State aid is prohibited under EU law unless it has been explicitly authorised by the Commission, for example, to develop certain economic activities without distorting competition.
Five block exemptions from the notification obligation already exist for aid to SMEs, R&D aid in favour of SMEs, aid for employment, training aid and regional aid.
The Commission's new draft general 'block exemption' regulation', proposes to exempt from the notification obligation three new types of state aid: environmental aid, aid in the form of risk capital and research and development aid in favour of large enterprises.
The new rules would, for example, allow subsidies of up to 50% of companies' project costs for industrial research (60-70% for SMEs), and up to 25% for experimental development (35-45% for SMEs). Subsidies exceeding these ceilings would still need to be notified to the Commission.
The new draft regulation, presented for consultation on 24 April 2007, aims to simplify and consolidate the existing five exemptions and the proposed three new ones into one. It is part of the state aid rules reform launched in June 2005 and the aim of which is to encourage member states to contribute to the Lisbon Strategy by focusing aid on improving the competitiveness of EU industry and creating sustainable jobs.
The Commission consultation on the draft regulation is open until 3 June 2007, after which it will be again discussed with member states in early 2008, with a view to the Commission adopting the final regulation before summer 2008.
The European Association of Craft, Small and Medium-sized Enterprises (UEAPME) welcomed the proposal for a new regulatory framework as "a huge improvement over the previous set-up", as it streamlines and rationalises a complicated body of legislation, making it more user-friendly. However, UEAPME regrets that state-aid measures as regards innovation are not included in the text.