The project referred to in the Question is being held on the basis that the promoter has already received combined grant aid of €200,000 during the period 2010/2011 for other projects which is the limit of what is allowable under EU State Aid rules.
State Aid refers to any aid granted by a Member State which distorts or threatens to distort competition by favouring certain undertakings or goods. EU Member States are required, under State Aid rules to submit a notification to DG Competition in the European Commission (EC) when they propose to provide state support for schemes and programmes that could be considered to distort competition in any way. Commission Regulation EC 1998/2006 allows for aid of up to €200,000, known as de minimis aid, to be provided from public funds to enterprises over a period of three years as this amount is considered too small to have an effect on economic activity between competing forces.
In the original Rural Development Programme (RDP) document approved by the EC in July 2007 Ireland outlined that, as the aid to be granted under two of the Axis 3 measures of the RDP would not in any way distort competition, it would not constitute State Aid and would, therefore, not require notification to DG Competition. The measures concerned — Basic services for the economy and rural population —€49.61m and Village Renewal and Development —€54.2mprovide support for non-commercial community based projects and focus particularly on community infrastructure.
Recently Ireland was notified by the EC that only DG Competition has the competence to judge whether or not state support can be deemed to be State Aid and that a State Aid notification in the context of these two measures should have been submitted when the original programme was being prepared in 2006/2007.
The notification process was not undertaken at the time of programme design and Ireland is now required to complete the notification process as soon as possible and obtain the necessary state aid clearance to proceed with projects requiring grant aid in excess of €200,000. As the consequences of non-compliance with State Aid rules are significant, particularly for project promoters, it is necessary to suspend the allocation and approval of projects with grant amounts of over €200,000 in order to avoid non-compliance.
The documentation for the State Aid notification has been submitted through the relevant EU notification systems and as soon as my Department receives the Commission decision we will notify all Local Development Companies. The project referred to in the question will be reconsidered should clearance be granted to award amounts over €200,000.