Commissioner Neelie Kroes at the EP ECON Committee: State aid in support of innovation can be acceptable (plus very brief remarks on Endesa, football and the Italian banking sector)

October 7, 2005

Brussels, 06 Oct 2005

Competition Commissioner Neelie Kroes told MEPs on Thursday that state aid to support measures for innovation can be approved by the Commission. Speaking to the Economic and Monetary Affairs Committee, she warned however that state aid alone would not solve Europe's competitiveness and innovation problems. "We need effective competition to create natural incentives for new products from large, small and start-up companies alike," she said.

Updating the committee on progress in her review of state aid rules, she said the consultation process had revealed broad support for her approach of less, but better targeted, state aid, decided on the basis of economic efficiency, though all parties were anxious for more clarity on how this would work in practice.

"Where markets fail to deliver, there needs to be action. State aid policy is one contribution - but only when the benefits clearly outweigh competition concerns. There are four criteria: there must be a well defined market failure; state aid should be the appropriate policy instrument, as opposed to structural policy or regulatory action; the aid must have an incentive effect and be proportionate; distortions of competition must be limited. But for the first time, the Commission is indicating its acceptance of support measures for innovation," she said.

She added that the regional aid review was also progressing, with the focus being placed on the most deprived regions, but with room for manoeuvre for Member States to define some of their other regions as needing special treatment.

Endesa, football and the Italian banking sector

Responding to questions from MEPs on the Commission's attitude to the proposed merger of Spanish utility companies Endesa and GasNatural, she said the Commission was currently studying the case presented by Endesa and was waiting for the submission from GasNatural. All she would add for the moment was that Endesa's argument that the takeover had a European dimension based on a third of its revenue being outside Spain appeared to be a serious one.

Asked about the sale of television rights for football - an issue of particular interest in the United Kingdom - she stressed that her approach was based on close cooperation with the UK competition authorities. "We want consumers to benefit from a competitive market. A better deal for football fans should also bring in more money for the sports bodies... so far fans have been deprived of choice."

On the current controversy over banking takeovers in Italy, she said: "Inappropriate or illegal barriers in the EU can damage the banking system: we cannot tolerate them, we should identify them and seek to reduce them. As to the situation in Italy, but also elsewhere in Europe, an efficient banking sector is an important precondition for better economic performance."

Ms Kroes also repeated her support on a personal basis for fellow woman politician Angela Merkel, drawing criticism from some MEPs including the committee's chair, Pervenche Berès (PES, FR), who suggested such statements were inappropriate given the impartiality required of the Competition Commissioner. Ms Kroes insisted that in making these comments "I am not pushing a political line."

2005/10/06 08:30:00
Pervenche Berès (FR) - PES - In the chair
Committee on Economic and Monetary Affairs

European Parliament
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