EU aid under scrutiny

May 13, 2005

Neelie Kroes, the European Union's Competition Commissioner, has signalled a possible tightening of state aid rules on commercially oriented research to encourage governments to spend more on basic scientific studies.

At a conference on innovation and research at Germany's federal Ministry of Economics and Labour in Berlin, Ms Kroes said the EU's state aid research and development guidelines were "in need of a serious update".

She indicated a review of state spending on university research to clarify when study grants should be spent on "universities and research centres (that) are increasingly behaving like normal market participants".

Currently, public funding of non-profit making higher education or research establishments is allowed where research results are published freely. This rule on publication applies to funding co-operative ventures with industry, with private partners also having to cover their own costs.

Ms Kroes said: "We need to look at the relationship between public and private entities conducting research," but she did not indicate whether spending rules should be tightened or loosened.

Her intentions over government funding of purely private research were clearer, however. "It appears increasingly advantageous to allow member states to distinguish between activities that are closer to the market and activities that are pure research... So it makes sense... to focus more on activities that relate to pure research or 'pre-competitive' innovative activities."

"Industrial research" (developing or improving new or existing products, processes or services) can attract up to 75 per cent public funding, and "pre-competitive development activity" (the shaping of the results of industrial research into a plan, arrangement or design for products, processes or services) up to 50 per cent.

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