ANNOUNCEMENT 10 Feb 2009

In February 2009, the British government announced a change to private-sector financial support.

NUMBER OF INTERVENTIONS

1

  • 1 harmful
  • 0 neutral
  • 0 liberalising

SOURCE



The letter from the EC to the UK - Brussels, 27.2.2009 C(2009) 1504 final. Available from < http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_N72_2009 >


Inception date: 01 Mar 2009 | Removal date: 30 Dec 2010
Still in force

Interest payment subsidy

On 10 February 2009, the United Kingdom notified the European Commission of its "Temporary aid for the production of green products" (N 72/2009) mentioned aid measure.
 
The United Kingdom considers that the financial crisis is affecting its whole economy at local regional and country level. The notified measure is aimed at remedying a serious disturbance in the economy of the UK.

The UK authorities identified the common budgetary ceiling of GBP 8 billion (EUR 9 billion) for the implementation of this notified measure (N 72/2009) and the aid measures "Temporary aid in the form of Subsidised Interest Rate" (N 257/2009) and "Temporary Aid in the form of Loan Guarantees" (N 71/2009).
 
The scheme applies to all companies: SMEs and large firms. Its geographic scope covers the whole territory of the United Kingdom. The UK authorities estimated that the number of beneficiaries will exceed 1000 firms.
 
The aid will be granted in the form of interest rate subsidies for investment loans related to the production of "green" products. The subsidized interest rate applies during a maximum period of 2 years after the loan has been granted.
 
The scheme is explicitly based on Article 87(3)(b) EC Treaty, and relies on the Commission communication 'Temporary Framework for State aid measures to support access to finance in the current financial and economic crisis' ('the Temporary Framework'), in particular on its Section 4.5 concerning aid for the production of green products.
 
The Commission stated that the notified measure constitutes state aid within the meaning of Article 87 (1) of the EC Treaty and gave the following assessment:
 
"State resources are involved in the notified scheme since the aid is granted from national, regional and local State resources, via the respective aid granting authorities at national, regional, or local level. The measure is selective since it will be granted only to certain firms. The measure conveys an advantage to beneficiaries by granting them investment loans with subsidised interest rates which would not be probably available on the market in the absence of the notified measure. Consequently, the aid will strengthen the financial position of beneficiaries in relation to its competitors in the Community and therefore will have potentially distorting effects on competition. 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." (par. 36-39 of the letter from the EC to the UK - Brussels, 27.2.2009 C(2009) 1504 final).
 
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.41-45 of the letter).
 
The list of affected tariff lines is based on the appendix list of environmental goods of interest as classified in the WTO's document TN/TE/19.
 
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
 

AFFECTED PRODUCTS

 
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