New Union framework for R&D aid adopted

On May 21, 2014, the EU Commission has now finally adopted the Union Framework for State Aid for Research, Development and Innovation. The goal is to increase R&D spending to three percent of gross domestic product in order to boost economic growth.

The first level of review is then the General Block Exemption Regulation (GBER), which sets out the conditions for granting aid without notification. The new EU framework basically starts at the second level and sets out the criteria on the basis of which the EU Commission examines R&D measures that neither fall outside the scope of EU state aid control at the factual level nor can be granted without notification under the GBER.

At the same time, the Union Framework specifies which R&D measures already do not qualify as economic activities within the meaning of EU state aid law. In this context, it is important to first clarify the term “independent collaborative research”: Here, the Union Framework now explicitly clarifies that this only includes R&D projects that are initiated by a research institution or research infrastructure – also jointly with other research institutions and research infrastructures – and are not carried out on behalf of a company.

Technology transfer as a special feature

Whereas under the old EU Framework this was already considered a non-economic activity if it was “an activity of a purely internal nature and all income from it was reinvested in the main activities of the research institutions”, now the income from technology/knowledge transfer must be fully reinvested in the main activities of the research institution or research infrastructure that carried out the technology/knowledge transfer.

In contrast, the new Union framework provides for a significant relief for those research institutions or research infrastructures that carry out both economic and non-economic activities, but whose non-economic areas of activity clearly outweigh the economic ones on a permanent basis. A state measure is unobjectionable under state aid law if, on the one hand, the economic activity is merely a subordinate activity, is necessarily connected with or required for the non-economic activity, and, on the other hand, is limited in scope to a maximum of 20% of the total annual budget.

EU Commission exempts further aid from notification requirement

With the new GBER, member states can henceforth grant more aid measures and higher aid amounts without having to have them approved by the EU Commission. For some groups of aid, the scope has been extended through more flexible eligibility conditions, more favorable maximum aid intensities and higher aid amounts.

Aid for local infrastructure, for broadband, research and energy infrastructure, innovation clusters, regional urban development funds, for culture and heritage conservation, for audiovisual works, sports and recreational infrastructure, as well as aid to address the consequences of certain natural disasters are exempt from notification.

In addition, investment aid in favor of research infrastructure will in future be exempt under the terms of the GBER. From now on, there are simplified options for start-up companies. Universities and research institutions should note that aid that is not covered by the exemption option under the GBER is not necessarily considered illegal. Rather, these subsidies would only have to be notified to the EU Commission.

New transparency requirements for granting subsidies

According to a communication from the EU Commission on the introduction of new transparency rules for the granting of state aid, in future the bodies granting aid in the EU member states will have to publish the name of the recipient, the amount and purpose of the aid and its legal basis for disbursements of more than EUR 500,000. In addition, the individual member states must set up a special website showing, with regard to all grants of aid exceeding 500,000 euros, which companies have received state aid, how much this aid was and for what purpose it was granted.

Furthermore, it must be stated whether the recipient company is a so-called SME or a large company, where the recipient is based and which industry it belongs to. The required information must be published on national or regional websites within six months of the granting of the aid. The large-volume aid website is to be set up by each Member State within two years of the publication of the Transparency Notice.