Invitation to submit comments on the draft Commission Regulation on the application of Articles 87 and 88 of the EC Treaty to de minimis aid in the agricultural production sector
Date: 2007-07-05
Institutions: European Commission
Subjects: State aid, agricultural production, aid to agriculture, control of State aid, exchange of information

C 151/16

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Invitation to submit comments on the draft Commission Regulation on the application of Articles
87 and 88 of the EC Treaty to de minimis aid in the agricultural production sector

(2007/C 151/07)

Interested parties may submit their comments within one month of the date of publication of this draft
Regulation to:

European Commission
Directorate-General for Agriculture and Rural Development
Unit H.2
Office: Loi 130 05/100
B-1049 Brussels
Fax: (32-2) 296 76 72
E-mail: Agri-State-Aids@ec.europa.eu

DRAFT COMMISSION REGULATION (EC) No …/…

of …

on the application of Articles 87 and 88 of the EC Treaty to de minimis aid in the agricultural
production sector

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Com-
munity,

the risks that even low
the agriculture sector and of
levels of aid could fulfil the criteria of Article 87(1) of
the Treaty in that sector, Regulation (EC) No 69/2001
excludes the agriculture sector from its scope.

Having regard to Council Regulation (EC) No 994/98 of 7 May
1998 on the application of Articles 92 and 93 of the Treaty
establishing the European Community to certain categories of
horizontal State aid (1), and in particular Article 2(1) thereof,

(3)

(Having published a draft of this Regulation (2)),

(Having consulted the Advisory Committee on State aid),

Whereas:

(1)

(2)

Regulation (EC) No 994/98 empowers the Commission
to set out in a regulation a threshold below which aid
measures are considered not to meet all the criteria of
Article 87(1) of
the Treaty and therefore do not fall
under the notification procedure provided for in Article
88(3) of the Treaty.

The Commission has applied Articles 87 and 88 of the
Treaty and in particular clarified, in numerous decisions,
the notion of aid within the meaning of Article 87(1) of
the Treaty. It has also stated its policy with regard to a de
minimis ceiling under which Article 87(1) of the Treaty
can be considered not to apply, firstly in its communica-
tion on de minimis aid (3) and then in Commission Regu-
lation (EC) No 69/2001 of 12 January 2001 on the
application of Articles 87 and 88 of the EC Treaty to de
minimis aid (4). In view of the special rules which apply in

(1) OJ L 142, 14.5.1998, p. 1.
(2) OJ C 151, 5.7.2007, p. 16.
(3) OJ C 68, 6.3.1996, p. 9.
(4) OJ L 10, 13.1.2001, p. 30.

However, since the experience gained over the years has
shown that the very small amounts of aid granted in the
agriculture sector may also not meet
the criteria of
Article 87(1) of the Treaty where certain conditions are
met, the Commission laid down rules allowing the grant
of de minimis aid in that sector in Commission Regulation
(EC) No 1860/2004 of 6 October 2004 on the applica-
tion of Articles 87 and 88 of the EC Treaty to de minimis
aid in the agriculture and fisheries sectors (5). That Regu-
lation, by virtue of which the total amount of de minimis
aid granted to one and the same undertaking is regarded
as not meeting all the criteria of Article 87(1) of the
Treaty where it does not exceed EUR 3 000 per benefi-
ciary over any period of
three years or a cumulative
amount laid down for each Member State representing
0,3 % of annual output in the agriculture sector, covers
both primary production and the processing and
marketing of agricultural products.

(4)

Given the similarities between activities in the processing
and marketing of agricultural products within the
meaning of Article 1(2)(b) and (c) of Commission Regu-
lation (EC) No 1998/2006 of 15 December 2006 on the
application of Articles 87 and 88 of the EC Treaty to de
minimis aid on the one hand and industrial activities on

(5) OJ L 325, 28.10.2004, p. 4. Regulation as amended by Regulation (EC)

No 1998/2006 (OJ L 379, 28.12.2006, p. 5).

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the other, activities in the processing and marketing of
agricultural products were included in the scope of Regu-
lation (EC) No 1998/2006, which governs de minimis aid
for industrial activities. As a result, those activities were
excluded from the scope of Regulation (EC) No 1860/
2004. The fisheries and aquaculture sectors, which are
also covered by Regulation (EC) No 1860/2004, will be
dealt with shortly in a separate de minimis Regulation. For
the sake of clarity, Regulation (EC) No 1860/2004 should
be repealed and replaced by a new Regulation applicable
only to the agricultural production sector.

light of

experience,

In the
the
the Commission's
maximum amount of aid of EUR 3 000 per beneficiary
over a period of
three years may be increased to
EUR 6 000 and the ceiling of 0,3 % of annual output in
the agriculture sector may be increased to 0,6 % without
trade between Member States being affected, without
there being any distortion or threat of distortion of
competition, and without aid being granted within those
limits falling under Article 87(1) of the Treaty, provided
that certain conditions are met. This increase will also
help to reduce the administrative burden. It should not
be possible for aid amounts exceeding the ceiling of
EUR 6 000 to be broken down into a number of smaller
parts with the aim of benefiting from this Regulation.

This Regulation should not apply to export aid or aid
favouring domestic over imported products. In particular,
it should not apply to aid financing the establishment
and operation of a distribution network in other coun-
tries. Aid towards the cost of participating in trade fairs,
or of studies or consultancy services needed for the
launch of a new product or an existing product on a new
market does not normally constitute export aid.

The Court of Justice of the European Communities has
established that, once the Community has legislated for
the establishment of a common organisation of
the
market in a given sector of agriculture, Member States
are under an obligation to refrain from taking any
measure which might undermine or create exceptions to
it (1). For this reason, this Regulation should not apply to
aid whose amount is laid down on the basis of price or
quantity of products purchased or put on the market.

For the sake of transparency, equal treatment and the
correct application of the de minimis ceiling, all Member
States should apply the same method of calculation. In
order to facilitate this calculation, aid amounts not taking
the form of a cash grant should be converted into their
gross grant equivalent. Calculation of the grant equivalent
of forms of transparent aid other than grants or aid
payable in several instalments requires the use of market
interest rates prevailing at the time of granting such aid.
With a view to a uniform, transparent and simple appli-
cation of the State aid rules, the market rates for the

(5)

(6)

(7)

(8)

purposes of this Regulation should be deemed to be the
reference rates which are periodically laid down by the
Commission on the basis of objective criteria and
published in the Official Journal of the European Union or
on the internet. It may, however, be necessary to add
additional basis points on top of the floor rate in view of
the securities provided or the risk associated with the
beneficiary.

Again for the purposes of transparency, equal treatment
and the correct application of the de minimis ceiling, this
Regulation should apply only to de minimis aid which is
‘Transparent aid’ should be taken to mean
transparent.
aid for which it
is possible to calculate precisely in
advance the gross grant equivalent without the need to
undertake a risk assessment. Such precise calculation can,
for instance, be realised as regards grants,
interest rate
subsidies and capped tax exemptions. Aid in the form of
soft
loans should be considered to be transparent de
minimis aid when the gross grant equivalent has been
calculated on the basis of market interest rates prevailing
at the time of grant. Aid in the form of capital injections
should not be considered to be transparent de minimis aid
unless the total amount of the public capital injection is
lower than the de minimis ceiling per beneficiary. Aid in
the form of risk capital measures as referred to in the
Community guidelines on State aid to promote risk
capital
investments in small and medium-sized enter-
prises (2) should not be considered to be transparent de
minimis aid unless the risk capital scheme concerned
provides capital only up to the de minimis ceiling per
beneficiary. Given the level of the amounts that may be
considered not to distort or threaten to distort competi-
tion and, as a result, not to fall under Article 87(1) of the
Treaty within the meaning of this Regulation, this Regu-
lation should not apply to aid in the form of guarantees.

This Regulation should not apply to undertakings in diffi-
culty within the meaning of the Community guidelines
on State aid for rescuing and restructuring firms in diffi-
culty (3) given the difficulties linked to determining the
gross grant equivalent of aid granted to this type of
undertaking.

In accordance with the principles governing aid falling
within Article 87(1) of the Treaty, de minimis aid should
be considered to be granted at the moment the right to
receive the aid is conferred on the undertaking under the
applicable national legal regime.

In order to avoid circumvention of maximum aid intensi-
it
ties laid down in different Community instruments,
should not be possible for de minimis aid to be cumulated
with State aid in respect of the same eligible costs if such
cumulation would result in an aid intensity exceeding
that
laid down by Community rules in the specific
circumstances of each case.

(9)

(10)

(11)

(12)

(1) Judgment in Case C-113/00 Spain v Commission [2002] ECR I-7601,

paragraph 73.

(2) OJ C 194, 18.8.2006, p. 2.
(3) OJ C 244, 1.10.2004, p. 2.

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(13)

(14)

(15)

(16)

This Regulation does not exclude the possibility that a
measure adopted by a Member State might not be
considered to be State aid within the meaning of Article
87(1) of the Treaty on a basis other than this Regulation,
for instance in the case of capital injections, because such
measure has been decided in conformity with the prin-
ciple of private investors operating in normal market-
economy conditions.

The Commission must ensure that State aid rules are
complied with, and in particular that aid granted under
the de minimis rules adheres to the conditions thereof. In
accordance with the cooperation principle laid down in
Article 10 of the Treaty, Member States should facilitate
the achievement of this task by establishing the necessary
machinery to ensure that the total amount of aid granted
under the de minimis rule does not exceed either the
ceiling of EUR 6 000 per beneficiary or the overall ceil-
ings established by the Commission on the basis of the
value of agricultural output. To that end, the Member
States, when granting a de minimis aid, should inform the
undertaking of its de minimis character, receive full infor-
mation about other de minimis aid received during the
previous three years, and carefully check that
the de
minimis ceilings will not be exceeded by the new de
minimis aid. Alternatively, compliance with the ceilings
may also be ensured by means of a central register.

Regulation (EC) No 1860/2004 is
to expire on
31 December 2008. Since this Regulation has to enter
into force before that date, the consequences of that as
regards its applicability to aid granted to undertakings in
the agricultural production sector under Regulation (EC)
No 1860/2004 should be clarified.

In the light of the Commission's experience and in par-
ticular the frequency with which it is generally necessary
to revise State aid policy, the period of validity of this
Regulation should be limited. Should this Regulation
expire without having been extended, Member States
should have an adjustment period of six months with
regard to de minimis aid covered by it,

HAS ADOPTED THIS REGULATION:

Article 1

Scope

This Regulation applies to aid granted to undertakings in the
agricultural production sector, with the exception of:

(a) aid the amount of which is laid down on the basis of price

or quantity of products on the market;

(d) aid granted to undertakings in difficulty.

Article 2

Definitions

For the purpose of this Regulation:

1.

2.

‘undertakings in the agricultural production sector’ means
undertakings active in the primary production of agricultural
products;

‘agricultural products’ means the products listed in Annex I
to the Treaty, except
fisheries and acquaculture products
covered by Council Regulation (EC) No 104/2000 (1).

Article 3

De minimis aid

Aid measures shall be deemed not to meet all the criteria
1.
of Article 87(1) of the Treaty and shall therefore not fall under
the notification requirement of Article 88(3) of
the Treaty
where they fulfil the conditions laid down in paragraphs 2 to 7
of this Article.

2.
The total de minimis aid granted to any one undertaking
shall not exceed EUR 6 000 over any period of three years. This
ceiling shall apply irrespective of the form of the aid or the
objective pursued.

3.
The cumulative amount of de minimis aid granted per
Member State to undertakings in the agricultural production
sector over any period of three years shall not exceed the value
set out in the Annex hereto.

4.
The ceilings in paragraphs 2 and 3 shall be expressed as a
cash grant. All figures used shall be gross, that is before any
deduction for direct taxation. Where aid is awarded in a form
other than a grant, the aid amount to be taken into account
shall be the gross grant equivalent of the aid.

5.
Aid payable in several instalments shall be discounted to
its value at the moment of its being granted. The interest rate to
be used for discounting purposes and to calculate the gross
grant equivalent shall be the reference rate applicable at the time
of grant.

6.
De minimis aid must be transparent aid. Transparent aid
shall be taken to mean aid for which it is possible to calculate
precisely in advance the gross grant equivalent as a percentage
of eligible expenditure without the need to undertake a risk
interest rate subsidies and
assessment
capped tax exemptions).

(for example: grants,

Aid in the form of loans shall be considered transparent aid
where the gross grant equivalent has been calculated on the
basis of market interest rates prevailing at the time of the grant.

(b) aid to export-related activities, namely aid directly linked to
the quantities exported, to the establishment and operation
of a distribution network or to other current expenditure
linked to the export activity;

Aid in the form of capital
injections shall not be considered
transparent aid unless the total amount of the public capital
injection does not exceed the ceiling per beneficiary referred to
in paragraph 2.

(c) aid contingent on the use of domestic over imported goods;

(1) OJ L 17, 21.1.2000, p. 22.

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Aid in the form of risk capital measures shall not be considered
transparent aid unless the risk capital scheme concerned only
provides capital to each undertaking up to the ceiling per benefi-
ciary referred to in paragraph 2.

7.
De minimis aid shall not be cumulated with State aid in
respect of the same eligible costs if such cumulation would
result in an aid intensity exceeding that laid down by Com-
munity rules in the specific circumstances of each case.

8. Where the total amount of aid granted for an aid measure
exceeds the ceiling referred to in paragraph 2, none of that
amount — not even the fraction not exceeding the ceiling —
may benefit from this Regulation. In such cases no aid may be
claimed for the measure under this Regulation, either at the
time aid is granted or subsequently.

The information referred to in the first subparagraph shall be
kept:

(a) in the case of individual de minimis aid, for 10 years from

the date on which the aid is granted;

(b) in the case of de minimis aid schemes, for 10 years from the
date on which the last individual aid was granted under the
scheme in question.

5.
On written request the Member States shall provide the
Commission, within a period of 20 working days, or such
longer period as may be specified in the request, with all the
information that the Commission considers necessary for asses-
this Regulation have been
sing whether
complied with, in particular the total amount of de minimis aid
received by any undertaking.

the conditions of

Article 4

Monitoring

1. Where a Member State intends to grant de minimis aid to
an undertaking, it shall inform that undertaking in writing of
the prospective amount of the aid (expressed as gross grant
equivalent) and of its de minimis character, making express refer-
ence to this Regulation and citing its title and publication refer-
ence in the Official Journal of the European Union.

The Member State shall obtain a declaration from each benefi-
ciary undertaking demonstrating that the amount of aid received
by it does not exceed the maximum amount laid down in
Article 3(2). Where that amount is exceeded, the Member State
concerned shall ensure that the aid measure leading to the
ceiling being exceeded is notified to the Commission or recov-
ered from the beneficiary undertaking.

2.
The Member State shall only grant de minimis aid after
having checked that it will not raise the total amount of de
minimis aid received by the undertaking during the reference
period of three years to a level above the ceiling laid down in
Article 3(3).

3. Where a Member State has set up a central register of de
minimis aid containing complete information on all de minimis
aid falling within the scope of this Regulation granted by any
authority within that Member State, the second subparagraph of
paragraph 1 shall not apply once the register covers a period of
at least three years.

4. Member States shall record and compile all the informa-
tion regarding the application of this Regulation. Such records
shall contain all information necessary to demonstrate that the
conditions of this Regulation have been complied with.

Article 5

Repeal

Regulation (EC) No 1860/2004 is repealed with effect from
1 January 2008.

Article 6

Transitional provisions

1.
This Regulation shall apply to aid granted under Regu-
lation (EC) No 1860/2004 to undertakings in the agricultural
production sector meeting the requirements of that Regulation,
provided that such aid falls within the scope of this Regulation
and also meets the requirements laid down in Article 3 of this
Regulation. Any aid not meeting the latter requirements shall be
assessed by the Commission in accordance with the relevant
applicable frameworks, guidelines, communications and notes.

At the end of the period of validity of this Regulation, de
2.
minimis aid which fulfils the conditions of this Regulation may
continue to be applied under the conditions laid down in this
Regulation for a further period of six months.

Article 7

Entry into force and period of validity

into force on the seventh day
This Regulation shall enter
following that of its publication in the Official Journal of the Euro-
pean Union.

It shall apply from 1 January 2008 until 31 December 2013.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, …

For the Commission

…

Member of the Commission

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Maximum cumulative amounts of de minimis aid granted per Member State to undertakings in the agricultural
production sector as referred to in Article 3(3)

ANNEX

(in EUR)

BE

BG

CZ

DK

DE

EE

IE

EL

ES

FR

IT

CY

LV

LT

LU

HU

MT

NL

AT

PL

PT

RO

SL

SK

FI

SE

UK

41 148 000

20 784 000

21 738 000

52 438 000

264 060 000

2 838 000

37 014 000

72 636 000

262 800 000

389 034 000

274 290 000

3 570 000

8 286 000

4 218 000

1 668 000

39 402 000

738 000

122 964 000

34 824 000

85 698 000

43 860 000

81 924 000

6 624 000

11 484 000

25 398 000

28 668 000

148 326 000