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The European Commission has adopted new rules that will facilitate the granting of aid measures by Member States in support of research, development and innovation (R&D&I) activities.  

The European Commission has adopted new rules that will facilitate the granting of aid measures by Member States in support of research, development and innovation (R&D&I) activities. The new R&D&I state aid Framework sets out the conditions under which Member States can grant state aid to companies to carry out R&D&I activities. Moreover, the scope of measures that no longer need to be notified to the Commission for prior approval has been widened under the new General Block Exemption Regulation (GBER). These new rules will help Member States reach the targets of the Europe 2020 Strategy for smart, sustainable and inclusive growth, while at the same time limiting distortions in the Single Market. See alsoMEMO/14/368. They constitute a key component of the Commission's State Aid Modernisation package (seeIP/12/458).

Commission Vice President in charge of competition policy Joaquín Almunia said: "Research and innovation are key for growth and the competitiveness of our European economy. However, highly innovative projects often carry high risks and may not be implemented due to funding gaps. The new framework will help to overcome such market failures and foster a smart use of public resources for research, development and innovation activities, in complement to private funding."

To boost economic growth, the EU aims to increase R&D spending to 3% of GDP. However, EU R&D spending is still lagging behind major global competitors such as the US or Japan, mainly due to lower levels of private investment. The new rules aim to ensure that public money is used where it is needed and that state aid mobilises private investment in projects that would otherwise not be implemented, while preserving competition in the Single Market. They will also facilitate the transition of knowledge and ideas to the market.

The EU's R&D&I state aid rules are set out in two complementary texts: the new GBER (which also covers other types of state aid – see IP/14/587) sets out the conditions under which state aid may be granted without prior notification to the Commission. The new Framework, in turn, sets out the criteria under which the Commission will assess R&D&I aid measures which have to be notified by Member States because they have a higher potential for distorting competition. Both sets of rules will enter into force on 1 July 2014.

The new state aid rules for R&D&I set out in the GBER and the R&D&I Framework include the following key features:

1. Greater flexibility for implementing R&D&I measures

Under the GBER, the threshold amounts below which aid is exempted from notification, meaning that it does not have to be notified to the Commission for approval, have been significantly increased. This gives Member States more flexibility and speeds up the process for implementing R&D&I aid. For example, Member States can now grant aid for experimental development of up to €15 million per project and per beneficiary without prior Commission approval, as compared to €7.5 million under the previous rules. Moreover the scope of aid measures for R&D&I projects that can be exempted from notification under the GBER has also been widened. It now extends to pilot projects and prototypes, innovation clusters and aid for process and organisational innovation.

2. Higher aid levels permissible

In order to help industry overcome financing gaps, the R&D&I Framework will, for individually notified measures, allow aid up to 70% of eligible costs for large companies and 90% for small companies doing applied research, including the costs of prototyping and demonstration. The higher aid levels will be available if there is a genuine financing gap and the Commission will carry out a detailed analysis, based on the Framework's criteria, to confirm the necessity for granting such higher rates, so as to avoid undue distortions of competition in the Single Market.

3. Simplification and more legal certainty

In order to simplify the assessment of large aid amounts for projects that are clearly in the common European interest, R&D projects that are co-financed by the EU, e.g. under Horizon 2020 (seeMEMO/13/1085), will now be presumed to constitute necessary and appropriate state aid. Since public funding of non-economic activities does not constitute state aid, the new rules in the R&D&I Framework provide clearer criteria and guidance for distinguishing between economic and non-economic activities.

See MEMO/14/368 on the main changes introduced by the new rules.

The text of the GBER is available here:

http://ec.europa.eu/competition/state_aid/legislation/block.html#gber

The R&D&I Framework is available here:

http://ec.europa.eu/competition/state_aid/modernisation/index_en.html#rdi

Background

The current framework for R&D&I aid (see MEMO/06/441) entered into force in January 2007 and defines criteria for assessing the compatibility of state aid for R&D&I with the Single Market, under Articles 107(3)(b) and 107(3)(c) of the Treaty on the Functioning of the European Union (TFEU). The revision of the framework (see MEX/11/1221, IP/13/1300), together with the revision of the GBER rules on R&D&I aid (seeIP/12/627, MEX/13/0508, IP/13/736, IP/13/1281), is embedded in the Commission's State Aid Modernisation initiative (see IP/12/458). In this context, the revision of R&D&I rules seeks to support sustainable growth and contribute to the quality of public spending by discouraging aid that does not bring real added-value and distorts competition.

Since the previous set of R&D&I aid rules entered into force in 2007, the Commission has authorised more than 250 aid schemes and around 55 large individual aid measures, the latter alone being worth about €2.5 billion. Around 80% of the large aid projects involved key enabling technologies (KET), such as micro and nanoelectronics, advanced materials, industrial biotechnologies and advanced manufacturing systems. Member States have also increasingly used the possibility to implement R&D&I aid without prior approval by the Commission, under the General Block Exemption Regulation (GBER). In total, R&D&I state aid awarded under the previous rules amounts to an estimated €62.4 billion.

The new rules are part of the Commission's State Aid Modernisation initiative (see IP/12/458), which aims to foster aid measures that boost economic growth while focusing the Commission’s scrutiny on cases with the biggest impact on competition. As part of this package, the Commission has already reformed its state aid procedures (see IP/13/728) and adopted new guidelines on state aid for broadband (see IP/12/1424), regional development (see IP/13/569), cinema (see IP/13/1074), airports and airlines (see IP/14/172), risk finance (see IP/14/21), as well as energy and environment (see IP/14/400).