REPORT - eupublicprocurementeupublicprocurement.org.ua/.../2016/08/SA-Conference-Report.pdf · The...

HARMONISATION OF PUBLIC PROCUREMENT SYSTEM IN UKRAINE WITH EU STANDARDS

www.eupublicprocurement.org.ua

REPORT ON THE FIRST INTERNATIONAL STATE AID CONFERENCE

“A NEW APPROACH TO STATE AID TO UNDERTAKINGS IN UKRAINE - DOING MORE WITH LESS”

Iana Roginska May 2016

A Project funded by the European Union and implemented by a Consortium led by Crown Agents Ltd

http://www.eupublicprocurement.org.ua/

HARMONISATION OF PUBLIC PROCUREMENT SYSTEM IN UKRAINE WITH EU STANDARDS FIRST INTERNATIONAL STATE AID CONFERENCE

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The contents of this Report are the sole responsibility of the Crown Agents and its Consortium partners and the opinions expressed in this Report are not to be understood as in any way reflecting

an official opinion of EUROPEAID, the European Union or any of its constituent or connected organisations.


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ABBREVIATIONS

AMCU Anti-Monopoly Committee of Ukraine

CIB Comprehensive Institution Building (EU Programme)

CEFTA Central and Eastern Europe Free Trade Area

DCFTA Deep and Comprehensive Free Trade Area

EC European Commission

ECT Energy Community Treaty

ENAP European Neighbourhood Action Plan

ENPI European Neighbourhood & Partnership Instrument

EU European Union

EUD EU Delegation to Ukraine

GBER General Block Exemption Regulation

GGE Gross Grant Equivalent

IDP Institutional Development Plan

MEDT Ministry of economic development and trade of Ukraine

R+D+I Research, Development and Innovation

SAM State Aid Modernisation

SGEI Services of General Economic Interest

SOE State owned enterprises

SME Small and Medium-sized Enterprise

TFEU Treaty on the Functioning of the European Union

PCA Partnership and Cooperation Agreement

WTO World Trade Organisation


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TABLE OF CONTENTS

Page

1. Introduction 5

2. Conference 10

Annexes 27

Annex 1: Conference Programme 28

Annex 2: Presentation “New sphere of regulation in Ukraine (international obligations, Law on State aid, secondary legislation)” by Ms.Anna Artemenko, State Commissioner, Anti-Monopoly Committee of Ukraine

31

Annex 3: Presentation “Notion of State aid in EU and Ukraine” by Dr. Eugene Stuart, Team Leader, EU funded Project “Harmonisation of Public Procurement System in Ukraine with EU Standards”

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Annex 4: Presentation “EU-Ukraine Association Agreement: obligations in State aid and recent developments” by Mr. Boris Filipov, EU Delegation to Ukraine

42

Annex 5: Presentation “Energy Community Treaty: obligations and recent proposals for amendments in State aid” by Ms. Marie-Therese Richter, Energy Community Treaty Secretariat

49

Annex 6: Presentation “State aid vs. general measures” by Dr. Mihalis Kekelekis, EFTA Surveillance Authority

53

Annex 7: Presentation “Legal and economic aspects of State aid assessment” by Ms. Ann-

Sophie Dupont, European Commission, DG Competition

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Annex 8: Presentation “State aid assessment – challenges for Ukraine” by Ms. Anna Artemenko, State Commissioner, Anti-Monopoly Committee of Ukraine

69

Annex 9: Presentation “Sectoral aid (with case studies)” by Mr. Sigitas Cemnolonskis, EU

Project Expert 74

Annex 10: Presentation “Horizontal aid (with case studies)” by Ms. Iana Roginska, EU

Project Expert 80

Annex 11: Presentation “Funding for energy” by Ms. Marie-Therese Richter, Energy

Community Treaty Secretariat

86

Annex 12: Presentation “Recent developments in State aid in the EU: State Aid

Modernisation” by Ms. Ann-Sophie Dupont, European Commission, DG Competition

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Annex 13: Presentation “Public Procurement, Infrastructure and SGEI – application of the Law of Ukraine on State aid” by Dr. Mihalis Kekelekis, EFTA Surveillance Authority

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Annex 14: Presentation “Pilot Project on assessment of State aid schemes in the energy sector of Ukraine” by Mr. Denys Chernikov, EU Project Expert

104

Annex 15: List of participants 111

Annex 16: Press-release 116


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1. INTRODUCTION

The EU funded Project “Harmonisation of Public Procurement System in Ukraine with EU Standards” commenced work in Kiev on 11 November 2013. The general objective of the Project is “to contribute to the development of a solid and consistent public finance management through the establishment of a comprehensive and transparent regulatory framework for public procurement, an efficient public procurement institutional infrastructure, the accountability and integrity of public authorities in regard to public procurement and the development of the Ukrainian State aid system”.

The Project is currently providing priority assistance in regard to State aid legislation in Ukraine, preparations for the entry into force of the Law on State Aid to Undertakings of July 2014, the strengthening of the AMCU as the main institution responsible in the State aid system of Ukraine, the implementation of Ukraine’s international commitments in this field and training and awareness raising across the government system.

State aid is essentially about the impact on competition and trade of subsidies, tax breaks and other forms of government concessions which benefit some firms and, therefore, can impact negatively on other firms. In the modern era of free trade, these types of state economic intervention are now regarded as problematic when they have a significant impact on trade and competition. With the opening up of trade and the international position of a country (including EU integration, WTO and Energy Community Treaty membership) a key consequence is that international rules concerning state support to economic activity (and the interests of new trading partners in the impact of state aids and subsidies on trade and competition) need to be taken fully into account.

The legal necessity to control State aid in Ukraine arises from a number of Ukraine’s international obligations. First, the EU-Ukraine Partnership and Cooperation Agreement (PCA) (1998) required gradual approximation of law to EU standards in a range of fields, including the regulation of State aid. The PCA dealt with State aid regulation as part of competition policy. In the context of the later European Neighbourhood Policy (which includes Ukraine), the bilateral European Neighbourhood Action Plan (ENAP) of 2005 elaborated the PCA requirement further by requiring continuing progress in the establishment of State aid control and providing that Ukraine must develop legislation and a control regime compatible with that of the EU. Separately and in parallel, Ukraine became a member of the WTO in 2008 and joined the Energy Community Treaty in 2011. The WTO Agreements require a range of disciplines on subsidies and membership of the Energy Community includes a commitment to ensure the application of EU compatible rules as regards State aid in the energy sector.

In July 2014, Ukraine concluded an Association Agreement with the European Union. The EU-Ukraine Association Agreement entered into force provisionally on 1 January 2015. The Agreement’s State aid provisions (Articles 262 to 267) require Ukraine, within a specified transitional period, to accomplish a range of important steps towards the full operation of a State aid control system which would be fully compatible with EU standards. Further, the EU-Ukraine Association Agenda replaced the ENAP in 2009, creating a new mechanism for the prioritisation of agreed reforms. The latest updated version of the Association Agenda (of 24 June 2013) specifies the following in regard to State aid: “The Parties shall cooperate in the establishment of an effective system of State aid control and monitoring in Ukraine and implement the corresponding institutional reform programme (IRP) under the Comprehensive Institutional Building (CIB) programme”.

On 1 July 2014 the Parliament of Ukraine adopted the Law “On State Aid to Undertakings” in order to comply with Ukraine’s pre-existing commitments under the Partnership and Cooperation Agreement


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and the Energy Community Treaty together with the more detailed obligations envisaged in the EU-Ukraine Association Agreement signed in July 2014. In its present form, the Law is essentially a “framework” law, leaving many matters to be regulated in detail by secondary legislation over a three-year transitional period from the date of publication (2 August 2014) to the date the Law will fully enter into force (2 August 2017). In line with international commitments and best practices, the intention is to apply strong rules in Ukraine; emphasising the importance of well-targeted State aid measures and programmes which clearly address market failures and, at the same time, avoid unduly negative effects on competition. On this basis, businesses which receive advantages from the State will not become overly reliant on aid and will remain incentivised to innovate and operate efficiently and become or remain competitive. Moreover, without undue barriers created by the State, new market entrants will not be blocked and weaker companies are less likely to stay in the market. Ultimately, this benefits consumers (via market competition) and tax-payers (via more streamlined and effective public finance management and the better use of taxpayers’ money). It is also important that significant institutional development takes place in the context of the Law and during its three-year transitional period. This will involve organisational development and capacity building at the AMCU, policy review and operational structuring on the part of main stakeholders (especially economic line Ministries) and intensive training for all stakeholders. On 4 March 2013, and primarily to meet a pre-condition related to a proposed EU funded CIB Programme on State Aid, the Cabinet of Ministers adopted an Action Plan to implement the institutional reform of monitoring and control of state aid to undertakings covering the period 2013 to 20201. The main activities set out in the Action Plan consist of:

drafting the relevant legislation on State aid;

the collection of data on state aid,

institutional development,

establishment of the State aid register,

training the staff of the AMCU and other stakeholders in the future state aid system.

On 17 September 2014, the Cabinet of Ministers approved the Action Plan for the implementation of the Association Agreement between the EU and Ukraine where specific targets are established for the development of State aid control. In particular, the Government’s Action Plan is focused on the following targets of State aid reform:

(by August 2017) the AMCU, the MEDT and the Ministry of Finance have to draft and submit for

the Cabinet of Ministers’ approval the draft laws and regulations provided for under the Law on State Aid to Undertakings and adjust the Action Plan for the institutional building reform in the sphere of monitoring and control of State aid (approved by the Cabinet of Ministers’ Order of 4 March 2013, № 102)

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(by December 2014) an operationally independent authority should be established and empowered to fully apply Article 262 of the Association Agreement through the Cabinet of Ministers’ decision concerning the financial, staff and technical organisation of the authorised body on State aid (responsible institutions for relevant institutional organisation are the AMCU, the MEDT, the Ministry of Finance and the Ministry of Justice)

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1 Government Decision N. 102-p of 4 March 2013 concerning the main provisions for institutional reform in the

field of State aid. 2 Point 168.

3 Point 169.


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The underlying assumptions in the 2013 Action Plan were that the system development (with EU CIB support) would take place in the period 2015 to 2019. Thus, the system itself would not be fully operational before 2020.

On 16 September 2015 the Cabinet of Ministers approved the revised Institutional Development Plan for the State aid system in line with recommendations of the EU Delegation and Project. The revised IDP envisages that, in the period from January 2016 until July 2017, the AMCU, supported by EU Projects, will organise training courses for its own staff involved in State aid monitoring and for the largest State aid providers. In December 2015, the AMCU developed a draft training programme taking into account the work programme of the Project and the future EU funded project for the development of the national State aid system within the CIB programme.

In regard to the institutional capacity of the AMCU, State aid functions are being handled at present by a newly created Unit on State aid monitoring within the Competition Policy Department. According to the organisational structure of the AMCU, this Unit will comprise of 7 people with possibility of increasing this to 13 people by August 2017 and creating a State Aid Department in the AMCU on this basis. The following deadlines have to be met by Ukraine in drafting secondary legislation in order to comply with the provisions of the Law on State Aid to Undertakings and the Association Agreement.

The Ukrainian State Aid System – Relevant Deadlines

Source Provision Reference Date/Deadline Law on State Aid to Undertakings

Publication Chapter 9 2 August 2014 Entry into force of enabling powers on secondary legislation (Art 3(2)(2); Art 6(2); Art 7; Art 8;

Chapter 9 2 August 2014

Entry into force of Law Chapter 9 2 August 2017 Notification of existing State aids


Review by AMCU and alignment of existing State aids


1. Cabinet of Ministers to submit proposals to the Verkhovna Rada of Ukraine to bring the legislative instruments of Ukraine into compliance with the Law; 2. Cabinet of Ministers to bring the Cabinet’s legal and regulatory instruments into compliance with the Law; 3. Cabinet of Ministers to ensure Ministries and other central executive bodies have brought their legal and regulatory instruments into compliance with the Law; 4. Cabinet of Ministers to

Chapter 9 2 November 2017


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ensure legal and regulatory instruments set forth by the Law are adopted.

In recent months, the AMCU has been drafting a package of the secondary legislation on State aid required by the Cabinet of Ministers Resolution (30 July 2015 No. 29147/37/1-15) and related to the elaboration of the provisions and methodology of the Law on State Aid to Undertakings. The package includes 8 AMCU procedural acts and 2 draft Cabinet of Ministers’ Resolutions that would regulate certain substantive elements of the State aid system necessary for the implementation of the Law from August 2017. These are:

1) AMCU procedures:

Procedure for monitoring of State aid

Procedure for the submission to the Anti-Monopoly Committee of Ukraine of information

concerning existing State aid

Procedure for keeping and ensuring public access to the State aid Register.

Procedure for notification of the new State aid and alterations to the existing State aid (including a

draft templates for the notification of new State aid and for the alterations to the existing State aid

schemes)

Procedure for the handling State aid cases and on the review of AMCU decisions

2) Resolution/s of the Cabinet of Ministers of Ukraine “On approval of the criteria of

compatibility of certain categories of State aid” under Article 6 of the Law on State aid to

Undertakings (i.e. the substantive rules)

The emerging structure and staffing of the AMCU related to its State aid regulatory functions will need comprehensive support both before and after the Law on State Aid to Undertakings comes into full effect in August 2017. Accordingly, the AMCU is to be the primary beneficiary of the envisaged EU funded Comprehensive Institution Building (CIB) Programme on State aid Monitoring and Control Project4 which is due to commence in September 2016.

Since its commencement in November 2013, the Project has been providing a continuous programme of initial support for the period 2014 until mid-2016 in the State aid field. This is focused on:

Legislative support

Stakeholder training

Preparatory work on the State aid inventory, register and annual reporting

Awareness raising.

In accordance with the approved planning for the Project, the work of the Project is organised into 5 Components and Component 5 deals with support for the State aid system. In particular, the Project’s Work Programme for 2016 includes an International State aid Conference as part of awareness-raising in the State aid field.

The First International State Aid Conference “A NEW APPROACH TO STATE AID TO UNDERTAKINGS IN UKRAINE - DOING MORE WITH LESS” held on 27 May 2016 aimed to introduce the coming Ukrainian State aid system to a wide audience and the media. In particular, a focus of the event was on the 4 See Europeaid Contract Notice of 30 March 2016.


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content of the Law on State Aid to Undertakings, the requirements of the Association Agreement and the ECT regarding State aid regulation and the role of key State aid providers in working with the AMCU to avoid major problems as the system commences.

The International State Aid Conference on 27 May 2016 brought together Ukrainian officials, business, civil society and international State aid experts and practitioners to discuss the emerging State aid system in Ukraine, new legislative initiatives of the State aid providers and EU law, policy and practical examples on State aid regulation.

The period 2014 - 2016 has been important for the development of State aid system in Ukraine: the Law of Ukraine on State aid to undertakings was adopted, the Institutional Development Plan of the State aid system was amended by the Government to align with the Law, necessary secondary legislation was adopted by the AMCU introducing procedural rules, a pilot project on the creation of the inventory of State aid schemes in the energy sector (Energy State Aid Pilot) was also completed and the theoretical basis for the creation of the State aid Register in Ukraine was introduced to the AMCU.

The Conference covered a wide range of topics, including the latest legislative initiatives on State supports in Ukraine, challenges for Ukraine in the introduction of the State aid system and key elements of the EU approach to the regulation of State aid (See the Conference Programme - Annex 1 to this Report). The Programme was designed jointly by the Anti-Monopoly Committee of Ukraine and Project Experts.

The Conference was attended by more than 90 representatives of public authorities, policy makers, international experts, local self-governance bodies, NGOs, representatives of Ukrainian law firms and the media (the list of participants can be found in Annex 15). The participants shared their opinions, raised issues and received answers from the State regulators and internationally recognised experts concerning the new State aid regulation system. The media had an opportunity to interview Ukrainian officials and EU experts during the Conference. The Project’s press release on the Conference (See Annex 16) can be found on the Project’s website: www.eupublicprocurement.org.ua.



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2. THE CONFERENCE

Opening of the Conference

Mr Yurii Terentiev, Chairman of the Anti-Monopoly Committee of Ukraine, opened the Conference welcoming participants on behalf of the AMCU and thanked them for the wide interest shown in this event. He expressed the hope that the introduction of the State aid regulation system will be successful and emphasised the importance of creating a level playing field for all the firms and undertakings in the country without the need to grant State aid. He also underlined that the State aid control system being developed in Ukraine has benefits for all; including a more effective use of State resources and the elimination of wasteful State supports. From the competition perspective, it is clear that businesses usually receive State support to lower their production costs and this always leads to some distortion of competition. He added that the AMCU is currently working on drafting the secondary legislation necessary to implement the Law on State Aid to Undertakings; in particular, on criteria for the assessment of State aid, using the EU State aid practice and examples. However, Mr Terentiev noted that in the EU this system is working for more some 60 years while, at this stage, Ukraine has only one further year to introduce it and make it functional. Finally, he emphasised that in Ukraine the attitude to State aid has to be changed – State aid can no longer be the rule, it can only be a well justified exception. Mr Thomas Frellesen, Deputy Head of the EU Delegation to Ukraine, welcomed participants and spoke about the obligations of Ukraine according to the provisions of the EU-Ukraine Association Agreement. He said that all States spend public money and, in a general sense, “aid” someone. However, the subject of “State Aid” under EU law is a very precise concept that is regulated by the European Commission across all EU Member States. In effect, “state aid” is about the impact on competition and trade of subsidies, tax breaks and other forms of government support which benefit some firms and, therefore, can impact negatively on other firms, whether domestic or foreign. Thus, the EU system of State aid control is a unique system, developed since the 1950s, to avoid the negative effects on competition and trade of excessive business subsidisation by governments.

Mr Frellesen underlined that Ukraine is committed to regulate State aid to business and industry in line with EU standards under the EU-Ukraine Association Agreement which is provisionally in force since 1 January 2015. An earlier commitment in 2011 under the Energy Community Treaty already required the EU rules to be applied also in the energy sector (excluding coal). Moreover, since 2008, Ukraine is required to apply the disciplines of the WTO Subsidies and Countervailing Measures Agreement (where some similar disciplines also apply to business and industry supports). While this remains a very complex field (in the EU and elsewhere), he said that Ukraine is making strong progress towards meeting its commitments to regulate State aid in line with both EU and other international standards. In particular, the Law on State Aid to Undertakings comes fully into force on 2 August 2017 and the Anti-Monopoly Committee of Ukraine is developing its capacity to operate as the national State aid regulator under the Law. However, there is still much work to be done before that date and subsequently.

Mr. Frellesen alsor noted that before August 2017, the Law needs to be supplemented by a range of secondary legislation that adequately follows the EU rules (both substantive and procedural) in the Ukrainian context. Some further refinement of the Law itself may also be desirable. Moreover, in a large number of policy areas, Ukrainian law and policy needs to be adapted to the post-August 2017


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requirements. In addition, as a result of training and other awareness raising initiatives, a high degree of “State Aid awareness” needs to develop across the system of public administration in Ukraine (in the Verkhovna Rada, at most Central Ministries, all Regional Administrations and at least all major local authorities and in the business community).

To embed State aid know-how in the most relevant public authorities, Mr Frellesen emphasised the need for State aid contact points (perhaps up to 5 trained officials) in each of the above mentioned organisations to ensure that their organisation is ready for August 2017 and to coordinate State aid questions within the organisation and between the organisation and the Anti-Monopoly Committee of Ukraine. Such contact points can collectively create a State Aid Network in Ukraine.

Mr Frellesen also said that the benefits of the Ukrainian State aid system for Ukraine will be clear after the system starts to fully operate. Importantly, the days of secret subsidies will be over and this will contribute to greater public finance transparency and Ukraine’s anti-corruption efforts. Also policy initiatives envisaging support to the business sector will have to withstand critical assessment as regards the need for them, the amount of support being contemplated, possible effects on other firms and their likelihood of success.

Moreover, he underlined that experience elsewhere shows that the application of the EU State aid rules does result in improved public finance management and taxpayer savings – or “doing more with less”.Thus, the smooth implementation of the Ukrainian State aid system offers clear benefits to Ukrainian businesses (from the standpoint of competition in the marketplace), to the Ukrainian Government (in terms of best practice economic policies and the avoidance of wasteful subsidisation) and to citizens (as regards the best use of taxpayers’ money). Finally, it is also important in regard to the trade relations between the EU and Ukraine.

Mr. Frellesen said that, for its part, the EU will continue to support the development of the State aid system and has allocated a further €4 million to a new Project to assist the Ukrainian authorities from late 2016 to late 2019.

Dr. Eugene Stuart, Team Leader, EU funded Project “Harmonisation of Public Procurement System in Ukraine with EU Standards” welcomed the participants and also thanked the AMCU for its active cooperation with the Project in advancing work on the State Aid System since early 2014. Dr. Stuart emphasised on the title of the Conference, with its focus on “doing more with less”. This should become the new approach to State aid to undertakings in Ukraine. He also noted the positive achievements in Ukraine concerning the development of State aid system: adoption of the Law on State aid, amendments to the Budgetary Code of Ukraine, institutional development, a range of training initiatives and a significant start in overall awareness-raising.

Dr. Stuart mentioned that the Project had so far completed intensive trainings on State aid for approximately 100 Ukrainian officials. In addition, the Project prepared a number of Reports which can be accessed on its website – www.eupublicprocurement.org.ua. The Project also published the first Study on State supports to undertakings in Ukraine in March 2015, covering government support to industry in the previous 5 years in an attempt to get a general picture of the level and types of State support in Ukraine. Looking ahead, the Project will be publishing three text books in September 2016 for officials, lawyers, business interests and general public to provide a comprehensive base of understanding across the many dimensions of State aid law and policy before Law on State aid comes fully into force.

Mr Anatolii Kutsevol, Deputy Director of the Government Office for European Integration, welcomed the participants. He said that this was the first conference on this topic since the EU-Ukraine Association Agreement came into provisional force. He congratulated the AMCU on behalf of the Office for European Integration for all the work done in this sphere and underlined that this was an example of the serious and correct implementation of the EU acquis communautaire in Ukraine. Mr



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Kutsevol also thanked the Project for the assistance provided in supporting the creation of the State aid system in Ukraine and expressed hope that the future CIB Project will also be successful. In conclusion, he noted that progress in the sphere of State aid implementation is already significant and that Ukraine is moving in the right direction and with right people.

Ms Yulia Kovaliv, First Deputy Minister of Economic Development and Trade of Ukraine, welcomed the participants of the conference and thanked the AMCU and the Project for initiating the needed debates on the regulation of State aid. She noted that MEDT wants to build a liberal economy but there are still restrictions facing EU companies wishing to enter the Ukrainian market. State aid regulation can play an important role in eliminating trade barriers and to show to foreign investors that Ukraine operates fair competition. Ms Kovaliv underlined that the objective of the Ministry is to build fair regulation on the market and expressed hope that State aid control will help with many directions to liberalise the Ukrainian economy. She also added that the Government of Ukraine presented a new Action plan for reforms in the nearest months in order to further liberalise the economy of the country.

Session 1: State aid in the context of Free trade agreements

Ms. Anna Artemenko, State Commissioner, Anti-Monopoly Committee of Ukraine, made a presentation on “New sphere of regulation in Ukraine (international obligations, Law on State aid, secondary legislation)” (see Annex 2) in which she highlighted the following issues:

The international obligations of Ukraine to control State aid: Articles 262-267 Chapter 10 Part IV of the Association Agreement between EU and Ukraine, Articles 18 (с) and 18 (2) of the Energy Community Treaty, Article XVI (4) of the WTO Agreement;

the system of State aid control as a new sphere of law in Ukraine;

the main provisions of the Association Agreement concerning State aid: drafting of the necessary legislation taking into account acquis communautaire, creation of the independent Authorised body (prohibition of State aid which can affect competition and trade; allowed State aid is an exemption from the general rule; standstill provision), implementation of the main principles of the EU State aid law;

the necessary steps to create a fully functioning State aid system: adoption of national legislation on State aid and ensuring the functioning of the Authorised body, which will have necessary powers before 2019, creation of the State aid Register before 2021, any State aid in Ukraine has to be assessed based on rules, identical to EU rules, concerning countries with with a difficult economic situation before 2021, the alignment of schemes of State support with the criteria defined in Articles 262 and 264 of the Association Agreement before 2023;

the new powers of the AMCU as Authorised body: consideration of notifications of State aid; deciding whether State support is State aid; assessment of the compatibility of State aid; collection of information on State aid; giving recommendations to align existing State aid; providing advice on State aid; deciding on the termination of incompatible State aid; drafting secondary legislation;

procedural rules on the consideration of new State aid.


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Dr. Eugene Stuart, Team Leader, EU funded Project “Harmonisation of Public Procurement System in Ukraine with EU Standards”, presented the topic on “The Notion of State aid in EU and Ukraine” (see Annex 3). This covered:

fundamentals of State aid: State Aid involves public expenditure or public revenue exemptions which create a selective advantage for one or more businesses in the market. State Aid [almost] always affects competition and trade (actually or potentially) and there are an indefinite variety of actual types of supports or interventions which may constitute State Aid;

definition of State aid: it was noted that EU Treaties refer to “aid”, but TFEU Article 107(1) gives a description. In effect, any State (widely defined) measure (of any type) which confers and advantage on one or more firms (undertakings) vs. their competitors, has an actual or potential effect on competition and has an actual or potential effect on trade. This description is then followed by a prohibition (Article 107(1) of TFEU). The speaker underlined that as recently as 19 May 2016 the European Commission published its Notice on the notion of State aid which provides useful and wide-ranging guidance for Ukrainian authorities in understanding this complex sphere and latest interpretations;

exceptions: subsidies to primary agricultural production, certain transport subsidies, defence industries; aid to remedy effects of natural disasters, aid of a social character, provided there is no discrimination – TFEU Article 107(2). Also there are categories of aid that may be compatible if they are declared compatible with the EU Internal Market, following an analysis and decision by the European Commission - TFEU Article 107(3). These include aid for regional development, for the development of certain economic activities or areas, aid to support a “Project of Common European Interest”, aid for culture and heritage conservation etc;

tests to identify State aid: TEST 1: the measure is not excluded by the phrase “Save as otherwise provided by this Treaty…” which generally relates to primary agricultural production, services of general economic interest and security and defence industries; TEST 2: the support is provided by or through State resources (covering both public expenditure and revenue foregone to the public budget) – directly or indirectly; TEST 3: the measure creates a selective advantage (State not acting like private sector investor, lender or operator); TEST 4: the measure supports an undertaking or an economic activity (goods or services); TEST 5: there is an actual or potential impact on competition; TEST 6: there is an actual or potential effect on trade;

In regard to State compensation for the provision of Services of General Economic Interest it was explained that such compensation (e.g. in regard to public utilities, transport etc.) is not State aid when the Altmark conditions are met: a) the beneficiary has been properly entrusted with clearly defined public service obligations; b) the parameters for calculating the compensation are established in advance in an objective and transparent manner; c) the compensation is reasonable (taking account of necessary costs, revenues received and reasonable profit on these activities); d) selection of SGEI provider either by public procurement procedure or else compensation determined on the basis of an analysis of what it would cost a typical, well-run undertaking to discharge these obligations;

de minimis rule: any State support of less than €200,000 per undertaking over three years is not State aid, but not: aid directly supporting export operations, aid involving the use of domestically manufactured products to a greater extent than imported products, aid to purchase trucks;


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Ukrainian aspects of the definition of State aid according to the Law on State aid. Dr Stuart also underlined that Association Agreement is primarily a trade agreement and State aid rules were introduced there in order to facilitate trade between EU and Ukraine.

Mr. Boris Filipov from the EU Delegation to Ukraine in his presentation “EU-Ukraine Association Agreement: obligations in State aid and recent developments” (see Annex 4) focused on the following:

overview of the Association Agreement and State Aid provisions: General principles (what is State aid (Article 262 (1) and when is it allowed Article 262 (2) (3) and (4)), Transparency (Article 263); Interpretation (Article 264) and the domestic system of State aid control (Article 267);

general principles–Article 262(1) of the Association Agreement: any aid granted by Ukraine or the Member States of the European Union through State resources which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods is incompatible with the proper functioning of this Agreement insofar as it may affect trade between the Parties;

compatible aid: Article 262(2) of the Association Agreement: automatic compatibility, Article 262(3): discretionary power, Article 263(4): services of general economic interest;

Article 263(1) of the Association Agreement on “Transparency”: each Party shall ensure transparency in the area of State aid. To this end, each Party shall notify annually to the other Party the total amount, types and the sectoral distribution of State aid. Notifications should contain information concerning the objective, form, the amount or budget, the granting authority and where possible the recipient of the aid. He also noted that any aid below the threshold of €200,000 per undertaking over a period of three years does not need to be notified;

Article 264 of the Association Agreement “Interpretation”: criteria from the application of Articles 106, 107 and 93 of the TFEU, relevant jurisprudence of the Court of Justice and relevant secondary legislation, frameworks, guidelines and other administrative acts in force in the European Union;

Article 267(1) of the Association Agreement: the domestic system of State aid control must contain national State aid legislation and establish an operationally independent authority which is entrusted with the powers of Association Agreement within three years of the entry into force of the Agreement. Any new aid granted in Ukraine must be consistent with the provisions of Articles 262 and 264 of the Agreement within one year of the date of establishment of the authority. A comprehensive inventory of aid schemes must be instituted before the establishment of the authority within five years of the entry into force of the Association Agreement; aid schemes must be aligned with the criteria referred to in Articles 262 and 264 within a period of no more than seven years from the entry into force of the Agreement;

concerning regional aid maps: Ukraine is to be regarded as an area identical to those areas of the European Union described in Article 107(3)(a) TFEU (NUTS II regions with a GDP per capita in purchasing power standards (PPS) that is equal to or less than 75% of the EU-28 average) for the first five years after the entry into force of the Agreement. Ukraine also shall submit to the European Commission its gross domestic product per capita figures harmonised at NUTS II level within four years of the entry into force of the Agreement;


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In conclusion, Mr Filipov pointed out that Ukraine will have to implement ambitious reforms regarding the use of State aid and State aid policy. The EU-Ukraine Association Agreement provides for transition periods that should be well used for the preparation of the application of EU State aid rules in Ukraine. He also noted that Ukraine has already taken necessary steps: adopted the Law of Ukraine on State Aid to Undertakings on 1 July 2014, created a State Aid Unit within the AMCU and adopted the initial necessary secondary legislation on State aid.

Ms Marie-Therese Richter, Energy lawyer from Energy Community Treaty Secretariat focused in her presentation “Energy Community Treaty: obligations and recent proposals for amendments in State aid” (see Annex 5) on the following:

legal basis, obligations and recent amendments and proposals to the Article 18 of the ECT: the speaker noted that in the ECT enforcement is not currently very effective and that is why these proposals for the amendment of Article 18 were introduced. Ms Richter said that ECT Secretariat acknowledged the efforts of Ukraine to comply with ECT provisions although full implementation has not taken place yet;

the purpose of State aid control: a level playing field for all competitors, reducing the risk of a subsidy race, the efficient use of public money, strengthening competition and eliminating trade barriers.

At the end of the first session of the Conference, one of the participants asked the question concerning the consequences for Ukraine of signing the Open sky agreement with the EU as this also contains provisions on competition and State aid compliance. Dr Eugene Stuart said that the introduction of State aid control rules generally has positive consequences for consumers; as in case of control of aid to airports and airlines which leads to lower prices for air tickets for final consumers.

Session 2: STATE AID ASSESSMENT

Dr Mihalis Kekelekis from EFTA Surveillance Authority made a presentation on “State aid vs. general measures” (see Annex 6) and focused on the following topics:

an introduction of the EFTA Surveillance Authority (Norway, Iceland and Lichtenstein) to Conference participants. He explained that EFTA countries use the EU legislation but have their own decision making practice;

selectivity criteria of State aid and some of its basic principles: aid favours certain regions, sectors, undertakings, products, but general measures do not involve State aid. He explained that a measure is selective when it favours certain undertakings or the production of certain goods in comparison with others which, in the light of the objective pursued by the system in question, are comparable in the legal and factual situation [Commission v NL, C-279/08P, NOx]. Selectivity is closely linked to advantage: a measure is selective only if it creates an advantage for certain undertakings but not for others in a comparable factual and legal situation [Mediaset v Commission, C-403/10P]. A discriminatory measure [e.g. because it favours a certain technology] is also selective;

concerning the number of beneficiaries of a selective measure, he pointed out that the fact that the number of beneficiaries able to claim entitlement under the measure is very large, or


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that they belong to different sectors, is not sufficient to call into question its selective nature [Heiser, C-172/03];

presented some examples of selective and general measures. Selective measures include the following: favouring small undertakings over large ones in respect of the purchase of commercial vehicles, favouring large insolvent companies, tax exemptions on exports, derogations from tax system, unless justified by the nature and structure of it. General measures, for example, are: measures in order reduce unemployment or to improve working conditions, consumer subsidies, reductions of corporate tax, setting corporate tax, infrastructure projects for public use;

Dr Kekelekis speaker summed up that general measures which are applicable without distinction between undertakings do not constitute State aid. A measure is selective when it confers an advantage and there is no State aid if a prima facie differentiation between undertakings is inherent in the system of which the measure is a part.

Ms Ann-Sophie Dupont from the European Commission DG Competition presented “Legal and economic aspects of State aid assessment” (see Annex 7) addressing the following:

There is a need to control State aid in order to prevent undue distortions of competition due to State aid and to create a level playing field. State aid may limit incentives and sanctions that should create efficiency, innovation, creativity and competitiveness; it may also distort market prices and lower benefits for consumers. There is a need to focus State intervention where it has the maximum positive effect in terms of economic and social development and competitiveness because the market does not always deliver an optimal outcome (market failures: externalities, public goods, imperfect information). State aid control contributes to a better use of scarce public resources and reduces wasteful spending (subsidy races), increases the resources available for "good aid", for other public expenditures or to allow for tax cuts;

the common principles of State aid assessment are the following: contribution to well-defined objective of common interest, need for State intervention, appropriateness of State aid as a policy instrument, incentive effect, proportionality of the aid amount (aid limited to minimum necessary), limit negative effects on competition and trade and transparency;

the definition of the objective of common interest depends on the Guidelines/rules concerned: Regional Aid: reduce developmental gap between regions; R&D&I: promotion of R&D&I; Aviation (aid to airports): increase mobility of Union citizens and connectivity of regions by establishing access points for intra-Union flights, combat air traffic congestion at major Union hub airports or facilitate regional development;

the general principle in regard to the need of State aid intervention is that aid has to be targeted to bring about a material improvement which the market cannot deliver. Ms Dupont also said that the appropriateness of the aid means that aid must be an appropriate policy instrument involving the selection of the least distortive policy tool;

Ms Dupont explained that State aid has an incentive effect when it induces the recipient to change behaviour in line with a common interest objective. It is important to ensure that, in the absence of aid, the same objective would not have been reached. Thus, there is a need for a counter-factual analysis: what would the company do with and without the aid? The application for aid must also precede actual work to be subsidised;


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State aid is considered to be proportionate when it is limited to a minimum, when limits are expressed as caps on the aid amount and/or aid intensity. The aid amount is e.g. the net extra cost to achieve the objective and aid intensity is a proportion of eligible costs. It was also important that aid must avoid undue negative effects on competition and trade and that positive effects must outweigh negative effects;

Ms Dupont also noted that the main purposes of transparency in the State aid system are to allow companies, other authorities, to get information on aid granted, to increase discipline and accountability, including by beneficiaries, and to facilitate reporting & monitoring/control at different levels;

concerning the creation of the State aid control system in Ukraine, Ms Dupont added that this will attract more investors to the country and will increase competition. Instead of lobbying for State support, businesses will invest in innovation and this will lower non-transparent and inefficient public spending.

Ms Anna Artemenko, State Commissioner, Anti-Monopoly Committee of Ukraine spoke on “State aid assessment – challenges for Ukraine” (see Annex 8) and provided the following information:

the AMCU is now in the process of drafting criteria for State aid assessment which will contain principles and main provisions for the assessment of the following types of aid: regional aid; did to SMEs; training aid; employment aid; rescue and restructuring aid; environmental aid; R, D, I; support of certain sectors of economy (coal, steel, energy, financial services…);

the following challenges can be identified in creating of the State aid system in Ukraine: need to “change attitude” of State aid grantors; the usual process of legal drafting has to be changed; “revolutionary way” will lead to change in State policy on State aid granting; difference in size and structure of the economy of Ukraine and the EU; difference in regulation of certain spheres in Ukraine and EU complicates implementation of the acquis communautaire; State aid must be limited in time; transparent criteria for the selection of beneficiaries of State aid is needed; need to stop the practice of granting State aid only to SOEs; short term for assessment of existing State aid schemes and their alignment with the Law;

the following solutions have been proposed: cooperation of the AMCU with State bodies, NGOs, business, European Commission, Energy Community Secretariat; introduction of State aid assessment ex-ante; creation of consultative network on State aid; and use of the mechanism of prior consultations before sending notifications to the AMCU. Ms Artemenko noted that for Ukraine this process of implementation of State aid control system will be difficult but necessary. The introduction of this system is also important from the point of view of international trade as illegal and incompatible State aid affects competition and trade. If companies from the EU are expected to invest in Ukraine they have to know that in Ukraine there is a level playing field for all businesses.

After the presentation, a participant from the law firm “Asters” asked Ms Artemenko if the AMCU is planning to prepare any kind of methodology to identify what can be considered State aid and when in Ukraine block exemptions might be introduced. Ms Artemenko answered that the committee will prepare such guidelines for State aid grantors, business and practitioners. Concerning block exemptions, Ms Artemenko noted that the AMCU is allowed by the Law to adopt block exemptions but it is not a compulsory requirement. The AMCU needs time to identify the spheres and thresholds


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which might be block exempted but this can only happen after the inventory of all the existing State aid schemes is completed.

Another question concerned the scope of application of the Law on State aid to Undertakings, in particular, when assessing the effect on trade. Ms Artemenko answered that Association Agreement with EU is first of all trade agreement. That is why the analysis of the effect on trade and on competition are interrelated and in 90% of cases will be assessed together.

SESSION 3: TYPES AND CATEGORIES OF AID – WHAT IS ALLOWED AND WHAT IS NOT

Mr Sigitas Cemnolonskis, EU Project Expert, continued the conference with his presentation on “Sectoral aid (with case studies)” (see Annex 9) and shared his thoughts on the following issues:

there are specific EU rules on State aid to sectors such as steel and coal, energy sector, broadband, agriculture, fisheries and aquaculture, audiovisual, public service broadcasting, postal sector, financial sector and transport;

in these sectors, State aid such as rescue and restructuring aid and regional investment aid is forbidden. What is allowed is employment aid, training aid, environmental aid, aid for research, development and innovation, closure aid and de minimis aid;

concerning the criteria for the assessment of compatibility of State aid for closure in the coal sector, the speaker noted that aid to cover current production losses may be granted provided a number of conditions are met (the operation of the coal production units concerned must form part of a closure plan, the aid must not exceed the difference between the foreseeable production costs and revenue, prices for EU coal must not be lower than those for coal from third countries, there should be a downward trend of aid and specific cumulation requirements must be met). If the coal production units to which aid is granted are not closed at the date fixed in the closure plan, the EU Member State concerned must recover all aid granted in respect of the whole period covered by the closure plan;

concerning aid in the energy sector, Mr Cemnolonskis noted that EU State aid rules in the energy sector are complicated for various legal and economic reasons. Certain specific rules apply only to the nuclear sector, in the electricity sector (aid for long-term commitments that were made by electricity companies and guarantees), for measures related to environmental protection and energy conservation;

when aid is provided to agriculture, fisheries and aquaculture, the general State aid rules do not apply, or apply only to a limited extent in the sectors producing and marketing products of agriculture and fisheries. Agricultural subsidies under the Common Agricultural Policy and elements of the Common Fisheries Policy are excluded from the scope of Article 107(1) of the Treaty;

in the broadband sector, State aid is allowed to cover investment costs in relation to the rapid deployment of broadband networks. Where the provision of a broadband network is regarded as an SGEI, it has to be assessed in line with the relevant parts of the existing rules that apply for SGEI compensation. State aid to broadband can also be regarded as investment aid under the Regional Aid Guidelines;

as regards audiovisual and broadcasting services in overall terms, there has been a challenge for State aid policy to take account of public service and cultural objectives related to these


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sectors, while seeking to ensure that distortions of competition are minimised. State aid granted in the postal sector must ensure that cross-subsidisation is avoided and it should also meet requirements that apply when compensation is provided for Services of General Economic Interest;

concerning problematic State aid granted in sensitive sectors, Mr Cemnolonskis pointed out that the practice in most countries of Central and Eastern Europe that were required to implement State aid control systems under agreements with the EU prior to accession was to prop up ailing industries, for example the steel and coal sectors. As regards aid to sensitive sectors, further consultations between key ministries (State aid providers) are needed in Ukraine to find how to implement the provisions of the Association Agreement.

Ms Iana Roginska, EU Project Expert, spoke about “Horizontal aid (with case studies)” (see Annex 10) focusing on the following issues:

horizontal State aid is aid granted for the purpose of eliminating difficulties of a certain nature that may arise in any economic sector. It is represented by horizontal measures applied in pursuit of a specific goal. Horizontal State aid is: regional aid; aid for SME; aid for Research, Development and Innovation; environmental aid; training aid; employment aid; risk capital aid; rescue and restructuring aid;

presented statistics on the State aid in EU Member States;

concerning regional aid, it was mentioned that such aid may be granted as: support for investment and job creation by undertakings and support for certain operating expenses of undertakings. Criteria for the assessment of such aid is set out in the Commission Guidelines on Regional State aid for 2014-2020 and Commission Regulation No 651/2014 (GBER);

investment regional aid was also underlined and Ms Roginska noted that investment aid can be used for setting up a new business establishment, the extension of the capacity of an existing establishment, diversification of production into new not previously produced products, fundamental change in production processes, acquisition of assets linked to an establishment that has closed or would have closed is also covered;

concerning State aid to SMEs, the European Commission takes the position that a degree of positive action by governments can be justified in creating additional incentives for SME development and providing State aid for this purpose;

concerning aid for research, development and innovation, the following aid categories have been identified by the European Commission as permissible: aid for R&D projects, aid for feasibility studies, aid for the construction and upgrade of research infrastructures, aid for innovation, aid for innovation clusters. In order to be compatible with the internal market and exempted from the notification requirement, State aid has to satisfy conditions concerning State aid objective, intensities, eligible costs, etc;

when it comes to environmental aid, specific common assessment principles apply: existence of the objective of common interest, need for State intervention, appropriateness of State aid, incentive effect, proportionality of the aid, avoidance of undue negative effects on competition and trade, transparency. Certain types of environmental aid are exempted from notification and some have to be notified. Exempted aid is that generally used for the purposes of increasing the level of environmental protection in the absence of EU standards; investment aid for the early adaptation to future EU standards; investment aid for energy


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efficiency measures; investment aid for energy efficiency projects in buildings; investment aid for high-efficiency cogeneration; investment aid for the promotion of energy from renewable sources etc;

in assessing whether notified aid for rescue is compatible with the internal market the European Commission will consider the following aspects: contribution to a well-defined objective of common interest; need for State intervention; proportionality of the aid (aid limited to the minimum); appropriateness of the aid measure; incentive effect of the envisaged State aid; avoidance of undue negative effects on competition and trade between EU Member States and the transparency of the aid. Special requirements for restructuring plans also apply;

the restructuring plan must: restore the long-term viability of the beneficiary within a reasonable timescale and on the basis of realistic assumptions, identify the causes of the beneficiary’s difficulties and the beneficiary’s own weaknesses, and outline how the proposed restructuring measures will remedy the beneficiary’s underlying problems, it should demonstrate how the plan will benefit long-term viability of the beneficiary; the expected results of the planned restructuring should be demonstrated under a baseline scenario as well as under a pessimistic (or worst-case) scenario, the beneficiary’s return to viability should mainly derive from internal measures, long-term viability is achieved when an undertaking is able to provide an appropriate projected return on capital after having covered all of its costs;

in most cases of training aid, EU Member states apply GBER. The Commission Communication on Training Aid applies only for notifiable aid when its grant equivalent exceeds €2 million per training project. In order to be compatible, State aid has to satisfy conditions concerning the State aid objective, intensities, eligible costs, etc. Aid may not be granted for training which undertakings carry out to comply with national mandatory standards on training. Intensities of aid are the following: 50 % of the eligible costs; provided aid < 70%, it may be increased as follows: + 10% for workers with disabilities or disadvantaged workers, + 20% for small enterprises, + 10% for medium enterprises, 100% for training on board EU-flagged ships. Eligible costs are: trainer’s fee; trainer’s & trainees’ travel expenses & accommodation; materials; depreciation of tools; guidance & counseling; trainees’ personnel costs;

concerning employment aid under the GBER the following categories of aid are distinguished: aid for disadvantaged persons (for the recruitment, for compensating the costs of assistance) and aid for workers with disabilities (for the employment of workers, for compensating the additional costs of employing workers with disabilities);

eligible costs for aid for recruitment of above mentioned persons are the following: the wage costs over a maximum period of 12 months (for severely disadvantaged worker - 24 months; over any period during which the worker with disabilities is employed). Aid intensity may not exceed 50 % of the eligible costs (75% for workers with disabilities);

eligible costs for aid for compensating the costs of assistance provided to disadvantaged/disabled workers are the following: employing staff for assistance of the disadvantaged workers over a maximum period of 12 months (for severely disadvantaged worker - 24 months); training such staff to assist the worker (+ equipment, software, transport for workers with disabilities). Aid intensity: may not exceed 50 % of the eligible costs (100% for workers with disabilities).


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Ms Marie-Therese Richter, Energy Community Treaty Secretariat, in her presentation “Funding for energy” (see Annex 11) shared views on the following:

the legal basis for the provision of State aid to the energy sector (GBER, Guidelines on State aid for environmental protection and energy 2014-2020). Ms Richter decided to cover the question of funding of renewable energy initiatives in detail; while pointing out that it is possible to promote use of renewable energy even without State aid;

Guidelines on State aid for environmental protection and energy 2014-2020 contain criteria for the assessment of the compatibility of a notified aid measure with the internal market. Policy Guidelines of the ECT Secretariat: legal obligation to apply by national authorities and the Secretariat;

the common assessment principles apply to State aid for renewable energy initiatives: contribution to a well-defined objective of common interest, need for State intervention, appropriateness of the aid measure, incentive effect, proportionality of the aid (aid kept to the minimum), avoidance of undue negative effects on competition and trade between Member States, transparency of aid;

investment and operating aid for renewables should be granted in a competitive bidding process and on the basis of clear, transparent and non-discriminatory criteria. The European Commission will authorise aid schemes for periods up to 10 years, after which Member States will have to re-notify the measure.

Ms. Ann-Sophie Dupont from the European Commission DG Competition continued with a presentation on “Recent developments in State aid in the EU: State Aid Modernisation” (see Annex 12) in which she focused on the following aspects of State aid Modernisation:

State aid modernisation (SAM) was initiated in times of budgetary constraints with the aim of fostering growth in a competitive internal market (facilitate the granting of “good aid” (Europe 2020), discouraging ineffective or counter-productive aid), focussing enforcement on cases with biggest impact (less ex ante control of less distortive aid, ex post monitoring, evaluation & transparency), streamlining rules and speeding up decisions (simplification and harmonisation of rules, improvement of procedures);

in the process of modernisation, the following rules were updated and adopted: Notice on the notion of aid, de minimis Regulation was reviewed, new GBER, major guidelines were reviewed as well as procedural rules;

SAM was initiated to help the Commission to concentrate on the assessment of potentially more distortive types of aid on the basis of "common assessment criteria": contribution to a well-defined objective of common interest, need for State intervention, appropriateness of the aid measure, incentive effect, proportionality of the aid (aid limited to the minimum necessary), avoidance of undue negative effects on competition and trade between Member States. Now the Commission is concentrating on big cases in the fiscal sphere: transfer pricing arrangements approved in tax rulings - Starbucks (NL); Fiat Finance & Trade (Lux); Amazon (Lux); Apple (Ireland); Gibraltar ruling practice (UK); Excess profit ruling (BE);


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The objective of SAM was to orient State aid expenditures towards Europe 2020 objectives e.g. digital single market, energy policy, financial services, industrial policy and the fight against tax evasion;

An important and very long-expected Notice on the notion of aid was recently adopted on 19 May 2016 which helps to identify all elements of State aid and latest interpretations;

A further objective of the SAM for the Commission is also to deepen the relationship with EU Member States, to use more ex post control (monitoring, evaluation, transparency) and probably to have more ex officio cases.

SESSION 4: SOME AREAS OF POTENTIAL DIFFICULTY FOR UKRAINE

Ms Oksana Grishkevich from the Ministry of Economic Development and Trade opened the fourth session of the Conference talking about current legislative initiatives of the Ministry which might constitute State aid measures. In particular, she explained new draft legislation on State support to investment projects. Ms Grishkevich said that in this new draft law there is a differentiation between the notion of “State investment activities” (meaning that the State is acting as a private investor) and “State support” (where the State supports investment plans proposed by business). Further she underlined that the MEDT Department on attracting investments is working currently on the alignment of its normative acts in line with Law on State aid to Undertakings and that all new normative acts are drafted also taking into account the State aid rules.

Dr Mihalis Kekelekis from EFTA Surveillance Authority presented “Public Procurement, Infrastructure and SGEI – application of the Law of Ukraine on State aid” (see Annex 13):

firstly, the speaker addressed the issue of advantage given to undertakings through State aid. If the State provides aid through an open tender, then there is no State aid. The transfer of State resources does not provide an advantage to the recipient where the State acts in the same way as a private operator acting under normal market economic conditions would have done, in similar circumstances [Case C-39/94 SFEI];

further he explained that the State aid rules do not apply for funding of infrastructure that is not to be subsequently exploited commercially or for infrastructure that is for the public interest, for example, roads without concession contracts (e.g. tolls), parks and play ground with open access, non-liberalised markets (e.g. management of railways network). Dr. Kekelekis also added that there is no aid if users of infrastructure enjoy equal and non-discriminatory access to it, e.g. tariffs paid are the same for all users and similar to tariffs in comparable infrastructures, they can be centrally regulated and infrastructure is not dedicated;

the speaker also presented the topic of SGEI: there is no explicit “one size fits all” definition of SGEI at EU level - definition is in respect to some general minimum common features. SGEI is a dynamic concept - evolution depending on the needs of citizens, technological and market developments, social and political traditions in EU Member States;

Several examples of SGEIs in the EU were presented: employment procurement activities (Höfner and Elser), anti-pollution surveillance with which a body governed by private law has been entrusted by the public authorities in an oil port (Diego Cali), basic postal services


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(Corbeau, Deutsche Post, TNT Traco), ambulance services (Ambulanz Glöckner), ensuring the navigability of the state’s most important waterway (Port de Mertert), operation of on air routes which are not commercially viable but which it is necessary to operate for reasons of the general interest (Ahmed Saeed);

services which are not considered to be SGEI are: dock work (consisting of loading, unloading, transhipment, storage and general movement of goods or material of any kind) (Merci convenzionali), operation of a commercial port not automatically SGEI (GT Link), collection, processing and marketing of milk for human consumption (Centrale di Latte), PSO on a route to a given airport if there is already adequate service to another airport in the “catchment” area (aviation GL), advertising, e-commerce, teleshopping, use of premium rate numbers in prize games (Broadcasting GL), setting up a parallel broadband infrastructure when market already provides (Broadband communication).

Mr Denys Chernikov, EU Project Expert, presented the “Pilot Project on assessment of State aid schemes in the energy sector of Ukraine” being completed by the AMCU with Project support (see Annex 14) and explained the following:

international obligations of Ukraine to control State aid and, in particular, the ECT obligation to control State aid as of 2011 and the infringement procedure against Ukraine which was initiated in 2014 that was a push to start the pilot project on creating the inventory of State aid measures in the energy sector of Ukraine;

concerning the organisation of the pilot project the speaker explained the following: monitoring relevant schemes and individual measures for the year 2014 by the Ukrainian authorities: National Commission on Energy and Utilities, Ministry of Coal and Energy, Ministry of Economic Development and Trade. 15 schemes and measures were analysed, 11 reported by the authorities and 4 identified by the Project experts. Analysis by the Project experts showed: budget programmes, tax benefits, state guarantees and wholesale electricity market schemes. The results were presented to the AMCU and recommendations were offered concerning the alignment of some schemes or their elimination;

the speaker gave a number of examples of energy support schemes, explained the methodology of their assessment (according to the EU State aid rules), showed how some of those could be brought into compliance with State aid rules. For example, State Target Economic Programme on Energy Efficiency and Development of Energy Generation from Renewable Energy Sources and Alternative Fuels for the Years 2010-2016 has the following positive features: the objective in general corresponds to the Guidelines on State aid for environmental protection and energy 2014-2020. Its negative features are: already includes a list of items to finance, selection of other projects does not have criteria of ‘economic activities – objectives – eligible costs;

another example concerned tax exemptions: Exemption from corporate tax of production of energy saving equipment, former Art. 158 of the Tax Code of Ukraine (cancelled in 2015). Positive features are: horizontal list of goods to be exempted. Negative: exempted are only undertakings authorised by the State Energy Efficiency Service;

Mr Chernikov also underlined problems with the wholesale electricity market in Ukraine. In particular, he pointed to the matter of access to the wholesale market for the electro-metallurgical enterprises. Retail tariffs are set for electricity for selected coal mining companies and measures for reconstruction and modernisation of power plants and combined


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heat and power stations between now and 2020 are established. All this leads to losses of “Energoatom” and arrears of SOE “Energorynok”;

further on the speaker proposed a number of recommendations: budget and targeted programmes should be aligned according to the EU Guidelines (environmental protection and energy, regional aid, coal mine closure); State guarantees should be more transparent and have market price; natural gas market – AMCU’s role should be more clear in special obligations facility; whole sale electricity market – removal of the State support by implementing the new legislation on fundamentals of functioning of the wholesale electricity market.

Ms Sofia Ugriumova from the Ministry of Energy and Coal in her brief presentation on current legislative initiatives of the Ministry pointed out the following:

budget expenditures in 2015-2016 for State support in the coal sector were reduced significantly. Currently the Ministry is working on the Draft Law on State support in the coal sector with a focus on closure aid. The Ministry is planning to close 11 coal mines, to privatise 15 coal mines and leave 7 as State- owned enterprises. After the closure of coal mines it is envisaged that mine workers will receive State support;

the speaker also underlined that Ukraine is lacking an integrated system for the regulation of the coal sector, the rules of State aid and subsidies control of EU and WTO are not generally taken into account;

in the sphere of energy regulation, a new draft Law was also introduced by the Ministry and the relevant Committee of the Parliament has approved it and proposed it for adoption;

concerning tax incentives, Ms Ugriumova pointed out that Ministry is planning to provide such exemption (grant equivalent of 60 million USD) to a Japanese company which imports turbines for nuclear plants to Ukraine.

Mr Andrii Savenko from the Ministry of Finance also presented the current position of the Ministry concerning State aid granting and the reform of public spending as a whole. Mr Savenko pointed out the following:

the Public Finance Management Strategy is being discussed in order to make necessary amendments to include the improvement proposals of international donors, in particular, it is proposed to include either a Chapter or Articles on State aid;

almost all Ministries of Ukraine do not have concrete objectives in their work to be reached. That is why the Prime minister of Ukraine gave a task to all of them to identify three main objectives to be reached. For the Ministry of Finance, one of the objectives is to improve the budget expenditure mechanism, to use public funds more effectively and to assess fiscal risks of State owned enterprises on the State budget;

the speaker also underlined that privatisation processes help to optimise public finance management considerably.


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SESSION 5: CHALLENGES AND BENEFITS OF THE UKRAINIAN STATE AID SYSTEM

During the last session of the Conference an open discussion was held with the participants, allowing them to ask questions that emerged during the Conference or to express their point of view on any topic related to the introduction of the State aid rules in Ukraine.

The representative from the Ministry of Finance was asked about the model for the management of State owned enterprises, in particular, which model Ukraine should follow – European or Asian. Mr Savenko answered that in Japan, for example, 90% of undertakings are private and that is why there are no such special strategy or model of management of State owned enterprises. European models are also not always applicable to the situation in Ukraine. Accordingly, Ukraine has to combine all best practices of Europe to create its own unique system.

A further question concerned the effectiveness of State management in general in Ukraine; more specifically whether it is necessary to merge some Ministries. Mr Savenko answered that many functions of Ministries in Ukraine overlap and that is why the identification of their priority objectives is a necessary step to make them more efficient.

In response to a question concerning the Altmark criteria and its implementation in the Law on State aid, Dr Kekelekis said that Altmark criteria are not currently in the Law but it will be up to the AMCU to decide whether compensation for the public services is State aid or not. Ms. Artemenko, added that the list of SGEIs will be identified in a normative act of the Cabinet of Ministers only after the AMCU, together with relevant Ministries, analyses the market and sees what services could be identified as SGEIs in Ukraine.

A specific question was asked about the establishment of the export credit agency in Ukraine and whether there are similar examples of such bodies in the EU. Dr Stuart said that the nature of support to be given by an export credit agency need to be considered. Subsidised business loans clearly do constitute State aid and would need to be assessed. Moreover, the EU operates specific State aid rules for short term export insurance. If a State aid scheme is constructed to address a market failure for export insurance and it is operated on normal market terms – there is no State aid. He also noted that most EU countries in some way support export activities, but do not give export subsidies – support for export activities is not the same as export subsidies (prohibited by both the EU and the WTO). An example of support for export activity might be aid to participate in trade fairs abroad where, in particular, SMEs can get up to €2 million to participate in trade fairs under the EU GBER rules.

Asked about the maximum period for the granting of State aid to promote the use of renewable energy, Mr Chernikov said that Ukrainian schemes for the promotion of renewable energy sources do not involve State aid as no transfer of State resources is involved. Ms Richter added that, in regard to investment and operating aid for renewables, it is desirable to re-notify such aid every 10 years.

Several participants thanked the organisers of the Conference and noted that the topic is very important now for Ukraine and needs more awareness-raising initiatives.

Following the discussion, Dr Eugene Stuart and Ms Anna Artemenko made some general remarks before closing the Conference. Dr Stuart expressed the hope that the Conference had provided some clarifications on the relevance of the State aid system for business and for the country in general. He noted that at least 13 Ministries in Ukraine now need to look at their legislation before 2 August 2017 and should ideally repeal dormant legislation providing state support. It would also be important to systemize legislation to see the full and clear picture of how much support each Ministry is granting, who are the beneficiaries and whether financing is provided or not under particular legislation that enable State support to be given for particular purposes/businesses. Moreover, the AMCU still has


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considerable work to do, in particular, to draft substantive rules on State aid (Article 6 of the Law) to set the intensities of aid, to decide about the regulation of certain sectors etc.

In her closing remarks, Ms Anna Artemenko underlined that she was very satisfied with the participation, professionalism of speakers, the active engagement of the participants and the organization and results of the Conference in general. She said that it was a good start that at least four Ministries in Ukraine now have people who are dealing with State aid issues as contact points and know the rules. She also thanked the participants for questions which were well grounded and in many instances reflected topics which the AMCU are currently considering in the process of preparing for the implementation of the Law. Ms Artemenko underlined that this is an indication of the importance of the topic for legal practitioners also as they would be the second contact points after the AMCU for business to advise them of different aspects of State aid granting.

Ms Artemenko added that the Committee is now working on its consultancy function on State aid to clarify procedural rules for State aid grantors in the first instance. The Unit on State aid monitoring has already been created within the AMCU and its work will be maximally transparent with the involvement of as many experts as possible to ease towards the implementation of the new rules and to raise awareness of this new sphere of regulation.

Finally, she thanked all the speakers, experts, ECT, EU Delegation, the Project, DG COMP for their assistance in delivering this event and expressed the hope that there will be more conferences, seminars and workshops dedicated specifically to the content and challenges of the Ukrainian State Aid System.


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ANNEXES

Annex 1: Conference Programme Annex 2: Presentation “New sphere of regulation in Ukraine (international obligations, Law on State aid, secondary legislation)” by Ms.Anna Artemenko, State Commissioner, Anti-Monopoly Committee of Ukraine Annex 3: Presentation “Notion of State aid in EU and Ukraine” by Dr. Eugene Stuart, Team Leader, EU funded Project “Harmonisation of Public Procurement System in Ukraine with EU Standards” Annex 4: Presentation “EU-Ukraine Association Agreement: obligations in State aid and recent developments” by Mr. Boris Filipov, EU Delegation to Ukraine Annex 5: Presentation “Energy Community Treaty: obligations and recent proposals for amendments in State aid” by Ms. Marie-Therese Richter, Energy Community Treaty Secretariat Annex 6: Presentation “State aid vs. general measures” by Dr. Mihalis Kekelekis, EFTA Surveillance Authority Annex 7: Presentation “Legal and economic aspects of State aid assessment” by Ms. Ann-Sophie Dupont, European Commission, DG Competition Annex 8: Presentation “State aid assessment – challenges for Ukraine” by Ms. Anna Artemenko, State Commissioner, Anti-Monopoly Committee of Ukraine Annex 9: Presentation “Sectoral aid (with case studies)” by Mr. Sigitas Cemnolonskis, EU Project Expert Annex 10: Presentation “Horizontal aid (with case studies)” by Ms. Iana Roginska, EU Project Expert Annex 11: Presentation “Funding for energy” by Ms. Marie-Therese Richter, Energy Community Treaty Secretariat Annex 12: Presentation “Recent developments in State aid in the EU: State Aid Modernisation” by Ms. Ann-Sophie Dupont, European Commission, DG Competition Annex 13: Presentation “Public Procurement, Infrastructure and SGEI – application of the Law of Ukraine on State aid” by Dr. Mihalis Kekelekis, EFTA Surveillance Authority Annex 14: Presentation “Pilot Project on assessment of State aid schemes in the energy sector of Ukraine” by Mr. Denys Chernikov, EU Project Expert Annex 15: List of participants Annex 16: Press-release


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ANNEX 1: Conference Programme

FIRST INTERNATIONAL STATE AID CONFERENCE IN UKRAINE

“A NEW APPROACH TO STATE AID TO UNDERTAKINGS IN UKRAINE - DOING MORE WITH LESS”

Friday 27 May 2016, Kyiv

Venue: Premier Palace Hotel, The Sofyivskiy Grand Hall, 5-7/29 T. Shevchenka Blvd. / Pushkinska St.

Programme5 08.15 – 09.00 Registration of participants

09.00 – 9.30 Welcome and opening remarks

Mr. Yurii Terentiev, Chairman of the Anti-Monopoly Committee of Ukraine Mr. Thomas Frellesen, Deputy Head of the EU Delegation to Ukraine

Dr. Eugene Stuart, Team Leader, EU funded Project “Harmonisation of Public Procurement System in Ukraine with EU Standards” Ms. Yulia Kovaliv, First Deputy Minister of Economic Development and Trade of Ukraine Mr. Anatolii Kutsevol, Deputy Director of the Government Office for European Integration

9.30 – 10.40 9.30 – 9.50 9.50 – 10.10 10.10 – 10.20 10.20 – 10.30 10.30 - 10.40 10.40 – 11.10

SESSION 1: STATE AID IN THE CONTEXT OF FREE TRADE AGREEMENTS Moderator: Dr. Eugene Stuart, Team Leader, EU funded Project “Harmonisation of Public Procurement System in Ukraine with EU Standards” 1. “New sphere of regulation in Ukraine (international obligations, Law on State aid, secondary

legislation)” – Ms. Anna Artemenko, State Commissioner, Anti-Monopoly Committee of Ukraine

2. “Notion of State aid in EU and Ukraine” - Dr. Eugene Stuart, Team Leader, EU funded Project “Harmonisation of Public Procurement System in Ukraine with EU Standards”

3. “EU-Ukraine Association Agreement: obligations in State aid and recent developments” - Mr. Boris

Filipov, EU Delegation to Ukraine

4. “Energy Community Treaty: obligations and recent proposals for amendments in State aid” – Ms. Marie-Therese Richter, Energy Community Treaty Secretariat

Discussion

Coffee break/Press corner

5 Simultaneous interpretation


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11.10 – 12.40 11.10 – 11.30 11.30 – 12.00 12.00 – 12.30 12.30 – 12.40

SESSION 2: STATE AID ASSESSMENT

Moderator: Ms. Anna Artemenko, State Commissioner, Anti-Monopoly Committee of Ukraine

1. “State aid vs. general measures” – Dr. Mihalis Kekelekis, EFTA Surveillance Authority

2. “Legal and economic aspects of State aid assessment” – Ms. Ann-Sophie Dupont, European Commission, DG Competition

3. “State aid assessment – challenges for Ukraine” – Ms. Anna Artemenko, State Commissioner, Anti-Monopoly Committee of Ukraine

Discussion

12.40 – 13.40

Lunch

13.40 – 15.30 13.40 – 14.10 14.10 – 14.40 14.40 – 15.00 15.00 – 15.20 15.20 – 15.30 15.30 – 15.50 15.50 – 17.10 15.50 – 16.10 16.10 – 16.30 16.30 – 17.10 17.10 - 17.20

SESSION 3: TYPES AND CATEGORIES OF AID – WHAT IS ALLOWED AND WHAT IS NOT

Moderator: Ms. Ann-Sophie Dupont, European Commission, DG Competition

1. “Sectoral aid (with case studies)” – Mr. Sigitas Cemnolonskis, EU Project Expert

2. “Horizontal aid (with case studies)” – Ms. Iana Roginska, EU Project Expert

3. “Funding for energy” – Ms. Marie-Therese Richter, Energy Community Treaty Secretariat

4. “Recent developments in State aid in the EU: State Aid Modernisation” – Ms. Ann-Sophie Dupont, European Commission, DG Competition

Discussion

Coffee break

SESSION 4: SOME AREAS OF POTENTIAL DIFFICULTY FOR UKRAINE

Moderator: Dr. Eugene Stuart, Team Leader, EU funded Project “Harmonisation of Public Procurement System in Ukraine with EU Standards”

1. “Public Procurement, Infrastructure and SGEI – application of the Law of Ukraine on State aid” – Dr. Mihalis Kekelekis, EFTA Surveillance Authority

2. “Pilot Project on assessment of State aid schemes in the energy sector of Ukraine” –Mr.

Denys Chernikov, EU Project Expert

3. New policy initiatives in Ukraine

Gennadiy Kryvosheya, Member of the Parliament, Committee on Industrial Policy and Entrepreneurship

Oksana Grishkevich, Ministry of Economic Development and Trade

Sofia Ugriumova, Ministry of Energy and Coal

Andrii Savenko, Ministry of Finance


30

17.20 – 18.00 17.20 – 17.40 17.40 – 18.00 18.30

Discussion

SESSION 5: CHALLENGES AND BENEFITS OF THE UKRAINIAN STATE AID SYSTEM

Moderator: Ms. Anna Artemenko, State Commissioner, Anti-Monopoly Committee of Ukraine Open Forum Panel Discussion: (Panel of main speakers) Closing remarks

Dr. Eugene Stuart, Team Leader, EU funded Project “Harmonisation of Public Procurement System in Ukraine with EU Standards”

Mr. Yurii Terentiev, Chairman of the Anti-Monopoly Committee of Ukraine Conference Reception (by invitation)


31

ANNEX 2: Presentation “New sphere of regulation in Ukraine (international obligations, Law on State aid, secondary legislation)” by Ms.Anna Artemenko,

State Commissioner, Anti-Monopoly Committee of Ukraine


32


33


34


35

ANNEX 3: Presentation “Notion of State aid in EU and Ukraine” by Dr. Eugene Stuart, Team Leader, EU funded Project “Harmonisation of Public Procurement

System in Ukraine with EU Standards”


36


37


38


39


40


41


42

ANNEX 4: Presentation “EU-Ukraine Association Agreement: obligations in State aid and recent developments” by Mr. Boris Filipov, EU Delegation to

Ukraine


43


44


45


46


47


48


49

ANNEX 5: Presentation “Energy Community Treaty: obligations and recent proposals for amendments in State aid” by Ms. Marie-Therese Richter, Energy

Community Treaty Secretariat


50


51


52


53

ANNEX 6: Presentation “State aid vs. general measures” by Dr. Mihalis Kekelekis, EFTA Surveillance Authority


54


55


56


57


58


59

ANNEX 7: Presentation “Legal and economic aspects of State aid assessment” by Ms. Ann-Sophie Dupont, European Commission, DG Competition


60


61


62


63


64


65


66


67


68


69

ANNEX 8: Presentation “State aid assessment – challenges for Ukraine” by Ms. Anna Artemenko, State Commissioner, Anti-Monopoly Committee of Ukraine


70


71


72


73


74

ANNEX 9: Presentation “Sectoral aid (with case studies)” by Mr. Sigitas Cemnolonskis, EU Project Expert


75


76


77


78


79


80

ANNEX 10: Presentation “Horizontal aid (with case studies)” by Ms. Iana Roginska, EU Project Expert


81


82


83


84


85


86

ANNEX 11: Presentation “Funding for energy” by Ms. Marie-Therese Richter, Energy Community Treaty Secretariat


87


88


89


90

ANNEX 12: Presentation “Recent developments in State aid in the EU: State Aid Modernisation” by Ms. Ann-Sophie Dupont, European Commission, DG

Competition


91


92


93


94


95


96


97

ANNEX 13: Presentation “Public Procurement, Infrastructure and SGEI – application of the Law of Ukraine on State aid” by Dr. Mihalis Kekelekis, EFTA

Surveillance Authority


98


99


100


101


102


103


104

ANNEX 14: Presentation “Pilot Project on assessment of State aid schemes in the energy sector of Ukraine” by Mr. Denys Chernikov, EU Project Expert


105


106


107


108


109


110


111

ANNEX 15: CONFERENCE PARTICIPANTS № Name Occupation

1. Eugene Stuart Team Leader, EU Project “Harmonisation of Public Procurement System in Ukraine with EU Standards”

2. Iana Roginska State aid expert, EU Project “Harmonisation of Public Procurement System in Ukraine with EU Standards”

3. Anna Styuart EU Project “Harmonisation of Public Procurement System in Ukraine with EU Standards”

4. Sigitas Cemnolonskis EU Project “Harmonisation of Public Procurement System in Ukraine with EU Standards”

5. Oksana Sapiga EU Project “Harmonisation of Public Procurement System in Ukraine with EU Standards”

6. Yulia Kovaliv First Deputy Minister of economic development and trade of Ukraine

7. Anatolii Kutsevol Government office on European Integration

8. Oksana Grishkevitch Acting Director of the Department of attracting investments

9. Sofiia Ugrymova Ministry of energy and coal of Ukraine

10. Denys Chernikov EU Project expert

11. Thomas Frellesen Deputy Head of EU Delegation to Ukraine

12. Boris Filipov EU Delegation to Ukraine

13. Anne Sophie Dupont DG COMP, European Commission

14. Mihalis Kekelikis EFTA Surveillance Authority

15. Marie-Therese Richter ECT Secretariat

16. Yurii Terentiev Chairman of the AMCU

17. Anna Artemenko State Commissioner, AMCU

18. Savenko Andriy Ministry of finance of Ukraine

19. Christine Jackson Crown Agents Ltd


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20. Valentin Derevinakin Deputy Team Leader, EU Project “Harmonisation of Public Procurement System in Ukraine with EU Standards”

21. Lakhno Sergii Director of the Department of Competition Policy, AMCU

22. Cherednichenko Darya Deputy Director of the Department of Competition Policy, AMCU

23. Olga Kylyk Unit on State aid monitoring, AMCU

24. Eugen Dudnyk Head of Unit on State aid monitoring, AMCU

25. Olena Gadomska Unit on State aid monitoring, AMCU

26. Jana Tkachenko Unit on State aid monitoring, AMCU

27. Chabanyuk Oksana Unit on State aid monitoring, AMCU

28. Valentyna Kravchuk Minenergy, Department of accounting

29. Iryna Kotsuba Minenergy, Department of accounting

30. Olena Dubrovina MEDT, Department of economic strategy

31. Inna Grygorenko MEDT, Department of attracting investments

32. Natalia Efremova Ministry of finance

33. Viktoria Gladka Law firm “Arzinger”

34. Marina Achtimirova Law firm “Arzinger”

35. Sergii Glushenko Law firm “Asters”

36. Denys Sytnyk Director, «Sytnyk and partners»

37. Liudmyla Gorodnycha Lawyer, «Sytnyk and partners»

38. Antonina Yagolnik Law firm “СLACIS”

39. Mykola Boychuk Lawyer, “Vasyl Kisil and partners”

40. Oleksandr Fefelov Lawyer, “Il’yashev and partners”


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41. Sergii Denysenko Lawyer, Law firm “EKBO”

42. Yulia Eismont Lawyer, “Redkliff partners”

43. Oleksandr Dyakulych Lawyer, CKM group

44. Volodymyr Kostenok Lawyer, CKM group

45. Ulyana Khrom’yak Advisor, «Everlegal СІІІ»

46. Olga Mikheeva “Baker & McKenzie”

47. O. Kushnirenko Unit of industrial policy of the National academy of science of Ukraine

48. Liudmyla Deineko Unit of industrial policy of the National academy of science of Ukraine

49. Denys Nazarenko Analyst, “DiXi Group”

50. Taras Tkachuk Analyst, “DiXi Group”

51. Olena Scherban NGO “Anti-Corruption Action Centre”

52. Svitlana Kovalivska Development Director of the Institute of social and economic research

53. Volodymyr Sayenko Partner of “Sayenko Kharenko” law firm

54. Yulia Kuida Lawyer of “Sayenko Kharenko” law firm

55. Iaroslav Medvedev Law firm “Avellum”

56. Maryna Myronenko Ministry of justice

57. Mykola Bortnychuk Ministry of justice

58. Oleksii Kononov Expert of the " Parliamentary Expert Group on European Integration"

59. Oleh Vizgunov NGO “Office of reforms”

60. Dmytro Galchynskyi Lawyer

61. Oleksandr Iavorsky Federation of employers of Ukraine


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62. Olga Grygoryan Head of press office of the AMCU

63. Olena Lutsovjat Press office of the AMCU

64. Igor Samochodskyi European Business Association

65. Iaroslava Gryshyna National Bank of Ukraine

66. Alina Luchko State Regulatory Service of Ukraine

67. Pavlo Markhaichuk Kyiv state administration

68. Iryna Dibrova Ministry of regional development

69. Natalia Potiomkina Ministry of regional development

70. Margaryta Udod AMCU

71. Tetiana Kulishova AMCU

72. Olesya Myzina State property fund of Ukraine

73. Olesya Pistryk State property fund of Ukraine

74. Dmytro Glinskyi Independent Association of banks of Ukraine

75. Liubov Kuzmenko AMCU

76. Klymenko Tamara AMCU

77. Tetiana Iurchenko AMCU

78. Olena Feleniuk Governmental Office on European Integration

79. Nelia Merkulova Ministry of infrastructure

80. Sergii Shepelyev Kyiv state administration

81. Sergii Pos NGO “Agency for Promotion of International Trade with Ukraine”

82. Vadym Altukhov


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83. Valerii Skyba Intercontinental Foundation “Centre for Democracy and Freedom”

84. Vitaliya Hermaniuk Working Group No.3: Ukraine – EU (NGO)

85. Anna Lozova National University


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ANNEX 16: Press release “EU AND AMCU CONVENED THE FIRST INTERNATIONAL STATE AID CONFERENCE IN KYIV”

On 27 May 2016 an International State Aid Conference: “A New Approach to State Aid to Undertakings in Ukraine – Doing More with Less” was held in Kyiv. It was organised by the EU Project supporting State aid system development in Ukraine together with the future regulator – the Anti-Monopoly Committee of Ukraine (AMCU).

The purpose of the Conference was to introduce the coming Ukrainian State aid system to a wide

audience. In particular, a focus of the event was on the content of the Law on State Aid to Undertakings, the requirements of the EU-Ukraine Association Agreement and the Energy Community Treaty regarding State aid regulation, as well as the new obligations for different stakeholders and the overall benefits for Ukraine. The Law on State Aid to Undertakings comes fully into force in August 2017 and is expected to have implications for most Government Ministries,

Regional authorities and larger local administrations in Ukraine.

The Chairman of the Antimonopoly Committee, Mr. Yuri Terentyev, opened the Conference, saying that: “The Antimonopoly Committee acknowledges the importance of the implementation of the Association Agreement between Ukraine and the EU and, therefore, is already introducing the best European practices concerning State aid regulation and improving the legal framework in compliance with EU standards.”

Mr. Thomas Frellesen, Deputy Head of the EU Delegation to Ukraine, welcomed the participants and recognised the progress that Ukraine is making towards establishing a fully operational State aid system by August 2017 in line with EU standards. Mr Frellesen said:“While this remains a very complex field, Ukraine is making strong progress towards meeting these commitments. The benefits of an efficient and well-functioning State aid system for Ukraine will be clear after the system starts to fully operate. Importantly, this will contribute to greater market competition, public finance transparency and Ukraine’s anti-corruption efforts.” Team Leader of the EU funded Project, Dr Eugene Stuart, said: “The Law on State Aid to Undertakings comes fully into force on 2 August 2017 and the Anti-Monopoly Committee is

developing its capacity to operate as the national State aid regulator under the Law. However, apart from that, before August 2017, the Law needs to be supplemented by a range of secondary legislation that adequately follows the EU rules in the Ukrainian context. A high degree of “State Aid awareness” also needs to develop across the system of public administration in Ukraine. As the title of today’s Conference indicates, this will involve a “new approach to State aid in Ukraine”. And indeed, experience elsewhere shows that the application of the EU State aid rules does result in improved public finance management and taxpayer savings – or “doing more with less.”

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