Commission Decision of 7 June 2006 on State aid granted by Germany for the acquisition of shares in winegrowers' cooperatives (notified under document number C(2006) 2070)
Date: 2006-06-07
Institutions: European Commission
Subjects: Germany, State aid, agricultural cooperative, control of State aid, producer organisation, viticulture

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COMMISSION DECISION

of 7 June 2006

on State aid granted by Germany for the acquisition of shares in winegrowers' cooperatives

(notified under document number C(2006) 2070)

(Only the German text is authentic)

(2007/57/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Commu-
nity, and in particular 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:

(6) Germany submitted comments to the Commission by letter
of 5 November 2003, registered as received on 6 November
2003.

(7)

By letter of 7 March 2005, registered as received on 9
March 2005, Germany submitted further comments to the
Commission and requested an assessment of the measure
pursuant to Commission Regulation (EC) No 1860/2004 of
6 October 2004 on the application of Articles 87 and 88 of
the EC Treaty to de minimis aid in the agriculture and
fisheries sectors (3).

I.

PROCEDURE

II.

DETAILED DESCRIPTION OF THE AID

(1)

The measure was notified by letter of 19 April 2001 in
response to a written inquiry from the Commission. Since
the measure had already been implemented, the record of
the aid was transferred to the register of non-notified state
aid (aid No NN 32/01).

(2) Additional

information was submitted by letters of: 13
February 2002, registered as received on 18 February 2002;
5 July 2002, registered as received on 9 July 2002; and 5
December 2002, registered as received on 10 December
2002. A meeting to discuss the aid took place at the
Directorate-General for Agriculture on 25 June 2002.

(3)

By letter SG (2003) D/232035 of 2 October 2003 the
Commission informed Germany of its decision to initiate
the procedure under Article 88(2) of the EC Treaty in
respect of this state aid measure (aid No C 60/2003).

(4) On 6 November 2003 the Commission decision to initiate
the procedure was published in the Official Journal of the
European Union (2) and interested parties were invited to
submit their comments.

(5)

The Commission received comments
from interested
parties and from the regional authorities granting the aid
by letters of 18 November 2003, registered as received on
25 November 2003; 23 December 2003, registered as
received on 5 January 2004; and 12 February 2004,
registered as received on 17 February 2004.

II.1

Title of the measure

(8) Aid for

the acquisition of shares by winegrowers in

Rhineland-Palatinate

II.2

Legal basis

(9)

The scheme is based on the following:

the Guideline on granting assistance from funds of the rural
district of Bernkastel-Wittlich to support winegrowers who
join a winegrowers' cooperative;

the Guideline on granting assistance from funds of the rural
district of Cochem-Zell to support winegrowers who join a
winegrowers' cooperative/producer organisation;

the Guideline on granting assistance from funds of the rural
district of Trier-Saarburg to support winegrowers who join a
winegrowers' cooperative/producer organisation;

the Notice issued by the local authority association of
Schweich to increase the assistance granted by the rural
district of Trier-Saarburg to support winegrowers who join a
winegrowers' cooperative/producer organisation.

(1) OJ C 267, 6.11.2003, p. 2.
(2) See footnote 1.

(3) OJ L 325, 28.10.2004, p. 4.

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(10) The Guideline issued by the district administration of
Bernkastel-Wittlich specifically provides for aid to purchase
shares in the Moselland cooperative. The Guidelines issued
by the district administration of Cochem-Zell contain
similar provisions, and this has led in practice to support
being granted only for shares in the Moselland cooperative.
The Guidelines issued by the district administration of Trier
Saarburg and the local authority association of Schweich
are not specifically targeted at a particular company, but
generally at cooperatives and producer organisations
approved under the German Market Structure Act.

(16) The assistance paid by the local authority association of
Schweich was additional (cumulative) to payments in the
rural district of Trier-Saarburg.

(17)

In the rural district of Cochem-Zell, interest relief of up to
4,95 % was granted on any loans taken out for the purchase
of shares during a maximum period of four years.

(18)

In 2000, the following payments were made to producer
organisations:

II.3

Aim of the measure

(11) The aim of the scheme was to increase the proportion of
grapes collected by producer organisations and to reduce
the proportion of cask wine freely saleable, i.e. not sold via
producer organisations. The objective was to help stabilise
prices on the cask-wine market. At the same time the long-
term objective was to close down production capacity in
the form of vinification facilities on individual holdings,
especially at small winegrowing enterprises in the Mosel-
Saar-Ruwer winegrowing area.

(12) The aid was designed to cover part of winegrowing
enterprises' costs when acquiring shares in winegrowers'
cooperatives/producer organisations (hereinafter: producer
organisations). The aid was granted on condition that the
winegrower undertook to keep the shares for five years
from the date on which the application was filed. Each
enterprise also had to bring into the producer organisation
its total cultivated area and deliver all its grapes, must and
wine to the producer organisation. Each enterprise was also
required to shut down its corresponding vinification
facilities.

Winegrowers'
cooperative
Moselland

Producer orga-
nisation Mosel-
herz

Producer organi-
sation Mosel Gate

Rural district/
municipality

Bernkastel-Wit-
tlich

Cochem-Zell

EUR 44 022

EUR 20 171

EUR -

EUR -

EUR -

EUR -

EUR 7 631

EUR 5 011

Trier-Saarburg

EUR 51 270

EUR 6 990

Schweich

EUR 16 975
Total EUR 132 438

EUR 3 390

EUR 10 380

EUR 12 642

(19)

In 2000, a total of EUR 155 460 was paid out. The scheme
was financed from funds of the district administrations and
of the Schweich local authority.

II.5.

Duration of the measure

(20) The duration of the scheme in the rural district of Cochem-
Zell was four years (2000 to 2003). The other measures
were limited to 2000.

II.4.

Budgetary appropriations of the aid

II.6.

Beneficiaries

(13) The aid was granted in the form of direct grants and in the

form of interest relief on capital-market loans.

(21) The aid was paid direct to the producer organisations which
sold shares at reduced prices to newly-joining winegrowers
and winegrowing enterprises.

(14) The cost of acquiring shares was normally EUR 293,99.
reduced

the grant was

cost was

less,

the

Where
proportionately.

(15) The following grants per share were granted:

Rural district/
municipality

For the acquisi-
tion of 1 to 5
shares

For each addi-
tional share

Maximum grant
per enterprise
newly joining a
producer organi-
sation

Bernkastel-Wit-
tlich

Cochem-Zell

Trier-Saarburg

EUR 76,69

EUR 38,35

EUR 766,94

EUR 76,69

EUR 76,69 No upper limit

EUR 76,69

EUR 38,35

EUR 766,94

Schweich

EUR 51,13

—

EUR 255,65

(22) Winegrowers and winegrowing enterprises in each rural
district were thereby able to acquire shares in producer
organisations at reduced cost.

(23) The measure enabled producer organisations to increase
their own capital and secure the purchase of raw materials.

II.7

Reasons for initiating the procedure

(24) After provisional examination, the measure was classified as
operating aid to winegrowing enterprises and producer
organisations — which is incompatible with the common
market. The Commission therefore initiated a formal
investigation procedure.

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III.

COMMENTS BY INTERESTED PARTIES

III.1.

Complaints against the measure

(25) The Commission received a complaint concerning the
introduction of the aid scheme. The complainant pointed
out that the aid enabled winegrowers to acquire shares in
local producer organisations at reduced prices. Besides the
advantage of increased capital, the producer organisations
were then also able to secure the purchase of raw materials
in the form of must and raw wines. The complainant
argued that
this placed competitors at a disadvantage
regarding the procurement of must and raw wines.

III.2.

Comments by interested parties as part of the

formal investigation procedure

(26) The comments by interested parties/the German regional
authorities granting the aid stressed the support given to
necessary structural change in a 2 000-year-old steep-slope
winegrowing area whose conservation was hugely impor-
tant for tourism and gastronomy. They argued that the
measure contributed towards closing down production
capacity. Application of Regulation (EC) No 1860/2004
was also requested.

IV.

COMMENTS BY GERMANY

(27)

for

In its comments, Germany emphasised the need for support
for necessary structural change in a 2 000-year-old steep-
slope winegrowing area whose conservation was hugely
important
tourism and gastronomy. The aid was
intended to offset the disadvantages of winegrowers and
winegrowing enterprises whose own vinification facilities
had to be closed down in order to fulfil the five-year
delivery obligation to the producer organisation, and was
therefore justified as a capacity-reduction scheme.

(28)

In additional comments, Germany requested the applica-
tion of Regulation (EC) No 1860/2004.

V.

ASSESSMENT OF THE AID

CMO

(29) Article 36 the EC Treaty applies to winegrowing and wine
processing, which are covered by Council Regulation (EC)
No 1493/1999 of 17 May 1999 on the common
organisation of the market in wine (4).

(30) According to the comments by Germany and the interested
parties,
the winegrowers' and winegrowing enterprises'
economic difficulties were due to structural change in

(4) OJ L 179, 14.7.1999, p. H1.Regulation as last amended by
Regulation (EC) No 2165/2005 (OJ L 345, 28.12.2005, p.,).

market outlets. The usual marketing of cask wine with own
vinification facilities had become increasingly difficult. The
market now required either
raw materials (grapes or
freshly-pressed must) or quality, market-oriented wines.
Private companies could have entered into similar contracts
with the winegrowing enterprises and could have taken
over their marketing risks.

(31)

In this context, as described in paragraph 12 above, the
regional authorities bore part of the cost of buying shares
in winegrowers' producer organisations. Buyers of shares in
the producer organisations concerned were required to
bring into the producer organisation their total cultivated
area and deliver all their grapes, must and wine to the
producer organisation. The winegrowers had to undertake
to keep the shares for five years, which in practice meant
shutting down their vinification facilities. The producer
organisations were better able — compared with other
wine-production and wine-marketing companies — to
secure the purchase of raw materials by requiring their
winegrowers and winegrowing enterprises to deliver to
them all the grapes, must and wine which they produced
during a five-year period (see section II.2 above).

(32) Favouring the producer organisations by securing the
commitment of winegrowers to deliver all their grapes,
must and wine and to close down their own vinification
facilities constitutes a structural measure strengthening the
position of
the producer organisations. The producer
organisations' advantage of secured procurement, taken in
isolation, can be justified as an effect of a market
restructuring measure corresponding to the goals stipulated
in Article 39 of Regulation (EC) No 1493/1999.

State Aid

(33) Under Article 71(1) of Regulation (EC) No 1493/1999,

‘Save as otherwise provided in this Regulation, Articles 87,
88 and 89 of the Treaty shall apply to the production of
and trade in the products covered by this Regulation.’

(34) Article 71(2) stipulates that

‘Chapter II of Title II [abandonment premiums] shall not
impede the granting of national aid designated to achieve
objectives
to those sought by that Chapter.
Paragraph 1 shall nevertheless apply to such aids.’

similar

(35) Under Article 87(1) of the EC Treaty, any aid granted by a
Member State or through State resources in any form
whatsoever which distorts or threatens to distort competi-

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tion by favouring certain undertakings or the production of
certain goods, insofar as it affects trade between Member
States, is prohibited.

of the shares was not very high, this structural change did
not take place until the regional and municipal authorities'
aid scheme was launched.

(36) The aid scheme in question was financed from public funds
of the districts concerned and of one municipality in the
German Land Rhineland-Palatinate. The aid is liable to
distort competition (5) and to affect trade between Member
States (6).

V.1.

Economic advantage derived by winegrowers

and winegrowing enterprises from grants for
acquiring shares and from interest relief

(37) Certain winegrowers and winegrowing enterprises

in
Rhineland-Palatinate have acquired shares in producer
organisations with support
from the German regional
authorities, thus paying a reduced price for the shares (see
paragraph 15 above). The amount deducted from the usual
price of
the shares should normally be borne by the
purchasers. The price reduction therefore constitutes a
direct economic advantage for the undertakings concerned,
financed from public resources.

(38)

Interest relief of up to 4,95 % granted to some winegrowers
and winegrowing enterprises for such a purchase (see
an economic
paragraph 17 above)
financed from public
advantage
resources.

also constitutes

those growers,

for

(39) Article 87(1) of the EC Treaty is therefore applicable.

(40) Section V.3 below will examine whether point 9 — aid for
capacity reduction — of the Community guidelines for
State aid in the agricultural
the
Agricultural guidelines) (7)
is applicable to the above-
mentioned advantages.

(hereinafter:

sector

(43) Those producer organisations were able — compared with
other wine-production and wine-marketing firms — to
increase their capital and liquidity and earn extra income
through the additional entry of shareholders that were able
to acquire shares at reduced prices or with the help of
interest assistance. A further advantage to the producer
organisations comprised the winegrowers' undertaking,
linked to the assisted purchase of shares, to deliver all their
grapes, must and wine and to close down their vinification
facilities.

(44)

In this connection, it is appropriate to cite paragraph 26 of
the ECJ judgment in case C-156/98 Germany v Commis-
sion (8):

‘In the present case it must be observed that the origin of the
advantage indirectly conferred on the undertakings referred to by
Paragraph 52(8) of the EStG is the renunciation by the Member
State of
tax revenue which it would normally have received,
inasmuch as it is this renunciation which has enabled investors to
take up holdings in those undertakings on conditions which are in
tax terms more advantageous.’

(45) That judgment was confirmed in paragraph 95 of CFI case
T-93/02, Confédération nationale du Crédit Mutuel v Commis-
sion, (9)

V.2.

Economic advantage derived by producer

organisations

(41) The Commission confirms the view expressed in its letter
initiating the formal investigation procedure, namely that
the producer organisations derived advantage from the aid
given to winegrowers and winegrowing enterprises for
purchasing their shares. The aid for the acquisition of shares
was restricted to certain recognised producer organisations
(see paragraph 10 above). The winegrowers and wine-
growing enterprises had to keep the shares for five years.

(42) According to the German authorities, a restructuring of the
wine market was unavoidable. Although winegrowers could
have acquired shares in producer organisations as the price

(46)

(5) According to the case law of the European Court of Justice, an
improvement in the competitive position of an enterprise as a result
of state aid is generally speaking a distortion of competition in
relation to competing enterprises which do not receive such support
(Case C-730/79, Philip Morris ECR [1980] 2671, paragraphs 11 and
12).

(6) Germany's intra-Community trade in wine comprised 10 364 600
million hectolitres in imports and 1 881 900 million hectolitres in
exports in 1999. No separate data are available for Rhineland-
Palatinate. (Source: German Federal Statistics Office).

(7) OJ C 232, 12.8.2000, p. 19.

‘…[I]t is not necessary, in order to found a finding of the
existence of intervention by means of State resources in
favour of an undertaking, that the undertaking must be the
direct recipient. It follows from Article 87(2)(a) EC that aid
having a social character granted to individual consumers is
capable of coming within the scope of Article 87(1) EC.
Likewise,
that a Member State renounces tax
revenue may involve an indirect transfer of State resources,
capable of being treated as aid to economic operators other
than those to which the tax advantage is accorded directly
(Case C-156/98 Germany v Commission [2000] ECR I-
6857, paragraphs 24 to 28).’

the fact

In the light of the case law cited above, the Commission
concludes that the aid for winegrowers and winegrowing
enterprises to buy shares in certain producer organisations
and to retain them for at least five years resulted in an
increase in those producer organisations' capital which
would not otherwise have occurred. Purchase of such
shares with state support constitutes an indirect transfer of
state resources to producer organisations. The resulting
increase in the producer organisation's capital constitutes

(8) Case C-156/98, Germany

v Commission ECR [2000]

I-6857,

paragraph 26.

(9) Case T-93.02, Confédération nationale du Crédit Mutuel v Commission

ECR [2005] (not yet published) paragraph 95.

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an indirect economic advantage which is to be treated as
state aid other
than the advantage granted to the
winegrowers and winegrowing enterprises.

(47) Article 87(1) of the EC Treaty is therefore applicable.

d)

There must be no overcompensation for value of
production lost or future losses of income. At least
half of the costs should be met by a contribution from
the sector, either through voluntary contributions or
by means of compulsory levies.

V.3.

Exemptions under Article 87(2) and (3) of the

EC Treaty

(48) An examination therefore needs to be made of whether one
of the exceptions/exemptions from the basic ban on state
aid under Article 87(1) of the EC Treaty applies.

(49) According to the information available, the exemptions
under Article 87(2) and Article 87(3) (a), (b) and (d) of the
EC Treaty are not applicable since the aid cannot be
regarded as

— aid to promote the economic development of areas
where the standard of living is abnormally low or
where there is serious underemployment, nor as

— aid 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, nor as

— aid to promote culture and heritage conservation
where such aid does not affect trading conditions and
competition in the Community to an extent that is
contrary to the common interest.

(50) Article 87(3)(c) of the EC Treaty is therefore the only

exemption which might possibly apply.

Compatibility of the aid to winegrowers and winegrowing
enterprises

(51) By letter of 13 February 2002, the German authorities
proposed assessing the measure on the basis of point 9 of
the Agricultural guidelines.

e)

No aid may be granted which would interfere with the
mechanisms of the common market organisations.

R e a ) T h e g e n e r a l

i n t e r e s t o f

t h e s e c t o r

(53) The scheme seems to have had a positive effect

in
concentrating agricultural production and to have led to
some stabilisation of the price situation in the cask-wine
market. The aid was limited to three rural districts and one
municipality in Rhineland-Palatinate. The Rule issued by the
district administration of Bernkastel-Wittlich specifically
provided for aid to purchase shares in the Moselland
cooperative. The Rules issued by the district administration
of Cochem-Zell contained similar provisions,
leading in
practice to support being granted only for the purchase of
shares in the Moselland cooperative. The Rules issued by the
district administration of Trier-Saarburg and the local
authority association of Schweich were not specifically
targeted at a particular enterprise, but designed to assist
cooperatives/producer organisations approved under the
German Market Structure Act (Marktstrukturgesetz). Other
private-sector enterprises which were involved in wine
production or wine trading but which did not meet the
conditions referred to above were therefore not eligible to
take part in the measure. The scheme was limited to a
maximum duration of four years.

(54) Under point 9.6 of the Agricultural guidelines, aid schemes
for closing capacity should be available to all market
participants in the sector concerned. As set out above, this
condition cannot be regarded as fulfilled. The Commission
also received a letter of complaint from an economic
operator in the wine sector who pointed out that assisting
certain cooperatives through this measure was by no means
in the general interest of the wine sector, because private-
sector enterprises involved in wine production or wine
trading were not able to take part in the scheme.

(52) Under point 9, aid may be granted for shutting down
production capacity provided that the aid is consistent with
other Community schemes
reducing production
capacity and meets the following conditions:

for

R e b ) C o u n t e r p a r t

a)

b)

The aid must be in the general interest of the sector
concerned and limited in time.

There must be a sufficient counterpart
from the
beneficiaries, normally consisting of a definitive and
irrevocable decision to scrap or irrevocably close the
production facility concerned.

(55) The German authorities stated that the aid scheme was
designed to shut down production capacity in winegrowing
enterprises. The justification given was that
the wine-
growers undertook to deliver all their grapes, must and
wine to the producer organisation and that, in the long
term, their own vinification capacity would be shut down.

c)

The possibility must be excluded that the aid could
serve to rescue and restructure enterprises in difficulty.

(56) Under point 9.2 of the Agricultural guidelines, aid for
dismantling capacity may be approved only if it forms part
of a programme for restructuring the sector which has

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clearly-defined goals and a set timescale. The scheme in
question here was implemented without an underlying
restructuring programme.

(63) No other justifications under Article 87(3)(c) of the EC

Treaty are applicable.

(57) Under point 9.4 of the Agricultural guidelines, beneficiaries
must make an adequate contribution in return — normally
consisting of a definitive and irrevocable decision to scrap
or
irreversibly close down the production capacity
concerned. Beneficiaries must give a legally-binding under-
taking that the closure is definitive and irrevocable. The
German authorities stated that no legally-binding under-
takings were given by the winegrowers regarding the
closure of their own capacity. As regards wine production,
the obligation to deliver grapes, must and wine is
tantamount to shutting down such capacity, but only for
the five-year period covered by that obligation. The
Commission concludes that this condition has not been
met.

R e c ) N o a i d t o e n t e r p r i s e s i n d i f f i c u l t y

(58) This condition is not expressly stipulated in the aid scheme.

R e d ) N o o v e r c o m p e n s a t i o n a n d
c o n t r i b u t i o n o f

t h e s e c t o r

(59) Point 9.6 of the Agricultural guidelines specifies that the
amount of aid must be strictly limited to compensation for
losses in asset value, plus an incentive payment which may
not exceed 20 % of the value of the assets concerned. In
addition, point 9.7 provides that at least half of the cost of
such aid schemes should be met by contributions from the
relevant sector, either through voluntary contributions or
compulsory levies.

(60) The German authorities have not

submitted precise
calculations for any losses in asset value by the wine-
growing enterprises. At present, it cannot therefore be ruled
out that losses have been overcompensated and/or that the
aid exceeds 50 % of the actual costs of the aid scheme. The
Commission therefore considers that these conditions have
not been met.

R e 5 ) C o m m o n m a r k e t o r g a n i s a t i o n

(61) The measure is not contrary to the objectives of

the

common market organisation for wine.

Compatibility of the aid to the producer organisations

(64)

In the agricultural sector the Commission favours the
formation of producer organisations in which farmers are
grouped together in order to concentrate supply and to
adapt production to market requirements. State aid may be
granted for starting up such an organisation (point 10.5 of
the Agricultural guidelines) or for significantly extending its
activities to cover new products or new sectors (point 10.6
of the Agricultural guidelines). In the present case none of
these conditions are met.

(65) Under point 10.8 of the Agricultural guidelines, aid granted
to producer organisations to cover expenses which are not
linked to setting-up costs, such as investments, is to be
assessed in accordance with the rules governing such aid.
Since the measure in question here comprises only an
increase in the producer organisations' capital, there is no
investment involved and this point cannot apply as the
basis for assessing compatibility.

(66) For the reasons stated above,

the aid granted to the
producer groups does not comply with point 10 of the
Agricultural guidelines. It therefore constitutes operating
aid incompatible with the common market.

(67) No other justifications under Article 87(3)(c) of the EC

Treaty are applicable.

V.4.

De minimis aid to producer organisations and

winegrowing enterprises

(68) The Commission's experience has shown that very small
amounts of aid granted subject to certain conditions do not
fall under Article 87(1) of the Treaty.

(69) Under Regulation (EC) No 1860/2004, aid not exceeding
EUR 3 000 per beneficiary over three years, where the total
amount of such aid is restricted to approximately 0,3 % of
annual agricultural output, does not affect trade between
Member States and does not distort or threaten to distort
competition and therefore does not fall under Article 87(1)
of the Treaty.

(62) Since, for the reasons stated above, the aid granted to the
winegrowers and winegrowing enterprises does not comply
with point 9 of the Agricultural guidelines, it constitutes
operating aid incompatible with the common market.

(70) Under Article 5 of Regulation (EC) No 1860/2004 the
same applies to aid granted before entry into force,
provided that the requirements of Articles 1 and 3 thereof
are fulfilled.

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(71) Article 1 limits the application to the agricultural sector.
This aid concerns marketing of wine. The restrictions of
Article 1 (a) to (c) are not applicable.

(78) This decision is without prejudice to the possibility for the
producer groups concerned to claim a corresponding
amount from the winegrowers and winegrowing enter-
prises or to avail themselves of other legal remedies if such
a possibility exists under national law.

(72) Therefore, up to a maximum amount of EUR 3 000 the
measures do not constitute aid because not all the criteria
of Article 87(1) of the EC Treaty have been fulfilled. In
order to avoid double counting, this limit is to be applied
only at the level of the winegrowing enterprises.

(79)

(73) For the reasons stated above, the Commission considers
that granting assistance for the acquisition of shares up to
the maximum amount of EUR 3 000 does not constitute
aid, provided that the conditions of Regulation (EC) No
1860/2004 have been met. Any amount exceeding that
threshold at the level of the beneficiary winegrowers and
winegrowing enterprises constitutes aid in its entirety.

is

In the district of Cochem-Zell, the aid to be recovered from
the winegrowers and winegrowing enterprises
to
correspond to the interest relief received by them. The
obligation to recover the aid from the winegrowers and
winegrowing enterprises is, however, without prejudice to
the possibility that support of up to EUR 3 000 does not
constitute aid within the meaning of Article 87(1) of the EC
Treaty provided that the conditions of Regulation (EC) No
1860/2004 have been met. Any amount exceeding that
threshold at the level of the beneficiary winegrower or
winegrowing enterprise constitutes aid within the meaning
of Article 87 (1) of the EC Treaty in its entirety and is to be
recovered in full.

VI.

CONCLUSIONS

(74) The Commission concludes that the assistance and interest
support granted under this measure constitute operating
aid which is not covered by any of the derogations to the
general prohibition on such aid and which is therefore
incompatible with the common market. The Commission
also finds
that Germany implemented the measure
unlawfully.

(75) Where illegally-granted state aid is found to be incompa-
tible with the common market, the natural consequence is
that the aid should be recovered in order — as far as
possible — to restore the competitive position that existed
before the aid was granted.

(76) This decision concerns the scheme in question and must be
implemented immediately, including as regards recovery in
accordance with Article 14 of Council Regulation (EC) No
659/1999 of 22 March 1999 laying down detailed rules for
the application of Article 93 of the EC Treaty (10).

(77)

In order to eliminate the direct and indirect advantage
derived by the winegrowers, winegrowing enterprises and
producer groups, but at
the same time avoid double
counting of the aid, Germany is to recover the aid from the
undertakings to which the state resources were paid. The
obligation to recover the aid from producer groups is,
however, without prejudice to the possibility that support
of up to EUR 3 000 granted to winegrowers and
winegrowing enterprises does not constitute aid within
the meaning of Article 87(1) of the EC Treaty provided that
the conditions of Regulation (EC) No 1860/2004 have been
met. Any amount exceeding that threshold at the level of
the beneficiary winegrower or winegrowing enterprise
constitutes aid in its entirety and is to be recovered from the
producer group whose shares the final beneficiary has
acquired.

(10) OJ L 83, 27.3.1999, p. 1 Regulation as amended by the2003 Act of

Accession.

(80) This decision is without prejudice to the possibility for the
winegrowers and winegrowing enterprises concerned to
avail
remedies vis-à-vis the
producer groups, if such a possibility exists under national
law.

themselves of other

legal

HAS ADOPTED THIS DECISION:

Article 1

The state aid scheme in the form of direct assistance or interest
relief to winegrowers and winegrowing enterprises for investing
in shares in producer organisations and in the form of direct
assistance for producer organisations, which was unlawfully
implemented by the Federal Republic of Germany in breach of
Article 88(3) of the EC Treaty, shall — without prejudice to
Article 2 — be deemed incompatible with the common market.

Article 2

The scheme referred to in Article 1 shall be deemed not to
constitute aid insofar as it complies with the conditions of
Regulation (EC) No 1860/2004.

Article 3

1. Within two months from the date of notification of the
present decision, the Federal Republic of Germany shall inform
all winegrowers and producer organisations concerned with the
application of the state aid scheme of the Commission's decision
that the state aid scheme referred to in Article 1 is incompatible
with the common market.

2. The Federal Republic of Germany shall take all necessary
measures to ensure that the aid referred to in Article 1 and
unlawfully granted is recovered from the beneficiary wine-
growers and/or producer organisations, without prejudice to
Article 2 or any subsequent claims under national law. Within

6.2.2007

EN

Official Journal of the European Union

L 32/63

two months from the date of notification of the present decision,
the Federal Republic of Germany shall inform the Commission of
the identity of those beneficiaries, the aid amounts individually
granted and the methods used to determine those amounts.

3. Recovery shall be effected without delay and in accordance
with the procedures of national law permitting the immediate
and effective implementation of this Decision.

4. The aid to be recovered shall bear interest throughout the
period,
the
beneficiaries' disposal until its actual recovery.

from the date on which it was first placed at

5. The interest shall be calculated in accordance with the
provisions laid down in Chapter V of Commission Regulation
(EC) No 794/2004 of 21 April 2004 implementing Council
Regulation (EC) No 659/1999 laying down detailed rules for the
application of Article 93 of the EC Treaty.

Article 4

The Federal Republic of Germany shall inform the Commission,
within two months of the date of notification of this Decision, of
the measures already taken and planned to comply with it.
Germany shall submit, within the same period, all documents
which demonstrate that recovery proceedings have been initiated
against the beneficiaries of the unlawful aid.

Article 5

This decision is addressed to the Federal Republic of Germany.

Done at Brussels, 07 June 2006.

For the Commission
Mariann FISCHER BOEL
Member of the Commission