EU Splits Over Plan to Loosen Funding Rules to Boost Cutting-Edge Tech

(Bloomberg) -- Several of the smaller European Union countries warned against relaxing common limits to state aid to boost cutting-edge technologies, as France and Germany are pushing for loose rules to support European industries against U.S. and Chinese competitors. 

The Netherlands, Denmark, Finland, Ireland, Romania and Sweden warned that a tool to grant subsidies from several countries for big industrial initiatives “poses risks for the level playing field in the EU,” in a letter they wrote to the European Commission. The program, called Important Projects of Common European Interest,” or IPCEI, is being used to channel funding to develop initiatives including batteries and microchips.

“Excessive and non-targeted use of the instrument would lead to subsidy races and unfair competition with the EU,” the document said. The countries are calling for the commission to play a larger role to verify that the aid focuses on research and doesn’t replace private funding or fund mass production or commercial activities.

The Netherlands and other nations have been skeptical about a French and German push to loosen the EU’s review of state funding for industry. The European Commission polices state aid to prevent one European country showering cash on favorite companies to the detriment of rivals.

European leaders have called for more investment in semiconductors to alleviate a supply shortage that’s rippled through several industries, and companies like California-based Intel Corp. have been chasing European support to help increase local capacity. 

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