Guidelines for the examination of State aid to fisheries and aquaculture
Date: 2004-09-14
Institutions: European Commission
Subjects: EU law - national law, State aid, aquaculture, control of State aid, derogation from EU law, fishing industry, peripheral region

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GUIDELINES FOR THE EXAMINATION OF STATE AID TO FISHERIES AND AQUACULTURE

(2004/C 229/03)

1. LEGAL BASIS AND SCOPE

1.1.

The application of State aid rules, laid down in Articles 87 to 89 of the EC Treaty, to the production
of and trade in fisheries products is provided for in Article 19(1) of Council Regulation (EC)
No 2792/1999 of 17 December 1999 laying down the detailed rules and arrangements regarding
Community structural assistance in the fisheries sector (1) and in Article 32 of Council Regulation
(EC) No 104/2000 of 17 December 1999 on the common organisation of the market in fishery and
aquaculture products (2).

The principle of incompatibility of State aid with the common market, laid down in Article 87(1) of
the Treaty, is subject to the derogations provided for in Article 87(2) and (3). It is within the frame-
work of these Guidelines that the Commission intends to administer those derogations in the fish-
eries sector.

1.2.

These Guidelines apply to the entire fisheries sector and concern the exploitation of living aquatic
resources and aquaculture together with the means of production, processing and marketing of the
resultant products, but excluding recreation and sport fishing which does not result in the sale of
fisheries products.

They relate to all measures which constitute aid within the meaning of Article 87(1) of the Treaty,
including any measure entailing a financial advantage in any form whatsoever funded directly or
indirectly from the budgets of public authorities (national, regional, provincial, departmental or
local) or from other State resources. The following, for example, are to be considered as aid: capital
transfers, reduced-interest loans, interest subsidies, certain State holdings in the capital of undertak-
ings, aid financed by special levies or parafiscal charges, aid granted in the form of State securities
against bank loans, the reduction of or exemption from charges or taxes, including accelerated
depreciation and the reduction of social contributions.

2. OBLIGATION TO NOTIFY STATE AID AND EXEMPTION FROM THIS OBLIGATION

The Commission reminds Member States of their duty to notify to the Commission their plans to
grant new aid, in accordance with Article 88(3) of the Treaty and Article 2 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 (3).

Under the conditions specified in points 2.1 and 2.2, certain measures are, however, exempt from
the notification requirement.

2.1. As laid down in Article 19(2) of Regulation (EC) No 2792/1999, Articles 87, 88 and 89 of the
Treaty do not apply to obligatory financial contributions by Member States to measures co-financed
by the Community and provided for under the development plans referred to in Article 3(3) of that
Regulation and defined in Article 9(b) of Council Regulation (EC) No 1260/1999 of 21 June 1999
laying down general provisions on the Structural Funds (4) or under Article 5 of Council Regulation
(EC) No 2370/2002 of 20 December 2002 establishing an emergency Community measure for
scrapping fishing vessels (5). Consequently, Member States should not notify such contributions to
the Commission. Such contributions are not subject to these Guidelines.

(1) OJ L 337, 30.12.1999, p. 10. Regulation as last amended by Regulation (EC) No 2369/2002 (OJ L 358, 31.12.2002,

p. 49).

(2) OJ L 17, 21.1.2000, p. 22. Regulation as last amended by the 2003 Act of Accession.
(3) OJ L 83, 27.3.1999, p. 1. Regulation as last amended by the 2003 Act of Accession.
(4) OJ L 161, 26.6.1999, p. 1. Regulation as last amended by the 2003 Act of Accession.
(5) OJ L 358, 31.12.2002, p. 57.

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However, under Article 19(3) of Regulation (EC) No 2792/1999, measures which provide for public
financing by Member States exceeding the provisions of that Regulation or of Regulation (EC)
No 2370/2002 concerning obligatory financial contributions, as referred to in Article 19(2) of
Regulation (EC) No 2792/1999, must be notified as State aid to the Commission. They are subject
to these Guidelines.

In order to reduce the administrative burden which may result from an application of Article 19(3)
of Regulation (EC) No 2792/1999, and to facilitate the disbursement of Community Structural
funds, Member States have an interest to distinguish clearly between the obligatory financial contri-
butions they intend to grant in order to co-finance Community measures within the framework of
the Financial Instrument for Fisheries Guidance in compliance with Article 19(2) of Regulation (EC)
No 2792/1999, which do not have to be notified, and State aid, which is subject to the notification
requirement.

2.2. Member States do not have to notify aid in the fisheries sector which fulfils the conditions laid
down in the group exemptions Regulations adopted by the Commission pursuant to Article 1 of
Council Regulation (EC) No 994/1998 of 7 May 1998 on the application of Articles 92 and 93 of
the Treaty establishing the European Community to certain categories of horizontal State aid (1).
Such aid includes:

— aid fulfilling the conditions laid down in Commission Regulation (EC) No 1595/2004 of 8
September 2004 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 fisheries
products (2),

— aid for training fulfilling the conditions laid down in Commission Regulation (EC) No 68/2001
of 12 January 2001 on the application of Articles 87 and 88 of the EC Treaty to training aid (3),

— aid to research fulfilling the conditions laid down 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-sized enterprises (4),

— aid for employment fulfilling the conditions laid down in Commission Regulation (EC) No
2204/2002 of 12 December 2002 on the application of Articles 87 and 88 of the EC Treaty to
State aid for employment (5),

— aid fulfilling the conditions of any future Regulation adopted by the Commission pursuant to

Article 1 of Regulation (EC) No 994/1998 and which applies to the fisheries sector.

2.3.

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 (6) does not apply to fisheries.

3. PRINCIPLES

3.1.

In the fisheries sector, as well as in other economic sectors in the Community, the policy of the
Community relating to State aid aims to prevent distortion of competition in the internal market.

State aid in the fisheries sector is only justified if it is in accordance with the objectives of the
Competition Policy and the objectives of the Common Fisheries Policy, as set out in these guidelines,
and, in particular, in Council Regulation (EC) No 2371/2002 of 20 December 2002 on the conser-
vation and sustainable exploitation of fisheries resources under the Common Fisheries Policy (7) and
Regulations (EC) No 2792/1999 and (EC) No 104/2000.

(1) OJ L 142, 14.5.1998, p. 1.
(2) OJ L 291, 14.9.2004
(3) OJ L 10, 13.1.2001, p. 20. Regulation as amended by Regulation (EC) No 363/2004 (OJ L 63, 28.2.2004, p. 20).
(4) OJ L 10, 13.1.2001, p. 33. Regulation as amended by Regulation (EC) No 364/2004 (OJ L 63, 28.2.2004, p. 22).
(5) OJ L 337, 13.12.2002, p. 3.
(6) OJ L 10, 13.1.2001, p. 30.
(7) OJ L 358, 31.12.2002, p. 59.

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3.2.

It is essential to ensure consistency and coherence between Community policies in respect of the
control of State aid and in respect of the use of Structural funds under the Common Fisheries
Policy.

Therefore, as far as measures are eligible for Community funds, they will only be eligible for State
aid if they comply with the criteria laid down in Regulation (EC) No 2792/1999. In no case may
the rate of financial participation of State aid, expressed as percentage of eligible costs, exceed, in
subsidy equivalent, the total rate of national and Community subsidies fixed by Annex IV to that
Regulation.

The Commission will assess any aid for measures which are not covered by these Guidelines or by
Regulation (EC) No 1595/2004 on a case-by-case basis, taking into account the principles set out in
Articles 87, 88 and 89 of the Treaty and the Community's Common Fisheries Policy.

3.3.

It is essential that no aid is granted in circumstances where Community law, and in particular rules
of the Common Fisheries Policy, are not complied with. State aid may therefore only be considered
compatible if, before granting any aid, the Member State concerned undertakes to verify that the
measures financed and their effects comply with Community law. During the grant period, Member
States must verify that the beneficiaries of the aid comply with the rules of the Common Fisheries
Policy. If during the grant period it is found that the beneficiary does not comply with rules of the
Common Fisheries Policy, the grant must be reimbursed in proportion to the gravity of the infringe-
ment.

3.4.

In order to ensure that the aid is necessary and acts as an incentive to develop certain activities, no
aid for activities in which the beneficiary would already engage under market conditions alone may
be deemed to be compatible with the common market. No aid should be granted in respect of activ-
ities which have already been undertaken by the beneficiary.

3.5.

State aid may not be protective in its effect: it must serve to promote the rationalisation and effi-
ciency of the production and marketing of fishery products. Any such aid must yield lasting
improvements so that the industry can develop solely on the basis of market earnings.

3.6.

State aid to the export of or to trade in fishery products within the Community is incompatible
with the common market.

3.7.

State aid which is granted without imposing any obligation serving the objectives of the Common
Fisheries Policy on the part of recipients and which is intended to improve the situation of undertak-
ings and increase their business liquidity or is calculated on the quantity produced or marketed,
product prices, units produced or the means of production, and which has the effect of reducing
the recipient's production costs or improving the recipient's income is, as operating aid, incompa-
tible with the common market. The Commission intends to apply this rule with rigour to all oper-
ating aid, including aid in forms of tax relief, or of reductions of contributions to social security or
to unemployment benefit systems.

3.8.

In the interest of transparency, no State aid may be declared compatible by the Commission if the
Member State concerned has not communicated the total amount of aid per measures as well as the
aid intensity.

In accordance with the established practice of the Commission, thresholds should normally be
expressed in terms of aid intensities in relation to a set of eligible costs, rather than in terms of
maximum aid amounts. However, account is taken of all factors making it possible to assess the real
advantage to the recipient.

The cumulative effect for the recipient of all measures involving an element of subsidy granted by
the State authorities pursuant to Community, national, regional or local law, particularly those that
are designed to promote regional development, is taken into account when State aid schemes are
being assessed.

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3.9. Guidelines on national regional aid (1) do not apply in this sector. The components of regional aid
schemes involving the fisheries sector will be examined on the basis of the present Guidelines.

3.10. State aid for categories of measures covered by Regulation (EC) No 1595/2004, but which is
designed to benefit enterprises other than SMEs, or exceeds the threshold laid down in Article 1(3)
of that Regulation, will be assessed on the basis of these Guidelines and of the criteria laid down for
each category of measures in the Articles 4 to 13 of that Regulation.

4. AID WHICH MAY BE DECLARED COMPATIBLE

4.1. Aid falling within the scope of certain horizontal guidelines

4.1.1. State aid for environmental protection will be assessed in accordance with the Community guide-
lines on State aid for environmental protection (2). In addition to the requirements of those guide-
lines, State aid for environmental protection will not be declared compatible if it concerns the capa-
city of a vessel or serves to increase the effectiveness of its fishing gear.

4.1.2. State aid aimed at rescuing and restructuring firms in difficulty will be assessed in accordance with
the Community Guidelines on State aid for rescuing and restructuring firms in difficulty (3). In addi-
tion to the requirements of those guidelines, State aid aimed at restructuring firms the activity of
which includes fishing at sea may be granted only when an appropriate plan designed to reduce the
fleet capacity beyond what is mandatory under Community law has been submitted to the Commis-
sion.

4.2. Aid for the permanent withdrawal of fishing vessels through their transfer to third coun-

tries

Aid for the permanent withdrawal of fishing vessels through their transfer to third countries, which
is not linked to the purchase or construction of new vessels, is compatible with the common market
provided that it meets the requirements of Regulation (EC) No 2792/1999 for eligibility for Com-
munity aid, and in particular Article 7(3)(b), Article 7(5)(b) and (c), and Article 8 of, and points 1.1
and 1.2 of Annex III to that Regulation.

In accordance with Article 11(3) of Regulation (EC) No 2371/2002, no exit from the fleet supported
by State aid will be permitted unless preceded by the withdrawal of the fishing licence as defined in
Council Regulation (EC) No 3690/1993 of 20 December 1993 establishing a Community system
laying down rules of the minimum information to be contained in fishing licences (4) and, where
provided for, the fishing authorisations as defined in the relevant regulations.

4.3. Aid for the temporary cessation of fishing activities

4.3.1. Aid for the temporary cessation of fishing activities may be deemed compatible if it complies with

the conditions of Article 16 of Regulation (EC) No 2792/1999.

(1) OJ C 74, 10.3.1998, p. 9. Guidelines as amended by Amendments to the Guidelines on national regional aid (OJ C

258, 9.9.2000, p. 5).
(2) OJ C 37, 3.2.2001, p. 3.
(3) OJ C 288, 9.10.1999, p. 2.
(4) OJ L 341, 31.12.1993, p. 93.

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In the case of a temporary cessation of fishing activities established within the framework of a
recovery plan or a management plan, State aid may only be declared compatible if the plan has
been adopted pursuant to Article 5 or 6 of Regulation (EC) No 2371/2002.

In the case of a temporary cessation of fishing activities established within the framework of an
emergency measure, State aid may only be declared compatible if the measure has been decided by
the Commission in accordance with either Article 7 of Regulation (EC) No 2371/2002 or Article
45(1) of Council Regulation (EC) No 850/1998 of 30 March 1998 for the conservation of fishery
resources through technical measures for the protection of juveniles of marine organisms (1), or by
one or more Member States in accordance with either Article 8 of Regulation (EC) No 2371/2002
or Article 45(2) of Regulation (EC) No 850/1998.

4.3.2. In accordance with Article 12(6) of Regulation (EC) No 2792/1999, accompanying social measures
for crew members of affected fishing vessels in order to facilitate temporary cessation of fishing
activities in the framework of plans for the protection of aquatic resources may be deemed compa-
tible.

The cessation of activities must be adopted by a Member State under Article 8, 9 or 10 of Regu-
lation (EC) No 2371/2002, or under Article 46 of Regulation (EC) No 850/1998, or under Article
13 of Council Regulation (EC) No 88/98 of 18 December 1997 laying down certain technical
measures for the conservation of fishery resources in the waters of the Baltic Sea, the Belts and the
Sound (2), or under Article 1(3) of Council Regulation (EC) No 1626/94 of 27 June 1994 laying
down certain technical measures for the conservation of fishery resources in the Mediterranean (3).

The plans for the protection of aquatic resources must include, in addition to the temporary cessa-
tion of activities, effective measures designed to reduce fishing mortality, for example by reducing
fishing capacity permanently or adopting technical measures. The plans must be notified to the
Commission and contain precise and measurable objectives and a time frame.

The Commission will request without delay the opinion of the Scientific, Technical and Economic
Committee as provided for in Article 33(1) of Regulation (EC) No 2371/2002 on the plans.
Evidence of the social impact of the plans and justification of special measures going beyond the
normal social security regime must be provided. Crew members are only those persons engaged on
board of an operational seagoing fishing vessel as a main occupation. Aid to vessel owners will not
be eligible, except for those vessel owners whose main occupation is to work on board of their
vessel.

Scientific and, where necessary, economic justification of such aid must accompany the notification
of the measure to the Commission. Measures must not go beyond what is strictly necessary in order
to attain the objective pursued and must be of limited duration. Overcompensation is to be avoided.

The granting of compensation by a Member State may last for one year and may be extended by
one additional year.

4.3.3. State aid as specified in points 4.3.1 and 4.3.2 may only offset part of the loss of income associated

with a temporary cessation measure.

4.3.4. Aid to restrict fishing activities which is introduced by a Member State for the purpose of reducing

its fishing effort under Article 16(2) of Regulation 2371/2002 is not allowed.

(1) OJ L 125, 27.4.1998, p. 1. Regulation as last amended by Regulation (EC) No 602/2004 (OJ L 97, 1.4.2004, p. 30).
(2) OJ L 9, 15.1.1998, p. 1. Regulation as last amended by Regulation (EC) No 812/2004 (OJ L 150, 30.4.2004, p. 12).
(3) OJ L 171, 6.7.1994, p. 1. Regulation as last amended by Regulation (EC) No 813/2004 (OJ L 150, 30.4.2004, p. 32).

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4.4. Aid for investment in the fleet

4.4.1. Aid for the renewal of fishing vessels may be deemed compatible with the common market subject
to the requirements of Articles 9 and 10 of, and point 1.3 of Annex III to Regulation (EC)
No 2792/1999 and provided that the sum of the State aid does not exceed, in subsidy equivalent,
the total rate of national and Community subsidies fixed by Annex IV to that Regulation.

No aid may be granted to shipyards for the construction of Community fishing vessels. Aid to ship-
yards for building, repair or conversion of non Community fishing vessels are subject to the Frame-
work on State aid to shipbuilding (1).

4.4.2. Aid for the modernisation and equipment of fishing vessels may be deemed compatible with the
common market subject to the requirements of Articles 9 and 10 of, and point 1.4 of Annex III to
Regulation (EC) No 2792/1999 and provided that the sum of the State aid does not exceed, in
subsidy equivalent, the total rate of national and Community subsidies fixed by Annex IV to that
Regulation.

4.4.3. Aid specified in points 4.4.1 and 4.4.2 may only be granted if the provisions of Article 13 of Regu-
lation (EC) No 2371/2002, of Commission Regulation (EC) No 1438/2003 of 12 August 2003
laying down implementing rules on the Community Fleet Policy as defined in Chapter III of Council
Regulation (EC) No 2371/2002 (2) and, where relevant, of Council Regulation (EC) No 639/2004 of
30 March 2004 on the management of fishing fleets in the Community outermost regions (3) are
complied with.

4.4.4. Aid for the purchase of used vessels is deemed compatible with the Common Market only if it
f) of Regulation (EC)

complies with the provisions of Article 12(3)(d) and Article 12(4)(
No 2792/1999.

4.4.5. No State aid for investment in the fleet will be deemed compatible or granted by a Member State
for measures in relation to which Community financial assistance has been suspended under Article
16(1) of Regulation (EC) No 2371/2002.

4.5.

Socio-economic measures

Income support to workers in the fisheries and aquaculture sector and to workers employed in the
processing and marketing of fishery and aquaculture products may be considered compatible with
the common market provided that it forms part of socio-economic back-up measures compensating
income losses linked to measures designed to achieve an adjustment of capacity adopted pursuant to
Article 11(1) of Regulation (EC) No 2371/2002. Such aid will be assessed on a case-by-case basis, in
line with the principles set out in point 3. In case of temporary cessation of fishing activity, point
4.3 applies.

4.6. Aid to make good damage caused by natural disaster or exceptional occurrences

According to Article 87(2)(b) of the Treaty, aid to make good damage caused by natural disasters or
exceptional occurrences is deemed to be compatible with the common market.

In order for such aid to be considered compatible with the common market, the level of damages
caused by natural disasters or exceptional occurrences must reach a threshold of 20 % of the
average turnover of the firm concerned in the previous three years in Objective 1 regions as defined
in Article 3 of Regulation (EC) No 1260/1999, and including the regions defined in Article 6(1) of
that Regulation, and 30 % in other areas.

(1) OJ C 317, 30.12.2003, p. 11.
(2) OJ L 204, 13.8.2003, p. 21. Regulation as amended by Regulation (EC) No 916/2004 (OJ L 163, 30.4.2004, p. 81).
(3) OJ L 102, 7.4.2004, p. 9.

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Once the existence of a natural disaster or an exceptional occurrence has been demonstrated, an aid
of up to 100 % to compensate for material damage is permitted. Compensation should be calcu-
lated at the level of the individual beneficiary and overcompensation must be avoided. Amounts
received under an insurance scheme or normal costs not incurred by the beneficiary must be
deducted. Damages which could be covered by an ordinary commercial insurance contract or repre-
sent normal entrepreneurial risk are not eligible for aid.

Any compensation must be granted within three years of the event to which it relates.

4.7. Outermost regions

Where provisions of Community law specifically address outermost regions, as it is the case for the
provisions laid down in Annex IV to Regulation (EC) No 2792/1999 on aid intensities for invest-
ments in the fisheries sector, the Commission will only declare an aid to the fisheries sector in those
regions compatible as far as it complies with those provisions. In relation to measures for which no
specific provisions for outermost regions are provided for, aid designed to meet the needs of outer-
most regions will be assessed on a case-by-case basis, and having regard to the factors characteristic
of these regions identified in Article 299(2) of the Treaty on the one hand, the compatibility of the
measures concerned with the objectives of the Common Fisheries Policy and the potential effect of
the measures on competition in these regions and in the other parts of the Community on the other
hand.

4.8. Aid financed through parafiscal charges

Aid schemes funded by special charges, in particular parafiscal charges, imposed on certain fishery
and aquaculture products irrespective of their origin, may be deemed compatible where aid schemes
benefit both domestic and imported products, and where the aid as such complies with the condi-
tions of these guidelines.

5. PROCEDURAL MATTERS

The Commission recalls that the provisions of Regulation (EC) No 659/1999 and its implementing
provisions apply.

In particular, where a negative decision is adopted by the Commission on an aid which has been
granted without having been notified to and approved by the Commission, Member States are
obliged to recover the aid from the beneficiary, with interest, under the conditions laid down in
Article 14 of Regulation (EC) No 659/1999.

In the interest of accelerating the examination of aid measures, Member States are advised to fill in
the forms provided for in part I and part III.14 of Annex I to Commission Regulation (EC)
No 794/2004 of 21 April 2004 implementing Council Regulation (EC) No 659/1999 laying down
detailed rules for the application of Article 93 of the EC Treaty (1).

5.1. Re-notification and annual report

In order for the Commission to be able to fulfil its duty to keep under constant review all systems of
aid existing in the Member States, Member States should re-notify to the Commission open-ended
schemes at the latest two months before the tenth anniversary of their entry into force.

Article 21 of Regulation (EC) No 659/1999 provides that Member States are to submit to the
Commission annual reports on all existing aid schemes to which no specific reporting obligations
have been imposed in a conditional decision. Individual aid granted outside an approved aid scheme
must also be included in those reports. The annual report must contain all relevant information as
indicated in the form in Annex III C to Commission Regulation (EC) No 794/2004.

(1) OJ L 140, 30.4.2004, p. 1.

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5.2.

Proposals for appropriate measures

These guidelines replace the earlier Guidelines for the examination of State aid to fisheries and aqua-
culture (1) as a result of the development of the Common Fisheries Policy, notably through the adop-
tion of Regulation (EC) No 2369/2002 which amended Regulation (EC) No 2792/1999, and of
Regulation (EC) No 2371/2002 and of Regulation (EC) No 1595/2004.

The Commission will amend these guidelines as and when experience is gained in the regular exami-
nation of inventories of State aids and in the light of the development of the Common Fisheries
Policy.

In accordance with Article 88(1) of the Treaty and Article 18 of Regulation (EC) No 659/1999, the
Commission proposes that Member States amend their existing aid schemes relating to aids in the
fishery sector to conform to these guidelines by 1 January 2005 at the latest.

The Member States are invited to confirm that they accept these proposals for appropriate measures
in writing by 15 November 2004 at the latest.

In the event that a Member State fails to confirm its acceptance in writing before that date, the
Commission will assume that the Member State concerned has accepted these proposals, unless it
explicitly indicates its disagreement in writing.

Should a Member State not accept the whole or part of these proposals by that date, the Commis-
sion will proceed in accordance with Article 19(2) of Regulation (EC) No 659/1999.

5.3. Date of application

The Commission will apply these guidelines with effect from 1 November 2004 to any State aid
notified upon or after that date.

An ‘unlawful aid’ within the meaning of Article 1(f) of Regulation (EC) No 659/1999 will be
appraised in accordance with the guidelines applicable at the time when the administrative act
setting up the aid has entered into force.

Reference made in these guidelines to Community law or Commission guidelines must be inter-
preted as including a reference to any change in those instruments after 1 November 2004.

(1) OJ C 19, 20.1.2001, p. 7.