Better control of state aid needed

Even 10 years after the Commission for State Aid Control had been established, the institution is not operating independently even though this is an obligation that Serbia has undertaken with the Stabilization and Accession Agreement.

The task of line institutions for state aid control, in European Union being the European Commission, is to provide equal business conditions for all companies by ensuring that state interventions do not make a major impact on harmonized functioning of the internal market. 

Last week (26 and 27 September) Belgrade hosted the first regional conference „State aid and economies of the Western Balkans”, which brought together the representatives of state aid control institutions from the neighboring countries. On this occasion, the European Policy Center – CEP, NALED and web portal European Western Balkans (EWB) noted that the Commission for State Aid Control of Serbia, as per the valid Law, cannot be considered an operationally independent body in terms of Article 73, Paragraph 4 of the Stabilization and Accession Agreement. Since its establishment, this institution has not issued any decisions indicating inappropriate state aid, nor a decision on refunding illegally assigned state aid, which testifies to its lack of independence.

 „Adequate state aid control is a pre-requisite for free market and protection of competition, which brings benefits for the users, i.e. the citizens,” said Dušan Protić, Program Manager for Internal Market and Competitiveness in CEP.

In July, CEP and NALED published an analysis and recommendations for improving the organizational model and ensuring operational independence of the Commission for State Aid Control, in line with the requirements for opening negotiations in Chapter 8 „Competition Policy“, which involves the rules about state aid allocation. It should be once again noted that this Chapter, precisely due to the areas regarding state aid, is among the hardest negotiation chapters, together with Chapters 23 ad 24, and would probably require longest negotiations. If the recommendations from this analysis would be adopted and implemented, the Commission could be independent in managing its jurisdiction, while capacity building in terms of the number of employees would allow more room for risk analysis, as well as preventive and advisory activities. This would also lead to the fulfillment of one of the requirements for opening negotiations in this Chapter. 

„Furthermore, the change of Commission's organizational model would have a series of positive effects on businesses, including better protection of competition, encouraging economic growth, as well as additional benefits for the citizens resulting from reduced room for corruption and higher transparency and responsibility in spending the budget funds“ said Irena Đorđević, Research Officer in NALED.

CEP, NALED and EWB remind that the Ministry of Finance has adopted and included the analysis recommendations into the new Draft Law on State Aid Control which was sent to the National Parliament for adoption, thus showing the initiative to start negotiations within Chapter 8 and the willingness to cooperate with the civil society. The analysis and recommendations for improving the work of the Commission for State Aid Control, presented at public discussions in Belgrade, Niš and Novi Sad in July and August this year, can be viewed at the link (in Serbian). The analysis was developed within the project Prepare to Participate implemented by CEP, NALED and EWB, with financial support of the European Union.