Global Trade Alert

On 1 September 2008 the French authorities notified the European Commission regarding their intentionto support local hotel businesses in overseas territories (DOM) in order to encourage regional development. According to the French authorities, this measure is necessary in order to maintaintouristic attractivity in regions that are heavily dependent on the tourism industry.
 
The measure consists in financial support related to the renovation of hotel infrastructures of relative small size (under 100 rooms) and older than 15 years. The beneficiairies will receive up to 300'000 euros for room renovation (5'000 per room/max. 60 rooms). The aid is estimated to amount in total 13.5 million euros.
 
The aid will be effective from 1 January 2009 until 31 December 2013.
 
The Commission found that the measure constitutes State aid within the meaning of Article 87(1) of the EC Treaty.
 
The Commission assesses that the measure is selective, since the aid is only given to a limited number of businesses, providing them direct subsidies that would not be available in the absence of the related measure, which is likely to distort competition. The measure is likely to affect trade between member States since it applies to the tourism sector, where intra-Community trade exists. (par. 31-34 of the letter from the EC to France - Brussels, 17.04.2009 C (2009) 3015)
 
The Commission decided not to raise objections since the measureis compatible with the Common Market according to the Article 87(3)(a) EC Treaty. (par. 40 of the letter)
 
A state measure in the GTA database is assessed solely in terms of theextent to which its implementation affects the extent of discriminationagainst foreign commercial interests. On this metric, the state aidproposed here is discriminatory.