2003/195/EC: Commission Decision of 16 October 2002 on the scheme by which Italy plans to aid employment in the Region of Sicily (notified under document number C(2002) 3738) (Text with EEA relevance)
Date: 2002-10-16
Institutions: European Commission
Subjects: Italy, Sicily, State aid, aid system, control of State aid, employment aid

24.3.2003

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Official Journal of the European Union

L 77/57

COMMISSION DECISION

of 16 October 2002

on the scheme by which Italy plans to aid employment in the Region of Sicily

C 56/1999 (ex N 668/1997)

(notified under document number C(2002) 3738)

(Only the Italian text is authentic)

(Text with EEA relevance)

(2003/195/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

procedure laid down in Article 88(2) of the EC Treaty in
respect of the aid.

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

(1)

(2)

(3)

By letter No 6307 of 19 September 1997, the Italian
authorities notified the Commission, in accordance with
Article 88(3) of the Treaty, of Article 11(1) of Sicilian
Regional Law No 16 of 27 May 1997 (Regional Law No
16/97). The Law was to enter into force subject to the
Commission’s prior authorisation under Articles 87 and
88 of the Treaty. The scheme was accordingly entered
in the
register of notified aid under number N
668/1997.

information in
The Commission requested additional
letters dated 24 October 1997 and 1 April 1998, and
the Italian authorities replied by letter of 11 May 1999.

By letter dated 10 August 1999,
informed Italy that

the Commission
it had decided to initiate the

(4)

(5)

(6)

(7)

(8)

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

On 15 February 2000 a meeting took place in Brussels
between the Commission departments and the Italian
authorities in the course of which the Italian authorities
stated that they intended to submit comments on the
decision to initiate the procedure in this case as soon as
the Court of Justice had delivered judgment on Italy’s
application for the annulment of Commission Decision
2000/128/EC of 11 May 1999 concerning aid granted
by Italy to promote employment (4). That Decision
declared that a scheme of assistance towards the hiring
of employees under
training and work experience
contracts, and the conversion of those contracts into
open-ended contracts, was
incompatible with the
Community rules.

On 7 March 2002, by its Judgment in Case C-310/99
Italy v Commission (5) the Court of Justice dismissed
Italy’s application.

In the case at issue here the Commission received no
comments from interested parties.

By letter of 24 June 2002, the Commission told the
Italian authorities that if it did not receive information
or observations within twenty days of the date of that
the
letter it would take a decision on the basis of
information in its possession.

(1) OJ L 83, 27.3.1999, p. 1.
(2) OJ C 27, 29.1.2000, p. 13.

(3) See footnote 2.
(4) OJ L 42, 15.2.2000, p. 1.
(5) Not yet reported.

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(9)

The Commission received no such observations or
information.

II. DESCRIPTION

(10) Article 11(1) of Regional Law No 16/97 concerns the
financing in 1997 and 1998 of an aid scheme (NN
91/A/95) introduced by Article 10 of the Regional Law
of 15 May 1991, No 27, which the Commission
authorised on 14 November 1995, and which was to
have expired at the end of 1996.

(11)

The scheme provides in the first place for a grant of
30 % of gross remuneration for employees hired under
training and work experience contracts (contratti di
formazione e lavoro); the grant is available for the entire
duration of the contract. The percentage rises to 50 %
of gross remuneration if the employee belongs to any of
a number of disadvantaged groups: young people
unemployed for
three years or more, handicapped
people, and former drug addicts.

three years of

Secondly, the scheme provides for grants of 50 %, 40 %
and 25 % of the employee’s gross remuneration if the
fixed-term training and work experience contract
is
is
the grant
converted into an open-ended contract;
available for the first
the open-ended
contract. Those percentages rise to 60 %, 50 % and
50 % if the employee belongs to any of a number of
disadvantaged groups: once again unemployed people,
handicapped people, and former drug addicts. These
grants are given only if at least 50 % of the employees
hired under training and work experience contracts are
then kept on under open-ended contracts.

(12)

The scheme is available to businesses in the Region of
Sicily which are engaged in the distributive trades, craft
industry, tourism, manufacturing or agriculture.

III. ASSESSMENT OF THE AID

1. Do the measures constitute aid?

Form and intensity of the aid

(13)

In order to assess whether the measures provided for in
the scheme constitute State aid within the meaning of
Article 87(1) of the Treaty,
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. 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
their own
would normally have had to bear out of
financial
this advantage is
resources, and whether
conferred on a specific category of undertaking. In the
case at
issue here the Italian authorities allow firms
located in one region of the country, namely Sicily, to
be paid grants towards the hiring of employees under
training and work experience contracts, and towards the
conversion of those contracts into open-ended contracts;
the authorities thus take over part of the firms’ labour
costs, which are normal expenditure incurred in their
own interest, and confer a financial advantage that
improves their competitive position. In addition, these
measures favour firms operating in specific areas of
Italy, because they are not available to firms outside
those areas.

(14)

The second requirement for the applicability of Article
87 is that the planned measures must be paid for by the
State or out of State resources. In the present case the
use of State resources is shown by the fact that the cost
of the measure is borne by the public budget.

(15)

strengthening their

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 favour firms operating in lines of business
open to competition,
financial
position and freedom of action as compared with
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 (6),
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

(16)

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

(6) [1988] ECR 4067.

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2. Compatibility of the measures with the common
market

development, and must comply with the rules governing
sensitive industries.

(17) 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).

(18)

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.

(23)

The measures provided for in this scheme:

(a) are not aimed solely at people who have never had

a job or who have lost their previous job;

(b) are not intended for net job creation within the
meaning of the guidelines on aid to employment,
because the recipient firm is under no obligation to
increase the number of employees as compared with
a reference period;

(c) are not aimed solely at encouraging firms to take on
certain groups of workers experiencing particular
difficulties entering or re-entering the labour market.

(19) As the aid is aid to employment, the Commission has to
for exemption under
it qualifies

consider whether
Article 87(3)(a) and (c).

(24)

(20)

(21)

(22)

In line with the guidelines on aid to employment (7), the
Commission is generally favourably disposed towards
aid in respect of people who have never had a job or
who have lost their previous job, if the aid is intended
for the creation of new jobs (net job creation) in SMEs
and in regions eligible for regional aid, and likewise
towards aid to encourage firms to take on certain
groups of workers experiencing particular difficulties
entering or re-entering the labour market anywhere in
the country. In the latter case it is enough that (cid:145)the post
falls vacant
following voluntary departure and not
redundancy(cid:146).

The guidelines on aid to employment state that (cid:145)The
Commission will make sure that the level of the aid
does not exceed that which is necessary to provide an
incentive to create jobs(cid:146), and will satisfy itself that there
is some degree of stability in the jobs created.

The guidelines
state that on certain conditions the
Commission may also authorise aid to maintain jobs,
provided it is confined to regions eligible for exemption
under Article 87(3)(a), and provided it satisfies the
conditions for operating aid. Such aid must be limited
in time and progressively reduced, must be designed to
overcome structural handicaps and to promote lasting

the

that

The Commission concludes
aid can be
considered aid to maintain jobs, and in accordance with
point 22 of the guidelines on aid to employment can be
to be determined,
treated as operating aid.
therefore, whether
the
the
admissibility of operating aid described in recital 23 of
this Decision.

satisfies

It has

tests

for

it

Eligibility of the region

(25) On 1 March 2000 the Commission approved the Italian
regional aid map for the period 2000-2006, delimiting
the regions qualifying for exemption under Article
87(3)(a) of the Treaty (8). In accordance with that map
Sicily is a region eligible for aid under the exemption.

(26)

(27)

The aid at issue here is indeed confined to a region
qualifying for exemption under Article 87(3)(a) of the
Treaty, and is limited in time, but
is not being
progressively reduced.

it

The measures were introduced in 1991, and had thus
been in force for six years at the time when a two-year
extension was proposed. Eligible costs and aid intensities
remained unchanged over the six years for which the
scheme had been authorised, and the two-year extension
now being considered would not reduce the aid in any

(7) OJ C 334, 12.12.1995, p. 4.

(8) OJ C 175, 24.6.2000, p. 11.

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way from what it was in the six years preceding: the aid
measures proposed for the year 1998 are identical to
those proposed for 1997, and both are identical
to
those in force in 1991(cid:151)1996.

(28)

scheme for

This is a separate scheme which comes on top of the
national
training and work experience
contracts provided for in Laws Nos 863/84, 407/90,
169/91 and 451/94; among other things that scheme
provided for
security
contributions for firms located in areas where the level
of unemployment was above the national average.

total exemption from social

(29) Decision 2000/128/EC declared that in this respect the
training and work experience scheme was incompatible
with the common market, because it was not aimed at
the creation of jobs in the recipient firm for persons
who had not yet found employment or had lost their
previous
intended to
encourage the employment of workers experiencing
re-entering the
particular difficulties
labour market. The Commission asked that
the
incompatible aid which had already been unlawfully
paid be recovered from the recipients. No such recovery
has yet taken place.

in entering or

and was not

employment,

in Article 11(1) of Regional Law No 16/1997 is
incompatible with the common market,

HAS ADOPTED THIS DECISION:

Article 1

The aid scheme which Italy plans to implement under Article
11(1) of the Sicilian Regional Law No 16 of 27 May 1997 is
incompatible with the common market.

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

This Decision is addressed to the Italian Republic.

(30)

The aid scheme at issue here, therefore, does not satisfy
the tests of the guidelines on aid to employment.

Done at Brussels, 16 October 2002.

IV. CONCLUSIONS

(31) On the basis of the assessment set out in point III.2, the
Commission must find that the aid scheme provided for

For the Commission

Mario MONTI

Member of the Commission