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Commission authorises French funding for Daher-Socata and Sogerma

The European Commission has authorised France under EU State aid rules to grant repayable advances of €35.14 million to Daher-Socata (€12.34 million) and Sogerma (€22.8 million) for the development of the next-generation Main Landing Gear Doors (MLGD) and Main Landing Gear Bay (MLGB) of the future Airbus A 350 XWB.

The Commission found the repayable advances compatible with the EU Framework for State aid for research and development (R&D) and innovation. In particular, the aid addresses a specific market failure, is appropriate, and is limited to the minimum necessary.

"The two French R&D projects focus on new lightweight materials to cut aircraft fuel consumption. I am satisfied that the State support for these leading-edge projects will contribute to know-how increase in Europe without unduly distorting competition," said Competition Commissioner Joaquín Almunia.

France notified the two measures on 18 September 2009. Funding will be granted under an existing State aid scheme approved by the Commission in March 2006 (case N 51/2006).

Both projects aim at developing the utilisation of composite material for the fabrication of specific aero-structures' components. The MLGD project (undertaken by Daher-Socata) involves industrial research and experimental development activities for a total eligible cost of €30.85 million, whereas the MLGB project (undertaken by Sogerma) involves exclusively experimental development activities for a total eligible cost of €57 million.

Both advances will be repaid in full when a pre-defined sales target will be attained. Each additional delivery beyond this target will trigger the payment of a royalty-fee.

The Commission found that the financial sector was reluctant to provide sufficient risk-sharing capital for such long-term R&D projects. The Commission, therefore, concluded that the aid would address a genuine market failure. Moreover, the Commission identified that the aid granted to both companies is limited to the amount necessary for enabling R&D projects of this magnitude. The Commission therefore concluded that the aid was appropriate and proportional.

Given the particular structure of the aeronautical market, and the small market shares held by the two beneficiaries, the impact on competition will be limited.

The non-confidential version of the decisions will be made available under the case numbers N 525/2009 and N 527/2009 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved.

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