More state aid to big firms, no special provisions for the SMEs

Joaquín Almunia, Vice-President of the EC in charge of Competition, gave a press conference on several decisions on State aids, adopted on the same day by the European Commission. He notably announced the launch of a public consultation on a proposal for revised and understandably more relaxed State aid rules. The big multinationals are to take advantage of that. That’s why Almunia speaks in front of some market board. (EC Audiovisual Services, 18/12/2013).

Joaquín Almunia, Vice-President of the EC in charge of Competition, gave a press conference on several decisions on State aids, adopted on the same day by the European Commission. He notably announced the launch of a public consultation on a proposal for revised and understandably more relaxed State aid rules. The big multinationals are to take advantage of that. That’s why Almunia speaks in front of some market board. (EC Audiovisual Services, 18/12/2013).

Rules for state aid covering research, development and innovation investments (R&D&I) are already relaxed in the European Union, in order to facilitate growth and job creation. Mind you that in this case the bending of competition rules is not confined to very small businesses, the SMEs and mid cups, but covers the entire constellation of the European business sector, including the multinationals. Now the EU Commission tries to further facilitate state aid on R&D&I. Let’s see if this new Commission initiative is as it looks like or it is drafted to help only the big guys.

Favouring the multinationals

In the case of multinationals, most of big groups tend to locate their research and development departments or their specialised affiliate companies on European soil, in order to profit from the high educational and technical standards of the labour force and the always increasing EU subsidies on R&D. This new European Commission initiative further facilitate the conditions under which member states can grant state aid for research, development and innovation activities (R&D&I). By the same token the Commission is very probably aiming at supporting the EU multinationals, a target which is not necessarily negative.

Of course the Commission would not accept that its new proposal is aimed to further help only the big groups. Nevertheless the most important item in this package is the doubling of the threshold above which a clearing is required. Whilst currently, aid for experimental development of up to €7.5 million can be granted without prior Commission approval, under the proposed new rules member states would have to seek Commission approval only if the aid exceeds €15 million per project and per beneficiary.

Last week Commission Vice President in charge of competition policy, Joaquín Almunia, said: “The new Framework we propose means more effective R&D&I aid, fewer distortions of competition and less red tape. It will help Member States reach the targets of the Europe 2020 Strategy for smart, sustainable and inclusive growth. Well-designed public support to R&D&I will enhance competitiveness and will help address the societal challenges the EU is facing.”

Undoubtedly, €15 million per project and per beneficiary is not at all a small amount. It surpasses by far the abilities of SMEs and even of mid cups. Let alone that loan demands for such projects are usually rejected by banks, if the inquiring part is an SME or mid cup firm in the south of Eurozone. It’s not the same for the multinationals, which have many options to finance themselves, while for the SMEs it’s only the banks.

No special provision for the SMEs

The relevant Press release issued by the Commission last week stressed that this new threshold of €15 million refers “to aid for experimental development”. But this category is so broad and becomes even broader with the fact that the above ceiling refers to the aid and not to the total cost of the project. This means the interested party can receive also aid from EU R&D support programmes. In short, the entire cost may exceed the double of the above mentioned threshold.

The Commission doesn’t hesitate even to state it clearly that the whole affair is to support the large company groups. It states, “The proposed framework on state aid for R&D&I is not a stand-alone act but is complementary to the General Block Exemption Regulation (GBER) which sets the conditions for certain aid measures – including R&D&I-aid – to be exempted from prior notification to the Commission. The Framework, in turn, sets the standard for large R&D&I aid that goes beyond the GBER’s limits and requires individual scrutiny by the European Commission before being granted. The GBER is also currently under revision and a new draft has been submitted to public consultation on 18 December 2013. Both the GBER and the framework will offer Member States more possibilities to channel state aid towards boosting innovation, growth and jobs…”.

The Commission insists that this is to help growth and job creation in general, but still no particular support is provided for the R&D&I of SMEs. It should be reminded that 85% of the new jobs in the EU are created by very small firms and SMEs. It’s not only that though. The doubling of the ceiling of aid, above which an announcement to the Commission is required, helps only the wealthy countries, which can afford such expensive aid schemes.

This doesn’t mean that the proposal in question will necessarily trigger negative developments overall. The problem is that no special attention is paid to the needs of the SMEs and mid cups in crisis countries like Greece, Italy, Spain, Portugal and why not Ireland. Given that the available financial options of practically all SMEs are restricted to lenders, and that the banks in the south of Europe are not according any new loans, the Commission initiative is obviously introducing new inequalities and increases the fragmentation within the EU economy.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Featured Stings

Marco Polo’s Dream

The third bailout agreement for Greece is a done deal amid European economies full of problems

The untold story of who caused and who pays for the economic crisis

Digital business is Europe’s best hope to get back to growth

To my Chinese friend

Glaringly false reassurances about the repercussions of the EU-US free trade agreement

The DNA of the future retail CEO

EU rewards organisations that make eco-innovation pay

EU’s core members are eyeing larger parts of arms trade and of world map

European Youth Forum welcomes the European Commission’s proposed revision of the Union Code on Visas, however it does not go far enough

Eurozone: Inflation plunge to 0.4% in July may trigger cataclysmic developments

Youth not prioritised in new Commission

MWC 2016 LIVE: BlackBerry acquires Encription, talks Microsoft and health

Eurogroup asked to reduce public debts of its member states

Germany’s fiscal and financial self-destructive policies

Youth unemployment: think out of the box

Greek citizens to pay the price again but Tsipras risks losing next elections

Eurozone’s north-south growth gap to become structural

Rehn ready to sacrifice part of the real economy

Desires for national independence in Europe bound by economic realities

Starbucks and FIAT again under Commission’s microscope: is Europe ready to kick multinationals out of the house?

No way out for Eurozone’s stagnating economy

Alexis Tsipras against internal and external “enemies” in pursue of a two-phase deal now

Commission criticised member states on blocking financial transaction tax

European car industry: The Germans want it all

French Prime Minister passes Stability Program and takes his ‘café’ in Brussels this June

My unlimited China

EU Youth Conference concludes in Luxembourg with concrete plans on how to create real youth participation

Why the ECB had to clarify it caters for the entire Eurozone not just Germany?

EU prepares a banking union amidst financial ruins

Europe enters uncharted waters with Kiev-Moscow standoff

Why the financial scandals multiply?

A Sting Exclusive: China’s Foreign Minister Wang Yi on South China Sea issue at the ASEAN Regional Forum

The next EU President will first have to drink his tea at Downing Street

Why the merchant ships can pollute the atmosphere with CO2 quite freely

Another doomed EU attempt to interfere in Libya?

The US banks drive the developing world to a catastrophe

China invites the EU to a joint endeavor for free trade and order in the world

Can the national and age groups pockets of unemployment cause irreparable damages to Eurozone?

COP21 Breaking News_03 December: Europe’s children urge leaders to commit to climate action at UN Climate Summit in Paris

On Youth Participation: Are we active citizens?

Hundreds of thousands migrants ready to cross the Mediterranean. Only a local matter?

“They are trying to make improvements, but of course they are quite slow for my generation”, Vice President of JADE Victor Soto on another Sting Exclusive

A Sting Exclusive: “Without climate, forget about peace!”, Swedish MEP Bodil Valero cautions from Brussels

An EU Summit without purpose

No end to Deutsche Bank’s problems: new litigations in the US and frailty in EU stress test

EU Parliament: No EU-US trade agreement without safe data

World Retail Congress Dubai 2016: Retail’s night of nights

Can the banking union help Eurozone counter its imminent threats?

2014 budget: The EU may prove unable to agree on own resources

More Stings?

Comments

  1. Like to know more about your funding and donors services

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s