WRITTEN QUESTION E-2672/96 by Gastone Parigi (NI) to the Commission (15 October 1996)

Subject: Breach of Article 92 of the Treaty and other Community laws by the Friuli Venezia Giulia Region with regard to rural tourism

In its law No. 25 of 22 July 1996, laying down provisions concerning rural tourism, the Friuli Venezia Giulia Region provided for incentives for operators in the rural tourism sector (in the form of equipment grants or equivalent measures), but limited them to individuals whose principle occupation was farming or whose farms were situated in 'less favoured' zones.

In our opinion, the above-mentioned Friuli Venezia Giulia regional law, by legislation to allow rural farm tourism activities and provide incentives for operators in that field subject to the restrictions mentioned above, conflicts with Article 92 of the Treaty establishing the EC, in that it favours 'certain undertakings or the production of certain goods' and thus distorts or threatens to distort competition.

Moreover, these provisions conflict with Community rules which, in providing for action to promote rural tourism, would encounter the discrimination in question in the territory of the Friuli Venezia Giulia region.

This being so, would the Commission intervene with the Friuli Venezia Giulia regional authorities to ensure that this breach of the above-mentioned Community rules is remedied as soon as possible?

Answer given by Mr Van Miert on behalf of the Commission (21 November 1996)

The general prohibition on state aid set out in Article 92(1) of the EC Treaty is followed by a number of possible derogations (paragraphs 2 and 3). Before granting such derogations, the Commission has to assess aid measures adopted by Member States in the light of the general interest of the Community.

These principles apply in full to rural tourism and, in the case of agriculture, to products covered by a common market organization. In practice, aid for rural tourism activities normally qualifies for the derogation under Article 92(3)(c) provided that it does not affect trading conditions to an extent contrary to the common interest.

In this respect, the Commission would have no reason to object to a decision by a regional administration to allocate public resources on the basis of certain priorities.

In any event, it follows from the definition of state aid given in Article 92(1) that the very concept of aid involves some degree of government arbitration between the different interests at stake which manifests itself in the decision made by the public authority granting the aid to favour 'certain undertakings or the production of certain goods'. To this extent, any form of state aid, by definition, results in differential treatment. The review conducted by the Commission under Articles 92 and 93 is designed, among other things, to ascertain whether the conditions for applying one of the derogations provided for in Article 92(2) and (3) in respect of the fundamental incompatibility laid down in paragraph 1 are met. Limiting aid to certain categories of recipient, e.g. farmers practising farming as their main occupation, is not intrinsically incompatible with the provisions of the Treaty.

The Friuli-Venezia Giulia legislation referred to by the Honourable Member has been notified to the Commission in accordance with Regulation (EEC) No 2328/91 on improving the efficiency of agricultural structures ((OJ L 218, 6.8.1991. )) with a view to possible part-financing by the Community. The Commission is now looking into the matter. Its decision will be published in the Official Journal.

It should be pointed out that aid of minor importance, known as de minimis aid, is exempt from the notification and prior authorization requirement arising from Articles 92 and 93. The conditions for applying this rule are spelt out in a Commission communication. ((OJ C 68, 6.3.1996. )) The Community provisions governing de minimis aid do not apply in agriculture. However, this exclusion does not extend to rural tourism since this is an activity different from the production of, and trade in, agricultural products,