3.2. 79 Official  Journal  of the European  Communities No C 31/9 
COMMUNICATION  OF  THE  COMMISSION  ON  REGIONAL  AID  SYSTEMS 
On 21 December  1978  the Commission  informed  the Member  States  of the principles 
which,  in accordance  with  the powers  vested  in the Commission  by Articles  92 et seq.  of 
the EEC  Treaty,  it will  apply  to regional  aid systems  already  in force  or to be established 
in the  regions  of the  Community.  The  principles  were  set out  in the  form  of a 
Communication  the text  of which  is published  hereunder. 
The Commission  has  proposed  to the  Member  States  under  Article  93 (1) of that 
Treaty  that  their  Governments  take  the  measures  necessary  to give  effect  to these 
principles  within  the time  limits  provided  for in the Communication. 
In its Communication  of 26  February  1975  the 
Commission  informed  the Council  of the  principles 
of coordination,  valid  for  all  regions  of  the 
Community,  which  it would  apply  from  1 January 
1975. circumstances,  if any,  in which  it might  consider 
operating  aids  to be compatible.  Until  then  there 
should  be no increase  in the level  of the existing  aids 
and no further  aids  of this  type  should  be introduced. 
The Commission  undertook  at that  time  to pursue 
with experts  from  the Member  States  technical  studies 
with  a view  to finding  standards  of measurement 
capable  of making  comparable  all forms  of regional 
aids in force  in the  Community.  The  common 
method  of evaluation  had  hitherto  fixed  investment 
as the  sole  denominator  in  considering  the 
transparency  of  aids  and  aid  systems.  The 
employment  situation  in the  various  regions  of the 
Community  and  the  emphasis  which  some  Member 
States  wish  to give  to the  creation  of jobs  in their 
regional  aid scheme  were,  however,  borne  in mind  in 
carrying  out the studies  on measurability.  In view  of 
this, an  alternative  denominator  expressed  in 
European  units  of account  per  job  created  by the 
investment  is being  introduced  into  the principles  of 
coordination.  The  standard  of measurement  will  thus 
be broadened.  In addition  the methods  for measuring 
aids are being  supplemented  as a result  of the studies 
on measurability.  All  aids  which  have  maximum 
intensities  which  can  be  expressed  in terms  of 
investment  or jobs  created  can now  be coordinated. Finally,  a method  of coordinating  aids  given  on the 
transfer  of an establishment  is introduced. 
These  principles  of coordination,  as set out  in this 
Communication,  do  not  apply  to the  products 
mentioned  in Annex  II to the EEC  Treaty. 
To give  effect  to the above  and  having  regard  to the 
views  expressed  in  previous  Communications, 
including  in  particular  the  preambles  to  the 
Communications  of 23 June  1971  and  26 February 
1975,  the principles  of coordination  have  been  partly 
redefined  and  the methods  for their  implementation, 
including  the  common  method  of evaluation,  have 
been  amended  and  supplemented. 
The Commission,  in accordance  with  the  powers 
vested  in it by Articles  92 et seq.  of the EEC  Treaty, 
will from  I January  1979,  apply  the  principles  set 
out hereunder  to regional  aid  systems  already  in 
force  or to be established  in the regions  of the Com-
munity. 
Some  existing  regional  aids  are  not,  however, 
conditional  on investment,  in the sense  envisaged  in 
the principles  of coordination,  or on job creation  and 
have  the  character  of  operating  aids.  The 
Commission  has  reservations  in principle  as to the 
compatibility  of operating  aids  with  the  common 
market.  The  Commission  will  specify  the Principles  of coordination  of regional  aid  systems 
I. The  coordination  has five  principal  aspects  which 
form  one  whole:  ceilings  of aid  intensity-
differentiated  according  to the nature  and  gravity 
No C 31/10 Official  Journal  of the European  Communities 3. 2. 79 
of the  regional  problems,  transparency,  regional 
specificity,  the sectoral  repercussions  of regional 
aids and  a system  of supervision. 
The differentiated  ceilings  of aid intensity 
2. The  differentiated  ceilings  are  fixed  in net  grant 
equivalents  expressed  either  as a percentage  of 
initial  investment  or  in  European  units  of 
account  (EUA)  (*) per  job  created  by the  initial 
investment.  No  ceilings  are  fixed  for Greenland. 
The alternative  ceilings  for the various  categories 
of region  are set out hereunder: 
(i) for  Ireland,  the  'Mezzogiorno',  Northern 
Ireland,  Berlin  (West)  and  the  French 
Overseas  Departments  — a ceiling  of 75 % 
net grant  equivalent  of initial  investment 
will apply  to aids  linked  and  fixed  directly 
in relation  to initial  investment  or jobs 
created,  the  alternative  ceiling  being  a net 
grant  equivalent  of 13  000  EUA  per  job 
created  by  the  initial  investment.  In 
addition,  as  from  1 January  1981,  for 
projects  with  an initial  investment  exceeding 
three  million  EUA  not  more  than  a further 
25 % net  grant  equivalent  of  initial 
investment  or a net  grant  equivalent  of 
4 500  EUA  per  job  created  by the  initial 
investment  can  be paid  in other  aids  and 
must  be spread  over  a minimum  of five 
years; Industry  Act  1972,  with  the  exception  of 
areas  classified  as Intermediate  Areas  at that 
date,  the  alternative  ceilings  will  be 30 % 
net grant  equivalent  of initial  investment  or 
a net grant  equivalent  of 5 500  EUA  per job 
created  by the  initial  investment,  but  the 
latter  may  not  exceed  40  % net  grant 
equivalent  of initial  investment; 
(iii) for  the  'Zonenrandgebiet'  and  the  special 
development  area  in the North  of Denmark 
and the  islands  of Bornholm,  Aero,  Samso 
and Langeland  the  alternative  ceilings  will 
be 25  % net  grant  equivalent  of initial 
investment  or 4 500  EUA  per  job  created  by 
the initial  investment,  but the latter  may  not 
exceed  30 % net  grant  equivalent  of initial 
investment; 
(iv) for  the other  regions  of the  Community  the 
alternative  ceilings  will  be 20 % net  grant 
equivalent  of initial  investment  or a net 
grant  equivalent  of 3 500 EUA  per  job 
created  by the  initial  investment,  but  the 
latter  may  not  exceed  25 % net  grant  equiv-
alent  of initial  investment;  for  these  regions 
the trend  must  be towards  a reduction  in the 
level  of aids  as far as possible. 
3. One  of the  appropriate  alternative  ceilings  must 
be respected  by the  total  regional  aids  accorded 
to a given  initial  investment  or on the creation  of 
jobs.  The  absolute  ceilings  fixed  above  the 
ceilings  expressed  in EUA  per  job  created  by the 
initial  investment  do not  apply  in the case  of the 
tertiary  sector. 
(ii) for  the  part  of  French  territory  which 
receives  the  regional  development  premium 
(as listed  in Annex  1 of decree  No  76/325 
of 14.  4. 1976  — J.O.R.F.  No  90 of 14.  4. 
1976),  the aided  areas  in the Italian  regions 
of Friuli-Venezia  Giulia,  Trentino-Alto 
Adige,  Val  d'Aosta,  Lazio,  Marche, 
Toscana,  Umbria  and  Veneto  in so far  as 
these  regions  are  not  included  in  the 
'Mezzogiorno',  and  the  parts  of the  United 
Kingdom  other  than  Northern  Ireland 
which  were  defined  as Assisted  Areas  on 
1 January  1978  under  Section  7 (7) of the 
(') As defined  by  Council  Decision  76/250/EEC  of 
21 April  1975  (OJ  No L 104,  24. 4. 1975). Aids  not  conditional  on  initial  investment  or job 
creation 
4. There  are  some  regional  aids  in use  in the 
Community  at present  which  are  not  conditional 
on initial  investment  or job  creation  and  which 
have  the  character  of  operating  aids.  The 
Commission  has  reservations  in principle  as to 
the compatibility  of operating  aids  with  the 
common  market. 
Application  of these  aids  may  however  continue 
until  final  decisions  on their  compatibility  have 
been  taken  in the  course  of the  Commission's 
review  of existing  aid systems  under  Article  93 (1) 
of the EEC  Treaty.  Before  the end  of a three-year 
period,  the Commission  will,  in the light  of these 
3. 2. 79 Official  Journal  of the European  Communities No C 31/11 
decisions,  specify  the  circumstances,  if any,  in 
which  the  Commission,  notwithstanding  its 
reservations  in  principle,  might  consider 
operating  aids  to  be  compatible  with  the 
common  market.  Until  then  the  level,  duration 
and geographic  scope  of application  of the 
existing  aids  should  not be increased  and  further 
aids of this  type  should  not be introduced  unless 
a derogation  from  this  principle  has been  granted 
under  point  7 hereunder. 
5. In order  to place  all Member  States  in the same 
position  with  regard  to the ceilings,  particularly 
in the context  of outbidding,  the Member  States 
concerned  will  have  to ensure  that  the  ceilings 
fixed  at points  2 and  3 above  are not  exceeded 
when  the above  aids  are awarded. 
Aids  to the transfer  of an establishment 
6. In the case  of transfer  of an establishment  to an 
aided  region,  the ceilings  will  be 100  % of the 
cost of transfer  of capital  equipment  or the 
appropriate  ceiling  from  point  2 above  applied  to 
the value  of the  capital  equipment,  or to the 
number  of workers  transferred.  The  absolute 
ceilings  fixed  above  the ceilings  expressed  in EUA 
per job  created  by  the  initial  investment  at 
point  2 will  not  apply  in the case  of transfers. 
Derogations 
7. Derogations  from  the intensity  ceilings  or from 
the principle  at point  4 above  regarding  increases 
in, or the  introduction  of, certain  aids  may  be 
granted  by the  Commission  provided  that  the 
necessary  justification  is communicated  in advance 
in accordance  with  the procedure  provided  for at 
Article  93 of the  EEC  Treaty.  The  Commission 
will periodically  supply  the Member  States  with  a 
list of any  such  derogations. 
Review  of ceilings 
8. The  level  of all ceilings  will  be revised  at the end 
of a three-year  period  having  regard  in particular 
to experience  gained,  the  evolution  of the 
regional  situation  in the  Community  (especially 
with  regard  to the evolution  of unemployment), 
the number  of jobs  created  or maintained  and 
changes  in aid  systems.  Before  31 December 
1979,  however,  the  Commission  will  examine 
with  experts  from  the  Member  States  the 
problems  of the cumulation  of regional  and  other aids beyond  that  discussed  in point  12. Before  the 
same  date  it will  also  examine  how  absolute 
ceilings  expressed  in EUA  per job created  by the 
initial  investment,  above  the percentage  of initial 
investment  ceiling,  might  be introduced  and  the 
levels  at which  such  ceilings  might  be fixed.  The 
question  as  to whether  an  absolute  ceiling 
expressed  as a percentage  of initial  investment 
should  be introduced  above  the ceiling  expressed 
in EUA  per job created  by the initial  investment 
for the  regions  listed  at point  2 (i) of these 
principles  will  also  be examined. 
Regional  specificity 
9. Regional  specificity  will  be implemented  in the 
light  of the following  principles: 
(i) that  regional  aids  do not  cover  the  whole 
national  territory,  i.e. general  aids  may  not 
be granted  under  the  heading  of regional 
aids;  (x) 
(ii) that  aid  regimes  clearly  specify,  either  in 
geographical  terms  or  by  quantitative 
criteria,  the  limits  of aided  regions  or, 
within  these,  the limits  of aided  areas; 
(iii) that,  except  in the  case  of growth  points, 
regional  aids  are not granted  in a pin-point 
manner,  i.e. to isolated  geographical  points 
having  virtually  no  influence  on  the 
development  of a region; 
(iv) that,  where  problems  which  are different  in 
kind,  intensity  or urgency  occur,  the  aid 
intensity  must  be adapted  accordingly; 
(v) that  the  graduation  and  variation  of rates 
of aid across  different  areas  and  regions  are 
clearly  indicated; 
(iv) that  the regional  aids  awarded  in the regions 
benefiting  from  the  European  Regional 
Development  Fund  should  in principle  form 
part of a regional  development  programme 
within  the  meaning  of  Article  6 of 
Regulation  (EEC)  No  724/75  establishing 
that Fund. 
Sectoral  repercussions 
10. The  lack  of sectoral  specificity  in regional  aid 
systems  makes  their  assessment  difficult  because 
(i) With  the exception  of Ireland  and  the Grand  Duchy  of 
Luxembourg  which  are considered  each  as one  region. 
No C 31/12 Official  Journal  of the  European  Communities 3. 2. 79 
of the problems  that  the sectoral  repercussions  of 
these  aids  may  pose  at Community  level. 
11. In the absence  of a general  solution  for dealing 
with  these  sectoral  repercussions,  the 
Commission,  following  consultation  with  the 
Member  States,  will  examine  to what  extent 
appropriate  restrictions  should  be applied  when 
awarding  regional  aids  where  such  restrictions 
are justified  by the situation  in a sector. 
12. When  an investment  benefits  both  from  regional 
aids and  from  other  types  of aid on a regionally 
differentiated  basis,  the regional  aid may  be given 
only in so far as when  the regional  aid and  the 
regional  component  of the other  types  of aid are 
cumulated,  the  ceilings  mentioned  in points  2 
and 3 above  are not exceeded. 
System  of supervision 
13. The  Commission  shall  supervise  the application 
of the  coordination  principles  by means  of a notification  system  which  will  ensure  business 
secrecy. 
Methods  for implementation 
14. The  methods  for implementing  the principles  of 
coordination,  which  include  the common  method 
of evaluation,  defined  in the  Annex  to the 
Communication  of the  Commission  of 23 June 
1971  supplemented  by the Communication  of the 
Commission  of 27 June  1973,  will  continue  to 
apply.  They  are,  however,  amended  and 
supplemented  in accordance  with  the  Annex  to 
this Communication. 
Date  of effect 
15. The  principles  of coordination  set out  in this 
Communication  will  be  applied  by  the 
Commission  from  1 January  1979  in all regions 
of the  Community  for an initial  period  of three 
years.  In so far  as a transitional  period  for 
changes  in  aid  systems  required  by  this 
coordination  is deemed  necessary  by a Member 
State,  the Commission  may  fix such  a period. 
ANNEX 
METHODS  FOR  IMPLEMENTING  THE  PRINCIPLES  OF COORDINATION  OF 
REGIONAL  AID  SYSTEMS 
The alternative  ceilings  of aid intensity 
1. The  technical  studies  pursued  with  the Member  States 
have  shown  that  it is possible  to assess,  on the basis  of 
certain  assumptions  and  conventions,  the  extent  to 
which  the  aid  systems  of the  Member  States  do not 
exceed  the  appropriate  ceilings.  Notwithstanding  the 
result  of such  an assessment,  the Member  States  must 
still ensure  that  these  ceilings  are in fact  not exceeded 
in the  individual  cases  of application  of the  aid 
systems. 
2. The  technical  studies  have  also  led to the adoption  of 
an ex-post  system  of measurement  in situations  where 
the regional  aid  systems  of a Member  State  include 
both  aids  which  can  and  which  cannot  be measured  in 
advance.  The  Member  States  concerned  must 
incorporate  in their  aid  systems  a rule  to the  effect 
that in the individual  case  the net grant  equivalent  of 
aids which  can  be calculated  in advance  is subtracted 
from  the appropriate  ceiling  to establish  the  balance 
of aid which  could  still  be paid.  The  aid which  cannot be measured  in advance  will  then  be paid  to the 
extent  of this  balance  expressed  as a net  grant 
equivalent.  If the  aid  is to be paid  over  a period  of 
years  any  balance  remaining  at the end  of a particular 
year may  be carried  forward  to the  next  year  and 
increased  by the discount/reference  rate.  This  process 
continues  until  the aid terminates  in accordance  with 
its own  particular  rules  of payment  or until  the 
balance  to the  ceiling  is exhausted.  It should  be 
remembered  here  that  the  ceilings  are not  necessarily 
those  fixed  at points  2 and  3 of the  principles  of 
coordination  but  rather  the  maxima  fixed  by the 
Member  State  and  accepted  by the Commission  under 
Article  93 of the EEC  Treaty. 
Aids  conditional  on initial  investment  or job creation 
3. Labour  aids  will  be considered  measurable  when  the 
aid awarded  for each  job  created  can  be expressed  as 
a net  grant  equivalent  in EUA.  Labour  aids  which 
3. 2. 79 Official  Journal  of the  European  Communities No C 31/13 
cannot  be so expressed  can,  however,  always  be 
measured  by the ex-post  system  described  at point  2 
above. 
4. Aids  towards  the  rental  of buildings  will  be 
considered  measurable  when  they  are limited  in time 
and the percentage  of the rent  given  by way  of aid in 
each year  is fixed.  The  rent  on the actual  building 
excluding  the land  is assumed  to be equivalent  to a 
rate of return  on the value  of the building  when  the 
rate of return  is deemed  to be equal  to the reference 
rate. The  rent  on the land  element  is assumed  to be 
equal  to a real  rate  of return,  i.e.  the  difference 
between  the reference  rate  and  the rate  of inflation. 
The capital  value  of the building  and  land  shall  be 
included  in the standard  basis  for the purposes  of 
defining  the investment  against  which  aids  are to be 
measured. 
5. Aids  in the form  of loan  guarantees  will  be measured 
by equating  the guarantee  to an interest  subsidy  on a 
loan equivalent  to  the  value  of the  amount 
guaranteed.  The  value  of the  equivalent  interest 
subsidy  is taken  as the  difference  between  the 
reference  rate  applicable  in a particular  Member  State 
and the  rate  at which  that  Member  State's 
Government  can borrow,  taken  over  the same  period 
as that  to which  the reference  rate  relates.  Any  charge 
made  by a Member  State  for granting  a guarantee  will 
be deducted  from  the value  of the  guarantee  thus 
calculated.  The  ratio  of the total  amount  paid  out on 
behalf  of defaulters  each  year  to the total  amount  of 
guarantees  still  outstanding  will  be communicated 
annually  by the Member  State  to the  Commission. 
This information  on the default  ratio  may  be used  to 
adjust  the value  of a guarantee.  Should  a Member 
State  prefer  not  to use  this  method  for  evaluating 
guarantees,  it will  notify  the  Commission  of all 
individual  cases  involving  investment  of over  1-5 
million  EUA  in which  guarantees  are given. 
6. Tax-concessions  will  be measured  by the  ex-post 
system  outlined  at point  2 above. 
Aids  not conditional  on initial  investment  or job creation 
7. Aids  related  to replacement  investment  will  be 
measured  by means  of a method  which  is introduced 
with considerable  reservations  as it involves  a wide 
degree  of approximation.  It is however  considered 
necessary  to place  all Member  States  in the  same 
position  with  regard  to the  ceilings.  The  method 
described  hereunder  will  therefore  be used  to ensure 
observance  of the  ceilings  at least  until  the 
Commission  specifies  the circumstances,  if any,  in 
which  it might  consider  aids  of this  type  to be 
compatible. 
Aids to replacement  investment  will  be measured  by 
first expressing  the aid awarded  as a net grant  equi-
valent  of replacement  investment  using  the common 
method  of evaluation.  This  net grant  equivalent  will 
then be related  to the initial  investment  by using  an 
appropriate  discount  rate.  The  timing  of replacement investment  will  be based  on the average  life of capital 
equipment. 
8. Tax  aids  which  have  the character  of operating  aid 
will be measured  by the ex-post  system  outlined  at 
point  2 above. 
9. Labour  aids  which  have  the character  of operating  aid 
and which  are  expressed  as a fixed  amount  per 
specified  period  for  each  person  employed  will  be 
measured,  by means  of the reference  rate,  as the net 
grant  equivalent  of the sum  necessary  to generate  the 
cash flow  of the  aid.  The  use  of this  method  of 
measurement  will  be based  on the understanding  that 
the amount  paid  for each  person  employed  cannot  be 
increased.  Where  the amount  paid  is not  fixed  the 
ex-post  system  outlined  at point  2 above  will  be 
applied. 
Aids  given  on the transfer  of an establishment 
10. Aids  given  on the transfer  of capital  equipment  will 
be considered  measurable  when  they  are  either 
expressed  as a percentage  of the  costs  of moving 
capital  equipment  (including  costs  of dismantling  and 
remounting)  or expressed  as a percentage  of the value 
of the  capital  equipment  moved.  The  value  of the 
capital  equipment  moved  and  receiving  aid in either 
of the two  ways  above  shall  not be included  as capital 
expenditure  eligible  for further  aid, and shall  therefore 
be excluded  from  the standard  basis. 
11. Aids  awarded  on the basis  of the number  of workers 
transferred  will  be coordinated  against  the appropriate 
ceilings  in EUA  per job created. 
The EUA  ceilings  in national  currencies 
12. The  ceilings  expressed  in EUA  per job created  by the 
initial  investment  will  be expressed  throughout  each 
year for each  Member  State  in its own  currency  at the 
exchange  rate  of the first  day  of the year  on which 
exchange  values  for EUA  into  all currencies  of the 
Community  are available.  The  ceilings  thus  expressed 
may be revised  during  the year  by agreement  between 
the Commission  and  a Member  State  if necessitated 
by a significant  change  in exchange  rates.  The 
Commission  will  communicate  to each  Member  State 
the value  of the ceilings  in its own  currency. 
Reference  rates  and discount  rates 
13. The  communication  of 23 June  1971  provided  for a 
unique  up-dating  or discount  rate  throughout  the 
Community  in applying  the  common  method  of 
evaluation.  Because  of the difference  in interest  rates 
in the different  Member  States,  discounting  will  now 
be carried  out at reference  rates  reflecting  the average 
rate of interest  on the market  concerned. 
14. These  reference/discount  rates  for each  Member  State 
have  for the present  been  fixed  as follows: 
No C 31/14 Official  Journal  of the  European  Communities 3. 2. 79 
Belgium  — The  rate  for  Societe  Nationale  du Credit 
pour  l'lndustrie  loans  of more  than  10 years; 
Denmark  — The  European  Investment  Bank  lending 
rate plus  1-5  percentage  points; 
France  — The  rate  used  for  plant  and  equipment 
loans  from  the Credit  National; 
Germany  — The  rate  for medium  term  loans  from  the 
Kreditanstalt  fur  Wiederaufbau  (programmes  Ml  and 
M2); 
Ireland  — 'AA'  rate  for loans  in excess  of seven  years 
as fixed  by the Standing  Committee  of Commercial  or 
Merchant  Banks; 
Italy  — Average  reference  rate  applicable  to payments 
by central  Government  of interest  subsidies  to credit 
institutions; 
Luxembourg  — The  average  yield  on a representative 
selection  of bonds  issued  in Luxembourg  francs  on the 
primary  market  in Luxembourg  as published  by the 
Luxembourg  Stock  Exchange; 
Netherlands  — The  rate  of yield  on debt  certificates; 
United  Kingdom  — The  broadly  commercial  rate  at 
which  medium-term  loans  are  made  under  the 
Industry  Act  1972. 
15. The  reference  rate  is fixed  at the  beginning  of each 
year  on the  basis  of the  average  annual  rate  for  the 
preceding  year.  However,  should  there  be a significant 
change  in the  relevant  rate,  it will  be adjusted  by 
agreement  between  the  Commission  and  the  Member 
State  concerned.  Such  an adjustment  would  only  be 
made  if there  was  an appreciable  discrepancy  — at 
least  two  percentage  points  — between  the  current 
reference  rate  and  the  average  of the  rates  recorded 
over  a three-month  period. 
The common  method  of evaluation  when  applied  to 
individual  cases 
16. The  common  method  of  evaluation  applies,  in 
general,  to the  examination  and  calculation  of aid 
intensities,  both  for  regional  aid systems  and  for  their 
application  to individual  cases.  However,  many  of the 
assumptions  and  conventions  used  at the  level  of the 
systems  are  not  necessary  and  should  not  be applied 
in the  individual  case.  As a result  of the  experience 
gained  since  the  introduction  of the  common  method 
of evaluation  and  the  contacts  between  the 
Commission  and  the  Member  States  in  its 
implementation  the  following  refinements,  which  are 
to be applied  in the individual  case,  are confirmed: 
— the  actual  costs  of land,  buildings  and  plant  will 
be used  rather  than  the  hypothetical  standard 
basis, — the  reference/discount  rate  will  be the  rate  ruling 
at the beginning  of the  project, 
— where  the  aids  and/or  investment  are  not  given  or 
undertaken  all in one  year,  the actual  timing  of the 
aids and  investment  will  be taken  into  account. 
This  is done  by discounting  both  the  investment 
and aids,  on the  basis  of calender  years,  back  to 
the year  the investment  was  initially  undertaken, 
— in the  calculation  of aids  towards  the  rental  of 
buildings  or  periods  of  reduced  rents  in 
State-owned  buildings,  the  actual  rent  grant  or 
reduction  and  the  actual  capital  value  of the 
buildings  will  be used. 
Alternative  methods  of evaluation 
17. The  common  method  of  evaluation  describes  a 
method  of evaluation  to be used  for  each  type  or 
category  of aid.  However,  where  for administrative  or 
other  reasons  the  Commission  considers  that  the 
method  that  would  normally  be  used  would  be 
difficult  or inappropriate  to use  for a particular  aid,  it 
will devise  an  alternative  equivalent  method  to 
overcome  these  difficulties.  The  Commission  will 
periodically  supply  the  Member  States  with  details  of 
such  alternative  methods. 
Interpretation 
18. (i)  Initial  investment  will  be  interpreted  as 
investment  in fixed  assets  in the  creation  of a 
new establishment,  the  extension  of an existing 
establishment  or  in  engaging  in  an  activity 
involving  a fundamental  change  in the  product 
or production  process  of an existing  establishment 
(by means  of rationalization,  restructuring  or 
modernization).  Investment  in fixed  assets  by way 
of take-over  of an establishment  which  has  closed 
or which  would  have  closed  had  such  take-over 
not taken  place,  may  also  be deemed  to be initial 
investment.  The  manner  in which  initial  investment 
so defined  is identified  in the regional  aid systems 
of the  Member  States  will  be examined  by the 
Commission  in the  course  of its  review  of 
existing  aid  systems  under  Article  93 (1) of the 
EEC  Treaty. 
(ii) For  the  purposes  of point  2 (i) of the  principles 
the 'aids  linked  and  fixed  directly  in relation  to 
initial  investment  or  jobs  created'  will  be 
interpreted  as  including  grants,  loans  on 
preferential  terms  or interest  relief  grants  and 
guarantees  linked  to the  initial  investment  or 
lump  sum  grants  fixed  directly  in relation  to the 
number  of jobs  created.  Where,  in the  case  of 
projects  with  an  investment  exceeding  three 
million  EUA,  the ceiling  specified  for such  aids  is 
not reached,  the  balance  to the  ceiling  may  be 
added  to the  ceiling  specified  for  other  aids 
which  must  be spread  over  a minimum  of five 
years. 
3. 2. 79 Official  Journal  of the  European  Communities No C 31/15 
(iii) For  the purposes  of point  3 of the principles,  the 
tertiary  sector  will  be interpreted  as being  made 
up of  the  activities  listed  in divisions:  6 
(distributive  trades,  hotels,  catering  and  repairs), 
7 (transport  and  communication)  — with  the 
exception  of classes  71 (railways),  72 (other  land 
transport),  73 (inland  water  transport),  74 (sea transport  and  coastal  shipping),  75 (air transport) 
and 76 (supporting  services  to transport)  — 8 
(banking  and  finance,  insurance,  business 
services,  renting)  and  9 (other  services)  of the 
General  Industrial  Classification  of Economic 
Activities  within  the  European  Communities 
(NACE  — 1970).