Article 23(c) of the Convention governing the Central African Economic Union enshrines the prohibition of state aid. This prohibition is echoed in Regulation No. 06/19-UEAC-639-CM-33 of 7 April 2019 on competition, whose Article 78 provides that public aid liable to distort competition is prohibited, in particular where it takes the form of subsidies, tax and duty exemptions, exemptions from parafiscal levies, interest rate subsidies, loan guarantees on particularly favourable terms, supply of goods on preferential terms, or coverage of operating losses.

The CEMAC Regulation 06/2019 clarifies, however, that compensation measures for a company entrusted with public-service obligations are not considered state aid, provided that:

  • the obligations are strictly defined;
  • the compensation, defined in advance, is established objectively and transparently, without granting an economic advantage that could favour the beneficiary company over its competitors;
  • the compensation does not exceed what is necessary in view of the revenue and a reasonable profit expected for the company;
  • where the company was not selected through a tender procedure, the compensation is calculated based on a cost analysis of what an average, well-run company would have incurred to meet the public-service obligations.

While some public aid may be compatible with the common market — following consultation of the Community Competition Council (CCC) — it nonetheless remains subject to strict oversight by CEMAC's competition authorities.

I. Public aid potentially compatible with the common market

Article 81 of CEMAC Regulation 06/2019 on competition sets out the conditions for aid to be compatible with the Common Market. To qualify, aid must be:

  • categorical aid of a social nature, provided it is granted without discrimination based on product origin;
  • aid intended to remedy damage caused by natural disasters or other unforeseeable and insurmountable events for the company.

Accordingly, under the Regulation, the following may be considered compatible with the Common Market:

  • aid to companies, particularly small and medium-sized enterprises, aimed at promoting the economic development of disadvantaged regions or those with notably lagging economic development;
  • aid aimed at promoting an important project of common sub-regional interest, or at remedying a serious disturbance in a Member State's economy;
  • aid to companies, particularly SMEs, aimed at facilitating the development of certain activities, provided it does not alter trading conditions to an extent contrary to the common interest;
  • aid aimed at promoting culture, heritage conservation, and environmental protection, provided it does not alter trading and competition conditions within the Community to an extent contrary to the common interest.

II. Oversight of public aid by the competition authorities

The CEMAC Competition Commission is informed in good time of all projects intended to introduce or amend aid or aid schemes, via notification from CEMAC Member States. Where the Commission doubts a project's compatibility with the Common Market, it opens a procedure without delay. Interested public or private parties — particularly competitors of the companies receiving aid — may refer a matter to the Commission under Regulation 06/19 to challenge the compatibility of aid with the Common Market.

Articles 64 et seq. of Regulation No. 000350 on the procedure for applying CEMAC competition rules, of 25 September 2020, provide that, for the purpose of examining state-aid schemes, CEMAC Member States must notify the Commission of any aid project that is not inherently compatible with the Common Market.

As for complaints, these are sent in three (3) copies, with supporting evidence for the allegations, to the Commission, which acknowledges receipt to the senders without delay and informs the Member State that a procedure has been opened.

Where the Commission considers, based on the information submitted to it, that there is insufficient grounds to act on a complaint, it informs the complainant and gives them a deadline to supplement the complaint if needed.

Once the file is under investigation, the Commission may gather all necessary information from the competent authorities of Member States, from the companies benefiting from the aid in question, and from any other natural or legal person, including competitors of the beneficiary company. It may also carry out any necessary inspections of companies and associations.

In practice, duly mandated Commission agents are vested with powers of action and investigation. Following any inspection, the investigators draw up a report. This report, together with a list of all documents provisionally seized, is communicated within a maximum of seven (7) working days to the parties and to the Member State concerned (Article 71 of CEMAC Regulation 000350).

The Commission may also ask the Competition Council (CCC) to carry out investigations and may refer matters to it for an opinion on the state of competition in the sector of the beneficiary company, and on the compatibility of the aid with the principles set out in the Competition Regulation.

The Commission then has a deadline to issue its decision on the compatibility of the public aid referred to it. The aid review procedure is closed by a Commission decision, which either:

a) finds that the notified measure, where applicable after amendment by the Member State, does not constitute aid;
b) finds that the notified measure, where applicable after amendment by the Member State, is compatible with the CEMAC Common Market;
c) makes a favourable compatibility decision subject to conditions and obligations allowing it to monitor compliance with those conditions;
d) finds that the notified aid is incompatible with the CEMAC Common Market and declares that it cannot be implemented.

Where the Member State withdraws its notification, abandoning the measure, the Commission closes its procedure by decision.

However, where aid has been implemented without prior authorisation, the Commission — after giving the Member State concerned the opportunity to submit its observations — may issue a decision ordering the Member State to suspend payment of the unlawful aid until it rules on the aid's compatibility with the CEMAC Common Market. If the aid is declared incompatible with the Common Market yet implemented nonetheless, the Commission issues a decision ordering the Member State to suspend the unlawful aid and to recover, without delay, all or part of the funds paid, as applicable. Should a Member State fail to comply with an injunction or any other Commission decision, the matter may be brought before the Community Court of Justice.

Source: Village de la Justice