2002/633/EC: Commission Decision of 27 February 2002 concerning measures adopted by Italy for the recovery and completion of serviced small business areas developed for Sirap SpA and the allocation of plots and industrial buildings (Text with EEA relevance) (notified under document number C(2002) 611)
Date: 2002-02-27
Institutions: European Commission
Subjects: Italy, State aid, handicrafts, industrial building, industrial equipment, regional aid

2.8.2002

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Official Journal of the European Communities

L 205/89

II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 27 February 2002

concerning measures adopted by Italy for the recovery and completion of serviced small business
areas developed for Sirap SpA and the allocation of plots and industrial buildings

(notified under document number C(2002) 611)

(Only the Italian text is authentic)

(Text with EEA relevance)

(2002/633/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Commu-
nity, and in particular the first subparagraph of 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 the provision cited above (1),

Whereas:

I. PROCEDURE

(1)

(2)

(3)

By letter of 6 October 1997 the Italian authorities noti-
fied the Commission, under Article 88(3) of the EC
Treaty, of a draft Law of the Sicilian Region on rules for
the recovery and completion of serviced small business
areas developed by Sirap SpA.

By letter of 21 October 1997 the Commission requested
further information.

On 10 December 1997 the Italian authorities informed
the Commission that the notified draft law had been
approved as Law No 46 of the Sicilian Region of 24
December 1997 (2) (hereinafter Law No 46/1997) and
transmitted the text of the law. The request for further
the
information was answered on 15 January 1998;

(4)

(5)

Commission received the information on 23 February
and 16 April 1998. The Commission sent further ques-
tions on 4 June 1998, to which the Italian authorities
replied on 16 October 1998.

During its examination of the aid, the Commission also
learnt of the existence of a scheme for the allocation of
plots and industrial buildings to small and medium-sized
enterprises
authorities. These
provisions were communicated to the Commission in
an annex to the letter of 16 April 1998 referred to in
recital 3.

(SMEs) by municipal

the aid in question.

On 9 December 1998 the Commission decided to
initiate the procedure provided for in Article 88(2) of the
Treaty in respect of
Italy was
informed by letter of 30 December 1998. The publica-
tion of that letter in the Official Journal of the European
Communities (3) did not give rise to any reactions by other
interested parties. Comments from Italy were received by
the Commission on 10 March 1999. On 24 November
1999 a meeting was held in Brussels with representatives
from Italy and the Sicilian Region. The Commission
received a further letter from the Italian authorities dated
7 June 2001 in which the latter undertook to apply the
measures in question within the limits established by the
Commission notice on de minimis aid (4).

(1) OJ C 162, 10.6.2000, p. 4.
(2) Sicilian Regional Official Gazette, 30.12.1997.

(3) OJ C 162, 10.6.2000, p. 4.
(4) OJ C 68, 6.3.1996, p. 9.

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(6)

(7)

(8)

II. DESCRIPTION OF THE AID

II.1. Sirap’s background: the Decision of 3 March

1999

Sirap SpA (hereinafter Sirap), which was wound up on 1
February 1993, was a publicly owned company whose
object was to promote economic development in the
Sicilian Region (which is eligible for regional aid under
Article 87(3)(a)). Following the winding-up, the firms
that had carried out work for Sirap were not paid the
amounts owed to them and most of them had to be
wound up. To remedy this situation, the Italian authori-
ties granted an initial amount of aid in the form of guar-
antees and interest subsidies to the firms in question in
order to prevent a series of bankruptcies.

The Commission concluded its examination of the aid in
question by adopting Decision 1999/678/EC of 3 March
1999 (5), which found that the funding granted by the
Italian authorities to the firms affected by the winding-
up of Sirap constituted aid under Article 87(1) of the EC
Treaty. This finding was based chiefly on the fact that
the aid enabled the recipients to avoid some of the
consequences of the bankruptcy of the promoter. The
firms were thus placed artificially in a more favourable
position than other similar firms operating in Italy. The
Commission therefore concluded that the measures did
not qualify for exemption under Article 87(2) and (3) of
the Treaty. Italy was therefore requested to put an end to
the aid scheme as regards the part not covered by the de
minimis rule and to take the necessary steps to recover
all the aid granted unlawfully. However, no unlawful aid
it would not
was recovered as Italy announced that
proceed with any recovery until a final decision had been
adopted.

II.2. Sirap and the measures in question

Sirap had the task of awarding contracts for and superin-
tending infrastructure development works to encourage
businesses to locate there. In the case in point, the works
comprised primary and secondary site development for
the serviced small business areas and the construction of
industrial buildings. The measure adopted by the Italian
authorities provided for the payment of claims held by
members of the professions in respect of design, works
supervision and accountancy services, by the firms that
carried out the works and the owners of the land where
the work was carried out. The payment of these debts
was to have been made by Sirap using funds paid in
instalments by the Sicilian Region, since Sirap
several
operated under a contract concluded with the Region.
Following the bankruptcy of Sirap in February 1993,
much of the work had to be left unfinished as the firms

were not paid, which is why the Region is financing the
completion of the works and hand them over to the
municipalities (6). Payment of the claims is to be made
within the limits of the funds originally earmarked for
financing the works. Where the total claims exceed the
is to be reduced
the reimbursement
available funds,
proportionately.

II.3. The notified measure (ex N 693/97)

(9)

By letter of 6 October 1997 the Italian authorities noti-
fied the Commission, under Article 88(3) of the Treaty,
of the measures for the recovery and completion of
serviced small business areas developed by Sirap SpA,
already in liquidation. The measures are provided for in
Law No 46/1997 (7) and concern three types of action:

(a) works on serviced small business areas (essentially
primary and secondary site development) entrusted
to Sirap but not completed following the declaration
of the latter’s bankruptcy are to be handed over to
the administrations of
the relevant municipalities.
The Sicilian Region is authorised to settle claims by
firms that carried out work on behalf of Sirap within
the limits of the amounts available under the finance
originally granted at the time the works in question
were carried out. Payment is subject to the condition
that creditors have not asked for their claim to be
included in the list of Sirap’s liabilities as part of the
bankruptcy proceedings. Articles 2 and 3 of Law No
46/1997 provide that, once completed, the works
financed by the Sicilian Region are to be handed over
to the municipalities;

(b) Article 4 of Law No 46/1997 authorises the Region
to grant ITL 21 billion (EUR 10 845 594) to the
municipalities in 1997 for completion of the works
on serviced small business areas;

(c) the Region grants a contribution representing up to
80 % of the necessary expenditure to craft coopera-
tives and their partners or to cooperative firms that
carry out or complete the work themselves. The
contribution is reduced to 50 % of the necessary
expenditure in the case of any businesses that also
own the land. Under the Law, craft cooperatives or
cooperative firms are craft associations which have
the object of managing the completed business areas
on condition that the areas, once completed, can be
used immediately. Article 7 of Law No 46/1997
billion
budget
provides
(EUR 2 582 284) to complete the work in 1997.

ITL 5

for

of

a

(6) It should be noted that the municipalities were regarded as the
owners of the works although the latter were transferred to them
only once completed.

(5) OJ L 269, 19.10.1999, p. 29.

(7) See footnote 2.

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II.4. The non-notified measures (ex NN 130/98)

(10)

The fourth type of measure, contained in the provisions
on the allocation of plots and industrial buildings (8) and
applicable throughout Sicily, concerns the letting of plots
and buildings to SMEs by municipalities against payment
of rent fixed by the administrations on the basis of the
estimated cost of maintaining the infrastructure and the
buildings over a five-year period.

(11)

(12)

III. REASONS WHY THE COMMISSION INITIATED
PROCEEDINGS UNDER ARTICLE 88(2) OF THE EC
TREATY

In view of the similarity of this case with that forming
the subject of Decision 1999/678/EC, the Commission
concludes that the financing of the creditors of Sirap (the
first measure) was intended to avoid the rules on bank-
ruptcy and hence to give an advantage to the recipient
firms.

The Commission takes the view that payment of the
work ordered by Sirap is one of the latter’s contractual
obligations. However, despite the fact that Sirap should
have ensured that its contract with the Sicilian Region
allowed the latter to succeed it in contracts with the
firms carrying out the work, this was not done. Conse-
quently,
there is no contractual relationship between
Sirap’s creditors and the Sicilian Region which in this
case requires the Region to pay the creditors. The
Commission believes that there were other ways the
Region could have recovered the works already carried
out. It could have paid Sirap in liquidation the sums
corresponding to the work carried out, in exchange for
ownership of the works, or acquired the works carried
out during the liquidation if the official receiver had
decided to sell them by means of an open and non-
discriminatory invitation to bid. Instead of choosing one
of the two options,
it seems that the Sicilian Region
preferred to pay the creditors directly, thus obliging it to
pay them on a statutory basis using the funds initially
earmarked for carrying out the whole of the work.

(13)

The measure in question therefore constitutes operating
aid as it is not intended to be used for investment or job
creation.

(14)

Furthermore, none of
the information communicated
indicates that the conditions applicable to operating aid
provided for in the guidelines for regional aid have been
satisfied (9).

(15) Whilst the financing granted to the municipalities, craft
cooperatives and cooperative firms (second and third
measures) does not appear to constitute State aid,
its
close connection with the arrangements for the acquisi-
tion of the works by the Sicilian Region places it in the
more general context of those arrangements.

(16) As regards the rents paid by SMEs to municipalities,
which are determined by the latter (fourth measure), the
Commission had objected to the level of the rents and
had considered that aid might be involved as the rent
In that
may have been lower than the market price.
event, the aid granted could be regarded as investment
aid for SMEs or as operating aid subject to the conditions
provided for in the regional aid guidelines. The Commis-
sion had also stated that ‘it is possible that some or all of
the aid granted in this manner to craft firms and SMEs
may be covered by the de minimis rule, under which aid
amounting to not more than ECU 100 000 may be
granted over a three-year period’ (10). However,
the
Italian authorities have not provided any reasons since
the initiation of proceedings to indicate that the advan-
tages in question fell within the limits of the de minimis
rule.

IV. ASSESSMENT OF THE AID

IV.1. First measure

(17) As regards the arrangements for the acquisition of the
works by the Sicilian Region, Italy provided explanations
by letter of 10 March 1999. The works to be completed
clearly belonged to the municipal administrations from
to Article 37(2) of Sicilian
the beginning, pursuant
Regional Law No 35 of 23 May 1991. It was therefore
not a question of acquisition but of restitution to the
rightful owner. For that reason the other two options
proposed by the Commission were not applicable as the
municipalities had been the owners of the works right
from the beginning. The sole purpose of the contribu-
tions towards the completion of the work was to speed
up the restitution of the works to the municipalities. The
measures were designed to conserve the work already
carried out. In any event, if the Region had not acted,
the creditors would have instituted proceedings against
the municipalities which would in turn have instituted
proceedings against
the Region. The outcome would
have been identical, but the solution taken was more
rapid. Accordingly, the first measure is not covered by
Article 87(1) of the Treaty and does not constituted State
aid.

(8) Decree of 8 February 1991, Italian Official Gazette, 20.4.1991.
(9) OJ C 74, 10.3.1998, p. 4, point 4.15.

(10) See footnote 4.

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IV.2. Second measure

However, the Region has undertaken, by letter of 7 June
2000, to comply with the limits of the de minimis rule.

(18)

(19)

The second measure is the financing granted to the
municipalities in order to complete the work. It does not
constitute State aid as no advantage is transferred to a
firm but to another public authority. Furthermore, even
if it did constitute aid, the commitment given by Italy on
7 June 2001 to comply with the limits of the de minimis
rule means that aid can be ruled out.

IV.3. Third measure

The third measure enables the Region to grant financing
to groups of firms in order to complete the work. The
financing amounts to 80 % of costs or 50 % if the firms
own the land on which the works are carried out. As the
works belong to the municipalities, it is for them to bear
the total costs incurred. The Region is not granting any
advantage as it not paying for all the costs to the groups
of firms. As a result, the third measure is not caught by
Article 87(1) of the Treaty and does not constitute State
aid. Even if it were to be regarded as aid, the commit-
ment given by the Italian authorities on 7 June 2001 to
comply with the limits of the de minimis rule means that
aid can be ruled out.

IV.4. Fourth measure

(20) As regards assessing the advantage resulting from the
letting of the industrial buildings and plots, the regional
authorities have emphasised the difficulty of quantifying
any advantage derived by the tenant firms in view of the
lack of any directly comparable situation on the market.

V. CONCLUSIONS

(21)

The beneficiaries of the measure are small and medium-
sized firms (11), which is a favourable factor in the
Commission’s assessment. There is also the undertaking
given by the Italian authorities to comply with the limits
of the de minimis rule in respect of all the measures
referred to in the initiation of proceedings. The Commis-
sion therefore concludes that no aid is involved.

(22)

This Decision is consistent with Decision 1999/678/EC
which concludes that the part not covered by the de
minimis rule constitutes aid,

HAS ADOPTED THIS DECISION:

Article 1

The measures taken by the Italian authorities for the recovery
and completion of serviced small business areas developed by
Sirap SpA and for the allocation of plots and industrial build-
ings to municipalities do not constitute aid within the meaning
of Article 87(1) of the Treaty.

This Decision is addressed to the Italian Republic.

Article 2

Done at Brussels, 27 February 2002.

For the Commission

Mario MONTI

Member of the Commission

(11) Pursuant to Article 7 of Regional Law No 46/97 which refers to
Law No 96/81, as subsequently amended (Measures for small and
medium-sized industrial, commercial and craft enterprises, coopera-
tives and fisheries). SMEs are therefore covered by Article 7 of
Regional Law No 46/97.