2003/226/EC: Commission Decision of 24 September 2002 on an aid scheme which the Federal Republic of Germany is planning to implement — "Guidelines on assistance for SMEs — Improving business efficiency in Saxony": Subprogrammes 1 (Coaching), 4 (Participation in fairs), 5 (Cooperation) and 7 (Design promotion) (notified under document number C(2002) 2606) (Text with EEA relevance)
Date: 2002-09-24
Institutions: European Commission
Subjects: Saxony, State aid, aid system, control of State aid, small and medium-sized enterprises, type of business

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COMMISSION DECISION

of 24 September 2002

on an aid scheme which the Federal Republic of Germany is planning to implement (cid:151)
(cid:145)Guidelines on assistance for SMEs (cid:151) Improving business efficiency in Saxony(cid:146): Subprogrammes 1
(Coaching), 4 (Participation in fairs), 5 (Cooperation) and 7 (Design promotion)

(notified under document number C(2002) 2606)

(Only the German version is authentic)

(Text with EEA relevance)

(2003/226/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(3)

Having regard to the Treaty establishing the European
Community, 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 those provisions (1),

Whereas:

(1)

(2)

1. PROCEDURE

By letter SG(98) D/9545 dated 12 November 1998, the
the Land of
Commission approved the guidelines of
Saxony on assistance for SMEs until 31 December
2000 (2).

to Article 88(3) of

By letter dated 29 December 2000 (registered as
received by the Secretariat-General of the Commission
on 3 January 2001 under ref. A/47), Germany notified
pursuant
the EC Treaty six
subprogrammes forming part of a new version of the
guidelines (hereinafter referred to as the (cid:145)scheme(cid:146)) (3)
that
to run for five years from the date of
Commission approval. The Commission requested
further information by letters dated 5 February 2001
(registered under D/50478) and 5 September 2001
(registered under D/53620).

is set

(1) OJ C 34, 7.2.2002, p. 2.
(2) State aid N 567/98 (cid:151) Germany (Richtlinien zur Mittelstandsf(cid:246)rderung

(cid:151) Verbesserung der unternehmerischen Leistungsf(cid:228)higkeit).

(3) The guidelines in their revised form include 11 subprogrammes.
The notification was limited to six of
the others were
considered by Germany not to fall within the scope of Article
87(1) of the EC Treaty.

them;

Germany provided additional
information by letters
dated 12 March 2001 (registered the same day under
A/3069), 13 March 2001 (registered on 20 March
under A/3361), 1 June 2001 (registered on 11 June
under A/34569) and 9 October 2001 (registered on 10
October under A/37882).

(4)

A meeting between the German authorities and the
Commission was held on 14 June 2001 in Berlin.

(5)

(6)

(7)

By letter dated 2 August 2001, Germany sent summary
information on the six subprogrammes with a view to
exempting them from the requirement of compatibility
with the common market until
the
Commission takes a final decision provided that they
comply with Commission Regulation (EC) No 70/2001
of 12 January 2001 on the application of Articles 87
and 88 of
the EC Treaty to State aid to small and
medium-sized enterprises (4).

such time as

The Commission informed Germany by letter SG(2001)
D/292745 of 13 December 2001 that it had decided to
initiate the formal investigation procedure laid down in
Article 88(2) of the EC Treaty in respect of some of the
subprogrammes, namely the subprogrammes (cid:145)Coaching(cid:146),
(cid:145)Participation
(cid:145)Design
promotion(cid:146). In its decision the Commission did not raise
any objections to the subprogrammes (cid:145)External
trade
consultancy(cid:146) and (cid:145)Environmental management(cid:146).

(cid:145)Cooperation(cid:146)

fairs(cid:146),

and

in

In its letter the Commission reminded Germany that
Article 88(3) of the EC Treaty had suspensory effect and
that Article 14 of Council Regulation (EC) No
659/1999 (5), dated 22 March 1999, provides that all
unlawful aid may be recovered from the recipient. At

(4) OJ L 10, 13.1.2001, p. 33.
(5) OJ L 83, 27.3.1999, p. 3.

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the same time,
it highlighted the fact that individual
grants of aid which complied with all the conditions of
Commission Regulation
70/2001 were
considered to be compatible with the common market
according to Article 3(1) of that Regulation.

(EC) No

State aid rules in the (cid:145)sensitive sectors(cid:146) (coal and steel,
transport, synthetic fibres and shipbuilding).

(14)

The scheme will not apply to activities linked to the
production, processing or marketing of products listed
in Annex I to the Treaty.

(8)

The Commission decision to initiate the procedure was
published in the Official
the European
Communities (6). The Commission called on interested
parties to submit their comments on the measure but
did not receive any comments back.

Journal

of

(9)

Germany set out its position by letter dated 21 January
2002 (registered under A/30488).

(10) After the opening of the formal investigation procedure
two more meetings between the German authorities and
the Commission took place on 19 February 2002 in
Brussels and on 10 June 2002 in Berlin.

2. DESCRIPTION OF THE MEASURE

2.4. Formal investigation into four subprogrammes

(15)

The following four subprogrammes of the scheme are
the subject of the procedure under Article 88(2) of the
EC Treaty:

(cid:151) Coaching (subprogramme 1),

(cid:151) Participation in fairs (subprogramme 4),

(cid:151) Cooperation (subprogramme 5),

(cid:151) Design promotion (subprogramme 7).

2.5. Conditions of the four subprogrammes

2.1. Form of the aid and legal basis

(16)

(11)

The aid is granted by the Land of Saxony in the form of
grants under Sections 23 and 44 of the Land Budget
Order and on the basis of the scheme under scrutiny.

For the purposes of the scheme, the Land of Saxony
identified areas facing particular development problems
on the basis of certain indicators such as income,
purchasing
rate.
Germany provided the Commission with a very detailed
map of those areas. Two thirds of them are located at
the EU’s external borders.

unemployment

power

and

the

(12)

(13)

2.2. Budget and duration

for

The scheme runs
from the date of
Commission approval of the four subprogrammes; the
budget for the overall scheme amounts to around EUR
89 million for this period.

five years

2.3. Recipients

concerning

The aid scheme is designed to assist economically viable
small and medium-sized enterprises within the meaning
of Commission Recommendation 96/280/EC of 3 April
1996
and
medium-sized enterprises (SMEs) (7) with establishments
in Saxony, which ranks as an assisted area under Article
the EC Treaty until 31 December 2003.
87(3)(a) of
Germany undertook to comply with the Community

definition

small

the

of

(17) Aid under the subprogramme (cid:145)Coaching(cid:146)

is aimed at
facilitating access by SMEs to services provided by
outside consultants. The measure is designed to provide
management with assistance in financial, personnel,
technological and organisational matters.

(18)

(19)

enterprises

The aid ceiling for this part of the scheme is 65 % for
small
particular
development problems and 50 % for SMEs in other
areas.

facing

areas

the

in

Eligible costs under the subprogramme are costs for
outside consultancy. The services provided must not
exceed 50 consultancy-days a year and must not
constitute a continuous or periodic activity. Excluded
from receiving
an
enterprise’s usual operating expenditure, such as routine
tax consultancy services,
services or
advertising.

concerning

services

regular

legal

are

aid

(6) See footnote 1.
(7) OJ L 107, 30.4.1996, p. 4.

(20) Aid under the subprogramme (cid:145)Participation in fairs(cid:146) is
intended to help SMEs with their representation at fairs
inside and outside the Community.

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(21)

In areas
facing particular development problems, a
maximum aid intensity of 60 % is envisaged for small
enterprises participating in fairs within the Community.
In general, a ceiling of 50 % applies for SMEs in other
areas.

(cid:151) consultancy fees and fees for other services and

activities provided by outside consultants,

(cid:151) rental payments for premises, costs of material and
the salaries of employees and the office manager.

(22)

Eligible costs under this subprogramme are:

(cid:151) rental payments for the exhibition stand,

(cid:151) construction and dismantling of the stand by third

parties,

(cid:151) transport of goods being exhibited,

(cid:151) participation

fees,

interpretation

costs

and

advertising costs.

This subprogramme allows aid for up to five times a
year, and this includes the repeated participation (up to
three times) in the same fair.

The subprogramme (cid:145)Cooperation(cid:146) aims at promoting
cooperation between not less than 3 to 5 firms in the
same region or
to improve their
efficiency and sales opportunities. The following in
particular will be supported:

in order

sector

(cid:151) feasibility studies on cooperation projects to open

up regional and sector-specific markets,

(23)

(24)

(cid:151) other

services

in
connection with workshops and information events,

provided

parties

third

by

(cid:151) establishment of cooperation offices in Germany,

(cid:151) setting-up of (cid:145)enterprise pools(cid:146) (Absatzgemeinschaften)
for opening up foreign markets inside and outside
the Community:
these are cooperative or contact
arrangements providing SMEs with the services
necessary to enter a foreign market (8).

(25)

The aid ceiling is generally 65 %; for small enterprises in
areas facing particular development problems, it is 80 %.

(26)

Eligible costs
offices are:

for

the establishment of cooperation

(8) The (cid:145)enterprise pools(cid:146) measure was initially the subject of

the
procedure in Case CP 92/01 (cid:151) Germany but was then combined
with the main procedure in Case C 89/01 (cid:151) Germany, of which
Germany was informed by letter D/54756 dated 16 November
2001.

(27)

(28)

subprogramme

(cid:145)Design
The
facilitating
SMEs
access
professional product designers.

by

promotion(cid:146)
the
to

aims
services

at
of

In general, an aid ceiling of 50 % applies; for small firms
in areas
facing particular development problems, a
ceiling of 70 % is envisaged.

(29)

Eligible costs are expenditures on outside design firms
for:

(cid:151) the design of consumer goods,

investment goods

and services,

(cid:151) corporate design and product design.

(30)

For all the subprogrammes, Germany has undertaken to
notify separately each individual case of aid where one
of the following thresholds is exceeded:

(a)

the total eligible costs of the project are at least EUR
25 million and the net aid intensity is at least 50 %
of the net ceiling specified in the regional map for
the area concerned; or

(b) the total amount of aid is at least EUR 15 million

gross.

(31) Germany has undertaken to grant aid under

the
subprogrammes only when an application for aid was
submitted by the firm concerned before the project was
started.

(32) Germany has promised to ensure that aid granted under
the subprogrammes will not be combined with any
other State aid within the meaning of Article 87(1) of
in
the EC Treaty or with Community
connection with the same eligible costs if this will result
in the relevant aid intensity ceilings being exceeded.

funding

(33) Germany has undertaken to submit an annual report on

the application of the subprogramme.

3. GROUNDS FOR INITIATING THE PROCEDURE

(34)

For the reasons set out below,
the Commission has
examined the four subprogrammes under Commission

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Regulation (EC) No 70/2001 and under
the 1998
Community guidelines on national regional aid (regional
aid guidelines) (9).

(35) Aid under the subprogramme (cid:145)Coaching(cid:146) for consultancy
services that do not relate to the enterprise’s usual
operating expenditure satisfied the criteria laid down in
as
Regulation (EC) No 70/2001, provided
stipulated in Article 5(a) of
the aid
ceiling does not exceed 50 % gross. This condition is
not met in so far as the subprogramme provides for aid
intensities of up to 65 % for small enterprises in areas
The
facing
development
Commission thus had serious doubts
to the
compatibility of the subprogramme with the common
market.

that Regulation,

problems.

particular

that,

as

map approved by the Commission, plus 15 percentage
points gross in Article 87(3)(a) regions. The regional aid
map specifies for the Land of Saxony aid intensities of
35 % net plus 15 percentage points gross for SMEs.
Hence, aid intensities of 80 % for small enterprises in
areas facing particular development problems and 65 %
for SMEs in other areas were not in line with Regulation
(EC) No 70/2001 and so the Commission had raised
serious doubts as
to their compatibility with the
common market.

(39) Moreover,

the

(cid:145)Cooperation(cid:146)

subprogramme

clearly
contained measures linked to the establishment and
operation of a distribution network abroad and other
current expenditure linked to the export activity. This is
in breach of Article 1 of Regulation (EC) No 70/2001,
which explicitly excludes such measures from the scope
of the Regulation. Thus, the Commission had serious
doubts as to the compatibility of this subprogramme
with the common market.

(36) Under the subprogramme (cid:145)Participation in fairs(cid:146), aid may
be granted to a beneficiary up to five times each year,
and participation at the same fair is permitted on up to
three occasions. This is at variance with Article 5(b) of
Regulation (EC) No 70/2001, which stipulates that the
exemption is to apply only to the first participation of
an enterprise in a particular
In
addition, the subprogramme provides for aid intensities
that may exceed the ceiling of 50 % gross laid down in
Article 5(b). The Commission thus had serious doubts as
the subprogramme with the
to the compatibility of
common market.

fair or exhibition.

(40)

the

offices)

(salaries

The aid that may be granted in respect of certain cost
elements
for employees and managers of
subprogramme
under
cooperation
(cid:145)Cooperation(cid:146) may also include operating aid, which is
covered by the regional aid guidelines. Operating aid
though must fulfil certain conditions, e.g.
it must be
both limited in time and progressively reduced and
must not be intended to promote exports between
Member
aid
the
guidelines);
conditions are not met by the
subprogramme. Therefore, the Commission had serious
doubts as to its compatibility with the common market.

(point 4.17 of

regional

States

these

(37)

(38)

In so far as the subprogramme (cid:145)Cooperation(cid:146) refers to
consultancy services and other services provided by
third parties in the context of cooperation that do not
relate to the enterprise’s usual operating expenditure,
the Commission assumed that the aid fulfils the criteria
laid down in Regulation (EC) No 70/2001 provided that,
as stipulated in Article 5(a) of that Regulation, the aid
ceiling does not exceed 50 % gross. With aid intensities
of 80 % for small enterprises in areas facing particular
development problems and 65 % for SMEs in other
areas, the subprogramme is clearly not consistent with
that Regulation.

aid in respect of

In addition, the subprogramme (cid:145)Cooperation(cid:146) provides
setting-up of national
the
for
cooperation offices and the remuneration of office
employees. On the basis of the information provided by
Germany, the Commission had serious doubts whether
these measures are covered by Article 4 (Investment) of
that
Regulation (EC) No 70/2001. Article 4(3) of
Regulation stipulates that aid intensities may not exceed
the ceiling of regional investment aid determined in the

(41)

In the Commission’s view, the subprogramme (cid:145)Design
promotion(cid:146) basically falls within the scope of Article 5
(consultancy and other
and activities) of
Regulation (EC) No 70/2001 but, since here too the aid
intensities exceed the ceiling of 50 % gross laid down in
Article 5(b), the Commission had serious doubts as to
its compatibility with the common market.

services

4. COMMENTS FROM GERMANY

(42) Germany takes the view that the aid scheme has to be
examined under the Community guidelines on State aid
((cid:145)SME
for
guidelines(cid:146)) because it was notified to the Commission

and medium-sized enterprises (10)

small

(9) OJ C 74, 10.3.1998, p. 9.

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

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under the accelerated procedure on 3 January 2001, i.e.
before Commission Regulation (EC) No 70/2001
entered in force (11). Since the questions put by the
Commission in its letter dated 5 February 2001 were
not
the notification should have been
considered to be complete from the beginning.

substantial,

(43) With reference to the wording of recitals 11 (12) and
14 (13) to Regulation (EC) No 70/2001, Germany takes
the view that higher aid intensities in assisted regions
under Article 87(3)(a) or (c) of the EC Treaty and in
favour of small enterprises should be considered as
compatible with the common market than those that
apply to medium-sized firms in non-assisted areas. Since
the Regulation declares an aid ceiling of 50 % in respect
of consultancy and other services and activities for
medium-sized enterprises outside assisted areas to be
compatible with the
aid
intensities
should be authorised on the basis of a
notification pursuant to Article 88(3) of the EC Treaty
for small enterprises in Article 87(3)(a) areas.

common market, higher

possible for the Commission to allow notified aid which
goes beyond the provisions of that Regulation.

(46) According to Germany, the Commission, when adopting
Regulation (EC) No 70/2001, did not aim to tighten aid
intensities but to simplify aid procedures and to relieve
the Commission of the need to handle routine cases. A
tightening of aid policy towards small enterprises is,
according to Germany, not in line with the conclusions
of the European Council meetings in Lisbon on 23 and
24 March 2000 and in Stockholm on 23 and 24 March
2001, both of which announced a reinforcement of
horizontal objectives.

(47) Germany takes the view that the aim and purpose of
Regulation (EC) No 70/2001, which is designed to
relieve the Commission of the need to handle routine
cases, would not be undermined by allowing higher aid
ceilings for small enterprises in assisted areas because
such notifications are limited in number and are the
In addition, no appropriate measures were
exception.
introduced with the Regulation and so a stricter aid
policy could not have been intended; otherwise, cases of
aid
been treated
unequally.

approved would

already

have

(44) With reference to recital 4 (14) to Regulation (EC) No
70/2001, Germany takes the view that, even though
Article 5 of that Regulation does not provide for higher
aid ceilings for small enterprises, this does not mean
that more favourable treatment of
firms or
assisted areas within the meaning of Article 87(3)(a) of
the EC Treaty cannot be approved by the Commission;
correspondingly higher aid ceilings should simply be
notified beforehand.

small

(48) As regards the subprogramme (cid:145)Participation in fairs(cid:146),
Germany considers that one-off participation by a firm
is insufficient to open up a market, as only repeated
the same fair could give the firm a
presence at
sufficiently high profile. Here too,
the Commission
allegedly had a wide margin of discretion and could
approve notified aid directly under Article 87 of the EC
Treaty and, as a result, could allow notified aid that
went beyond the provisions of Regulation (EC) No
70/2001.

(45) Germany points out that the Commission has a wide
margin of discretion and can approve notified aid
schemes directly under one of the derogations provided
for in Article 87 of the EC Treaty even though the
notified aid may not match precisely the requirements
of Regulation (EC) No 70/2001. Hence it should be

(11) The Regulation entered into force on 2 February 2001.
(12)

(cid:145)Having regard to the differences between small enterprises and
medium-sized enterprises, different ceilings of aid intensity should
be set for small enterprises and for medium-sized enterprises.(cid:146)
(cid:145)This Regulation should exempt aid to small and medium-sized
enterprises regardless of location. Investment and job creation can
contribute to the economic development of less favoured regions
in the Community. Small and medium-sized enterprises in those
regions
the
location and the difficulties deriving from their size. It is therefore
appropriate that small and medium-sized enterprises in assisted
regions should benefit from higher ceilings.(cid:146)
(cid:145)This Regulation is without prejudice to the possibility for Member
States of notifying aid to small and medium-sized enterprises.
Such notifications will be assessed by the Commission in
particular in the light of the criteria set out in this Regulation.(cid:146)

from both the structural disadvantage of

suffer

(13)

(14)

(49) With regard to the

subprogramme

single firms. However, aid for

(cid:145)Cooperation(cid:146),
Germany acknowledges that the measure goes beyond
the scope of Regulation (EC) No 70/2001 since it
contains very complex measures in favour of groups of
SMEs and not
the
setting-up of offices and for
the remuneration of
employees should not be considered as investment aid
within the meaning of Article 4 of the Regulation but as
(cid:145)aid for other purposes(cid:146) within the meaning of point
4.2.8. of the SME guidelines. Although point 4.2.8 is
not
the
included in Regulation (EC) No 70/2001,
Commission should approve this kind of aid directly
under Article 87(3) EC of the Treaty.

(50)

In response to the Commission’s argument that certain
measures under the subprogramme (cid:145)Cooperation(cid:146) might
constitute operating aid, Germany takes the view that
the requirement of (cid:145)progressive reduction(cid:146) under point
4.17 of the regional aid guidelines does not have to be
fulfilled because of
low aid
intensities.

subprogramme’s

the

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(51) As regards aid for the setting-up of enterprise pools
inside and outside the Community, Germany points out
that the establishment of an office abroad cannot be
regarded as
the (cid:145)establishment and operation of a
distribution network abroad(cid:146) because the costs would
not be directly linked to the exportation of goods but,
in fact, as an incentive for SMEs to open up a foreign
market, more often than not outside the Community.
The personnel and operating costs should be approved
by the Commission directly under Article 87(3) of the
EC Treaty.

5. ASSESSMENT OF THE MEASURE

5.1. Existence of State aid

(52)

The four subprogrammes which are the subject of the
formal
investigation procedure under Article 88(2) of
the EC Treaty fall within the scope of Articles 87(1) of
the EC Treaty and 61(1) of the EEA Agreement for the
following reasons: they provide for the granting of aid
from State resources to firms involved in producing
in
goods
intra-Community trade. These grants enable recipients
situation and to
to improve their overall
enhance their market position.
therefore be
assumed that the measures under scrutiny are liable to
trade between
distort competition and thereby affect
Member States. Germany has not
challenged this
finding.

providing

involved

financial

It must

services

or

5.2. Legality of aid

(53)

The Commission notes that Germany has complied with
the notification requirement under Article 88(3) of the
EC Treaty.

5.3. Procedural rules

(54) Germany argues that the aid scheme notified should be
assessed under the accelerated procedure (see recital 42).
The Commission
relevant
procedural rules are those contained in Regulation (EC)
No 659/1999. The 20-day rule
indicated in the
accelerated procedure does not apply in the present case
and its application would not in any event affect the
findings of the notification, for the following reasons:

agree. The

does

not

1.

the scheme notified under the accelerated procedure
and registered on 3 January 2001 did not fulfil the
requirements of the Commission communication on
the accelerated clearance of aid schemes for SMEs

of
fulfil

the meaning
the measure did not

and of amendments of existing schemes (15). As a
that
(cid:145)new scheme(cid:146) within
communication,
the
latter’s requirements precisely for the reasons that
led the Commission to open the Article 88(2)
procedure (all aid to exports in intra-Community
trade are excluded from the procedure). As a
(cid:145)modification of an existing scheme(cid:146) within the
meaning of that communication, the measure did
not fall
into any of the categories specified there
since it consisted of more than a mere prolongation
with a budgetary increase and did not involve a
tightening of the criteria for applying the scheme;

the time limit does not in any event start to run
until the notification is complete, which was not the
case here as long as the Commission was requesting
further information;

the notification was clearly made after the entry into
force of Regulation (EEC) No 659/1999,
the
procedural provisions of which were immediately
applicable, including in the present case. Germany
did not invoke Article 4(6) of that Regulation;

the Commission also opened the Article 88(2)
procedure on the ground that the measure was new,
a finding not contested by Germany within the
relevant time limit;

the Commission informed Germany by letter dated
5 February 2001 that complements provided for in
the notified scheme could not be approved under
the
finding also not
contested by Germany.

accelerated procedure,

a

2.

3.

4.

5.

(55) Germany argues that

the scheme notified should be
assessed in the light of the SME guidelines (see recital
42). The Commission does not agree. Regulation (EC)
No 70/2001 entered into force on 2 February 2001. As
of that date, the Commission was obliged to apply the
Regulation although a start had already been made on
examining the notification. Moreover, recital 4 to the
Regulation stipulates that (cid:145)the guidelines on State aid for
small and medium-sized enterprises should be abolished
from the date of entry into force of this Regulation(cid:146).
There are no transitional rules for aid notified before its
entry into force. Thus,
the Commission was and is
required to assess the notified subprogrammes in the

(15) OJ C 213, 19.8.1992, p. 10.

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light of Regulation (EC) No 70/2001 and not in the
light of the SME guidelines. As regards operating aid for
SMEs in assisted areas, the Commission has also had
regard, where necessary, to the regional aid guidelines,
which were not abolished in whole or in part at the
time Regulation (EC) No 70/2001 was adopted.

aid can be approved, once again exercising its wide
margin of discretion on the basis of Article 87(3)(c) of
the EC Treaty. Such measures must be assessed with a
view to ensuring coherence of decision-making practice
and equality of treatment (16).

(56) Germany’s argument

if

the

SME

that,

rather

guidelines

the Commission had
decided within 20 working days of the original attempt
at notification,
than
Regulation (EC) No 70/2001 would have had to be
applied (see recital 42) has no bearing on the present
assessment, for all the reasons set out above, since it
does not distinguish between procedural and substantive
issues. Whatever the reason for the decision opening the
procedure being adopted after the entry into force of
Regulation (EC) No 70/2001, the Commission was and
is obliged to apply that Regulation. In any event, the
original
the
requirements of the accelerated procedure and was, in
any event, incomplete. At no time did Germany invoke
Article 4(6) of Regulation (EC) No 659/1999.

comply with

notification

not

did

5.4. Compatibility of aid with the common market

5.4.1. Subprogramme (cid:145)Coaching(cid:146)

The subprogramme (cid:145)Coaching(cid:146) provides for aid of a kind
that
It
is covered by Regulation (EC) No 70/2001.
complies with that Regulation and hence with Article
87(3)(c) of the EC Treaty only in so far it provides for
aid for consultancy services that do not relate to the
enterprise’s usual operating expenditure and provided
that, as stipulated in Article 5(a) of the Regulation, the
aid ceiling does not exceed 50 % gross.

as

in so far

condition is not met

the
This
subprogramme specifies aid ceilings of up to 65 % for
small enterprises in areas facing particular development
problems that are located in an Article 87(3)(a) region.
The Commission thus notes
the
measure is not in conformity with Regulation (EC) No
70/2001.

this part of

that

(57)

(58)

(59) Having regard to recital 4 to Regulation (EC) No
70/2001, which states that (cid:145)notifications will be assessed
by the Commission in particular in the light of the
criteria set out in this Regulation(cid:146), the Commission goes
on to assess whether or not the additional amounts of

(60)

In the Commission’s experience, an aid intensity in
excess of 50 % for this type of measure would exceed
the amount necessary to provide enterprises with an
incentive to incur such expenditure. This is also true for
small enterprises and for SMEs in assisted areas. Higher
aid intensities would cause a disproportionate distortion
of competition. In particular, the Commission takes the
view that requiring an enterprise to finance at least half
of the cost contributes to the efficiency and feasibility of
the measure.
that a higher aid
intensity would adversely affect trading conditions to an
extent contrary to the common interest; this part of the
measure cannot, therefore, be regarded as compatible
with the common market under Article 87(3)(c) of the
EC Treaty.

thus concludes

It

(61) Germany argues that a higher intensity for this type of
aid should be available for small enterprises, as opposed
to medium-sized enterprises (see recital 43). It refers in
particular to recital 11 to Regulation (EC) No 70/2001.
The Commission does not agree. Recital 11 refers to the
investment aid outside assisted
specific situation of
areas. It does not refer to external consultancy aid. The
Commission considers that a single rate (of 50 %) for
external consultancy aid is appropriate for all SMEs.
Such aid would generally represent a relatively modest
amount compared with new investment and would be
in the nature of a one-off cost (bearing in mind that
usual operating aid is excluded under Article 5 of the
above Regulation). As such, one would not normally
expect
through
medium-term borrowing. However, it is mainly in the
area of medium-term borrowing (for the purposes of
investment) that SMEs experience a disadvantage owing
to their relative size, with small enterprises being placed
at a greater disadvantage than medium-sized enterprises.
That is why the Commission considers that a difference

finance

SMEs

costs

such

to

(16) See, for example, the judgment dated 24 March 1993 in Case
C-313/90 [1993] ECR I-1125, paragraph 44 and Article 4(2) of
Council Regulation (EC) No 994/98, OJ L 142, 14.5.1999, p. 1.

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8.4.2003

in aid intensity is justified in the case of investment aid,
but not in the case of external consultancy aid, where
this relative disadvantage is less acute.

(62) Germany also states that a higher aid intensity than that
deemed compatible with the common market should be
available for small firms in assisted areas under Article
87(3)(a) and (c) of the EC Treaty (see recital 43). It refers
in particular
to recital 14 to Regulation (EC) No
70/2001. The Commission does not agree. Recital 14
refers to the specific situation of investment aid. It does
not refer to external consultancy aid. The Commission
considers
for external
consultancy aid is appropriate for all SMEs, whether or
not in assisted areas. Such aid does not generally have a
direct long-lasting impact on regional development or
job creation, at least not in the way that investment aid
does. There is consequently no need for higher aid
intensities in assisted areas.

that a single rate (of 50 %)

(66)

small

between

(63) Germany argues that it is illogical for there to be no
differentiation
and medium-sized
enterprises in assisted areas when it comes to granting
investment aid (see recital 43). The Commission does
not agree. That observation made is irrelevant to the
present case, which does not involve investment aid but
external consultancy aid. For investment aid the regional
development factor is more important than the relative
size of enterprises. In any event, Member States may fix
aid intensities lower than those set by Community law.
for
fix
They
medium-sized enterprises.

intensities

lower

could

thus

aid

(64) Germany has argued for a positive decision on the basis
of certain assertions concerning the circumstances under
which Regulation (EC) No 70/2001 was adopted (see
recitals 46 and 47). The Commission notes that the
objectives of that Regulation are stated in its recitals.
The absence of appropriate measures does not mean
that the wording of the Regulation is identical to that of
the SME guidelines (it is not) but rather reflects a broad
range of policy and other considerations that are though
incapable of influencing the correct legal interpretation
of the relevant texts.

(67)

(65) As regards the regional aid guidelines, Germany has not
argued that the measure constitutes operating aid in an
Article 87(3)(a) area (in any event, Article 5 of
Regulation (EC) No 70/2001 does not
apply to
operating aid) or demonstrated that the relevant rules
set out in the guidelines (notably the rule that the aid

to

be

have

temporary,

would
and
proportional to the handicaps it seeks to alleviate) have
been respected. The Commission thus has no reason to
find that the aid could be compatible with the common
market on that basis.

degressive

5.4.2. Subprogramme (cid:145)Participation in fairs(cid:146)

that

share

The subprogramme (cid:145)Participation in fairs(cid:146) provides for
aid that is governed by Regulation (EC) No 70/2001. It
allows for aid to be granted to an enterprise up to five
times each year, included repeated participation (up to
three times) in the same fair. Germany stresses that it is
not possible for an enterprise to gauge the importance
of participating in a particular
fair after only one
participation. Thus, with regard to recitals 11 and 14 to
that Regulation, Germany argues
it must be
possible for the Commission to allow more generous
aid measures and higher aid intensities (see recital 48).
this view. The
The Commission does not
Commission’s
the
that
shown
subprogramme is not
in line with Article 5(b) of
Regulation (EC) No 70/2001, which lays down that only
the first participation of an enterprise in a particular fair
or exhibition is to be exempted and that the gross aid
must not exceed 50 % gross of the additional costs. The
measure is compatible with the common market only in
so far as aid is granted for the first participation and
incompatible in so far as aid is granted for subsequent
participations. This rule is necessary since only in this
way is the incentive effect of the measure guaranteed.
Once an SME has participated in a certain fair,
it
reasonably can be expected to finance the second
participation itself after deciding whether participation
is useful.

assessment

has

Furthermore, the Commission considers that exercising
once again in full its margin of discretion would in no
way alter this finding. For all the reasons set out above,
it takes the view that the means of achieving the SME
development objective whilst preserving the incentive
the Commission’s
effect within the meaning of
customary
and
sufficient
are
and existing policy
appropriate. A measure directly serving the market,
such as participation in a fair, in respect of which the
50 % ceiling as provided for under this subprogramme
is exceeded adversely affects trading conditions to an
extent
In the
that an enterprise is
Commission’s view,
cost
required to contribute
contributes
the
measure. Consequently, the Commission considers that

the
to the efficiency and feasibility of

common interest.

the fact
at

contrary to the

least half of

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L 91/21

higher aid intensities could not be regarded as being
to
compatible with the common market pursuant
Article 87(3)(c) of the EC Treaty.

(70)

(68) As regards the regional aid guidelines, Germany has not
argued that the measure constitutes operating aid in an
Article 87(3)(a) area (and,
in any event, Article 5 of
apply to
Regulation (EC) No 70/2001 does not
operating aid) or demonstrated that the relevant rules
set out in the guidelines (notably the rule that the aid
would have
and
degressive) have been respected. The Commission thus
has no reason to find that the aid could be compatible
with the common market on that basis.

to be proportional,

temporary

5.4.3. Subprogramme (cid:145)Cooperation(cid:146)

(71)

(69)

contains

In addition,

(cid:145)Cooperation(cid:146)

subprogramme

several
The
different aid measures. Aid can be granted, among other
things, for the (cid:145)establishment of cooperation offices in
Germany(cid:146) to cover rental charges, costs of materials and
personnel costs. The offices and/or enterprises involved
can receive an indeterminate amount of aid. The
Commission considers this to be operating aid, which
has to be examined in the light of the regional aid
guidelines. It insists that the subprogramme must fulfil
all the requirements set out in the guidelines without
exception, namely operating aid must be both limited in
time and progressively reduced and must not be
intended to promote exports between Member States
(point 4.17).
the Member State has to
demonstrate the existence of any handicaps and gauge
their
these
importance. The Commission notes that
conditions are not met as the scheme runs for five
years, regardless of the fact that the regional aid map
for Germany expires on 31 December 2003. Moreover,
the aid measures are not progressively reduced and
Germany takes the view that progressive reduction is
not necessary because of
the small amounts of aid
involved (see recitals 49 and 50). The Commission
cannot accept this argument and is of the opinion that,
in so far as operating aid is provided for by this
measure, it is not compatible with the common market.
In addition, Germany has not demonstrated how the
measure is justified in relation to the handicaps that
the
need to be alleviated; nor
cooperation offices are being established only in Saxony.
However, Germany is free to support
the measure
(cid:145)establishment of cooperation offices in Germany(cid:146) as de
minimis aid under the conditions set out in Commission
Regulation (EC) No 69/2001 of 12 January 2001 on the
application of Articles 87 and 88 of the EC Treaty to de
minimis aid (17).

it certain that

is

a

the

gain

foothold

enterprises

itself and/or

The subprogramme (cid:145)Cooperation(cid:146) also comprises aid
the (cid:145)establishment of enterprise pools(cid:146)
measures for
inside and outside the European Union (see recital 51).
Here, at least three SMEs with complementary product
ranges set up such a joint office. Eligible costs are
personnel costs and operating costs of the (cid:145)enterprise
pool(cid:146)
concerned. The
objective of the enterprise pool is to help SMEs explore
and
foreign markets. The
in
Commission takes the view that this measure cannot be
commercial
sufficiently
representation and is thus linked to the (cid:145)establishment
and operation of a distribution network(cid:146), which is
excluded from Regulation (EC) No 70/2001 (Article
1(2)(b)) as well as from the regional aid guidelines. In
the light of its long-standing practice, the Commission
will not approve any aid that constitutes export aid.
Such aid cannot
therefore be considered compatible
with the common market on the basis of either of those
legal bases, for all the reasons indicated therein.

distinguished

from

takes

the view that

Furthermore, the Commission considers that exercising
in full once again its margin of discretion with regard to
the measures above would not alter this finding. For the
reasons
its
it
set out above,
customary policy on this matter
sufficient and
appropriate. In its opinion, the aid intensities of up to
80 % for measures directly serving the market under
this subprogramme adversely affect trading conditions
to an extent contrary to the common interest; thus, this
part of
the measure cannot be regarded as being
compatible with the common market under Article
87(3)(c) of the EC Treaty.

is

(72)

In so far as the subprogramme (cid:145)Cooperation(cid:146) provides
for aid in respect of external consultancy services and
participation in fairs and seminars abroad, it is in line
with Article 5 of Regulation (EC) No 70/2001, provided
that the aid does not exceed 50 %. In the Commission’s
view,
(cid:145)enterprise pools(cid:146) abroad can clearly advise SMEs
in matters concerning foreign markets, and SMEs that
have recourse to such services may obtain some
compensation for them. Regulation (EC) No 70/2001
takes into account the international obligations of the
European Union;
to the WTO
Agreement on Subsidies and Countervailing Measures
and states that (cid:145)aid towards the costs of participation in
trade fairs or of studies or consultancy services needed
for the launch of a new or existing product on a new
market [(cid:133)] does not normally constitute export aid(cid:146).

recital 16 refers

5.4.4. Subprogramme (cid:145)Design promotion(cid:146)

(17) OJ L 10, 13.1.2001, p. 30.

(73)

similar

For
promotion(cid:146)

reasons,

the

(cid:145)Design
subprogramme
in line with Regulation (EC) No

is not

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8.4.2003

70/2001 and is
incompatible with the
common market in so far as it provides for consultancy
services that exceed the ceiling of 50 % gross.

therefore

HAS ADOPTED THIS DECISION:

Article 1

5.4.5. Closing remarks

(74)

in the case of

The Commission notes that,
the aid
scheme under scrutiny, the exemptions provided for in
Article 87(2) of the EC Treaty do not apply since the
aid measure does not pursue any of the objectives listed
there and since Germany did not argue that this would
be the case.

culture

(75) Aid under the scheme is not intended to promote the
execution of an important project of common European
to remedy a serious disturbance in the
interest or
intended to
economy of a Member State, nor is it
The
promote
or
Commission
the
therefore
subprogrammes cannot be exempted under Article
87(3)(b) or (d) of the EC Treaty as regards the basic
incompatibility of State aid with the common market.
The exemption under Article 87(3)(a) is not applicable
either because the aim of the measures is the promotion
of SMEs in Saxony, which is a horizontal objective.

conservation.

considers

heritage

that

and (cid:145)Cooperation(cid:146) of

The four subprogrammes (cid:145)Coaching(cid:146),
(cid:145)Participation in fairs(cid:146),
the guidelines
(cid:145)Design promotion(cid:146)
promoting SMEs (cid:151) Improving business efficiency (Richtlinien
zur Mittelstandsf(cid:246)rderung (cid:151) Verbesserung der unternehmerischen
Leistungsf(cid:228)higkeit) constitute State aid within the meaning of
Article 87(1) of the EC Treaty.

Article 2

that

To the extent
they do not exceed the scope and aid
four
intensities of Regulation (EC) No 70/2001,
subprogrammes referred to in Article 1 can be regarded as
being compatible with Article 87(3)(c) of the EC Treaty.

the

To the extent that they provide for aid exceeding the scope
and the aid intensities of Regulation (EC) No 70/2001, the four
subprogrammes are incompatible with the common market.

Article 3

To the extent that the subprogramme (cid:145)Cooperation(cid:146) provides
for operating aid, it is incompatible with the common market.

Article 4

6. CONCLUSION

Germany may implement the four subprogrammes referred to
in Article 1 only if they have been brought into line with this
Decision.

(76)

The subprogrammes (cid:145)Coaching(cid:146),
(cid:145)Participation in fairs(cid:146)
and (cid:145)Design promotion(cid:146), as well as the subprogramme
(cid:145)Cooperation(cid:146) (in so far as it provides for consultancy
services or participation in a fair) are compatible with
the common market provided that Germany reduces the
aid intensities to the ceilings specified in Regulation (EC)
No 70/2001 and limits
the granting of aid for
participation in fairs to one participation in a particular
fair or exhibition.

(77) As far as the subprogramme (cid:145)Cooperation(cid:146) provides for
operating aid, which does not fulfil the requirements of
the regional aid guidelines, it is incompatible with the
common market. The same applies to aid measures
linked to the establishment of (cid:145)enterprise pools(cid:146) within
the European Union, within the EEA and in countries
with the official status of a candidate for accession to
the European Union,

Article 5

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

Article 6

This Decision is addressed to the Federal Republic of Germany.

Done at Brussels, 24 September 2002.

For the Commission

Mario MONTI

Member of the Commission