State aid: the Commission confirms the state guarantee granted to the IFP (Institut Français du Pétrole) because of its EPIC status

European Commission - Press release

State aid: the Commission confirms the state guarantee granted to the IFP (Institut Français du Pétrole) because of its EPIC status

Brussels, 29 June 2011 - The European Commission has concluded that the unlimited state guarantee granted to the lnstitut Français du Pétrole Énergies Nouvelles (IFP) because of its status as a public body constitutes state aid compatible with the internal market as long as the IFP's economic activities are conducted solely on an ancillary basis and are connected with its main activity, which is public research.

In the words of Joaquín Almunia, Vice-President of the European Commission in charge of competition policy, 'We have everything to gain from public bodies making their technology, research infrastructure and researchers' know-how available to European industry. As long as such economic activities remain limited in relation to the budgets devoted to public research, the risk of a public guarantee distorting competition will be more than offset by the positive impact on the European Union, particularly in terms of the spread of scientific knowledge'.

The Commission has carefully examined the effects of the statutory guarantee enjoyed by the IFP and considers that the IFP derives only limited financial benefits from the guarantee in terms of carrying on its economic activities. In particular, the contractual research conducted by the IFP accounted for only a small portion of its activities over the period in question (2006-2009). Insofar as this contractual research was closely linked to the independent public research that is the IFP's main activity, the fact of its being covered by the state guarantee had not, in the Commission's considered view, altered trading conditions to a degree contrary to the interests of the European Union. The Commission has also taken account of the positive impact of these ancillary activities on the spread of scientific knowledge. This decision was taken under Article 107(3)(c) of the Treaty on the Functioning of the European Union – an article that, under certain conditions, permits aid to be granted to facilitate the development of certain activities.

In 2008, the Commission had drawn a distinction between the unlimited state guarantee granted to the IFP because of its EPIC status and another state aid procedure relating to the same research body (see IP/05/1683).

Background – the IFP and EPIC status

In previous decisions, the Commission has concluded that an organisation granted EPIC status acquires in that way a selective advantage amounting to incompatible state aid when the recipient's main activity is an economic one – a state of affairs in which the state assumes, for no consideration, all the risks associated with that activity. In particular, this was the case regarding EDF in 2003 (see IP/03/1737) and La Poste ( the French Post Office) in 2010 (see IP/10/51). This second decision is now the subject of proceedings before the General Court of the European Union (T-154/10).

Unlike the other EPICs investigated to date, the IFP is a research body, most of whose budget is devoted to non-economic activities (independent R&D, training, the dissemination of research results, etc.). Its economic activities (contractual research, leasing of facilities, the exclusive transfer of technology to its commercial subsidiaries) are very limited and are covered only collaterally by the state guarantee.

The non-confidential version of the decision will be made available under case number C35/2008 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the "State aid Weekly e-News".