EU State Aid Law: New De Minimis Regulation Published

On December 18, 2013, the EU Commission published a new version of its de minimis regulation. Accordingly, aid measures that meet the requirements of the Regulation do not meet all the criteria for constituting aid under Article 107(1) of the EC Treaty. 1 TFEU and are therefore exempt from the notification and approval requirement from the outset.

Exempted is any aid granted to a company by the public authorities (in total) up to a total amount of EUR 200,000, related to a period of three fiscal years (EUR 100,000 for companies from the road transport sector). In this respect, the new regulation does not provide for any changes to the old regulation. It also remains the case that only “transparent” aid is exempt from the notification requirement. This includes, in particular, aid in the form of grants or interest subsidies.

Innovations of the 2013 Regulation

Up to now, government loans have only been covered by the de minimis exemption under very narrow conditions. In this regard, there are facilitations with the new regulation. Loans are now considered to be transparent aid – under certain conditions – without further examination if the beneficiary of the aid is not a company in difficulty and the loan does not exceed an amount of EUR 1,000,000 (or EUR 500,000 in the case of road haulage companies).

A definition of “aid to a single undertaking” has also been added. This now expressly includes constellations in which, for example, an enterprise holds the majority of the voting rights of the shareholders or partners of another enterprise, or in which an enterprise is entitled to exercise a controlling influence over another enterprise pursuant to an agreement concluded with that enterprise or on the basis of a clause in its Articles of Association. These companies may not receive more than the maximum exempted amount of EUR 200,000 in total. Any subsidies granted in excess of this must be examined on the basis of the general rules and, if necessary, the amount of the subsidy must be reduced. independently.

Entry into force of the new regulation and need for action

The new regulation will come into force on 01 January 2014. It replaces the old de minimis regulation from 2006 and applies directly in all EU member states. The new “general” de minimis regulation joins the specific regulation for de minimis aid in favor of companies involved in services of general economic interest.

Since the new regulation does not provide for any tightening compared to the old regulation, there is currently no need for action for existing de minimis aid. However, aid-granting bodies and aid recipients who were not exempt from the notification requirement under the old de minimis Regulation should check whether the new Regulation opens up corresponding exemption possibilities. It should be noted, however, that the new de minimis Regulation also requires that the aid in question be granted as “de minimis aid” and with an explicit reference to the Regulation.

Public Procurement Law: No Revocation of the Notice of Allocation in the Event of a Breach of Good Faith

According to the ruling of the Düsseldorf Administrative Court (VG) of September 4, 2013, the revocation of a funding decision is an abuse of rights and an error of judgment if the funding provider has signaled to the recipient that a violation of procurement law is not detrimental to the funding.

The plaintiff applied to the responsible state commissioner for state funds to relocate its site. After allocation of the necessary budgetary funds by the responsible ministry, the State Commissioner granted the plaintiff the requested allowances. Section II of the grant notice contained a provision stating that, in accordance with the AN-Best-P, the German Construction Contract Procedures (Verdingungsordnung für Bauleistungen – VOB) and the German Contract Procedures for Services (Verdingungsordnung für Leistungen – VOL) must be observed when awarding contracts.

The approved grants were gradually drawn down by the plaintiff and disbursed accordingly by the State Commissioner. According to the notification of the auditing office, the plaintiff violated the VOB (German Construction Contract Procedures) in all of the construction contracts awarded, whereupon the state commissioner revoked his grant decisions due to violation of the grant law and demanded that the plaintiff return part of the grants awarded.

After an unsuccessful objection, the plaintiff filed an action before the Düsseldorf Administrative Court and was successful. The court was convinced that the plaintiff had violated the requirement of the award notice to observe the provisions of the VOB in many respects. However, in the present case, the revocation of the award decisions was an abuse of rights and an error of judgment, since the State Commissioner had contradicted his earlier conduct and thus violated the principle of good faith.

This was because the State Commissioner, as the competent authority, had signaled to the plaintiff by his entire conduct that he expected that the plaintiff would not be able to comply with the requirement to observe the VOB because of the short time available. This created a state of trust on the part of the plaintiff, according to which non-compliance with the procurement regulations would not have any negative consequences for the grant.

In addition, the State Commissioner had not examined the plaintiff’s proof of use of funds to determine whether the construction work had been put out to public tender and had nevertheless issued a positive audit opinion on the proof of use of funds.

Thus, there was a tacit agreement between the parties involved that the subsidy would be granted even if the award condition was not met.