Brussels, 21/09/2005 (Agence Europe) - "Even though effective competition is the best way of increasing innovation and competitiveness in Europe, State aid may also have a very useful part to play in this", Neelie Kroes told the press on Wednesday, after the adoption by the College of her communication on state aid to innovation (EUROPE 9030). This text identifies a series of measures for which State aid may be authorised by the Commission in application of ex-ante rules and criteria, and opens a period of consultation which will continue until 21 November, and should lead to a modification of existing rules by next year, particularly for research and development and venture capital. At this stage, the communication relates to just SMEs, "but it is not ruled out that in the very near future, larger businesses could also be dealt with under the proposed framework", announced the Commission in charge of Competition.
Open markets remain "the driving force behind competitiveness in innovation", stressed Ms Kroes, who recognises that although "State aid cannot resolve all of Europe's problems", it can contribute "where the market cannot". A public measure in favour of innovation could, therefore, be authorised if: (a) the aid targets a well-defined shortcoming in the market. The Commissioner said that the consultation would be used, amongst other things, to specify who would be tasked with identifying a market shortcoming (the SMEs themselves, the Member States, the Commission, etc). Answering a question, she suggested a combination of players, stressing the need to keep a “transparent system; (b) the aid is the most appropriate instrument ; (c) the aid genuinely stimulates innovation and is in proportion to the objectives laid down ; (d) competition distortions are limited.
The Commission aims to authorise aid to activities related to innovation, which encourage risk-taking and experimentation and have a part to play in plugging the gap between research on the market, and activities which improve the general environment for business. It proposes six types of measures: (a) support for innovative companies during their start-up phase, by granting exemptions from social contributions and other local and regional taxes (up to a level of 50% and for up to five years after the company was set up), and subsidies of up to a million EUR for three years, subject to certain conditions; (b) greater flexibility for aid to capital investment (which is not something Europe has enough tradition of, in the view of Ms Kroes). The Commission will take another look at its communication in order to check whether current ceilings must be revised or exemptions per category granted; (c) extension of activities covered by the framework to aid for research and development, for which aid to SMEs is authorised. This could relate to the development of prototypes which may be used commercially, or pilot projects, technical assessments, feasibility studies and modelisation costs, expenditure to adapt technologies to specific production requirements, marketing costs, training in the field of management and sales, and also the intensity of aid (for which a limit of 15% has been set), etc; (d) subsidies to promote the use of third parties in innovation (the development of which may have been slowed down in Europe). Seeking out innovative projects, consultancy services to business, and the leasing of equipment and premises may benefit from State aid. This may take the form of a "voucher for innovation services" of a maximum sum of 200,000 EUR over three years; (e) subsidies to help SMEs to recruit highly qualified scientists and engineers, and in favour of exchanges of staff with universities and big businesses; (f) support for the development of polls of excellence by joint projects between groups and projects of common interest at European level.