EC to relax rules on 'aid' to small businesses

21st September 2006, Comments 0 comments

BRUSSELS, Sept 20, 2006 (AFP) - The European Commission, reacting to pressure from Britain, France and Germany, proposed on Wednesday increasing the financial support member states may give to companies beyond formal state aid.

BRUSSELS, Sept 20, 2006 (AFP) - The European Commission, reacting to pressure from Britain, France and Germany, proposed on Wednesday increasing the financial support member states may give to companies beyond formal state aid.

The figure for such "de minimis" aid, offered generally to small and medium-sized enterprises (SMEs), currently stands at EUR 100,000 euros over three years for any given company.

That figure is deemed to have "no substantial effect on competition and trade between Member States, and therefore not to constitute state aid".

Now the EU's executive arm wants that figure doubled to EUR 200,000 to take into account "economic developments since the de minimis ceiling was last increased, as well as likely developments between now and the expiry date of the new Regulation".

The exemption is limited to measures for which the inherent state aid amount can be calculated precisely in advance.

Guarantees will be covered, under the revised proposal, to the extent that the amount of the underlying loan does not exceed EUR 1.7 million.

European Competition Commissioner Neelie Kroes said: "We have listened carefully to the member states and stakeholders views on our earlier draft and we now propose creating a safe harbour tailor-made for guarantee schemes for small and medium sized enterprises.

"This should allow member states to boost the competitiveness of such companies without adversely affecting competition."

Member states have until October 20 to submit their opinions.

Needing no such time to respond, the European SMEs employers organisation, welcomed the amended rules

"The new text will cover a vast majority of the existing schemes for SMEs, allowing them to benefit from substantial government loan guarantees without facing burdensome notification requirements," said the group's secretary general Hans-Werner Mueller.

Copyright AFP

Subject: French news

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