In cases of "market failures" state aid given by Member States might be necessary to support R&D&I projects of undertakings. The European Commission assures that none of these market interventions leads to an unacceptable distortion of competition within the European Union.
Research, Development and Innovation (R&D&I) generally thrive best in open and competitive markets. However, sometimes the market, if left to its own devices, does not lead to an economically efficient outcome. Market failures may hamper the delivery of optimal levels of research and innovation. Member States may address these market failures by supporting undertakings with state aid.
The European Commission assures that these market interventions do not provoke an unacceptable distortion of competition in the European Union.
The State Aid Action Plan, adopted in 2005 by the Commission, aims to create a simple, user-friendly and coherent set of rules. The goal is to reduce state aid gradually while refocusing it on activities that have the most sustainable impact on competitiveness, growth and jobs ("less but better targeted aid").
The European Commission reports on the development of state aid biannually in the Scoreboard. The level of R&D&I state aid remained rather stable between 2001 and 2005 in the EU and rose slightly in 2006 and 2007. EU-wide, state aid expenditure on R&D&I amounted to € 10.1 billion in 2008.
R&D&I State Aid Framework
The Commission reviewed the existing state aid rules in 2006 in order to better reflect Community policy priorities such as promoting cross-border research cooperation and Public-Private Partnerships for research.
The new Community Framework for State Aid for Research and Development and Innovation, adopted by the Commission on 22 November 2006, entered into force on 1 January 2007. It follows the logic of the State Aid Action Plan. It allows for new types of aid for innovation purposes whilst, on the other hand, it introduces a more refined economic approach to large sums of aid.
General Block Exemption Regulation
The new General Block Exemption Regulation, adopted by the Commission on 7 July 2008, entered into force in August 2008. This regulation allows Member States to implement state aid measures without having gone through the notification procedure. In addition to the previous version it also covers large companies and the new innovation measures.