1999/233/EC: Commission Decision of 17 June 1998 on aid measures for farming under Laws Nos 44/89 and 57/92 of the Region of Lazio (Italy) (notified under document number C(1998) 1893) (Only the Italian text is authentic) (Text with EEA relevance)
Date: 1998-06-17
Institutions: European Commission
Subjects: Italy, Latium, State aid, agricultural land, aid to agriculture, regional aid

30. 3. 1999

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Official Journal of the European Communities

L 86/17

COMMISSION

COMMISSION DECISION

of 17 June 1998

on aid measures for farming under Laws Nos 44/89 and 57/92 of the Region of
Lazio (Italy)

(notified under document number C(1998) 1893)

(Only the Italian text is authentic)

(Text with EEA relevance)

(1999/233/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

both these instruments were then registered as non-
notified aid under reference NN 90/93.

Having regard to the Treaty establishing the European
Community, and in particular the first subparagraph of
Article 93(2) thereof,

Having given notice to the parties concerned to submit
their comments in accordance with the first subparagraph
of Article 93(2) (1),

Whereas:

I

(1) By letter of 11 February 1993, Italy’s Permanent
Representative to the European Communities noti-
fied the Commission, pursuant to Article 93(3) of the
the Region of Lazio
Treaty, of a draft Law of
providing for measures in favour of agricultural
production.

The notification was recorded under aid No 106/93.

The Italian authorities provided further information
by letter of 8 July 1993, and telex of 30 September
1994.

(3) By letter of 21 March 1995, the Commission notified
the Italian Government of its decision to initiate the
procedure provided for in Article 93(2) of the Treaty
with regard to the measures concerned in favour of
agricultural crops.

The Commission gave the Italian Government
notice under the procedure to submit its comments.

The Commission also gave notice to the other
Member States and to other parties concerned to
submit their comments, by publishing a notice in
the Official Journal of the European Communi-
ties (2).

(4) The Italian authorities submitted their comments by
fax of 11 May 1995, by letter of 15 December 1995,
and, in response to the Commission’s telex of 22
July 1996, by letter of 21 August 1996. No other
comments were submitted.

II

(2) It transpired during the examination of the measures
in question that the text, notified as a draft, had
come into force as Lazio Regional Law No 57/92,
amending Law No 44/89, which had never been
notified pursuant to Article 93(3). The provisions of

(5) The measures in respect of which the Commission
initiated the Article 93(2) procedure consist of subsi-
dised loans which the Region of Lazio grants for the
purchase of agricultural land, where such purchase is

(1) OJ C 267, 14. 10. 1995, p. 9.

(2) OJ C 267, 14. 10. 1995, p. 9.

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or

likely to rationalise the distribution of land-owner-
ship among persons actually working the land (either
individually
together with
in partnership),
reduced-interest loans to cooperatives and groups of
the purpose of
cooperatives purchasing land for
extending
the
for
processing, packaging and marketing of agricultural
products from the holdings of the partners.

constructing

premises

or

Differing rates are applied, depending on the loca-
tion of the land being purchased (mountain areas:
30 % of the reference rate; less-favoured areas: 40 %;
other areas: 60 %).

The reference rate for land improvement loans is set
every two months by the Ministry of Agriculture.

(6) The Commission, in its letter of notice, considered
that, when assistance such as that provided for in
Law No 44/89 is granted at the level of primary
production, the rates applied must not exceed the
maximum rates set by the Commission, namely
35 % and 75 % in mountain areas and less-favoured
areas within the meaning of Council Directive 75/
268/EEC of 28 April 1975 on mountain and hill
farming and farming in certain less-favoured areas (1),
repealed and replaced by Council Regulation (EC)
No 950/97 of 20 May 1997 on improving the effi-
ciency of agricultural structures (2).

Where the aid is granted to firms processing or
in regions not
marketing agricultural products
covered by Objective 1, the rate must not exceed:

least one of

— 55 % for projects included in an operational
the
programme or satisfying at
criteria in Article l of Council Regulation (EEC)
No 866/90 of 29 March 1990 on improving the
processing and marketing conditions for agricul-
tural products (3),
repealed and replaced by
Council Regulation (EC) No 951/97 of 20 May
1997 on improving the processing and marketing
conditions for agricultural products (4);

— 35 % for other projects.

Furthermore, the aid must comply with the sectoral
restrictions laid down in the selection criteria set out
in point 2 of the Annex to Commission Decision
90/342/EEC on the selection criteria to be adopted
for investments for improving the processing and
marketing conditions for agricultural and forestry

(1) OJ L 128, 19. 5. 1975, p. 1.
(2) OJ L 142, 2. 6. 1997, p. 1.
(3) OJ L 91, 6. 4. 1990, p. 1.
(4) OJ L 142, 2. 6. 1997, p. 22.

products (5) used in the framework of Regulation
(EEC) No 866/90 mentioned above. In 1994 these
criteria were
contained in
replaced by
Commission Communication 94/C 189/04 (6).

those

(7) The Commission initiated the Article 93(2) pro-
cedure in respect of the aid measures in question,
noting that Regional Law No 44/89, as amended by
Regional Law No 57/92, offers no guarantee of
compliance with those sectoral restrictions and does
not ensure compliance with the limits set by the
Commission on the amount of aid to investment at
the level of primary production of agricultural prod-
ucts or at processing and marketing level.

The amount of the interest subsidy (and therefore the
net subsidy equivalent) varies, in each case where it is
applied and throughout the duration of the loan, as a
function of the reference rate set every two months
by the Government for land improvement loans.

(8) As there is no legal provision in these instruments to
prevent the degree of aid intensity from exceeding
what is permissible, or to ensure compliance with
sectoral restrictions at the level of processing, the
Commission cannot regard the aid as compatible
with the provisions of the Treaty governing State aid.

III

(9) Under Article 92(1) of the Treaty, any aid granted by
a State or through State resources in any form what-
soever which distorts or
to distort
competition by favouring certain undertakings or the
production of certain goods is, in so far as it affects
trade between Member States, incompatible with the
common market.

threatens

The aid measures in question constitute aid within
the meaning of Article 92(1) of the Treaty.

They place farming enterprises in a more favourable
economic position than their competitors which do
not receive assistance. They distort or threaten to
distort competition, therefore, in the manner indi-
cated.

(10) In the case under consideration the aid measures for
the purchase of land may be granted for all agricul-
tural products.

(5) OJ L 163, 29. 6. 1990, p. 71.
(6) OJ C 189, 12. 7. 1994, p. 5.

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L 86/19

They may harm Community trade, for example, by
hampering imports or facilitating exports, namely by
disturbing from the outside the market’s own regu-
lating forces. There is no need for Community trade
actually to be affected; the potential adverse effect is
sufficient. Where the beneficiary of a subsidised loan
finds himself competing with enterprises from other
Member States there are grounds for believing that
the Community market is affected.

ising undue benefits for operators in certain Member
States.

(14) In this case, the aid schemes are not designed to
attain objectives of this nature. The Italian Govern-
ment has not provided any evidence to show that
they satisfy the requirements for the application of
any of the exceptions contained in Article 92(3).

As the aid measures in question may concern all the
product sectors which are subject
to a common
organisation of the market, all aid is liable to affect
trade between Member States and constitute in addi-
tion a distortion of competition in the common
market.

(11) It should be underlined in this connection that even
the relatively modest scale of an aid scheme or of the
recipient enterprises does not automatically mean
that trade between Member States will be unaffected.

It does not constitute a measure to promote the
execution of an important project of common Euro-
pean interest as defined in Article 92(3)(b) given that,
in view of the impact it may have on trade, it is
contrary to the common interest. Nor is it a measure
for remedying a serious disturbance in the economy
of the Member State concerned, as defined in that
provision.

The aid was not notified as a regional aid within the
meaning of Article 92(3)(a) of the Treaty. It does not
seek to implement demonstrable investments or to
create jobs, and, to that extent, does not contribute to
the region. On the
the lasting development of
contrary, it has a sectoral objective in that it concerns
the agricultural sector.

In the light of the above, the aids in question are
State aids which satisfy the terms of Article 92(1) of
the Treaty.

The principle of incompatibility laid down in Article
92(1) of the Treaty is subject, however, to exceptions.

(15) In the case of the aid to facilitate the development of
certain activities (sectoral aid), the Commission is
prepared to consider it compatible with the common
market under Article 92(3)(c), provided that it:

— does not adversely affect trading conditions to an
extent contrary to the common interest, and

— facilitates the development of certain economic

activities.

IV

(12) The exceptions to the incompatibility contained in
Article 92(2) clearly do not apply, and the Italian
authorities have not relied on them as a defence.

(13) The exceptions contained in Article 92(3) must be
interpreted strictly when any regional or sectoral aid
programme or individual case of application of a
general aid scheme is scrutinised.

They may, in particular, be granted only where the
Commission can establish that the aid is necessary
for attaining one of
the objectives listed in that
Article. Granting an exception to an aid that is not
designed to attain any of
those objectives would
amount to permitting trade between Member States
to be affected, and to allowing distortions of
competition that are unjustified in terms of
the
Community interest and, at the same time, author-

distorts

threatens

As it is aid within the meaning of Article 92(1), by
definition it
distort
or
competition, but under Article 92(3)(c), it is automat-
ically incompatible only where it does so to an
extent contrary to the common interest. In any
the aid be granted in
event,
accordance with the relevant Community rules.

is necessary that

to

it

(16) When evaluating aid of the type referred to in Article
the Treaty the Commission applies
93(3)(c) of
Council Regulation (EEC) No 2328/91 of 15 July
1991 on improving the efficiency of agricultural
structures (1), as replaced by Regulation (EC) No 950/
97 (2), and Regulation (EEC) No 866/90 (3).

V

(17) As

to the aid to promote investment

in the
processing and marketing of agricultural products
referred to in the third paragraph of Article 3 of
Regional Law No 44/89, the Italian authorities stated
they had
fax of 11 May 1995 that
in their

(1) OJ L 218, 6. 8. 1991, p. 1.
(2) OJ L 142, 2. 6. 1997, p. 1.
(3) OJ L 91, 6. 4. 1990, p. 1.

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Official Journal of the European Communities

30. 3. 1999

never actually implemented it. By letter of 21 August
1996, they forwarded to the Commission Regional
Law No 60 of 19 December 1995 repealing the third
paragraph of Article 3 of Regional Law No 44/89.

still in force, they are to be examined also in the
light of Regulation (EC) No 950/97, replacing Regu-
lation (EEC) No 2328/91, which entered into force
on 9 June 1997.

In view of the above, the Commission concludes that
there is no longer any need to initiate the Article
93(2) procedure notified in its letter of 21 March
1995 as regards investment in the processing and
marketing of agricultural products.

(18) As to the investment in primary production, the
Italian authorities said, in their letter of 15 December
1995,
the information provided removed all
doubt concerning the grant of aid for the purchase of
land to encourage direct ownership by the people
working the land.

that

On this point, the Commission informed the Italian
authorities, in its telex of 22 July 1996, that the draft
Regional Law notified in their letter of 15 December
1995 (later approved and adopted as Regional Law
No 60/95 referred to in the preceding point) did not
the
entirely
Commission when initiating the procedure.

comments made by

address

the

Concerning the aid for the purchase of land other
than for the purpose of establishing facilities for the
processing and marketing of agricultural products
(provided for in paragraph 3 of Article 3 of Regional
the Commission,
Law No 44/89, now repealed),
when initiating the procedure, said:

‘[. . .] the wording of Regional Law No 44/89 [. . .]
does not serve to enforce the limits set by the
Commission on the intensity of aid to investment at
the level of primary production [. . .].

Consequently, as there is no legal provision in these
instruments to prevent the degree of aid intensity
from exceeding what
the
Commission cannot regard the aid as compatible
with the provisions of the Treaty governing State aid.
[. . .]'

is permissible

[. . .]

The Italian authorities did not submit any comments
in response to this letter from the Commission.

The measures fall within the scope of the first indent
of Article 12(5) of Regulation (EEC) No 2328/91,
which has been replaced by Article 12(2) of Regula-
tion (EC) No 950/97.

Under the above provision together with Article 35
of Regulation (EEC) No 2328/91, as replaced by
Article 37 of Regulation (EC) No 950/97, Articles 92,
93 and 94 of the Treaty apply to the aid measures in
question.

(20) The Commission’s established practice (1) is normally
to authorise aid for the purchase of land, under the
Regulation referred to in the preceding point, up to
35 % of eligible expenditure in the less-favoured
areas.

In setting the maximum rate for aid for the purchase
of land at 35 %, the Commission, in line with its
established practice, applied by analogy the rate
provided for in general for investments in farm hold-
ings, referred to in the proposed relevant measures
on aid granted by the Member States in the livestock
and livestock-products sector (letter No 75/29416 of
19 September 1975).

(21) The Commission’s

established practice

further
concedes the possibility of increasing the rate of aid
from 35 % to a maximum of 75 % for investment in
less-favoured areas under Directive 75/268/EEC. In
raising the rate to 75 %, the Commission considered
that land in less-favoured areas, by its nature, is less
productive than that in other areas. This principle,
and hence the need for a higher rate in less-favoured
areas, were acknowledged in so far as investment in
primary production is concerned in Regulation
(EEC) No 2328/91 and Council Regulation (EEC)
No 797/85 of 12 March 1985 on improving the
efficiency of agricultural structures (2).

(22) However, since it is uncertain, for the reasons set out
above, whether the aid measures for the purchase of
land provided for in Regional Law No 44/89 and
Regional Law No 57/92 amending Regional Law No
44/89 comply with the maximum rates of 35 % and
75 % for the abovementioned less-favoured areas,
the Commission has concluded, on the basis of the
information available, that the measures concerned
cannot be regarded as compatible with the rules of
competition set out above,

(19) The aid for the purchase of land granted before 9
June 1997 is to be studied in the light of Regulation
(EEC) No 2328/91. As the measures concerned are

(1) State aid Nos N 682/97 (OJ C 67, 3. 3. 1998), N 156/97 (OJ
C 347, 18. 11. 1997), N 797/96 (OJ C 245, 12. 8. 1997) and
N 940/96 (OJ C 231, 30. 7. 1997).

(2) OJ L 93, 30. 3. 1985, p. 1.

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HAS ADOPTED THIS DECISION:

Article 1

The aid schemes provided for in Regional Law No 44/89
and Regional Law No 57/92 on aid for the purchase of
land are unlawful since they have been granted in breach
of the procedural rules contained in Article 93(3) of the
Treaty.

Those aid schemes are, furthermore, incompatible with
the common market under Article 92 of the Treaty and
must be abolished where they fail to comply with the
maximum rates of 35 % or 75 % in the less-favoured
areas defined in Articles 21 to 25 of Regulation (EC) No
950/97.

Article 2

Italy shall recover the aid granted under Regional
1.
Law No 44/89 as amended by Law No 57/92 where it
exceeds the maximum rates of 35 % or 75 %, respect-
ively:

(a) in the mountainous and less-favoured areas within the
meaning of Directive 75/268/EEC in the case of aid
granted up to 9 June 1997;

(b) in the less-favoured areas defined in Articles 21 to 25
of Regulation (EC) No 950/97 in the case of aid
granted after 9 June 1997.

Aid granted in excess of

the abovementioned
2.
maximum rates shall be recovered within two months of
the date of notification of this Decision. Recovery shall be
made in accordance with the procedures and provisions of
national law.

Amounts to be recovered shall bear interest from the date
on which each aid is granted. Interest shall be calculated
on the basis of the commercial rate, with reference to the
rate used to calculate the subsidy equivalent for regional
aids.

Article 3

Italy shall inform the Commission, within two months of
the date of notification of this Decision, of the measures
it intends taking to comply with it, and within three
months of its date of notification of the measures actually
taken to comply with it.

Article 4

This Decision is addressed to the Italian Republic.

Done at Brussels, 17 June 1998.

For the Commission

Franz FISCHLER

Member of the Commission