2003/228/EC: Commission Decision of 16 October 2002 on the aid scheme by which Italy plans to reduce the energy costs of small and medium-sized enterprises in the Region of Sardinia (notified under document number C(2002) 3715) (Text with EEA relevance)
Date: 2002-10-16
Institutions: European Commission
Subjects: Sardinia, State aid, aid system, control of State aid, small and medium-sized enterprises

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Official Journal of the European Union

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COMMISSION DECISION

of 16 October 2002

on the aid scheme by which Italy plans to reduce the energy costs of small and medium-sized
enterprises in the Region of Sardinia

(notified under document number C(2002) 3715)

(Only the Italian text is authentic)

(Text with EEA relevance)

(2003/228/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

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

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

Having regard to Council Regulation (EC) No 659/1999 of 22
March 1999 laying down detailed rules for the application of
Article 88 of the EC Treaty (1),

Having called on interested parties to submit their comments
pursuant to the provisions cited above (2),

Whereas:

I. PROCEDURE

By letter No 13305 of 30 October 2001, the Italian
the
authorities notified, pursuant
small
Treaty,
and
scheme
draft
medium-sized enterprises
in the Region of
Sardinia.

to Article 88(3) of
for

of
(SMEs)

aid

a

The scheme was to enter into force only after prior
authorisation under Articles 87 and 88 of the Treaty,
and it was accordingly entered in the register of notified
aid measures under number N 759/2001.

(1)

(2)

(3)

(4)

(5)

the Commission
By letter dated 26 April 2002,
informed Italy that
it had decided to initiate the
procedure laid down in Article 88(2) of the EC Treaty in
respect of the aid.

The Commission decision to initiate the procedure was
published in the Official
the European
Communities (3). The Commission invited interested
parties to submit their comments on the aid.

Journal

of

(6)

The Commission received no comments from interested
parties.

II. DESCRIPTION

Object

(7)

(8)

Because there is no natural gas distribution network in
Sardinia,
firms on the island have to pay more for
energy than firms in other parts of Italy where there is
such a network.

In order to compensate SMEs in Sardinia for the extra
the
cost of using more expensive energy sources,
scheme would provide for the grant of aid in the form
of tax credits.

(9)

The scheme is designed to meet regional development
objectives.

Legal basis

The Commission requested additional
information by
letter dated 30 November 2001. After a reminder was
sent to them on 24 January 2002, the Italian authorities
replied by letter No 2236 of 20 February 2002.

(10)

The legal basis is Article 145(9) of Law No 388/2000 of
23 December 2000 and the draft interministerial decree
of the Ministry of Economic Affairs and the Ministry of
Production Activities concerning the conditions and
procedures for granting tax aid to SMEs in the Region

(1) OJ L 83, 27.3.1999, p. 1.
(2) OJ C 132, 4.6.2002, p. 6.

(3) See footnote 2.

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of Sardinia to compensate them for non-implementation
of the natural gas distribution programme.

Duration and budget

(11)

The scheme, which has a budget of EUR 10,3 million,
covers the energy costs borne by firms in 2000 and
2001.

Recipients

(12)

recipients

The
are SMEs within the meaning of
Commission Recommendation 96/280/EC of 3 April
1996
and
concerning
medium-sized enterprises (4)
located in Sardinia and
belonging to the agri-foodstuffs, textiles, clothing, paper,
chemicals, petrochemicals, building materials, glass,
ceramics and mechanical engineering sectors.

definition

small

the

of

Objective of the scheme

(13)

The scheme would provide operating aid, in that the aid
is intended to reduce firms’ routine energy costs.

Form and intensity of the aid

(14)

The aid is to be granted in the form of tax credits
amounting to no more than 60 % of the cost of buying
liquid fuels (combustible oils and LPG).

III. DOUBTS RAISED BY THE COMMISSION IN THE
ARTICLE 88(2) PROCEEDINGS

the Treaty,

Article 87(1) of
it has to be determined
whether they confer an advantage on the recipients,
whether that advantage derives from State resources,
whether they affect competition, and whether they are
liable to affect trade between Member States.

(18)

The first requirement
for the applicability of Article
87(1) of the Treaty is that the measure must confer an
advantage on certain specific undertakings. It has to be
determined whether the recipients receive an economic
advantage they would not have received under normal
market conditions, or whether they avoid costs which
they would normally have had to bear out of their own
financial
this advantage is
conferred on a specific category of undertaking. The
granting of tax credits to firms located in one region of
Italy, Sardinia, does confer an economic advantage on
the recipients, because tax credits reduce the amount of
tax that
firms would otherwise have to bear. The
measures favour firms operating in specific areas of
Italy, because they are not available to firms outside
those areas.

resources, and whether

(19)

The second requirement for the applicability of Article
87 is that the planned measures must be paid for by the
In terms of State
State or out of State resources.
resources
a
the measures
negative quantity, a sum not collected by the public
authorities, because the granting of tax credits reduces
tax revenue.

involved here generate

(15) As part of the procedure under Article 88(2) of the
Treaty, the Commission expressed doubts as to whether
the handicap identified by the Italian authorities was a
structural handicap within the meaning of the guidelines
on national regional aid, and whether the aid available
under
its
scheme was
contribution to regional development.

justified in terms of

the

(20)

(16)

The Commission received no observations either from
the Italian authorities or from other interested parties.

IV. ASSESSMENT

1. Do the measures constitute State aid?

(17)

In order to assess whether the measures provided for in
the scheme constitute State aid within the meaning of

the

recipient

The third and fourth conditions for the applicability of
Article 87(1) of the Treaty require that the aid distort or
threaten to distort competition, and that it be liable to
affect trade between Member States. The measures at
issue here do threaten to distort competition, because
they strengthen the financial position and freedom of
as
action of
compared with
firms
competitors who do not qualify.
If that effect makes
itself felt in intra-Community trade, then trade between
Member States is affected. The Court of Justice has held,
for example in Case 102/87 France v Commission (5), that
such measures distort competition and affect
trade
between Member States if the recipient firms export part
of their output to other Member States, and that if they
do
is
export,
nevertheless favoured, because firms in other Member
State have less opportunity to export their products to
the firms’ home market.

themselves

domestic

output

not

(4) OJ L 107, 30.4.1996, p. 4.

(5) [1988] ECR 4067.

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Official Journal of the European Union

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(21)

The measures at issue are therefore in principle banned
considered to be
and can be
by Article 87(1),
compatible with the common market only if
they
qualify for one of
the exemptions laid down in the
Treaty.

current expenses is normally prohibited. Exceptionally,
however, such aid may be granted in regions eligible
under the derogation in Article 87(3)(a), provided that it
its contribution to regional
is justified in terms of
development and its nature, and provided its level
is
proportional to the handicaps it seeks to alleviate.

2. Lawfulness of the scheme

(22)

The measures have not yet entered into force, and the
Commission accordingly finds that the Italian authorities
have complied with the obligation to notify laid down
in Article 88(3) of the Treaty.

3. Compatibility of the measures with the common
market

(23) After determining that the measures under examination
constitute State aid caught by Article 87(1) of
the
Treaty, the Commission has to consider whether they
can be declared compatible with the common market
under Article 87(2) and (3).

(24)

The Commission takes the view that the aid does not
qualify for the exemptions in Article 87(2): it is not aid
having a social character of
the kind referred to in
Article 87(2)(a), nor is it aid intended to make good the
damage caused by natural disasters or exceptional
occurrences of the kind referred to in Article 87(2)(b),
nor does it satisfy the tests of Article 87(2)(c). For
obvious reasons the exemptions in Article 87(3)(b) and
(d) are not applicable either.

(25) As the aid is operating aid,

consider whether
Article 87(3)(a) of the Treaty.

it qualifies

the Commission has to
for exemption under

Eligibility of the region

(26) On 1 March 2000 the Commission approved the Italian
regional aid map for
the period 2000 to 2006,
delimiting the regions qualifying for exemption under
Article 87(3)(a) of the Treaty (6).
In accordance with
that map Sardinia is a region eligible for aid under the
exemption.

Operating aid

(28)

Point 4.17 of the guidelines states that operating aid of
this kind must be both limited in time and progressively
reduced.

(29) Although the region where the aid at issue is to be
granted is an area eligible for exemption under Article
87(3)(a), the Commission is unable to conclude on the
Italian
basis of
authorities that
its
contribution to regional development and its nature,
and that its level
is proportional to the handicaps it
seeks to alleviate.

the aid is justified in terms of

information supplied by the

the

(30)

(31)

the aid provided for

Firstly,
in the scheme, which
replaces a scheme that applied in 1998 and 1999 under
the de minimis rule, is intended to offset operating costs
already borne by firms in 2000 and 2001. The fact that
the period has already ended means that the aid cannot
be necessary to compensate for structural handicaps,
and that it cannot have an incentive effect. Moreover,
given the period to which the scheme relates,
the
the measure has not been
transitional nature of
demonstrated.

Secondly, the Commission is unable to conclude that
the criteria applied for selecting recipient industries, the
form taken by the aid or the aid’s duration are suited to
alleviating the type of handicap identified, or that the
level of aid is proportional to that handicap, as the aid
does not seem to be limited to the additional costs
actually borne by the firms. Nor can the Commission
conclude that the aid available under the scheme is to
be progressively reduced.

of

to

the

contributing

(32) As regards the necessity of the measures in question as
a means
socioeconomic
development of Sardinia, the Italian authorities have not
provided information on the lack of economically viable
energy sources that might be alternatives to natural gas,
and the Commission consequently cannot conclude that
the handicap identified by the Italian authorities, namely
gas distribution network,
the
constitutes a genuine structural
factor hampering the
region’s socioeconomic development.

a natural

lack of

(27)

Point 4.15 of the guidelines on national regional aid (7)
reducing a firm’s
states that

regional aid aimed at

(33)

(6) OJ C 175, 24.6.2000, p. 11.
(7) OJ C 74, 10.3.1998, p. 9.

The Italian authorities argue that the lack of such a
network obliges
to more
expensive energy sources;
it may indeed constitute a
factor contributing to economic disequilibrium, in so far

to have

recourse

firms

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as the demand for a good, natural gas, is not satisfied by
the supply of that good. But it will be possible to satisfy
the demand once the infrastructure needed for natural
gas distribution has been built and made available to
businesses, which, under the plan for the creation of a
island
methane
(Programma di metanizzazione della Sardegna),
is
provisionally scheduled to take place by the end of
2006.

gas distribution network on the

intended to improve

which is
situation of
liquidity
undertakings
constitutes operating aid which is incompatible with the
common market.

the
their business

and increase

(40)

The aid proposed under the scheme at issue is of this
kind,
consequently incompatible with the
common market.

and is

(34)

the
The Commission therefore cannot conclude that
handicap identified by the Italian authorities
is a
structural handicap within the scope of the guidelines
on national regional aid, and that
the aid available
under the scheme is justified in terms of its contribution
to regional development.

V. CONCLUSIONS

(41) On the basis of the assessment set out in section IV.3,
the Commission must
the aid scheme to
reduce the energy costs of SMEs in the Region of
Sardinia is incompatible with the common market,

find that

Production, processing and marketing of products listed in
Annex 1 to the Treaty

HAS ADOPTED THIS DECISION:

Agriculture

Article 1

(35) Under point 3.7 of the Community guidelines for State
aid in the agriculture sector (8),
the guidelines on
national regional aid do not apply to the agricultural
sector.

(36) Under point 3.5 of the same guidelines, unilateral State
aid measures which are simply intended to improve the
financial situation of producers but which in no way
the
to the development of
contribute
are
sector
considered
aid which is
to constitute operating
incompatible with the common market.

(37)

The aid provided for under the scheme at issue is of this
kind,
consequently incompatible with the
common market.

and is

The aid scheme provided for in Law No 388/2000 by which
and
Italy plans
medium-sized enterprises
is
incompatible with the common market.

in the Region of Sardinia

energy costs of

to reduce

small

the

The scheme may accordingly not be implemented.

Article 2

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

Article 3

Fisheries and aquaculture

This Decision is addressed to the Italian Republic.

(38) Under point 1.5 of the guidelines for the examination of
State aid to fisheries and aquaculture (9), the guidelines
on national regional aid do not apply to the fisheries
and aquaculture sector.

(39) Under the third indent of the fourth paragraph of point
1.2 of the same guidelines, State aid which is granted
without imposing any obligation on the recipients and

Done at Brussels, 16 October 2002.

For the Commission

Mario MONTI

Member of the Commission

(8) OJ C 28, 1.2.2000, p. 2.
(9) OJ C 19, 20.1.2001, p. 7.