Article 92
(1) of the Treaty lays down the principle that aid having certain characteristics, which it specifies, is incompatible with the common market. The derogations from that principle which are set out in Article 92 (2) of the Treaty are inapplicable in this instance, given the nature and objectives of the aid, and were not in any case invoked by the Italian Government. V Article 92 (3) of the Treaty specifies the aid which may be considered to be compatible with the common market. Compatibility with the Treaty must be viewed in the context of the Community and not of a single Member State. So as to maintain the proper functioning of the common market and take account of the principles laid down in Article 3 (f) of the Treaty, the exceptions to the principle of Article 92 (1) which are set out in Article 92 (3) must be interpreted strictly in examining any aid scheme or any individual aid measure. In particular, the derogations may be applied only if the Commission finds that, if the aid were not granted, market forces alone would not be sufficient to induce the recipients to act in such a way as to achieve one of the objectives pursued. Applying the derogations to cases which do not contribute to such an objective, or where the aid is not necessary for that purpose, would mean conferring undue advantages on the industries or undertakings of certain Member States and affecting trading conditions between Member States and distorting competition, without any justification based on the common interest referred to in Article 92 (3). With regard to the derogations provided for in Article 92 (3) (a) and (c) for aid to promote or facilitate the development of certain regions, it should be noted that the standard of living in the PAT is not abnormally low, nor does it suffer from serious underemployment within the meaning of the derogation laid down in Article 92 (3) (a). Neither are Riva and Mori located in an assisted area pursuant to the derogation in Article 92 (3) (c). With regard to the derogations provided for in Article 92 (3) (b), it is to be noted that the aid is not intended to remedy a serious disturbance in the Italian economy, nor has the Italian Government claimed that this was the case. The other derogation provided for in Article 92 (3) (b) concerns aid to promote the execution of an important project of common European interest. In the Community framework on State aid in environmental matters, of which the Member States were informed by letters dated 7 November 1974 and 23 March 1987, the Commission allowed for the possibility that such aid could qualify for the derogation provided for in Article 92 (3) (b), provided that it was granted to finance additional adaptation investments in existing plant, other than investments leading to increased production capacity. Given that the investment to be made by Cartiere del Garda consists of the building of an additional paper-making machine and therefore concerns solely an increase of capacity, any aid for this investment does not fulfil the criteria to be considered eligible for the derogation provided for in Article 92 (3) (b). The Commission notes in this context, however, that the environmental aid framework allows for the possibility that aid not fulfilling the requirements of the framework may be found to be compatible with the common market on the basis of Article 92 (3) (c).