EC Extends State Aid for Shipbuilding

Monday, July 07, 2008

The European Commission has prolonged the Framework on state aid rules for shipbuilding for three more years, until 31 December 2011. This extension follows an earlier extension in 2006 (see IP/06/1452). The Commission has concluded that the Framework, which came into effect on 1 January 2004 (see IP/03/1607) has been applied without any problems and does not need to be revised at this stage. The Framework's main principle is that horizontal state aid rules apply to shipbuilding except where specific provisions apply that reflect the specific characteristics of the shipbuilding industry and market. The specific provisions contained in the Framework concern regional aid, closure aid, export credits, development aid, employment aid and aid for research, development and innovation. The Framework's rules on innovation aid are specific to the shipbuilding industry and have had as yet limited application. The Commission wishes to continue applying these rules and assess their impact on fostering innovation in the sector.

EU Competition Commissioner Neelie Kroes said: "EU shipyards need to innovate, and the innovation aid rules in the Framework on state aid for shipbuilding were designed to foster such innovation. I am pleased to see that so far these rules are increasingly applied, although we need further experience with their application before drawing conclusions on whether specific sectoral rules are still necessary".

The current Shipbuilding Framework, adopted in 2003, was initially due to expire on 31 December 2006. On 24 October 2006, the Commission decided to prolong this Framework by two years, until 31 December 2008 (see IP/06/1452) in order to acquire more experience with its rules. The experience gathered since then shows that there have not been many cases of application of the Framework. Two of its provisions - aid to facilitate the closure of inefficient capacity and aid to create jobs - have not been applied. Other provisions, such as aid to invest in shipyards located in assisted regions ("regional aid"), or export credits and development aid, do not seem to have raised particular problems. Also, as regards regional aid, the Commission has clarified how it interprets the relevant provisions in a number of recent decisions (Volkswerft Stralsund – see IP/06/1696, Rolandwerft – see IP/06/1850, Komarno – see IP/07/390 and Peene Werft – see IP/07/896) .

The Framework's provision on innovation aid aims to foster technological risk taking by EU shipyards, in the context of an increasingly competitive market. So far, the Commission has approved five innovation aid schemes but has only received feedback on three of these schemes. It therefore wishes to continue to apply these rules in order to gain more experience on their application.

A public consultation conducted by the Commission confirmed general support for the prolongation of the Framework.

The text of the shipbuilding aid Framework is available on the Europa website:
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:52003XC1230(01):EN:NOT

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