VADEMECUM COMMUNITY RULES ON STATE AID - Interact

(iii) compensation does not exceed the net costs of providing the service plus a
reasonable profit (i.e. no over-compensation); and
(iv) the compensation is determined either through public procurement or if no public
tender has taken place, the company entrusted with the SGEI is compensated on the
basis of the costs of a typical well-run company.
Measures
1. Decision
The Decision specifies the conditions under which compensation to companies for the
provision of SGEI is compatible with state aid rules and does not have to be notified to the
Commission in advance.
Conditions:
• a clearly defined public service mandate;
• no over-compensation;
• compensation of less than €30 million per year per undertaking; and
• annual turnover of less than €100 million per undertaking.
• no limits for amount of compensation: - hospitals;
- social housing;
- air and sea transport to islands;
- airports and ports below specific
thresholds defined in passenger volumes.
2. Framework
The Framework specifies the conditions under which compensation not covered by the
Decision is compatible with state aid rules. Such compensation will have to be notified to the
Commission due to the higher risk of distortion of competition.
The rules are designed to ensure that there is no overcompensation (compensation that
exceeds the net costs of the public service) and no cross-subsidizing (compensation that is
used on other markets open to competition) as such circumstances could not be found
compatible with the Treaty.
3. Transparency Directive
The Transparency Directive clarifies that companies receiving compensation and operating on
both public service and other markets must have separate accounts for their different
activities, so that the absence of over-compensation can be established.
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