State Aid / Germany (Sachsen-Anhalt) - Aid No SA (2014/N) - Compensation for losses caused by floods 2013 (losses in the agricultural sector)

Transcription

1 EUROPEAN COMMISSION Brussels, C(2014) Subject: State Aid / Germany (Sachsen-Anhalt) - Aid No SA (2014/N) - Compensation for losses caused by floods 2013 (losses in the agricultural sector) Sir, The Commission wishes to inform Germany that, having examined the information supplied by your authorities on the scheme referred to above, it has decided not to raise any objections to the notified scheme 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 scheme was notified in accordance with Article 108(3) TFEU by letter from the Permanent Representation of Germany to the European Union of 14 February 2014, registered on 17 February The German authorities submitted additional information on 14 March and on 30 April DESCRIPTION OF THE AID SCHEME 2.1. Title (2) Compensation for losses caused by floods 2013 (losses in the agricultural sector) 2.2. Objective of the aid scheme (3) The notified aid scheme aims to make good the direct damage suffered by undertakings active in the agricultural sector and caused by a natural disaster - floods of May and June 2013 in Sachsen-Anhalt (hereinafter: "the floods") Legal basis Richtlinie über die Gewährung von Zuwendungen zur Beseitigung der Hochwasserschäden 2013 (Richtlinie Hochwasserschäden Sachsen-Anhalt 2013): Section 2, part B, point 1 (Hilfen zur Schadensbeseitigung der Land- und Forstwirtschaft und in der ländlichen Infrastruktur im Außenbereich von Gemeinden: Schäden in der Land- und Forstwirtschaft); Seiner Exzellenz Herrn Frank-Walter Steinmeier Bundesminister des Auswärtigen Werderscher Markt 1 D Berlin B-1049 Brussels - Belgium Telephone: exchange 32 (0) Telex: COMEU B Telegraphic address: COMEUR Brussels.

2 Landeshaushaltsordnung des Landes Sachsen-Anhalt of Ascertainment of the natural disaster and geographic scope (4) The heavy rainfalls of May and June 2013 in the region of Sachsen-Anhalt resulted in rising levels of rivers and led to flooding that severely affected the infrastructure and operation of undertakings in many parts of Sachsen-Anhalt. Germany could not provide a final list of affected areas but indicated that compensation will only be paid to undertakings in the agricultural sector that have suffered material damages caused directly by the floods. (5) The floods and the extent of the resulting damage were classified by the German Federal Office for Civil Protection and Disaster Assistance (BBK) as a natural disaster. The German Weather Service declared "century rainfall". (6) The natural disaster was transnational and affected also several other regions of Germany as well as Austria, Hungary and the Czech Republic. On 3 June 2013, the Commission issued a press communication 1 on the event, referring also to the huge floods of 2002 that affected the same countries, and mentioned that in principle the Member States concerned would be eligible for support from the European Solidarity Fund (EUSF) Budget (7) The allocated budget of the measure is EUR 6 million financed by budgetary funds of the Land Sachsen-Anhalt and of the Bund Duration (8) The aid scheme will be implemented as a one-off measure from the date of the Commission Decision until 31 December Beneficiaries (9) Undertakings of all sizes active in the agricultural sector. The estimated number of beneficiaries is below Eligible expenses (10) Aid under the present notified scheme would be granted to remediate material damages directly caused by floods: - losses on crops; - losses with regard to farm buildings and facilities, machinery and equipment, as well as animals; - other costs which are a direct consequence of the floods (as e.g. losses on raw materials and supplies (operating capital), evacuation costs). They also include costs of measures which were taken immediately before or during the floods as far as they directly served to avert dangers associated with the floods and to limit the losses associated with the floods

3 (11) Aid would also be granted in case of losses due to impossible sowing if the respective areas, also with a changed crop rotation, cannot be cultivated by 30 th June 2014 at the latest. Other indirect damages shall not be compensated under the notified aid scheme. (12) Aid shall also cover preparatory and related costs (e.g. expert opinions) Form of aid and intensity (13) Aid under the present notified scheme would be granted in the form of direct grants. (14) The compensation would be up to 100% of the eligible expenses. (15) Support up to EUR 2000,- will be excluded Cumulation (16) The aid cannot be cumulated with aid received from other local, regional, national or EU schemes to cover the same eligible costs. (17) In order to ensure that the cumulation rules are respected, it is required from the undertaking to declare to the competent authority all payments received from any other sources aiming to compensate the same eligible expenses, including insurance payments received under insurance policies. Given the estimated number of beneficiaries, audit with regard to other payments is foreseen in all cases. Costs which have not occurred due to the natural disaster shall also be deducted from the aid amount Management of the measure (18) In order to receive compensation the undertaking has to contact the competent authority ("Amt für Landwirtschaft, Flurneuordnung und Forsten") by submitting an application which contains all the relevant information no later than by 30 June The awarding authority should in principle decide by 31 December (19) The awarding authority verifies the application (including the plausibility of the information), determines the eligible damage and assesses whether the conditions for granting the aid are met. Re-verifications will be conducted in case of large scale damages. (20) The amount of damage in the agricultural sector is determined in accordance with the Guidelines for a national framework directive on State subsidies for compensation of losses by natural disasters in the agricultural sector ( Grundsätze für eine nationale Rahmenrichtlinie zur Gewährung staatlicher Zuwendung zur Bewältigung von durch Naturkatastrophen oder widrige Witterungsverhältnisse verursachten Schäden in der Landwirtschaft ) and with the corresponding Commission authorisation decision of 27 June 2013 (SA.36787). (21) In case of losses on crops, the aid is awarded on the basis of the official or expert's ascertainment of damages submitted together with the application. In case of impossible sowing, the damage can be claimed once as loss of income and must be supported by adequate supporting documents. In case of other eligible expenses, the aid is based on invoices, expert's reports, estimation of costs or other relevant documents submitted together with the application. 3

4 (22) The concept of damage as applied by the German authorities is based on the principle that only the costs necessary to restore or replace damaged asset to its initial prefloods condition are eligible. (23) The amount of compensation will be calculated separately for each individual beneficiary. (24) The payments should be made within 3 years after the damages occurred Other commitments (25) The German authorities gave their assurance that the measures covered by the scheme at hand cannot benefit from co-financing under Council Regulation (EC) 1698/ ASSESSMENT UNDER STATE AID RULES 3.1. Presence of aid within the meaning of Article 107(1) TFEU (26) For Article 107(1) TFEU to apply, the measure must provide an economic benefit to an undertaking which it would not have received in its normal course of business, the aid must be selective, the benefit must be granted by the State or through State resources and the aid must threaten to distort competition and be capable of affecting trade between Member States. (27) These conditions are met. (28) The measure is financed out of State resources, from the State budget. It benefits certain undertakings in Germany, (Sachsen-Anhalt) as mentioned in recital (9). As these benefiting undertakings are active in a highly competitive international market, the measure distorts or threatens to distort 3 competition and affects trade between Member States. (29) Therefore, the Commission concludes that the measure constitutes State aid pursuant to Article 107(1) TFEU. (30) As a result the aid may be regarded as compatible with the internal market only if any of the exemptions provided for in Article 107 TFEU apply Compatibility with the internal market pursuant to Article 107(2)(b) TFEU (31) According to Article 107(2)(b) TFEU, aid to make good the damage caused by natural disasters or exceptional occurrences shall be compatible with the internal market. (32) The German authorities have indicated that the notified aid would be granted under the aid scheme that stipulates the conditions for receiving the aid, the aid amounts and the method to calculate the losses and the compensation. 2 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, , p. 1.). 3 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. 4

5 (33) Currently, the Commission assesses aid to make good the damage caused by natural disasters or exceptional occurrences on the basis of Chapter V.B.2. of the Community Guidelines for aid in the agriculture and forestry sector (hereinafter: "AGRI Guidelines"). 5 Application of the AGRI Guidelines (34) As laid down in point 121 of the AGRI Guidelines, the Commission has consistently held that the notions of natural disaster and exceptional occurrence contained in Article 107(2)(b) TFEU must be interpreted restrictively. 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 of the AGRI Guidelines provides that the Commission will continue to evaluate proposals to grant aid in accordance with Article 107(2)(b) TFEU on a caseby-case basis, having regard to its previous practice in this field. The existence of a natural disaster (35) The Commission has already confirmed in several decisions that floods 6 constitute natural disasters within the meaning of Article 107(2)(b) TFEU. (36) The heavy rainfall that took place in May and June 2013 resulted in floods affecting business activities of undertakings over a large territory of several German Federal States including Sachsen-Anhalt. The floods and the scale of damages they caused can be qualified as natural disaster. The event was recognised as a natural disaster by the German authorities and by the Commission (see recitals (5) and (6)). (37) For the above mentioned reasons the flood event notified by the German authorities may be considered a natural disaster within the meaning of Article 107(2)(b) TFEU. Mechanism to rule out overcompensation (38) According to point 123 of the AGRI Guidelines, the Commission will permit aid of up to 100% to compensate for material damages, once the existence of a natural disaster has been demonstrated. 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 agricultural producers for loss of income resulting from the destruction of the means of agricultural production, provided that there is no overcompensation. In all cases the Member State has to 4 OJ C 319, , p.1. 5 The application of the AGRI Guidelines was prolonged by the Commission communication concerning the amendment and prolongation of the application of the Community guidelines for State aid in the agriculture and forestry sector 2007 to 2013 (OJ C 339, , p.1) until See State aid/germany (Bavaria), Aid No SA.31144/N/10 (N 274/A/2010) Disaster Aid Scheme "Bayerischer Härtefonds Finanzhilfen" (beneficiaries in the agriculture and forestry sector) of 15 June 2011; State aid/germany (Saxony), Aid No SA (2011/N) Framework scheme disaster aid Saxony (beneficiaries in the agriculture sector) of 25 January 2012; State aid/poland, SA (2011-N) Aid scheme for compensation for damage caused by floods in Poland (beneficiaries in the agriculture sector) of 4 April 2012; State aid N 359/2010 Germany Disaster Aid Scheme "Regelung Hochwasserhilfe 2010 Sachsen" (OJ C 283, , p. 3.); State aid N 386a/2009 Germany Scheme on granting of State aid to compensate for damage caused by natural disasters in Rheinland-Pfalz (OJ C 25, , p. 11.); State Aid/Hungary, Aid No SA (2011/N) Agricultural weather risk management scheme of 8 May 2012; State Aid/Germany, Aid No (2013/N) Guidelines for a national framework directive on state subsidies for compensation of losses by natural disasters in the agricultural sector of 27 June

6 demonstrate a direct link between the damage caused by the natural disaster and the State aid and as precise an assessment as possible to be made of the damage suffered by the beneficiaries concerned. (39) To meet these requirements, the German authorities established the following criteria: i. Compensation may only be granted to the affected undertakings to cover the costs caused by damage which is a direct consequence of the floods of May/ June To this extent the German authorities have provided detailed report and evidence proving that damages in the agriculture sector in Sachsen-Anhalt were caused by the floods of May/June ii. iii. iv. To determine the damage, the German authorities require that, together with the application for contribution, the beneficiaries of the aid submit documents (see recital (21)) ascertaining the material value of the damage caused directly by the floods. The amount of compensation will be calculated separately for each individual beneficiary (see recital (23)). The total amount of the granted aid to an individual undertaking cannot exceed the amount of its justified damage, reduced by any reimbursement received from any other sources (e.g. donations, other grants, other funds) including insurance payments. v. The cumulated amount of compensation paid to the individual beneficiary may not exceed 100 % of the eligible expenses as the German authorities confirm (see recital (17)) that any other compensatory payments for the same eligible expenses, including insurance payments, will be deducted from the amount of aid paid under this notified aid scheme. vi. In case of overcompensation, the competent authority has a legal obligation to recover any overpayments. (40) It can therefore be concluded that the amount of the individual aid under the present scheme and of all the compensations from any other sources, including insurance payments, may not exceed the total amount of the justified damage incurred by the individual beneficiary. (41) On the basis of the foregoing the Commission finds that the proposed scheme compensates for damage caused by the natural disaster only and that it introduces an appropriate mechanism to ensure that there will be no overcompensation. (42) Therefore, the Commission considers that the objective of the proposed scheme is to restore the situation of the affected undertakings to the pre-natural disaster status and to enable them to resume their activities without giving them an additional advantage. The Commission also notes that the notified scheme in principle excludes indirect losses from compensation (see recital (11); the only exception concerns losses from impossible sowing under certain circumstances). Duration of the scheme (43) According to point 189 of the AGRI Guidelines, schemes covering State aid measures that can also benefit from co-financing under Council Regulation (EC) No 1698/2005 6

7 should be limited to the duration of the programming period Other aid schemes should not apply for more than seven years. (44) The current aid scheme would apply until 31 December As it cannot benefit from co-financing under Council Regulation (EC) No 1698/2005 (see recital (25)), the duration of the measure is in line with the conditions laid down in point 189 of the AGRI Guidelines. Moreover it is in line with the provisions of point 119 of the AGRI Guidelines because no payment will be done more than 3 years after the triggering event. (45) German authorities confirmed that the notified scheme will be implemented only from the date of approval by the Commission (see recital (8)). (46) In line with the foregoing, the Commission considers that the relevant provisions of the AGRI Guidelines are complied with. 4. CONCLUSION (47) The Commission has accordingly decided not to raise objections to the scheme on the grounds that it is compatible with the internal market pursuant to Article 107(2)(b) of the Treaty on the Functioning of the European Union. (48) 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 the publication of the full text of this letter in the authentic language on the Internet site: Your request should be sent by registered letter or fax to: European Commission Directorate-General for Agriculture and Rural Development Directorate I Office: Loi 130 /128 B-1049 Brussels Fax No.: Yours faithfully, For the Commission Dacian CIOLOŞ Member of the Commission 7