EC approves state aid for French and Spanish shipbuilders

The European Commission (EC) has approved, under the EC Treaty?s rules on state aid, French and Spanish schemes to provide innovation aid to shipbuilding worth respectively ?25 million per annum for six years and ?20 million per annum for two years. As with an earlier scheme for Germany, the Commission concluded that the aid was not likely to cause undue distortion of competition within the Single Market and was therefore compatible with EC Treaty state aid rules and in particular with the Commission?s framework on state aid to shipbuilding.

The framework introduced revised rules on aid in support of innovation in the shipbuilding sector, in line with the goals of the Lisbon agenda, and more specifically the goals of the LeaderSHIP 2015 programme to improve the sector?s competitiveness.

Competition Commissioner Neelie Kroes commented: “Innovation is key to improving Europe?s competitiveness, and this aid can therefore contribute to a more competitive shipbuilding industry, as well as benefiting many remote regions, given the location of many shipyards.”

Under the two schemes on innovation aid to shipbuilding, shipbuilders will be able to benefit from state aid in support of the industrial application of products and processes the implementation of which carries a risk of technological or industrial failure, and which are technologically new or represent a substantial improvement over the state of the art in the EU?s shipbuilding industry. The aid can be up to 20% of the expenditure related to the innovative part of the project.

The French Government has budgeted ?25 million annually for its scheme, which may run for up to six years. In line with the Commission?s decision on restructuring aid to Alstom, its subsidiary Marine d?Alstom will only be able to benefit from this scheme as from 7 July 2006.

The Spanish scheme also allows for aid to shipbuilding companies for regional investments, and for research and development (R&D). The regional investment aid is available for companies situated in regions eligible for such aid and is in line with the shipbuilding framework and the Community Guidelines on national regional aid. The aid for R&D meets the conditions of the Community framework for state aid for such aid. The budget in Spain for all types of aid together amounts to approximately ?20 million per year for the next two years. No such aid will be granted to Izar before the implementation of the previous Commission decision related to this company as well as to the civil activities of the new company Navantia.