Commission Decision

of 20 September 2000

on the part of the Italian regional aid map for the period 2000 to 2006 concerning the areas eligible for the derogation in Article 87(3)(c) of the Treaty

(notified under document number C(2000) 2752)

(Only the Italian text is authentic)

(Text with EEA relevance)

(2002/282/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Community, and in particular the first subparagraph of Article 88(2) thereof,

Having regard to the Agreement on the European Economic Area, and in particular Article 62(1)(a) thereof,

Having called on interested parties to submit their comments in accordance with the abovementioned provisions(1), and having regard to those comments,

Whereas:

I. Procedure

(1) By letter SG(98) D/1672 of 24 February 1998, the Commission called on the Italian authorities to notify to it under Article 88(3) of the Treaty and in respect of the period 2000 to 2006 the methodology for determining the regions to be assisted as from 1 January 2000, together with the list of the regions and the corresponding aid intensities and aid cumulation ceilings, by 31 March 1999 at the latest; the methodology and the aid intensities and aid cumulation ceilings laid down must be compatible with the guidelines on national regional aid(2) ("the guidelines").

(2) By letter SG (98) D/12386 of 30 December 1998, it informed the Italian authorities that, under the guidelines, in particular the method described in point 3 and Annex III, and subject to the overall ceiling of 42,7 % of the Community population, the national ceiling for the population covered by the derogations in Article 87(3)(a) and (c) which the Commission deems compatible with the common market is 43,6 % for the period 2000 to 2006. In the same letter the Commission noted that some of the NUTS (nomenclature of statistical territorial units) level II regions in Italy corresponding to 33,6 % of the population satisfied the eligibility criteria for regional aid under Article 87(3)(a). Consequently, the coverage of regional aid under Article 87(3)(c) must not exceed 10 % of the Italian population.

(3) Following reminders dated 14 June 1999 (SG(99) D/4259) and 26 October 1999 (SG(99) D/01986) the Italian authorities, acting under Article 88(3), notified the draft regional aid map to the Commission by letter No 16497 of 16 December 1999 from their Permanent Representation, registered as received by the Commission on 17 December 1999. A request for further information was sent to the Italian authorities on 20 January 2000. By letters dated 31 January and 1, 11 and 17 February, the Italian authorities provided additional information. Two meetings between the Italian authorities and the Commission departments took place in Brussels on 14 January and 1 February.

(4) By letter SG(2000) D/102347 of 13 March 2000, the Commission informed Italy that, having examined the information provided by the Italian authorities on the measure in question, it had decided, pursuant to Articles 87 and 88 of the Treaty and Articles 61 and 62 of the EEA Agreement, not to raise any objections with regard to the part of the map concerning the Italian regions eligible for the derogation in Article 87(3)(a) of the Treaty (State aid N 792/99) and to initiate the procedure laid down in Article 88(2) of the Treaty in respect of the part of the map concerning the Italian regions eligible for the derogation in Article 87(3)(c) of the Treaty (State aid C 16/2000).

(5) The Commission's decision not to raise any objections with regard to part of the Italian map, which it found to be compatible with the Treaty, and to initiate the formal investigation procedure in respect of the other part was published in the Official Journal of the European Communities(3). Interested parties were invited to submit their comments on the aspects of the measure in respect of which the Commission had initiated the procedure within one month of the date of publication of the notice in the Official Journal.

(6) On 31 July 2000 the Commission received comments from the municipality of Fivizzano (Tuscany). They were submitted after the deadline for the submission of comments by interested parties.

(7) By letter of 3 July 2000 (SG(2000) D/53627), the Commission requested the Italian authorities to state whether, following their proposal of 21 June 2000 concerning the areas eligible under Objective 2 of the Structural Funds, the areas proposed as eligible for regional aid in accordance with point 3.10.5 of the guidelines remained unchanged with respect to the notification made in December 1999.

(8) By letters of 26 July (No 8933) and 29 August 2000 (No 9619) from their Permanent Representation, registered as received by the Commission on 31 July (SG(2000) A/36395) and 29 August (SG(2000) A/37065) respectively, the Italian authorities submitted their comments to the Commission.

II. Description of the aspects of the measure in respect of which the Commission initiated the procedure

(9) The draft regional aid map notified by the Italian authorities covers the period 1 January 2000 to 31 December 2006.

(10) Of the areas proposed by Italy for the Article 87(3)(c) derogation, some were presented on the basis of a particular methodology (point 3.10.3 of the guidelines), others were presented as areas eligible under Objective 2 of the Structural Funds (point 3.10.5) and yet others were proposed as areas eligible under Objective 1 (phasing-out) of the Structural Funds (also point 3.10.5).

(11) The proposed intensity ceilings are the following:

- 8 % nge for all areas with the exception of the areas proposed in Abruzzi and Molise,

- 20 % nge for the areas proposed in Abruzzi and Molise.

(12) All the above aid intensity ceilings are increased by 10 percentage points gross for small firms and by six percentage points gross for medium-sized firms as defined in Commission Recommendation 96/280/EC of 3 April 1996 concerning the definition of small and medium-sized enterprises(4), with the exception of the areas in Abruzzi and Molise, where a bonus of 10 percentage points gross is proposed also for medium-sized firms.

(13) The Commission has examined the Italian map in the light of the guidelines, and in particular point 5.2 thereof, which stipulates that the draft map must be "drawn up in accordance with the criteria set out in points 3.5, 3.10, 4.8 and 4.9".

(14) As regards the areas proposed as areas eligible for Objective 2 of the Structural Funds, the Italian authorities have proposed parts of employment areas (sistemi locali del lavoro) in the regions of Piedmont, Liguria, Friuli-Venezia Giulia, Veneto, Emilia-Romagna, Tuscany, Marche, Umbria, Abruzzi and Lazio.

(15) Those areas, proposed under point 3.10.5 of the guidelines, which establishes eligibility for the Structural Funds as a criterion for eligibility for the regional aid map, did not yet have the status of eligible areas under Objective 2 of the Structural Funds since, at the time the procedure was initiated, the Italian map for Objective 2 of the Structural Funds had not yet been approved. Consequently, the proposal that these areas be considered eligible for the Article 87(3)(c) derogation in accordance with point 3.10.5 of the guidelines was not deemed compatible with the Treaty. In this connection, the Commission also pointed out that eligibility for Objective 2 did not necessarily mean that all the areas selected were also eligible for the Article 87(3)(c) derogation. They would be included on the regional aid map provided that they satisfied the general conditions laid down in the guidelines and complied, in particular, with the minimum population and compactness conditions.

III. Comments submitted by Italy

(16) During the formal investigation procedure, the Italian authorities amended their original notification with regard to the areas proposed for the Article 87(3)(c) derogation in line with the outcome of discussions which had enabled the Commission to approve the Italian map for Objective 2 of the Structural Funds.

(17) As provided for in the original notification, the Italian authorities have proposed, for the Article 87(3)(c) derogation, some areas on the basis of a particular methodology (point 3.10.3 of the guidelines), others as areas eligible under Objective 2 of the Structural Funds (point 3.10.5) and yet others as areas eligible under Objective 1 (phasing-out) of the Structural Funds (also point 3.10.5).

(18) As regards the first group, the Italian authorities have proposed a particular methodology, one statistical unit and quantitative indicators for determining the regions eligible.

(19) As stated in the original notification, the statistical unit applied is the employment area (sistema locale del lavoro). The method used for demarcating the employment areas is designed to produce a breakdown of Italian territory that maximises the population flow between home and place of work within a given geographical unit. It is based on the results of the 1991 census. Italy has been divided into 784 employment areas.

(20) As stated in the original notification, the indicators are the following:

- average unemployment rate during the period 1994 to 1996,

- a composite indicator identifying the less-favoured industrial areas (arithmetic mean of the unemployment rate - calculated as an average of the unemployment rates over the period 1994 to 1996 - and of the ratio of jobs in industry to the total number of jobs existing in 1996),

- change in the number of jobs in agriculture over the period 1991 to 1996,

All these data are supplied by the national statistics office (ISTAT - Istituto Nazionale di Statistica).

(21) The indicators applied to employment areas under the method described in the guidelines led the Italian authorities to select 49 employment areas.

(22) As regards the areas proposed as areas eligible for Objective 2, the Italian authorities have proposed parts of employment areas in the regions of Valle d'Aosta, Piedmont, Liguria, Lombardy, Friuli, Veneto, Emilia-Romagna, Tuscany, Marche, Umbria, Abruzzi and Lazio.

(23) As regards the areas proposed as areas eligible for Objective 1 (phasing out), the Italian authorities have proposed, as stated in the original notification, parts of employment areas in the region of Molise.

(24) As stated in the original notification, the proposed intensity ceilings are the following:

- 8 % nge for all employment areas with the exception of the areas proposed in Abruzzi and Molise,

- 20 % nge for the areas proposed in Abruzzi and Molise.

(25) As stated in the original notification, all the above aid intensity ceilings are increased by 10 percentage points gross for small firms and by six percentage points gross for medium-sized firms (OJ L 107, 30.4.1996), with the exception of the areas in Abruzzi and Molise, where a bonus of 10 percentage points gross is proposed also for medium-sized firms. The intensity ceilings also represent cumulation ceilings applicable to total aid where assistance is granted concurrently under several regional schemes, irrespective of whether it comes from local, regional, national or Community sources.

IV. Assessment

(26) The Commission has examined the part of the Italian map concerning the areas proposed under the derogation in Article 87(3)(c) of the Treaty, as amended in the course of the formal investigation procedure, in the light of Article 87(3)(c) of the Treaty and the guidelines on national regional aid.

(27) As regards the population ceiling, the Commission notes that the draft Italian map for the purposes of the derogation in Article 87(3)(c), which covers 10 % of the Italian population, is consistent with point 3.10 of the guidelines and with the Commission letter of 30 December 1998 (SG(98) D/12386). As regards this aspect, the draft map can be regarded as being compatible with the relevant provisions of the guidelines.

(28) In conformity with point 3.10 of the guidelines, the Commission notes that the Italian authorities have notified a particular methodology, a statistical unit and quantitative indicators for determining the areas proposed for the derogation in Article 87(3)(c).

(29) As regards the indicators, the Commission notes that they satisfy the conditions laid down in point 3.10.2 of the guidelines, namely:

- their number, including both simple indicators and combinations of indicators, is limited to three,

- they are objective and relevant to the examination of the socioeconomic circumstances of the regions,

- they are based on statistical series covering the last three years available or are derived from the last survey carried out,

- they are drawn up by reliable statistical sources.

(30) As regards the conformity of the proposed areas with the conditions laid down in the guidelines, it should be recalled that point 3.10.3 of the guidelines stipulates that:

(a) "The regions must conform to NUTS level III or, in justified circumstances, to a different homogeneous geographical unit. Only one type of geographical unit may be submitted by each Member State."

The Italian authorities have proposed an approach based on employment areas. The method used for determining those areas is designed to produce a breakdown of Italian territory that maximises the population flow between home and place of work within a given geographical unit and is based on the results of the 1991 census. Italy has been divided into 784 employment areas. These are economically significant areas that form part of a single local job market or ensure a strong correlation between home and place of work. They are economically and socially homogenous areas. They have been used since 1987 as units of reference in national policies on programming, economic development, employment and local autonomy. The employment area meets the wish of the Commission that the population ceiling should not be used to select only areas with a high density of firms without taking account of the population that contributes to this productive activity and benefits from wealth creation. By ensuring a correlation between home and place of work, the employment area guarantees compliance with the spirit of the Treaty, which allows derogations from the fundamental prohibition on aid for firms laid down in Article 87 with a view to promoting the development of certain economic areas,

(b) "The individual regions proposed or the groups of contiguous regions must form compact zones, each of which must have a population of at least 100000."

All the areas proposed by Italy comply with the second indent of point 3.10.3 of the guidelines,

(c) "The regions proposed must show significant disparities (half of the standard deviation) compared with the average of the potential 87(3)(c) regions of the Member State concerned, in respect of one or other indicator used in the method."

All the areas proposed by Italy comply with the third indent of point 3.10.3 of the guidelines.

(31) As regards the areas proposed under point 3.10.5 of the guidelines, which establishes eligibility for the Structural Funds as a criterion for eligibility for the regional aid map, the following observations should be made:

- the Commission notes that all these areas are included in the map of areas eligible under Objective 2 of the Structural Funds for the period 2000 to 2006(5),

- in accordance with the second indent of point 3.10.3 of the guidelines, "the individual regions proposed or the groups of contiguous regions" form zones each of which "have a population of at least 100000",

- also in accordance with the second indent of point 3.10.3, "the individual regions proposed or the groups of contiguous regions" form "compact zones". Indeed, the parts of employment areas proposed present a strong correlation between home and place of work. They therefore meet the wish of the Commission that the population ceiling should not be used to select only areas with a high density of firms without taking account of the population that contributes to this productive activity and benefits from wealth creation.

The Commission points out that one third of the areas eligible for the Article 87(3)(c) derogation are not eligible under the Structural Funds, while half of the areas eligible under Objective 2, representing 7 % of the Italian population, have not been proposed by the Italian authorities for regional aid. While accepting their proposal, the Commission would draw the attention of the Italian authorities to the loss of effectiveness of regional policy resulting from the dispersion between the above two mechanisms for supporting regional development.

(32) As regards the areas proposed as areas eligible for Objective 1 (phasing out) and in accordance with point 3.10.5 of the guidelines, the following observations should be made:

- all these areas are included in the NUTS level II region (Objective 1 - phasing-out) for the period 2000 to 2006(6);

- in accordance with the second indent of point 3.10.3 of the guidelines, "the individual regions proposed or the groups of contiguous regions" form zones each of which "have a population of at least 100000";

- also in accordance with the second indent of point 3.10.3, "the individual regions proposed or the groups of contiguous regions" form "compact zones". Indeed, the parts of employment areas in the region of Molise present a strong correlation between home and place of work. They therefore meet the wish of the Commission that the population ceiling should not be used to select only areas with a high density of firms without taking account of the population that contributes to this productive activity and benefits from wealth creation.

(33) As regards the aid intensity ceilings for the areas proposed by the Italian authorities, the Commission notes that, in accordance with point 4.8 of the guidelines, and with the exception among other things of the outmost regions or the regions with low population density, "the ceiling on regional aid must not exceed 20 % nge in general" or 10 % nge in regions eligible under Article 87(3)(c) "which have both a higher per capita GDP/PPS and a lower unemployment rate than the respective Community average". As notified to the Italian authorities by letter SG(98) D/12398 of 30 December 1998, which adjusts the national regional aid coverage ceilings for the period 2000 to 2006, the employment areas proposed in the regions of Abruzzi and Molise, with a proposed aid intensity of 20 % nge, are not subject to the 10 % nge ceiling.

(34) The Commission would point out that, since the aid intensity for the areas proposed in the regions of Abruzzi and Molise is 20 % nge, and those two regions qualified for Objective 1 in the previous programming period, and since the aid intensity for the other areas proposed is 8 %, both figures have been adjusted "to reflect the seriousness and intensity of the regional problems addressed when examined in a Community context" in accordance with point 4.8 of the guidelines. Accordingly, this aspect of the Italian proposal can be regarded as being compatible with the relevant provisions of the guidelines.

(35) The Commission notes that the aid intensities proposed for small and medium-sized firms are consistent with point 4.9 of the guidelines, which allows the supplements provided for in the Community guidelines on State aid for SMEs(7) to be granted, namely 10 percentage points gross in the case of regions qualifying for exemption under Article 87(3)(c). As regards this aspect, the Italian proposal can be regarded as being compatible with the relevant provisions of the guidelines.

(36) Lastly, the Commission notes that the aid cumulation rules set out in point 4.18 of the guidelines have been complied with. As regards this aspect too, the Italian proposal can be regarded as being compatible with the relevant provisions of the guidelines.

V. Conclusion

(37) In the light of the foregoing considerations, the Commission finds that the new draft of the part of the Italian regional aid map for the period 2000 to 2006 which concerns the Italian regions eligible for the derogation in Article 87(3)(c) of the Treaty is compatible with the guidelines on national regional aid(8),

HAS ADOPTED THIS DECISION:

Article 1

The part of the Italian regional aid map for the period 2000 to 2006 which concerns the areas eligible for the derogation in Article 87(3)(c) of the Treaty is compatible with the common market within the meaning of Article 87(3)(c) of the Treaty.

Implementation of the measure is accordingly authorised.

Article 2

This Decision is addressed to the Italian Republic.

Done at Brussels, 20 September 2000.

For the Commission

Mario Monti

Member of the Commission

(1) OJ C 175, 24.6.2000, p. 4.

(2) OJ C 74, 10.3.1998, p. 9.

(3) OJ C 175, 24.6.2000, p. 11.

(4) OJ L 107, 30.4.1996, p. 4.

(5) Commission decision of 27 April 2001 (C(2001) 1073)).

(6) OJ L 194, 27.7.1999, p. 53.

(7) OJ C 213, 23.7.1996, p. 4.

(8) OJ C 74, 10.3.1998.

ANNEX A

List of employment areas proposed in full

CODE AREA

>TABLE>

ANNEX B

List of employment areas proposed in part

>TABLE>