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21.3.

98 EN Official Journal of the European Communities C 86/3

STATE AID
C 1/98 (ex N 750/B/95)
Italy

(98/C 86/03)

(Articles 92 to 94 of the Treaty establishing the European Community)

Commission communication pursuant to Article 93(2) of the EC Treaty to other Member States
and interested parties concerning aids planned in Sicilian Regional Law No 68/95 and the
application of certain regional aid schemes for the production, processing and marketing of
agricultural products

By the following letter, the Commission informed the On 24 September 1997, the Commission approved aid
Italian Government of its decision to open the NØ750/A/95 (letter to the Italian Government No
procedure. SG(96) D/8236).

In the light of the information supplied by the Italian


‘By letter dated 8 August 1995, the Italian Permanent authorities, Articles 6 and 7 of Regional Law No 68/95
Representative to the European Union notified the certainly apply to the sectors concerned. As regards the
Commission, in accordance with Article 93(3) of the other provisions of the Law, the Italian authorities have
Treaty, of the above draft Regional Law. never replied to the Commission’s question regarding the
sectors covered by the aid schemes provided for in
Articles 1, 3 and 5 of the Law (question posed in a telex
Examination of the aid provided for in the draft (in the dated 3 December 1996).
meantime adopted as Regional Law No 68/95) was split
into two parts to permit measures applicable to the
production, processing and marketing of products listed After studying the available information, the Commission
in Annex II to the Treaty (aid NØ750/B/95, the subject has decided to open the procedure provided for in
of this communication) to be examined separately. Article 93(2) of the Treaty in respect of the aid provided
for in Articles 1 (excluding the part relating to Article 44
of Regional Law No 25/93, which is now redundant), 3,
5, 6 and 7 of Regional Law No 68/95.
NB: Except where otherwise stated, ‘‘sectors concerned’’
means all Annex II products (agricultural and fisheries
products). In reaching this decision, the Commission took account
of the following:

Additional information was requested by the 1.ÙArticles 1 and 3 of Regional Law No 68/95 (and the
Commission on 2 October 1995. Some of the regional provisions to which it refers) and Article 5 of
information requested was supplied by the Italian Regional Law No 68/95
Permanent Representative in letters dated 18 July and 6
November 1996.
Article 1 of Law No 68/95

On 3 December 1996, the Italian authorities were asked 1.1.ÙÙThis Article sets up two guarantee funds (one for
for further specific, detailed information on the all the industrial undertakings, the other for trading
sectors covered by Regional Law No 68/95. undertakings) intended to cover the risks of
financial restructuring operations implemented
under the following provisions:

By letter dated 15 September 1995, the Italian authorities —ÙArticle 34 of Regional Law No 15/93,
provided certain information on Article 6 of the
Regional Law. The remaining information requested has
still not been sent. In response to a reminder sent by the —ÙArticle 43 of Regional Law No 25/93, as
Commission on 22 October 1997, the Italian authorities, amended by Article 3 of Regional Law No
in a letter dated 28 October 1997, informed the 68/95,
Commission that they would not be supplying the
remaining information. —ÙArticle 44 of Regional Law No 25/93.
C 86/4 EN Official Journal of the European Communities 21.3.98

1.2.ÙÙThe aid scheme provided for in Article 34 of 1.9.ÙÙBy letter dated 16 January 1997, the Italian auth-
Regional Law No 15/93 was approved by the orities informed the Commission that, although it
Commission as aid number NØ730/95. The aid is in has not been formally repealed, Article 44 has not
the form of reduced interest rates for the financial been applied because the budgetary resources
restructuring of undertakings in the manufacturing provided for the scheme by Regional Law 25/93
sector. were not released in time (before the end of the
1993 financial year).

1.3.ÙÙThe aid scheme provided for in Article 43 of


Regional Law No 25/93 was approved as de 1.10.ÙThe reference made in Article 1 of Regional Law
minimis aid as part of aid NØ472/94. The aid is to No 68/95 to the scheme provided for in Article 44
cover the debts of trading undertakings. of Regional Law No 25/93 is therefore null and
void. The Commission notes this.

1.4.ÙÙAs regards the aid provided for in Article 44 of


Regional Law No 25/93, the Commission decided
that it was incompatible with the common market 1.11.ÙAs regards the existing aid schemes referred to
(decision of 17 July 1996, adopted under under 1.2, 1.3 and 1.6, doubts were raised about
procedure CØ30/95 — ex aid NØ113/B/93). Article their non-applicability to the sectors concerned
44 provides for aid in the form of reduced interest during examination of the aid in the form of a
rates on loans for the consolidation of the debts of guarantee. The Italian authorities were therefore
undertakings trading in fruit and vegetables, in asked on 3 December 1996 about the sectoral
particular citrus fruits. scope of each of the provisions of Regional Law
No 68/95 (and, therefore, of the aid schemes in
question).
Article 3 of Regional Law No 68/95

1.12.ÙSince the Italian authorities have refused to supply


1.5.ÙÙArticle 3 of Regional Law No 68/95 amends the this information, the Commission cannot at present
conditions for applying the aid introduced by the exclude the possibility that Articles 1, 3 and 5 of
scheme referred to in 1.3 above. Regional Law No 68/95 and the regional
provisions referred to under 1.2 and 1.3 above also
apply to these sectors.
Article 5 of Regional Law No 68/95

1.13.ÙIt is therefore also unable to verify that the aids


1.6.ÙÙThis Article, which provides for aid in the form of provided for by Articles 1, 3 and 5 of Regional
reduced interest rates on loans to cover the debts Law No 68/95 are compatible with the common
of craft undertakings was approved as aid market in the light of the criteria for assessment
NØ750/A/95 as de minimis aid. which apply to State aids in the sectors in question
(in particular as regards State guarantees and
national aids to firms in difficulties).
Appraisal

1.14.ÙThe Commission is therefore obliged to open the


1.7.ÙÙIn view of the mechanism set up (the guarantee is procedure provided for in Article 93(2) of the
granted on loans benefiting from the inital regional Treaty against Articles 1, 3 and 5 of Regional Law
aids), compatibility of the aid in the form of a No 68/95 to the extent that they apply to the
guarantee must be assessed inter alia, in the light of sectors in question.
the compatibility of the initial aid granted in the
form of an interest rate reduction for loans to
consolidate debts.
1.15.ÙUnder that procedure, the Commission:

1.8.ÙÙAs regards the guarantee granted by the fund for


the operations provided for in Article 44 of —Ùrequests the Italian Government to provide,
Regional Law No 25/93, since the Commission with regard to the scheme provided for in
has already decided that those operations are Article 34 of Regional Law No 15/93 (and the
incompatible with the common market, it must also provision of Article 1 of Regional Law No
view the guarantee as incompatible. 68/95 referring thereto), in the event that it has
21.3.98 EN Official Journal of the European Communities C 86/5

been applied in the sectors concerned, 2.5.ÙÙThe criteria in question are as follows:
information which will enable the Commission
to verify that the rules on State aid in those
sectors are being complied with; —Ùthe loans must be ‘‘seasonal credits’’ to cover
general overheads (the purchase of inputs, the
payment of workers, etc.),
—Ùwith regard to the schemes provided for in
Article 43 of Regional Law No 25/93 (and the
provisions of Articles 1 and 3 of Regional Law —Ùthe loan must not be granted for a single
No 68/95 referring thereto) and Article 5 of product or linked to a single operation,
that Law, reminds the Italian Government that
the de minimis rule does not apply to the
sectors concerned. It asks the Italian authorities —Ùthe duration of the loan must not exceed 12
to confirm that the schemes were actually months.
implemented (and continue to be so) in
accordance with that rule outside the sectors
concerned. 2.6.ÙÙThere are doubts, however, about whether the aid
in question can be considered as a true operating
loan (in the sense of a ‘‘seasonal credit’’).

2.ÙArticle 6 of Regional Law No 68/95


Export aid

2.1.Ù This Article provides for aid in the form of reduced


interest rates on loans for a period not exceeding 2.7.ÙÙIf account is taken of the rules for the granting of
twelve months granted to traders in Sicily at least aid, in particular the restriction of aid to export-
70Ø% of whose turnover is accounted for by the oriented undertakings and calculation of the size
sale of fruit and vegetables, including citrus fruits, of the reduced interest rate loan (50Ø% of the
outside the region. undertaking’s turnover), the aid would seem to
correspond to the definition of export aid given in
the Commission communication on application of
the de minimis rule (‘‘Øüexport aidü means any aid
2.2.Ù The interest rate after application of the reduction directly linked to the quantities exported [.Ø.Ø.] or
is 4Ø% and the loan may not exceed 50Ø% of the to current expenditure linked to the export
average turnover during the last three years. activity’’). The aid in question is directly linked to
the quantities exported, firstly, because their
relative volume is important in determining the
undertaking’s eligibility for the measure and,
2.3.Ù The budget for the measure for the period secondly, because the aid is calculated on the basis
1995-1997 is ITL 15Ø000 million (around ECU 7,5 of the undertaking’s turnover (which must be
million) allocated as follows: ITL 10Ø500 million mostly accounted for by export earnings).
specifically for the citrus fruit sector and ITL 4Ø500
million for the fruit and vegetable sector in general.
2.8.ÙÙIn view of these special conditions, the aid, even if
it is presented in the form of a ‘‘traditional’’
operating loan, would appear, in covering part of
Appraisal the costs involved, to have the intention (and the
effect) of supporting exports of the two types of
product referred to in the Article 6 concerned
(citrus fruits and fruit and vegetables). It cannot
2.4.ÙÙThe Italian authorities asked that these aids be therefore be considered as a seasonal credit
examined in the light of the criteria used by the intended to cover advance payment of the
Commission for operating loans before adoption of operator’s expenditure linked to the agricultural
the guidelines published in OJ CØ44 of 16 February production cycle pending receipt of income during
1996Ø(Î). that same cycle.

2.9.ÙÙIt is Commission practice to consider export aid as


(Î)ÙApplication of the guidelines to new aid schemes is currently
operating aid ineligible for any of the derogations
suspended (see Commission letter to the Member States provided for in Article 92(2) and (3) of the Treaty
dated 4 July 1997). (see Commission communication on the method
C 86/6 EN Official Journal of the European Communities 21.3.98

for the application of Article 92(3)(a) and (c) to Appraisal


regional aidØ(Ï). The aid has no lasting effect on
the development of the sector or region concerned
and its effect disappears when the payment of aid
ceases. 3.6.ÙThe aid provided for in Article 7 of Regional Law
No 68/95 must be examined in the light of the
criteria used by the Commission for examining aid
intended to reduce the financial cost of loans taken
2.10.ÙThe Commission has therefore decided to open the out to finance investments already carried out
procedure provided for in Article 93(2) of the (criteria applicable to agricultural and fisheries
Treaty in respect of this aid. undertakings), in accordance with which:

3.ÙArticle 7 of Regional Law No 68/95 —ÙThe cumulated grant equivalent of the aid
granted when the loans were taken out and the
aid in question may not exceed the rate
3.1.ÙThe Article 7 in question authorises the IRCAC generally allowed by the Commission for
(Istituto Regionale per il Credito alla Cooperazione investment aid (for the production and the
— Regional Institute for Cooperative Credit), under processing and marketing of Annex II products).
Regional Law No 37/78, to grant young people Any sectoral limits must be respectedØ(Ð).
loans at a reduced rate of interest as working capital
to set up undertakings.
—ÙThe aid in question must follow adjustments in
the rate of interest on new loans to take account
3.2.ÙRegional Law No 37/78 (since repealed) provided of changes in the price of money (the aid must
for an aid scheme for young entrepreneurs be less than or equal to the change in the rate
permitting the granting of: 1. aid in the form of for new loans) or must be for agricultural under-
grants and reduced rate loans for investments and 2. takings presenting guarantees of viability,
aid in the form of reduced rate loans for running particularly where the financial charges resulting
undertakings during the first three years after those from existing loans are such that there is a risk
investments had been made and brought on line. that the undertakings could be placed in danger
or could fail.

3.3.ÙBecause of delays in making investments, a number


(25 according to the information available) of coop- —ÙThe difficulties of the undertakings must be the
eratives could not begin production before the end result of external rather than internal factors.
of the grace period (three years) for the repayment
of the loans taken out for making the investments
and could consequently not repay the loans. They
were therefore ineligible for the operating loan. 3.7.ÙThe Italian authorities have provided no
information permitting verification that the criteria
have been complied with.
3.4.ÙThe measure in question (Article 7 of Regional Law
No 68/95) permits, in substance, the grant of one of
the aids provided for in Law No 37/78 to under-
takings which, under that Law, do not fulfil the 3.8.ÙThe Commission has therefore decided to open the
eligibility criteria for that aid. procedure provided for in Article 93(2) of the
Treaty in respect of the aid provided for in Article 7
of Regional Law No 68/95.
3.5.ÙThe Article in question allows those undertakings
access to the operating loan provided for in Law
No 37/78 provided that the loan granted under the
provisions of that Law is equal to or greater than Under the procedure laid down in Article 93(2) of the
the debt incurred (on financing the investment). Treaty, the Commission hereby gives notice to the
IRCAC sets unpaid debts off against new loans (i.e. Italian Government to submit its comments within one
part of the new loan is used to pay off the loan month of the date of this letter.
taken out to make the investments).

(Ð)ÙOJ LØ79, 23.3.1994 (agricultural sector) and OJ CØ100,


(Ï)ÙOJ C 212, 12.8.1988. 27.3.1997 (fisheries sector).
21.3.98 EN Official Journal of the European Communities C 86/7

The Commission will give notice to the other Member Any repayment must be made in accordance with Italian
States and to other interested parties, by way of a notice law and include interest calculated on the basis of the
in the Official Journal of the European Communities, to reference rate used to assess regional aid schemes and
submit their comments within one month of publication starting to run on the date when the illegal aid was
of that notice. granted.’

The Commission hereby gives the other Member States


The Commission draws the attention of the Italian and interested parties notice to submit their comments on
Government to the letter it sent to all the Member States the measures in question within one month of the date of
on 3 November 1983 concerning their obligations under publication of this notice to:
Article 93(3) of the EC Treaty and to the notice
published in Official Journal of the European Communities
CØ318 of 24 November 1983, page 3, which states that
European Commission,
any aid granted illegally, i.e. without a final decision
Rue de la Loi/Wetstraat 200,
under the procedure laid down in Article 93(2) of the
B-1049 Brussels.
Treaty having been reached, is likely to be the subject of
a request for reimbursement and/or a refusal to charge
to the EAGGF budget expenditure on national measures Any comments will be forwarded to the Italian
directly affecting Community measures. Government.