The European Commission has called for a sweeping overhaul of EU rules on state aid to industry that would allow governments to grant some categories of aid without scrutiny from Brussels but would restrict other forms of assistance. Investment aid to large companies, such as that proposed by the Government to Intel's new plant at Leixlip, would only be allowed in the EU's poorest regions.
Competition commissioner Neelie Kroes said that the rules needed to be changed to make the European economy more competitive but promised to listen to national governments before making a formal proposal.
"The state aid reforms outlined in the Action Plan aim to ensure member-states have a clear, comprehensive and predictable framework, so that they can provide state aid which contributes to cohesion, competitiveness and high quality public services.
"But before I make concrete proposals for change, I want to see the results of the broad consultation - including businesses, member-states and the European Parliament - that we are launching on the basis of this Action Plan," she said.
The Action Plan calls for a simplification of state aid rules so that governments would have to notify the commission about fewer decisions to help companies. It would encourage the targeting of aid towards small and medium-sized enterprises and discourage grants to large companies, particularly to failing enterprises.
Ms Kroes told the European Parliament's economic and monetary affairs committee in Strasbourg yesterday that the Commission wanted to help member-states to get the best value for money for their taxpayers.
At present, governments have to notify the commission about almost all proposals to grant state aid, although a complex system of exemptions means that many grants are approved without difficulty. The Commission wants to simplify the system by creating block exemptions for certain categories of aid that promote economic competitiveness and innovation or help the EU's poorest regions to catch up economically.
Article 87 of the EC Treaty prohibits any aid granted by a member-state or through state resources in any form whatsoever which distorts or threatens to distort competition by favouring certain firms or the production of certain goods in so far as it affects trade between EU countries.
The treaty allows for exemptions, however, if the aid is judged to be beneficial and helps to achieve objectives of common interest without distorting competition within the single market.
Ms Kroes said that a reform of state aid rules should take account of the objectives outlined in the Lisbon Agenda for economic growth and competitiveness. "The aim is a coherent and holistic framework for national support to research, innovation, entrepreneurship, human capital, high quality services of general economic interest, environmental protection, and of course, regional cohesion.
"Regional aid is recognised as the instrument to redress imbalances in regional development and contribute to cohesion - irrespective of the correction of market failures. This is also why we propose that investment aid to large companies remains possible in assisted regions."
