Special Report No 09// 2014#Is the EU investment and promotion support to the wine sector well managed and are its results on the competitiveness of EU wines demonstrated? #(pursuant to Article 287(4), second subparagraph, TFEU)
Date: 2014-07-02
Institutions: European Court of Auditors
Subjects: EU aid, EU policy, aid evaluation, aid to agriculture, competitiveness, investment aid, rural development, vineyard, viticulture, wine

EN 

2014 

NO 09

Special Report 

Is the EU investment and 
promotion support to the 
wine sector well managed 
and are its results on the 
competitiveness of EU 
wines demonstrated?

EUROPEAN
COURT
OF AUDITORS

 
EUROPEAN COURT OF AUDITORS 
12, rue Alcide De Gasperi 
1615 Luxembourg 
LUXEMBOURG

Tel. +352 4398-1

E-mail: eca-info@eca.europa.eu 
Internet: http://eca.europa.eu

Twitter: @EUAuditorsECA 
YouTube: EUAuditorsECA

More information on the European Union is available on the Internet (http://europa.eu).

Luxembourg: Publications Office of the European Union, 2014

ISBN 978-92-872-0304-5
doi:10.2865/68006

© European Union, 2014
Reproduction is authorised provided the source is acknowledged.

Printed in Luxembourg

EN 

2014 

NO 09

Special Report

Is the EU investment and 
promotion support to the 
wine sector well managed 
and are its results on the 
competitiveness of EU 
wines demonstrated?

(pursuant to Article 287(4), second subparagraph, TFEU)

Contents

02

Paragraph

Abbreviations

Glossary

I – IX 

Executive summary

1 – 11 

Introduction

1 – 11 

The wine sector in the EU

12 – 15  Audit scope and approach

16 – 80  Observations

16 – 34  Part I — Is the investment measure under the wine CMO appropriately  
designed and implemented with due regard to the principle of  
economy?

18 – 21 

The need for supplementary investment measures under the wine CMO is not  
demonstrated …

22 – 25  … and the implementation of wine CMO investments was delayed  

or restricted in some Member States …

26 – 29  Member States visited give limited assurance that only the financially viable  

projects are supported …

30 – 34  … and do not systematically evaluate the reasonableness of project costs

35 – 64  Part II — Is the promotion measure appropriately designed and  

efficiently implemented?

37 – 42  Support for promotion is also granted to big companies with an already strong  

reputation and export tradition …

43 – 47  … and which were likely to have undertaken the promotion actions without  

public support (deadweight effect)

48 – 51  Unclear definition of eligible expenditure until 2013

 
 
Contents

03

52 – 54  Member States do not always check whether irregular duplicate funding  

occurs

55 – 64  An insufficient audit trail undermines the effectiveness of visited Member  

States’ controls to ensure the occurrence and eligibility of promotion  
actions

65 – 80  Part III — Are the effects of the measures appropriately demonstrated?

65 – 70  The monitoring and evaluation of the measures focuses on outputs and  

financial implementation, but there is not yet sufficient information on the  
results achieved

71 – 73  The effects of CMO investments cannot be easily separated from the effects  

of rural development investments …

74 – 75 

There has been an increase of Member States’ wine exports to third  
countries …

76 – 80  … but it is difficult to determine to what extent this is directly attributable  

to the promotion measure

81 – 90  Conclusions and recommendations

Annex I  —  Supply balance sheet at EU-27 level — main items

Annex II  — 

 Annex Xb to Council Regulation (EC) No 1234/2007

Reply of the Commission

 
 
 
Abbreviations

04

EAGF: European Agricultural Guarantee Fund

EAFRD: European Agricultural Fund for Rural Development

ERDF: European Regional Development Fund

EU: European Union

EU-27: European Union of 27 Member States

ha: hectare

hl: hectolitre

NSP: national support programme

PDO: Protected Designation of Origin

PGI: Protected Geographical Indication

RD: rural development

USD: United States Dollar

Wine CMO: common organisation of the market in wine

Glossary

05

By-product distillation measure: Support granted for the voluntary or obligatory distillation of by-products of 
wine making (grape marc and wine lees) which has been carried out in accordance with the conditions laid down in 
point D of Annex XVb to Council Regulation (EC) No 1234/2007.

Concentrated grape must: Concentrated grape must is uncaramelised grape must which is obtained by partial 
dehydration of grape must carried out by any authorised method other than by direct heat.

Crisis distillation: Support granted until 31 July 2012 for voluntary or obligatory distillation of surplus wine decided 
upon by Member States in justified cases of crisis so as to reduce or eliminate the surplus and at the same time 
ensure supply continuity from one harvest to the next.

Deadweight effect: A situation where a subsidised project would have been wholly or partly undertaken without 
the grant aid.

Economy: The principle of economy is concerned with attaining a given level of outputs or results at the lowest 
costs. 

Effectiveness: The principle of effectiveness is concerned with attaining the specific objectives set and achieving 
the intended results.

Efficiency: The principle of efficiency is concerned with the best relationship between resources employed and the 
outputs or results produced. 

Export refunds: Under the common agricultural policy the European Union sets minimum price levels for certain 
farm products. These minimum price levels in many cases are higher than the world price level for the same 
products. When farmed products have to be exported to third countries (=outside the EU), it is necessary to bridge 
the price between the EU price level and the world market price level. This bridging is done by paying exporters 
export refunds. Export refunds vary in time, by product sector and by the products made thereof.

Green harvesting measure: Green harvesting means the total destruction or removal of grape bunches while still 
in their immature stage, thereby reducing the yield of the relevant area to zero. Support for green harvesting may 
be granted as compensation in the form of a flat rate payment per hectare to be determined by the Member State 
concerned.

Grubbing-up premium: Support granted to vine growers for the permanent withdrawal of all vines in a parcel or 
holding.

Harvest insurance measure: Support aimed at contributing to the safeguarding of producers’ incomes where 
these are affected by natural disasters, adverse climatic events, diseases or pest infestations.

Glossary

06

Investment measure: Support granted for tangible or intangible investments in processing facilities, winery 
infrastructure and marketing of wine which improve the overall performance of the enterprise and concern 
one or more of the following: (a) the production or marketing of products referred to in Annex XIb to Council 
Regulation (EC) No 1234/2007; (b) the development of new products, processes and technologies related to the 
products referred to in Annex XIb.

Mutual funds measure: Mutual funds shall provide assistance to producers seeking to insure themselves against 
market fluctuations. Community support for the setting-up of mutual funds may be granted in the form of 
temporary and digressive aid to cover the administrative costs of the funds. This measure was not chosen by any 
Member State.

National support programme/national envelope: Wine producing Member States use EU wine CMO funds 
through national support programmes to finance specific support measures to assist the wine sector (Article 103i of 
Regulation (EC) No 1234/2007). Member States submit to the Commission 5-year support programmes containing 
measures in accordance with the rules governing the wine sector (Article 103k of Regulation (EC) No 1234/2007).

Other wines: Wines non-eligible to the promotion measures, for example table wines without any grape variety 
indication.

Potable alcohol distillation measure: Support granted, in the form of a per-hectare aid, until 31 July 2012 to 
producers, for wine which is distilled into potable alcohol.

Programming period: National support programmes are drawn up for a period of 5 years. Programming period 
2009–13 is the first one and the second one is 2014–18.

Promotion measure: Support for information or promotion measure concerning Community wines. The promotion 
measure relates to wines with a Protected Designation of Origin or Geographical Indication or wines with an 
indication of the grape variety. This measure may consist only of: (a) public relations, promotional or advertisement 
measures, (b) participation at events, fairs or exhibitions of international importance, (c) information campaigns,  
(d) studies of new markets, necessary for the expansion of markets outlets, and (e) studies to evaluate the results of 
the promotional and information measures. The Community contribution to promotion activities shall not exceed 
50 % of the eligible expenditure (Article 103p of Regulation (EC) No 1234/2007).

Restructuring and conversion of vineyards measure: Support for restructuring and conversion of vineyards 
may only cover one or more of the following activities: (a) varietal conversion, including by means of grafting-on; 
(b) relocation of vineyards; (c) improvements to vineyard management techniques. The normal renewal of vineyards 
which have come to the end of their natural life shall not be considered as a restructuring and conversion activity. 
Support for restructuring and conversion of vineyards may only take the following forms: (a) compensation of 
producers for the loss of revenue due to the implementation of the measure; (b) contribution to the costs of 
restructuring and conversion.

Glossary

07

Rural development programme: A document prepared by a Member State or region, and approved by the 
Commission, to plan the implementation of the RD policy.

Single payment scheme: An aid scheme which replaced most of the pre-existing direct aid payments and in 
which aid is decoupled from any obligation to produce. Instead, full payment of aid is subject to the condition 
that farmers keep all their land in good agricultural and environmental condition (GAEC) and respect statutory 
management requirements (SMRs) — the so-called cross-compliance. Member States may provide support to vine-
growers by allocating to them payment entitlements within the meaning of Chapter 3 of Title III of Regulation (EC) 
No 1782/2003 in accordance with point O of Annex VII to that regulation.

Sound financial management: According to Article 27 of the financial regulation applicable to the general budget 
of the European Communities (the ‘financial regulation’ (OJ L 248, 16.9.2002)), the concept of sound financial 
management comprises the principles of economy, efficiency and effectiveness. 

Varietal wine: Wines without geographical indication which are allowed under certain conditions to mention the 
grape variety. These wines are eligible to the promotion measure.

Wine year: The production year for wine products (described in Part XII of Annex I to Regulation (EC) 
No 1234/2007). It begins on 1 August each year and ends on 31 July of the following year.

Executive  
summary

08

I
The European Union (EU) is the world’s biggest wine 
producer. In 2008, the Council introduced a reform of 
the common organisation of the market (CMO) in wine 
aimed essentially at improving the competitiveness of 
EU wine producers and balancing supply and demand, 
this in the context of a long persisting structural sur-
plus of supply over demand. The main financial instru-
ments of this reform include a temporary grubbing-
up scheme and the setting up of national support 
programmes (NSPs), whereby Member States choose 
among 11 available measures those best adapted to 
their particular situation.

II
The Court covered in a previous audit1 the grubbing-
up of vineyards, which principally aimed at balancing 
supply and demand. With this audit, the Court exam-
ined whether the investment and promotion support 
to the wine sector is well managed and whether its 
results on the competitiveness of EU wines are dem-
onstrated. The Court concludes that the management 
of investment and promotion support to the wine 
sector during the initial years covered by the audit 
was adversely affected by design and implementation 
weaknesses highlighted in this report and the impact 
on the competitiveness of EU wines was not always 
demonstrated.

IV
Furthermore, the investment measure was not imple-
mented with due regard to the principle of economy. 
Most Member States audited did not ensure that only 
viable projects received the aid and there is a risk of 
overspending, as the reasonableness of projects costs 
was not systematically evaluated.

V
The promotion actions are often used for consolidat-
ing markets, rather than winning new markets or 
recovering old markets. Despite the intended prefer-
ence to support SMEs, large enterprises were also 
funded.

VI
Member States were insufficiently selective in the 
implementation of the promotion measure. In particu-
lar, the Court found clear cases where beneficiaries 
would have borne the costs of the promotion actions 
without EU support. Furthermore, the costs of promo-
tion actions, overheads and costs of implementing 
bodies were insufficiently justified: supporting docu-
mentation was poor or defective. This undermines the 
effectiveness of Member States’ documentary checks 
to ensure the occurrence and eligibility of promotion 
actions.

III
The need for an additional investment measure 
specific to the wine sector is not demonstrated as it 
already existed under the rural development policy. 
This supplementary measure is a source of complexity, 
created administrative obstacles and in some Member 
States resulted in implementing delays or in an exces-
sively restrictive scope of the eligible investments. At 
the time of the audit, a significant portion of the initial 
allocations made by Member States to the investment 
measure had to be reallocated to other measures of 
the NSPs.

VII
The available funds dedicated by Member States to 
the promotion measure are budgeted to more than 
double for the programming period 2014–18 com-
pared to the funds spent in the previous programming 
period2. Given the difficulties experienced by the 
Member States to spend the 2009–13 budget initially 
earmarked for promotion actions, there is a risk that 
the 2014–18 budget is set at too high a level, thus 
endangering the application of sound financial man-
agement principles.

1 

Special Report No 7/2012  — The reform of the common organisation 
of the market in wine: Progress to date (http://eca.europa.eu).

2 

522 million euro were spent under the promotion measure in the 
programming period 2009–13. For the programming period 2014–18, 
Member States allocated 1 156 million euro to the promotion 
measure (EU-27). This means an increase of 121 % compared to the 
funds spent in the previous period. 

Executive summary 

09

(b)  In order to minimise the risk of deadweight the 

Commission should ensure that Member States in 
their selection procedures require beneficiaries to 
clearly demonstrate their need for EU aid and that 
normal operating costs are not financed by the EU 
budget.

(c)  The Commission should ensure that ancillary costs 
such as implementing bodies’ costs and overheads 
are properly justified and limited to a maximum 
percentage of the total costs.

(d)  The Member States should ensure a sufficient  

audit trail linking every promotion aid to specific 
and adequately documented actions.

(e)  The Commission should require Member States 

to evaluate more closely the results of promotion 
projects. In particular, the results of the promotion 
actions should be assessed at beneficiary level 
rather than for the entire EU wine sector. Member 
States should make better use of the reports pro-
duced by beneficiaries at the end of the promo-
tion actions to assess and consolidate their results.

(f)  After a sufficient period of time has elapsed, the 
Commission should analyse how the budget allo-
cated to the NSPs for the period 2014–18 matches 
the needs of the EU wine sector and the absorp-
tion capacity of the Member States. Based on this 
analysis, the Commission should readjust where 
appropriate the budget to ensure that it provides 
incentives for Member States to be more efficient 
in the application of the measures.

VIII
The Commission and the Member States audited do 
not yet produce sufficient relevant information to 
show the direct results attributable to the measures. 
In the case of the investment measure, the effect of 
CMO investments cannot be easily separated from 
rural development investments. In the case of the 
promotion measure, the result indicators used cover 
many variables outside the influence of the promotion 
actions. Consequently, the results of the measures are 
not yet demonstrated.

IX
On the basis of these observations the Court recom-
mends the following.

For the investment measure:

(a)  In order to rationalise the aid scheme, the Com-

mission should monitor the absorption of funds, 
analyse the need for the measure and assess 
whether the wine sector compared to other agri-
cultural sectors needs additional investment aid.

(b)  Member States should mitigate the risk to the 
economy by a systematic assessment of the 
reasonableness of project costs and the financial 
viability of the applicants. The result of these as-
sessments should be adequately documented. The 
Commission should ensure that Member States 
apply these checks effectively.

For the promotion measure:

(a)  The governing regulation should restrict individu-
al beneficiaries from presenting in each program-
ming period a promotion programme for the same 
targeted countries. The Commission should also 
limit the scope of the measure concerning the 
eligibility of brand advertising and give more em-
phasis to favouring the accession of SMEs to the 
promotion measure.

Introduction

10

04 
In 2008, the wine CMO was re-
formed by Council Regulation (EC) 
No 479/20087. According to the impact 
assessment, two of the main objectives 
of the wine CMO reform were:

 — to enhance the competitiveness of 

European wine; and

 — to ensure a better balance between 

supply and demand.

05 
Since 1 August 2008, market interven-
tion measures, such as distillations, 
export refunds and storage measures, 
have been gradually reduced and 
on 31 July 2012 these measures ended 
completely8. Market intervention 
expenditure fell from 364 million euro 
a year prior to the implementation of 
the wine CMO reform (2007/08) to zero 
in 2012/13.

3 

Eurostat, wine supply balance 
sheet, average last 5 wine 
years (2007/08–2011/12).

4  Data sources: Eurostat, 
Comext database, data 
extraction 24 July 2013.

5  COM(2006) 319 final of  

22 June 2006.

6 

SEC(2007) 893 final of  
4 July 2007.

7  Council Regulation (EC) 

No 479/2008 of 29 April 2008 
on the common organisation 
of the market in wine, 
amending Regulations (EC) 
No 1493/1999, 
(EC) No 1782/2003, 
(EC) No 1290/2005, 
(EC) No 3/2008 and repealing 
Regulations (EEC) No 2392/86 
and (EC) No 1493/1999 
(OJ L 148, 6.6.2008, p. 1). In 
August 2009, that regulation 
was repealed and the wine 
CMO was integrated into 
the single CMO established 
by Council Regulation (EC) 
No 1234/2007 of 
22 October 2007 establishing 
a common organisation of 
agricultural markets and on 
specific provisions for certain 
agricultural products (OJ L 299, 
16.11.2007, p. 1).

8  Only by-product distillation 
remained as its purpose 
is to ensure wine quality 
production and environment-
friendly wine production.

The wine sector in the EU

01 
The European Union is the world’s big-
gest wine producer. With around 3 mil-
lion ha of vines, the EU produces on 
average approximately 158 million hl 
of wine per year. Annual average 
consumption within the EU is approxi-
mately 127 million hl3. During the wine 
year 2011/12, around 23 million hl of 
wine were exported to third countries 
and 14 million hl of wine were import-
ed, corresponding to a market value 
of 8,6 billion euro and 2,4 billion euro4 
respectively (see wine supply balance 
sheet in Annex I).

02 
In 2005, when the Commission initi-
ated its preparatory work for a reform 
of the common organisation of the 
market (CMO), there was a structural 
surplus production of wine estimated 
at 18,5 million hl.

03 
In a communication to the Council and 
the European Parliament5 the Commis-
sion stated that the growing imbal-
ance between supply and demand was 
the principal reason for reforming the 
CMO. In 2007 the Commission pub-
lished an impact assessment6, which 
evaluated the situation of the EU wine 
sector. This impact assessment con-
firmed an unsustainable market imbal-
ance and a loss of competitiveness of 
EU wines compared to non-EU ones.

07 
Apart from the single payment 
scheme11, the financially most im-
portant measures introduced by the 
Member States in their NSPs for the 
programming period 2009–13 were 
the restructuring and varietal conver-
sion of vineyards (43 % of the budget 
for NSPs, i.e. more than 2 billion euro 
over the 5-year period), promotion 
and investment (these two measures 
each represent 10 % of the budget for 
NSPs, i.e. 522 and 518 million euro re-
spectively) (see Graph 1). These three 
measures aim to increase the competi-
tiveness of the wine sector and reflect 
the intention under the new wine 
CMO to switch from market interven-
tion measures to market-oriented 
measures.

11

9 

These measures are: 
restructuring and conversion 
of vineyards, green 
harvesting, mutual funds, 
harvest insurance, single 
payment scheme, promotion, 
investment, by-product 
distillation as well as three 
temporary measures that 
ended by 31 July 2012 
(potable alcohol distillation, 
crisis distillation and use of 
concentrated grape must).

10  Amounts fixed in 
Article 190a(2) of 
Regulation (EC) No 1234/2007, 
based on historical 
expenditure under Council 
Regulation (EC) No 1493/1999 
of 17 May 1999 on the 
common organisation of 
the market in wine (OJ L 179, 
14.7.1999, p. 1) for intervention 
measures to regulate markets 
as referred to in Article 3(1)(b) 
of Council Regulation (EC) 
No 1290/2005 of 21 June 2005 
on the financing of the 
common agricultural policy 
(OJ L 209, 11.8.2005, p. 1).

11  The single payment scheme 
is one of the measures 
available under the NSP 
but is not considered to 
contribute directly to the 
competitiveness of the wine 
sector. Allocation for this 
measure during the period 
of 2009–13 amounts to 
510 million euro.

Introduction

06 
The main financial instruments of the 
reformed wine CMO for the pro-
gramming period 2009–13 are the 
following.

(a)  Voluntary grubbing-up of vine-
yards, the aim of which was to 
create a wine sector attuned to 
market conditions by allowing less 
competitive vineyards to be per-
manently removed. This scheme 
ended in wine year 2010/11. An 
area of 161 166 ha of vineyards 
have been grubbed up under 
this scheme. EU funds dedicated 
to this scheme amounted to 
around 1 025 million euro.

(b)  National support programmes 
(NSPs), also known as ‘national 
envelopes’: a specific budget is 
made available to Member States 
for drawing a 5-year support 
programme composed of sev-
eral measures to be chosen from 
among a list of 11 measures avail-
able9. Such support programmes 
are submitted to the Commission 
for approval. Eighteen Member 
States receive an annual budget 
for their NSP. For the first program-
ming period of 5 years the overall 
budget is 5,3 billion euro. The 
corresponding annual budgets 
per Member States are set out in 
Annex II.

(c)  Transfer of amounts10 to existing 
rural development (RD) pro-
grammes in order to increase rural 
development support in wine-
producing regions.

Introduction

12

1 Share of the most important measures from the NSP (programming period 2009–13)
h
p
a
r
G

Closed measures**  13 %

Others*  14 %

Single payment scheme 10 %

Investments 10 %

Restructuring 43 %

Promotion 10 %

* By-product distillation, harvest insurance, green harvesting, ongoing plans according to Regulation No 1493/1999.

** Measures closed since 2012/13 wine year: potable alcohol and crisis distillations, concentrated grape must aid.

Source: Commission — financial table transmitted by the Member States, October 2013.

08 
The investment measure consists 
of support granted for tangible or 
intangible investments in processing 
facilities, winery infrastructure and 
marketing of wine. The objective of 
the support is to improve the overall 
performance of the enterprise12. The 
Member States have to define the 
eligible investment operations. The 
maximum aid rate is 40 %13 of the 
eligible investment costs which, in the 
projects selected by the Court, can 
vary from 6 000 euro for a new screw 
capping machine to 10,3 million euro 
for the building and equipping of 
a new cooperative regrouping several 
cooperatives.

12  Article 103u of Regulation (EC) 

No 1234/2007.

13  Other aid rate: 50 % in regions 
classified as convergence 
regions in accordance with 
Council Regulation (EC) 
No 1083/2006 of 11 July 2006 
laying down general 
provisions on the European 
Regional Development Fund, 
the European Social Fund 
and the Cohesion Fund and 
repealing Regulation (EC) 
No 1260/1999 (OJ L 210, 
31.7.2006, p. 25), 75 % in 
the outermost regions in 
accordance with Council 
Regulation (EC) No 247/2006 
of 30 January 2006 laying 
down specific measures for 
agriculture in the outermost 
regions of the Union (OJ L 42, 
14.2.2006, p. 1) or 65 % in 
the smaller Aegean islands 
within the meaning of Council 
Regulation (EC) No 1405/2006 
of 18 September 2006 laying 
down specific measures for 
agriculture in favour of the 
smaller Aegean islands and 
amending Regulation (EC) 
No 1782/2003 (OJ L 265, 
26.9.2006, p. 1).

 
Introduction

09 
The promotion measure consists of 
supporting information or promo-
tion measures concerning Community 
wines in third countries, thereby im-
proving their competitiveness in those 
countries14. This measure comprises:

 — public relations, promotion or ad-

vertisement measures, in particular 
highlighting the advantages of the 
Community products, especially 
in terms of quality, food safety or 
environmental friendliness;

 — participation in events, fairs or exhi-
bitions of international importance;

 — information campaigns, in par-

ticular on the Community systems 
covering designations of origin, 
geographical indications and or-
ganic production;

 — studies of new markets, necessary 

for the expansion of market outlets;

 — studies to evaluate the results of 
the information and promotion 
measures15.

10 
The maximum aid rate for promo-
tion measures is 50 % of the eligible 
expenditure which, in the projects 
selected by the Court, can vary from 
30 000 euro for public relation actions 
to 32,6 million euro for a complete set 
of the promotion actions described in 
the paragraph above.

11 
The investment and promotion 
measures under the NSP are subject 
to shared management between 
the Commission and the Member 
States. This means that the overall 
responsibility for the management of 
the measures lies with the Commis-
sion, although the implementation 
is entrusted to Member States. Thus, 
implementation of the investment 
and promotion measures and related 
control systems are to a large extent 
under the responsibility of Member 
States16. Final beneficiaries of these 
measures have to respect the condi-
tions required by the EU and national/
regional legislation.

13

14  Based on Council 

Regulation (EC) No 3/2008 
of 17 December 2007 on 
information provision and 
promotion measures for 
agricultural products on the 
internal market and in third 
countries (OJ L 3, 5.1.2008, 
p. 1), the Commission 
may directly grant aid for 
information campaigns on 
the European Union system 
of wine classification. Such 
information campaigns 
of a general character 
are different from the 
specific support actions 
dealt with in this report. 
On 21 November 2013 the 
Commission proposed 
to repeal and replace 
Regulation (EC) No 3/2008. 
According to the proposal, 
aid should be available for 
information and promotion 
measures linking wine to 
other agricultural products, 
provided that no aid is granted 
under other EU measures. 

15  Article 103p of Regulation (EC) 

No 1234/2007.

16  Article 76 of Commission 

Regulation (EC) No 555/2008 
of 27 June 2008 laying 
down detailed rules for 
implementing Council 
Regulation (EC) No 479/2008 
on the common organisation 
of the market in wine as 
regards support programmes, 
trade with third countries, 
production potential and 
on controls in the wine 
sector (OJ L 170, 30.6.2008, 
p. 1) implementing the basic 
Council regulation on the 
CMO in wine stipulates that: 
‘Without prejudice to specific 
provisions of this Regulation 
or other Community 
legislation, Member States 
shall introduce checks and 
measures in so far as they 
are necessary to ensure 
the proper application of 
Regulation (EC) No 479/2008 
and this Regulation. They shall 
be effective, proportionate 
and dissuasive so that they 
provide adequate protection 
of the Communities’ financial 
interests.’

14

17  Special Report No 7/2012.

18  Special Reports Nos 8/2012, 

1/2013 and 6/2013  
(http://eca.europa.eu).

Audit scope and  
approach

(a)  Is the investment measure  

under the wine CMO appropriately 
designed and implemented with 
due regard to the principle of 
economy?

(b)  Is the promotion measure appro-
priately designed and efficiently 
implemented?

(c)  Are the effects of the measures ap-

propriately demonstrated?

14 
The audit focused on projects 
funded between wine year 2008/09 
and 2010/11, i.e. covering the first 
3 years of the implementation of the 
reform. The Court visited the Com-
mission’s relevant services and the 
following Member States and regions: 
Austria, France — regions of Aquitaine 
and Languedoc-Roussillon, Italy — 
regions of Lazio and Veneto, Portugal 
and Spain — region of Catalonia. The 
five Member States visited account 
for 95 % and 82 % respectively of the 
expenditure on the promotion and 
investment measures in the first pro-
gramming period (2009–13).

12 
The last special report issued by the 
Court on the wine CMO was pub-
lished in 201217. The report covered 
the two financially most important aid 
schemes of the wine CMO reform — 
grubbing-up of vineyards and re-
structuring and varietal conversion of 
vineyards — and explored in particular 
their contribution towards balancing 
supply and demand in the EU wine 
market, which is one of the two major 
objectives of the reform (see para-
graph 4). In order to complete its audit 
of the wine CMO reform, the Court 
sought to cover the major measures 
for competitiveness selected by the 
Member States in their NSPs: invest-
ment and promotion. The objective of 
the audit was to answer the following 
question: ‘Is the EU investment and 
promotion support to the wine sec-
tor well managed and are its results 
on the competitiveness of EU wines 
demonstrated?’

13 
The audit assessed whether the invest-
ment and promotion measures were 
appropriately designed. The Court also 
examined the available monitoring 
and evaluation data to assess whether 
the Commission and the Member 
States achieved the expected results 
efficiently. As regards the investment 
measure, the Court has already audited 
the efficiency of similar investment 
measures under the rural develop-
ment policy18. Therefore, the Court 
concentrated on aspects linked to the 
economy of this measure, such as the 
financial viability and reasonableness 
of costs of the supported investments. 
This audit scope is reflected in the fol-
lowing main sub-questions.

Audit scope and approach 

15

15 
In total 37 beneficiaries of aid were 
visited on the spot: 23 for promotion 
projects, 11 for investment projects 
and 3 for promotion and investment 
projects. In addition, 73 projects were 
selected for examination through desk 
review. In total 113 projects have been 
analysed (79 for promotion and 34 for 
investment)19. The sample selection 
was based on the materiality of the 
projects and the type of beneficiary so 
as to select a range of projects typ-
ical of those financed in the Member 
States concerned.

19  More promotion projects were 
analysed than investment 
projects because in two 
Member States the selected 
investment measure’s 
implementation was delayed 
and one Member State 
decided to not implement this 
measure.

Observations

16

20  For 2009/10 this budget 
transfer was 40,5 and 
80,9 million euro respectively. 

The need for supplementary 
investment measures under 
the wine CMO is not demon-
strated …

18 
Notwithstanding its specific applica-
tion to the wine sector (rather than 
general application across all agricul-
tural sectors), the investment measure 
under the wine CMO essentially covers 
the same scope as the RD investment 
aid measures No 121 (‘Modernisa-
tion of agricultural holdings’) and 
No 123 (‘Adding value to agriculture 
and forestry products’). Furthermore, 
as shown in Box 1, the goal of the 
measure under the wine CMO is the 
same as that of the two investment 
measures under RD.

19 
With the new wine CMO, more RD aid 
is made available to the wine- 
producing regions by increasing 
budget appropriations for RD pro-
grammes in those regions. Accord-
ing to Annex Xc of Regulation (EC) 
No 1234/2007, from 2011 onwards the 
increase is 121,4 million euro20 per year.

Part I — Is the investment 
measure under the wine 
CMO appropriately 
designed and imple-
mented with due regard 
to the principle of 
economy?

16 
Good design is essential for sound 
financial management. The investment 
measure grants public support to the 
type of enterprise that is also eligible 
for EU funding under the rural de-
velopment policy. In order to be well 
designed, the measure under the wine 
CMO should correspond to a well iden-
tified need that is not addressed by 
existing measures. It should also not 
cause unnecessary administrative bur-
den on the implementing authorities.

17 
In order to implement investment 
measures with due regard to the 
principle of economy, Member States 
should put in place administrative 
checks and procedures to ensure that:

(a)  the support is granted to finan-
cially viable projects: in order to 
avoid wasting public money on 
projects that fail prematurely, 
Member States should, through 
adequate viability checks, analyse 
the soundness of the applicant’s 
financial situation and document 
such analysis;

(b)  the project costs claimed by 

beneficiaries are reasonable. This 
check should be performed using 
a suitable evaluation system, such 
as reference costs, the comparison 
of a number of offers or an evalu-
ation committee.

Observations

17

1
x
o
B

Investment measures under the wine CMO and RD have the same goal

(a) Investment measure under the wine CMO (Article 103u(1) of Regulation (EC) No 1234/2007): ‘Support may 

be granted for tangible or intangible investments in processing facilities, winery infrastructure and market-
ing of wine which improve the overall performance of the enterprise …’

(b) Measure 121 under the RD (Article 26(1) of Regulation (EC) No 1698/200521): ‘Support provided in Art-

icle 20(b)(i), shall be granted for tangible and/or intangible investments which: (a) improve the overall 
performance of the agricultural holding …’

(c) Measure 123 under the RD (Article 28(1) of Regulation (EC) No 1698/2005): ‘Support provided in Art-

icle 20(b)(iii), shall be granted for tangible and/or intangible investments which: (a) improve the overall 
performance of the enterprise …’

21  Council Regulation (EC) No 1698/2005 of 20 September 2005 on support for rural development by the European Agricultural Fund for Rural 

Development (EAFRD) (OJ L 277, 21.10.2005, p. 1).

21 
The Court considers that it is not 
apparent why the wine sector specifi-
cally needed supplementary invest-
ment aid, since such aid was already 
avail able to all agricultural sectors 
under the RD policy and budget ap-
propriations for RD aid to wine pro-
ducing regions were increased (see 
paragraph 19). No study or analysis 
underpinned the decision to make the 
additional support available.

22  Lithuania allocated its 

whole national envelope to 
promotion. Luxembourg 
(from 2009/10), Malta and 
United Kingdom allocated 
their whole national envelope 
to the single payment scheme.

20 
For the 2009–13 period, nine Mem-
ber States (Czech Republic, Germany, 
Spain, France, Italy, Cyprus, Hungary, 
Austria and Slovakia) included the 
investment measure in their NSPs 
and nine (Bulgaria, Greece, Lithuania, 
Luxembourg, Malta, Portugal, Roma-
nia, Slovenia and United Kingdom) did 
not22. Portugal decided not to include 
the investment measure in its NSP, 
considering that adequate support 
was already available under the RD 
programme: indeed, for the RD pro-
gramming period 2007–13, 13,5 % of 
the total budget for the two RD invest-
ment aid measures was attributed to 
the Portuguese wine sector.

 
18

23  Article 20(2) of Regulation (EC) 
No 555/2008: ‘No operation 
shall be included for support 
pursuant to Article 15 of 
Regulation (EC) No 479/2008 
under a national support 
programme in accordance 
with Title II of that Regulation 
for a given Member State 
or region which is included 
for support in the rural 
development programme 
of that Member State or 
region under Regulation (EC) 
No 1698/2005’.

24  COM(2012) 737 final of 

10 December 2012 states 
in part 4.3: ‘Demarcation 
problems with similar 
operations in rural 
development programmes 
have caused delays in the 
implementation of this 
measure particularly in Italy 
and Spain’. 

25  Community guidelines 
on state aid for rescuing 
and restructuring firms in 
difficulty: ‘a firm is regarded 
as being in difficulty where it 
is unable, whether through 
its own resources or with the 
funds it is able to obtain from 
its owner/shareholders or 
creditors, to stem losses which, 
without outside intervention 
by the public authorities, will 
almost certainly condemn it 
to going out of business in the 
short or medium term’.

Observations

… and the implementation 
of wine CMO investments 
was delayed or restricted in 
some Member States …

22 
Because investment measures under 
the wine CMO and RD were running 
in parallel from wine year 2008/09 on-
wards, the risk of double funding had 
to be minimised. Member States were 
thus required to finance in the frame-
work of the CMO measures different 
operations from those financed in 
accordance with the RD programmes23. 
The necessity to draw and ensure the 
respect of a dividing line between very 
similar measures (especially the divid-
ing line between M123 from RD and 
investment under the wine CMO) in-
creased the administrative burden for 
the Member States, who had to modify 
their existing rural development pro-
grammes prior to the implementation 
of the CMO investment measure.

23 
In Italy and Spain, the obligation to 
draw the above mentioned dividing 
line significantly delayed the imple-
mentation of the investment meas-
ure under the wine CMO24. In these 
Member States, RD programmes are 
managed at regional level and so the 
dividing line had to be drawn by each 
region. There was a delay of 3 years in 
implementing the measure under the 
wine CMO. In Italy, only 44 % of the 
initially forecasted amount was spent.

24 
In addition, the dividing line between 
operations eligible under the differ-
ent measures excessively restricted 
the scope of the CMO measure in 
Spain. While the content of the invest-
ment measures under the RD did not 
change, only investments made by 
Spanish beneficiaries in the EU but 
outside the Spanish national terri-
tory were eligible for aid under the 
wine CMO. As a result, Spain only 
spent 295 000 euro for the one project 
presented, despite an initial forecast 
of 148 million euro to be spent for the 
whole 2009–13 period.

25 
In Austria and France the dividing line 
was established at central level and the 
investment measure was implemented 
already in the wine year 2008/09 with-
out any delay.

Member States visited give 
limited assurance that only 
the financially viable pro-
jects are supported …

26 
Regulation (EC) No 1234/2007 in its 
Article 103u(2) stipulates that ‘support 
shall not be granted to enterprises 
in difficulty’25. Nevertheless, a weak 
financial situation of an enterprise not 
considered to be in difficulty at the 
time of the grant application can jeop-
ardise the viability of a project pre-
sented by such enterprise. The current 
legislation does not explicitly require 
Member States to carry out viability 
checks before granting the aid.

Observations

19

28 
In Austria and France the selection 
procedures were based on the ‘first 
come-first served’ principle. Even 
though enterprises in difficulty were 
ineligible, the lack of selection pro-
cedures had the consequence of not 
guaranteeing that, among all the 
eli gible projects, only the viable ones 
were supported (see Box 2).

27 
The Commission has not provided any 
guidance to Member States as regards 
project selection procedures concern-
ing the investment measure. The audit 
found that, of the four Member States 
visited implementing the investment 
measure, only one region of Italy 
(Veneto) carried out meaningful viabil-
ity checks including verifications of the 
financial standing of the beneficiar-
ies (see Box 2). The region of Lazio in 
Italy applied a less detailed evaluation 
system, based on the comparison of 
the claimant annual accounts for the 
year preceding the investment with 
the expected effects of the investment 
on the accounts of the year following 
the investment.

2
x
o
B

Viability checks: Examples of good and weak practices

In Italy, region of Veneto, selection criteria had been laid down, including an informatics tool for assessing the 
foreseeable performance of the investment on the basis of economic data provided by the beneficiary. Only 
projects demonstrating an economic sustainability could be subsidised, i.e. non-viable projects were auto-
matically excluded.

In Austria the Court found an investment project of a bottling line for a cooperative granted in 2009 which is 
currently in liquidation. There was no selection criterion allowing to detect that the project of this cooperative 
was not sustainable with regard to the cooperative’s financial situation. This cooperative had been approved 
for aid despite having negative annual results and shrinking capital prior to the investment and a continuous 
loss of members since at least 2006.

29 
In Spain the selection procedures 
comprise an evaluation of the viabil-
ity of the project and of the financial 
situation of the beneficiary. Neverthe-
less, no minimum evaluation score is 
required for a project to be selected.

 
Observations

20

33 
Although in recent guidelines27 the 
Commission considers the purchase of 
barrels as a potential eligible invest-
ment, the regulation requires a du-
ration of the investment of at least 
5 years28. Since barrels are generally 
used only for 3 years, their acquisi-
tion does not comply with the EU 
requirement. Moreover, the limited 
lifetime of such an investment creates 
a significant risk that barrels could be 
purchased to replace existing ones and 
not to increase the capacity for ageing 
wine.

34 
In France and Austria the evaluation 
of the reasonableness of costs was 
not formalised. This evaluation relied 
on the expertise of the person who 
reviewed the application. Consequent-
ly, the Court found no evidence that 
these Member States systematically 
assess the reasonableness of project 
costs. Furthermore there was no obli-
gation to present different offers from 
potential providers.

26  Article 24(2) of Commission 
Regulation (EU) No 65/2011 
of 27 January 2011 laying 
down detailed rules for the 
implementation of Council 
Regulation (EC) No 1698/2005, 
as regards the implementation 
of control procedures as well 
as cross-compliance in respect 
of rural development support 
measures (OJ L 25, 28.1.2011, 
p. 8), made applicable to CMO 
investments by Article 77(5) 
of Regulation No 555/2008 
provides that: ‘[administrative 
checks on applications for 
support shall in particular 
include verification of]: the 
reasonableness of the cost 
submitted, which shall be 
evaluated using a suitable 
evaluation system, such as 
reference costs, a comparison 
of different offers or an 
evaluation committee’.

27  Guidelines for implementation 

of the national support 
programmes in the wine 
sector according to 
Regulations (EC) No 1234/2007 
and (EC) No 555/2008 of 
25 February 2013.

28  According to Article 72 of 

Regulation (EC) No 1698/2005, 
to which Article 103u of 
Regulation (EC) No 1234/2007 
refers.

… and do not systematically 
evaluate the reasonableness 
of project costs

30 
Member States should check project 
applications to ensure that costs to be 
reimbursed by EU funds are reason-
able, including verifying the appli-
cations against reference costs and 
the submission of different offers, so 
that the objective of the measure is 
achieved at a reasonable cost26, i.e. in 
an efficient way. The audit assessed 
whether the Member States have put 
in place a formal system to evaluate 
the reasonableness of the costs.

31 
The audit found that only two of the 
four Member States visited that imple-
ment the investment measure applied 
such procedures. Italy (Veneto and 
Lazio) and Spain evaluate the reason-
ableness of the costs through formal-
ised procedures before approval of the 
application. In particular, the appli-
cants are required to submit for their 
investment operations three different 
offers with the choice made among 
these three offers. The validity of this 
choice can be assessed by an external 
evaluator.

32 
However, the assessment of the rea-
sonableness of costs performed by the 
Italian authorities (Veneto and Lazio) 
was undermined by the fact that the 
purchase of wooden barrels for ageing 
wine was considered as an eligible 
investment cost although they usually 
have to be replaced after 3 years. In 
France and Austria such investments 
were not considered to be eligible 
operations.

21

29  Article 103p(2) of 

Regulation (EC) No 1234/2007.

30  Recital 5 of Regulation (EC) 

No 479/2008.

31  Article 4 of Regulation (EC) 

No 555/2008 ‘Preference shall 
be given to micro, small and 
medium-sized enterprises …’.

32 

In Spain, France, Italy and 
Portugal some beneficiaries 
audited already had subsidiary 
companies implanted in 
the third countries’ markets 
to execute their marketing 
before the CMO funding. In 
Spain two big beneficiaries 
executed promotion actions 
in countries where they were 
implanted for more than 
60 years.

Observations

Part II — Is the promotion 
measure appropriately 
designed and efficiently 
implemented?

Support for promotion is 
also granted to big compa-
nies with an already strong 
reputation and export 
tradition …

35 
The promotion actions ‘relate to wines 
with a protected designation of origin 
or a protected geographical indication 
or wines with an indication of the wine 
grape variety’29. All other wines are 
ineligible for the promotion measure.

36 
In order to be appropriately designed 
and efficiently implemented the pro-
motion measure should:

 — target beneficiaries that need pub-
lic subsidies to achieve the goals of 
the measure, which are to strength-
en the reputation of EU quality 
wine and to recover old markets 
and win new ones30;

 — give the preference to micro, small 
and medium-sized enterprises 
(SMEs)31;

 — be implemented in such a way to 
ensure that a sufficient audit trail 
exists to justify the occurrence and 
eligibility of promotion actions.

37 
Despite the preference of the legislator 
to favour SMEs, in all Member States 
visited, excepted Austria, promotion 
aid has been granted to big wine-
producing companies that have a long 
export tradition32. Some of those are 
already present in third countries 
with local partners or have their own 
distributors and commercial networks. 
The need for EU budgetary support 
for such enterprises is not evident (see 
Box 3). Furthermore, the availability of 
EU aid for such purposes incites these 
enterprises to reduce proportion-
ately their own funding for promotion 
measures.

38 
The Court considers that, in this 
context, grants received under the 
wine CMO promotion measure do not 
efficiently contribute to strengthening 
the EU wine reputation, or to winning 
new markets or to recovering old ones. 
In the case of big companies, already 
well established in those markets, 
they rather have the effect to protect 
or consolidate existing market shares. 
In such cases, since consolidating the 
presence in a given market is a con-
stant activity to remain present and 
visible in the market, the EU contribu-
tion for this type of action becomes 
essentially a partial subsidy of the 
companies’ operational costs.

Observations

22

3
x
o
B

Examples of promotion grants awarded to well-known and big wine producers

Subsidised promotion actions for champagne

Between 2009 and 2012, 2,4 million euro of EU funding has been spent to subsidise promotion actions for 
champagne producers. The reputation of the Protected Designation of Origin (PDO) ‘champagne’ is long 
established.

Spain (Catalonia): six beneficiaries represented 88 % of the total approved funding for the period 2009–11

In Spain (Catalonia), there is a clear preference to grant promotion aid to beneficiaries with already strong 
international presence and export experience. As a result, the bulk of the promotion funding for the peri-
od 2009–11 was awarded to a few big companies. During this period, 79 claimants were awarded aid amount-
ing to a total of 15,2 million euro. 88 % of this amount — 13,4 million euro — was granted to six claimants 
comprising enterprises or groups of enterprises that employ more than 750 persons each and have an annual 
turnover exceeding 200 million euro (such companies are not eligible for the investment measure).

39 
This is confirmed by the fact that such 
big beneficiaries apply, year after year, 
for promotion subsidies for actions in 
the same third-country markets, such 
as the United States, which are the 
most frequently targeted markets33. 
Such promotion measures cannot 
therefore be considered as being 
aimed at opening up a new market or 
recovering shares in existing ones.

40 
When Regulation (EC) No 555/2008 en-
tered into force, the support for pro-
motion actions could not be granted 
for more than 3 years for a given ben-
eficiary in a given third country. How-
ever, the regulation was subsequently 
twice amended, each time extending 
the possibility to allow the same bene-
ficiaries to benefit from the aid for 
longer periods. The first amendment 
gave the possibility to renew once 
the promotion action programmes 
for a period no longer than 2 years34. 
The second amendment provided the 
possibility for beneficiaries from the 
previous programming period to be 
supported again in the same targeted 
third country35 for a maximum of 
5 years. Therefore, beneficiaries can 
receive grants for promotion actions 
in one targeted market for the whole 
programming period 2009–13 and re-
new their promotion actions in the fol-
lowing programming periods (2014–18 
and onwards).

33  COM(2011) 774 final of 

18 November 2011, p. 11.

34  Article 1(1) of Commission 

Regulation (EU) No 772/2010 
of 1 September 2010 
amending Regulation (EC) 
No 555/2008 laying 
down detailed rules for 
implementing Council 
Regulation (EC) No 479/2008 
on the common organisation 
of the market in wine as 
regards support programmes, 
trade with third countries, 
production potential and on 
controls in the wine sector 
(OJ L 232, 2.9.2010, p. 1).

35  Article 1(2)(a) of Commission 

Implementing Regulation (EU) 
No 202/2013 of 8 March 2013 
amending Regulation (EC) 
No 555/2008 as regards 
the submission of support 
programmes in the wine 
sector and trade with third 
countries (OJ L 67, 9.3.2013, 
p. 10) : ‘for each programming 
period the support for the 
promotion and information 
lasts no longer than three 
years for a given beneficiary 
in a given third-country; 
however, if necessary, it may 
be renewed once, for a period 
no longer than two years.’

 
Observations

23

41 
The Court considers that those two 
amendments offered an incentive 
for promotion actions to consolidate 
markets, which is not an objective 
laid down by the EU legislation (see 
paragraph 38).

42 
Furthermore, advertisement measures 
to support an established commercial 
brand name are not excluded from 
financing. The Court found numerous 
examples where EU funding simply 
replaced the advertising expenditure 
previously undertaken by enterprises. 
The Court considers that the support 
for established commercial brands, 
which merely replaces EU funding 
for the previous commercial fund-
ing by the enterprise itself, does not 
correspond to the measure’s original 
purpose to support the wine market 
rather than established brands (see 
also paragraph 44).

… and which were likely to 
have undertaken the promo-
tion actions without public 
support (deadweight effect)

43 
In the programming period 2009–13, 
the amounts earmarked to finance 
promotion projects were greater than 
the demand for the aid. In a context of 
sufficient funds allocated to the pro-
motion measure, the Member States 
tend to support all eligible projects 
rather than to apply strict selection 
procedures to ensure that only the 

best projects, among those eligible, 
receive public aid. In this respect, the 
audit found that none of the audited 
Member States checked whether appli-
cants were in need of public support. 
Giving grants to beneficiaries that 
would have undertaken the invest-
ment in promotion actions even with-
out grant funding (the so-called dead-
weight effect) reduces the efficiency 
of EU funds, as public expenditure is 
not needed to achieve the objectives 
of promotion measures.

44 
The audit found clear cases of dead-
weight in four out of the five Member 
States audited. As an example, the 
Table below presents the promo-
tion budget of beneficiaries from 
France, Austria and Portugal for the 
years 2007 and 2008 (before the 
implementation of the wine CMO) 
and years 2009 to 2011 (implementa-
tion of the wine CMO promotion). 
The audit found that in these cases, 
EU funds have replaced a significant 
part of the previous promotion costs 
incurred by the company. Whereas 
the Portuguese beneficiary’s ex-
penditure in 2008 was 1,2 million euro, 
in 2009 its own budgetary expenditure 
has been reduced to 0,3 million euro, 
with another 0,3 million euro being 
financed by the EU. A similar trend was 
observed for the Austrian and French 
beneficiaries. This illustrates that the 
EU funding replaced a substantial part 
of the resources previously spent by 
the company instead of increasing the 
overall spending on promotion meas-
ures. The Commission’s audit services 
have already noted this phenomenon 
in their audit reports.

Observations

24

l

e EU funds partly replace existing promotion expenditures of some beneficiaries
b
a
T

Promotion budget
in euro

2007

2008

2009

2010

2011

Beneficiary from

Targeted country

Portugal

United States

France

United States

Austria

United States
Switzerland

Beneficiary’s promotion 
expenditure 

EU fund commitment in the 
approved application

910 200

1 164 900

323 866

304 305

304 200

0

0

323 866

304 305

304 200

Total

910 200

1 164 900

647 732

608 610

608 400

Beneficiary’s promotion 
expenditure 

EU fund commitment in the 
approved application 

1 045 000

1 186 000

725 000

743 500

797 500

0

0

725 000

743 500

797 500

Total

1 045 000

1 186 000

1 450 000

1 487 000

1 595 000

Beneficiary’s promotion 
expenditure 

EU fund paid

26 983

54 278

58 442

0

0

0

Total

26 983

54 278

58 442

46 143

8 215

54 358

25 993

25 064

51 057

46 
When the EU subsidy replaces part of 
the current promotion costs or serves 
to cover expenditure that the benefi-
ciary would have borne anyway, the 
Court considers that the expenditure 
charged to the EU budget has a clear 
deadweight effect and therefore is an 
inefficient use of the EU funds.

36  This beneficiary, for the wine 
year 2008/09 presented 
‘salaries costs’ amounting to 
90 761 euro.

37  55 515 euro for the wine year 

2008/09.

45 
Moreover, the Court found several 
instances where EU grants covered 
internal costs that were already being 
incurred prior to the introduction of 
the promotion measure. For instance, 
in Spain, costs of salaries have been 
funded36 for staff which had been 
employed by the beneficiary for the 
management of promotion in third 
countries, in the exact same position, 
since 2002. Furthermore, under the 
cost item ‘Commercial missions of long 
duration’37 internal costs which would 
have been borne by the beneficiary, 
such as office rental, medical insur-
ance and two additional salaries, were 
considered as eligible expenditure.

49 
Regulation (EC) No 555/2008 was 
recently amended41 to clarify some 
aspects of ‘eligible expenditure’. This 
amendment stipulates that personnel 
costs are eligible. However Article 13 of 
Regulation (EC) No 1290/2005 on the 
financing of the common agricultural 
policy states that ‘expenditure relat-
ing to administrative and personnel 
costs incurred by Member States and 
beneficiaries of aid from the EAGF 
shall not be borne by the Fund’. The 
provisions of the Regulation (EC) 
No 555/2008 governing the meas-
ure are thus clearly in contradiction 
with the relevant Regulation (EC) 
No 1290/2005.

50 
Personnel costs should not be eli-
gible as they favour deadweight (see 
paragraph 45).

51 
The recent guidelines of the Commis-
sion42 despite not being legally bind-
ing43 clarify certain points regarding 
eligible expenditure.

25

38 

In June 2008, the first 
allocation for promotion 
by the Member States in 
their NSP’s amounted to 
almost 830 million euro. In 
October 2013 this allocation 
had been reduced by 37 %, 
i.e. down to 522 million euro. 
Except Romania, all Member 
States who chose to 
implement the promotion 
measure reduced their 2008 
forecast and funds had to be 
reallocated to other measures. 

39  According to the Member 

States’ NSPs transmitted to the 
Commission in August 2013 
(EU-28).

40  As an example France 

published at least eight 
legal texts about the 
implementation of the 
promotion measure. 

41  Commission Implementing 
Regulation (EU) No 752/2013 
of 31 July 2013 amending 
Regulation (EC) No 555/2008 
as regards national support 
programmes and trade with 
third countries in the wine 
sector (OJ L 210, 6.8.2013, 
p. 17).

42  Guidelines for implementation 

of the national support 
programmes in the wine 
sector according to 
Regulations (EC) No 1234/2007 
and (EC) No 555/2008 — 
Promotion of wine on third-
countries markets —  
26 April 2013.

43  Disclaimer written on the front 
page of the guidelines: ‘This 
guide is aimed at assisting 
Member States. It is provided 
for information purposes 
only and its contents are 
not intended to replace 
consultation of any applicable 
legal sources or the necessary 
advice of a legal expert, where 
appropriate …’

Observations

47 
As explained above, as the available 
amount allocated by Member States 
for promotion measures was greater 
than the actual demand there was 
no incentive for the Member States 
to apply effective selection proce-
dures. Notwithstanding the difficulties 
encountered in spending the reduced 
allocation for the 2009–13 period38, the 
promotion allocation planned for the 
next programming period (2014–18) 
is increased and is set at 1 161 mil-
lion euro39, although no analysis was 
undertaken to show any increased 
need. Taking into account all the inef-
ficiencies explained in the previous 
paragraphs, the Court is of the opinion 
that by making available an excessive 
level of funds for the measure, the 
risks of inefficient use of those funds is 
significantly increased.

Unclear definition of eligible 
expenditure until 2013

48 
Eligible expenditure was defined nei-
ther in Regulation (EC) No 1234/2007, 
nor in Regulation (EC) No 555/2008. 
The absence of a statutory definition 
of ‘eligible expenditure’ has led to 
uncertainty and instability of national 
provisions for the application of the 
measure. An adaptation phase has 
been necessary, during which several 
clarifications and amendments have 
been made to national regulations40. 
This has given rise to diverging prac-
tices among Member States. Different 
interpretations of the term ‘eligible 
expenditure’ between different con-
trol bodies in some Member States 
occurred.

Observations

26

Member States do not always 
check whether irregular 
duplicate funding occurs

52 
Member States are required to ensure 
that provision is made for checks to 
avoid irregular duplicate financing of 
measures under the wine CMO rules 
and other Community or national 
schemes.

54 
In some Member States, the coexist-
ence of several national/regional 
funding possibilities for the promotion 
of wines in third countries does not 
ensure transparency concerning pro-
motion aids for the EU wine sector. In 
France despite a national legal frame-
work which excludes the accumulation 
of other supports with wine CMO aids, 
the risk of double funding is not prop-
erly managed. In fact, the Court found 
cases of double financing (see Box 4).

53 
In Portugal four out of six beneficiaries 
visited benefited from EU aid under 
the wine CMO and from European 
Regional Development Funds (ERDF). 
Although the Court did not find dou-
ble funding cases, in the absence of 
evidence of cross-checks with ERDF 
expenditure carried out by the Portu-
guese managing authorities, a risk of 
double financing of the same expendi-
ture from two EU sources persists.

4
x
o
B

An example of double funding from EU and national aids in France

A beneficiary received for the same promotion action 2 000 euro from the EU wine CMO and 4 250 euro from 
a national aid scheme. Despite the limited amount, this case demonstrates that the risk of irregular double 
funding is not properly checked by the French authorities.

 
27

44  Article 76 of Regulation (EC) 

No 555/2008: ‘Member States 
shall introduce checks and 
measures in so far as they 
are necessary to ensure 
the proper application of 
Regulation (EC) No 479/2008 
and this Regulation. They shall 
be effective, proportionate 
and dissuasive so that they 
provide adequate protection 
for the Communities’ financial 
interests.’

Observations

An insufficient audit trail 
undermines the effective-
ness of visited Member 
States’ controls to ensure the 
occurrence and eligibility of 
promotion actions

55 
Controls should be effective, propor-
tionate and dissuasive so that they 
provide adequate protection for the 
Communities’ financial interests. Con-
trary to the investment measure, the 
EU legal framework does not require 
explicitly on-the-spot controls of 
promotion operations, but stresses the 
need for controls to be effective and 
dissuasive44.

56 
Of the five Member States visited, only 
Italy carries out on-the-spot controls in 
third countries during the execution of 
promotion actions. The other Member 
States do not control promotion ac-
tions in third countries. Spain carries 
out on-the-spot controls only in its ter-
ritory for the promotion action ‘Infor-
mation travels (journalists, importers, 
market coordinators, etc.) to the area 
where the wine is produced’.

57 
Many promotion actions — such as 
wine tastings — are characterised by 
their transient and intangible na-
ture — in the sense that they leave no 
physical trace that could be checked 
afterwards. Because controls on the 
spot are lacking, a thorough audit 
trail permitting full reconciliation of 
a specific promotion action with cor-
responding invoices is essential.

58 
In Spain, France, Italy and Austria, the 
audit found that the invoices exam-
ined often did not give sufficient 
details regarding the nature of the 
promotion actions carried out. Typi-
cally, such invoices referred to a global 
promotion contract or an action that 
had been carried out, without provid-
ing any details of the different expend-
iture items related to the promotion 
actions.

59 
In Italy, certain providers of promotion 
services systematically presented such 
global invoices, without any sup-
porting documentation which would 
allow the expenditure claimed to be 
traced to specific promotion actions 
(see Box 5).

5
x
o
B

Global invoice, not supported by any other documentation, reimbursed by EU 
funds

In Italy, an invoice containing the following information: ‘Promotional program of Italian wine: February–
April 2011 — 482 743,47 USD’ was presented for aid payment and 50 % was reimbursed from EU funds. No fur-
ther details or supporting documentation were given for the invoiced amount, such as copies of the invoices 
for itemised costs incurred during the execution of promotion actions.

 
Observations

28

61 
During the audit visit to France, a num-
ber of ineligible invoices included in 
such tables and funded under the 
CMO were found by the Court (see 
Box 6).

60 
In France, for the programming 
period 2009–13, beneficiaries of the 
promotion measure could present pay-
ment claims based only on a summary 
table of invoices certified by an audit 
firm (no invoices supporting the claim 
were required). The summary tables 
of invoices do not certify the eligibil-
ity of expenditure and the informa-
tion contained therein is not detailed 
enough to allow adequate verifica-
tion of the claim. Given this situation, 
administrative controls based on such 
summary tables cannot be effective. 
This increases significantly the risk that 
ineligible expenditure is funded under 
the wine CMO.

6
x
o
B

Wine promotion actions — VIP tickets to Roland Garros — 50 % financed from EU 
funds

A summary table of invoices from one beneficiary presenting an amount of 3 405 euro was classified as ‘infor-
mation travels (journalists, importers, market coordinators, etc.) to the area where the wine is produced’. On 
the basis of this summary table of invoices the French authorities considered the amount as eligible expendi-
ture. 50 % of it, i.e. 1 703 euro, was financed from EU funds.

The amount claimed corresponded in reality to an invoice for three VIP tickets for the French open tennis 
championship held at ‘Roland Garros’, which cannot be considered as a wine promotion action.

62 
A noteworthy example of insufficient 
justification of costs incurred by bene-
ficiaries is the case of the so-called im-
plementing bodies. Beneficiaries can 
appoint an implementing body to or-
ganise and coordinate their promotion 
operations. Expenses of implementing 
bodies which assist the beneficiary in 

implementing the measure are eligible 
in Italy, Portugal and Romania. In these 
Member States, implementing bodies 
are often paid based on a flat rate (% 
of the global costs of the promotion 
actions) without sufficient justification 
of the service provided.

 
29

45  Regulation (EU) No 752/2013 

which introduces 
Article 5a(2) into Commission 
Regulation (EC) No 555/2008.

Observations

63 
In Romania, the use of such an im-
plementing body is compulsory. 
The fees of such bodies are eligible 
as a flat rate of 13 % of the global 
project expenditure, without any 
justification needed for the service 
provided. Between 2009 and 2012 Ro-
mania spent 1,5 million euro of EU 
funds for promotion actions, of which 
around 200 000 euro for implementing 
bodies. In Portugal and Italy imple-
menting bodies may also receive up 
to 13 % of the cost of the promotion 
actions.

64 
Overheads defined notably as ‘costs 
of coordination, administration and 
management’ are eligible in all Mem-
ber States visited with the exception 
of Austria. In 2013, the Commission 
authorised45 overheads up to 4 % of 
the actual cost of implementing the 
project. The nature of certain over-
heads (e.g. coordination, management, 
etc.) is, at least partly, the same as the 
activities carried out by implementing 
bodies in the preparation and imple-
mentation of the promotion actions.

7
x
o
B

Implementing body fees and overheads amounting to a total of 268 110 euro for 
1 year

In Italy, the implementing body of one beneficiary was paid fees amounting to 208 530 euro — without a de-
tailed description of the service provided — i.e. 7 % of the cost of the promotion actions amounting to 3 mil-
lion euro, for a promotion project (wine year 2009/10). In this particular case, the promotion actions had been 
carried out by the beneficiary. Furthermore, the beneficiary also received 59 580 euro for overheads (2 % of 
the promotion action). The Court considers that, when promotion operations are carried out exclusively by 
the beneficiary, remunerating an implementing body represents an unjustified and excessive cost.

 
30

46  Article 103l of Regulation (EC) 
No 1234/2007: ‘Support 
programmes shall consist of 
the following elements:  
(a) a detailed description 
of the measures proposed 
as well as their quantified 
objectives … (f) the criteria 
and quantitative indicators to 
be used for monitoring.’

47  For the end of the 

programming period, 
a 25 % increase in Austria, an 
increase of 767 000 hl and 
537,7 million euro in Spain, 
and, for 2012, the achievement 
of 1 million hl of exports to 
third countries, with a value of 
250 million euro, in Portugal. 

48  Article 188a(5) of 

Regulation (EC) No 1234/2007: 
‘Member States shall submit 
to the Commission by 1 March 
each year, and for the first time 
by 1 March 2010, a report on 
the implementation of the 
measures provided for in their 
support programmes.’

49  COM(2012) 737 final and 
COM(2011) 774 final.

50  The 2013 management plan 
of DG Agriculture and Rural 
Development.

Observations

Part III — Are the effects 
of the measures appropri-
ately demonstrated?

The monitoring and evalu-
ation of the measures 
focuses on outputs and 
financial implementation, 
but there is not yet sufficient 
information on the results 
achieved

65 
Appropriate management of a pub-
lic support measure requires, in the 
first place, that the objectives of the 
measure are specific and quantified46. 
A regular examination of relevant in-
put, output and results is also essential 
to obtain up-to-date information on 
whether the measure is progressing as 
intended. Periodic evaluations of the 
support should also be carried out and 
should use, among other sources, the 
information produced for monitoring. 
Only with relevant and reliable moni-
toring and evaluation information, the 
Commission and the Member States 
will be able to demonstrate what they 
have achieved with the public money.

66 
The Court assessed whether the NSPs 
of the five Member States audited 
include appropriate objectives and key 
input, output and result indicators to 
make it possible to monitor and evalu-
ate their achievement.

67 
For the programming period 2009–13, 
none of the Member States visited had 
established quantified objectives for 
the investment measure in their NSPs. 
Concerning the promotion measure, 
among the Member States visited, only 
Austria, Spain and Portugal had set 
some quantified objectives concerning 
the increase of wine exports to third 
countries47. This lack of common quan-
tified objectives determined ex ante 
makes it difficult for the national 
authorities to have adequate tools to 
measure the effects of the promotion 
and investment measures. Further-
more, it prevents the consolidation of 
the effects of the measures at EU level.

68 
As regards the indicators for the 
investment and promotion meas-
ures, the annual reports transmitted 
by Member States to the Commis-
sion48 only provide details regarding 
input, output and budgetary execu-
tion aspects. Indeed, these reports 
show that monitoring is generally 
complete for these aspects (number of 
beneficiaries funded, funds spent, type 
of investments or promotion carried 
out) but that there is insufficient infor-
mation showing the results achieved. 
Likewise, the information at EU 
level published by the Commission49 
does not use any result indicators to 
evaluate the effects of the wine CMO 
measures. Moreover, for promotion, 
the only indicators in its management 
plan relate either to input or output 
indicators such as ‘Share of promo-
tion in wine sector under the national 
support programmes’ or ‘Execution 
level and efficient use of the national 
support programmes (NSP) in the wine 
sector’50 respectively.

31

51  Annex V of Regulation (EC) 

No 555/2008.

52  For example, in Austria 
between 2009–12, 
20,6 million euro have been 
spent for investment in the 
wine sector under the RD and 
21 million euro have been 
spent under the wine CMO.

Observations

69 
The Member States visited require 
from the beneficiaries an activity 
report at beneficiary level after the 
implementation of the subsidised 
promotion actions. Even though the 
quality of these reports varies consid-
erably, they are not actually used (e.g. 
to analyse and consolidate data) to as-
sess the effects of promotion projects. 
Overall, comprehensive information on 
the results and impact of the measure 
is missing. In fact, the audit found that 
only in some country-level evaluation 
reports51 or studies the Member States 
provided some indications on the 
results achieved by the investment and 
promotion support.

The effects of CMO invest-
ments cannot be easily 
separated from the effects 
of rural development invest-
ments …

71 
As already mentioned in Box 1, the 
goal of the investment measure under 
the wine CMO is the same as the two 
investment measures under the RD. 
Moreover, the overall volume of fund-
ing for the two RD measures in the 
wine sector is comparable in some 
Member States to that of the invest-
ment measure in the wine CMO52.

70 
More specifically, France and Austria 
assessed the results of the invest-
ments through ‘the wine sales trend 
in volume and value’. Italy used ‘the 
number of enterprises introducing 
new products, processes and or tech-
niques’. Regardless of the relevance 
and reliability of these result indica-
tors, the Court found that the dupli-
cation of investment support under 
the wine CMO and rural development 
(see paragraph 18 and Box 1) makes it 
impossible to unequivocally attribute 
the results reported to the wine CMO 
support (see next section). The results 
of promotion support are measured 
through the ‘wine exports to tar-
geted third countries’. In the Court’s 
view, this indicator is too general, not 
confined to the beneficiaries of the 
measure and covers numerous vari-
ables affecting the entire wine sector 
and which are mostly outside the influ-
ence of the promotion actions (see 
paragraphs 74 to 80).

72 
The coexistence of investment meas-
ures under two different schemes 
makes the evaluation of the results 
from the investment under the wine 
CMO particularly difficult. 55 % of the 
beneficiaries selected for the audit 
have benefited from investment aid 
under both schemes wine CMO and 
RD. Even if the assumption is made 
that both investments are respon-
sible for the overall increase of per-
formance, it is impossible to attribute 
a share of this increase in performance 
to each investment measure (see 
Box 8).

73 
It is therefore difficult to evaluate ex-
clusively the effects of the wine CMO 
measure and thus to be able to assess 
the effectiveness of the measure.

Observations

32

8
x
o
B

French beneficiary who benefited from investment aid under RD and under the 
wine CMO for the wine years 2009/10 and 2010/11

Type of aid

Wine CMO

M123 under RD

Investment

Eligible costs in euro

EU participation in euro

Wine processing equipment  
(i.e. tanks)

Bottling line and storage 
equipment

694 279

1 863 483

277 711

372 69753 

53  Regional aid also amounted to 372 697 euro.

These investments are complementary.

Between 2008 and 2011 there was an overall increase of the performance of the enterprise — increase in 
turnover and net income. To attribute the share of this increase to each investment is not possible.

There has been an increase 
of Member States’ wine 
exports to third countries …

74 
Since 2009, wine exports from the EU 
to third countries have grown sub-
stantially, reaching an all-time high 
of 23 million hl and 8,9 billion euro in 
value terms in 2012 (see Graphs 2a 
and 2b).

75 
According to Graph 2a, be-
tween 2005 and 2008 EU-27 wine 
exports increased by 28 % and be-
tween 2009 and 2012 — during the 
implementation of the promotion 
measure — wine exports increased by 
a further 64 %. This growth coincided 
with the introduction of the promo-
tion measures. Graph 2b also illus-
trates that the trend in wine exports to 
third countries is offering a potential 
increasing outlet for EU wine. Such 
a positive evolution of intra-EU wine 
sales is unlikely as the internal market 
is already saturated (a small potential 
remains in wine-importing Member 
States).

 
Observations

33

10

b EU-27 wine exports to third countries 
2
and United States (in billion euro)
h
p
a
r
G
d
n
a
a
2
h
p
a
r
G

o
r
u
e
n
o
i
l
l
i

B

6

8

2

4

0

2005 2006 2007 2008 2009 2010 2011 2012

Third countries
United States

Source: Eurostat, Comext database, data extraction 26 July 2013.

EU-27 wine exports to main  
third countries (in million euro)

o
r
u
e
n
o
i
l
l
i

M

1 000

800

600

400

200

0

2007

2008

2009

2010

2011

2012

Switzerland
Canada
Japan

Russia
China

54  SEC(2011) 1371 final.  

Final report ‘Evaluation 
des mesures appliquées 
au secteur vinicole dans le 
cadre de la Politique Agricole 
Commune’, October 2012 
(http://ec.europa.eu/
agriculture).

55  Exports from EU-27 to China 

have increased by 280 % in 
value between 2009 and 2012.

… but it is difficult to deter-
mine to what extent this is 
directly attributable to the 
promotion measure

76 
However, the increase observed can-
not unequivocally be attributed to the 
promotion measure. Several external 
factors such as increases in purchasing 
power of consumers in third countries, 
changes in international trade condi-
tions and wine production in third 
countries also have had a direct influ-
ence on EU-27 wine export. Thus, as 
already mentioned in several reports 
of the Commission54, it is not possible 
to establish to what extent a causal 
link exists between the measure and 
export performance at Member States 
and at EU level.

77 
The current growth in wine exports 
is mainly driven by a limited number 
of countries, such as China55, whose 
wine consumption has increased 
considerably in the recent past. 
Graphs 3a and 3b show that be-
tween 2007 and 2012 Chinese wine 
consumption has increased by 3,9 mil-
lion hl and EU-27 wine exports to 
China have increased by 2,2 million 
hl. This suggests that the evolution of 
EU-27 exports to China was strongly 
influenced by external factors such 
as economic growth and the increase 
in purchasing power of consumers in 
that country. Even without promotion 
action there is an increase of the wine 
consumption.

 
 
 
 
 
 
 
Observations

34

b
3
h
p
a
r
G
d
n
a
a
3
h
p
a
r
G

Wine consumption in China 

EU-27 wine exports to China

l

h
0
0
0
1

18 000

17 000

16 000

15 000

14 000

13 000

1  Forecast.

2007

2008

2009

2010

2011 20121

l

h
0
0
0
1

3 000

2 500

2 000

1 500

1 000

500

0

2007

2008

2009

2010

2011

2012

Source: Wine consumption: International Organisation of Vine and Wine (OIV): statistical report on world vitiviniculture. EU-27 wine exports:  
Eurostat, Comext database, data extraction 17 September 2013.

78 
Furthermore, despite the export 
growth in absolute terms, EU-27 wines 
exported have lost market shares in 
the main third countries targeted by 
promotion actions (see Graph 4). Only 

in Switzerland and Japan did EU-27 
wines increase their market shares 
of the wine imported. This loss of 
market share is to be analysed by the 
Commission.

4
h
p
a
r
G

EU-27 share (%) in import of major trading partners

100

80

60

40

20

0

United 
States

China

Japan

Mexico

Canada

Russia

Switzerland

2007

2012

Source: United Nations, Comtrade database, data extraction 20 September 2013.

 
 
 
 
 
 
 
 
 
 
 
 
 
35

56  Average annual growth rate 
in value of EU-27 exports 
to third countries between 
2010 and 2012 — Comext 
database.

Observations

79 
According to Article 103p(2) of Regula-
tion (EC) No 1234/2007, not all wines 
are eligible for the measure. Wines 
such as table wines without a grape 
variety indication are ineligible (see 
paragraph 35). If the promotion meas-
ure is effective, eligible EU-27 wine 
exports to third countries should per-
form better than other wines.

80 
In value terms, however, eligible wines 
do not clearly perform better than 
other wines. Eligible wine presents an 
annual growth rate of 14,8 % to reach 
an export value of 8 059 million euro 
(i.e. 15,4 million hl) in 2012 whereas 
non-eligible wine (other wines) 
shows an increase rate of 14,5 %56 to 
reach an export value of 806 million 
euro (i.e. 7,1 million hl) in 2012 (see 
Graph 5). This comparison of the very 
similar evolution of exports of eligible 
as opposed to ineligible wines under 
the promotion measure points to 
a strong causal effect of other factors 
at play in the export trends.

exported to third countries (2010=100)

5 Evolution of the values of EU wine 
h
p
a
r
G

135
130
125
120
115
110
105
100

2010

2011

2012

Eligible wines (PDO, PGI, varietal wines)
Other wines

Source: Eurostat, Comext database, data extraction 25 July 2013.

 
Conclusions and 
recommendations

36

81 
As part of the wine CMO reform, 
Member States may use the EU budget 
to finance investment and promotion 
projects that seek to increase the com-
petitiveness of EU wine producers.

82 
This audit examined the following 
question: ‘Is the EU investment and 
promotion support to the wine sector 
well managed and are its results on 
the competitiveness of EU wines dem-
onstrated?’ The Court concludes that 
the management of investment and 
promotion support to the wine sector 
during the initial years covered by this 
audit was adversely affected by design 
and implementation weaknesses high-
lighted in this report and the impact 
on the competitiveness of EU wines 
was not always demonstrated.

83 
The audit found that the investment 
measure is not appropriately designed, 
because, in the first place, the need 
for an additional investment measure 
specific to the wine sector is not dem-
onstrated as it already existed under 
the rural development policy. No study 
or analysis underpinned the proposed 
existence of any additional need for 
the wine sector.

84 
The supplementary investment 
measure is a source of complexity 
and created administrative obstacles 
as an artificial dividing line had to be 
established between the two types 
of investment aid. In some Member 
States, this resulted in implementing 
delays or in an excessively restric-
tive scope of the eligible investments 
(paragraphs 18 to 25).

Recommendation 1

In order to rationalise the aid scheme, 
the Commission should monitor the 
absorption of funds, analyse the need 
for the investment measure and assess 
whether the wine sector compared to 
other agricultural sectors needs ad-
ditional investment aid.

85 
The investment measure under the 
wine CMO was not implemented with 
due regard to the principle of econ-
omy. Most Member States audited did 
not ensure that only viable projects 
were granted aid (paragraphs 26 to 29). 
There is a risk of overspending, as the 
reasonableness of projects costs was 
not systematically evaluated before 
granting the aid (paragraphs 30 to 34).

Conclusions and recommendations

37

Recommendation 2

Recommendation 3

(a)  The governing regulation should 
restrict individual beneficiaries 
from presenting in each program-
ming period a promotion pro-
gramme for the same targeted 
countries.

(b)  The Commission should also limit 
the scope of the measure concern-
ing the eligibility of brand adver-
tising to avoid that EU funding 
replaces operational expenditure 
of the beneficiary and give more 
emphasis to favouring the acces-
sion of SMEs to the promotion 
measure.

87 
The budget available for promotion 
actions was greater than the demand 
and thus Member States were not suf-
ficiently selective in the implementa-
tion of the measure. In particular, they 
did not systematically check that ap-
plicants had a demonstrable need for 
public support. Furthermore, despite 
the intended preference for SMEs, 
large enterprises were also funded. As 
a result, the audit found clear cases 
of deadweight, where the promotion 
aid covered normal operating costs 
which would have been borne by 
the beneficiary in the normal course 
of operations without EU support 
(paragraphs 43 to 51).

Member States should mitigate the risk 
to the economy by a systematic assess-
ment of the reasonableness of project 
costs. The result of this assessment 
should be adequately documented. 
When feasible, benchmarks should be 
developed for common cost items in 
order to facilitate the assessment of 
costs in project proposals.

Member States should carry out viabil-
ity checks to assess the soundness of 
the applicant’s financial situation and 
document such analysis.

The Commission should ensure that 
Member States have effective systems 
to carry out checks on reasonableness 
of the costs and the financial viability 
prospects of projects.

86 
The audit found that the promotion 
measure is not appropriately designed 
and efficiently implemented. Promo-
tion actions are often used for consoli-
dating markets rather than winning 
new markets or recovering old mar-
kets. The need to consolidate a mar-
ket is constant for a wine producer 
intending to maintain its market share. 
This raises the question as to whether 
such promotion actions can have 
a sustainable effect without undue 
reliance on continuous EU support. 
Furthermore, the support for estab-
lished commercial brand advertising 
does not correspond to the measure’s 
original purpose to support the wine 
market rather than established brands 
(paragraphs 37 to 42).

Conclusions and recommendations

38

89 
Furthermore, the results of the 
measures in terms of enhancing the 
competitiveness of EU wines are not 
demonstrated. The monitoring and 
evaluation information on inputs, 
outputs and financial implementation 
of the measures is adequate. However, 
the Commission and Member States 
produce insufficient relevant informa-
tion to show the direct results attrib-
utable to the measures. In the case of 
the investment measure, the combina-
tion of wine CMO support with rural 
development investments makes it 
impossible to isolate the effects of the 
wine CMO. In the case of the promo-
tion measure, the result indicators 
used cover many variables outside the 
influence of the promotion actions 
(paragraphs 65 to 80).

Recommendation 6

The Commission should require Mem-
ber States to evaluate more closely the 
results of promotion projects. In par-
ticular, the results of the promotion ac-
tions should be assessed at beneficiary 
level rather than for the entire EU wine 
sector. Member States should make 
better use of the reports produced by 
beneficiaries at the end of the promo-
tion actions to assess and consolidate 
their results.

Recommendation 4

In order to minimise the risk of dead-
weight the Commission should ensure 
that Member States in their selection 
procedures require beneficiaries to 
clearly demonstrate their need for EU 
aid and that normal operating costs 
are not financed by the EU budget.

88 
The costs of promotion actions, 
overheads and costs of implementing 
bodies were insufficiently justified 
with poor or defective supporting 
documentation. In the absence of 
on-the-spot controls, insufficient sup-
porting documentation undermines 
the effectiveness of Member States’ 
documentary checks to ensure the 
occurrence and eligibility of promo-
tion actions. Furthermore, Member 
States did not sufficiently minimise 
the risk that the same promotion ac-
tion receives irregular double funding 
(paragraphs 52 to 64).

Recommendation 5

(a)  The Commission should ensure 

that ancillary costs such as for the 
implementing body and overheads 
are properly justified and limited 
to a maximum percentage of the 
total costs.

(b)  The Member States should ensure 
a sufficient audit trail linking every 
promotion aid to specific and 
adequately documented actions. 
They should also systematically 
check that other EU and national 
funding sources do not provide 
irregular double funding to the 
same promotion action.

Conclusions and recommendations

39

90 
Finally, the available funds dedicated 
by Member States to the promotion 
measure are budgeted to more than 
double for the programming pe-
riod 2014–18 compared to the funds 
spent in the previous programming 
period57. Given the difficulties experi-
enced by the Member States to spend 
the current budget for promotion 
actions, there is a risk that the 2014–
18 budget is set at too high level, thus 
endangering the application of sound 
financial management principles 
(paragraphs 43 and 47).

Recommendation 7

After a sufficient period of time has 
elapsed, the Commission should ana-
lyse how the budget allocated to the 
NSPs for the period 2014–18 matches 
the needs of the EU wine sector and 
the absorption capacity of the Mem-
ber States. Based on this analysis, the 
Commission should readjust where ap-
propriate the budget to ensure that it 
provides incentives for Member States 
to be more efficient in the application 
of the measures.

57  522 million euro were 

spent under the promotion 
measure in the programming 
period 2009–13. For the 
programming period 2014–18, 
Member States allocated 
1 156 million euro to the 
promotion measure (EU-27). 
This means an increase of 
121 % compared to the funds 
spent under the previous 
period.

This Report was adopted by Chamber I, headed by Mrs Rasa BUDBERGYTĖ,  
Member of the Court of Auditors, in Luxembourg at its meeting of 9 April 2014.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA
President

Annexes

I Supply balance sheet at EU-27 level — main items
x
e
n
n
A

40

in 1 000 hl

Usable production 

Final stocks

Gross human consumption

Total distillations1

Wine exports to third countries

Wine imports from third countries

2005/06

2006/07

2007/08

2008/09

2009/10

2010/11

2011/12

171 015

173 359

138 255

30 663

15 547

13 279

174 483

167 578

134 541

30 452

19 633

13 993

159 416

168 314

130 354

15 890

17 763

13 672

160 154

170 776

127 086

19 606

15 829

13 985

160 208

167 441

127 417

19 982

18 802

15 039

153 121

162 444

121 290

16 339

21 968

14 961

156 845

159 304

127 886

17 413

23 352

14 895

1  Crisis, potable alcohol and by-product distillations and distillation named brandies (i.e Cognac). 
Source: Eurostat, wine supply balance sheet, data extraction 25 September 2013.

 
Annexes

I
I
x
e
n
n
A

Annex Xb to Council Regulation (EC) No 1234/2007

Annex Xb 
Budget for support programmes 
referred to in Article 103n(1) of Council Regulation (EC) No 1234/2007

Budget Year

BG

CZ

DE

EL

ES

FR

IT1

CY

LT

LU

HU

MT

AT

PT

RO

SI

SK

UK

2009

15 608

2 979

22 891

14 286

213 820

171 909

238 223

2 749

30

344

16 816

232

8 038

37 802

42 100

3 522

2 938

0

2010

21 234

4 076

30 963

19 167

284 219

226 814

298 263

3 704

37

467

23 014

318

10 888

51 627

42 100

3 770

4 022

61

2011

22 022

4 217

32 190

19 840

279 038

224 055

294 135

3 801

45

485

23 809

329

11 313

53 457

42 100

3 937

4 160

67

2012

27 077

5 217

39 341

24 237

358 000

284 299

341 174

4 689

45

595

29 455

407

13 846

65 989

42 100

5 119

5 147

124

2013

26 742

5 151

38 867

23 945

352 774

280 311

336 736

4 643

45

587

29 081

401

13 678

65 160

42 100

5 041

5 082

120

41

in 1 000 EUR

from 2014 
onwards

26 762

5 155

38 895

23 963

353 081

280 545

336 997

4 646

45

588

29 103

402

13 688

65 208

42 100

5 045

5 085

120

1   The national ceilings in Annex VIII to Regulation (EC) No 1782/2003 for Italy corresponding to years 2008, 2009 and 2010 are reduced by 
EUR 20 million and those amounts have been included in the budget amounts of Italy for the years 2009, 2010 and 2011 as laid down in 
this table.

 
Reply of the  
Commission

42

Executive summary

Common reply to paragraphs I to VIII
The Commission stresses that the reform of the 
common organisation of the market in wine, 
adopted by the Council in 2008, has already ful-
filled one of its key objectives, i.e. that of restoring 
market balance; it is also clear that considerable 
headway has been made towards fulfilment of the 
second objective, which is to enhance the competi-
tiveness of the wine sector. Large-scale distillation 
financed by the European budget has been brought 
to an end without harming the market, and exports 
to third countries have increased in value and vol-
ume, thanks in particular to the reform measures.

Furthermore, the Council and Parliament have just 
confirmed the utility of the wine reform, by retain-
ing its principles in Regulation (EU) No 1308/20131 
on the new common organisation of the markets 
for the period 2014–20, thereby demonstrating their 
willingness to give the measures time to maximise 
their impact, while at the same time expanding the 
range of sub-measures of the aid programmes (new 
innovation measure, opening up of promotion to 
actions targeted at the domestic market, exten-
sion of restructuring to replanting for plant health 
reasons).

The investments of the wine support programmes 
are complementary to those of the rural develop-
ment programmes. It is a deliberate move on the 
part of the legislator to have these two programmes 
running in parallel.

1  OJ L 347, 20.12.2013.

(1)  Strategic motive: the wine sector support pro-
grammes are designed to increase the competi-
tiveness of the sector, while the rural development 
programmes are designed to ensure the sustainable 
development of rural areas. The wine sector support 
priorities do not necessarily overlap with those set 
out in rural development policy. Thanks to the wine 
support programme, the sector is guaranteed a dir-
ect allocation from the Community’s investment 
budgets.

(2)  Financial  motive:  under  the  wine  support  pro-
grammes, Member States are not required to pro-
vide a financial, national or regional contribution.

It is generally acknowledged that product promo-
tion is a key way to boost sales and open up new 
markets, even though the impact is difficult to 
gauge.

The Commission acknowledges that the imple-
mentation of the support programmes encoun-
tered some teething problems, as underlined by 
the Court in its audit covering the first 3 years of 
programming (2009–13). That is why the Commis-
sion made a number of changes to the implement-
ing regulation as well as drafting guidelines to 
help explain and clarify the procedures governing 
the selection, eligibility, follow-up and control of 
measures financed by the programmes. The Com-
mission is, of course, prepared to make any neces-
sary changes to the texts in the light of feedback 
received.

Reply of the Commission 

43

For paragraph III concerning the demarcation 
between the investments in both schemes, the 
Commission wants to highlight that the dividing 
line is now very clear and averts the risk of double 
financing and of an unwieldy administrative bur-
den. The delay noted in implementing the measures 
at the start of the programme can also be explained 
by other reasons, for instance by the difficulty in 
obtaining bank guarantees due to the crisis.

For point IV concerning the principle of economy 
in investment measure, the Commission stresses 
that during its audits, it verifies that Member States 
have assessed whether the costs of the measure are 
reasonable. In accordance with the provisions of 
Regulation (EC) No 1290/2005, the audits verify that 
Member States have adopted all the requisite legis-
lative and administrative provisions and any other 
measures (administrative and supervisory) neces-
sary to ensure proper protection of the financial 
interests of the Union. In this connection, the audits 
also serve to verify whether Member States have 
complied with the principles of sound financial 
management, which comprise, inter alia, an assess-
ment of the reasonableness of the costs.

For point V concerning the consolidation of mar-
kets, the Commission considers that one of the aims 
of the measure to promote wine in third countries 
is to increase the number of outlets for the wine. 
This can be achieved by taking action in estab-
lished markets as well in new markets or those in 
which a prior foothold has been lost. If a foothold 
is gained in new markets, it needs to be consoli-
dated. Community legislation does not rule this 
out2; furthermore, although preference is given to 
SMEs, large firms may also benefit from the assis-
tance because the issue is one of preference, not 
eligibility.

2  Article 103p(1) of Regulation (EC) No 1234/2007 states that 

the support ‘shall cover information or promotion measures 
concerning Community wines in third countries, thereby 
improving their competitiveness in those countries.’

For point VII concerning the allocation for promo-
tion, the Commission does not share the Court’s 
opinion that there is a risk that the promotion 
budget was set at too high a level by Member 
States. There is no budget specifically earmarked 
for promotion in the financial annex to the Coun-
cil Regulation. Member States present their aid 
programme with indicative breakdowns, which 
they may change twice a year, depending on the 
needs expressed. At this point, it is worth recalling 
the objectives of the wine reform adopted by the 
Council in 2008: (1) to restore market balance (‘one 
shot’ grubbing-up 2009–11) and (2) to improve com-
petitiveness (through ‘structural’ measures). The 
first stage has been completed and the equivalent 
of the grubbing-up amount was carried over to the 
aid programmes, as envisaged in the reform, to 
increase the amount for these measures, which are 
more ‘structural’ than promotion and investment 
primarily are. The increase in the amounts allo-
cated by Member States to the measures was thus 
foreseen. When the CMO reform was adopted in 
December 2013, the Council and Parliament did not 
wish to change the approach adopted at the time 
of the wine reform (including in respect of budget 
allocation). They also strengthened the promotion 
measure by opening it up to the internal market for 
measures focusing on information on responsible 
wine consumption and on the PDO/PGI systems in 
the Union.

For point VIII concerning the results of the meas-
ures, it should be added that it is always difficult 
to isolate the effects of a given policy from factors 
external to that policy. However, by carefully estab-
lishing the evaluation methodology, it is possible 
to gauge the effects of the different instruments/
measures (for example by using statistical informa-
tion). The Commission regularly organises evalu-
ations on the general impact of a policy in line with 
the financial regulation (every 6 years).

Reply of the Commission 

44

IX 

For the investment measure 

(a)  The Council and Parliament have just confirmed, 

in December 2013, the utility of the wine 
reform by retaining its guiding principles in 
Regulation (EU) No 1308/2013 on the new 
common organisation of the markets for the 
period 2014–20. They have thus demonstrated 
their willingness to allow the wine reform tools 
time to take full effect, while at the same time 
expanding the range of sub-measures of the aid 
programmes (new innovation measure, opening 
up of promotion to actions targeted at the 
domestic market, extension of restructuring to 
replanting for plant health reasons).

As far as the absorption of funds is concerned, 
the Commission carries out monitoring of the 
amounts received by beneficiaries on a monthly 
basis.

In accordance with Article 110 of the horizon-
tal Regulation 1306/2013, the Commission will 
ensure that the combined impact of all CAP 
instruments is measured and assessed in rela-
tion to the common objectives of the CAP. This 
includes an evaluation of the coherence of the 
CAP instruments by 2018 (first results). In this 
context, in 2018, the Commission will examine 
how to include an assessment of the added 
value of having an investment support both 
under the wine COM and rural development. It 
should be noted that information on the impact 
of a policy can only be obtained after a suffi-
ciently long period of time has elapsed.

(b)  The Commission considers that this part of 
the recommendation is addressed to the 
Member States.

Community legislation provides Member States 
with a framework for ensuring the continuity 
of projects ex post (Article 103u(5) of Regula-
tion (EC) No 1234/2007). During its audits of the 
investment measure, the Commission verifies 
that Member States have assessed whether the 
costs of the measure are reasonable. 

In accordance with the provisions of Regula-
tion (EC) No 1290/2005, the audits verify that 
Member States have adopted all the requisite 
legislative and administrative provisions and 
any other measures (administrative and super-
visory) necessary to ensure proper protection 
of the financial interests of the Union. In this 
connection, the audits also serve to verify 
whether Member States have complied with 
the principles of sound financial management, 
which comprise, inter alia, an assessment of the 
reasonableness of the costs.

The general issue of selecting investment pro-
jects, particularly when it comes to verifying 
the reason ableness of the costs and the viability 
of the projects (ex ante), will be dealt with at 
CMO Management Committee meetings.

For the promotion measure 

(a)  The Commission considers that depending on 

the circumstances beneficiaries may have access 
to the measure in the second programming 
period, for example to consolidate its market 
position in the same third country. While the 
objective of the measure is to improve the 
competitiveness of PDO/PGI wines and varietal 
wines and must be met, the rules do not 
preclude identifying particular brands. It may 
be important for beneficiaries, who pay 50 % 
of project costs, to be able to draw attention 
to their brand so as to be recognised by the 
target markets and, consequently, to increase 
their sales. Moreover, the amendments to 
Regulation (EC) No 555/2008 and the adoption 
of the guidelines in 2013 allow preference to be 
given more clearly to SMEs.

(b)  The Council regulation allows for aid to be 
granted if the measures taken comply with 
the rules in force. The selection procedure, as 
defined in the regulation and in the guidelines 
mentioned in (a), provides, inter alia, for the 
evaluation of the expected impact of the 
measures on demand growth.
The Commission will discuss with Member States 
the adaptation of the guidelines in order to 
ensure a complementarity of EU funded promo-
tion projects with existing actions to avoid the 
risk of the deadweight effect.

Reply of the Commission 

45

(c)  The Commission considers that this 

recommendation has been taken into account 
for the programming period 2014–18.
This issue was addressed in Article 53(b) of Coun-
cil Regulation (EU) No 1308/2013, in Commission 
Implementing Regulation (EU) No 752/2013 of 
31 July 2013 which adds Article 5a to Commis-
sion Regulation (EC) No 555/2008 and in the 
guidelines.

(d)  This recommendation is addressed to the Mem-

ber States.

(e)  The Commission considers that this recom-

mendation has been taken into account for the 
programming period 2014–18.
For the new programming period, the Commis-
sion has proposed, in its guidelines, examples of 
indicators which the Member States can propose 
to beneficiaries for the purposes of evaluating 
the results of promotion measures depending 
on the action taken.

In analysing the projects of the 2014–18 pro-
grammes, the Commission required Member 
States to provide appropriate indicators for 
each measure. The support programmes now 
include a section providing clearer information 
on the criteria and quantitative indicators used 
for monitoring and evaluation. Member States 
were invited to demonstrate the link between 
the objectives they set for each measure and 
the indicators used to gauge progress towards 
attaining these objectives.

On 1 March 2014, Member States are to pre -
sent the second cost/benefit analysis3 of the 
support programmes. It must contain relevant 
information for the purposes of analysing the 
programmes of the first programming period 
2009–13.

3 

The first cost/benefit analysis was made available on 1 March 2011 
and was, therefore, limited to the first 2 years of implementation 
of the programmes.

The third cost/benefit analysis is to be presented 
by Member States by 1 January 2017.

The Commission would emphasise that the 
information on implementation of the meas-
ures (monitoring information) should be dis-
tinguished from information on the results and 
impacts of these measures (evaluation informa-
tion). Evaluation data can only be obtained after 
a period of time has elapsed.

(f )  In accordance with Article 110 of the horizontal 
Regulation 1306/2013, the Commission will 
ensure that the combined impact of all CAP 
instruments is measured and assessed in relation 
to the common objectives of the CAP. This 
includes an evaluation of the efficiency of the 
CAP instruments by 2018 (first results). In this 
context, in 2018, the Commission will examine 
how to include an assessment of the use of the 
budget allocated to the wine support scheme 
and of its impacts. It should be noted that 
information on the impact of a policy can only 
be obtained after a sufficiently long period of 
time has elapsed.

Introduction

11
The financial regulation stipulates that Member 
States and the Commission shall fulfil their respec-
tive control and audit obligations and assume the 
resulting responsibilities. In particular, when execut-
ing implementing tasks such as the implementation 
of the promotion and investment measures, Mem-
ber States shall take all the necessary measures to 
protect the Union’s financial interests.

Reply of the Commission 

46

Observations

18
In December 2013, the Council and Parliament con-
firmed the utility of the wine reform, by retaining its 
principles in Regulation (EU) No 1308/20134 on the 
new common organisation of the markets, thereby 
demonstrating their willingness to give the wine 
reform measures time to maximise their impact, 
which meant continuing to invest under the two 
support schemes.

The investments of the wine support programmes 
are complementary to those of the rural develop-
ment programmes. It is a deliberate choice on the 
part of the legislator to have these two programmes 
running.

(1)  Strategic motive: the wine sector support pro-
grammes are designed to increase the competi-
tiveness of the sector, while the rural development 
programmes are designed to ensure the sustainable 
development of rural areas. The wine sector support 
priorities do not necessarily overlap with those set 
out in rural development policy. Thanks to the wine 
support programme, the sector is guaranteed a dir-
ect allocation from the Community’s investment 
budgets.

(2)  Financial  motive:  under  the  wine  support  pro-
grammes, Member States are not required to pro-
vide a financial contribution, either national or 
regional.

Box 1 
See the reply to paragraph 18.

4  OJ L 347, 20.12.2013.

19
Amounts were indeed transferred to rural develop-
ment and allocated to programmes in wine- 
growing regions. However, these amounts were not 
specifically allocated to the wine sector.

20
Romania introduced the investment measure from 
the new programming period 2014–18.

21
Given the competitiveness problems in the sector, 
demonstrated by the large-scale distillation which 
took place in the early part of the new millen-
nium, and given the gradual phasing-out of market 
measures, the Commission regarded the possibility 
of providing support for investments as a positive 
development for the sector.

See also the replies to points 18 and 19.

22
In important Member States there were no delays 
or restriction in implementation. Given the risks of 
overlap in the two support schemes, the Commis-
sion felt that it was essential to establish a dividing 
line to ensure sound budget management and alle-
viate the fears expressed by the Court on numerous 
occasions.

Three types of demarcation were proposed by 
the Management Committee and applied to the 
programmes: (1) demarcation by operation; this 
demarcation took practical shape with the amend-
ment of Article 20(2) and (3) of Regulation (EC) 
No 555/2008, (2) demarcation by date of the finan-
cial commitments, and (3) exclusion of the measure, 
or of some of the operations of a measure of a given 
programme.

Reply of the Commission 

47

Establishing this dividing line, which was not 
initially provided for in the implementing regula-
tion, meant that programmes had to be adapted 
under both support schemes. Once clear divid-
ing lines had been drawn up, there were limited 
additional administrative costs for the national 
administrations.

23
Establishing a dividing line is more difficult in 
regionalised Member States, such as Spain and Italy.

Wine is grown in all regions of Italy and is an impor-
tant sector economically, environmentally and 
socially. Each region has its own characteristics, and 
for some of them it has been difficult to establish 
the dividing line. However, this line is now estab-
lished in detail in the regions concerned. This meas-
ure is considered to be one of the most important 
for improving competitiveness, particularly since 
intervention measures disappeared. Expenditure on 
this measure in 2013 should amount to EUR 55 mil-
lion (17 % of the budget for this measure in 2013).

Other reasons may, however, also explain the delays 
observed during the first years of the programming 
period: difficulties in obtaining a bank guarantee 
because of the financial crisis, or delay in imple-
menting the legislative framework for this measure 
at national or regional level.

See the replies to paragraph 22.

24
See the replies to paragraphs 22 and 23.

Common reply to paragraphs 26 and 
27
The Council and Parliament, like the Commission, 
have established rules concerning ex post control of 
the durability of operations. Article 103u(5) of Regu-
lation (EC) No 1234/2003 stipulates that Article 72 of 
Regulation (EC) No 1698/2005 (rural development) 
shall apply mutatis mutandis to investment aid in 
national aid programmes (wine)5. Similar provisions 
have been established by Article 50(5) of Regula-
tion (EU) No 1308/2013, referring to Article 71 of 
Regulation (EU) No 1303/2013, which replaces Art-
icle 72 of Regulation (EC) No 1698/2005.

The general issue of selecting investment projects, 
in particular with a view to verifying that costs are 
reasonable and projects viable (ex ante), will be 
tackled within the framework of CMO Management 
Committee meetings.

28
Application of the ‘first come, first served’ principle 
does not necessarily entail a lack of supervisory 
control of the project’s viability. The selection 
procedures in Austria and France have not stopped 
the projects finally approved being verified and 
declared viable.

If there is no specific provision on this issue in Regu-
lation (EC) No 555/2008, the rules of sound financial 
management apply (cf. Article 9 of Regulation (EC) 
No 1290/2005).

See the replies to paragraphs 26 and 27.

5  Article 72 of Regulation (EC) No 1698/2005 specifies that all 

funded projects must be durable, that is to say the Member State 
must ensure that the operation does not, within 5 years of the 
managing authority’s funding decision, undergo a substantial 
modification, including cessation of an activity.

Reply of the Commission 

48

29
See the replies to paragraphs 26 to 28.

33
See the replies to paragraphs 26 and 32.

Box 2 
See the replies to paragraphs 26 to 28.

34
See the replies to paragraphs 30 and 31.

37
The Commission is of the view that the Council 
regulation enables aid to be given to beneficiaries 
of this kind if the actions taken comply with the 
conditions of the regulation.

It should also be emphasised that the measure has 
enabled a wide variety of firms to be helped, includ-
ing inter-branch associations and wine-growers’ 
cooperatives, which bring together a large number 
of winegrowers and winemakers.

The amendments to Regulation (EC) No 555/2008 
and the adoption of the guidelines in 2013 make 
it possible to improve cost eligibility, the qual-
ity of project selection and the implementation, 
follow-up, supervision and assessment of actions 
taken. The selection procedure provides, for exam-
ple, for assessing the likely impact of actions on the 
growth in demand (Article 5(2)(c) of Regulation (EC) 
No 555/2008) for the products concerned.

Joint reply to paragraphs 30 and 31
Member States often use standard price lists that 
correspond to the market price for certain opera-
tions (for example, in construction work). Because 
the beneficiary contributes financially to the pro-
ject, it also has an interest in obtaining lower prices.

During its audits of the investment measure, the 
Commission verifies that Member States have 
assessed whether the costs concerned are reason-
able. In accordance with the provisions of Regula-
tion (EC) No 1290/2005, the audits verify that Mem-
ber States have adopted all the requisite legislative 
and administrative provisions and any other meas-
ures (management and control) necessary to ensure 
effective protection of the financial interests of 
the Union. In this connection, the audits also serve 
to verify whether Member States have complied 
with the principles of sound financial management 
which cover, inter alia, assessing whether the costs 
concerned are reasonable.

32
The guidelines designate the purchase of wooden 
barrels as an eligible operation.

The Commission would emphasise that, in many 
cases, oak barrels are used for more than 3 years 
and sometimes for up to ten.

Mere barrel replacement is not eligible (Article 17 of 
Regulation (EC) No 555/2008). Indeed, it is impor-
tant to distinguish the eligibility of barrels from the 
eligibility of barrel replacement. A barrel is eligible 
(if it is used for more than 5 years); barrel replace-
ment is not.

Reply of the Commission 

49

Box 3 
See also the reply to paragraph 37.

38
The Commission does not share the Court’s view.

Subsidised promotion actions for champagne 

The Commission considers that even if champagne 
has a high reputation in the EU and a number of 
third countries, it also has many competitors that, 
although they have not yet acquired the same 
status, are increasing their market share, particularly 
in certain markets of strategic importance. 
Moreover, the effects of the economic crisis may, in 
a number of cases, lead to other types of sparkling 
wine or similar products being consumed in the 
place of champagne. If certain products were to 
be excluded because they had a sufficiently high 
reputation, the said reputation, in relation to that 
of other products, would have to be measured 
objectively, and justification provided for funding 
the promotion of other products in the same 
range — a state of affairs that would present 
difficulties in terms of fair treatment.

Spain (Catalonia): six beneficiaries 
represented 88 % of the total approved 
funding for the period 2009–11

This is the situation observed in Catalonia, where 
the focus is on a large firm that received aid of 
EUR 8.1 million (out of the EUR 15.2 million granted 
in this autonomous community). Scrutiny of the 
information submitted by the Spanish authorities 
in Annex VIII to Regulation (EC) No 555/2008 and 
analysed by the Commission’s departments reveals 
that total aid of EUR 61 million was granted in Spain 
during the same period to 350 firms, including the 
Consejo Regulador DOC a Rioja and the Fundación 
Castilla la Mancha Tierra de viñedos, which 
represent a large number of businesses.

Among the aims of the promotion measure in third 
countries is that of increasing the number of wine 
outlets, not only in consolidated markets but also in 
new markets or those in which a foothold has been 
lost. If new markets are opened, they should be 
consolidated, partly through an increase in market 
share. Community rules do not prevent this6. More-
over, although preference is given to SMEs, large 
firms may also benefit from the assistance. Large 
firms are in the vanguard7 of promoting all Euro-
pean wines in third countries, where smaller firms 
have more difficulty taking promotional initiatives. 
In Italy, for example, large enterprises implement 
measures by creating multiplier effects through 
temporary joint ventures.

The amendments to Article 5c) of Regulation (EC) 
No 555/2008 and the adoption of the guidelines in 
2013 should enable the quality of selection to be 
improved and, in particular, clearer preference to be 
given to SMEs, new beneficiaries and beneficiaries 
targeting a new third country8.

See also the reply to paragraph 37.

6  Article 103p(1) of Regulation (EC) No 1234/2007 specifies that aid 
is granted for information or promotion measures taken in third 
countries in favour of Community wines in order to improve their 
competitiveness in the countries concerned.

7  Where the self-funding capacities of large firms are concerned, 
it should be borne in mind that promotion efforts are not 
traditional efforts to invest in a product that meets a carefully 
gauged need. Rather, the spill-over from promotion campaigns 
benefits enterprises other than those realising the investment 
(enterprises making products in the same range and with the 
same geographical origin). The financial efforts made by the 
largest firms to promote their products thus benefit all operators 
in the sector.

8 

The guidelines, in particular, recommend examining projects 
on the basis of a selection grille, with points for each selection 
criterion, and selecting projects on the basis of an assessment of 
the merits of each project. The Member State should therefore 
choose those projects that offer the best quality/price ratio 
and should give preference to SMEs, new beneficiaries and 
beneficiaries that are opening a new market.

Reply of the Commission 

50

39
The information submitted by the Member States 
in accordance with Annexes V and VIII to Regula-
tion (EC) No 555/2008 show that, in general, benefi-
ciaries target more than one market.

The Commission’s report on the implementation 
of the promotion measure shows that only 37 % of 
projects funded target a single market, while the 
majority target between two and seven different 
markets. A significant concentration of actions has 
also been observed, with 75 % of actions cover-
ing seven countries (the United States, China/
Hong King, Japan, Mexico, Canada, Russia and 
Switzerland).

The United States is the most frequently targeted 
market, with 22 % of actions.

Competition in the United States’ market is very 
pronounced. That is why it is vital for firms to have 
a presence there, partly with a view to securing new 
outlets and retaining existing ones. It is essential for 
them to get themselves better known in order to 
ensure stable trade flows in the future.

See also the reply to paragraph 38.

40
The possibility of extending the support by a maxi-
mum of 2 years was decided on in 2010, following 
delays, observed in the Member States and third 
countries, due to administrative formalities. Such an 
extension was possible only after an assessment of 
the actions already taken.

As for the second amendment to the regulation, the 
Commission is of the view that one and the same 
enterprise can have access to the measure in the 
second programming period, in particular in order 
to consolidate the market, if it complies with the 
conditions of the regulation, notably where eligible 
actions and selection are concerned. In any case, 
what we are concerned with here is a new project 
and not an extension of the initial project. It has to 
be the subject of an ad hoc selection.

See also the replies to paragraphs 38 and 43 to 46.

41
See the replies to paragraphs 38 to 40.

42
While the objective of the measure is to increase 
the competitiveness of PDO/PGI wines and varietal 
wines and must be met, the rules do not preclude 
identifying particular brands. It may be important 
for the beneficiaries, who pay 50 % of the project 
costs, to be able to draw attention to their brand 
so as to be recognised by the target markets and, 
consequently, to increase their sales.

See also the reply to paragraph 37.

43
See the replies to paragraph 37 and footnote 46.

44
See the replies to paragraphs 37 and 43.

The Commission will discuss with Member States 
the adaptation of the guidelines in order to ensure 
a complementarity of EU-funded promotion pro-
jects with existing actions to avoid the risk of the 
deadweight effect.

Reply of the Commission 

51

45
See the replies to paragraphs 37 to 46.

The issue of the eligibility of personnel costs and 
general expenses is dealt with in paragraph 49.

46
It should be noted that it is difficult to exclude situ-
ations in which the beneficiaries would have taken 
such actions without the support of the EU. The 
object of the measure is to increase competitive-
ness. All producers must have the same opportunity 
to apply the measure.

See also the replies to paragraphs 43, 44 and 45.

The Commission will discuss with Member States 
the adaptation of the guidelines in order to ensure 
a complementarity of EU-funded promotion pro-
jects with existing actions to avoid the risk of the 
deadweight effect.

47
There is no specific allocation for the promotion 
measure.

The Commission would point out that it is for 
Member States to provide a breakdown of the 
amounts for each measure on the basis of their own 
needs, and within the annual budget granted to the 
measure via the regulation of the Council and of 
the European Parliament. This measure-by-measure 
breakdown is indicative in nature, and the Member 
States can readjust the amounts for each measure 
twice a year. It is therefore the Member States that 
have decided whether or not to give priority to this 
measure.

See also the reply to paragraph 43.

48
To provide further parameters for such measures, 
the Commission adopted guidelines in 2013 to help 
the Member States establish their 2014–18 pro-
gramming on the basis of experience acquired in 
the first years of the programming (see the Court’s 
footnote 4).

See also the replies to paragraphs 37, 49 and 51.

49
This issue has already been taken into account 
in Article 53(b) of Council Regulation (EU) 
No 1308/2013, in Commission Implementing 
Regulation (EU) No 752/2013 of 31 July 2013 which 
adds Article 5a to Commission Regulation (EC) 
No 555/2008 and in the guidelines9.

Before these provisions were adopted, the eligibil-
ity of administrative and personnel costs had been 
the subject, in 2007, of internal interpretation by DG 
Agriculture10.

50
The personnel costs and general expenses are to 
be eligible when they are strictly connected to the 
action; but they must be given a framework, as in 
fact they have been.

See also the reply to paragraph 49.

9  Article 53(b) of Regulation (EU) No 1308/2013 provides the legal 
basis empowering the Commission to adopt delegated acts for 
establishing rules concerning the administrative and personnel 
costs that may be included in support programmes. Article 5a 
of Regulation (EC) No 555/2008 provides parameters for the 
personnel costs and general expenses, which must be strictly 
linked to the preparation, implementing or follow-up of the 
action concerned. The guidelines adopted in 2013 define the 
expenditure concerned more precisely.

10  Adonis note 005778 of 1 March 2007: this pointed out that 

Article 13 of Regulation (EC) No 1290/2005 is generally designed 
to prevent the EAGF from assuming personnel costs and 
administrative expenses when implementing the CAP; the note 
also pointed out that this same article was not designed to 
prevent the EAGF from funding the personnel costs involved in 
supplying specific services. In the Commission’s opinion, there is 
consequently no contradiction.

Reply of the Commission 

52

51
The guidelines are a useful tool for the Member 
States as they implement the promotion measure. 
It was essential to have a clear definition of eligible 
expenditure. That is why it has been included in 
the guidelines. It should be noted that the Mem-
ber States have particularly welcomed this docu-
ment supporting the presentation of the 2014–18 
programming period. The guidelines also have the 
advantage of being adaptable to expressed needs, 
so assuring Member States and producers better 
security when implementing the measure.

53
The Commission accorded particular importance to 
this issue when analysing the 2014–18 programmes.

The Court’s observations will be taken into account 
by the Commission in its forthcoming audits of the 
promotion and investment measures.

Box 4 
The Commission will follow up this matter in the 
context of the clearing of accounts procedure.

55
The Commission acknowledges the problem pre-
sented by on-the-spot control in third countries, 
although Community legislation does not require 
such control.

The issue of on-the-spot controls was raised when 
the new programming period was being negotiated 
with the Member States. Romania, Italy, Spain and 
Slovakia, in particular, envisaged controls in third 
countries in their programmes. The other Member 
States argue that controls of this type in third coun-
tries would be too onerous and not cost-effective.

To mitigate the effects of the lack of controls in 
third countries, the Commission guidelines propose 
that invoices and documents be provided for con-
trol purposes11.

The Commission is alert to the need to improve 
the quality of controls in relation to this measure, 
particularly through possible amendments to the 
guidelines.

56
See the reply to paragraph 55.

57
The issue of controls on intangible actions such as 
wine tastings is dealt with in the guidelines, which 
now require invoices and accompanying documents 
to be provided. These may consist, for example, of 
photos, copies of articles, lists of participants, cer-
tificates confirming participation in trade fairs, etc.

See also the reply to paragraph 55.

11  Point 8 of the guidelines: 

 Applications for payment sent to the competent national 
authority should be accompanied by copies of original invoices 
and supporting documents of the beneficiary, which should be 
classified by budget heading. 
 All these documents should be listed in a summary table, 
together with the amounts expressed in euro and, in the case of 
Member States outside the euro zone, in their national currency 
as well. If needed, translations may be required. 
 All supporting documents should give the following information: 
the supplier, the service provided with details of the way it relates 
to the measure in question, the date, the amount (exclusive of 
VAT) and the registration number. They should be accompanied 
by proof of payment. Supporting documents may be for example 
a certificate confirming the participation in a fair, photos, copies of 
articles, lists of participants, etc. In case there are subcontractors, 
their invoices should contain a clear indication to what part of an 
operation each cost relates to. If there is one invoice, it should be 
broken down by operation and cost; otherwise there should be 
a separate invoice by operation. 
 In the event of an audit on the premises, the competent national 
authority and the Commission inspectors should be able to 
inspect the original documents, classified according to these 
rules.

Reply of the Commission 

53

58
See the replies to paragraphs 55 and 57.

59
See the replies to paragraphs 55 and 57.

64.
The guidelines provide that costs may be consid-
ered eligible if they have not already been imputed 
to another category of expenses13.

See also the reply to paragraphs 62 and 63.

Box 5 
See the replies to paragraphs 55 and 57.

Box 7 
See the replies to paragraphs 55, 62, 63 and 64.

60
See the replies to paragraphs 55 and 57.

Box 6 
The Commission will follow up this matter in the 
context of clearing of accounts procedure.

Joint reply to paragraphs 62 and 63
Article 5a) of Regulation (EC) No 555/2008 describes 
the personnel costs and overheads (the latter lim-
ited to 4 %) incurred by the beneficiary in preparing 
and implementing the action. Contrary to current 
practice in the aid scheme defined by Regula-
tion (EC) No 3/200812, relating to horizontal pro-
motion, recourse to an implementing body is not 
required. If such recourse does in fact take place, 
the service concerned is one for which invoices 
and documents in proof have to be produced, as 
described in the guidelines (see the Court’s foot-
note 56).

Recourse to an implementing body is no longer 
obligatory in Romania. New provisions were intro-
duced in the 2014–18 aid programme. National 
legislation now clearly provides for the beneficiary’s 
being able to implement the project entirely itself, 
provided that certain conditions are met.

See also the replies to paragraphs 55 and 64.

12  OJ L 3, 5.1.2008.

65
It is important to have reliable monitoring data 
available. However, there are other sources of 
information, such as statistics and studies. More-
over, a balance must be struck between the amount 
of information required for policy needs and the 
administrative costs and charges resulting from 
data collection.

The Commission would emphasise that informa-
tion on the implementation of measures (follow-up 
information) must be differentiated from informa-
tion on a policy’s results and impact (information 
on the assessment). The latter can be obtained only 
after a sufficient period of time has elapsed.

67
When the Member States’ administrations drew 
up their draft programmes in 2008, they were at 
the beginning of a learning process. Several Mem-
ber States have had difficulties in devising proper 
objectives for the newly introduced measures. Con-
sequently, there has often been a lack of quantified 
objectives in the first programming period.

13  Point 6 of the guidelines: 

 Eligible costs cover only the costs of the operations carried out 
and borne by the beneficiary after the date the contract takes 
effect and prior to its expiry. 
The eligible costs are eligible only in so far as they:  
— can be verified; 
— include no cost already charged to another expenditure 
category; 
— are not funded from another project.

Reply of the Commission 

54

In analysing the draft programmes for the period 
2014–18, the Commission has insisted that Member 
States supply appropriate indicators for each meas-
ure. The aid programmes now include, in a clearer 
form, a section concerning the criteria and quantita-
tive indicators used for follow-up and assessment. 
In this section, Member States are invited to show 
the link between the objectives they have set for 
each measure and the indicators for measuring 
to what extent these objectives will have been 
achieved.

On 1 March 2014, the Member States have to pre -
sent the second cost/benefit analysis14 of the sup-
port programmes, which should include elements 
relevant to the analysis of programmes during the 
first programming period, 2009–13.

The third cost/benefit analysis must be presented 
by the Member States by 1 March 2017.

See also the reply to paragraph 65.

68
The annual reports are intended to supply informa-
tion on the implementation of the aid programmes. 
That means that they have to be focused more on 
information and financial implementation, and less 
on results and impact; indeed, the assessment can 
be carried out only after a sufficient period of time 
has elapsed.

See also the replies to paragraphs 65 and 67.

14  The first cost/benefit analysis was submitted on 1 March 2011 

and has therefore been limited to the first 2 years of programme 
implementation.

69
For the new programming period, the Commission 
has proposed, in the guidelines, examples of indica-
tors that Member States can offer beneficiaries so 
that the results of the promotion measure can be 
evaluated on the basis of the actions taken.

Moreover, the Commission regularly organises 
assessments of the general impact of a policy in line 
with the financial regulation (every 6 years).

See also the reply to paragraph 67.

70
The Commission shares the Court’s view that it is 
always difficult to isolate the impact of a policy 
from factors extraneous to the policy. However, 
careful development of the assessment method-
ology allows us to approximate the effects of the 
various instruments/measures (for example, by 
using statistics). It is worth recalling, however, that 
the reform of the wine sector should be examined 
as a set of complementary measures.

See also the replies to paragraphs 69, 72 and 75 to 
80.

71
See the reply to paragraph 18.

72
A carefully designed assessment can make it pos-
sible to approximate the effects of the measures 
taken at various levels. The monitoring and assess-
ment system is designed to monitor the implemen-
tation of measures at the policy and/or programme 
level, and not at the level of each beneficiary.

As mentioned in paragraph 18, by design, rural 
development has a regional dimension, whereas 
the wine CMO has a sectoral dimension.

Reply of the Commission 

55

73
See the reply to paragraph 72.

75
The Commission confirms the European wine trade 
data, which show the advantage of continuing the 
promotion measure in third countries.

Thus, Graphs 2a and 2b clearly show the increase 
in exports by value, although this trend is strongly 
influenced by higher grape and wine prices.

On the Chinese market, EU wines face competition 
from local wines (83 % of Chinese consumption) 
and wines from Chile (exempt from customs duties), 
Australia and South Africa.

Owing to this stiff competition, it is crucially impor-
tant to promote Union wines to maintain market 
share.

76
It is difficult to isolate the effects of the promotion 
measure on the competitiveness of a sector. Even 
when selection and assessment procedures are 
optimised, a degree of uncertainty always remains.

However, this is not a sufficient reason to call into 
question the merits of the measure; the measure 
is fully justified because it is indispensable against 
a background of trade liberalisation and stiffer 
competition from our main competitors, such as the 
United States, which has public promotion poli-
cies (its budget allows it to fund aid measures for 
exports).

However, it should be possible to refine the assess-
ment by using indicators that are appropriate to the 
beneficiary level (see reply to paragraph 69) and by 
a more in-depth analysis of the measure by Member 
States.

See the replies to paragraphs 69 and 70.

77
The Chinese market is highly specific. Per capita 
consumption is less than 1 litre (whereas in Europe 
per capita consumption is around 30 litres). 
Although wine consumption is increasing, European 
wines compete with wines from Australia, Chile 
and South Africa that may benefit from preferential 
treatment as regards import tariffs.

See also the replies to paragraphs 39 and 75.

78
Without the promotion measure, the losses of mar-
ket share would probably have been bigger.

The Commission has analysed the outlook and 
drawn attention to the risk of market share losses 
in some third countries. The risk may stem from the 
small scale of EU enterprises, segmentation of the 
sector or restrictions on varietal wines in various 
Member States.

European wines must fight to maintain their market 
shares. Promotion is a very important tool.

It should be pointed out that the Commission has 
just launched a study of the competitiveness of 
European wines in third countries and in the EU; the 
study will examine in particular the key factors in 
the competitiveness of EU wines in relation to wines 
from third countries and the obstacles to improving 
it.

Common reply to paragraphs 79 and 
80
Even if promotion actions are taken in favour of 
some types of wine, all other wines benefit indir-
ectly from them because they will have a positive 
effect on the image and consumption of other 
types of wine.

Reply of the Commission 

56

Conclusions and recommendations

82
The audit covered the first 3 years of the program-
ming period 2009–13, which mark the introduc-
tion of these measures. After a ‘running-in’ period, 
Member States were better able to implement 
their programme measures, particularly in terms of 
budget execution.

The Commission has put in place the tools to 
improve the implementation, monitoring and 
control of the measures in the programmes (seven 
amendments to Regulation (EC) No 555/200815, 
guidelines for restructuring, investment and promo-
tion in third countries16).

With regard to competitiveness, it is of course dif-
ficult to isolate the effect of those two measures on 
the competitiveness of the wine sector, which is the 
second objective of the 2008 wine reform, since the 
first objective (restoring market equilibrium) has 
already been met. The reform of the sector should 
be examined as a set of complementary measures. 
However, it is worth highlighting the steady rise in 
exports, in terms of value and volume, in an increas-
ingly competitive global context, in spite of the 
downturn in 2008 and 2009 following the economic 
crisis.

83
The Commission considers that the specific invest-
ment measures in the wine COM is important to 
increase competitiveness.

In December 2013, the Council and Parliament 
confirmed the utility of the 2008 wine reform by 
retaining its guiding principles in Regulation (EU) 
No 1308/201317 on the new common organisation 
of the markets. In this way, they demonstrated their 
willingness to allow the wine reform tools time to 
take full effect, including by leaving the invest-
ments in the two aid schemes.

See Commission reply to Recommendation 1.

84
Given the risk of overlap between the two aid 
schemes, the Commission has considered it essen-
tial to establish a dividing line (not originally envis-
aged) for the sake of good budgetary orthodoxy. 
The demarcation between the programmes is now 
clear and should make it possible to avoid the risks 
of double funding.

The delays in the implementation of the measure in 
the first years of the programming period can also 
be explained by other factors, such as the difficulty 
of obtaining bank guarantees owing to the eco-
nomic crisis.

15  Regulation (EC) No 42/2009 (OJ L 16, 21.1.2009), Regulation (EC) 
No 702/2009 (OJ L 202, 4.8.2009), Regulation (EU) No 772/2010 
(OJ L 232, 2.9.2010), Regulation (EU) No 568/2012 (OJ L 169, 
29.6.2012), Regulation (EU) No 202/2013 (OJ L 67, 9.3.2013) and 
Regulation (EU) No 752/2013 (OJ L 210, 6.8.2013).

16  Guidelines for implementation of the national support 

programmes in the wine sector according to Regulations (EC) 
No 1234/2007 and No 555/2008 of 25 February 2013 and of 
26 April 2013.

17  OJ L 347, 20.12.2013.

Reply of the Commission 

57

Recommendation 1
The Council and Parliament have just confirmed, in 
December 2013, the utility of the wine reform by 
retaining its guiding principles in Regulation (EU) 
No 1308/2013 on the new common organisation of 
the markets for the period 2014–20. They have thus 
demonstrated their willingness to allow the wine 
reform tools time to take full effect, while at the 
same time expanding the range of sub-measures 
of the aid programmes (new innovation measure, 
opening up of promotion to actions targeted at 
the domestic market, extension of restructuring to 
replanting for plant health reasons).

As far as the absorption of funds is concerned, the 
Commission carries out monitoring of the amounts 
received by beneficiaries on a monthly basis. 
In accordance with Article 110 of the horizontal 
Regulation 1306/2013, the Commission will ensure 
that the combined impact of all CAP instruments is 
measured and assessed in relation to the common 
objectives of the CAP. This includes an evaluation of 
the coherence of the CAP instruments by 2018 (first 
results). In this context, the Commission will exam-
ine how to include an assessment of the added 
value of having an investment support both under 
the wine COM and rural development. It should be 
noted that information on the impact of a policy 
can only be obtained after a sufficiently long period 
of time has elapsed.

85
See Commission reply to Recommendation 2.

Recommendation 2
The Commission considers that this part of the rec-
ommendation is addressed to the Member States.

Under the principles of subsidiarity and shared 
management, the selection of projects is a matter 
for the Member States, and the Commission cannot 
assess the reasonableness of costs ex ante.

The Community rules provide the Member States 
with a framework to examine project durabil-
ity ex post (Article 103u(5) of Regulation (EC) 
No 1234/2007).

Moreover, the Commission checks that Member 
States assess the reasonableness of costs during its 
audit missions on the investment measure. Pursu-
ant to Regulation (EC) No 1290/2005, audits check 
that Member States have adopted all appropriate 
legislative and administrative rules and that they 
have adopted any other measures (management 
and control) necessary to ensure effective protec-
tion of the financial interests of the Union. In this 
connection, audits also check that Member States 
are complying with the principles of sound financial 
management, which include, inter alia, an assess-
ment of the reasonableness of costs.

The general issue of the selection of investment 
projects, particularly for the verification of the 
reasonableness of the costs and the viability of the 
projects (ex ante), will be dealt with at the meetings 
of the Management Committee for the single CMO.

86
The success of the EU wine policy in reaching its 
objectives including a 50 % increase of exports is 
a good indicator that the promotion measure has 
had a very positive effect.

The promotion measure in third countries seeks, 
among other things, to increase the number of out-
lets for wine, which can be done through measures 
in consolidated markets but also by measures in 
new markets or markets that have been lost. If new 
markets are opened, they must be consolidated. 
Community rules do not prevent this18. Moreover, 
although preference is given to SMEs, large under-
takings can also receive the aid because it is a mat-
ter of a preference, not an eligibility criterion.

18  Article 103p(1) of Regulation (EC) No 1234/2007 provides that 

‘Support under this Article shall cover information or promotion 
measures concerning Community wines in third countries, 
thereby improving their competitiveness in those countries.’

Reply of the Commission 

58

The Commission will discuss with Member States 
the adaptation of the guidelines in order to ensure 
a complementarity of EU-funded promotion pro-
jects with existing actions to avoid the risk of the 
deadweight effect.

87
The Commission has attached particular impor-
tance to improving the quality of the selection 
of projects for the new 2014–18 programming 
period through the amendments to Regulation (EC) 
No 555/2008 and the adoption of the guidelines in 
2013.

The selection procedure provides for, among other 
things, an assessment of the foreseeable effects of 
the actions on growth in demand.

When the new programming period was being 
negotiated with the Member States, the question 
of on-the-spot checks on the measure was raised. 
Some Member States require such checks. The oth-
ers argue that such checks would be too onerous 
and disproportionate from the point of view of cost 
effectiveness.

To make up for the lack of verification in third coun-
tries, the Commission proposed in the guidelines 
listing the invoices and documents to be provided 
for the purposes of the checks.

See also the replies to paragraphs 43 to 51 and to 
Recommendation 4.

The amendments to Regulation (EC) No 555/2008 
and the adoption of the guidelines in 2013 improve 
the quality of the selection, in particular by giving 
preference more clearly and effectively to SMEs, 
new beneficiaries and beneficiaries targeting a new 
third country.

The rules do not preclude emphasising brands; the 
objective of the measure is to improve the competi-
tiveness of PDO/PGI wines and varietal wines. For 
the beneficiaries, who share 50 % of the costs of the 
actions, it may be important to be able to empha-
sise brands too so that they can be recognised in 
the target markets and consequently increase sales.

Recommendation 3(a)
The Commission considers that depending on the 
circumstances beneficiaries may have access to the 
measure in the second programming period, for 
example to consolidate its market in the same third 
country.

Moreover, the amendments to Regulation (EC) 
No 555/2008 and the adoption of the guidelines in 
2013 improve the quality of the selection, in par-
ticular by giving preference more clearly and effec-
tively to SMEs, new beneficiaries and beneficiaries 
targeting a new third country.

Recommendation 3(b)
While the objective of the measure is to increase 
the competitiveness of PDO/PGI wines and varietal 
wines and must be met, the rules do not preclude 
identifying particular brands. For the beneficiaries, 
who share 50 % of the costs of the actions, it may 
be important to be able to emphasise brands too so 
that they can be recognised in the target markets 
and consequently increase sales. Moreover, the 
amendments to Regulation (EC) No 555/2008 and 
the adoption of the guidelines in 2013 allow prefer-
ence to be given more clearly to SMEs.

Reply of the Commission 

59

Recommendation 4
The Council regulation allows aid to be granted if 
the actions undertaken meet the conditions laid 
down in the regulation. The selection procedure, as 
defined in Article 5 of Regulation (EC) No 555/2008 
and in the guidelines provides, inter alia, for the 
evaluation of the expected impact of the measures 
on demand growth.

The Commission will discuss with Member States 
the adaptation of the guidelines in order to ensure 
a complementarity of EU-funded promotion pro-
jects with existing actions to avoid the risk of the 
deadweight effect.

88
The Commission recognises the problem posed 
by on-the-spot verification of this measure in third 
countries, even if Community legislation does not 
require it.

When the new programming period was being 
negotiated with the Member States, the question 
of on-the-spot checks of the measure was raised. 
Romania, Italy, Spain and Slovakia in particular 
require checks in third countries. The other Member 
States argue that such verification would be too 
onerous and disproportionate from the point of 
view of cost effectiveness.

To make up for the lack of verification in third coun-
tries, the Commission proposed in the guidelines 
listing the invoices and documents to be provided 
for the purposes of the checks.

The Commission is keen to improve the quality of 
the checks on this measure, in particular through 
possible adaptation of the guidelines and rules.

Recommendation 5(a)
The Commission considers this recommendation 
has been taken into account for the programming 
period 2014–18.

The question of the administrative and person-
nel costs incurred by the beneficiary has already 
been taken into account in Article 53(b) of Coun-
cil Regulation (EU) No 1308/2013, in Commission 
Implementing Regulation (EU) No 752/2013 of 
31 July 2013 which adds Article 5a to Commission 
Regulation (EC) No 555/2008 and in the guidelines.

With regard to the implementing bodies, under 
the guidelines the costs can be considered eligible 
if they have not already been allocated to another 
category of expenditure.

Recommendation 5(b)
This part of the recommendation is addressed to 
the Member States.

The existence of a sufficient audit trail is verified 
by default during ‘clearance of accounts’ audits. 
When the regulatory provisions require specific 
controls and it has been shown that the audit trail 
has shortcomings, the Commission requires correc-
tive measures and may apply a financial correction. 
Moreover, to make up for the lack of verification in 
third countries, the Commission proposed in the 
guidelines listing the invoices and documents to be 
provided for the purposes of the checks.

Reply of the Commission 

60

89
When analysing programme projects for the period 
2014–18, the Commission insisted that Member 
States provide appropriate indicators for each 
measure. The aid programmes now include more 
clearly a part relating to the quantitative criteria 
and indicators used for monitoring and assessment. 
Member States have been asked to demonstrate 
the link between the objectives they have set for 
each measure and the indicators that are supposed 
to measure the extent to which the objectives have 
been met.

Moreover, on 1 March 2014, Member States must 
present the cost/benefit analysis19 for support pro-
grammes, which should provide useful information 
for the analysis of the programmes during the first 
programming period 2009–13. The third cost/bene-
fit analysis must be presented by Member States by 
1 March 2017.

The Commission would stress that the information 
relating to the implementation of the measures 
(information on monitoring) must be differentiated 
from the information concerning the outcomes and 
impacts of the measures (information on assess-
ment). These data can be obtained only after some 
time has passed.

The subsequent assessment of the costs and bene-
fits must be presented by Member States before 
1 March 2017.

19  The first cost/benefit analysis was submitted on 1 March 2011 and 
was therefore limited to the first 2 years of the implementation of 
the programmes.

Recommendation 6
The Commission considers this recommendation 
has been taken into account for the programming 
period 2014–18.

For the new programming period, in the guidelines 
the Commission has proposed examples of indica-
tors that Member States could offer to beneficiaries 
to assess the outcomes of the promotion measure, 
depending on the actions conducted.

See also the reply to paragraph 89.

90
The Commission does not agree with the Court’s 
opinion that there is a risk that the promotion 
budget was set at too high a level by Member 
States. There is no budget specifically earmarked 
for promotion in the financial annex to the Coun-
cil Regulation. Member States present their aid 
programme with indicative breakdowns, which they 
may change twice a year, depending on the needs 
expressed.

At this point, it is worth recalling the objectives 
of the wine reform adopted by the Council in 
2008: (1) to restore market balance (‘one shot’ 
grubbing-up 2009–11) and (2) to improve competi-
tiveness (through ‘structural’ measures). The first 
stage has been completed and the equivalent of 
the grubbing-up amount was carried over to the 
aid programmes, as envisaged in the reform, to 
increase the amount for these measures, which are 
more ‘structural’ than promotion and investment 
primarily are. The increase in the amounts allo-
cated by Member States to the measures was thus 
foreseen.

Reply of the Commission 

61

When the CMO reform was adopted in Decem-
ber 2013, the Council and Parliament did not wish to 
change the guiding principles adopted at the time 
of the wine reform, including at the level of budget 
allocation. They further strengthened the promo-
tion measure by opening the domestic market for 
actions targeted at information about responsible 
wine consumption and the PDO/PGI schemes in the 
Union.

Recommendation 7
In accordance with Article 110 of the horizontal 
Regulation 1306/2013, the Commission will ensure 
that the combined impact of all CAP instruments is 
measured and assessed in relation to the common 
objectives of the CAP. This includes an evaluation of 
the efficiency of the CAP instruments by 2018 (first 
results). In this context, the Commission will exam-
ine in 2018 how to include an assessment of the use 
of the budget allocated to the wine support scheme 
and of its impacts. It should be noted that informa-
tion on the impact of a policy can only be obtained 
after a sufficiently long period of time has elapsed.

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EU funds are available to support investments in 
wine production and to promote EU wines in 
non-EU countries. In this report, the Court 
examines whether this support for the wine 
sector is well managed and whether it has 
improved the competitiveness of EU wines. 
During its audit the Court found that the need to 
provide investment aid to the wine sector, in 
addition to the aid already available under rural 
development policy, had not been 
demonstrated. Promotion support was often 
used to consolidate market share rather than to 
win new markets. Moreover, the Court identified 
promotion operations which would have been 
undertaken anyway, even without public 
funding. Finally, the impact of the assistance on 
the competitiveness of EU wine producers was 
not always demonstrated. The Court has 
provided the Commission and the Member 
States with recommendations on how to remedy 
the weaknesses mentioned in the report.

EUROPEAN
COURT
OF AUDITORS