2004/834/EC: Commission Decision of 7 May 2004 on the scheme of aid which Spain intends to grant to certain olive oil producer organisations (notified under document number C(2004) 1630)
Date: 2004-05-07
Institutions: European Commission
Subjects: Spain, State aid, aid system, olive oil, producer organisation, production aid

L 360/22

EN

Official Journal of the European Union

7.12.2004

II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 7 May 2004

on the scheme of aid which Spain intends to grant to certain olive oil producer organisations

(notified under document number C(2004) 1630)

(Only the Spanish text is authentic)

(2004/834/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

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

Having given the parties concerned notice to submit
their
comments pursuant to that Article (1), and having regard to
those comments,

(5)

(6)

By letter dated 24 September 2002 Spain submitted a
series of comments.

The Commission has received comments on the aid from
the interested parties. It sent those comments to Spain so
that it could comment on them.

Whereas:

(1)

(2)

(3)

(4)

I. PROCEDURE

the Spanish authorities
By letter dated 5 June 2001,
aid to olive oil
the
notified the Commission of
producer organisations
in the decision to
initiate proceedings, as provided for in Article 88(3) of
the Treaty.

set out

By faxes dated 28 June and 12 September 2001 and 29
January and 29 April 2002, the Commission requested
further information, which was sent by letters dated 27
July 2001 and 17 January, 4 March and 12 June 2002.
In their letter dated 12 June 2002, the Spanish autho-
rities stated that the information supplied was complete
and sufficient and asked the Commission to adopt a
decision on compatibility as soon as possible.

By letter dated 17 July 2002, the Commission informed
Spain of its decision to initiate the procedure laid down
in Article 88(2) of the Treaty concerning this aid scheme.

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 in question.

(1) OJ C 222, 18.9.2002, p. 18.
(2) See footnote 1.

II. DETAILED DESCRIPTION OF THE AID

(7)

Name, scheme: scheme of aid to olive oil producer orga-
nisations.

(8)

Budget: for 2001, ESP 20 million (EUR 120 200).

(9)

Duration: indefinite.

(10)

Beneficiaries:
Extremadura.

four olive oil producer organisations in

(11)

(12)

Purpose of
to
undertake the management of olive oil production aid.

to help these organisations

the aid:

Possible impact of the aid: distortion of competition,
encouragement
for certain olive oil producers and
violation of the provisions of the corresponding market
organisation.

(13)

Intensity of the aid, eligible costs, cumulation: between
ESP 1 500 and ESP 2 000 per application forwarded by
the organisation.

7.12.2004

EN

Official Journal of the European Union

L 360/23

(14)

(15)

reasons why the procedure was

The
described below:

initiated are

The draft regional decree notified provides for aid to be
granted to olive oil producer organisations which
undertake the management and inspection of production
aid for olive oil and table olives; the aid is in the form of
a grant calculated on the basis of the number of aid
applications forwarded. These organisations undertake
administrative work and are not concerned with the
marketing of the oil.

(16) According to the Spanish authorities, the beneficiaries are
four organisations with a total of 11 500 producers.
These organisations are recognised in accordance with
Council Regulation No 136/66/EEC establishing
a
common organisation of the market in oils and fats (1).

(20) According to the Spanish authorities,

the olive oil
producer organisations
an effective means of
are
managing production aid but in the region of Extre-
madura most applications for aid are made on an indi-
vidual basis; the aid analysed will allow the number of
organisations and the number of members of existing
organisations to increase.

(21)

The duration of the aid scheme is indefinite and the
budget for 2001 is ESP 20 million (EUR 120 200).

(22)

In initiating the procedure, the Commission had regard
to the following:

(17)

(18)

The aid for the first 1 200 applications processed is ESP
1 500 (EUR 9,02), a figure which may be increased, if the
number of applications processed is greater than in the
previous year, to ESP 1 600 (EUR 9,62) and ESP 2 000
the number of appli-
(EUR 12,02) per application.
cations
2 000
ESP
aid
exceeds
(EUR 12,02) per application.

If
the

1 200,

is

The financing of
these organisations is governed by
Article 20d of Regulation No 136/66/EEC, which
the production aid to be paid to
allows 0,8 % of
recognised organisations
to help
and associations
finance expenditure incurred by their activities as a
whole.

(19) According to the Spanish authorities, the region of Extre-
madura currently does not pay the full 0,8 % to the
organisations but only pays about 0,6 %. This is due to
two factors:

for

(EC) No

the 2000/2001 marketing year,

— The first is the enormous difference in the allocation
of the 0,8 % advance between the organisations and
the associations of organisations, specifically under
647/2001 (2)
Commission Regulation
the
fixing,
amounts provided for in Article 21(1)(a) and (b) of
Regulation (EC) No 2366/98 laying down rules for
the application of the aid scheme for the 1998/99,
1999/2000 and 2000/2001 marketing years (3). That
difference is EUR 2 per aid application in favour of
the associations. Spain is the only country in the
Community where
this
advantage.

associations

enjoy

the

— The second factor is the subsequent allocation of the
balance of the 0,8 %, using a different criterion, to the
number of applications transmitted by each organi-
sation, creating differences between regions.

(1) OJ 172, 30.9.1966, p. 3025/66. Regulation last amended by the

2003 Act of Accession.
(2) OJ L 91, 31.3.2001, p. 44.
(3) OJ L 293, 31.10.1998, p. 50. Regulation last amended by Regu-

lation (EC) No 1780/2003 (OJ L 260, 11.10.2003, p. 6).

the amount of

and associations

(23) Article 20d of Regulation No 136/66/EEC allows 0,8 %
the production aid to be paid to
of
to help
recognised organisations
finance expenditure incurred by their activities as a
whole. Furthermore, Article 11(2) of Council Regulation
(EEC) No 2261/84 laying down general rules on the
granting of aid for the production of olive oil and of
aid to olive oil producer organisations (4) requires the
producer Member States to ensure that the sums made
over to the associations and to producer organisations
are used by them only for financing the activities for
which they are responsible under Community legislation,
including the submission of aid applications on behalf of
their members. Article 11(3) states that if sums are not
used, in whole or in part, as specified in paragraph 2,
they must be repaid to the Member States concerned and
shall be deducted from the expenditure financed by the
European Agricultural Guidance and Guarantee Fund.

(24)

receiving this

The granting of State aid to producer organisations, over
and above the aid allowed under Community rules, is not
allowed under
those rules and could cause market
distortions and possible discrimination against other
producers in the Community. The producer organisations
which undertake the management of aid receive two
types of aid: Community aid plus State aid on top. The
management of production aid may be considered to
confer an advantage on producers forming part of the
compared with
organisations
producers not
forming part of an organisation or
forming part of other organisations not receiving State
aid. This would be the case in particular if the total
the aid received exceeded the cost of
amount of
to the
aid and the
managing the
producers or
to activities which benefited them.
Furthermore, the producers or organisations which do
not benefit
from State aid could be obliged to bear
part of the cost of managing the applications for aid,
which those producers forming part of organisations
receiving aid would not have to do.

surplus went

aid as

(4) OJ L 208, 3.8.1984, p. 3. Regulation last amended by Regulation

(EC) No 1639/98. (OJ L 210, 28.7.1998, p. 38).

L 360/24

EN

Official Journal of the European Union

7.12.2004

(25)

considered the

Since the Spanish authorities, in their letter dated 12 June
2002,
information supplied to be
complete and sufficient and asked the Commission to
adopt a decision on its compatibility as
soon as
possible, the Commission had to take its decision on
the basis of the information available.

(30)

The aid in question was based on Regulations No
136/66/EEC, (EC) No 2366/98 and (EC) No 674/2001,
constituting the market organisation,
and so was
compatible with Articles 87 and 88 of the Treaty.

(26) On that basis, the Commission considered that the aid
planned appeared to be State aid intended to improve the
financial situation of olive oil producer organisations, not
contributing in any way to the development of the sector
(point 3.5 of the Community Guidelines on State aids in
the agricultural sector (1). Therefore, at this phase, this aid
is regarded as operating aid,
incompatible with the
common market. This type of aid has no lasting effect
the sector and its immediate
on the development of
the
effect disappears with the measure
judgment of
Instance in Case T-
459/93, Siemens SA v. Commission (2). This aid results
directly in an improvement in the opportunities for the
production and marketing of
the products by the
compared with those not
operators
receiving comparable aid (in the same or
in other
countries).

the Court of First

concerned as

itself

(see

(27)

Justice of

It also considered that
this aid to olive oil producer
organisations related to a product, olive oil, subject to
a market organisation governed by Council Regulation
No 136/66/EEC which is the exclusive competence of
the Community and in whose operation the Member
States have only a limited capacity to intervene. The
Court of
the European Communities has
always held (see, inter alia, Case 177/78 Pigs and Bacon
Commission v. McCarren (3)
that market organisations
must be considered to be complete and exhaustive
systems which exclude any possibility of the Member
States
establish
exceptions or undermine them. This means that, at this
phase, this aid should be regarded as an infringement of
the market organisation and hence of Community rules.

adopting measures which

could

(31)

The draft Decree had not been published and so was not
finalised.

IV. COMMENTS BY THE INTERESTED PARTIES

(32)

The Organisation of olive oil producers in Extremadura
(Opracolex) made comments as part of the procedure.

(33)

The beneficiaries of this aid are four organisations which
have, according to Opracolex, 11 500 producers as
members. These organisations carry out administrative
duties
involving the management and inspection of
production aid for olive oil and table olives.

(34) Opracolex considers that this aid does not fall under
Article 87(1) of the Treaty, which requires beneficiaries
to be undertakings, meaning bodies which carry out an
economic activity so that measures which affect other
types of beneficiary are excluded. The activity carried
out by Opracolex in managing the inspection measures
required for
the granting of production aid under
Community rules is not done for profit and is not one
of the purposes of any form of economic activity. This
activity cannot be regarded as a business activity and so
falls outside the scope of Article 87 of the Treaty.

(28) Accordingly, at the phase of initiating the procedure, the
Commission considered that the aid in question seemed
not to benefit from any of the exceptions in Article 87(3)
of the Treaty and so decided to initiate against it the
procedure under Article 88(2) of the Treaty;
it asked
Spain to submit its comments and provide information
for the assessment of the aid.

(35)

The activities carried out by Opracolex do not distort
competition or affect
trade. They are activities which
have no impact on the market and so cannot be
regarded in any way as an aid likely to have an impact
on trade between the Member States.

III. COMMENTS BY SPAIN

(29)

By letter dated 24 September 2002, Spain put forward
the following arguments.

(1) OJ C 28, 1.2.2000, p. 2.
(2) [1995] ECR II-1675.
(3) [1979] ECR 2161.

(36)

The aid is intended solely for the administrative activities
undertaken by the organisation, and there is no possi-
bility of any surplus which could be used for production.
The aid presupposes a benefit granted to offset the disad-
vantages existing in the region of Extremadura, such as
the low level of
the level of
education and training of the work force, etc. Hence it
is an aid tending to benefit a particularly disadvantaged
region.

infrastructure there,

7.12.2004

EN

Official Journal of the European Union

L 360/25

(37)

It is highly improbable that the total amount of the aid
received will exceed the cost of managing the aid.
Opracolex provided a copy of the annual summaries of
its income and expenditure in 1999, 2000 and 2001.
They show that expenditure exceeded income and that
the organisation relied basically on loans. In no circum-
stances did the aid generate a surplus which could be
shared among the producers who were members of
Opracolex. The difference between income and expen-
diture is borne by the members, who pay annual contri-
butions, which means a reduction in their income.

Without aid it could not continue, so depriving its
members of the management of aid which it now
offers them,

— as regards Opracolex, this aid would have a lasting
effect as regards its members’ situation since it would
mean that Opracolex could continue to operate, so
providing olive oil producers with support.

(EUR)

Article 87(1) of the Treaty

V. ASSESSMENT OF THE AID

Balance for
1999

Balance for
2000

Balance for
2001

15 090,58

59 606,87

0

136 819,32 193 868,87

172 423,29

Aid retained from
total
production
aid (1)

Expenditure on the
and
management
operation of
the
organisation

Loans used

58 977,47

63 733,58

115 765,80

(1) Within the meaning of Article 20d of Regulation No 136/1966/EEC.

(38)

Furthermore, even if
this aid were considered to fall
under Article 87(1) of the Treaty, it could in any case,
in Opracolex's view, be
exception
provided for in Article 87(3)(a) of the Treaty as aid for
the economic development of regions where the standard
of living is abnormally low.

eligible

the

for

(40) Under Article 87(1) of the Treaty, any aid granted by a
Member State or through State resources in any form
whatsoever which distorts or threatens to distort compe-
tition
the
certain
favouring
insofar as it affects
production of certain goods is,
trade between Member States,
incompatible with the
common market.

undertakings

by

or

(41) Articles 87 and 88 of the Treaty apply to all agricultural
products under Annex I which are subject to a market
organisation. Olive oil is such a product so Articles 87
and 88 of the Treaty apply to it.

(42)

The beneficiaries of this aid scheme are producer groups
recognized within the meaning of Regulation No
136/66/EEC. These producer groups must, in conformity
with Article 20(1)(c) of the Regulation:

(39)

In this respect, Extremadura considers itself a region to
which Article 87(2)(a) of the Treaty (1) could apply. This
aid would contribute to the development of Extremadura
for the following reasons:

‘(a) consist of

individual growers and/or organisations
engaged in producing, processing or marketing
olives and olive oil and consisting solely of olive
growers;

— it would improve supervision of

aid. Although this

the approaches
is not
required to secure
production aid,
it helps improve the situation of
olive oil producers in a particularly disadvantaged
region by allowing them to secure cooperation for
an important aspect of their activities, namely the
management of aid,

(b) be capable of verifying the olive and olive-oil

production of their members;

(c) where they do not belong to a recognized association

be empowered to:

— submit an application for production aid on

behalf of all their member growers,

— Opracolex will benefit from economic aid which will
allow it to cover at least some of its operating costs.

(1) Map of State aids for regional purposes for 2000-06 (State aid No N 773/99,

SG 2000 D/103727.cor).

— receive the aid and to share it out among their

members;

L 360/26

EN

Official Journal of the European Union

7.12.2004

(d) where they belong to an association, be empowered
to provide the association with a statement of the
production of
the
purposes of the application for aid;

each member

grower,

for

(see judgment of 20 November 2003 of the Court of
Justice in Case C-126/01, Ministère de l'Economie, des
Finances et de l'Industrie v GEMO SA (1).

(e) have a minimum number of members or represent a
minimum percentage of growers or of oil production
in the region in which they have been set up;

(f) exercise no discrimination in any of their activities,
between producers who are eligible to become
members, in particular on grounds of nationality or
location of establishment;

(g) have statutes which include provisions to ensure that
the members of a group who wish to withdraw from
membership may do so […].’

(47)

(48)

The aid in question confers on its beneficiaries an
advantage which reduces the normal burden on their
budget.
from State
is granted by the State or
It
It is specific or selective in that it favours
resources.
certain undertakings or types of productions, specifically
olive oil producers.

In the light of the experience acquired, the Commission
considers that very low levels of aid granted in the agri-
culture sector do not fulfil the criteria of Article 87(1) of
the Treaty, provided certain conditions are met. This is
the case where both the amount of aid received by indi-
vidual producers remains small, and the overall level of
aid granted to the agriculture sector does not go above a
small percentage of the value of production.

(43)

The activities developed by the organisations benefiting
from these aids are detailed in the above mentioned
Article 20c of Regulation No 136/1966/EEC. These
activities consist in an administrative task of managing
and inspecting Community olive oil production aid.
These activities can only be executed by the producer
groups recognised by each Member state within the
the Regulation No 136/1966/EEC. For
meaning of
these reasons,
these
activities, which include the inspection of producers, to
be executed by other entities or by a producer group of
another Member state.

it would not be possible for

(44)

The organisations receiving the aid submit
the appli-
cations for production aid on behalf of the producers
and verify the olive and olive-oil production of their
members. These groups carry on this activity for the
benefit of olive oil producers.

income

showed that

summaries of

(45) Opracolex, whose comments included a copy of
and expenditure

the
for
annual
expenditure
1999, 2000 and 2001,
exceeded income,
the organisation is basically
dependent on loans and that the aid does not generate
a surplus. The difference between income and expen-
diture is borne by the members who pay annual contri-
butions. This aid therefore allows members’ contributions
to the organisation receiving aid to be reduced or even
eliminated.

that

(49) Agricultural production in the Community is normally
characterised by the fact that a commodity is produced
by a large number of very small producers, producing
largely interchangeable goods within the framework of
common organisations of the market. For this reason,
the impact of small amounts of aid granted to individual
producers over a given period of time should be related
to the value of agricultural production at sector level over
the same period of time.

(50) Aid not exceeding a ceiling of EUR 3 000 per beneficiary
over any period of three years, where the total amount of
such aid granted to all enterprises over
three years
remains below a ceiling around 0,3 % of the agricultural
output for 2001 (for Spain, EUR 106 755 000) does not
affect
trade between Member States and/or does not
distort or threaten to distort competition and therefore
does not fall under Article 87(1) of the Treaty

(51)

This conclusion would not apply to aid the amount of
which is fixed on the basis of price or quantity of
products put on the market, aid to export-related
activities, namely aid directly linked to the quantities
exported, to the establishment and operation of a distri-
bution network or to other current expenditure linked to
the export activity and aid contingent upon the use of
domestic over imported goods.

(46)

For these reasons, the real beneficiaries of this aid are
producers who benefit from lower annual contributions.
The funding by the state of services which reduce
farmers’ normal operating costs is an aid to the farmer

(52)

The total budget for the present scheme of aid is EUR
120 200 per year. As the number of producers who
benefit
the
amount of aid per beneficiary and year is EUR 10,4.

from the scheme is said to be 11 500,

(1) Not yet published.

7.12.2004

EN

Official Journal of the European Union

L 360/27

Conclusion

(53)

In view of the reduced amount of aid per beneficiary, its
method of granting and the overall level of aid granted,
the Commission considers that the aid in question does
not fall within the scope of Article 87(1) of the Treaty.

notified does not constitute aid within the meaning of Article
87(1) of the Treaty.

Implementation of the aid is accordingly authorised.

VI. CONCLUSIONS

Article 2

(54)

This aid does not constitute aid within the meaning of
Article 87(1) of the Treaty,

This Decision is addressed to the Kingdom of Spain.

HAS ADOPTED THIS DECISION:

Done at Brussels, 7 May 2004.

Article 1

The scheme of State aid which Spain intends to grant to olive
regional decree
oil producer organisations under

the draft

For the Commission

Franz FISCHLER
Member of the Commission