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Brussels, 28 January 2009

The Commission declares State aid to the fruit and vegetable sector in France to be incompatible with the common market

The European Commission today adopted a negative final decision concerning State aid granted by France between 1992 and 2002 to finance ‘contingency plans’. This aid relates to public funds paid by the Office National Interprofessionnel des Fruits, des Légumes et de l’Horticulture (ONIFLHOR) to certain French agricultural committees to finance measures to deal with crises in the fruit and vegetable sector. The aid went to the fruit and vegetable producer organisations in the departments concerned. The funds involved are believed to have been in excess of €330 million.

The Commission launched a formal investigation in 2005 as it doubted whether the aid was compatible with the common market. In the decision adopted today, the Commission first examines the nature of the ‘contingency plans’, which provide for measures to deal with crises arising from the oversupply of French produce on the Community market, in particular by subsidising sales prices, storage or the destruction of part of the crop as well as financial incentives for processing the fresh product. On non-European Union markets, export subsidies based on prices or quantities produced are also believed to have been used to dispose of surplus French produce.

The Commission found that such measures are clearly likely to distort competition on the Community market by promoting the disposal of French fruit and vegetables to the detriment of produce from other Member States. The ‘contingency plans’ therefore represent a kind of ‘national’ common market organisation (CMO) superimposed on the Community CMO and seriously affecting its operation. Furthermore, the aid is unlawful as it was not notified to the European Commission.

The Commission concludes that the aid in question cannot benefit from any of the exemptions provided for in the EC Treaty and is therefore incompatible with the common market. France will therefore have to recover the aid granted.

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