2000/621/EC: Commission Decision of 3 May 2000 notified by Italy (Marche Region) concerning amendments to the single programming document for 1994 to 1999 for assistance from the Community Structural Funds for Objective 5(b) areas (notified under document number C(2000) 1336) (Only the Italian text is authentic)
Date: 2000-05-03
Institutions: European Commission
Subjects: Marches, State aid, Structural Funds, aid system, development aid, earthquake

14.10.2000

EN

Official Journal of the European Communities

L 260/47

COMMISSION DECISION

of 3 May 2000

notified by Italy (Marche Region) concerning amendments to the single programming document
for 1994 to 1999 for assistance from the Community Structural Funds for Objective 5(b) areas

(notified under document number C(2000) 1336)

(Only the Italian text is authentic)

(2000/621/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,

tional training, the preparation of production rules and
quality manuals and checks, suitability tests and checks
on the origin of products listed in Annex I
to the
Treaty (3).

called

Having
their
comments (1) pursuant to the provision cited above and having
regard to their comments,

interested

submit

parties

on

to

Whereas:

(1)

(2)

(3)

(4)

(5)

(6)

I

PROCEDURE

By letter of 14 May 1998, recorded as received on 18
May, the Italian Permanent Representation to the Euro-
pean Union notified an aid scheme for the Marche
Region in accordance with Article 88(3) of the Treaty.

By telex No 28448 of 15 July 1998, the Commission
requested further information. By letter of 12 October
1998, recorded as received on 20 October, and by fax of
23 November 1998, recorded as received on the same
day, the Italian authorities provided further information
and made corrections.

By letter of 21 December 1998 (SG(98) D/12141), the
Commission informed Italy of its decision to initiate the
procedure laid down in Article 88(2) of the EC Treaty in
respect of certain aspects of the way the aid measures
were applied.

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

By letter of 31 March 1999,
the Italian authorities
submitted their observations to the Commission. No
comments have been received from interested parties.

II

DESCRIPTION

The measures concern a large number of amendments
and extensions to the single programming document
(SPD)
for assistance from the Community Structural
Funds to the areas of the Marche Region eligible under
Objective 5(b)
in the programming period 1994 to
1999. They consist of grants in respect of investments
for primary production, processing and marketing and
the mounting of promotional campaigns, research, tech-
nical assistance, promotion and dissemination, voca-

(1) OJ C 233, 14.8.1999, p. 2.
(2) See footnote 1.

(7)

(8)

The objective of the measures is to promote the devel-
opment of the areas of the Marche Region eligible under
Objective 5(b) which were hit by a number of earth-
through joint action involving the
quakes in 1997,
EAGGF, national financial resources and those of the
private sector under the SPD for the Objective 5(b) areas
of the Region.

The aid measures were applicable until December 1999.
In the case in point, since they involve a package of
measures most of which are to be Community part-
financed and for reasons of consistency, the Commission
has decided to apply Article 15(2) of Regulation (EEC)
No 2082/93 concerning measures part-financed by the
Structural Funds (4) to all the measures covered by the
notification. Under that Article, expenditure may not be
considered eligible for assistance from the Funds if it has
been incurred before the date on which the corre-
sponding application reaches
the Commission. The
Commission therefore regards the start date for the
granting of the aids covered by this Decision to be the
date when it received the first notification, i.e. 14 May
1998.

(9)

However, in their letter of 12 October 1998, the Italian
authorities stated that they intended to grant certain aids
to cover expenditure incurred by the beneficiaries before
that date.

In respect of aid measures for primary agricultural
production, the Italian authorities declared that:

(3) For

a detailed description of

the measures,

see OJ C 233,

14.8.1999, p. 2.

(4) Council Regulation (EEC) No 2082/93 of 20 July 1993 amending
Regulation (EEC) No 4253/88 laying down provisions for imple-
menting Regulation (EEC) No 2052/88 as regards coordination of
the activities of the different Structural Funds between themselves
and with the operations of the European Investment Bank and the
instruments (OJ L 193, 31.7.1993, p. 20).
other existing financial

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(a) all expenditure incurred by recipients before 14 May
1998 and complying with Commission Decision
C(97) 2491 of 18 September 1997 on the applica-
tion to the Marche Region of Council Regulation
(EC) No 950/97 of 20 May 1997 on improving the
efficiency of agricultural structures (5) and on the
horizontal provisions of Commission Decision
C(95)736 of 3 April 1995 approving the Objective
5(b) SPD for Marche would be regarded as eligible
and would qualify
the
Community;

for part-financing by

(b) all expenditure incurred by recipients before 14 May
1998 and after 9 October 1997, the date on which
the regional public invitations to submit applications
for assistance were published, and complying with
the decision adopted by the Commission on the aid
measures would also be regarded as eligible and
would qualify for part-financing by the Community,
subject to approval.

In respect of aid measures concerning on-farm invest-
ment for processing and marketing, the Italian authori-
ties declared that the expenditure incurred by each bene-
ficiary operator before 14 May 1998 would also be
considered eligible for a Community contribution, but
only where this was in accordance with Commission
Decision C(97)2137 of 2 October 1997 on the applica-
tion in the Marche Region of Council Regulation (EC)
No 951/97 of 20 May 1997 on improving the
processing and marketing conditions for agricultural
products (6) and the horizontal provisions of Commis-
sion Decision C(95)736 of 3 April 1995 approving the
Objective 5(b) SPD for Marche.

In accordance with its standard practice, the Commis-
if it is to contribute to the
sion takes the view that,
development of certain economic activities or of certain
economic areas in accordance with Article 87(3)(c) of
the Treaty, aid must have an incentive effect.
If the
investment has already been made, that incentive effect
is lacking and the aid in question is regarded simply as
operating aid, which is incompatible with the common
market and therefore prohibited by the Treaty.

In this particular case, in their informal contacts with the
Commission the Italian authorities pointed out
that
some of the measures were included in the programme
implementing Regulation (EC) No 950/97 in the Marche
Region but that following the earthquake suffered by the
Region in 1997, the funds available were used for other
purposes and that the Region had therefore requested
amendments to the programme of assistance from the
Community Structural Funds for Objective 5(b) areas for
1994 to 1999. The Italian authorities did not, however,

(10)

(11)

(12)

(13)

(14)

(15)

refer to this in their written replies to the Commission's
questions during the scrutiny phase.

In view of its doubts about the incentive effect of the
measures, the Commission therefore decided to initiate
the procedure with regard to the aid granted for invest-
ments in primary production and in on-farm processing
and marketing of agricultural products in respect of
expenses incurred before 14 May 1998, the date on
which the Commission was notified of the measures.
However, it did not raise objections to the aid paid in
respect of expenditure incurred after 14 May 1998, on
the grounds that in such cases the measures qualified
under the derogation provided for in Article 87(3)(c) of
the Treaty and could therefore be considered compatible
with the common market, and the Commission did not
raise objections to the other measures covered by the
notification.

III

COMMENTS FROM ITALY

The Italian authorities emphasise that no aid has yet
been paid, so there is no question of an infringement of
Article 88(3) of the Treaty.

The Italian authorities emphasise that the Regulations
governing the Structural Funds are based on partnership
and technical assistance with the Member State. They
refer to Council Regulation (EEC) No 729/70 of 21 April
1970 on the financing of
the common agricultural
policy (7), Article 8 of which requires the Member States
to take the measures necessary to prevent and deal with
irregularities in the management of the Funds. It is there-
fore clear that ‘expenditure [...] not considered eligible
for assistance’ referred to in Article 15(2) of Regulation
(EEC) No 2082/93, means expenditure committed and
implemented by the national authority through finance
from the rotating fund and certainly not that incurred by
an economic operator who is a beneficiary of part-
funded assistance but lays himself open to the risk of
not being reimbursed.

In any case, however, the Italian authorities contest the
claim that the measure produces retrospective effect.
They emphasise that the measure contains a suspensory
clause that makes payment of the aid subject to approval
by the Commission. Furthermore, they consider that the
measure meets the conditions laid down in Article 15(2)
of Regulation (EEC) No 2082/93 in so far as the noti-
fication to the Commission came later than the request
submitted in July 1997 for an amendment to measures
in the Objective 5(b) single programming document.

(5) OJ L 142, 2.6.1997, p. 1.
(6) OJ L 142, 2.6.1997, p. 22.

(7) OJ L 94, 28.4.1970, p. 13.

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The Italian authorities explain that the delay in preparing
the notification of the aid measures pursuant to Article
88(3) of the Treaty was due mainly to the unforeseeable
circumstances arising from the earthquake that affected
the region in 1997, which required staff to be rede-
ployed to other more urgent tasks. Various discussions
and meetings also took place with the Commission
departments and no mention was made at any of these
of the problem of the formal date of submission of the
application for approval of the aid scheme. Had this
been the case, an invitation, albeit incomplete, would
have been submitted immediately.

(19)

(16)

(17)

formal

cut-off date

The Italian authorities also consider that the aids have
the necessary incentive effect and cannot therefore be
regarded as operating aid. In the case of the Marche
Region, invitations had to be issued subject to approval
because of the Region's need to maintain its intended
programming beyond the
for
accepting the proposed amendments. Assistance may
legitimately be granted to a final beneficiary (i.e. a bene-
ficiary operator) where he submits an application in
response to a public invitation. The fact of submitting an
application for assistance implies a legal obligation on
the administration entitling the applicant to Community
finance, even if the invitation itself is ‘conditional’. The
the
suspensory condition relates
compatibility of
the
request for funding.

to recognition of
the legitimacy of

the aids, not

aid may distort

even relatively small
common agricultural policy,
amounts of
conditions of
competition and affect trade between Member States.
The Commission therefore concludes that the measures
concerned constitute State aid within the meaning of
Article 87(1) of the Treaty.

the

facilitated

the Commission concluded that
development
the

The prohibition on State aid contained in Article 87(1)
to exceptions. After a preliminary exam-
is subject
the various
ination,
measures
certain
of
economic activities without adversely affecting trading
conditions to an extent contrary to the common interest
and that they could therefore qualify under the deroga-
tion provided for in Article 87(3)(c) of the Treaty in so
far as they related to expenses incurred after the noti-
fication of the aid measures to the Commission on 14
May 1998.

(20) However,

the Commission expressed doubts as

to
whether aid in respect of expenditure incurred before
that date could be regarded as facilitating the develop-
ment of certain economic activities within the meaning
of Article 87(3)(c) of the Treaty. In accordance with
long-standing Commission practice, which has been
upheld by the Court of
Justice (8) aid can only be
regarded as
facilitating the development of certain
economic activities or areas if the Commission is able to
establish that market
forces alone would not have
induced the potential recipients to act in a way that
helps achieve the desired objective. Since the informa-
tion then available to the Commission showed that the
producers in the Marche Region had voluntarily entered
into the expenditure concerned, without the inducement
of aid this element was lacking. Aid awarded after the
event to cover the expenditure incurred would simply be
operating aid not qualifying for exemption on any of the
grounds referred to in Article 87(2)(b).

IV

ASSESSMENT

(18)

The measures in respect of which the Commission
initiated the procedure provided for in Article 88(2) of
the Treaty consist of a series of aids for investments in
the primary production of agricultural products and for
on-farm investment in the processing and marketing of
agricultural products. The aid is granted selectively to
individual beneficiaries. The aid for primary production
is granted in the livestock (meat and dairy), fruit and
vegetables, olive oil and wine sectors. The aids for on-
farm processing and marketing are granted in the seeds,
oilseeds, meat, cheese and organic products sectors.
Between them these sectors account for a substantial
proportion of agricultural production, and it is clear that
intra-Community trade involves large quantities of the
products concerned, without it being necessary to give
detailed figures for each sector. It is accepted that in the
the
agricultural sector, because of

the existence of

(21)

(22)

The Commission considers that the answers provided by
the Italian authorities under the procedure dispel the
abovementioned doubts. In particular, the Commission
has taken into consideration the explanations provided
of the programming procedure in the Marche Region as
described by the competent authorities and outlined in
paragraph 17.

It emerges from the information provided by the Italian
authorities that a response to a regional invitation can
be considered as equivalent to an aid application. The
conditions laid down by the Italian authorities corre-
spond to those set out in the Commission's Guidelines
on national regional aid (9) and the Commission's Guide-
lines for State aid in the agriculture sector (10), whereby
aid schemes must stipulate that no aid may be granted
an application has been submitted to the
until
competent authorities and that no aid may be granted in
respect of work already begun or activities undertaken
before an aid application has been properly submitted to
the competent authorities. Although the latter Guide-
lines were adopted after the facts of the present case

(8) See in particular the judgment
Commission [1980] ECR 2671.

in Case C-730/79 Philip Morris v

(9) OJ C 74, 10.3.1998, p. 9 (in particular point 4.2).
(10) OJ C 28, 1.2.2000, p. 2 (in particular point 3.6).

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case

took place, they are intended to apply the general princi-
ples previously followed by the Commission and set out
in paragraph 20. The Commission therefore considers it
appropriate to apply the same principle by analogy to
the
in question. The Commission therefore
considers the aid to be compatible with the common
market in accordance with Article 87(3)(c) of the Treaty,
provided that the beneficiary has submitted an applica-
tion for assistance to the competent authorities before
the expenditure is actually incurred.

In order to avoid misunderstandings in future,
the
Commission strongly urges the Italian authorities to
ensure that aid schemes are notified to the Commission
before invitations are published, even if those invitations
do contain a suspensory clause making payment of the
aid conditional on Commission approval. Nevertheless,
in the present case the Commission recognises that the
administrative resources of the Region were under some
strain as a result of the earthquakes which affected the
region in 1997.

HAS ADOPTED THIS DECISION:

Article 1

The State aid which Italy is planning to implement by amend-
ments to the single programming document for the Marche
Region (Objective 5(b))
is compatible with the common
market, subject to the conditions set out in Article 2.

Article 2

No aid may be granted in respect of expenditure incurred
before 14 May 1998, unless the beneficiary has submitted an
application for assistance to the competent authorities prior to
that date in respect of the relevant expenditure under the
scheme notified.

This Decision is addressed to the Italian Republic.

Article 3

Done at Brussels, 3 May 2000.

This Decision is without prejudice to any future deci-
sions on Community
the
financing of the measures concerned,

contributions

towards

For the Commission

Franz FISCHLER

Member of the Commission

(23)

(24)