WRITTEN QUESTION E-2517/99 by Adriana Poli Bortone (UEN) to the Commission. The Sviluppo Italia company and breaches of Community rules.
Date: 1999-12-22
Institutions: European Parliament, Provisional data
Subjects: EU financing arrangements, Italy, Mezzogiorno, Structural Funds, application of EU law, control of State aid, regional development, restriction on competition

C 280 E/60

Official Journal of the European Communities

EN

3.10.2000

proposal on subsidies also places Finland at a disadvantage in view of the low reference harvests it sets for
fibre flax crops, since the subsidies would be partly calculated on this basis. Different levels of aid are
proposed for the processing of long and short fibres, even though the definition of the differences between
the different types of fibre is not clear and their use in practice is largely the same.

What action will the Commission take to ensure that long- and short- fibre flax are not pointlessly
separated from each other by these new definitions? What does the Commission propose to do to ensure
that there are good conditions for the cultivation and processing of fibre flax in Finland as elsewhere? How
does the Commission propose to protect the development of flax cultivation and processing and its
prospects as a part of Finnish agriculture?

Answer given by Mr Fischler on behalf of the Commission

(20 January 2000)

The major increase in the areas sown with fibre flax and hemp in recent years has not been matched by a
comparable expansion in output or in real market demand for these products. The support scheme has
been destabilised by low-cost and very low-yield flax and hemp crops, developed with the sole purpose of
generating entitlement to assistance.

A series of legal provisions have been adopted in recent years to step up controls and to try to prevent
speculative crops. However,
it is clear that these
provisions have not had the desired effect. Their main consequence has been considerably to complicate
the legislation.

in view of the development of the areas cultivated,

The Commission(cid:146)s reform proposal (1) is intended to put the sector back on a healthy footing and to take
account of the technical developments of recent years, in particular in relation to new uses. The proposed
scheme is intended to ensure that economic activity is maintained in the traditional production of long-
fibre flax for use in the textiles industry, but it also aims at helping other economically viable outlets to
become established and find stable markets. Finnish flax producers will have an opportunity to develop the
crop as long as their output matches a demand on the market. However, subsidy-driven production will be
restricted.

The proposal thus aims at achieving balance on the market for new flax and hemp products, while
continuing the effort to simplify management and tighten up budgeting already under way in a number of
other sectors covered by the common agriculture policy (CAP). In the circumstances, budget stabilisers
must be introduced to prevent any fraudulent increase in quantities eligible for assistance and to avoid the
risk of Community expenditure running out of control. Bearing in mind the need for rigorous budgeting,
the stabilisers must be calculated on the basis of figures corresponding as far as possible to real levels of
output rather than on the basis of somewhat problematic forward estimates of expansion.

As to the differentiation between long-fibre and short-fibre flax, two products with quite distinct markets,
the proposal provides for criteria to be laid down in the implementing arrangements to be introduced by
the Commission at a later stage. Implementing rules are the most suitable instrument for transposing
technical definitions into law, because they are more adaptable to any technical progress in the sector.

(1) COM(99) 576 final.

(2000/C 280 E/061)

WRITTEN QUESTION E-2517/99

by Adriana Poli Bortone (UEN) to the Commission

(22 December 1999)

Subject: The (cid:145)Sviluppo Italia(cid:146) company and breaches of Community rules

The (cid:145)Sviluppo Italia(cid:146) company was set up by a legislative decree of the Italian Government (1/99) to
In addition to resources from the
provide assistance to depressed areas of the Mezzogiorno region.

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Official Journal of the European Communities

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revolving fund set up by law 208/99, its original capital stock is also made up of Community funds and its
relations with the public authorities are governed by special agreements not subject to public accounting
procedures.

Does the Commission not consider that this situation is incompatible with Community law on competi-
tion, use of Community funds and state aids, particularly in the light of the considerations set out below?

1.
Public funds of Community origin intended to finance business promotion programmes in depressed
areas are being used to provide start-up (risk) capital and liquidity flows (finance) for a single (joint stock)
company formally belonging to the private sector and not subject to government control. These funds
could be used for purposes other than those stipulated with little real prospect of doing anything to assist
the local situation they were originally intended to alleviate.

Given the vagueness of the role assigned to the (cid:145)Sviluppo Italia(cid:146) company and the impossibility of
2.
separating its accounts for activities undertaken in the public interest and its business activities, the
company enjoys a dominant position on the market for development services and financial services, while
being able to evade public accounting procedures, giving it a privileged position as sole partner, to the
detriment of new or existing businesses in the sector.

3.
The (cid:145)Sviluppo Italia(cid:146) company has the legal personality of a private firm and thus the capacity to
evade the securities and guarantees required of a company subject to public law as regard the organisation
its activities (parliamentary control, auditing, public accounting procedures and
and performance of
recruitment by competitive examination).

Answer given by Mr Monti on behalf of the Commission

(14 February 2000)

Member States are competent to manage resources deriving from structural funds. Therefore, the choice to
merge all the State(cid:146)s holdings in a single company, constituted as a joint stock company, is not relevant
under Community state aid rules. Article 222 (ex Article 166) of the EC Treaty does not prejudice the rules
in Member States governing the system of property ownership. Accordingly the creation, by a Member
State, of a holding in the form of joint stock company operating on the market does not constitute, per se,
an infringement of Community competition rules.

In any case, the commercial activities performed by Sviluppo Italia will be subject to the Community rules
on competition and on structural funds.

The Commission is not informed as to the involvement of state aid elements in favour of Sviluppo Italia. If
information should come to the attention of the Commission, it will examine it and take a decision in this
respect.

(2000/C 280 E/062)

WRITTEN QUESTION E-2520/99

by Jonas Sj(cid:246)stedt (GUE/NGL) to the Commission

(22 December 1999)

Subject: New Finnish application concerning egg production aid

In reply to my question No E-1710/99 (1), the Commission explained that Finnish aid for egg production
under Article 138 must cease from the new year. It has since come to my notice that the Finnish
Government has submitted a new application to allow production aid based on a different article. Can the
Commission guarantee that the aid which ceases at the end of the year will not be allowed to be replaced
by any other form of government aid?

(1) OJ C 203 E, 18.7.2000.