2000/132/EC: Commission Decision of 25 November 1999 on the measure which Germany is planning to implement for the promotion of agricultural products of Mecklenburg-Vorpommern (notified under document number C(1999) 4227) (Only the German version is authentic)
Date: 1999-11-25
Institutions: European Commission
Subjects: Germany, Mecklenburg-Western Pomerania, State aid, advertising, agricultural product, sales promotion

12. 2. 2000

EN

Official Journal of the European Communities

L 37/31

COMMISSION DECISION

of 25 November 1999

on the measure which Germany is planning to implement for the promotion of agricultural
products of Mecklenburg-Vorpommern

(notified under document number C(1999) 4227)

(Only the German version is authentic)

(2000/132/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
pursuant to those provision(s) (1),

(7)

Whereas:

(1)

(2)

(3)

(4)

(5)

(6)

I. PROCEDURE

By letter dated 24 December 1997, Germany notified
the Commission of a measure granting aid for the
It provided the
promotion of agricultural products.
Commission with further information by letters dated
20 May 1998, 17 September 1998 and 17 February
1999.

As the aid concerned both aids for fishery products and
for agricultural products the dossier was split. State aid
N 22/A/98 (now C 23/99) concerned the aid related to
agricultural products, State aid N 22/B/98 concerned
the aid related to fishery products. State aid N 22/B/98
was approved by the Commission by letter SG (98)
D/4799 of 15 June 1998. The present Decision only
concerns State aid N 22/A/98 (now C 23/99).

By letter dated 3 May 1999, the Commission informed
Germany that it had decided to initiate the procedure
laid down in Article 88(2) of the Treaty in respect of the
measure.

(8)

The Commission Decision to initiate the procedure was
published in the Official Journal of the European Communi-
ties (2). The Commission called on interested parties to
submit their comments.

The German authorities submitted their comments by
letter of 8 September 1999. The Commission received
no comments from interested parties.

II. DESCRIPTION

(9)

The measure is meant
to promote the development
towards a market driven production process in the agri-
cultural sector in Mecklenburg-Vorpommern, Germany.
Especially small and medium sized enterprises encounter
difficulties in adjusting their production process and in
organising their marketing activities. Therefore, the State

(1) OJ C 213, 24.7.1999, p. 19.
(2) See footnote 1.

of Mecklenburg-Vorpommern wants
the
threshold to start marketing activities and wants to
promote the development of marketing skills among the
agricultural entrepreneurs in the area.

to lower

subsidies promotional

and
The measure
mesures
in
general. The measure concerns in particular subsidies
for:

to improve the marketing possibilities

activities

— the organisation of the restaurant competition ‘Essen

und Trinken in Mecklenburg-Vorpommern’

— the developement of promotional concepts,

— participation in fairs and trade markets,

— the development of quality labels and trademarks,

— the participation in seminars
concerning sales promotion,

and workshops

— market research,

— promotional activities and sales supporting activities

(advertising),

— the development and maintenance of a regional

label,

— the use of brochures and leaflets.

The measure grants support to producer associations,
undertakings that are active in the processing and
marketing of agricultural products, organisations for the
support of sales promotion, and agricultural associa-
tions. According to the original notification the benefi-
ciaries had to have a legal seat in Mecklenburg-Vorpom-
mern in order to be eligible for support. The aid is given
in the form of direct grants. Maximally 50 % of the
eligible costs may be reimbursed (60 % if the beneficiary
is a small or medium sized undertaking). However, the
maximum amount that may be granted as subsidy is
DEM 150 000. The measure will be in force in the
period 1999 to 2002.

The aid consists of several measures that can be divided
into ‘soft aids’ and promotional aids. In the decision
initiating the procedure under Article 88(2) of the Treaty
the Commission stated that she had no objections to the
measure in as far as it concerned soft aids as such. This
restaurant
concerned
competition, the participation in fairs and trade markets,
the participation in seminars and workshops concerning
sales promotion,
the development of promotional
concepts, the development of quality labels and trade-
marks, and market research.

organisation

the

the

of

L 37/32

EN

Official Journal of the European Communities

12. 2. 2000

(10)

The promotional aids have to comply with the Commis-
sion communication concerning State involvement in
the promotion of agricultural and fisheries products (1)
and, if the promotion is in the form of advertising, the
framework for national aids for advertising of agricul-
tural products and certain products not listed in Annex
II to the EEC Treaty, excluding fishery products (2).

rules relating to the various general facilities which are
of assistance in the pursuit of that occupation. There-
fore, the Commission had doubts about the compati-
bility of the measure with Article 43 and Article 48 of
the Treaty.

(11) One of the main conditions for promotional aids is
compliance with Article 28 of the Treaty. According to
point 2.3.1 of
the Annex to the abovementioned
Commission communication of 1986 there is a danger
of an infringement of Article 28 if ‘... undue emphasis is
placed on the national origin of the product in promo-
tional
the producing
country in word or symbol may be made providing that
a reasonable balance between references, on the one
hand, its national origin is kept. The references should
be subsidiary to the main message put over to the
consumers by the campaign and not constitute the prin-
cipal reason why consumers are being advised to buy
the product’.

Identification of

campaigns.

(12)

In earlier decisions (3) the Commission concluded that
the measure did comply with Article 28 of the Treaty.
However, the Commission re-examined the material the
German authorities sent as an example. The example
consists of a picture of agricultural products, a few text
lines and two signs ‘Mecklenburg-Vorpommern’. The
text lines say ‘Hier schmeckt's’ (Here it tastes well),‘Bei
uns kommt alles frisch auf den Tisch’
(Everything is
fresh on our table), and a text saying that a good soil
and a temperate climate are the best conditions for a
rich harvest of fruits and vegetables and potatoes. It
seemed there was hardly any other message than the fact
that the products were from Mecklenburg-Vorpommern.
Therefore, the Commission had doubts as to the exis-
tence of a reasonable balance between references to the
qualities and varieties.

(13)

Furthermore, the measure would grant aid to undertak-
ings that had a legal seat in Mecklenburg-Vorpommern
only. According to Articler 43 of the Treaty restrictions
on the freedom of establishment of nationals of a
Member State in the territory of another Member State
are prohibited. This prohibition applies as well to restric-
tions on the freedom of establishing agencies, branches
or subsidiaries by nationals of any Member State estab-
lished in the territory of any Member State.

III. COMMENTS FROM GERMANY

(14)

(15)

(16)

stated that

the promotion material

In their letter of 8 September 1999, the German authori-
that was
ties
submitted with the notification will not be supported
under the measure. New promotion concepts will be
designed to make this part of the measure operational.
The rules and conditions for such promotion activities
as mentioned in the Commission communication
concerning State involvement in the promotion of agri-
cultural and fisheries products and the framework for
national aids for advertising of agricultural products and
certain products not listed in Annex II to the EEC Treaty,
excluding fishery products will be respected. A report
giving information about the way the measure is made
operational will be yearly submitted to the Commission.

Furthermore, the German authorities indicated that they
have crossed out the condition of having a legal seat in
Mecklenburg-Vorpommern in order to become eligible
for support under the measure.

the German authorities mentioned that

Finally,
the
budget for the total measure (State aids N 22/A/98 and
N 22/B/98) has been increased to DEM 750 000 per
year. Of this budget DEM 230 000 per year will be
dedicated to measures concerning fisheries as such a
budget was approved for
fisheries by Commission
Decision concerning N 22/B/98, letter SG (98) D/4799.

IV. ASSESSMENT OF THE MEASURE

(17) Under Article 87(1) of the Treaty any aid granted by a
Member State or through State resources in any form
whatsoever which distorts or
to distort
competition by favouring certain undertakings or the
in so far as it affects
production of certain goods is,
trade between Member States,
incompatible with the
common market.

threatens

As the Court has held on several occasion (4), the said
prohibition is concerned not solely with the specific
rules on the pursuit of an occupation but also with the

(18)

(1) OJ C 272 of 28.10.1986.
(2) OJ C 302 of 12.11.1987.
(3) See NN 27/97, Promotion Directive and N 22/B/98, promotion of

fishery products of Mecklenburg-Vorpommern.

(4) See Case 305/87, Commission Versus Hellenic Republic, ECR 1989, p.

1461.

The measures grants aid for the promotion of agricul-
tural products out of State resources to a restricted
group of beneficiaries that are active in the marketing
and processing of products that are traded within the
Community. Therefore, the measure manifestly concerns
State aid in the sense of Article 87(1) of the Treaty. The
German authorities have not contested this.

12. 2. 2000

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Official Journal of the European Communities

L 37/33

Article 87(3)(c) of the Treaty

(24)

(19) Aid to facilitate the development of certain economic
activities or of certain economic areas may be deemed
by the Commission to be compatible with the common
market under Article 87(3)(c) of the Treaty if the aid
does not adversely affect trading conditions to an extent
contrary to the common interest.

Soft aid

(20) As stated in the description of the measure the Commis-
sion had not objections against the measures that could
be considered as soft aids as such. The Commission
could not approve this part of the measure because of
the objections against the eligibility criteria, namely the
in Mecklenburg-
requirement
Vorpommern. Since the German authorities have now
withdrawn this requirement, the Commission has no
objection to the granting of this aid since it meets the
conditions of the derogation in Aricle 87(3)(c).

to have a legal

seat

(21)

(22)

(23)

Promotion and advertising aids

The development and maintenance of a regional label
has to be evaluated as a promotional activity for which
the Commission communication concerning
State
involvement in the promotion of agricultural and fish-
eries products and, as the promotion is in the form of
advertising as well, the framework for national aids for
advertising of agricultural products and certain products
not listed in Annex II to the EEC Treaty, excluding
fishery products apply.

The abovementioned communication and framework
are equally applicable when examining the promotional
activities, the sales supporting activities, and the use of
brochures and leaflets.

Both the communication and the framework stress the
fact
that aid for promotion cannot be considered
compatible with the common market if the promotion
material infringes Article 28 of the Treaty. Furthermore,
the framework prohibits aid for advertising related to
partiuclar firms and sets a condition that the advertising
should concern at least one of the following categories:

— surplus agricultural products,

— new products or replacement products not yet in

surplus,

— the development of certain regions,

— the development of small and medium-sized under-

takings,

— or

the advertising of high-quality products and

health foods.

stated that

the promotion material

The Commission initiated the procedure provided for
under Article 88(2) of
lthe Treaty because she had
doubts about the compatibility of submitted promo-
tional material with Article 28 of the Treaty. However,
in their letter of 8 September 1999 the German authori-
that was
ties
submitted with the notification would not be supported
under the measure. New promotion concepts will be
designed to make this part of the measure operational.
The rules and conditions for such promotion activities
as mentioned in the Commission communication
concerning State involvement in the promotion of agri-
cultural and fisheries products and the framework for
national aids for advertising of agricultural products and
certain products not listed in Annex II to the EEC Treaty,
excluding fishery products will be respected. A report
giving information about the way the measure is made
operational will be yearly submitted to the Commission.
Therefore, the Commission now considers the measure
to be compliant with Article 28 of the Treaty.

(25)

The German authorities have guaranteed that no aid will
be given to make promotion for a particular firm.

(26)

The abovementioned framework states that the advert-
ising which is subsidised should concern at least one of
the following categories:

— surplus agricultural products,

— new products or replacement products not yet in

surplus,

— the development of certain regions,

— the development of small and medium-sized under-

takings,

— the advertising of high-quality products and health

foods.

The measure is aimed at the development of agriculture
in Mecklenburg-Vorpommern. Most of its beneficiaries
will be
small or medium-sized undertakings. The
measure is meant to promote the sales of agricultural
products of which a considerable number are in surplus.
Therefore, the Commission considers this condition to
be fulfilled.

(27)

The framework for national aids for advertising of agri-
cultural products and certain products not
listed in
Annex II to the EEC Treaty, excluding fishery products
state that the beneficiaries of the aid for advertising
should at least contribute 50 % of the costs. However,
point 4.3 of the framework allows the possibility to raise
the abovementioned maximum rate of direct aid (of
50 %), particularly in the case of products from small
and medium-sized undertakings.

Finally,
the aid intensity for aids granted under the
abovementioned framework should not exceed 50 % of
the eligible costs.

(28)

The notified draft grants a maximum aid of 50 % but
makes an exception for aids to small and medium-sized
undertakings (SMEs). SMEs may be granted aids of 60 %
of the eligible costs.

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Official Journal of the European Communities

12. 2. 2000

(29)

The basic aid intensity complies with the abovemen-
tioned framework. In similar cases the Commission has
approved advertising aids for SMEs with an aid intensity
of 60 % or even 75 % (N 703/95, N 624/95 and NN
27/97). Therefore, the Commission considers this condi-
tion to be fulfilled.

Compliance with Article 43 and 48

(30) As mentioned above the Commission initiated the
procedure provided for by Article 88(2) of the EC Treaty
because it seemed the requirement to have a legal seat in
Mecklenburg-Vorpommern to become
for
support would be an infringement of Article 43 and
Article 48 of the Treaty.

eligible

In their letter of 8 September 1999, the German authori-
ties indicated that they have crossed out the condition of
having a legal seat in Mecklenburgh-Vorpommern in
order to become eligible for support under the measure.
Therefore the Commission considers the measure to be
compliant with Articles 43 and 48 of the Treaty.

Increased budget

Finally, in their letter of 8 September 1999, the German
authorities indicated that the planned to increase the
budget
from DEM 230 000 to
DEM 750 000 per year.

the measure

for

the promotion of agricultural and fisheries products and
the framework for national aids for advertising of agri-
cultural products and certain products not
listed in
Annex II to the EEC Treaty, excluding fishery products.

(35)

Therefore, the Commission considers the notified drat to
be a measure that facilitates the development of certain
economic activities, where such aid does not adversely
affect trading conditions to an extent contrary to the
common interest as meant in Article 87(3)(c),

HAS ADOPTED THIS DECISION:

Article 1

The measure which Germany is planning to implement
concerning the promotion of agricultural,
food industry,
forestry, and fisheries products — the ‘Richtlinien für die
Gewährung von Zuwendungen des Landes zur Förderung des
Absatzes und zur Verbesserung der Marktposition land-, ernäh-
rungs-, forst-, und fischwirtschaftliche Erzeugnisse’ originally
notified by letter of 24 December 1997 is compatible with the
common market within the meaning of Article 87(3)(c) of the
Treaty.

Implementation of the measure is accordingly authorised.

The increase of the budget however, does not alter the
Commission evaluation of the measure as the aid inten-
sities remain the same.

Article 2

This Decision is addressed to the Federal Republic of Germany.

V. CONCLUSION

Done at Brussels, 25 November 1999.

the measure by the
Following the amendments of
German authorities
the
measure to be compliant with the Commission practice
regarding soft aids or to be compliant with the Commis-
sion communication concerning State involvement in

the Commission considers

For the Commission

Franz FISCHLER

Member of the Commission

(31)

(32)

(33)

(34)