Introductory text

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation (EC) No 994/98 of 7 May 1998 on the application of Articles 92 and 93 of the Treaty establishing the European Community to certain categories of horizontal State aid^f1, and in particular point (a)(iv) of Article 1(1) thereof,

Having published a draft of this Regulation^f2,

Having consulted the Advisory Committee on State Aid,

Whereas:

Regulation (EC) No 994/98 empowers the Commission to declare, in accordance with Article 87 of the Treaty, that under certain conditions training aid is compatible with the common market and not subject to the notification requirement of Article 88(3) of the Treaty.

The Commission has applied Articles 87 and 88 of the Treaty to training aid in numerous decisions and has also stated its policy, most recently in the Community framework on training aid^f3. In the light of the Commission's considerable experience in applying those Articles to training aid, it is appropriate, with a view to ensuring efficient supervision and simplifying administration without weakening Commission monitoring, that the Commission should make use of the powers conferred by Regulation (EC) No 994/98.

In order to establish a transparent and coherent policy for all sectors, it is appropriate that the scope of this Regulation be as broad as possible and include the agricultural sector, fisheries and aquaculture.

This Regulation is without prejudice to the possibility for Member States to notify training aid. Such notifications will be assessed by the Commission in particular in the light of the criteria set out in this Regulation, or in accordance with the applicable Community guidelines and frameworks, if such guidelines and frameworks exist. This is currently the case for activities relating to the production, processing and marketing of products listed in Annex I to the Treaty and for the sector of maritime transport. The framework on training aid should be abolished from the date of entry into force of this Regulation, since its contents are replaced by this Regulation.

For reasons of transparency, it should be recalled that in accordance with the second subparagraph of Article 51(1), of Council Regulation (EC) No 1257/1999 of 17 May 1999 on support for rural development from the European Agricultural Guidance and Guarantee Fund (EAGGF) and amending and repealing certain Regulations^f4, Articles 87 to 89 of the Treaty do not apply to financial contributions provided by the Member States for measures subject to Community support for training according to Article 9 of the said Regulation.

For reasons of transparency it should be underlined that this Regulation should only apply to training measures which constitute State aid within the meaning of Article 87(1) of the Treaty. Many training measures are not caught by that Article, but constitute general measures because they are open to all enterprises in all sectors without discrimination and without discretionary power for the authorities applying the measure, e.g. general tax incentive schemes, such as automatic tax credits, open to all firms investing in employee training. Other training measures do not fall within the scope of Article 87(1) of the Treaty because they directly benefit people everywhere and do not grant an advantage to certain enterprises or sectors. Examples are: schooling and initial training (such as apprenticeships and day-release schemes); the training or re-training of unemployed people, including traineeships in enterprises; measures directly targeted at workers or even at certain categories of workers, affording them the opportunity of receiving training unconnected with the firm or industry in which they work (for example the ‘learning account’). On the other hand, it should be recalled that contributions from sectoral funds, if they are made compulsory by the State, are not considered as private resources, but constitute State resources within the meaning of Article 87(1) of the Treaty.

This Regulation should exempt any aid that meets all the relevant requirements of this Regulation, and any aid scheme, provided that any aid that could be granted under such scheme meets all the relevant requirements of this Regulation. With a view to ensuring efficient supervision and simplifying administration without weakening Commission monitoring, aid schemes and individual grants, outside any aid scheme, should contain an express reference to this Regulation.

In order to eliminate differences that might give rise to distortions of competition, in order to facilitate coordination between different Community and national initiatives concerning small and medium-sized enterprises, and for reasons of administrative clarity and legal certainty, the definition of ‘small and medium-sized enterprises’ used in this Regulation should be that laid down in Commission Recommendation 96/280/EC of 3 April 1996 concerning the definition of small and medium-sized enterprises^f5.

In order to determine whether or not aid is compatible with the common market pursuant to this Regulation, it is necessary to take into consideration the aid intensity and thus the aid amount expressed as a grant equivalent. Calculation of the grant equivalent of aid payable in several instalments, and calculation of aid in the form of a soft loan, require the use of market interest rates prevailing at the time of grant. With a view to a uniform, transparent and simple application of the State aid rules, the market rates for the purposes of this Regulation should be deemed to be the reference rates, provided that, in the case of a soft loan, the loan is backed by normal security and does not involve abnormal risk. The reference rates should be those which are periodically fixed by the Commission on the basis of objective criteria and published in the Official Journal of the European Communities and on the Internet.

Training usually has positive external effects for society as a whole since it increases the pool of skilled workers from which other firms may draw, improves the competitiveness of Community industry and plays an important role in employment strategy. In view of the fact that enterprises in the Community generally underinvest in the training of their workers, State aid might help to correct this market imperfection and therefore can be considered under certain conditions to be compatible with the common market and therefore exempted from prior notification.

In order to ensure that State aid is limited to the minimum necessary to obtain the Community objective which market forces alone would not make possible, the permissible intensities of exempted aid should be modulated according to the type of training provided, the size of the enterprise and its geographical location.

General training provides transferable qualifications and substantially improves the employability of the trained worker. Aid for this purpose has less distortive effects on competition, so that higher intensities of aid can be considered compatible with the common market and exempted from prior notification. Specific training, on the other hand, which mainly benefits the enterprise, involves a greater risk of distortion of competition so that the intensity of aid which can be considered compatible and exempted from prior notification should be much lower.

In view of the handicaps with which SMEs are confronted and the higher relative costs that they have to bear when they invest in the training of their workers, the intensities of aid exempted by this Regulation should be increased for SMEs.

In assisted areas under Article 87(3)(a) and (c) of the Treaty, training has a relatively greater external impact, since there is a substantial underinvestment in training in those regions and a higher unemployment rate. Consequently, the intensities of aid exempted by this Regulation should be increased for those areas.

The characteristics of training in the maritime transport sector justify a specific approach for that sector.

It is appropriate that large amounts of aid remain subject to an individual assessment by the Commission before they are put into effect. Accordingly, aid amounts exceeding a fixed amount, which should be set at EUR 1 000 000, are excluded from the exemption provided for in this Regulation and remain subject to the requirements of Article 88(3) of the Treaty.

This Regulation should not exempt aid cumulated with other State aid, including aid granted by national, regional and local authorities, or with Community assistance, in relation to the same eligible costs when such cumulation exceeds the thresholds fixed in this Regulation.

In order to ensure transparency and effective monitoring in accordance with Article 3 of Regulation (EC) No 994/98, it is appropriate to establish a standard format in which Member States should provide the Commission with summary information whenever, in pursuance of this Regulation, an aid scheme is implemented or an individual aid outside such schemes is granted, with a view to publication in the Official Journal of the European Communities. For the same reasons, it is appropriate to establish rules concerning the records that Member States should keep regarding the aid exempted by this Regulation. For the purposes of the annual reports to be submitted to the Commission by Member States, it is appropriate for the Commission to establish its specific requirements, including, in view of the wide availability of the necessary technology, information in computerised form.

Having regard to the Commission's experience and in particular the frequency with which it is generally necessary to revise State aid policy, it is appropriate to limit the period of application of this Regulation. Should this Regulation expire without being extended, aid schemes already exempted by this Regulation should continue to be exempted for six months,

HAS ADOPTED THIS REGULATION: