2005/350/EC: Commission Decision of 7 May 2004 concerning the aid granted by Spain to olive pomace enterprises — State aid C 21/02 (ex NN 14/02) (notified under document number C(2004) 1635)
Date: 2004-05-07
Institutions: European Commission
Subjects: Spain, State aid, common organisation of markets, control of State aid, interest rate subsidy, olive oil, olive-growing

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COMMISSION DECISION

of 7 May 2004
concerning the aid granted by Spain to olive pomace enterprises — State aid C 21/02 (ex NN 14/02)

(notified under document number C(2004) 1635)

(Only the Spanish text is authentic)

(2005/350/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(6)

By letter dated 15 April 2002, Spain submitted a series
of comments. By letter dated 2 April 2004, Spain
submitted additional information.

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

After giving notice to the interested parties to submit their
comments in accordance with the above Article (1) and having
regard to their comments,

Whereas:

(7)

The Commission has not received any comments from
interested parties.

II. DETAILED DESCRIPTION OF THE AID

(8)

Title, scheme: aid scheme for olive pomace enterprises.

I. PROCEDURE

(9)

Budget:
1 202 024,21.

the maximum budget

is estimated at EUR

By letter dated 14 December 2001,
the Commission
asked the Spanish authorities for information on the
aid scheme for olive pomace enterprises.

(10) Duration: one year.

By letter dated 4 January 2002, the Spanish authorities
notified the Commission of the aid scheme for olive
pomace enterprises described in the Decision to initiate
the procedure provided for in Article 88(2) of the Treaty.

Since the aid scheme had already been adopted, it was
transferred to the register of unnotified aid (aid No NN
14/02).

(11)

Beneficiaries: olive pomace
bottling enterprises.

extracting,

refining and

(12) Objective of the measures: to finance the adjustment of
production processes to the new specifications set out in
the Order of the Office of the Prime Minister of 25 July
2001 laying down limits for certain polycyclic aromatic
hydrocarbons in olive pomace oil (3) and to guarantee
the normal operation of mills during the 2001/2002
marketing year.

By letter of 12 March 2002, the Commission informed
Spain of its decision to initiate the procedure provided
for in Article 88(2) of the Treaty with respect to the aid
scheme.

(13)

Possible effect of the aid: distortion of competition by
favouring certain olive pomace products and breach of
the corresponding common market organisation.

The Commission Decision to initiate the procedure was
published in the Official Journal of the European Commu-
nities (2). The Commission invited interested parties to
submit their comments on the aid.

(1) OJ C 93, 18.4.2002, p. 2.
(2) See footnote 1.

(14) Aid intensity, eligible costs, overlap with other schemes:
interest-rate subsidy for loans and subsidies for gua-
rantees for those loans. The size of
the loans varies
according to the beneficiary.

(3) Boletín Oficial del Estado No 178, 26.7.2001, p. 27397.

(1)

(2)

(3)

(4)

(5)

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(15)

The grounds for initiating the procedure are given below.

— loans are for one year,

The Ministry of Agriculture, Fisheries and Food Order of
14 November 2001 establishing a credit line for enter-
prises which extract, refine and bottle olive pomace oil (4)
provides for loans totalling a maximum of ESP 5 000
million (EUR 30.05 million) with an interest
rate
subsidised by the Ministry of Agriculture, Fisheries and
Food (hereafter referred to as MAFF), which can also
subsidise guarantees for those loans.

The loans are intended to finance the adjustment of
production processes to the new specifications set out
in the Order of the Office of the Prime Minister of 25
July 2001 and to guarantee the normal operation of mills
during the 2001/02 marketing year.

The maximum loan for each beneficiary corresponds to
the recognised rights determined by the Olive oil Agency
for MAFF. In determining rights, account is taken of the
accredited volume of olive oil stocks at all stages of the
production process in each branch of the industry on 3
July 2001, the volume of oil delivered to bottling plants
for commercial distribution from that date until the date
of entry into force of the MAFF Order of 14 November
2001 and a maximum standard price of ESP 125 (EUR
0,761266) per kilogram of stocks.

— the interest rate is the ICO reference rate for one-year

loans at the time the loan is granted,

— the margin of

the financial

institutions

is 0,75

percentage points,

— the risk is covered by the financial institutions,

— the interest-rate subsidy provided by MAFF is of three
percentage points, the beneficiaries having to pay a
minimum of 1,5 %.

(22) MAFF may also establish subsidies

for guarantees
provided, where appropriate, by the Sociedad Estatal de
Caución Agraria (State Agricultural Guarantee Institute)
where this is necessary for obtaining loans. The subsidy
for the guarantee is intended to cover the administration
costs up to 1 % of the outstanding balance of the loan
for which the guarantee is provided.

(23)

In initiating the procedure, the Commission took account
of the following points.

(16)

(17)

(18)

(19)

Beneficiaries must have adjusted or begun to adjust their
production processes to the new specifications before the
first deadline for
interest and the
the payment of
production volume for the 2001/2002 marketing year
must be
three
marketing years.

the previous

to that

similar

for

(20)

The maximum loans for the three branches are:

— EUR 22 537 953,91 for extracting enterprises,

— EUR 4 507 590,78 for refineries,

— EUR 3 005 060,52 for bottlers.

(21)

The Instituto de Crédito Oficial
Institute),
offers loans on the following conditions:

in conjunction with financial

(ICO)

(Official Credit
institutions,

(24)

(25)

to olive pomace

The interest-rate subsidy for the loans constitutes aid
granted by the State
extracting,
refining and bottling enterprises.
In addition, certain
enterprises also receive another form of aid granted by
the State comprising a subsidy to cover part of the cost
of
the
administering
subsidised loans.

guarantees provided for

the

The loans are intended in part to finance the adjustment
of production processes to the new standards and speci-
fications laid down in the Order of the Office of the
Prime Minister of 25 July 2001. However, the size of
the subsidised loans and the aid are not linked to the
cost of the adjustments to production processes. In fact,
the maximum loan entitlement per beneficiary is that
recognised by the Olive oil Agency of MAFF, based on
the accredited volume of stocks of oil at all stages of
processing for each industry on 3 July 2001 and the
volume of oil delivered to bottling industries
for
commercial distribution. The Commission, at this stage,
had no information to indicate that this aid was linked to
investments related to eligible expenditure detailed in the
Community Guidelines for State aid in the agriculture
sector (5).

(4) Boletín Oficial del Estado No 278, 20.11.2001. p. 42443.

(5) OJ C 28, 1.2.2000, p. 2.

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(26)

(27)

to

situation

Therefore, on the basis of the information available, the
Commission took the view that the planned aid in the
form of interest-rate subsidies on loans and a subsidy to
the cost of guarantees was State aid
cover part of
of
financial
the
improve
intended
producers but which in no way contributed to the deve-
the sector (point 3.5 of
lopment of
the Community
Guidelines
for State aid in the agriculture sector).
Therefore, at that stage, any aid that might have been
granted appeared to be operating aid, incompatible with
the common market. This aid has no lasting effect on the
development of the sector concerned and its immediate
effects disappear with the measure itself (see judgment of
the Court of First Instance of 8 June 1995 in Case T-
459/93, Siemens SA v Commission (6). The direct conse-
quence of
the
production and marketing opportunities of the benefi-
ciaries
receiving
comparable aid (both in the Member State concerned
and in other Member States).

in relation to other operators not

aid measures

to improve

these

is

this

aid for olive pomace

Furthermore,
extracting,
refining and bottling enterprises is for a product, olive
oil, that is subject to a common market organisation, in
accordance with Regulation No 136/66/EEC of
the
Council of 22 September 1966 on the establishment of
a common organisation of the market in oils and fats (7),
and there are limits on the extent to which Member
States may intervene in the operation of such market
organisations, which are the exclusive responsibility of
the Community. The Court of Justice has consistently
held (see,
inter alia, the judgment of 26 June 1979 in
Case 177/78, Pigs and Bacon Commission v Mc Carren and
Company Limited (8) that common organisations of the
and
considered
market must
exhaustive systems which preclude the Member States
from adopting derogations or measures which conflict
with them. Therefore, it appeared at this stage that the
aid must be considered to infringe the common organi-
sation of the market and, therefore, Community rules.

comprehensive

be

(30) On 3 July 2001,

the Spanish Government, via the
Ministry of Health and Consumer Affairs, decided to
prohibit the movement of all olive pomace oil on the
Spanish market at all points along the food chain.

(31)

The immobilisation of and the prohibition of sale to the
public of olive oil was decided exclusively to protect the
interests of consumers, since the various quality checks
carried out during the previous few days by the different
bodies responsible for ensuring compliance with health
standards had revealed that at least a proportion of the
olive pomace oil on the market contained certain
compounds of the group of polycyclic aromatic hydro-
carbons in concentrations that might present a risk to
consumers.

(32)

The Spanish Government, via the Office of the Prime
Minister,
therefore published the Order of 25 July
2001 laying down limits for certain polycyclic aromatic
hydrocarbons in the oils concerned and establishing stan-
dardised working procedures for the production of oil-
pomace oil.

(33)

The stocks of pomace oil affected by the measure were
estimated at 30 000 tonnes stored at the 56 extraction
plants active in Spain, 12 000 tonnes at the seven refi-
neries and another 8 000 tonnes at Spain's 150 bottling
plants.

(28)

In the light of the above, the Commission took the view
that the aid could be considered to be operating aid
incompatible with the common market and that it did
not appear to qualify for any of the exemptions provided
for in Article 87(3) of the Treaty; it consequently decided
to initiate the procedure provided for in Article 88(2) of
the Treaty.

in the middle of

(34) MAFF realised the great difficulty the 50 000 tonnes
immobilised right
the olive oil
production period would cause, since with a harvest
for the year expected to exceed one million tonnes,
more than 80 000 tonnes of pomace oil would be
produced, and producers could find themselves at the
beginning of 2002 with 130 000 tonnes of pomace oil
for which there would be scant possibility of finding a
market.

III. COMMENTS BY SPAIN

(35)

(29)

By letter dated 15 April 2002, Spain put forward the
following arguments.

(6) [1995] ECR II-1675.
(7) OJ 172, 30.9.1966, p. 3025/66. Regulation as last amended by the

2003 Act of Accession.

(8) [1979] ECR 2161.

By-products of oil production, pomace and olive pomace
pastes (alperujos) are removed from Spanish oil mills by
pomace oil extractors and, given the serious crisis, it is
doubtful whether extractors would ship pomace and
olive pomace pastes from mills to their own installations
to produce pomace oil. This would have caused an envi-
ronmental disaster of incalculable proportions because oil
mills are not equipped for the indefinite storage of by-
products nor for their decontamination.

(36)

(37)

(38)

(39)

(40)

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totally solves

The removal of by-products from oil mills by pomace oil
extractors
the environmental problems
caused by the olive oil production process. Similarly,
the pomace oil extraction — refining — bottling —
distribution chain plays a decisive role in the economic
activity of the sector (10 % of Spanish final agricultural
production).

(42)

If production in the olive oil food chain were to stop, it
would be impossible to finance the new marketing year,
thus paralysing the sector, because payment obligations
arising from the financing of the previous marketing year
were not all met and the financial
institutions were
therefore unwilling to finance the new marketing year.

it

is incorrect

to affirm that

they are
Furthermore,
granted solely on the basis of price, quantity, unit of
production or unit of
In
addition to a quantitative factor for determining the
size of the loans, beneficiaries must fulfil a number of
obligatory requirements.

the means of production.

on

State

communication

aids:
The Commission
subsidised short-term loans
in agriculture (crédits de
gestion) (9) recognises that Community agriculture is in
an unfavourable position compared with other sectors
as regards the need to obtain short-term loans and its
ability to finance such loans. Such loans may not be used
to selectively aid particular sectors or economic operators
in the agricultural sector for reasons not exclusively
linked to those difficulties. However, State aid for such
loans may exclude other economic activities or operators
in the opinion of the Member State, have fewer
who,
difficulties in obtaining short-term loans.

to make payments

The Government's aim was to help those undertakings
deprived of revenue from their usual sales by the health
relating to the previous
alert
marketing year and so regain creditworthiness with
lending bodies before the start of the new marketing
year, as well as to encourage production processes that
present a full health guarantee and restore consumer
confidence.

faced with an exceptional

situation
The sector was
stemming from the suspension of the market by the
Spanish authorities for reasons of food safety, although
neither Community nor Spanish legislation laid down
maximum levels for the substances detected.
is a
small measure designed to mitigate the effects of an
exceptional situation,
i.e. the suspension of a market,
something that could result in very serious consequences
for the whole Spanish olive oil sector.

It

aid is granted in return for

The
a number of
commitments from beneficiaries. An initial requirement
is to have begun the adjustment of production processes
to comply with the new Spanish rules on the presence of
certain polycyclic aromatic hydrocarbons in olive pomace
oils, not previously covered by Community or Spanish
legislation. Beneficiaries also have to undertake to achieve
a production level
in the 2001/2002 marketing year
similar to that in the previous three marketing years.
The development of the olive pomace sector and the
therefore gua-
removal of contaminating residues
ranteed.

is

(41)

The objective of this aid is not simply to improve the
financial situation of producers without contributing to
the development of the sector. The aid is compatible with
the common market because the measures are incentives
requiring that beneficiaries provide something in return.

(43)

In conclusion, Spain takes the view that:

— the aid is intended to deal with an exceptional
compatible with the
occurrence
common market under Article 87(2)(b) of the Treaty,

and could be

— the aid is intended to mitigate the consequences of
the suspension of the market following a health alert.
The aim is not to place beneficiaries in an advan-
tageous position but rather to maintain a productive
activity that is absolutely necessary for the stability of
the environment within the olive oil production
chain,

— the aid is an incentive for which beneficiaries must
provide something in return and which contributes to
the development of the sector and that consequently
Article 87(3)(c) of the Treaty applies,

— the absence of short-term aid would prevent

the
normal production of olive oil and paralyse the
whole olive oil production chain,
seriously
affecting trading conditions and producing irreparable
environmental damage, to an extent contrary to the
common interest,

thus

— the sector concerned, because of

this exceptional
lost markets caused by a lack of
the confidence of
the
the marketing year and required aid
in obtaining the necessary

situation of
consumer confidence, also lost
the banks
financing of
from the authorities
financing.

in its creditworthiness as regards

(9) OJ C 44, 16.2.1996, p. 2.

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(50)

(51)

(52)

(53)

(54)

(44)

By letter dated 2 April 2004, Spain submitted additional
information. According to that information, because of
the suspension of the market following a health alert and
the adoption of new rules by the public authorities, all
olive pomace oil had to be withdrawn from the market.
The oil was returned to the bottlers to be refined again to
remove polycyclic aromatic hydrocarbons and then to be
rebottled and relabelled before being returned to the
market.

(45)

The stocks of olive pomace oil affected by the public
measure were estimated at 50 000 tonnes. As
the
maximum budget
is estimated at EUR 1 202 024,21,
the aid per tonne would be EUR 24. As the cost of a
tonne of olive pomace oil is EUR 600, the amount of aid
corresponds to 4 % of the cost of the oil.

(46)

The cost for the sector of withdrawing the oil, debottling
it, reprocessing it and rebottling it in order to put it back
on the market has been very high and has caused
processors in the sector significant losses. The costs are
much higher than the aid granted.

IV. ASSESSMENT OF THE AID

Article 87(1) of the Treaty

(47)

The interest-rate subsidy for the loans involves State aid
for olive pomace extracting, refining and bottling enter-
prises. Furthermore, certain enterprises will also receive
State aid in the form of a subsidy to cover part of the
cost of administering the guarantees provided for the
subsidised loans. Consequently,
the Commission is of
the opinion that
these measures must be considered
selective State aid.

(48) Articles 87 and 88 of the Treaty apply to all agricultural
products listed in Annex I subject to a common market
organisation. Olive pomace
refining and
bottling involve a product, olive oil, that is subject to a
common market organisation. Articles 87 and 88
therefore apply to this aid.

extracting,

In this case, the aid confers on beneficiaries an advantage
that alleviates the normal burden on their budget. It is
granted by the State or through State resources.
It is
specific or selective in that it favours certain companies
or products, in this case olive pomace extracting, refining
and bottling enterprises.

that

the beneficiaries of

To fall within the scope of Article 87(1), aid must also
affect competition and trade between Member States.
This criterion implies
the
measure must engage in an economic activity. Case law
on this provision has repeatedly stated that international
trade is considered to be affected when the beneficiary
company engages in an economic activity which is the
subject of trade between the Member States. By the very
fact that the aid strengthens the position of the bene-
companies
ficiary
competing in intra-Community trade,
trade can be
considered to be affected.

in relation to other

company

issue,

In the case at
the beneficiaries engage in an
economic activity, olive pomace extracting, refining and
bottling, that is the subject of trade between the Member
States. Spain shipped olive pomace oil worth EUR
7 160 250 to the rest of the Community in 2000 and
received shipments worth EUR 2 941 310 (10).

In fact, the beneficiaries operate in a sector which is
particularly open to competition.
It must be stressed
that there is intense competition in the olive oil sector
between producers of the Member States whose products
intra-Community trade. Spanish
are
subject of
producers participate
competition by
supplying substantial quantities of products to other
Member States.

fully in that

the

these aid measures may affect

trade in
Consequently,
olive oil between Member States, as happens when aid
confers an advantage on operators in one Member State
to the detriment of
those in others. The measures
concerned have a direct and immediate effect on the
in Spain. They
production costs of olive pomace oil
therefore confer an economic advantage over enterprises
in other Member States, which do not have access to
comparable aid. They thereby distort or
threaten to
distort competition.

(49) According to Article 87(1), any aid granted by a Member
State or through State resources in any form whatsoever
which distorts or threatens to distort competition by
favouring certain undertakings or
the production of
certain goods is,
in so far as it affects trade between
Member States, incompatible with the common market.

(55)

In view of the above, the aid at issue must be considered
as State aid meeting the criteria laid down in Article
87(1). However,
to the
principle of incompatibility laid down in Article 87(1).

there are some exceptions

(10) Source: Eurostat.

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Article 87(2)(b) of the Treaty

and would consequently be granting illegal advantages to
operators in certain Member States.

(56) Article 87(2)(b) provides that aid to make good the
damage caused by natural disasters or exceptional occur-
common market.
rences
According to Spain, these aid measures are justified on
the grounds that they are intended to make good the
damage caused by an exceptional occurrence.

compatible with the

is

(62)

(57)

Spain argues that the suspension of the market by the
Spanish authorities for reasons of food safety constitutes
an exceptional occurrence and that the aid may therefore
be compatible with the common market under Article
87(2)(b).

(58) When considering exceptions from the general principle
laid down by Article 87(1) that State aid is incompatible
with the common market, the Commission holds that
‘exceptional occurrence’ contained in
the notion of
Article 87(2)(b) must
restrictively.
interpreted
be
Hitherto, the Commission has accepted as exceptional
occurrences wars,
internal disturbances or strikes and,
with certain reservations and depending on their extent,
major nuclear or industrial accidents and fires which
result in widespread loss. Because of the inherent diffi-
culties
the Commission
evaluates the compatibility of such aid on a case-by-
case basis, having regard to its previous practice and
the scale of the occurrence at issue (point 11.2.1 of
the Community Guidelines for State aid in agriculture).

in foreseeing such events,

(59)

In the case at issue, the aid was granted, according to the
Spanish authorities, because of their suspension of the
market in olive pomace oil for reasons of food safety
following the measures taken by the public authorities.
However,
the
suspension of
the market constitutes an exceptional
occurrence within the meaning of Article 87(2)(b) of
the Treaty.

demonstrated

has not

Spain

that

(60)

Consequently, these aid measures do not qualify for a
derogation under Article 87(2)(b) as aid to make good
the damage caused by exceptional occurrences.

Article 87(3) of the Treaty

(61)

The exceptions provided for in Article 87(3) may be
granted only when the Commission determines that the
the listed
aid measure is needed to attain one of
objectives. To allow measures which do not meet that
condition to benefit
from these exceptions would be
tantamount to allowing infringements of trade between
Member States and distortions of competition without
any justification on the grounds of Community interest

the aid measures in
The Commission considers that
to
as
aid
regional
question were not
intended
encourage new investments or
to
job creation, nor
compensate for disadvantages relating to infrastructure
affecting all the producers in a region, but as aid to
the
is
eminently sectoral and must be evaluated in accordance
with Article 87(3)(c).

sector. Consequently,

agricultural

this

aid

(63) Article 87(3)(c) provides that aid to facilitate the deve-
lopment of
certain
certain economic
economic areas, where such aid does not adversely
affect trading conditions to an extent contrary to the
common interest, may be considered compatible with
the common market.

activities or

(64)

(65)

(66)

In fact,

The adjustment of production processes to the specifi-
cations set out in the Order of the Office of the Prime
Minister of 25 July 2001 is a requirement for receipt of
the aid. However, neither the size of the subsidised loans
nor the size of the aid is linked to the cost of adjusting
production process.
the maximum loan enti-
tlement per beneficiary is that recognised by the Olive
oil Agency of MAFF, based on the accredited volume of
olive oil stocks at all stages of the production process in
each branch of the industry on 3 July 2001 and the
volume of oil delivered to bottling plants for commercial
distribution. The Spanish authorities have not provided
any information to show that
the aid is linked to
investments related to the eligible expenditure referred
to in the Community Guidelines for State aid in agri-
culture. In addition, on the assumption that the aid is
linked to investments, Spain has provided no information
to show that this investment aid fulfils the conditions
laid down by the above guidelines.

to the Commission
In its comments, Spain refers
communication on State aids:
subsidized short-term
loans in agriculture (crédits de gestion), but has provided
the
no information to show that
conditions laid down in that communication.

aid fulfils

this

In particular, this aid must be available indiscriminately
to all economic operators in the agricultural sector. If
particular economic activities or operators are excluded,
the Member State must demonstrate that exclusion is in
all cases duly justified. Spain has provided no such proof.
The aid must be limited to the amount strictly necessary
to compensate for the disadvantage, which the Member
State must quantify. Spain has provided no information
on this. Therefore, these aids do not fulfil the conditions
laid down by the above communication.

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(67)

Spain, in its letter dated 2 April 2004, explained that the
suspension of the market following a health alert was
ordered by the Spanish administration on 3 July 2001
food safety. This obliged producers to
for reasons of
from the market and
withdraw all olive pomace oil
return it to processors to be refined again to remove
polycyclic aromatic hydrocarbons and then rebottled
and relabelled so it could be returned to the market.

(68)

The cost to the sector of withdrawing the oil, debottling
it, refining it and relabelling it in order to put it back on
the market was much higher than the aid granted.

(69)

The health alert was declared after various checks
revealed the presence of a high content of polycyclic
aromatic hydrocarbons in olive pomace oil,
including
benzopyrene, which, according to the World Health
Organisation, is carcinogenic. In the absence of specific
legislation, the Office of the Prime Minister approved a
Ministerial Order laying down limits for certain poly-
cyclic aromatic hydrocarbons in olive pomace oil.

the

for meeting

(70) As a general rule, the Commission considers that the
and safety
quality
responsibility
laid down by Community and
requirements for oil
national
undertakings
the
lies with
legislation
concerned. Losses arising from the need to refine olive
pomace oil again in order to put it back on the market
because it does not meet the legal requirements must be
considered to be part of the normal entrepreneurial risk
assumed by undertakings working in the sector. The
Commission could, therefore, not normally consider the
payment of aid to cover such losses as being in the
common interest.

(71) However in the present case, the Commission has taken
into consideration the fact that until July 2001 no limit
had been fixed by Community or national legislation for
certain polycyclic aromatic hydrocarbons in olive pomace
oil. Under these circumstances, checks for polycyclic
aromatic hydrocarbons were not routinely undertaken
as part of the normal checks carried out in the sector
concerned. The fact that losses caused by withdrawing,
debottling, refining, rebottling and relabelling the oil in
order to put it back on the market were incurred by the
the undertakings working in the sector
majority of
suggests that
in this specific case the losses incurred
fall outside the normal entrepreneurial risk.

(72) An analogy can be made with point 11.4 of

the
Community Guidelines
for State aid in agriculture,
which states that the Commission authorises aid of up
the actual cost of measures to combat
to 100 % of

animal and plant diseases as part of an appropriate
programme at Community, national or regional
level
for the prevention, control or eradication of diseases.
There must be a provision, whether laid down by law,
regulation or administrative action, to the effect that the
competent national authorities should be involved in
dealing with the disease. Only diseases which are a
matter of concern for the public authorities and not
measures
reasonably take
responsibility themselves may be the subject of aid
measures. The objective of the aid may be preventive
or compensatory measures or a combination of both.
In the
in question, no such national or
Community provisions existed at the time the problem
arose, but the swift adoption in July 2001 of rules setting
limits for certain polycyclic aromatic hydrocarbons in
olive pomace oil clearly demonstrated public concern
regarding this problem.

for which farmers must

case

In this context, the Commission authorised, on the basis
of Article 87(3)(c) of the Treaty, aid for the destruction of
feedingstuffs contaminated with dioxin (aid No NN
105/1998). This aid was limited to the cost of trans-
porting and destroying contaminated citrus pellets and
feedingstuffs in a manner that takes account of environ-
mental and public health considerations. Until that date,
no upper limit had been fixed in Community legislation
for the presence of dioxin in materials to be used for the
preparation of feedingstuffs.

In the light of the above, the Commission considers that
this aid facilitates the development of economic activities
in the olive pomace oil sector. In addition, in so far as
the cost to the sector of withdrawing olive pomace oil
from the market and returning it
to processors for
refining again to remove polycyclic aromatic hydro-
for
carbons
and
marketing was higher
the
Commission takes the view that the granting of the aid
will not adversely affect trading conditions to an extent
contrary to the common interest.

relabelling
aid granted,

then rebottling

than the

and

(73)

(74)

V. CONCLUSIONS

(75)

The Commission finds that Spain has unlawfully imple-
mented the aid in question inbreach of Article 88(3) of
the Treaty.
Its granting was illegal, given that it was
grantedbefore the Commission could decide on its
compatibility with the common market. However, the
aid is compatible with the common market and is
eligible
in Article
thederogation provided for
87(3)(c) of the Treaty as a measure intended to facilitate
the development of the sector,

for

30.4.2005

EN

Official Journal of the European Union

L 110/55

HAS ADOPTED THIS DECISION:

Article 2

Article 1

This Decision is addressed to the Kingdom of Spain.

implemented for olive pomace
The State aid Spain has
extracting, refining and bottling enterprises in the form of
subsidies for interest on loans and for the cost of administering
guarantees, provided for in the Ministry of Agriculture, Fisheries
and Food Order of 14 November 2001 establishing a credit line
for enterprises which extract, refine and bottle olive pomace oil,
is compatible with the common market.

Done at Brussels, 7 May 2004.

For the Commission

Franz FISCHLER
Member of the Commission