European Commission adopts new General Block Exemption Regulation – Transformational effects on State aid as we know it

The European Commission has now adopted the long awaited replacement for the 2008 General Block Exemption Regulation (universally known as “GBER”) to take effect from 1 July 2014. The 2008 version changed State aid practice massively, and it is that which has formed the foundation of the types of State assistance issued across the UK for the last few years. The Regional Growth Fund (RGF), for example, has been dispersed in the vast majority in accordance with GBER’s provisions. GBER has set the types of investment activity eligible for support across the EU, to what maximum percentages of aid against total spend (known as “aid intensity”), and in what maximum aid amounts before an individual notification would be required, ever since 2008.

The new version adopted now has effectively taken the 2008 original, updated and in some cases simplified it, but most of all has expanded it to cover many further types of activity not previously eligible under GBER. This is not to say that the new GBER will make things possible which previously could not be done, because Member States always had the right to notify individual projects and schemes and seek the European Commission’s approval within its discretion. The big difference the new GBER will make is that it allows such a wider frame of projects to proceed with the legal certainty of being covered by a block exemption, without the need for a lengthy and uncertain individual notification and clearance procedure.

The Commission regularly comes under criticism for making life too difficult for Member States to intervene and stimulate economic development, thereby stifling projects which patently will support development and not damage competition, (which is the only thing the State aid rules are there to protect). Particularly since the now notorious European Court judgement in Leipzig Halle in 2011, this has extended in particular to preventing State authorities from entering into their own investments which previous caselaw had suggested they were able to do. The Commission now states that the new GBER should cover up to 90% of future aid to be provided in the EU.

The most striking element of the new GBER is the increase in scope. The new types of activity capable of being supported within new GBER include the following:

1.  Investment aid in local infrastructures made available on an open, transparent and non-discriminatory process.

2.  Aid for Sport and Multifunctional Recreational Infrastructure.

3.  Investment aid for remediation of contaminated sites.

4.  Aid for employment of disadvantaged workers.

5.  Investment aid for research infrastructures.

6.  Expanded risk finance aid for SMEs.

7.  Regional urban development aid.

8.  Innovation clusters.

9.  Aid schemes to repair damage from natural disasters.

10.  Aid for culture and heritage conservation.

11.  Aid for broadband infrastructures.


1. Investment aid in local infrastructures made available on an open, transparent and non-discriminatory process.

Aid must not exceed €10m and the viability gap in the cost of building such infrastructures and this does not apply to airports and ports, but otherwise this is perhaps the most striking of the new features which should allow a host of municipal projects to proceed, for example SME incubator facilities, where previously this was problematic, especially post Leipzig Halle. It should be noted that where costs exceed €20m then the project will need to be notified regardless of the aid amount. This does seem potentially to prejudice innocuous projects with low aid intensities but high costs, and perhaps there will be clarification on this eg, in the new GBER FAQs.


2. Aid for Sport and Multifunctional Recreational Infrastructure.

This allows aid towards the investment and incremental operating costs of a wide variety of projects ranging from sports stadia to multi-arenas but does not apply to leisure parks and hotels. Aid must not exceed €15m and the viability gap in the cost of delivery and again, regardless of the aid amount, the project will need to be notified if the costs exceed €50m and the point above applies here equally.


3. Investment aid for remediation of contaminated sites.

This allows aid of up to €20m towards the extra remediation costs required to bring back into productive use contaminated sites, assuming the original polluter cannot be made to pay. Again this covers viability gap and mirrors to many extents the previous UK aid scheme “Land Remediation Scheme” that covered similar costs, but included brownfield and derelict sites. 


4. Aid for employment of disadvantaged workers.

This will allow aid up to €5m to subsidise wage costs of disadvantaged workers, up to 50% of wage costs, to cover people under 24, over 50, or long term unemployed. Previous support for additional costs of hiring disabled workers is maintained.


5. Investment aid for research infrastructures.

This will allow investment aid for research centres to be established. The old rules allowed aid for specific R&D projects but not the creation of the infrastructure to facilitate them. Aid will be allowed up to 50% of investment costs and up to €20m per project.


6. Expanded risk finance aid for SMEs.

The new rules significantly expand the possibilities for aid to risk finance schemes to support SMEs traditionally falling within the equity gap for investors.  The new rules will allow up to €15m of equity, quasi equity, loans, guarantees or mixed investments in SMEs plus associated measures for start-ups, alternative trading platforms and scouting costs.


7. Regional urban development aid.

The new rules will facilitate urban development funds with a value of up to €20m set up in assisted areas, based on sustainable urban development strategies and co-financed by ERDF. This will effectively allow variants of the increasingly well known “JESSICA” programmes for ERDF co investment in sustainable urban regeneration funds.


8. Innovation clusters.

This will allow aid for the setting up and operation (for up to five years) of innovation clusters, ie. structures or organised groups of potentially large and small undertakings and research organisations working collaboratively for mutual gain (up to 50% of eligible costs). Maximum aid amount up to €7.5m per cluster.


9. Aid schemes to repair damage from natural disasters.

This will allow aid for up to 100% of the costs required to remedy natural disasters.


10. Aid for culture and heritage conservation.

This will allow aid of up to €100m per project (€50m if operating aid) for the preservation of a variety of different forms of culture and heritage preservation. The UK previously had its own schemes for such aid (eg. Historic Environment Regeneration Scheme) which will now be replaced going forwards.


11. Aid for broadband infrastructures.

This has been a key area for the Commission in recent years, with a huge volume of notifications processed. The conditions for permissible aid for broadband infrastructures are quite tight and involve determination of existing broadband penetration, but will still offer some means of granting aid (up to €70m) in this area without further notification (NB. The UK already has an extended framework scheme in place for broadband support).


In addition an important change is the 10% bonus available for aid projects (apart from regional aid) provided in the form of a repayable advance (broadly a grant which gets repaid only if the project ultimately generates revenues).

The above shows the many new possibilities for aid which the new GBER presents. This is not to say however that types of activity capable of being aided under the old GBER have gone.  On the contrary, aid for the purposes of R&D in particular is to be further encouraged (with maximum aid amounts doubled for different types of R&D, such that the most basic type of R&D (known as experimental development) is now eligible for aid up to a maximum amount of €15m (up from €7.5m), albeit still at maximum 25% of total eligible costs.  Training aid is again encouraged, albeit with a flat rate of maximum 50% aid intensity rather than distinguishing different types of training based on the transferability of the skills imparted (NB. maximum amount per project still €2m). Various forms of environmental aid remain encouraged, in particular the promotion of energy from renewable resources.  Aid measures to support investment by SMEs remains broadly as before.

Last but not least, regional investment aid remains supportable, naturally in assisted areas only, although it is noted that the new UK regional aid map for 2014-2020, appears to have considerably widened the number of areas that are eligible for support, even if generally only at 10% maximum aid intensity. One variation which does cut flexibility however, is the requirement that large enterprises seeking regional aid only receive it for new investments on particular sites, hence regional investment aid to large undertakings merely to add further capacity (to do the same thing) in existing locations will no longer be eligible for support.

The above overall represents a considerably more generous approach from the Commission, which has set out to facilitate legal certainty for the sorts of projects it does not believe will routinely distort competition, and thereby reserve its closest scrutiny for those that it believes might cause such problems. However, the Commission is not doing this without safeguards against abuse. To balance things out the Commission is introducing major administrative requirements to assure greater transparency and accountability. The new GBER includes clearer rules around how the incentive effect must be demonstrated (ie. to show that the aid is having an incentivising effect on the recipient’s investment behaviour) as well as new rules requiring scheme owners to collect information for future evaluation. Applicants should also be aware that for some awards above €500,000 there is a requirement to publish details of the award on-line. Statements made by the Commission in recent months suggest that stronger ex-post controls will be implemented to check that GBER schemes are being administered correctly. What this is expected to mean is future audits, perhaps in similar vein to the methods employed by auditors for the EU structural funds programmes like ERDF. 

The above comments represent only the briefest snapshot view of the new GBER, and they hide many nuances.  With time the new rules will be studied more carefully, but 1 July will arrive very quickly and many projects have been waiting for this development before proceeding.  One thing is for sure, although the new rules appear to offer a lot more flexibility there will remain a premium on careful respect for the rules and ensuring a proper audit and governance trail.  It will surely only be a matter of time before the Commission has a close look at some Member States’ flagship aid programmes to check that it is satisfied that everything is being done correctly and no inappropriate corners are being cut.

The new GBER may be found at:

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

Jay Mehta

Senior Associate

I specialise in European Funding (ERDF, Horizon 2020, ESF and State aid) and Information Access (FOI/EIR) law.

Jonathan Branton

Partner - Head of EU/Competition

I lead the firm in EU/Competition issues, specialising in behavioural antitrust, merger control, public procurement and State aid, and all related issues of public funding, including the UK’s Regional Growth Fund, ERDF and ESIF. I also head up the firm’s Brussels office and the firm’s cross-discipline Public Sector group.