On 25 November 2021, the Commission adopted its revised Communication on the Criteria for the analysis of the compatibility with the internal market of State aid to promote the execution of important projects of common European interest (“IPCEI”). This is particularly relevant for companies who have breakthrough innovative projects and need to seek public support for their projects. For example, under the current Communication, the Commission approved public support to two major research and innovation projects of European interest along the battery value chain for electric vehicles (“summer” and “autumn” projects) and a project in microelectronics. Various other projects are being assessed, for instance on Next Generation Cloud Infrastructure and Services and on green hydrogen.

The revised communication sets out the criteria following which the Commission will approve IPCEI with the State aid rules as of 1 January 2022.

The revision aims to take into account recent EU policies and strategies such as the European Green Deal, the Digital Strategy, the New Industrial Strategy for Europe, the European Strategy for Data and Next Generation EU and to allow larger participation of SMEs and start-ups.

In substance, for a project to be eligible to IPCEI aid, it must:

  • represent an important contribution to the Union’s objectives or strategies and have a significant impact on sustainable growth;
  • overcome important market or systemic failures not otherwise adequately addressed or remedied;
  • involve at least 4 EU Member States and benefit to a wider part of the Union;
  • present positive spillover effects beyond the undertakings or sector aided;
  • involve important co-financing by the beneficiary;
  • comply with the new principle of ‘do no significant harm’ to the environment according to the EU taxonomy.

To be considered as important, the project must fulfil the following criteria:

  • R&D&I projects must be of a major innovative nature;
  • projects comprising of first industrial deployment must allow for the development of a new product or service with high research and innovation content or the deployment of a fundamentally innovative production process. First industrial deployment means the upscaling of pilot facilities, demonstration plants or of the first-in-kind equipment and facilities, covering the steps after the pilot line, following R&D&I activities, but not mass production or commercial activities;
  • infrastructure projects in the environmental, energy, transport, and with the 2021 revision, health and digital sectors, must be of great importance for the environment, climate, energy (including energy security), transport, health, industrial or digital strategies of the Union or contribute significantly to the internal market.

Concretely, the Commission would approve the public funding if it is necessary and proportionate, and if, on the basis of a balancing test, the expected positive effects of the aid in contributing to the objective of common European interest, outweigh its possible negative effect on competition.

The aid is deemed to be necessary if it does not compensate for normal business risk, meaning that without the aid, the realization of the project would be impossible or only possible in a manner restricting the benefits expected from the aided project. This is examined through a counterfactual scenario of absence of aid for instance where there is not any alternative project possible or where there is an alternative project outside the EU. The revised communication stresses that the counterfactual scenario must be credible to be taken into account. The aid is proportionate if it does not exceed the existing funding gap. To avoid any overcompensation where a project turns out to be more profitable than expected, the revised communication allows the Commission to request from the granting authorities to implement a claw-back mechanism. Finally, to prevent the negative undue distortions of competition, the Commission will verify that there is not any less distortive policy instruments or other less distortive types of aid instruments to achieve the same result.

The revised communication makes it easier for Member States to support large, pan-European projects that support environmental objectives. It also makes some openings to projects pursuing industrial policy objectives, for instance to address a strategic dependency, provided that the project relates to a first industrial deployment, following an R&D&I activity and containing itself, that is even after the pilot phase, an important R&D&I component. R&D&I content of an IPCEI project is not defined, but referring to the decisional practice and communication of the Commission in the area of State aid for R&D&I, such content relates to any or a combination of fundamental research, industrial development and experimental development.

Photo of Johan Ysewyn Johan Ysewyn

Johan Ysewyn is widely respected as a highly skilled European competition lawyer, advising on complex competition issues, including on merger control, anti-cartel enforcement, monopolisation cases and other conduct investigations. He acts as Co-Head of the firm’s Global Competition group and as Managing Partner…

Johan Ysewyn is widely respected as a highly skilled European competition lawyer, advising on complex competition issues, including on merger control, anti-cartel enforcement, monopolisation cases and other conduct investigations. He acts as Co-Head of the firm’s Global Competition group and as Managing Partner of the Brussels office.

Clients turn to Johan when they need cutting-edge competition and regulatory advice. He has been advising some of the world’s leading companies for over 30 years on their most complex competition issues. Johan is “an exceptional lawyer who is solution-oriented, has a remarkable ability to rapidly understand our business and has excellent reactivity.” (Chambers Global) Johan “attracts considerable praise for his reliable practice, as well as his great energy and insight into cartel proceedings.” (Who’s Who Legal)

Johan represents clients from around the world in dealings with competition authorities as well as in court litigation. He has in-depth knowledge of regulatory procedures and best practices as well as longstanding relationships with key regulators, in particular at the European Commission. He has also an active advisory practice covering a range of areas of interest to corporates, including the interplay between ESG goals and competition law, the impact of competition law enforcement on digital markets and broad strategic compliance issues.

Johan’s experience spans many industry sectors, with recent experience in telecoms and information technology, media, healthcare, consumer goods, retail, energy and transport. He has advised on several of the most major merger investigations in recent years. In addition, he has represented clients in many conduct investigations.

Johan’s practice also has a strong focus on global and European cartel investigations. He has acted for the immunity applicants in the bitumen and marine hose cartels, and acted for defendants in alleged cartels in financial services, consumer goods, pharmaceuticals, chemicals, consumer electronics and price benchmarking in the oil sector. He has acted for the European Payments Council in the first European Commission investigation into standardisation agreements in the e-payments sector. Johan has written and lectured extensively on international cartel and leniency-related issues. He co-authors the loose-leaf European Cartel Digest and lectures on cartel law and economics at the Brussels School of Competition.

Johan is also one of the leading experts on EU State aid issues, working both for beneficiaries and governments. He has advised a number of leading banks and governments, as well as represented major European airlines. From the cases that can be publicly disclosed, he has been involved in the Fortis, KBC, Dexia, Arco, Citadele, airBaltic and Riga Airport State aid cases.

Photo of Carole Maczkovics Carole Maczkovics

Carole Maczkovics has developed a cutting-edge expertise in State aid law, with a strong background in the economic regulation of network industries (energy and transport) and in public contracting (EU subsidies, public procurement, concessions).

Carole has a proven track record of advising public…

Carole Maczkovics has developed a cutting-edge expertise in State aid law, with a strong background in the economic regulation of network industries (energy and transport) and in public contracting (EU subsidies, public procurement, concessions).

Carole has a proven track record of advising public and private entities, which she successfully represents in administrative and judicial proceedings on complex State aid and regulatory matters before the European Commission as well as before the Belgian and European courts. She also assists clients with the application of the new EU Foreign Subsidy Regulation and UK subsidy control regime.

Carole has published many articles on State aid law and on regulated network industries, and contributes to conferences and seminars on a regular basis. She is a visiting lecturer at King’s College London and at the Brussels School of Competition on the application of regulation and competition law (including State aid) in the railway sector. Carole gives trainings on State aid law at EFE, in Paris. She has been recently appointed as Academic Director of the European State aid Law Institute (EStALI).