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I Information

Commission

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Euro exchange rates (1)

 8 September 2004

(2004/C 225/01)

1 euro= 

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(1)

Source: reference exchange rate published by the ECB.

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STATE AID — UNITED KINGDOM

Aid C 17/04 (ex N 566/03) — ‘Enterprise capital funds’

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

(2004/C 225/02)

(Text with EEA relevance)

By means of the letter dated 7 May 2004 reproduced in the authentic language on the pages following this summary, the Commission notified the United Kingdom of its decision to initiate the procedure laid down in Article 88(2) of the EC Treaty concerning the abovementioned aid scheme.

Interested parties may submit their comments on the measure in respect of which the Commission is initiating the procedure 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. Confidential treatment of the identity of the interested party submitting the comments may be requested in writing, stating the reasons for the request.

SUMMARY

By letter dated 25 November 2003, registered at the Commission on 26 November 2003, the UK authorities notified, pursuant to Article 88(3) of the EC Treaty, the 'Enterprise capital funds' scheme. By letter D/58191 dated 19 December 2003 the Commission requested additional information concerning the abovementioned measure. This information was submitted by the United Kingdom authorities by letter dated 30 January 2004 and letter dated 19 March 2004, registered at the Commission on 3 February 2004 and 25 March 2004, respectively.

The scheme intends to improve access to growth capital for small and medium-sized enterprises (SMEs) throughout the United Kingdom. SMEs seeking to raise initial equity funding of between GBP 250 000 (EUR 357 000) and GBP 2 million (EUR 2,9 million) will approach licensed enterprise capital funds (ECFs) to be set up under the scheme. The licensing process will be overlooked by the Small Business Service (SBS) of the UK Department of Trade and Industry.

The scheme is exclusively aimed at unquoted small and medium-sized enterprises (1) in the United Kingdom. Firms in difficulty as defined by the Community guidelines on State aid for rescuing and restructuring firms in difficulty (2) are excluded from investment. Enterprise capital funds (ECFs) will not invest in sensitive sectors under State aid restrictions or in sectors to which the Commission Communication on State aid and risk capital (3) does not apply.

The notified scheme is intended to be self-financing over the medium term. In terms of accounting for the scheme in its initial phase, the United Kingdom has allocated [...] (4) to cover the cash-flow cost of the initial leverage.

The United Kingdom seeks approval for an initial period of 10 years.

Enterprise capital funds will be required to invest in small and medium-sized enterprises by means of equity or quasi-equity instruments.

The United Kingdom authorities have committed themselves that the beneficiary SMEs' eligibility for other publicly funded grants, loans or other forms of investment aid outside of this notification will be restricted by 30 % of the aid intensity that would otherwise be permissible.

Existence of State aid

The Commission considers, at this stage of the procedure, that the measure constitutes State aid within the meaning of Article 87(1) of the EC Treaty. According to the provisions of the Commission Communication on State aid and risk capital (5), the assessment of the presence of State aid must consider the possibility that a measure may confer aid on at least three different levels:

At the level of investors, the Commission considers that there is State aid within the meaning of Article 87(1) of the EC Treaty.

At the level of the fund, the Commission does not consider the enterprise capital funds to be separate aid beneficiaries.

At the level of the companies invested in, the Commission considers that there is State aid within the meaning of Article 87(1) of the EC Treaty.

Preliminary assessment of conformity of the measure

The measure fulfils several of the conditions laid down in the Commission communication on State aid and risk capital.

Evidence of market failure

Point VI.5 of the Commission Communication on State aid and risk capital stipulates that the Commission will require evidence of market failure for risk capital measures. It may however be prepared to accept the case for market failure when each tranche of finance for an enterprise from risk capital measures which are wholly or partially financed through State aid will contain a maximum of EUR 500 000, or EUR 750 000 in regions qualifying for assistance pursuant to Article 87(3)(c), or EUR 1 million in regions qualifying for assistance pursuant to Article 87(3)(a) of the EC Treaty.

Taking into account that the United Kingdom consists of non-assisted areas as well as Article 87(3)(c) and Article 87(3)(a) areas as outlined in the Regional Aid Map 2000-2006 for the United Kingdom (7), and bearing in mind that the United Kingdom authorities intend to grant tranches of investment aid of up to GBP 2 million (EUR 2,9 million) regardless of the location of the beneficiary enterprise, the Commission concludes that the existence of market failure cannot be taken for granted without further evidence. The intended tranche size under the present scheme significantly exceeds the thresholds outlined in the Commission Communication on State aid and risk capital and the Commission must therefore require provision of evidence for the existence of market failure.

In order to demonstrate the existence of market failure, the United Kingdom authorities have submitted a paper entitled ‘Assessing the Scale of the Equity Gap in the UK Economy’, written in 2003, as well as a paper entitled ‘Assessing the Finance Gap’. The key finding of these papers is that there is a gap in the provision of venture capital for SMEs in the deal size range of GBP 250 000 (EUR 357 000) to GBP 2 million (EUR 2,9 million).

The Commission, after a first preliminary assessment of the measure, has doubts if the arguments presented by the United Kingdom authorities can sufficiently justify the granting of risk capital investment tranches considerably higher than the maximum investment tranches foreseen by the Commission Communication on State aid and risk capital. The Commission is of the opinion that a more thorough analysis of this complex question is necessary. The Commission wishes to collect information from other interested parties, notably from potential providers of risk capital to SMEs in the United Kingdom. In order to do so, the Commission must, for legal reasons, open the procedure provided for in Article 88(2) of the EC Treaty. It is only with the help of such observations that the Commission can decide whether such aid is necessary and does not adversely affect trading conditions to an extent contrary to the common interest.

TEXT OF LETTER

‘The Commission wishes to inform the United Kingdom that, having examined the information supplied by your authorities on the aid measure referred to above, it has decided to initiate the procedure laid down in Article 88(2) of the EC Treaty.

By letter dated 25 November 2003, registered at the Commission on 26 November 2003, the UK authorities notified, pursuant to Article 88(3) EC, the “Enterprise Capital Funds” scheme. By letter D/58191 dated 19 December 2003 the Commission requested additional information concerning the above-mentioned measure. This information was submitted by the UK authorities by letter dated 30 January 2004 and letter dated 19 March 2004, registered at the Commission on 3 February 2004 and 25 March 2004.

The scheme intends to improve access to growth capital for small and medium-sized enterprises (SMEs) throughout the UK. SMEs seeking to raise initial equity funding of between £ 250,000 (EUR 357,000) and £ 2 million (EUR 2.9 million) will approach licensed Enterprise Capital Funds (ECFs) to be set up under the scheme. The licensing process will be overlooked by the Small Business Service (SBS) of the UK Department of Trade and Industry.

The legal basis of the scheme is section 8 of the “Industrial Development Assistance Act 1982”.

The scheme is exclusively aimed at unquoted small and medium-sized enterprises (8) in the United Kingdom. Firms in difficulty as defined by the “Community guidelines on State aid for rescuing and restructuring firms in difficulty” (9) are excluded from investment. Enterprise Capital Funds (ECFs) will not invest in sensitive sectors under State aid restrictions or in sectors to which the “Commission Communication on State Aid and Risk Capital” (10) does not apply. Low-risk sectors including property, land, finance and investment companies, or finance-type leasing companies will not be eligible for investment under the scheme. Enterprise Capital Funds will also be prevented from investing in other ECFs.

The UK Department of Trade and Industry (DTI) will have statutory responsibility through its executive agency Small Business Service (SBS). It will monitor ongoing investments undertaken by ECFs without having any direct control over ECFs' individual investment decisions. It will also ensure that each ECF complies with its business plan and adheres to the terms of its successful bid.

The notified scheme is intended to be self-financing over the medium term. In terms of accounting for the scheme in its initial phase, the UK has allocated [...] (11) to cover the cash-flow cost of the initial leverage.

The UK seeks approval for an initial period of 10 years.

The Enterprise Capital Funds (ECFs) foreseen under the scheme will combine private and public money for investment into SMEs. Following a licensing process attributing ECF status, the funds will then be entitled to receive public leverage at market rates or above.

Leverage to licensed Enterprise Capital Funds will be limited to no more than two times the private capital raised by the fund. The leverage, interest on the leverage and a profit-share for the public contribution will need to be repaid by the Enterprise Capital Funds, thereby ensuring that over the medium term the programme will be self-financing.

The exact amounts of leverage, profit-share and repayment priorities will be determined by a competitive bidding process, thereby ensuring minimal public support to attract private capital. Open invitation for applications through publication of the scheme in the Official Journal of the European Union and the relevant trade press will safeguard this general principle. As part of applying for ECF status, applicants will be asked to specify how much leverage (maximum two times private capital) they wish to use, the profit share with the public and the prioritisation of repayments of:

Potential ECF operators will be asked to submit a robust business plan including:

ECFs will be required to abide by British Venture Capital Association (BVCA) guidelines on accounting standards.

The public administrative body will not accept bids in which the public leverage is exposed to greater risk than the private capital. At the same time, private investors in Enterprise Capital Funds may be exposed to greater downside risk than the public. This will ensure commercial best practice in the operation and decision making of the Enterprise Capital Funds.

Once an Enterprise Capital Fund has been approved and has started to make investments, it will be eligible to receive public leverage in proportion to the amount of capital drawn down from private investors in the form of a participating stake in the Enterprise Capital Fund. The size of the leverage entitlement will be capped at up to two times the private capital committed for Enterprise Capital Funds.

Enterprise Capital Funds will invest in eligible SMEs and will be allowed to participate in initial equity funding rounds of up to £ 2 million (EUR 2.9 million) in total. Follow-on investments will be permitted so long as the total equity funding raised by any beneficiary SME is no greater than the £ 2 million (EUR 2.9 million) limit. After a period of at least 6 months from the Enterprise Capital Fund's initial investment in an SME, follow-on investments in excess of the £ 2 million (EUR 2.9 million) limit will also be permitted where necessary to prevent dilution. This will be subject to an upper limit of 10 % of each ECF's committed capital that may be invested in any single company, to ensure a satisfactory level of portfolio diversity.

Enterprise Capital Funds will be required to invest in small and medium-sized enterprises by means of equity or quasi-equity instruments.

The UK authorities have committed themselves that the beneficiary SMEs' eligibility for other publicly funded grants, loans or other forms of investment aid outside of this notification will be restricted by 30 % of the aid intensity that would otherwise be permissible.

In accordance with Article 6(1) of Council Regulation 659/1999 of 22 March 1999, the decision to initiate proceedings shall summarise the relevant issues of fact and law, shall include a preliminary assessment from the Commission as to the aid character of the proposed measure, and shall set out the doubts as to its compatibility with the common market.

By notifying the scheme, the UK authorities respected their obligations under Article 88(3) EC.

The Commission considers, at this stage of the procedure, that the measure constitutes State aid within the meaning of Article 87(1) of the EC Treaty. According to the provisions of the “Commission Communication on State Aid and Risk Capital” (12), the assessment of the presence of State aid must consider the possibility that a measure may confer aid on at least three different levels:

At the level of investors, the Commission considers that there is State aid within the meaning of Article 87(1) EC. The involvement of state resources is demonstrated by the fact that the UK authorities will provide up to two times the amount provided by private investors in Enterprise Capital Funds as public leverage. Private investors in Enterprise Capital Funds, who may be undertakings within the meaning of the EC Treaty, receive an advantage as the measure allows them to raise capital provided by the public. In the absence of public participation in the Enterprise Capital Funds, the private investors would not have been able to raise the same amounts of capital at the same conditions. Furthermore, in the case of profits earned by the Enterprise Capital Funds, private investors are entitled to higher returns than the public. Even though no person or organisation is debarred from investing in the funds, the limited size of the funds will not guarantee that all potential investment will be accepted and the Commission therefore considers that there is selectivity. Finally, the scheme affects trade between Member States, as investment in capital is an activity that is the subject of considerable trade between Member States.

At the level of the fund, the Commission in general tends to the view that a fund is a vehicle for the transfer of aid to investors and/or enterprises invested in, rather than being an aid beneficiary itself. However, in certain cases, notably measures involving transfers in favour of existing funds with numerous and diverse investors, the fund may have the character of an independent enterprise. Under the present scheme, the Enterprise Capital Funds will be newly created and will be prevented from diversifying into other activities than those intended by the scheme. The Commission therefore does not consider the Enterprise Capital Funds to be separate aid beneficiaries. This principle is in line with the Commission decisions on the “Viridian Growth Fund” (13), the “Coalfields Enterprise Fund” (14) and the “Community Development Venture Fund” (15).

At the level of the companies invested in, the Commission considers that there is State aid within the meaning of Article 87(1) EC as risk capital would not be available to SMEs in the same amounts and at the same conditions in absence of the scheme. The stated objective of the scheme is to extend the opportunity to access risk capital to SMEs in the United Kingdom and the scheme is therefore considered to be selective.

ECFs will be restricted to investments in small and medium-sized enterprises within the Commission definition. In addition, there will be restrictions preventing investments within specified sectors, including low risk firms as described under point 2.1.3 above.

ECFs will be required to invest capital in SMEs by means of equity or quasi-equity instruments. Investments that are composed wholly of debt instruments with no equity features will not be permitted.

The public authorities will have no involvement in the investment choices and decision making of any ECFs apart from setting restrictions to ensure that investments are limited to SMEs. The administrative body SBS will only approve ECFs where operators have a clear incentive to maximise returns. The terms on which the public authorities will invest in ECFs will give private investors very strong incentives to ensure that their funds are profit-driven and perform successfully. These incentives arise because private investors will have to pay interest on the public capital, and fully repay capital to both the public and private investors, before any profits can be distributed. As a result, private investors will bear at least a proportionate share of any losses made by ECFs. Investment decisions will be taken by commercial managers of the ECF funds with an interest in ensuring a maximum return for the fund. ECFs or their operators will be required to act in line with industry standards (BVCA guidelines).

The UK authorities will ensure that the ECF scheme is publicised and that applications are invited from across the EEA with notices in the Official Journal of the European Union and the relevant trade press. There will be no restriction on location for any investor or operator.

Enterprise Capital Funds (ECFs) will not invest in sensitive sectors under State aid restrictions or in sectors to which the “Commission Communication on State Aid and Risk Capital” (16) does not apply. Low-risk sectors including property, land, finance and investment companies, or finance-type leasing companies will not be eligible for investment under the scheme.

The UK authorities have committed themselves that the beneficiary SMEs' eligibility for other publicly funded grants, loans or other forms of investment aid outside of this notification will be restricted by 30 % of the aid intensity that would otherwise be permissible.

Point VI.5 of the “Commission Communication on State Aid and Risk Capital” stipulates that the Commission will require evidence of market failure for risk capital measures. It may however be prepared to accept the case for market failure when each tranche of finance for an enterprise from risk capital measures which are wholly or partially financed through State aid will contain a maximum of EUR 500,000, or EUR 750,000 in regions qualifying for assistance under Article 87(3)(c) or EUR 1 million in regions qualifying for assistance under Article 87(3)(a) EC.

Taking into account that the UK consists of non-assisted areas as well as Article 87(3)(c) and Article 87(3)(a) areas as outlined in the Regional Aid Map 2000–2006 for the United Kingdom (17), and bearing in mind that the UK authorities intend to grant tranches of investment aid of up to £ 2 million (EUR 2.9 million) regardless of the location of the beneficiary enterprise, the Commission concludes that the existence of market failure cannot be taken for granted without further evidence. The intended tranche size under the present scheme significantly exceeds the thresholds outlined in the “Commission Communication on State Aid and Risk Capital” and the Commission must therefore require provision of evidence for the existence of market failure.

In order to demonstrate the existence of market failure, the UK authorities have submitted a paper “Assessing the Scale of the “Equity Gap” in the UK Economy” written in 2003, as well as a paper “Assessing the Finance Gap”. The key finding of these papers is that there is a gap in the provision of venture capital for SMEs in the deal size range of £ 250,000 (EUR 357,000) to £ 2 million (EUR 2.9 million) for the following reasons:

The Commission, after a first preliminary assessment of the measure, has doubts if the arguments presented above can sufficiently justify the granting of risk capital investment tranches up to 5.7 times than the maximum investment tranches foreseen by the “Commission Communication on State Aid and Risk Capital”. The Commission is of the opinion that a more thorough analysis of this alleged market failure is necessary. The Commission wishes to collect information from other interested parties, notably from potential providers of risk capital to SMEs in the United Kingdom on this complex question. In order to do so, the Commission must, for legal reasons, open the procedure provided for in Article 88(2) ECT. It is only with the help of such observations that the Commission can decide whether such aid is necessary and does not adversely affect trading conditions to an extent contrary to the common interest.

In the light of the foregoing considerations, the Commission, acting under the procedure laid down in Article 88(2) of the EC Treaty, requests the United Kingdom to submit its comments and to provide all such information as may help to assess the aid scheme, within one month of the date of receipt of this letter.

The Commission wishes to remind the United Kingdom that Article 88(3) of the EC Treaty has suspensory effect, and would draw your attention to Article 14 of Council Regulation (EC) No 659/1999, which provides that all unlawful aid may be recovered from the recipients.

The Commission warns the United Kingdom that it will inform interested parties by publishing this letter and a meaningful summary of it in the Official Journal of the European Union. It will also inform interested parties in the EFTA countries which are signatories to the EEA Agreement, by publication of a notice in the EEA Supplement to the Official Journal of the European Union and will inform the EFTA Surveillance Authority by sending a copy of this letter. All such interested parties will be invited to submit their comments within one month of the date of such publication.’

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(1)  The definition of small and medium-sized enterprises applied by the United Kingdom authorities for the purposes of the scheme is always in line with the definition given in Annex I to Commission Regulation (EC) No 70/2001 of 12 January 2001 on the application of Articles 87 and 88 of the EC Treaty to State aid to small and medium-sized enterprises (OJ L 10, 13.1.2001, p. 33).

(2)OJ C 288, 9.10.1999, p. 2.

(3)OJ C 235, 21.8.2001, p. 3.

(4)  Business secret.

(5)OJ C 235, 21.8.2001, p. 3.

(6)OJ C 235, 21.8.2001, p. 3.

(7)  Commission decision of 26 July 2000 (OJ C 272, 2000).

(8)  The definition of small and medium-sized enterprises applied by the UK authorities for the purposes of the scheme is always in line with the definition given in Annex I to the Commission Regulation No 70/2001 on the application of Articles 87 and 88 of the EC Treaty to State aid to small and medium-sized enterprises (OJ L 10, 13.1.2001, p. 33).

(9)OJ C 288, 09.10.1999, p. 2.

(10)OJ C 235, 21.8.2001, p. 3.

(11)  Business secret

(12)OJ C 235, 21.8.2001, p. 3.

(13)  State Aid C 46/2000.

(14)  State Aid N 722/2000 .

(15)  State Aid N 606/2001.

(16)OJ C 235, 21.8.2001, p. 3.

(17)  Commission decision of 26 July 2000 (OJ C/272/2000).

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STATE AID — ITALY

Aid C 19/04 (ex NN 163/03) — Fiscal incentives in favour of certain undertakings for collective investment in transferable securities specialised in holding stocks of small and medium capitalisation companies

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

(2004/C 225/03)

(Text with EEA relevance)

By means of the letter dated 7 May 2004 reproduced in the authentic language on the pages following this summary, the Commission notified Italy of its decision to initiate the procedure laid down in Article 88(2) of the EC Treaty concerning the abovementioned measures.

Interested parties may submit their comments on the measures in respect of which the Commission is initiating the procedure within one month of the date of publication of this summary and the following letter, to:

These comments will be communicated to Italy. Confidential treatment of the identity of the interested party submitting the comments may be requested in writing, stating the reasons for the request.

SUMMARY

Description of the measure

The measure is included in Article 12 of the Law Decree (Decreto Legge) of 30 September 2003, No 269, concerning ‘Misure in materia di sviluppo dell'economia e di correzione dei conti pubblici’ (DL 269/2003), as converted into the Law (Legge) of 24 November No 326 (L 326/2003). The scheme entered into force on 2 October 2003, upon publication of DL 269/2003 in the Italian Official Journal and has not been notified to the Commission.

Article 12 of DL 269/2003 provides that, as of the fiscal year in which certain specific requirements are fulfilled, the capital revenue accruing to the investment vehicles, considered by the legislation in question that specialise in investing in the stocks of small and medium capitalisation companies being listed in a regulated European stock exchange, is subject to 5 % substitute tax, in lieu of the ordinary 12,5 % substitute corporate tax.

In order to achieve equal effective taxation between foreign and Italian investment vehicles, Article 12 of DL 269/2003 provides for a reduced nominal rate of 5 % substitute tax to be applied to the capital revenue accruing to Italian non-specialised investment vehicles that invest in specialised investment vehicles, for the part of their income deriving from such specialised investment vehicles, while capital revenue accruing to Italian investment vehicles, which derives from foreign investment vehicles is 60 % exempt.

With a view to extending the incentive to other investment vehicles, Article 12 of DL 269/2003 provides that the pension funds are also subject to 5 % effective tax on the portion of their revenue deriving from foreign specialised investment vehicles, and that the revenue deriving from Italian investment vehicles enjoys a 6 % tax credit corresponding to the 5 % substitute tax imposed on the capital revenue accruing to specialised investment vehicles participated in by such pension funds.

All Italian investment vehicles and the foreign undertakings for collective investment in transferable securities regulated by Council Directive 85/611/EEC (UCITS) can benefit from the reduced rate, provided they are specialised in investing in stocks of small and medium capitalised companies listed in a regulated European stock exchange. Pursuant to Article 12 of DL 269/2003 the latter companies are those whose capital does not exceed EUR 800 million, as determined on the basis of the average market price of the company's stocks on the last trading day of each quarter of the year.

Pursuant to Article 12 of DL 269/2003, the investment vehicles concerned are specialised if they hold stock of small and medium capitalised companies listed in a European regulated stock exchange corresponding to at least two thirds of the value of their assets held during the solar year, for at least one sixth of the total number of days of operation of the fund, as reported in the periodic financial accounts of such investment vehicles. The scheme is applicable only from the fiscal year in which an investment vehicle invests not less than two thirds of its total assets in stocks of small and medium capitalisation companies listed in a European stock exchange, or as of the time the bylaws of the investment vehicle provide for the vehicle to invest prevalently in stock of small and medium capitalisation companies listed in a European stock exchange.

Besides the Italian investment vehicles, all other open-end and closed-end Italian funds, the so-called ‘historic Luxembourg funds’, the SICAV companies, and the foreign UCITS can benefit from the reduced 5 % tax, provided they are registered as specialised investment vehicles, or with respect to the portion of their revenues invested in registered specialised investment vehicles.

Assessment of the measure

The Commission considers the investment vehicles in question to be undertakings, within the meaning of Article 87(1) of the EC Treaty, as they appear to undertake economic activities in competitive markets as enterprises. Article 12 of DL 269/2003 seems to afford to specialised investment vehicles a double economic advantage, as opposed to other investment vehicles. First, the measure affords a direct advantage equal to the amount of forgone substitute tax on the capital revenues accruing to specialised investment vehicles, which can be quantified as 7,5 % of its net operating result. The Commission observes that the amount of the advantage does not appear to be proportional to the quantity of stock of small and medium capitalised listed companies owned by a specialised investment vehicle nor does it appear to be proportional to the contribution of the revenue from small and medium capitalised listed companies to the net operating result of the specialised investment vehicle. Second, the Commission considers that the scheme seems to provide an indirect advantage in favour of specialised investment vehicles, in that by increasing the after-tax revenue of such specialised investment vehicles, for any given pre-tax return, it favours investors' demand of shares of specialised investment vehicles, thus providing for easier access to capital.

Furthermore, Article 12 of DL 269/2003 seems to confer a selective advantage to foreign specialised investment vehicles with respect to Italian-specialised and non-specialised UCITS because it seems to award pension funds a reduced 5 % substitute tax with exclusive respect to the capital revenue distributed from foreign specialised investment vehicles, while the capital revenues accruing to the pension funds investing in Italian- specialised investment vehicles being subject to 5 % substitute tax bear an effective 11 % tax burden.

Article 12 of DL 269/2003 seems to imply the use of State resources in terms of foregoing of tax revenues normally accruing to the Italian Treasury. The Commission observes that the Italian authorities have provided a confirmation of this assumption by their conservative estimate of the aggregate amount of fiscal expenditures involved.

The scheme appears to be selective in that the above advantages are limited to specialised investment vehicles. Because of the scheme, in certain circumstances, the foreign specialised investment vehicles being participated by Italian pension funds seem to receive a specific advantage with respect to Italian specialised investment vehicles. Non-specialised investment vehicles, are therefore placed at a disadvantage as they bear a heavier charge, notably the non-reduced substitute and withholding taxes, with respect to their capital earnings, including the revenue from investment in small and medium capitalisation companies. Moreover, the Commission has doubts that all types of investment vehicles can, de facto, enjoy the advantages provided by the scheme, with particular reference to closed funds which usually invest their capital in non-listed small-and medium-sized companies.

Given that the specialised investment vehicles benefiting from the scheme operate on European financial markets where competition, including intra-Community competition is particularly intense, the presence of fiscal advantages in favour of certain vehicles, introduces a distortion of competition within these markets. The Italian authorities did not prove that the benefits from this distortion are outweighed by advantages in terms of channelling funds to small and medium capitalisation companies.

Finally, the Commission has doubts as to whether the State aid granted in favour of the specialised investment vehicles is compatible with the single market. The Italian authorities have not presented any arguments to indicate that any of the exceptions provided for in Articles 87(2) and (3) of the EC Treaty, under which State aid may be considered compatible with the common market, apply in the present case. The tax advantages granted by the regime do not seem to be related to specific investments, to job creation or to specific projects eligible to receive aid under the existing block exemption regulations framework, nor under other Community guidelines. They simply constitute a reduction of charges that should normally be borne by the undertakings concerned in the course of their business and must therefore be considered as operating State aid, the benefits of which cease as soon as the aid is withdrawn. According to the constant practice of the Commission, such aid cannot be considered compatible with the single market in that it does not facilitate the development of certain activities or of certain economic areas and is not limited in time, digressive, nor proportionate to what is necessary to remedy to specific economic handicaps.

Considering its doubts on the compatibility of the aid with the EC Treaty, the Commission has decided to initiate the formal investigation procedure laid down in Article 88(2) of the EC Treaty.

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

‘La Commissione desidera informare l'Italia che, dopo aver esaminato le informazioni fornite dalle Sue autorità sulle misure succitate, ha deciso di avviare il procedimento di cui all'articolo 88, paragrafo 2 del trattato CE.

PROCEDIMENTO

DESCRIZIONE DETTAGLIATA DELLA MISURA

Contesto generale

Disposizioni tributarie

Regime tributario dei redditi conseguiti dagli strumenti di investimento operanti in qualità di intermediari finanziari, soggetti ad imposta sostitutiva in Italia

Regime tributario dei redditi degli strumenti di investimento soggetti a regime d'imposta sostitutiva operanti in qualità di partecipanti in altri strumenti di investimento

Regime tributario dei redditi di capitale conseguiti o distribuiti ad altri sottoscrittori degli strumenti di investimento non soggetti all'imposta sostitutiva

VALUTAZIONE DELLA MISURA

Aiuto di Stato ai sensi dell'articolo 87, paragrafo 1 del trattato CE

Promozione di imprese/attività economiche

Esistenza di un vantaggio economico

Partecipazione di risorse statali

Selettività

Giustificazione della misura in relazione alla natura del sistema tributario

Distorsione della concorrenza ed incidenza sugli scambi tra gli Stati membri

Compatibilità

CONCLUSIONI

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(1)  Cfr. direttiva 85/611/CEE del Consiglio del 20 dicembre 1985 concernente il coordinamento delle disposizioni legislative, regolamentari ed amministrative in materia di taluni organismi d'investimento collettivo in valori mobiliari (o.i.c.v.m.) e le successive modifiche.

(2)  La principale differenza tra le SICAV (società d'investimento a capitale variabile) ed i fondi d'investimento risiede nell'assenza di separazione patrimoniale tra capitale investito e capitale sociale. Le quote di partecipazione alla SICAV (azioni) costituiscono il capitale sociale della società medesima.

(3)  Al fine di evitare ogni confusione nella lettura di quanto segue, si precisa che i fondi di pensione sono strumenti d'investimento che non rientrano nel campo d'applicazione del disposto dell'articolo 12 del DL 269/2003.

(4)  Cfr. il ‘Provvedimento del Governatore 27 agosto 2003’ della Banca d'Italia, che modifica le disposizioni relative agli OICVM contemplate dal precedente Provvedimento del Governatore del 20 settembre 1999, adeguandole alle nuove norme introdotte dalla disciplina dei fondi chiusi emanata dal decreto n. 47 del 31 gennaio 2003.

(5)  Tale limite è fissato a 2 mesi nel caso di fondi chiusi.

(6)  Una società può essere inquadrata come società di piccola o media capitalizzazione per uno o più trimestri solari, a seconda delle fluttuazioni dei mercati azionari.

(7)  Secondo il disposto dall'articolo 10-ter della L 77/1983, i proventi derivanti da OICVM di diritto estero non regolamentati dalla direttiva 85/611/CEE del Consiglio concorrono a formare l'attivo netto non essendo soggetti ad imposta alla fonte.

(8)  L'articolo 12 del DL 269/2003 mantiene l'attuale credito d'imposta del 15 per cento, onde evitare che l'aliquota d'imposta ridotta del 5 per cento applicata agli strumenti d'investimento specializzati sia reincamerata a livello dell'investitore partecipante, come avverrebbe se, invece che al 15 per cento, il credito fosse limitato ad un livello del 5 per cento, coincidente con l'aliquota dell'imposta sostitutiva corrisposta dallo strumento d'investimento. Per evitare tuttavia che, qualora sia stata corrisposta solo un'imposta del 5 per cento, gli investitori partecipanti fruiscano indebitamente dell'intero credito del 15 per cento, la misura stabilisce che il credito d'imposta costituisce credito d'imposta limitato per la parte in cui non trova copertura nell'imposta sostitutiva del risultato maturato di gestione, cioè per il 9 per cento, per cui non può essere rimborsato o essere utilizzato per sconti sull'imposta sui redditi dovuta negli esercizi fiscali in cui il reddito è stato percepito. Per compensare l'imposta prelevata alla fonte, la normativa italiana prevede il pagamento di una somma a titolo di restituzione agli investitori esteri (non residenti), che abbiano sottoscritto quote in strumenti d'investimento soggetti a tassazione in Italia, i quali hanno il diritto ad un rimborso d'imposta pari al 15 per cento dei proventi distribuiti dagli strumenti di investimento, a titolo di compensazione dell'imposta precedentemente corrisposta. Il dispositivo limita il rimborso al 6 per cento qualora i proventi siano distribuiti da strumenti d'investimento specializzati assoggettati ad imposta sostitutiva, la cui aliquota sia stata ridotta al 5 per cento a norma dell'articolo 12 del DL 269/2003.

(9)  Cfr. cause riunite T-92/00 e T-103/00, Território Histórico de Álava — Diputación Foral de Alava et al. contro la Commissione [2002] Racc. II-1385.

(10)  Cfr. causa T-214/95 Het Vlaamse Gewest contro la Commissione — 1998 ECR II-717.

(11)  GU L 10 del 13.1.2001, pagg. 33-42.

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Non-opposition to a notified concentration

(Case No COMP/M.3513 — CATERPILLAR/XPART)

(2004/C 225/04)

(Text with EEA relevance)

On 20 August 2004, the Commission decided not to oppose the above notified concentration and to declare it compatible with the common market. This decision is based on Article 6(1)(b) of Council Regulation (EC) No 139/2004. The full text of the decision is available only in English and will be made public after it is cleared of any business secrets it may contain. It will be available:

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Non-opposition to a notified concentration

(Case No COMP/M.3532 — CVC/FP/HYNIX SYSTEM IC BUSINESS (JV))

(2004/C 225/05)

(Text with EEA relevance)

On 31 August 2004, the Commission decided not to oppose the above notified concentration and to declare it compatible with the common market. This decision is based on Article 6(1)(b) of Council Regulation (EC) No 139/2004. The full text of the decision is available only in English and will be made public after it is cleared of any business secrets it may contain. It will be available:

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Notice of initiation of an anti-dumping proceeding concerning imports of granular polytetrafluoroethylene (PTFE) resin originating in the People's Republic of China and Russia

(2004/C 225/06)

The Commission has received a complaint pursuant to Article 5 of Council Regulation (EC) No 384/96 (1), (the basic Regulation), alleging that imports of granular polytetrafluoroethylene (PTFE) resin, originating in the People's Republic of China and Russia (the countries concerned), are being dumped and are thereby causing material injury to the Community industry.

1.   Complaint

The complaint was lodged on 26 July 2004 by CEFIC (the complainant) on behalf of producers representing a major proportion, in this case more than 50 %, of the total Community production of granular polytetrafluoroethylene (PTFE) resin.

2.   Product

The product allegedly being dumped is granular polytetrafluoroethylene (PTFE) resin in primary forms and its raw polymer (reactor bead), the latter whether in wet or dry form, originating in the People's Republic of China and Russia (the product concerned), normally declared within CN code ex 3904 61 00. This CN code is only given for information.

3.   Allegation of dumping

The allegation of dumping in respect of Russia is based on a comparison of normal value established on the basis of domestic prices, with the export prices of the product concerned to the Community.

In view of the provisions of Article 2(7) of the basic Regulation, the complainant established normal value for the People's Republic of China on the basis of the price in a market economy country, which is mentioned in paragraph 5.1(d) of this notice. The allegation of dumping is based on a comparison of normal value, thus calculated, with the export prices of the product concerned when sold for export to the Community.

On this basis, the dumping margins calculated are significant for both countries concerned.

4.   Allegation of injury

The complainant has provided evidence that imports of the product concerned from the People's Republic of China and Russia have individually and overall a significant market share in the Community.

It is alleged that the volumes and the prices of the imported product concerned have, among other consequences, had a negative impact on the market share held, the quantities sold and the level of prices charged by the Community industry, resulting in substantial adverse effects on the overall performance, the financial situation and the employment situation of the Community industry.

5.   Procedure

Having determined, after consulting the Advisory Committee, that the complaint has been lodged by or on behalf of the Community industry and that there is sufficient evidence to justify the initiation of a proceeding, the Commission hereby initiates an investigation pursuant to Article 5 of the basic Regulation.

5.1.   Procedure for the determination of dumping and injury

The investigation will determine whether the product concerned originating in the People's Republic of China and Russia is being dumped and whether this dumping has caused injury.

(a)   Sampling

In view of the apparent large number of parties involved in this proceeding, the Commission may decide to apply sampling in accordance with Article 17 of the basic Regulation.

(i)   Sampling for exporters/producers in the People's Republic of China

In order to enable the Commission to decide whether sampling is necessary and, if so, to select a sample, all exporters/producers, or representatives acting on their behalf, are hereby requested to make themselves known by contacting the Commission and providing the following information on their company or companies within the time limit set in paragraph 6(b)(i) and in the format indicated in paragraph 7 of this notice:

In order to obtain the information it deems necessary for the selection of the sample of exporters/producers, the Commission will, in addition, contact the authorities of the exporting country, and any known associations of exporters/producers.

(ii)   Final selection of the sample

All interested parties wishing to submit any relevant information regarding the selection of the sample must do so within the time limit set in paragraph 6(b)(ii) of this notice.

The Commission intends to make the final selection of the sample after having consulted the parties concerned that have expressed their willingness to be included in the sample.

Companies included in the sample must reply to a questionnaire within the time limit set in paragraph 6(b)(iii) of this notice and must cooperate within the framework of the investigation.

If sufficient cooperation is not forthcoming, the Commission may base its findings, in accordance with Articles 17(4) and 18 of the basic Regulation, on the facts available. A finding based on facts available may be less advantageous to the party concerned, as mentioned in paragraph 8 of this notice.

(b)   Questionnaires

In order to obtain the information it deems necessary for its investigation, the Commission will send questionnaires to the Community industry and to any association of producers in the Community, to the sampled exporters/producers in the People's Republic of China, to the exporters/producers in Russia, to any association of exporters/producers, to the importers, to any association of importers named in the complaint, and to the authorities of the exporting countries concerned.

(i)   Exporters/producers in Russia and importers

All such interested parties should contact the Commission forthwith by fax, but not later than the time limit set out in paragraph 6(a)(i) of this notice, in order to find out whether they are listed in the complaint and, if necessary, request a questionnaire, given that the time limit set in paragraph 6(a)(ii) of this notice applies to all such interested parties.

(ii)   Exporters/producers claiming an individual margin in the People's Republic of China

Exporters/producers in the People's Republic of China claiming an individual margin, with a view to the application of Articles 17(3) and 9(6) of the basic Regulation, must submit a completed questionnaire within the time limit set in paragraph 6(a)(ii) of this notice. They therefore have to request a questionnaire within the time limit set in paragraph 6(a)(i) of this notice. However, such parties should be aware that if sampling is applied to exporters/producers, the Commission may none the less decide not to calculate an individual margin for them, if the number of exporters/producers is so large that individual examination would be unduly burdensome and would prevent the timely completion of the investigation.

(c)   Collection of information and holding of hearings

All interested parties are hereby invited to make their views known, submit information other than questionnaire replies and to provide supporting evidence. This information and supporting evidence has to reach the Commission within the time limit set in paragraph 6(a)(ii) of this notice.

Furthermore, the Commission may hear interested parties, provided that they make a request showing that there are particular reasons why they should be heard. This request must be made within the time limit set in paragraph 6(a)(iii) of this notice.

(d)   Selection of the market economy country

In accordance with Article 2(7)(a) of the basic Regulation, it is envisaged to choose the United States of America as an appropriate market economy country for the purpose of establishing normal value in respect of the People's Republic of China. Interested parties are hereby invited to comment on the appropriateness of this choice within the specific time limit set in paragraph 6(c) of this notice.

(e)   Market economy status

For those exporters/producers in the People's Republic of China who claim and provide sufficient evidence that they operate under market economy conditions, i.e. that they meet the criteria laid down in Article 2(7)(c) of the basic Regulation, normal value will be determined in accordance with Article 2(7)(b) of the basic Regulation. Exporters/producers intending to submit duly substantiated claims must do so within the specific time limit set in paragraph 6(d) of this notice. The Commission will send claim forms to all exporters/producers in the People's Republic of China named in the complaint and to any association of exporters/producers named in the complaint, as well as to the authorities of the People's Republic of China.

5.2.   Procedure for assessment of Community interest

In accordance with Article 21 of the basic Regulation and in the event that the allegations of dumping and injury caused thereby are substantiated, a decision will be reached as to whether the adoption of anti-dumping measures would not be against the Community interest. For this reason the Community industry, importers, their representative associations, representative users and representative consumer organisations, provided that they prove that there is an objective link between their activity and the product concerned, may, within the general time limits set in paragraph 6(a)(ii) of this notice, make themselves known and provide the Commission with information. The parties which have acted in conformity with the precedent sentence may request a hearing setting the particular reasons why they should be heard within the time limit set in paragraph 6(a)(iii) of this notice. It should be noted that any information submitted pursuant to Article 21 will only be taken into account if supported by factual evidence at the time of submission.

6.   Time limits

(a)   General time limits

(i)   For parties to request a questionnaire or other claim forms

All interested parties should request a questionnaire or other claim form as soon as possible, but not later than 10 days after the publication of this notice in the Official Journal of the European Union.

(ii)   For parties to make themselves known, to submit questionnaire replies and any other information

All interested parties, if their representations are to be taken into account during the investigation, must make themselves known by contacting the Commission, present their views and submit questionnaire replies or any other information within 40 days of the date of publication of this notice in the Official Journal of the European Union, unless otherwise specified. Attention is drawn to the fact that the exercise of most procedural rights set out in the basic Regulation depends on the party's making itself known within the aforementioned period.

Companies selected in a sample must submit questionnaire replies within the time limits specified in paragraph 6(b)(iii) of this notice.

(iii)   Hearings

All interested parties may also apply to be heard by the Commission within the same 40 day time limit.

(b)   Specific time limit in respect of sampling

(c)   Specific time limit for the selection of the market economy country

Parties to the investigation may wish to comment on the appropriateness of the United States of America which, as mentioned in paragraph 5.1(d) of this notice, is envisaged as a market-economy country for the purpose of establishing normal value in respect of the People's Republic of China. These comments must reach the Commission within 10 days of the date of publication of this notice in the Official Journal of the European Union.

(d)   Specific time limit for submission of claims for market economy status and/or individual treatment

Duly substantiated claims for market economy status (as mentioned in paragraph 5.1(e) of this notice) and/or for individual treatment pursuant to Article 9(5) of the basic Regulation, must reach the Commission within 15 days of the date publication of this notice in the Official Journal of the European Union.

7.   Written submissions, questionnaire replies and correspondence

All submissions and requests made by interested parties must be made in writing (not in electronic format, unless otherwise specified) and must indicate the name, address, e-mail address, telephone and fax, and/or telex numbers of the interested party. All written submissions, including the information requested in this notice, questionnaire replies and correspondence provided by interested parties on a confidential basis shall be labelled as ‘Limited’ (4) and, in accordance with Article 19(2) of the basic Regulation, shall be accompanied by a non-confidential version, which will be labelled ‘For inspection by interested parties’.

Commission address for correspondence:

8.   Non-cooperation

In cases in which any interested party refuses access to or does not provide the necessary information within the time limits, or significantly impedes the investigation, provisional or final findings, affirmative or negative, may be made in accordance with Article 18 of the basic Regulation, on the basis of the facts available.

Where it is found that any interested party has supplied false or misleading information, the information shall be disregarded and use may be made of the facts available. If an interested party does not cooperate or cooperates only partially and findings are therefore based on facts available in accordance with Article 18 of the basic Regulation, the result may be less favourable to that party than if it had cooperated.

9.   Schedule of the investigation

The investigation will be concluded, according to Article 6(9) of the basic Regulation within 15 months of the date of the publication of this notice in the Official Journal of the European Union. According to Article 7(1) of the basic Regulation, provisional measures may be imposed no later than nine months from the publication of this notice in the Official Journal of the European Union.

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(1)OJ L 56, 6.3.1996, p.1. Regulation as last amended by Regulation (EC) No 461/2004 (OJ L 77, 13.3.2004, p. 12).

(2)  Individual margins may be claimed pursuant to Article 17(3) of the basic Regulation for companies not included in the sample, Article 9(5) of the basic Regulation concerning individual treatment in cases involving non-market economy countries/economies in transition, and Article 2(7)(b) of the basic Regulation for companies claiming market economy status. Note that claims for individual treatment necessitate an application pursuant to Article 9(5) of the basic Regulation and that claims regarding market economy status necessitate an application pursuant to Article 2(7)(b) of the basic Regulation.

(3)  For guidance on the meaning of related companies, please refer to Article 143 of Commission Regulation (EEC) No 2454/93 concerning the implementation of the Community Customs Code (OJ L 253, 11.10.1993, p. 1).

(4)  This means that the document is for internal use only. It is protected pursuant to Article 4 of Regulation (EC) No 1049/2001 of the European Parliament and of the Council (OJ L 145, 31.5.2001, p. 43). It is a confidential document pursuant to Article 19 of Council Regulation (EC) No 384/96 (OJ L 56, 6.3.1996 p.1) and Article 6 of the WTO Agreement on Implementation of Article VI of the GATT 1994 (Anti-dumping Agreement).

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