Annexes to COM(1978)221 - - Main contents
Please note
This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(1978)221 - . |
|---|---|
| document | COM(1978)221  |
| date | May 24, 1978 |
General applications . . u; • ’
6. The Treaty rules are not a static instrument but give the Commission a flexibility to accept the realities of the situation at both Community and Member State level. Given conditions of the past few years, a certain multiplication of sectoral aids, particularly in the Member States with economic structures less well adapted to the new situation in the world eoonomy is seen as an in— evitable reaction to the pressure to which their economies are subject,bearing in mind particularly the social pressures created by limited growth and rising
' unemployment. ' ' ' ■ .
7. In determining its position on individual aid proposals the Commission'has
developed a number of basic criteria: -
7.1. In the context of changing economic and social situations to ensure that
the Community dimension is taken into account within the actions, of Member States; in particular that action is .taken only where there is real need, that that action will lead to a restoration of long-term viability and that all "these actions will give added efficacy to the economic, social and regional policies of the Community. State aids should seek to solve long— term problems and not to preserve the status quo or put off decisions and changes which are inevitable. In balancing the Community and national intei>-ests, the Commission endeavours to ensure that industrial problems and un—
... employment are not transferred from one Member State to another.
7*2. The Commission accepts that the need to adapt structures should be qualified by taking into account the short-term social costs involved. Time is necessary for adjustment. While State aids should not be used simply to preserve existing structures limited use of resources to ameliorate the social and economic costs of change, for example in the form of rescue operations or . even controlled operating aids for a strictly limited period (crisis measures), can be accepted.
7*3. The intensity of aid given should be proportionate to the problem it is
sought to resolve. In this respect problems, whether regional or industrial, should be overcome with a minimum disturbance to competition and respect for the difficulties which have to be solved in each Member State.
7.4. Moreover, the Commission is also concerned to ensure that proposed aid measures should be degressive (e.g. in the rate and/or amount of aid); limited in time;and clearly linked to objectives for restructuring of the sector concerned. .
8. The principles of competition laid down in the Treaty limit the initiatives
' that the Commission can take in the field of State aids and determine the role of the Commission in handling cases of State aid, which is principally to react to the initiatives envisaged by Member States.
Therefore,the principal method of operation of the Commission is a case—by—case examination of proposals from Member States to grant aid. Such proposals, if their economic impact can be judged in advance, are considered in the light of the provisions of t*e Treaty and in particular the derogations of Article 92(3) EEC Treaty. If, as is the case in most general aid schemes, it is not possible initially to judge the effect of an aid proposal, the Commission will review the individual cases of application of the aid in question in the light of the general principles outlined above. This examination will include the application of the principles defined in any framework for aid to specifio sectors.
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9. The Commission does not systematically define a priori such general principles to he followed hy Member States because of the danger of generalizing the use of the aids within Member States even where they are not strictly necessary and the inflexibility which would result, as such frameworks cannot take into account the specific characteristics of the industry concerned in each Member State. However, in cases where it has become evident that an industry faces a situation of particular difficulty throughout the Community, or shall face such difficulties, it is possible to develop certain guidelines which indicate the policy the Commission will pursue in matters of subsidies for this industry. Such guidelines have been developed in particular in cases where industries are in crisis, for example textiles, shipbuilding and steel, under the rules of' CECA, or because particular industries are growth points which should be stimulated in the common interest.
In other areas where Member States face problems of a similar nature or intensity, for example regional aid and aid for the environment, the Commission has also developed this kind of framework.
10. The Commission has to take into account also the sectoral effects of certain other types of aid given, for exa.mple, aids for regional development or social purposes, such as employment aids. Hie Commission has applied restrictions when necessary (see point 13. below).
Policy in specific sectors
11. Acting within the above policy the Commission has approached equally the problems created by industries in crisis as well as those where the problem is growth. The former group has concerned shipbuilding (four successive Council Directives on aid), textiles (general principles on aid first elaborated in 1971 and refined and extended in 1976), man-made fibres (proposal of appropriate measures under Article 93(1)) and steel (general principles were proposed to Member States in April 1977 and a. proposal for a Decision under Article 95 EGSG sent to the Council and the Consultative Committee in May 1978).
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11.1. The Commission’s approach in the case of industries in crisis cited above has been based on certain common principles. The Commission has recognized that the crisis in these industries has threatened either
a disorderly rundown of their activities with' serious adverse consequences for employment in general, or a series of interventions by Member States designed to protect their industries, possibly by trans— ferring difficulties to other Member States, with aid levels being fruitlessly bid-up at substantial cost to all Member States.
The general purpose of the Commission’s initiatives has been to avoid both of these undesirable eventualities and at the same time to encourage the establishment of industries able to compete freely on the world market. To these ends it has accepted the justification for aids where these have facilitated adaptation to the new market conditions in an orderly manner. Such adaptations require (a) either an actual reduction in capacity or the avoidance of undesirable increases in capacity; and (b) the restoration of the competitiveness of Community industry. . .
11.2. In more concrete terms this has led to the specification of the following principles irr these initiatives:
— aids should not be given where their sole effect would be to maintain the status quo. Production aids as such are therefore in principle inadmissible, unless firstly they are conditional on action by the recipient which will facilitate adjustment (e.g. restructuring programmes); and secondly they are limited ' in time;
— similarly! rescue measures have "been recognized as necessary to
. provide a breathing space while longer term solutions to an ■
enterprise's difficulties are worked out, so as not to frustrate any required capacity reductions, such rescue measures should be limited to cases where they are .required to cope with acute social problems; * 1
— aids for investment should not result in capacity increases, since it is a common feature of the industries concerned that
. capacity is excessive. (The Commission has sought in certain ' instances to apply this.criterion in the oase of regional aids —
' a point discussed in paragraph 13. below). '
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12. As far as concerns industrial growth sectors, the Commission, while
it is in principle positively disposed to their stimulation, empha— ' '
sizes in its decisions the benefits to be obtained from Community*-wide cooperation in such actions. The principal competitive
problems facing the Comijrunity come from States outside the Community, in
, particular those highly industrialized and/or technically'advanced.
The Commission has encouraged Member States to promote an active policy
of development in the fields of computer technology, electronics, aero—
nautics, particularly by general promotion of research and development.
It has raised no objections therefore to the use of State aids to attain
these objectives. , ' .. ' '
In this context mention should be made also of the favourable position ’ the Commission has adopted to proposals to promote the availability of finances for the creation of new undertakings and the development of small and medium-sized enterprises. ,
13. In- considering its policy on sectoral aid schemes the Commission has
also taken into account the sectoral effeots of other types of aids. '
In particular: . ' .
— Aids to employment. The Commission has distinguished between aids designed to promote new work places and those designed to maintain existing jobs. In regard to the latter it has considered that if such
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aids are concentrated on sectors which face acute difficulties in all Member States, and are not associated with substantial plans for , reorganization, their granting will lead not to the solution of the
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social and industrial difficulties, but to their transfer to other .
• Member States* For these reasons it has recently imposed important restrictions on such an employment aid.
— As concerns regional aid, bearing in mind the general objectives of
the Treaty and in particular the derogation of Article 92(3)(a) and
(c) EEC Treaty covering the grant of regional aid, the accumulation
' ' of sectoral with regional aids is not excluded in principle* However,
where a point of extreme overcapacity has been reached in a particular
sector, the Commission has demanded from Member States that even
regional aid which would encourage investment that would lead to an
in principle
increase in capacity should not/be granted, for example in the case ' of the synthetic fibre industry, and shipbuilding.
Conclusion
14* The Commission welcomes this opportunity for a fruitful exchange of views on State aids with the Council, which it is ready to renew, without prejudice to its competences* It would note that Member States are already associated with its decisions on matters of State aid through a constant stream of consultation at both bilateral and multilateral level.
This practice of the Commission was explained in letters of the President of the Commission of 5 January 1977 and 11 April 1978. Furthermore, the Commission would recall that in its Annual Report of Competition Policy addressed to the Parliament its policies and actions are described in detail. On the basis of this report the Commission is prepared tox hold periodic discussions on its policy with the relevant experts from the Member States. , ,