2007/253/EC: Commission Decision of 19 January 2005 on the Rivesaltes plan and CIVDN parafiscal charges operated by France (notified under document number C(2005) 50)
Date: 2005-01-19
Institutions: European Commission
Subjects: France, State aid, control of State aid, quasi-fiscal charge, redirection of production, sales promotion, set-aside, viticulture

30.4.2007

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Official Journal of the European Union

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II

(Acts adopted under the EC Treaty/Euratom Treaty whose publication is not obligatory)

DECISIONS

COMMISSION

COMMISSION DECISION

of 19 January 2005

on the Rivesaltes plan and CIVDN parafiscal charges operated by France

(notified under document number C(2005) 50)

(Only the French text is authentic)

(2007/253/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

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

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

Whereas:

I.

PROCEDURE

(1)

the measures subject

Following a complaint, the Commission questioned the
to this
French authorities about
Decision by letters of 19 July 1999, 16 December 1999,
24 August 2000 and 9 December 2000. France replied to
the Commission by letters of 19 August 1999, 24 February
2000 and 25 January 2001. The Commission met the
French authorities on 26 January 2000 and a delegation of
the inter-branch committee for natural
sweet wines
(CIVDN) on 31 March 2000.

(2)

Since the measures were applied without prior authorisa-
tion from the Commission, they were entered in the register
of non-notified aid under the number NN 139/2002.

(3)

(4)

(5)

(6)

By letter dated 21 January 2003, the Commission informed
France of its decision to initiate the procedure laid down in
Article 88(2) of the Treaty in respect of the aid.

The Commission decision to initiate the procedure was
published in the Official Journal of the European Union (2).
The Commission called on the other Member States and
interested parties to submit their comments on the aid in
question.

The French authorities sent their comments by letter of 16
and 18 June 2003. The Commission received comments
from the complainant which it
to the French
authorities by letter of 6 August 2004. The French
authorities replied by letter of 10 September 2004.

sent

II.

DESCRIPTION

1.

THE ‘RIVESALTES PLAN’

In 1996, the CIVDN decided to set up a wine conversion
project aiming to replace part of the production of natural
sweet wines in the Eastern Pyrenees region by grubbing up
and replanting with quality wine varieties,
in order to
remedy the structural crisis facing this product, demon-
strated by regular collapses in outlets. The purpose of the
aid was to finance improvements to the quality of the vine
population in the region. The scheme was fully wound up
on 1 August 2002.

(1) OJ C 82, 5.4.2003, p. 2.

(2) See footnote on page 1.

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(7)

Producers in the region had access to two types of aid
designed to implement this conversion project (known as
the ‘Rivesaltes Plan’):

Mourvèdre, Roussanne, Marsanne and Vermentino) and
1 000 hectares for the production of varietal ‘vins de pays’
(Chardonnay, Cabernet, Merlot…).

— a ‘set-aside premium’ per hectare financed by an inter-

branch contribution;

— and area aid financed from State and local authorities'

funds to cover part of the conversion costs proper.

(8)

(9)

1.1. THE ‘SET-ASIDE PREMIUM’

By decision 96-1 of 5 July 1996, the CIVDN for registered
designation of origin (AOC)
introduced an inter-branch
contribution to finance the conversion plan for ‘Rivesaltes’
and ‘Grand Roussillon’.

The purpose of the contribution, amounting to FRF 50/
hectolitre (3) produced in the Eastern Pyrenees Region
where the natural sweet wines concerned are made, was to
finance the payment of a ‘set-aside premium’ for any plot
which, having produced ‘Rivesaltes’ or ‘Grand Roussillon’
wine in 1995, would produce table wine or ‘vin de pays’
from the 1996 to the 2000 harvests inclusive. The capital
generated from levying the contribution was assigned to a
special fund.

(10) The ‘set-aside premium’ was in effect granted to producers
undertaking not to claim the registered designations of
origin (AOC) ‘Rivesaltes’ or ‘Grand Roussillon’ for five years.
This premium was also designed to compensate for the loss
of revenue caused by the impact on pricing of no longer
using these two designations. The premium did not imply
stopping or reducing production, but merely compensating
for producing without the registered designation of origin.
The aim was therefore to rapidly reduce the potential for
marketing AOC wines.

(11) The premium amounted to FRF 5 000 a year per hectare
‘set aside’. All plots benefiting from aid ceased to receive the
premium in the year they were converted.

(12) The Commission was not informed of the overall amount
this scheme. No information was
of aid paid under
provided on the amount of revenue that the inter-branch
contribution generated nor on the number of hectares for
which aid was received.

1.2. CONVERSION AID

(14) To support this plan, the French authorities had agreed to
provide FRF 111 million in financial assistance, distributed
the Office national
as
interprofessionnel des
Inter-branch Wine
Office] and FRF 26 million by local authorities (Langue-
doc-Roussillon and the Eastern Pyrenees General Council).

follows: FRF 85 million via
[National

vins

(15) This assistance would cover aid amounting to FRF 25 000/
ha for conversion to AOC Muscat de Rivesaltes, and FRF
40 000/ha for conversion to AOC Côtes du Roussillon
Villages and ‘vin de pays’.

(16) According to the French authorities,

the real costs of
conversion in the region could be estimated at FRF
110 000/ha. The French authorities confirmed that the
conversion plans had mostly been implemented (2 350 ha
out of the 3 250 ha planned).

(17) According to the French authorities, the total cost of the
conversion plan implemented came to FRF 258,5 million
(EUR 39,4 million). The public authorities contributed FRF
75,250 million (EUR 11,01 million) of the FRF 111 million
(EUR 16,9 million) initially provided for. According to the
information provided by the French authorities, as a
proportion of the total funding, 29,11 % of the conversion
costs actually incurred was covered by public bodies.

the market

(18) The French authorities pointed out that they send an annual
report to the Statistical Office of the European Commu-
nities, in accordance with Article 9 of Council Regulation
(EEC) No 822/87 of 16 March 1987 on the common
organisation of
including a
statement of
the area under vines, broken down by
department and by type of grape produced (wine grapes,
including quality wine produced in certain regions (quality
wine psr), table grapes) and a statement of grubbed-up areas
and vine planting submitted in the same format with a
breakdown by department and by type of grape produced.
The French authorities enclosed a copy of the tables sent for
the 1997/98 marketing year.

in wine (4),

2.
INTER-BRANCH CONTRIBUTIONS FOR PUBLICITY
AND PROMOTION AND FOR OPERATING CERTAIN AOCS.

(13) According to the French authorities, the conversion plan for
the AOC Rivesaltes vineyard as adopted in 1996 covered
3 250 hectares: 1 250 hectares for production of ‘Muscat
de Rivesaltes’; 1 000 hectares for production of ‘Côtes du
(Syrah,
Roussillon’ and ‘Côtes du Roussillon Villages’

(3) 1 FRF = EUR 0,15 approximately.

(19) By Decision 97-3 of 29 December 1997,

the CIVDN
introduced an inter-branch contribution starting on
1 January 1998 to finance advertising campaigns and for
operating the following AOCs: ‘Rivesaltes’, ‘Grand Roussil-
lon’, ‘Muscat de Rivesaltes’ and ‘Banyuls’.

(4) OJ L 84, 27.3.1987, p. 1. Regulation repealed by Regulation (EC)

No 1493/1999 (OJ L 179, 14.7.1999, p. 1).

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(20) The amount per hectolitre excluding tax was set as follows:
‘Grand
‘Muscat de Rivesaltes’: FRF 50/hl

‘Banyuls and Banyuls Grand Cru’: FRF 25/hl;
Roussillon’: FRF 30/hl;
and ‘Rivesaltes’: FRF 30/hl.

(21) These contributions were allocated as follows: ‘Rivesaltes’:
FRF 25/hl for advertising and FRF 5/hl for operations;
‘Grand Roussillon’: FRF 45/hl for advertising and FRF 5/hl
for operations; ‘Banyuls’: FRF 20/hl for advertising and FRF
5/hl for operations.

(22) By Decision 98-1 of 10 July 1998, the CIVDN introduced
an inter-branch contribution starting on 1 September 1998
to finance advertising campaigns and for operating the
following AOCs: ‘Rivesaltes’, ‘Grand Roussillon’ and ‘Maury’.

(23) The amount of contributions per hectolitre excluding tax
were set as follows: ‘Grand Roussillon’: FRF 25/hl; ‘Maury’:
FRF 5/hl; ‘Rivesaltes’: FRF 35/hl.

(24) These contributions were allocated as follows: ‘Rivesaltes’:
FRF 30/hl for advertising and FRF 5/hl for operations;
‘Grand Roussillon’: FRF 20/hl for advertising and FRF 5/hl
for operations; ‘Maury’: FRF 5/hl for operations.

(25) The previous two contributions were repealed by Decision
99-1 of 17 December 1999, by which the CIVDN
introduced an inter-branch contribution to finance pub-
licity and promotion initiatives and for operating the
following AOCs: ‘Banyuls’, ‘Banyuls Grand Cru’, ‘Muscat de
Rivesaltes’, ‘Rivesaltes’, ‘Grand Roussillon’, and ‘Maury’.

(26) The amounts per hectolitre excluding tax were set as
follows: ‘Grand Roussillon’: FRF 25/hl; ‘Rivesaltes’: FRF 35/
hl; ‘Banyuls’ and ‘Banyuls Grand Cru’: FRF 25/hl; ‘Muscat de
Rivesaltes’: FRF 55/hl; ‘Maury’: FRF 0/hl.

(27) These contributions were allocated as follows: ‘Rivesaltes’:
FRF 30/hl for advertising and FRF 5/hl for operations;
‘Grand Roussillon’: FRF 20/hl for advertising and FRF 5/hl
for operations;
for
advertising and FRF 5/hl
‘Banyuls and
Banyuls Grand Cru’: FRF 20/hl for advertising and FRF 5/hl
for operations.

‘Muscat de Rivesaltes’: FRF 50/hl
for operations;

(28) This contribution was continued, with slight modifications,
by Decision 00-1. At the time the examination procedure
was initiated, the Commission did not have any informa-
tion on the duration of this scheme or as to whether it
would be continued.

3.

POINTS RAISED BY THE COMMISSION IN THE

CONTEXT OF INITIATING AN EXAMINATION PROCEDURE

(29) Dealing first with the nature of the contributions in this
they were directly

the Commission noted that

case,

approved by the French Government under the procedure
provided for in Law 200 of 2 April 1943 creating an inter-
branch committee for natural sweet wines and liqueur
wines with registered designations. The Government's
approval is thus a precondition for such contributions to
in particular, that
be adopted. Law No 200 stipulates,
contributions are to be compulsory for all members of the
branches concerned as soon as they have been approved by
the Government or, in the case in point, its Commissioner.
It follows that this type of contribution requires an official
the
act
Commission considered at this stage of the examination
procedure that this was a case of parafiscal charges, i.e.
public resources.

effect. Consequently,

to take full

in order

(30) With regard to the ‘set-aside premium’ provided for in the
French aid scheme, no provision was made for such
premiums under the common market organisation (CMO)
and, more specifically, Council Regulation (EEC) No 456/80
of 18 February 1980 on the granting of temporary and
permanent abandonment premiums in respect of certain
areas under vines and of premiums for the renunciation of
replanting (5). That Regulation provided only for a premium
for
temporary or permanent cessation of production,
payable when a producer decided to contribute to reducing
the Community's wine-growing potential by, in particular,
grubbing up vines. Since potential was not reduced and no
abandonment initiatives were financed by the premium, the
scheme did not appear, at
the time the examination
procedure was initiated, to fall within the scope of the
former common organisation of the market in wine under
Regulation (EEC) No 822/87.

(31) The purpose of the aid would appear to have been to give
financial support to producers who, as business operators,
had freely decided to undertake a purely commercial
venture,
for charges which seem to be expenditure
connected with the exercise of economic activity. According
to the consistent practice of the Commission and according
Justice (6),
to the case law of
operating aid is aid intended to relieve an undertaking of
the expenses which it would itself normally have had to
bear in its day-to-day management or its usual activities.
This concept is reiterated in point 3.5 of the Community
guidelines on State aid in the agriculture sector (7) (here-
inafter ‘agriculture guidelines’), according to which such
aids, by their very nature, are likely to interfere with CMO
mechanisms.

the European Court of

(32) The Commission noted here that the aid was granted per
hectare and per year, and is therefore closely connected
with the quantity of wine produced. The Commission
explained that under no circumstances can it approve aid

(5) OJ L 57, 29. 2.1980, p. 16. Regulation repealed by Regulation (EC)

(6)

No 1493/1999.
Judgment of
the European
Communities of 8 June 1995, case T-459/93, Siemens SA v.
Commission, Rec. p. II-01675.

the Court of First

Instance of

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

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which would be incompatible with the rules governing a
CMO or which would disturb the smooth operation of the
market organisation concerned. When the examination
procedure was initiated,
it considered that the ‘set-aside
premium’ seemed to constitute operating aid likely to
interfere with the mechanisms of the wine CMO and that it
could therefore be incompatible with the applicable market
and competition rules.

the real costs
capped at FRF 33 000/ha and 30 % of
incurred by the individual producers. It follows that any aid
granted in excess of that ceiling or of 30 % of the real costs
incurred by individual producers might be incompatible
with the applicable rules.

(33) Regarding the conversion costs, Article 14 of Regulation
(EEC) No 822/87 stipulated that all national aid for planting
vineyards would be prohibited from 1 September 1988,
except where such planting met criteria relating,
in
particular, to reducing production or improving quality
without resulting in an increase in production. Accordingly,
only varieties that would bring about an improvement in
quality and that did not have high productivity in the wine-
growing area concerned would be allowed.

(34) Commission Regulation (EEC) No 2741/89 of 11 Septem-
ber 1989 laying down criteria to apply under Article 14 of
Council Regulation (EEC) No 822/87 on national aid for
the planting of wine-growing areas (8) laid down the criteria
for examining draft national aid schemes for the planting of
wine-growing areas permitted under Articles 87, 88 and 89
of the Treaty. Article 2 of Regulation (EEC) No 2741/89
stipulates
satisfactorily
demonstrate compliance with the objective of reducing
production quantity or improving quality without leading
to increased production.

that draft national

aid must

financing together,

(35) Article 5 of Regulation (EEC) No 2741/89 stipulates that
the amount of aid granted per hectare of vineyard planted
may not exceed 30 % of the actual cost of grubbing-up and
planting. The French authorities conclude that, since the
total cost of the conversion carried out amounted to FRF
258 500 000 and the public authorities contributed FRF
the public
75 250 000,
taking all
the
authorities contributed 29,11 % of
conversion scheme actually carried out. But Article 5 of
Regulation (EEC) No 2741/89 stipulated that the relevant
factor for calculating the conversion costs was the aid
actually granted per hectare of vines planted. At the stage of
the examination procedure, this logic seemed to exclude
overall calculations relating to the conversion exercise as a
whole and, consequently, calculations based on the average
per hectare of
the French
authorities calculated this average in relation to differen-
tiated conversion schemes.

the total costs. Moreover,

the costs of

(36) The Commission considered at that stage that in view of the
costs per hectare put forward by the French authorities (FRF
110 000/ha), the aid granted in this case should have been

(37) By virtue of the powers conferred on it under Article 10 of
Regulation (EC) No 659/1999 of 22 March 1999 laying
down detailed rules for the application of Article 93 of the
EC Treaty (9), the Commission asked the French authorities
the necessary information on the two
to send it all
conversion measures carried out. In particular, this was to
include information concerning the number of wine-
growers who had received national aid for planting areas
under vines; the area concerned, broken down by soil type;
the part of that area which was planted after grubbing; the
part of
that area recognised as suitable for producing
quality wine psr; the intended use of the planted areas (wine
grapes, table grapes, grapes for drying, nursery or parent
vine for root-stocks, etc.); the varieties used; proof that the
French authorities granted prior authorisation for the use of
the aforesaid varieties;
the development of production
potential and all relevant information about the level of aid.

(38) As for aid for advertising used by certain AOCs, the French
authorities have pointed out that the rules governing the
parafiscal charges intended to finance the CIVDN were
regularly notified and had already been examined and
approved by the Commission. Indeed, in the context of
State aid No N 184/97 (10) (Aid and parafiscal charges for
the benefit of the CIVDN), the Commission most recently
approved State aid financed by a parafiscal charge to cover,
among other things, advertising and operating measures for
the benefit of
the CIVDN. However, according to the
information received, the contributions in the case in hand
are levied by the CIVDN in addition to the parafiscal
charges intended for the communication and advertising
measures already authorised by the Commission. Conse-
quently, when the examination procedure was initiated, the
the authorisation given
Commission considered that
previously did not tacitly authorise subsequent amend-
ments or any other measure on top of the previously
authorised aid.

(39) The Commission has asked the French authorities to send it
these aid schemes,
the necessary information about
including any schemes not mentioned or notified which
may currently be in force, so as to allow it to assess their
compatibility with, in particular, the negative and positive
criteria applicable to advertising and the maximum amount
of aid which may be authorised. This information should
also make it possible to measure the repercussions of any

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

(8) OJ L 264, 12.9.1989, p. 5. Regulation repealed by Regulation (EC)

Accession.

No 1227/2000 (OJ L 143, 16.6.2000, p. 1).

(10) Commission letter SG(97)D/3741 of 16.5.1997.

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accumulation of aid involving the previously authorised
scheme and the non-notified schemes concerned by this
Decision.

into liquidation. These aid schemes are held not to comply
with EU rules in that they do not have an aim of general
interest.

(40) The Commission has also noted that the mechanisms of the
parafiscal charges in this case are very similar to those of
the charge already authorised by the Commission. It is also
clear from the texts introducing these charges that they
affect only the wine production in a specific region. At the
stage of the examination procedure, it could therefore be
concluded that no imported products were or had been
subject to the parafiscal charges concerned in this case.

III.

THIRD PARTY COMMENTS

(41) The complainant submitted the following comments and
requested their identity to be treated as confidential. After
having examined the grounds given for so doing,
the
Commission considers it right to respect the complainant's
request.

(42) According to the complainant, the set-aside premium and
the conversion aid are but two elements of a single aid
scheme designed to reduce the quantity of a certain product
placed on the market. Aid allocated for setting aside plots
and aid allocated under the conversion scheme must be
taken together for assessment of compliance with Com-
munity law.

(43) The complainant is of the opinion that the autonomous
financial management of the Rivesaltes Plan provided for in
CIVDN Decision No 96-1 of 5 July 1996 was breached
since the set-aside premium was financed by funds that
were not
inter-branch
exclusively generated by the
contribution introduced in 1996. Thus the complainant
believes that the set-aside premium was financed by the
CIVDN's own resources to the tune of over FRF 11 million.
Moreover, the complainant believes that part of the funding
obtained through advertising contributions was used to
finance the plan, in particular the set-aside premium.

(44) According to the complainant, the General Council of the
Eastern Pyrenees paid the CIVDN FRF 2 million at the
beginning of the 2000 financial year to fund the set-aside
premium. In addition, the General Council
is alleged to
have claimed in the March 2003 edition of its magazine
‘L'accent Catalan’ to have directly paid wine-growers aid per
hectare amounting to EUR761 and then EUR 1 293 under
the Rivesaltes Plan on top of the aid paid as a set-aside
premium and the conversion aid. The complainant believes
that that this aid was not notified to the Commission.

(45) The complainant deems that

the capital generated by
parafiscal charges for advertising in favour of the CIVDN
was used to finance advertising campaigns for their own
products, i.e. for certain enterprises, rather than to finance
advertising campaigns for the various categories of AOCs in
general. It is alleged that these practices are still applied
today by the inter-branch wine committee of Roussillon
(CIVR), the body that replaced the CIVDN when it went

(46) According to the complainant, during 2001 and 2002, the
CIVDN continued to demand that merchants pay parafiscal
charges even though the body that replaced it afterwards,
the CIVR, had also begun to invoice contributions in
contradiction with national law.

IV.

COMMENTS FROM FRANCE

(47) By letter of 16 June 2003, the French authorities submitted
their comments concerning the Commission's decision to
initiate the procedure provided for in Article 88(2) of the
Treaty in respect of the aid measure notified.

(48) The French authorities confirmed at the outset that the
measures in question had not been continued beyond the
five-year period set initially, which began in the 1996/97
the Commission was
marketing year.
informed by letters dated 14 December 2000 and
6 December 2001 that the CIVDN had been wound up.
The CIVR, which replaced the CIVDN, did not implement
any of the same type of measures.

In any event,

1.

THE ‘RIVESALTES PLAN’

1.1. THE ‘SET-ASIDE PREMIUM’

(49) The French authorities explained that

the aim of

the
measure was not to reduce the wine-growing potential
since the commitment made by beneficiaries was essentially
to agree to market table wine or ‘vin de pays’, rather than
AOC wine produced from set-aside plots. As such, this
premium could not be treated, as the Commission deems,
as a mere operating aid unduly constituting liquidity relief.

(50)

the purpose of

In fact,
the premium was to reward
beneficiaries for undertaking not to market AOC produc-
tion from the set-aside plots. It did therefore not constitute
a supplement to beneficiaries' revenue but rather compen-
sated them for a loss in income.

(51) Thus, when the measure was implemented, one hectare
under AOC Rivesaltes vine would generate, on the basis of
the maximum authorised yield of 40 hl, a production of
between 25 hl of natural sweet wine at FRF 1 140/hl and
15 hl of table wine or ‘vin de pays’ at FRF 350/hl, giving a
turnover of between FRF 32 250 and FRF 33 000/ha. After
the land is set aside, one hectare under vine could produce
50 hl of table wine or ‘vin de pays’ (average area yield), i.e. a
turnover of between FRF 12 500 and FRF 17 500/ha.

(52) The average difference after set-aside (loss of revenue for
producers) would therefore be about FRF 15 000/ha, from
which, in the interests of completeness, the cost of alcohol
to produce natural sweet wine should be deducted, i.e. FRF
2 000 for 25 hl, which makes the net difference total FRF
13 000/ha.

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(53) Even if account is taken of the fact that the difference as of
1999 was less, due to the fall in the production price of
natural sweet wines (FRF 900/hl), it was still FRF 6 500/ha
[FRF 26 000 (turnover/ha AOC) — FRF 17 500 (turnover/
ha for table wine or ‘vin de pays’) — FRF 2 000 (cost of
alcohol to make natural sweet wines)].

(54) Under these conditions, the French authorities considered
that the set-aside premium could in no way constitute
operating aid that would grant beneficiaries undue income
supplements or liquidity relief.

(55) Moreover, the French authorities underline that the set-aside
premium did not jeopardise the wine CMO mechanisms by
potential market disturbances. Thus no wine was distilled
under the compulsory distillation scheme in the Eastern
Pyrenees between the 1996/97 and 1999/2000 marketing
years. Besides, the amount sent for preventative distillation
for the marketing years in question reflects normal market
conditions in table wine and ‘vin de pays’.

(56) Alternatively, the French authorities insist that the measure
shows solidarity as it is not financed by the State but by an
inter-branch contribution paid by the producers them-
selves.

1.2. CONVERSION AID

(57) According to the French authorities, this measure consti-
tutes an exceptional addition to national aid to renew
vineyards, which was established to implement Regulation
(EEC) No 2741/89.

(FR/XXX/05.00/017)

the subject of document

(58) The French authorities pointed out that aid to improve the
vine population was first notified in 1993 (aid No N 769/
93),
in
successive lists of national aid. Regarding the annual report,
the French authorities explained that the communication
required under Article 8 of Regulation (EEC) No 2741/89
could be made in the context of the annual communication
sent by Member States under Article 9 of Regulation (EEC)
No 822/87. However Article 9 of Regulation (EEC)
No 822/87 states that ‘by 1 September of each year, the
forward a communication to the
Member States shall
Commission concerning the development of wine-growing
potential, which shall include a statement of the areas under
vines on their territory’ and ‘by 1 December of each year …
a report on the development of wine-growing potential’.

No 822/87, including a statement of the area under vines,
broken down by department and by type of grape produced
(wine grapes, including quality wine psr, table grapes) and a
statement of grubbed-up areas and vine planting submitted
in the same format with a breakdown by department and
by type of grape produced. The French authorities enclosed
a copy of the tables sent for the 1997/98 marketing year.
Under these circumstances, the French authorities con-
sidered that they could not be accused of failing to meet
their obligations under Regulation (EEC) No 822/87.

(60)

In order to make an accurate and thorough assessment of
the Rivesaltes Plan conversion aid, the French authorities
deemed it necessary to take into account the fact that area
under Muscat de Rivesaltes was excluded from the
supplement to renewal aid under the plan. These areas
only benefited from renewal aid at rates corresponding to
national levels. Nonetheless, the FRF 85 million that the
French authorities noted in their previous letters included
FRF 31 million of national aid to renew vines in the area
under Muscat.

(61)

the conversion aid in the context of

In the end,
the
Rivesaltes Plan for the area under varietal ‘vin de pays’ and
Côtes du Roussillon villages was assessed as follows:

a)

b)

c)

in the geographical area concerned by the Rivesaltes
Plan and for vineyards with area under varietal ‘vin de
pays’ and Côtes du Roussillon villages, 2 357 ha (875
producers) received national aid to renew vines, which
totalled FRF 57,280 million.

out of
these 2 357 ha, 875 producers received
‘exceptional’ supplements to the national aid under
the Rivesaltes Plan for 1 238 ha. The total amount of
this supplement was FRF 8,006 million, on top of the
FRF 28,613 million of national conversion aid
received for these 1 238 ha.

for these 875 producers, the supplement provided for
in the Plan was paid on the following basis: 662
received FRF 5 000/ha for 990 ha,
totalling FRF
4,950 million; 80 received FRF 10 000/ha for 133 ha,
totalling FRF 1,330 million; and 133 received FRF
15 000/ha for 115 ha, totalling FRF 1,726 million.

(62)

In total, under this Plan, FRF 36,623 million was paid for
the renewal of vines over an area of 1 238 ha to 875
producers.

(59) The French authorities pointed out they send an annual
report to the Statistical Office of the European Commu-
nities, in accordance with Article 9 of Regulation (EEC)

(63) 221 cases exceeded FRF 33 000/ha for an area of 166 ha,

corresponding to FRF 0,883 million.

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(64) The French authorities sent a list of the varieties used in
conversion schemes and the different decrees setting the
level of aid for each year.

distorts or threatens to distort competition 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’.

2.

INITIATIVES FOR PROMOTION AND PUBLICITY AND

FOR OPERATING AOCs

(65) The French authorities first specified that these initiatives

were not continued after 31 December 2000.

(72) Article 76 of Regulation (EEC) No 822/87, applicable when
the aid was granted, provided that, unless otherwise
provided in the same Regulation, Articles 92, 93 and 94
of the Treaty (now Articles 87, 88 and 89) were applicable
to the production and sale of wine products.

(66) The advertising initiatives funded by receipts from the
compulsory voluntary contribution (CVO) were of the same
nature as those funded by revenue from the parafiscal
charges, which were notified to and approved by the
Commission (aid Nos N 230/90 (11) and N 184/97).

(67) The credit generated by collecting CVO therefore enabled
the initiatives funded by the parafiscal charge to be
consolidated.
it appeared necessary to step up
advertising of this wine to develop outlets for it, given the
market situation which had serious impacts on the local
wine economy.

In fact

(68)

In this respect, the French authorities noted that authorisa-
tion to finance promotion aid could be given for up to
100 %. The French authorities pointed out
the
publicity aid concerned initiatives
to advertise AOC
products and was financed by parafiscal charges and
voluntary contributions.

that

(69)

In reply to the Commission's request, the French authorities
sent examples of the promotion and publicity material
used.

3.

COMMENTS ON THE OBSERVATIONS MADE BY THIRD

PARTIES

(70)

In their letter dated 10 September 2004,
the French
authorities replied to the observations made by third
parties. They explained that there was a perception that the
aid had been diverted from its initial objective and used for
the sole profit of an enterprise in competition with the third
parties concerned. The French authorities took exception to
these allegations, which directly challenged the probity of
the various administrations concerned and therefore invited
the Commission to dismiss these arguments.

1.1. EXISTENCE OF A SELECTIVE ADVANTAGE FINANCED BY

STATE RESOURCES

(73) Measures which, whatever their form, are likely directly or
indirectly to favour certain undertakings or are to be
regarded as an economic advantage which the recipient
undertaking would not have obtained under normal market
conditions are regarded as aid.

(74) The Commission notes that the type of contributions in
this case required the adoption of an act by a public
authority for their full
impact to be felt and that the
resources they generated served as a tool to implement a
State-supported policy. In addition, there is no proof that
the beneficiaries of aid are always those liable to the
corresponding charges. For these reasons, the contributions
do not meet the criteria for derogations from Article 87(1)
of the Treaty, as proposed by Court of Justice case law (12).
Consequently, the Commission considers that this is a case
of parafiscal charges, i.e. public resources.

(75) Moreover, according to ECJ case law, measures which, in
various forms, mitigate the charges which are normally
included in the budget of an undertaking and which,
therefore, without being subsidies in the strict sense of the
word, are similar in character and have the same effect are
also considered to be aid (13).

(76) The existence and type of the aid must be established for
the potential beneficiaries of the Rivesaltes Plan and of the
inter-branch contributions for publicity and promotion and
for operating and financing certain AOCs. In the case in
point, the support given did favour certain undertakings
since the aid was only granted to AOC producers operating
in certain specific regions.

V.

ASSESSMENT

1.2. EFFECTS ON TRADE

1.

ARTICLE 87(1) OF THE TREATY.

(71) Article 87(1) of the Treaty states that,

‘save as otherwise
provided in this Treaty, any aid granted by a Member State
or through State resources in any form whatsoever which

(77) Lastly, in order to establish whether the aid falls within
Article 87(1) of the Treaty, an assessment must be made on
whether it is likely to affect trade between Member States.

(12) EU CoJ Judgment of 15 July 2004 in Case C-345/02, Pearle, not yet

published in ECR.

(13) Court Judgment of 22 May 2003, Case C-355/00, Freskot, ECR p. I-

(11) Commission letter SG(90)D/25148 of 22.8.1990.

5263.

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(78) The Court has

ruled that when State financial aid
strengthens the position of an undertaking compared with
other undertakings competing in intra-Community trade,
the latter must be regarded as affected by that aid (14).

(79) The fact that there is trade between Member States in the
wine sector is demonstrated by the existence of a common
market organisation for the sector.

(80) The following table shows, as an example, the level of trade
in wine products between France and the other Member
States over the last
the afore-mentioned
two years of
conversion scheme in France.

Wine

1999/2000

EU as at
30/04/2004

France

Usable production

168 076 000 hl

54 271 000 hl

Exports to other MS as
at 30/04/2004

Imports from other MS
as at 30/04/2004

—

—

15 500 000 hl

5 700 000 hl

(81) The aid granted is therefore likely to affect trade between
the Member States and to distort or potentially distort
competition since it
favours the production of certain
national wines to the detriment of production in other
Member States. The wine sector is extremely open to
competition at Community level and is consequently very
sensitive to any measure favouring production in a
particular country.

1.3. CONCLUSIONS REGARDING THE NATURE OF THE ‘AID’

UNDER ARTICLE 87(1) OF THE TREATY

(82)

In the light of the above explanations, the Commission
considers that the measures in favour of producers of AOC
wines operating in certain specific regions constitute a
financial advantage financed by public resources allocated
to them which is not available to other operators, which
distorts or has the potential to distort competition by
favouring certain undertakings and productions, thereby is
likely to affect trade between Member States. It is therefore
aid within the meaning of Article 87(1) of the Treaty.

(14) Court Judgement of 17 September 1980 in Case 730/79, Philip

Morris/Commission, ECR p. 2671, Ground 11.

2.

ASSESSMENT OF THE COMPATIBILITY OF THE AID

(83) However, Article 87 of

the Treaty provides scope for
derogations to the general principle that State aid is
incompatible with the Treaty, whilst it is clear that some are
not applicable to the case in point, notably the derogations
under Article 87(2). These were not cited by the French
authorities.

(84) The derogations provided for in Article 87(3) of the Treaty
must be interpreted strictly when considering regional or
sectoral aid programmes or any individual case of
application of general aid schemes. In particular, they may
be allowed only where the Commission is able to establish
that the aid is necessary to achieve one of the aims in
question. Allowing such derogations to apply to aid not
meeting that condition would be tantamount to allowing
trade between Member States to be affected and permitting
distortion of competition that has no justification in the
light of the Community interest and, by the same token,
undue advantages for the operators of certain Member
States.

(85) The Commission considers that

the aid measures in
question are not intended to encourage economic devel-
opment
living is
in a region where the standard of
abnormally low or where there is serious underemploy-
ment within the meaning of Article 87(3)(a) of the Treaty.
Nor are they intended to promote the execution of an
important project of common European interest or to
remedy a serious disturbance in the economy of a Member
State within the meaning of Article 87(3)(b). Nor again are
they intended to promote either culture or heritage
conservation within the meaning of Article 87(3)(d).

(86) Article 87(3)(c) of the Treaty provides that aid to facilitate
the development of certain economic activities or of certain
economic areas may be considered to be compatible with
the common market where such aid does not adversely
trading conditions to an extent contrary to the
affect
common interest. In order to be covered by this derogation,
aid must contribute to the development of the sector in
question.

2.1. UNLAWFULNESS OF AID

(87) The Commission notes that the French authorities did not
notify it of the measures introducing the aid in question, as
required by Article 88(3) of the Treaty. Article 1(f) of
Regulation (EC) No 659/1999 defines unlawful aid as new

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aid put into effect in contravention of Article 93(3) of the
Treaty. The obligation to notify State aid is enshrined in
Article 1(c) of Regulation (EC) No 659/1999 (15).

Article 1(f) of Regulation (EC) No 659/1999 is to be
assessed in accordance with the rules and guidelines
applicable at the time when the aid is granted.

(88) Since the measures

implemented by France contain
elements of State aid, it constitutes new aid, not notified
to the Commission, and therefore unlawful under the
Treaty.

(94) Regarding State aid financed by parafiscal charges, the
measures financed by this aid and the methods of financing
the aid itself must be assessed by the Commission.

2.2.

IDENTIFYING THE GUIDELINES APPLICABLE TO THE
NON-NOTIFIED MEASURES

2.3. ANALYSIS IN THE LIGHT OF THE APPLICABLE RULES

(89)

In accordance with Point 23.3 of the agriculture guidelines
and the Commission notice on the determination of the
applicable rules for the assessment of unlawful State aid (16),
all unlawful aid under Article 1(f) of Regulation (EC)
No 659/1999 must be assessed in accordance with the
texts in force at the time when the aid was granted.

(90) The agriculture guidelines have applied since 1 January
2000. Any aid granted after this date must be assessed in
the light of these guidelines. However, any aid granted
before this date must, where necessary, be assessed in the
light of
the measures and practice applicable before
1 January 2000.

2.3.1. The aid measures

2.3.1.1. The ‘set-aside premium’

(95) The set-aside premium was financed by an inter-branch
contribution, which was a compulsory charge levied by
public authorities for the wine conversion project. The
purpose of the premium was to compensate producers for
the loss of income deriving from their commitment not to
claim the registered designation of origin (AOC) ‘Rivesaltes’
and to refocus their production on table wine and ‘vin de
pays’.

subject

(91) Point 3.2 of the agriculture guidelines states that, even if
Articles 87, 88 and 89 of the Treaty are fully applicable to
the sectors covered by the CMOs, their application remains,
in the
to the provisions
however,
Regulations concerned.
In other words, recourse by a
Member State to Articles 87, 88 and 89 of the Treaty
cannot override the provisions of the Regulation governing
the market organisation concerned (17). The Commission
must also assess whether aid runs counter to smooth
operation of
the market concerned and therefore is
incompatible with the single market.

set out

nor,

(96) However, the set-aside premiums as provided by the French
in the market
aid scheme were not provided for
(EEC)
organisation
No 456/80. That Regulation provided only for a premium
for
temporary or permanent cessation of production,
payable when a producer decided to contribute to reducing
the Community's wine-growing potential by, in particular,
grubbing up vines.

by Regulation

specifically,

(92) The aid provided for in the Rivesaltes Plan was granted
between 1 January 1997 and 31 July 2000, i.e. before the
entry into force on 1 August 2000 of Regulation (EC)
No 1493/1999 of 17 May 1999 on the common
organisation of the market in wine. Since the measures
concerned fall within the scope of the common organisa-
tion of the market in wine, they must be examined in the
light of the legislation in force at that time, i.e. Regulation
(EEC) No 822/87.

(93) As for the advertising aid introduced for certain AOCs,
which, according to the French authorities, was discon-
tinued after 31 December 2000, the compatibility of the
aid granted must be assessed in the light of the guidelines
for State aid for advertising products listed in Annex I to the
EC Treaty and of certain non-Annex I products (18), point
70 of which states that unlawful aid within the meaning of

(97) The Commission states that the purpose of the French
measure was not to reduce wine production but solely to
cease using the Rivesaltes AOC. Since potential was not
reduced and the premium did not finance any abandon-
ment, the measure does not fall within the scope of the
previous organisation of the market in wine.

(98) Although Regulation (EEC) No 456/80 appears not to
apply because no production was abandoned, the measure
must be assessed in the light of other horizontal measures
regarding State aid. Article 17 of Regulation (EEC) No 456/
80 stated that the provisions of this Regulation did not
prevent aid from being granted under national rules that is
designed to achieve the same objectives as those pursued by
this Regulation, provided they are assessed within the
meaning of Articles 92, 93 and 94 of the Treaty (now
Articles 87, 88 and 89).

(15) ‘New aid’ shall mean all aid, that is to say, aid schemes and individual
aid, which is not existing aid, including alterations to existing aid.

(16) OJ C 119, 22.5.2002, p. 22.
(17) Court Judgment of 26 June 1979, Case 177/78, Pigs and Bacon

Commission v. McCarren, ECR. p. 2161.

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

(99) The measure in question does not provide for abandon-
ment of production. It cannot therefore be treated as a
measure designed to achieve the same objectives as those
pursued by Regulation (EEC) No 456/80, in other words, to
reduce wine-growing potential.

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(100) The French authorities themselves explained that the aim of
the measure was not to reduce the wine-growing potential
since the commitment made by beneficiaries was essen-
tially to agree to marketing table wine or ‘vin de pays’,
rather than AOC wine, produced from set-aside plots.

(106) It

the

that

considers

set-aside premium constitutes
operating aid likely to interfere with the mechanisms of
the common organisation of the market in wine and that it
is therefore incompatible with the applicable market and
competition rules.

(101) The French authorities specified that the purpose of the
premium was to reward beneficiaries for undertaking not
to market AOC production from the set-aside plots. Thus,
in their opinion,
it did not constitute a supplement to
beneficiaries' revenue but rather compensated them for a
loss in income. As such, this premium could not be treated
as a mere operating aid which unduly constitutes liquidity
relief.

2.3.1.2. Conversion aid

(107) Article 14 of Regulation (EEC) No 822/87 stipulated that
all national aid for planting vineyards would be prohibited
from 1 September 1988, except where such planting met
criteria relating, in particular, to reducing production or
improving quality without resulting in an increase in
production.

(102) However, in contrast to the French authorities' recommen-
dation, the Commission is of the opinion that the purpose
of the national aid is to give financial support to producers
who, as business operators, had freely decided to undertake
a purely commercial venture, the costs of which constitute
expenditure in connection with economic activity. In fact,
State compensation to economic operators for a loss of
voluntarily sustained income constitutes public aid with the
impact of mitigating the economic effects of their decision.

(103) According to the consistent practice of the Commission
before the agriculture guidelines were adopted on 1 January
2000 and according to the Court of Justice case law (19),
operating aid is aid intended to relieve an undertaking of
the expenses which it would itself normally have had to
bear in its day-to-day management or its usual activities.
The Court notes that it is consistent practice that operating
aid can in no cases be declared as compatible with the
single market under Article 87(3)(c) of the Treaty since by
its very nature this aid has the potential to alter trading
is contrary to common
that
conditions to an extent
interest.

(104) This principle is reiterated in point 3.5 of the agriculture
guidelines, which state that unilateral state aid measures
which are simply intended to improve the financial
situation of producers but which in no way contribute to
the development of the sector, and in particular aids which
are granted solely on the basis of price, quantity, unit of
production or unit of
the means of production are
considered to be comparable to operating aids which are
incompatible with the common market. Point 3.5 adds that
by their very nature, such aids are likely to interfere with
the mechanisms of the CMOs.

(108) Commission Regulation (EEC) No 2741/89 laid down the
criteria for examining draft national aid schemes for the
planting of wine-growing areas permitted under Articles 92,
93 and 94 of the Treaty (now Articles 87, 88 and 89).

(109) Article 2 of that Regulation stipulates that draft national
aid must satisfactorily demonstrate compliance with the
objective set out in the second subparagraph of Article 14
(2) of Regulation (EEC) No 822/87 of reducing production
quantity or improving quality without leading to increased
production.

(110) Article 3 of

that Regulation states that planting must
involve varieties which, in the terrain concerned, are not
considered high-productivity varieties, are recognized as
improving quality and are specifically authorised by the
national authorities under the draft aid measure concerned.

(111) The French authorities pointed out

that

they send an
annual report to the Statistical Office of the European
Communities, in accordance with Article 9 of Regulation
(EEC) No 822/87, with a statement of the area under vines,
broken down by department and by type of grape
produced (wine grapes, including quality wine psr, table
grapes) and a statement of grubbed-up areas and vine
planting submitted in the same format with a breakdown
by department and by type of grape produced. The French
authorities enclosed a copy of the tables sent for the 1997/
98 marketing year.

(105) The Commission notes that the aid was granted per hectare
per year on the basis of continued production and that it
was therefore closely linked to the quantity of wine
produced.

(19) Court Judgment on the afore-cited Siemens case.

(112) The Commission did receive from the French authorities
information on the varieties used in the conversion projects
enabling it to ascertain compliance with the conditions
referred to in points 107 to 110. This information had
allowed the Commission previously to conclude that the
requirements of Community
vine varieties met
legislation applicable at the time the aid was granted.

the

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(113) Article 5 of Regulation (EEC) No 2741/89 stipulated that
the amount of aid granted per hectare of vineyard planted
may not exceed 30 % of the actual cost of grubbing-up and
planting. The costs to be taken into account in allocating
the aid may be determined on a flat-rate basis in each
region, particularly in the light of geomorphological
characteristics.

the promotion of
rules governing national aid for
agricultural products and certain products that are not
listed in Annex II to the EEC Treaty, except for fishery
products (20), applicable to this type of aid. Moreover, the
Commission considered that the CIVDN's administrative
expenses were not to be counted as aid.

(114) According to the information provided by the French
authorities, as a proportion of the total funding, 29,11 %
of the conversion costs actually incurred was covered by
public bodies. Thus the French authorities concluded that
the total amount of the aid did not exceed the 30 % ceiling
set by EU legislation.

(115) Article 5 of Regulation (EEC) No 2741/89 stipulated that
the relevant factor for calculating the conversion costs was
the aid actually granted per hectare of vines planted. This
logic excludes overall calculations relating to the conver-
sion exercise as a whole and, consequently, calculations
based on the average per hectare of the total costs.

(116) The Commission considers that, in view of the costs per
hectare put
(FRF
110 000/ha), the aid granted in this case should have been
the real costs
capped at FRF 33 000/ha and 30 % of
incurred by the individual producers.

forward by the French authorities

(117) The new information provided by the French authorities
shows that, in total, under this Plan, FRF 36,623 million
was paid for the renovation of vines over an area of 1 238
ha to 875 producers. 221 cases exceeded FRF 33 000/ha
for an area of 166 ha, corresponding to FRF 0 883 million.

(118) The Commission concludes that

individual cases that
exceed the ceiling of 30 % of actual costs and/or the ceiling
of FRF 33 000/ha constitute State aid that is incompatible
with the applicable rules.

2.3.1.3. Aid for publicity and promotion and for

operating the AOCs concerned

the end of 2002,

(119) The Commission most recently approved State aid No N
184/97, valid until
financed by a
parafiscal charge to cover, among other things, advertising
and operating measures for the benefit of the CIVDN. The
initial measure was approved by the Commission in 1990
under State aid No N 230/90. The Commission had then
concluded that the aid granted for collective promotion to
improve and to consolidate the product image of natural
sweet wine and to develop sales was in accordance with the

(120) The Commission deems that the authorisation given for
State aid N 184/97 does not constitute a tacit authorisation
for further modifications, or other measures, such as the
case in point, on top of the previously authorised aid.

(121) However

the French authorities confirmed that

the
advertising initiatives funded by CVO receipts were of the
same nature as those financed through the parafiscal charge
that had been notified to and approved by the Commission.
According to the French authorities, it therefore constituted
exclusively an increase in the overall budget
the
measure.

for

(122) Since the same conditions had been applied when these aid
schemes were granted, the Commission, in referring to its
Decision on State aid N 184/97, is therefore in a position
to conclude that advertising and operating aid for the
AOCs financed by the new contributions are compatible
with the applicable competition rules.

(123) The Commission takes note of the comments from third
parties, according to which the measures financed breached
the applicable competition rules on advertising aid for
agricultural products since it was paid to specific under-
takings. However the supporting documents submitted
show instead that these advertising campaigns could be
treated as technical assistance schemes where the bene-
ficiaries were wine producers.

2.3.2. Financing the aid

(124) In accordance with the case law of the Court of Justice (21),
the Commission normally considers that the financing of
State aid by means of compulsory charges may influence
the aid by having a protective effect which goes beyond the
aid as such. The levies in question are compulsory charges.
According to the same case law, the Commission considers
that aid may not be financed by parafiscal charges that also
apply to products imported from other Member States.

(125) The Commission already concluded, notably in State aid N
the scheme introduced by the French

184/97,
authorities did not affect imported products.

that

(20) OJ C 302, 12.11.1987, p. 6.
(21) Court Judgment of 25.6.1970, Case 47/69, France v. the Commis-

sion, ECR. p. 487.

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(126) The documents introducing parafiscal charges in the case in
point show that they impact only on the production of
natural sweet AOC wine in the Eastern Pyrenees Region.
The set-aside premium was financed by a contribution that
only affected regional production of the wine concerned,
therefore excluding all imported products.

(127) It can therefore be concluded that no imported products
are or have been subject to the parafiscal charges concerned
in this case.

VI.

CONCLUSION

(128) The State aid operated by France in the form of ‘set-aside
premiums’ granted to French wine producers that under-
take not to claim the registered designations of origin
(AOC) ‘Rivesaltes’ or ‘Grand Roussillon’ from the 1996
harvest to the 2000 harvest inclusive is incompatible with
the single market.

(129) The State aid operated by France in the form of

the
conversion plan for the AOC Rivesaltes vineyard from the
1996 harvest to the 2000 harvest inclusive, that was granted
to individual cases exceeding 30 % of the actual costs and/or
exceeding the EUR 5 030,82/ha (FRF 33 000/ha) ceiling is
incompatible with the single market.

(130) The State aid operated by France between 1 January 1998
and 31 December 2000 in the form of advertising and
operating aid to the ‘Rivesaltes’, ‘Grand Roussillon’, ‘Muscat
de Rivesaltes’ and ‘Banyuls’ AOCs is compatible with the
single market under Article 87(3)(c) of the Treaty.

(131) The measures

in question were not notified to the
Commission in accordance with Article 88(3) of the Treaty
and therefore constitute unlawful aid under Article 1(f) of
Regulation (EC) No 659/1999.

(132) The Commission regrets that France operated the above aid
measures in contravention of Article 88(3) of the Treaty.

(133) It should be remembered that, in the case of aid measures
implemented without awaiting the Commission's final
decision, given the binding nature of the rules of procedure
laid down in Article 88(3) of the Treaty, which the Court of
Justice recognised as having direct effect in its judgments of
19 June 1973 in Case 77/72, Carmine Capolongo v.
Azienda Agricola Maya (22); 11 December 1973 in Case
120/73, Gebrueder Lorenz GmbH v. Federal Republic of
Germany (23) and 22 March 1977 in Case 78/76, Steinike
& Weinlig v. Federal Republic of Germany (24),
the
unlawfulness of the aid concerned cannot be regularised

(22) ECR p. 611.
(23) ECR p. 1471.
(24) ECR p. 595.

ex post facto (judgment of 21 November 1991 in case C-
354/90, Fédération Nationale du Commerce Extérieur des
Produits Alimentaires v. French Republic) (25).

(134) The Court of Justice recalled that where an aid measure, of
which the method of financing is an integral part, has been
implemented in breach of the obligation to notify, national
in principle order the reimbursement of
courts must
charges or contributions levied specifically for the purpose
of financing that aid. It also noted that it is for the national
courts to uphold the rights of the persons concerned in the
event of a possible breach by the national authorities of the
prohibition on putting aid into effect, referred to in the last
sentence of Article 88(3) of
the Treaty and directly
applicable. Such breaches cited by interested individuals
and ascertained by national courts must result in the courts
drawing the necessary consequences, in accordance with
national law, with regard to both the validity of the acts
giving effect to the aid and the recovery of financial support
granted (26).

the Commission must decide that

(135) Where an unlawful aid is incompatible with the common
market, Article 14(1) of Regulation (EC) No 659/1999
provides that
the
Member State concerned take all necessary measures to
recover the aid from the beneficiary. Such reimbursement is
necessary to re-establish the situation applying previously,
and involves cancelling all the financial advantages from
which beneficiaries of the unlawfully granted aid have
unduly benefited since the date the aid was granted.

(136) Article 14(2) of Regulation (EC) No 659/1999 stipulates
that recovery includes interest at an appropriate rate fixed
by the Commission. Such interest is payable from the date
on which the unlawful aid was made available to the
beneficiary.

(137) The aid must be reimbursed in accordance with the
procedures laid down by French law. The amounts include
interest from the date on which aid was granted until the
date of its effective recovery. It is to be calculated at the
Commission's reference rate, laid down by the method for
setting the reference and discount rates (27).

(138) The Commission does not have data on the overall amount
of aid granted under the ‘set-aside premium’ since it does
not know the amount of receipts taken nor the number of
hectares for which aid was received. Whilst specifying that
they do not in any way alter the Commission's conclusions,
the Commission notes the comments made by third
parties, according to which the ‘set-aside premium’ was the

(25) ECR p.I-5505.
(26) Court Judgment of 21 October 2003, joint cases C-261/01 and C-

262/01, Van Calster e.a., not yet published in the ECR.

(27) Commission notice on the method for setting the reference and

discount rates (OJ C 273, 9.9.1997, p. 3).

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subject of additional public aid and financing undeclared by
the French authorities. According to the information
available to the Commission, the amount of public aid to
finance the ‘conversion aid’ totalled EUR 11,01 million.

(139) This Decision will not prejudice the conclusions the
Commission may draw, if necessary, for the financing of
the common agricultural policy by the European Agricul-
tural Guidance and Guarantee Fund (EAGGF),

HAS ADOPTED THIS DECISION:

Article 1

1. The State aid operated by France in the form of ‘set-aside
premiums’ granted to French wine producers undertaking not to
claim the registered designations of origin (AOC) ‘Rivesaltes’ or
‘Grand Roussillon’ from the 1996 harvest to the 2000 harvest
inclusive is incompatible with the single market.

2. The State aid operated by France in the form of
the
conversion plan for the AOC Rivesaltes vineyards from the 1996
harvest to the 2000 harvest inclusive, that was granted in
individual cases to exceed 30 % of the actual costs and/or the
EUR 5 030,82/ha (FRF 33 000/ha) ceiling is incompatible with
the single market.

3. The State aid operated by France between 1 January 1998
and 31 December 2000 in the form of advertising and operating
aid to the ‘Rivesaltes’, ‘Grand Roussillon’, ‘Muscat de Rivesaltes’
and ‘Banyuls’ AOCs is compatible with the single market under
Article 87(3)(c) of the Treaty.

Article 2

1.
France shall take all necessary measures to recover the
incompatible aid referred to in Article 1(1) and (2) from the
beneficiaries.

Recovery shall be effected without delay and in accordance with
the procedures of national
law provided that they allow the
immediate and effective execution of the decision. The aid to be
recovered shall include interest from the date on which it was at
the disposal of the beneficiaries until the date of its recovery. It is
to be calculated at the Commission's reference rate, laid down by
the method for setting the reference and discount rates.

For the purpose of the recovery of incompatible aid referred
2.
to in Article 1(1), France shall inform the Commission of the
overall amount of aid granted under this measure and its
financing,
including the overall amount of receipts from the
inter-branch contribution introduced for this purpose, and the
number of hectares for which the ‘set-aside premium’ was
received.

Article 3

France shall
inform the Commission, within two months of
notification of this Decision, of the measures that it has taken to
comply therewith.

Article 4

This Decision is addressed to the French Republic.

Done at Brussels, 19 January 2005.

For the Commission

Mariann FISCHER BOEL

Member of the Commission