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On Approving Small Amounts of Individual State Aid and General Procedure for Granting State Aid

Unofficial translation

GOVERNMENT OF GEORGIA

REGULATION №529

1 September 2014 Tbilisi

On Approving Small Amounts of Individual State Aid and General Procedure for Granting State Aid

Article 1 – The attached document of Small Amounts of Individual State Aid and a General Procedure for Granting State Aid shall be approved according to Article 6 of the Law of Georgia and Article 12 (2) (e), Article 13 (1) and Article 34 (6) of the Law of Georgia on Competition.

Article 2 - This Regulation shall take effect upon promulgation.

Prime Minister Irakli Garibashvili

Small Amounts of Individual State Aid and a General Procedure for Granting State Aid

Article 1 - General provisions

1. This procedure has been developed according to the Law of Georgia on Competition (hereinafter the Law).

2. The procedure is intended to:

a) Ensure non-discrimination and transparency of the procedures for granting state aid;

b) Establish a procedure for coordinating state aid with authorised bodies;

c) In case of non-compliance of state aid with the law and the provisions of this document, define the authority of the appropriate body, the Legal Entity under Public Law - the Competition Agency (hereinafter the Agency);

d) Define a small amount of individual state aid as provided for in the Law.

3. As provided by this procedure, the Agency is an authorised body.

4. The terms used in this procedure have the meanings as defined by the Law.

Article 2 - Scope of the procedure

This procedure shall only apply to state aid that, according to Article 12 (3) of law, needs to be granted in coordination with the Agency, and that shall be granted for the purpose of:

a) Economic development of certain regions;

b) Facilitation of conservation of culture and cultural heritage.

Article 3 - Forms of state aid and principles of granting state aid

1. The forms of state aid shall be:

a) Exemption, reduction or deferment of taxes;

b) Writing off debt and debt restructuring;

c) Issuing preferential loans;

d) Transferring operating assets;

e) Providing financial aid;

f) Securing profit;

g) Tax privileges;

h) Other forms.

2. The state procurement provided for by the Law of Georgia on State procurement shall not be considered as granting the right provided for by sub-paragraph 'g' of the first paragraph of this article.

3. When granting state aid, the principles of non-discrimination and transparency shall be observed.

4. This procedure shall not apply to the cases provided for by Article 12(2) of the Law, except the cases defined in “e” subparagraph of the same paragraph.

Article 4 - Application for granting state aid

1. To determine state aid compliance with the Law a body granting state aid shall apply to the Agency with an application.

2. An application for granting state aid shall comprise the following information:

a) The name of a state aid granter;

b) The aim of granting a state aid including the necessity of granting and expected results in the market caused by granting state aid;

c) The form of granting state aid provided for by the Article 3(1) of this procedure;

d) State aid recipient/recipients;

e) The volume of the state aid;

f) The terms/procedures of granting state aid;

g) The periodicity of granting state aid, if any;

h) The size and periodicity of issuing each tranche if a state aid is granted in the form of a monetary allowance;

i) The mechanism for distributing state aid among its recipients;

j) Substantiation of the fact that the state aid to be granted does not materially restrict competition in the respective market.

3. A state aid granter shall also notify the Agency of essential changes in the terms of granting state aid.

4. An essential change in the terms of granting state aid defined in the third paragraph of this article shall be any change in the second paragraph of this article, as well as any other changes in the terms of granting state aid that may considerably restrict competition in the respective market.

Article 5 – Coordination of state aid

1. Not later than within 14 working days after an application for granting state aid is submitted to the Agency, the Agency shall, on the basis of the information received, determine the compliance of granting state aid with the Law and this procedure. If necessary, this time period may be extended up to two months if the Agency notifies the State aid granter before the expiration of 14 working days, three working days before the set term expires.

2. In considering compliance of state aid with the Law, the Agency may request and receive information from a state aid granter or/and from relevant state bodies according to the legislation of Georgia.

3. In case of state aid compliance with the Law and the provisions of this rule, the Agency shall prepare a positive legal opinion, and inform the Government of Georgia and the state aid granter.

4. If it is determined that state aid may not be granted according to the Law and this procedure, the Agency shall, within the time period provided for by the first paragraph of this article, inform the Government of Georgia and the state aid granter.

5. If it is determined that a state aid granter's action is incompatible with the Law, the Agency shall be authorized to request the state aid granter to submit additional substantiation and/or prepare an appropriate recommendation.

6. In case of a negative legal opinion provided for by the fourth paragraph of this article, the Agency may give a recommendation to the state aid granter to bring its action in line with the Law.

7. On the basis of a legal opinion/recommendation of the Agency, the Government of Georgia shall make a decision on granting or refusing to grant state aid.

Article 6 - Appealing against the granted state aid

1. If the granted state aid considerably restricts competition in the respective market, and/or the legislation of Georgia related to the procedure for granting state aid has been violated in the competition sector, a directly aggrieved person may appeal against the granted state aid.

2. The Tbilisi City Court, authorised to hear competition-related disputes, shall hear disputes related to violation of this procedure.

Article 7 - Small amounts of individual state aid

1. The general procedure for granting state aid defined in this procedure shall not apply to state aid, the size of which for one undertaking does not exceed GEL 400 000 in total for three consecutive fiscal years, except the cases presented in paragraphs 2 – 4 of this Article.

2. The economic agent operating in the field of freight transportation by ground transport, the individual state aid, in total, shall not exceed GEL 200 000 for three consecutive fiscal years.

3. The state aid defined in the second paragraph of this Article shall not be used for acquisition of ground- freight transport.

4. In case of granting single state aid to one economic agent operating in the agriculture sector, individual state aid, in total, shall not exceed GEL 200 000 for three consecutive fiscal years.

5. For the purpose of this article, interdependent persons defined in the Law shall be considered as one undertaking.

Article 8 - Transitional provisions

This procedure shall not apply to the state aid granted before this procedure was enacted and changes in the terms and conditions of such state aid need not be coordinated with the Agency.