EU Relaxes State Aid Rules for Research, Broadband, Other Sectors

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By Bengt Ljung  

May 21— The European Commission May 21 adopted relaxed state aid rules for research and innovation to boost economic growth in the European Union.

The Commission also exempted several new sectors from prior scrutiny of state aid, including areas such as infrastructure for broadband and energy, innovation clusters, culture and audiovisual works.

EU Competition Commissioner Joaquin Almunia told a news conference in Brussels that the EU was falling behind its goal to reach spending of 3 percent of gross domestic product (GDP) on research, development and innovation (RDI) by 2020.

“We all know Europe is falling short of the goal. Our expenditure on RDI is about 2 percent of GDP, compared to 3 percent that is our objective. And 3 percent is the present level of our main competitors, the United States and Japan,” the commissioner said.

The gap is mostly due to lower levels of private investments, he said.

RDI Aid Increases

The new rules will increase the permitted level of RDI state aid to 70 percent for big companies and 90 percent for small companies for eligible costs of applied research, including costs for prototyping and demonstration.

The threshold for smaller RDI amounts that are automatically exempted also will be increased. For example, aid for experimental development is increased to 15 million euros from 7.5 million euros per project and per beneficiary. In addition, the rules are simplified when RDI projects co-financed by the EU automatically will be presumed to be permissible.

“This is an excellent example of what can be considered as good state aid, when state aid contributes to a sustainable growth path by providing what the market fails to deliver on its own,” Almunia said.

The current framework for RDI aid entered into force in January 2007.

The decision to exempt more sectors from state aid scrutiny before the aid is paid out means that the number of exempt measures will increase to 75 percent from 60 percent of all aid measures, and to 66 percent from 30 percent of the aid amounts, the Commission said.

“These new rules will cut red tape for member states and encourage them to put in place smart aid measures which contribute to economic growth and do not harm fair competition,” Almunia said.

This revision of the EU General Block Exemption Regulation will exempt categories such as aid for infrastructure for broadband, research and energy, innovation clusters, regional urban development funds, culture and heritage conservation, audiovisual works, sports, recreational infrastructures and reconstruction after natural disasters.

Thresholds for exemptions also will be raised and procedures simplified, the Commission said.

Focus on Distortion of Competition

By exempting harmless aid, the Commission hopes to be able to concentrate its scrutiny on aid measures that are more likely to distort competition in the EU Single Market. But more exemptions of scrutiny before state aid is paid out also will mean that the Commission steps up its monitoring of state aid after it has been distributed.

Also on May 21, the Commission introduced new rules for transparency. For all state aid above 500,000 euros, EU countries are required to publish online the identity of the beneficiary, the amount, the objectives of the aid and the legal basis.

The new rules will enter into force on July 1 this year.

The Commission set in motion its reform of the state aid rules on May 8, 2012, when it set out new objectives. Before the decisions of May 21 this year, the Commission reformed its state aid procedures and adopted new guidelines for broadband, regional development, airports, airlines, risk finance, energy and environment.

To contact the reporter on this story: Bengt Ljung in Brussels at

To contact the editor responsible for this story: Heather Rothman at

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