Global Trade Alert

On 14 April 2010, the Finnish authorities notified by electronic means a temporary aid scheme for granting limited amounts of compatible aid under the Temporary Framework for State aid measures to support primary agricultural production in the current financial and economic crisis ('the Temporary Framework').
 
The Finnish authorities consider that the crisis affects the agriculture sector as well, especially because the variation in the relative prices of the agricultural product and input markets has been exceptionally rapid and strong.
 
The Finnish authorities state that the budget of the present scheme is EUR 22 million. Aid can be granted from 1 August 2010 until 31 December 2010.
 
The beneficiaries of the aid scheme are farmers engaged in agriculture and horticulture in 2010 who fulfil the eligibility criteria for national aids under the Act on National Aid for Agriculture and Horticulture. The Finnish authorities estimate the number of beneficiaries to be over 1 000 undertakings.
 
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 trade. 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. 23 of the letter from the EC to Finland - Brussels, 20.5.2010 C(2010) 3297)
 
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. 24-36 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.