Belgium: Interest rate subsidies and guarantees for primary producers hit by the financial crisis
Description
By notification of 22 January 2010, the Belgian authorities notified a temporary aid scheme for granting limited amounts of compatible aid under the Temporary Framework for State aid measures to support access to finance in the current financial and economic crisis."
The scheme intends to provide support to the agricultural sector in the Flemish region, which has been severely hit by the financial and economic crisis. It aims therefore at remedying the serious disturbance in the economy of Belgium.
The aid will be provided in the form of interest rate subsidies and in the form of guarantees.
The notified measure has a total budget of €2.73 million. Aid can be granted from the date of approval of the present scheme until 31 December 2010. The beneficiaries of the notified scheme will be small and medium-sized undertakings active in the primary production of agricultural products. According to the Belgian authorities, the sector of the primary agricultural production in Flanders consists only of SME's. The number of beneficiaries will be between 501 and 1000.
The Commission concluded that the measure contains state aid and gave the following assessment:
"The aid at issue is financed out of State resources and benefits certain undertakings. Pursuant to the case law of the Court of Justice, aid to an undertaking is deemed to affect trade between Member States if that undertaking operates in a market open to intra-Union trade8. The mere fact that the competitive position of an undertaking is strengthened compared with other competing undertakings, by giving it an economic benefit which it would not otherwise have received in the normal course of its business, points to a possible distortion of competition. The beneficiaries of the aid at issue operate on a market where intra-Union trade takes place. The aid measure could therefore distort competition and affect trade between Member States and consequently constitutes aid pursuant to Article 107(1) of the TFEU." (par. 30 of the letter from the European Commission to Belgium - Brussels, 10.2.2010 C(2010)935).
Article 107(3)(b) TFEU enables the Commission to declare aid compatible with the Common Market if it is "to remedy a serious disturbance in the economy of a Member State." This aid has to be applied restrictively and must tackle a disturbance in the entire economy of the Member State according to the interpretation of the Article 107 (3)(b) by the Court of First Instance.
The Commission referred to its Communication on the financial crisis (Temporary Framework) and concluded that the Measure complies with the conditions laid therein. Therefore, despite the measure constituting State aid pursuant to the Article 107 (1) TFEU, it is compatible with the internal market according to the Article 107 (3)(b) TFEU. The Commission raises no objections against the measure at issue and authorizes it as emergency intervention in the face of the current financial crisis. (par. 31-45 of the letter ).
A state measure in the GTA database is assessed solely in terms of the extent to which its implementation affects the extent of discrimination against foreign commercial interests. On this metric, the state aid proposed here is discriminatory.
Any Evidence-Based Deliberation:
| Question | Result |
|---|---|
| Is there anything in the public record to suggest that evidence of the effectiveness of the proposed measure was considered during official deliberations? | Yes |
| Is there any evidence that alternatives to the proposed measure were considered? | |
| Is there anything in the public record that suggests that empirical evidence informed the comparison across the alternatives available to government? | |
| Was such evidence identified? | |
| Is such evidence publicly available? | |
| Did the official decision-maker in question provide an explanation as to why a chosen measure was favoured over alternatives? | |
| Is there any evidence to suggest that potentially affected trading partners were consulted before the measures were taken? | |
| Is there any evidence that safeguards have been put in place to ensure that implementation of the initiative is transparent and non-discriminatory? | |
| Did the government state its intention to review the measure within one year of implementation? | Yes |
Date Discovered:
Implemented: Yes
Date of inception: 11 Feb 2010
Duration: 10 months
GTA Evaluation: Red
Source:
the letter from the European Commission to Belgium - Brussels, 10.2.2010 C(2010)935 - http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=...
Government Response:
- 613 reads
