2000/286/EC: Commission Decision of 10 November 1999 concerning aid which the Region of Tuscany (Italy) intends to grant in the livestock sector in favour of the Chianina cattle breed (notified under document number C(1999) 3866) (Only the Italian text is authentic)
Date: 1999-11-10
Institutions: European Commission
Subjects: Tuscany, aid to agriculture, application of EU law, cattle, livestock farming, regional aid

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II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 10 November 1999

concerning aid which the Region of Tuscany (Italy) intends to grant in the livestock sector in
favour of the Chianina cattle breed

(notified under document number C(1999) 3866)

(Only the Italian text is authentic)

(2000/286/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 called on interested parties to submit their comments
to the aforementioned provisions (1), and having
pursuant
regard to those comments,

Whereas:

(4) By letter dated 29 September 1998,

the Commission
informed Italy of its decision to initiate the procedure
laid down in Article 88(2) of the EC Treaty in respect of
this aid. The Italian Permanent Representation was
informed of
the Commission decision to initiate the
procedure by letter SG(98) 035729 dated 16 September
1998.

(5) The Commission decision to initiate the procedure was
published
European
Communities. The Commission invited interested parties
to submit their comments.

in the Official

Journal

the

of

I. Procedure

(6) By letters dated 23 October and 11 December 1998, the
Italian authorities submitted to the Commission their
comments with respect to the opening of the procedure.

(1) By letter dated 5 December 1997, the Italian Permanent
Representation to the European Union notified the
Commission under Article 88(3) of the Treaty of an aid
scheme in the livestock sector in favour of the Chianina
cattle breed.

(7) The Commission also received comments from interested
third parties by letters dated 14 and 15 January 1999. It
forwarded
given the
them to Italy, which was
opportunity to express its views. Comments were sent by
the Italian authorities by letter dated 12 May 1999.

(2) By letters dated 4 March 1998, received on 5 March
1998, and 7 July 1998, received on 13 July 1998, Italy
supplementary
furnished
information.

Commission

with

the

II. Description of the scheme and implementation
period

Description

(3) By letter of 28 August 1998, the Commission asked the
in view of the summer break, for a
Italian authorities,
five-working-day extension of the term within which it
was due to adopt a decision on the aid concerned.

(1) OJ C 390, 15.12.1998, p. 15.

(8) The aid scheme notified provides

for a three-year
programme (1997 to 1999) to protect and improve the
Chianina cattle breed, a local breed which derives its
name from the Chiana Valley, in Tuscany, from which it
originated.

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(9) The scheme aims at countering the steady decline which
has characterised this breed by preserving and possibly
improving its genetic base and by helping stockfarmers
to bear the additional costs resulting from rearing this
breed as opposed to more productive and viable ones.

These data show that, after more than doubling between
the numbers of head and cows
1967 and 1990,
registered have decreased at annual average rates of 2,7 %
and 2,9 % respectively since 1990,
from 35 873 and
17 134 in 1990 to 30 021 and 13 635 in 1996.

data

submitted by

to the
the overall population of

Italian
(10) According
authorities,
this breed has
decreased by over 80 % in Italy as a whole in the past 40
years,
from 510 000 head in 1954 to 100 000 at
present (2). The following table shows how figures in the
herd books have developed over the past 30 years:

the

Table 1

Number of cows and head of cattle registered in the herd
book in Italy

Year

1967

1968

1974

1976

1978

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

Cows registered

Head of cattle
registered

6 981

7 562

12 307

15 335

14 471

11 030

12 362

13 046

11 583

11 093

12 125

13 677

14 511

15 759

16 412

17 134

16 199

15 551

14 228

13 959

14 072

13 635

14 395

15 592

25 376

31 620

29 838

22 744

25 490

26 899

23 884

22 873

25 002

28 200

29 921

32 246

34 168

35 873

33 528

31 801

29 298

29 767

30 622

30 021

(2) Source: Chianina Association (Associazione di razza).

and the

strength and resistance

(11) The original dramatic decrease witnessed by the breed in
the 1950s and 1960s was primarily due to the advent of
consequent
mechanised farming practices
reduction in the number of Chianinas used as draft
animals, a purpose to which they are particularly suited
owing to their
to difficult
working conditions. The current decline is essentially due
to the high costs sustained by stockfarmers in rearing
Chianinas and the low income from this breed compared
to other more profitable types of cattle. Most of
the
holdings are small and located in difficult hilly or
mountain areas, which means that there is no scope for
economies of
to
survive, stockfarmers tend to slaughter as many animals
as possible before the females reach first calving. This
approach results in a reduction of the genetic base and
the
genetic variability of
selection process and the future genetic improvement of
the breed. The Italian authorities fear that in the long run
this decline might endanger the breed’s actual prospects
of survival.

the breed and jeopardises

scale or cost

reductions.

In order

(12) The measures planned to counter

this trend are as

follows:

M e a s u r e 1: Aid for the establishment of an artificial
the
insemination
following pilot projects:

programme with

financing

for

(a)

embryos with high genetic
the production of
potential (taking oocytes from five-month-old heifers
and fertilising them in vitro with semen from the best
breeding bulls); and

(b)

implanting the fertilised embryos into breeding cows.
The resulting females will be used as a source of
oocytes and then as breeding cows and the males as
breeding bulls (after genetic testing).

the measure is URATA (Unione
The beneficiary of
the
Regionale delle Associazioni Toscane Allevatori),
Regional Union of the Associations of Stockfarmers of
the Tuscany Region, which will carry out
the pilot
projects.

M e a s u r e 2: Aid for the purchase of breeding bulls of
the Chianina breed from holdings listed in the herd book.
The aid is in the form of a grant covering 40 % of the
investment cost.

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The aid will be granted to stockfarmers rearing the
Chianina breed, registered in herd books and located in
the region, who will buy certified breeding bulls.

Implementation period of the aid scheme

M e a s u r e 3: Aid for the maintenance until first calving
of adult female animals of the Chianina breed which:

(15) According to the information contained in the original
notification sent by the Italian authorities, this scheme
involved a three-year programme to run from 1997 to
1999.

(a) were born on a holding listed in the herd book;

(b) are themselves listed in a herd book;

(16) The notified proposal

for a Decision by the Regional
Council presented by the Regional Executive (Giunta) on
10 November 1997 provided for a budget allocation of
ITL 500 000 000 for 1997. For the subsequent years,
reference was made to the 1998 and 1999 budgets.

(c) calved for the first time on a holding listed in the

same herd book.

the

The aid would take
form of a premium of
ITL 350 000 (approximately EUR 175) per head. By
means of this premium, the Italian authorities hope to
encourage stockfarmers
to use females as breeding
animals rather than selling them or fattening them for
slaughter, operations which so far have proven to be
more profitable and less risky. By limiting the aid to
animals meeting the abovementioned requirements, the
Italian authorities aim at increasing the female genetic
base of
the breed. The aid could be granted to all
stockfarmers with registered animals complying with the
requirements.

(13)

In its decision to initiate proceedings under Article 88(2)
of the Treaty the Commission expressed strong doubts
about the compatibility of Measure 3 with the common
market since, on the basis of the information provided by
the Italian authorities, the measure seemed to be merely
operating aid,
the
costs
day-to-day
normally
management of
their activities, without any proven
favourable structural effect on the development of the
sector.

intended to relieve stockfarmers of

associated with

the

(14) With respect to Measures 1 and 2, on the other hand,
the Commission clearly stated that, from the substantive
point of view, both measures were in principle eligible
for the derogation provided for in Article 87(3)(c) of the
Treaty. The Commission decided however to initiate the
Article 88(2) procedure with respect
to these two
measures also, in view of the serious suspicion that the
entire
applied
retrospectively; if this were the case, it would invalidate
any positive assessment of the two measures concerned.
The entire aid scheme would then in fact
lack the
element of necessity which guides the Commission in its
assessment of State aid cases and it would become
nothing more
therefore
aid
operating
than
incompatible with the common market.

notified might

scheme

and

aid

be

(17) The allocation of ITL 500 000 000 for 1997 to finance
measures under
the scheme seemed to imply that
projects carried out in 1997, prior to presentation to the
Regional Council by the Regional Executive of
the
proposal for a Decision providing for the aid scheme and
the relevant funding, could benefit from the measures. In
cases be paid
aid could in some
other words,
retrospectively,
the
expenditure
for
potential beneficiary was legally entitled to apply for the
aid. Under those circumstances, the aid would have lost
its character of necessity (3), since the operations assisted
would still have been carried out in the absence of aid
(or of a legal undertaking by the public authorities to pay
aid);
constituted
operating aid (4) without any structural effect on the
sector as a whole and, as such,
incompatible with the
common market.

the aid would have

incurred before

consequently,

(18) To clarify this point, the Commission asked the Italian
authorities in a letter dated 9 January 1998 to specify
whether the measures in the programme had already
been
the
implementation period specified in the programme
notified on 5 December had been amended in the mean
time.

or whether

implemented

1997

in

(19) By letter dated 4 March 1998,

(cid:145)the aid measures provided for

the Italian authorities
in the
replied that
programme were not
implemented in 1997 and the
implementation period initially laid down has not been
amended(cid:146).

(20) The Commission understood this to mean that no aid
had yet been paid but
that aid could be paid for
expenditure incurred before the potential beneficiaries
were legally entitled to aid; the Commission therefore

(3) See Judgement of the Court of Justice of 17 September 1980 in
Case 730/79 (Philip Morris Holland v. Commission [1980] ECR
2671).

(4) See Judgement of the Court of First Instance of 8 June 1995 in
Case T-459/93 (Siemens SA v. Commission [1995] ECR 1675).

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decided to initiate the procedure with respect to all three
measures in the scheme notified, in view of the possible
retrospective nature of the aid.

limit within which, according to the case law of
the
Court of Justice (5), it must make known its position on
an aid measure notified under Article 88(3) of the EC
Treaty.

III. Comments from interested parties

(21) The Commission received comments from two parties:
Toscane
URATA (Unione
Allevatori), which is also a beneficiary of Measure 1, by
letter of 14 January 1999; and COPA (Committee of
Agricultural Organisations of
the European Union) by
letter of 15 January 1999.

Regionale Associazioni

(22) The position of

the two parties is identical.

In their
letters, both parties stressed the unique qualities of the
Chianina cattle breed, the importance of this breed in the
economy of marginal areas where stockfarmers are faced
with difficult
living and working conditions, and the
negligible impact of the aid on competition and trade
between Member States. Both parties expressed their full
support for the initiative undertaken by Italy to protect
the breed and counter its decline.
these
considerations,
they called upon the Commission to
revise its position and to authorise the programme in its
entirety, so that action is taken before it is too late and
the Chianina breed becomes endangered.

In light of

IV. Comments from Italy

(23) By letter of 23 October 1998, the Italian authorities sent
the Commission Delibera
della Giunta Regionale
the Regional Executive) No 1205 of 19
(Decision of
October 1998 incorporating some of the comments and
information requested under
the procedure initiated
pursuant to Article 88(2) of the EC Treaty. In the same
letter, Italy also asked the Commission for an extension
of
submission of
comments. Further comments were submitted by letter of
11 December 1998.

the one-month period for

the

(24) The comments submitted by the Italian authorities in
letter of 23 October 1998 focus on four

their first
points.

(25) First, Italy raises an objection of procedure, arguing that
the Commission has failed to respect the two-month time

the

letter

validity of

Italy maintains
that
the Commission should have
i.e. within two
expressed its position by 5 May 1998,
months from 4 March 1998, the date of Italy’s reply to
the Commission’s
request of 9 January 1998 for
information. The Italian authorities question
additional
sent by the
additional
the
Commission on 23 April 1998 asking for written
confirmation of the decision not to withdraw Measure 3
from the notified aid scheme, arguing that the letter is
not a request for additional information since it merely
reiterates a request already made in the letter of 9
January,
to which the Italian authorities had clearly
replied by letter of 4 March 1998. The 23 April letter
does not have the effect of suspending the two-month
time limit (expiring on 5 May 1998), and was sent by
the Commission only in order to artificially extend the
normal deadline.

(26) Secondly,

the

Italian

question

authorities

the
Commission’s interpretation of
the aid
the premium granted for heifers listed
in Measure 3:
in the herd book and calving for the first time on a
holding listed in the same herd book is defined by
the Commission as aid for the (cid:145)maintenance(cid:146) of
the
animal.

the nature of

According to the Italian authorities
the aid is an
(cid:145)incentive(cid:146) to extension of the female genetic base of the
breed on holdings listed in the herd book, encouraging
those female
farmers to rear for (cid:145)breeding purposes(cid:146)
genetic
for
features
animals with
improvement of the breed.

necessary

the

the

possibility

(27) Thirdly, the Italian authorities dispute the Commission’s
view of the period of implementation of the programme
granted
and
retrospectively for expenditure incurred in 1997. They
the first year of
claim that 1997 was chosen as
implementation of
the
funding necessary for the first year, reference was made
to the 1997 regional budget, that is the budget of the

the programme because,

aid might

that

for

be

(5) Judgements of

the Court of

Justice in Case 120/73 Lorenz v.
Germany [1973] ECR 1471 and Case 84/82 Germany v.
Commission [1984] ECR 1451.

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in which the programme was

year
approval to the Regional Council.

submitted for

V. Assessment

The Italian authorities maintain that, even though it was
evident that the programme could not be implemented in
1997, it was not advisable to amend it at that stage, so
as
the
to avoid delaying assessment procedures at
Commission. Their intention was to await completion of
the procedure initiated by notification to the Commission
and, once the Commission had reached a decision, to
the
implement
initial three-year period (i.e. in 1999) and to extend the
duration of the implementation period, by Decision of
the Regional Council, for the time necessary to reach the
three years initially envisaged. It was planned to notify
the extension in accordance with
the Commission of
Article 88(3) of the Treaty.

the programme for the remainder of

(28) Finally,

the Italian authorities question the approach
followed by the Commission in assessing the measure,
arguing that the Commission should assess the aid as a
whole in the light of Article 87(3)(c), and not merely
compare the measures with the existing legislation and
previous cases. They also recall that a similar measure in
the Chianina breed was approved by the
favour of
Commission in the
Integrated
Mediterranean Programme for Tuscany (6). Measure 1.5 of
that Programme provided for a premium of ECU 190/200
for each animal born on specific stockfarms upon
reaching a certain age. The Chianina was one of the
breeds eligible for this aid. The measure was adopted to
encourage
genetic
to
improvement projects.

framework of

stockfarmers

take

part

the

in

(29)

the
letter of 11 December 1998,
In their additional
Italian authorities again drew the attention of
the
Commission to the specific qualities of Chianina cattle,
the economic disadvantages connected to the rearing of
this breed, its genetic decline, the limited amount of the
aid and the negligible extent of trade in this breed at
Community level.

(30) The comments sent by the Italian authorities in reaction
to the observations
from third parties do not add
anything new to the observations already sent to the
Commission.

(6) Decision No 336 of 26 July 1988 (cid:145)Procedures and provisions
implementing Regulation (EEC) No 2088/85 IMP for Tuscany(cid:146).

Procedure

(31) The comments made by the Italian authorities concerning
the Commission’s failure to comply with the two-month
time limit appear unfounded.

spirit

normal

stated categorically that

in which the Italian
The letter of 4 March 1998,
authorities
they were not
prepared to withdraw Measure 3 from the notified aid
scheme, was in fact followed by a series of telephone
contacts between Commission and Italian officials.
During the telephone conversations, which took place in
characterising
the
of
Commission relationships with Member States,
the
possibility of amending the programme along the lines
suggested by the Commission was discussed, and the
possibility of withdrawal of Measure 3 left open by the
Italian authorities. Reference to these conversations is
made both in the letter sent by the Commission to the
Italian authorities on 23 April 1998 (7) and in the reply
sent by the Italian authorities on 7 July 1998 (8).

cooperation

the

last

(32) As pointed out in the Commission’s letter of 23 April
1998, only in the
telephone
course of
conversation did the Italian authorities clearly exclude
withdrawal of the measure concerned. In the light of this
the
development,
it was perfectly
Commission to ask for written confirmation of
Italy’s
final position, which had remained ambivalent till that
moment. If the Italian authorities were really convinced
that the letter sent by the Commission on 23 April 1998
had no suspensive effect, they should have informed the
Commission upon expiry of
for a
Commission decision (i.e., in their view, 5 May 1999) of
their decision to put the measure into effect as provided
for by the case law of the Court of Justice (9) and then

the time limit

legitimate

for

did

in a

(7) It is explicitly stated in this letter that the Italian authorities were
asked by telex of 9 January 1998 to provide further information,
which they
Italian Permanent
Representation dated 4 March 1998, and that after this exchange
of correspondence,
telephone conversations took place between
Commission departments and the competent national departments,
in the course of which the possibility of amending the programme
notified on 5 December 1997 was mentioned.

from the

letter

(8) The position was confirmed in conversations between Commission

and Italian officials.

(9) Judgements of

the Court of

Justice in Case 120/73 Lorenz v.
Germany [1973] ECR 1471 and Case 84/82 Germany v.
Commission [1984] ECR 1451.

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waited for the Commission’s final decision on the aid (10).
In fact, the Italian authorities preferred to wait till 7 July
1998 before replying to the Commission’s letter of 23
April 1998, i.e. they waited two months to provide an
answer which, according to them, had already been made
clear in their letter of 4 March 1998.

The Commission never authorised the aid, nor did it give
grounds for legitimate expectation that it would do so,
nor was this ever an existing system within the meaning
the Treaty. The Italian Permanent
of Article 88(1) of
Representation was
the
the Article 88(3)
Commission’s decision to initiate
procedure by
letter SG(98) D 035729 dated 16
September 1998, as stated in point 4 above.

informed

therefore

of

Substance

(33) Article 87(1) of

the EC Treaty provides that any aid
granted by a Member State or through State resources in
any form whatsoever which distorts or
threatens to
distort competition by favouring certain undertakings or
the production of certain goods shall,
in so far as it
affects trade between Member States, be incompatible
with the common market.

(34) Article 24 of Council Regulation (EEC) No 805/68 of 27
June 1968 on the common organisation of the market in
beef and veal (11)
lays down that, save as otherwise
provided in the Regulation, Articles 87, 88 and 89 of the
Treaty shall apply to the production and trade of the
products listed in Article 1, which includes the products
covered by the measure at issue.

to

public

specific

resources,

(35) The notified programme provides for the granting of aid,
through
agricultural
undertakings which will undeniably be granted an undue
economic and financial advantage to the detriment of
other agricultural undertakings not receiving the same
contribution. According to the case law of the Court of
Justice,
improvement in the competitive position of an
undertaking as a result of State financial aid leads to
possible distortion of competition compared with other

(10) Under Article 4(6) of Council Regulation (EC) No 659/1999 of 22
March 1999 laying down detailed rules for the application of
the
Article 93 of
Commission has 15 working days following receipt of the notice
in which to take a decision.

the EC Treaty (OJ L 83, 27.3.1999, p. 1),

(11) OJ L 148, 28.6.1968, p. 24. This Regulation was repealed and
replaced by Council Regulation (EC) No 1254/1999 of 17 May
1999 (OJ L 160, 26.6.1999, p. 21).

competing undertakings not receiving such assistance (12).
The Italian authorities claim that the amount of the aid is
very low and therefore not likely to distort competition.
It should be borne in mind, however, that neither the
relatively low level of the aid nor the relatively modest
the
size of
possibility of
trade between Member States being
distorted (13). In the agricultural sector, this is reflected in
the Commission communication on de minimis aids (14)
which excludes agriculture from the application of the de
minimis rule.

the beneficiary undertakings

rules out

(36) The measures do affect trade between Member States:
there is in fact substantial intra-Community trade in beef.
In 1998, Italy’s imports of beef (15) from all EU Member
States totalled 2 372 245 tonnes, while its exports to all
In the same
other EU states totalled 180 757 tonnes.
of
value
year,
ECU 3 226 000, while the value of output for the EU as
a whole was ECU 21 465 000 (17).

produced

cattle (16)

Italy

to

a

(37) No specific data are available at Community level on
trade in the breed concerned by the aid.
In order to
demonstrate that the aid would have no influence at all
on trade between Member States, the Italian authorities
refer
to Chianina beef production of around 3 312
tonnes, but without mentioning the year to which this
figure relates.

(38) The relevant market which has to be taken into account
in the specific case at
issue is however the EU beef
market as a whole, including all types of beef with which
Chianina beef competes or may compete as well as the
market in substitute products that could replace Chianina
beef in consumers’ buying patterns. Moreover, the Court
of Justice has held that aid to an undertaking may be
such as to affect trade between the Member States and
distort competition where that undertaking competes
with products coming from other Member States even if
it does not itself export its products. Where a Member
State grants aid to an undertaking, domestic production
may for that reason be maintained or increased with the
result
that undertakings established in other Member
States have less chance of exporting their products to the

(12) See footnote 3.
(13) Court of Justice Judgements of 21 March 1990, Case C-142/87,
Belgium v. Commission; ECR [1990] I-959, and of 14 September
1994, Joined Cases C-272/92, C-279/92 and C-280/92, Spain v.
Commission, ECR [1994] I-4103.

(14) OJ C 68, 6.3.1996, p. 9.
(15) Including live cattle.
(16) Includes calves.
(17) Source: Eurostat.

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market in that Member State. Such aid is therefore likely
trade between Member States and distort
to affect
competition (18).

framework of that Article and of the specific provisions
applicable to the case at issue.

(39) The Commission therefore concludes that the measures
are caught by the prohibition in Article 87(1) of the EC
Treaty.

(40) The prohibition in Article 87(1)

is

followed by

exemptions in Article 87(2) and (3).

(41) The exemptions listed in Article 87(2) are manifestly
the aid measure in
Italy has not

inapplicable given the nature of
Indeed,
question and its objectives.
submitted that Article 87(2) is applicable.

(42) Article 87(3) specifies the circumstances under which
State aid may be considered to be compatible with the
common market. Compatibility with the common market
must be assessed from the point of view of
the
Community and not that of an individual Member State.
In the interest of the functioning of the common market,
the exemptions from the ban on State aid must be
interpreted restrictively.

(43) Article 87(3)(a) is manifestly inapplicable since the aid is
not intended to promote the development of areas where
the standard of living is abnormally low or where there is
serious underemployment.

(44) With regard to Article 87(3)(b), the aid in question is not
intended to promote the execution of an important
project of common European interest or to remedy a
serious disturbance in Italy’s economy.

(45) This aid is not intended to achieve or be suitable for
achieving the objectives referred to in Article 87(3)(d).

Measures 1 and 2 (cid:151) Aid for the implementation of projects
for the genetic improvement of the breed and for the purchase
of pure-bred male breeding stock

(47)

(48)

In its decision to initiate the procedure in Article 88(3) of
the EC Treaty, the Commission stressed that in principle
it could have adopted a favourable approach with respect
to these two measures since, judged on their merits, they
both seemed compatible with the common market and
could therefore benefit from the derogation provided for
by Article 87(3)(c).

It is in fact consistent Commission practice, as set out in
its letter to the Member States S 75/29416 dated 19
September 1975 (19), to authorise aid of up to 100 % of
eligible expenditure for the implementation of artificial
insemination programmes of a maximum duration of six
years and aid of up to 40 % of the cost of the animal for
the purchase of pure-bred male breeding animals listed in
herd books. The two measures do not exceed the
duration and the aid rate set in that letter and could
therefore be considered in principle compatible with the
common market.

the entire aid scheme.

(49) The Commission decided however to initiate the Article
88(3) procedure with respect to these two measures since
it had strong doubts as to the possible retrospective
the
nature of
retrospective aspect of the aid would have invalidated
any positive assessment of the two measures concerned
and the aid would have become nothing more than
operating aid,
is aid which produces no lasting
structural effect on the development of the sector and
which, as such, cannot be considered compatible with
the common market.

If confirmed,

that

(46) Under Article 87(3)(c) of

certain economic

the Treaty aid designed to
facilitate the development of certain economic activities
or of
considered
compatible with the common market provided that such
aid does not adversely affect trading conditions to an
extent contrary to the common interest. The notified aid
to be assessed within the
scheme needs

areas may be

therefore

(50) The information provided by the Italian authorities in
their letter of 23 October 1998 (20) has dispelled the
Commission’s doubts on the possible retrospective nature
of the notified aid scheme, by excluding the possibility
that aid will be paid for expenditure incurred before
prospective
aid;
moreover, the authorities have undertaken to notify to
the
the
implementation period.

Commission

beneficiaries

amending

decision

became

eligible

the

for

(18) Judgement of the Court of Justice of 13 July 1988 in Case 102/87
French Republic v. Commission of the European Communities
ECR [1988] 4067.

(19) Proposals for appropriate measures relating to aids granted by
Member States in the livestock and livestock products sector.

(20) See point 27.

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(51) The

two measures

considered
compatible with the common market in accordance with
Article 87(3)(c) of the EC Treaty.

therefore

can

be

Measure 3 (cid:151) Aid for the maintenance until first calving of
female breeding animals meeting specific requirements

(52) The aid covered by the measure concerned is a premium
for the maintenance until first calving of female animals
of the Chianina breed meeting specific requirements. The
aid, which is
in the form of a (cid:145)one-off(cid:146) premium
(ITL 350 000) per livestock unit, is a function of the unit
of production and as such is in principle incompatible
with the common market. Like aids based on the
the
quantity produced or marketed, on the price of
product or on the means of production (animal
feed,
etc.), this type of aid is regarded as operating aid (21), that
is aid which simply confers a short-term economic
advantage. The objective of
this aid is merely to cut
beneficiaries’ production costs for the duration of the aid,
relieving them of the business costs they normally sustain
in the day-to-day management of their business. This aid
has no structural effect on the development of the sector
and cannot be considered to facilitate the economic
development of certain economic activities or of certain
economic areas. Furthermore, the payment of such aid is
likely to interfere with the operation of the mechanisms
established by the common market organisations in the
framework of agricultural policy to the disadvantage of
producers who are not in receipt of aid.

(53) An exception to the strict rule prohibiting this type of
aid is however provided for by the Commission letter to
the Member States S 75/29416 (see point 48), which
authorises the granting of aid at a rate of 30 % for the
retention of pure-bred male breeding animals if this is
justified by special considerations, particularly of a
regional nature (22).

(54) The exception clearly refers to the granting of aid for the
maintenance of (cid:145)male(cid:146) breeding animals. (cid:145)Female(cid:146) breeding
to which Measure 3 is addressed, are not
animals,
covered.

(21) See footnote 4.
(22) See the following aid schemes: N 490/96; N 636/97; N 573/98.

It could be argued that the exception should apply (cid:145)by
analogy(cid:146) to female animals, in line with the Commission’s
practice in other cases. However, the very fact that this
provision is an exception to the strict
rule which
prohibits aid based on the unit of production, regarded
as operating aid by definition, means that it must be
interpreted strictly. The reason for the different approach
to male and female breeding animals lies in the totally
different nature of the two types of aid: the rearing of
high-quality male breeding animals is a major factor in
the process of genetic development and therefore in the
overall qualitative improvement of the livestock sector.
However, the decision to use high-quality male animals,
registered in a herd book, for breeding purposes prevents
their use for
the more lucrative business of meat
production. Thus in deciding to use these animals for
breeding instead of for meat production the stockfarmer
has chosen a costly, high-risk investment that will pay off
only in the long term, if at all. It is very expensive to
maintain breeding bulls, and their slaughter price is
usually extremely low, and insufficient to offset the costs
of maintenance. Stockfarmers therefore tend to reduce
the number of breeding bulls as far as possible, and to
long as possible, with consequent
use them for as
In
eventual deterioration of
providing for an exception in the case of these animals,
the Commission considered, in the light of all the above
considerations,
the distortive impact of an aid
measure based on the unit of production was more than
counterbalanced by the positive effect of such a measure
on the structural development of the livestock sector.

genetic heritage.

that

the

the

to cover

livestock unit

(55) This reasoning cannot be applied in the same way to
female breeding animals. Stockfarmers do not have to
choose between two different and mutually exclusive
uses. The same female animal can be (cid:151) and usually is (cid:151)
for breeding and later for milk and meat
used first
production, with no reduction in value. In this case, a
premium per
cost of
maintenance would constitute aid to stockfarmers to
reduce the normal operating costs of their business. Such
a premium is caught by the definition of operating aid,
which, as explained in point 52, is incompatible with the
common market and cannot therefore benefit from the
exception provided for by Article 87(3)(c). That is why
the exception referred to in point 53 relates exclusively
to male breeding animals, and why in this case it must
be interpreted strictly, and cannot be applied (cid:145)by analogy(cid:146),
in line with the Commission’s practice in other cases, to
female breeding animals. The premium for
female
breeding animals of the Chianina breed is caught by the
general prohibition on operating aid which,
the
reasons outlined in point 52,
incompatible by
definition with the common market and cannot therefore
benefit
from the exception provided for by Article
87(3)(c).

for

is

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(56) The Italian authorities have contested the Commission’s
interpretation of the measure as aid for the maintenance
of the animals, as described above. They have stressed
that
the aid should be rather seen as an (cid:145)incentive(cid:146)
designed to (cid:145)orient(cid:146) producers towards rearing female
than for meat
animals for breeding purposes rather
production. In this connection, it is worth recalling that
orientation of production, as well as income support, is
one of
common
organisation of the markets which, as repeatedly held by
the Court of Justice, are complete and exhaustive systems
excluding any power on the part of the Member State to
take measures
to
jeopardise them (23). In this respect, any aid interfering
with the mechanism of
the market organisations
automatically excludes the applicability of the exceptions
provided for in Article 87(3).

likely to derogate from them or

the objectives

and tasks of

the

Applicability of Regulation (EEC) No 2078/92

in accordance with Community criteria.

(57) A derogation from the above prohibition could have
been claimed by the Italian authorities if the aid was
granted for animals belonging to a breed in danger of
extinction,
In
this case, the aid would fall within the scope of Council
Regulation (EEC) No 2078/92 of 30 June 1992 on
agricultural production methods compatible with the
requirements of the protection of the environment and
the maintenance of the countryside (24). The protection of
endangered breeds is recognised as one of the actions
which may contribute
the
purposes of the Regulation, namely the protection and
improvement of genetic diversity. Measures of this type
may therefore be eligible for part-financing or for State
aid within the meaning of Article 10 of the Regulation,
which authorises Member States to implement additional
aid measures where the aid is granted on different terms
from those laid down in the Regulation or the amounts
exceed the limits stipulated therein, provided that the aid
measures comply with the objectives of the Regulation
and with Articles 87, 88 and 89 of the Treaty.

achievement of

to the

(58) Compatibility with the objectives of the Regulation is to
the same criteria set at
be assessed on the basis of
Community level to establish whether the breed is in
danger of extinction for part-financing purposes. The
Commission regards a breed as being in danger of
of Regulation (EEC)
extinction for
No 2078/92 whenever the number of breeding female
animals is below the ceilings listed below (25):

the purposes

(23) See Judgement of the Court of Justice of 18 May 1977 in Case
C-111/76 (Officier van Justitie v. Beert van den Hazel, [1977] ECR
901).

(24) OJ L 215, 30.7.1992, p. 85.
(25) See Commission document VI/3768/98 on (cid:145)Programmes

to
protect genetic diversity of endangered breeds of farm animals and
plant varieties under Regulation (EEC) No 2078/92(cid:146).

Table 2

Breeding females per breed

Bovines

Equidae

Sheep

Pigs

Breeds with stable
populations

5 000

5 000

7 500

2 000

Breeds with
decreasing
populations

Breeds with
increasing
populations

7 500

7 500

9 000

9 000

4 000

4 000

6 000

6 000

and when in addition the total number of breeding
females
is below the
following:

registered in the herd books

Table 3

Breeding females registered in herd books

Bovines

Equidae

1 000

1 300

Sheep

2 000

Pigs

600

(59) According to the data submitted by the Italian authorities
and reported in Table 1, in 1996 the number of female
breeding animals registered in the herd book was thirteen
times the Commission ceiling. Even if all female breeding
animals were registered and therefore if this figure were
representative of the entire female breeding population,
the figure for 1996 would be twice that set to define
endangered breeds. The Chianina breed is therefore not
in danger of extinction and does not fall within the scope
of Regulation (EEC) No 2078/92.

if

the current

(60) The Italian authorities do not dispute that the breed is
not yet in danger of extinction. They maintain, however,
trend continues unabated and no
that
action is taken now to counter it, there is a risk that it
may subsequently be in danger. That is why they believe
that
the Commission should not merely examine the
scheme in the light of existing legislation and precedents,
but rather assess it on a broader view on the basis of
Article 87(3)(c) and regard this measure as one to
facilitate the development of the sector without affecting
trade to an extent contrary to the common interest.

(61) With respect

to the fears expressed by the Italian
authorities about possible extinction of the breed, data
submitted by the Italian authorities and reported in

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19.4.2000

that

Table 1 show (as mentioned in point 10)
the
Chianina population has decreased since 1990 at a yearly
average rate of around 2 %. However, the same table also
indicates that
this decline followed some 30 years of
dramatic increase of the breed, whose population almost
doubled from 1967 to 1990. To support their argument,
the Italian authorities have also submitted projections (26),
showing that, if the current downward trend continues at
the same pace, in the year 2004 the number of registered
females will drop to 10 780 (from the current 13 635).
Italian
In making
authorities do not take into account the effect of the two
aid measures on which the Commission has already
expressed a favourable opinion in principle, nor do they
mention that their figure would, in any case, still be 10
times the Community ceiling.

calculation,

however,

this

the

(62) As to the observations concerning the Commission’s
approach in assessing the measure, it should be recalled
that Article 87(3)(c) is itself an exception to the general
prohibition of State aid laid down in Article 87(1).
It
must therefore be interpreted strictly and applied only
when the Commission is fully satisfied that all the criteria
laid down in the Article are met. Measures 1 and 2 of
the notified aid scheme, which pursue the same objective
as Measure 3, meet all these requirements and have in
fact been authorised by the Commission. Operating aid
such as that provided by Measure 3, however, does not
meet the criteria, by definition, and cannot therefore be
authorised.

(66)

or

costs(cid:146)

losses

incurred

(63) The Italian authorities have not provided any sound
argument to refute the Commission’s assessment of the
aid as operating aid. They have never quantified
(cid:145)additional
by
income
stockfarmers, nor have they indicated any proportional
relation between such costs and the planned premium. In
the original notification,
the Italian authorities simply
defined the amount of the premium as (cid:145)appropriate(cid:146); in
their letter of 11 December 1998 they make a general
reference to the fact that the aid would cover at least
50 % of the aforementioned additional costs. No further
detail is given. The Commission can only note that the
premium of EUR 180,76 envisaged by the Italian
authorities for a breed which is not clearly in danger of
extinction would be almost 50 % higher
than the
premium provided for by Regulation (EEC) No 2078/92
(EUR 120,8) for endangered breeds.

(64) Moreover, the economic arguments submitted to explain
the difficulties faced by Chianina stockfarmers and justify
the granting of the premium are of a very general nature
(general weakness of the livestock sector at national level,
environmental
structural
factors,
lack of quality
assurance systems and of strategies for the commercial
(cid:145)discriminatory(cid:146) system of
promotion of Chianina beef,

lack of economies of

stockfarms,
scale,

conditions

of

aid within the framework of the 1992 CAP reform). They
depict a situation of structural weakness in the livestock
sector at national and regional
level which cannot be
invoked by the
Italian authorities as a reasonable
justification for granting aid under a scheme whose
favourable impact on the sector as a whole they have
been unable to demonstrate, and which they cannot
prove will not have a distortive effect vis-(cid:224)-vis those
stockfarmers who are obliged,
faced with the same
difficult living and working conditions, to survive with
their own means and skills.

(65) Finally,

the aid,

to justify the granting of

the Italian
authorities mention a similar scheme authorised by the
Commission within the framework of
the Integrated
Mediterranean Programme for Tuscany in 1988 to 1992.
In that case, a contribution of ECU 190/200 per livestock
unit was authorised for a certain number of local breeds,
including
Italian
authorities there is no reason why a different approach
should be adopted in the case at issue.

the Chianina. According

to the

a

specific

establishing

It will be remembered that the aid scheme concerned was
authorised by the Commission on the basis of a specific
Regulation (27)
part-financed
programme in favour of specific regions within the
framework of the common agricultural policy and not on
the basis of the competition rules laid down in Article 87
to 89 of the EC Treaty. In the present case, however, the
scheme was notified by the Italian authorities to the
Commission pursuant to Article 88(3) of the EC Treaty
and is therefore to be assessed solely on the basis of
Articles 87 to 89 of the Treaty. Consequently, it could be
authorised only if it were considered compatible with the
common market according to the articles in question,
not on the basis of other provisions not applicable to the
specific case at issue.

VI. Conclusions

the

compatible with

(67) The above considerations lead to the conclusion that
Measures 1 and 2 of the notified aid scheme may be
common market
considered
according to Article 87(3)(c) of
the Treaty, since the
doubts on the retrospective nature of the aid scheme that
had induced the Commission to initiate the Article 88(3)
procedure
two measures have been
dispelled by the Italian authorities. Those authorities
must notify the Commission of the decision amending
the programme implementation.

against

these

(26) Letter from the Italian authorities of 11 December 1998 (see point

29).

(27) Council Regulation (EEC) No 2088/85 of 23 July 1985
concerning the Integrated Mediterranean Programme (OJ L 197,
27.7.1985, p. 1).

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(68) Measure 3 of the aid scheme is incompatible with the
common market and cannot therefore benefit from any
of the exceptions to Article 87(1) of the Treaty,

HAS ADOPTED THIS DECISION:

Article 1

The premium of ITL 350 000 (approximately EUR 175)
first

1.
per livestock unit granted for the maintenance until
calving of adult female animals of the Chianina breed which:

(a) were born on a holding listed in the herd book;

(b) are themselves listed in the herd book;

The aid for

the purchase of breeding bulls of

3.
the
Chianina breed listed in a herd book, in the form of a grant to
cover 40 % of the cost of the investment, is compatible with
the common market subject to the amendment of the period
of
to avoid the
payment of any retrospective aid.

implementation referred to in Article 3,

Article 2

Italy may not implement the aid scheme described in Article
1(1).

Article 3

Italy shall amend the period of
the aid
measures referred to in Article 1(2) and (3) so that no aid is
granted for expenditure incurred before the date of notification
of the aid to the Commission.

implementation of

(c) calved for the first time on a holding listed in the same

herd book,

Article 4

is incompatible with the common market.

The aid for the establishment of an artificial insemination
2.
programme providing for the financing of the following pilot
projects:

(a)

the production of embryos with high genetic potential
(taking oocytes from five-month old heifers and fertilising
them in vitro with semen from the best breeding bulls);

Italy shall
inform the Commission, within two months
following notification of this decision, of the measures taken to
comply with it.

Article 5

This Decision is addressed to the Republic of Italy.

(b)

implanting the fertilised embryos into breeding cows,

Done at Brussels, 10 November 1999.

is compatible with the common market
to the
amendment of the period of implementation referred to in
Article 3, to avoid the payment of any retrospective aid.

subject

For the Commission

Franz FISCHLER

Member of the Commission