Brussels, 07/06/2001 (Agence Europe) - The European Commission has decided the aid to research and development that the Italian authorities contemplated granting to Iveco SpA for the development of a new range of light vans was not compatible with the common market. The aid was not justified given the limited innovative character of the investment.
In November 1999, the Italian authorities had notified the Commission of their intention to grant aid worth EUR 16 million in nominal values toward a EUR 111 million project for the renewal and expansion of Iveco's range of light vehicles, Iveco being a subsidiary of Fiat. The project, which aimed to develop a new "vehicle system" for the S2000 range was carried out in the 1994-1999 period.
After an indepth inquiry, the Commission considers that, although the project results in an improved product compared to the earlier model, the innovative character of the investment does not go beyond common practice in the automobile industry regarding the development and launch of new models. In addition, it stresses that Iveco's R&D effort did not substantially increase as a result of the project, and was comparable to that of similar motor vehicle manufacturers. According to the rules governing State aid to R&D, such aid can only be approved if it is an incentive to enterprises to undertake R&D activities in addition to normal day-to-day operations. This, states the European Executive, was not so in this case. The Commission specifies that, if the public subsidy were granted in cases of this kind, it "would simply amount to operating aid, and would not achieve its goal of inducing firms to pursue research, which they would not otherwise have pursued".