SGEIs are carried out in the public interest under conditions defined by the State, which imposes what is called a public service obligation (PSO) on the provider. Since SGEI provision may not generate a sufficient profit for the provider, an appropriate level of public compensation may be required to offset the additional costs stemming from the PSO.
Examples of SGEIs include:
- transport networks
- postal services
- social services
The SGEI Package
The European Commission has published the SGEI package to tell aid providers about the State aid rules on SGEIs. This is made up of the SGEI Framework, SGEI Decision and SGEI De Minimis Regulation, which are the three ways in which SGEI aid can be provided.
The SGEI Framework sets out the conditions that need to be met to be sure that State aid in the form of public service compensation can be allowed. To use the SGEI Framework, you need to formally tell the European Commission what you want to do, and wait for their decision.
The main features of the SGEI Framework are:
- A precise methodology is given for calculating the amount of compensation allowable
- Member States must introduce efficiency incentives to encourage the entity providing the service to do so in the most efficient manner
- Any aid granted must comply with the relevant public procurement rules
- When there are multiple organisations providing an SGEI the compensation must be calculated in the same way to avoid discrimination
If you think you may need to use the SGEI Framework please contact the DfE State aid unit for further advice.
The SGEI Decision exempts Member States from the obligation to notify public service compensation for certain SGEI categories to the Commission. Aid given under the SGEI Decision must be supported by an act of entrustment, which is usually for a period not exceeding 10 years unless a longer period can be justified.
SGEI de minimis Regulation
The European Commission says that SGEI aid amounts of below €500,000 over a three year period (that is, the current and last 2 financial years) are too small to affect competition and do not need to be regarded as State aid. Such aid may fall within the scope of the SGEI De Minimis Regulation.
Giving SGEI de minimis aid
As an aid provider, you do not need to formally tell the European Commission about aid given under the SGEI de minimis regulation, but there are some things you need to do to make sure that you comply with all of the requirements of the regulation:
- you must write to the service provider, entrusting the service to them
- the SGEI de minimis aid you give must not result in the service provider receiving the aid going over the €500,000 limit
- you must ask the service provider how much de minimis aid they have received in the current and previous 2 financial years. This includes industrial de minimus and SGEI de minimis
- the European Commission has a currency converter that must be used to calculate de minimus aid. The exchange rate applicable is the rate at the time the assistance is awarded
- you need to write to the service provider to tell them how much de minimus aid you are giving them
Receiving SGEI de minimis aid
You need to keep a careful record of how much you receive. If you are awarded more than €500,000 over the three year period you are breaching the rules and the European Commission may ask you to pay it back.
You must declare the amount of SGEI de minimis aid you have received to any public or granting authority that asks. They will request this if you have applied for support from them which is also classed as de minimis aid.
Contact the DfE State aid unit
If you work for a public authority, and would like to find out more about the SGEI rules, you should contact the DfE State aid team: email@example.com