DG State Aid – Control and Regeneraton of Deprived Urban ... - REVIT

framework. A regeneration process is multi-facetted. The Commission appreciates
that different Member States tackle regeneration problems in different ways: they
may wish either to invest directly in regeneration schemes or decide to also involve
the private sector. The approach to regeneration from a state aid point of view must
therefore bear this in mind and allow room for manoeuvre.
A formal regeneration framework based upon limited experience can quickly turn
out to restrict choices and options. Therefore, for the time being, the current state aid
rules – applied by and enriched through extensive cooperation between Member
States and the Commission – deliver the necessary flexibility to accommodate all
differing and innovative measures in a field that is constantly evolving.
Based on the experience gained with actual and future regeneration cases, the
Commission will however continue to assess whether there is a need for an
additional, specific instrument on state aid for undertakings in deprived urban areas.
The Commission’s regeneration track record demonstrates that the state aid regime
is prepared to deal with challenges in regeneration field. Presently, there are a
number of possibilities to support regeneration either through a direct application of
Article 87, in particular 87(3)(c) of the EC Treaty, or though horizontal state aid rules,
i.e. Block exemptions, Guidelines for environmental protection, Guidelines for risk
capital, etc.
The sections below give an overview of state aid rules that are relevant for the
assessment of regeneration measures.
4. Overview of state aid rules applicable in the field of regeneration
4.1 Basic substantive rules
The basic substantive rules on the control of state aid in the EU are set out in Article
87 of the EC Treaty. This article provides that state aid is in principle incompatible with
the common market. Article 87(1) of the EC Treaty can be broken down into four
tests to establish if a measure within an urban regeneration scheme constitutes state
aid. A state aid will only be present if all four tests are met:
– Is the measure granted by the state or through state resources?
– Does the measure favour certain undertakings or the production of certain
goods 8 ?
– Does the measure distort or have the potential to distort competition by
selectively 9 favouring certain beneficiaries?
– Does the measure produce an effect on intra-Community trade?
The principle of incompatibility of state aid with the Treaty is not, however, absolute.
Article 87(2) and Article 87(3) contain a number of exemptions under which state aid
shall or may be considered compatible by the Commission. In exercising its wide
8 The latter also covers provision of services.
9 Selectivity could be with respect of the type of firms (e.g. small or medium size enterprises), their location (e.g.
a specific region) or their sector of activity. In the extreme case, aid could be addressed to one specific firm.
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