2001/806/EC: Commission Decision of 29 November 2000 on the aid scheme "Subsidieregeling weegapparatuur en geautomatiseerde bemonsteringsapparatuur" which the Netherlands is planning to implement for small and medium-sized manure transport companies (Text with EEA relevance) (notified under document number C(2000) 3935)
Date: 2000-11-29
Institutions: European Commission
Subjects: Netherlands, State aid, aid to undertakings, organic fertiliser, small and medium-sized enterprises, transport company

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II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 29 November 2000

on the aid scheme ‘Subsidieregeling weegapparatuur en geautomatiseerde bemonsteringsappara-
tuur’ which the Netherlands is planning to implement for small and medium-sized manure trans-
port companies

(notified under document number C(2000) 3935)

(Only the Dutch text is authentic)

(Text with EEA relevance)

(2001/806/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(4)

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

The Commission received comments from interested
parties. It forwarded them to the Netherlands, which was
given the opportunity to react;
its comments were
received by letter dated 27 September 2000, registered
as received on 2 October 2000 (A/38015).

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

(5)

Having called on interested parties to submit their comments
pursuant to the provisions cited above (1) and having regard to
their comments,

Whereas:

By letters dated 10 August 2000, registered as received
on 14 August 2000 (A/36761), and 16 August 2000,
registered as received on 21 August 2000 (A/36855),
the Dutch Government submitted a modified aid scheme
on which the Commission asked for further information
by letters of 22 August (D/54357) and 31 August 2000
replied on 27
(D/54472). The Dutch Government
September 2000, registered as received on 2 October
2000 (A/38015).

(1)

(2)

(3)

I. PROCEDURE

By letter dated 27 July 1999, registered as received on
31 August 1999 (A/36575), the Netherlands notified the
Commission of the aid scheme ‘Subsidieregeling weegap-
paratuur en geautomatiseerde bemonsteringsapparatuur’
(hereinafter SWB).

(6)

By letter dated 17 April 2000 (SG (2000)/D 103197),
the Commission informed the Netherlands that it had
decided to initiate the procedure laid down in Article
88(2) of the EC Treaty in respect of the aid scheme.

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

(1) OJ C 175, 24.6.2000, p. 6.
(2) See footnote 1.

II. DETAILED DESCRIPTION OF THE AID

The SWB scheme was introduced to encourage the
purchase of weighing facilities and automated test equip-
ment for controlling exactly the weight and composition
of manure to ensure compliance with Council Directive
91/676/EEC of 12 December 1991 (Nitrate Directive)
concerning the protection of waters against pollution
caused by nitrates from agricultural sources. The Dutch
legal basis for conforming with this Directive is the
‘Meststoffenwet’ (Manure Law) of 4 December 1997, as
amended on 16 March 1999. It stipulates that, from 1
January 2000 onwards, manure transport companies
will be obliged to use automated test and weighing
machinery; previously, they were allowed to estimate the
weight and composition of manure.

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(7)

(8)

(9)

(10)

By the proposed aid measure, the Dutch Government
intends to provide manure transport companies with an
incentive to install the equipment in question before it
becomes mandatory under the ‘Meststoffenwet’. The
original scheme, announced on 27 July 1999, provided
for subsidies with an aid intensity equivalent to 35 % of
the acquisition cost. The aid was available to any
company, regardless of size, which applied for it. Under
the modified scheme, aid recipients will be small or
medium-sized enterprises which meet the conditions set
out in point 3.2 of the Community guidelines on state
aid for small and medium-sized enterprises (3)
(SME
guidelines).

To qualify for a subsidy under the SWB scheme, the
machinery must have been installed before 15
September 1999. The application was to be submitted
between 6 April and 29 April 1999. The subsidy would
be paid out not later than 1 March 2000. Under the
terms of the SWB-scheme, the payment of the aid would
be effected only after approval by the Commission.

set

a budget of
aside
The Dutch Government
NLG 2 800 000
(EUR 1 270 585), which would
provide subsidies for about 200 facilities. Under the
modified SWB scheme, the aid intensity is 7,5 % in the
case of medium-sized enterprises and 15 % in the case of
small enterprises. The eligible costs are defined as the
costs for the purchase of the weighing and automated
test equipment. The cost of installing the equipment is
borne by the transport companies.

the initial aid scheme,

Following notification of
the
Commission initiated the procedure under Article 88(2)
of the EC Treaty as it had serious doubts as to whether
the SWB scheme qualified for the derogations set out in
Article 87(2) and (3) of the EC Treaty since none of
them seemed to apply. In the case of the first deroga-
tion, set out in Article 87(3)(c), the Commission deemed
that none of the conditions of the Community guide-
lines on state aid for environmental protection (4) (here-
inafter
applied. No
environmental guidelines)
evidence was provided that the investment aid allowed a
significantly higher level of environmental protection
than the mandatory environmental standards as the
‘Meststoffenwet’ was adopted specifically to transpose
the Nitrate Directive into national law. In addition, the
proposed intensities of aid exceeded the thresholds laid
down in the environmental guidelines. The SME guide-
lines seemed not to be applicable either, since the incen-
tive effect of the aid seemed to be an artificial one, the
aid was not limited to small and medium-sized enter-

the

(3) OJ C 213, 23.7.1996, p. 4.
(4) OJ C 72, 10.3.1994, p. 3.

(11)

(12)

prises and the maximum intensities exceeded the ceilings
stipulated in the guidelines.

III. COMMENTS FROM INTERESTED PARTIES

The German Government stressed that it agreed with the
Commission as regards the distortive effect of the SWB
scheme. The obligation laid down in the Dutch Manure
Law corresponded to the terms of the Nitrate Directive,
which all Member States had to transpose into national
law. The German Government pointed out that North
Rhine-Westphalia and Lower Saxony, which border on
the Netherlands, are two Lander carrying on intensive
animal husbandry. As Dutch companies in Germany
transported manure,
they competed with German
companies. By relieving them of some of the investment
costs imposed on them under the Nitrate Directive, the
Dutch measure distorted competition between Germany
and the Netherlands. Furthermore, the German Govern-
ment observed that the administrative practice of the
Dutch authorities was such that aid was granted only to
companies
registered in the Netherlands. Moreover,
given the very limited application period, companies
from outside
automatically
the Netherlands were
excluded from the possibility of receiving subsidies, and
this constituted discrimination against competitors from
other Member States.

IV. COMMENTS FROM THE NETHERLANDS

The Dutch Government gave notification of a modified
scheme whereby the intensity of aid was limited to
7,5 % in the case of medium-sized companies and to
15 % in the case of small companies. It stressed that the
incentive effect lay in the fact that the subsidy was
designed to encourage manure transport companies to
buy automated test and weighing equipment some
months prior to the entry into force of the mandatory
standards in order to provide for proper transposal and
implementation of the Nitrate Directive in the Nether-
lands. Otherwise, these companies would be reluctant to
install the equipment or would do so too late, resulting
in a shortage of properly adapted manure transport
vehicles. The Dutch authorities also pointed out that the
the distance over
subsidy cannot exceed 15 %,
which manure is transported tends to be rather limited
and that the adverse effect on trade between Germany
and the Netherlands would be negligible. Moreover, the
scheme in question is not limited to companies regis-
tered in the Netherlands. It is open to any company
offering manure transport services in the Netherlands.
Lastly, they stressed that one German enterprise and
three Belgian companies operate in the Netherlands and
none of
them had applied for subsidies under the
scheme.

that

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V. ASSESSMENT OF THE MEASURE

(13)

The investment aid planned by the Dutch Government
subsidises the purchase of weighing and testing equip-
ment in order to comply with the provisions of the
Nitrate Directive. It thus favours the companies involved.
By strengthening their financial position, this financial
incentive threatens to distort competition on the EU
internal market as the manure transport service provided
by Dutch companies competes with the service offered
by companies registered in other Member States which
are not eligible for subsidies designed to promote
imposed by
compliance with mandatory standards
Community or national
legislation as no such aid
scheme exists in other Member States. Consequently, the
aid is likely to have an adverse effect on trade between
Member States in this sector and constitutes state aid
within the meaning of Article 87(1) of the EC Treaty.

(14)

Following the publication of the Commission decision to
initiate proceedings, the Dutch authorities submitted a
modified SWB scheme in which it is stipulated that state
aid may be granted only to small and medium-sized
enterprises as defined in the SME guidelines.

(15) Accordingly, the Commission based its assessment on
the fact that the SWB scheme is designed primarily to
encourage the purchase of weighing facilities and auto-
mated test equipment by small and medium-sized enter-
prises for controlling exactly the weight and composi-
tion of manure in order to comply with the Nitrate
Directive. Manure, a by-product of livestock farming, is
not included in the list of agricultural products in Annex
I to the EC Treaty, and the Community guidelines for
state aid in the agriculture sector (5) do not therefore
apply.

(16)

(17)

The planned aid can be regarded as being compatible
with the common market only if one of the derogations
in Article 87(2) and (3)(a), (b), (c) and (d) of the Treaty
applies to it.

The aid does not have a social character, it is not granted
to individual consumers, it does not serve to make good
the damage caused by natural disasters or exceptional
occurrences, and it is not granted to the economy of
certain areas of
the Federal Republic of Germany
affected by the division of Germany. The derogation in
Article 87(3)(a) of the EC Treaty does not apply to the
present case either because the aid was not designed to
promote the economic development of an area where
the standard of living is abnormally low or where there
is serious underemployment. As far as the derogation in
the
Article 87(3)(b) of

the EC Treaty is concerned,

Commission holds that the aid was clearly not intended
to promote an important project of common European
interest nor to remedy a serious disturbance in the
economy of a Member State. The regional aspect of the
derogation in Article 87(3)(c) of the EC Treaty does not
apply since the companies are not located in assisted
areas, and the scheme does not promote culture and
heritage conservation as mentioned in Article 87(3)(d) of
the EC Treaty. The Dutch authorities did not attempt to
justify the aid on any of these grounds.

(18) As regards the first part of the derogation in Article
87(3)(c) of the EC Treaty, namely aid to facilitate the
development of certain economic activities, the Commis-
sion based its assessment on the fact that, according to
the Dutch Government, the SWB scheme was designed
primarily to encourage the purchase of weighing facili-
ties and automated test equipment by small and
medium-sized enterprises for controlling exactly the
weight and composition of manure in order to comply
with the Nitrate Directive.

In this connection,
it must be recalled that, by its
decision of 11 March 1992 (6) concerning the establish-
ment of a national manure bank, being a public founda-
tion for
the environmentally acceptable disposal of
surplus manure, the Commission expressly prohibited
operating aid for variable costs, such as transport,
for manure-processing projects.
storage and delivery,
Moreover,
decision on manure-processing
projects (7), it confirmed it's a priori negative attitude to
further manure-related aid in the Netherlands.

in its

(19)

The Commission first assessed the measure in the light
the SME guidelines. Applying the derogations in
of
Article 87(3)(c) of the EC Treaty and in line with the
requirements of the SME guidelines, the present project
is deemed to be incompatible with the common market
for the following reasons.

(20) According to the general principles laid down in point
4.1 of the SME guidelines, for a state aid measure to
qualify for exemption, it must in the first place be in the
nature of an incentive; it must not therefore be oper-
ating aid and it must be necessary in order to achieve
objectives which market forces alone would not secure.
The Dutch Government pointed out that the aid scheme
was designed to give an incentive to manure transport
companies to buy automated test and weighing equip-
ment some months prior to the entry into force of
mandatory standards and thus to ensure proper trans-
posal and implementation of the Nitrate Directive in the
Netherlands. This has to be classified as an artificial

(5) OJ C 28, 1.2.2000, p. 2.

(6) OJ L 170, 25.6.1992, p. 34.
(7) Aid measure C 17/90 (OJ C 82, 27.3.1991, p. 3).

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incentive since any company wishing to offer manure
transport services in this market sector would have to
install new equipment according to the Dutch manda-
tory standards over virtually the same period as that laid
down in the SWB scheme. Consequently, the measure
cannot be considered to be necessary or to have an
incentive effect within the meaning of the SME guide-
lines.

transport

adapted manure

(21) Moreover, the measure must be proportionate, with the
positive effect outweighing the damaging effect which
state aid has on competition and trade. The Dutch
Government considers that the positive effect of the
measure derives from the fact that it encourages manure
transport companies to install the equipment necessary
to comply with the ‘Meststoffenwet’. Otherwise, these
companies would be reluctant to install the equipment
or would do so much too late, resulting in a shortage of
properly
vehicles. The
Commission also holds that the aid is not intended to
alleviate the handicaps typically faced by small and
medium-sized enterprises, such as difficulty of access to
capital and credit stemming from a lack of information,
the risk-averse nature of the financial markets and the
limited guarantees that SMEs can offer. The measure has
the sole effect of reducing the costs which Dutch enter-
prises would normally have to bear in order to comply
with the mandatory standards based on harmonised
Community law. The measure therefore favours manure
transport companies in the Netherlands by relieving
them of some of the investment costs of the new equip-
ment, whereas their competitors that transport manure
in other Member States must meet the entire cost of this
equipment themselves. The Commission therefore takes
the view that the aid cannot be regarded as propor-
tionate since the damaging effects on competition and
trade outweigh the positive effects, which are considered
to be artificial because the aid scheme introduces stan-
dards with which manure transport companies would in
any case have had to comply from 1 January 2000.

ment is thus intended for the purchase of new equip-
ment and not the replacement of existing equipment.
On the basis of section A in point 3.2.3 of the environ-
mental guidelines,
therefore
approve the aid relating to those investment costs that
do not exceed the cost of adapting old equipment.

the Commission cannot

(24)

Finally, section B of point 3.2.3 of the environmental
guidelines does not apply either because the aid for
investment in new plant is not intended to encourage
firms to improve on mandatory environmental stan-
dards but
to subsidise investment costs in order to
comply with mandatory standards.

(25)

Consequently, the aid scheme cannot be approved on
the basis of the environmental guidelines.

VI. CONCLUSIONS

(26)

the

light of

foregoing considerations,

In the
the
Commission concludes that none of the general princi-
ples set out in point 4.1 of the SME guidelines, namely
the incentive effect, the necessity and the proportionality
of the measure, is fulfilled. The measure does not consti-
tute aid to investment as defined in the SME guidelines
and is not aimed at encouraging firms to improve on
mandatory standards as required by the environmental
guidelines. As the measure in question does not comply
with the SME guidelines on the environmental guide-
lines, it cannot be considered to contribute to the devel-
opment of economic activities without affecting trade
between Member States to an extent contrary to the
common interest.
Inasmuch as the derogation under
Article 87(3)(c) of the EC Treaty is not relevant, the
principle of prohibition stipulated in Article 87(1) of the
EC Treaty is fully applicable,

HAS ADOPTED THIS DECISION:

(22)

This means that the aid scheme cannot be approved on
the basis of the SME guidelines.

Article 1

(23)

The Commission then considered whether the measure
complied with the environmental guidelines. As regards
the doubts as to the applicability of the environmental
guidelines expressed by it in its decision to initiate the
procedure, it considers the incentive effect to be artificial
(see point 20). Since the entry into force of the ‘Mest-
stoffenwet’, manure transport companies are required to
ensure that the weight and composition of the manure
are accurately measured. The aim of the aid scheme is to
encourage the purchase of the correct equipment to
ensure the precise recording of manure data. This invest-

The state aid which the Kingdom of the Netherlands is plan-
ning to implement for small and medium-sized enterprises,
amounting to EUR 1 270 585,
incompatible with the
common market.

is

The aid may accordingly not be implemented.

Article 2

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

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This Decision is addressed to the Kingdom of the Netherlands.

Article 3

Done at Brussels, 29 November 2000.

For the Commission

Mario MONTI

Member of the Commission