Brussels, 14/06/2000 (Agence Europe) - As briefly indicated in yesterday's EUROPE, the European Commission extended, by one year ,the period of validity of the existing Community framework for State aid in the car sector. It will assess, by 2001, the possibility of replacing this specific regime with rules of the "multisectorial" framework.
The car Framework was established in 1989 to ensure the transparency of aid paid by the Member States to their national automobile industry and impose strict discipline in the granting of such aid in order to reduce distortions of competition in sector were overcapacity leads to strong price competition.
The European rules set conditions in which the Member States may grant regional aid. The aids must be notified when: 1) the total investments exceed EUR 50 million and the aids reach a total of EUR 5 million, 2) the total value of aid exceeds the minimum level of EUR 100,000 over three years.
After notification, the Commission assesses the necessity of the aid (the company must show there is an economically viable alternative location to receive the aid), eligibility of costs, proportionality of the aid, (cost/benefit analysis), and the effects on the industry and on competition (variations in production capacity in the group and sector).