Commission Decision of 2 June 2004 State aid which Italy (Sicily) has envisaged for the promotion and advertising of agricultural products (notified under document number C(2004) 1923) (Text with EEA relevance)
Date: 2004-06-02
Institutions: European Commission
Subjects: Sicily, State aid, advertising, agricultural product, control of State aid, sales promotion

6.2.2007

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Official Journal of the European Union

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COMMISSION DECISION

of 2 June 2004

State aid which Italy (Sicily) has envisaged for the promotion and advertising of agricultural products

(notified under document number C(2004) 1923)

(Only the Italian text is authentic)

(Text with EEA relevance)

(2007/54/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(6)

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

Having called on interested parties to submit their comments
pursuant to the provision cited above (1) and having regard to
their comments,

Whereas:

By telex AGR 024925 of 22 October 2002 Commission
to provide
services asked the competent authorities
explanations and clarifications regarding the complemen-
tary information lately sent and the measures contained in
Regional Law n. 27/1997. In the same letter Commission
services indicated that if the aid measures envisaged by
Article 6 of Regional Law n. 27 of 1997 and, possibly, by
other provisions of the same Law had not yet been put into
effect and the competent authorities could assure that no
aids had been paid and would be paid under Regional Law
n. 27/1997 the competent authorities could consider the
possibility of withdrawing the notification under examina-
tion.

I.

PROCEDURE

(1)

(2)

(3)

(4)

By letter dated 2 September 1997,
registered on 5
September 1997, the Italian Permanent Representation at
the European Union notified the Commission of Article 6
of Regional Law n. 27 of 1997 of the Sicilian Region, in
accordance with Article 88(3) of the EC Treaty.

By telex VI/41836 of 28 October 1997, Commission
services asked the competent authorities
to provide
clarifications on the aid provided for by Article 6 and on
Regional Law n. 27 of 1997.

By letter dated 19 January 1998 the competent authorities
sent some complementary information and indicated that
the Law had already entered into force. The notification was
therefore transferred to the register of non notified aids
under number NN 36/98, as communicated to Italy by
letter SG(98)D/32328 of 3 April 1998. However,
the
competent authorities also clearly indicated that no aid
would be granted under the law before the termination of
the procedure of Article 88(3) of the Treaty.

By telex VI/13937 of 31 May 2000 (anticipated in the
English version by telex of 14 April 2000/VI/10442)
Commission services asked the competent authorities to
provide explanations regarding the provisions contained in
Regional Law n. 27/1997 and a copy of the Law itself.

(5)

By letter dated 31 July 2002, registered on 5 August 2002,
the competent authorities
some complementary
information regarding Article 5 of the Law.

sent

(7) Not having received any reply to the above telex, by telex
AGR 30657 of 20 December 2002, Commission services
sent the Italian authorities a reminder inviting them to
submit the requested information within one month and
informing them that unless satisfactory replies to all the
questions asked were
received within this deadline,
Commission services reserved the right to propose the
Commission to issue an information injunction on the
basis of Article 10(3) 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 (2).

(8)

(9)

By letter of 10 July 2003 SG(2003)D/230470 the
Commission notified Italy of its decision containing an
information injunction in respect of Article 6 and Article 4
of Regional Law n. 27/1997, which it had adopted on 9
July 2003 (C(2003) 2054fin) on the basis of Article 10(3)
of Regulation (EC) No 659/1999.

By the said information injunction the Commission had
requested Italy to provide, within 20 working days from the
notification of its decision, all the documents, information
and data necessary to enable the Commission to establish
whether the aids foreseen in the law had been granted and
were compatible with the common market. Besides inviting
Italy to provide any other information deemed useful for
the assessment of the above measures, the information
injunction specified a list of information that Italy was
requested to provide.

(1) OJ C 48 of 24.2.2004, p. 2.

of Accession.

(2) OJ L 83 of 27.3.1999, p. 1. Regulation as amended by the 2003 Act

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(10) Neither a reply to the above information injunction, nor a
request for a prolongation of the deadline within which a
reply had to be provided, were received by Commission
services.

beyond that date would be granted. By the same telex
Commission services acknowledged the withdrawal of
Article 6 (Cooperatives, cantine sociali) of Regional Law
n. 27/1997.

(11) By letter dated 17 December 2003 (SG(2003)D/233550),
the Commission informed Italy that by its decision C(2003)
4473 fin of 16 December 2003 it had decided to initiate
the procedure laid down in Article 88(2) of the Treaty in
respect of the aid measures provided for by Article 4
(Advertising of Sicilian products) and by Article 6
(Cooperatives, cantine sociali) of Regional Law n. 27/1997.

(12) The Commission Decision to initiate the procedure was
published in the Official Journal of the European Commu-
nities (3). The Commission called on interested parties to
submit their comments.

(13) By letters dated 10 February 2004 registered on 13
February 2004, the Italian Permanent Representation at the
European Union, on behalf of Regione Siciliana asked
Commission services for a prolongation of 20 working
days to provide the information requested by the Commis-
sion in its Decision C(2003) 4473 fin of 16 December
in respect of Article 4 (Advertising of Sicilian
2003,
products) of Regional Law n. 27/1997. In the same letter
the Italian authorities announced their intention to with-
draw the notification of the aid measure concerned by
Article 6 (Cooperatives, cantine sociali) which, as indicated
in their letter, had not been not implemented.

(14) By telex AGR 05312 of 23 February 2004 Commission
services confirmed that the prolongation requested by Italy
had been granted with effect from 13 February 2004.

(15) By letter dated 18 February 2004,

registered on 26
February 2004 the Italian Permanent Representation sent
a request for a prolongation of 20 working days with regard
to the same aid measure.

(16) By letter of 24 February 2004, registered on 1 March 2004,
later confirmed by letter dated 12 March 2003, registered
on 17 March 2003, the Italian authorities informed the
Commission of the withdrawal of the notification of the aid
measure concerned by Article 6 (Cooperatives, cantine
sociali) of Regional Law n. 27/1997 which, as indicated in
their letters, had not been and would not be implemented.

(17) By telex AGR 07074 of 11 March 2004 the Italian
authorities were informed that, since the Commission
Decision concerned had been published in the Official
Journal of the European Union on 24 February 2004 and the
deadline for third parties to submit comments in its respect
would expire on 24 March 2004, no prolongation to
comments
information requested and/or
submit

the

(3) See footnote 1.

(18) The Commission received comments from Italy in respect
of Article 4 (Advertising of Sicilian products) of Regional
Law n. 27/1997 by letter dated 15 March 2004, registered
on 18 March 2004.

(19)

In accordance with the Decision to open the procedure (4),
the current decision only concerns the State aids provided
for by Article 4 (Advertising of Sicilian products) of
Regional Law n. 27/1997 in favour of Annex I agricultural
products which may have been and which may be granted
from the entry into force of the Community Guidelines for
State aid for advertising of products listed in Annex I to the EC
Treaty and of certain non-Annex I products (5) , (hereafter the
advertising guidelines), i.e . from 1 January 2002.

(20) As the notification of Article 6 (Cooperatives, cantine
sociali) of Regional Law n. 27/1997 was withdrawn by Italy
by letter of 24 February 2004, registered on 1 March 2004,
there is no reason to describe and assess the aid measures
provided for by Article 6.

II.

DETAILED DESCRIPTION OF THE AIDS

through specialised bodies, or

(21) Article 4 (Propaganda prodotti siciliani) amends Article 17
of Regional Law No 14/1966 and envisages that
‘(1)
Advertising campaigns are implemented directly by the
Regional Ministry or through the Institute for Foreign Trade
or
through Consortia
established by the Ente Fiera del Mediterraneo and by the
Ente Fiera di Messina or by these entities and one or more
Chambers of Commerce of the Region on the basis of the
programmes indicated in Article 15. The said programmes
may have three-year duration. (2) With the exclusion of the
if the implementation of the
consortia indicated above,
programmes is entrusted to bodies outside the national or
the regional administration, the rules on entrusting the
services of the public administration will apply’.

(22) Despite repeated requests from Commission services, and
the information injunction issued by the Commission by its
Decision of 9 July 2003, the Italian authorities had not
provided the information which could help the Commis-
sion to dispel the doubts that Article 4 may provide for
State aids within the meaning of article 87(1) of the EC
treaty and, if the case, to allow the Commission to conclude
that these aids may be considered compatible with the
common market. Moreover it was not clear whether the
aids concerned had already been granted or not.

(4) See points 27, 28 and 29 of the Decision in OJ C 48 of 24.2.2004,

p. 2.

(5) OJ C 252 of 12.9.2001, p. 5.

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(23)

In its Decision to open the procedure envisaged by Article
88(2) of the Treaty on the measure under examination, the
Commission noted that at that stage of the procedure, due
to the lack of information from the Italian authorities, the
Commission did not know whether Article 4 of Regional
Law n. 27/1997 provided for the introduction or the
modification of State aids for promotion and/or advertising
of Annex I agricultural products.

(24) Moreover

the Commission expressed doubts on their
compatibility with the common market, as due to the lack
of replies from the Italian authorities, it was entirely unclear
to the Commission whether the measures which were to be
financed under Article 4 of the law would be compatible
with the rules which are currently applicable to these types
of aid measures, i.e. with the rules set out in the Community
Guidelines for State aid for advertising.

(25) Also given the modalities of

implementation of

the
advertising and promotion campaigns and programmes
envisaged by Article 4 and reported above at recital 21, the
Commission expressed doubts that the State aid measures
possibly provided therein would be implemented in
compliance with EU public procurement rules. In particular
regarding the direct selection of the entities and bodies in
charge of the advertising campaigns the Commission had
doubts that a contract for pecuniary interest would be
concluded in writing between the contracting authority and
the service providers selected, and, that in this case, the
strict conditions of the Teckal judgement would be met (6) .
If those conditions were not met, the Commission had
doubts that the selection of the intermediaries would be
done following the rules of Council Directive 92/50/EEC (7)
if applicable, and,
in accordance with the
principles of the EC Treaty, in particular those of equal
treatment and transparency, by ensuring a ‘sufficient degree
of advertising’ as requested by the Court of Justice (8).

in any case,

III.

COMMENTS FROM INTERESTED PARTIES

(26) No comments from interested parties were received.

IV.

COMMENTS FROM ITALY

(27) The Commission received comments from Italy, on behalf
of Regione Siciliana, by letter dated 15 March 2004,
registered on 18 March 2004.

(28)

In this letter the Italian authorities confirmed the with-
drawal of the notification of Article 6 of Regional Law n.
27/97 and communicated their observations regarding
Article 4.

(29)

In particular
the
modification introduced by Article 4 (Propaganda prodotti

the Italian authorities indicated that

(6)

Judgement of the Court of justice of 18 November 1999, Case C-
107/98, Teckal Srl v Comune di Viano and Azienda Gas-Acqua
Consorziale (AGAC) di Reggio Emilia (1999) ECR I-8121.

(7) OJ L 209, 24.7.1992, p. 1. Directive as last amended by the 2003

(8)

Act of Accession.
Judgement of the Court of justice of 7 December 2000, Case C-324/
98, Telaustria Verlags GmbH and Telefonadress GmbH v Telekom
Austria AG (2000) ECR I-10745.

to Article 17 of Regional Law n. 14/1966,
siciliani)
regarding the implementation of advertising campaigns
through Consortia established by the Ente Fiera del
Mediterraneo and by the Ente Fiera di Messina or by these
entities and one or more Chambers of Commerce of the
Region, was not applied as the said consortia were not
established.

(30) According to the information provided, the promotional
programmes are implemented directly by the Regional
Ministry or
through the Institute for Foreign Trade
(conventions drafted in the years 1993-1998, and 1999-
2001-2003 in the context of the Agreements between the
Ministry of production Activities and the Regions). The
responsible subjects
submitted for
financing on a yearly basis and procure the necessary
services for their implementation on the basis of
the
applicable rules, within the respect of market rules, except
where exclusivity contracts with the organisers exist.

the projects

select

(31) The competence of the Regional Ministry concerns not only
the agri-food sector but also other sectors (crafts, publish-
ing, textile, etc.) Regarding the sector under examination
the activities which are financed at the rate of 100 % of the
expenses by public funds are the following ones:

(a)

(b)

participation to trade fairs and exhibitions in Italy and
abroad: expenses which are directly linked to the
organisation of the stand, the setting-up, the connec-
tion to water and electricity, inclusion in the catalogue
of the trade fair, related publicity, interpreting services,
transport and insurance costs;

expenses which are necessary for

organisation of international workshops in Italy and
abroad:
the
organisation and the performance of the meetings
(rent of rooms, setting-up, selection of meetings,
interpreting services and related publicity);

(c)

advertising through mass media (press, posters, radio,
television).

(32) The beneficiaries of the interventions listed above under
letters (a) and (b) are consortia of undertakings and
undertakings which are regularly enrolled in the Chambers
of Commerce in Sicily. The selection of the beneficiaries is
made through a yearly public call for proposals, on the
basis of selection criteria published in advance on the
Official Journal of the Sicilian Region. On the basis of the
fourth recital of 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 (9) the interventions
indicated above under letters (a) and (b) are not export aids
and since 2002 the aids concerned are applied according to
the ‘de minimis rule’. Regarding the agri-food sector, having

(9) OJ L 10, 13.1.2001, p. 30.

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regard to the Guidelines applicable to promotion and
advertising the aids concerned would appear to be soft aids
the general agricultural
falling under point 14(1) of
Guidelines (10) concerning:
‘the organisation of competi-
tions, exhibitions and fairs’. Moreover notwithstanding the
fact that the regional law does not specify the maximum
ceiling of EUR 100 000 per beneficiary over a three-year
period, the aids granted to each beneficiary undertaking for
participating to fairs and workshop would be much below
this ceiling.

(33) With regard to the advertising through the mass media the
Italian authorities specified that the actions implemented
both in Italy and in other Community countries do not
concern specifically the products of one undertaking or of a
group of undertakings, and advertise the products in a
generic way, without emphasising their origin, even when
the products are typical regional products. For agri-food
advertising campaigns the message which is addressed to
consumers concerns a product or a group of products,
without making reference to their producer undertakings in
the Region. The advertising is generic, does not contain any
invitation to purchase the products solely because of their
regional origin, and it cannot be considered to disparage
the products of other Member States. The advertising
should not therefore breach Article 28 of the Treaty.

(34) The observations made by the Italian authorities are
applicable to promotional and advertising actions carried
out both in the European Community and in third
countries, as the same criteria are applied.

V.

ASSESSMENT OF THE AID

(35) Article 87(1) of the Treaty provides that any aid granted by
a Member State or through State resources in any form
whatsoever which distorts or threatens to distort competi-
tion by favouring certain undertakings or the production of
certain goods shall, in so far as it affects trade between
Member States, be incompatible with the common market.

resources,

through public regional

(36) The measure under examination provides for the granting
of aid,
to specific
agricultural undertakings in Sicily which will undeniably
be granted an undue economic and financial advantage to
the detriment of other undertakings not receiving the same
contribution. According to the case law of the Court of
Justice,
improvement in the competitive position of an
undertaking as a result of State financial aid leads to
possible distortion of competition compared with other
competing undertakings not receiving such assistance (11).

(37) The measure affects trade between Member States in that
there is substantial intra-Community trade in agricultural

(10) OJ C 28 of 1.2.2000, p. 2, rectified in OJ C 232 of 12.8.2000, p. 17.
(11) Judgment of the Court of Justice of 17 September 1980, Case C-
730/79, Philip Morris Holland BV v Commission of the European
Communities (1980) ECR 2671, paragraphs 11 and 12.

products as indicated by the table (12) below which lists the
overall value of agricultural imports and exports between
Italy and the Community over the 1997-2001 period (13). It
must be considered that within Italy, Sicily is a significant
producer of agricultural products.

All agriculture

Millions ECU-EUR
Export
9 459
9 997
10 666
10 939
11 467

Millions ECU-EUR
Import
15 370
15 645
15 938
16 804
16 681

1997
1998
1999
2000
2001

(38) With respect to the above, it should however be recalled
that the Court of Justice has held that aid to an undertaking
may be such as to affect trade between the Member States
and distort competition where that undertaking competes
with products coming from other Member States even if it
does not itself export its products. Where a Member State
grants aid to an undertaking, domestic production may for
that reason be maintained or increased with the result that
undertakings established in other Member States have less
chance of exporting their products to the market in that
Member State. Such aid is therefore likely to affect trade
between Member States and distort competition (14).

(39) The Commission therefore concludes that

the measure
under examination is caught by the prohibition in Article
87(1) of
the Treaty. The Italian authorities have never
contested this point.

(40) The prohibition in Article 87(1) is followed by exemptions

in Article 87(2) and (3).

(41) The exemptions listed in Article 87(2)(a) (b) and (c) are
manifestly inapplicable given the nature of the aid measures

(12) Source: Eurostat.
(13) According to consistent case law, the condition of the effect on the
trade is met since the benefiting company carries out an economic
activity which is the subject of trade between the Member States. The
simple fact that aid strengthens the position of this company in
relation to other competing companies in intra-Community trade,
makes it possible to consider that this trade was affected. With
regard to State aids in the agriculture sector it is settled case-law that,
even when the overall amount of aid in question is small and it is
divided among a large number of farmers, intracommunity trade and
competition are affected. See Judgment of the Court of Justice of 19
September 2002 Case C-113/00, Kingdom of Spain v Commission
of the European Communities (2002) ECR I-7601, paragraphs 30 to
36 and 54 to 56; Judgment of the Court of Justice of 19 September
2002 Case C-114/00, Kingdom of Spain v Commission of the
European Communities (2002) ECR I-7657, paragraphs 46 to 52
and 68 to 69.

(14) Judgement of the Court of Justice of 13 July 1988 in Case 102/87
the European Communities

French Republic v Commission of
(1988) ECR 4067.

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in question and their objectives.
submitted that either Article 87(2)(a)
applicable.

Indeed,

Italy has not
(c) are

(b) or

(42) Article 87(3)(a) is also inapplicable since the aids are not
intended to promote the development of areas where the
standard of
living is abnormally low or where there is
serious underemployment. Moreover Italy has not sub-
mitted that Article 87(3)(a) is applicable.

(43) Article 87(3)(b) is also inapplicable as the aids in question
are not intended to promote the execution of an important
project of common European interest or to remedy a
serious disturbance in Italy's economy. Moreover Italy has
not submitted that Article 87(3)(b) is applicable.

(44) These aids are not intended to achieve or suitable for
achieving the objectives of promoting culture and heritage
conservation referred to in Article 87(3)(d), nor has Italy
submitted that Article 87(3)(d) is applicable.

(45) Considering the nature of the aids under examination and
their objectives
the only exemption which may be
applicable is the one provided for by Article 87 (3)(c) of
the Treaty.

relations exercises, including surveys and market research
are not considered as advertising. State aid for such
promotion in the broader sense is subject to points 13
and 14 of the Community guidelines for State aid in the
agriculture sector (17). Since the notification does not
specify that the aid scheme under examination applies
only to small and medium enterprises, Commission
Regulation No 1/2004 of 23 December 2003 on the
application of Articles 87 and 88 of the EC Treaty to State
aid to small and medium-sized enterprises active in the
production, processing and marketing of agricultural
products (18) is not applicable to this case.

(50) With regard to aids

for advertising point 7 of

the
advertising Guidelines establishes that advertising, to which
the Guidelines apply, does not only concern any operation
using the media (such as press, radio, TV or posters) which
is designed to induce consumers to buy the relevant
product, but that it also includes any operation which is
designed to induce economic operators or consumers to
buy the relevant product and all material which is
distributed direct to consumers for the same purpose,
including advertising activities aimed at consumers at the
point of sale.

Applicable provisions

Aids for promotion

(46) The applicability of the exemption mentioned at recital 45
needs to be assessed in the light of the provisions applicable
to the granting of State aids for promotion and advertising
in the agriculture sector, i.e. of the provisions contained in
the advertising Guidelines (15).

(47) According to point 7.1 of the advertising Guidelines, the
Commission will apply these guidelines to new State aid,
including pending notifications from Member States, with
effect
from 1 January 2002. Unlawful aid within the
meaning of Article 1(f) of Regulation (EC) No 659/1999
will be assessed in accordance with the rules and guidelines
applicable at the time when the aid is granted.

(48)

In accordance with the decision to open the procedure
where the Commission expressed doubts that the measures
concerned may not comply with the rules currently applied
to this type of aids (16), this Decision only concerns the aids
granted and to be granted from 1 January 2002 for the
promotion and advertising of Annex I
agricultural
products.

(49) With regard to the aids for promotion, point 8 of the said
advertising Guidelines establishes that promotion opera-
tions such as the dissemination to the general public of
scientific knowledge, the organisation of
trade fairs or
exhibitions, participation in these and similar public

(51) On the basis of the information available, it appears that the
measures for participation to trade fairs and workshops in
the Community and outside the Community, which are
described above at recitals 31(a) and (b) and 32 of this
Decision, can be entirely considered as aids for promotion
only to the extent that the described activities do not
include either operations which are designed to induce
economic operators or consumers to buy the relevant
to
product, or material which is distributed direct
consumers for the same purpose. On the basis of paragraph
7 of the advertising Guidelines aids for operations which
are designed to induce economic operators or consumers to
buy the relevant product, and for material which is
distributed direct to consumers for the same purpose are
considered as aids for advertising.

(52)

In so far as the said measures for participation to trade fairs
and workshops
in the Community and outside the
Community are indeed aids for promotion, in compliance
with point 13 and 14 of the Community Guidelines for
State aid to the agricultural sector, the aids can be granted at
a rate of up to 100 % but should not exceed EUR 100 000
per beneficiary over any three-year period, or, in the case of
aid granted to undertakings falling within the scope of the
Commission definition of small and medium-sized enter-
prises, as defined in 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-

(15) See footnote 5.
(16) See points 27, 28 and 29 of the Decision in OJ C 48 of 24.2.2004,

p. 2.

(17) See footnote 9.
(18) OJ L 1 of 3.1.2004, p. 1.

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sized enterprises (19), 50 % of the eligible costs, whichever
is greater. For the purpose of calculating the amount of aid,
the beneficiary is considered to be the person receiving the
services. As it appears from the observation provided by the
Italian authorities the promotional measures under exam-
the above
ination are financed within the respect of
maximum aid amount and appear therefore compatible
with the applicable rules (20).

(53)

In compliance with the said point 14 of
the general
agricultural Guidelines, in order to avoid the creation of
distortions of competition, this type of aid measure should
in principle be available to all those eligible in the area
concerned based on objectively defined conditions. On the
basis of the information provided by Italy and reported
above at recital 32 of this decision, this condition appears
to be met (21). Aids which are restricted to identified groups
in order to provide support only for their members cannot
be considered to facilitate the development of the sector as
a whole and must be considered as operating aids. Thus,
where the provision of such services is undertaken by
producer groups or other agricultural mutual support
organisations, the services concerned must be available to
all eligible farmers. In such cases any contribution towards
the administrative costs of
the group or organisation
concerned should be limited to the costs of providing the
service.

Aids for advertising

(54)

In so far as the said measures for participation to trade fairs
and workshops include also operations which are designed
to induce economic operators or consumers to buy the
relevant product or material which is distributed direct to
consumers for the same purpose (for example advertising
to the point of sale or advertising which is addressed to
economic operators, such as food processors, wholesale or
retail distributors, restaurants, hotels and other catering
establishments), these measures need to be assessed on the
basis of the rules for advertising aids, as much as the
advertising measures carried out through the mass media
television) which were described
(press, posters, radio,
above at recitals 31 (c) and 33 of this Decision.

(19) OJ L 10, 13.1.2001, p. 33. Regulation as last amended by Regulation

(EC) No 364/2004 (OJ L 63, 28.2.2004, p. 22).

(20) As far as the agriculture sector is concerned, promotional and
advertising measures implemented outside the EU are not explicitly
covered by the agricultural guidelines. Therefore, the Commission
exercises its powers of discretion in their assessment. According to
current Commission practice, where the measures envisaged comply
with relevant state aid rules applicable within the EU territory, they
can be considered compatible with the common market (see for
example Italy/Tuscany Aid N 656/02, Aid NN 150/02 (ex N 109/02)
(Commission letter C(2003) 1747 of 11.6.2003) and Aid NN 44/03
(ex N 6/03) (Commission letter C(2003) 2534 of 23.7.2003).
(21) As indicated in Commission Decision C(2002)1786 fin of 7.5.2002
(Aid N 241/01 — Italy/Chambers of Commerce) the establishment
and the enrolment of a European undertaking in the locally
competent Chamber of Commerce are not subject to any legal or de
facto limitation. See also Aid N 62/01 (Italy/Union of the Chambers
of Commerce of Piemonte and Veneto, Commission Decision SG
(2001)D/290914 of 8.8.2001.

(55) According to the advertising Guidelines, normally, produ-
cers and traders would be expected to bear the costs of
advertising themselves, as part of their normal economic
activities.

(56) Therefore, in order not to be regarded as operating aids but
as aids that are compatible with the common market under
Article 87(3)(c) of the Treaty, advertising aids should not
interfere with trade to an extent contrary to the common
interest (negative criteria), and should facilitate the devel-
opment of certain economic activities or of certain
economic areas (positive criteria). Moreover State aids must
comply with the Community's international obligations,
which in the case of agriculture are specified in the
Agreement on Agriculture (WTO-GATT 1994).

(57)

In order to satisfy the negative criteria, according to point
3.1 of the applicable advertising Guidelines, the aid must
not be granted for campaigns contrary to Article 28 of the
Treaty (point 3.1.1), or for campaigns which contravene
secondary Community legislation (3.1.2), or for advertising
related to particular firms (3.1.3). Moreover where the
conduct of publicly financed advertising activities
is
entrusted to private firms,
to exclude the
possibility of aid to the firms carrying out the campaigns,
the choice of the private firm concerned must be made on
in a non-discriminative way, where
market principles,
necessary using tendering procedures which are
in
accordance with Community law, and in particular with
case-law (22) using a degree of advertising sufficient
to
enable the services market to be opened up to competition
and the impartiality of procurement procedures to be
reviewed.

in order

(58) On the basis of the information provided, the requirements
envisaged by point 3.1.1 (campaigns contrary to Article 28
of the Treaty) and 3.1.3 (advertising related to particular
firms) appear to be met by the advertising measures which
are described above at recitals 30, 31(c) and 33 of this
Decision. On the other hand, no indication that
the
requirement indicated at point 3.1.2 (campaigns which
contravene secondary Community legislation) is also met
was provided by the Italian authorities.

(59) Besides satisfying the negative criteria, according to point
3.2 of the applicable advertising Guidelines, advertising aids
should satisfy at list one of the positive criteria aimed at
showing that the aid indeed facilitates the development of
certain economic activities or of certain economic areas.
This positive condition is considered to be met provided

(22) Case C-324/98, already cited.

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the
the subsidised advertising concerns any of
that
following: surplus agricultural products or underexploited
species; new products or replacement products not yet in
surplus; high-quality products,
including products pro-
duced or obtained using environmentally friendly produc-
tion or catchment methods, such as products from organic
farming; development of certain regions; development of
small and medium sized undertakings (SMEs) as defined by
Regulation (EC) No 70/2001; projects that are implemented
by organisations officially recognised within the meaning of
Council Regulation (EC) No 104/2000 of 17 December
1999 on the common organisation of
the markets in
fishery and aquaculture products (23); projects that are
jointly implemented by producer organisations or other
organisations of the fishery sector recognised by national
authorities.

(60) With regard to the aids for advertising, the observations
submitted by the Italian authorities do not indicate that the
advertising measures in question meet any of the above
positive criteria.

the
(61) Regarding the maximum level of State aid for
the
advertising of agricultural products point 5 of
applicable advertising Guidelines requires that as a general
rule, direct aid, from a general purpose government budget,
must not exceed the amount which the sector itself has
committed to a given advertising campaign. Thus, in the
case of aid for advertising, the rate of direct aid should not
exceed 50 % and undertakings from the sector will have to
contribute at
through
voluntary contributions or
through the collection of
parafiscal
levies or compulsory contributions. To take
account of the weight of some of the positive criteria
mentioned in point 3.2 of the advertising Guidelines, the
Commission may authorise the raising of
the above-
mentioned maximum rate of direct aid up to 75 % of the
costs in the case of advertising for products produced by
SMEs in areas eligible for support under Article 87(3)(a) of
the Treaty.

the cost, either

least 50 % of

(62) On the basis of the information provided and reported
above at recital 31 of this Decision, it appears that all the
promotional and advertising measures envisaged by the
present scheme are financed at the rate of 100 % by public
funds. The condition that 50 % (or 25 % where applicable)
of the financing must come from the sector is therefore not
met.

the Commission exercises

(64) The same conclusion applies to both measures implemen-
ted within the Community and outside the Community.
Since the advertising measures implemented outside the
Community are not explicitly covered by the agricultural
guidelines,
its powers of
discretion in their assessment. According to current
Commission practice, where they comply with relevant
state aid rules applicable within the Community territory
the envisaged measures can be considered compatible with
the common market and aid up to 80 % can be
authorised (24). In the present case as it appears from the
information provided and reported above at recitals 31 and
33 of this Decision, the measures implemented within and
outside the Community are the same ones and aid is
granted at the rate of 100 %. Therefore also in this case
neither the requirements set out at points 3.1.2 (campaigns
which contravene secondary Community legislation) and
3.2 (positive criteria) of the applicable advertising Guide-
lines, nor the maximum level of State aid which is allowed
by the Commission are respected (25).Also these aid
measures are therefore incompatible with the common
market.

(65) This Decision concerns exclusively aid to the agricultural
sector for the promotion and advertising of Annex I
agricultural products.
It does not constitute a formal
position of the Commission as to whether service providers
were selected in accordance with Community public
procurement rules and case-law. The Commission reserves
the right to further investigate the issue under the angle of
public procurement.

VI.

CONCLUSION

(66) From the abovementioned considerations, it results that the
aid measures for promotion, in so far as they comply with
point 13 and with point 14 of the Community Guidelines
for State aid to the Agriculture sector, can be considered
compatible with the common market in accordance with
Article 87(3)(c) as aids to facilitate the development of
certain economic activities.

(67) The aid measure for advertising, which do not comply with
the rules set out in the Community guidelines for State aid
for advertising of products listed in Annex I to the EC
Treaty and of certain non-Annex I products, are not
compatible with the
and can be
implemented only if they are modified in compliance with
the said rules.

common market

(63) From the above assessment the Commission can therefore
conclude that the advertising aids under examination do
set out at points 3.1.2
not meet
(campaigns which contravene
secondary Community
legislation), 3.2 (positive criteria) and 5 (maximum level
of State aid) of the applicable advertising Guidelines.

the requirements

(23) OJ L 17, 21.1.2000, p. 22. Regulation as amended by the 2003 Act

of Accession.

(68) The aid measures for advertising which are incompatible
with the common market, if granted, must be recovered
from the beneficiaries,

(24) See for example Italy/Tuscany Aid N 656/02, Aid NN 150/02 (ex N
109/02) (Commission letter C(2003) 1747 of 11.6.2003) and Aid
NN 44/03 (ex N 6/03)
(Commission letter C(2003) 2534 of
23.7.2003).
(25) See footnote 23.

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HAS ADOPTED THIS DECISION:

Article 1

the disposal of the beneficiaries until the date of its recovery.
Interest shall be calculated on the basis of the reference rate used
for calculating the grant-equivalent of regional aid.

The State aids which Italy has envisaged for the promotion of the
agricultural products listed in Annex I to the Treaty on the basis
of Article 4 of
the Sicilian Regional Law No 27/97 are
compatible with the common market.

The above aids may accordingly be implemented.

Article 2

The State aids which Italy has envisaged for the advertising of the
agricultural products listed in Annex I to the Treaty on the basis
of Article 4 of
the Sicilian Regional Law n. 27/97 are
incompatible with the common market.

The above aids may accordingly not be implemented.

Article 3

Italy shall
take all necessary measures to recover from the
beneficiaries the aids referred to in Article 2, if it has unlawfully
made them available to the beneficiaries.

Recovery shall be effected without delay and in accordance with
law provided that they allow the
the procedures of national
immediate and effective execution of the decision. The aid to be
recovered shall include interest from the date on which it was at

Article 4

Italy shall amend its provisions regarding aids for the advertising
of Annex I agricultural products in compliance with the
Community guidelines for State aid for advertising of products
listed in Annex I to the EC Treaty and of certain non-Annex I
products.

Article 5

Italy 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 Republic of Italy.

Done at Brussels, 2 June 2004.

For the Commission

Franz FISCHLER

Member of the Commission