TACTICS PROPOSALS ON ADJUSTMENTS OF STATE AID RULES FOR RESEARCH, DEVELOPMENT AND INNOVATION NOTABLY REGARDING CLUSTERS SUMMARY REPORT

Transcription

1 TACTICS PROPOSALS ON ADJUSTMENTS OF STATE AID RULES FOR RESEARCH, DEVELOPMENT AND INNOVATION NOTABLY REGARDING CLUSTERS SUMMARY REPORT Introduction The TACTICS 1 consortium (Oseo/France; VINNOVA/Sweden; TMG/Upper Austria; Veneto Innovazione/Italy; PAED/Poland; MMU (replacing NWDA)/UK and IWT/Flanders) aims at supporting and further expanding the European Cluster Alliance, and contributing to the development of better cluster policies and practical cluster support tools across Europe. The work of this group of seven regional and national public innovation agencies has been focused around six thematic task forces. Additionally 14 European cluster experts the so called Reflection Group 2 have actively participated in the Task Forces and provided inputs and support in developing new policy initiatives via the six task forces. ECA-members have also been regularly consulted and asked to provide their views and experiences. During the project life-time the TACTICS consortium has provided several opportunities for the ECA community to contribute to this policy development process. Once again it was possible since one of the major issues raised by the TACTICS Task Force #2 Channelling RDI funding through excellent clusters concerns the review of the Community Framework for State Aid for Research, Development and Innovation 3. It is generally accepted that clusters provide fertile environments for companies to thrive which in turn drives innovation, regional development and competitiveness. For these reasons, a large number of countries and regions have embraced the concept of clusters and have developed clusters through a variety of initiatives, programmes or cluster-specific innovation policy support frameworks. As a result, 1 TACTICS InnoNet under the Pro INNO Europe Initiative Refer to ANNEX I

2 there are a plethora of Cluster Initiatives, often facilitated by specific organisations of various operational and financial structures and a range of permanently developing activities and services. Due to this dynamic situation and ongoing policy development there is a strong risk that state aid rules from yesterday might be out of step with current developments and policy priorities and might indeed represent serious barriers, legal or others, for supporting or channelling RDI through clusters. There is therefore an urgent need for state aid rules to be updated to reflect current policy priorities, notably regarding clusters. A number of interesting contributions to this debate have already been published, for example TAFTIE The European Network of Innovation Agencies has put forward proposals for the renewal of a number of State Aid Rule guidelines 4. Given this context the ECA secretariat and the TACTICS consortium invited the ECA members and particularly cluster policy makers to actively participate in this review by sharing their experiences both positive and negative on how clusters deal with the issues and potential barriers relating to state aid rules, especially on how to distribute and receive public funding and proposing ideas to develop and improve the current Community Framework for State Aid for R&D&I. The following suggestions are based on 2 workshops with participants of DG Competition, DG Enterprise and Industry and DG Region Experiences, statements and proposals we received from the respondents and will hopefully expand the range of innovative activities, notably via clusters, eligible for financial support from the public sector. We would like to highlight especially that the following represents the views, proposals, concerns, problems, practical examples of national and regional agencies and/or public authorities responsible for developing cluster policies and managing cluster programmes in their countries as well as Cluster Organisations which are faced state aid rules constraints and uncertainties. These are not the views of theoretical juridical experts. Therefore these complaints and suggestions will require possibly further legal review. 4 TAFTIE 2

3 The role of a Cluster Initiative or a Cluster Organisation The role of a Cluster Initiative or a Cluster Organisation is to link and connect different actors as researchers, companies and public authorities together so that new products and services will be generated more effectively. The purpose with cluster development is always economic growth and competitiveness especially for the benefit of SMEs. Through clusters, not only individual firms can be supported by Cluster Organisations, but group of firms, sometimes across sectors. Another perspective is that through cluster support, the fragmentation of R&D and innovation funds is reduced, priorities can be better set, and smart specialization strategies could be more effectively implemented as well as emerging industries could be more easily identified and supported. Please see also the attached extract of the Glossary from the Cluster Internationalisation Handbook. With this as a background and in regard to the fast globalisation we do believe that it is very important to have a clear picture of how and in which way we can support clusters and SMEs with public funding (if required) in order to provide economic growth in Europe. 1. Market distortion? NO! Representative ECA-Member feedbacks: Clusters promote a number of services of general interest, in accordance with the Lisbon/EU2020 strategies. They promote economic development in the long run, with sometimes few economic returns in the first years. Clusters should therefore be recognized as a mechanism for delivering missions of general interest. State aid regulations should encourage the promotion of operation and development of Cluster Initiatives. Most of the services and related activities covered by the competitiveness Poles are of common public interest and do not distort competition. It is the guiding principle of the cluster policy in our region that innovations are considered as a key for sustainable economic, ecological and societal development. The focus of the cluster activities rather is the thematic community as a whole. Accordingly the goods provided by the cluster management tend to be public goods. They are provided in close cooperation with the relevant 3

4 public actors and are mainly in the public interest. They cannot be considered as a market distortion. Instead of applying the state aid rules for R&D&I Cluster Initiatives make use of the de minimis regulation. As a consequence of the de minimis rule, companies - carrying out R&D&I activities in the framework of a cluster initiative - get the aid straight in their own pockets, but funding is likely be insufficient to develop significant activities. A further issue is the role of Cluster Organisations in developing and implementing Smart Specialisation Strategies (S3). This has to avoid undue constraint by State Aid rules especially when different regions in different member states coordinated their S3 programmes to reduce duplication and add value to each other. The Ministry of Economy Trade and Business considers that the thinking regarding state aid rules for innovation should be adjusted. The cluster/competitiveness poles support is of public interest for the regional and national development. Cluster activities help to implement government programmes and it is an important tool for recovery (after the crisis). Clusters are drivers of innovation, regional development and competitiveness. Our National Reform Programme and the National Competitiveness Strategy 2020 stress the importance of developing clusters for the future of the economic development but the financing system for innovative clusters should be updated and known by all Member States and through exchange of best practices. Our national authorities strongly believe that there is a need to alter the existing general approach to cluster management support in regard to State aid and market distortion. From a broader point of view, public support to cluster management should be considered as an activity of public interest, acting as a link between different economic actors and contributing to the implementation of national and European competitiveness strategies. Cluster management organisations are generally non-profit organisations which are not performing an economic activity and thus do not disturb the competition rules of the Single market. As such, European cluster management organisations should not be liable to State aid rules. 4

5 WE are convinced, that The services and related activities covered by Cluster Organisations or Cluster Initiatives are of COMMON PUBLIC INTEREST & DO NOT DISTORT COMPETITON. On this understanding state aid rules wouldn t be any longer a barrier for public financial support to develop significant activities. 2. Clarity & Definitions: Representative ECA-Member feedbacks: One of the major problems that we have encountered is the difficulty of getting a definitive interpretation of state aid rules. It is not practical to refer all questions to Brussels but the advice has often been inconclusive. Lack of clarity is one important reason that prevents promoting this aid scheme. Financing of Cluster Organisations/Cluster Agencies is difficult to accomplish with the current framework for state aid rules. One of the main difficulties is that that we as a region don t know exactly if Cluster Organisations are considered as private entities or not, and it is very difficult to understand what to make with state aid rules text, how to interpret. Definitions, keep it wide to allow interpretations Present rules define Innovation cluster in a general manner. This approach should be maintained also in the future as it is important to give room for different types of cluster and their activities. Flexibility on this point stimulates innovation and development among the European clusters and their SMEs. 5

6 There are different statements from respondents From request to keep definitions wide To the need to narrow the room for regional interpretations. To create more clarity and to make it easier to apply state aid rules for R&D&I The activities mentioned in the definition of innovation clusters (section 2.2) should include additional newly focused activities like cross-border and trans-national cooperation as well as cooperation between SMEs and research organisations. Existing definitions for cluster initiatives and cluster organisations should be included as examples to have it confirmed that they belong also to this definition. a) Innovation Clusters? (section 2.2) Definition of innovation clusters should not apply to structures but to the functions that they assume regardless the legal structure. Innovation cluster as outlined in the state aid rules is difficult to apply. Adjust legal definitions of state aid rules and commonly used definitions in the various EC communications and reports established in the frame of EU-projects. (Please see the attached extract of the Glossary from the Cluster Internationalisation Handbook.) It is important to show and explain the role of a Cluster Initiative or Cluster Organisation. 6

7 WE suggest, that The legal definition of Innovation Cluster should be kept wide, but should Reflect the role of a Cluster Initiative/Organisation Show examples of commonly used definitions which can be found in the literature and fit into the definition of Innovation Cluster. E.g.: Cluster initiatives are increasingly managed by specialised institutions, known as cluster organisations, which take various forms, ranging from non-profit associations, through public agencies to companies. (EC Comm.: Towards world-class cluster in the EU, this definition is used as well in the Tactics Cluster Internationalisation Handbook) E.g.: Cluster Initiatives are organised efforts to increase growth and competitiveness of clusters within a region involving cluster firms, government and/or the research community. (TCI green book) b) Cluster Organisation / Research Organisation / Innovation Intermediary? (sections 2.2, 3.1, 5.8) Representative ECA-Member feedbacks: There is confusion whether some activities are of an economic nature or not for this concern it is of utmost importance to clarify whether innovation intermediaries are also addressed in section (public funding of non-economic activities) or not, and why Cluster Organisations (innovation clusters) carrying out mainly non-economic activities are not considered in section In the current section 3.1., innovation intermediaries are mentioned as a heading; they are not mentioned in (public funding of non-economic activities) and (public funding of economic activities) refers to not-for-profit innovation intermediaries. We do not consider the not for profit nature of innovation intermediaries as being a relevant approach. Consideration of the economic character of an activity should not be related to any kind of legal form; i.e. a 7

8 company may run an activity as an innovation intermediate (especially in the context of Innovation Clusters), whereas a not for profit organisation may have economic activities as described in section A definition of innovation intermediaries, which should focus on different kinds of activities, rather than a type of structure, is required in section 2.2. Note: Cluster Organisations have different names in different countries, e.g. compétitivité pôles, centres of expertise, innovation networks and competence networks etc. The State Aid rules need to be simplified and clarified so that they use one term to describe the range of networking organisations. The State Aid rules need to state which types of networking organisations, e.g. Cluster Organisations, are included. On national level we had a similar problem during the Business Support Simplification Process. After considerable debate it was decided to use one term, ie "Business Collaboration Networks", which covered Cluster Organisations, innovation networks etc. The definition innovation intermediaries should refer to those support structures that, by servicing either public/private entities, have a direct impact on the market with innovation related solutions/products/technologies. WE suggest that The legal entity operating the innovation cluster (Cluster Organisation) carrying out mainly non-economic activities of public interest and should be mentioned in section The term innovation intermediary needs to be defined properly in section 2.2. (Definitions). The term innovation intermediary should also be mentioned explicit in the text of section 3.1., and to reduce uncertainties. The last paragraph of the section 5.8 Aid for innovation cluster needs to include as well Cluster Organisations, innovation intermediaries and not only research organisations. 8

9 3. Activities (mentioned in section 2.2. and 5.8.) Representative ECA-Member feedbacks: Wider range of activities should be covered as eligible costs of the operating aid for cluster animation. These services covered by the Competitiveness Poles and Cluster Organisations are of common/public interests. They don t distort competition, don t exclude the activities of private partnerships and can be related to economic and technological animation. The list of activities carried out by a Cluster Organisation/Initiative or in the framework of a cluster should be enlarged. One of the main advantages of clustering is the excellent form of networking. Linking triple helix stakeholders together, plus providing access to sources of finance and addressing people/user issues. Our proposal is to allow non-geographical clusters (with the participation of a wide range of stakeholders) to be eligible for state aid. Cluster Organisations also act as a conduit for information: both disseminating information to businesses in the cluster and collecting information from businesses, which is potentially useful to policy makers. This will help the development of more effective and efficient public policies for businesses. Cluster Organisations can also act as an honest broker to bring businesses together for collaboration without reducing the competition between the businesses. Reflecting the global reality They are provided in close cooperation with the relevant public actors and are mainly in the public interest > cannot be considered as a market distortion. 9

10 WE suggest, That the range of activities should be enlarged from so called animation activities to activities supporting the sustainability, the quality (cluster excellence), internationalisation, user driven innovation and special activities which help to overcome newly raised challenges and to prevent market failures. Therefore it is necessary to raise the importance of distinction between economic and non economic activity independently from being a profit or non profit organisation. 4. Clarity & Definitions: Activities of non-economic nature Representative ECA-Member feedbacks: Confusion whether activities are of economic nature or not. The organisation of training programmes, workshops and conferences to support knowledge sharing and networking between the members of Clusters are within the scope of operating aids for Cluster animation (5.8.), whilst Article Public funding of non-economic activities indicates that the Commission nevertheless considers that the primary activities of research organisations are normally of a non-economic character, notably: Education for more and better skilled human resources; Independent R&D for more knowledge and better understanding, including collaborative R&D; Dissemination of research results. This leads to the impression that the same activity, whether provided by a research organisation (aiming at diffusing knowledge) or a Cluster Organisation (aiming at sharing knowledge), are of a different nature, whereas we suggest that both activities shall be considered as non-economic, whether for research organisations or Cluster Organisation. There has to be made a difference between intermediaries which have activities consisting of offering goods and/or services on a given market and those who answer to common interest and who are justified by reason of general economic development. The first ones have to fall within the scope of the State aid Framework for Research and Development and Innovation. 10

11 To define in the scope of public funding of non-economic activities a further paragraph, which could confirm that Cluster Organisations are run primarily non-economic activities and that these activities should be defined (e.g. knowledge diffusion including cross-border collaboration, etc ). Cluster management organisations are generally non-profit organisations which are not performing an economic activity and thus do not disturb the competition rules of the Single market. In some regions and member states there is a requirement for cluster organisations to become selffinancing. This should not exclude them from State Aid exemption for the non-economic activities of cluster development services they deliver to businesses, especially to SMEs. WE ask for Making a difference between intermediaries which have activities consisting of offering goods and/or services on a given market in competition with others (economic activity) and those who answer to common interest and who are justified by reason of general economic development (non-economic). The first ones have to fall within the scope of the State Aid Framework for Research and Development and Innovation. Considering that the legal entity that manages and operates the Innovation Cluster acts for the longer-term mission of public/common interest and its activities like general animation of the cluster initiative, support to the sharing of knowledge, facilitating networking of the members, promotion of SME development, offering training, foster internationalisation and inter-clustering are NOT of economic nature. We also suggest that providing better guidance within the new RDI framework on the types of activities performed by Innovation Clusters that may be considered as economic and those that may be non-economic. We believe that the diffusion and sharing of knowledge provided by either research organisations or Cluster organisations should be considered as being of a non-economic nature. 11

12 5. Market failure (section and others) Representative ECA-Member feedbacks: Cluster Organisations can counter steer market failures and help when it comes to jump over the valley of death. A purely private financing of cluster management-organisations as the Framework for State Aid for R&D&I suggests for the mid-term - can only be achieved if the Cluster managementorganisations offer exclusively market-oriented services. This means that only those services can be offered, of which their financial benefits can be estimated by the cluster actors. But in fact, just the benefits of services related to networking are difficult to estimate. So the willingness to pay for it is correspondingly low. It is thus still a classic case of market failure, which can very well be solved by - partly public - funding of these services. A key issue for State Aid is the concept of "market failure". If market failure can be demonstrated then funding to address the market failure should not be considered to be State Aid. Creating bridges between large undertakings or universities and SMEs may also contribute to addressing coordination market failures, and supporting clustering. WE want to highlight that The use of Cluster Organisations and activities within Cluster Initiatives counter steer market failures Public funding to address a market failure should not be considered to be state aid. 6. Duration of financial support (section 5.8) Representative ECA-Member feedbacks: When it comes to operating aid for cluster animation we believe that 5 years as the basic duration to be authorized by the Commission is too limited due to the long development process for cluster and emerging markets. In order to provide added legal certainty and to better allow for strategic and long term policy making, we believe that at least 10 years (with national reviews every 5 year) should be the basic duration allowed. Experience shows that these time periods are required for 12

13 new, sustainable and innovative environments to be successfully developed. Long-term public financing under transparent and foreseeable conditions does not run contrary to the general objective that clusters eventually should be self-financing. The Cluster management- organisations are supplying services that are primarily of general public interest in the region (acquisition of new companies, marketing an industry or a location of business, increasing the boundaries between a region and its cluster actors) and are therefore financed by the public out of public funds. The supporting measures should be improved and not time limited. Longer-term missions of public/common interest require sustained public support There is an urgent need for state aid rules to be updated to reflect current policy priorities and the reality of the ground. Cluster-policies generate effects only on the long term and, accordingly need a longer public support, with as counterpart, objective assessments of the results of each Cluster Initiative. Experience shows that sustainability of clusters and cluster management organisations is very closely related to a long-term public support, leading clusters to maturity. There should be specific incentives for the identification and support of emerging sectors that are of utmost importance at EU level. Mission of Cluster Initiatives must be mid and long-term ones and evaluation must take this in account. RDI driven clusters are working on long-term economic goals. Therefore they have to be considered as such. Financial contribution which has to be done when applying for financial support, makes it impossible for most of the entrepreneurs to start. 13

14 We need State aid rules for RDI which Reflect current policy priorities Enable sustained public support not time limited to 5/10 years - that creates successful, dynamic and mature clusters for the benefit of the regions preconditioned that in return the outcome and impact of the public aid is evaluated objectively. 7. Aid intensity, indirect aid and (Notification) process Representative ECA-Member feedbacks: Max. investment aid intensity of 15 % and max. operating aid intensity of 50 % for a max. period of 5 years (10 year exceptionally) is not sufficiently well adapted to cluster dynamics and should therefore be revised. The aid intensities allowed for investment support (max 15% for large companies and 25 to 35 % for medium sized and small companies respectively) is from our perspective not reasonable. For new clusters or emerging clusters it is not feasible to contribute with % since the Cluster Organisations and actors in the new clusters have quite limited budgets. The degressive of the aid for clusters animation (operational aid) threatens the sustainability of clusters. Investment aids are very complicated to implement No application for state aid for RDI due to the necessity of bringing 50% financial contribution. It is completely unrealistic, for numerous clusters, to seek 50% of private funding. They sometimes have difficulties to get 20% of private funding when they have a majority of SMEs among their members. Improve visibility of indirect aids whenever potentially transferred in order to reduce uncertainties and inconveniences at user level. The type of activities comprising indirect aid or not should be detailed. 14

15 The regulation should be easier to implement and the notification process should become simpler and faster. Too many public administrations involved in the process Slow payment of aids leads to severe problems with Cash Flow which is a crucial issue for cluster organisations which are non-profit making and have minimal assets. WE suggest, The regulation should be easier to implement and the notification process should become simpler and faster, e.g. by integrating the Aid for innovation clusters category into the general block exemption regulation (GBER); That the commission should answer in a defined time on questions about State aid rules. 8. Further to the a.m. statements and suggestions we support the following proposals for renewal of state aid rules for R&D&I elaborated by the EURADA group and another by TAFTIE. EURADA (European Association of regional Development Agencies) R&D Guidelines The guidance applied to cluster needs to be reconsidered in order to take into consideration the need to sustain cluster management organisations. TAFTIE (European Association of Leading National Innovation Agencies) Their proposals included a recommendation that the regional constraint be skipped in order to enable the development and support non-geographical clusters (R&D&I state aid framework, section 2.2(m) and 5.8 next to last paragraph). Aid for innovation clusters 15

16 This current formulation of the aid for innovation clusters seems to provide little added value to other forms of aid, at least in the case of TAFTIE agencies. This aid would benefit from a redesign, which would better link it with the various forms of networking and cluster collaboration taking place or planned in Europe. One additional aspect needing further clarification is the use of this aid to encourage trans-national/cross-border collaboration. This is also one of the few forms of aid enjoying regional bonuses, which raises the question why geographical networking, clustering or collaboration would be more desirable than any other. The rationale for this is by no means clear. While recognising that there is a need for a more fundamental change in the rules concerning State aid for various open innovation platforms, we propose that this aid is changed at this stage to allow a wider range of collaborative networks and non-geographical clusters to be eligible for this form of aid. The full proposal you find at: 9. Examples of application, interpretations Other concerns also reflect the new role of Cluster Organisations in financing of innovation, in raising collective projects and training, in particular for SMEs. Participation of Cluster Organisations representing SMEs, should be facilitated in the future programmes. They also highlight the low level of de minimis, and the reduced role it can play for clusters and SMEs, with a limited amount of , and the strong necessity to encourage SMEs clusters strongly, where the cluster organisation has the most added value to leverage projects, and jobs for the future. Practical concrete examples and cases extracted from the contributions of the ECA and Tactics community: The public financed part of the Cluster Organisation is not considered as STATE AID because: The cluster organisation was established to fulfil the tasks which lie in the general interest and are provided either by the state itself or by bodies established or appointed by the state. The company is the managing and supporting organisation of Cluster Initiatives and company-networks. It is a nonprofit organisation. The Cluster Organisation does not carry out an economic activity, which is an activity consisting of offering goods and/or services on a given market. (Public funding of non-economic activities (state aid rules ) 16

17 In case of the support programmes for clusters, the following categories of aid have been applied for by cluster organisations: Regional investment and employment aid 5, Aid for research and development projects 5, Training aid 5 and De minimis aid 6 The Aid for innovation clusters category have not been chosen yet in the support programmes because the general block exemption regulation (GBER) and de minimis rules provide more favourable conditions in many ways. According to the regional government position, the Competitiveness Poles and Clusters (networks of companies) aren t within the scope of the Community Framework for State Aid For Research and Development and Innovation (Art. 87 (1) of the EC Treaty). The main objective of the Competitiveness Poles and Clusters is to support the socio-economic development in the concerned sectors and strengthen the competitiveness and the international visibility of the region. Moreover, it aims at stimulating cooperation between enterprises. The Competitiveness Poles and Clusters missions consist namely in the sector s animation (collective actions aiming at stimulating the networking between the enterprises, the R&D and the training regional actors). Moreover, there is no pooling of equipment and facilities implemented by the Competitiveness Poles and clusters. As non-profit organisations ensuring a mission of public interest, they are directly funded by the regional authorities, but these grants cannot in any way benefit to the private companies. Regarding regional framework, they play in a way the same role as the National Contact Points dedicated to the stimulation of companies participation in the Community R&D&I Framework Programmes. Another aspect of the rules that should be maintained concerns the body being eligible for aid. The legal entity operating the cluster is the appropriate recipient of aid. In the national cluster programmes the Cluster Organisation always is a legal entity with ability to manage different kinds of funding in the common interest. 5 Commission Regulation (EC) No 800/2008 of 6 August 2008 declaring certain categories of aid compatible with the common market in application of Articles 87 and 88 of the Treaty (General block exemption Regulation) 6 Commission Regulation (EC) No 1998/2006 of 15 December 2006 on the application of Articles 87 and 88 of the Treaty to de minimis aid 17

18 The region has released state aids measures mainly on the basis of General block exemption Regulation (EC) No 800/2008 (and previous Regulations) and Regulation (EC) No 1998/2006 De minimis (and previous versions). The region, where only a small minority of clusters have a legal entity, chose to use the de minimis scheme case. The regional law for clusters only requires a group of companies (free grouping or aggregate) to share a pact for carrying out common projects for a well-defined period of time. Companies belonging to a cluster that has been selected for the aid and benefiting from the funding, have to declare all other de minimis aids they were granted within the actual and the previous two financial years. The ceiling cannot be exceeded. The Innovation Union has identified the financing of innovation of one of the main barriers for bringing new ideas to the market. This is particularly true in a period of credit crunch, caused by the financial and economic crisis. Therefore new mechanisms for financing innovation are announced to solve in particular the problem of access to finance and, in this sense, we should reconsider the State Aid orientations. Other problems stated by the respondents and not so frequently mentioned aspects and single recommendations: Most of the public effort for RDI is coming from the Member States. This must go ahead as the EU Commission cannot take over this support on its own. Clusters composed with smaller companies should be encouraged, because it is more difficult to obtain fees, but very valuable for SMEs to be in networks. State aid rules for innovation clusters should also vary according to the composition of clusters' membership: indeed, clusters mainly composed of SMEs have much more difficulties to seek private funding than clusters with major companies as members. The level of public funding permitted to finance clusters should just be proportional to the share of SMEs in their membership Other countries outside Europe have not these kinds of rules, so being competitive means our rules are not stronger than the other ones (China, US...) The EU should take into account foreign cluster policies (US, China, etc.) that are more favourable to clusters than EU rules, to make sure European clusters do not suffer from a distorted competition. 18

19 The universities (and public research institutions) play a crucial role in cluster organisations, however they face with enormous problems by contributing to the costs of joint activities (generally 20% as retention). The financial problem can be the cause of why universities and public research institutions are reluctant to join clusters and taking part in joint activities. As a recommendation, we propose that universities and public research institutions shall have to provide a minimum financial contribution (less than current 20%) thereby making universities more interested in joining clusters. Explanation of the incentive effect (section , section 6. and 7. Esp ) The requirement to identify the incentive effect through counterfactual analysis (comparison of the expected levels of activity after governmental financial support with activity without aid) is not feasible in practice. > Abolition of the determination of the incentive effect. I would like the EU to standardize the definitions of: Cluster, Cluster Initiative and Cluster Association. Problems: no prioritisation of cluster collective projects, slow payment of aid, no direct interlocution, no visibility, no attendance to priority lines defined in strategic agenda. Financial problems to develop new projects; a high percentage of private sources is necessary Lack of specific and clear regulations and policy about clusters One of ECA members (Ministry of Economy Trade and Business) like to specify clearly in the report not only activities but also economic sectors where clusters are eligible. In their country the EC state aid rules represent serious barriers for supporting innovative clusters set up in shipbuilding sectors, in synthetic fibres sector and in mettalurgy sector(because is a confusion with the steel sector where there are big units and not SMEs) in agro-food sector and in tourism. These clusters are not financed. All innovative clusters must be eligible for financial support both from the public sector and structural funds respecting the aid intensity, indirect aid and notification process till their maturity. 19

20 10. At a glance the ECA requests and suggestion to the future Community Framework for State Aid for Research, Development and Innovation: 1. Most services and related activities covered by Cluster Organisations or Cluster Initiatives are of COMMON PUBLIC INTEREST & DO NOT DISTORT COMPETITION. 2. To create more clarity and to make it easier to apply state aid rule for RDI the role of Cluster Initiatives / Cluster Organisation needs to be reflected in definitions (innovation cluster) and activities. 3. The term innovation intermediary should be defined properly as well. 4. Align the legal definition of Innovation Cluster (Framework for State Aid) with commonly used definitions used in EU Communications and projects > see attached extract of the Glossary from the Cluster Internationalisation Handbook. 5. The use of Cluster Organisations / Cluster Initiatives can address market failures and funding to do this should not be considered to be State Aid. 6. Wider range of activities should be covered as eligible costs of the operating aid of innovation clusters. 7. It necessary to raise the importance of distinction between economic and non-economic activities and therefore to provide better guidance in the new RDI Framework. 8. State aid rule for RDI should enable sustained not time limited - public support that creates successful, dynamic and mature clusters for the benefit of the regions preconditioned that in return the outcome and impact of the public aid is evaluated. 9. The regulation should be easier to implement and the notification process should become simpler and faster, e.g. by integrating the aid for innovation clusters category to the general block exemptions regulation (GBER). 10. Slow notification process and payment of aids leads to severe problems with Cash Flow which is a crucial issue for cluster organisations which are non-profit making and have minimal assets. This summary is established mainly on basis experiences, statement and proposals we received from respondents of ECA community as well as workshops with participants of DG Comp. - among others. The TACTICS consortium partner TMG Upper Austria is available for any questions. Please contact Iris Reingruber (iris.reingruber@tmg.at) or Anke Merkl (anke.merkl@tmg.at). 20

21 APPENDIX: Glossary of key terms from the Cluster Internationalisation Handbook The Cluster Internationalisation Handbook is a TACTICS key deliverable and is aimed at providing explanations of the Why? for internationalisation and presenting various guides, e.g. tools, case examples and other descriptions, to enable the How?. The Handbook is established under the lead of TACTIS partner Bill Greenhalgh from Centre for Enterprise / Manchester Metropolitan University Business School/UK. The following is an extract from the Glossary of key terms from the Cluster Internationalisation Handbook. This Glossary was produced in collaboration with the European Cluster Excellence Initiative Cluster A cluster is a geographical proximate group of interconnected companies and associated institutions in a particular field, linked by commonalities and externalities. (Michael E. Porter, On Competition, Harvard Business Press, 1998, p.215) Cluster members or constituents Cluster members or better constituents (since to be part you do not need to sign a membership) include end product or service companies; suppliers of specialized inputs, components, machinery, and services; financial institutions; and firms in related industries. Clusters also often include firms in downstream industries (that is, channels or customers); producers of complementary products; specialized infrastructure providers; government and other institutions providing specialized training, education, information, research and technical support (such as universities, think tanks, vocational training providers); and standard setting agencies. Government agencies that significantly influence a cluster can be considered part of it. Finally, many clusters include trade associations and other collective private sector bodies that support cluster members. (Michael E. Porter, On Competition, Harvard Business Press, 1998, p ) Cluster Initiative Cluster initiative: an organised effort to increase the growth and competitiveness of a cluster within a region, involving cluster firms, government and/or the research community. (Örjan Sölvell, Göran Lindqvist and Christian Ketels, The Cluster Initiative Greenbook, Vinnova/TCI, 2003, p. 21

22 Cluster Initiative Participant Businesses and other innovation stakeholders involved in cluster initiatives (extracted from EC Communication: Towards world-class clusters in the European Union: Implementing the broad-based innovation strategy- SEC(2008) 2637, 17 October 2008, p.7) Cluster Organisation Cluster initiatives are increasingly managed by specialised institutions, known as cluster organisations, which take various forms, ranging from non-profit associations, through public agencies to companies. (EC Communication: Towards world-class clusters in the European Union: Implementing the broad-based innovation strategy- SEC(2008) 2637} 17 October 2008, p.8). A Cluster Organisation does not necessarily have members, but it provides services to the cluster initiative participants. Note: Cluster organisations have different names in different countries, eg. compétitivité pôles, centres of expertise, innovation networks and competence networks etc. Cluster Association and Cluster Association Members A non-profit association legally formed by members businesses and other innovation stakeholders involved in cluster initiatives (concluded from definitions above). 22