State aid – Green Deal and Digitalisation in a challenging year 2021

State aid and sustainability

With climate change high on the agenda of European Commission President, Ursula von der Leyen, the scene is set for a debate in 2021 on ways in which competition policy can be used to encourage greening of the economy.

Stakeholders were recently invited to submit ideas to a public consultation on how EU competition rules, including State aid, could be deployed in support of the transition to a greener economy. DG Competition is now evaluating the responses to the consultation, which closed on 20 November 2020, and the results will feed into its programme for a conference planned for early 2021.

While the Commission has been grappling for some time with the issue of how to adapt competition policy to the digital transition, the green transition is a relatively new item on DG Competition's agenda. It is also an area where there has been relatively little academic research, or case law, to inform the Commission's thinking. Yet the debate on competition policy and sustainability has already kicked off at national level, with the Dutch, French, German and Greek competition authorities recently taking initiatives in this area.

At European level, Commission President von der Leyen is clearly expecting competition policy to do its part to support the "Green Deal” by helping companies in boosting the efficient use of resources, investing in environmentally friendly technologies and moving to a cleaner, circular economy.

For this reason, in the next year we can expect discussion on aspects of competition law that could be used to support the Green Deal goals.

For state aid this namely entails discussions on how state aid can be used to enable R&D and investments in environmentally sustainable industries. Mechanisms could include a "green bonus" or other rewards for positive actions, or negative consequences for activities harmful to the environment e.g. polluting factories.

DG Competition has therefore begun work on incorporating aspects of the Green Deal into its state aid policies as a part of its 2021 Work Programme.

In this, the Commission announced a revision of several state aid guidelines, most importantly for the Green Deal, the Energy and Environmental Aid Guidelines and a State Aid General Block Exemption Regulation (GBER).

The Commission's forthcoming reflection on competition and sustainability is likely to focus on the need to avoid national divergence on the issue. DG Competition will want to promote a harmonised approach, based on a number of common principles.

This debate around competition debate and sustainability can be expected to gather speed in the next 12 months. It could lead, at the very least, to a revision of existing "soft law", the publication of new guidance for Member States regarding enforcement policy or even the launch of a test case.

State aid and broadband development

Also, with regard to the challenging plans to speed up the European digitalisation far going developments are to be expected in the broadband development related European state aid law in 2021 and the following years. In particular, in view, of the implementation of the European Electronic Communications Code (“EECC”) in December 2018, the European state aid law will be evaluated by the EU Commission in consideration of the far going changes determined by the EECC which have to be implemented by all EU member states until 21 December 2020.

The EECC particularly aims to drive broadband investments in high capacity networks, i.e. the rollout of optic fibre and 5G networks. Besides the requirement to implement the provisions of the EECC into the national regulatory law of each Member State creating incentives for broadband network operators to roll out high capacity networks also in economically less attractive geographical areas will require a further analysis whether the existing state aid rules related to broadband development are still appropriate to support the ambitious European digitalisation plans.

Against this background, the European Commission has already launched a consultation in September 2020 for the evaluation of the Broadband State Aid Guidelines and the broadband relevant parts of the GBER. The consultations are addressed to all interested public or private bodies or persons and focus in detail on whether the existing rules have encouraged the development of telecommunications infrastructure and improved competitiveness in the sector, and also asking whether the rules meet both technological developments and socio-economic needs and whether the new EU strategic objectives in Shaping Europe´s Digital Future can be met. The consultations run from 08.09.20 to 05.01.21 and the Commission plans to publish the results of the consultations in the second quarter of 2021. A corresponding consultation was also launched by the EU Commission at 2 December 2020 as part of the review of the Broadband Cost Reduction Directive running until 2 March 2021.

For more information contact Morten Nissen, Francine Cunningham, Marcio da Silva Lima or Alexander Brøchner.