Considerations for state aid recipients in Portugal

Considerations for aid recipients

Is there a legal right for businesses to obtain state aid or is the granting of aid completely within the authorities’ discretion?

In the setting of SGEI and pursuant to the applicable agreements in force, in cases where aid is present (hence, non-cumulative fulfilment of the Altmark Trans ruling criteria), the beneficiaries have a legal and contractual right to access the predetermined annual financial compensations that can be judicially enforced before administrative courts in cases of non-attribution.

Outside the SGEI setting it is more difficult for a potential beneficiary to successfully claim that a specific aid measure is due, although such situations can potentially occur, for instance, in the setting of projects compliant with state aid rules approved by a managing authority of a thematic or regional operational programme in the framework of the Portugal 2020 Partnership Agreement, in a scenario where all applicable requirements are met and the corresponding aid payment is not performed.

What are the main criteria the national authorities will consider before making an award?

The requirements for a successful award vary and are detailed in the national programmes that implement, via the relevant managing authorities, the European Commission/Portugal 2020 Partnership Agreement, which covers the ERDF, the ESF, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund.

The 2020 Partnership Agreement is implemented through 12 operational programmes, comprising four thematic programmes, five mainland regional programmes, two programmes for outermost regions and one programme on technical assistance.

Potential successful applications, private and public, have a particular focus on the following priorities, as detailed in the relevant programmes, and call for proposal documents that implement and execute the Partnership Agreement:

• improving entrepreneurship and business innovation, including developing the e-economy, and improving SME access to finance their investments and advanced business services;
• boosting R&D knowledge, strengthening research and innovation systems in enterprises and developing an innovation-friendly business environment;
• increasing economic competitiveness by enhancing the production of tradable goods and services;
• tackling unemployment, improving the quality of education and training and their match with labour market demand, and raising the qualifications and skills of the active labour force; and
• supporting the shift to a low-carbon and resource-efficient economy.

What are the main strategic considerations and best practices for successful applications for aid?

The main strategic considerations and best practices for successful applications are as follows:

• full detailed review and compliance with the call for proposal documentation requirements (material and formal) published by the relevant granting authority;
• sound technical and financial data on the project, as applicable;
• precise definition of total costs, eligible costs and non-eligible costs;
• an investment plan, including by project components;
• timely compliance with the applicable deadlines and conditions of the call for proposal;
• absence of debts to social security and tax authorities;
• public procurement rules knowledge;
• sound evidence that the private contribution to the project is secure; and
• non-execution of the project prior to the respective approval by the relevant public authority.

How may unsuccessful applicants challenge national authorities’ refusal to grant aid?

Unsuccessful applicants’ challenges against refusal to grant aid are not uncommon, although such challenges are not reasoned on state aid rules but on the decision adopted by the managing authority grounded on other factors, such as non-fulfilment of the applicable formal requirements (for instance, incomplete disclosure of the required documents by the applicant) or application with lack of merit pursuant to the call for proposal rules or the specific programme regulation. These judicial challenges, which can include interim measures requests, are brought before administrative courts. Per applicable procedural rules, opposition proceedings can also be brought against a granting authority decision, notably by a competitor.

To what extent is the aid recipient involved in the EU investigation and notification process?

Aid recipients tend to be involved in pre-notification or notification processes, solely at the national level and as a rule exclusively in individual cases that require significant knowledge of the sector and activities at stake, notably with regard to collection of updated information on the relevant activity, active players, quantities of produced goods or rendered services and status of the industry, among other variables.

The aid recipient can only participate in the preparatory work if so requested by the relevant central, regional or local Portuguese authority and has no power to enforce its participation in pre-notification or notification processes. Further, although exceptions may apply, aid recipients do not participate in meetings with DG COMP officials, as national authorities, when specific technical knowledge is required, prefer to involve sectoral regulators, national agencies or government bodies that hold in-depth knowledge of the relevant sector.

As such, aid recipients can act as a relevant material support information source for national authorities at the national level, notably when specific detailed information is required on the project or aid measure, although as a rule with no formal involvement in the interactions performed by Portuguese authorities with DG COMP’s units.