt a series of general policy measures, applicable to all companies on their territories and, consequently, falling outside the State aid rules, with the aim of temporarily alleviating financing problems in the short and medium term. For example, payment deadlines for social security and similar charges, or even taxes, could be extended or measures for employees could be introduced. If such measures are open to all undertakings, in principle they do not constitute State aid.

(16)

EFTA States may also grant financial support directly to consumers, for instance for scrapping old products and/or buying green products. If such aid is granted without discrimination based on the origin of the product, it does not constitute State aid.

(17)

Moreover, general Community programmes, like the Competitiveness and Innovation Framework Programme (2007 to 2013) established by Decision No 1639/2006/EC of the European Parliament and of the Council (5) and the Seventh Framework Programme of the European Community for research, technological development and demonstration activities (2007-2013) established by Decision No 1982/2006/EC of the European Parliament and of the Council (6) may be used to best effect to deliver support to SMEs, but also to large undertakings.

3. STATE AID POSSIBLE UNDER EXISTING INSTRUMENTS

(18)

Over the last few years, the Authority has significantly modernised the State aid rules in order to encourage EFTA States to target public support better on sustainable investments, thus contributing to the Lisbon Strategy. In this context, particular emphasis has been given to SMEs, accompanied by more openings for granting State aid. In addition, the State aid rules have been greatly simplified and streamlined by the recently adopted General Block Exemption Regulation (7) which now offers EFTA States a wide panoply of aid measures with minimum administrative burden. In the current economic situation, the following existing State aid instruments are of particular importance

(19)

The de minimis Regulation (8) as adapted to the EEA Agreement specifies that support measures worth up to EUR 200 000 per company over any three year period do not constitute State aid within the meaning of the EEA Agreement. The same Regulation also states that guarantees of up to EUR 1,5 million do not exceed the de minimis threshold and therefore do not constitute State aid. Consequently, EFTA States can grant such guarantees without calculation of the corresponding aid equivalent and without administrative burdens.

(20)

The above-mentioned General Block Exemption Regulation (GBER) forms a central element of the State aid rules by simplifying the State aid procedure for certain important aid measures and fostering redirection of State aid to priority EEA objectives. All previously existing block exemptions, along with new areas (innovation, environment, research and development for large companies and risk capital measures for SMEs) have been brought under a single instrument. In all the cases covered by the GBER, EFTA States can grant aid without prior notification to the Authority. Therefore, the speed of the process lies fully in the hands of the EFTA States. The GBER is particularly important for SMEs, in that it provides for special rules on investment and employment aid exclusively for SMEs. In addition, all the 26 measures covered are open to SMEs, allowing EFTA States to accompany SMEs during the different stages in their development, assisting them in areas ranging from access to finance to research and development, innovation, training, employment, environmental measures, etc.

(21)

New Guidelines on State aid for environmental protection (9) provide that EFTA States may grant State aid, inter alia, as follows:

—

aid for companies which improve their environmental performance beyond Community standards, or in the absence of Community standards, of up to 70 % of the extra investment costs (up to 80 % in the field of eco-innovation) for small undertakings and of up to 100 % of the extra investment costs if the aid is granted following a genuinely competitive bidding process, even for large companies; aid for early adaptation to future Community standards and aid for environmental studies is also allowed,

—	in the field of renewable energies and cogeneration, EFTA States may grant operating aid to cover all extra production costs,

—

in order to attain environmental targets for energy saving and for reductions in greenhouse gas emissions, EFTA States may grant aid enabling undertakings to achieve energy savings and aid for renewable energy sources and cogeneration of up to 80 % of the extra investment costs for small undertakings and of up to 100 % of the extra investment costs if the aid is granted following a genuinely competitive bidding process.

(22)

On 7 February 2007, the Authority adopted new Guidelines for State aid for research and development and innovation. That text contains new provisions on innovation, specially targeted at SMEs and also corresponding to better targeting of aid on job and growth creation along the lines set out in the Lisbon Strategy. In particular, EFTA States may grant State aid, inter alia, as follows:

—	aid for R&D projects, in particular aid for fundamental research, of up to 100 % of the eligible costs and aid for industrial research of up to 80 % for small enterprises,

—	aid for young innovative enterprises of up to EUR 1 million and even more in assisted regions, aid for innovation clusters, aid for innovation advisory services and aid for innovation support services,

—	aid for the loan of highly qualified personnel, aid for technical feasibility studies, aid for process and organisational innovation in services and aid for industrial property rights costs for SMEs.

(23)

Training is another key element for competitiveness. It is critically important to maintain investment in training, even at a time of rising unemployment, in order to develop new skills. Under the new GBER, EFTA States may grant both general and specific training aid to companies totalling up to 80 % of the eligible costs.

(24)

In 2008, the Authority adopted new Guidelines on State aid in the form of guarantees, which specify the conditions under which public guarantees for loans do not constitute State aid. In accordance with those Guidelines, guarantees are not considered State aid, in particular, when a market price is paid for them. Besides clarifying the conditions which determine whether or not aid in the form of guarantees is present, the new Guidelines also introduce, for the first time, specific safe-harbour premiums for SMEs, allowing easier but safe use of guarantees in order to foster the financing of SMEs.

(25)

New Guidelines on State aid to promote risk capital investments in small and medium-sized enterprises were adopted by the Authority on 25 October 2006. These are aimed at innovative and fast growing SMEs — a key focus of the Lisbon Strategy. The Authority put in place a new safe-harbour threshold of EUR 1,5 million per target SME, a 50 % increase. Beneath that ceiling the Authority accepts that, as a rule, alternative means of funding from financial markets are lacking (that is to say, that a market failure exists). In addition, aid for risk capital has been included in the GBER.

(26)

In disadvantaged regions, EFTA States can grant investment aid for setting up a new establishment, extending an existing establishment or diversifying into new products under the Guidelines on national regional aid 2007-2013, which have applied since January 2007.

(27)

The Guidelines on national regional aid 2007-2013 also introduce a new form of aid to provide incentives to support business start-ups and the early stage development of small enterprises in assisted areas.

(28)

Under the existing Guidelines on State aid for rescuing and restructuring firms in difficulty, EFTA States can also grant aid to companies requiring public support. For that purpose, EFTA States may notify rescue and/or restructuring aid schemes for SMEs.

4. APPLICABILITY OF ARTICLE 61(3)(b)

4.1. General principles

(29)

Pursuant to Article 61(3)(b) of the EEA Agreement the Authority may declare compatible with the functioning of the EEA Agreement aid ‘to remedy a serious disturbance in the economy of an EFTA State’. This provision is identical to Article 87(3)(b) EC, in relation to which the European Court of First Instance has ruled that the disturbance must affect the whole of the economy of the Member State concerned, and not merely that of one of its regions or parts of its territory. This, moreover, is in line with the need to interpret strictly any derogating provision such as Article 61(3)(b) of the EEA Agreement (10).

(30)

This strict interpretation has been consistently applied by the Commission in its decision-making (11). The Authority has also adopted a strict interpretation of Article 61(3)(b) EEA (12).

(31)

In this context, the Authority considers that, beyond emergency support for the financial system, the current global crisis requires exceptional policy responses.

(32)

All EFTA States will be affected by this crisis, albeit in different ways and to different degrees, and it is likely that unemployment will increase, demand fall and fiscal positions deteriorate.

(33)

In the light of the seriousness of the current financial crisis and its impact on the overall economy of the EFTA States, the Authority considers that certain categories of State aid are justified, for a limited period, to remedy those difficulties and that they may be declared compatible with the functioning of the EEA Agreement on the basis of Article 61(3)(b) thereof.

(34)

Therefore EFTA States have to show that the State aid measures notified to the Authority under this framework are necessary, appropriate and proportionate to remedy a serious disturbance in the economy of an EFTA State and that all the conditions are fully respected.

4.2. Compatible limited amount of aid

4.2.1. Existing framework

(35)

Article 2 of the de minimis Regulation (13) as adapted to the EEA Agreement states that:

‘Aid measures shall be deemed not to meet all the criteria of Article 61(1) of the EEA Agreement and shall therefore be exempt from the notification requirement of Article 2 of Part II of Protocol 3 to the Surveillance and Court Agreement, if they fulfil the conditions laid down in paragraphs 2 to 5 of this Article.

The total de minimis aid granted to any one undertaking shall not exceed EUR 200 000 over any period of three fiscal years. The total de minimis aid granted to any one undertaking active in the road transport sector shall not exceed EUR 100 000 over any period of three fiscal years. These ceilings shall apply irrespective of the form of the de minimis aid or the objective pursued and regardless of whether the aid granted by the EFTA State is financed entirely or partly by resources of Community origin. The period shall be determined by reference to the fiscal years used by the undertaking in the EFTA State concerned’.

4.2.2. New measure

(36)

The financial crisis is affecting not only structurally weak companies but also companies which will find themselves facing a sudden shortage or even unavailability of credit. An improvement in the financial situation of those companies will have positive effects for the whole EEA economy.

(37)

Therefore, in view of the current economic situation, it is considered necessary to temporarily allow the granting of a limited amount of aid that will nevertheless fall within the scope of Article 61(1) of the EEA Agreement, since it exceeds the threshold indicated in the de minimis Regulation.

(38)

The Authority will consider such State aid compatible with the common market on the basis of Article 61(3)(b) of the EEA Agreement, provided all the following conditions are met:

(a)	the aid does not exceed a cash grant of EUR 500 000 per undertaking; all figures used must be gross, that is, before any deduction of tax or other charge; where aid is awarded in a form other than a grant, the aid amount is the gross grant equivalent of the aid;

(b)	the aid is granted in the form of a scheme;

(c)

the aid is granted to firms which were not in difficulty (14) on 1 July 2008; it may be granted to firms that were not in difficulty at that date but entered in difficulty thereafter as a result of the global financial and economic crisis; the aid scheme does not apply to firms active in the fisheries sector;

(d)	the aid is not export aid or aid favouring domestic over imported products;

(e)	the aid is granted no later than 31 December 2010;

(f)

prior to granting the aid, the EFTA State obtains a declaration from the undertaking concerned, in written or electronic form, about any other de minimis aid and aid pursuant to this measure, received during the current fiscal year and checks that the aid will not raise the total amount of aid received by the undertaking during the period 1 January 2008 to 31 December 2010 to a level above the ceiling of EUR 500 000;

(g)

the aid scheme does not apply to undertakings active in the primary production of agricultural products; it may apply to undertakings active in the processing and marketing of agricultural products (15) unless the amount of the aid is fixed on the basis of the price or quantity of such products purchased from primary producers or put on the market by the undertakings concerned, or the aid is conditional on being partly or entirely passed on to primary producers (16).

4.3. Aid in the form of guarantees

4.3.1. Existing framework

(39)

The Guidelines on State aid in the form of guarantees aim at giving EFTA States detailed guidance about the principles on which the Authority intends to base its interpretation of Articles 61 and 62 of the EEA Agreement and the application thereof to State guarantees. In particular, the Guidelines specify the conditions under which State aid can be considered not to be present. It does not provide compatibility criteria for assessment of guarantees.

4.3.2. New measure

(40)

In order to further encourage access to finance and to reduce the current high risk aversion on the part of banks, subsidised loan guarantees for a limited period can be an appropriate and well targeted solution to give firms easier access to finance.

(41)

The Authority will consider such State aid compatible with the functioning of the EEA Agreement on the basis of Article 61(3)(b) thereof, provided all the following conditions are met:

(a)	for SMEs, EFTA States grant a reduction of up to 25 % of the annual premium to be paid for new guarantees granted in accordance with the safe-harbour provisions as set out in the Annex (17);

(b)	for large companies, EFTA States also grant a reduction of up to 15 % of the annual premium for new guarantees calculated on the basis of the same safe-harbour provisions set out in the Annex;

(c)

when the aid element in guarantee schemes is calculated through methodologies already accepted by the Authority following their notification under a regulation incorporated into the EEA Agreement in the field of State aid (18), EFTA States may also grant a similar reduction of up to 25 % of the annual premium to be paid for new guarantees for SMEs and up to 15 % for large companies;

(d)

the maximum loan does not exceed the total annual wage bill of the beneficiary (including social charges as well as the cost of personnel working on the company site but formally in the payroll of subcontractors) for 2008. In the case of companies created on or after 1 January 2008, the maximum loan must not exceed the estimated annual wage bill for the first two years in operation;

(e)	guarantees are granted until 31 December 2010 at the latest;

(f)	the guarantee does not exceed 90 % of the loan for the duration of the loan;

(g)	the guarantee may relate to both investment and working capital loans;

(h)

the reduction of the guarantee premium is applied during a maximum period of two years following the granting of the guarantee. If the duration of the underlying loan exceeds two years, EFTA States may apply for an additional maximum period of eight years the safe-harbour premiums set out in the Annex without reduction.

(i)	the aid is granted to firms which were not in difficulty (19) on 1 July 2008; it may be granted to firms that were not in difficulty at that date but entered in difficulty thereafter as a result of the global financial and economic crisis.

4.4. Aid in the form of a subsidised interest rate

4.4.1. Existing framework

(42)

4.4.2. New measure

(43)

Companies may have difficulties in finding finance in the current market circumstances. Therefore the Authority will accept that public or private loans are granted at an interest rate which is at least equal to the central bank overnight rate plus a premium equal to the difference between the average one year interbank rate and the average of the central bank overnight rate over the period from 1 January 2007 to 30 June 2008, plus the credit risk premium corresponding to the risk profile of the recipient, as stipulated by the Authority’s Guidelines on reference and discount rates.

(44)

The aid element contained in the difference between this interest rate and the reference rate defined by the Guidelines on reference and discount rates will be considered, on a temporary basis, to be compatible with the functioning of the EEA Agreement on the basis of Article 61(3)(b) thereof, provided the following conditions are met:

(a)

this method applies to all contracts concluded on 31 December 2010 at the latest; it may cover loans of any duration: the reduced interest rates may be applied for interest payments before 31 December 2012 (20); an interest rate at least equal to the rate defined in the Guidelines on reference and discount rates must apply to loans after that date;

(b)	the aid is granted to firms which were not in difficulty on 1 July 2008 (21); it may be granted to firms that were not in difficulty at that date but entered in difficulty thereafter as a result of the global financial and economic crisis.

4.5. Aid for the production of green products

4.5.1. Existing framework

(45)

4.5.2. New measure

(46)

Because of the current financial crisis, companies are also finding it more difficult to gain access to finance for production of more environmentally friendly products. Aid in the form of guarantees may not be sufficient to finance costly projects aiming at increasing environmental protection by adapting earlier to future standards not yet in force or by going beyond such standards.

(47)

The Authority considers that environmental goals should remain a priority despite the financial crisis. Production of more environmentally friendly, including energy-efficient products, is in the EEA’s common interest and it is important that the financial crisis should not impede this objective.

(48)

Therefore, additional measures in the form of subsidised loans could encourage production of ‘green products’. However, subsidised loans may cause serious distortions of competition and should be strictly limited to specific situations and targeted investment.

(49)

The Authority considers that, for a limited period, EFTA States should be given the possibility of granting aid in the form of an interest-rate reduction.

(50)

On the basis of Article 61(3)(b) of the EEA Agreement, the Authority will consider compatible with the functioning of the EEA Agreement any interest-rate subsidy for investment loans that meets all the following conditions:

(a)	the aid relates to investment loans for financing projects consisting of production of new products which significantly improve environmental protection;

(b)	the aid is necessary for launching a new project; in the case of existing projects, aid may be granted if it becomes necessary, due to the new economic situation, in order to pursue the project;

(c)	the aid is granted only for projects consisting of production of products involving early adaptation to or going beyond future Community product standards (22) which increase the level of environmental protection and are not yet in force;

(d)	for products involving early adaptation to or going beyond future Community environmental standards, the investment starts on 31 December 2010 at the latest with the objective of putting the product on the market at least two years before the standard enters into force;

(e)

the loans may cover the costs of investment in tangible and intangible assets (23) with the exception of loans for investments which account for production capacities of more than 3 % on product markets (24) where the average annual growth rate, over the last five years before the start of the investment, of the apparent consumption on the EEA market, measured in value data, remained below the average annual growth rate of the EEA’s GDP over the same five year reference period;

(f)	the loans are granted on 31 December 2010 at the latest;

(g)

for calculation of the aid, the starting point should be the individual rate of the beneficiary as calculated on the basis of the methodology contained in point 4.4.2 of these Guidelines. On the basis of that methodology, the company may benefit from an interest-rate reduction of:

—	25 % for large companies,

—	50 % for SMEs;

(h)	the subsidised interest rate applies during a maximum period of two years following the granting of the loan;

(i)	the reduction in the interest rate may be applied to loans granted by the State or public finance institutions and to loans granted by private financial institutions. Non-discrimination between public and private entities should be ensured;

(j)	the aid is granted to firms which were not in difficulty (25) on 1 July 2008; it may be granted to firms that were not in difficulty at that date but entered in difficulty thereafter as a result of the global financial and economic crisis;

(k)	EFTA States ensure that the aid is not directly or indirectly transferred to financial entities.

4.6. Risk capital measures

4.6.1. Existing framework

(51)

The Guidelines on State aid to promote risk capital investments in small and medium-sized enterprises set out the conditions under which State aid supporting risk capital investment may be considered compatible with the functioning of the EEA Agreement in accordance with Article 61(3) of the EEA Agreement.

(52)

Based on the experience gained from applying the Guidelines on State aid to promote risk capital investments in small and medium-sized enterprises, the Authority considers that there is no general risk capital market failure in the EEA. It does, however, accept that there are market gaps for some types of investment at certain stages of enterprises’ development which are the result of imperfect matching of supply of and demand for risk capital and can generally be described as an equity gap.

(53)

Point 4.3 of the above-mentioned Guidelines states that for tranches of finance not exceeding EUR 1,5 million per target SME over each period of twelve months, under certain conditions market failure is presumed and does not need to be demonstrated by EFTA States.

(54)

Point 5.1(a) of the same Guidelines states that ‘the Authority is aware of the constant fluctuation of the risk capital market and of the equity gap over time, as well as of the different degree by which enterprises are affected by the market failure depending on their size, on their stage of business development, and on their economic sector. Therefore, the Authority is prepared to consider declaring risk capital measures providing for investment tranches exceeding the threshold of EUR 1,5 million per enterprise per year compatible with the functioning of the EEA Agreement, provided the necessary evidence of the market failure is submitted’.

4.6.2. Temporary adaptation of the existing rules

(55)

The turmoil on the financial market has had a negative effect on the risk capital market for early growth SMEs by tightening the availability of risk capital. Due to the currently greatly increased risk perception associated with risk capital linked with uncertainties resulting from possibly lower yield expectations, investors are currently tending to invest in safer assets the risks of which are easier to assess as compared to those associated with risk capital investments. Furthermore the illiquid nature of risk capital investments has proven to be a further disincentive for investors. There is evidence that the resulting restricted liquidity under current market circumstances has widened the equity gap for SMEs. It is therefore considered appropriate to temporarily raise the safe-harbour threshold for risk capital investments to meet the increased equity gap and to temporarily lower the percentage of minimum private investor participation to 30 % also in the case of measures targeting SMEs in non assisted areas.

(56)

Accordingly, on the basis of Article 61(3)(b) of the EEA Agreement, certain limits set out in the Guidelines on State aid to promote risk capital investments in small and medium-sized enterprises are temporarily adapted until 31 December 2010 as follows:

(a)	for the purposes of point 4.3.1, the maximum permitted tranches of finance are increased to EUR 2,5 million from EUR 1,5 million per target SME over each period of twelve months;

(b)	for the purposes of point 4.3.4, the minimum amount of funding to be provided by private investors is 30 % both in and outside assisted areas;

(c)	other conditions laid down in the Guidelines remain applicable;

(d)	this temporary adaptation of the guidelines does not apply to risk capital measures covered by the GBER;

(e)	EFTA States may adapt approved schemes to reflect the temporary adaptation of the guidelines.

4.7. Cumulation

(57)

The aid ceilings fixed under these Guidelines will be applied regardless of whether the support for the aided project is financed entirely from state resources or partly financed by the Community.

(58)

The temporary aid measures foreseen by these Guidelines may not be cumulated with aid falling within the scope of the de minimis Regulation for the same eligible costs. If the undertaking has already received de minimis aid prior to the entry into force of this temporary framework the sum of the aid received under the measures covered by point 4.2 of these Guidelines and the de minimis aid received must not exceed EUR 500 000 between 1 January 2008 and 31 December 2010. The amount of de minimis aid received from 1 January 2008 must be deducted from the amount of compatible aid granted for the same purpose under points 4.3, 4.4, 4.5 or 4.6.

(59)

The temporary aid measures may be cumulated with other compatible aid or with other forms of Community financing provided that the maximum aid intensities indicated in the relevant Guidelines or Block Exemption Regulations are respected.

5. SIMPLIFICATION MEASURES

5.1. Short-term export credit insurance

(60)

The Guidelines on short-term export-credit insurance stipulate that marketable risks cannot be covered by export-credit insurance with the support of EFTA States. Marketable risks are commercial and political risks on public and non-public debtors established in countries listed in the Annex to the Guidelines, with a maximum risk period of less than two years. Risks concerning debtors established in the EU Member States and the EFTA States together with six further OECD members are considered marketable.

(61)

The Authority considers that, as a consequence of the current financial crisis, a lack of insurance or reinsurance capacity does not exist in every EFTA State, but it cannot be excluded that, in certain countries, cover for marketable risks could be temporarily unavailable.

(62)

Point 4, paragraphs 9 to 13, of the above-mentioned Guidelines states that:

‘in such circumstances, those temporarily non-marketable risks may be taken on to the account of a public or publicly supported export-credit insurer for non-marketable risks insured for the account of or with the guarantee of the State. The insurer should, as far as possible, align its premium rates for such risks with the rates charged elsewhere by private export-credit insurers for the type of risk in question.

An EFTA State intending to use the escape clause should immediately notify the EFTA Surveillance Authority of its draft decision. That notification should contain a market report demonstrating the unavailability of cover for the risks in the private insurance market by producing evidence thereof from two large, well-known international private export-credit insurers as well as a national credit insurer, thus justifying the use of the escape clause. Alternatively, evidence of unavailability of cover in the private insurance market may possibly be demonstrated by means of a market report by an independent consultant which the Authority considers reliable and impartial. The notification should moreover contain a description of the conditions which the public or publicly supported export-credit insurer intends to apply in respect of such risks.

Within two months of the receipt of such notification, the Authority will examine whether the use of the escape clause is in conformity with the above conditions and compatible with the EEA Agreement.

If the Authority finds that the conditions for the use of the escape clause are fulfilled, its decision on compatibility is limited to two years from the date of the decision, provided that the market conditions justifying the use of the escape clause do not change during that period.

Furthermore, the Authority may, in consultation with the other EFTA States, revise the conditions for the use of the escape clause; it may also decide to discontinue it or replace it with another appropriate system’.

(63)

Those provisions, applicable to large companies and SMEs, are an appropriate instrument in the current economic situation if EFTA States consider that cover is unavailable on the private insurance market for certain marketable credit risks and/or for certain buyers of risk protection.

(64)

In this context, in order to speed up the procedure for EFTA States, the Authority considers that, until 31 December 2010, EFTA States may demonstrate the lack of market by providing sufficient evidence of the unavailability of cover for the risk in the private insurance market. Use of the escape clause will in any case be considered justified if:

—	a large well-known international private export credit insurer and a national credit insurer produce evidence of the unavailability of such cover, or

—	at least four well-established exporters in the EFTA State produce evidence of refusal of cover from insurers for specific operations.

(65)

The Authority, in close cooperation with the EFTA States concerned, will ensure swift adoption of decisions concerning the application of the escape clause.

5.2. Simplification of procedures

(66)

State aid measures referred to in these Guidelines must be notified to the Authority. Beyond the substantive measures set out in these Guidelines, the Authority is committed to ensuring the swift authorisation of aid measures that address the current crisis in accordance with these Guidelines provided close cooperation and full information is provided by the EFTA States concerned.

(67)

This commitment will complement the on-going process, whereby the Commission is currently drafting a number of improvements to its general State aid procedures, particularly to allow quicker and more effective decision-making in close cooperation with Member States. This general simplification package should, in particular, enshrine joint commitments by the Commission and Member States to more streamlined and predictable procedures at each step of a State aid investigation and allow faster approval of straightforward cases.

6. MONITORING AND REPORTING

(68)

Decision No 195/04/COL of 14 July 2004 on the implementing provisions referred to under Article 27 in Part II of Protocol 3 to the Surveillance and Court Agreement laying down detailed rules for the application of Article 1 of Part I of Protocol 3 to the Surveillance and Court Agreement requires EFTA States to submit annual reports to the Authority.

(69)

By 31 July 2009, EFTA States must provide the Authority with a list of schemes put in place on the basis of the present Guidelines.

(70)

EFTA States must ensure that detailed records regarding the granting of aid provided for by these Guidelines are maintained. Such records, which must contain all information necessary to establish that the necessary conditions have been observed, must be maintained for ten years and be provided to the Authority upon request. In particular, EFTA States must have obtained information demonstrating that the aid beneficiaries under the measures provided for in points 4.2, 4.3, 4.4 and 4.5 were not companies in difficulty on 1 July 2008.

(71)

In addition, a report on the measures put in place on the basis of these Guidelines should be provided to the Authority by EFTA States by 31 October 2009. In particular, the report should provide elements indicating the need for the Authority to maintain the measures provided for by these Guidelines after 31 December 2009, as well as detailed information on the environmental benefits of the subsidised loans. EFTA States must also provide this information for any subsequent year during which these Guidelines are applied, before 31 October of each year.

(72)

The Authority may request additional information regarding the aid granted, to check whether the conditions laid down in the Authority’s decision approving the aid measure have been met.

7. FINAL PROVISIONS

(73)

The Authority applies these Guidelines from the date of their adoption. These Guidelines are justified by the current exceptional and transitory financing problems related to the banking crisis and will not be applied after 31 December 2010. After consulting the EFTA States, the Authority may review them before that date on the basis of important competition policy or economic considerations. Where this would be helpful, the Authority may also provide further clarifications of its approach to particular issues.

(74)

The Authority applies the provisions of these Guidelines to all notified risk capital measures on which it must take a decision after these Guidelines are adopted, even if the measures were notified prior to adoption of these Guidelines.

(75)

In accordance with the Guidelines on the applicable rules for the assessment of unlawful State aid, the Authority will apply the following in respect of non-notified aid:

(a)	these Guidelines, if the aid was granted after adoption of these Guidelines;

(b)	the guidelines applicable when the aid was granted in all other cases.

(76)

The Authority, in close cooperation with the EFTA States concerned, ensures swift adoption of the decisions upon complete notification of measures covered by this document. EFTA States should inform the Authority of their intentions and notify plans to introduce such measures as early and comprehensively as possible.

(77)

The Authority wishes to recall that any procedural improvement depends entirely on submission of clear and complete notifications.

(1) Communication from the Commission to the European Council, COM(2008) 800.

(2) Conclusions of ECOFIN Council of 7 October 2008.

(3) OJ C 270, 25.10.2008, p. 8.

(4) See chapters of the Guidelines on the application of State aid rules to measures taken in relation to financial institutions in the context of the current global financial crisis and on the recapitalisation of financial institutions in the current financial crisis: limitation of aid to the minimum necessary and safeguards against undue distortions of competition, adopted on 29 January 2009.

(5) OJ L 310, 9.11.2006, p. 15.

(6) OJ L 412, 30.12.2006, p. 1.

(7) Commission Regulation (EC) No 800/2008 of 6 August 2008 declaring certain categories of aid compatible with the common market in application of Articles 87 and 88 of the Treaty (General Block Exemption Regulation) (OJ L 214, 9.8.2008, p. 3) incorporated into the EEA Agreement at point 1j of Annex XV to the Agreement by Decision No 120/2008 of 7 November 2008 (OJ L 339, 18.12.2008, p. 111, and EEA Supplement No 79, 18.12.2008), e.i.f. 8.11.2008.

(8) Commission Regulation (EC) No 1998/2006 of 15 December 2006 on the application of Articles 87 and 88 of the Treaty to de minimis aid (OJ L 379, 28.12.2006, p. 5) incorporated into the EEA Agreement at point 1ea of Annex XV to the Agreement by Decision No 29/2007 (OJ L 209, 9.8.2007, p. 52, and EEA Supplement No 38, 9.8.2007, p. 34), e.i.f 28.4.2007.

(9) The updated version of the State Aid Guidelines is published on the Authority’s website: http://www.eftasurv.int/fieldsofwork/fieldstateaid/state_aid_guidelines/

(10) Joined cases T-132/96 and T-143/96 Freistaat Sachsen and Volkswagen AG v Commission [1999] ECR II-3663, paragraph 167.

(11) Commission Decision 98/490/EC in case 47/96 Crédit Lyonnais (OJ L 221, 8.8.1998, p. 28), point 10.1; Commission Decision 2005/345/EC in case 28/02 Bankgesellschaft Berlin (OJ L 116, 4.5.2005, p. 1), points 153 et seq.; and Commission Decision 2008/263/EC in case C 50/06 BAWAG (OJ L 83, 26.3.2008, p. 7), point 166. See also Commission Decision in case NN 70/07 Northern Rock (OJ C 43, 16.2.2008, p. 1) and Commission Decision of 4 June 2008 in case C 9/08 SachsenLB, not yet published.

(12) The Authority has never approved an aid measure on the basis of Article 61(3)(b) EEA.

(13) See footnote 3 above.

(14) For large companies, see point 2.1 of the Guidelines on State aid for restructuring firms in difficulty. For SMEs, see Article 1(7) on the definition of the General Block Exemption Regulation.

(15) As defined in Article 2.3 and 2.4 of Commission Regulation (EC) No 1857/2006 of 15 December 2006 on the application of Articles 87 and 88 of the Treaty to State aid to small and medium-sized enterprises active in the production of agricultural products and amending Regulation (EC) No 70/2001 (OJ L 358, 16.12.2006, p. 3).

(16) For the State aid provisions in Articles 61 to 63 of the EEA Agreement to apply, State aid must be granted to undertakings involved in the production of goods which fall within the product scope of the EEA Agreement. Article 8(3) of the Agreement provides that ‘unless otherwise specified, the provisions of this Agreement shall apply only to: (a) products falling within Chapters 25 to 97 of the Harmonized Commodity Description and Coding System, excluding the products listed in Protocol 2; (b) products specified in Protocol 3, subject to the specific arrangements set out in that Protocol’. Agricultural products, in so far as they do not fall under Chapters 25 to 97 of the Harmonized Commodity Description and Coding System or are specified in Protocol 3, fall outside the scope of application of the EEA Agreement.

(17) The premiums in the Annex refine the safe-harbour provisions of the Guidelines on State aid in the form of guarantees by taking account of different levels of collateralisation. They may also be used as benchmark to calculate the compatible aid element for guarantee measures falling under point 4.2 of this framework.

The calculation of the safe-harbour premiums is based on the margins provided by the Guidelines on reference and discount rates, taking account of an additional reduction of 20 basis points (see footnote 12 (11 for the EU text) of the Guidelines on State aid in the form of guarantees). For each rating category, however, the safe-harbour premium as set out in the Guidelines on State aid in the form of guarantees remained the upper premium limit for each rating category. As to the definition of the different levels of collateralisation see footnote 2, page 1 of the Guidelines on reference and discount rates.

(18) Such as the General Block Exemption Regulation or Commission Regulation (EC) No 1628/2006 of 24 October 2006 on the application of Articles 87 and 88 of the Treaty to national regional investment aid (OJ L 302, 1.11.2006, p. 29) incorporated into the EEA Agreement at point 1i of Annex XV to the Agreement by Decision No 157/2006 (OJ L 89, 29.3.2007, p. 33 and EEA Supplement No 15, 29.3.2007, p. 26), provided that the approved methodology explicitly addresses the type of guarantees and the type of underlying transactions at stake.

(19) See footnote 9 above.

(20) EFTA States wishing to use this facility have to publish the daily overnight rates online and make them available to the Authority.

(21) See footnote 9 above.

(22) Future Community product standard means a mandatory Community standard setting environmental levels to be attained for products sold in the European Union which has been adopted but is not yet in force.

(23) As defined in point 70 of the Guidelines on State aid for environmental protection.

(24) Defined according to point 58 of the Regional aid Guidelines.

(25) See footnote 9 above.

ANNEX

Safe-harbours Temporary Framework in basis points (*1)
Rating category (Standard & Poor’s)	Collateralisation
Rating category (Standard & Poor’s)	High	Normal	Low
AAA	40	40	40
AA+ AA AA-	40	40	40
A+ A A-	40	55	55
BBB+ BBB BBB-	55	80	80
BB+ BB	80	200	200
BB- B+	200	380	380
B B-	200	380	630
CCC and below	380	630	980

(*1) For companies which do not have a credit history or a rating based on a balance sheet approach (such as certain special purpose companies or start-up companies), EFTA States may grant a reduction of up to 15 % (25 % for SMEs) on the specific safe-harbour premium set at 3,8 % in the Guidelines on State aid in the form of guarantees. However, the premium can never be lower than the premium which would be applicable to the parent company or companies.

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