Business blasts Monti over R&D spending

Date: 04/04/02

By Peter Chapman

COMPETITION chief Mario Monti is under attack from European businesses for scuppering the EU's new bid to outspend the US on research and development by the year 2010.

Just a few weeks ago in Barcelona, EU leaders signed-off a pledge to ensure 3 of gross domestic product is spent on wealth-creating R&D by the end of the decade - with businesses expected to foot two-thirds of the bill.

But European Voice has learned that the Italian trust-buster has already ruled out any possibility of slackening tough EU state aid rules to encourage more R&D spending.

Instead, Monti's spokesman Michael Tscherny confirmed he will announce plans later this month to renew until 2005 current 'guidelines' setting out policy in the sector.

Erik Berggren, competition expert for EU bosses' union UNICE, said the move was 'weak' and will saddle member states and firms with an onerous system that hinders their efforts to spur R&D - leaving US rivals, who get far easier access to state cash, to race ahead.

He said existing rules on state aid for R&D are 'complex and unclear' and the Commission's definition of permissible R&D aid is 'too narrow'. He added that it results in legal uncertainty for companies and blocks the effectiveness of member states' measures to encourage research and development.

He claimed it also thwarts many international R&D efforts and hampers attempts to fund the creation and long-term maintenance of independent laboratories.

'To simply extend inadequate existing rules would therefore be very disappointing and prolong a situation where investment in R&D is hindered to the detriment of economic development in the EU,' Berggren said.

'It is also surprising considering wide-held views that R&D investment should be brought 'to the top of the agenda', bearing in mind that the EU will not be able to meet its target if the US outspends Europe by €76 billion a year on R&D.'

Berggren says Commissioner Philippe Busquin should have stood up to Monti and demanded a better deal.

But a senior aide to the Belgian commissioner - who holds one of the EU executive's lowest profile posts - said he had done his best with a weak hand.

The aide claimed the current regime still allowed plenty of scope for countries to support invention.

Demanding too much, the aide said, could have antagonised Monti and member states - and led to an even tougher regime. The official added that Monti would also unveil plans to boost state aid to small companies by creating a new block exemption that would do away with the requirement for countries to notify Brussels of low levels of aid targeting SMEs.

But businesses say the impact of this move will be minimal, since aid to big companies is likely to be most vital in the bid to claw back the advantage from the US.

According to the European Voice, Mario Monti, is set to refuse relaxing state aid rules on R&D spending in April 2002, making it difficult for the EU to achieve its new goal of outspending the US on research by 2010.