85/379/EEC: Commission Decision of 22 May 1985 concerning an aid scheme for potable spirits producers in France (Only the French text is authentic)

• Articles: 5

Article 1

The aids for the private storage and maturing of armagnac and calvados, notified to the Commission by letter dated 29 September 1983, are incompatible with the common market and France may not implement them.

Article 2

France shall take the measures necessary to comply with this Decision within one month of its notification and shall inform the Commission thereof within the same period.

Article 3

This Decision is addressed to the French Republic.

Done at Brussels, 22 May 1985.

For the Commission

Peter SUTHERLAND

Member of the Commission

(1)OJ No L 54, 5.3.1979, p. 1.(2)OJ No L 89, 29.3.1985, p. 1.

Article 92

(1) of the EEC Treaty, which provides that such aids are incompatible with the common market.

The exceptions to this principle do not apply in this case in view of the features of the plannried aids and the fact that they do not seek to satisfy the conditions for application of those exceptions.

Article 92

(3) of the EEC Treaty specifies which aids may be considered compatible with the common market. Such compatibility is determined in the light of objectives pursued in the interest of the Community and not in that of a single Member State.

In order to safeguard the proper functioning of the common market, and having regard to the principle embodied in Article 3 (f) of the EEC Treaty, the exceptions to the incompatibility of aids provided for in Article 92 (3) of the EEC Treaty must be construed narrowly when any aid is scrutinized.

In particular, they may be invoked only where the Commission is satifsfied that, without the aid, market forces alone would be insufficient to guide the recipients towards patterns of behaviour that would serve one of the said objectives.

To apply the said exceptions in the case of aid that did not serve such an objective or where aid is not necessary for that purpose would be to place the industries or firms of certain Member States at an unfair advantage. Their financial position would be bolstered as a result, whereas trading conditions between Member States would be affected and competition distorted without any justification on grounds of the common interest within the meaning of Article 92 (3).

The proposed assistance for the storage and maturing of armagnac and calvados spirits would relieve the recipients of certain costs inherent in those operations. In fact, the operations are intended to enable them to sell later a better quality product at a higher price. This means that the producer foregoes an immediate income and pays certains costs, which are covered, however, by a higher return at some point in the future. Both in France and in other Member States, however, spirits competing with armagnac and calvados undergo similar treatment without their producers qualifying for assistance to cover part of the cost.

To agree to such aid being granted to armagnac and calvados producers alone would, under the circumstances, be tantamount to inflicting on their competitors a disadvantage which might be reflected in an unwarranted drop in their sales.

The aid is operating aid involving no restructuring, redeployment or innovation.

V In view of the above, the prohibition provided for in Article 92 (1) cannot be waived under paragraph 2 of that Article, given that the exceptions provided for in that paragraph are clearly not applicable in the present case.

Nor do the aids for the private storage and maturing of armagnac and calvados satisfy the conditions for the application of one of the exceptions provided for in Article 92 (3) of the EEC Treaty.

With regard to the exceptions contained in subparagraphs (a) and (c) of Article 92 (3) for aids to promote the development of certain areas, the Armagnac and Calvados areas are not ones where the standard of living is abnormally low or where there is serious underemployment within the meaning of subparagraph (a).

The operating aids planned by the French Government are not likely to contribute to the development of certain economic areas within the meaning of subparagraph (c).

As regards the exceptions provided for in subparagraph (b) of Article 92 (3), it is obvious that the aids in question are not intended to support a project of common European interest or to remedy a serious disturbance in the French economy.

Lastly, as to the exception in subparagraph (c) of Article 92 (3) regarding aid to facilitate the development of certain economic activities, the aids in question, being intended to cover certain operating costs, cannot have a development effect within the meaning of that exception. Moreover, the fact that a substantial proportion of the products which are to qualify for assistance is exported to other Member States makes it impossible to take the view that trading conditions would not be affected to an extent contrary to the common interest.

Consequently, the planned aids do not satisfy the conditions necessary for application of one of the exceptions in Article 92 (3) of the EEC Treaty,

HAS ADOPTED THIS DECISION: