Commission Decision of 9 November 2005 concerning the aid scheme that France plans to implement in favour of producers and traders of liqueur wines: Pineau des Charentes, Floc de Gascogne, Pommeau de Normandie and Macvin du Jura (notified under document number C(2005) 4189)
Date: 2005-11-09
Institutions: European Commission
Subjects: France, State aid, aid system, control of State aid, fortified wine, production aid, viticulture

6.2.2007

EN

Official Journal of the European Union

L 32/37

COMMISSION DECISION

of 9 November 2005

concerning the aid scheme that France plans to implement in favour of producers and traders of
liqueur wines: Pineau des Charentes, Floc de Gascogne, Pommeau de Normandie and Macvin du Jura

(notified under document number C(2005) 4189)

(Only the French text is authentic)

(2007/55/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 called on interested parties to submit their comments
pursuant to the above provision (1),

Whereas:

I.

PROCEDURE

(1)

(2)

(3)

(4)

(5)

By letter dated 23 June 2003,
the French Permanent
Representation to the European Union notified the
Commission under Article 88(3) of the EC Treaty of an
aid scheme that it planned to implement in favour of
producers and traders of
liqueur wines: Pineau des
Charentes, Floc de Gascogne, Pommeau de Normandie
and Macvin du Jura. Further information was sent by letters
dated 9 August, 24 and 28 November 2003 and 17 and
24 February 2004.

By letter dated 20 April 2004, the Commission informed
France that it had decided to initiate the procedure laid
down in Article 88(2) of the EC 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 invited interested parties to submit their
comments on the aid in question.

The Commission has received no comments from inter-
ested parties.

By letter dated 11 June 2004, recorded as received on
14 June 2004, France submitted its comments to the
Commission.

II.

DESCRIPTION

(6)

The aids notified are a continuation of those previously
notified to and approved by the Commission in connection

(1) OJ C 42, 18.2.2005, p. 2.
(2) See footnote 1.

with state aids Nos N 703/95 (3) and N 327/98 (4) and
involve publicity and promotion measures, research and
experimentation measures, technical assistance measures
and measures
to promote the production of quality
products.

(7)

The Court of Justice annulled the Commission decision on
state aid N 703/95 in a judgment detailed below.

(8)

Seven instalments were paid under the two aid schemes
703/95 and 327/98, which were initially planned to run for
five years from 1995/96, the final instalment covering the
period from May 2001 to April 2002. However, because of
budget constraints imposed by the Government, the final
payments are still frozen today. The expiry date of the
previous scheme was extended to 30 April 2002.

(9) As regards the products covered, changes were made from
the previous schemes. The spirit-drinks sector (Armagnac,
Calvados, Cognac) did not ask for the scheme to be
extended. Consequently, the French authorities decided to
restrict it to liqueur wines with a registered designation of
origin.

(10) For all the inter-branch organisations targeted and all the
aid measures described below, the total budget planned is
EUR 12 000 000, broken down as follows: EUR 9 360 000
for Pineau des Charentes, EUR 2 040 000 for Floc de
Gascogne, EUR 360 000 for Pommeau de Normandie and
EUR 240 000 for Macvin du Jura.

(11) The research,

technical assistance and quality-product
development measures will be financed solely by the
Member State
from the budget. The publicity and
promotion measures will be financed partly by the Member
State and partly by the inter-branch organisations con-
cerned by means of obligatory voluntary levies (CVO)
charged to their members. For publicity measures within
the European Union, the Member State will contribute up
to a maximum of 50 %.

(3) Letter No SG(96) D/9957 to the French authorities dated

21 November 1996.

(4) Letter No SG(98) D/6737 to the French authorities dated 4 August

1998.

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(12) The CVO applies to the volumes of liqueur wines with a
registered designation of origin marketed by winegrowers,
professional distillers,
located
within the production area of the registered designation
of origin concerned.

traders and wholesalers

Pommeau de Normandie

Macvin du Jura

EU

360 000

175 000

Non-member
countries

—

—

Total

360 000

175 000

Total

8 981 000

1 212 500

10 193 500

(13)

In 2002, the CVO was EUR 12,96/hectolitre for Pineau des
Charentes, EUR 0,25/bottle
Floc de Gascogne,
EUR 30,79/hectolitre for Pommeau de Normandie and
EUR 2,75/hectolitre for Macvin de Jura.

for

1.

Publicity and promotion measures

(14) The French authorities explained that the planned pro-
grammes will be carried out on certain European Union
markets, including the French market, and on markets of
the planned
non-member countries. The purpose of
publicity measures is to encourage the development of
purchasing intentions by improving knowledge of liqueur
wines, without promoting just the products of specific
companies. The products concerned will all be registered
destinations of origin: Pineau des Charentes, Floc de
Gascogne, Pommeau de Normandie and Macvin du Jura.

(15) These measures benefit all organised producers of liqueur
wines who, according to the French authorities, could not
alone carry out equivalent measures
to improve the
marketing of their products.

(16) Steps will be taken to ensure that the publicity campaigns
do not aim to dissuade consumers from buying products
from other Member States or to disparage those products.

(17) The programmes will

involve publicity,

information and
communication campaigns, comprising a range of mea-
sures, including advertising in the media, the creation and
distribution of other promotional materials and publicity
campaigns at points of sale. They may be accompanied by
promotion measures such as public relations measures,
participation in fairs, seminars and events,
information
brochures and documentation and studies of the product's
image in the eyes of consumers and the relevance of the
campaigns.

(18) The French authorities promised to submit originals or
the

the publicity material

to be used for

copies of
campaigns.

(19) The aid planned by the above inter-branch organisations for
publicity will be limited to 50 % for measures within the
European Union including France and 80 % for measures in
non-member countries.

(20) The estimated aid in euro for the planned measures is:

EU

Non-member
countries

Total

Floc de Gascogne

1 490 000

212 500

1 702 500

Pineau des Charentes

6 956 000

1 000 000

7 956 000

2.

Research measures

(21) According to the French authorities, the purpose of the aid
for research and experimentation is exclusively to support
general research that is useful to the sector as a whole.

(22) For Pineau des Charentes: microbiology, bacterial deteriora-
tion and consequences (identifying the factors promoting
the development of lactic bacteria in Pineau des Charentes,
perfecting tests for contamination and methods to solve the
problem); ageing methods (identifying analytical criteria
characteristic of oxidation phenomena and the factors
responsible for ageing); constituting an analytical database
(general analyses — rate of vinifiable alcohol, sugars, pH,
any chemical or bacteriological contamination, metals,
cations, volatile compounds, plant-protection product
residues).

(23) For Floc de Gascogne: studies of vine varieties and blends,
with the aim of optimising the harmonisation of blends of
varieties to increase the freshness and fruitiness of Floc de
Gascogne (aiming to achieve high sugar contents, intense
colour and consistent total acidity); study of Armagnac
suitable for producing Floc de Gascogne (analysis —
copper, ethanol and ethyl acetate contents, alcoholic
strength, improvement of the Armagnac used); study and
development of a Floc de Gascogne suited to targeted
consumption types, qualitative and quantitative tests,
storage.

(24) For Macvin du Jura: technical development (monitoring the
Jura vine varieties in order to
maturity of groups of
determine the state of maturity and the vine varieties best
suited for the production of Macvin du Jura); selection and
evaluation of vineyards; quality of musts and pressing
(effects of extraction methods — enzymage and cold
pressing — and of pellicular maceration of musts on the
aromatic quality of Macvin du Jura); impact of the quantity
of SO2 during settling; clarification and treatment
for
bottling (comparison of different methods to ensure that
Macvin du Jura is and remains limpid after bottling).

(25) The full cost of the planned research work will be financed.
The estimated allocation of aid for this research measure
over the five years, including computer and bibliographical
expenditure and expenditure on all
for
disseminating the results of the measures implemented to
all operators, is: Pineau des Charentes, EUR 912 600; Floc
de Gascogne, EUR 118 000 and Macvin du Jura,
EUR 65 000.

the means

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3.

Technical assistance measures

duty was fixed of FRF 1 400 per hectolitre (7) for liqueur
wines and FRF 350 per hectolitre for naturally sweet wines.

(26) The French authorities described the planned technical
assistance measures, which will consist primarily of
technical
training to improve and control production
processes at all levels (primary production, wine-making,
tasting) and of measures to disseminate knowledge.

(27) The full cost of this work will be financed, subject to the
abovementioned ceiling. The estimated allocation of aid for
this work over the five years is: Pineau des Charentes,
EUR 280 800 and Floc de Gascogne, EUR 169 000.

4.

Aid for the production of quality products

(28) Aid for the production of quality products is planned for
Pineau des Charentes and Floc de Gascogne. The following
measures are planned: HACCP and traceability (develop-
ment and dissemination of a reference framework in
accordance with the technical and regulatory requirements);
technical and economic studies to encourage quality-
improvement measures.

(29) The estimated allocation of aid for these measures over the
five years is: Pineau des Charentes, EUR 210 600 and Floc
de Gascogne, EUR 50 500.

III.

INITIATION OF THE PROCEDURE PROVIDED FOR

IN ARTICLE 88(2) OF THE TREATY

(30) As regards the nature of, the conditions for granting and
the method of financing the planned aid, the preliminary
examination of the measures did not raise any substantive
doubts, although,
the aid for publicity
measures, the Commission took the view that France must
make an explicit undertaking that any reference to the
national origin of
the products concerned would be
secondary.

in the case of

(31) The Commission initiated the procedure provided for in
Article 88(2) of the Treaty because of doubts concerning
the compatibility of
the aid with other provisions of
Community law, in particular Article 90 of the Treaty.

(32)

It should be pointed out that the Commission Decision
concerning state aid No N 703/95, of which the notified
measure is an extension, was annulled by the Court of
Justice (5).

(33)

In its judgment, the Court recalled that during 1992 and
1993 (6)
French government had introduced a
the
differentiated system of
taxation for liqueur wines and
naturally sweet wines. Thus, from 1 July 1993 an excise

(5)

Judgment of the Court in Case C-204/97, Portuguese Republic v
Commission of the European Communities, [2001] ECR I-03175.

(34) During 1993/94, certain French producers refused to pay
the additional excise duty on liqueur wines. When that
excise strike was suspended in June 1994, the President of
the Confédération nationale des producteurs de vins de liqueur
AOC (National Confederation of Producers of Liqueur
of Origin;
a Registered Designation
Wines with
CNVDLAOC) justified that suspension by reference to the
fact that, according to him, the French Government was
planning to pay French producers of
liqueur wines an
annual indemnity and compensation for the years 1994 to
1997 in order to compensate for the difference in taxation.

(35)

In 1995, the Associação de Exportadores de Vinho do Porto
(Association of Port Wine Exporters; AEVP) sent
two
complaints to the Commission. It claimed that there was a
link between the difference in taxation between liqueur
wines and naturally sweet wines and certain aid paid to
French producers of liqueur wines. According to the AEVP,
the aid was intended to compensate French producers of
liqueur wines for the higher level of taxation, which meant
that only foreign producers of liqueur wines had to pay the
higher tax. They claimed that this discriminatory taxation
infringed Article 95 (now Article 90) of the Treaty.

(36) The Court established that part of the aid in question
appeared to favour a category of producers that broadly
coincided with the category of French producers of liqueur
wines fiscally disadvantaged by the system of taxation and
that the possible existence of a link between the system of
taxation and the proposed aid scheme in question
represented a serious difficulty in determining whether
that scheme was compatible with the provisions of the
Treaty.

(37) The Court stressed that, under those circumstances, only by
initiating the procedure provided for in Article 93(2) of the
Treaty (now Article 88(2)) would the Commission have
been in a position to appreciate the issues raised in the
complaints lodged by the AEVP.

(38) The Court also found that the Commission Decision was
devoid of any statement of reasons, i.e. that the Commis-
sion had not explained why it had concluded that the
complaint
lodged by the AEVP claiming a possible
infringement of Article 95 (now Article 90) of the EC Treaty
was unfounded.

(39) The Court therefore concluded that the contested decision
was unlawful, as a result both of the failure to initiate the
procedure under Article 93(2) (now Article 88(2)) of the
Treaty and of the breach of the duty to state reasons, as
provided for in Article 190 (now Article 253) of the Treaty.

(6) Rectifying Finance Act No 93-859 of 22 June 1993.

(7) FRF 1 = EUR 0,15.

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(40) Given this judgment, the Commission regarded it essential
to make a detailed examination in the light of Article 90 of
the Treaty of the notified aid scheme, which is an extension
of the scheme approved in the Decision annulled by the
Court.

(48) The Commission also took the view that it should comply
with the Court's wish to allow third parties to put forward
their arguments concerning a possible infringement of
Article 90 of the Treaty.

(41) As part of its preliminary examination of the measure, the
Commission therefore asked the French authorities whether
in practice, a partial
the state aid concerned was not,
reimbursement, exclusively to French producers of liqueur
wines, of the tax provided for in Article 402(a) of the
General Tax Code.

(42)

In its answers during this first phase, France stressed that
there had been no link in the past and there was no link
today between the proposed support measures and excise
duties, for the following reasons:

(43) According to the French authorities, the amount allocated
for the aid (EUR 2,4 million per year, EUR 12 million over
five years) is tiny compared with what the sector pays back
in excise duties. Thus, the 150 000 hectolitres of liqueur
wines with a registered designation of origin marketed, on
which an excise duty of EUR 214/hl is imposed, brings in
more than EUR 32 million per year in excise revenue.

(44) With this special rate of EUR 214/hl imposed on liqueur
wines, compared with EUR 54/hl for natural sweet wines,
this sector paid an extra EUR 24 million in excise duties.
According to France,
sum was also out of all
proportion to the proposed level of aid.

this

(45) According to the French authorities, no provision had ever
been implemented providing for the use of funds collected
under Article 402a of the General Tax Code for the benefit
of French producers of
liqueur wines. Thus, between
1 January 1995 and 31 December 2000, the revenue
collected was paid to the fonds de solidarité vieillesse (Old-Age
Solidarity Fund). Between 1 January 2001 and 31 December
2003,
it was paid to a fund intended to finance the
reduction of working hours. Since 1 January 2004, this
revenue has been paid into the national budget.

(46) After examining this information, the Commission was of
the opinion that it did not categorically dispel the doubts
regarding the existence of a link between the tax collected
and the aid.

(47) The Commission took the view that the fact that the
amount of aid (EUR 2,4 million) did not tally with the
revenue from excise duties on liqueur wines (EUR 32 mil-
lion) or with the additional excise duties imposed on
sweet wines
compared with natural
liqueur wines
(EUR 2,4 million) did not constitute reasonable proof of
the absence of a link between the tax and the aid. It could
not therefore be ruled out, at this stage of the procedure,
that the aid could, at least in part, be used to provide
compensation to French producers of liqueur wines that
other Community producers could not receive.

(49)

In the decision to initiate the procedure provided for in
Article 88(2) of the Treaty, the Commission therefore asked
France to provide information and additional figures in
support of its position.

(50)

Initially, France was asked to specify whether the national
authorities had already made an undertaking to producers
of French liqueur wines to provide compensation, even
partial, for the impact of the introduction of the tax in
1993.

(51) The Commission then asked France to provide figures for
the sums collected under the tax on liqueur wines from
French products and imported products respectively and for
the sums collected, broken down by product (French or
Community).

(52) Noting that Pineau des Charentes was, by far, the principal
beneficiary of the notified aid, receiving 78 % of the total,
followed by Floc de Gascogne with 17 %, then Pommeau de
Normandie with 3 % and, finally, Macvin du Jura with 2 %,
the Commission asked France to explain if these percen-
tages coincided, for each of these products, with those for
the revenue that the State received from the tax on liqueur
wines.

(53) Since most of the aid is for publicity measures, France was
asked to explain whether this was representative of French
Government policy in other
in
particular as regards quality products.

agricultural

sectors,

(54) The Commission asked France to provide the budget for aid
for publicity campaigns in France for each of the four
products concerned.

(55) France was also asked to provide explanations concerning
any link between the revenue from the CVO and the
resources from the national budget used to finance the aid.

IV.

COMMENTS SUBMITTED BY FRANCE

(56) By letter dated 10 January 2005, France submitted the

following information and comments:

(57) As regards publicity measures (see recital 30), the French
authorities promised that
the financing would not be
provided for measures placing the emphasis on the French
origin of the liqueur wines concerned.

(58) As regards the link between the tax on liqueur wines and
the aid, France again underlined that
there was no
correlation between the revenue from excise duties and
the amount of aid from the national budget. The revenue

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from excise duties, including that from liqueur wines, is
paid into the general state budget. According to the French
authorities, the public authorities take decisions on aid for
certain economic sectors completely independently. In this
case, the aid is intended to remedy a number of structural
in particular a lack of
handicaps affecting these wines,
awareness of the products among consumers, the small size
and the dispersal of production facilities and the lack of
means to improve market position.

(59) France confirmed that

text allowing
compensation for the excise duties paid by producers of
liqueur wines (see recital 50).

there is no legal

differentiate between French products and those from other
Member States.

(61)

In any event, according to the figures produced by the
customs authorities, excise duties levied in 2003 on natural
sweet wines and liqueur wines of all origins amounted to
EUR 142,5 million, broken down as follows: EUR 25,2 mil-
lion from natural sweet wines, subjected to a duty of EUR
54/hl on a volume of 467 000 hl, and EUR 117,3 million
from liqueur wines, subjected to a duty of EUR 214/hl on a
volume of 548 000 hl.

(60) As regards the revenue from the release to the market of
French liqueur wines and of imported liqueur wines (see
recital 51), France first of all explained that the tax statistics
(which are broken down by excise duty tariff) do not

(62)

In this latter figure, it is possible, on the basis of harvest
declarations, to isolate liqueur wines produced in France.
These break down as follows: 94 477 hl of Pineau des
Charentes, 2 091 hl of Macvin du Jura, 5 680 hl of
Pommeau and 6 057 hl of Floc de Gascogne.

(63) France submitted a table showing the distribution of the planned aid between the four inter-branch

organisations and the breakdown by volume of liqueur wines produced (see recital 52).

Designation

Volumes produced

Percentage of production

Percentage of planned aid

Pineau des Charentes

112 436 hl (2001)

Floc de Gascogne

Pommeau

Macvin du Jura

8 413 hl (2003)

5 111 hl (2002)

2 717 hl (2002)

87 %

7 %

4 %

2 %

78 %

17 %

3 %

2 %

(64) France noted that the share of each liqueur wine in total production and the percentage of planned aid
are close, although they do not coincide totally. It stressed that the distribution of planned aid was the
result of discussions between the beneficiary inter-branch organisations and had not been imposed by the
public authorities.

(65) As regards the Commission's question about the budget for publicity measures (see recital 53), France
provided figures showing that, particularly for quality wines psr, the sums devoted to publicity measures
represent between 50 % and 74 % of the overall budget available to the inter-branch organisations.

(66) France forwarded, for each of the four inter-branch organisations concerned, the share of the budget
assigned to publicity campaigns in France. The authorities stated that this allocation would remain
unchanged if the aid scheme were approved and was the result of a free choice by the inter-branch
organisations concerned.

Liqueur wines with a
registered designation of
origin

2003 promotional bud-
get (EUR)

Promotion in France

Planned aid (EUR
2,4 million/year) (EUR)

Promotion in France

Pineau

Floc

Pommeau

Macvin

1 671 000

279 000

166 000

22 600

74 %

64 %

100 %

100 %

1 872 000

408 000

72 000

48 000

74 %

64 %

100 %

100 %

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(67) As regards the possible relation between the revenue from the CVO and the resources from the national

budget used to finance the aid, France provided the following table:

Designation of origin

Volume (hl)

Rate of CVO

Revenue from the CVO
allocated for promotion
(EUR)

Aid from the national
budget for promotion
(EUR)

Pineau

Floc

Pommeau

Macvin

112 436

EUR 12,96/hl

1 457 000 EUR

1 591 000 EUR

8 413

5 111

2 717

EUR 0,25/bottle

EUR 30,79/hl

EUR 2,75/hl

279 000 EUR

157 000 EUR

75 000 EUR

340 000 EUR

72 000 EUR

35 000 EUR

(68) The revenue that can be used for publicity is not restricted to the amounts collected by means of the
CVO. In particular, inter-branch organisations can draw on other resources, for example revenue from
the provision of services and the sale of advertising material and from other sources. France confirmed
that the publicity measures would receive private financing covering at least 50 % of eligible costs.

(69) For the purposes of comparing planned aid and revenue from excise duties, estimated on the basis of

volumes harvested (8), France provided the following figures:

Designation

Estimated revenue from excise
duties/year (EUR)

Planned aid (EUR)

Aid/excise duties

Pineau des Charentes

Floc de Gascogne

Pommeau

Macvin du Jura

20 218 078

1 296 198

1 215 520

447 474

1 872 000

408 000

72 000

48 000

9,3 %

31,5 %

5,9 %

10,7 %

(70) France stressed that this latter table was particularly significant, because it showed that the aim was not to
compensate for the burden of excise duties by means of aid, since there was no quantitative correlation
between the two.

V.

ASSESSMENT

must affect intra-Community trade and distort or threaten
to distort competition.

1.

Nature of the aid. Applicability of Article 87(1)

of the Treaty

(73)

In this
conditions are met:

case,

the Commission considers

that

these

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

1.1. State resources

(74) The research,

technical assistance and quality-product
development measures will be financed entirely by the
state from its budgetary resources.

(72) For a measure to fall within the scope of Article 87(1) of
the Treaty, the following four conditions must all be met:
(1) the measure must be financed by the state or through
state resources,
it must selectively concern certain
undertakings or production sectors, (3) it must involve an
economic advantage for the beneficiary undertakings, (4) it

(2)

(75) On the other hand, the promotion and publicity measures
will be financed partly by the state and partly (minimum of
50 %) by the trade organisations concerned from resources
drawn primarily from the ‘compulsory voluntary levy’
(CVO) imposed on their members.

(8) Volumes may differ from the volumes released for consumption).

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(76) The Commission considers that the budget allocated to
promotion and publicity measures is made up entirely of
state resources, on the basis of the arguments set out below.

resources allocated to measures for which the state is
responsible.

(77) The Commission has always taken the view that compul-
sory contributions from undertakings in a sector that are
allocated to funding financial
support measures are
parafiscal charges and therefore constitute state resources
when those contributions are imposed by the state or when
the proceeds of those contributions pass through a body
established by law.

(78)

the French Government made the levies
In this case,
compulsory as part of an extension of
inter-trade
agreements. The agreements were extended by means of a
decree published in the Journal officiel de la République
française. These levies therefore require an act adopted by
the public authorities to take their full effect.

(79) However, case law of the Court of Justice suggests that,
when the nature of a state aid is being assessed, it must also
be decided whether the state is responsible for the measure
concerned (9). Recent case law (10) has provided a framework
that should be examined here.

(80) The Court declared that certain measures financed by the
members of trade organisations through resources levied
from their members did not
fall within the scope of
Article 87(1) of the Treaty, since (a) contributions were
compulsorily allocated to financing the measures;
(b)
neither the organisation nor the public authorities had
power, at any time, freely to dispose of those resources; (c)
the members of
the trade organisation concerned had
exclusive responsibility for the measure, which did not
form part of government policy.

(81) This case law implies that, when the role played by the state
is purely and simply that of an intermediary, because it does
not intervene in policy choices made by the trade and at no
time disposes of
the resources collected, which are
compulsorily allocated to the measures in question, the
criterion of state responsibility is not met. The measures
can therefore be considered not to be state aid.

(82) Nevertheless, this case does not meet the criteria stipulated
in the Pearle judgment. In particular, the fact that the state
contributes 50 % to the financing of these promotion/
publicity measures clearly shows that they form part of
government policy, and, consequently, the funds used to
finance them should be regarded, in their totality, as public

(9)

Judgment of the Court of Justice in Case C-482/99, French Republic v
Commission, [2002] ECR I-4397, ground 24 and judgment in Case C-
126/01, GEMO, [2003] ECR I-13769.

1.2. Selective nature

(83) The measures benefit exclusively French producers of

liqueur wines and are therefore selective.

1.3. Existence of an advantage

(84) Producers of liqueur wines enjoy an economic advantage in
the form of funding for various measures (research projects,
technical assistance, the development of quality products,
promotion and publicity). This advantage improves the
competitive position of
the beneficiaries. According to
consistent case law of the Court of Justice, the improvement
of the competitive position of an undertaking resulting
from state aid implies, as a general rule, a distortion of
competition with respect
to other undertakings not
receiving the same support (11).

1.4.

Impact on trade and distortion of competition

(85) This aid is likely to affect trade between Member States
insofar as it promotes national products to the detriment of
the products of other Member States. Indeed, there is very
open competition in the Community wine sector, as is well
shown by the existence of a common organisation of the
markets in the sector.

(86) The following table shows, by way of an example, the level
of intra-Community and French trade in wine products
over the years 2001, 2002 and 2003 (12).

Wine (1 000 hl)

Year

EU imports

EU exports

2001

2002

2003

39 774

40 453

43 077

45 983

46 844

48 922

French
imports

French exports

5 157

4 561

4 772

15 215

15 505

14 997

(87) Some of the planned measures are intended to be carried
out outside the European Union. However, in view of the
interdependence of
the markets on which Community
undertakings operate, it cannot be ruled out that aid could
distort intra-Community competition by strengthening the
competitive position of certain operators (13), even though
the aid benefits products for export outside the Commu-
nity (14).

(11) Judgment in Case 730/79, Philip Morris v Commission, [1980] ECR

2671, grounds 11 and 12.

(12) Agriculture in the European Union, Statistical and economic
information 2004. Directorate-General for Agriculture, European
Commission.

(13) Judgment of the Court in joined Cases 6 and 11-69, Commission v

French Republic, [1969] ECR 523, ground 20.

(10) Judgment of the Court in Case C/345/02, Pearle v Hoofdbedrijfschap

(14) Judgment of the Court in Case C-142/87, Belgium v Commission,

Ambachten, [2004] ECR I-7139.

[1990] ECR 959, ground 35.

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(88)

In the light of the above, the measures in question fall
within the scope of Article 87(1) of the Treaty and may be
declared compatible with the Treaty only if they are eligible
for one of the derogations provided for therein.

According to points 16 to 30 of the guidelines, advertising
must not infringe Article 28 of the Treaty or Community
secondary legislation and must not relate to particular
undertakings.

2.

Compatibility of the aid

(89) The only possible derogation at this stage is that provided
for in Article 87(3)(c), which stipulates that aid to facilitate
the development of certain economic activities or of certain
economic areas, where such aid does not adversely affect
trading conditions to an extent contrary to the common
interest may be considered to be compatible with the
common market.

checks

(90) To be able to benefit from that derogation, the aid in
question must comply with the rules on state aid. The
Commission first of all
the applicability of
Commission Regulation (EC) 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 (15). If that Regulation does not apply,
the Commission checks whether other legal bases, such as
guidelines or Community frameworks, may apply.

(91) Since the planned aid is not restricted to small and
medium-sized enterprises, Regulation (EC) No 1/2004 does
not apply. The Commission therefore based its assessment
on the following instruments: (a) the Community guidelines
for State aid in the agriculture sector (16)
(hereafter
‘agricultural guidelines’); (b) 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 (17)
(hereafter ‘guidelines on advertising’) and (c) the Commu-
nity framework for state aid for research and develop-
ment (18) (hereafter ‘framework’).

(92) Since it is intended to finance the planned aid, at least in
through compulsory contributions assimilated to
the Commission also assessed the

part,
parafiscal charges,
methods of financing the aid.

2.1. The measures

2.1.1. A i d f o r p u b l i c i t y a n d p r o m o t i o n

(93) The guidelines on advertising (19) lay down positive and
negative criteria that all national aid schemes must meet.

(15) OJ L 1, 1.1.2004, p. 1.
(16) OJ C 232, 12.8.2000, p. 17.
(17) OJ C 252, 12.9.2001, p. 5
(18) OJ C 45, 17.2.1996, p. 5, subsequently amended with regard to its
application to the agricultural sector, OJ C 48, 13.2.1998, p. 2.

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

(94) The French authorities explained that the measures will not
that publicity will not
benefit particular undertakings,
disparage other Community products and that it will make
no unfavourable comparison when referring to the national
origin of products.

(95) References to national origin must be secondary to the
principal message conveyed to consumers by the campaign
and must not be the main reason it is suggested they buy
the product. In this case, it is important that the French
origin of the products concerned is not the main message
of campaigns carried out on French territory.

(96) On the basis of the samples sent by the French authorities
and the explicit undertaking made by France on this matter,
it can be concluded that no particular emphasis will be
placed on the national origin of the products concerned
and that any reference to origin will be secondary to the
principal message conveyed by the publicity campaigns.

(97) As regards the positive criteria, according to points 31 to
33 of the guidelines on advertising, products benefiting
from publicity campaigns must concern one of
the
following: surplus agricultural products or underexploited
species, new products or replacement products not yet in
surplus, the development of certain regions, the develop-
ment of small and medium-sized undertakings, or high-
quality products, including organic products.

their

(98) The French authorities explained that the measures will aim
to develop the regions of production concerned by
ensuring the disposal of
typical products. The
measures will fulfil the need to provide support for the
network of small and medium-sized enterprises in the
geographical areas concerned: the wine-sector undertakings
concerned are essentially small, with few employees and
often still family-owned. The measures will also aim to
promote high-quality products (registered designations of
origin).

(99) With regard, more particularly,

to aid for advertising
agricultural products bearing a protected designation of
origin or a protected geographical indication registered by

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the Community (20), in order to guarantee that aid will not
be granted to individual producers, the Commission checks
that all producers of the product covered by the registered
designation of origin have the same entitlement to the aid.
This means that publicity measures must refer to the
registered designation of origin itself and not to any logo or
label, unless all producers are entitled to use it. In the same
way, when, for practical reasons, aid is paid to a producer
group, the Commission requests assurances that the aid will
actually benefit all producers, whether or not they are
members of the group.

(104) The French authorities sent the Commission examples of
the material
for promotion and publicity measures
financed under the notified aid scheme, on the basis of
which it can be confirmed that the commitments made by
those authorities have been kept.

(105) The Commission concludes

that

the aid fulfils

the

conditions laid down at Community level.

(100) The French authorities have given an undertaking that all
producers of
the products covered by the publicity
campaigns and those involved in marketing them will
benefit, without discrimination, by means of the measures
implemented collectively, from the aid.

(101) As regards the ceilings on aid provided for in point 60 of
the guidelines, up to 50 % of the financing for publicity
measures may come from state resources and the balance
must be provided by the trade bodies and inter-branch
organisations that benefit from the measures concerned.

(102) The French authorities have given an undertaking that
public financing will cover a maximum of 50 % of the
publicity measures carried out within the European Union.
The balance will have to be provided by operators in the
agricultural sector concerned.

(103) The measures carried out outside the European Union can
be financed at the rate of 80 %. This is in accordance with
the position adopted by the Commission (21), according to
which the participation of producers in part-financed
measures of this type is provided for,
in particular, by
Council Regulation (EC) No 2702/1999 of 14 December
1999 on measures to provide information on, and to
promote, agricultural products in third countries (22). With
regard to measures the Community can carry out in non-
member countries, Article 9 of the Regulation stipulates
that,
in the case of public relations, promotional and
publicity measures for agricultural products and foodstuffs,
part of the financing must remain the responsibility of the
in the case of measures
proposer organisations. Thus,
lasting at least two years, as a general rule, the minimum
contribution from those organisations is 20 % of the cost,
with a maximum Community contribution of 60 % and a
contribution from the Member State of 20 %. It follows
that the beneficiaries of this type of measure should make a
real contribution of at least 20 % of the cost in order to
limit distortions of competition with respect
to other
Community products.

(20) In accordance with Council Regulation (EEC) No 2081/92 of 14 July
1992 on the protection of geographical indications and designations
of origin for agricultural products and foodstuffs (OJ L 208,
24.7.1992, p. 1).

(21) State aid No N 166/2002.
(22) OJ L 327, 21.12.1999, p. 7.

2.1.2. A i d f o r r e s e a r c h

research and experimentation
(106) As regards the aid for
measures and that
the dissemination of scientific
for
progress, point 17 of the agricultural guidelines lays down
that aid for research and development should be examined
in accordance with the criteria set out in the applicable
Community framework for State aid for research and
development (23). The latter specifies that an aid rate of up
to 100 % is compatible with the common market, even
where research and development is carried out by firms,
subject to fulfilment in each case of the four conditions laid
down therein:

(a)

(b)

The aid is of general interest to the particular sector
concerned, without unduly distorting competition in
other sectors.

least national distribution and not

Information is published in appropriate journals, with
at
limited to
members of any particular organisation, to ensure
that any operator potentially interested in the work
can readily be aware that it is being or has been
carried out, and that the results are or will be made
available, on request, to any interested party. This
information must be published no later than any
which may be given to members of any particular
organisation.

(c)

the work are made available for
The results of
exploitation by all
including the
beneficiary of the aid, on an equal basis in terms both
of cost and of time.

interested parties,

(d) The aid fulfils the conditions laid down in Annex II,
‘Domestic support: the basis for exemption from the
reduction commitments’,
to the Agreement on
agriculture concluded during the Uruguay Round of
multilateral trade negotiations (24).

(107) The French authorities have given the following under-

taking:

(a)

The research will be of general interest to the sector
concerned and intended for general use and dis-

(23) See footnote 18.
(24) OJ L 336, 23.12.1994, p. 22.

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semination and will not affect trading conditions or
unduly distort competition in other sectors.

(b) At

the end of each programme, when the data
gathered have been validated, they will be dissemi-
nated in those journals most accessible to those
concerned. The results of research will be published
and disseminated so as to provide information on and
access to those results to all the producers and traders
concerned, without discrimination, at the same time
as everyone else and on request. The conclusions of
the work or summaries will be published in the
publications of the inter-branch organisations con-
in the
cerned intended for
specialist publications of the technical bodies involved
in carrying out the studies and research and in various
brochures and other publications. They will be made
available to those in the sector via the usual channels
in agricultural sector or via the Ministry of Agricul-
ture and Fisheries.

the general public,

(c)

In view of the general interest of the research, no
commercial use of the results is planned. The question
of
the
conditions for access to rights of exploitation will
therefore not arise.

rights of exploitation or of

the cost of

(d) The French authorities have given an assurance that
the measures financed do not
involve any direct
payments to producers or processors and that they
satisfy the international trade criteria to which the
European Union has committed itself.

(108) The Commission concludes

that

this aid fulfils

the

conditions laid down at Community level.

2.1.3. A i d f o r t e c h n i c a l a s s i s t a n c e

is available to all

(109) Point 14 of the agricultural guidelines lays down that this
type of aid is authorised, with an aid intensity of 100 %,
where it
those eligible in the area
concerned based on objectively defined conditions and the
total amount of aid granted does not exceed EUR 100 000
per beneficiary per three-year period or, in the case of small
and medium-sized enterprises, 50 % of eligible expendi-
ture, whichever is greater. The French authorities have
undertaken to comply with those conditions.

(110) The Commission concludes

that

this aid fulfils

the

conditions laid down at Community level.

2.1.4. A i d

f o r
p r o d u c t s

t h e

p r o d u c t i o n

o f

q u a l i t y

(111) Point 13 of the agricultural guidelines lays down that this
type of aid is authorised, with an aid intensity of 100 %,

is available to all

those eligible in the area
where it
concerned based on objectively defined conditions and the
total amount of aid granted does not exceed EUR 100 000
per beneficiary per three-year period or, in the case of small
and medium-sized enterprises, 50 % of eligible expendi-
ture, whichever is greater. The French authorities have
undertaken to comply with those conditions.

(112) The Commission concludes

that

this aid fulfils

the

conditions laid down at Community level.

2.2. Financing of the aid

2.2.1. T h e c o m p u l s o r y l e v y ( C V O )

(113) In accordance with the case law of the Court of Justice (25),
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 (CVO) 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.

traders and wholesalers

(114) The CVO applies to the volumes of liqueur wines with a
registered designation of origin marketed by winegrowers,
professional distillers,
located
within the production area of the registered designation
of origin concerned. The French authorities also explained
that, unlike the taxes collected under Community directives
on excise duties on alcohol and alcoholic beverages, the
inter-branch contributions, by definition, are imposed only
on the liqueur wines covered by the registered designations
of origin concerned, i.e. exclusively products in the regions
specified in the regulations, which means that the CVO is
not imposed on liqueur wines from other Member States.

(115) As regards more particularly wholesalers, it cannot be ruled
out that they also market imported products. However, the
French authorities specified that the inter-branch levy paid
by wholesalers will apply only to volumes of the liqueur
wines with a registered designation of origin referred to in
i.e. Pineau des Charentes, Floc de
the notification,
Gascogne, Pommeau de Normandie and Macvin du Jura.
Therefore, imported wine is excluded from payment of the
levy.

(116) Since only the national

liqueur wines with a registered
designation of origin covered by the measure are subject to
the levy it can be concluded that no imported product is
taxed.

(117) As regards state aid financed by parafiscal charges, the
Court has also established other criteria that should be
examined here. In the Nygård case (26), the Court laid down

(25) Judgment of the Court of Justice in Case 47/69 Government of the
French Republic v Commission of the European Communities, [1970] ECR
487.

(26) Judgment in Case C-234/99, Niels Nygård v Svineafgiftsfonden, [2002]

ECR I 3657.

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that a charge constitutes a breach of the prohibition of
discrimination laid down by Article 90 of the Treaty if the
advantage conferred by the use of the revenue generated by
the charge benefits in particular those national products
subject to it that are processed or marketed on the national
market by partially offsetting the charge imposed on them,
thus placing national products that are exported at a
disadvantage.

(118) The aid for promotion and publicity, which is the only aid
to be financed by means of
the CVO, benefits the
marketing sector and may not confer the same benefits
on traders who are involved exclusively in sales outside
France or outside the European Union.

(119) The French authorities however have given assurances that
both the Pineau des Charentes National Committee and the
Floc de Gascogne Inter-Branch Committee finance publicity
and promotion measures both in France and in the
European Union and non-member countries and stress that
their decisions are taken fully independently by their
management boards, on which all those involved in the
sector are represented.

(120) On the other hand, the inter-branch organisation of cider
designations and the inter-branch committee for the wines
of the Jura are said not to be planning, for the moment, to
finance measures outside the French market. However,
according to the French authorities,
the decision to
concentrate measures on the French market was taken by
the sector itself, which gives priority to consolidating its
position on the national market, in the knowledge that the
sale of these liqueur wines abroad has not yet become the
norm in the trade. The French authorities affirm that this
policy does not disadvantage any trader, because sales
outside France remain marginal and there are no traders
specialising in the export trade.

total amounts levied on national products marketed on the
domestic market in connection with the charge in question
and the advantages afforded exclusively to those products.

2.2.2. C o m p a t i b i l i t y w i t h o t h e r p r o v i s i o n s o f

t h e T r e a t y

(124) It should be recalled here that state aid, certain of whose
conditions contravene other provisions of
the Treaty,
cannot be declared to be compatible with the common
market. In the present case, the Commission examined
whether the complaint lodged by the AEVP against aid
N 703/95 concerning a possible infringement of Article 90
of the Treaty was well founded. The Commission also notes
that the AEVP submitted no comments under the present
procedure.

(125) Article 90 of the Treaty lays down that ‘No Member State
shall impose, directly or indirectly, on the products of other
Member States any internal taxation of any kind in excess
of that imposed directly or indirectly on similar domestic
products’.

(126) In the present case, the rate of excise duty applicable to
liqueur wines in France is the same for French wines and
for wines from other Member States.

(127) If the tax paid by French producers were partially offset by
the aid that is restricted to those same producers, meaning
that only non-French producers were obliged to pay the full
amount of the tax, this would constitute discriminatory
internal taxation contrary to Article 90 of the Treaty.

(128) It should first of all be noted that taxes do not fall within
the scope of the provisions of the Treaty on state aid unless
they constitute the means of financing an aid measure and
form an integral part of that aid.

(121) In any event,

the French authorities have given an
from
undertaking that exported products will benefit
measures financed by means of the inter-branch levies to
the same extent as products marketed in France.

(129) It follows that the tax on liqueur wines will only have an
impact on the appraisal of the compatibility of the planned
aid and therefore need be examined here if
there is a
sufficiently close link between the tax and the aid measures.

(122) The Commission notes this undertaking and is of the
opinion that there is nothing in the information provided
by France that indicates that
there is, at present, any
discrimination against exported liqueur wines.

(123) However,

the Commission draws the attention of

the
the Nygård
French authorities to the implications of
judgment as regards discrimination between exported
products and products marketed on national territory. In
particular, the Court ruled that it is up to the national
courts to establish the extent of any possible discrimination
against particular products. To that end, they must verify,
during a reference period, the financial equivalence of the

(130) The judgment of the Court of Justice of 13 January 2005 in
the Streekgewest Westelijk North-Brabant case (27), handed
down after the procedure provided for in Article 88(2) of
the Treaty had been opened with respect to the aid covered
by this Decision, clarified the circumstances in which a
sufficiently close link must be considered to exist between a
tax and an aid measure, meaning that the tax can be
considered to form an integral part of the aid.

(131) Ground 26 of the above judgment stipulates in particular
that, for a tax, or part of a tax, to be regarded as forming an
integral part of an aid measure, it must be hypothecated to
the aid measure under the relevant national rules, in the

(27) Not yet published in the ECR.

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sense that the revenue from the tax has a direct impact on
the amount of the aid and, consequently, on the assessment
of the compatibility of the aid with the common market.

the common market, in particular in the light of Article 90
of the Treaty, under the procedure on state aid provided for
in Article 88 of the Treaty.

VI.

CONCLUSIONS

(136) In the light of the above, the Commission concludes that
the aid planned by France is eligible for the derogation
provided for in Article 87(3)(c) of the Treaty and can be
declared compatible with the common market,

HAS ADOPTED THIS DECISION:

Article 1

The state aid that France plans to implement in favour of
producers and traders of liqueur wines totalling EUR 12 000
000 is compatible with the common market under Article 87(3)
(c) of the Treaty.

The implementation of this aid is therefore authorised.

Article 2

This Decision is addressed to the French Republic.

Done at Brussels, 9 November 2005.

For the Commission
Mariann FISCHER BOEL
Member of the Commission

(132) In the Streekgewest case, the Court ruled that even if, for
the purposes of the budget estimates of the Member State
in question, an increase in the amount of the tax is offset by
the advantage given (aid), that fact is not sufficient in itself
to show that
the tax was hypothecated to the tax
exemption (28).

(133) In this particular case, France indicated that

liqueur wines. None of

the tax
revenues are paid into the general state budget and that
there is no law allowing compensation for excise duties
the
paid by the producers of
information in the possession of the Commission suggests
the contrary. On the basis of this finding, the Commission
can therefore conclude that the revenue from the tax on
liqueur wines is not hypothecated to the aid granted to
those products, without any need to demonstrate the
absence of any quantitative link between the amounts
levied by France and the amounts spent in the context of
the aid measure.

(134) In the alternative case, the Commission also notes that the
tables provided by France following the opening of the
procedure provided for in Article 88(2) of the Treaty show
that
there is no quantitative correlation between the
revenue from the tax for the various products and the aid
granted for those products.

(135) Since there is no sufficiently close link between the tax and
the planned aid, it is not necessary to assess the effects of
this tax on the compatibility of the notified measures with

(28) Ground 27 of the judgment.