2003/595/EC: Commission Decision of 5 March 2003 on the aid scheme implemented by the Federal Republic of Germany in connection with the sale and export of products from the Land of Mecklenburg-Western Pomerania (Text with EEA relevance) (notified under document number C(2003) 519)
Date: 2003-03-05
Institutions: European Commission
Subjects: Mecklenburg-Western Pomerania, State aid, control of State aid, export aid, infringement procedure (EU), market access, small and medium-sized enterprises

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COMMISSION

COMMISSION DECISION

of 5 March 2003

on the aid scheme implemented by the Federal Republic of Germany in connection with the sale
and export of products from the Land of Mecklenburg-Western Pomerania

(notified under document number C(2003) 519)

(Only the German text is authentic)

(Text with EEA relevance)

(2003/595/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 called on interested parties to submit their comments
pursuant to the provisions cited above,

Whereas:

1. PROCEDURE

(1)

(2)

In June 2001 the Commission became aware of the
guidelines of the Land of Mecklenburg-Western Pomer-
ania for the granting of aid in respect of the sale and
export of products from Mecklenburg-Western Pomer-
ania (hereinafter referred to as ‘the Land guidelines’). It
appeared that certain provisions of the Land guidelines
were incompatible with Article 87 of the EC Treaty.
Since the Land guidelines are dated 25 May 1998, the
aid was classified as non-notified aid and registered
under No NN 55/2001.

By letter dated 2 July 2001 (D/52684), the Commission
asked Germany for its comments on the Land guidelines
in the light of the law applicable to State aid. Germany
provided its comments by letter dated 30 August 2001
(A/36853).

(3)

(4)

(5)

(6)

The Commission informed Germany by letter dated 28
it had
December 2001 (SG(2001) D/293172)
decided to initiate the procedure laid down in Article
88(2) of the EC Treaty in respect of the scheme.

that

Germany submitted its comments by letter dated 4
February 2002 (A/30809).

A meeting between the German authorities and the
Commission was held on 7 June 2002 in Berlin.

The Commission Decision to initiate proceedings was
published in the Official Journal of the European Commu-
nities (1). The Commission invited interested parties to
submit their comments on the measure but none were
received.

2. DESCRIPTION OF THE MEASURE

2.1. Objective

(7)

The specific objective of
the Land guidelines is to
develop or recover transregional and export markets.
These include markets outside Mecklenburg-Western
Pomerania, i.e. markets in Germany and other Member
States and in third countries.

(1) OJ C 170, 16.7.2002, p. 2.

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2.2. Form of the aid and legal basis

(8)

The aid is provided in the form of a non-repayable grant.
The Land guidelines, which entered into force on 25
form its legal basis. They were enacted
May 1998,
without prior notification as a de minimis scheme and
contain an explicit reference to the de minimis rules laid
down 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 (1) and in the Commis-
sion notice on the de minimis rule for State aid (2).

2.3. Subprogrammes

(9)

The Land guidelines comprise the following four subpro-
grammes:

— A: Market-launch activities;

— B: Participation in fairs and exhibitions in Germany

and abroad;

— C: Offices shared abroad;

— D: Foreign trade assistants.

— Advice on drawing up marketing plans or parts of
marketing plans (e.g. product styling, pricing, adver-
tising strategies and sales organisation).

— Advice on presenting and demonstrating prototypes.

— Advice on operating commodities exchanges.

— Workshops to improve exports, develop new sales
and cooperation opportunities, and develop image-
enhancing, multisectoral logos of origin.

— The maximum amount of aid for each enterprise is

EUR 20 500.

(13)

Participation in fairs and exhibitions in Germany and
abroad:

— Expenditure directly necessary for the establishment
and operation of stands (hire, construction costs,
connection to electricity and water supplies and
waste water disposal, entries in catalogues, adver-
tising relating to such events,
interpretation, trans-
port and insurance).

2.4. Recipients

— The maximum amount of aid for each enterprise is

EUR 7 690.

(10)

of

3 April

96/280/EC

The aid recipients are small and medium-sized enter-
prises (hereinafter ‘SMEs’) as defined in Commission
Recommendation
1996
concerning the definition of small and medium-sized
enterprises (3).
In the case of aid covered by subpro-
gramme B ‘Participation in fairs and exhibitions in
Germany and abroad’, the following also qualify: trade-
fair associations, chambers of industry and commerce,
associations,
associations,
municipalities, etc. provided that they operate on behalf
of other enterprises or their own members and the aid is
passed on to those enterprises.

federations, groups,

craft

(14) Offices shared abroad:

— Expenditure directly necessary for the establishment
and operation of shared offices (non-fixed office
equipment and machines, expenditure on current
business necessities, expenditure on foreign staff
where the basic legal relationship was established
with a view to the setting up and operation of a
shared office).

2.5. Eligible costs

— The maximum amount of aid for each enterprise is

EUR 25 000.

(11)

The following costs under the four subprogrammes are
considered to be eligible costs:

(15)

Foreign trade assistants:

(12) Market-launch activities:

— Advice on developing marketing objectives

for

specific firms.

— The gross salary liable to wage and income tax of
one foreign trade assistant for a period of one year
and, in exceptional cases, two years.

(1) OJ L 10, 13.1.2001, p. 30.
(2) OJ C 68, 6.3.1996, p. 9.
(3) OJ L 107, 30.4.1996, p. 4.

— The maximum amount of aid for each enterprise is

EUR 24 600.

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3. GROUNDS FOR INITIATING THE PROCEDURE

(16)

The Land of Mecklenburg-Western Pomerania intended
to apply the Land guidelines as a de minimis aid scheme.
The Commission, in its decision to initiate the formal
investigation procedure, expressed serious doubts as to
whether the Land guidelines were compatible with the
relevant rules on de minimis aid, came to the view that
they constitute State aid within the meaning of Article
87(1) of the EC Treaty and had considerable misgivings
as to whether the aid granted under the Land guidelines
was compatible with the common market.

(17)

In its decision to initiate the formal investigation proce-
dure, the Commission considered the following aspects
of the Land guidelines to be incompatible with the rules
on de minimis aid:

— the granting of export aid,

— the permissible ceiling for de minimis aid,

— the actual activities covered, and

— the surveillance mechanism for de minimis aid.

(18)

that

the Commission pointed out

Regarding the granting of export aid under the subpro-
grammes,
the de
minimis rules expressly exclude such aid from the scope
of the two sets of rules on de minimis aid (1). It raised
doubts as to the compatibility of aid for measures such
as the drafting of marketing plans, the presentation and
demonstration of prototypes, the setting-up and opera-
tion of offices shared abroad, the operation of commod-
ities exchanges, events to promote exports and develop
new opportunities for sales and cooperation abroad, and
the employment of foreign trade assistants able to speak
a foreign language appropriate for the target country
and with training or experience in foreign trade to
provide support for the foreign trade activities of the aid
recipient.

(19) However, in the Commission's view, aid towards partici-
pation in trade fairs and studies or consultancy services
needed for the launch of a new or existing product on a
new market does not normally constitute export aid (2).

(20)

The Commission also pointed out in this connection that
the wording of the Land guidelines, in exempting ‘aid for
exports’ from the restriction on aid cumulation (i.e. the
stipulation that total de minimis aid must not exceed

(1) Export aid is defined as aid directly linked to the quantities
exported,
to the establishment and operation of a distribution
network or to current expenditure linked to the export activity
(Article 1(b) of Commission Regulation (EC) No 69/2001 and foot-
note 3 to the notice on the de minimis rule).

(2) Recital 4 to Commission Regulation (EC) No 69/2001 and footnote

3 to the notice on the de minimis rule.

EUR 100 000), fails to make sufficiently clear that there
must be no de minimis aid whatever for exports.
It
considered that this interpretation could not be under-
stood clearly and without doubt by all the parties to
whom the Land guidelines were addressed.

(21)

Regarding the calculation of
the de minimis ceiling,
including in cases of cumulation of aid, the Commission
expressed serious doubts as to whether the wording of
the Land guidelines was in line with the rules promul-
gated by it. Under the Community rules, the total de
minimis aid granted to any one enterprise is not
to
exceed EUR 100 000 over any period of three years;
under the Land guidelines, aid to recipients may not
exceed the ceiling after 19 August 1992 and within a
period of three years.

(22)

Regarding the sectoral scope of the de minimis rules, the
Commission stipulated that the relevant rules do not
apply to agriculture, fisheries and aquaculture. However,
the Land guidelines do not expressly exclude aid for the
processing of agricultural,
fisheries and aquaculture
products.

(23)

The Commission likewise expressed serious doubts as to
whether the Land guidelines complied with the moni-
toring arrangements in the last sentence of Article 3(3)
of Commission Regulation (EC) No 69/2001.

(24)

In so far as aid under the Land guidelines is not covered
by the de minimis rules, the Commission has, in the light
of 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 (3), expressed serious doubts as to whether
that aid is compatible with the common market.
It
appears that the Land guidelines were not restricted to
SMEs and were not in compliance with Article 5(b) of
that Regulation. Under Article 1(2)(a), the Regulation
does not apply to activities linked to the production,
processing or marketing of products listed in Annex I to
the Treaty. Moreover, Article 1(2)(b) of the Regulation
also excludes aid to export-related activities. In addition,
the Land guidelines fail to comply with all the other
conditions set out in the Regulation. Accordingly, the
Commission expressed serious doubts as to whether the
Land guidelines were compatible with the common
market.

(3) OJ L 10, 13.1.2001, p. 33.

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(25)

In appraising the aid not covered by the de minimis rules,
the Commission proceeded on the basis of the guidelines
on national regional aid (1) (hereinafter ‘regional guide-
lines’). Mecklenburg-Western Pomerania constitutes an
assisted area under Article 87(3)(a) of the EC Treaty.
However, none of the cases of aid appear to constitute
initial investment for the purposes of point 4.4 of the
regional guidelines. The rules on operating aid were then
relied on (points 4.15 and 4.17). Operating aid for
exports between Member States is ruled out under the
regional guidelines. However, even if it were accepted
that the Land guidelines served not only to promote
exports, operating aid must meet a number of require-
ments, i.e. it must be limited in time and progressively
reduced and must be proportional to the handicaps it
seeks to alleviate. The Commission was unable to discern
any evidence that, in those circumstances, the aid could
be considered to be compatible with the common
market.

4. GERMANY'S COMMENTS

(26)

In its comments, Germany argues that subprogramme A
(‘Market-launch activities’) is compatible with the rules
on de minimis aid since the aid was restricted to consul-
tancy services and studies for launching products of
eligible enterprises on the market and thus did not
constitute export aid under recital 4 to Regulation (EC)
No 69/2001. It consequently considers that measures
under the subprogramme do not constitute aid for the
purposes of Article 87(1) of the EC Treaty. Since the
measures do not constitute aid, they did not need to
meet the criteria laid down in Regulation (EC) No 70/
2001 and in the regional guidelines (2).

(27) Germany considers that all activities under subpro-
gramme B (‘Participation in fairs and exhibitions in
Germany and abroad’) are covered by the de minimis
rules. It argues that, under recital 4 to Regulation (EC)
No 69/2001, aid for participation in trade fairs does
normally not constitute export aid and that, conse-
quently, under Article 2(1) of the Regulation it does not
constitute State aid within the meaning of Article 87(1)
of the EC Treaty. According to Germany, it follows that
verification under Regulation (EC) 70/2001 and the
regional guidelines is inappropriate (3).

(28) Germany contends as regards subprogramme C (‘Offices
shared abroad’) that those offices did not operate as
distribution networks (in most cases they were staffed by
one person only); in fact, they perform contact and coor-

(1) OJ C 74, 10.3.1998, p. 9.
(2) Germany has indicated that, under that subprogramme, each enter-
prise received an average of EUR 11 128 in the period 1998 to
2002.

(3) Germany has indicated that, under that subprogramme, each enter-
prise received an average of EUR 1 830 in the period 1998 to
2002.

and enterprises. Enterprises

dination functions, also acting on behalf of enterprises
not participating directly in the offices. The offices
provided the forum for initial contacts with foreign offi-
cials
from completely
different sectors often shared the office infrastructure,
such as installations and secretaries. Consequently, the
measures taken by Germany should not be considered as
aid to export-related activities within the meaning of
Article 1(b) of Regulation (EC) 69/2001 but consultancy
offices covered by recital 4 to the Regulation that are
compatible with the de minimis rules and do not consti-
tute aid within the meaning of Article 87(1) of the EC
Treaty (4).

(29) Germany considers that

the measures under subpro-
gramme D (‘Foreign trade assistants’) are not directly
linked to export activities since the work of those assis-
tants is restricted to developing general foreign trade-
related structures (e.g.
foreign language back-up) but
does not involve activities directly relating to quantities
exported to the establishment and operation of a distri-
bution network or to other current expenditure linked
to the export activity. Consequently, it is assumed that
the measures under this subprogramme are compatible
with Regulation (EC) No 69/2001 and do not constitute
State aid within the meaning of Article 87(1) of the EC
Treaty (5).

(30) Germany concedes that the wording of the Land guide-
lines regarding the permissible amount of de minimis aid
is, in fact, liable to be misleading but in practice the de
minimis ceiling of EUR 100 000 per enterprise over a
three-year period has never been exceeded. Moreover, all
enterprises were informed that the aid in question was
de minimis aid and were required to disclose whether
they had received other de minimis aid in the previous
three years. As Germany emphasises, the new de minimis
aid was granted only after establishing that it did not
raise the aggregate amount of de minimis aid received in
the relevant three-year period above the ceiling.

(31) Germany concedes that the array of activities covered by
the Land guidelines is not in line either with the scope of
the Commission notice on the de minimis rule for State
aid or with Article 1(a) of the Regulation (EC) No 69/
2001. It confirms that no enterprise in receipt of aid has
carried on activities linked to the production, processing
or marketing of products listed in Annex I to the EC
Treaty. It undertakes to repeal the Land guidelines as a
whole.

(4) Germany has indicated that, under that subprogramme, each enter-
prise received an average of EUR 18 853 in the period 1998 to
2002.

(5) Germany has indicated that, under that subprogramme, each enter-
prise received an average of EUR 10 018 in the period 1998 to
2002.

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(32) Germany considers that neither Regulation (EC) No 70/
2001 nor the regional guidelines are applicable and that
all measures are in accordance with the de minimis rule
and thus do not constitute State aid.

Commission is required to apply the Regulation with
retroactive effect or whether the notice on the de minimis
rule for State aid is applicable to de minimis aid granted
before that time (consecutio legis).

5. ASSESSMENT OF THE MEASURE

(37)

5.1. Existence of State aid

(33)

(34)

The Commission is required to verify whether the Land
guidelines are compatible with Article 87(1) of the EC
Treaty. In principle, any financial State aid for a parti-
cular group of enterprises alters competition to a certain
degree and thus affects trade between Member States.
However, not all aid produces perceptible effects on
trade and competition between Member States. Accord-
ingly, aid that does not exceed an absolute maximum is
exempt from the notification requirement under Article
88(3) of the EC Treaty and, as de minimis aid, does not
fall within the scope of Article 87(1) of the EC Treaty.
The Commission finds that the Land guidelines provide
exclusively for small amounts of aid, which may perhaps
be treated as de minimis aid.

In 1992 the Commission laid down for the first time, in
the Community guidelines on State aid for small and
medium-sized enterprises, what, in its view, constitutes
de minimis aid (1). The Commission notice on the de
minimis rule for State aid amended the de minimis rule
set out in the 1992 guidelines (2). The maximum total
amount of de minimis aid that could be granted within a
period of three years from the first de minimis aid was
raised to EUR 100 000. The rule did not extend, for
example, to aid for expenditure on agriculture and fish-
eries or aid for export-related activities, i.e. aid directly
linked to the quantities exported, to the establishment
and operation of a distribution network or to other
current expenditure linked to the export activity.

(35) Article 1 of Regulation (EC) No 69/2001 of 12 January
2001 extends the scope of
the de minimis rule by
applying it to all sectors while allowing exemptions for
aid for the transport sector and activities linked to the
production, processing or marketing of products listed
in Annex I to the EC Treaty. Likewise, it does not apply
to aid for export-related activities. Under Article 2 of the
Regulation, the total de minimis aid granted to any one
enterprise is not
to exceed EUR 100 000 over any
period of three years.

(36)

Since Regulation (EC) No 69/2001 entered into force on
2 February 2001 while the Land guidelines came into
is doubtful whether the
it
effect on 25 May 1998,

Regulation (EC) No 69/2001 does not specify whether it
has retroactive effect. However, there is nothing in the
wording of the Regulation to preclude its application to
previous cases provided that the monitoring arrange-
ments defined in Article 3 are adapted accordingly. The
Commission considers that, since there are no express
provisions to the contrary, de minimis aid granted before
the entry into force of
the Regulation should be
appraised in accordance with the criteria spelt out in
that Regulation.
In so far as the Regulation exempts
specified types of measure from the notification require-
ment,
it lays down a procedural rule intended to be
directly applied to pending cases. On the other hand, the
direct application of the Regulation is in line with its
is
objectives of simplification and decentralisation.
only to aid measures that lie outside the scope of the
Regulation and consequently cannot be exempted under
it that the Commission will apply the rules that were in
force when the aid was granted. Since the wording of
the Regulation is generally more generous than the
previous de minimis rules and since those rules will apply
in any case if the aid is not exempted under the Regula-
tion, due regard will be had to the legitimate expecta-
tions of those eligible under the Land guidelines and to
the principle of legal certainty. From an economic stand-
point, the Commission is of the view that aid measures
that, under the Regulation, are not today in an integrated
market considered to be aid under Article 87(1) of the
EC Treaty could not have constituted aid at an earlier
time in a less integrated market. Consequently, in this
case it will apply the Regulation, without prejudice to its
right to apply the rules that were in force when the
measure was implemented if the measure is not exempt
under the Regulation.

It

(38) Article 1(b) of Regulation (EC) No 69/2001 defines the
term ‘aid to export-related activities’ and expressly lays
down that the de minimis rule cannot be invoked for
such aid. Under the Article, such aid comprises:

— aid directly linked to the quantities exported;

— aid for the establishment and operation of a distribu-

tion network;

(1) OJ C 213, 19.8.1992, p. 2.
(2) OJ C 68, 6.3.1996, p. 9.

— aid for other current expenditure linked to the export

activity.

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(39)

The Commission must now verify whether the measures
under the Land guidelines constitute aid to export-related
activities within the meaning of Article 1(b) of Regula-
tion (EC) No 69/2001.

Regulation (EC) No 69/2001, does not come within its
intra-Community scope and consequently must be
treated as improper export aid.

(40)

the presentation of prototypes,

the
The Commission has concluded on the basis of
information supplied by Germany that subprogramme A
does, in fact, provide for aid for consultancy services and
(such as
the development of marketing strategies
marketing plans,
the
operation of commodities exchanges, etc.) for the launch
of a new or existing product on a new market that do
not fall within the definition in Article 1(b) of Regulation
(EC) No 69/2001. Recital 4 to the Regulation in fact
states that such measures do not normally constitute
export aid. Nevertheless, the term ‘normally’ is intended
to make it clear that aid for consultancy services is not
invariably
the Commission
considers that the consultancy services in subprogramme
A do not constitute ‘aid to export-related services’ within
the meaning of the Regulation.

permissible. However,

(41)

The Commission considers that the measures in subpro-
gramme B are covered by recital 4 to Regulation (EC)
No 69/2001 and consequently do not constitute ‘aid to
export-related activities’ within the meaning of Article
1(b) of the Regulation.

(42)

(43)

The measures in subprogramme C concern the setting-
up of shared offices inside and outside the Community
and the EEA and in countries that have the official status
of candidates for accession to the European Union.
Eligible costs consist of expenditure directly necessary
for the establishment and operation of such offices, such
as movable office equipment and machines, current busi-
ness necessities and foreign staff. The offices are
intended to provide SMEs with information on foreign
markets and to form an initial point of contact.

the information provided by Germany,

The Commission considers that aid under this subpro-
gramme provides eligible enterprises with non-dedicated
funds and is thus to be treated as operating aid. On the
basis of
the
Commission cannot rule out the possibility that aid for
the establishment and operation of a commercial trade
representation might be used for a foreign distribution
network. It is of the view that those measures are linked
to ‘the establishment and operation of a distribution
network’ and constitute aid for ‘current expenditure
linked to the export activity’ that, under Article 1(b) of

(44) Under subprogramme D, aid can be granted for the
gross salary of a foreign trade assistant for one year or,
in exceptional cases, two years. The measure is intended
to give SMEs an incentive to engage staff with the
language skills and experience in international
trade
necessary for them to penetrate foreign markets.

(45)

The Commission considers that this measure must, by
definition, be treated as current expenditure linked to an
export activity within the meaning of Article 1(b) of
Regulation (EC) No 69/2001. Consequently,
is
excluded from the scope of the Regulation.

it

(46)

Summarising paragraphs 40 to 45,
the Commission
concludes that subprogrammes A and B do not consti-
tute aid to export-related activities within the meaning
of Article 1(b) of Regulation (EC) No 69/2001 and are
thus not excluded from the scope of the Regulation.
Regarding subprogrammes C and D,
it concludes that
those measures constitute aid to export-related activities
within the meaning of Article 1(b) of the Regulation and
are thus excluded from the scope of the Regulation.

(47)

If all the requirements of Regulation (EC) No 69/2001
are met, subprogrammes A and B do not constitute State
aid within the meaning of Article 87(1) of the EC Treaty.

(48)

The Commission concludes that, from a formal stand-
point, the Land guidelines as worded are not in line with
Regulation (EC) No 69/2001. In particular, the provi-
sions on cumulation with other de minimis aid are
misleading, to say the least, and aid for activities linked
to the production, processing or marketing of products
listed in Annex I to the EC Treaty are not expressly
exempted. At all events, the Commission finds that the
Land guidelines were repealed after the initiation of the
investigation procedure and has satisfied itself
formal
that, under the Land guidelines, no aid was granted that
fell outside the sectoral scope of the Regulation and the
de minimis ceiling was not exceeded. Consequently,
it
in so far as no export aid within the
concludes that,
meaning of Article 1(b) of
the Regulation was not
granted, the Land guidelines were applied in line with
Article 87(1) of
the EC Treaty. Aid granted under
subprogrammes A and B does not, therefore, constitute
State aid within the meaning of Article 87(1) of the EC
Treaty.

(49)

(50)

(51)

(52)

(53)

(54)

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If subprogrammes C and D provide for investment aid
and/or operating aid for the specified activities within
the Community, they may affect trade between Member
States; consequently, the aid must be regarded as State
aid within the meaning of Article 87(1) of the EC Treaty.
According to the settled case law of the European Court
of Justice (1) and in view of the particular situation in the
areas in question, this also holds good for measures
affecting movements between a Member State and the
EEA but also countries that have the official status of
candidates for accession to the European Union (2) since
the economic links between the Union and the future
Member States are constantly developing on the basis of
the Europe Agreements.

trade assistants does not affect trade between Member
States and so does not constitute aid within the meaning
of Article 87(1) of the EC Treaty.

5.2. Lawfulness of the aid

(55)

The Commission regrets that Germany, in granting the
aid, incorrectly applied Article 88(3) of the EC Treaty.

If the measures providing aid for exports are imple-
mented in third countries (3),
the Commission must
verify whether, in the light of the settled case law of the
Court of Justice, in particular the judgment in Tubemeuse,
they affect trade between Member States and thus consti-
tute State aid within the meaning of Article 87(1) of the
EC Treaty.

(56)

The Commission finds that, under subprogramme C,
financial aid could be granted up to a maximum of
EUR 25 600 over a period of three years. In fact, the
average aid granted amounted to EUR 18 853.

In its analysis, the Commission took account of the
special features of this particular case. In view of the
very small amounts of aid involved, the restriction on
aid to small and medium-sized enterprises and the
special nature of the measure, it took the view that the
measure under subprogramme C to assist offices shared
abroad does not affect trade between Member States and
so does not constitute aid within the meaning of Article
87(1) of the EC Treaty.

The Commission finds that, under subprogramme D,
financial aid could be granted up to a maximum of
EUR 24 600 over a period of three years. In fact, the
average aid granted amounted to EUR 10 018.

In its analysis, the Commission took account of the
special features of this particular case. In view of the
very small amounts of aid involved, the restriction on
aid to small and medium-sized enterprises and the
special nature of the measure, it took the view that the
measure under subprogramme D granting aid for foreign

(1) See,

in particular,

the judgment

in ‘Tubemeuse’

(Case C-142/87,

Belgium v Commission [1990] ECR 1–959, paragraphs 31 to 44).
(2) The candidate countries are currently the following 13 countries
whose applications for accession to the European Union have been
accepted by the European Council: Bulgaria, Cyprus, the Czech
Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland,
Romania, Slovakia, Slovenia and Turkey.

(3) ‘Third countries’ is used below to mean countries other than those
in the Community and the EEA and those that have the official
status of candidates for accession to the European Union.

5.3. Compatibility of the aid

In this section the Commission verifies the compatibility
of the measures in so far as they constitute aid within
the meaning of Article 87(1) of the EC Treaty, i.e. the
implementation of subprogrammes C and D within the
Community, the EEA and the candidate countries. It is a
fundamental principle of the Commission's aid policy
that such aid is considered to be incompatible with the
common market. It is particularly objectionable when
the aid is granted for intra-Community exports since this
directly affects the market of another Member State. The
distortion of competition through the financing of a
stronger presence on the market of another Member
State infringes not only the rules on State aid but also
Article 10 of the EC Treaty. This is contrary to the
economic policy objective of
Community's overall
creating a single market
is without hindrances,
restrictions and distortions and is dedicated to the prin-
ciple of an open market economy with free competition.

that

(57) Although the measures were applied in the Land of
Mecklenburg-Western Pomerania, which is an area
eligible for aid under Article 87(3)(a) of the EC Treaty,
the aid is contrary to the rules on regional aid laid down
in the regional guidelines. The Commission is of the
view that those measures constitute operating aid within
the meaning of points 4.15 and 4.17 of the regional
guidelines. Under point 4.17, operating aid intended to
promote exports between Member States is ruled out (4).
In any case, Germany has failed to present any argu-
ments establishing that the relevant rules of the regional
guidelines (in particular the rule that the aid must be
progressively reduced and proportional to the handicaps
it seeks to alleviate) have been complied with. Conse-
quently, there are no grounds on which the export aid
could be considered to be compatible with the common
market.

the

regional guidelines,

(4) Regarding aid for initial investment within the meaning of point 4.4
of
the Commission has previously
authorised a German and an Austrian aid scheme which covered
only SMEs that were operating in countries that at that time were
neither EU Member States, nor EEA member countries, nor coun-
tries that have the official status of candidates for accession to the
European Union (Commission Decision 97/257/EC, State aid C 49/
95 — Germany (OJ L 102, 19.4.1997, p. 36) and Commission
Decision 97/241/EC, State aid C 50/95 — Austria (OJ L 96,
11.4.1997, p. 23)).

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(58) Although the aid was restricted to SMEs, it is contrary to
Regulation (EC) No 70/2001, which expressly excludes
aid for export-related activities, i.e. aid directly linked to
the quantities exported, to the establishment and opera-
tion of a distribution network or to other current expen-
diture linked to the export activity. Moreover, other
provisions of the Regulation have been infringed. The
Commission concludes that the export aid is not in
accordance with the Regulation. Moreover,
the aid
adversely affects trading conditions to an extent contrary
to the common interest with the result that it cannot be
considered to be compatible with the common market
under Article 87(3)(c).

(59)

(60)

The Commission finds that the exemptions in Article
87(2) of the EC Treaty are not applicable to the Land
guidelines since the aid measure does not pursue any of
the objectives listed in the Article and since Germany
has failed to present any arguments establishing that it
does.

the Land guidelines

The aid granted under
is not
intended to promote the execution of an important
project of common European interest or to remedy a
serious disturbance in the economy of a Member State
or to promote cultural and heritage conservation. Conse-
quently, neither Article 87(3)(b) nor Article 87(3)(d) of
the EC Treaty applies to the Land guidelines.

(64)

(65)

within the meaning of Article 87(1) of the EC Treaty
and is consequently incompatible with the common
market.

the restriction of

It consequently took the view that

In its analysis, the Commission took account of the
special features of this case, in particular the very small
amounts of aid involved,
the aid
scheme to SMEs and the special nature of the measures
in question.
the
measures in subprogrammes C and D of the Land guide-
lines promoting exports
the
Community and the EEA and outside the countries that
have the official status of candidates for accession to the
European Union do not adversely affect trade between
Member States and consequently do not meet all the
criteria set out in Article 87(1) of the EC Treaty.

in countries outside

the EC Treaty,

in
The Commission's established practice, which is
accordance with Article 87 of
is to
require repayment from the recipients of unlawful aid
that is not compatible with the EC Treaty in so far as
that aid is not covered by the de minimis rule. That prac-
tice was confirmed in Article 14 of Council Regulation
(EC) No 659/1999 of 22 March 1999 laying down
detailed rules for the application of Article 93 of the EC
Treaty (1). Under Article 14, the Member State concerned
is to take all necessary measures to recover the aid from
the beneficiary. To secure complete clarity as to the
number of cases of
recovery that must be made,
Germany was required to draw up a list of enterprises
that fell outside the scope of Commission Regulation
(EC) No 69/2001 and had been granted aid within the
meaning of Article 87(1) of the EC Treaty,

6. CONCLUSION

(61)

The Land guidelines were not notified and therefore
constitute unlawful aid under Article 88(3) of the EC
Treaty. Aid that is granted and not covered by Regula-
tion (EC) No 69/2001 is consequently unlawful.

HAS ADOPTED THIS DECISION:

Article 1

(62) Aid granted under subprogrammes A and B does not
constitute aid to export-related activities within the
meaning of Article 1(b) of Regulation (EC) No 69/2001.
It was granted within the scope of that Regulation and
does not constitute State aid within the meaning of
Article 87(1) of the EC Treaty.

The guidelines of

1.
the Land of Mecklenburg-Western
Pomerania for the granting of aid in respect of the sale and
export of products
from Mecklenburg-Western Pomerania
(hereinafter referred to as the ‘Land guidelines’) constitute State
aid within the meaning of Article 87(1) of the EC Treaty. In so
far as they fall within the scope of Article 87(1) of the EC
Treaty, they constitute unlawful aid.

(63)

Regulation (EC) No 69/2001 does not apply to subpro-
grammes C and D of the Land guidelines. Those subpro-
grammes allow aid to be granted to export-related activ-
ities, i.e. aid directly linked to the quantities exported, to
the
establishment and operation of a distribution
network or to other current expenditure linked to the
export activity. Such aid, which was granted to promote
exports inside the European Community, the EEA and
countries that have the official status of candidates for
accession to the European Union, constitutes State aid

The Land guidelines do not constitute State aid within the
2.
meaning of Article 87(1) of the EC Treaty in so far as they
satisfy the conditions laid down in Commission Regulation (EC)
No 69/2001.

Consequently, subprogrammes A (‘Market-launch activities’)
and B (‘Participation in fairs and exhibitions in Germany and
abroad’) do not constitute State aid.

(1) OJ L 83, 27.3.1999, p. 1.

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The Land guidelines constitute State aid within the
3.
meaning of Article 87(1) of the EC Treaty in so far as they
grant assistance that does not fall within the scope of Commis-
sion Regulation (EC) No 69/2001.

Consequently, subprogrammes C (‘Offices shared abroad’) and
D (‘Foreign trade assistants’) constitute State aid in so far as
they are caught by paragraph 4.

4.
The Land Guidelines do not constitute State aid within
the meaning of Article 87(1) of the EC Treaty in so far as they
provide for the granting of aid in respect of export measures to
countries other than those in the Community and the European
Economic Area and those that have the official status of candi-
dates for accession to the European Union.

Article 2

In so far as the Land guidelines provide for the granting of aid
in respect of measures to promote exports within the Commu-
nity, the European Economic Area and countries that have the
official status of candidates for accession to the European
Union, they are incompatible with the common market under
Article 87(1) of the EC Treaty.

Article 3

Germany shall take all necessary measures to recover from the
recipients the aid referred to in Article 2 and unlawfully made
available to the recipients.

Recovery shall be effected without delay and in accordance
with the procedures of national law provided that they allow
the immediate and effective execution of the Decision. The aid

to be recovered shall include interest from the date on which it
was made available to the recipients until
its
recovery. Interest shall be calculated on the basis of the refer-
ence rate used for calculating the grant equivalent of regional
aid.

the date of

Article 4

Germany shall present the Commission with a list of enter-
prises that have received aid within the meaning of Article 2 of
this Decision.

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, 5 March 2003.

For the Commission

Mario MONTI

Member of the Commission