(3) specifies which types of aid may be considered to be compatible with the common market. The compatibility of aid with the Treaty has to be assessed in the context of the Community as a whole and not that of a single Member State. So as to ensure the proper functioning of the common market and compliance with Article 3 (f) of the Treaty, the derogations from the principle laid down in Article 92 (1) that are set out in Article 92 (3) should be interpreted strictly in examining any proposed aid scheme or individual grant of aid.
In particular, the derogations are applicable only if the Commission is able to establish that, if the aid were not granted, market forces alone would not induce the potential recipient to behave in a way that would help to achieve one of the abovementioned objectives.
Allowing derogations for aid which does not in any way contribute to such an objective or which is not necessary for that purpose would amount to granting an unfair advantage to industries or firms in certain Member States by simply improving their financial position, and would be liable to affect trading conditions between Member States adversely and to distort competition, without any Community interest as justification, as is required by Article 92 (3).
As far as the derogation pursuant to Article 92 (3) (b) is concerned, the aid was clearly not intended to promote the execution of an important project of common European interest or to remedy a serious disturbance in the French economy. Aid for betting is not apt to solve the type of situation described in Article 92 (3) (b).
As far as the derogation pursuant to Article 92 (3) (a) and (c) on aid to promote the development of certain regions is concerned, the aid granted to the PMU does not have any regional objective, nor has the French Government cited any such grounds in order to justify the aid.
Lastly, as regards the derogation provided for in Article 92 (3) (c) for aid to facilitate the development of certain economic activities, the following points should be taken into consideration:
1. the FF 315 million in aid which the PMU received for the computerization of its bet-taking and processing operations covered almost 29 % of the cost of such computerization. Computerization had become essential in order to speed up and improve the processing of bets. The intensity of the aid is high. The Commission accepts similar rates of investment aid in the Community's less-developed regions. Such a situation clearly does not obtain here. In addition, there is growing competition in the sector. Before applying the derogation provided for in Article 92 (3) (c) in such circumstances, the Commission must assess whether the aid distorts or threatens to distort competition and the growing trade in the sector to an extent contrary to the common interest or whether, on the contrary, its disruptive effect on the Community market is too small to outweigh the beneficial effect of the aid on the development of the sector. In this instance, the Commission considers that, given the state of development of competition and trade before the setting-up of the PMI in January 1989, the aid granted between 1982 and 1985 for the computerization of the PMU did not produce any disruptive effects on the market contrary to the common interest, bearing in mind the direct and indirect effects of the aid in developing all the economic factors making up the sector, including the improvement in horse-breeding. The aid was therefore compatible with the common market pursuant to Article 92 (3) (c) of the Treaty;
2. the measure in the form of exemption from the one-month delay rule for VAT deductions resulted in a cash resources facility. In this instance too, since the aid ranks as operating aid that is potentially more harmful to competition than that described in point 1, the Commission must assess whether the aid could, in view of the market situation, have produced disruptive effects that would have outweighed any beneficial effects on the development of the sector. For the same reason as that described in the previous point, the Commission considers that, up to January 1989, the aid was compatible with the common market pursuant to Article 92 (3) (c). As described above, the aid was after 1989 offset in full by a permanent deposit which the racecourse undertakings had to lodge with the Treasury;
3. the exemption from the employers' contribution to building and construction work conferred cash resources facilities on the PMU. Like the aid granted through exemption from the one-month delay rule for deduction of VAT, this aid granted to the PMU qualifies up to 1989 for the derogation provided for in Article 92 (3) (c), but, given the development of trade thereafter, must be considered incompatible with the common market after 1989.
VIII As mentioned in Section VI, since the aid granted by the French Government to the PMU was not notified in accordance with Article 93 (3) of the EEC Treaty, the Commission may require the aid to be repaid if it deems it ineligible for any of the derogations pursuant to Article 92 (3). Consequently, the aid in the form of exemption from the contribution to building and construction work received by the PMU should be repayable as from 1989, the date on which the PMU started to operate in other Community countries.
Nevertheless, the Commission considers that repayment as from that date should not be required in view of the French authorities' argument that the contribution could not be levied because of the 1962 Decree of the Council of State referred to in Section IV, point 7. However, this argument cannot be accepted as from the time when the initiation of proceedings was notified to the French authorities, namely on 11 January 1991.
The Commission has not been given the means to quantify for itself the aid element to be recovered in respect of this latter measure. For this reason, in adopting the implementing measures required to comply with this Decision, the French Government must be required to determine itself and communicate to the Commission the amount of aid to be recovered.
Such recovery must be carried out in accordance with the procedures and provisions of French law, notably as regards interest on arrears owed to the State, with such interest starting to run as from 11 January 1991, the date on which the Commission notified the French authorities of its decision to initiate proceedings,
HAS ADOPTED THIS DECISION:
