EU frowns on aid to chip firms............................................
news.com
By Reuters
December 17, 1997, 2:30 p.m. PT
BRUSSELS--The European Commission, increasingly wary about subsidies to the semiconductor industry, today warned it may ban Austrian aid to Siemens AG.
It won a similar fight with Italy involving SGS-Thomson as Italy dropped a planned 18 million ecu grant to the company, the Commission said earlier today. The ecu is the European Union's currency.
The Commission's tough stance worries European manufacturers, which say rivals in the U.S. and in Asia are getting significant research and development aid. "I think the Commission should also look at help and subsidies being given in the United States and even more so in Taiwan, [South] Korea and Japan," Eckhard Runge, secretary general of the European Electronic Component Manufacturers Association (EECA), told Reuters.
The Commission announced it had strong doubts about allowing the Austrian government to give 27 million ecus ($30.1 million) in aid to Siemens Baulemente mainly to upgrade a semiconductor production plant. Siemens Baulemente belongs to Siemens AG's semiconductors division.
The Commission also said Italy had dropped a plan to grant 18 million ecus ($20 million) to SGS-Thomson Electronics after EU competition chief Karel Van Miert proposed to ban the aid.
In both cases, Van Miert took the view that the projects were part of the companies' core activities and that they would have carried them out, with or without public support, to keep pace with competition. Public aid would therefore distort competition by disadvantaging other European semiconductor firms.
"The 'incentive' effect of the proposed aid--an inducement for the company to carry out research which it would not otherwise have pursued--appears non-existent," the Commission said in a statement on the Siemens case.
Van Miert's tough stance, which contrasts with an apparent inability to prevent much larger subsidies to rescue state-controlled firms, was criticized by EU Research Commissioner Edith Cresson in May, when the Commission discussed aid to SGS-Thomson. Cresson defended the firm, saying that the subsidies would merely provide a level playing field in competing with U.S. and Asian manufacturers. SGS-Thomson is a joint venture involving Italian state holding company IRI and France Telecom.
In a move to speed up anti-dumping disputes involving Korean imports, meanwhile, EECA has signed an agreement with the Korea Semiconductor Industry Association with regard to the collection of data on production, costs, and prices of dynamic random access memory (DRAMS). Korean companies account for 35 percent of the European DRAM market, whereas European firms supply a meager two percent of Korean needs.
Only European or Korean anti-dumping authorities will have access to such data, once an anti-dumping procedure is opened, the Commission said in a separate statement published in the EU's Official Journal. |
