2000/319/EC: Commission Decision of 22 December1999 on the State aid scheme implemented by Italy for the production, processing and marketing of products listed in Annex I to the EC Treaty (Sicilian Regional Law No 68 of 27 September 1995) (Notified under document number C(1999) 5202) (Only the Italian text is authentic)
Date: 1999-12-22
Institutions: European Commission
Subjects: Sicily, State aid, agricultural product, control of State aid, fishery product, infringement of EU law

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Official Journal of the European Communities

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COMMISSION DECISION

of 22 December1999

on the State aid scheme implemented by Italy for the production, processing and marketing of
products listed in Annex I to the EC Treaty (Sicilian Regional Law No 68 of 27 September 1995)

(Notified under document number C(1999) 5202)

(Only the Italian text is authentic)

(2000/319/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 the provision cited above (1) and having regard to
their comments,

Whereas:

I. PROCEDURE

the Treaty, of a draft regional

(1) By letter dated 8 August 1995 the Italian Permanent
Representation to the European Union notified the
Commission on Sicily’s behalf, and in accordance with
Article 88(3) of
law,
subsequently adopted as Sicilian Regional Law No 68 of
27 September 1995 on the (cid:145)Establishment of a guarantee
fund
and
commercial undertakings and a fund to consolidate the
debts of small businesses. Aid for commercial operators(cid:146)
(hereinafter referred to as Regional Law No 68/95).

to consolidate

debts of

industrial

the

(2) Examination of the measure was split into two parts as

follows:

Under aid N 750/A/95, the Commission examined and
authorised under Articles 87 and 88 of
the Treaty
(Commission letter SG(96) D/8236 of 24 September
1996) the measures in the Law applying to sectors other
than agriculture, fisheries and aquaculture.

Application of the measures in the Law as they related to
agriculture, fisheries and aquaculture were examined by
the Commission as aid N 750/B/95.

(1) OJ C 86, 21.3.1998, p. 3.

(3) The Commission asked for more information on 2
October 1995 (telex No 36342), on 13 March 1996
(telex No 11717) and on 2 September 1996 (telex No
33700). Some of the information sought was provided
by the Italian Permanent Representation in its letters of
18 July and 6 November 1996.

On 3 December 1996 (telex No 46422),
the Italian
authorities were asked for specific detailed information
on the sectors covered by Regional Law No 68/95.

By letter dated 15 September 1997, the Italian authorities
sent some information on Article 6 of the Regional Law.
The other information requested was never provided. In
reply to a reminder from the Commission dated 22
October 1997 the Italian authorities told the Commission
by letter dated 28 October 1997 that they had no more
information to offer.

On 24 September 1997, the Commission approved aid N
750/A/95 (letter
to the Italian Government SG(96)
D/8236).

In the light of the information supplied by the Italian
authorities, Articles 6 and 7 of Regional Law No 68/95
certainly apply to the production, processing and
marketing of the products listed in Annex I to the EC
Treaty. As regards the Law’s other provisions, the Italian
authorities have not replied to the Commission’s question
regarding the sectors
covered by the aid schemes
provided for in Articles 1, 3 an 5 of the Law (question
posed in a telex dated 3 December 1996).

(4) By letter dated 13 February 1998 (SG(98) D/1223), the
Commission notified Italy that it had decided to initiate
the procedure laid down in Article 88(2) of the EC Treaty
in respect of the aid as it applied to agriculture, fisheries
and aquaculture.

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(5) The commission decision to initiate the procedure was
European
published
Communities (2). The Commission invited interested parties
to submit their comments on the aid.

in the Official

Journal

the

of

(6) By letter dated 30 June 1998,

submitted their
comments were received from other interested parties.

comments

the Italian authorities
to the Commission. No

Following an informal meeting between the Commission
and the Italian authorities at which they said they would
ask for the aid under Article 6 of
the Law to be
examined apart from the other measures against which
the procedure under Article 88(2) of
the Treaty was
initiated, the Commission sent telex No 42510, dated 10
information on
November 1998, asking for
Article 6. By letter dated 19 November 1998, the Italian
authorities provided the Commission with further
information on that Article.

further

in its primary production sense,

(7) This Decision relates solely to the eligibility of the aid
measures in the sectors covered by Annex I to the Treaty
the
(agriculture
processing and marketing of agricultural,
fisheries and
aquaculture products). Unless otherwise stated in this
Decision the term (cid:145)sectors concerned(cid:146) shall refer to all
agricultural and fisheries products listed in Annex I to
the EC Treaty.

II. DETAILED DESCRIPTION

(8) The measures covered by this Decision are exclusively
those contained in the Articles of Regional Law No
68/95 described below in so far as they apply to Annex I
products (agricultural and fisheries products). Where they
apply to sectors other than agriculture,
fisheries and
aquaculture,
the measures contained in the Law have
already been examined and approved by the Commission
under Articles 87 and 88 of the EC Treaty in its letter
SG(96) D/8236 of 24 September 1996.

(9) Article 1 of Law No 68/95

This Article sets up two guarantee funds
(one for
industrial
commercial
financial
businesses)
restructuring operations implemented under Article 34 of
Regional Law No 15/93, Article 43 of Regional Law No

undertakings,
intended to cover

the risks of

the other

for

(2) See footnote 1.

25/93, as amended by Article 3 of Regional Law No
68/95, and Article 44 of Regional Law No 25/93.

(10) The aid scheme provided for in Article 34 of Regional
Law No 15/93 was approved by the Commission as aid
N 730/95. The aid is in the form of reduced interest
rates for the financial restructuring of undertakings in the
manufacturing sector.

(11) The aid scheme provided for in Article 43 of Regional
Law No 25/93 was approved by the Commission as de
minimis aid as part of aid N 472/94. The aid is to
reschedule the debts of commercial businesses.

the Commission decided that

(12) As regards the aid provided for in Article 44 of Regional
Law No 25/93,
it was
incompatible with the common market (decision of 17
July 1996, adopted under procedure C 30/95 (cid:151) ex N
113/B/93). Article 44 provides for aid in the form of
reduced interest rates on loans to consolidate the bank
debts of undertakings trading in fruit and vegetables,
citrus fruits in particular.

(13) Article 3 of Regional Law No 68/95

Article 3 of Regional Law No 68/95 amends
the
conditions for applying the aid introduced by the scheme
to reschedule
commercial businesses
provided for in Article 43 of Regional Law No 25/93
and approved as de minimis aid as part of aid N 472/94.

the debts of

(14) Article 5 of Regional Law No 68/95

Article 5 of Regional Law No 68/95 provides for aid in
the form of reduced interest rates on loans to reschedule
the debts of small businesses and was approved as de
minimis aid under aid N 750/A/95.

(15)

In the case of Articles 1, 3 and 5, the Commission made
the points below in its decision to initiate the procedure.

(16) As regards Article 1, in view of the mechanism set up
(the guarantee is granted on loans benefiting from the
initial regional aids), compatibility of the aid in the form
the
of a guarantee must be assessed in the light of
compatibility of the initial aid granted in the form of an
interest rate reduction for loans to consolidate debts. As
regards
the
operations provided for in Article 44 of Regional Law No
25/93, since the Commission has already decided that

the guarantee granted by the fund for

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those operations are incompatible with the common
market, it must also view the guarantee as incompatible.

actually implemented (and continued to be so)
accordance with that rule outside the sectors concerned.

in

(17) By letter dated 16 January 1997, the Italian authorities
informed the Commission that, although it has not been
formally repealed, Article 44 had not been applied
because the budgetary resources provided for the scheme
by Regional Law No 25/93 were not committed in time
(before the end of the 1993 financial year). The reference
made in Article 1 of Regional Law No 68/95 to the
scheme provided for in Article 44 of Regional Law No
25/93 is therefore null and void. The Commission noted
this when initiating the procedure laid down in Article
88(2) of the EC Treaty.

(18) As regards the other aid schemes established by Article 1
of Regional Law No 68/95, doubts were raised about
their non-applicability to the sectors concerned when the
aid in the form of a guarantee was being examined. The
Italian authorities were therefore asked on 3 December
1996 about the sectoral scope of each of the provisions
of Regional Law No 68/95 (and, therefore, of the aid
schemes in question). Since the Italian authorities have
not
the Commission was
unable to exclude the possibility that Articles 1, 3 and 5
of Regional Law No 68/95 and the regional provisions
referred to above also apply to these sectors.

supplied this

information,

(21) Article 6 of Regional Law No 68/95

This Article provides for aid in the form of reduced
interest rates on loans for a period not exceeding 12
months granted to traders in Sicily at least 70 % of whose
turnover
fruit and
is accounted for by the sale of
vegetables, including citrus fruits, outside the region.

(22) The interest rate payable by the traders after application
of the reduction corresponds to the rate laid down in
Article 4, second paragraph, point 1 of Regional Law No
13/1986 and the loan may not exceed 50 % of
the
average turnover for the previous three years. The budget
for the measure in the three-year period 1995 to 97 is
ITL 15 000 million, 70 % of which was allocated to the
citrus fruit sector.

(23)

In its decision to initiate the procedure, the Commission
made the following comments on Article 6 of Regional
Law No 68/95:

(19) The Commission was therefore also unable to verify that
the aid provided for in Articles 1, 3 and 5 of Regional
Law No 68/95 was compatible with the common market
in the light of the criteria for assessment which apply to
State aid in the sectors in question (in particular as
regards State guarantees and national aid to firms in
difficulties). The Commission was therefore obliged to
initiate the procedure provided for in Article 88(2) of the
Treaty against Articles 1, 3 and 5 of Regional Law No
68/95 to the extent that they apply to the sectors in
question.

(20) Under

the procedure,

the Commission requested the
Italian Government
to provide, with regard to the
scheme provided for in Article 34 of Regional Law No
15/93 (and Article 1 of Regional Law No 68/95 referring
thereto) and in the event that it had been applied in the
sectors concerned, information enabling the Commission
to verify that the rules on State aid in those sectors were
being complied with. As regards the schemes provided
for in Article 43 of Regional Law No 25/93 (and Articles
1 and 3 of Regional Law No 68/95 referring thereto) and
Article 5 of Regional Law No 68/95, the Commission
reminded the Italian Government that the de minimis rule
It asked the
does not apply to the sectors concerned.
the schemes were
Italian authorities to confirm that

of

the

in the Official

(cid:145)The Italian authorities asked that this aid be examined in
the criteria used by the Commission for
the light of
adoption of
the guidelines
operating loans before
European
Journal
published
(OJ C 44, 16.2.1996) (1). The criteria in
Communities
question are as follows:
the loans must be (cid:145)seasonal
credits(cid:146) to cover general overheads (purchase of input,
payment of workers, etc.), the loan must not be granted
for a single product or linked to a single operation; the
duration of the loan must not exceed 12 months. There
are doubts, however, about whether the aid in question
can be considered as a true operating loan (in the sense
of a (cid:145)seasonal credit(cid:146)) (cid:133) . If account is taken of the rules
for the granting of aid, in particular the restriction of aid
to export-oriented undertakings and calculation of the
the
the reduced interest
size of
undertaking’s
seem to
the
turnover),
correspond to the definition of export aid given in the
Commission communication on application of
the de
minimis rule ((cid:145)(cid:147)export aid(cid:148) means any aid directly linked
to the quantities exported [(cid:133)] or to current expenditure
linked to the export activity(cid:146)). The aid in question is
directly linked to the quantities exported, firstly, because
their relative volume is important
in determining the
undertaking’s eligibility for the measure and, secondly,
because the aid is calculated on the basis of
the
undertaking’s turnover (which must be mostly accounted
for by export
special
conditions, the aid, even if it is presented in the form of
a (cid:145)traditional(cid:146) operating loan, would appear, in covering
part of the costs involved, to have the intention (and the
effect) of supporting exports of the two types of product

rate loan (50 % of

In view of

aid would

earnings).

these

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referred to in the Article 6 concerned (citrus fruits and
fruit and vegetables). It cannot therefore be considered as
a seasonal credit intended to cover advance payment of
the operator’s expenditure linked to the agricultural
production cycle pending receipt of income during that
same cycle. It is Commission practice to consider export
aid as operating aid ineligible for any of the derogations
provided for in Article 87(2) and (3) of the Treaty (see
Commission communication on the method for
the
application of Article 87(3)(a) and (c) to regional aid).
The aid has no lasting effect on the development of the
sector or region concerned and its effect disappears when
the payment of aid ceases. The Commission has therefore
decided to open the procedure provided for in Article
93(2) (now 88(2)) of the Treaty in respect of this aid.

(1) Application of the guidelines to new aid schemes is
currently suspended (see Commission letter to the
Member States dated 4 July 1997).(cid:146)

(24) Article 7 of Regional Law No 68/95

Article 7 authorises the IRCAC (Istituto Regionale per il
Credito alla Cooperazione (cid:151) Regional
Institute for
Cooperative Credit), under Regional Law No 37/78, to
grant young people loans at a reduced rate of interest as
working capital to set up undertakings.

(25) Regional Law No 37/78 (since repealed) provided for an
aid scheme for young entrepreneurs permitting the grant
of: (a) aid in the form of grants and reduced rate loans
for investments and (b) aid in the form of reduced rate
loans for running undertakings during the first
three
years after those investments had been made and brought
on line. Because of delays in making investments, a
number of cooperatives (25 based on the information
available) could not begin production before the end of
the period of grace (three years) for repaying the loans
taken out to make the investments and so could not
repay them. The cooperatives were therefore ineligible
for the operating loan.

(26) Article 7 of Regional Law No 68/95 permits,

in
substance, the grant of one of the aid measures provided
for in Regional Law No 37/78 to undertakings which,

allows

question

aid. The Article

under that Law, did not fulfil the eligibility criteria for
those
in
that
undertakings access to the operating loan provided for in
Regional Law No 37/78 provided that the loan granted
under the provisions of that Law is equal to or greater
incurred (on financing the investment).
than the debt
IRCAC sets unpaid debts off against new loans (i.e. part
of the new loan is used to pay off the loan taken out to
make the investments).

limits must be respected;

in accordance with which:

(27) The Commission had the following to say about Article 7
in its decision to initiate the procedure. The aid provided
for in Article 7 of Regional Law No 68/95 must be
examined in the light of
the criteria used by the
Commission for examining aid intended to reduce the
financial cost of loans taken out to finance investments
already carried out (criteria applicable to agricultural and
fisheries undertakings),
the
cumulated grant equivalent of the aid granted when the
loans were taken out and the aid in question may not
exceed the rate generally allowed by the Commission for
investment aid (for the production and the processing
and marketing of Annex II (now Annex I) products); any
sectoral
the aid in question
must follow adjustments in the rate of interest on new
loans to take account of changes in the price of money
(the aid must be less than or equal to the change in
the rate for new loans) or must be for agricultural
undertakings
viability,
particularly where the financial charges resulting from
the
existing loans are such that
undertakings could be placed in danger or could fail; the
undertakings’ difficulties must be the result of external
rather
Italian authorities
provided no information permitting verification that the
criteria had been complied with. The Commission
therefore decided to initiate the procedure provided for
in Article 88(2) of
the aid
provided for under Article 7 of Regional Law No 68/95.

the Treaty in respect of

there is a risk that

than internal

factors. The

guarantees

presenting

of

(28) Before concluding this description of

the measures it
should be noted that Article 9 of Regional Law No 68/95
expressly makes the aid provided for in that Law subject
to the conclusion of the procedures provided for in the
then Article 93(2) and (3) of the Treaty. Furthermore, in
their letter of 30 June 1998, the Italian authorities stated
that the appropriations for Article 1 of the Regional Law
had lapsed in their entirety because the necessary
commitments could not be given by the deadlines
stipulated in the law on public accounts and,
in their
letter of 19 November 1998, they further stated that the
entire appropriation for Article 6 had been removed

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from the regional budget in the absence of a Commission
decision by the end of 1998.

III. COMMENTS FROM ITALY

compensate for an initial handicap faced by Sicilian
businesses which were unable to make use of a relief
already provided for in the legislation of other countries.
Moreover, the possibility of annual renewals of the loans,
allowed under
the Community rules and regulations
cited, would diminish, where necessary, the effect of the
provision in the regional legislation on the redemption of
the debts over 36 months. The national authorities
claimed that the length of the redemption period should
be stressed because the loan amount would start
to
diminish from the first month in which it was granted,
so that its average duration would be certainly less than
36 months.

(29)

the

contrary,

In their letter of 30 June 1998, the Italian authorities
note in particular that, given the absence of a provision
to
and
marketing of products listed in Annex I
(previously
Annex II) to the Treaty (agricultural and fishery products)
do not appear to be excluded from the aid provided for
in Regional Law No 68/95, as worded.

the production, processing

(30) The Italian authorities also emphasise that the aid for the
agricultural sector is intended to compensate for the
disadvantages (the seasonal nature of production and
the structure of
the holdings) penalising agricultural
operators relative to those in other economic sectors and
the aid would be granted to all
that,
operators in the sector without any discrimination and
regardless of the type of agricultural activity involved.

in any event,

(31) The Italian authorities also point

that

this handicap would be likely to result

to the exceptional
nature of this aid, which is intended to compensate for
in Sicily
the general handicap faced by enterprises
because of the island’s high interest rates, which are on
average higher than those elsewhere in Italy. They point
out
in
distortions of competition. For this reason, the national
authorities conclude that aid in the form of an interest
rate subsidy, albeit operating aid, should be exceptionally
authorised. The Italian authorities note that
this aid
would comply with the Community rules in force on the
date Regional Law No 68/95 was approved because (a)
the maximum length of a loan is one year and (b) it is
not restricted to a single product and single operation.
Furthermore, Community rules do not
lay down aid
intensity limits and allow for annual renewals of the loan.

for

(32) The national authorities also point out that the case in
the undertakings’
involve loans
point does not
short-term needs, but a rescheduling of
their debts
resulting from short-term bank loans taken out at high
interest rates which have affected the competitiveness of
the island’s undertakings relative to the rest of Italy and
the European Community. The Italian authorities believe
that
the undertakings had been able to borrow
short-term at an interest rate equivalent to the subsidised
rate, which is roughly identical
to the rate applied
outside Sicily, they would not now have their current
intended to
debt burden. The Law,

therefore, was

if

(33) The Italian authorities also noted that the problem is
further aggravated by the fact that many undertakings
cannot avail themselves of the relief laid down in existing
rules and regulations because they do not have sufficient
funds to guarantee the loans sought. This shortcoming
should not be seen in absolute terms, however, because,
where the guarantees are the same, the banks are willing
to grant operators in other regions what they refuse to
grant to Sicily’s. The reasons for this, according to the
national
and
are Sicily’s
economic circumstances, which place the island at a
disadvantage relative to the other regions of Italy. The
Italian authorities claim that Article 1 would therefore
eliminate
island’s
businessmen.

environmental

authorities,

differential

penalising

this

the

(34) The Italian authorities also state that particular attention
should be paid to Article 3 of the Law and that the aid
provided for in Article 43 of Regional Law No 25/93
(which Article 3 of the Law under examination amends)
was approved as de minimis aid. They also point out that,
unlike in the case of Article 44 of Regional Law No
25/93 (on which the Commission adopted a negative
decision on 17 July 1996) (cid:145)the national authorities felt
legitimately entitled to conclude they had (cid:147)tacit consent(cid:148)
since for some years (three)
the relevant Directorate
(which was certainly informed, as usual, by the other
departments) had made no comment whatsover on the
said Article 43(cid:146). According to the national authorities,
such comments would apply to Article 1 of Regional
Law No 68/95 in that it refers to Article 3 of that same
Law and to Article 43 of Regional Law No 25/93.

(35) The Italian authorities further state that the appropriation
for the purposes of Article 1 has lapsed in its entirety,
given that the commitments could not be made within
the time limits laid down in the law on public accounts.

(36) As regards Article 6 of Regional Law No 68/95 in
particular, the national authorities note that the Article
does not introduce a new aid scheme, but should instead
be considered a refunding of Article 48 of Law No
32/91. That Article, examined by the Commission as part

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to benefit

the part of

impossible for

appropriation fully.

In addition, most of

of aid N 377/91, provided for an appropriation of ITL
30 000 million for operating loans of less than one year,
at a subsidised rate of interest, in the three-year period
1991 to 1993; the loans were offered to holdings at least
70 % of whose turnover related to sales of citrus fruit,
fruit and vegetables outside the region. The
other
provision made no reference to a marketing year, laying
down instead a single time limit, that for the budget
appropriation. When the relief introduced by the Article
came into operation unopposed by the Commission, the
national authorities found themselves unable to use up
the
the
appropriation actually used, about ITL 17 000 million,
was used only in 1993 and so after the dates laid down
in the Law. This has made it
those
beneficiaries with bank loans for the 1991, 1992 and
1993 marketing years
from the Law’s
subsidising effects. Therefore, Article 6 of Regional Law
No 68/95 and Article 7 of Regional Law No 81/95 are
the appropriation
intended to recover
provided for in Article 48 of Regional Law No 32/91 left
unused and Article 6 of Regional Law No 68/95 in
particular allows for a reduction in interest on debts
incurred in the years after 1993 until 1995/1996. Article
6 of Regional Law No 68/95 and Article 7 of Regional
Law No 81/95 are the completion,
from a financial
standpoint, of Article 48 of Regional Law No 32/91
which the Community accepted as
an exceptional
measure. Given that Article 6 of Regional Law No 68/95
the said
provides for appropriations until 1997,
Article must be considered a refinancing of Article 48 of
Regional Law No 32/91, of which it retains the content,
and lastly that
the Commission by letter dated 19
December 1997 suspended application of the rules on
State aid for short-term loans in the agricultural sector
until 30 June 1998, the Italian authorities conclude that
Article 6 is compatible with the Community rules and
regulations in force when Article 48 of Regional Law No
32/91 was examined. The authorities further state that, if
the Commission intended to change the previous policy
and carry out its examination in the light of the rules on
export aid, as
stated in its decision to initiate the
procedure, they would give due consideration to the new
policy, even though it seemed rather inappropriate given
that previous cases had legitimately led the regional
legislature to adopt a solution based on the success of
earlier precedents.

that

(37)

In view of the possible splitting of the examination of the
measure concerned from the rest of the notification, the
Italian authorities
submitted further observations on
Article 6 to the Commission in a letter dated 19
November 1998. These observations
contested the
description of
the aid measures envisaged therein as
(cid:145)export aids(cid:146). According to the national authorities, the
proposed aid measures could not be considered (cid:145)export
aid(cid:146) for the following reasons:

some of

their production abroad,

(a) Most of the citrus producers in Italy or in other EU
countries benefiting from authorised aid tend to
export
and
certainly most of it outside subnational geographical
areas. Therefore, to consider any sales outside the
region but within the national boundaries as (cid:145)exports(cid:146)
and the undertakings concerned as (cid:145)export-oriented(cid:146)
goes beyond any interpretation of the provision and
beyond the most
the
Treaty;

restrictive interpretation of

the sole purpose of

(b) The aid is not directly linked to the quantities
limiting the
exported. For
the
amount of aid, Article 6(3)
lays down that
subsidised loan cannot ever exceed 50 % of
the
average turnover, meaning the undertaking’s turnover
from all activities. The reference to the (cid:145)maximum
unit values fixed annually pursuant to Article 18 of
Regional Law No 13/86(cid:146) meets the need to provide
objective criteria which,
in the case in point, have
been taken over from pre-existing legislation. This
reference relates to specific parameters concerning
(cid:145)advances and management expenses related to the
processing and marketing of products contributed
by the members of agricultural cooperatives(cid:146). No
reference is made to the volume of exports;

(c) The agricultural operators had no interest in aid for
the buyers (traders) who, at the time they purchased
the goods, could not have reasonably expected a
relief proposed under a subsequent law. The national
authorities note that Regional Law No 68/95 was
approved when the first two farm years covered by it
(1993/1994, 1994/1995) had already ended while
third one had already begun (1995/1996).
the
Furthermore,
this provision, which would not be
proposed in future, could not affect the volumes and
prices of the goods already sold (or gone rotten in
the storehouses)
in the years from 1991 to 1996.
Even assuming that to sell the produce of Messina in
this
Reggio Calabria might constitute an (cid:145)export(cid:146),
does not explain how an aid measure introduced at
the end of 1995 could have caused the traders to go
into debt in 1993, 1994 and early 1995, so affecting
quantities and prices, with a view to an aid which
they could not even foresee. The national authorities
further noted that
the Commission could have
commented in this vein when it examined Article 48
of Regional Law No 32/91, which contained the
same
The
Commission did not make any comment on that

application.

provision,

future

for

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occasion, even though the same Treaty and the same
rules on short-term operating loans applied;

assistance provided for in Article 48 of Regional Law
No 32/91.

(d)

is clear from the text of

It
the provision under
examination that the reference to volume of sales
was introduced because the regional legislator wanted
to identify a marketing sector which, by virtue of its
turnover, was more exposed than other sectors to
traumatic falls in employment. This is why Article
6(4) of Regional Law No 69/95 provides for the
cancellation and
the
beneficiaries do not meet their obligation to maintain
employment levels. In the light of this observation
the competent authorities asked the Commission to
reconsider the aid in question and to evaluate it
under the rules applicable to State aid in the form of
(cid:145)subsidised short-term loans(cid:146) by analogy with Article
48 of Regional Law No 32/91.

recovery

the

aid

of

if

In support of their request that the aid provided for in
Article 6 be reconsidered and evaluated under the rules
applicable to such subsidised short-term loans,
the
in their letter of 19
national authorities pointed out
November 1998 that:

(a) By letter SG(92) D/17980 dated 14 December 1992,
the Commission communicated its unconditional
decision not
to the aid
to raise any objections
provided for in Article 48 of Regional Law No 32/91
(cid:145)in the form of subsidised short-term loans(cid:146), and only
reserved the right to review its position under the
then Article 93(1) of the EC Treaty. This right was
not exercised; the Commission instead approved the
subsequent refinancing of that provision (Article 7 of
Regional Law No 81/95 and Article 20 of Regional
Law No 33/96) based on the reasoning used to
approve the original provision. These considerations
influenced the regional legislator when preparing the
1995 Law and gave rise to legitimate expectations on
the part of the beneficiaries;

(b) The appropriation provided for

in Article 6 of
Regional Law No 68/95, even if added to the
refinancing of Regional Law No 32/91, does not
exceed the original appropriation provided for by
that Law, which amounted to ITL 30 000 million;

(c) The reference to the 1993/1994, 1994/1995 and
1995/1996 marketing years was made exclusively
because of the need to take account of prevailing
situations of
indebtedness, which had significantly
increased because insufficient use was made of the

the competent authorities
Lastly,
decision were taken within the year,
appropriation for
removed from the regional budget.

said that unless a
the budgetary
the measure would be definitively

(38) As regards Article 7 of Regional Law No 68/95,

that

factors,

such as

the
national authorities noted that the aid in question should
be considered compatible with the criteria applied by the
Commission. They pointed out
the undertakings’
difficulties were caused not only by intrinsic factors such
as their establishment in the main by young unemployed
the
people, but also by external
amendments to Regional Law No 37/78 and the need to
adapt the facilities to the new sectoral legislation, which
caused long delays in completing the projects. As a
result, many cooperatives set up by young people were
required to pay instalments on fifteen-year loans before
starting up production and went bankrupt because they
were unable to pay the loan instalments that fell due
even before
facilities. Other
cooperatives, which barely managed to complete their
the subsidised
facilities testing, were unable to collect
operating loan because they were already behind in
from the
repaying
credit
the national authorities
institution (IRCAC). Moreover,
the
noted that,
should the Commission authorise
the IRCAC would grant aid solely to those
measure,
cooperatives,
to
agricultural
guarantee viability. If aid were provided to undertakings
in difficulty, or even at risk of bankruptcy, the whole
point of the provision itself would be frustrated.

they could test

fifteen-year

including

loans

ones,

their

their

able

(a)

In reply to the observations made by the Commission in
its decision to initiate the procedure,
the national
authorities also specified in regard to this measure that
the intended beneficiaries of the aid provided for in the
said Article 7 were (cid:145)undertakings(cid:146) qualifying for rescue
aid because they were in serious financial difficulty even
before commencing production. In order to prove this,
the national authorities specified that:
the aid in
question would be a contribution to the loan interest at a
rate of 4 %, equal to the rate applied by the IRCAC to the
loans for cooperatives; (b) the measure provided for an
operating loan allowing cooperatives
run by young
people to start up or continue the activity for which the
project financed by Regional Law No 37/78 was carried
out; (c) the aid in question, which was at least equivalent
to the debt owing and was paid in a single tranche or as
one-off aid, was granted to resolve a situation of
indebtedness preventing the cooperative from dealing
successfully with the start-up or initial management costs
of the activity, so allowing the cooperative to pay the
(d) the aid was
loan instalments as they became due;
granted
and
difficulties
in
characterised by high regional unemployment. Lastly, the
national authorities, citing the attached letter from the
IRCAC dated 5 May 1998, specified that none of the

serious

sector

to

a

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cooperatives in receipt of financing for an agricultural
project involving primary production had applied for the
aid in question, although an application could still be
submitted.

when the measure was notified, amounted to a total of
ECU 302 093 000 for fruit (including ECU 75 909 000
for citrus fruits) and to ECU 138 525 000 for vegetables,
while Italian exports to other Member States amounted
to ECU 964 153 000 for fruit (including ECU 60 652 000
for citrus fruits) and ECU 460 791 000 for vegetables. It
should be noted that the region of Sicily is a typical
producer of such products.

IV. ASSESSMENT OF THE AID

(39) According to Article 87(1) of the Treaty, 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. The Commission is of the opinion that,
in the case in point, all the measures in question satisfy
the conditions for the application of Article 87(1). The
this view has not been
Commission also notes that
contested by the Italian authorities.

(40) Article 1 of Regional Law No 68/95 sets up two
guarantee funds (one for industrial undertakings,
the
other for commercial undertakings) intended to cover the
financial restructuring operations implemented
risks of
under the aid schemes provided for in other Laws to
which reference is made; Article 3 amends the conditions
for applying the aid introduced by one of the schemes
referred to in Article 1, on rescheduling the debts of
trading undertakings; Article 5 provides for aid in the
form of reduced interest rates on loans to reschedule the
debts of small businesses; Article 6 provides for aid in
the form of reduced interest rates on loans for a period
not exceeding one year granted to traders in Sicily at
least 70 % of whose turnover is accounted for by the sale
of fruit and vegetables, including citrus fruits, outside the
region; Article 7 authorises
IRCAC to grant
cooperatives of young people operating loans at a
to set up
reduced rate of
undertakings.

interest as working capital

the

(41)

In the absence of information from the Italian authorities
to prove the opposite, the Commission feels it is correct
to state that at least some of the beneficiaries of the aid
measures in question operate in sectors where there is a
great deal of intra-Community trade. In 1996 imports of
agricultural products into Italy from other Member States
amounted to a total of ITL 28 734 billion, while exports
from Italy to the other Member States
totalled ITL
17 821 billion (3). In the case of citrus fruits and other
to which Article 6
fruit and vegetables in particular,
these products into Italy in 1995,
relates,

imports of

(42) The prohibition on State aid contained in Article 87(1) of
the Treaty is not unconditional.
In the case in point,
however, the exceptions allowed for under Article 87(2)
of the Treaty manifestly do not apply and so have not
been invoked by the Italian authorities. By the same
token, the aid is not intended to promote the execution
of an important project of common European interest or
to remedy a serious disturbance in the economy of a
Member State within the meaning of Article 87(3)(b),
nor
intended to promote culture and heritage
conservation under Article 87(3)(d), nor have the Italian
authorities
therefore
necessary to see whether the proposed measures might
qualify for a derogation under Article 87(3)(a) or (c) of
the Treaty.

invoked such derogations.

is

is

It

it

(43) As a preliminary observation, the Commission notes that,
based on the reply from the competent authorities (see
recital 29), the notified Law under examination can apply
to all the products listed in Annex I to the EC Treaty; the
purpose of this assessment and its scope relate therefore
to agricultural and fisheries products. For the sake of
convenience, where reference is subsequently made to
(cid:145)agriculture(cid:146) and/or (cid:145)agricultural products(cid:146) it shall be taken
to include (cid:145)fisheries(cid:146) and the products derived from it.

(44) Article 1 of Regional Law No 68/95 establishes two
guarantee funds (one for industrial undertakings and one
for commercial undertakings) intended to cover the risks
of financial restructuring operations implemented under
other provisions (Article 34 of Regional Law No 15/93;
Article 43 of Regional Law No 25/93, as amended by
Article 3 of Regional Law No 68/95; Article 44 of
Regional Law No 25/93).

(45) To the compatible with the rules on State aid applying to
the sectors covered by this decision (to which the
Commission notice on the de minimis rule for State aid (4)
does not apply),
the financial restructuring operations
must be carried out in accordance with the Community
guidelines on State aid for rescuing and restructuring
firms in difficulty (5), which apply to the agricultural

(3) Source: Ministry for Agricultural Policies: data communicated in the

(4) OJ C 68, 6.3.1996, p. 9.
(5) OJ C 283, 19.9.1997, p. 2; see point 4.4 (Operation and review of

context of State aid C 36/98 (decision not yet published).

the guidelines).

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sector from 1 January 1998. Before these guidelines
entered into force, Commission practice under certain
conditions also allowed for State aid measures in the
agricultural sector where they were designed to reduce
the financial cost of investments already carried out (6).
To facilitate the assessment of the aid measures provided
for
are
summarised below.

in Regional Law No 68/95,

these

rules

should be a one-off operation. A series of rescue
operations which effectively maintain the status quo,
postpone the inevitable and in the meantime transfer
the
and social
problems to other more efficient producers and other
Member States is clearly unacceptable.

agricultural

industrial,

attendant

(a) The current Community guidelines in force require
restructuring aid to satisfy the following general
conditions: (i) the restructuring plan must restore the
long-term viability and health of the firm within a
reasonable timescale and on the basis of realistic
assumptions as to its future operating conditions; (ii)
measures should be taken to avoid as far as possible
the adverse effects on competitors; (iii) the amount
and intensity of the aid must be limited to the strict
minimum needed to enable restructuring to be
undertaken and must be commensurate with the
benefits anticipated from the Community’s point of
view;
the
restructuring plan accepted by the Commission and
must discharge all obligations laid down by the
Commission; (v) the grant of restructuring aid must
be monitored at regular intervals through detailed
annual reports on the implementation, progress and
success of the restructuring plan.

the company must

fully implement

(iv)

loans taken out

investment aid (for

(c) The rules governing Commission practice before the
above guidelines came into force for assessing aids to
reduce the financial costs of
to
finance investments already carried out, state that (7):
(cid:145)The cumulated grant equivalent of the aid granted
when the loans were taken out and the aid in
question may not exceed the rate generally allowed
the
by the Commission for
production and the processing and marketing of
Annex II
(now Annex I) products); any applicable
sectoral ceilings must be complied with. The aid in
question must
follow adjustments in the rate of
interest on new loans to take account of changes in
the price of money (the aid must be less than or
equal to the change in the rate for new loans) or
must be for agricultural undertakings presenting
guarantees
the
financial charges resulting from existing loans are
such that there is a risk that the undertakings could
be placed in danger or could fail. The difficulties of
the undertakings must be the result of external rather
than internal factors.(cid:146)

viability, particularly where

of

(b) In the case of rescue aid, the rules in point 3.1 of the
current Community guidelines on State aid for
rescuing and restructuring firms in difficulty state
that, to be authorised by the Commission, the rescue
aids ((cid:133)) must: (cid:151) consist of
liquidity help in the
loan guarantees or loans bearing normal
form of
commercial
interest rates; (cid:151) be restricted to the
amount needed to keep a firm in business (for
example, covering wage and salary costs and routine
supplies); (cid:151) be paid only for
the time needed
(generally not exceeding six months) to devise the
necessary and feasible recovery plan; (cid:151) be warranted
on the grounds of serious social difficulties and have
no undue adverse effects on the industrial and
agricultural situations in other Member States. A
the rescue
further condition is that,

in principle,

(6) The rules were set out in a Commission working document of
(cid:145)Aids intended to reduce the loan burden of
6 March 1989:
investments already carried out; criteria applied to this kind of aid.(cid:146)
For recent precedents on their application see the Commission’s
final decision on State aid C 65/97 (Portugal: consolidation of the
debts of intensive livestock units and the relaunch of pig farming,
currently being published) and Commission Decision 1999/484/EC
(Spain, aid for the Hamsa company) (OJ L 193, 26.7.1999, p. 1).

(46) Article 1 of Regional Law No 68/95 under examination
industrial
sets up two guarantee
for commercial undertakings)
undertakings,
intended to cover the risks of
financial restructuring
operations implemented under Article 44 of Regional
Law No 25/93, among other provisions.

the other

funds

(one

for

Article 44 of Regional Law No 25/93 provides for aid in
the form of reduced interest rates on loans for the
consolidation of the debts of undertakings trading in fruit
(in particular citrus fruits) and vegetables. In its Decision
97/106/EC of 17 July 1996 on aid measures provided for
in Sicilian Regional Law No 25/93 (8), the Commission
decided that the aid was incompatible with the common
market as it did not meet the requirements for aids for
rescuing and restructuring companies in difficulty.

(7) For these rules see footnote 6.
(8) OJ L 37, 7.2.1997, p. 11.

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for

rescuing

and restructuring

In the context of the procedure initiated against Article 1
of Regional Law No 68/95 the national authorities have
failed to provide any information that might allow the
Commission to change its original evaluation and to
consider the original aid provided for by Article 44 of
Regional Law No 25/93 compatible with the rules on
aids
in
difficulty or with other State aid rules applicable to the
sectors concerned by this Decision.
In particular, no
the measure complies with the current
evidence that
rescuing and restructuring
rules on State
companies in difficulty or with the rules previously
applied by Commission practice for examining aid
intended to reduce the financial cost of loans taken out
to finance investments already carried out (see recital 45)
from the
has been either provided or
information supplied by the national authorities.

is apparent

companies

aid for

Law No 68/95, in so far as it relates to the aid provided
for in Article 44 of Regional Law No 25/93.

(47) Article 1 of Regional Law No 68/95 under examination
sets up two guarantee
industrial
undertakings,
for commercial undertakings)
financial restructuring
intended to cover the risks of
operations implemented under Article 34 of Regional
Law No 15/93, among other provisions.

the other

funds

(one

for

subsidised loans

Since the Commission in Decision 97/106/EC declared
the aid in the form of
for debt
consolidation operations under Article 44 of Regional
Act 25/93 to be incompatible with the rules on State aid
and the information provided in the context of
this
procedure does not allow the Commission to change its
view and to establish the said operations’ compatibility
with the rules for rescuing or restructuring companies in
difficulty or with any other State aid rules applicable to
the sectors concerned by this Decision, the Commission
must consider any additional aid provided for by Article 1
of Regional Law No 68/95 in the form of a collateral
guarantee for the same debt consolidation operations
(provided for in Article 44 of Regional Law 25/93) to be
aid which does not meet the conditions required by the
Community rules on rescue and restructuring aids
described at recital 45, without needing to analyse the
other rules applicable to State aids granted in the form of
guarantees (9).

Therefore, since the information provided is insufficient
to establish the aid’s compatibility with the rules for
rescuing and restructuring companies in difficulty or with
any other State aid rules applicable to the sectors
concerned,
in accordance with Article 7(6) of Council
Regulation (EC) No 659/1999 of 22 March 1999 laying
down detailed rules for the application of Article 93 of
the EC Treaty (10) the Commission must take a negative
decision on the aid provided for in Article 1 of Regional

(9) These rules are set out in the Commission communication on the
application of Articles 87 and 88 of the EC Treaty to State aid
granted in the form of guarantees, adopted by the Commission on
24 November 1999 (not yet published). This communication
replaces the Commission letters to the Member States (SG(89)
D/4328 of 5 April 1989 and SG(89) D/12772 of 12 October
1989).

(10) OJ L 83, 27.3.1999, p. 1.

for

Article 34 of Regional Law No 15/93 provides for aid in
the financial
reduced interest
the form of
rates
restructuring of undertakings
in the manufacturing
sector. The aid was approved by the Commission as aid
the aid originally approved was
N 730/95. Since
addressed to the manufacturing sector
there would
appear to be no evidence that the aid has also been
applied to the sectors concerned by this Decision.

However, since the national authorities did not reply to
the Commission’s questions in its decision to initiate the
procedure and it cannot be excluded that this aid may
apply also to the sectors covered by this Decision, the
Commission needs to evaluate its compatibility with the
rules applicable to the sectors so covered.

In the context of the procedure initiated against Article 1
of Regional Law No 68/95, the national authorities have
failed to provide any information that might allow the
Commission to consider the original aid provided for in
Article 34 of Regional Law No 15/93 in the form of
reduced interest rates for the financial restructuring of
undertakings to be compatible with the rules on aid for
rescuing and restructuring companies in difficulty or with
other State aid rules applicable to the sectors concerned
by this Decision.
the
measure complies with the current rules on State aid for
rescuing and restructuring companies in difficulty or with
the rules previously applied by Commission practice for
examining aid intended to reduce the financial cost of
loans taken out to finance investments already carried
out
is
(see recital 45) has been either provided or
apparent from the information supplied by the national
authorities.

In particular no evidence that

Since the information provided in the context of
the
procedure initiated against Article 1 of Regional Law No

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for

rules

compatibility with the

68/95 does not allow the Commission to establish the
rescuing or
aid’s
restructuring companies in difficulty or with any other
State aid rules applicable to the sectors concerned by this
Decision, the Commission must consider any additional
aid provided for by Article 1 of Regional Law No 68/95
in the form of collateral guarantees
the same
restructuring operations (provided for in Article 34 of
Regional Law No 15/93) to be aid which does not meet
the conditions required by the Community rules on
recital 45,
rescue and restructuring aid described at
without needing to analyse the other rules applicable to
State aid granted in form of guarantees (11).

for

Therefore, since the information provided is insufficient
to establish the aid’s compatibility with the rules for
rescuing and restructuring companies in difficulty or with
any other State aid rules applicable to the sectors
concerned, in accordance with Article 7(6) of Regulation
(EC) No 659/1999 the Commission must take a negative
decision on the aid provided for in Article 1 of Regional
Law No 68/95, in so far as it relates to the aid provided
for in Article 34 of Regional Law No 15/93.

As regards the aid provided for in Article 34 of Regional
Law No 15/93, which was approved by the Commission
for the manufacturing sector under aid N 730/95, the
Commission reserves the right to initiate the procedure
laid down in Article 88(2) of the Treaty, in accordance
with Article 16 of Regulation (EC) No 659/1999, with a
view to investigating any possible misuse of
the aid
authorised by the Commission for non-Annex I products,
also been provided, without
where
authorisation, to the sectors covering products listed in
Annex I to the EC Treaty.

aid has

this

(48) Article 1 of Regional Law No 68/95 sets up two
guarantee funds (one for industrial undertakings,
the
other for commercial undertakings) intended to cover the
risks of
financial restructuring operations implemented
under Article 43 of Regional Law No 25/93, among
other provisions.

same Law was concerned (cid:145)the national authorities felt
legitimately entitled to conclude they had (cid:147)tacit consent(cid:148)
since for some years (three)
the relevant Directorate
(which was certainly informed, as usual, by the other
departments) had made no comment whatsoever on the
said Article 43(cid:146).

As regards these observations the Commission would
firstly point out that no (cid:145)tacit consent(cid:146) to the application
of the de minimis rule in the agricultural sector could
have been inferred by the national authorities, given that
this rule is not applied to the agricultural sector. It must
be noted in particular that the agricultural and fishery
sectors are expressly excluded from the scope of
the
Commission notice on the de minimis rule for State
aid (12) as currently applied and were also expressly
excluded from the scope of the de minimis rule originally
contained in the Community Guidelines on State aid for
small and medium-sized enterprises (SMEs) (13).

Secondly, in the light of the observations submitted by
the national authorities,
the Commission reaffirms its
doubts that the aid scheme provided for in Article 43 of
Regional Law No 25/93 may be applicable to the sectors
concerned by this decision.

Thirdly, the Commission notes that in the context of the
present procedure the national authorities have failed
to provide
allow the
any information that might
Commission to consider the original aid provided for in
Article 43 to cover the debts of commercial undertakings
to be compatible with the rules on aid for rescuing and
restructuring companies in difficulty or with other State
aid rules applicable to the sectors concerned by this
the measure
decision.
complies with the current rules on State aid for rescuing
and restructuring companies in difficulty or with the
rules previously applied by Commission practice for
examining aid intended to reduce the financial cost of
loans taken out to finance investments already carried
cout (described at recital 45) has been either provided or
is apparent
from the information supplied by the
national authorities.

In particular no evidence that

Article 43 of Regional Law No 25/93 provides for aid to
reschedule the debts of commercial undertakings and was
approved as de minimis aid under aid N 472/94. The
national authorities commented on this measure by
referring to the comments made in relation to Article 3
of Regional Law No 68/95 (see recital 34). The national
authorities pointed out that whereas the Commission had
adopted a negative decision on Article 44 of Regional
Law No 25/93 (see recital 46), where Article 43 of that

Since the information provided in the context of
the
procedure initiated against Article 1 of Regional Law No
68/95 does not allow the Commission to establish the
compatibility of
the operations under Article 43 of
Regional Law No 25/93 with the rules for rescuing or
restructuring companies in difficulty or with any other
State aid rules applicable to the sectors concerned by this
Decision, the Commission considers any additional aid

(11) See footnote 9.

(12) See footnote 4.
(13) OJ C 213, 19.8.1992, p. 2, points 3.2 and 1.6.

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for

provided under Article 1 of Regional Law No 68/95
the same
in the form of collateral guarantees
restructuring operations (laid down in Article 43 of
Regional Law No 25/93 and implemented under the de
minimis rule in the agricultural and fishery sectors) to be
aid which does not meet the conditions required by the
Community rules on rescue and restructuring aids
described at recital 45, without needing to analyse the
other rules applicable to State aid granted in the form of
guarantees (14).

Therefore, as the information provided cannot establish
the compatibility of the aid with the rules for rescuing
and restructuring of companies in difficulty as described
above or with any other State aid rules applicable to the
in accordance with Article 7(6) of
sectors concerned,
Regulation (EC) No 659/1999 the Commission must take
a negative decision on the aid provided for in Article 1
of Regional Law No 68/95, in so far as it relates to the
aid provided for in Article 43 of Regional Law No 25/93.

As regards the de minimis aid provided for in Article 43
of Regional Law No 25/93 and approved by the
Commission as part of aid N 472/94, the Commission
reserves the right to initiate the procedure laid down in
Article 88(2) of the Treaty, in accordance with Article 16
of Regulation (EC) No 659/1999, with a view to
investigating any possible misuse of aid authorised by the
Commission in respect of products not listed in Annex I
to the EC Treaty, where such aid is also granted, without
authorisation, to the sectors concerning products listed in
Annex I.

(49) Article 3 of Regional Law No 68/95 amends

the
conditions for applying the aid introduced by the scheme
pursuant to Article 43 of Regional Law No 25/93 to
reschedule the debts of trading undertakings (which was
approved as de minimis aid as part of aid N 472/94) (see
recital 48). The Commission notes that paragraph 4 of
Article 3 establishes that the aid provided for in Article 3
is granted to the undertakings within the limits laid down
for de minimis aid, which does not apply to the sectors
concerned by this Decision. However, the Commission
must also consider: (a) the doubts that it expressed when
the national authorities’
(b)
initiating the procedure;
comments as reported above (see recitals 34 and 48) as
regards Article 43 of Regional Law No 25/93; (c) the fact
that
these comments the content of
Article 3 of Regional Law No 68/95, which makes
reference to Article 43 of Regional Law No 25/93, may
be applicable also to the sectors concerned by this
Decision; (d) the fact that the said Article 43 concerns aid

in the light of

(14) See footnote 9.

the

in this context

to reschedule the debts of commercial undertakings
which were approved under the de minimis rule; and,
finally, (e) the fact that the national authorities have not
provided any information which would enable the
the possible
Commission to assess
aid with State
for
compatibility of
aid rules
the rules
agriculture and fisheries
for
(in particular
rescuing and restructuring companies
in difficulty).
Therefore, for the reasons already given (recital 48), as
the information provided is insufficient to establish the
rescuing or
aid’s
restructuring companies in difficulty (see recital 45) or
with any other State aid rules applicable to the sectors
in accordance with Article 7(6) of Council
concerned,
Regulation (EC) No 659/1999,
the Commission must
take a negative decision on the aid provided for in
Article 3 of Regional Law No 68/95, to the extent that it
refers to the aid provided for in Article 43 of Regional
Law No 25/93 and that
it may apply to the sectors
concerned by this decision.

compatibility with the

rules

for

As regards the aid provided for in Article 43 of Regional
Law No 25/93 and approved as de minimis aid by the
Commission as part of aid N 472/94, the Commission
reserves the right to initiate the procedure laid down in
Article 88(2) of the Treaty, in accordance with Article 16
of Regulation (EC) No 659/1999, with a view to
investigating any possible misuse of aid authorised by the
Commission in respect of products not listed in Annex I
to the EC Treaty, where such aid is also granted, without
authorisation, to the sectors concerning products listed in
Annex I.

(50) Article 5 of Regional Law No 68/95 concerns aid in the
form of reduced interest rates on loans to reschedule the
debts of small businesses, approved as de minimis aid as
part of aid N 750/A/95. The national authorities made
no comment on this during the procedure. Since the aid
originally approved was for the small business sector
there is no evidence that the aid may also apply to the
sectors concerned by this Decision. However, as the
national authorities have not provided any information,
although requested to do so, and it cannot be excluded
that this aid may also apply to the sectors concerned by
this Decision where the de minimis rule does not apply,
the Commission must assess its compatibility with the
rules applicable to these sectors.

In the context of
the present procedure the national
authorities have failed to provide any information which
might
aid
allow the Commission to consider
provided for by Article 5 of Regional Law No 68/95 in
the form of reduced interest rates on loans to cover the

the

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debts of undertakings to be compatible with the rules on
aid for rescuing and restructuring companies in difficulty
or with other State aid rules applicable to the sectors
covered by this decision. In particular no evidence that
the measure complies with the current rules on State aid
for rescuing and restructuring companies in difficulty or
with the rules previously applied by Commission practice
for examining aid intended to reduce the financial cost of
loans taken out to finance investments already carried
out (described at recital 45) has been either provided or
from the information supplied by the
is apparent
national authorities.

Therefore, since the information provided is insufficient
to establish the compatibility of the aid under Article 5
of Regional Law No 68/95 (in the form of reduced
interest rates on loans to cover the debts of undertakings)
with the rules for rescuing and restructuring companies
in difficulty or with any other State aid rules applicable
to the sector concerned, in accordance with Article 7(6)
of Regulation (EC) No 659/1999 the Commission must
take a negative decision on the aid provided for in
Article 5 of Regional Law No 68/95,
in so far as it
applies to the sectors covered by this Decision.

(51) Article 6 of Regional Law No 68/95 provides for aid in
the form of reduced interest rates on loans for a period
not exceeding 12 months granted to traders in Sicily at
least 70 % of whose turnover is accounted for by the sale
of fruit and vegetables, including citrus fruits, outside the
region. The national
authorities maintain in their
comments that the measure constitutes a refinancing of a
measure already approved by the Commission (Article 48
of Regional Law No 32/91) and that
it constitutes a
subsidised short-term loan to be examined in the light of
the criteria applied to this type of measure before the
entry into force of
the Communication on State aid:
subsidised short-term loans in agriculture (crØdits de
gestion) (15). For the reasons set out below the national
authorities’ arguments cannot be accepted.

to aids

for
for

1990/1991

(a) The original approval of Article 48 of Regional Law
No 32/91 (aid N 377/91) as a subsidised short-term
loan concerned the financing of the measure only for
1991, 1992 and 1993, without mentioning the
specific farm years
for which the measure was
intended (the measure only made a (cid:145)casual(cid:146) reference,
an exemption from certain
by providing
requirements
farm year).
the
Although Commission practice for this type of aid
was not yet set down in a written text (the criteria
subsidised
in the
applicable
short-term loans are specified at
the
approval of the measure as a subsidised short-term
loan could only be based on the belief
the
measure was
subsidised short-term loan
real
granted for the normal running of an agricultural
operator needing to pay in advance expenditure
linked to the agricultural production cycle pending
receipt of
In
approving the measure the Commission also specified
that: (cid:145)in the case of aid in the form of operating loans
at a reduced rate of interest, the Commission is not
opposed to their grant, but it reserves the right to
review its position at a later date under Article 93(1)
of the Treaty(cid:146);

income during that

recital 54),

form of

cycle.

same

that

a

(b) A subsequent

the

approval of

(cid:145)refinancing(cid:146) of
Article 48 of Regional Law No 32/91 related
expressly to the financing, in the financial years 1995
and 1996, of the measure as a subsidised short-term
loan for the 1992/1993 farm year. Since this year
was included in the original time-frame of Article 48,
the Commission
to which reference was made,
considered the new measures to be a (cid:145)refinancing(cid:146)
of measures already approved (aid C 61/96, ex N
408/B/96). In particular the Articles providing for the
refinancing were:
(i) Article 7 of Regional Law
No 81/95 (C 61/96, ex N 408/B/96), which made
reference to the (cid:145)aims(cid:146) of Article 48 of Regional Law
No 32/91 and authorised the financing, in the 1995
financial year, of
the 1992/1993 farm year (ITL
2 000 million); and (ii) Article 20 of Regional Law
No 33/96 (C 61/96, ex aid N 408/B/96), which made
reference to the (cid:145)aims(cid:146) of Article 48 of Regional Law
No 32/91, and to Article 7 of Regional Law No
81/95 and authorised the financing, in the financial
(ITL
year 1996, of
2 000 million);

the 1992/1993 farm year

(52) As

that

regards

the argument

the aid would be a
(cid:145)refinancing of Article 48 of Regional Law No 32/91(cid:146)
and that
the Commission’s approval of a subsequent
refinancing of the provision in question had (cid:145)influenced
the regional legislator when preparing the 1995 Law and
gave rise to legitimate expectations on the part of the
beneficiaries(cid:146), as already stated in the telex dated 10
November 1998, the Commission would point out that:

(15) OJ C 44, 16.2.1996, p. 2.

(c)

In the letter authorising the above refinancing of
the
Article 48 of Regional Law No 32/91 for
1992/1993 farm year
(aid C 61/96, ex Aid N
the Commission warned the national
408/B/96)
the refinancing was
authorities
that approval of
without prejudice to the examination of
the new
measure notified and examined under Aid N

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750/B/95 (Article 6 of Regional Law No 68/95),
which constituted a new aid scheme (SG(97) D/455
of 23 January 1997) and,
the
authorities were informed that Regional Law No
68/95 would be examined on the basis of the new
rules on operating loans, which would come into
force after 31 December 1996;

in that context,

for

the

for earlier years

(d) Article 6 of Regional Law No 68/95 (under
examination) does not mention Article 48 of
Regional Law No 32/91 but reproduces substantially
the same content, and authorises the financing, in the
three financial years 1995, 1996 and 1997, of the
1993/1994, 1994/1995 and 1995/1996 farm years.
However, contrary to Article 48 of Regional Law No
32/91 which appeared to provide for the future, and
contrary to Article 7 of Regional Law No 81/95 and
to Article 20 of Regional Law No 33/96 which
(although providing for a past farm year) identified
the year as 1992/1993 (already covered by the
approval of the original Article 48 of Regional Law
No 32/91), Article 6 of Regional Law No 68/95
clearly provides for aids only for past
farm years
(1993/1994, 1994/1995 and 1995/1996) which,
moreover, are not covered by the original approval
of Article 48, relating to financing for the period
1991 to 1993. The provision of aid in the form of
subsidised short-term loans
(see
recital 54) runs counter to the philosophy underlying
subsidised short-term loans
agricultural
sector, which are exceptionally considered as aid
contributing to the development of the agricultural
sector in derogation from the prohibition laid down
in Article 87 of the Treaty. Furthermore, it is worth
the
pointing out
notification of Regional Law No 68/95 (examined
under aid N 750/B/95), the Commission warned the
competent Italian authorities that (a) the aid for the
1993/1994 and 1994/1995 farm years appeared to
be operating aid that was incompatible with the
the national
common market
authorities
they
could prove that the aid satisfied the criteria then
applying for restructuring companies in difficulty (on
the aid for 1995/1996
(b)
which see recital 45);
should satisfy the criteria set out in the new draft
Communication, a copy of which was attached; (c) in
any event, the aid provided for by Article 6, being
least 70 % of whose
addressed to undertakings at
turnover came from the sale of citrus fruits, other
fruits and vegetables outside the region, appeared to
be
common
market. The Commission accordingly invited the
national authorities to abolish or modify the measure,
or to provide the necessary explanations for a refusal
to comply with this request; these explanations were
never provided (see points 1 to 3 of the letter dated
2 October 1995 (VI/036342)).
In its decision to
the Commission explicitly
initiate the procedure,

and so invited
to withdraw the measure unless

that within two months of

incompatible with the

export aid,

doubted that the aid in question was, in fact, export
aid.

It follows from the above that Article 6 of Regional Law
No 68/95, which merely reproduces
the content of
Article 48 of Regional Law No 32/91 without referring
to it and provides for the past rather than for the future,
cannot, strictly speaking, be considered a refinancing of
the said Article 48.

(53)

is therefore necessary to establish whether the aid
It
provided for in Article 6 of Regional Law No 68/95 can
be considered (cid:151) as the Italian authorities claim (cid:151) a
subsidised short-term loan compatible with Commission
practice.

The rules applying to subsidised short-term agricultural
loans in force at the time of notification prohibited the
grant of a loan for a single product or operation and
limited their length to 12 months.

that

to the

Italian authorities

In its letter dated 23 January 1997 (SG(97) D/455)
authorising the refinancing of Article 48 of Regional Law
No 32/91 for the last time for the 1992/1993 farm year
(aid C 61/96, ex N 408/B/96), the Commission pointed
approving this
out
refinancing in no way predetermined the examination of
the new measure notified and examined as part of aid N
750/B/95 (i.e. Article 6 of Regional Law No 68/95),
which constituted a new aid scheme (SG(97) D/455 of
23 January 1997) and informed them that Regional Law
No 68/95 would be examined in the light of the new
in force after 31 December
rules on (cid:145)operating loans(cid:146)
1996
short-term
on
(Commission
agricultural loans).

communication

However, following a prior suspension of the entry into
force of
the new rules, by letter dated 19 December
1997 (SG(97) D/10801) the Commission informed the
the
Member States that, starting from 30 June 1998,
Commission communication on subsidised short-term
loans in agriculture, as interpreted in the Commission
letter dated 19 December 1997 (SG(97) D/10801), would
enter into force and that
to
Article 88(2) (the then Article 93(2)) of the EC Treaty

the procedure pursuant

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would be initiated in respect of any aid coming into or
remaining in force after 30 June 1998 that did not
comply with the new rules.

As the aid introduced by Article 6 of Regional Law No
68/95 would apply to the 1993/1994, 1994/1995 and
and the new Commission
1995/1996 farm years,
Communication on subsidised short-term loans
in
agriculture would apply in respect of aids coming into or
remaining in force after 30 June 1998, it appears that
the
the 1993/1994,
1994/1995 and 1995/1996 farm years may still be
examined under
the criteria applicable to subsidised
short-term loans before the entry into force of the new
communication (30 June 1998).

short-term loans

aid for

for

(54) The criteria in question were as follows: the loans must
be (cid:145)seasonal credits(cid:146) to cover general overheads (purchase
of input, the payment of workers, etc.), the loan must
not be granted for a single product or linked to a single
operation, the duration of the loan must not exceed 12
It
the new rules
months.
in the Commission
for
type of aid set out
this
communication on subsidised
in
short-term loans
agriculture also include the same criteria, together with
other stricter requirements, compliance with which was
not an issue addressed by the national authorities in their
observations.

is worth pointing out

that

rules

and regulations

Community
cited, would
diminish, where necessary, the effect of the provision
in the regional legislation on the redemption of the
debts over 36 months. The national authorities
claimed that
the redemption period
should be stressed because the loan amount would
start to diminish from the first month in which it
was granted, so that its average duration would be
much less than 36 months.(cid:146));

the length of

for

(but

since

the duration of

(which is doubtful),

(c) Thirdly, even assuming that the subsidised loan were
two
not granted for a single product
categories of products) or linked to a single operation
(but mainly to one type of operation, export), and
the loan did not exceed 12
that
months
the national
authorities stated that (cid:145)the agricultural operators had
no interest in an aid for the buyers (traders) who, at
the time they purchased the goods, could not have
reasonably expected a
a
subsequent law(cid:146) and that (cid:145)Regional Law No 68/95
was approved when the first two farm years covered
by it (1993/1994 and 1994/1995) had already ended
while the third one had already begun (1995/1996)(cid:146)
the aid does not appear to match the philosophy
underlying (cid:145)seasonal credits(cid:146) which is to allow the
agricultural operator to cover in advance expenditure
linked to the agricultural production cycle pending
receipt of income during that same cycle.

relief proposed under

In the present case the above criteria for subsidised
short-term loans do not seem to be satisfied for the
following reasons:

(a) Firstly Article 6 of Regional Law No 68/95 concerns
only trading undertakings in Sicily at least 70 % of
whose turnover is accounted for by the sale of fruit
and vegetables,
including citrus fruits, outside the
region. The aid would therefore appear to be granted
exclusively for two specific categories of products
and linked, mainly, to a single operation (export from
Sicily);

This is also confirmed by the following statements of the
competent authorities reported at recital 32: (cid:145)(cid:133) the case
in point does not involve loans for the undertakings’
short-term needs, but a rescheduling of
their debts
resulting from short-term bank loans taken out at high
interest rates which have affected the competitiveness of
the island’s undertakings relative to the rest of Italy and
the European Community.
((cid:133)) The Italian authorities
believe that if the undertakings had been able to borrow
short-term at an interest rate equivalent to the subsidised
rate, which is
to the rate applied
outside Sicily, they would not now have their current
debt burden.(cid:146)

roughly identical

(b) Secondly,

authorities’

than 12 months

given the national

vague
it cannot be
comments (see recitals 31 and 32),
the loans in question might be for
excluded that
(the national authorities
longer
stated that:
(cid:145)Furthermore, Community rules do not
lay down aid intensity limits and allow for annual
renewals of the loan (cid:133) Moreover, the possibility of
the loans, allowed under the
annual renewals of

that

essential

the (cid:145)subsidised loans(cid:146) concerned do not
The fact
satisfy the
for being termed
requirements
(cid:145)subsidised short-term loans(cid:146) within the meaning of
Commission practice seems also to be confirmed by the
national authorities when stating that (cid:145)it appears that the
reference to the volume of sales was introduced because
the regional
legislator wanted to identify a marketing
sector which, by virtue of its turnover, was more at risk
than other sectors to traumatic falls in employment. This
is why Article 6(4) of Regional Law No 69/95 provides
for the cancellation and recovery of the aid, plus interest,

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the beneficiaries do not meet

if
maintain employment levels(cid:146).

their obligation to

It follows from the above that the aid measures provided
for in Article 6 of Regional Law No 68/95, which
provide for the past rather than for the future, address
exclusively two specific categories of products, are linked
mainly to a single operation (export from the region),
appear to last more than 12 months, do not appear to
correspond to the normal
(cid:145)philosophy(cid:146) underlying this
type of aid and therefore cannot be considered as
(cid:145)subsidised short-term loans(cid:146) compatible with the rules
applied by the Commission to this type of aid, both
before and after the entry into force of the Commission
in
communication on subsidised
agriculture.

short-term loans

(55)

comments,

the national

In their
authorities have
contested any description of the aid as export aid by
stressing in particular that (cid:145)sales outside the region(cid:146) does
not necessarily and exclusively mean export out of Italy.
The Commission agrees that (cid:145)sales outside the region(cid:146)
need not necessarily and exclusively mean export out of
Italy, and so it will no longer pursue this line in its
examination of the aid under this Decision. Nevertheless,
as the Commission noted when initiating the procedure,
since the method for calculating the aid (see recital 23)
seems to correspond to the method for calculating an
export aid and given that the national authorities have
based their comments on a literal
interpretation of
Article 6 of Regional Law No 68/95, without supplying
documentary evidence on, for instance, exports from the
region to elsewhere in Italy and out of
the
Commission cannot rule out the fact that the aid may be
a de facto export aid.

Italy,

all

operation.

aids must

restructuring

and on the basis of

In accordance with the

agricultural situations in other Member States. A further
in principle, the rescue should be a
condition is that,
same
one-off
satisfy
guidelines,
the
(a) they must restore the
following general conditions:
the firm within a
long-term viability and health of
realistic
reasonable
timescale
assumptions as to its future operating conditions;
(b)
measures must be taken to offset as far as possible
adverse effects on competitors;
the amount and
(c)
the aid must be limited to the strict
intensity of
minimum needed
be
undertaken and must be
related to the benefits
anticipated from the Community’s point of view; (d) the
company must
the restructuring plan
that was submitted to and accepted by the Commission
and must discharge any other obligations laid down by
the Commission decision;
implementation,
progress and success of the restructuring plan must be
monitored by requiring the submission of detailed annual
reports to the Commission. No evidence that the notified
measure complies with the above criteria has been either
provided by the Italian authorities or is apparent from
the information supplied.

fully implement

restructuring

enable

the

(e)

to

to

(57)

In their comments the national authorities have not
referred to the possibility that the aid provided for in
Article 6 of Regional Law No 68/95 may satisfy the
requirements set by the rules previously applied by the
Commission for examining aid intended to reduce the
financial cost of loans taken out to finance investments
already carried out. No evidence that
the notified
measure complies with the requirements set out in recital
45 has either been provided or is apparent from the
information supplied by the national authorities.

(58)

(56)

In their observations, the national authorities have not
referred to the possibility that the aid provided for in
Article 6 of Regional Law No 68/95 may satisfy the
requirements for rescuing or restructuring companies in
difficulty.
In accordance with the relevant Community
guidelines (16) rescue aids must: consist of liquidity help
in the form of loan guarantees or loans bearing normal
commercial
interest rates; be restricted to the amount
needed to keep a firm in business (for example, covering
wage and salary costs and routine supplies); be paid only
for the time needed (generally not exceeding six months)
to devise the necessary and feasible recovery plan; be
warranted on the grounds of serious social difficulties
and have no undue adverse effects on the industrial and

In the view of

In their observations,
the national authorities have
vaguely referred to a connection between the measure
and the maintenance of employment. However
the
national authorities have offered no evidence that the aid
the Community
observes the spirit and the letter of
guidelines on employment (17).
the
(cid:145)it is clear from the
national authorities (see recital 37):
text of
the
reference to the volume of sales was introduced because
the regional
legislator wanted to identify a marketing
sector which, by virtue of its turnover, was more exposed
than other sectors to traumatic falls in employment. This
is why Article 4(4) of Regional Law No 69/95 provides
the
for
beneficiaries do not meet their obligation to maintain
employment levels.(cid:146)

the cancellation and recovery of

the provision under

examination that

the aid if

(16) See footnote 5.

(17) OJ C 334, 12.12.1995, p. 4.

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levels,

It should be noted that, while Article 6(4) of Regional
Law No 69/95 provides for the cancellation and recovery
of the aid if the beneficiaries fail in their obligation to
maintain employment
the aid provided for in
Article 6 does not appear to comply with either the spirit
or the letter of the guidelines on employment aid, and
with points 16 and 22 of those guidelines in particular
(on aid for maintaining employment). It should be noted
in particular that: (a) the aid is not adopted or designed
specifically as an aid to protect employment; (b) the aid
amount does not depend on the number of employees;
and (c) its form bears no relationship to the labour costs.
So, even if it can indirectly contribute to maintaining
employment, as is the case in many other aid categories,
the aid provided for in Article 6 of Regional Law 69/95
cannot be deemed employment aid within the meaning
of the relevant Community guidelines.

(59) Therefore the aid provided for in Article 6, which is
clearly not an aid for investment, does not appear to
satisfy either the requirements for subsidised short-term
loans, or for rescuing or restructuring companies in
difficulty, or for maintaining employment, or any of the
requirements for exemption set by some other legal basis,
to be pure operating aid
but would instead appear
granted to reschedule past debts, whose effect disappears
when the payment of aid ceases.

(60)

In the agriculture and fisheries sectors, which cover the
production, processing and marketing of Annex I
products,
it has been constant Commission policy for
many years to prohibit the payment of operating aid in
all regions,
including regions which fall under Article
87(3)(a) of the Treaty. By their very nature, such aid is
likely to interfere with the mechanisms of the common
organisation of the market, which takes precedence over
the competition rules laid down in the Treaty (18). This
policy has been confirmed many times (19).

(61) Since the Italian authorities’ comments confirm that the
objective of the measure under examination is to relieve
the beneficiaries of their debt burden, and that there is
no counterpart on the part of the beneficiaries which

(18) Judgment of the European Court of Justice in Case 177/78 Pigs

and Bacon Commission v McCarren [1979] ECR 2161.

(19) XXth Report on Competition Policy, 1990, paragraphs 337 and
347; XXIst Report on Competition Policy, 1991, paragraphs 316
and 317; XXIInd Report on Competition Policy, 1992, paragraphs
503 and 504; XXIIIrd Report on Competition Policy, 1993,
paragraphs 547 and 548; XXVth Report on Competition Policy,
1995, pp. 238 to 240; XXVIth Report on Competition Policy,
1996, pp. 251 to 255.

might benefit
the development of certain economic
certain regions, having regard to the
activities or
principles laid down in the case law (20) the Commission
is therefore bound to conclude that the measure cannot
benefit from the derogations under Article 87(3)(a) and
(c) of the Treaty.

(62) Article 7 of Regional Law No 68/95 authorises the
IRCAC, under Regional Law No 37/78,
to grant
cooperatives of young people with indebtedness loans at
a reduced rate of interest as working capital. Regional
Law No 37/78 (since repealed) provided for an aid
scheme for young entrepreneurs permitting the grant of:
(a) aid in the form of grants and reduced-rate loans for
investments and (b) aid in the form of reduced-rate loans
for running undertakings during the first three years after
those investments had been made and brought on line.
Because of delays in making investments, a number of
cooperatives (25 according to the information available)
could not begin production before the end of the period
of grace (three years) for repaying the loans taken out to
make the investments and consequently could not repay
them. These cooperatives were therefore ineligible for the
operating loan. Article 7 of Regional Law No 68/95
permits,
the aid
measures provided for in Regional Law No 37/78 to
undertakings which, under that Law, do not fulfil the
eligibility criteria for that aid. In particular the Article in
to the
those undertakings
question allows
operating loans provided for in Regional Law No 37/78
provided that the loan granted under the provisions of
that Law is equal to or greater than the debt incurred (on
financing the investment). The IRCAC sets unpaid debts
off against new loans (i.e. part of the new loan is used to
pay off the loan taken out to make the investments).

the grant of one of

in substance,

access

(63)

investments already carried out

In its decision to open the procedure, the Commission
noted that the aid must be examined in the light of the
criteria used by the Commission for examining aid
intended to reduce the financial cost of loans taken out
to finance
(criteria
applicable to agricultural and fisheries undertakings). In
accordance with these criteria:
(a) the cumulated grant
equivalent of the aid granted when the loans were taken
out and the aid in question may not exceed the rate
generally allowed by the Commission for investment aid
(for the production and the processing and marketing of
Annex II (now Annex I) products); (b) any sectoral limits
must be respected; (c) the aid in question must follow
adjustments in the rate of interest on new loans to take
account of changes in the price of money (the aid must
be less than or equal to the change in the rate for new

(20) In particular, judgment of the Court of First Instance of 8 June
1995 in Case T-459/93, Siemens v Commission [1995] ECR
II-1675, and the case law cited therein.

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loans) or must be for agricultural undertakings presenting
guarantees of viability, particularly where the financial
charges resulting from existing loans are such that there
is a risk that the undertakings could be placed in danger
or could fail; (d) the difficulties of the undertakings must
be the result of external rather than internal factors.

principle, the rescue should be a one-off operation. A
series of rescue operations which effectively maintain the
status quo, postpone the inevitable and in the meantime
transfer the attendant industrial, agricultural and social
problems to other more efficient producers and other
Member States is clearly unacceptable.(cid:146)

the

that

(64) The comments made by the national authorities do not
allow the Commission to verify that the above criteria
are satisfied and therefore to conclude that the aid can be
considered compatible with the common market in the
light of
those criteria. The national authorities have
provided no information enabling the Commission to
verify that the criteria indicated at recital 63(a) and (b)
have been complied with. As regards the criterion under
recital 63(c), although the Italian authorities have given
assurances
aid will be granted only to
cooperatives,
including agricultural ones, presenting
guarantees of viability, they have not specified either on
what basis they estimate that these undertakings offer
guarantees of viability, or the kind of guarantees offered.
Furthermore, not even the requirement mentioned at
recital 63(d) would seem to be satisfied, because, on the
one hand, it cannot be ruled out that the difficulty of the
undertakings in question was caused by internal factors
(as the undertakings are mainly established by young
unemployed people) and, on the other hand,
is
doubtful, without further details, whether external factors
such as those mentioned by the national authorities ((cid:145)the
amendments to Regional Law No 38/78 and the need to
adapt the plants to the new sectoral
legislation, which
caused long delays in completing the projects(cid:146)) can cause
a difficulty that makes the undertakings qualify for, and
require, this type of aid.

it

(66) The national

(a)

the

that

authorities noted
intended
beneficiaries of
the aid provided for in Article 7 of
in serious
Regional Law No 68/95 were (cid:145)undertakings(cid:146)
financial difficulty even before commencing production
and said that:
the aid in question would be a
contribution to the loan interest at a rate of 4 %, equal to
the rate applied by the IRCAC to the loans
for
cooperatives; (b) the measure provided for an operating
loan allowing cooperatives run by young people to start
up or continue the activity for which the project financed
by Regional Law No 37/78 was implemented; (c) the aid
in question, which was at least equivalent to the debt
owing and was paid in a single tranche or as one-off aid,
was granted to resolve a situation of
indebtedness
preventing the cooperative from dealing successfully with
the start-up or initial management costs of the activity,
to pay the loan instalments as they
so allowing it
became due; (d) the aid was granted to a sector in serious
difficulties
regional
unemployment.

characterised

high

and

by

for

also

rescue aid under

rescuing and restructuring firms

Law 68/95 might
for

(65) The national authorities have also pointed out that the
enterprises qualifying for the aid provided for in Article 7
satisfy
of Regional
the
the Community
requirements
guidelines
in
difficulty. Point 3.1 of the rules on rescue, which apply
to new State aid in the agricultural sector from 1 January
1998 (21) and replace the rules cited in the decision to
initiate the procedure, states that, (cid:145)to be authorised by the
Commission,
the rescue aids ((cid:133)) must: (cid:151) consist of
liquidity help in the form of loan guarantees or loans
bearing normal commercial interest rates; (cid:151) be restricted
to the amount needed to keep a firm in business (for
example, covering wage and salary costs and routine
supplies); (cid:151) be paid only for the time needed (generally
not exceeding six months) to devise the necessary and
feasible recovery plan; (cid:151) be warranted on the grounds
of serious social difficulties and have no undue adverse
effects on the industrial and agricultural situations in
in
other Member States. A further condition is that,

(21) See footnote 5.

(67) The comments made by the national authorities do not
criteria
the Commission to verify that
enable
the
rescuing
described in its communication on aid for
In
companies in difficulty have been complied with.
particular: (a) no assurance has been provided that the
loan would bear a normal commercial interest rate (it is
worth pointing out that at the time of the notification
the loan interest concerned would have been (cid:145)a rate of
4 %, equal to the rate applied by the IRCAC to the loans
for cooperatives(cid:146), while the reference rate applied by the
Commission to Italy was 11,35 %, and is currently
4,76 %); (b) no assurance has been provided that the aid
would be paid only for the time needed (generally not
to devise the necessary and
exceeding six months)
feasible recovery plan; (c) no guarantee has been given
that the aid would be restricted to the amount needed to
keep a firm in business (for example, covering wage and
salary costs and routine supplies); on the contrary, the
undertakings
financial
difficulty even before starting a production activity(cid:146) and
the aid, being at least equivalent to the expired debt,
would be paid in order
to (cid:145)resolve a situation of
indebtedness preventing the cooperative from dealing
successfully with the start-up or initial management costs
of the activity, so allowing it to pay the loan instalments
as they became due(cid:146)
there is no
guarantee that
the aid would have no undue adverse
effects on the industrial and agricultural situations in

concerned were

(see recital 38);

(cid:145)in serious

(d)

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other Member States. Moreover, although the national
authorities stated that the aid was aimed at a sector in
serious difficulty and characterised by high unemployment,
and the cooperatives are set up by the young unemployed, it
cannot be concluded that the measure per se is rescue
aid justified on grounds of serious social difficulties.
Furthermore, although the national authorities stated that
(cid:145)the aid in question, which is at least equivalent to the debt
owing and is paid in a single tranche or as one-off aid, is
granted to resolve a situation of indebtedness(cid:146), the fact that
the (cid:145)undertakings(cid:146)were in serious financial difficulty even
before starting production means that the condition (cid:145)that, in
principle, the rescue should be a one-off operation(cid:146), cannot
be deemed to be satisfied.

(68)

rescuing and restructuring firms

In their comments,
the national authorities have not
referred to the possibility that the aid provided for by
Article 7 of Regional Law No 68/95 may satisfy the
requirements for restructuring companies in difficulty. In
accordance with the Community guidelines on State aid
in difficulty (22)
for
restructuring aids must satisfy all the following general
conditions: (a) they must restore the long-term viability
and health of the firm within a reasonable timescale and
on the basis of realistic assumptions as to its future
operating conditions;
(b) measures must be taken to
offset as far as possible adverse effects on competitors; (c)
the amount and intensity of the aid must be limited to
the strict minimum needed to enable restructuring to be
undertaken and must be
related to the benefits
anticipated from the Community’s point of view; (d) the
company must
the restructuring plan
that was submitted to and accepted by the Commission;
the
the implementation, progress and success of
(e)
restructuring plan will be monitored by requiring the
submission of detailed annual reports to the Commission.
No evidence that the notified measure complies with the
above criteria has been either provided or is apparent
from the information provided.

fully implement

(69) Since the conditions for rescue or restructuring aids
mentioned above are not satisfied, no mention of a
(cid:145)feasible recovery plan(cid:146) has been made, no evidence of
possible improvements to the financial efficiency of the
undertakings concerned has been produced by the
national authorities and, from the information provided,
it appears that the aid is not linked to new investments
and does not satisfy the requirements of any other legal
basis allowing for derogation from Article 87 of
the
Treaty,
the aid in question would appear to be pure
operating aid to relieve the beneficiary undertakings of
their debts whose effect disappears when the payment of
aid ceases. Furthermore, in this context, the Commission
reserves its position on the compatibility, with the rules

(22) See footnote 5.

on State aid which it currently applies, of the original aid
to
scheme provided for in Regional Law No 37/78,
which Article 7 of Regional Law No 68/95 refers.

(70)

In the agriculture and fishering sectors, which cover the
production, processing and marketing of Annex I
it has been constant Commission policy for
products,
many years to prohibit the payment of operating aid in
all regions,
including regions which fall under Article
87(3)(a) of the Treaty. By their very nature, such aid is
likely to interfere with the mechanisms of the common
organisations of the market, which take precedence over
the competition rules laid down in the Treaty (23). This
policy has been confirmed many times (24).

(71) Since the observations of the Italian authorities confirm
that the objective of the measure under examination is to
relieve the beneficiaries of their debt burden, and that
there is no counterpart on the part of the beneficiaries
which might be considered to benefit the development of
certain economic activities or certain regions, having
regard to the principles laid down in the case law (25), the
Commission is therefore bound to conclude that
the
measure cannot benefit
from the derogations under
Article 87(3)(a) and (c) of the Treaty.

V. CONCLUSIONS

(72)

In view of the above, it must be concluded that the aid
envisaged by the Regional Law under examination,
insofar as applicable to the agriculture and fisheries
sectors, constitutes State aid within the meaning of
Article 87(1) of the Treaty which cannot qualify for any
of the derogations provided for in Article 87(2) or (3).

(73) However, in view of the fact that Article 9 of Regional
Law No 68/95 under examination expressly makes the
aid planned under the Law conditional on the outcome
of the procedure laid down in the then Article 93(2) and
(3) (now Article 88(2) and (3)) of the Treaty and that the

(23) See footnote 18.
(24) See footnote 19.
(25) See footnote 20.

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Italian authorities specified that the financing provided
for in Articles 1 and 6 of the Regional Law had lapsed in
its entirety (see recital 28), it appears that all procedures
for the payment of
to the measure
under examination have been suspended and that there is
therefore no need to provide in this Decision for
recovery of
the aid introduced by Regional Law No
68/95,

the aid pursuant

HAS ADOPTED THIS DECISION:

Article 1

Article 2

Italy shall withdraw the aid schemes referred to in Article 1.

Article 3

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

Article 4

This Decision is addressed to the Italian Republic.

Done at Brussels, 22 December 1999.

The State aid introduced by Articles 1, 3, 5, 6 and 7 of Sicilian
Regional Law No 68 of 27 September 1995 for agricultural
and fisheries enterprises is incompatible with the common
market.

For the Commission

Franz FISCHLER

Member of the Commission