STATE AID: PARLIAMENT BACKS BETTER TARGETING.

The own-initiative report is Parliament's response to the action plan tabled by the Commission in June 2005*, on which consultation has just ended (see Europe Information 3029). It emphasises that state aid should be an instrument of "last resort". To this end, it calls for the new concept to be clearly defined, notably the notion of "failing markets". The report also recommends that the member states should require companies to publish details of the subsidies they receive to enable shareholder to better evaluate the real performance of the company, notably in cases where state aid might be reduced.

The report contains a number of more sectoral recommendations. It emphasises that state aid for R&D can enable member states to target shortcomings in the market and give industry an incentive to invest more in research. Regarding state support for services of general economic interest, Parliament says that this only counts as state aid when there is over-compensation. The report also backs a more rational approach to regional state aid, focusing on infrastructure investment and horizontal aid. While noting that...

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