2000/736/EC: Commission Decision of 28 June 2000 on the part of the Portuguese regional aid map for the period 2000 to 2006 which relates to the regions eligible for exemptions under Article 87(3)(c) of the Treaty (notified under document number C(2000) 1964) (Text with EEA relevance) (Only the Portuguese text is authentic)
Date: 2000-06-28
Institutions: European Commission
Subjects: Portugal, aid system, control of State aid, derogation from EU law, eligible region, regional aid

L 297/22

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Official Journal of the European Communities

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COMMISSION DECISION

of 28 June 2000

on the part of the Portuguese regional aid map for the period 2000 to 2006 which relates to the
regions eligible for exemptions under Article 87(3)(c) of the Treaty

(notified under document number C(2000) 1964)

(Only the Portuguese text is authentic)

(Text with EEA relevance)

(2000/736/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Community, and in particular Article 88(2) thereof,

Having regard to the Agreement on the European Economic
Area, and in particular Article 62(1)(a) thereof,

Having called on interested parties to submit their comments
pursuant to those provisions (1),

Whereas:

(1)

(2)

I. PROCEDURE

By letters dated 19 May 1999 and 25 May 1999 (Nos
445 and 458 respectively), registered by the Commis-
sion on 20 May 1999 and 26 May 1999, the Portuguese
Permanent Representation notified the Commission, in
accordance with Article 88(3) of the EC Treaty, of the
draft regional aid map for the period 2000 to 2006 (2).
By letter dated 11 June 1999 (D/52497) to the Portu-
guese
the Commission
requested further information. By means of letters dated
12 July 1999 and 12 October 1999 from the Portuguese
Permanent Representation (Nos 692 and 994 respec-
tively), registered by the Commission on 19 July 1999
and 4 November 1999, and a bilateral meeting held on
7 September 1999, the Portuguese authorities provided
this information.

Permanent Representation,

By letter dated 19 January 2000 (SG(2000) D/100638),
the Commission informed Portugal that, having exam-
ined the information provided by the Portuguese author-
ities on the measure in question,
in
accordance with Articles 87 and 88 of the Treaty and
Articles 61 and 62 of the EEA Agreement, not to raise
the Portuguese
any objections regarding the part of
regional aid map relating to the regions eligible for
exemptions under Article 87(3)(a) of the Treaty (State
aid N 305/99), and to initiate the formal investigation

it had decided,

(3)

(4)

(5)

(6)

procedure provided for by Article 88(2) of the Treaty in
respect of
the regions eligible for exemptions under
Article 87(3)(c) of the Treaty (State aid C 78/99).

The Commission's decision not to raise objections to
one part of the Portuguese map, considering it compat-
ible with the Treaty, and to initiate the formal invest-
igation procedure with respect to the rest of the map,
the European
was published in the Official
Communities (3). Interested parties were invited to submit
their comments within one month of the date of publi-
cation of this decision.

Journal of

The Commission received no comments from interested
parties.

By means of letters dated 21 February 2000 from the
Portuguese Permanent Representation and 2 May 2000
from the Portuguese Minister for Economic Affairs (Nos
221 and 2610), registered by the Commission on 22
February 2000 and 4 May 2000 respectively, a bilateral
meeting held on 12 April 2000 and a fax dated 18 May
2000, the Portuguese authorities gave their comments to
the Commission.

II. DESCRIPTION OF THE PART OF THE MEASURE IN
RESPECT OF WHICH THE COMMISSION INITIATED
THE PROCEDURE

The draft regional aid map proposed by the Portuguese
authorities covers the whole of Portugal and is for the
period 1 January 2000 to 31 December 2006. Under
the exemption provided for in Article 87(3)(c) of the
Treaty,
the
following NUTS (Nomenclature of Territorial Statistical
Units) level III regions and the following aid intensity
ceilings (in net grant equivalent — nge):

Portuguese

authorities

proposed

the

(1) OJ C 62, 4.3.2000, p. 2.
(2) In accordance with the Guidelines on national regional aid (OJ C
74, 10.3.1998, p. 9) a Member State's regional aid map is based on
the regions of a Member State eligible under
the derogations
provided for by Article 87(3)(a) and (c), the ceilings on the intensity
of aid for initial investment or the aid for job creation approved for
each region, and the applicable aid combination ceilings.

Grande Lisboa:

45,68 % nge in 2000, 36,76 %
nge in 2001; 27,84 % in 2002,
18,92 % nge in 2003, 10 % nge
in 2004 to 2006;

(3) See footnote 1.

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Lezíria do Tejo:

Médio Tejo:

Oeste:

Península de Setúbal:

47,68 % nge in 2000, 40,76 %
nge in 2001, 33,84 % in 2002;
26,92 % nge in 2003, 20 % nge
in 2004 to 2006;

47,68 % nge in 2000; 40,76 %
nge in 2001, 33,84 % in 2002,
26,92 % nge in 2003, 20 % nge
in 2004 to 2006;

47,68 % nge in 2000, 40,76 %
nge in 2001, 33,84 % in 2002,
26,92 % nge in 2003, 20 % nge
in 2004 to 2006;

47,68 % nge in 2000, 40,76 %
nge in 2001, 33,84 % in 2002,
26,92 % nge in 2003, 20 % nge
in 2004 to 2006.

In the Portuguese notification, all the above aid intensity
ceilings are increased by 10 percentage points gross for
small and medium-sized enterprises (4). The figures also
represent
the aid combination ceilings for the total
amount of aid in cases where assistance is granted
concurrently under several regional aid schemes, irres-
pective of whether
regional,
it comes
national or Community sources.

from local,

The Commission examined the Portuguese notification
in the light of the Guidelines on national regional aid
and,
in particular, point 5.2 thereof, which stipulates
that the draft map should be ‘drawn up in accordance
with the criteria set out in points 3.5, 3.10, 4.8 and
4.9.’, taking due account of the fact that the maximum
total coverage of regional aid in Portugal has been set at
100 % of the national population for the period from
2000 to 2006 (5).

As regards the aid intensity ceilings proposed by the
Portuguese authorities for each of the NUTS level III
regions referred to above, the Commission recalled that,
in accordance with point 4.8 of the Guidelines,
‘the
ceiling on regional aid must not exceed 20 % nge in
general’ and 10 % nge in regions eligible under Article
87(3)(c), ‘which have both a higher per capita GDP/PPS
and a lower unemployment rate than the respective
Community average’. The NUTS level
region of
Grande Lisboa is the only region subject to the 10 % nge
ceiling.

III

(7)

(8)

(9)

(10)

the guidelines,

The Commission also recalled that, in accordance with
point 5.7 of
for regions losing their
Article 87(3)(a) status as a result of the review of the
regional aid map and acquiring Article 87(3)(c) status, it
could accept during a transitional period a progressive

(4) OJ L 107, 30.4.1996, p. 4.
(5) OJ C 16, 21.1.1999, p. 5.

reduction of the aid intensities for which such regions
had been eligible under Article 87(3)(a) at a linear or
faster rate until the intensity ceiling corresponding to the
application of points 4.8 and 4.9 was reached. Since all
the abovementioned regions, which together constitute
the NUTS level II region Lisboa e Vale do Tejo, qualified
for the derogation provided for in Article 87(3)(a) until
31 December 1999 and since the relevant aid ceiling
was set at 75 % gross, the aid intensities proposed by the
Portuguese authorities took account of this possibility.

(11) However, the Commission pointed out that, in accord-
ance with footnote 43 concerning point 5.7 of
the
guidelines, the aforementioned transitional provisions do
not apply to the parts of NUTS level II regions losing
their Article 87(3)(a) status which, ‘where the additional
population-density percentage obtained by applying the
second adjustment at point 8 of Annex III to these
guidelines is not available, would have had to be
excluded from the new aid map’. In the case of Portugal,
this additional percentage corresponds to 23,2 % of the
total national population.

(12)

the entire NUTS level

the national population, should benefit

That being so, the Commission noted that, according to
II
the Portuguese notification,
region Lisboa e Vale do Tejo, which accounts for 33,4 %
of
from the
transitional period referred to in point 5.7 of the guide-
lines for the purpose of adapting the aid intensities from
which they had benefited under Article 87(3)(a). In the
light of the restrictions placed on the geographical scope
of
the
these transitional provisions, only 10,2 % of
Portuguese population could benefit from such a trans-
itional period. Under the circumstances, the proposal by
the Portuguese authorities regarding the aid intensity
ceilings proposed for each of the NUTS level III regions
concerned could not be deemed compatible with the
relevant provisions of the guidelines. For this reason, the
Commission doubted whether this aspect of the Portu-
guese proposal was compatible with the Treaty.

(13) Accordingly, the Commission noted that, in view of the
aforementioned doubts
regarding the aid intensities
proposed for each of the above regions, it did not take
the view that the said intensities reflected the seriousness
and intensity of the regional problems addressed when
examined in a Community context, in accordance with
point 4.8 of the guidelines. By the same token, it did not
consider that the aid intensities proposed for small and
medium-sized enterprises were in compliance with point
4.9 of the guidelines. Moreover, the Commission did not
the aid combination rules
take the view either that
contained in point 4.18 of
the guidelines had been
complied with.

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III. COMMENTS

FROM

THE
AUTHORITIES

PORTUGUESE

(14)

the Portuguese

In their comments, submitted as part of the formal
investigation procedure,
authorities
emphasised their opposition to the principle of limiting
the geographical scope of the transitional arrangements
provided for by point 5.7 of the Guidelines on national
regional aid. The Portuguese authorities felt that foot-
note 43 would drastically limit the effect of point 5.7 of
the Guidelines, at a time when proper monitoring of the
regions losing their right to exemptions under Article
87(3)(a) of the Treaty was required to avoid excessively
rapid changes in eligibility, and that its application to
the NUTS level II region Lisboa e Vale do Tejo was
unjustified, since it would lead to the imposition of
excessive restrictions on industrial and regional policies
in a Member State which, in relative terms, gives least
aid to businesses.

(15)

The Portuguese authorities also felt that the imposition
of the limitations provided for in footnote 43 of point
in any event, have the
5.7 of the Guidelines would,
effect of unduly penalising the NUTS level
II region
Lisboa e Vale do Tejo for the following reasons:

— With the exception of the NUTS level

III region
the
Grande Lisboa (in which GDP is 114 % of
Community average), the NUTS level II region Lisboa
e Vale do Tejo has development levels comparable to
the regions covered by Article 87(3)(a) which
surround it (the per capita GDP of each of the other
four NUTS level III regions in question is between
55 % and 58 % of
the Community average).
However, the aid intensity ceilings would be signifi-
cantly lower in these regions. In other words, these
four NUTS level III regions (Lezíria do Tejo, Medio
Tejo, Oeste and Península de Sétubal) would not be
eligible for the exemption provided for by Article
87(3)(a) simply because of being part of the NUTS
level II region Lisboa e Vale do Tejo.

— Under the limitations imposed by footnote 43, only
a restricted part of the NUTS level II region Lisboa e
Vale do Tejo, which contains less than a third of its
from the transitional
population would benefit
arrangements provided for in point 5.7 of the Guide-
lines. Indeed, the four less-developed NUTS level III
regions represent 45 % of
the
NUTS level II region Lisboa e Vale do Tejo and the
new aid intensity ceiling (20 % in cash terms) would
apply to some of them from 1 January 2000.

the population of

imposition of the limits laid down in footnote 43 to
point 5.7 of the Guidelines would not allow equal
treatment of different Member States and regions, in
that it would make it impossible to guarantee that all
the aid intensity ceilings applicable were adequate,
taking into account the seriousness and intensity of
specific regional problems.

(16)

The Portuguese authorities also believed that the imposi-
tion of the limits set by footnote 43 was at odds with
the Council's approach to the Structural Funds, which
was much more generous as regards the ‘phasing out’ of
Objective 1 status for the NUTS level II region Lisboa e
Vale do Tejo. Such limits on regional state aid would
produce a contradiction between regional policy and
competition policy, which would be at variance with the
objective set by the Commission in this area (6).

(17) Despite their opposition in principle to the imposition
of any limits on the geographical scope of the trans-
itional arrangements provided for by point 5.7 of the
Guidelines,
the Portuguese authorities did, however,
amend their original notification during the formal
investigation procedure. The Portuguese
authorities
made this change mainly to avoid a negative decision
from the Commission under Article 7(5) of Council
Regulation (EC) No 659/1999 (7), which would have had
a negative effect on the implementation of a consistent
and coordinated regional policy in Portugal. The new
proposal
for exemptions under Article 87(3)(c) put
forward the following aid intensity ceilings for the NUTS
level III regions in question:

Grande Lisboa:

10 % nge for the whole period
2000 to 2006;

Lezíria do Tejo:

Médio Tejo:

Oeste:

Península de Sétubal:

47,68 % nge in 2000, 40,76 %
nge in 2001, 33,84 % in 2002,
26,92 % nge in 2003, 20 % nge
in 2004 to 2006;

47,68 % nge in 2000, 40,76 %
nge in 2001, 33,84 % in 2002,
26,92 % nge in 2003, 20 % nge
in 2004 to 2006;

47,68 % nge in 2000, 40,76 %
nge in 2001, 33,84 % in 2002,
26,92 % nge in 2003, 20 % nge
in 2004 to 2006;

47,68 % nge in 2000, 40,76 %
nge in 2001, 33,84 % in 2002,
26,92 % nge in 2003, 20 % nge
in 2004 to 2006.

— Consequently, given the relative levels of develop-
ment of the NUTS level III regions in question, the

(6) Communication from the Commission to the Member States on the
links between regional and competition policy — Reinforcing
concentration and mutual consistency (OJ C 90, 26.3.1998, p.3).

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

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(18) As in the original notification, all the above aid intensity
ceilings are increased by 10 percentage points gross for
small and medium-sized enterprises. They also represent
the aid combination ceilings for the total amount of aid
in cases where assistance is granted concurrently under
several regional aid schemes, irrespective of whether it
comes from local, regional, national or Community
sources.

IV. ASSESSMENT OF THE MEASURE

(19)

The Commission examined the part of the Portuguese
notification which related to the regions proposed for
exemptions under Article 87(3)(c) of the Treaty, together
with the amendments submitted during the formal
investigation procedure, in the light of the Guidelines on
national regional aid.

(20) As regards the aid intensity ceilings proposed by the
Portuguese authorities for the NUTS level III regions, the
Commission would recall that, in accordance with point
4.8 of the guidelines, and with the exception of low
population density regions or outermost regions,
‘the
ceiling on regional aid must not exceed 20 % nge in
general and 10 % nge in regions eligible under Article
87(3)(c), which have both a higher per capita GDP/PPS
and a lower unemployment rate than the respective
Community average’. As the Portuguese authorities were
informed by letter SG(98) D/12398 of 30 December
1998, the NUTS level III region of Grande Lisboa is the
only region subject to the 10 % nge ceiling.

(21)

The Commission would also point out that, in accord-
ance with point 5.7 of the guidelines, for regions losing
their Article 87(3)(a) status as a result of the review of
the regional aid map and acquiring Article 87(3)(c)
status, it can accept during a transitional period of no
more than two years for operating aid and four years for
aid for initial investment and job creation, a progressive
reduction of the aid intensities for which such regions
had been eligible under Article 87(3)(a) at a linear or
faster rate until the intensity ceiling corresponding to the
application of points 4.8 and 4.9 is reached. Since all the
abovementioned regions, which together constitute the
NUTS level II region Lisboa e Vale do Tejo, qualify for
the derogation provided for in Article 87(3)(a) until 31
December 1999 and since the relevant aid ceiling is set
at 75 % gross (which corresponded, at the date of noti-
fication and for aid in the form of non-refundable
grants, to 54,6 % nge), the aid intensities proposed by
the Portuguese authorities for the NUTS level III regions

(22)

(23)

(24)

Lezíria do Tejo, Médio Tejo, Oeste and Península de
Sétubal take account of this possibility.

In this regard, the Commission would also point out
that, in accordance with footnote 43 concerning point
5.7 of the guidelines, the aforementioned transitional
provisions do not apply to the parts of NUTS level II
regions losing their Article 87(3)(a) status which, ‘where
the additional population-density percentage obtained
by applying the second adjustment at point 8 of Annex
III to these guidelines is not available, would have had to
be excluded from the new aid map’.

is

Finally, the Commission would point out that, as it
stressed in point 3.3 of
its Communication to the
Member States on the links between regional and
competition policy (8), how ‘phasing out’
to be
conducted will vary depending on which of the two
policies is involved. Consistency between them will none
the less be ensured, as Agenda 2000 points out, by the
fact that ‘measures for the regions which will benefit
from transitional (phasing out) support from the Struc-
tural Funds will have to comply with the competition
rules on State aid’, so it follows that the application of
the rules laid down by the Guidelines, which are in
themselves a guarantee of fairness, does not imply unfair
treatment of Portugal by comparison with the other
Member States.

That being so,
the Commission would note that,
according to the Portuguese notification, the four NUTS
level III regions, Lezíria do Tejo, Médio Tejo, Oeste and
Península de Sétubal, which account for 14,9 % of the
national population, should benefit from the four-year
transitional period referred to in point 5.7 of the guide-
lines for the purpose of adapting the current aid intensi-
ties under the system laid down in Article 87(3)(a) while,
in the light of the restrictions placed on the geographical
scope of these transitional provisions by footnote 43 of
point 5.7 of the Guidelines, only 10,2 % of the Portu-
guese population could benefit from such a transitional
period. This is because,
in the case of Portugal, the
additional percentage referred to in footnote 43, which
can be calculated by the method set out at point 3 and
in Annex III of the Guidelines, after the second adjust-
ment referred to above is removed and the maximum
total coverage of 42,7 % of the Community population
is taken into account, corresponds to 23,2 % of the total
national population.

(25)

The Commission would point out, however, that the
objective of the limitations imposed by footnote 43 on
the geographical scope of the transitional arrangements
laid down in point 5.7 of the Guidelines, is simply to
ensure that regions whose socio-economic situation is
such that they should not be included in the regional aid
map, do not gain double benefits, firstly under the aid
coverage arrangements (as regions which are losing their
Article 87(3)(a) status) and in application of the second
adjustment referred to at point 8 of Annex III to the
Guidelines and, secondly, through the aid ceilings. Since

(8) See footnote 6.

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that

their

the Community average,

the per capita GDP of each of the four NUTS level III
regions which would benefit
from the transitional
arrangements in question (Lezíria do Tejo, Medio Tejo,
Oeste and Península de Sétubal) is between 55 % and
58 % of
it does not seem
they should be totally or
reasonable to insist
partially excluded from the Portuguese regional aid map,
because of
socio-economic situation. On the
contrary, the four NUTS level III regions in question
have sufficient regional disparities with regard to the
thresholds set out at point 5 of Annex III of the Guide-
lines, and they were taken into consideration for this
reason in the calculation of the distribution key for
Community coverage of
regional aid under Article
87(3)(c) of the Treaty between Member States, in accord-
ance with the method laid down in section I of Annex
III of the Guidelines. That being the case, and since the
per capita GDP of these regions is now similar, any
differences in treatment between these regions could
damage the development prospects of the region as a
whole. This being the case, despite exceeding by 4,7 % in
terms of
total population the limit obtained by the
mechanical application of footnote 43, the Portuguese
proposal can, in this instance, be considered compatible
with the Guidelines as regards the scope of the trans-
itional arrangements provided for at point 5.7.

(26)

The Commission would also point out that, in accord-
ance with point 4.8 of the Guidelines, the aid intensity
ceilings proposed for each region must be adjusted to
reflect the seriousness and intensity of the regional prob-
lems addressed when examined in a Community
context. Given that the draft Portuguese map implies a
significant and immediate reduction in the aid intensities
which apply to the NUTS level II region Grande Lisboa
(75 % gross for 10 % nge), and the low levels of
economic development of the NUTS level III regions
Lezíria do Tejo, Medio Tejo, Oeste and Península de
Sétubal, this aspect of the Portuguese proposal can also
be considered compatible with the relevant provisions of
the Guidelines.

(27)

Finally, the Commission notes that the proposed aid
intensities for small and medium-sized enterprises are in
line with point 4.9 of the Guidelines, which provides
that the ceilings may be raised by the supplements for
SMEs provided for in the Commission notice on aid for
SMEs (9), that is, by 10 percentage points gross in the
case of regions qualifying for exemption under Article
87(3)(c), and that the rules on aid combinations set out
at point 4.18 of the Guidelines were respected. In rela-
tion to these two points, the Portuguese proposal can
also be considered compatible with the relevant provi-
sions of the Treaty.

V. CONCLUSION

(28)

In the light of the above, the Commission considers the
new draft Portuguese regional aid map for the period
2000 to 2006 for the regions eligible for exemptions
under Article 87(3)(c) of the Treaty to be compatible
with the Guidelines on national regional aid,

HAS ADOPTED THIS DECISION:

Article 1

The part of the Portuguese regional aid map for the period
2000 to 2006 which relates to the regions eligible for exemp-
tions under Article 87(3)(c) of the Treaty is considered compat-
ible with the common market under Article 87(3)(c) of the
Treaty.

Implementation of the measure is therefore authorised.

This Decision is addressed to the Portuguese Republic.

Article 2

Done at Brussels, 28 June 2000.

For the Commission

Mario MONTI

Member of the Commission

(9) OJ C 213, 23.7.1996, p. 4.