Embargo VISTA illimité(*)

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1 EUROPEAN COMMISSION Brussels, C(2015). final Embargo VISTA illimité(*) Subject: State aid Denmark SA (2015/N) Aid for the preservation of farm animal genetic resources Sir, The European Commission ("the Commission") wishes to inform Denmark that, having examined the information supplied by your authorities on the State aid scheme referred to above, it has decided not to raise any objections to the relevant scheme as it is compatible with the internal market pursuant to Article 107(3)(c) of the Treaty on the Functioning of the European Union ("TFEU"). The Commission has based its decision on the following considerations: 1. PROCEDURE (1) By letter of 5 May 2015, registered as received by the Commission on the same day, Denmark notified, according to Article 108(3) TFEU, the above mentioned aid scheme. The Danish authorities provided additional information on 12 June 2015, registered by the Commission on 15 June The Commission sent a request for additional information to the Danish authorities on 27 July 2015, which the Danish authorities provided by letter of 2 October 2015, registered by the Commission on 5 October DESCRIPTION 2.1. Title (2) Aid for the preservation of farm animal genetic resources. Udenrigsminister Kristian JENSEN Udenrigsministeriet Asiatisk Plads 2 DK-1448 København K (*) Ce timbre porte sur l'ensemble des documents qui composent le dossier. Commission européenne, B-1049 Bruxelles Belgique; Europese Commissie, B-1049 Brussel België; Telephone: 32 (0)

2 2.2. Objective (3) With the present notification, the Danish authorities wish to promote the preservation of old breeds of Danish farm animals which are in danger of being lost to farming. The scheme thus promotes agricultural practices that contribute to meeting environmental objectives in terms of restoring, preserving and enhancing biodiversity Legal basis (4) The legal basis is a) 24 i Lov om hold af dyr, jf. lovbekendtgørelse nr. 466 af 15. maj 2014 (Section 24 of the Animal Husbandry Act No 466 of 15 May 2014) ; b) Bekendtgørelse om tilskud til bevaring af husdyrgenetiske ressourcer for 2015 (Order on aid for the preservation of farm animal genetic resources in 2015) (the "bekendtgørelse") 2.4. Duration (5) From the date of the Commission's decision until 31 December (6) The Danish authorities have undertaken not to grant any aid before the Commission has approved the scheme Budget (7) The overall budget for the period is DKK 11.6 million (approx. EUR 1.6 million), financed from national resources. The estimated annual budget for 2015 is DKK 1.6 million (approx. EUR ) and for DKK 2 million (approx. EUR ) Form of the aid (8) Direct grant Beneficiaries (9) The beneficiaries are undertakings which rear certain old breeds of Danish farm animals, which are in danger of being lost to farming, and associations of such undertakings. Large undertakings 1 are excluded from the scheme. (10) The number of beneficiaries is estimated to be between 100 and 120 as regards aid to breeders and 11 as regards aid to breeders' associations. 1 Large undertakings are undertakings not fulfilling the criteria laid down in Annex I to 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). 2

3 2.8. Description of the aid scheme (11) The notified aid scheme is set up in order to ensure the preservation of old Danish farm breeds which are at risk of becoming extinct as they are no longer used in production farming. The focus is mainly on the cultural and historical importance of such breeds but there is also an interest in keeping them as productive animals, considering the combinations of heritable genetic specificities that have been lost in modern breeds. (12) The conservation work is primarily focused on maintaining viable populations. Denmark is working towards reaching a minimum population size of 13 old Danish farm breeds from 5 species (equidae, cattle, sheep, goats and pigs), in accordance with the recommendations made in the Interlaken declaration adopted in the framework of the FAO Global Strategy for the management of farm animal genetic resources. Smaller populations than females and 20 males are considered to be either endangered or threatened with extinction. (13) The overall coordination of the work on genetic resources relating to Danish livestock is carried out by the Advisory Committee on the preservation of genetic resources from indigenous breeds of Danish farm animals ("the Preservation Committee"). The notified aid scheme will be managed by the Danish AgriFish Agency (NaturErhverstyrelsen). (14) The notified scheme is not part of Denmark's Rural Development Programme for ("RDP"). The Danish authorities have explained that the aid for preservation of farm animal genetic resources is not among the prioritised objectives of the RDP, but that the notified aid scheme is still designed in a manner that is consistent with the Regulation (EU) No 1305/ and the objectives of the rural development policy. The aid scheme contributes in particular to the achievement of Union priority for rural development specified in Article 5(4)(a) of Regulation (EU) No 1305/2013 as regards the restoration, preservation and enhancement of biodiversity. (15) The Danish AgriFish Agency selects the eligible endangered breeds on the basis of recommendations of the Preservation Committee. The following breeds are eligible for aid: Equidae: Jutland Horse (Den Jydske Hest) Fredriksborger Horse (Fredriksborg Hest) Knabstrupper Horse (Knabstrupper) Cattle: Danish Red dairy cattle, anno 1970 (Rød Dansk Malkerace anno 1970) Danish Black and White dairy cattle, anno 1965 (Sortbroget Dansk Malkerace anno 1965) Danish Shorthorn (Dansk Korthorn) Jutland Cattle (Jysk Kvæg) Old Danish/Agersø cattle (Agersø-kvæg) 2 Regulation (EU) No 1305/2013 of the European Parliament and of the Council of 17 December 2013 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) (OJ L 347, , p. 487). 3

4 Sheep and Goats: Danish Landrace Sheep (Det Danske Landfår) White-headed Marsh sheep (Hvidhovedet Marsk Får) Danish Landrace Goat (Dansk Landrace Ged) Pigs: Danish Landrace, anno 1970 (Dansk Landrace Svin anno 1970) Black and White Landrace (Sortbroget Landrace Svin) The breeds concerned are included in the FAO list of breeds drawn up in the framework of the Global Strategy for the management of farm animal genetic resources. (16) The aid scheme covers two types of aid: aid to keepers of endangered breeds ("animal aid") and aid to breeders' associations which contribute to the preservation of old Danish farm breeds. (17) To be eligible for aid, the beneficiaries must enter into a voluntary commitment to participate in the programme for five years. They do this by way of a cooperation agreement concluded with the Preservation Committee. (18) The Danish authorities have confirmed that aid applications must be submitted prior to the start of the commitment period and shall include the applicant's name and identification details, the description of the activity and the animals concerned, the relevant aid amounts and the start and end dates of the commitment period. (19) The Danish authorities have explained that the aid scheme will not have any negative environmental impact and that it is a precondition for the aid that the beneficiary complies with the conditions of the Nitrate Directive 3. Aid to keepers of endangered breeds (animal aid) (20) The animal aid is granted annually to keepers of old Danish farm breeds on condition that they are recognised by the Danish AgriFish Agency as being involved in coordinated breeding activities for the preservation of the breed concerned. (21) The Danish authorities confirmed that animal aid is only granted for the rearing of farm animals of local breeds which are genetically adapted to one or more traditional production systems or environments in the country and which are in danger of being lost to farming. The beneficiaries must provide evidence of the pedigree of both the animal itself and its offspring. (22) The relevant mandatory standards established pursuant to Chapter I of Title VI of Regulation (EU) No 1306/2013 4, the relevant criteria and minimum activities as established pursuant to points (c)(ii) and (c)(iii) of Article 4(1) of Regulation 3 4 Council Directive 91/676/EEC of 12 December 1991 concerning the protection of waters against pollution caused by nitrates from agricultural sources (OJ L 375, , p. 1). Regulation (EU) No 1306/2013 of the European Parliament and of the Council of 17 December 2013 on the financing, management and monitoring of the common agricultural policy and repealing Council Regulations (EEC) No 352/78, (EC) No 165/94, (EC) No 2799/98, (EC) No 814/2000, (EC) No 1290/2005 and (EC) No 485/2008 (OJ L 347, , p. 549). 4

5 (EU) No 1307/ and other relevant mandatory requirements established by national law should be complied with. However, the preservation of endangered local breeds does not stand in direct relation to these statutory requirements but consists of keeping breeds with a lower yield capacity than modern breeds, thereby contributing to biodiversity. (23) The Danish authorities confirmed that applicants for the scheme will receive the information needed to fulfil their commitments. The Danish AgriFish Agency ensures this task in cooperation with a professional network of partners such as VikingGenetics (giving advice on reproduction in cattle), Nørlund Hestehospital (giving advice on reproduction in equidae) and Aarhus Universitet. Officially recognised bodies for keeping of herd books are entrusted with the task to provide advice and ensure the respect of rules. Moreover, a "breeders' day" is held annually in order to allow for the sharing of experience and meetings in which researchers and other expertise is involved are organised ad hoc. (24) The Danish authorities have provided statistics showing the number, at national level, of the breeding females concerned that were registered at certifying body and eligible for aid in 2014: Species Breed Number of breeding females Certifying body Equidae Jutland Horse (Den Jydske Hest) 152 SEGES Equidae Fredriksborger Horse (Fredriksborg Hest) 79 SEGES Equidae Knabstrupper Horse (Knabstrupper) 51 SEGES Cattle Cattle Danish Red dairy cattle, anno 1970 (Rød Dansk Malkerace anno 1970) Danish Black and White dairy cattle, anno 1965 (Sortbroget Dansk Malkerace anno 1965) 120 SEGES 74 SEGES Cattle Danish Shorthorn (Dansk Korthorn) 32 SEGES Cattle Jutland Cattle (Jysk Kvæg) 256 SEGES Cattle Old Danish/Agersø cattle (Agersø -kvæg) 33 SEGES Sheep Danish Landrace Sheep (Dansk Landfår) 279 SEGES Sheep White-headed Marsh sheep (Hvidhovedet Marsk får) Goat Danish Landrace Goat (Dansk Landrace Ged) Pig Danish Landrace, anno 1970 (Dansk Landrace Svin anno 1970) Pig Black and White Landrace (Sortbroget Landrace Svin) 115 SEGES 42 SEGES 18 Danish AgriFish Agency 110 Danish AgriFish Agency 5 Regulation (EU) No 1307/2013 of the European Parliament and of the Council of 17 December 2013 establishing rules for direct payments to farmers under support schemes within the framework of the common agricultural policy and repealing Council Regulation (EC) No 637/2008 and Council Regulation (EC) No 73/2009 (OJ L 347, , p. 608). 5

6 (25) The number of breeding females and the endangered status of the listed breeds as regards equidae, cattle, sheep and goats are certified by SEGES 6, which is the advisory scientific body of the Danish Agriculture & Food Council 7 (Landbrug & Fødevarer). SEGES is also responsible for keeping herd books for equidae, cattle, sheep and goats. SEGES is officially recognised by the Danish State. As regards pigs, the certification tasks and the keeping of herd books are carried out by the Danish AgriFish Agency. The Danish authorities have confirmed that both SEGES and the Danish AgriFish Agency have the necessary skills and knowledge to identify animals of the breeds in danger and that they also have access to broad professional networks. Officially recognised herd book keeping associations may establish further conditions for the recognition of breeding animals. Those conditions must be approved by the Danish authorities. (26) The animal aid covers compensation for the additional costs and income foregone resulting from breeding and keeping endangered breeds as compared to conventional husbandry. Transaction costs are not covered. The calculation of eligible costs and maximum aid amounts have been made on the basis of figures and data compiled in 2015 by the University of Copenhagen/ Faculty of Science. The data has mainly been retrieved from SEGES calculations 8 and the publication Danske husdyrgenetiske ressourcer 9. The calculation methods differ between the various breeds, due to differences in production economic parameters and available statistics. (27) The additional costs and income foregone as regards equidae are calculated on the basis of loss of income when selling a foal (the foals of endangered breeds tend to have much lower price) or, in case of stallions, the loss of income when selling the semen. The relevant prices of endangered breeds were compared to those of more common Danish Warmblood breed. (28) The additional costs and income foregone as regards cattle are calculated on the basis of the differences in gross profits and costs for milk production using modern type dairy cattle (Danish Holstein) compared to those endangered breeds of dairy cattle for which valid data on yield exists (Danish Red, Danish Black and White and Jutland Cattle). (29) The additional costs and income foregone as regards sows are calculated on the basis of lower productivity in case of endangered breeds (compared to modern Landrace-Yorkshire-Duroc slaughter pigs), and in case of boars, on the basis of standard costs involved in keeping boars compared to the cost of buying boar semen from a collection centre. (30) The additional costs and income foregone as regards sheep are calculated on the basis of income loss resulting from lower slaughter price of lambs of endangered breeds due to their higher level of fat (compared to the more common breeds such as Texel and Danish Shropshire) and additional costs related to compulsory pedigree records. In case of rams the additional costs are calculated on the basis Association representing the Danish farming and food industry, including businesses, trade and farmers associations ( SEGES (2015), Sørensen, L. H., & Nielsen, V. H. (2015). Danske Husdyrgenetiske Ressourcer. DCA Rapport nr Aarhus Universitet. 6

7 of costs related to compulsory pedigree records and the need to keep more rams than with modern breeds in order to avoid inbreeding. (31) The additional costs and income foregone as regards goats are calculated on the basis of income loss resulting from lower milk yield from endangered breeds (compared to the more common breeds such as Saanen) and additional costs related to compulsory pedigree records. In case of bucks the additional costs are calculated on the basis of costs related to compulsory pedigree records and the need to keep more rams than with modern breeds in order to avoid inbreeding. (32) The overall outcome of the calculations of additional costs and income foregone and the maximum aid amounts as proposed by the Danish authorities are as follows: Breed Additional costs and income foregone Maximum aid amount Unit Jutland Horse (Den Jydske Hest) DKK/ mare Fredriksborger Horse (Fredriksborg DKK/ mare Hest) Knabstrupper Horse (Knabstrupper) DKK/ mare Stallions of the endangered breeds DKK/ stallion Danish Red dairy cattle, anno 1970 (Rød Dansk Malkerace anno 1970) Danish Black and White dairy cattle, anno 1965 (Sortbroget Dansk Malkerace anno 1965) DKK/ cow DKK/ cow Danish Shorthorn (Dansk Korthorn) DKK/ cow Jutland Cattle (Jysk Kvæg) DKK/ cow Old Danish/Agersø cattle (Agersø -kvæg) DKK/ cow Breeding bulls of the endangered breeds DKK/ bull Black and White Landrace (Sortbroget DKK/ sow Landrace Svin) Danish Landrace, anno 1970 (Dansk DKK/ sow Landrace Svin anno 1970) Boars of the endangered breeds DKK/ boar Danish Landrace Sheep (Dansk Landfår) DKK/ ewe White-headed Marsh sheep (Hvidhovedet DKK/ ewe Marsk får) Rams of endangered breeds DKK/ ram Danish Landrace Goat (Dansk Landrace DKK/ doe Ged) Bucks of the endagred breed DKK/ buck (33) The maximum aid amounts proposed by the Danish authorities exceed EUR 200 per livestock unit 10 ; however it is laid down in the national legal basis (the 10 According to the conversion rates of animals to livestock units as expressed in Annex II to Commission Implementing Regulation (EU) No 808/2014 of 17 July 2014 laying down rules for the application of Regulation (EU) No 1305/2013 of the European Parliament and of the Council on 7

8 "bekendtgørelse") that the aid amount shall not exceed the additional costs and income foregone resulting from the keeping of the endangered breed concerned. (34) The Danish authorities have justified the need for higher aid amounts with the considerable difference between earnings from modern productive breeds and earnings from endangered old breeds. The relatively high costs involved in Danish agriculture are offset by high profits and yields; hence the losses incurred in connection with lower yielding breeds are particularly high. Therefore, in order to achieve the objective of the notified scheme and ensure a sufficient number of animals of each endangered breed, the aid amount has to be increased to a level providing the beneficiary an incentive to rear such breeds. Aid for breeders' associations (35) Aid is granted to breeders' associations which contribute to the preservation of old Danish farm breeds and which are working with a particular breed, as defined by a breed description. The description sets out the criteria to be met for animals to be classified as belonging to the breed or breeds concerned. (36) The aid is granted annually in relation to activities such as breeders' meetings and the establishment of pedigree records. The eligible costs are as follows: fees for registration and evaluation of animals; expenses relating to sampling and cryopreservation of semen and embryos; expenses relating to population structure surveillance; expenses relating to information services; expenses relating to meetings of breeders of old breeds. (37) The aid is paid on the basis of the beneficiary's submission of a statement detailing the eligible expenses paid or of material demonstrating the performance of the operations that gave rise to the eligible costs. (38) The maximum aid amount is DKK per breed, which may be shared between several associations for a particular breed. However, the aid cannot exceed 100% of the eligible costs Cumulation (39) The Danish authorities confirmed that the aid cannot be cumulated with aid received from other local, regional, national or Union schemes to cover the same eligible costs Other commitments (40) The Danish authorities made a commitment to publish the information required under point (128) of the the European Union Guidelines for State aid in the agricultural and forestry sectors and in rural areas 2014 to (the "Guidelines") by the deadline set out in point (131) of the Guidelines. 11 support for rural development by the European Agricultural Fund for Rural Development (EAFRD) (OJ L 227, , p. 18). OJ C 204, , p. 1. 8

9 (41) The national legal basis (the"bekendtgørelse") lays down that that aid shall not be granted to firms in difficulty within the meaning of point 35(15) of the Guidelines and that the payment of the notified aid will be suspended if the beneficiary still has at its disposal an earlier unlawful aid that was declared incompatible by a Commission decision, until that beneficiary has reimbursed or paid into a blocked account the total amount of unlawful and incompatible aid including the corresponding recovery interest. 3. ASSESSMENT 3.1. Existence of aid - Application of Article 107(1) TFEU (42) For Article 107(1) TFEU to apply, the scheme 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 scheme must be capable of affecting trade between Member States. (43) The scheme in question confers an advantage on its recipients as it favours only Danish keepers of old farm breeds and strengthens their position on the market. This advantage is granted through State resources. 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. 12 (44) Pursuant to the case law of the Court of Justice, aid to an undertaking appears to affect trade between Member States where that undertaking operates in a market open to intra-eu trade. 13 The beneficiaries of the notified aid scheme operate on a market where intra-trade takes place. Statistical data show that in 2014, Danish trade with EU countries did, for the livestock concerned, amount to EUR 828 million for exports and to EUR 21.5 million for imports 14. The sector concerned is open to competition at EU level and therefore sensitive to any measure in favour of the production in one or more Member States. Therefore, the present scheme is liable to distort competition and to affect trade between Member States. (45) In light of the above, the conditions of Article 107(1) of the TFEU are fulfilled. It can therefore be concluded that the proposed scheme constitutes State aid within the meaning of that Article. The aid may only be considered compatible with the internal market if it can benefit from one of the derogations provided for in the TFEU. 12 Judgment of the Court of 17 September 1980 in Case 730/79 Philip Morris Holland BV v Commission of the European Communities, ECLI:EU:C:1980: See in particular the judgment of the Court of 13 July 1988 in Case 102/87 French Republic v Commission of the European Communities, ECLI:EU:C:1988: Source: EUROSTAT 9

10 3.2. Lawfulness of the aid Application of Article 108(3) TFEU (46) The aid scheme was notified to the Commission on 5 May It has not been implemented before. Therefore, Denmark has complied with its obligation under Article 108(3) TFEU Compatibility of the aid Application of Article 107(3)(c) TFEU (47) Under Article 107(3)(c), an aid may be considered compatible with the internal market, if it is found to facilitate the development of certain economic activities or of certain economic areas, where such aid does not adversely affect trading conditions to an extent contrary to the common interest. (48) For this derogation to be applicable, the aid must fulfil the requirements of the relevant Union State aid legislation Application of the European Union Guidelines for State aid in the agricultural and forestry sectors and in rural areas 2014 to 2020 (49) As regards the notified aid scheme, Part II, Chapter 1, Section of the Guidelines is applicable. (50) Point 207 of the Guidelines states that the Commission will consider aid for agrienvironment-climate commitments compatible with the internal market under Article 107(3)(c) of the Treaty if it complies with the common assessment principles of these Guidelines and with the specific conditions set out in Section of the Guidelines Conditions set out in Section of Part II of the Guidelines (51) Based on the information provided in recital (9), payments are to be granted to undertakings which rear certain old breeds of Danish farm animals, which are in danger of being lost to farming, and associations of such undertakings. The condition set out in point 206 of the Guidelines is thus fulfilled. Aid to keepers of endangered breeds (animal aid) (52) It follows from recitals (17) and (22) the aid will be granted to undertakings who undertake, on a voluntary basis, agri-environment-climate commitments on agricultural land. The aid thus complies with the conditions set out in point 208 of the Guidelines. (53) As described in recitals (3) and (11) that the aid measure aims at preserving of old Danish farm breeds which are at risk of becoming extinct, which means that it contributes to biodiversity via the conservation of animal genetic resources in agriculture. The conditions set out in point 209 of the Guidelines are thus fulfilled. (54) According to point 210 of the Guidelines, the aid shall cover only voluntary commitments that go beyond relevant mandatory requirements. As explained in recital (22), the preservation of endangered breeds does not stand in direct 10

11 relation to the mandatory requirements referred to in point 210 of the Guidelines but consists of keeping breeds with a lower yield capacity than modern breeds. The Commission therefore considers that the conditions set out in point 210 of the Guidelines are complied with. (55) The Danish authorities explained (cf. recital (23)) that aid applicants will be provided with the necessary knowledge and information as required under point 211 of the Guidelines. That condition is therefore fulfilled. (56) It follows from recital (17) that the beneficiaries will undertake commitments that last for 5 years, which means that the requirement set out in point 212 of the Guidelines is met. (57) Points 213 to 215 of the Guidelines are not relevant for the present aid scheme. (58) The Danish authorities have confirmed (cf. recital (21)) that the notified scheme covers commitments to rear farm animals of local breeds which are genetically adapted to one or more traditional production systems or environments in the country and which are in danger of being lost to farming, in line with point 216 of the Guidelines. (59) Since the eligible species under the notified scheme are cattle, sheep and goats, equidae and pigs (cf. recital (15)), the condition set out in point 217 of the Guidelines is complied with. (60) According to point 218 of the Guidelines, local breeds are considered as being in danger of being lost to farming if the following conditions are fulfilled: a) the number, at national level, of breeding females concerned is stated; b) that number and the endangered status of the listed breeds is certified by a duly recognised relevant scientific body; c) a duly recognised relevant technical body registers and keeps up-to-date the herd or flock book for the breed; d) the bodies concerned possess the necessary skills and knowledge to identify animals of the breeds in danger. The Commission considers the conditions set out in point 218 of the Guidelines to be met, taking into account the information provided by the Danish authorities, as described in recitals (24) and (25). (61) The aid will cover compensation to beneficiaries for the additional costs and income foregone resulting from the commitments they have made and it will be granted annually (cf. recitals (20) and (26)). The requirements laid down in point 221 of the Guidelines are therefore complied with. (62) Since the scheme does not include transaction costs (cf. recital (26)), points 223 to 225 of the Guidelines are not applicable. 11

12 (63) According to point 228 of the Guidelines, aid for local breeds in danger of being lost to farming should in principle be limited to EUR 200 per livestock unit per year. However, point 229 of the Guidelines allows for an increase of the maximum aid amount in duly substantiated cases taking into account specific circumstances. (64) As already explained in recital (33), the aid exceeds the maximum aid level set out in point 228 of the Guidelines. Since the Danish authorities have provided information which justifies the increase of the maximum aid amount (cf. recitals (26) to (32) and (34)), in line with point 229 of the Guidelines, the Commission considers that the conditions relating to maximum aid levels are deemed to be fulfilled. Aid for breeders' associations (65) According to point 220 of the Guidelines, aid may be provided for the conservation of genetic resources in agriculture for operations not covered by the provisions under points 208 to 219 of the Guidelines. This applies to the aid to breeders' association, as described in recitals (11), (35) and (36). (66) The eligible costs described in recital (36) are linked to actions which correspond to the operations listed in point 227 a), b) and c) of the Guidelines. Therefore they comply with the specific eligibility conditions of the Guidelines. (67) It is laid down in the "bekendtgørelse" that the aid to breeders' associations cannot exceed 100% of the eligible costs (cf. recital (38)). The condition set out in point 230 of the Guidelines with regard to aid intensity is thus fulfilled. (68) On the basis of the above, the Commission concludes that the conditions set out in Section of Part II of the Guidelines are fulfilled Common Assessment Principles Contribution to a common objective (69) As described in recitals (3) and (11), the objective of the notified scheme is to establish an agro-environmental-climate measure in order to promote the preservation of old breeds of Danish farm animals which are in danger of being lost to farming. The scheme thus contributes to a common objective in line with points 43 and 44 of the Guidelines, as it promotes the preservation of the diversity of animal genetic resources in agriculture. The scheme is a rural development-like measure, which is not included in Denmark's RDP for Therefore, there is no risk of overlap and double funding is excluded. As described in recital (14), the notified aid scheme can be regarded as fitting into and consistent with Denmark's RDP for The Commission thus considers that the conditions of point 47 of the Guidelines are met and that the scheme contributes to the objectives of rural development. (70) As described in recital (11), the notified scheme is set up to promote biodiversity. Moreover, as indicated in recital (20), it is a precondition for the aid that the beneficiary complies with the conditions of the Nitrate Directive. Therefore, no negative impact on the environment within the meaning of point 52 of the Guidelines has been identified. 12

13 Need for State intervention - Appropriateness of aid (71) Since the notified scheme fulfils the specific conditions laid down in Section of Part II of the Guidelines (cf. recital (68)), and the aid to breeders respects the specific form prescribed for it (cf. recital (26)), the Commission considers, in line with points 55, 57 and 60 of the Guidelines, that the aid is necessary and that it is granted by means of an appropriate instrument to address the objective of common interest. Incentive effect and need for aid (72) As indicated in recital (17), aid applications must be submitted prior to the start of the commitment period, in line with point 70 of the Guidelines, and must include the information required under point 71 of the Guidelines. The Commission therefore considers that the condition of incentive effect is fulfilled. Point 72 of the Guidelines does not apply, since large undertakings cannot be beneficiaries of the scheme (cf. recital (9)). Proportionality (73) Pursuant to point 82 of the Guidelines, in principle, in order for the aid to be proportionate the Commission considers that the aid amount should not exceed the eligible costs. Point 84 of the Guidelines states that the criterion of proportionality is deemed to be fulfilled if the eligible costs are correctly calculated and the maximum aid intensities or maximum aid amounts set out in Part II of the Guidelines are respected. According to points 228 and 229 of the Guidelines, the maximum aid amount for local breeds in danger of being lost to farming is limited to EUR 200 but may be increased in duly substantiated cases. (74) The aid to be granted under the notified scheme exceeds the maximum aid level set out in point 228 of the Guidelines. The Danish authorities have however provided figures demonstrating that the increase of this amount is justified (cf. recitals (26) to (32)). (75) The maximum aid amounts are fixed on the basis of verifiable standard assumptions of additional costs and income foregone (cf. recital (26)) which respects the relevant requirements set out in point 93 of the Guidelines. (76) As confirmed by the Danish authorities (cf. recital (40)), the aid cannot be cumulated with aid received from other local, regional, national or EU schemes to cover the same eligible costs. The conditions regarding cumulation of aid, set out in points 99 to 107 of the Guidelines, are therefore not applicable to the present scheme. (77) On this basis, the condition of proportionality is deemed to be fulfilled. Avoidance of undue negative effects on competition and trade (78) The notified aid scheme fulfils the relevant specific conditions set out in Part II of the Guidelines, as assessed above in Section , and the aid does not exceed the relevant maximum aid intensities set out in point 228 of the Guidelines, with exception of the increase of the maximum amount as regards aid to breeders of endangered breeds. Since the Danish authorities have demonstrated that the increase of the latter amount is justified (cf. recitals (26) to (32) and (34)), as 13

14 required under point 229 of the Guidelines, the Commission considers, in line with point 113 of the Guidelines, that the negative effect on competition and trade is limited to the minimum. Transparency (79) Denmark has committed to comply with the transparency requirements set out in point 128 of the Guidelines (cf. recital (40)) Other commitments (80) The Commission notes that undertakings in difficulty are excluded from any support, in line with point 26 of the Guidelines, and that Denmark 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 (cf. recital (41)) Duration of the aid scheme (81) Pursuant to point 719 of the Guidelines, the Commission only authorizes schemes of limited duration. Aid schemes other than those benefiting from co-financing under Regulation (EU) No 1305/2013 and its implementing regulation should not apply for more than seven years. It follows from recital (5) that this requirement is met. 4. CONCLUSION The Commission has accordingly decided not to raise objections to the notified aid 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 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 Denmark will be deemed to agree to the publication of the full text of this letter. If Denmark 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. 14

15 Your request should be sent electronically via the secured system Public Key Infrastructure (PKI) in accordance with Article 3(3) of Commission Regulation (EC) No 794/ , to the following address: For the Commission Phil HOGAN Member of the Commission 15 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. 1). 15