EUROPEAN COMMISSION Brussels, C (2014) Subject: Sir, State aid/ Denmark Aid No SA.38773 (2014/N) Production and pro mille levy funds in agriculture The European Commission (hereinafter 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 Treaty on the Functioning of the European Union (hereafter the TFEU) 1. In taking this decision the Commission has relied on the following considerations: 1. PROCEDURE (1) In accordance with Article 108(3) of the TFEU, the Danish Permanent Representation to the European Union notified the Commission the aid scheme mentioned above by electronic communication dated 19 May 2014, registered on 20 May 2014. The Danish authorities provided additional information on 21 May 2014, registered on the same day. 2. DESCRIPTION 2.1. Title (2) Production and pro mille levy funds in agriculture 2.2. Beneficiaries (3) The beneficiaries are small and medium-sized enterprises active in the primary production and in processing of agricultural products. Their number is above 1000. 1 With effect from 1 December 2009, Articles 87 and 88 of the EC Treaty have become Articles 107 and 108, respectively, of the TFEU. The two sets of provisions are, in substance, identical. For the purposes of this Decision, references to Articles 107 and 108 of the TFEU should where appropriate be understood as references to Articles 87 and 88, respectively, of the EC Treaty. Udenrigsminister Martin Lidegaard Asiatisk Plads 2 DK-1448 København K
2.3. Legal basis (4) - Lov om administration af Det Europæiske Fællesskabs forordninger om markedsordninger for landbrugsvarer m. v. (bemyndigelsesloven), jf. lovbekendtgørelse nr. 297 af 28. april 2004; - Bekendtgørelse nr. 762 af 10. juli 2008 om administration og revision af promilleog produktionsafgiftsfonde m v. indenfor jordbrugs- og fiskeriområdet. 2.4. Description of the aid scheme (5) By the notification at hand the Danish authorities seek to extend the duration of the aid scheme N597/2008 until 31 December 2020. The existing scheme is authorised until 30 June 2014 by Commission decision C(2013)9134 of 13 December 2013 following the block notification submitted by the Danish authorities on 15 November 2013. (6) According to the Danish authorities, aid will continue to be granted in the same manner as described in the Commission decision No C(2009)8358 of 28 October 2009 on State aid scheme N597/2008 (hereafter the reference decision), to which the present decision refers in full (see recitals (6) to (47) of the reference decision). Aid is granted, by means of direct grants or subsidised services, to the following activities: a. generic advertising; b. technical support; c. combating animal and plant diseases; and d. research. 2.5. Duration (7) From 1 July 2014 until 31 December 2020. 2.6. Budget (8) The annual budget will stay as approved in the reference decision, i.e. DKK 600 million (approx. EUR 80.38 million) (see recital (3) of the reference decision). 2.7. Aid Intensity (9) The aid intensity will stay as approved in the reference decision, i.e. up to 100% of the eligible costs (see recitals (25), (33), (37) and (46) of the reference decision). 2.8. Incentive effect (10) Aid will be granted only towards activities begun after the Commission has authorised the aid scheme and after the competent authority has accepted the application with a binding decision indicating the aid amount (see recital (21) of the reference decision). 2
2.9. Other commitments (11) The Danish authorities declare that, where a beneficiary has previously received unlawful aid that has been declared incompatible by a Commission decision, aid payments would not be permitted until that beneficiary has reimbursed the aid received, including the corresponding recovery interest. (12) The Danish authorities confirmed that firms in difficulty within the meaning of the Community Guidelines on State aid for rescuing and restructuring firms in difficulty 2 will not be eligible for aid under the notified scheme. (13) The Danish authorities also committed to adapt the notified scheme to conform with any future amendments of the Union rules applicable to State aid in the agricultural sector. 3. ASSESSMENT 3.1. Existence of State aid (14) A previous, identical (except for duration) scheme was approved by the reference decision, to which reference is made. As explained in recitals (50) to (54) of the reference decision, such a scheme constitutes State aid within the meaning of Article 107(1) TFEU, because it is granted out of State resources (from funds financed by proceeds from the levy on pesticides paid directly into the State budget and the levies on the production of agricultural products as well as by exceptional appropriations from the State budget), benefits farmers in Denmark, and is therefore liable to distort competition and to affect trade between Member States. (15) In the light of the above, the conditions of Article 107(1) 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 Treaty. 3.2. Assessment of the compatibility of the aid (16) For the present case, Article 107(3)(c) TFEU may provide the appropriate basis for compatibility. Under that provision, aid to facilitate the development of certain economic activities or of certain economic areas may be considered to be compatible with the common market where such aid does not adversely affect trading conditions to an extent contrary to the common interest. (17) The financing of the scheme by production levies and by the pro mille levy was assessed by the Commission in the reference decision and found compatible (see recitals (56) to (60) of the reference decision). (18) In the reference decision the Commission assessed 2 OJ C 244, 1.10.2004, p. 2. 3
a. the aid for generic advertising to be in conformity with Chapter VI.D of the Community guidelines for State aid in the agriculture and forestry sector 2007 to 2013 (hereinafter: the Guidelines) 3 ; b. the technical support and the aid to combat animal and plant diseases to be in conformity with Regulation 1857/2006 4 ; c. the aid for research to be in conformity with the Community framework for State aid for research and development and innovation 5. (19) In the reference decision the Commission deemed the scheme to be in line with the relevant provisions of State aid legislation (see recital (99) of the reference decision) and therefore compatible with the internal market under Article 107(3)(c) TFEU. (20) The applicable rules have not changed since the adoption of the reference decision in 2009. The Danish authorities have confirmed that, other than prolonging its duration, there are no alterations to the scheme. (21) Consequently, it may be concluded that the proposed aid scheme complies with the relevant provisions of the Guidelines, Regulation 1857/2006, and the Community framework for State aid for research and development and innovation. Other conditions (22) The Danish authorities committed to suspend any payment of aid under the notified scheme 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 and the corresponding recovery interest (see recital (11)). 6 (23) In the light of point 20 of the Community Guidelines on State aid for rescuing and restructuring firms in difficulty, a firm in difficulty, given that its very existence is in danger, cannot be considered an appropriate vehicle for promoting other public policy objectives. As a consequence, the Commission considers that aid to firms in difficulty within the meaning of these guidelines cannot contribute to the development of economic activities without affecting trade to an extent contrary to the Union interest. (24) The Commission takes note of the Danish authorities' commitment (see recital (12)), that the notified scheme does not apply to firms in difficulty within the meaning of the Community Guidelines on State aid for rescuing and restructuring firms in difficulty. As a consequence, the criterion to exclude firms in difficulty from the scope of the notified aid (see point 145 of the Guidelines) is met. 3 OJ C 319, 27.12.2006, p. 1, prolonged by 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, 20.11.2013, p.1). 4 Commission Regulation (EC) No 1857/2006 of 15 December 2006 on the application of Articles 87 and 88 of the Treaty to State aid to small and medium-sized enterprises active in the production of agricultural products and amending Regulation (EC) No 70/2001 (OJ L 358, 16.12.2006, p. 3). Prolonged by Commision Regulation (EU) Ni 1114/2013 of 7 November 2013amending Regulation (EC) No 1857/2006 as regards its period of application (OJ L 298, 8.11.2013, p. 3). 5 OJ C 323, 30.12.2006, p. 1. 6 Judgment of the Court of 15 May 1997 in case C-355/95 P Textilwerke Deggendorf GmbH v. Commission, paragraph 25. 4
(25) The Commission also takes note of Denmark's commitment to adapt the notified scheme to conform with any future amendments of the Union rules applicable to State aid in the agriculture sector (see recital (13)). 4. CONCLUSION (26) The Commission has accordingly decided not to raise objections to the scheme (as prolonged) on the grounds that it is compatible with the internal market pursuant to Article 107(3)(c) of the Treaty on the Functioning of the European Union. (27) 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 the disclosure to third parties and to the publication of the full text of the letter in the authentic language on the Internet site: http://ec.europa.eu/competition/elojade/isef/index.cfm. Your request should be sent by registered letter or fax to: European Commission Directorate-General for Agriculture and Rural Development Directorate for Agricultural Legislation and procedures Rue de la Loi 200 B-1049 Brussels Fax No: 0032 2 29 67672 Yours faithfully, For the Commission Dacian CIOLOŞ Member of the Commission 5