2008/875/EC: Commission Decision of 20 May 2008 on the State aid implemented by the Netherlands in order to promote and facilitate the restructuring of the horticultural sector (C 74/03 ex N 450/01) (notified under document number C(2008) 1847)
Date: 2008-05-20
Institutions: European Commission
Subjects: Netherlands, State aid, control of State aid, horticulture, investment aid

21.11.2008

EN

Official Journal of the European Union

L 310/21

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

II

DECISIONS

COMMISSION

COMMISSION DECISION

of 20 May 2008

on the State aid implemented by the Netherlands in order to promote and facilitate the
restructuring of the horticultural sector (C 74/03 ex N 450/01)

(notified under document number C(2008) 1847)

(Only the Dutch text is authentic)

(2008/875/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty
Community and in particular
Article 88(2) thereof,

establishing the European
subparagraph of
the

first

Having regard to the Agreement on the European Economic
Area and in particular Article 62(1)(a) thereof,

Having called on interested parties to submit their comments, in
accordance with the provisions referred to above (1) and having
taken those comments into account,

Whereas:

I. PROCEDURE

(1)

By letter of 27 June 2001, registered on 4 July 2001, the
Dutch Permanent Representation to the European Union
notified the Commission, pursuant to Article 88(3) of the
EC Treaty, of participation in a limited liability company
purchasing land and premises in the greenhouse culti­
vation sector (registered under number N 450/01).

(2) Written details were submitted to the Commission by the
Dutch authorities by letters dated 11 March 2002,
15 July 2002, 17 December 2002 and 21 October
2003, registered on 12 March 2002, 18 July 2002,
26 December 2002, and 25 October 2003 respectively.

(3)

(4)

(5)

By letter dated 10 December 2003 (2) the Commission
notified The Netherlands of its decision to initiate the
procedure laid down in Article 88(2) of the EC Treaty
with regard to the above-mentioned notification.

The decision by the Commission to initiate the procedure
was published in the Official
the European
Union (3). The Commission invited interested parties to
comments within one month. The
submit
their
Commission did not
from
interested parties.

any comments

Journal of

receive

Additional written information was submitted by the
Dutch authorities by letter dated 11 January 2004,
registered on 21 January 2004. During 2004 several
meetings took place between the Dutch authorities and
the Commission. The Dutch authorities also commented,
by letter dated 18 May 2005, registered on 23 May
2005, on the initiation of the procedure.

(1) OJ C 15, 21.1.2004, p. 24.

(2) C(2003) 4477 final.
(3) See footnote 1.

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II. DESCRIPTION

(9)

Background to the measure

The return on the capital invested in the partnership and
the junior loans was set at 15 % per annum in cash for
the duration of the project (15 years). The shareholders
receive an annual dividend. The return and dividend are
established on the basis of the market rate.

(6)

(7)

In 2001 Land- en Tuinbouw Organisatie Nederland, the
Dutch Agricultural and Horticultural Organisation (LTO-
Nederland) (4) and the private limited company Ontwik­
kelings- en Participatiebedrijf Publiek Private Sector BV
(OPP) announced their intention to form a company,
‘Stallingsbedrijf Glastuinbouw Nederland Beheer BV’
(SGN). The
involved in the
purchase, temporary management and sale of land and
premises in the greenhouse cultivation sector in order to
promote and facilitate restructuring within the horti­
cultural sector.

company would be

After SGN was set up, the Product Board for Horticulture
(Productschap Tuinbouw, PT) (5), the Ministry of Agri­
culture, Nature and Food Quality, OPP and SGN would
enter into a limited partnership. Within this limited part­
nership, SGN would act as managing partner, with the
others as silent partners. The limited partnership would
be involved in the purchase, temporary management and
sale of land and premises in the greenhouse cultivation
sector in order to promote and facilitate restructuring
within the horticultural sector.

(8)

In order to set up this limited partnership, start-up
capital was required, as follows:

— Ministry of Agriculture, Nature and Food Quality
(through the Bureau Beheer Landbouwgronden, the
capital: EUR
Land Management Service
value:
2 268 500;
EUR 2 268 500,

market

(BBL)):

junior

loans,

— PT (6): capital: EUR 2 722 500; junior loans, market

value: EUR 2 722 500,

— OPP: capital: EUR 4 991 000,

— SGN: capital: EUR 150 000.

(4) LTO-Nederland is a private business organisation in the agricultural

sector.

(5) Dutch agriculture and agro-industry have a series of ‘product boards’,
organisations which provide a form of representation additional to
non-governmental organisations, and which consist of one vertical
public law organisation per sector. These product boards are mainly
active in the areas of food safety, animal welfare, quality, promotion
and working conditions. Their activities include the implementation
of European legislation. The regulations issued by the Product Board
for Poultry and Eggs that impose levies on producers and under­
takings to achieve a specific goal mentioned in these regulations,
need to be approved by the Minister for Agriculture, Nature and
Food Quality.

(6) The Product Board for Horticulture’s involvement will be financed
exclusively using its own resources; no parafiscal charges will be
levied on the production, processing or marketing of horticultural
products.

(10)

The limited partnership and SGN were to be set up in
order to promote spatial restructuring in the horticultural
sector. The aim behind this was to concentrate horticul­
turists in specific areas, enabling the sector to adapt
better to town and country planning and environmental
sustainability requirements.

(11) According to its articles of association, the limited part­
nership cannot be involved in property development
activities or
in speculation that could influence the
price of land. Its activities are limited to the acquisition,
sale and temporary management of properties. The
purchase, sale and temporary management and sale of
land by the limited partnership and its managing partner
SGN must be in line with market price; acquisition, sale
is
temporary management below market price
or
prohibited under
the articles of association. Private
undertakings in the sector are not obliged or encouraged
by the government to cooperate (specifically) with the
limited partnership.

(12) According to the Dutch authorities, horticulturalists will
not benefit directly or indirectly from the measure in a
way that will
influence or limit competition, since the
limited partnership will always have to sell the land or
premises at market price if it wishes to maintain its profit
margin and remain viable and continue its activities.

(13)

(14)

The measure is valid for 15 years and may not be
cumulated with any other aid measures. The total
budget
be
available
EUR 15 123 000.

aid measure will

the

to

Grounds for initiating the procedure

The Commission initiated the procedure in respect of the
notified aid measure because the information provided
was insufficient to enable it to assess the compatibility
In the
of the measure with Article 87 of the Treaty.
decision to initiate the procedure, the Commission had
explained what
information was needed in order to
assess whether the notified measure constituted State
aid and,
if so, whether the aid would be compatible
with the internal market.

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Official Journal of the European Union

L 310/23

(15)

The notification included information on the estab­
lishment of SGN, which would finance 50 % of
its
start-up capital using State resources (7). The government
would also be the primary source of the limited part­
nership’s initial capital. At the time that the procedure
was initiated, the Commission was unable to ascertain
whether the ‘market economy investor’ principle had
been observed when establishing the Dutch authorities’
involvement and if the scheme would be used to save
companies in difficulty. Therefore the Commission main­
tained the view that the investment of public capital in
SGN and the limited partnership could benefit the Dutch
greenhouse cultivation sector and therefore constituted
aid within the meaning of Article 87(1) of the EC Treaty.

III. COMMENTS FROM THE NETHERLANDS

(16)

By letter dated 18 May 2005 the Commission received
comments from the Dutch authorities on the initiation of
the procedure. Additional information was also provided
by letters dated 11 January 2004 and during various
bilateral meetings held in 2004.

(17)

In their letter dated 11 January 2004, the Dutch auth­
orities provided the following information:

— SGN’s management had specified that the sale and
lease-back of land and premises was excluded and
that
specifically stated in sales
contracts,

this would be

— the feasibility study relating to sale and spatial
restructuring had been carried out
(by Deloitte &
Touche, an audit company). This study included
calculations on the
the
investment policy and an indication of anticipated
return,

viability of

economic

— SGN’s management had stated and guaranteed that
the calculations and indications of
return in the
Deloitte & Touche report had formed the basis of
the anticipated return of 15 % (in line with market
expectations) as stated in the business plan.

(18) During the bilateral meetings

the Dutch authorities
explained that the 15 % dividend would be distributed

(7) The resources in the form of capital and junior loans provided by
the Product Board for Horticulture, Ontwikkelings- en Participatie­
bedrijf Publieke Sector b.v. (OPP) and the Dutch Ministry of Agri­
culture, Nature and Food Quality can be regarded as State resources.
The Product Board for Horticulture is a public body. OPP is a
subsidiary of a bank which is wholly owned by the government.

according to the different levels of risk accepted by the
various shareholders,
i.e. 50 % in the case of OPP and
25 % each for PT and the Ministry of Agriculture, Nature
and Food Quality.

(19)

LTO-Nederland and OPP each have a 50 % share in SGN,
the limited partnership’s managing partner. In the event
of SGN making a profit,
this profit would also be
distributed equally between LTO-Nederland and OPP.

(20)

(21)

(22)

In their letter dated 18 May 2005, the Dutch authorities
provided information on the limited partnership and its
activities. They stated that the feasibility study had been
carried out after LTO’s initiative to start a land company
and that the study had been used as the basis for the
business plan and indication of anticipated return; all
financial risks were included in the business plan. Both
private and public partners had been asked to participate
in the venture. The private investors asked to participate
as a partner were unfamiliar with the modus operandi
and approach of the activities suggested by SGN (8). In
the end this was too great an uncertainty for these
private investors and they chose not to invest in the
limited partnership. However, since the feasibility report
indicated return on investment for the activities to be
carried out by the limited partnership, and these would
not involve a risk higher than that found on the market,
the public partners decided to participate in the project.

The Dutch authorities confirmed that the limited part­
‘player’. Since silent partners
nership was the market
cannot by definition be involved in management, SGN
as managing partner performs
and
therefore acts on behalf of the limited partnership in
these matters.

activities

these

The Dutch authorities explained that,
in terms of the
management of the limited partnership, the activities of
SGN would almost only concern small- and medium-
sized companies. The public partners only provide the
loans.
limited partnership with capital
Investment decisions must be taken based on the
prospect of return and the business plan is used as a
guide for investment. Since this would involve project-
based activities, other private investors will participate in
later stages as well. Apart from capital and junior loans
no other aid can be granted for the same purpose.

and junior

(8) The private partners had never been actively involved in restruc­
turing activities before and were not aware that they would only
be able to purchase, sell and manage land and not permitted to be
involved in other (investment) activities. They also preferred junior
loans over the investment of capital. Capital was also required in
order to set up the limited partnership. The public partners involved
had sufficient experience in the reconstruction of land and premises
and were familiar with the markets involved.

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Official Journal of the European Union

21.11.2008

(23)

(24)

(25)

The Dutch authorities explained that the purpose of the
limited partnership was not to assist individual under­
takings, but
to support Dutch town and country
planning policy and to promote sustainable development
in the greenhouse cultivation sector in specific areas. In
order to achieve this,
the limited partnership would
purchase and sell property in strategic areas (9). The
sale and re-sale of the land and properties must be in
line with market prices in order to ensure the partnership
earns a return (10). The limited partnership does not
in companies in difficulty and ‘sale and lease-
invest
back’ contracts are specifically excluded.

the Dutch authorities gave assurances

Finally,
that
procurement rules are complied with, given the invol­
vement of certified appraisers in the purchase of land
and property by the limited partnership, transfers will
not exceed the EUR 206 000 limit
laid down in
Article 7 of Directive 2004/18/EC (11) and the appraiser
has to be chosen in consultation with the other party
involved in the purchase or sale of the property.

IV. ASSESSMENT OF THE AID

The limited partnership and its managing partner SGN
were to be active in the greenhouse cultivation sector in
the purchase of land and property to be used for the
production of horticultural products.
first be
established whether participation in the limited part­
nership and its managing partner SGN can be considered
to be State aid within the meaning of Article 87(1) of the
Treaty and if so, whether such aid would be compatible
with the common market.

It must

(26) Article 87(1) of the Treaty states that any aid granted by
a Member State or through State resources in any form
whatsoever which distorts or threatens to distort compe­
tition
the
certain
production of certain goods shall, in so far as it affects
trade between Member States, be incompatible with the
common market.

undertakings

favouring

by

or

(27) As indicated in the case-law of the Court of Justice of the
European Communities, aid to an undertaking may

(9) Strategic areas are those where all conditions for greenhouse culti­
vation (e.g. possibility of reconstruction, water and road infra­
structure) are met. This would be achieved due to third parties,
since the limited partnership and its managing partner SGN
cannot be involved in such activities.

(10) The return is achieved by acquiring different plots of land, restruc­
turing them and selling them at a higher price. Any increase in
value is not due to the supply of capital but merely to the location
and local possibilities. Furthermore, changes in market price can
usually be beneficial.
(11) Directive 2004/18/EC of

the
Council of 31 March 2004 on the coordination of procedures
for the award of public works contracts, public supply contracts
and public service contracts (OJ L 134, 30.4.2004, p. 114).

the European Parliament and of

adversely affect trade between Member States and distort
competition,
if that undertaking operates in a market
open to intra-Community trade (12). The limited part­
nership and its managing partner SGN are active on
in land
the market in trade of
meant to be used for horticultural production. Active
intra-Community trade is present within both these
markets (13).

land and, specifically,

(28)

The capital and the junior loans are financed using the
budgets of the Dutch Ministry of Agriculture, Nature and
Food Quality (via the Land Management Service (BBL), a
total of EUR 4 537 000), the Product Board for Horti­
culture (PT) (EUR 5 445 000), OPP (EUR 4 991 000) and
SGN (EUR 150 000). The PT is a public body established
by law, OPP is a limited liability partnership, wholly
owned by public bodies and SGN is a limited liability
partnership in which OPP has a 50 % share (the other
50 % being owned by LTO-Nederland, a private organi­
sation). Given the structure of the capital investment in
the
the limited partnership,
government has a share in the limited partnership and
that this capital comes,
indirectly in parts, from State
resources.

it can be concluded that

(29)

The measure in question is selective, given that
the
investment is made in order to purchase, temporarily
manage and re-sell land and premises in the horticultural
sector in order to promote and facilitate spatial restruc­
turing in the horticultural sector. These activities promote
development in the sector and therefore also horticultural
production.

(30) However, in accordance with Article 87(1) of the Treaty,
measures cannot be considered to be aid if no advantage
is conferred, given that in such cases, the measure does
not distort competition or adversely affect trade between
the measure must
impact of
Member States. The
therefore be examined in order to ascertain whether
the sectors concerned have benefited as a result.

(31) According to the Commission Communication on the
application of Articles 92 and 93 (now Articles 87 and
88) of the EC Treaty and of Article 5 of Commission

(12) See in particular the Court’s ruling of 13 July 1988 in case
C-102/87, French Republic v Commission of the European Communities
[1988] ECR I-4067.

(13) Land is a tradable asset; the high value of land and the possibilities
to invest and develop land makes its sale attractive for investors
operating in a Europe-wide or international scale. There is a high
level of intra-Community trade in horticultural products: in 2005,
intra-EU trade in fruit and vegetables amounted to EUR 7 099
million for vegetables and EUR 5 899 million for fruits (Source:
Eurostat).

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(referred to below as

in the
Directive 80/723/EEC to public undertakings
‘the
manufacturing sector (14)
1993 Communication’), a capital injection is considered
to be aid if it is made under circumstances unacceptable
to a private investor operating under normal market
conditions. Therefore, in order to ascertain whether this
measure confers advantage, the market economy investor
principle (MEIP) must be applied (15).

account market risks, final return on investment is 15 %
investment period of 15 years.
per annum for a total

(37)

In case T-296/97 (Alitalia v Commission) (17), it was estab­
lished that the conduct of a private investor in a market
economy is guided by prospects of profitability.

(32)

(33)

this decision in no way
The Commission notes that
anticipates
the
or
Commission on the subject of public procurement and
legislation governing this area.

prevents

analysis

further

by

the capital

The effects of the measure must be examined on the
injection and the partici­
following levels:
pation of public authorities in the limited partnership,
the benefit for SGN, the other associates in the limited
partnership and any
and
future
advantage for third parties (16).

interested parties

Capital injection and public participation in the
management of the limited partnership

(34) A conservative planning approach has been used when
limited partnership’s
preparing the models of
business plan. The first model was produced on the
basis of planning over 10 years and the second model
using a period of 15 years. On the basis of the calcu­
lations in the business plan and the financial risks iden­
tified, an investment period of 15 years was chosen.

the

(35)

The business plan covers an average land supply of 140
hectares, to be purchased gradually.
In the first three
years no land would be sold, only purchase and rental
activities would be used to secure the investment (as
collateral; a minimum level of available land would be
guaranteed). After this initial period,
the rate of sale
restricted to 50 hectares per year. A
would be
set as ownership
minimum of EUR 27 million is
is set
In order
equity.
this is done through junior
slightly higher. However,
loans
capital.
According to the calculations provided, the net present
value of the investment is positive.

to reduce risks, own capital

investment

rather

direct

than

of

(36)

It has also been found necessary for the undertaking to
be as flexible as possible and that it should work using a
project-based approach in order to be able to respond to
the economic cycle. The business plan refers to a return
on investment of 17,13 % per annum. Taking into

(14) Commission Communication — Application of Articles 92 and 93
of
the EC Treaty and of Article 5 of Commission Directive
80/723/EEC to public undertakings in the manufacturing sector
(OJ C 307, 13.11.1993, p. 3).
(15) See the 1993 Communication.
(16) Participants are individuals from whom property or land is bought

and who manage or purchase this property or land.

(38)

(39)

(40)

The Court of First Instance, in its ruling in case T-228/99
(Westdeutsche Landesbank Girozentrale v Commission of the
European Communities) (18) held that the average rate of
return cannot be an automatic criterion for determining
the existence and amount of State aid. The use of an
average return must be consistent with the notion that
an informed private investor, in other words, an investor
wishing to maximise profits but without
running
excessive risks in comparison with other participants in
the market, would, when calculating the appropriate
return to be expected for the investment,
in principle
to the average
require a minimum return equivalent
In its ruling in case
return for the sector concerned.
C-305/89 (Italian Republic v Commission of the European
Communities) (19), the Court took the view that a private
investor, whose involvement must be compared with that
of a public investor pursuing economic policy aims, will
not necessarily behave like an ordinary investor laying
out capital with a view to seeing a return in the (more
or less) short term, but must at least behave like a private
holding company or a private group and undertakings
pursuing a structural policy and is guided by the
prospects of longer-term profitability.

the State, as owner of

Since the government has a share in a limited part­
nership,
the share
capital will only be liable for the partnership’s debts up
to the liquidation value of the assets. The financial risk of
the investment
the government participates in would
therefore be limited.

(some of)

risks

The business plan is well thought out and is based on
moderate expectations. The limited partnership and SGN
are both working on the basis of a long-term vision with
a moderate growth model. The financial
that
depend on the economic cycle are therefore removed
in order to enhance the possibility and the size of
return on investment. The plan contains policy
objectives, expected rates of return and financial risk
calculations. On the basis of
the
Deloitte & Touche feasibility report, the project can be
regarded as being viable. The reluctance within the
to finance the project’s start-up phase
private market
was caused by unfamiliarity with the restructuring of
land and the specific features of
the agricultural and
greenhouse cultivation market.

the conclusions of

(17) Case T-296/97, Alitalia v Commission [2000] ECR II-3871,

paragraph 84.

(18) Case T-228/99, Westdeutsche Landesbank Girozentrale v Commission
[2003] ECR II-435, see in particular paragraphs 251 and 255.

(19) Case C-305/89, Italy v Commission [1991] ECR I-1603.

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Official Journal of the European Union

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(41)

injections were in this case based on
The capital
reasonable anticipated rates of return in the medium to
long term. The different parties required a return on their
investment of 15 % per annum over a period of 15 years.
This return was in line with average rates of return in the
sector concerned (20). The investors used the same criteria
as providers of capital under normal market conditions.

(42)

The Commission does not see why a market economy
investor should not provide capital, if it can be expected
that these initial
investments would help the company
become profitable in the future.

(43)

It can therefore be considered that, by providing the
start-up capital of EUR 15 123 000 the Dutch authorities
did not confer an advantage on SGN and acted like a
market economy investor and lender.

The benefit for SGN, the other partners in the
limited partnership and any future interested parties

(44) According to the information provided by the Dutch
authorities,
the purchase, management and re-sale of
the land and premises took place at market price. The
decision to participate in a partnership was based on the
essential need for flexibility within the venture and the
possibility of working on a project basis. This working
method enables private investors to participate in indi­
vidual projects, which reduces financial risk and ensures a
investment (21). The regulations
return on the initial
establishing the limited partnership and SGN ensure
that
the limited partnership
itself and SGN (acting on its behalf), does not differ
they are only
from that of other investors and that
involved in the
(with
the sites concerned
investing in the development of
being expressly excluded). Furthermore,
the market
price for the land and property that the limited part­
nership and SGN (acting on its behalf) wish to
purchase is that established with the help of independent
appraisers appointed by the selling and buying parties.
SGN, as the managing partner, can be held liable for all
the shortcomings of the limited partnership.

the market position of

referred to above

activities

(45) According to the information provided by the Dutch
authorities only the start-up capital was provided using
State resources and no other aid or State resources were

(20) Investments

investors

in land;

the different private

(NBM
Amstelland, Arcadis, Grontmij, Groenfonds, ING, Fortis, Nationale
Investerings Bank, Locatie Ontwikkelingsbedrijf, ABN AMRO,
that were approached to participate in the project
Rabobank)
stated that investment in land would generally take place in the
medium term (10 to 20 years) and that a profit of 15 % should be
available for the investors when compared to generally comparable
or similar investments in land.

(21) These private investments will be made on a project basis and be

related to the different phases of the project.

made available to the limited partnership or its managing
partner SGN.

(46) As the limited partnership has to pay a normal rate of
return to its investors, does not enjoy a beneficial or
privileged market position and operates on the basis of
freely-established market prices,
the Commission is
unable to establish the existence of a competitive
advantage which the limited partnership could not have
had under normal market conditions. The Commission
takes the view that no advantage was conferred upon the
limited partnership itself or its partners (LTO-Nederland)
or any future interested parties.

Advantage for third parties

(47) According to the information provided by the Dutch
authorities,
the purchase, management and re-sale of
the land and the glasshouses on it take place at market
rates. The market rates for land and property apply to
land and property purchased by the limited partnership
and are
independent
established with the help of
assessors appointed by the various parties.

(48)

The regulations establishing the limited partnership and
its managing partner SGN ensure that no other activities
can be engaged in and that the limited partnership must
strive towards a maximum return. The conferring of
in keeping
advantage to certain third parties is not
with the objective laid down in these provisions. The
possibility of the limited partnership purchasing, selling
and managing property obtained at prices other than
market price is excluded, which ensures that no help is
given to companies in difficulty.

(49)

In order to establish the price of
the land, certified
appraisers are appointed. By using these and other
services,
the provisions of Directive 2004/18/EC are
adhered to.

(50) According to the information provided by the Dutch
authorities, the limited partnership and SGN (acting on
its behalf) behave like any other market player towards
its clients (the individuals from whom the property or
land is purchased, who maintain this property or land or
who buy the property or land).
It can therefore be
concluded that the third parties involved in the activities
of the limited partnership and its managing partner SGN
do not have an advantage and therefore do not receive
any form of aid.

V. CONCLUSION

(51) On the basis of the above, the Commission’s doubts,
which prompted it to initiate the procedure and led to
the provisional
found in the decision
initiating the procedure, have now been removed.

conclusions

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Official Journal of the European Union

L 310/27

(52)

the invol­
The Commission therefore concludes that
vement of
the Dutch authorities in the limited part­
nership and SGN through the supply of capital and
junior loans is in keeping with the market economy
therefore constitute
investor principle and does not
State aid within the meaning of Article 87(1) of the EC
Treaty,

of EUR 15 123 000, does not constitute aid within the meaning
of Article 87(1) of the Treaty.

Article 2

This Decision is addressed to the Kingdom of the Netherlands.

HAS ADOPTED THIS DECISION:

Done at Brussels, 20 May 2008.

Article 1

The involvement of the Dutch authorities in the limited part­
nership in order to promote and facilitate the restructuring of
the horticultural sector, amounting to a capital and junior loans

For the Commission

Mariann FISCHER BOEL
Member of the Commission