State aid: Commission publishes results of evaluation of State aid rules on services of general economic interest applicable to health and social services and to small aid amounts

The European Commission has published a Staff Working Document summarising the results of the evaluation of the EU State aid rules for services of general economic interest (‘SGEI') applicable to health and social services, and to small amounts of aid. The evaluation concludes that, overall, the existing rules are fit for purpose. However, some adjustments may be needed to clarify and further simplify the existing rules to reduce red tape.

In June 2019, the Commission launched its evaluation of the EU State aid rules for SGEI applicable to health and social services, such as medical care provided by hospitals and social housing. These rules ensure that public funding granted for the provision of such services does not unduly distort competition in the Single Market. Furthermore, the Commission launched the evaluation of the rules for small amounts of aid for SGEIs (so-called ‘SGEI de minimis aid'). Under these rules, public service compensation measures of up to €500,000 for SGEI providers over a three-year period are exempted from the application EU State aid rules because they are considered too small to affect competition or trade between Member States.

The evaluation aimed at assessing how the current SGEI rules applicable to health and social services and to small amounts of aid have performed since their entry into force in 2012. In particular, the evaluation sought to:

• assess whether the 2012 SGEI rules have reached their objectives (i.e. clarification of key State aid principles, simplification and a diversified and proportionate approach to SGEI);
• verify whether the rules are still appropriate in light of the developments in the sectors and in the jurisprudence of the Court of Justice; and
• identify potential issues that Member States have faced when implementing the rules.

The Commission's assessment involved internal analyses and public and targeted consultations of Member States and stakeholders, such as citizens, public authorities, companies, associations, consumer/business organisations, NGOs and trade unions. In addition, the Commission commissioned an external study, which examined the market trends in the healthcare and social housing sectors in ten Member States.

Findings of the evaluation

The evaluation concludes that, overall, the SGEI rules for health and social services are fit for purpose. In addition, the evaluation shows that the amendments introduced to the SGEI rules in 2012, to simplify them and clarify certain key concepts, have facilitated their application to health and social SGEIs and the provision of small aid amounts to SGEIs. Furthermore, the evaluation concludes that the existing rules have contributed to reducing the administrative burden for the authorities entrusting the SGEIs.

At the same time, the evaluation revealed that certain adjustments may be needed to even further (i) simplify and clarify the existing rules, and (ii) reduce the administrative burden for Member States when compensating companies discharging SGEIs. For example, the concepts of ‘economic and non-economic activity', ‘effect on trade between Member States', ‘reasonable profit', ‘market failure' and ‘social housing' may need further clarification.

In relation to the rules on SGEI de minimis aid, the evaluation concludes that there may be a need to increase the ceiling under which small aid amounts to companies entrusted with SGEIs are deemed not to constitute State aid, and to align the SGEI de minimis Regulation with the general de minimis Regulation.

Next steps

The Commission will now reflect on how to address the issues identified in the context of the evaluation, starting in particular with the opportunity to review the SGEI de minimis Regulation. A call for evidence will be launched shortly to gather the views of stakeholders.

Background

SGEIs are economic services that public authorities identify as being of particular importance to citizens and which deliver outcomes in the overall public good that would not be supplied by the market (or would be supplied under different conditions in terms of objective quality, safety, affordability, equal treatment or universal access) without public intervention. SGEI are carried out in the public interest under conditions defined by the State that imposes a public service obligation on one or more providers. When providing SGEIs, companies might need to be compensated to offset the additional costs stemming from a provider's public service obligations. Public funding granted to companies carrying out economic activities may provide an economic advantage to the beneficiaries that their competitors do not have. This may give rise to distortions of competition in the Single Market. State aid control of SGEI ensures that public service compensation does not exceed what is necessary for the provision of the public service, that companies have incentives to innovate and compete, and that the Single Market is not fragmented.

The 2012 SGEI Package lays down the State aid rules applicable to SGEIs compensation. In particular:

• The SGEI Communication gives a comprehensive and practical overview of the EU State aid concepts relevant for SGEIs.
• The SGEI de minimis Regulation provides that compensation, which does not exceed €500,000 over any period of three fiscal years, does not fall under State aid scrutiny.
• The SGEI Decision exempts Member States from the obligation to notify to the Commission public service compensation if certain criteria are met.
• The SGEI Framework sets the conditions for assessing large compensation amounts that do not fall under the scope of the SGEI Decision. Such compensation will have to be notified to the Commission for assessment due to the higher risk of distortion of competition.

The evaluation covered the abovementioned rules insofar as they are applicable to health and social services. More information, including all stakeholder contributions submitted in the context of the evaluation, summaries of the consultations and the final report of the evaluation study, can be found on the Have your say portal.