ANNOUNCEMENT 09 Apr 2009In April 2009, the government of Slovakia announced a new commercial policy plan.
NUMBER OF INTERVENTIONS
the letter from the EC to Slovakia - Brussels, C(2009) final, State aid case N 222/2009. Available from < http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_N222_2009 >
the letter form the EC to Slovakia - Brussels, 2.2.2010 C(2010)756. Available from : < http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_N711_2009 >
On 9 April 2009, the Slovak Republic notified a temporary aid scheme ("Schéma pre docasné poskytovanie malej pomoci v Slovenskej republike pocas trvania financnej a hospodárskej krízy") for granting limited amounts of compatible aid under the "Temporary Framework for State aid measures to support access to finance in the current financial and economic crisis" (the Temporary Framework).
The Slovak authorities stated "that the financial crisis starts affecting its real economy as a whole at national, regional and local level. According to the Slovak Statistical Office reportfrom February 2009, in the last months of the current year the economic crisis brought a significant weakening of foreign demand, which caused a decrease of Slovak export (-33.9 in January 2009 and -30.9 in February 2009) having a negative impact on the production output (-27% in January 2009 and -26.9% in February 2009), the labour market and the overall domestic demand. The unemployment in Slovakia increased by 13% over January 2009 and by 25.9% in February 2009. These developments point to a rapid slowdown in the Slovak economy resulting from a decline in external and domestic demand. The last official forecast of the National Bank of Slovakia indicates that the GDP will decrease by- 2.4% in 2009." (par. 3 of the letter from the EC to Slovakia - Brussels, C(2009) final, State aid case N 222/2009 ).
Aid will be provided in "transparent form", as defined by the General Block Exemption Regulation, and in particular in form of direct grants, non-reimbursable grants and remission of penalties for non-payment of taxes or other kinds of payment.
The Slovak authorities estimate that under the scheme aid not exceeding EUR 400 million will be granted in 2009 and 2010. The scheme applies to SMEs and large firms. The Slovak authorities estimate the number of beneficiaries will be over 1000 firms. Export aid and aid favouring domestic over imported goods and services are excluded.
The Commission considered that the notified measure constitutes state aid within the meaning of Article 87 (1) of the EC Treaty and made the following assessment:
"State resources are involved in the notified scheme since the aid is granted from federal and regional resources, via the respective aid granting authorities at federal and regional level. The measure is selective since aid is awarded only to certain undertakings. The measure conveys an advantage by making available limited amounts of compatible aid which would not be available to the beneficiaries without the measure. The measure affects trade between Member States since the scheme is not limited to beneficiaries which are active in sectors where no intra-community trade exists. The measure distorts or threatens to distort competition." (par. 21-25 of the letter).
Article 87(3)(b) of the EC Treaty enables the Commission to declare aid compatible with the Common Market if it is "to remedy a serious disturbance in the economy of a Member State." This aid has to be applied restrictively and must tackle a disturbance in the entire economy of the Member State according to the interpretation of the Article 87(3)(b) by the Court of First Instance.
The Commission referred to its Communication on the financial crisis ('Temporary Framework') and concluded that the Measure complies with the conditions laid therein. Therefore, despite the measure constituting State aid pursuant to the Article 87(1) EC, it is compatible with the Common Market according to the Article 87(3)(b) EC Treaty. The Commission raises no objections against the measure at issue and authorizes it as emergency intervention in the face of the current financial crisis. (par. 27-32 of the letter).
Amendment to the Framework Scheme "Limited amounts of compatible aid" (N 222/2009) - State aid N711/2009
On 21 December 2009 Slovakia notified an amendment to the framework scheme (see above).
According to the European Commission's European Economic forecast of autumn 2009, the financial crisis is still affecting the Slovak economy. It has been primarily affected through the trade channel, as demand from trading partners has plummeted, triggering a plunge in exports by some 25% in the first half of 2009 compared to the same period of 2008. This was followed by an even larger fall in imports, as uncertainties related to the crisis led to a massive increase in savings by households. As a consequence, real GDP slowed markedly and tumbled by 11% (non annualized) in the first quarter of 2009.
In order to counter the negative effects the Slovak authorities notify an amendment to the approved aid scheme. The amendment foresees additional aid in the form of remission of debts, which creditors (e.g., tax authorities, health insurance, social insurance authority, municipalities, etc.) grant to firms (debtors) which were not in difficulty on 1 July 2008, but entered in difficulty thereafter as a result of the global financial and economic crisis.
All other elements of the approved scheme remain unchanged.
The Commission decided not to raise objections to the amended scheme and gave the following assessment:
"The Commission accordingly considers that the notified measure is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State and meets all the conditions of the Temporary Framework.
For these reasons, the Commission considers that the notified measure is in conformity with the Temporary Framework and considers it to be compatible with the Treaty on the basis of Article 107(3)(b) TFEU." (par. 9-10 of the letter form the EC to Slovakia - Brussels, 2.2.2010 C(2010)756)
A state measure in the GTA database is assessed solely in terms of the extent to which its implementation affects the extent of discrimination against foreign commercial interests. On this metric, the state aid proposed here is discriminatory.