Keywords
Summary

Keywords

1. State aid – Prohibition – Derogations – Discretion of the Commission – Criteria for assessment – Effect of the guidelines adopted by the Commission

(Art. 87(3), EC)

2. State aid – Prohibition – Exceptions – Aid eligible for the derogation provided under Article 87(3)(c) EC – Investment aid in the agricultural sector

(Art. 33 EC, 36, first para., EC and 87(3)(c), EC; Commission notice 2000/C 28/02)

Summary

1. In applying Article 87(3) EC the Commission enjoys a broad discretion, the exercise of which involves complex economic and social assessments which must be made in a Community context. In adopting rules of conduct and announcing, by publishing them, that they will be applied to the cases to which they relate, the Commission imposes a limit on the exercise of its discretion and may not depart from those rules on pain of being found, should the case arise, to be in breach of general principles of law, such as equal treatment or the protection of legitimate expectations. It follows that, in the specific area of State aid, the Commission is bound by the guidelines and notices it issues, in so far as they do not depart from the rules of the Treaty.

(see paras 46-47)

2. The Commission can regard as incompatible with the common market a measure to promote the development of a region or an activity when it is granted in a sector, such as that of the processing of agricultural products, in which any increase of production in the absence of normal outlets can adversely affect intra‑Community trade to an extent contrary to the common interest, irrespective of the beneficial effects for the region of the activity concerned.

Article 87(3)(c) EC must be interpreted as meaning that, in principle, when aid is granted in a market with overcapacity, it is such as to affect trading conditions to an extent contrary to the common interest.

The fact that aid also has beneficial effects for the region or the economic sector concerned does not necessarily imply that it must be considered to be compatible with the common market. It follows from Article 87(3)(c) EC that, when an aid measure affects trading conditions to an extent contrary to the common interest, it may not be declared compatible with the common market, irrespective of its possible beneficial effects. However, when assessing the effects on trade, the Commission must take into consideration all the characteristics of the measure and the market concerned.

This interpretation of primary law applies to aid in the agricultural sector too. It follows from the first paragraph of Article 36 EC, which recognises that the common agricultural policy takes precedence over the objectives of the Treaty in the field of competition, that any application in this field of the Treaty provisions is subject to account’s being taken of the objectives set out in Article 33 EC, namely, those of the common agricultural policy. Therefore, when assessing the compatibility of State aid granted in that sector, the Commission must take account of the requirements of that policy, which correspond to those of the common market as a whole. Among those requirements is the control of production.

It follows that the rules of conduct in point 4.2.5 of the Community Guidelines for State aid in the agriculture sector, according to which the Commission considers incompatible with the common market aid for investment in connection with the processing and marketing of agricultural products granted in the absence of normal outlets, are compatible with the provisions of primary law and in particular with Article 87(3)(c) EC, applied in compliance with the objectives of the common agricultural policy.

(see paras 48-53)