European law - R&D subsidies for large companies
Three new types of state aid, namely, environmental aid, aid in the form of risk capital and research and development aid in favour of large companies need no longer be notified to the European Commission, if a recently proposed EU law is ever to see...
Three new types of state aid, namely, environmental aid, aid in the form of risk capital and research and development aid in favour of large companies need no longer be notified to the European Commission, if a recently proposed EU law is ever to see the light of day.
As a general rule, state aid is prohibited under EU law unless it has been explicitly notified to the European Commission and authorised by the latter institution.
However, there are already in force a number of so-called "block exemptions" which divest member states from the notification obligation provided that the conditions found therein are satisfied.
Among these block exemptions, one may mention that dealing with research and development aid in favour of small and medium-sized enterprises.
Therefore, to date, while research and development aid in favour of small and medium sized enterprises is exempt from the notification requirement, the same cannot be said for such aid given by member states to larger companies.
The Commission is now proposing, among others, new block exemption rules that would facilitate the granting of research and development aid by member states to large enterprises as well.
In practical terms, this would mean that subsidies of up to 50 per cent of a large companies' project costs for industrial research and up to 25 per cent for experimental development can be granted by member states without the necessity of pre-notifying the same to the European Commission.
Member states would no longer have to await the Commission's approval before they could start granting aid and so could implement such measures without delay.
Subsidies exceeding these ceilings would still need to be notified to the Commission.
These new draft rules which have recently been presented by the European Commission for consultation have another objective besides that of exempting more subsidies from the notification obligation.
The new block exemption would also simplify and consolidate into one text five existing block exemptions, namely, those for aid to SMEs, research and development aid in favour of SMEs, aid for employment, training aid and regional aid.
Industry has welcomed this proposed law since it would make currently complicated state aid rules more user-friendly.
However, it also expressed its regret at, among other issues, the fact that state aid measures as regards innovation were not included in this new law.
• Dr Vella Cardona is a freelance consultant in EU, intellectual property and competition law. She is also a visiting lecturer at the University of Malta.
As a general rule, state aid is prohibited under EU law unless it has been explicitly notified to the European Commission and authorised by the latter institution.
However, there are already in force a number of so-called "block exemptions" which divest member states from the notification obligation provided that the conditions found therein are satisfied.
Among these block exemptions, one may mention that dealing with research and development aid in favour of small and medium-sized enterprises.
Therefore, to date, while research and development aid in favour of small and medium sized enterprises is exempt from the notification requirement, the same cannot be said for such aid given by member states to larger companies.
The Commission is now proposing, among others, new block exemption rules that would facilitate the granting of research and development aid by member states to large enterprises as well.
In practical terms, this would mean that subsidies of up to 50 per cent of a large companies' project costs for industrial research and up to 25 per cent for experimental development can be granted by member states without the necessity of pre-notifying the same to the European Commission.
Member states would no longer have to await the Commission's approval before they could start granting aid and so could implement such measures without delay.
Subsidies exceeding these ceilings would still need to be notified to the Commission.
These new draft rules which have recently been presented by the European Commission for consultation have another objective besides that of exempting more subsidies from the notification obligation.
The new block exemption would also simplify and consolidate into one text five existing block exemptions, namely, those for aid to SMEs, research and development aid in favour of SMEs, aid for employment, training aid and regional aid.
Industry has welcomed this proposed law since it would make currently complicated state aid rules more user-friendly.
However, it also expressed its regret at, among other issues, the fact that state aid measures as regards innovation were not included in this new law.
• Dr Vella Cardona is a freelance consultant in EU, intellectual property and competition law. She is also a visiting lecturer at the University of Malta.