The European Commission is reducing its oversight over state aid provided by European Union member states to their companies, as part of an overhaul of EU rules presented yesterday (21 May) by Joaquin Almunia, the European commissioner for competition.

The Commission wants to focus its resources on the largest state aid cases facing the single market. By restricting the criteria that triggers notification, member states will move from notifying 40% of all state aid to the Commission to an estimated 25% or even 10%. In exchange, member states will have to be more transparent about the un-notified state aid they give above €500,000, allowing other member states, rival companies and the public to scrutinize state interventions in the economy.

“These new rules will cut red tape for Member States and encourage them to put in place smart aid measures which contribute to economic growth and do not harm fair competition,” said Almunia.

In particular, the new state aid block exemption provides member states with “safe harbours” for aid which is clearly linked to boosting job creation or improving the economy’s competitiveness. Under the revised general block exemption, member states will enjoy greater flexibility when investing in broadband infrastructure, innovation clusters or cultural conservation, for example.

Almunia announced in May 2012 that he intended to modernise the existing state aid regime, by bolstering the Commission’s investigative powers, making its decision-taking process faster and concentrating the Commission’s attention on the biggest cases most likely to distort the single market.

He has since presented new state aid rules for a variety of sectors including regional development, broadband and airports.

The Commission has gained greater powers to require companies to provide it with information on their sector and has stepped up its cooperation with national courts to ensure that they apply state aid rules in a harmonised fashion.

Almunia’s state aid policy has come under fire from politicians in recent years, in particular as a result of the financial crisis and a series of bank bail-outs that had to be cleared with the European Commission. But Arnaud Montebourg, France’s minister for the economy, has subjected Almunia to a broader set of criticisms, telling journalists that Almunia was a “right-wing Taliban” whose “strict” application of state aid rules smacked of “autism”.

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