EUROPEAN COMMISSION. Brussels, C(2011)

Transcription

1 EUROPEAN COMMISSION Brussels, C(2011) Subject: State Aid / Germany (Sachsen-Anhalt) - Aid No SA (2011/N) - Application of Guidelines for a national framework on state subsidies for compensation of losses caused by natural disasters in the agricultural sector / Directive on the granting of subsidies for compensation of flood damages in agriculture Floods in Sachsen- Anhalt in January 2011 Sir, The Commission wishes to inform Germany that, having examined the information supplied by your authorities on the aid referred to above, it has decided to raise no objections to the relevant aid as it is compatible with the Treaty on the Functioning of the European Union (hereinafter: "TFEU"). In taking this decision the Commission has relied on the following considerations: 1. PROCEDURE (1) The aid was notified in accordance with Article 108(3) of the TFEU by letter from the Permanent Representation of Germany to the European Union of 6 May 2011, registered on 10 May (2) The notified measure concerns aid to be granted in accordance with the Guidelines for a national framework directive on state subsidies for compensation of losses caused by natural disasters in the agricultural sector. The Commission approved those principles, as regards damages to agricultural production, by Decision C(2009)1139 of (State aid case N 568/2008). 2. DESCRIPTION 2.1. Title (3) Application of Guidelines for a national framework on state subsidies for compensation of losses caused by natural disasters in the agricultural sector / H.E. Dr Guido Westerwelle Federal Minister for Foreign Affairs Werderscher Markt 1 D BERLIN B-1049 Brussels - Belgium Telephone: exchange 32 (0) Telex: COMEU B Telegraphic address: COMEUR Brussels.

2 Directive on the granting of subsidies for compensation of flood damages in agriculture - Floods in Sachsen-Anhalt in January Objective of the aid (4) Compensation for losses caused by floods in Sachsen-Anhalt in January 2011 in the whole river Elbe catchment including its feeder rivers Budget (5) The overall budget is 0.8 Million Duration (6) From the approval of the Commission until Beneficiaries (7) Between 51 and 100 agricultural producers National legal basis (8) Haushaltsordnung des Landes Sachsen Anhalt vom (9) Verwaltungsvorschriften des Landes Sachsen-Anhalt zur Landeshaushaltsordnung (10) Grundsätze für eine nationale Rahmenrichtlinie zur Gewährung staatlicher Zuwendungen zur Bewältigung von durch Naturkatastrophen oder widrige Witterungsverhältnisse verursachte Schäden in der Landwirtschaft (hereinafter: "the framework scheme") 2.7. Aid intensity (11) 100 % of the eligible damage according to the framework scheme Aid measure (12) The framework scheme lays down the conditions and modalities of compensation to agricultural producers in the event of damage caused to agricultural production among others by flood, landslide, rockslide, avalanches, earthquake and storm. The already approved framework scheme remains unchanged. (13) Paragraph 16 of the mentioned approval decision C(2009)1139 stipulates that every natural disaster giving rise to compensation to agricultural producers under the notified Guidelines would be individually notified to the Commission containing verified information on the existence of a natural disaster, demonstration of the direct link between the damage caused by the natural disaster and the State aid and a precise assessment of the damage, as well as demonstration of the exclusion of overcompensation. (14) The German authorities have notified floods that occurred in Sachsen-Anhalt in early January 2011 as a natural disaster. The floods affected the whole area of Sachsen- Anhalt. (15) As demonstrated by the German authorities, a sudden temperature rise together with heavy rainfalls after a long period of frost with snow layers led to a sudden and intense thaw in the first week of January From 6 to 7 January the temperature 2

3 rose by up to 12 Kelvin in the respective areas of northern Thüringen, Sachsen and Sachsen-Anhalt. This caused important amounts of snow and ice to melt, which had accumulated since November Furthermore, water levels strongly rose in the river Elbe catchment. As the water levels in the river Elbe catchment had already been quite high prior to the thaw, the additional water led to particularly strong water level rises in the affected rivers in Sachsen-Anhalt. According to the data of the Landesbetrieb für Hochwasserschutz und Wasserwirtschaft Sachsen-Anhalt (Sachsen- Anhalt Institute for flood protection and water management), several gauges of the rivers Aller, Ilse, Havel, Schwarze Elster, Elbe, Mulde, Saale, Wipper, Eine, Unstrut, Helme, Thyra, Weiße Elster, Bode, Warme Bode, Kalte Bode, Holtemme, Selke and Großer Graben rose up to alert levels. The highest alert level (Level 4) was reached at eleven gauges. The water flow rate in early January reached up to 554% of the average (at the gauge Zeitz/Weiße Elster). As a result, ha of agricultural area was flooded and damaged. Mainly winter crops and rapeseed were destroyed. (16) As documented by the German Authorities, up to 100 agricultural undertakings and an agricultural surface area of ha were harmed. (17) Aid will be made available in the form of interest subsidies relating to loans to cover the significant damage of around 4 million caused by the flooding in agricultural holdings in the entire Land of Sachsen-Anhalt. (18) The German authorities have specified that aid is available only for damage directly caused by the floods on farm buildings and facilities, equipment and means of agricultural production as well as losses of income. (19) The eligible damage is determined by deducting insurance payments and any other compensation for the same damage from the verified value of the damage. In order to ensure that the cumulation rules are respected, it is required from each aid applicant to declare to the respective local authority all aid payments received to cover the same eligible costs. (20) The German authorities have specified that the damage will be assessed and compensation granted according to the conditions of the framework scheme and have confirmed that all other requirements stipulated in Commission decision C(2009)1139 will be respected. 3. ASSESSMENT 3.1. Presence of aid (21) For Article 107(1) of the TFEU to apply, the measures must provide an economic benefit to an undertaking which it would not have received in its normal course of business, the aid must be granted to certain undertakings, the benefit must be granted by a Member State or through state resources and the aid must be capable of affecting trade perceptibly between Member States as well as distorting competition. (22) Prima facie, these conditions would seem to be met. (23) The measure is financed out of State resources. It benefits certain undertakings (farmers in Sachsen-Anhalt). As these benefiting undertakings are active in a highly 3

4 competitive international market, the measure distorts or threatens to distort 1 competition and affects trade between Member States. (24) Therefore, the measure constitutes aid and Article 107(1) of the TFEU applies. Hence it must be examined whether derogation from the general principle of the incompatibility of State aid under Article 107(1) might be granted Aid to compensate farmers for losses caused by natural disasters (25) According to Article 107(2)(b) of the TFEU, aid to make good the damage caused by natural disasters or exceptional occurrences shall be compatible with the internal market. For this derogation to be applicable, aid measures must fulfil the requirements of State aid legislation. (26) Aid to make good the damage caused by natural disasters or exceptional occurrences is assessed under Chapter V.B.2 of the Community Guidelines for State aid in the agriculture and forestry sector 2007 to ( the Guidelines ). (27) As laid out in point 121 of the Guidelines, the Commission has consistently held that the notions of natural disaster and exceptional occurrence contained in Article 107(2)(b) of the TFEU must be interpreted restrictively. This has been confirmed by the European Court of Justice 3. Hitherto the Commission has accepted that earthquakes, avalanches, landslides and floods may constitute natural disasters provided that a sufficiently precise description can be established. Point 122 provides that the Commission will continue to evaluate proposals to grant aid in accordance with Article 107(2)(b) on a case-by-case basis, having regard to its previous practice in this field. (28) Point 123 provides that once the existence of a natural disaster or an exceptional occurrence has been demonstrated, the Commission will permit aid of up to 100 % to compensate for material damage. Compensation should normally be calculated at the level of the individual beneficiary. In order to avoid over-compensation, any payments due, for example under insurance policies, should be deducted from the amount of aid. The Commission will also accept aid to compensate farmers for loss of income resulting from the destruction of the means of agricultural production, provided that there is no over-compensation. (29) The German authorities have indicated that the notified aid would be granted under the framework scheme that stipulates the conditions for receiving the aid and the method to calculate the losses and the compensation. With Decision C(2009)1139 of (State aid case N 568/2008) the Commission approved the framework scheme under Chapter V.B.2 of the Guidelines. The framework scheme remains unchanged. (30) The aid will be granted in accordance with the conditions of the approved framework scheme, and as required in paragraph 16 of the approval decision, the present notification merely communicates detailed information on the existence and According to the case law of the Court of Justice, improvement in the competitive position of an undertaking resulting from a State aid generally points to a distortion of competition compared with other competing undertakings not receiving such assistance, Case C-730/79, ECR 1980, p. 2671, paragraphs 11 and 12. OJ C 319, , p. 1. See judgment of 11 November 2004 in Case C-73/03 Spain v Commission, paragraph 37; Judgement of 23 February 2006 in Case C-346/03 and C-529/03 Giuseppe Atzeni and others, paragraph 79. 4

5 seriousness of the event in order to demonstrate the existence of a natural catastrophe, on the damage, as well as on the exclusion of overcompensation. Hence the assessment is limited to verify the existence of a natural disaster, to check the direct link between the natural disaster and the damage and to control that there is no overcompensation. (31) The German authorities have explained that the actual damage was caused by severe flooding in the Land Sachsen-Anhalt in early January Sufficient information on the existence and seriousness of the event verified by Landesbetrieb für Hochwasserschutz und Wasserwirtschaft Sachsen-Anhalt as well as related documents of the Bundesamt für Bevölkerungsschutz und Katastrophenhilfe have been submitted. Therefore the exceptional emergency situation notified by the German authorities should be considered a natural disaster within the meaning of Article 107(2)(b) of the TFEU. (32) The German authorities have specified that only verified damage caused by the January 2011 flooding in Sachsen-Anhalt is eligible for compensation. A sufficient description of the damage on farm buildings and facilities, equipment and means of agricultural production which amounts to around 4 million has been provided (see paragraph (17)). The German authorities have confirmed that the aid would be granted according to the framework scheme, notably in determining the damage, verifying the causal link between the natural disaster and the damage occurred, and assessing and verifying the value of the eligible losses at the level of the individual beneficiary. The German authorities have assured that income losses will only be compensated in accordance with the framework scheme (State aid case N 568/2008). Furthermore, any payment due, for example under insurance policies, will be deducted from the amount of aid. (33) Finally, the German authorities committed to suspend any payment of aid under the notified measure if the beneficiary still has at its disposal an earlier unlawful aid that was declared incompatible by a Commission Decision (either concerning an individual aid or an aid scheme), until that beneficiary has reimbursed or paid into a blocked account the total amount of unlawful and incompatible aid and the corresponding recovery interest. 4 (34) Based on the above considerations, the notified aid meets the requirements as provided under chapter V.B.2 of the Guidelines. 4. CONCLUSION (35) As the measure complies with Chapter V.B.2 of the Guidelines, the measure may be considered to be compatible with the Internal Market under Article 107 (2) (b) of the TFEU. The Commission has accordingly decided not to raise objections to the notified measure. (36) If this letter contains confidential information which should not be disclosed to third parties, please inform the Commission within fifteen working days of the date of receipt. If the Commission does not receive a reasoned request by that deadline, you will be deemed to agree to disclosure to third parties and to publication of the full text of the letter in the authentic language on the Internet site 4 See judgment of 15 May 1997 in Case C-355/95 P Textilwerke Deggendorf GmbH v. Commission, paragraph 25 5

6 Your request should be sent by registered letter or fax to: European Commission Directorate-General for Agriculture and Rural Development Directorate M.2 Office: Loi 130 /140 B-1049 Brussels Fax No.: Yours faithfully, For the Commission Dacian CIOLOŞ Member of the Commission 6