2008/723/EC: Commission Decision of 18 July 2007 on State aid C 37/05 (ex NN 11/04) implemented by Greece — tax-exempt reserve fund (notified under document number C(2008) 3251) (Text with EEA relevance)
Date: 2008-07-18
Institutions: European Commission
Subjects: Greece, State aid, aid to undertakings, control of State aid, investment aid, regional aid, tax exemption

12.9.2008

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

II

DECISIONS

COMMISSION

COMMISSION DECISION

of 18 July 2007
on State aid C 37/05 (ex NN 11/04) implemented by Greece — tax-exempt reserve fund

(notified under document number C(2008) 3251)

(Only the Greek version is authentic)

(Text with EEA relevance)

(2008/723/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

one of
these draft measures, certain companies are
allowed to set up a special tax-free reserve fund of up
to 35 % of their profits in order to carry out investments
of an equal amount. The Commission also reminded
Greece of
its obligation to notify the Commission of
any measures constituting aid before their implemen­
tation, pursuant to Article 88(3) of the EC Treaty.

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

(2)

Having called on interested parties to submit their comments
pursuant to the provision cited above (1),

Whereas:

I. PROCEDURE

the

By letter dated 27 November 2003 (A/38170) the Greek
authorities provided some of the information requested.
As the answers were not complete,
the Commission
letter of
reminded the Greek authorities by
3 December 2003 (D/57817) of its request and of its
power to instruct Greece to provide the requested infor­
mation under Article 10(3) of Council Regulation
Council Regulation (EC) No 659/1999 of 22 March
1999 laying down detailed rules for the application of
Article 93 of
the
Commission received two letters dated 8 December
in
2003 (A/38600) and 21 January 2004 (A/30440)
infor­
which the Greek authorities provided further
mation. However, the replies were very general and not
sufficiently detailed to allow the Commission to assess
the measures in the light of Articles 87 and 88 of the EC
Treaty.

the EC Treaty (2). Subsequently,

(1)

to

provide

Based on information collected by the Commission,
Greece was requested by letter dated 22 October 2003
(D/56772),
several
measures included in a draft law on ‘Development and
social policy measures — Objectivity of tax controls and
other provisions’, with a view to establish the extent to
which they constitute
aid within the meaning of
Article 87 of the EC Treaty. Under the provisions of

information about

(3)

On 15 January 2004, Greece enacted Law 3220/2004 on
‘Development and social policy measures — Objectivity
of tax controls and other provisions’, which entered into
force on 30 January 2004, on its publication in the
Official Journal of Greece No 3220/2004 (FEK A 15).

(1) OJ C 20, 27.1.2006, pp. 16-25.

(2) OJ L 83, 27.3.1999, p. 1.

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(4)

(5)

(6)

(7)

(8)

(9)

(10)

letter dated 13 May 2004
The Commission, by
(COM(2004) 1894), adopted an information injunction
pursuant to Article 10(3) of Council Regulation (EC) No
659/1999. The Commission notified the Greek authori­
ties of this decision by letter dated 14 May 2004.

By letter dated 17 June 2004,
the
Commission on 23 June 2004 (CAB(2004)1647), the
the information
Greek authorities provided a part of
necessary to assess whether the measure in question is
in compliance with Article 88(3) of the EC Treaty.

registered at

letters

By
dated 7 September 2004 (D/56332),
21 September 2004 (D/56733) and 27 January 2005
(D/50744), the Commission asked for additional
infor­
mation. Greece provided the Commission with further
information by letters dated 6 December 2004, registered
at the Commission on 13 December 2004 (A/39659),
11 January 2005,
the Commission on
registered at
17 January 2005 (A/30523), and 25 April 2005,
registered at
the Commission on 29 April 2005
(A/33595).

its

intention to issue

By letter dated 13 July 2005 the Commission informed
a
the Greek authorities of
suspension injunction pursuant Article 11(1) of
the
Regulation (EC) No 659/1999. By letter dated 25 July
2005, registered at the Commission on 29 July 2005
(A36189) the Greek authorities proposed repealing the
to revenues and
measure, however only with effect
profits accrued after 1 January 2005, while it would
stay in force for revenues and profits made before that
date.

By letter dated 20 October 2005 (3), the Commission
informed Greece that
it had decided to initiate the
procedure laid down in Article 88(2) of the EC Treaty
on the aid measure. In this decision, published in the
Official Journal of the European Union (4), the Commission
invited interested parties to submit their comments on
the measure.

By letters dated 18 November 2005 and 21 December
2005, registered at the Commission on 22 November
2005 (A/39597) and 23 December 2005 (A/40796) re­
spectively, Greece requested an extension of the deadline
for
submitting its observations on the Decision of
20 October 2005.

By letters of 25 November 2005 and 12 January 2006
the Commission
deadline
extensions.

respective

granted

the

(11)

By letter dated 30 January 2006,
the
Commission on 31 January 2006 (A/30817), Greece

registered at

(3) C(2005)3873 of 20.10.2005.
(4) Cf. footnote 1.

(12)

(13)

(14)

information and requested a third
submitted further
deadline extension, which was not granted by the
Commission.

Industries,

registered at

Federation of Greek

By fax dated 14 February 2006,
the
Commission on the same day (A/31227), a third party,
the
requested an
extension of the deadline for submitting its observations
on the Decision of 20 October 2005. The Commission
refused to grant this extension by letter of 20 February
considered the prescribed period for
2006,
as
submitting
the
Article 6(1) of Regulation (EC) No 659/1999 of
22 March 1999 should normally not exceed one
month, as sufficient. Moreover, no particular justification
was provided for the deadline extension request.

comments, which

according

to

it

By fax dated 28 February 2006,
the
Commission on the same date (A32693), the Federation
of Greek Industries (FGI) submitted its comments as an
interested third party.

registered at

registered at

By e-mail dated 6 April 2006,
the
Commission on the same date (A/32693), and by
letters dated 16 June 2006 and 26 October 2006,
registered at
the Commission on 20 June 2006
(A/34774) and 30 October 2006 (A/38658) respectively,
Greece submitted further information. In the letter dated
16 June 2006 Greece declared that the information sent
by letter dated 6 April 2006 is to be considered within
the framework of this procedure and not as a separate
notification.

II. DETAILED DESCRIPTION OF THE AID SCHEME

II.1. Objective of the scheme

(15) Article 2 of Greek Law 3220/2004 (hereinafter referred
to as ‘the measure’ or ‘the scheme’) aims at promoting
economic development
regions of
Greece, at
the increase of employment and entrepre­
neurship and the improvement of the competitiveness
of the economy.

throughout

the

II.2. Legal basis of the scheme

(16)

The legal basis of the scheme is Greek Law 3220/2004
entitled ‘Development and social policy measures —
Objectivity of tax controls and other provisions’ (5) (here­
inafter referred to as the Law 3220/2004), which entered
into force on 28 January 2004, upon being published in
the Greek Government Gazette (FEK A 15). The Greek
authorities further stipulate that the relevant eligible cost,
aid intensities, eligible undertakings and projects are set
law, 2601/1998 (6)
out
(hereinafter referred to as the Law 2601/1998).

in the regional development

(5) Government Gazette No 15A of 28 January 2004.
(6) Aναπτυξιακός Νόμος 2601/1998, Greek Government Gazette A 81

of 15 April 1998.

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(17)

II.3. Forms of aid

undistributed profits

The aid will take the form of a special tax-free reserve
fund established by a beneficiary from up to 35 % of its
aggregate
during 2004. Ad­
ditionally, the fund can be established from up to 50 %
of the profits during 2003 after deduction of the profits
from the year 2002 or,
if the undertakings made an
eligible investment
in 2003, the reserve fund can be
created up to an amount of that investment but not
exceeding 35 % of
the aggregate undistributed profits
of 2003. Aid is granted at the moment of a beneficiary’s
tax declaration is accepted by the Greek fiscal authorities.
This usually took place in the first half of 2004 and
2005. The fund may be used by the undertakings
referred to in Article 3 of Law 2601/1998, irrespective
of which category of fiscal books they keep or where
they are established. The purpose of the reserve shall
be to carry out investments of at least the volume of
the fund over the three years following its creation.

(18) After the three-year period from the dated the tax-free
reserve fund was created, the total amount of the reserve
used for the eligible investments shall be used to increase
the capital of the undertaking and shall be exempted
from income tax. Within the first year of the three-year
period the beneficiaries must spend at least one third of
the special reserve fund on carrying out the investment.
The part of the fund that will not be used for investment
during three years shall be declared as late supplementary
income and will be taxed according to the general tax
provisions plus legal interest. The legal interest rate will
i.e. at
be at least 1 % per month for the amount due,
least 12 % per year and thus far higher than the reference
rate of 4,43 % for aid granted in the year 2004 and
4,08 % for aid granted in year 2005 (7).

II.4. Beneficiaries and sectoral delimitations

(19)

In order to benefit from the scheme, an undertaking
must be active within one of the 23 sectors as defined
in Article 3 of Law 2601/1998. The first sector, manu­
facturing (8), includes the production of textile materials,

(7) EC State aid reference, published on http://ec.europa.eu/comm/

competition/state_aid/others/reference_rates.html

(8) Article 3.1.a of Law 2601/1998.

software

high-tech

production of basic metals and manufacturing of auto­
mobiles (9). The other sectors are sustainable energy
production (10), applied research and technology develop­
ment (11),
services (12),
develop­
ment (13), quality services (14), mining (15), quarrying and
treatment of minerals and marble (16),
intensive agri­
culture and fishery (17), agricultural and agro-industrial
cooperatives (18), packaging of agriculture products and
fish (19), urban development (20), public car parking (21),
liquid gas and fuels undertakings (22), transport to remote
landlocked areas (23), large joint ventures (24), large inter­
trade undertakings (26),
national
therapy
disabled
and
centres
homes (27), specific tourism undertakings (28), monasteries
en­
for
gineering (30), undertakings in listed buildings or with
traditional production or with a name of origin (31).
Companies active in the manufacturing sector, as well
as in intensive agriculture and fishery can also use the
scheme for its activities outside of Greece (32). Interna­
its
tional
activities
the
Community (33).

trade companies (25),
and

trade companies can use the scheme for

erecting hostels

as outside of

rehabilitation

centres (29),

in Greece

as well

cultural

and

(20) Article 3 of Law 2601/1998 also defines for each sector
a specific set of expenditure that may be made from the
fund. Only firms making investments falling within the
categories referred to in Article 3 of the Law 2601/1998
may be beneficiaries of the scheme. The Greek authorities
confirmed that the measure applies to all firms estab­
lished anywhere in Greece without any distinction
between domestic and foreign firms or between new
and old firms.

(9) Article 15 Annex of Law 2601/1998.
(10) Article 3.1.b of Law 2601/1998.
(11) Article 3.1.c of Law 2601/1998.
(12) Article 3.1.d of Law 2601/1998.
(13) Article 3.1.e of Law 2601/1998, implementation required.
(14) Article 3.1.f of Law 2601/1998.
(15) Article 3.1.g of Law 2601/1998.
(16) Article 3.1.h of Law 2601/1998.
(17) Article 3.1.i of Law 2601/1998.
(18) Article 3.1.j of Law 2601/1998.
(19) Article 3.1.k of Law 2601/1998.
(20) Article 3.1.l of Law 2601/1998.
(21) Article 3.1.m of Law 2601/1998.
(22) Article 3.1.n of Law 2601/1998.
(23) Article 3.1.o of Law 2601/1998, secondary legislation required
(24) Article 3.1.p of Law 2601/1998.
(25) Article 3.1.q of Law 2601/1998, implementation required.
(26) Article 3.1.r of Law 2601/1998.
(27) Article 3.1.e of Law 2601/1998.
(28) Article 3.1.t of Law 2601/1998.
(29) Article 3.1.u of Law 2601/1998.
(30) Article 3.1.v of Law 2601/1998.
(31) Article 3.1.w of Law 2601/1998.
(32) Article 3.2 of Law 2601/1998.
(33) Article 3.1.q, last sentence, of Law 2601/1998.

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II.5. Eligible projects

— construction of water

and steam transportation

(21)

The aid concerns investment and operating costs linked
to the business activities defined in Article 3 of
Law 2601/1998.
investment costs, no
difference is made between initial investment and repla­
cement
Investment projects may concern
mainly:

In the case of

investment.

network (48);

— computers (49);

— software (50);

— construction, expansion and modernisation of plants

and buildings as well as landscaping (34);

— further development of software, up to 60 % of total

investment (51);

— construction of storage capacity (35);

— purchase of unused buildings (36);

— purchase of industrial space (37);

— purchase of new modern machinery and other

equipment (38);

— process-automation systems and related software as

well as training (39);

— means of transportation within greater plant area and

for staff (40);

— refrigerator trucks (41);

— access land works for mines (52);

— equipment and means of

transportation to the

islands (53);

— transportation equipment (54);

— furniture, equipment (55);

— second-hand trucks (56).

(22)

The operating costs may mainly include:

— conversion and repair of old plants or buildings or

installations (57);

— leasing costs (58);

— buildings and equipment

intended for accommo­

dation and social needs of workers (42);

— studies for implementation of new technology (59);

— environmentally motivated investments (43);

— cost of relocation for environmental reasons (60);

— investment

in
production for
energy saving (44);

renewable
electric power

energy,

and heat

combined
(CHP),

— implementation

over
GRD 1 billion (approximately EUR 2,9 million) (61);

business

plans

of

of

— establishment, extension or modernisation of labora­

tories for applied research (45);

— recycling facilities (46);

— investment into efficiency (47);

(34) Article 3.1.a.i. et al. of Law 2601/1998.
(35) Article 3.1.a.ii. et al. of Law 2601/1998.
(36) Article 3.1.a.iii. of Law 2601/1998.
(37) Article 3.1.a.iv, c.ii. and f.ii. Law 2601/1998.
(38) Article 3.1.a.v. and others of Law 2601/1998.
(39) Article 3.1.a.vi. and others of Law 2601/1998.
(40) Article 3.1.a.ix. and others of Law 2601/1998.
(41) Article 3.1.a.x. of Law 2601/1998.
(42) Article 3.1.a.xi. and others of Law 2601/1998.
(43) Article 3.1.a.xii. and others of Law 2601/1998.
(44) Article 3.1.a.xiii. and others of Law 2601/1998.
(45) Article 3.1.a.xiv. and others of Law 2601/1998.
(46) Article 3.1.a.xxi. of Law 2601/1998.
(47) Article 3.1.a.xxii. of Law 2601/1998.

— training (62);

— implementation of

restructuring business plan to

firms that are not in difficulty (63);

(48) Article 3.1.b.ix. of Law 2601/1998.
(49) Article 3.1.e.iii. of Law 2601/1998.
(50) Article 3.1.e.iii. and p.vi. of Law 2601/1998.
(51) Article 3.1.e.iii. of Law 2601/1998.
(52) Article 3.1.g.viii. and h.viii. of Law 2601/1998.
(53) Article 3.1.n.ii. of Law 2601/1998.
(54) Article 3.1.o.i., q.vi., t.v., u.iv., of Law 2601/1998.
(55) Article 3.1.p.iv. of Law 2601/1998.
(56) Article 3.1.q.vi. of Law 2601/1998.
(57) Article 3.1.l.i.

last sentence, p.iii,

t.i. and ii. where it concerns
modernisation, u.i. where it concerns modernisation and ii., as
well as w.i. and ii. of Law 2601/1998.

(58) Article 3.1.a.v. and others of Law 2601/1998.
(59) Article 3.1.a.vii. and others of Law 2601/1998.
(60) Article 3.1.a.viii. and i.x. of Law 2601/1998.
(61) Article 3.1.a.xv., e.v. (GRD 500 million), g.xii. of Law 2601/1998.
(62) Article 3.1.a.xv., e.v. and g.xii. of Law 2601/1998.
(63) Article 3.1.a.xvi. of Law 2601/1998.

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— introduction of process and product certification and

II.8. Duration and budget of the scheme

related studies (64);

— restructuring of plants to be more flexible (65);

— innovation and innovative prototypes (66);

— patent registration (67);

— introduction

and

adaptation

of

environmental

technologies (68);

— purchase of reproductive proliferating material (69);

— studies on organisation and markets (70);

— studies on eligibility to aid (71).

II.6. Aid intensities

(23)

The tax exemption corresponds to the totality of the
corporate tax on the profits allocated to the reserve
fund. The applicable corporate tax rate is 35 %. At
least one third of the reserve must be spent within the
fist year of its creation, while the rest must be spent
within three years at the latest.
In order to calculate
the maximum aid intensity, both the aid and the expen­
diture shall be discounted to the end of the first year. The
interest rate to be used is the Community reference and
discount rate (72) applicable to Greece on the moment of
granting the aid, which was 4,43 % for 2004 and 4,08 %
for 2005. The maximum possible aid intensities are thus
37,05 % and 36,89 % respectively (73).

II.7. Cumulation of aid

(24)

Law 3220/2004 explicitly excludes cumulation with aid
granted under Law 2601/1998. The Greek authorities
confirmed that no other aid schemes exist that would
support the same eligible costs.

(64) Article 3.1.a.xvii. of Law 2601/1998.
(65) Article 3.1.a.xviii. of Law 2601/1998.
(66) Article 3.1.a.xx. of Law 2601/1998.
(67) Article 3.1.a.xx. of Law 2601/1998.
(68) Article 3.1.g.x. and h.xi of Law 2601/1998.
(69) Article 3.1.i.vii. of Law 2601/1998.
(70) Article 3.1.p.viii. of Law 2601/1998.
(71) Article 3.1.p.ix. of Law 2601/1998.
(72) Established according to the Commission notice on the method for
setting the reference and discount rates, OJ C 273, 9.9.1997, p. 3
and published on
http://europa.eu.int/comm/competition/state_aid/others/reference_
rates.html

(73) The maximum possible aid intensities are calculated as the highest
possible percentage of aid in the eligible costs, both discounted to
the year of granting the aid:
AI2004¼
35 %

¼ 37,05 %, AI2005¼

¼ 36,89 %

35 %

1
3

þ 2
3

ð1 þ 0;0443Þ–2

1
3

þ 2
3

ð1 þ 0;0408Þ–2

(25)

(26)

(27)

Firms referred to in Article 3 of Law 2601/1998 may
create a special tax-exempt reserve under Article 2 of
Law 3220/2004 of profits accrued only during 2003
and 2004. The budget of the scheme is not mentioned
and given that the scheme is a tax advantage, the total
Government revenue foregone is not limited and depends
on the past profits and eligible investments made during
the years 2005-07 and the related claims.

III. GROUNDS FOR INITIATING THE PROCEDURE

The Commission considered that
the non-notified aid
scheme constitutes State aid within the meaning of
Article 87(1) of
involved State
the EC Treaty.
resources, it affords an advantage to the beneficiaries, it
is selective and has an effect on trade. Since the measure
was new and was put into effect without prior notifi­
cation to the Commission, it constituted unlawful aid.

It

The Commission has examined the scheme in the light of
Article 87 of the EC Treaty, and in particular, where
these provisions apply, under
the specific State aid
about
rules. The Commission had serious doubts
whether the measure fulfilled the criteria of any of the
applicable rules, and thus about the compatibility of the
measure with the common market.

IV. COMMENTS FROM THIRD PARTIES

(28)

The Federation of Greek Industries (hereinafter referred to
as ‘FGI’) submitted its comments as an interested third
party.

(29)

(30)

(31)

The FGI first argued that the Commission considerably
restricted its
for an
extension of the time limit for the submission of its
comments.

rights by rejecting its

request

then argued that

The FGI
the measure is of general
nature and not selective. Even if some aspects of the
measure
reserve was
the
created with a view to supporting specific types of
investment costs of any undertaking, so it should be
considered as a general tax measure.

tax-exempt

selective,

are

The FGI then claims that the measure is existing aid
within the meaning of Article 1(b) of Regulation
(EC) No 659/1999. For the Federation, Law 3220/2004
merely adapts the method for the setting up of
the
reserve, which is part of a State aid scheme established
by Law 2601/1998, which was
approved by the
Commission.

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(32)

(33)

The FGI considers that Law 3220/2004 introduces a
technical adaptation,
i.e. the possibility to create a tax-
exempt reserve before the investment, does not have any
concrete influence on the scope, amount or effect of the
scheme.

The FGI also holds that neither the existence of a larger
group of beneficiaries nor an increase in the budget, nor
invoked by the
investments of
Commission would be direct
the
change in the method for creating the reserve.

consequences of

a higher

amount

(34) According to the FGI, even if other changes introduced
by Law 3220/2004 were to be considered as new aid, it
would have to be considered as a severable amendment
to the existing aid scheme. In this case, only the new
provisions in question would have to be notified and the
classification of
the amended scheme as existing aid
would not be altered (74).

(35)

(36)

(37)

For the FGI, the reasoning in the opening decision is
unclear and equivocal, and insofar as the Commission
it has not fulfilled
based its decision on other factors,
its duty to state reasons under Article 253 of the EC
Treaty.

The FGI criticises the fact that the opening decision does
not explain the calculation of the aid intensity, in order
to allow a comparison with the aid intensity which arose
under Law 2601/1998.

then argues

that even if

the Commission
The FGI
considered that
the severable alterations had to be
notified as new aid, their compatibility would have to
be assessed for each individual beneficiary on a case-
by-case basis (75). When doing that,
the Commission
has in particular to consider its previous decision — in
which Law 2601/1998 was
a
compatible aid — as a framework that cannot be
amended within this procedure.

considered to be

V. COMMENTS FROM GREECE

V.1. Law 3220/2004 is existing aid

(38)

For the Greek authorities, the fact that the aid under
examination was introduced by a different Law to the

(74) Commission Report on the implementation of the Commission
notice on the application of state aid rules to measures relating
taxation, 9 February 2004, C(200)434,
to direct business
paragraph 56.

(75) Commission Report on the implementation of the Commission
notice on the application of state aid rules to measures relating
taxation, 9 February 2004, C(200)434,
to direct business
paragraph 51. See
also Commission Decisions: 11/07/2001
(OJ L 174, 4.7.2002, p. 31), 20/12/2001 (OJ L 40, 14.2.2003) etc.

previous Law 2601/1998 does not suffice for it to be
designated a new aid, according to the case law of the
Court (76).

(39) Greece claims that Article 2(2) of Law 3220/2004 does
not move the point in time at which the investment is
carried out.

(40) Moreover, Greece argues that a change in the point in
time at which undertakings form the reserve does not
have any direct correlation with an increase in the group
of beneficiaries.

(41) Greece furthermore considers that

there is no direct
correlation between the widening of the range of bene­
ficiaries and the distortion of competition.

(42)

The Greek authorities also consider it necessary to divide
the undertakings which benefit from Law 3220/2004
into two categories:

— those which were already entitled to form a tax-
the Law 2601/1998
reserve fund under
exempt
scheme.
In this case there is no new economic
advantage so the aid should be considered an
existing aid. Hence, the obligation to notify did not
apply and there can be no recovery;

— those which did not have entitlement to inclusion in
Law 2601/1998, for which that measure could be
considered as new aid; that said, the compatibility
with the provisions of
the EC Treaty should be
judged according to each case.

(43)

Lastly, Greece argues that
the reasons stated by the
Commission for describing the measure introduced by
Law 3220/2004 as new State aid are unclear and
inadequate, which is in breach with Article 253 of the
EC Treaty.

V.2. Possibility of inclusion of the measure in the
for compatible
existing Community frameworks

State aid

(44)

The Greek authorities consider that investments from the
tax-exempt
reserve fund qualify for inclusion in the
following frameworks of permissible State aid:

— Commission notice on de minimis aid (77);

(76) Case C-44/93 Namur-Les Assurances du Crédit SA v Office National du
Ducroire and the Belgian State, [1994] ECR II-2309, paragraph 83,
Joint cases T-195/01 and T-207/01, Government of Gibraltar v
[2002] ECR II-2309,
Commission of
paragraph 109-111.
(77) OJ C 68, 6.3.1996, p. 9.

the European Communities,

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— Guidelines on National Regional Aid (hereinafter

‘RAG’) (78);

— Multisectoral

framework on regional aid for large

investment projects (hereinafter ‘MSF’) (79);

— EFTA

Authority

Surveillance

Decision
No 152/01/COL of 23 May 2001 revising the
guidelines on the application of the EEA State aid
provisions to aid for environmental protection (80),
(hereinafter ‘Environmental Guidelines’);

these cases can be considered as being included in the de
minimis scheme. As regards the other 320 undertakings,
the
examination had begun and was
ongoing.

case-by-case

(48) On the basis of

the checks that have already been
completed, investments that according to the Greek auth­
orities may comply with the RAG account for:

— Community framework for State aid for Research and
Development (hereinafter ‘R&D Framework’) (81);

— Commission Regulation (EC) No 68/2001 of
12 January 2001 on the application of Articles 87
and 88 of the EC Treaty to training aid (hereinafter
‘Training BER’) (82);

— Commission Regulation (EC) No 70/2001 of
12 January 2001 on the application of Articles 87
and 88 of the EC Treaty to State aid to small and
medium-sized enterprises (hereinafter ‘SME BER’) (83);

(49)

— the Community guidelines for State aid in the agri­

culture sector (84);

— the Guidelines for the examination of State aid to
fisheries and aquaculture in the wording that
is
applicable to this aid (85).

(45) Aid to undertakings in difficulty and export aid are
excluded, and foreign firms established in Greece can
use the measure in question.

(46)

The Greek authorities also included in their reply a draft
legislative proposal to include the measure in the existing
tax-
frameworks on State aid. They propose to treat
exempt reserve funds retroactively as State aid and to
establish a national authority that would examine ex
case with
post
Community State aid rules.

each individual

compliance of

the

V.3. Information about investments covered by the
Community State aid rules

(47) According to the Greek authorities, 3 315 undertakings
have received an amount lower than EUR 100 000, so

(78) OJ C 74, 10.3.1998, p. 9.
(79) OJ C 70, 19.3.2002, p. 8.
(80) OJ L 237, 6.9.2001, p. 16.
(81) OJ C 45, 17.2.1996, p. 5.
(82) OJ L 10, 13.1.2001, p. 20.
(83) OJ L 10, 13.1.2001, p. 33.
(84) OJ C 232, 12.8.2000, p. 17.
(85) OJ C 229, 14.9.2004, p. 5 and OJ C 19, 20.1.2001, p. 7.

— the entire tax-exempt reserve fund of 84 under­

takings,

— part of the reserve fund of 103 undertakings.

V.4. Financial consequences of a negative decision
by the Commission in this matter

recovery of

The Greek authorities believe that a negative decision and
the consequent
the amounts would be
disastrous for the country. The Greek authorities put
forward that according to ECJ case law, it may, excep­
tionally, take into account the intolerable financial conse­
quences of its judgment and limit the consequences of
the latter (86).

VI. ASSESSMENT

VI.1. Qualification as State aid

that

The Commission considers
the measure under
scrutiny fulfils all the four cumulative conditions to be
considered aid within the meaning of Article 87(1) of the
EC Treaty, as also explained more precisely in the
Commission notice on the implementation of State aid
rules to measures related to direct business taxation (87).

The Court of Justice has consistently held that a measure
by the means of which the public authorities grant to
certain undertakings a tax exemption which, although
not involving a transfer of State resources, places the
persons to whom the exemption applies in a more
taxpayers
financial position than other
favourable
constitutes
of
aid within
State
Article 87(1) of the EC Treaty (88).

the meaning

(50)

(51)

(86) ECJ Decision in Case C-209/03, Bidar v London Borough of Ealing,
Secretary of State for Education and Skills [2005] ECR I-2119,
paragraph 68-69; Advocate-General Opinion in Case C-475/03,
Banca Popolare di Cremona v Agenzia Entrate Ufficio Cremona
[2006] ECR I-9373, paragraph 75; Advocate-General Opinion in
Case C-292/04, Wienand Meilicke and others v Finanzamt Bonn-
Innenstadt, not yet published, paragraph 34.

(87) OJ C 384, 10.12.1998, p. 3.
(88) Case C-6/97 Italian Republic v Commission [1999] ECR I-2981,

paragraph 16.

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VI.1.1. State resources

(52)

Firstly, the measure involves State resources, as the Greek
State foregoes tax revenues belonging to it.

measure to different extent. Therefore, the measure is
selective even among the sectors listed in Article 3 of
the Law 2601/1998. The submission of the Greek auth­
orities and the third party, that this scheme constitutes a
general taxation measure, is thus unsubstantiated.

VI.1.2. Advantage

(53)

(54)

Secondly, the measure affords an advantage to the ben-
eficiaries as they are allowed to form a tax-free reserve
fund from their profits up to 35 % for 2004 (financial
year 2005), and up to 50 % for 2003 (financial year
2004) on the remaining profits after the deduction of
that
the 2002 (financial year 2003) profits. The fact
part of
taxed
that are normally born
relieves
the reserve fund has not been
from their budget.
than the
interest
used and no interest or
Community reference and discount rate for Greece is
levied upon the deferred tax payment,
the difference
between the tax debt
including compound reference
interest and the actual amount to be paid constitutes a
benefit as well.

the profits of
them from charges

the beneficiaries is not

less

If

the

The reserve fund that was not used must according to
the Greek legislation be taxed at the legal interest rate.
The legal interest rate will be at least 1 % per month for
the amount due, which is at least 12 % per year and thus
far higher than the reference rate of 4,43 % for aid
granted in the year 2004 and 4,08 % for aid granted
in year 2005 (89). Consequently,
revenue
forgone by the state which has been placed in the fund
and which is taxed with the legal interest rate does not
constitute advantage and thus does not qualify as State
aid in the sense of Article 87(1) of the EC Treaty, as its
character is not more advantageous than the one of a
loan at market terms, which for loans to undertakings
that are not in difficulties is assumed according to the
Commission notice on the method for
setting the
to the
reference and discount
reference rate, plus possibly 400 basis points or more
if the liability is unsecured.

to amount

rates (90)

tax

VI.1.3. Selectivity

(55)

Thirdly, the measure is selective because it favours only
the companies performing business activities referred to
in Article 3 of the Law 2601/1998. Only the companies
in the listed sectors as opposed to sectors that have not
been included to the list may benefit from the measure.
Moreover, according to Article 3 of the Law 2601/1998
some sectors require secondary legislation in order to
become eligible for the advantages. According to the
Greek authorities such secondary legislation was not
put into force. Finally for each sector a different list of
eligible activities applies, with the consequence that
companies operating in different sectors benefit of the

(89) EC State aid reference, published on http://ec.europa.eu/comm/

competition/state_aid/others/reference_rates.html

(90) OJ C 273, 9.9.1997, p. 3.

(56)

(57)

VI.1.4. Effect on trade and distortion of competition

Fourthly, the measure has an effect on competition and
trade between Member States. As the measure gives an
advantage to the beneficiaries, it can distort or threaten
to distort competition. Besides, the activities mentioned
in Article 3 of Law 2601/1998 are indeed subject to
intra-Community
the
measure are not excluded from carrying on economic
activity
States.
Therefore, the aid scheme is liable to affect trade and
distort competition.

trade. Hence beneficiaries of

between Member

involving

trade

VI.1.5. Conclusion

follows

from the foregoing that

It
the measure in
question constitutes a scheme granting State aid within
the meaning of Article 87(1) of the EC Treaty. It is also
important
to
which the Greek authorities refer, was already deemed
to be a State aid scheme by the Commission, yet
considered compatible (91).

to bear in mind that Law 2601/1998,

VI.2. Qualification of the scheme as unlawful aid

(58) According to Article 1(f) of Council Regulation (EC) No
659/1999 ‘unlawful aid’ means new aid put into effect in
contravention of Article 93(3) (now 88(3)) of the Treaty.
According to Article 1(c) of the same Regulation ‘new
aid’ shall mean all aid which is not existing aid, including
alterations of existing aid.

(59) According to European Court of Justice case law, the
alteration, as such, of existing aid is to be classified as
new aid, and it is only where the alteration affects the
actual substance of the original scheme that the latter is
transformed into a new aid scheme. There is no
substantive alteration of an existing scheme where the
new element
initial
clearly severable
scheme (92).

from the

is

(60)

This measure, however, presents
procedural and material differences.

several

substantial

(91) Commission Decision in State aid Case No NN 59/A/98 (No SG(99)

D/884 of 3 February 1999), OJ C 84, 26.3.1999, p. 7.

(92) In Joined Cases T-195/01 and T-207/01: Government of Gibraltar v
Commission of the European Communities, [2002] ECR 2002, II-
2309, paragraphs 109 and 111.

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VI.2.1. Procedural changes

Firstly, this measure was not a pure replacement of the
existing measures, but a new stand alone measure, as it
did not
any previous measure.
Moreover, the periods of applicability of the measures
were not subsequent.

repeal or

replace

The Greek authorities confirmed, as mentioned above,
that the provisions of Article 2, Law 3220/2004 essen­
tially aim to complement Law 2601/1998, which
received Commission
the
framework of Case No NN 59/A/1998, as a national
regional development system, pursuant to the RAG (93).
should be noted that Law 2601/1998 has been
It
repealed as
the
Commission notes that this measure is new aid.

from February 2005. Nevertheless,

approval

1999

in

in

(66) Under Law 3220/2004 the creation of a special tax-
exempt reserve was permitted directly on the basis of
the income tax provisions without any obligation of
the beneficiary to declare specific information about the
eligible activities towards the Greek authorities. Neither
had the Greek authorities the possibility of refusing the
aid on the basis of the commitments they made in the
procedure that led to the approval of the aid granted
under Law 2601/1998.

(67) According to the decision approving Law 2601/1998,
the Greek authorities had to certify the completion of
the investment in order to allow the formation of the
untaxed reserve fund. The beneficiaries thus had first to
use own sources of financing before they were eligible
for aid. No similar obligation can be found in Law
3220/2004.

(61)

(62)

(63)

First of all, Law 3220/2004 applies to a set of projects in
a number of sectors. It refers to the list of eligible sectors
and projects given in Article 3 of Law 2601/1998.
However, it does not explicitly state that it amends the
latter. Moreover, the two provisions were in force in
parallel,
as Law 3220/04 entered into force on
28 January 2004 and the aid measure under the Law
2601/1998 expired on 23 December 2004, while Law
2601/1998 was repealed as from February 2005. Finally,
although the period during which the funds were created
under the two schemes did not overlap,
the periods
during which the measures applied overlapped, as both
laws applied for the profits of years 2003 and 2004. The
fact
the two measures were applied in parallel
demonstrates that one did not amend or replace the
other. Therefore, temporarily this measure is not pure
replacement or continuation of the measure approved
under NN Case No 59/A/1998 (94), but represents a
separate aid scheme.

that

(68)

(69)

(64)

Secondly, the procedure for granting the aid has been
changed, which has consequences on the conditions the
companies have to comply with in order to obtain the
aid.

(65) Under Law 2601/1998 it was necessary to apply for the
aid to the Greek authorities, which had to approve the
application before the aid was granted. Under
the
approval decision for 2601/1998 (95), the Greek auth-
orities committed themselves to verifying the limits for
cumulation and combination of aid, the respect of the
1996 R&D Framework,
the 1994 environmental
guidelines, the exclusion of transport equipment in the
transport sector and the exclusion of export aid. Addi­
tionally, the authorities had the obligation and the possi­
bility, after the reception of the application, of verifying
these issues.

Concerning the argument raised by the Greek authorities
that at least in some cases, the aid could have been
obtained under Law 2601/1998,
it must be observed
that this argument is irrelevant as the procedure under
the new measure was different and lighter and the criteria
for receipt of aid as well as the benefits of the aid for all
potential beneficiaries were widened.

VI.2.2. Material changes

Firstly, according to the Commission decision in Case No
NN 59/A/1998 (96), under Law 2601/1998, only initial
investment with the only exception of operating aid for
relocation into industrial zones was eligible, whereas
under Law 3220/2004 operating aid including repla­
cement
investment can also be granted and other
operating aid for any of the eligible activities. Under
Law 2601/1998, the aided investment had to be main­
five years, while Article 2(9) of Law
tained for
3220/2004 only requires maintaining the investment
goods or the fixed assets provided for by Article 2(2)
for three calendar years.

(70)

Besides, under Law 2601/1998, four forms of aid were
possible:

(a) direct grant linked to the initial investment;

(b) interest rebate in relation to medium/long-term loans
(at least four years) raised in order to finance the
initial investment;

(93) See footnote 78.
(94) See footnote 91.
(95) See footnote 81.

(c) grant in favour of leasing costs of new equipment;

(96) See footnote 91.

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(71)

(72)

(73)

(d) tax relief in the form of a tax-exempt fund equal to
40 % to 100 %, depending on sectors and geo-
graphical areas, of
eligible
investment costs.

the amount of

the

three
Law 3220/2004 does not provide for the first
forms of aid given above in paragraph 70(a),
(b) and
(c). Moreover, the tax-free reserves can be used for all
eligible expenditures up to 100 %, irrespective of the area
and the amount of eligible investment costs.

(75)

to benefit

the undertakings

Secondly, the period during which the tax-exempt fund
was set-up as compared to the moment of expenditure
on eligible activities was changed. Tax-exempt reserve
funds under Law 2601/1998 could have been created
in the year of expenditure on the eligible activity or up
to 10 years later. The funds under Law 3220/2004 could
have been created in the one to three years before the
expenditure on the eligible activity. The new measure is
much more beneficial for cash flow purposes since it
tax
allows
from the
exemption prior to the investment. Furthermore,
the
functioning of the measure has different consequences
on beneficiaries' possibilities to engage in the eligible
the new
projects. The number of beneficiaries of
scheme may be increased by those companies, which
under
the previous measure had not had enough
liquidity to finance their projects beforehand, but with
the addition of the tax exemption they were able to do
so.
is irrelevant whether the total
budget of the aid or the benefits to particular under­
takings were increased. The fact that, taken as a whole,
the new measure are less
the overall conditions of
it constitutes
restrictive is sufficient
new aid.

to conclude that

In this respect,

it

the Greek authorities rely
In their written comments,
heavily on the judgment of 9 August 1994 of
the
Court of Justice in Case C-44/93 Namur Les Assurances
du credit (97). In that case, the Court indicated that the fact
that the measure might in hypothetical situations lead to
an increase in the aid budget should not be considered as
an indication that it is a new aid if the aid is provided
under
remain
unaltered. However, the Commission considers that the
the
demonstrates
preceding
provisions of Law 3220/2004 are very different from
those of Law 2601/1998. Accordingly it does not
consider the judgment to be relevant to this case.

provisions which

statutory

analysis

clearly

earlier

that

competition.

to be
distortion of
notified in order for the Commission to evaluate the
compatibility of such aid.

therefore has

It

legal basis and (2) different

Finally, contrary to the claim of the Greek authorities
that the arguments put forward by the Commission in
its decision to open the formal investigation procedure is
it must be observed that the
unclear and inadequate,
Commission noted in that decision two reasons for
(1)
which it considered that the measure is new aid:
distinct
that
uses different timing of creation of the fund, and could
therefore have a different consequence on the internal
market. The Commission also provided an example: a
possible larger group of beneficiaries and increase in
budget was provided. The Commission considers that
such a statement of reasons was appropriate to the act
at issue in that it disclosed in a clear and unequivocal
fashion the reasoning followed by the Commission in
such as way as to enable the persons concerned to
ascertain the reasons for the decision.

instrument

VI.2.3. New aid

(76)

The Commission considers that the above analysis has
identified a number of indicators which suggest that the
scheme established by Law 3220/2004 should properly
be considered as a new aid scheme. In particular, the
scheme created by this Law co-existed for some time
with the scheme established by Law 2601/1998, and
contains different conditions and procedure for
the
grant of aid.

(77) However, even if Law 3220/2004 could be considered as
an alteration of an earlier scheme,
it is clear that the
modifications introduced by this law are of substantial
nature, as they do affect the evaluation of the compati­
bility of the aid measure with the common market (98),
and are not purely formal or administrative. Moreover,
the modifications applied to all beneficiaries and eligible
activities. Therefore the new scheme altered the aid
instrument as a whole, and thus it cannot be clearly
severable from the existing aid.

(78)

Contrary to the claims of
measure therefore constitutes new aid in its entirety.

the Greek authorities the

VI.2.4. Unlawful aid

(74)

The Greek authorities also claim that widening the range
of beneficiaries does not lead to distortion of compe­
tition. However, it is well established in Court case law
and the Commission's practice that any State aid in
to competition is liable to lead to a
sectors subject

(79)

The Greek authorities did not notify the measure before
its implementation and put it into effect in contravention
the
of Article 88(3) of
measure
sense of
Article 1(f) of Council Regulation (EC) No 659/1999.

the EC Treaty. Consequently,

constitutes unlawful

aid in the

(97) C-44/93, Namur Les Assurances du Crédit SA v Office National du
Ducroire and the Belgian State, [1994] ECR I-3829, paragraph 28.

(98) For detailed argumentation, see Section VI.3 below.

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VI.3. Compatibility of the unlawful aid scheme

(80) Having established that the scheme involves State aid
within the meaning of Article 87(1) of the EC Treaty,
it is necessary to consider whether the measure could be
found to be compatible with the common market.

(81)

The Commission has examined the scheme in the light of
Article 87 of the EC Treaty, and in particular, where
these provisions apply, on the basis of:

— the RAG (99);

— the MSF (100);

(83)

— Community guidelines on State aid for rescuing and
restructuring firms in difficulty (hereinafter ‘Rescue
and Restructuring Guidelines’) (101);

— the Environmental Guidelines (102);

— the R&D Framework (103);

— the training BER (104);

— the SME BER (105);

— the Community guidelines for State aid in the agri­

culture sector (106);

— the Guidelines for the examination of State aid to
fisheries and aquaculture in the wording that
is
applicable to this aid (107).

The aid was assessed according to the rules that were
applicable at the time of granting.

(82) During the preliminary investigation period the Greek
authorities made a number of statements concerning
to
the restriction of aid provision in an attempt

(99) See footnote 78.
(100) See footnote 79.
(101) OJ C 244, 1.10.2004, p. 2.
(102) See footnote 80.
(103) See footnote 81.
(104) See footnote 82.
(105) See footnote 83.
(106) See footnote 84.
(107) See footnote 85.

any additional

they committed to respect

mitigate the shortcomings in compatibility with the RAG.
Among them,
the Multi­
sectoral Framework for large investment projects and
not
the
to grant aid to firms in difficulty. However,
advantage is given to the beneficiaries directly by law,
without
administrative
discretion. Only a few supported sectors and projects
require secondary legislation in order to be effective.
Except
in those circumstances where secondary legis­
lation is necessary, it seems impossible for Greek auth­
orities to enforce any commitments against
taxpayers
invoking the rights recognised by law. Consequently,
these
considered in the
cannot be
commitments
assessment of the measure.

condition or

The Commission cannot accept either the arguments put
forward by the Greek authorities or those put forward
and the FGI (108). In particular, as regards, the argument
of the Greek authorities that aid to undertakings which
were already entitled to form a tax-exempt reserve fund
under the former scheme constitutes existing aid, the
Commission notes that the fact of being eligible under
an existing scheme does not justify aid provided under a
new scheme. In its reply to the Commission decision to
open a formal investigation procedure, the Greek auth­
orities proposed establishing a national authority that
would examine ex post the compliance of each individual
case with the Community
rules. The
Commission notes that it is its prerogative to examine
the compatibility of the aid and therefore this proposal
cannot be accepted.

State

aid

VI.3.1. Application of de minimis Regulation

(84)

The Commission Regulation (EC) No 69/2001 of
12 January 2001 on the application of Articles 87 and
88 of the EC Treaty to de minimis aid (hereinafter de
minimis Regulation (109) cannot be applied to the scheme
as a whole. The Law contains no provision limiting the
amount of aid a beneficiary can receive
to EUR
100 000 (110). Furthermore the provisions of Article 3
of Regulation (EC) No 69/2001 regarding cumulation
and monitoring are not respected.

(85) As regards the sectors of fisheries and agriculture, the
special provisions for de minimis aid are laid down by
the 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 (111). This Regulation entered into
force on 1 January 2005 and applies to aid granted
before its entry into force,
individual aid fulfils all
the conditions laid down in its Articles 1 and 3.

if

(108) See Case T-349/03 Corsica Ferries v Commission [2005] ECR

II-2197, paragraph 64.
(109) OJ L 10, 13.1.2001, p. 30.
(110) Case C-172/03, Wolfgang Heiser v Finanzamt Innsbruck [2005]

ECR I-1627.

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

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(86)

(87)

(88)

fisheries

Commission Regulation (EC) No 1860/2004 states that
aid granted in the fields of agricultural products or
fisheries products up to EUR 3 000 per beneficiary
over any period of
three years, within a maximum
amount established for each Member State (being for
Greece for agriculture and for
respectively
EUR 34 965 000 and EUR 2 036 370) is not State aid
within the meaning of Article 87(1) of
the Treaty
provided it
fixed on the basis of price or
quantity of products put on the market, nor related to
export (linked to the quantities exported, to the estab­
lishment and operation of a distribution network or to
other current expenditure linked to export activity), nor
contingent upon the use of domestic over imported
products. Within the framework of the scheme based
on Law 3220/2004, aid complying with the above
mentioned conditions will not be considered as State
aid within the meaning of Article 87(1) of the Treaty.

is not

The law contains no provision limiting the amount of aid
a beneficiary can receive to EUR 3 000 or the maximum
the
de minimis
provisions of Article 3 of Regulation (EC) No
1860/2004 regarding cumulation and monitoring are
not respected.

Furthermore,

for Greece.

amount

(EC) No

1998/2006

Commission Regulation
of
15 December 2006 on the application of Articles 87
the Treaty to de minimis aid (112) may be
and 88 of
applicable — according to Article 5(1) thereof — to
sector and undertakings active in the
the transport
processing and marketing of agricultural products,
if
the aid fulfils all
laid down in its
the conditions
Articles 1 and 2. These Articles require limiting the
to the
amount of
can receive
maximum eligible
under
stipulated
as
i.e. EUR 200 000 for undertakings active
Article 2(2),
in the processing
agricultural
products and EUR 100 000 for the transport sector.
Moreover,
it requires excluding undertakings active in
the processing and marketing of agricultural products,
in cases:

and marketing of

aid a beneficiary

amounts

(89)

The Law contains no provision limiting the amount of
aid a beneficiary can receive. Furthermore, the provisions
of Article 1 and 2 of Regulation (EC) No 1998/2006 are
not respected.

(90)

It follows that the scheme does not comply with the
conditions of the Regulations.

(91)

VI.3.2. Compatibility under RAG

The measure should first be examined on the basis of the
RAG. Primary production of agricultural products listed
in Annex I of the Treaty, the fisheries sector and coal
industry are excluded from the scope of application of
this measure agricultural
the RAG. However, under
production is
aid within two sectors,
for
intensive agriculture and fishery, as well as agricultural
and agro-industrial cooperatives. Moreover, coal mining
can be supported within the sectors mining, quarrying
and treating of minerals or marble. Consequently, in any
case, aid in these sectors cannot be justified under the
RAG.

eligible

(92) Under RAG, aid can be allowed subject

to various
conditions both for
and higher
operating costs. This Law does not clarify which of the
two would be applicable.

investment

initial

(93)

(a) when the amount of the aid is fixed on the basis of
the price or quantity of such products purchased
from primary producers or put on the market by
the undertakings concerned;

(b) when the aid is conditional on being partly or

entirely passed on to primary producers.

Finally, aid for the acquisition of road freight transport
vehicles granted to undertakings performing road freight
transport for hire or rewards must be excluded.

(112) OJ L 379, 28.12.2006, p. 5. Regulation replacing Regulation

(EC) No 69/2001.

investment
Firstly, following point 4.4 RAG the initial
must concern fixed capital relating to the setting-up of
a new establishment, extension of existing establishment
or starting up a new activity, or purchase of an estab­
lishment, which has closed or would have been closed
had it not been purchased, but which does not belong to
a firm in difficulty. The Commission does not consider
the eligible investment expenditures under this measure
to respect this definition and thus to qualify as initial
is not excluded
investment. Replacement
example
for
investment projects,
from the
where the projects concern means of
transportation
within the greater plant
and for personnel,
computers, furniture and equipment, access land works
into
second-hand trucks.
for mines or
buildings and equipment intended for accommodation
and social needs of workers does not seem to be a
productive investment. In the sector of transport to land­
locked inaccessible remote areas, projects related to trans­
portation equipment include transport equipment into

Investment

investment

eligible

area

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software

the standard basis, which is contrary to the RAG (113).
and further development of
Purchase of
software up to 60 % of total
investment exceeds the
limit of 25 % of investment into intangible assets on
the standard base. Other conditions necessary
top of
for inclusion of software among the eligible costs are
not imposed either (114). Moreover, as software develop­
ment constitutes the current business in the software
development sector, it qualifies as operating expenditure
sector. According to Article 3(2) of Law
in that
2601/1998,
investment aid can also be granted for
activities outside Greece. However, this is not eligible
under the RAG.

(94)

Furthermore, the maximum aid intensity, which in this
measure is up to 37,05 % and 36,89 % of the eligible
the
for 2004 and 2005 respectively, exceeds
costs
maximum aid intensities as defined in the Regional Aid
Map for Greece (115). In particular, it seems that in areas
A and B according to the Greek Regional Aid Map the
aid intensity ceilings for projects under Article 5 of the
Law 2601/1998 (i.e. 35 %), those for any projects co-
financed
Support
Framework (116) (i.e. 35 %) and those for other projects
(no regional aid provided for areas A, 18,4 % for Areas
B) may be exceeded. In areas C and D ceilings for the
tourism projects (i.e. 33,2 %) and for other projects
(35,1 %) may be exceeded.

the Community

according

to

(98)

(99)

for at least five years in the assisted region. No individual
aid operating aid was from the beginning justified. Hence
no individual aid granted under this scheme can be
considered as compatible under the RAG.

VI.3.3. Compatibility under MSF (2002)

The MSF (2002) requires notification of all regional aid
investment aid if the aid proposed exceeds the maximum
allowable aid that an investment of EUR 100 million can
obtain under the MSF reduced scale of the regional aid
large
ceilings. This measure neither
investment aid, nor does it
include an obligation to
notify such cases individually, nor does it apply lower
aid ceilings in such cases.

excludes

the

Consequently, the Commission notes that the measure
the above mentioned conditions of
does not respect
is incompatible under the MSF.
the MSF, and hence,
in order to be compatible with the MSF
Furthermore,
(2002),
comply with the RAG.
scheme must
the
However, this is not the case as shown in the previous
part. In particular, no individual aid granted under the
scheme was from the outset coupled with a legal obli­
gation to maintain the initial investment for at least five
years in the assisted region. Hence no individual aid
granted under
considered as
compatible under the MSF (2002).

can be

scheme

this

(95)

The measure does not contain the obligation to maintain
the initial investment for at least five years, as required by
point 4.10 of the RAG.

(96)

Secondly, following point 4.15 of the RAG operating aid
can be exceptionally justified in terms of its contributions
to regional development, where its level is proportional
to the handicaps it seeks to alleviate. However,
the
Commission did not receive any such indications and
has
this very broad measure
covering the entire territory of Greece and many widely
defined sectors can tackle specific regional handicaps.

serious doubts

that

(97)

Therefore, the Commission notes that the scheme as a
whole, which does not respect the scope, the definition
of initial investment and the aid intensity, is incompatible
under the RAG. Moreover, no individual aid granted
the scheme was from the beginning coupled
under
with a legal obligation to maintain the initial investment

(113) RAG, footnote 23.
(114) RAG, point 4.6.
(115) The regional aid map for Greece has been approved by the
Commission with State aid Decision N 469/1999 (Commission
letter of 21 January 2000, SG(2000) D/100661) and modified
with State aid Decision N 349/2002 (Commission letter of
17 July 2002, C(2002) 2604 fin) for the period 2000-2006.
(116) Community Support Framework for Greece for the period 2000-

2006, Commission Decision E(2000) 3405.

VI.3.4. Compatibility under the Rescue and Restructuring aid

Guidelines

(100) The Greek Authorities explained that the measure did not
apply to undertakings in difficulties. In fact, it could have
been only used by profit making companies. Therefore
the compatibility of this scheme under the Rescue and
Restructuring aid Guidelines is excluded. Hence, no indi­
vidual aid granted under this scheme may be declared
compatible under these guidelines.

VI.3.5. Compatibility under the Environmental Guidelines

(101) The Commission also assessed whether the aid for some
projects could be found to be compatible with the Envi­
ronmental Guidelines. The following investments could
be assessed under the Environmental Guidelines: en-
vironmentally motivated investment (117),
introduction
and
technologies,
of
investment in renewable energy, combined production
for electric power and heat (CHP) and energy saving, as
well as the establishment and expansion of recycling
facilities.

environmental

adaptation

(117) That is investments concerning the protection of the environment,
the restriction of ground, underground, water and air pollution, the
restoration of the natural environment and water recycling.

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(102) Point 28 of

the Environmental Guidelines allows the
granting of investment aid to SMEs within a period of
three years
from the adoption of new compulsory
Community standards. This scheme does not link the
aid to the introduction of new Community standards
and it does not clearly define investment costs.

the cost. This scheme does not condition the aid with the
person responsible for the pollution is not identified or
cannot be made to bear the cost.

(103) Point 29 of

reach

the Environmental Guidelines allows the
granting of investment aid, if that enables undertakings
to
the
Community standards. This scheme does not condition
the aid with reaching standards beyond the Community
standards and it does not clearly define investment costs.

environmental

standards

beyond

(104) Point 30 of
granting of
scheme does not clearly define investment costs.

the Environmental Guidelines allows the
investment aid into energy savings. This

(105) Point 31 of

the Environmental Guidelines allows the
granting of investment aid to the combined production
of electric power and heat, if the conversion efficiency is
particularly high. This scheme does not condition the aid
with particularly high conversion efficiency, does not
clearly define investment costs and may not respect the
relevant maximum aid intensities given in the guidelines.

in the

the Environmental Guidelines allows the
(106) Point 32 of
investment
renewable
aid to promote
granting of
sources of
absence of mandatory
energy
Community standards. This scheme, however, does not
provide a clear definition of renewable energy sources
and therefore it is not clear to what extent point 32 of
the guidelines are applicable. Moreover, the scheme does
not clearly define investment costs and it is not clear
whether the relevant maximum aid intensities are being
respected.

(107) Even if the investment were eligible under this point,
Greece has not demonstrated that
the eligible cost
would comply with the conditions of points 36 and
37 of the Environmental Guidelines, which define the
underlining investments and the eligible costs.

the Environmental Guidelines allows the
(108) Point 38 of
granting of
rehabilitation of polluted
aid for
industrial sites, where the person responsible for the
pollution is not identified or cannot be made to bear

the

strictest

environmental

the Environmental Guidelines allows the
(109) Point 39 of
firms established in an
investment aid if
granting of
urban area or
in a Natura 2000 designated area
lawfully carry on activities that create major pollution
and must, on account of this location move from its
place of establishment to a more suitable area. Thereby
location must be dictated on environ-
the change of
mental protection grounds and must have been ordered
by administrative or judicial decision and the firm must
comply with the
standards
applicable in the new region where it is located. The
aid intensity may be maximum 30 %, or 40 % for
SMEs, of
the eligible costs. Eligible costs are those
connected with purchase of land or the construction or
purchase of new plant of the same capacity as the plant
abandoned, less any benefits deriving from the relocation.
Any cost savings or benefits accruing from an increase in
capacity for the first five years of operation, or costs for a
technically comparable investment that does not provide
the same degree of environmental protection would have
to be deducted from eligible costs of the investment aid.
scheme does not provide any such
However,
reductions of eligible costs. This
scheme does not
condition the aid with the above mentioned restrictions
with the obligation to relocate and the eligible costs. The
maximum aid intensity for large companies of 30 % is
not respected by the scheme. Moreover, operating aid for
relocation is not excluded.

this

and

products

to produce

to improve

recycling materials

facilities
from packaging

(110) As regards the expenditure for the establishment and
raw and other
expansion of
materials
already
consumed, the scheme does not exclude that the aid
will be used for
from sources
external to the beneficiary. This is not in line with the
‘polluter pays’ principle, which requires that an under­
taking invests
its own environmental
record, and to reduce its own pollution (118). Conse­
quently, the Environmental Guidelines are not applicable
to the establishment and expansion of recycling facilities
that will be used for recycling materials from sources
external to the beneficiary. In the absence of the possi­
bility to assess this measure under the Environmental
Guidelines,
the Commission assessed it directly under
the Article 87(3)(c) of the EC Treaty. In the past, it has
been the Commission’s practice to assess such cases
under three additional criteria:
(1) the aid should not
relieve the original polluters from a burden they would
have to bear under Community law,
the treated
materials would otherwise not be collected or would be
treated in a less environmentally friendly way,
(3) the
the technologies
projects

should be innovative,

i.e.

(2)

(118) Environmental Guidelines, point 29 in connection with point

18(b).

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should go ‘beyond the state of the art’ (119). The scheme
does not ensure that aid for expenditure for the estab­
lishment and expansion of facilities to produce raw and
other materials from packaging and products already
consumed fulfils the three above mentioned additional
criteria.

Development and Innovation from 30.12.2006 (121), the
framework applied for the assessment of unlawful State
aid is that in force when the aid was granted,
i.e. the
R&D Framework (122).

(111) Furthermore, it is not excluded that operating aid may be
granted in the framework of the introduction and adap­
tation of environmental technologies. This aid could be
it was given for waste management,
justified only if
energy saving, renewable energy or combined heat and
power production. The aid would have to fulfil
the
conditions under points 43 to 67 of the environmental
guidelines. However,
directs
operating aid to the defined purposes nor follows the
relevant conditions.

the measure

neither

activities

therefore,

(115) Some projects are possibly related to research and dev-
the Commission
and,
elopment
considered them also in the context of
the R&D
Framework. These are the establishment, extension or
modernisation of
applied research,
further development of software, studies for implemen­
tation of new technology,
innovation and innovative
prototypes, and patent registration.

laboratories

for

(112) The doubts expressed by the Commission during the
opening of the procedure provided for in Article 88(2)
of the Treaty persist, therefore the scheme cannot be
declared compatible.

(116) The Commission notes that aid for the above mentioned
projects may fall within the material scope of the R&D
Framework, only insofar as these projects consist of
research activities as defined in Annex I to the R&D
Framework. Moreover,
the Commission considers that
they do not exclusively cover research and development
as defined in Annex I to the R&D Framework. From the
wording of the law, eligible costs under the measure do
not necessarily have to correspond to those under the
R&D Framework.

(113) Consequently, the Commission notes that the scheme
does not respect
the above mentioned conditions of
the Environmental Guidelines or that of Article 87(3)(c)
of
the EC Treaty as follows from the Commission's
practice, and hence, is incompatible under the Environ­
mental Guidelines and Article 87(3)(c) of the EC treaty.
Moreover, the Commission has looked into all points of
the Environmental Guidelines and Commission practice
under Article 87(3)(c) and found that the Greek authori­
ties did not demonstrate that any individual aid would be
from the moment of its granting compatible under these
Guidelines
under
Commission's
the
Article 87(3)(c) of the EC Treaty (120).

practice

or

(117) Furthermore, where the research projects or patent dev-
elopments receiving aid concern pre-competitive develop­
ment,
the generally applicable aid intensity ceiling of
Greece of 35 % (25 % basic intensity + 10 % for
is exceeded where no extra
Article 87(3)a regions)
bonuses are applicable, because
the maximum aid
the measure is up to 37,05 % and
intensity under
36,89 % for 2004 and 2005 respectively. According to
State aid rules the cost of patent registration is not
is a large enterprise.
eligible for aid if
However,
excluded from
receiving aid for patent registration under the scheme.

the applicant

enterprises

are not

large

VI.3.6. Compatibility under the R&D Framework

(114) According to the last

the
Community Framework for State aid for Research and

indent of Section 10.3 of

(119) WRAP environmental grant funding and WRAP lease guarantee
fund. OJ L 102, 7.4.2004, p. 59 for a general scheme on
recycling investments. For cases in related to recycling paper
C61/2002 — WRAP published in OJ L 314 of 28.11.2003,
p. 26 and Stora Enso Langerbrugge published in OJ L 53,
26.2.2005, p. 66 respectively. The criteria used in these cases
are also commented upon in the Annual Competition report of
2004.

(120) Case T-176/01 Ferriere Nord v Commission [2004] ECR II-3931,

paragraph 94.

(118) The incentive effect in the case of large undertakings
must be established and verified before aid is granted.
This condition under the R&D Framework was applicable
to all R&D aid to large companies, including fiscal aid.
However, the scheme does not provide for establishing
the incentive effect before granting the aid. As the under­
taking receiving aid was not obliged to increase the R&D
activities, even the fact that it may in some undertakings
result into increase of R&D activities cannot justify the
incentive effect, because this may have been a result of
factors external to the aid.

(121) OJ C 323 of 30.12.2006, p. 1.
(122) See footnote 81.

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(119) Moreover,

in the sector of agriculture, no evidence of
compliance with the four conditions
listed in the
Commission communication from 1998 amending the
Community framework for State aid for research and
development can be observed (123).

Therefore, the measure cannot as a whole be considered
compatible under the SME BER. However, where aid is
granted under the measure to small- and medium-sized
enterprises as they are defined in the Annex I to the SME
BER, the block exemption regulation may apply.

(120) Consequently, the Commission notes that the scheme
does not respect
the above mentioned conditions of
the R&D Framework, and hence, is incompatible under
the R&D Framework. Moreover, no individual aid granted
under the scheme to large companies was from the
beginning subject to the condition of incentive effect.
The Greek authorities did not demonstrate that any indi­
vidual aid would be from the moment of its granting
compatible under R&D Framework. Hence no individual
aid granted under this scheme can be considered as
compatible under the R&D Framework.

(125)

VI.3.7. Compatibility under the Commission Regulation No

68/2001 (‘Training BER’)

(121) The Commission assessed the aid for training related to
the introduction of process automation systems (124),
software related training (125) and other
training (126)
under the Training BER.

(122) From the wording of the law, it cannot be established
whether the eligible costs under the measure correspond
to those under the Training BER. Where the training
receiving aid is company specific,
the aid intensity
ceiling for
companies of 35 % (25 % basic
intensity + 10 % for Article 87(3)a regions) may be
exceeded, because the maximum aid intensity under the
measure is for years 2004 and 2005 up to 37,05 % and
36,89 % respectively.

large

(123) Consequently, the Commission notes that the scheme
does not respect the abovementioned conditions of the
Training BER,
considered
compatible under the Training BER.

and hence,

cannot

be

Investment aid for SMEs in Greece, which is in its entire
territory eligible for regional aid under Article 87(3)(a) of
the EC Treaty,
is subject to aid intensity ceilings 15 %
higher than the ceilings under the RAG. This applies to
all investment projects as they are included in paragraph
21 of this decision, except of investment in the agri­
culture sector, investment in means of transportation in
the transportation sector (127) and investment directed
abroad (128). The aid intensity ceilings are breached for
projects other than tourism, garages in Areas A and B
according to the Greek Regional Aid Map (no regional
aid is foreseen for areas A, 18,4 % for Areas B and a
15 % top-up for SMEs). Moreover, the condition in order
to maintain the
to apply such higher
investment
five
years. However, this is not required under the measure.
In the transport sector, the costs of transport means and
transport equipment shall not be included in the eligible
costs.

in the recipient

region for at

ceiling is

least

(126) Foreign direct investment outside Greece can only be
subject
to aid to small enterprises up to the aid
intensity ceiling of 15 % and 7,5 % for medium-sized
can be
enterprises. However, both these
exceeded under the present measure.

ceilings

(127) Studies for implementation of new technology, studies
related to introduction of process and product certifi­
cation, studies on organisation and markets, and studies
on eligibility to aid could be eligible for aid to SMEs.
these
However,
services are provided by outside consultants.
It is not
such studies are a continuous or a
excluded that
periodic activity that would relate to usual operating
activity.

the measure does not guarantee that

VI.3.8. Compatibility

under Commission Regulation No

70/2001 (‘SME BER’)

(124) The Commission notes that the measure does not make
any difference between aid amounts or eligible sectors or
the beneficiary.
projects depending on the size of

(123) OJ C 48, 13.2.1998, p. 2.
(124) Article 3.1.a.vi. et al. of Law 2601/1998.
(125) Article 3.1.p.vi. of Law 2601/1998.
(126) Article 3.1.a.xv., e.v. and g.xii. of Law 2601/1998.

(128) Consequently, the Commission notes that the scheme
the above mentioned conditions of
is incompatible under the

does not respect
the SME BER, and hence,
SME BER.

(127) Article 3.1.o.i of Law 2601/1998.
(128) Article 3.2 of Law 2601/1998.

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VI.3.9. Compatibility under

the Community guidelines

for

State aid in the agriculture sector

(EAGGF) and amending and repealing certain Regu­
lations (130).

(129)

In the agriculture sector, the analysis must be made at
two levels: for processing and marketing activities, on the
one hand, and for primary production, on the other
hand, being understood that, in both cases, the relevant
Community legislation to take into account is the one
applicable at
the
Community guidelines for State aid in the agriculture
and
sector
(hereafter
Commission Regulation
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 (129).

the time the aid was granted,

guidelines)
1860/2004

agricultural
(EC) No

the

i.e.

(130) As far as primary production is concerned, the relevant
provisions to take into account, on the basis of
the
measures, eligible expenses and operating costs defined
by Law 3220/2004, are those laid down in points 4.1,
13 and 14 of the agricultural guidelines, dedicated re­
spectively to investment aid, aid to encourage the
production
agricultural
products, and aid for the provision of technical support.

and marketing

quality

of

include

software)

acquisition

construction,

(131) According to point 4.1 of the agricultural guidelines,
eligible expenses within the framework of investments
the
may
or
immovable property, new machinery
improvement of
and equipment
and
(including computer
general costs (such as architects, engineers and consul­
tation fees, feasibility studies, the acquisition of patents
and licences) up to 12 % of the amount corresponding to
the other expenses quoted. Aid for the purchase of plants
is allowed, except for annual plants. The aid rates laid
down in the same point are 40 % of the eligible expenses
in the ‘normal’ and 50 % in the less-favoured areas, with
an increase of five percentage points for young farmers
from
carrying out
setting-up.

the investment within five years

(132) To be eligible for aid,

farms must also comply with
minimum standards in the field of environment, animal
handling and hygiene and investments must be targeted
on products for which normal market outlet can be
found, and the total amount of eligible expenses must
not exceed the limit
investment eligible for
for total
support set by the Member State in accordance with
Article 7 of Council Regulation (EC) No 1257/1999 of
17 May 1999 on support for rural development from the
European Agricultural guidance and Guarantee Fund

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

(133)

In case of relocation of farm buildings, several possi-
bilities may be envisaged:

— where the need to relocate results from an expro­
priation which, in accordance with the legislation of
the Member State concerned gives rise to a right to
compensation,
the payment of such compensation
will normally not be considered as State aid within
the meaning of Article 87(1) of the Treaty;

— in other cases, where relocation simply consists of the
removal and re-erection of existing
the actual costs

dismantling,
facilities, aid up to 100 % of
incurred may be accepted;

— when relocation results in the farmer benefiting from
more modern facilities,
the contribution from the
farmer must be at least equivalent to 60 % (50 % in
the case of the less-favoured areas) of the increase in
the value of the facilities concerned after relocation
(55 % or 45 % respectively in cases where the ben-
eficiary is a young farmer);

— where relocation results in an increase in production
capacity, the contribution from the beneficiary must
be at least equal to 60 % (50 % in the less-favoured
areas) of
the
expenses (55 % or 45 % respectively in cases where
the beneficiary is a young farmer).

corresponding proportion of

the

for environmental
(134) When investments are carried out
the agricultural guidelines
reasons, point 4.1.2.4 of
states that the aid rates of 40 % or 50 % in the less-
favoured areas may be increased by 20 or 25 percentage
the investment goes beyond the minimum
points if
Community requirements in force.
the
increase must be confined to the extra eligible costs
necessary to meet
the objective referred to and does
not apply in the case of investments which result in an
increase in production capacity.

In that case,

(135) According to point 13 of the agricultural guidelines, aid
for introduction of process and product certification and
related studies may not exceed EUR 100 000 per ben-
eficiary over any three-year period or, for SMEs, 50 % of
the eligible costs, whichever is greater.

(130) OJ L 160, 26.6.1999, p. 80. Regulation replaced by Regulation

(EC) No 1698/2005 (OJ L 277, 21.10.2005, p. 1).

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(136) According to point 14 of

the agricultural guidelines,
training aid may not exceed EUR 100 000 per bene­
ficiary over any three-year period or, for SMEs, 50 % of
the eligible costs, whichever is greater. Moreover, certain
conditions have to be fulfilled: the aid must be available
to all those eligible in the area concerned and where the
service is provided by producer groups or other agri­
cultural mutual support organisations,
it must not be
limited to the members of the group or organisation in
question and the contribution towards the administrative
costs of the group or organisation must be limited to the
costs of providing the service.

(138) The doubts expressed by the Commission during the
opening of the procedure provided for in Article 88(2)
of the Treaty persist, therefore the scheme cannot be
declared compatible.

(139) AIDS for processing and marketing of agricultural
products are governed by point 4.2 of the agricultural
guidelines, which contains two sets of rules:

(137) On the basis of

the information available to the
Commission, it seems that the aid intensities calculated
for the scheme (37,05 % for 2004 and 36,89 % for
2005) do not exceed those established in the various
points of the agricultural guidelines mentioned above,
but
the
conditions listed in points 131 to 136 of this Decision
have been fulfilled, except
in the case of relocation
measures, where the provisions of the scheme comply
with the rules described in point 133. In particular:

is not possible to determine whether all

it

— there is no evidence showing that, among the
operating costs listed in point 22, leasing operations
have been followed by the purchase of the good at
the end of the lease;

— there is no evidence showing that costs such as those
linked to studies for implementation of new tech­
nology, patent registration, studies on eligibility to
aid and studies on organisation and markets have
been taking into account only up to 12 % of the
other eligible expenses listed in point 131 in the
calculation of the aid;

— there is no evidence showing that training activities
have been supported in conformity with the
provisions of point 14.1. of
agricultural
guidelines;

the

(140)

or

acquisition

improvement

— a first set in which aid may be granted up to 50 % of
the eligible expenses in Objective 1 regions and 40 %
in the other regions, the eligible expense being the
construction,
of
immovable property, new machine and equipment
(including computer
software) and general costs
(such as architects, engineers and consultation fees,
feasibility studies,
the acquisition of patents and
licences) up to 12 % of the amount corresponding
to the other expenses quoted;
to be
eligible for aid, the beneficiary must, as in the case
comply with minimum
of primary production,
standards regarding the environment, hygiene and
animal handling; moreover no aid may be granted
unless
sufficient evidence can be produced that
normal market outlets for the products concerned
can be found, and investment projects with eligible
expenses in excess of EUR 25 million or where the
aid exceeds EUR 12 million must be specifically
notified to the Commission in accordance with
Article 88(3) of the Treaty.

in order

— a second set according to which, in the case of State
aid for investments in connection with processing
and marketing of agricultural products which are
granted within the framework of a regional aid
scheme which has been previously approved by the
Community guidelines on national regional aid.

as

is
In the present case, only the first
applicable,
for
the
processing and marketing of agricultural products are
envisaged is not
the
approved but
Commission.

scheme under which aids

contested by

set of

rules

— there is no evidence showing that aid linked to intro­
duction of process and product certification and
related studies has been granted in conformity with
point 13 of the agricultural guidelines;

— there is no evidence that annual plants have been
excluded from the scope of the aid earmarked for
the purchase of plants;

— there is no evidence showing that all farms having
received aids within the framework of the scheme
complied with minimum standards in the fields of
environment, hygiene and animal handling, and that
the investments were focused on products for which
market outlets could be found.

(141) As in the case of primary production, the Commission
notes that the aid intensities calculated for the scheme do
not exceed those established in point 4.2 of the agri­
cultural guidelines, but it is not possible to determine
whether all the conditions quoted in the first indent of
point 139 of this Decision above have been fulfilled. In
particular:

— there is no evidence showing that, among the
operating costs listed in point 22 above,
leasing
operations have been followed by the purchase of
the good at the end of the lease;

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— there is no evidence showing that costs such as those
linked to studies for implementation of new tech­
nology, patent registration, studies on eligibility to
aid and studies on organisation and markets have
been taking into account only up to 12 % of the
other eligible expenses listed in point 139 above in
the calculation of the aid;

— there is no evidence showing that all companies
having received aids within the framework of the
scheme complied with minimum standards in the
fields of environment, hygiene and animal handling,
and that the investments were focused on products
for which market outlets could be found;

— there is no evidence showing that all

investment
projects in processing and marketing of agricultural
products were projects with eligible expenses not
exceeding of EUR 25 million or where the aid did
not exceed EUR 12 million.

granted before 1 November 2004. The current guidelines
from 2004 (132) apply to aid granted after 1 November
2004.

(145)

In general it should be noted that no State aid may be
declared compatible by the Commission if the Member
State concerned has not communicated the total amount
of aid per measure as well as the aid intensity. The
cumulative effect for the recipient of all state subsidies
must be taken into account when the scheme is being
assessed. The scheme under examination neither provides
such details nor allows such an assessment. Moreover,
the scheme at issue does not ensure that the Member
State will verify the beneficiary's compliance with the
rules of the common fisheries policy.

(146) Both versions of the Guidelines provide for a prohibition
of aid which does not impose any obligation on the part
the recipient. These Guidelines underscore the en-
of
forcement of
the control of such aids, especially the
ones accorded in form of tax relief. As no information
has been provided by the Member State in order to assess
the aid to fishery and aquaculture, the Commission must
consider them as not compatible.

(142) The doubts expressed by the Commission during the
opening of the procedure provided for in Article 88(2)
of the Treaty persist, therefore the scheme cannot be
declared compatible.

(147)

(143) Consequently, except in the case of relocation measures,
the Commission notes that the scheme does not respect
the above mentioned conditions of
the agricultural
guidelines, and hence,
is incompatible under the agri­
the Commission found
cultural guidelines. Moreover,
that the Greek authorities did not demonstrate that any
individual aid would be from the moment of its granting
compatible under
these Guidelines or Commission
practice under Article 87(3)(c) of the EC Treaty.

VI.3.10. Compatibility under State aid guidelines applicable to

the fisheries and aquaculture sector

(144) Fishing and aquaculture firms can benefit

from the
measure under scrutiny. Projects of State aid related to
fisheries and aquaculture shall be considered in the
context of the Guidelines for the Examination of the
State Aid to Fisheries and Aquaculture. After the entry
into the force of the Greek Law 3220/2004 setting up
the scheme of aids at issue, the Guidelines changed from
1 January 2005. It follows that the Guidelines for the
the State Aid to Fisheries and Aqua­
Examination of
applied to aid
culture

from 2001 (131)

should be

to the different

aquaculture, processing,

Investment aids should be checked by the Commission
types of beneficiaries
with respect
and marketing).
(fishermen,
Every single application of
the measure should be
assessed separately on the basis of detailed conditions
listed in the Guidelines. The information contained in
the scheme does not allow such an assessment.

(148) On the basis of the above, the Commission considers the
insofar as it concerns
Article 2 of Law 3220/2004,
to be compatible. The
fisheries and aquaculture, not
the
expressed by
doubts
opening of the procedure provided for in Article 88(2)
of the Treaty persist, therefore the scheme cannot be
declared compatible. Consequently,
the Commission
found that the Greek authorities did not demonstrate
that any individual aid would be from the moment of
its granting compatible under these guidelines (133).

the Commission during

VI.3.11. Compatibility under Article 87(2) and (3) of the EC

Treaty

(149) None of the exceptions under Article 87(2) of the EC
Treaty can be applied in this case, as the measure is not
aimed at the objectives listed in these provisions.

(132) OJ C 229, 14.9.2004, p. 5.
(133) Case T-176/01 Ferriere Nord v Commission [2004] ECR II-3931,

(131) OJ C 19, 20.1.2001, p. 7.

paragraph 94.

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(150) Under Article 87(3)(a) of the EC Treaty, aid is considered
compatible with the common market when it is designed
to promote the economic development of areas where
the standard of living is abnormally low or where there is
serious underemployment. The criteria for assessment of
the compatibility under this article are reflected in the
specific rules as they are discussed above.

does not qualify for any of the exceptions provided for in
the Commission concludes
the Treaty,
the aid
scheme is
incompatible with the common market,
except for relocation of farm buildings in the agricultural
the analysis made
sector,
above, aid granted:

for which, on the basis of

that

(151) As regards Article 87(3)(b) of the EC Treaty, the aid in
question is not intended to promote the execution of an
important project of common European interest nor to
remedy to a serious disturbance in the economy of
Greece, nor
intended to promote culture or
heritage conservation.

is

it

(155)

(152) Article 87(3)(d) of the EC Treaty concerns culture and
heritage conservation where such aid does not affect
trading conditions and Competition in the Community
to an extend that is contrary to the common interest.
This can concern aid to monasteries for erecting hostels
and cultural centres and undertaking in listed buildings
or with traditional production or with a name of origin
in respect to the repair and restoration of listed buildings,
the investment into traditional machinery or certification
of traditional products or processes that are considered as
natural heritage. However,
the Commission does not
these
any information concerning nature of
have
activities as cultural heritage, the extent of the aid and
its impact on the trading conditions. Therefore,
the
Commission cannot conclude on the compatibility of
the EC
these measures under the Article 87(3)(d) of
Treaty.

(153) Lastly,

it is necessary to examine whether the aid can
qualify for the exception laid down in Article 87(3)(c)
of the EC Treaty which states that may be considered
compatible an 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. The criteria
for assessment of the compatibility under this article are
reflected in the specific rules as they are discussed above.
Any aid that does not comply with the conditions under
the specific rules requires a detailed justification, which is
not provided by the Greek authorities. Therefore, the
Commission cannot conclude on the compatibility of
these measures directly under the Article 87(3)(c) of the
EC Treaty.

— does not constitute State aid within the meaning of
Article 87(1) of the Treaty, when relocation results
from an expropriation which, in accordance with the
legislation of the Member State concerned, gives right
to compensation; or

— is compatible with the common market in the other

cases described in point 133.

scheme may be
Individual
considered to be compatible with the common market:

aid granted under

the

— under Regulation (EC) No 69/2001 only if the total
amount of aid granted under the scheme combined
with all other de minimis aid received by the be-
neficiary in the previous three year period does not
all material
exceed EUR 100 000 and respects
conditions of the regulation;

— under Regulation (EC) No 1860/2004 only if the
total amount of aid granted under
the scheme
combined with all other de minimis aid received by
the beneficiary in the previous three year period does
not exceed EUR 3 000 and respects all material
conditions of the regulation;

the

and

sector

processing

— under Regulation (EC) No 1998/2006 only if the
total amount of aid for undertakings active in the
transport
and
in
marketing of agricultural products granted under
the scheme combined with all other de minimis aid
received by the beneficiary in the previous three year
period does not exceed EUR 100 000, for the under­
and
in
takings
active
EUR 200 000,
in the
for undertakings
processing and marketing of agricultural products,
and respects all material conditions of the Articles
1 and 2 of the regulation;

transport

sector,

active

the

VI.4. Conclusion

(154) Since the aid scheme, as a whole and in all parts, except
for relocation of farm buildings in the agricultural sector,

— under any other State aid regulation, or approved aid
scheme only if the individual aid complied with all
the material conditions of the relevant regulation or
scheme at the time it was granted.

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(156) All other individual aid awarded under the scheme must

be considered incompatible with the common market.

number of legal relationships entered into in good faith
and where said practices were adopted due to the un­
certainty of Community provisions.

VII. RECOVERY

(157) According to the Article 14(1) of the Council Regulation
(EC) No 659/1999, where negative decisions are taken in
cases of unlawful aid, the Commission shall decide that
Member State concerned shall take all necessary measures
to recover the aid from the beneficiary.

(163) The claims by Greece do not hold in the underlying
measure as it concerns a non-notified, and hence, not
approved State aid measure. The extenuating circum­
stances, cited in the case law referred to by Greece (136),
the
of
acting in good faith and uncertainty of
Community provisions can therefore not
reasonably
hold.

(158) Only incompatible aid can be recovered. The compati­
bility shall be established at
the project
receiving aid. It shall further be established, whether the
aid was compatible under any Community State aid rules
or existing aid schemes at the time of granting according
to the rules valid at that time.

the level of

(159) When the Commission approves a notified aid, the aid
measure must assure that all conditions of the applicable
rules are met. Not fulfilling a condition would lead to
incompatibility. Consequently, an unlawful aid measure
shall not receive any better treatment when assessing the
compatibility. In order to conclude on compatibility, all
material conditions must have been fulfilled since the
beginning. It follows that attempts to introduce retro­
actively further conditions would not heal the incompat­
ibility of the aid measure at the time of granting the aid.

(160) Only aid under de minimis Regulations (EC) No 69/2001
and (EC) No 1860/2004, some provisions of SME and
Training BER and some provisions of the agricultural
guidelines could possibly be considered as fulfilling all
material conditions from the moment of granting.

financial

(161) As to the allegations of Greece that the Commission shall
limit the scope of recovery because it would have intol­
the
consequences
erable
Commission notes that, according to the Court case
law (134), Member States can only use the argument of
an absolute impossibility as defence not to recover the
aid. However, financial difficulties do not constitute such
an absolute impossibility.

Greece,

for

(162) The Judgments in the cases referred to by Greece (135),
referred to the possibility of a potential limitation of the
retrospective force of a European Court of Justice ruling,
in excep­
limiting the temporal effects of a judgment,
tional
resulted in serious
judgment
economic repercussions owing in particular to a large

cases,

the

if

(134) See in particular Case C-404/00 Commission v Spain [2003] ECR
I-6695, paragraph 45 and Case C-415/03 Commission v Greece
[2005] ECR I-3875, paragraph 35.

(135) See footnote 88.

as

to

by

institutions, whether

(164) As to possible good faith, the beneficiaries cannot claim
good faith, where they did not have legitimate expec­
tations to receive the aid. According to settled juris­
prudence (137),
the
expectations
legitimate
the aid can only be created by the
lawfulness of
Community
an approval
decision or by not acting against an incompatible
measure although they should have acted. From the
procedure, however,
the Commission
follows
signalled to the Greek authorities its concerns about
the compatibility of the measure as soon as it found
out about it, only a few months after its entry into
the Commission pursued its investi­
force. Thereafter,
gation. Consequently, Greece cannot invoke legitimate
expectations against a possible recovery. Moreover, the
Community provisions on State aid cannot be claimed to
be uncertain.

that

(165) The Commission therefore rejects

the possibility of
invoking limitations or exceptions to the recovery of
the unlawful by Greece,

HAS ADOPTED THIS DECISION:

Article 1

The State aid scheme implemented by Greece under
the Law 3220/2004 is incompatible with the

1.
Article 2 of
common market.

2.
In the agricultural sector, aid granted for relocation of
farm buildings does not constitute State aid within the
the Treaty, when relocation
meaning of Article 87(1) of
in accordance with the
results from an expropriation which,
legislation of
to
compensation. This aid is compatible with the common
market in the other cases of relocation.

the Member State concerned, gives right

(136) ECJ Judgement in Case C-209/03, Bidar v London Borough of Ealing,
Secretary of State for Education and Skills [2005] ECR I-2119, para.
68-69; ECJ Judgment in Case C-292/04, Wienand Meilicke and others
v Finanzamt Bonn-Innenstadt, not yet published, para. 34.

(137) Case C-91/01 Italy v Commission of the European Communities [2004]

ECR I-4355, paragraph 66.

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Article 2

Article 6

1. Within two months
following notification of
Decision, Greece shall submit the following information:

this

(a)

the list of beneficiaries that have received aid under the
scheme referred to Article 1(1) and the total amount of
aid received by each of them under the scheme;

(b) the total amount (principal and recovery interests) to be

recovered from each beneficiary;

(c) a detailed description of the measures already taken and

planned to comply with this Decision; and

(d) documents demonstrating that the beneficiaries have been

ordered to repay the aid.

Greece shall submit this information using the form given in
the Annex.

Greece shall keep the Commission informed of
the national measures taken to implement

the
2.
progress of
this
Decision until recovery of the aid granted under the scheme
referred to in Article 1(1) has been completed.
im-
mediately submit, on simple request by the Commission, infor­
mation on the measures already taken and planned to comply
with this Decision.
information
concerning the amounts of aid and recovery interest already
recovered from the beneficiaries.

It shall also provide detail

It shall

Article 7

This Decision is addressed to the Hellenic Republic.

Done at Brussels, 18 July 2007.

For the Commission

Neelie KROES
Member of the Commission

the

scheme

Individual aid granted under
referred to in
Article 1(1) of this Decision does not constitute aid if, at the
time it
fulfils the conditions laid down by a
regulation adopted pursuant to Article 2 of Council Regulation
(EC) No 994/98 (138) which is applicable at the time the aid is
granted.

is granted,

it

Article 3

the

scheme

this Decision which, at

referred to in
Individual aid granted under
the time it was
Article 1(1) of
granted,
it fulfilled the conditions laid down by a regulation
adopted pursuant to Article 1 of Regulation (EC) No 994/98
or by another approved aid scheme is compatible with the
common market up to maximum aid intensities applicable to
that type of aid.

Article 4

1.
Greece shall recover the incompatible aid granted under
the scheme referred to in Article 1(1) of this Decision from the
beneficiaries.

2.
The sums to be recovered shall bear interest from the date
on which they were put at the disposal of the beneficiaries until
their actual recovery.

3.
The interest shall be calculated on a compound basis in
accordance with Chapter V of Commission Regulation (EC) No
794/2004 (139).

4.
Greece shall cancel all outstanding payments of aid under
the scheme referred to in Article 1.1 with effect from the date
of notification of this decision.

Article 5

The recovery of the aid granted under the scheme referred

1.
to in Article 1(1) shall be immediate and effective.

Greece shall ensure that

2.
this Decision is implemented
within four months following the date of notification of this
Decision.

(138) OJ L 142, 14.5.1998, p. 1.
(139) OJ L 140, 30.4.2004, p. 1.

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ANNEX

Information regarding the implementation of the Commission Decision C 37/05 (ex NN 11/04), implemented by
Greece, [Tax exempt reserve fund]

Information about the amounts of aid received, to be recovered and already recovered

Identity of the beneficiary

Total amount of aid
received under the
scheme (°)

Total amount of aid
to be recovered (°)
(Principal)

Total amount already reimbursed (°)

Principal

Recovery interest

(°) Million of national currency.