Minnows gain in R&D aid overhaul

Competition Commissioner Neelie Kroes will next week unveil rules on state aid tailored for research and development (R&D).

While small- and medium-sized companies (SMEs) stand to reap significant gains, larger companies are already protesting that they will be burdened with red tape.

Plans for a framework for R&D and innovation were promised in the 2005 state aid action plan. Following a Commission-led consultation, which was completed last month, Kroes will next week (22 November) present rules aimed at boosting European competitiveness.

New rules, aimed primarily at SMEs, will allow governments to award up to €1 million for innovative start-ups and up to €200,000 a year for costs associated with R&D activities.

Aid will also be permitted for the management of research clusters involving a number of companies and for hiring qualified staff.

Aid for research activities, which include prototype projects, will apply to both small and large companies.

The latter, however, will have to provide detailed economic evidence of a ‘market failure’, or a gap in the market for R&D, to qualify for help exceeding €5m. "For SMEs it is presupposed there is a market failure. It should be presupposed also for larger companies," says Erik Berggren, a competition law specialist at UNICE, the European employers’ organisation, which represents larger businesses. "They should not be forced to provide all this economic data to prove there is a market failure," he added.

SMEs are more positive. "For the first time, the R&D framework includes innovation, which is very important to SMEs," said Gerhard Huemer, director for economic affairs at UEAPME, the European organisation for small companies. "Until now funding was only allowed for basic research."

Competition Commissioner Neelie Kroes will next week unveil rules on state aid tailored for research and development (R&D).