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Brussels, 18th July 2007

State aid: Commission approves €1.8 billion in aid for French overseas departments (DOMs)

The European Commission has approved ten aid schemes for the French overseas departments under the EC Treaty's state aid rules. This decision forms part of the general review of regional aid in all Member States (see IP/05/1653 and MEMO/05/491) under the new guidelines adopted in December 2005. The purpose of these new guidelines is to refocus regional aid on the most disadvantaged regions of the enlarged EU. The ten aid schemes concern exemptions from tax and social security contributions to offset the specific handicaps facing the outermost regions, which include the DOMs, recognised in Article 299(2) of the EC Treaty.

Competition Commissioner Neelie Kroes said "As outermost regions recognised by the EC Treaty the French overseas departments face specific handicaps. The Commission has verified that the ten aid schemes will contribute to regional development and are proportionate to the additional costs linked to the factors set out in Article 299(2) of the EC Treaty which they are intended to offset."

The ten aid schemes had previously been approved by the Commission under the regional aid guidelines for 2000-2006. They were notified afresh for reassessment under the new guidelines for 2007-2013.

The DOM programme law and guarantee fund include investment aid complying with the regional ceilings defined in the regional aid map, as follows:

  • for Guyane: 60% for large enterprises, 70% for medium-sized enterprises and 80% for small-sized enterprises;
  • for Martinique, Guadeloupe and Réunion: 50% for large enterprises, 60% for medium enterprises and 70% for small enterprises.

Under the guidelines, operating aid is also authorised in the outermost regions to offset the additional costs of economic activities resulting from the factors described in Article 299(2) of the EC Treaty. This article recognises the specific economic and social situation of the overseas departments, "which is compounded by their remoteness, insularity, small size, difficult topography and climate, economic dependence on a few products, the permanence and combination of which severely restrain their development".

The guidelines allow operating aid covering up to 10 % of the beneficiary's turnover without any specific justification in view of the constraints on the outermost regions. However this cannot be applied in this particular case as the measures in question, which take the form of exemptions from tax or social contributions, do not ensure that the level of aid for particular beneficiaries does not exceed 10% of their turnover. If an aid scheme exceeds this ceiling, the Member State must demonstrate that it is justified by its contribution to regional development and that its level is proportionate to the additional costs resulting from the factors set out to be offset in Article 299(2).

The Commission notes that each of the measures is intended to cover additional costs which have been identified. The Commission has carried out an overall review of the level of the aid in relation to the four DOMs' gross domestic product to assess their proportionality in relation to these additional costs since there is no overall quantification of private and public sector costs for the French overseas departments. The Commission notes that the total aid notified is equivalent to around 6.5% of the DOMs' total GDP, and this is proportionate to the overall additional costs borne by beneficiaries in the DOMs on the basis of comparable information for the Spanish and Portuguese outermost regions. The Commission has also concluded that there are few overlaps between costs, and where there are potential overlaps, the cumulation rules also apply.

In all cases the French authorities are required to submit each year a report for each overseas department giving a breakdown of the budget for each operating aid scheme authorised, identifying the ten main beneficiaries (according to the level of aid received) and indicating these beneficiaries' sector(s) of activity and the level of aid each beneficiary has received so that the impact of the operating aid measures on trade and competition can be assessed.

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