- New Rules on R&D and amendments to the General Block Exemption Regulation
The new rules facilitate the granting of aid measures by Member States in support of R&D and innovation (R&D&I) activities. The new R&D&I state aid Framework (R&D&I 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). Innovation These changes are part of the Commission’s wider State aid modernisation initiative and to benefit projects that are otherwise unable to secure funding because their higher-risk profile.
The main changes made to the State aid rules are:
- New categories of permissible aid: The GBER has been extended to cover aid for a range of projects including: (i) broadband infrastructure; (ii) innovation clusters; (iii) environmental projects; (iv) training schemes; and (v) local aid. Existing permissible categories have also been extended, for example, including a wider scope for risk finance aid and simplified provisions on start-up aid; and
- A widened “safe harbour” for funding: The aid thresholds for funding of a range of measures have been increased – this means that Member States can now grant increased aid without the burden or risk of requiring prior Commission approval. The annual limit of €1.5 million for risk finance has been replaced by a total limit of €15 million per business;
- R&D and innovation: Under the GBER, notification thresholds for categories of R&D have doubled (e.g. to €15 million for certain types of experimental development). Projects falling outside the GBER, which are otherwise subject to formal State aid approval by the Commission, will now be assessed in accordance with the provisions of the R&D&I Framework. The R&D&I Framework clarifies the type of factors that must exist to demonstrate the incentive effect and proportionality of the aid and the market failure that justifies the granting of public funding to such projects. 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.
- 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, 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.
- Firms in difficulty
In the context of its State Aid Modernisation initiative, the Commission has revised its rules for assessing Member States' support measures to rescue and restructure companies in difficulty. The new guidelines aim to ensure that public funding is channelled where it is needed most and that investors in failing firms carry a fair share of the costs of restructuring rather than taxpayers. The rules adopted apply only to non-financial firms in difficulty; a separate set of rules is in place for banks and other financial institutions. The Commission considers that the new State aid rules on aid for firms in difficulty ensure that public funding is granted only where it genuinely saves jobs and know-how on a lasting basis, and after the company owners have contributed their fair share of the costs.
The main changes in the guidelines adopted on 9 July 2014 are:
- New rules allowing temporary restructuring support for SMEs, designed to simplify the granting of state funding for restructuring while reducing distortions of competition by favouring measures that are less distortive, such as loans and guarantees, over structural aid such as direct grants or capital injections. Such support can now be granted for at most 18 months on the basis of a simplified restructuring plan.
- Betterfilters to ensure that state aid is used where it is really needed. Member States must demonstrate that the aid is needed to prevent hardship, for example in areas of high unemployment, and that the granting of restructuring aid will make a difference in that respect, for example by reducing the scale of job losses.
- New rules ensuring that investors pay a fair share of the costs of the firm's restructuring (i.e. "burden sharing").
The new rules will apply from 1 August 2014.