32001Y0120(01)

Guidelines for the examination of State aid to fisheries and aquaculture

(2001/C 19/05)

INTRODUCTION

The maintenance of a system of free and undistorted competition is one of the basic principles of the European Community. Community policy towards State aid is directed towards ensuring free competition, efficient allocation of resources and the unity of the Community market. Consequently, since the founding of the common market, the Commission's attitude has always been one of particular vigilance in this field.

Although Article 36 of the EC Treaty states that the rules on competition apply to the production of and trade in fisheries products only to the extent determined by the Council, the application of State aid rules to production of and trade in fisheries products is provided for in Article 32 of Council Regulation (EC) No 104/2000(1) on the common organisation of market. Furthermore, Article 19 of Council Regulation (EC) No 2792/1999(2) laying down the detailed rules and arrangements for Community structural assistance in the fisheries sector states that Articles 87 to 89 of the EC Treaty apply to aid granted by Member States to support this sector.

The common fisheries policy aims to establish the conditions necessary for ensuring rational and responsible exploitation of fisheries resources on a sustainable basis. The market organisation stabilises prices and unifies the Community market. Community rules for fishing provide for the conservation and the best possible use of available fish stocks.

Multiannual guidance programmes lay down restrictions on the size of national fishing fleets with the objective of establishing balance between fish stocks and their exploitation.

The Financial Instrument for Fisheries Guidance, one of the Community's structural funds, provides financial support for the structural adaptation necessary to attain the objectives of the common fisheries policy.

State aid is only justified if it is in accordance with the objectives of both the competition and fisheries policies.

Regulations governing the activities of the Structural Funds also state that they must be carried out in accordance with Community rules on competition.

The overriding need to ensure rational and responsible exploitation of fisheries resources in the face of severe biological restraints requires particular prudence in granting State aid to the fisheries sector. Any State aid which differs from schemes laid down for Community aid needs to be considered carefully and can only be accepted where it can be demonstrated that such aid will not contribute to the maintenance or development of fishing capacity where there is excess capacity in a fishery and will not contribute to reduced biodiversity.

It is within this framework that the Commission intends to administer derogations to the principle of incompatibility of State aid with the common market (Article 87(1) of the EC Treaty) provided for in Article 87(2) and (3) of the EC. Treaty and in its implementing instruments.

In order to ensure that the common market functions properly and that the objectives of the common fisheries policy are achieved, the Commission finds it necessary to propose to the Member States, pursuant to Article 88(1) of the EC Treaty, that they apply to their existing aid schemes for fisheries, already authorised by the Commission, the criteria laid down in these Guidelines.

These guidelines take the place of earlier ones published in 1997(3) as a result of the development of the common fisheries policy, notably through the adoption of the Regulation (EC) No 2792/1999.

The Commission will continue to amplify or modify these guidelines as and when experience is gained in the regular examination of inventories of State aids and in the light of the development of the common fisheries policy.

1. SCOPE AND GENERAL PRINCIPLES

1.1. Scope

These Guidelines relate to all measures which constitute aid within the meaning of Article 87(1) of the EC Treaty, including any measure entailing a financial advantage in any form whatsoever funded directly or indirectly from the budgets of public authorities (national, regional, provincial, departmental or local) or from other State resources. The following, for example, are to be considered as aid: capital transfers, reduced-interest loans, interest subsidies, certain State holdings in the capital of undertakings, aid financed by special levies or parafiscal charges and aid granted in the form of State securities against bank loans or the reduction of or exemption from charges or taxes, including accelerated depreciation and the reduction of social contributions.

These Guidelines apply to the entire fisheries sector and concern the exploitation of living aquatic resources and aquaculture together with the means of production, processing and marketing of the resultant products, but excluding recreation and sport fishing which does not result in the sale of fisheries products.

1.2. General principles

State aid may be granted only if it is consistent with the objectives of the common fisheries policy.

Aid may not be protective in its effect: it must serve to promote the rationalisation and efficiency of the production and marketing of fishery products in a way which encourages and accelerates the adaptation of the industry to the situation it faces, particularly in terms of the scarcity of fisheries resources.

Any such aid must yield lasting improvements so that the industry can develop solely on the basis of market earnings. Its duration must therefore be limited to the time needed to achieve the desired improvements and adaptations.

Consequently the following principles apply:

- State aid must not impede the application of the rules of the common fisheries policy. In particular, aid to the export of or to trade in fishery products within the Community is incompatible with the common market,

- Community provisions relating to structural policy have been adopted in order to achieve the objectives of the common fisheries policy.

If the available Community funds are insufficient to cover the part-financing of the measures eligible for such assistance, the overall rate of the State aid may be aggregated, where appropriate, with the rate of Community part-financing provided it does not exceed the overall rate of the aid laid down under the Community rules.

State aid exceeding this overall rate will only be permitted in accordance with the specific provisions below.

- State aid which is granted without imposing any obligation on the part of recipients and which is intended to improve the situation of undertakings and increase their business liquidity or is calculated on the quantity produced or marketed, product prices, units produced or the means of production, and which has the effect of reducing the recipient's production costs or improving the recipient's income is, as operating aid, incompatible with the common market.

1.3. The examination of aid schemes will be based on values expressed in terms of the total amount of support. However, account will be taken of all factors making it possible to assess the real advantage to the recipient.

The cumulative effect for the recipient of all measures involving an element of subsidy granted by the State authorities pursuant to Community, national, regional or local law, particularly those that are designed to promote regional development, will be taken into account when State aid schemes are being assessed.

1.4. Aid schemes funded by special charges, in particular parafiscal charges, imposed on certain fishery and aquaculture products irrespective of their origin, may be deemed compatible where aid schemes benefit both domestic and imported products.

1.5. Guidelines on national regional aid do not apply in this sector(4). The components of regional aid schemes involving the fisheries sector will be examined on the basis of the present Guidelines.

1.6. Since, given the existence of common fisheries policy, any aid in favour of certain enterprises or products, of whatever amount, may distort competition and affect trade between Member States, the so-called de minimis rule(5) does not apply towards expenditure in connection with the fishery and aquaculture sectors.

2. ANALYSIS OF THE VARIOUS CATEGORIES OF AID

2.1. Aid of a general nature

2.1.1. Under the conditions laid down in the following points, aid may be deemed compatible where the amount does not go beyond what is strictly necessary in order to achieve the purpose of the aid and is of a limited duration. The rate of aid for all types of aid mentioned in this section must not exceed, in subsidy equivalent, the total rate of national and Community subsidies permitted under Annex IV of Regulation (EC) No 2792/1999.

2.1.2. Aid for training and advisory services

2.1.2.1. Aid for the technical and economic training of persons working in the fisheries sector and aid to the provision of advisory services in new techniques and to technical or economic assistance is deemed to be compatible with the common market provided it is directed exclusively at improving the knowledge of recipients so as to help them increase the efficiency of their operations and to enhance their awareness of fishery conservation concerns. This aid should be available to all persons concerned on objectively defined conditions.

Relevant Commission guidelines for State aid in this area shall apply.

2.1.2.2. Aid in the form of advice to enterprises

Aid intended to promote better use of the undertakings' equipment, and in particular aid for advice on financial and technical management and data processing, is in principle compatible with the common market, provided that the relevant advice is not a continuous or periodic activity and does not relate to the undertaking's usual operating expenditure.

2.1.3. Aid to research and experimental fishing

2.1.3.1. Aid schemes to assist research can be regarded as compatible with the common market on condition that they comply with the Community framework for State aids for research and development(6).

2.1.3.2. Aid to experimental fishing projects may be granted provided their aim is the conservation of fishery resources and they implement more selective techniques.

2.1.4. Aid to product promotion and advertising

2.1.4.1. Aid to product promotion and advertising may be regarded as being compatible with the common market provided that:

(a) it concerns an entire sector or product or group of products in such a way that it does not promote the products of one or more specific undertakings;

(b) it is compatible with Article 28 of the EC Treaty pursuant to the Commission communication concerning State involvement in the promotion of agricultural and fisheries products(7);

(c) the conditions for granting it are comparable with those laid down in Article 14 and Annex III, point 3 of Regulation (EC) No 2792/1999 and are at least as stringent.

2.1.4.2. In the case where official recogniton of the product has been given pursuant to Regulation (EEC) No 2081/92 aid may be approved as of the date on which the name has been entered in the register provided for in Article 6(3) of this Regulation.

2.1.5. Aid to promote new market outlets

Aid to find and promote new market outlets for fishery and aquaculture products may be deemed to be compatible with the common market provided that it meets the conditions laid down in Regulation (EC) No 2792/1999 and it is compatible with Article 28 of the EC Treaty.

2.2. Aid to sea-fishing

2.2.1. Aid for the permanent withdrawal of fishing vessels

Aid for the permanent withdrawal of fishing vessels which is not linked to the purchase or construction of new vessels is compatible with the common market provided that it meets the requirements of Regulatian (EC) No 2792/1999 for eligibility for Community aid.

Aid for permanent transfer of fishing vessels to developing countries must be consistent with the objectives in the area of development cooperation as required by Regulation (EC) No 2792/1999.

Aid schemes for permanent withdrawal of fishing vessels under conditions which differ from the requirements of Regulation (EC) No 2792/1999 will be examined on a case-by-case basis. Any such scheme must be of a limited duration.

2.2.2. Aid for the temporary cessation of fishing

Aid for the temporary cessation of fishing may be deemed compatible if it is intended to offset part of the loss of income associated with a temporary cessation measure introduced under the circumstances laid down in Article 16 of Regulation (EC) No 2792/1999.

Accompanying social measures for fishermen in order to facilitate temporary cessation of fishing activities in the framework of plans for the protection of aquatic resources, as laid down in Article 12(6) of Regulation (EC) No 2792/1999, may be deemed compatible, subject to notification to the Commission of the plan concerned, which should contain precise and measurable objectives and a time frame. Evidence of the social impact of the plan and justification of special measures going beyond the normal social security regime shall be provided. Fishermen are only those persons engaged on board of an operational seagoing fishing vessel as a main occupation.

In both the above cases, aid may also be granted to vessel owners in order to offset social security costs.

Scientific and, where necessary, economic justification of such aid shall accompany its notification to the Commission. Measures must not go beyond what is strictly necessary in order to attain the objective pursued and must be of limited duration. Overcompensation shall be avoided.

Aid to restrict fishing activities which is introduced for the purpose of helping to achieve the target reductions in fishing effort under the multiannual guidance programmes for Community fishing fleets is not allowed.

2.2.3. Aid for investment in the fleet

2.2.3.1. Aid for the construction of new fishing vessels may be deemed compatible with the common market subject to the requirements of Articles 6, 7, 9 and 10 of, and Annex III (point 1.3) to, Council Regulation (EC) No 2792/1999 and provided that the sum of the State aid does not exceed, in subsidy equivalent, the total rate of national and Community subsidies fixed by Annex IV to that Regulation. No aid may be granted to shipyards for the construction of fishing vessels.

2.2.3.2. Aid for the modernisation of commissioned vessels may be deemed compatible with the common market subject to the requirements of Articles 6, 7, 9 and 10 of, and Annex III (point 1.4) to, Regulation (EC) No 2792/1999 and provided that sum of the State aid does not exceed, in subsidy equivalent, the total rate of national and Community subsidies fixed by Annex IV to that Regulation.

2.2.3.3. Aid for the purchase of used vessels is deemed compatible with the common market only if all the following requirements are met:

(a) vessels can be used for fishing for a further 10 years at least and, at the time of the purchase are not more than 20 years old;

(b) its aim is to enable sea-fishermen to acquire part ownership of vessels or to replace vessels after their total loss;

(c) the rate of aid does not exceed, in subsidy equivalent, 20 % of the actual cost of acquisition of the vessel.

Any aid granted less than 10 years previously for the construction or modernisation of a vessel or for the earlier purchase of the same vessel is reimbursed in proportion to the amount of time elapsed. However, Member States may waive this reimbursement if the purchaser in turn fulfils the conditions to qualify for the aid and undertakes to assume the rights and obligations of the previous beneficiary of the aid. Cumulation of aid is not allowed.

The annual report mentioned at point 3.3 shall include a list of all individual aid granted for the purchase of used vessels.

2.2.3.4. The premium to fishermen younger than 35 years, foreseen in Article 12(3)(d) of Regulation (EC) No 2792/1999, may be given in addition to the aid referred to at point 2.3.3.3 under the conditions laid down in that Article and in Article 12(4)(f) of the same Regulation.

A list of all individual aid granted under this regime shall be included in the annual report mentioned at point 3.3.

2.2.4. Aid for rescue and restructuring firms in difficulty

Aid aimed at rescuing and restructuring firms in difficulty will be assessed in accordance with the guidelines for aid for rescue and restructuring firms(8).

Aid aimed at restructuring firms whose main activity is fishing at sea may be granted only when a plan designed to reduce the fleet capacity has been submitted to the Commission.

2.2.5. Aid for the creation of joint enterprises

Aid for the creation of joint enterprises may be deemed compatible with the common market if it meets the requirements of the Community rules (Article 8 of, and Annex III to, Council Regulation (EC) No 2792/1999) provided that the sum of the State aid does not exceed, in subsidy equivalent, the total rate of national and Community subsidies fixed by Annex IV to that Regulation.

2.2.6. Aid for improving management and monitoring of fishing activities

Where a Member State adopts measures intended to improve management or strengthen the monitoring of fishing activities, going beyond the minimum requirements required by relevant Community regulation, such aid may be considered compatible with the common market subject to a case-by-case examination. The aid must not go beyond what is strictly necessary in order to attain the objective pursued and may not extend beyond a period of three years. Overcompensation shall be avoided.

2.3. Aid to processing and marketing in the fisheries sector

Aid to investment in the processing and marketing of fishery products may be deemed to be compatible with the common market provided that:

(a) the conditions for granting it are comparable with those laid down in Annex III (point 2.4) to Regulation (EC) No 2792/1999 and are at least as stringent;

(b) the sum of State aid does not exceed, in subsidy equivalent, the total rate of national and Community subsidies fixed by Annex IV to that Regulation.

2.4. Aid for port facilities

Aid for fishing port facilities intended to assist landing operations and the provision of supplies to fishing vessels may be regarded as being compatible with the common market provided that:

(a) the conditions for granting it are comparable with those laid down in Annex III (point 2.3) to Regulation (EC) No 2792/1999 and are at least as stringent;

(b) the sum of State aid does not exceed, in subsidy equivalent, the total rate of national and Community subsidies fixed by Annex IV to that Regulation.

No aid may be granted to ports for the construction of fishing vessels.

2.5. Protection and increase of aquatic resources

Aid for the protection and increase of aquatic resources in coastal waters may be deemed to be compatible with the common market provided that:

(a) the conditions for granting it are comparable with those laid down in Annex III (point 2.1) to Regulation (EC) No 2792/1999 and are at least as stringent;

(b) the sum of State aid does not exceed, in subsidy equivalent, the total rate of national and Community subsidies fixed by Annex IV to that Regulation.

Restocking in sea water may be deemed compatible.

2.6. Aid to producer associations

Aid to encourage the creation and facilitate the operation of producer organisations recognised under Community legislation may be allowed under the conditions laid down in Article 15(1) of Regulation (EC) No 2792/9919.

Aid intended to improve or provide support for the activities of producer groups or associations other than the producer organisations recognised under Community legislation may be deemed to be compatible with the common market provided that it takes the same form and meets the same conditions as aid granted to such recognised organisations and its rate does not exceed 80 % of the rate of aid granted to the latter.

Aid for measures implemented by members of the trade or the organisations mentioned in Article 15 of Regulation (EC) No 2792/1999, may be deemed to be compatible with the common market provided that it meets the requirements of Article 15(2) and (3) of this Regulation.

2.7. Aquaculture and freshwater fishing

Aid for aquaculture and aid for investment in commercial feshwater fisheries (stocking with fry, restocking, and installing/improving waterways and ponds) may be considered compatible with the common market provided that:

- the conditions for granting it are comparable with those laid down in Article 13 and Annex III to Council Regulation (EC) No 2792/1999 and are at least as stringent,

- the sum of State aid does not exceed, in subsidy equivalent, the total rate of national and Community subsidies fixed by Annex IV to that Regulation.

2.8. Aid in the veterinary and health fields

Aid in the veterinary and health-protection fields (e.g. veterinary fees, health checks, tests, screening, preventive treatment, drugs, eradication action following outbreaks of disease) may be deemed compatible with the common market provided that there are national or Community provisions which show that the competent public authority is concerned about the disease in question, either by organising an eradication campaign, in particular a compulsory scheme with compensation, or by introducing - as a first step - an early-warning system, possibly combined with aid incentives to encourage individuals to take part on a voluntary basis in preventive measures.

This will ensure that only action involving the public interest, notably in view of the danger of contamination, will attract aid to the exclusion of cases in which managers must reasonably themselves take responsibility for the normal risks run by the firm.

The objectives of the aid measures must be either preventive, compensatory or mixed and in accordance with the principles applied cancerning control of animal diseases in Council Decision 90/424/EC(9) on expenditure in the veterinary field.

2.9. Special cases

2.9.1. Public enterprises

These guidelines also apply to fishery undertakings which are entirely or partly publicly owned.

2.9.2. Income aid

Income support to workers in the fisheries and aquaculture sector and to workers employed in the processing and marketing of fishery and aquaculture products may be considered compatible with the common market provided it forms part of socioeconomic back-up measures linked to the adjustment or reduction of capacity or to exceptional circumstances to be assessed on a case-by-case basis.

In case of temporary cessation of activity, conditions set out in 2.2.2 apply.

Early retirement aid for fishermen and individual flat-rate premiums are compatible with the common market, provided they comply with Article 12(3)(a), (b) and (c) of Regulation (EC) No 2792/1999. Aid under conditions which differ from those laid down in Article 12 will be assessed on a case-by-case basis.

2.9.3. Aid to make good damage caused by natural disaster or exceptional occurrences.

According to Article 87(2)(b) of the EC Treaty, aid to make good damage caused by natural or exceptional occurrences is deemed to be compatible with the common market. Once the existence of a natural disaster or an exceptional occurrence has been demonstrated, an aid of up to 100 % to compensate for material damage is permitted.

Compensation should normally be calculated at the level of the individual beneficiary and overcompensation shall be avoided. Amounts received under an insurance scheme or normal costs not incurred by the beneficiary shall be deducted.

Damages which could be covered by an ordinary commercial insurance contract or represent normal enterprise risk are not entitled to attract aid.

Any compensation must be granted within three years of the event to which it relates.

When the Commission approves a general aid scheme in respect of natural disasters, Member States are asked to inform the Commission of the intention to grant this support in the wake of a natural disaster. In the case of aid to make good damage caused by an exceptional occurrence, Member States must make a notification for every case where it is intended to grant aid.

2.9.4. Insurance premiums

Aid of up to 80 % of the cost of insurance premiums to cover against risk of losses caused by exceptional occurrences or natural disasters, may be accepted.

Aid towards the payment of insurance premiums should not constitute a barrier to the operation of the internal market for insurance services or hinder its development. This would be the case, for instance, if the possibility to provide insurance is limited to a single company or group of companies or if it is stipulated that an insurance contract had to be taken out with a company established in the Member State concerned.

2.9.5. Outermost regions

Aid designed to meet the needs of outermost regions will be assessed on a case-by-case basis, having regard to the provisions of Article 299(2) of the EC Treaty and the compatibility of the measures concerned with the objectives of the common fisheries policy and the potential effect of the measures on competition in these regions and in the other parts of the Community.

2.9.6. Aid for employment

Aids for employment will be assessed in accordance with the Community Guidelines on aid for employment(10).

3. PROCEDURAL MATTERS

3.1. The implementation of these guidelines presupposes discipline both on the part of the authorities in the Member States and on the part of the Commission, particularly as regards the formal obligations to provide notification and the time limits set for this purpose.

The Commission reminds the Member States of their duty to notify aid schemes at the draft stage in accordance with Article 88(3) of the EC Treaty, supplying all the particulars necessary for their assessment.

In the interest of accelerating the examination of aid measures, Member States are advised to fill in the form provided in Annex I.

According to Article 19 of Regulation (EC) No 2792/1999 Member States must notify all State aid projects to the Commission, including those which benefit from Community co-financing.

Where aid is granted without being notified beforehand or before the Commission has taken a position on the draft scheme, the Commission may, pursuant to Article 11 of Regulation (EC) No 659/1999 laying down detailed rules for application of Article 93 of the EC Treaty(11), adopt a Decision requiring the Member State provisionally to recover aids unduly paid. Where a negative decision is taken in the case of unlawful aid, the Member State concerned shall be required to recover the aid from the beneficiary, under the conditions laid down in Article 14 of that Regulation.

With regard to the impact of unlawfully granted aid on the activities financed by the EAGGF Guarantee Section, any repercussions on expenditure financed by the Guarantee Section will be taken into account during the clearance of the accounts.

3.2. Proposals for appropriate measures

In accordance with Article 88(1) of the EC Treaty, the Commission proposes that Member States amend their existing aid schemes relating to aids in the fishery sector to conform with these guidelines by 1 July 2001 at the latest.

The Member States are invited to confirm that they accept these proposals for appropriate measures in writing by 1 March 2001 at the latest.

In the event that a Member State fails to confirm its acceptance in writing before that date, the Commission will assume that the Member State concerned has accepted these proposals, unless it explicitly indicates its disagreement in writing.

Should a Member State not accept the whole or part of these proposals by that date, the Commission will proceed in accordance with Article 19 of Regulation (EC) No 659/1999.

3.3. Annual report

Article 21 of Regulation (EC) No 659/1999 provides that Member States are to submit to the Commission annual reports on all existing aid schemes or individual aid granted outside an approved aid scheme to which no specific reporting obligations have been imposed in a conditional decision. The annual report must contain all relevant information as indicated in the form in Annex II.

Member States are also requested to transmit figures as provided for in the relevant FIFG Commission Regulation.

3.4. Entry into force

The Commission will apply these guidelines with effect from 1 January 2001 to any State aid notified upon or after that date.

An "unlawful aid" within the meaning of Article 1(f) of Regulation (EC) No 659/1999 shall be appraised in accordance with the guidelines prevailing at the time when the aid is granted.

(1) OJ L 17, 21.1.2000, p. 22.

(2) OJ L 337, 30.12.1999, p. 10.

(3) OJ C 100, 27.3.1997, p. 12.

(4) OJ C 74, 10.2.1998, p. 9.

(5) Commission notice on the de minimis rule for State aid (OJ C 68, 6.3.1996, p. 6).

(6) OJ C 45, 17.2.1996, p. 5.

(7) OJ C 272, 28.10.1986, p. 3.

(8) OJ C 288, 9.10.1999, p. 2.

(9) OJ L 224, 18.8.1990, p. 19.

(10) OJ C 334, 12.12.1995, p. 4.

(11) OJ L 83, 27.3.1999, p. 1.

ANNEX I

Information to be supplied pursuant to an Article 88(3) of the EC Treaty notification

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ANNEX II

Information to be contained in the annual report

1. Reference to the Commission aid number and Commission Decision.

2. Title of the scheme.

3. Expenditure under the scheme for a given year; separate figures shall be provided for each aid instrument (see point 7.2 of Annex I) and objective of the scheme (see point 6 of Annex I).

4. Number of recipients.

5. Assessment of results.