EN Official Journal of the European Union C 229/5

GUIDELINES FOR THE EXAMINATION OF STATE AID TO FISHERIES AND AQUACULTURE

(2004/C 229/03)

1. LEGAL BASIS AND SCOPE

1.1. The application of State aid rules, laid down in Articles 87 to 89 of the EC Treaty, to the production of and trade in fisheries products is provided for in Article 19(1) of Council Regulation (EC) No 2792/1999 of 17 December 1999 laying down the detailed rules and arrangements regarding Community structural assistance in the fisheries sector (1) and in Article 32 of Council Regulation (EC) No 104/2000 of 17 December 1999 on the common organisation of the market in fishery and aquaculture products (2). The principle of incompatibility of State aid with the common market, laid down in Article 87(1) of the Treaty, is subject to the derogations provided for in Article 87(2) and (3). It is within the framework of these Guidelines that the Commission intends to administer those derogations in the fisheries sector.

1.2. These Guidelines apply to the entire fisheries sector and concern the exploitation of living aquatic resources and aquaculture together with the means of production, processing and marketing of the resultant products, but excluding recreation and sport fishing which does not result in the sale of fisheries products. They relate to all measures which constitute aid within the meaning of Article 87(1) of the Treaty, including any measure entailing a financial advantage in any form whatsoever funded directly or indirectly from the budgets of public authorities (national, regional, provincial, departmental or local) or from other State resources. The following, for example, are to be considered as aid: capital transfers, reduced-interest loans, interest subsidies, certain State holdings in the capital of undertakings, aid financed by special levies or parafiscal charges, aid granted in the form of State securities against bank loans, the reduction of or exemption from charges or taxes, including accelerated depreciation and the reduction of social contributions.

2. OBLIGATION TO NOTIFY STATE AID AND EXEMPTION FROM THIS OBLIGATION

The Commission reminds Member States of their duty to notify to the Commission their plans to grant new aid, in accordance with Article 88(3) of the Treaty and Article 2 of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article 93 of the EC Treaty (3).

Under the conditions specified in points 2.1 and 2.2, certain measures are, however, exempt from the notification requirement.

2.1. As laid down in Article 19(2) of Regulation (EC) No 2792/1999, Articles 87, 88 and 89 of the Treaty do not apply to obligatory financial contributions by Member States to measures co-financed by the Community and provided for under the development plans referred to in Article 3(3) of that Regulation and defined in Article 9(b) of Council Regulation (EC) No 1260/1999 of 21 June 1999 laying down general provisions on the Structural Funds (4) or under Article 5 of Council Regulation (EC) No 2370/2002 of 20 December 2002 establishing an emergency Community measure for scrapping fishing vessels (5). Consequently, Member States should not notify such contributions to the Commission. Such contributions are not subject to these Guidelines. However, under Article 19(3) of Regulation (EC) No 2792/1999, measures which provide for public financing by Member States exceeding the provisions of that Regulation or of Regulation (EC) No 2370/2002 concerning obligatory financial contributions, as referred to in Article 19(2) of Regulation (EC) No 2792/1999, must be notified as State aid to the Commission. They are subject to these Guidelines. In order to reduce the administrative burden which may result from an application of Article 19(3) of Regulation (EC) No 2792/1999, and to facilitate the disbursement of Community Structural funds, Member States have an interest to distinguish clearly between the obligatory financial contributions they intend to grant in order to co-finance Community measures within the framework of the Financial Instrument for Fisheries Guidance in compliance with Article 19(2) of Regulation (EC) No 2792/1999, which do not have to be notified, and State aid, which is subject to the notification requirement.

2.2. Member States do not have to notify aid in the fisheries sector which fulfils the conditions laid down in the group exemptions Regulations adopted by the Commission pursuant to Article 1 of Council Regulation (EC) No 994/1998 of 7 May 1998 on the application of Articles 92 and 93 of the Treaty establishing the European Community to certain categories of horizontal State aid (6). Such aid includes: — aid fulfilling the conditions laid down in Commission Regulation (EC) No 1595/2004 of 8 September 2004 on the application of Articles 87 and 88 of the EC Treaty to State aid to small and medium-sized enterprises active in the production, processing and marketing of fisheries products (7), — aid for training fulfilling the conditions laid down in Commission Regulation (EC) No 68/2001 of 12 January 2001 on the application of Articles 87 and 88 of the EC Treaty to training aid (8), — aid to research fulfilling the conditions laid down in 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 (9), — aid for employment fulfilling the conditions laid down in Commission Regulation (EC) No 2204/2002 of 12 December 2002 on the application of Articles 87 and 88 of the EC Treaty to State aid for employment (10), — aid fulfilling the conditions of any future Regulation adopted by the Commission pursuant to Article 1 of Regulation (EC) No 994/1998 and which applies to the fisheries sector.

2.3. Commission Regulation (EC) No 69/2001 of 12 January 2001 on the application of Articles 87 and 88 of the EC Treaty to de minimis aid (11) does not apply to fisheries.

3. PRINCIPLES

3.1. In the fisheries sector, as well as in other economic sectors in the Community, the policy of the Community relating to State aid aims to prevent distortion of competition in the internal market. State aid in the fisheries sector is only justified if it is in accordance with the objectives of the Competition Policy and the objectives of the Common Fisheries Policy, as set out in these guidelines, and, in particular, in Council Regulation (EC) No 2371/2002 of 20 December 2002 on the conservation and sustainable exploitation of fisheries resources under the Common Fisheries Policy (12) and Regulations (EC) No 2792/1999 and (EC) No 104/2000.

3.2. It is essential to ensure consistency and coherence between Community policies in respect of the control of State aid and in respect of the use of Structural funds under the Common Fisheries Policy. Therefore, as far as measures are eligible for Community funds, they will only be eligible for State aid if they comply with the criteria laid down in Regulation (EC) No 2792/1999. In no case may the rate of financial participation of State aid, expressed as percentage of eligible costs, exceed, in subsidy equivalent, the total rate of national and Community subsidies fixed by Annex IV to that Regulation. The Commission will assess any aid for measures which are not covered by these Guidelines or by Regulation (EC) No 1595/2004 on a case-by-case basis, taking into account the principles set out in Articles 87, 88 and 89 of the Treaty and the Community's Common Fisheries Policy.

3.3. It is essential that no aid is granted in circumstances where Community law, and in particular rules of the Common Fisheries Policy, are not complied with. State aid may therefore only be considered compatible if, before granting any aid, the Member State concerned undertakes to verify that the measures financed and their effects comply with Community law. During the grant period, Member States must verify that the beneficiaries of the aid comply with the rules of the Common Fisheries Policy. If during the grant period it is found that the beneficiary does not comply with rules of the Common Fisheries Policy, the grant must be reimbursed in proportion to the gravity of the infringement.

3.4. In order to ensure that the aid is necessary and acts as an incentive to develop certain activities, no aid for activities in which the beneficiary would already engage under market conditions alone may be deemed to be compatible with the common market. No aid should be granted in respect of activities which have already been undertaken by the beneficiary.

3.5. State aid may not be protective in its effect: it must serve to promote the rationalisation and efficiency of the production and marketing of fishery products. Any such aid must yield lasting improvements so that the industry can develop solely on the basis of market earnings.

3.6. State aid to the export of or to trade in fishery products within the Community is incompatible with the common market.

3.7. State aid which is granted without imposing any obligation serving the objectives of the Common Fisheries Policy on the part of recipients and which is intended to improve the situation of undertakings and increase their business liquidity or is calculated on the quantity produced or marketed, product prices, units produced or the means of production, and which has the effect of reducing the recipient's production costs or improving the recipient's income is, as operating aid, incompatible with the common market. The Commission intends to apply this rule with rigour to all operating aid, including aid in forms of tax relief, or of reductions of contributions to social security or to unemployment benefit systems.

3.8. In the interest of transparency, no State aid may be declared compatible by the Commission if the Member State concerned has not communicated the total amount of aid per measures as well as the aid intensity. In accordance with the established practice of the Commission, thresholds should normally be expressed in terms of aid intensities in relation to a set of eligible costs, rather than in terms of maximum aid amounts. However, account is taken of all factors making it possible to assess the real advantage to the recipient. The cumulative effect for the recipient of all measures involving an element of subsidy granted by the State authorities pursuant to Community, national, regional or local law, particularly those that are designed to promote regional development, is taken into account when State aid schemes are being assessed.

3.9. Guidelines on national regional aid (13) do not apply in this sector. The components of regional aid schemes involving the fisheries sector will be examined on the basis of the present Guidelines.

3.10. State aid for categories of measures covered by Regulation (EC) No 1595/2004, but which is designed to benefit enterprises other than SMEs, or exceeds the threshold laid down in Article 1(3) of that Regulation, will be assessed on the basis of these Guidelines and of the criteria laid down for each category of measures in the Articles 4 to 13 of that Regulation.

4. AID WHICH MAY BE DECLARED COMPATIBLE

4.1. Aid falling within the scope of certain horizontal guidelines

4.1.1. State aid for environmental protection will be assessed in accordance with the Community guidelines on State aid for environmental protection (14). In addition to the requirements of those guidelines, State aid for environmental protection will not be declared compatible if it concerns the capacity of a vessel or serves to increase the effectiveness of its fishing gear.

4.1.2. State aid aimed at rescuing and restructuring firms in difficulty will be assessed in accordance with the Community Guidelines on State aid for rescuing and restructuring firms in difficulty (15). In addition to the requirements of those guidelines, State aid aimed at restructuring firms the activity of which includes fishing at sea may be granted only when an appropriate plan designed to reduce the fleet capacity beyond what is mandatory under Community law has been submitted to the Commission.

4.2. Aid for the permanent withdrawal of fishing vessels through their transfer to third countries

Aid for the permanent withdrawal of fishing vessels through their transfer to third countries, which is not linked to the purchase or construction of new vessels, is compatible with the common market provided that it meets the requirements of Regulation (EC) No 2792/1999 for eligibility for Community aid, and in particular Article 7(3)(b), Article 7(5)(b) and (c), and Article 8 of, and points 1.1 and 1.2 of Annex III to that Regulation.

In accordance with Article 11(3) of Regulation (EC) No 2371/2002, no exit from the fleet supported by State aid will be permitted unless preceded by the withdrawal of the fishing licence as defined in Council Regulation (EC) No 3690/1993 of 20 December 1993 establishing a Community system laying down rules of the minimum information to be contained in fishing licences (16) and, where provided for, the fishing authorisations as defined in the relevant regulations.

4.3. Aid for the temporary cessation of fishing activities

4.3.1. Aid for the temporary cessation of fishing activities may be deemed compatible if it complies with the conditions of Article 16 of Regulation (EC) No 2792/1999. In the case of a temporary cessation of fishing activities established within the framework of a recovery plan or a management plan, State aid may only be declared compatible if the plan has been adopted pursuant to Article 5 or 6 of Regulation (EC) No 2371/2002. In the case of a temporary cessation of fishing activities established within the framework of an emergency measure, State aid may only be declared compatible if the measure has been decided by the Commission in accordance with either Article 7 of Regulation (EC) No 2371/2002 or Article 45(1) of Council Regulation (EC) No 850/1998 of 30 March 1998 for the conservation of fishery resources through technical measures for the protection of juveniles of marine organisms (17), or by one or more Member States in accordance with either Article 8 of Regulation (EC) No 2371/2002 or Article 45(2) of Regulation (EC) No 850/1998.

4.3.2. In accordance with Article 12(6) of Regulation (EC) No 2792/1999, accompanying social measures for crew members of affected fishing vessels in order to facilitate temporary cessation of fishing activities in the framework of plans for the protection of aquatic resources may be deemed compatible. The cessation of activities must be adopted by a Member State under Article 8, 9 or 10 of Regulation (EC) No 2371/2002, or under Article 46 of Regulation (EC) No 850/1998, or under Article 13 of Council Regulation (EC) No 88/98 of 18 December 1997 laying down certain technical measures for the conservation of fishery resources in the waters of the Baltic Sea, the Belts and the Sound (18), or under Article 1(3) of Council Regulation (EC) No 1626/94 of 27 June 1994 laying down certain technical measures for the conservation of fishery resources in the Mediterranean (19). The plans for the protection of aquatic resources must include, in addition to the temporary cessation of activities, effective measures designed to reduce fishing mortality, for example by reducing fishing capacity permanently or adopting technical measures. The plans must be notified to the Commission and contain precise and measurable objectives and a time frame. The Commission will request without delay the opinion of the Scientific, Technical and Economic Committee as provided for in Article 33(1) of Regulation (EC) No 2371/2002 on the plans. Evidence of the social impact of the plans and justification of special measures going beyond the normal social security regime must be provided. Crew members are only those persons engaged on board of an operational seagoing fishing vessel as a main occupation. Aid to vessel owners will not be eligible, except for those vessel owners whose main occupation is to work on board of their vessel. Scientific and, where necessary, economic justification of such aid must accompany the notification of the measure to the Commission. Measures must not go beyond what is strictly necessary in order to attain the objective pursued and must be of limited duration. Overcompensation is to be avoided. The granting of compensation by a Member State may last for one year and may be extended by one additional year.

4.3.3. State aid as specified in points 4.3.1 and 4.3.2 may only offset part of the loss of income associated with a temporary cessation measure.

4.3.4. Aid to restrict fishing activities which is introduced by a Member State for the purpose of reducing its fishing effort under Article 16(2) of Regulation 2371/2002 is not allowed.

4.4. Aid for investment in the fleet

4.4.1. Aid for the renewal of fishing vessels may be deemed compatible with the common market subject to the requirements of Articles 9 and 10 of, and point 1.3 of Annex III to Regulation (EC) No 2792/1999 and provided that the sum of the State aid does not exceed, in subsidy equivalent, the total rate of national and Community subsidies fixed by Annex IV to that Regulation. No aid may be granted to shipyards for the construction of Community fishing vessels. Aid to shipyards for building, repair or conversion of non Community fishing vessels are subject to the Framework on State aid to shipbuilding (20).

4.4.2. Aid for the modernisation and equipment of fishing vessels may be deemed compatible with the common market subject to the requirements of Articles 9 and 10 of, and point 1.4 of Annex III to Regulation (EC) No 2792/1999 and provided that the sum of the State aid does not exceed, in subsidy equivalent, the total rate of national and Community subsidies fixed by Annex IV to that Regulation.

4.4.3. Aid specified in points 4.4.1 and 4.4.2 may only be granted if the provisions of Article 13 of Regulation (EC) No 2371/2002, of Commission Regulation (EC) No 1438/2003 of 12 August 2003 laying down implementing rules on the Community Fleet Policy as defined in Chapter III of Council Regulation (EC) No 2371/2002 (21) and, where relevant, of Council Regulation (EC) No 639/2004 of 30 March 2004 on the management of fishing fleets in the Community outermost regions (22) are complied with.

4.4.4. Aid for the purchase of used vessels is deemed compatible with the Common Market only if it complies with the provisions of Article 12(3)(d) and Article 12(4)( f) of Regulation (EC) No 2792/1999.

4.4.5. No State aid for investment in the fleet will be deemed compatible or granted by a Member State for measures in relation to which Community financial assistance has been suspended under Article 16(1) of Regulation (EC) No 2371/2002.

4.5. Socio-economic measures

Income support to workers in the fisheries and aquaculture sector and to workers employed in the processing and marketing of fishery and aquaculture products may be considered compatible with the common market provided that it forms part of socio-economic back-up measures compensating income losses linked to measures designed to achieve an adjustment of capacity adopted pursuant to Article 11(1) of Regulation (EC) No 2371/2002. Such aid will be assessed on a case-by-case basis, in line with the principles set out in point 3. In case of temporary cessation of fishing activity, point 4.3 applies.

4.6. Aid to make good damage caused by natural disaster or exceptional occurrences

According to Article 87(2)(b) of the Treaty, aid to make good damage caused by natural disasters or exceptional occurrences is deemed to be compatible with the common market.

In order for such aid to be considered compatible with the common market, the level of damages caused by natural disasters or exceptional occurrences must reach a threshold of 20 % of the average turnover of the firm concerned in the previous three years in Objective 1 regions as defined in Article 3 of Regulation (EC) No 1260/1999, and including the regions defined in Article 6(1) of that Regulation, and 30 % in other areas.

Once the existence of a natural disaster or an exceptional occurrence has been demonstrated, an aid of up to 100 % to compensate for material damage is permitted. Compensation should be calculated at the level of the individual beneficiary and overcompensation must be avoided. Amounts received under an insurance scheme or normal costs not incurred by the beneficiary must be deducted. Damages which could be covered by an ordinary commercial insurance contract or represent normal entrepreneurial risk are not eligible for aid.

Any compensation must be granted within three years of the event to which it relates.

4.7. Outermost regions

Where provisions of Community law specifically address outermost regions, as it is the case for the provisions laid down in Annex IV to Regulation (EC) No 2792/1999 on aid intensities for investments in the fisheries sector, the Commission will only declare an aid to the fisheries sector in those regions compatible as far as it complies with those provisions. In relation to measures for which no specific provisions for outermost regions are provided for, aid designed to meet the needs of outermost regions will be assessed on a case-by-case basis, and having regard to the factors characteristic of these regions identified in Article 299(2) of the Treaty on the one hand, the compatibility of the measures concerned with the objectives of the Common Fisheries Policy and the potential effect of the measures on competition in these regions and in the other parts of the Community on the other hand.

4.8. Aid financed through parafiscal charges

Aid schemes funded by special charges, in particular parafiscal charges, imposed on certain fishery and aquaculture products irrespective of their origin, may be deemed compatible where aid schemes benefit both domestic and imported products, and where the aid as such complies with the conditions of these guidelines.

5. PROCEDURAL MATTERS

The Commission recalls that the provisions of Regulation (EC) No 659/1999 and its implementing provisions apply.

In particular, where a negative decision is adopted by the Commission on an aid which has been granted without having been notified to and approved by the Commission, Member States are obliged to recover the aid from the beneficiary, with interest, under the conditions laid down in Article 14 of Regulation (EC) No 659/1999.

In the interest of accelerating the examination of aid measures, Member States are advised to fill in the forms provided for in part I and part III.14 of Annex I to Commission Regulation (EC) No 794/2004 of 21 April 2004 implementing Council Regulation (EC) No 659/1999 laying down detailed rules for the application of Article 93 of the EC Treaty (23).

5.1. Re-notification and annual report

In order for the Commission to be able to fulfil its duty to keep under constant review all systems of aid existing in the Member States, Member States should re-notify to the Commission open-ended schemes at the latest two months before the tenth anniversary of their entry into force.

Article 21 of Regulation (EC) No 659/1999 provides that Member States are to submit to the Commission annual reports on all existing aid schemes to which no specific reporting obligations have been imposed in a conditional decision. Individual aid granted outside an approved aid scheme must also be included in those reports. The annual report must contain all relevant information as indicated in the form in Annex III C to Commission Regulation (EC) No 794/2004.

5.2. Proposals for appropriate measures

These guidelines replace the earlier Guidelines for the examination of State aid to fisheries and aquaculture (24) as a result of the development of the Common Fisheries Policy, notably through the adoption of Regulation (EC) No 2369/2002 which amended Regulation (EC) No 2792/1999, and of Regulation (EC) No 2371/2002 and of Regulation (EC) No 1595/2004.

The Commission will amend these guidelines as and when experience is gained in the regular examination of inventories of State aids and in the light of the development of the Common Fisheries Policy.

In accordance with Article 88(1) of the Treaty and Article 18 of Regulation (EC) No 659/1999, the Commission proposes that Member States amend their existing aid schemes relating to aids in the fishery sector to conform to these guidelines by 1 January 2005 at the latest.

The Member States are invited to confirm that they accept these proposals for appropriate measures in writing by 15 November 2004 at the latest.

In the event that a Member State fails to confirm its acceptance in writing before that date, the Commission will assume that the Member State concerned has accepted these proposals, unless it explicitly indicates its disagreement in writing.

Should a Member State not accept the whole or part of these proposals by that date, the Commission will proceed in accordance with Article 19(2) of Regulation (EC) No 659/1999.

5.3. Date of application

The Commission will apply these guidelines with effect from 1 November 2004 to any State aid notified upon or after that date.

An ‘unlawful aid’ within the meaning of Article 1(f) of Regulation (EC) No 659/1999 will be appraised in accordance with the guidelines applicable at the time when the administrative act setting up the aid has entered into force.

Reference made in these guidelines to Community law or Commission guidelines must be interpreted as including a reference to any change in those instruments after 1 November 2004.

(1) OJ L 337, 30.12.1999, p. 10. Regulation as last amended by Regulation (EC) No 2369/2002 (OJ L 358, 31.12.2002, p. 49).

(2) OJ L 17, 21.1.2000, p. 22. Regulation as last amended by the 2003 Act of Accession.

(3) OJ L 83, 27.3.1999, p. 1. Regulation as last amended by the 2003 Act of Accession.

(4) OJ L 161, 26.6.1999, p. 1. Regulation as last amended by the 2003 Act of Accession.

(5) OJ L 358, 31.12.2002, p. 57.

(6) OJ L 142, 14.5.1998, p. 1.

(7) OJ L 291, 14.9.2004

(8) OJ L 10, 13.1.2001, p. 20. Regulation as amended by Regulation (EC) No 363/2004 (OJ L 63, 28.2.2004, p. 20).

(9) OJ L 10, 13.1.2001, p. 33. Regulation as amended by Regulation (EC) No 364/2004 (OJ L 63, 28.2.2004, p. 22).

(10) OJ L 337, 13.12.2002, p. 3.

(11) OJ L 10, 13.1.2001, p. 30.

(12) OJ L 358, 31.12.2002, p. 59.

(13) OJ C 74, 10.3.1998, p. 9. Guidelines as amended by Amendments to the Guidelines on national regional aid (OJ C 258, 9.9.2000, p. 5).

(14) OJ C 37, 3.2.2001, p. 3.

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

(16) OJ L 341, 31.12.1993, p. 93.

(17) OJ L 125, 27.4.1998, p. 1. Regulation as last amended by Regulation (EC) No 602/2004 (OJ L 97, 1.4.2004, p. 30).

(18) OJ L 9, 15.1.1998, p. 1. Regulation as last amended by Regulation (EC) No 812/2004 (OJ L 150, 30.4.2004, p. 12).

(19) OJ L 171, 6.7.1994, p. 1. Regulation as last amended by Regulation (EC) No 813/2004 (OJ L 150, 30.4.2004, p. 32).

(20) OJ C 317, 30.12.2003, p. 11.

(21) OJ L 204, 13.8.2003, p. 21. Regulation as amended by Regulation (EC) No 916/2004 (OJ L 163, 30.4.2004, p. 81).

(22) OJ L 102, 7.4.2004, p. 9.

(23) OJ L 140, 30.4.2004, p. 1.

(24) OJ C 19, 20.1.2001, p. 7.