MEMO/06/509

Brussels, 21st December 2006

State Aid: Commission Guidelines on National Regional Aid for 2007-2013 - – frequently asked questions

The European Commission has approved under EC Treaty state aid rules the regional aid map covering the period 2007-2013 for Finland (see IP/06/1871). This regional aid map is approved by the Commission under the new Regional Aid Guidelines (see IP/05/1653 and MEMO/05/491) and forms part of a wider exercise to review regional aid systems in all Member States. (see IP/06/1176, IP/06/1393, IP/06/1451 and IP/06/1528).

What is regional aid? Regional aid is defined in Article 87(3)(a) and (c) of the EC Treaty as state aid granted by Member States to promote the economic development of certain disadvantaged areas within the EU. It consists mostly in investment aid to large companies, targeted on specific regions in order to redress regional disparities. Increased levels of investment aid, granted to SME located in disadvantaged regions are also considered as regional aid.

What is a regional aid map? A regional aid map defines the regions of a Member State which are eligible for regional aid and establishes the maximum permitted levels of such aid in the eligible regions. These regions are known as “assisted regions”. The adoption of a regional aid map is a pre-condition for a Member State to grant regional aid. The current maps have been designed for the period 1999-2006 and will expire on 31/12/2006. Member States have to notify their new maps, based on the new regional aid guidelines adopted in December 2005, to the Commission sufficiently early to be approved before the new planning period starts on 1/1/2007.

What’s the proportion of assisted areas in the EU? In the light of the exceptional character of state aid, there must be substantially less assisted regions in the EU than there are unassisted regions. Moreover, given the European Council’s repeated calls for less state aid and the widely shared concerns about the distortive effects of investment aid for large companies, the Commission has fixed the overall population coverage to 42% of the current 25 Member States’ total population. What are the criteria for qualifying as assisted area? Article 87(3)(a) of the EC Treaty provides that aid to promote the economic development of areas where the standard of living is abnormally low or where there is serious underemployment may be considered compatible with the Single Market. This derogation concerns only areas, where the economic situation is extremely unfavourable in relation to the EU as a whole, that is, according to the regional aid guidelines, mainly regions with a gross domestic product (GDP) per capita of less than 75% of the EU average and the EU’s outermost regions. In addition, for regions whose GDP per capita exceeds 75% of the EU average only since the 2004 enlargement, a transitional period is foreseen until end 2010. Article 87(3)(c) of the EC Treaty is wider in scope and allows regional development aid, provided it does not adversely affect trading conditions to an extent contrary to the common interest. This derogation concerns areas which are disadvantaged in relation to the national average. As the regional handicap of these areas is smaller, both the geographic scope of the exception and the aid intensity allowed are lower than for regions targeted by Art. 87(3)(a). To determine the scope, the Commission assigns a population ceiling to each Member State, taking into account, among others, population density, unemployment and GDP per capita. Within this ceiling, the Member States then select their eligible regions according to objective criteria set out in the regional aid guidelines. These include GDP per capita, population density, geographical situation, etc.

What are the changes for Finland compared to the period 2000-2006? In the period 2000-2006, 42.2% of the Finish population was covered by national regional state aid: 13.7% of the population in Article 87(3)(a) regions and 28.5% in Article 87(3)(c) regions. Under the new regional aid map for the period 2007-2013, Finland has 33.0 % of its population covered under the derogation of Article 87(3)(c). Due to the economic development (growth of GDP/cap above the Community average), there are no more Article 87(3)(a) regions in Finland. The maximum aid intensities for the period 2000-2006 varied from 24%, 20%, 16% and 10%. For the period 2007-2013, the maximum aid intensities will vary from 15% to 10%. The following table from the annex of today’s decision sets out the regional state aid map for Finland:

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National regional state aid map 1.1.2007-31.12.2013 (Approved by the Commission on 21/12/06)

Ceiling for regional NUTSII investment aid2 Name - III1 (applicable to large enterprises) 1.1.2007-31.12.2013 1. Regions eligible for aid as regions of economic development under Article 87(3)(c) of the EC Treaty FI13 Itä-Suomi 15 2. Regions eligible for aid as low population density regions under Article 87(3)(c) of the EC Treaty for the whole period 2007-2013 FI1A Pohjois-Suomi 15 3. Regions eligible for aid under Article 87(3)(c) of the EC Treaty for the whole period 2007-2013 FI193 Keski-Suomi (partly, only the following areas) 15 Saarijärvi-Viitasaari, Keuruu, Äänekoski, Jämsä, Joutsa. FI194 Etelä-Pohjanmaa (partly, only the following areas) 15 Järviseutu, Kuusiokunnat, Suupohja. FI187 Etelä-Karjala (partly, only the following areas) 15 Imatra, Lappeenranta. FI191 Satakunta (partly, only the following areas) 15 Pohjois-Satakunta.

The following islands or island parts of the following municipalities belonging to the following NUTS -III FI181 Uusimaa 10 Helsinki, Inkoo (including Storramsjö-Hirdal, Barö, Räfsö, Degerö and Stävö) and Tammisaari (including Bromarv, Trollshovda, Lindö, Svedja-Öby and Odensö-Norrby-Båsa).

1 The Nomenclature of Territorial Units for Statistics (NUTS) was established by Eurostat more than 25 years ago in order to provide a single uniform breakdown of territorial units for the production of regional statistics for the European Union. This nomenclature is a three-level classification (NUTSI, NUTSII, NUTS III) taking into account three different criteria: See the classification for each Member state of the EU with the name of the NUTS region according to their level NUTS I,II or III: http://ec.europa.eu/comm/eurostat/ramon/nuts/codelist_en.cfm?list=nuts 2 For investment projects with eligible expenditure not exceeding EUR 50 million, this ceiling is increased by 10 percentage points for medium sized companies and 20 percentage points for small companies as defined in the Commission Recommendation of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises (OJ L 124, 20.5.2003, p. 36). For large investment projects with eligible expenditure exceeding EUR 50 million, this ceiling is subject to adjustment in accordance with paragraph 67 of the Guidelines on national regional aid for 2007-2013.

3 FI182 Itä-Uusimaa 15 Pernaja (including Sarvsalö, Kabböle-Isnäs, Tjuvö and Strömsland), Porvoo (including Emäsalo, Vässölandet and Tirmo-Fagersta), Ruotsinpyhtää (including Vahterpää, Gäddbergsö) and Sipoo (including Kitö and Löparö). FI183 Varsinais-Suomi 10 Dragsfjärd, Nauvo, Korppoo, Houtskari, Iniö, Rymättylä, and . (including Lempisaari and Livonsaari), (including and Angelansaari), Kemiö (including the island of Kemiö), (including the island of Otava), Parainen (including Stormälö, Lillmälö-Lenholm, Stortervolandet, Lilltervo and Lemlax), Piikkiö (including Harvaluoto), Särkisalo (including Isoluoto and Kaukassalo), (including Leikluoto, Kuuste, Mussalo-Lehtinen, Kaitainen and Naurisluoto-Kuusisto), Västanfjärd (including the island of Kemiö) and (including Pyhämaa-Lepäinen and Kittamaa). FI185 Päijät-Häme 15 Asikkala (including Vedentausta, Salonsaari, Rutalahti and Vähä-Pulkkila). FI186 Kymenlaakso 15 Kotka (including Tiutinen) and Pyhtää (including the island of Munapirtti). FI187 Etelä-Karjala 15 Parikkala (including Korpijärvi-Värtsi, Sarvisalo, Koukkuniemi, Loikansaari, Tarvassaari, Lahdenkylä and Harmaitsaari), Ruokolahti (including Äitsaari, Härskiänsaari, Utula-Kietävälä and Kekäleenniemi) and Taipalsaari (including Kirkkosaari, Rehula-Vehkataipale-Kattelussaari-Nieminen and Merenlahti). FI195 Pohjanmaa 10 Maalahti. Luoto (including Eugmo), Maksamaa (including Österö-Kvimo), Mustasaari (including Köklot, Raippaluoto and Värlax), Närpiö (including Storön) and Oravainen (including Oxkangar). FI200 Åland Islands 10 Ålands Skärgård 4. Regions eligible for aid under Article 87(3)(c) of the EC Treaty for the whole period 2007-2013 for higher rates of SME aid only Basic aid intensity FI192 Pirkanmaa (only Ylä-Pirkanmaa) 15 FI186 Kymenlaakso (only the city of Kuusankoski) 15 FI200 Åland Islands (only Ålands Landsbygd) 10

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