EUROPEAN COMMISSION. The Commission has based its decision on the following considerations:

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1 EUROPEAN COMMISSION Brussels, C(2016) 6983 final Subject: State aid/germany Aid No SA (2016/N) Brandenburg: Aid to large enterprises for animal disease prevention and control and for improving animal health Sir, The European Commission (hereinafter: "the Commission") wishes to inform Germany that, after examining the information supplied by your authorities on the aid scheme referred to above, it has decided not to raise any objections to the aid scheme in question, as it is compatible with the internal market pursuant to Article 107(3)(c) of the Treaty on the Functioning of the European Union (hereinafter: "TFEU"). The Commission has based its decision on the following considerations: 1. PROCEDURE (1) In accordance with Article 108(3) of the TFEU, Germany notified to the Commission the State aid scheme mentioned above by electronic communication of 21 April 2016, registered by the Commission on the same day. The Commission sent two requests for additional information on 20 June and 29 July 2016, to which the German authorities provided replies on 22 July and 29 August DESCRIPTION 2.1. Title (2) Brandenburg: Aid to large enterprises for animal disease prevention and control and for improving animal health Seiner Exzellenz Herrn Dr. Frank-Walter Steinmeier Bundesminister des Auswärtigen Werderscher Markt Berlin DEUTSCHLAND Commission européenne, B-1049 Bruxelles Belgique; Europese Commissie, B-1049 Brussel België

2 2.2. Objective (3) With the present notification the German authorities aim to support the cost of prevention of animal diseases, namely of vaccination against Zoonotic Salmonellosis in poultry farming in Brandenburg Legal basis (4) Gewährung von Beihilfen für Maßnahmen zur Tierseuchenverhütung und Bekämpfung zur Verbesserung der Tiergesundheit für Große Unternehmen (Nicht-KMU), 4. Dezember ; (5) Verordnung zum Schutz gegen bestimmte Salmonelleninfektionen beim Haushuhn und bei Puten (Geflügel Salmonellen Verordnung GflSalmoV) 2 ; (6) Commission Implementing Decision of 16 December 2014 approving certain amended programmes for the eradication, control and monitoring of animal diseases and zoonoses for the year 2014 and amending Implementing Decision 2013/722/EU as regards the Union financial contribution for certain programmes approved by that Decision (notified under document C(2014) 9650, OJ L 363, , p 173); (7) Commission Implementing Decision of 29 November 2013 approving annual and multiannual programmes and the financial contribution from the Union for the eradication, control and monitoring of certain animal diseases and zoonoses presented by the Member States for 2014 and the following years (notified under document C(2013)8417, OJ 328, , p 101); (8) Commission Regulation (EC) No 1177/2006 of 1 August 2006 implementing Regulation (EC) No 2160/2003 of the European Parliament and of the Council as regards requirements for the use of specific control methods in the framework of the national programmes for the control of salmonella in poultry, OJ L 212, , p Duration (9) From the date of the Commission decision until 31 December Budget (10) Overall budget: EUR 0.97 million 2.6. Beneficiaries (11) Large poultry undertakings in Brandenburg. Small and medium enterprises active in poultry farming are supported through a different state aid mechanism, namely through block exemption 3. 1 Granting of aid for animal disease prevention and control measures to improve animal health for large enterprises (non-smes), 4 December Regulation on the protection against certain salmonella infections in domestic poultry and turkeys (Poultry Salmonella Regulation GflSalmoV). 2

3 (12) The beneficiaries are active in the primary agricultural production Aid instrument (13) Direct grant, partially financed by means of a parafiscal levy Parafiscal levy (14) As notified, the aid in question is partially financed by revenues from a parafiscal levy (hereinafter: "the levy"), collected pursuant to 6 paragraph 2 of the "Gesetz zur Ausführung des Tiergesundheitsgesetzes" (Act implementing the Animal Health Law", hereinafter: "AGTierGesG"), for each of the following types of animals: horses, donkeys, mules and hinnies, bovine including bisons, water buffalos, pigs, sheep, goats, game and poultry. (15) As explained by the German authorities, this aid scheme is a measure forming part of the policy of Brandenburg. (16) The body competent to collect the levy is the following State authority: the Epizootic Office of the State Office for Occupational Safety, Health and Consumer Protection ("Landesamt für Arbeitsschutz, Verbraucherschutz und Gesundheit (LAVG) Tierseuchenkasse Brandenburg, hereafter "LAVG"). (17) The LAVG is a legal body of the Federal State Brandenburg, set up under public law through the Law establishing the State Office for Environment and the State Office for Occupational Safety, Health and Consumer Protection, as well as the dissolution of the State Office for the Environment, Health and Consumer Protection and the State Office for Occupational Safety from January 25, 2016 (GVBl. I / 16, [no. 5]) ("Gesetz zur Errichtung des Landesamtes für Umwelt und des Landesamtes für Arbeitsschutz, Verbraucherschutz und Gesundheit sowie zur Auflösung des Landesamtes für Umwelt, Gesundheit und Verbraucherschutz und des Landesamtes für Arbeitsschutz vom 25. Januar 2016 (GVBl. I/16, [Nr. 5]"). It is subject to the legal supervision by the relevant Brandenburg Ministries. (18) The Epizootic Office of the LAVG is collecting levies for the following purposes established by public law: (1) to provide compensation for animals lost due to epizootic or similar diseases; (2) to bear the costs of preventing and combating epizootic or similar diseases and improve animal health. (19) The levies are collected in accordance with 6 Paragraph 2 AGTierGesG, for each of the types of animals mentioned in recital (14). (20) The amount of the contributions is set out in the Regulation on the collection of epizootic cash contributions ("Tierseuchenkassenbeiträgen", hereafter: TierskBV) of 11 December 2014, replaced by the Ordinance of 7 December 2015 (GVBl. II Nr. 63). (21) The levy is fixed on the basis of the evolution of the number of animals, the evolution of holdings and their concentration in a particular location, the size of 3 Commission Regulation (EU) No 702/2014 of 25 June 2014 declaring certain categories of aid in the agricultural and forestry sectors and in rural areas compatible with the internal market in application of Articles 107 and 108 of the Treaty on the Functioning of the European Union, OJ L 193, , p. 1. 3

4 the holdings, the age and type of usage of the animals, the current level of compensation and aid grants and the epidemic hygienic risks. (22) The German authorities explained that the levy will not be imposed on imported products and that the exported animals will not be disadvantaged under the levy system. (23) In the view of the German authorities, the levy does not breach common market organisation ( CMO ) rules, i.e. the charges do not create competitive disadvantages by affecting market prices. Based on the calculations provided by the German authorities, the levy charged constitutes only a fraction of the market price of the marketed products (between 0.14% and 0.4% of the final price of animals) Description of the aid scheme (24) The present scheme supports measures related to the prevention of animal diseases. The scheme consists of a direct grant by means which the State reimburses the farmer for the netto costs of the vaccination of poultry. (25) The German authorities confirmed that: (a) (b) (c) (d) (e) (f) the aid will only be paid in relation to animal diseases or pests for which Union or national rules exist, whether laid down by law, regulation or administrative action; the aid will be paid as part of a public programme at Union, national or regional level for the prevention of the animal disease or part of emergency measures imposed by the competent public authority; the programmes and measures referred to in sub-point (a) above will contain a description of the prevention measures concerned; the aid does not relate to measures in respect of which Union legislation provides that the cost of such measures is to be borne by the beneficiary, unless the cost of such aid measures is entirely offset by compulsory charges on the beneficiaries; the aid will only be granted in respect of diseases referred to in the list of animal diseases established by the World Organisation for Animal Health or the animal diseases and zoonoses listed in Annexes I and II to Regulation (EU) No 652/2014 of the European Parliament and of the Council 4 ; no individual aid will be granted where it is established that the disease was caused deliberately or by the negligence of the beneficiary. 4 Regulation (EU) No 652/2014 of the European Parliament and of the Council of 15 May 2014 laying down provisions for the management of expenditure relating to the food chain, animal health and animal welfare, and relating to plant health and plant reproductive material, amending Council Directives 98/56/EC, 2000/29/EC and 2008/90/EC, Regulations (EC) No 178/2002, (EC) No 882/2004 and (EC) No 396/2005 of the European Parliament and of the Council, Directive 2009/128/EC of the European Parliament and of the Council and Regulation (EC) No 1107/2009 of the European Parliament and of the Council and repealing Council Decisions 66/399/EEC, 76/894/EEC and 2009/470/EC (OJ L 189, , p. 1). 4

5 (26) Eligible costs are the costs linked to the purchase, storage, administration and distribution of vaccines, medicines and other substances for the treatment of animals. (27) The aid will be granted directly to the farmers as a compensation for the vaccination costs. (28) The German authorities gave assurances that the aid and any other payments received by the beneficiary, including payments under other national or European Union measures or insurance policies for the same eligible costs, will not exceed 100% of the eligible costs. (29) The eligible costs are co-financed by the EU to an extent of 50 % (as long as the cost per vaccine dose is less than 0.10, which has been the case for the last 3 years) 5.The remaining 60-70% of the costs are financed by the State by means of a parafiscal levy consisting of contributions paid out by the concerned large undertakings. The German Authorities confirmed that the support does not involve an overcompensation of the costs. (30) The German authorities confirmed that the eligible costs are to be supported by documentary evidence which should be clear, specific and contemporary. For the purposes of calculating the aid intensity and the eligible costs, all figures used must be taken before any deduction of tax or other charge. Value added tax (VAT) shall not be eligible for aid, except where it is not-recoverable under national VAT legislation. (31) The German authorities committed to comply with the reporting obligation stipulated in point 728 of the European Union Guidelines for State aid in the agricultural and forestry sectors and in rural areas 2014 to (hereinafter: "the Guidelines") and to annually report to the Commission the animal diseases as well as the budget paid out to mitigate the damages caused by the respective animal disease. (32) The German authorities have confirmed that undertakings in difficulty within the meaning of the Guidelines on State aid or rescuing and restructuring non-financial undertakings in difficulty within the meaning of point 35(15) of the Guidelines are excluded from receiving any aid under the present schemes. (33) Germany committed to suspend the payment of the aid 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 the unlawful and incompatible aid including the corresponding recovery interest. 5 According to: (1) the Commission Implementing Decision of 29 November 2013 approving annual and multiannual programmes and the financial contribution from the Union for the eradication, control and monitoring of certain animal diseases and zoonoses presented by the Member States for 2014 and the following years, , L 328/101; and under COMMISSION IMPLEMENTING DECISION of 16 December 2014 approving certain amended programmes for the eradication, control and monitoring of animal diseases and zoonoses for the year 2014 and amending Implementing Decision 2013/722/EU as regards the Union financial contribution for certain programmes approved by that Decision, , L 363 p.173 and to (2) the results of 2012 to 2015 and 2016 forecast for Germany as regards vaccination against Salmonella. 6 OJ C 204, , p. 1, amended in the Commission Notice amending the European Union Guidelines for State aid in the agricultural and forestry sectors and in rural areas 2014 to 2020 (2015/C 390/05), OJ C 390, , p.4. 5

6 (34) The German authorities confirmed that the scheme does not have a negative consequences on the environment within the meaning of point 52 of the Guidelines 2.9. Cumulation (35) Aid under this scheme cannot be cumulated with aid received from other local, regional or national schemes to cover the same eligible costs. The aid is cofinanced in a proportion of 30-40% from union budget, while it is mandatory that the total aid amount per beneficiary does not surpass 100% of the eligible costs Other commitments (36) The German authorities made a commitment to publish the information required under points 128 and 131 of the Guidelines on the EU's dedicated State aid page ASSESSMENT 3.1. Existence of aid - Application of Article 107(1) TFEU (37) According to Article 107(1) of the TFEU, "[s]ave as otherwise provided in the Treaties, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market". (38) The qualification of a measure as aid within the meaning of this provision therefore requires the following cumulative conditions to be met: (i) the measure must be imputable to the State and financed through State resources; (ii) it must confer an advantage on its recipient; (iii) that advantage must be selective; and (iv) the measure must distort or threaten to distort competition and affect trade between Member States. Existence of State resources (39) The aid is financed through Union budget and through State budget collected by means of a parafiscal levy (recitals (13) and (29)). The scheme in question confers an advantage on its recipients. This advantage is granted through State resources and it benefits only certain undertakings, as indicated in recital (11) above. (40) The European Court of Justice recalled in Vent de Colère 8 that the concept of intervention through State resources is intended to cover, in addition to advantages granted directly by the State, those granted through a public or private body appointed or established by that State to administer the aid. The Court has also held that Article 107(1) TFEU covers all the financial means by which the public authorities may actually support undertakings, irrespective of whether or not those means are permanent assets of the public sector. The Court has held that funds financed through compulsory charges imposed by the legislation of the Member State, managed and apportioned in accordance with the provisions of that legislation, may be regarded as State resources within the meaning of Article Judgment in Vent De Colère and Others, C-262/12, ECLI:EU:C:2013:851, paras

7 107(1) TFEU even if they are managed by entities separate from the public authorities. (41) In the Pearle case 9 the European Court of Justice pointed out that compulsory contributions levied by an intermediary body, such as the LAVG, on all undertakings in a commercial sector can be regarded as not being State resources only if the following four cumulative conditions are met: i. the measure in question is established by the professional body that represents the enterprises and the employees of a business sector and does not serve as an instrument for the implementation of policies established by the State; ii. the goals of the measure in question are fully financed by the contributions of the enterprises of the sector; iii. the way of financing and the percentage/amount of the contributions are established by the professional body of the business sector, by representatives of employers and employees, without any State interference; iv. the contributions are obligatorily used for financing of the measure, without the possibility for the State to intervene. (42) In addition, in its judgment in Doux Elevage 10 the Court of Justice stated that neither the State's power to recognise an inter-trade organisation, nor the power of that State to extend an inter-trade agreement to all the traders in an industry permit the conclusion that the activities carried out by the inter-trade organisation are imputable to the State. (43) The notified aid scheme does not conform to all the conditions of the above quoted Pearle and Doux Elevage cases. The first, the third and the fourth above mentioned conditions of the Pearle case in recital (41)are not fulfilled. (44) As regards the first condition of the judgment in the Pearle case, it has to be noted that the scheme is established and managed by the State and not by a professional organisation (see recitals (18), (19), (20) and (24)). (45) Concerning the third condition, the levy and the amount of the contributions are imposed by means of law, i.e. by the Act implementing the Animal Health Law (AGTierGesG), see recitals (14), (19) and (20). The levy is compulsory and the LAVG, a legal body of the Federal State Brandenburg, is managing the levy system in general as described in recitals (16) - (18). These concrete elements indicate clearly that the State adopts the financing method and that the measure is used as an instrument for implementing a policy adopted by the State. (46) As regards the fourth condition, the LAVG is a legal body established under public law and is subject to supervision by the competent ministry under whose authorities the contributions are collected (see recitals (17), (18), (19)). Therefore, the Commission considers that the State has the possibility to intervene Judgment in Pearle BV, C-345/02, ECLI:EU:C:2004:448. Judgment in Doux Élevage SNC and Coopérative agricole UKL-ARREE v Ministère de l Agriculture, C-677/11, ECLI:EU:C:2013:348, para. 41 (see also paras 32, 35 and 38). 7

8 (47) Further, the scheme is managed by LAVG, which is a subordinate Federal State authority, subject to legal supervision by the relevant Brandenburg Ministries (recital (17)). (48) Since not all conditions of the Pearle and Doux Elevage judgments are met, it can be concluded that the financial means used by the LAVG to support the measures described in recitals (24) above do in fact amount to State resources. As the State retains control on the financing and on the expenditure modalities of the scheme, it can be concluded that the measures funded by revenues of the levy under the present scheme are granted through State resources and are imputable to the State. Other conditions of Article 107(1) TFEU (49) The scheme has the potential to distort competition as it confers an economic advantage on its recipients and that advantage strengthens their position on the market. According to the case law of the Court of Justice, the mere fact that the competitive position of an undertaking is strengthened compared to other competing undertakings, by giving it an economic benefit which it would not otherwise have received in the normal course of its business, points to a possible distortion of competition. 11 (50) Pursuant to the case law of the Court of Justice, aid to an undertaking is capable of affecting trade between Member States where that undertaking operates in a market open to intra-union trade. 12 The beneficiaries of aid operate in the agriculture sector which is open to competition at EU level 13 and therefore sensitive to any measure in favour of the production in one or more Member States. Therefore, the present measure is liable to affect trade between Member States. (51) In light of the above, the conditions of Article 107(1) TFEU are fulfilled. It can therefore be concluded that the proposed measure constitutes State aid within the meaning of that Article. It may only be considered compatible with the internal market if it can benefit from any of the derogations provided for in the TFEU Lawfulness of the aid Application of Article 108(3) TFEU (52) The aid scheme was notified to the Commission on 21 April 2016 and has not been implemented yet. Therefore, Germany has complied with its obligation under Article 108(3) TFEU Compatibility of the aid Application of Article 107(3)(c) TFEU (53) Under Article 107(3)(c) TFEU, an aid may be considered compatible with the internal market, if it is found to facilitate the development of certain economic Judgment in Philip Morris Holland BV v Commission of the European Communities, Case 730/79, ECLI:EU:C:1980:209. See in particular the judgment in French Republic v Commission of the European Communities, Case 102/87, ECLI:EU:C:1988:391. In 2013, German trade with all agricultural products with EU countries for exports amounted to EUR million, and for imports amounted to EUR million. Source: European Commission, Agriculture in the European Union and the Member States - Statistical factsheets, Germany - January Available at: 8

9 activities or of certain economic areas, where such aid does not adversely affect trading conditions to an extent contrary to the common interest. (54) For this derogation to be applicable, the aid must comply with the relevant Union State aid rules Application of the Guidelines (55) As regards the notified aid measure, the following chapter of Part II of the Guidelines is applicable: Section "Aid for the costs of the prevention, control and eradication of animal diseases and plant pests and aid to make good the damage caused by animal diseases and plant pests" (Prevention of animal diseases). (56) It follows from point 364 of the Guidelines that the Commission will consider aid for the costs of the prevention of animal diseases compatible with the internal market under Article 107(3)(c) TFEU if it complies with the common assessment principles of the Guidelines and with the conditions set out in Section of Part II of the Guidelines Conditions set out in Section of Part II of the Guidelines (57) In line with point 365 of the Guidelines, the aid will be given to undertakings active in the primary agricultural production (recital (12)). (58) As required by point 366 of the Guidelines, recital (25)(a) and (b) indicates that aid will only be paid in relation to animal diseases for which Union or national rules exist, whether laid down by law, regulation or administrative action; and as part of a public programme at Union, national or regional level for the prevention of the animal disease concerned; or emergency measures imposed by the competent public authority. (59) In line with point 367 of the Guidelines, the prevention measures will be detailed in the relevant public programmes or emergency measures (cf. recital (25)(c)). (60) As stated in recital (25)(d), the German authorities have undertaken that the aid will not relate to measures in respect of which Union legislation provides that the cost of such measures is to be borne by the beneficiary, unless the cost of such aid measures is entirely offset by compulsory charges on the beneficiaries, as provided for in point 368 of the Guidelines. (61) Point 370 of the Guidelines prohibits granting individual aid where it is established that the disease was caused deliberately or by the negligence of the beneficiary. This is reiterated in the present aid scheme (see recital (25)(f)). (62) The German authorities provided all references to the national and Union legal basis to prove that aid will only be paid for damage caused by animal diseases listed in the list of the World Organisation for Animal Health, and also on animal diseases and zoonoses listed in Annex I and Annex II of the European Parliament and Council Regulation (EU) No 652/2014 (recital (25)(e)). The condition of point 371 of the Guidelines is therefore met. 9

10 (63) According to point 373 of the Guidelines, in the case of ex-ante schemes, Member States must comply with the reporting obligation set out in point 728 of the Guidelines. The German authorities made a commitment to comply with that obligation (recital (31)). (64) As detailed in recital (26), the eligible costs with regard to prevention measures correspond to those in point 374 of the Guidelines. (65) The aid will be paid directly to the beneficiaries (recital (27)), which is in line with point 369 of the Guidelines. (66) According to the German authorities, the aid intensity for eligible costs will not exceed the maximum intensity of 100%, thus complying with the maximum aid intensity provided for in point 382 of the Guidelines (recital (28)). (67) On the basis of the above, the Commission concludes that the conditions in Section of Part II of the Guidelines are fulfilled Common assessment principles (68) According to points 38, 42 and 364 of the Guidelines, the common assessment principles apply to aid granted in accordance with Article 107(3)(c) TFEU. (69) As said in recital (3), the objective of the present notified aid scheme is to provide support for preventing Zoonotic Salmonellosis in poultry. The notified aid scheme contributes to a common objective in line with points 43 and 44 of the Guidelines. The notified aid scheme falls under Section 1.2 of the Guidelines. In accordance with point 48 of the Guidelines, the Commission therefore considers that such aid is contributing to the objectives of rural development. (70) Taking into account the objective of the notified aid scheme, no negative impact on the environment within the meaning of point 52 of the Guidelines has been identified (recital (34)). (71) Since the notified aid scheme fulfils the specific conditions laid down in Section of Part II of the Guidelines (recital (67)), the Commission considers, in line with points 55 and 57 of the Guidelines, respectively, that the aid is necessary and that it is an appropriate instrument to address the objective of common interest. (72) Pursuant to point (75)(f) of the Guidelines, there is no requirement for an incentive effect for aid to compensate for the costs of prevention of animal diseases and for losses caused by those animal diseases in accordance with Section of Part II of the Guidelines. (73) As described in recitals (26)-(28) the aid amount will not exceed the eligible costs, whereas the eligible costs are calculated accurately and the maximum aid intensities foreseen in Section of Part II of the Guidelines are respected. Furthermore, the aid will be cumulated with a co-financing from the European Union budget, provided that the total amount of aid per beneficiary does not exceed the aid intensity ceiling of 100% of eligible costs. Thus, in line with points 84 and 99 of the Guidelines, the principle of proportionality of the aid is respected. 10

11 (74) As described in recital (30) above, the conditions concerning the VAT and the calculation of eligible costs laid down in points 85 and 86 of the Guidelines are respected. (75) Since the present scheme fulfils the conditions laid down in Section of Part II of the Guidelines (recital (67)) and does not exceed the relevant maximum aid intensities (recital (66)), the Commission considers, in line with point 113 of the Guidelines, that the negative effect on competition and trade is limited to the minimum. (76) Germany committed to comply with the transparency requirements under the Guidelines (recital (36)) Other commitments (77) The Commission takes note of the commitment by the German authorities that aid will not be granted to undertakings in difficulty within the meaning of the Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty (recital (32)). (78) The Commission notes that Germany will suspend the payment of the notified aid if the beneficiary still has at its disposal an earlier unlawful aid that was declared incompatible by a Commission decision, in line with point 27 of the Guidelines (recital (33)) Assessment of the levy (79) According to point 29 of the Guidelines, Member States are requested to notify a parafiscal levy used for financing an aid measure if this forms an integral part of the aid measure. In compliance with this, the German authorities notified the parafiscal levy being used to finance the current scheme as described in recitals (14) to (23)). (80) Since State aid financed by a parafiscal charge is involved, the Commission must examine both the measures financed, i.e. the aid, and the way they are financed. According to the Court, where the method of financing the aid, in particular through compulsory contributions, forms an integral part of the aid measure, the Commission must take that method of financing into account when examining the aid. 14 (81) In order to define whether the measure forms an integral part of the aid measure, the following should be taken into account: the levy revenue should be allocated for the financing of the aid 15 and the amount of the tax should have a direct impact on the amount of State aid 16. (82) It has to be noted that, according to the national legal basis, the LAVG, as a public body controlled by the Brandenburg Ministries, collects the levy which See for example the judgment in Van Calster, joined cases C-261/01 and C-262/01, ECLI:EU:C:2003:571. Judgment in Streekgewest Westelijk Noord-Brabant, C-174/02, ECLI:EU:C:2005:10, paragraph 26; and judgment in Laboratoires Boiron, C-526/04, ECLI:EU:C:2006:528, paragraph 44. Judgment in Streekgewest Westelijk Noord-Brabant, ECLI:EU:C:2005:10, paragraph 28; judgment in Société Régie Networks v. Direction de contrôle fiscal Rhône-Alpes Bourgogne, ECLI:EU:C:2008:764, paragraph

12 serves to finance its services (recital (18)). The measures under the present scheme are covered partially by the revenue of the levy (recital (14)). Furthermore, the amount of the levy is set as a function of the risk of disease (cf. recital (21)) and the levy is raised for a number of identified species (recital (14)). The levy has therefore a direct impact of the amount of the aid and the Commission considers that the levy in the case at hand forms an integral part of the aid scheme. (83) A levy may be regarded as discriminatory internal taxation prohibited by Article 110 TFEU if the levy revenue is used for the benefit of domestic products only, so that the advantages accruing from it fully or partly offset the charge borne by those products. If the scheme discriminates between imported products and national products, the Commission cannot qualify the scheme as being compatible as the method of financing the aid would then infringe Article 110 TFEU. 17 (84) As confirmed by the German authorities, the levy will neither be imposed on imported products nor will exported products be disadvantaged by its imposition (recital (22)). (85) In relation to the Freskot judgment 18, the German authorities provided the necessary information to demonstrate that the levy does not breach common market organisation (CMO) rules (i.e. the charges do not create competitive disadvantages by affecting market prices). Based on the calculations provided by the German authorities, it was demonstrated that the levy charged constitutes only a fraction of the final price of animals (recital (23)). Therefore, the Commission considers that it is unlikely that cost increases as consequence of the levies have an influence on the market prices, and that the levies do not have a significant impact on trade, in particular on price formation. (86) On the basis of above, it can be concluded that the financing of the aid through parafiscal charges raises no objections. 4. CONCLUSION The Commission has accordingly decided not to raise objections to the notified aid scheme on the grounds that it is compatible with the internal market pursuant to Article 107(3)(c) TFEU. If any parts of this letter are covered by the obligation of professional secrecy according to the Commission communication on professional secrecy in State aid decisions 19 and should not be published, please inform the Commission within fifteen working days of notification of this letter. If the Commission does not receive a reasoned request by that deadline Germany will be deemed to agree to the publication of the full text of this letter. If Germany wishes certain information to be covered by the obligation of professional secrecy please indicate the parts and provide a justification in respect of each part for which non-disclosure is requested Judgment in Van Calster, joined cases C-261/01 and C-262/01, ECLI:EU:C:2003:571, paragraph 48. Judgement in Freskot AE v Elliniko Dimosio, C-355/00, ECLI:EU:C:2003:298. Commission communication C(2003) 4582 of 1 December 2003 on professional secrecy in State aid decisions, OJ C 297, , p

13 Your request should be sent electronically via the secured system Public Key Infrastructure (PKI) in accordance with Article 3(4) of Commission Regulation (EC) No 794/ , to the following address: For the Commission Phil HOGAN Member of the Commission 20 Commission Regulation (EC) No 794/2004 of 21 April 2004 implementing Council Regulation (EC) No 659/1999 laying down detailed rules for the application of Article 93 of the EC Treaty, OJ L 140, , p