Suur-Ameerika 1 / 10122 Tallinn / ESTONIA /+372 611 3558 / [email protected] / www.fin.ee/

Reg no 70000272

European Commission

Directorate-General for Competition

Unit H1

[email protected]

/

Our ref. 25.09.2026 No 12.1-2/3889-1

HT.100469 Estonia's comments on

the Draft Communication amending

RAG

Hereby we submit Estonia's comments on the draft Communication amending the Guidelines

on regional State aid (RAG).

Estonia in general supports the draft. We support the amendment proposed in the draft, which

places greater emphasis on the specific characteristics and challenges of the EU’s eastern

border regions. We also support that Estonia’s entire territory is treated as an eastern border

region and that the possibility of granting regional aid remains during the 2028–2034 period.

Nevertheless, we have some proposals for the draft and for the RAG in force:

1) Estonia proposes adding further options to the draft RAG to support food industry

enterprises operating in eastern border regions.

By food industry enterprises, we refer to NACE Rev. 2 economic activities: A.01 "Crop and

animal production, hunting and related service activities", A.03 "Fishing and aquaculture", C.10

"Manufacture of food products", and C.11 "Manufacture of beverages".

2) We propose enabling the granting of regional aid to food industry enterprises in eastern

border regions for any type of initial investment, regardless of whether or not new

economic activity is created.

Under the current RAG (paragraph 100), aid granted to large enterprises in TFEU Article

107(3)(c) region is restricted to "initial investment in favour of new economic activity". We

believe this provision should be amended so that, for large food industry enterprises in these

regions, regional aid could be granted for initial investment in general, rather than being limited

to initial investment creating new economic activity.

The current requirement significantly limits the scope for granting regional aid to large food

industry enterprises, what in turn may negatively impact food supply security. Therefore, we

consider it justified to simplify the conditions for granting regional aid and remove the

restriction in the regional aid guidelines that limits aid for large enterprises in “c areas” solely

to initial investment creating new economic activity. The administrative burden associated with

meeting and verifying this requirement is disproportionately high and unjustifiably restricts the

pool of eligible enterprises.

2

3) We propose to add the possibility to support food industry enterprises in eastern border

regions (whether located in areas eligible under Article 107(3)(a) or Article 107(3)(c))

at an equivalent aid intensity.

Food production is a strategically important sector and a component of broader economic and

security resilience. Given Estonia’s geographical location, reducing import dependency and

increasing crisis resilience are priorities for us. This can only be achieved if sufficient

investment can be made in food industry enterprises, including large enterprises that are critical

for food security. Furthermore, it must be noted that stricter regulatory requirements (e.g.,

packaging standards) impose additional obligations and investment needs on businesses to

remain competitive, yet do not necessarily yield direct economic returns. Therefore, the aid

intensity must be sufficiently high to support investment and ensure the region's balanced

development.

The adequacy of the aid intensity is particularly important for countries in eastern border

regions. In these countries, risks and costs associated with the investment environment

(including additional costs stemming from the security situation, supply chain vulnerabilities,

and geographical location) are generally higher; consequently, companies compete for

investments on unequal terms compared to those in the central and western regions of the EU.

A sufficiently high aid intensity compensates for the persistent disadvantages faced by eastern

border regions, enables the maintenance and expansion of production capacity in these areas,

and thereby improves the region's security of supply and economic security. It also increases

the willingness of entrepreneurs to make necessary investments.

4) In addition, we propose amending the definition of a "large investment project" (current

RAG paragraph 19, point 18), the formula for the "adjusted aid amount" (current RAG

paragraph 19, point 3), and the definition of "initial investment" (current RAG

paragraph 19, point 13) and align these provisions with the definitions of the second

draft of the Commission's General Block Exemption Regulation (hereafter GBER).

Compared to the definition of a "large investment project" in the current RAG, the second draft

of the GBER raises the threshold for a large investment project to 70 million euros and 75

million euros as of 1.01.2031.

Compared to the "adjusted aid amount" formula set out in the current RAG, the second draft of

the GBER has modified the "adjusted aid amount" formula to consider the increase of the

threshold for large investment projects.

Compared to the definition of "initial investment" in the RAG, the second draft of the GBER

has slightly modified the definition by adding "or the overall provision of service(s)" to the

concept of a "fundamental change in the production process".

It is important that the same terms are used in RAG and the GBER.

Yours sincerely,

(signed digitally)

Karin Madisson

Deputy Secretary-General for Public Governance Policy

Ljudmilla Sokolnikova +372 611 3360

[email protected]