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STATE AID — UNITED KINGDOM

State aid No C 37/06 (ex NN 91/05)

Fishing Vessel Modernisation Scheme

Invitation to submit comments pursuant to Article 88(2) of the EC Treaty

(Text with EEA relevance)

(2006/C 293/05)

By means of the letter dated 13 September 2006 reproduced in the authentic language on the pages following this summary, the Commission notified the United Kingdom of Great Britain and Northern Ireland of its decision to initiate the procedure laid down in Article 88(2) of the EC Treaty concerning the abovementioned aid.

Interested parties may submit their comments within one month of the date of publication of this summary and the following letter, to:

These comments will be communicated to the United Kingdom of Great Britain and Northern Ireland. Confidential treatment of the identity of the interested party submitting the comments may be requested in writing, stating the reasons for the request.

SUMMARY

In June 2004 the Commission was informed of aid granted by the Shetland Islands Council, the public authority in the Shetland Islands of the United Kingdom, to the fisheries sector which possibly concerned illegal State aid.

Under the Fishing vessel Modernisation Scheme aid was granted for the modernisation of fishing vessels, related to a major improvement like for example better storage of catches, replacement of the engine, improvements in working conditions or to crew safety, up to 10 % of the total cost of the improvement project, with a maximum of GBP 40 000 per vessel. Improvement projects which exceeded 50 % of the costs of a new vessel of the same type were not eligible, as well as works to vessels of less than five years old.

According to Article 88 (3) of the EC Treaty Member State have to inform the Commission of any plans to grant or alter aid. According to the United Kingdom, the scheme has been applied from at least the 1980's until 14 January 2005. However, the United Kingdom was not been able, due to the absence of past records, to provide evidence that the aid measures existed already before the United Kingdom joined the union and thus would have to be regarded as existing aids. Moreover, the United Kingdom has confirmed to have altered the aids over the years without notification to the Commission, as result of which the aid measure has to be considered as new aid.

Council Regulation (EC) No 659/1999 (1) does not lay down any limitation period for the examination of unlawful aid. However, Article 15 of that Regulation stipulates that the powers of the Commission to recover aid is subject to a limitation period of ten years, that the limitation period begins on the day on which the aid is awarded to the beneficiary and that that limitation period is interrupted by any action taken by the Commission. Consequently, the Commission considers that it is not necessary in this case to examine the aid granted more than ten years before any measure taken by the Commission concerning it. The Commission considers that the limitation period was interrupted by its request for information sent to the United Kingdom on 24 August 2004. Accordingly, the limitation period applies to aid granted to beneficiaries before 24 August 1994 and the Commission assesses below only aid granted by decisions taken between 24 August 1994 and 14 January 2005. According to the information available to the Commission. From 1994 to 14 January 2005 approximately GBP 11 673 514 appears to have been granted under the scheme.

The measures appear to be State aid in the sense of Article 87 of the EC Treaty. State aid can be declared compatible with the common market if it complies with one of the exceptions foreseen in the EC Treaty. State aid to the fisheries sector may be deemed to be compatible with the common market if they comply with the conditions of Guidelines for the examination of State aid to fisheries and aquaculture applicable at the time of granting of the aid (2).

The Guidelines refer to the conditions of Regulation (EC) No 3699/93 respectively Regulation (EC) No 2792/1999. According to Regulation (EC) No 3699/93 eligible investments shall relate in particular to the improvement of the quality of products caught and preserved on board, the use of better fishing and preserving techniques and the implementation of legal and regulatory provisions regarding health or improvement of working conditions and safety, and/or equipment on board vessels to monitor fishing activities. The operations may cover only vessels less than 30 years old, unless it concerns investments related to the improvement of working conditions and safety or equipment on board vessels to monitor fishing activities.

Under Regulation (EC) No 2792/1999, applicable to existing aid schemes as from 1 July 2001, any entry of new capacity should be compensated by the withdrawal of a capacity without public aid which is at least equal to the new capacity introduced in the segments concerned. Moreover, until 31 December 2001, if the objectives for the size of the fleet were not yet respected, the withdrawal of capacity should at least be 30 % more than the new capacity introduced. Aid may only be granted where the Member State has complied with its obligations under the Multi-annual Guidance Programme (MAGP) as required under Article 5 of that Regulation. Finally, Article 9 of the respective Regulation provides that the aid for the modernisation of fishing vessels can be granted only if the aid does not concern capacity in terms of tonnage or power.

At this stage of the examination the part of the aid granted for modernisation of fishing vessels seems not to comply with the conditions of Article 9 of Regulation (EC) No 2792/1999. Therefore, the Commission has, at this stage, serious doubts on the compatibility of the scheme with the conditions as applicable from 1 July 2001.

In accordance with Article 14 of Council Regulation (EC) No 659/1999, all unlawful aid can be subject to recovery from the recipient.

TEXT OF LETTER

1.   PROCEDURE

2.   DESCRIPTION

3.   COMMENTS FROM THE UNITED KINGDOM

4.   ASSESSMENT

4.1.   Legality

4.2.   Basis for the assessment

4.2.1.   Guidelines of 1994 and 1997

Regulation (EC) No 3699/93

4.2.2.   Guidelines of 2001

Regulation (EC) No 2792/1999

Regulation (EC) No 2369/2002

Regulation (EC) No 1421/2004

4.2.3.   Guidelines of 2004

4.3.   Compatibility

4.3.   Conclusion

5.   DECISION

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(1)  Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article 93 of the EC Treaty, OJ L 83, 27.3.1999, p. 1. Regulation as amended by the Act of Accession of 2003.

(2)OJ C 260, 17.9.1994, p. 3; OJ C 100, 27.3.1997, p. 12 and OJ C 19, 20.1.2001, p. 7; OJ C 229, 14.9.2004, p. 5.

(3)  Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article 93 of the EC Treaty, OJ L 83, 27.3.1999, p. 1. Regulation as amended by the Act of Accession of 2003.

(4)OJ C 229, 14.9.2004, p.5

(5)OJ C 260, 17.9.1994, p. 3; OJ C 100, 27.3.1997, p. 12 and OJ C 19, 20.1.2001, p. 7; OJ C 229, 14.9.2004, p.5.

(6)  Council Regulation (EC) 3699/93 of 21 December 1993 laying down the criteria and arrangements regarding Community structural assistance in the fisheries and aquaculture sector and the processing and the marketing of its products, OJ L 346, 31.12.1993, p. 1.

(7)  Council Regulation (EC) No 2792/1999 of 17 December 1999 laying down the detailed rules and arrangements regarding Community structural assistance in the fisheries sector OJ L 337, 30.12.1999, p. 10, as last amended by Regulation (EC) No 485/2005, OJ L 81, 30.3.2005, p. 1.

(8)OJ L 358, 31.12.2002, p. 49.

(9)OJ L 260, 6.8.2004, p. 1.

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