WRITTEN QUESTION E-3190/00

by Brigitte Langenhagen (PPE-DE) to the Commission

(12 October 2000)

Subject: Energy costs in horticulture, differing conditions of competition

Among those businesses whose survival is increasingly threatened by the rapidly rising energy prices are the horticultural firms of northern Germany, much of whose produce is cultivated in greenhouses. Because of tax advantages, in the Netherlands, for example, competition in these tightly-knit regions is extremely distorted. According to my research, German horticultural firms in the German-Dutch border region have to bear more than double the burden in energy costs than their Dutch competitors because of oil company price policy and higher VAT. With competition so fierce, the energy price rises cannot be passed on to the consumer. The already existing distortions of competition due to the absence of tax harmonisation in Europe have now been made glaringly obvious by the rising energy prices and threaten various industries and occupations in different ways.

Could the Commission answer the following questions:

1. Is the Commission aware of the precarious competitive environment in the horticultural industry?

2. What are the Commission's plans to eliminate or alleviate such distortions of competition in Europe?

3. What action will the Commission take against the oil companies' differing price policy in the various Member States?

4. Will the Commission take a strong line against obvious subsidies from Member States for different industries? If so, by what means?

5. How will the Commission push through a harmonisation of the different rates of VAT?

Answer given by Mr Fischler on behalf of the Commission

(14 December 2000)

1. The Commission regularly evaluates developments in the agriculture sector, including the horticulture sector.

2. and 3. Differences in tax systems may result in different competitive positions for undertakings located in different Member States. According to Article 93 (ex Article 99) of the EC Treaty it is for the Council to decide unanimously on tax issues. A Commission proposal for a Council directive restructuring the Community framework for the taxation of energy products(1) is under examination in the Council.

If taxation fulfils the conditions of Article 87(1) (ex Article 92) of the EC Treaty, that means in particular if it is selective (for example, a special rate for certain undertakings or productions) it falls under state aid control by the Commission.

If energy suppliers were to come to an agreement on prices or market shares in a certain region, this could be an infringement of Article 81 (ex Article 85) of the EC Treaty. Should the Honourable Member have information indicating such an agreement exists, she is invited to forward this information to the Commission so that it can be examined.

4. The Commission has no knowledge of state aids related to energy costs in the agriculture sector apart from the current exemption from the German ecotax which also benefits large glasshouses (approved as state aid N 575/99) and the current exemption from the Dutch carbon dioxide (CO2) tax (approved as state aid N 589/B/98). As far as the Commission knows, the Dutch horticulture sector enjoys no preferential treatment on the energy market.

5. As far as VAT is concerned, under current Community legislation, the standard rate applies to energy. The level of the standard rate is 16 % in Germany, and 17,5 % in the Netherlands. Moreover, taxable businesses can recover the VAT charged on energy costs. In the context of the new VAT strategy(2), a review and rationalisation of the rules and derogations applying to VAT rates will be considered in the medium term.

(1) OJ C 139, 6.5.1997.

(2) COM(2000) 348 final.