The European Commission said today it has approved changes to state aid rules, lowering the sums governments can give to large projects and integrating the automobile sector into the overall framework.
EU Competition Commissioner Mario Monti said the new rules would also be simpler, more accountable and promote greater transparency to the benefit of healthy competition and taxpayers alike .
The main purpose of the new framework is to limit the subsidy race between European regions for attracting major projects. Such 'subsidy auctions' are against the common European interest, Mr Monti said in a statement.
The new system will come into force at the beginning of 2004, and a year earlier for the automobile and synthetic fibres sectors, which currently have their own state aid rules, although they will be subject to a 12-month transition period.
From 2004, there will be no change to aid ceilings on projects costing up to 50 million euros but above that state contributions would be capped rather like a progressive tax rate system, the Commission said.