H.E. Tomáš Petříček

Ministerstvo zahraničních věcí České republiky

Loretánské náměstí 5

118 00 Praha 1

Česká republika

Commission européenne/Europese Commissie, 1049 Bruxelles/Brussel, BELGIQUE/BELGIË - Tel. +32 22991111

EUROPEAN COMMISSION

Brussels, 17.4.2020 C(2020) 2337 final

Subject: State Aid SA.56104 – Czech Republic, Support for measures to

combat the spread of porcine diseases with a view to improving

biosecurity

Excellency,

1. PROCEDURE

(1) The permanent representation of the Czech Republic notified the

abovementioned aid scheme to the Commission on 6 January 2020

according to Article 108(3) TFEU.

(2) The Commission sent a request for additional information on 26 February

2020. The Czech authorities answered by letter of 9 March 2020, registered

by the Commission on 10 March 2020.

2. DETAILED DESCRIPTION OF THE SCHEME

2.1. Title

(3) Support for measures to combat the spread of porcine diseases.

2.2. Objective

(4) To provide support for pig farmers for prevention measures to combat the

spread of the listed porcine diseases. The scheme promotes the

competitiveness of agriculture in the Czech Republic.

2.3. Legal basis

PUBLIC VERSION

This document is made available for

information purposes only.

H.E. Tomáš Petříček

Ministerstvo zahraničních věcí České republiky

Loretánské náměstí 5

118 00 Praha 1

Česká republika

Commission européenne/Europese Commissie, 1049 Bruxelles/Brussel, BELGIQUE/BELGIË - Tel. +32 22991111

(5) The legal basis is constituted by the following legal acts:

* Handling instructions for SENSITIVE information are given at https://europa.eu/!db43PX

2

(a) Act No 252/1997 on agriculture, as amended, in particular Sections 1, 2

and 2d (Zákon č. 252/1997 Sb., o zemědělství, v platném znění Prováděcí

ustanovení (jsou-li použitelná): Zejména § 1, § 2, § 2d)

(b) Act No 166/1999 on veterinary care and amending certain related acts, as

amended (Zákon č. 166/1999 Sb., o veterinární péči a o změně některých

souvisejících zákonů, v platném znění)

(c) Principles establishing conditions for granting subsidies on the basis of

Sections 2 and 2d of Act No 252/1997 on agriculture (Subsidy Schedule

8.F.d) (kterými se stanovují podmínky pro poskytování dotací na základě §

2 a § 2d zákona č. 252/1997 Sb., o zemědělství (Dotační program 8.F.d))

2.4. Duration

(6) From the date of the notification of the approval by the Commission until

31 December 2025.

2.5. Budget, Granting Authority and Form of Aid

(7) The national budget is adopted annually. The annual budget is CZK 1

billion (approximately EUR 39 million). The total budget for the aid

scheme over the duration of the aid scheme is CZK 6 billion (approximately

EUR 235 million).

(8) The granting authority is the State Agricultural Intervention Fund (Státní

zemědělský intervenční fond Adresa).

(9) The aid will be granted as a direct grant.

2.6. Beneficiaries

(10) Beneficiaries eligible for the aid are pig breeders, who are active in primary

agricultural production and registered to trade under Section 420 of Act No

89/2012 on agricultural production, pursuant to Section 2e of Act No

252/1997 on agriculture, and who have carried out eligible measures in

connection with the prevention of the listed porcine diseases (see recital

(21)).

(11) Beneficiaries are large enterprises, and micro, small and medium-sized

enterprises (SMEs).

(12) In accordance with the national legislation, large undertakings must

describe in the grant application a counterfactual scenario showing the

situation that would have occurred if the aid had not been granted.

(13) The estimated number of beneficiaries is from 101 to 500.

2.7. Description of the aid scheme

(14) The national legislation defines animal diseases, prevention measures and

costs that are eligible for the aid. The Czech authorities confirmed that the

aid scheme is intended solely for prevention measures and does not concern

any control or eradication measures.

3

(15) Measures can be eligible for the aid only if they are an integral part of the

Recovery programme for the listed pig diseases and do not constitute

routine maintenance.

(16) The Recovery programme is drawn up by the breeder in conjunction with

the State veterinarian. The Recovery programme is not an obligation

imposed to all the commercial farms.

(17) The Recovery program has to be approved by the competent Regional

Veterinary Administration of the State Veterinary Administration of the

Czech Republic. It includes a description of activities that are performed

throughout the duration of the programme in the form of services or

performed by the breeder with his own resources.

(18) The Czech authorities have confirmed that the aid scheme does not relate to

measures in respect of which Union legislation provides that the cost of

such measures is to be borne by the beneficiary.

(19) The aid is paid directly to the pig farmers concerned.

(20) The Czech authorities have confirmed that the aid will not be paid for

animal diseases caused deliberately or by the negligence of the beneficiary.

(21) The Czech authorities confirmed that the aid will be paid only in relation to

animal diseases included in the list of the World Organisation for Animal

Health or animal diseases and zoonoses listed in Annex I and Annex II to

Regulation (EU) No 652/2014 of the European Parliament and of the

Council1.

(22) The aid will be paid within four years of the occurrence of the costs caused

by the animal disease.

(23) The Czech authorities have confirmed that they will comply with the annual

reporting and monitoring obligations of ex ante schemes.

(24) In accordance with the national legislation, the eligible costs include

services or personal costs, other costs and other staff costs incurred by the

pig farmer himself due to the operations and implementation of activities,

which are part of an approved eradication plan.

(25) The costs and measures that are eligible for the aid are:

(a) mechanical cleaning and pressure-water washing of housing and its

component parts, including the floor and compartment areas, windows,

1 Regulation (EU) No 652/2014 of the European Parliament and of the Council of 15 May 2014 laying

down provisions for the management of expenditure relating to the food chain, animal health and animal

welfare, and relating to plant health and plant reproductive material, amending Council Directives

98/56/EC, 2000/29/EC and 2008/90/EC, Regulations (EC) No 178/2002, (EC) No 882/2004 and (EC) No

396/2005 of the European Parliament and of the Council, Directive 2009/128/EC of the European

Parliament and of the Council and Regulation (EC) No 1107/2009 of the European Parliament and of the

Council and repealing Council Decisions 66/399/EEC, 76/894/EEC and 2009/470/EC (OJ L 189,

27.6.2014, p. 1).

4

ceilings and vertical walls and interior fittings of housings, containers,

food storage, mixing rooms, storage facilities for instruments and tools;

(b) cleaning and disinfection of distribution systems for safe drinking and

service water;

(c) disinfection, pest control and rodent control of housings, utility areas,

manure management, entrance area including showers and streams for

disinfection, handling areas, rendering boxes, spaces used by staff and

optimisation of those spaces for the effective use of disinfection, pest

control and rodent control resources or bactericide heaters;

(d) optimisation of controlled ventilation and the operation of microbial

filters;

(e) minor modification of sanitary facilities;

(f) treatment of internal areas with a sanitising agent;

(g) veterinary operations arising from compliance with the requirements of

the Recovery programme (Ozdravovací Program od vyjmenovaných nákaz

prasat (dále jen „OP VNP“)) and equipment for taking samples, swabs

and analyses from compliance with the requirements of the Recovery

programme concerning both animals and for farming equipment;

(h) treatment of feed and drinking water.

The Czech authorities provided justification that minor modification of

sanitary facilities are eligible only if minor repair of damaged floor tiles,

damaged floor surface, walls etc. are carried out for damaged sanitary

facilities in the context of disinfection measures prior to the treatment by a

sanitary product in order to ensure maximum efficiency of the provided

disinfection measures.

(26) Personnel costs and other costs are eligible only in the case of in-house

operations if the cleaning and disinfection of the holding and equipment is

performed by the applicant who implements the prevention measures with

own resources.

(27) Eligible personnel costs that are eligible for the aid are

(a) wages for staff;

(b) social security and health insurance;

(c) social costs incurred in accordance with the rules in force;

(d) travel costs;

(e) other staff costs (relating to activities to combat the spread of listed

porcine diseases with a view to improving biosecurity; specific cost items

are given at the end of the explanatory information on the subsidy

programme).

5

(28) Other costs that are eligible for the aid are:

(a) rental of equipment and machinery;

(b) energy (gas, electricity);

(c) water and sewer costs;

(d) fuel (coal, wood);

(e) motor fuels, lubricants, spare parts and components;

(f) costs of telecommunication and communication services;

(g) tax and insurance costs (means of transport);

(h) costs for servicing and maintenance of machinery and equipment for

carrying out activities to combat the spread of the spread of listed porcine

diseases with a view to improving biosecurity;

(i) administrative costs and accessories associated with the implementation of

activities to combat the spread of listed porcine diseases with a view to

improving biosecurity,

(j) depreciation.

(29) Other personnel costs that are eligible for the aid include

(a) remuneration for work and similar tasks performed on the basis of a

relationship other than employment, service or membership, and cash

benefits provided to employees in connection with termination of an

employment, service or membership relationship to the employer;

(b) remuneration for work under agreements outside an employment

relationship;

(c) remuneration for work (activity) done under specific rules in cases where

there is no working relationship with the employer (for example, the

remuneration of expert opinions, the remuneration of voluntary care

workers, officials of cooperatives, intermediaries, municipal council

members, remuneration and other services provided to pupils (apprentices)

in vocational training, etc.);

(d) amounts reimbursed by the employer to other employers to refund

operations included in other staff costs.

(30) The Czech authorities provided justification why treatment of feed and

drinking water is part of the eligible measures. According to the Czech

authorities the costs of feed and feedwater treatment are included in the

eligible costs under the aid scheme since the feed and feedwater given to

pigs in this way reduces the risk of health problems and therefore falls

under prevention measures aimed to prevent the spread of pig diseases by

increasing biosecurity.

6

(31) Further, the Czech authorities explained that the particular manner and

method of feed and feedwater treatment is an integral part of the respective

Recovery programme. In case of feedwater treatment the following

products are recognised: products based on organic acids and their salts.

The pH lowering reduces the risk of drinking water contamination by

undesired microflora. The acidic environment limits mainly the

multiplication of Gram-positive bacteria (such as Salmonella). Vitamin and

multivitamin liquid and water-soluble products are used to boost pig health.

(32) The feed treatment consists particularly in hydrothermal treatment, spraying

preservatives preventing recontamination, acidification of feed, probiotics,

endotoxin and mycotoxin adsorbents, antioxidants, short-chain and

medium-chain fatty acids and their derivatives, substances reducing the

buffering capacity of feed, enzyme-treated soy protein concentrates, vitamin

premixes, prebiotics, immunomodulators, amino acids lowering the feed

pH, fat emulsifiers, enzymes, phytogenic substances boosting immunity,

intestinal integrity and growth of symbiotic gut microflora. Further, the

Czech authorities declared that the list of measures included in Chapters I –

VI and VIII of the national regulation, and which costs are described in

recitals (25) to (29), comprises only the activities defined as eligible costs

referred to in point 374 (e) of the Guidelines of the European Union

Guidelines for State aid in the agricultural and forestry sectors and in rural

areas 2014 to 20202 (hereinafter "the Guidelines"), and does not include

measures that constitute routine practice in commercial pig farms.

(33) The Czech authorities have confirmed that any costs which are not incurred

directly due to the animal disease which should have been incurred

otherwise by the beneficiary are not eligible for the aid.

(34) The Czech authorities have confirmed that the aid and any other payments

received by the beneficiary under insurance policies for the same eligible

costs (see also recital (39)), will not exceed 100 % of the eligible costs. In

accordance with the national legislation, the aid intensity is up to 100% of

proven eligible costs for the category of porcine animal concerned and no

more than CZK 1 000 for each removed housing for the category of porcine

animal concerned.

2.8. Other

(35) The Czech authorities confirmed that the aid will not have an environmental

impact.

(36) The Czech authorities confirmed that the notified aid scheme is not part of

the Rural Development Programme of the Czech Republic.

(37) The eligible costs must be supported by documentary evidence that include

an approved Eradication Programme of the listed porcine diseases, tax

documents, copies of documents proofing payment and existence of the

measures and confirmation by Regional Veterinary Association that the

measures have been completed.

2

OJ C 204 of 1.7.2014, p. 1. Amended by the Notices published in OJ C 390, 24.11.2015, p. 4, OJ C

139, 20.4.2018, p. 3 and OJ C 403, 9.11.2018, p. 10.

7

(38) Value added tax (VAT) is not eligible for aid, except where it is not-

recoverable.

(39) The Czech authorities confirmed that the aid will not be cumulated with

State aid, funds from European Union, any other regional aid scheme or de

minimis aid received from other local, regional or national aid to cover the

same eligible costs. The applicant cannot be a body which has received, for

the relevant year and for the purpose for which the grant is requested, a loan

with the support of the Support and Guarantee Fund.

(40) The Czech authorities confirmed that they will comply with the

transparency requirements under the Guidelines. The State Agricultural

Intervention Fund is obligated to enter in the central registration system of

State aid the data on State aid provided in line with the Guidelines. The

requested data will be published on the website

https://webgate.ec.europa.eu/competition/transparency/public/search/home/.

(41) The Czech authorities indicate that no aid will be granted to undertakings in

difficulty within the meaning of point 35(15) of the Guidelines.

(42) The Czech authorities confirm to suspend the award and/or payment of any

aid under the notified aid scheme to any undertaking that has benefited from

earlier unlawful aid declared incompatible by a Commission Decision

(either as an individual aid or an aid under an aid scheme being declared

incompatible), until that undertaking has reimbursed or paid into a blocked

account the total amount of unlawful and incompatible aid and the

corresponding recovery interest.

(43) The Czech authorities confirm to adapt the aid scheme to the Guidelines

applicable after the expiry of the current ones.

3. ASSESSMENT OF THE MEASURE/AID, INCLUDING:

3.1. Existence of Aid – Application of Article 107(1) of the TFEU

(44) According to Article 107(1) TFEU: "[s]ave as otherwise provided in the

Treaties, any aid granted by a Member State or through State resources in

any form whatsoever which distorts or threatens to distort competition by

favouring certain undertakings or the production of certain goods shall, in

so far as it affects trade between Member States, be incompatible with the

internal market.”

(45) The qualification of a measure as aid within the meaning of this provision

therefore requires the following cumulative conditions to be met: (i) the

measure must be imputable to the State and financed through State

resources; (ii) it must confer an advantage on its recipient; (iii) that

advantage must be selective; and (iv) the measure must distort or threaten to

distort competition and affect trade between Member States.

(46) EU competition law applies only to undertakings, i.e. to operators carrying

out an economic activity. The recipients of the aid scheme are pig keepers

who are engaged in agricultural production (recital (10)), therefore, the aid

scheme is earmarked for an economic activity.

8

(47) The scheme was enacted by legislative acts (recital (5)) and therefore it is

imputable to the State. The measure is granted from public funds and is

hence financed through State resources (recitals (7)-(8)).

(48) Eligible pig keepers operating in Czech Republic may get a grant to

compensate eligible costs. Therefore, the aid scheme provides financial

benefit, an economic advantage, for pig keepers as indicated in recitals (4)

and (10). The notified scheme predetermines the eligible measures that are

available for pig keepers operating in the Czech Republic. Therefore, the

aid scheme is a general scheme. According to the case law of the Court of

Justice, examining a general scheme of aid, it is necessary to identify

whether the measure in question, notwithstanding the finding that it confers

an advantage of general application, does so to the exclusive benefit of

certain undertakings or certain sectors of activity3. The notified scheme

gives only those big keepers (see recital (10)), who have performed the

eligible measures, a comparative economic advantage, by strengthening

their position on the market. Therefore, pig keepers that have not performed

the eligible measures and other undertakings in a comparable legal and

factual situation, in the light of the objectives pursued by the scheme, within

the relevant sectors, will not be eligible for aid and thus will not receive the

same advantage. Therefore, the advantage specifically benefits one or more

undertakings. According to the case law of the Court of Justice4, the mere

fact that the competitive position of an undertaking is strengthened

compared to 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; therefore, the aid

scheme is selective.

(49) The scheme has the potential to distort competition, given that it confers an

economic advantage on its recipients and that advantage strengthens their

position on the market. According to the case law of the European Court of

Justice, the mere fact that the competitive position of an undertaking is

strengthened compared to 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 competition5.

(50) Pursuant to the case law of the European Court of Justice, aid to an

undertaking is capable of affecting trade between Member States where that

undertaking operates in a market open to intra-Union trade.6 The

beneficiaries of aid operate in the agricultural sector, which is open to

competition at EU level and therefore sensitive to any measure in favour of

3 Judgment of the Court of 30 June 2016, Case C-270/15, Kingdom of Belgium v Commission,

ECLI:EU:C:2016:489.

4 Judgment of the Court of 17 September 1980, Case 730/79, Philip Morris Holland BV v Commission of

the European Communities, ECLI:EU:C:1980:209.

5 Judgment of 17 September 1980, C-730/79, Philip Morris Holland BV v Commission, EU:C:1980:209.

6 See in particular the judgment of the Court of Justice of 13 July 1988 in Case C-102/87, French Republic

v Commission of the European Communities, ECLI:EU:C:1988:391.

9

the production in one or more Member States. Therefore, the present

measure is liable to affect trade between Member States.

(51) In the light of the above, the conditions of Article 107(1) TFEU are

fulfilled. It can therefore be concluded that the proposed scheme constitutes

State aid within the meaning of that Article. The State aid may only be

considered compatible with the internal market if it can benefit from any of

the derogations provided for in the TFEU.

3.2. Capability of the Aid - Application of Article 107(3) TFEU

(52) Under Article 107(3)(c) TFEU an aid may be considered compatible with

the internal market, if it is found to facilitate the development of certain

economic activities or of certain economic areas, where such aid does not

adversely affect trading conditions to an extent contrary to the common

interest.

(53) For this derogation to be applicable, the aid must comply with the relevant

Union State aid rules.

3.2.1. Application of the Guidelines

(54) As regards the notified aid scheme, Section 1.2.1.3 of Part II of the

Guidelines "Aid for the costs of the prevention, control and eradication of

animal diseases and plant pests and aid to make good the damage caused

by animal diseases and plant pests" is applicable.

(55) According to point 364 of the Guidelines, the Commission will consider aid

for the costs of the prevention, control and eradication of animal diseases

and aid to make good the damage caused by animal diseases compatible

with the internal market under Article 107(3)(c) TFEU, if it complies with

the common assessment principles of the Guidelines and with the

conditions set out in Section 1.2.1.3 of Part II of the Guidelines.

3.2.1.1. Conditions set out in Section 1.2.1.3 of Part II of the

Guidelines

(56) As provided for in point 365 of the Guidelines, aid may be granted to

undertakings active in the primary agricultural production (recital (10)). The

provisions of point 365 of the Guidelines are complied with.

(57) As provided for in point 366 (a) of the Guidelines, aid may only be paid in

relation to animal diseases or plant pests for which Union or national rules

exist, whether laid down by law, regulation or administrative action.

(58) As provided for in point 366 (b) of the Guidelines, aid may only be paid as

part of a public programme at Union, national or regional level for the

prevention, control or eradication of the animal disease or emergency

measures imposed by the competent public authority.

(59) The aid scheme is a part of a public program for prevention of animal

diseases at national level, and as required by point 367 of the Guidelines the

programmes contains a description of the prevention, control and

10

eradication measures concerned as indicated in recitals (14) to (17). Thus,

the provisions of point 367 of the Guidelines are complied with.

(60) The Czech authorities confirmed that the aid does not relate to measures in

respect of which Union legislation provides that the cost of such measures

is to be borne by the beneficiary (recital (18)). Thus, the provisions of point

368 of the Guidelines are complied with.

(61) As provided for in point 369 of the Guidelines, the aid is paid directly to the

undertaking concerned (recital (19)).

(62) The Czech authorities confirmed that no individual aid will be granted

where it is established that the disease was caused deliberately or by the

negligence of the beneficiary as provided for in point 370 of the Guidelines

(recital (20)).

(63) According to point 371 of the Guidelines, the aid may only be granted in

respect of diseases referred to in the list of animal diseases established by

the World Organisation for Animal Health or the animal diseases and

zoonoses listed in Annexes I and II to Regulation (EU) No 652/2014 of the

European Parliament and of the Council. The Czech authorities confirmed

that the aid is paid only in relation to those diseases (recital (21)).

(64) As provided for in point 372 of the Guidelines, the aid must be paid out

within four years from the date of the occurrence of the cost or damage

caused by the animal disease. That provision is complied with (recital (22)).

(65) As provided for in point 373 of the Guidelines, the Czech authorities

confirmed that they comply with the annual reporting and monitoring

obligations (recital (23)).

(66) As provided for in point 374 of the Guidelines, eligible prevention measures

and costs are limited to

(a) health checks;

(b) analyses including in vitro diagnostics;

(c) tests and other screening measures including TSE and BSE tests;

(d) the purchase, storage, administration and distribution of vaccines,

medicines, substances for the treatment of animals and plant protection

products;

(e) the preventive slaughtering or culling of animals or the destruction of

animal products and plants and the cleaning and disinfection of the holding

and equipment.

The eligible costs are analyses, samples or cleaning or disinfection

measures, even carried out by the applicant himself (see recitals (25) –

(29)). Minor modification of sanitary facilities (recital (25)(e)) are eligible

only if they are carried out as part of disinfection measures in order to

ensure maximum efficiency of the provided disinfection measures (see

recital (25)). Therefore, they are considered as cleaning and disinfection

11

measures. Adjusting ventilation and filters (recital (25)(d)) are accepted as

cleaning and disinfection of air quality. The eligible measures fit into the

list of point 374 of the Guidelines (for the treatment of feed and drinking

water (recital (25)(h)), see assessment in recital (73)).

(67) Point 375 of the Guidelines is not relevant for this Decision (recital (14)).

(68) As provided for in point 376 of the Guidelines, measures and costs referred

in points 374 (d), 374 (e) of the Guidelines and cleaning and disinfection of

the holding and equipment measures are not limited to aid granted in kind.

In the present case eligible measures that can be performed with own

resources are cleaning and disinfection measures (recitals (4), (17) and 0 to

(29)). Therefore, direct grant is allowed and in line with the provisions of

point 376 of the Guidelines.

(69) The present case does not include aid to make good the damage caused by

animal diseases. Thus, point 377 of the Guidelines is not relevant for the

present case.

(70) As provided for in point 378 of the Guidelines, the Czech authorities have

confirmed that any costs which are not incurred directly due to the animal

disease which should have been incurred otherwise by the beneficiary are

not eligible for the aid (see recital (33)). Point 378 of the Guidelines is

therefore complied with.

(71) The aid scheme does not include grant for the market value of the animals

slaughtered (see recital (25)). Therefore, point 379 of the Guidelines is not

relevant for the present case.

(72) The aid scheme does not include aid referred to in point 380 of the

Guidelines (recital (25)). Therefore, point 380 of the Guidelines is not

relevant for the present case.

(73) As provided for in point 381 of the Guidelines, in exceptional and duly

justified cases, the Commission may accept the costs incurred in carrying

out necessary measures other than those referred to in the Section.

Treatment of feed and drinking water (see recital (25)(h)) is one of the

measures in the scheme but it is not part of the eligible prevention measures

in the Guidelines (see recital (66)). The measures of the scheme can be

eligible for the aid only if they are part of the Recovery programme (recital

(15)) that is approved by the competent Regional Veterinary Administration

(recital (17)). The Czech Authorities have confirmed that the treatment of

feed and feedwater given to pigs reduces the risk of health problems and

that the measure is an integral part of the Recovery programme and

explained the nature of the feed and feedwater treatment measures (see

recitals (30)-(32)). Treatment of feed and drinking water supports and it is

an integral part of the same goals and objectives than measures explicitly

listed in point 374 of the Guidelines. Therefore, given the preventive

approach of the scheme, the Commission can accept the justification

provided by the Czech authorities as provided for in point 381 of the

Guidelines (see recitals (30)-(32)(66)).

12

(74) As provided for in point 382 of the Guidelines, the aid and any other

payments received by the beneficiary (see also recital 87) under insurance

policies for the same eligible costs, will be limited to 100 % of the eligible

costs (recitals (34) and (39)).

(75) In light of the above, the Commission comes to the view that the notified

aid measure fulfils the specific conditions laid down in Section 1.2.1.3 of

Part II of the Guidelines.

3.2.1.2. Common assessment Principles

(76) According to points 38, 42 and 364 of the Guidelines, the common

assessment principles apply in order to determine whether aid is granted in

accordance with Article 107(3)(c) TFEU.

Duration of the aid scheme

(77) Pursuant to point 719 of the Guidelines, the Commission only authorizes

schemes of limited duration. Aid schemes other than those benefiting from

co-financing under Regulation (EU) No 1305/20137 and its implementing

regulation should not apply for more than seven years. It follows from

recital (6) that this requirement is met. In addition, Czech Republic

committed to adapt the aid scheme to the new Guidelines, which will apply

after the expiry of the current ones (see recital (43)).

Contribution to a common objective

(78) According to point 43 of the Guidelines, the objectives of aid in the

agriculture and forestry sectors and in rural areas are to ensure viable food

production and to promote the efficient and sustainable use of resources in

order to achieve intelligent and sustainable growth. The objective of the

present notified aid scheme is prevention of animal diseases that contributes

to ensure viable food production (see recital (4)). It therefore complies with

point 43 of the Guidelines.

(79) The notified scheme is consistent with the rural development objectives (see

recital (4)) and therefore satisfies the condition of point 44 of the

Guidelines. Moreover, it does not interfere with the mechanisms of the

common organisation of the markets.

(80) The notified scheme is a rural development like measure financed

exclusively from national funds, therefore, in accordance with point 47 of

the Guidelines, the Member State should demonstrate how the state aid

scheme under consideration fits into and is consistent with the relevant rural

development programme. The notified aid scheme falls under Section 1.2 of

the Guidelines. In accordance with point 48 of the Guidelines, the

Commission therefore considers that such aid is contributing to the

objectives of rural development.

7

Regulation (EU) No 1305/2013 of the European Parliament and of the Council of 17 December 2013

on support for rural development by the European Agricultural Fund for Rural Development (EAFRD)

and repealing Council Regulation (EC) No 1698/2005 (OJ L 347, 20.12.2013, p. 487).

13

(81) Taking into account the objective of the notified aid scheme (recital (4)), no

negative impact on the environment within the meaning of point 52 of the

Guidelines has been identified.

Need for State intervention

(82) As provided for in point 55 of the Guidelines, the Commission considers

that the market is not delivering the expected objectives without State

intervention concerning the aid measures fulfilling the specific conditions

laid down in Part II of the Guidelines. The aid scheme fulfils the specific

conditions laid down in Section 1.2.1.3 of Part II of the Guidelines (see

recital (75)). Therefore, in line with point 55 of the Guidelines the

Commission considers that there is a need for State intervention.

Appropriateness of aid

(83) As provided for in point 57 of the Guidelines, the Commission considers

that aid granted in the agricultural sector which fulfils the specific

conditions laid down in the relevant Section of Part II of the Guidelines is

an appropriate policy instrument. The scheme fulfils the specific conditions

laid down in Section 1.2.1.3 of Part II of the Guidelines (see recital (75)).

Therefore, the aid is an appropriate policy instrument.

(84) Point 60 of the Guidelines provides that where a specific form is foreseen

for an aid measure described in Part II of these Guidelines such form is

considered as an appropriate aid instrument for the purpose of these

Guidelines. The direct grant being one of the possibilities provided in

section 1.2.1.3 of Part II of the Guidelines, it is considered as an appropriate

aid instrument.

(85) Point 69 of the Guidelines limits aid granted under Section 1.2 of Part II of

the Guidelines to undertakings which have undertaken reasonable efforts to

minimise the risk concerned. Similarly, point 326 of the Guidelines requires

a minimum contribution from producers to losses or the cost of such aid

measures or some other adequate measures which should be taken to

mitigate the risk of distortion of competition and ensure that the State aid is

proportionate to the losses suffered. As described in recital (17), aid under

the notified scheme is granted to operations only if they are part of an

approved eradication plan, as opposed to routine maintenance, while no aid

will be granted where it is established that the disease was caused

deliberately or by the negligence of the beneficiary (recital (20)). Therefore,

the Commission considers that the requirements of points 69 and 326 of the

Guidelines are fulfilled.

Incentive effect and need for aid

(86) Pursuant to point 75(f) of the Guidelines, there is no requirement for an

incentive effect for aid to compensate for the costs of prevention, control

and eradication of animal diseases and for losses caused by those animal

diseases in accordance with Section 1.2.1.3 of Part II of the Guidelines.

Proportionality of aid

(87) As described in recital (39), the aid amount will not exceed the eligible

costs, whereas the eligible costs are calculated accurately and the maximum

aid intensities foreseen in Section 1.2.1.3 of Part II of the Guidelines are

14

respected. Furthermore, as also provided for in recital (39), the aid scheme

does not allow for a cumulation of the aid under the present scheme with

any other State aid or de minimis to cover the same eligible costs. Thus, it is

in line with points 84, 99 and 100 of the Guidelines and the principle of

proportionality of the aid is respected.

(88) The eligible costs are supported by documentary evidence (see recital (37)),

which is in line with point 85 of the Guidelines.

VAT

(89) VAT will not be eligible for aid except where it is not-recoverable (see

recital (38)), which is in line with point 86 of the Guidelines.

Avoidance of undue negative effects on competition and trade

(90) Since the aid scheme fulfils the conditions laid down in Section 1.2.1.3 of

Part II of the Guidelines (see recital (75)) and does not exceed the relevant

maximum aid intensities (see recital (74)), the Commission considers, in

line with point 113 of the Guidelines, that the negative effect on

competition and trade is limited to the minimum.

Transparency

(91) Czech Republic complies with the transparency requirements under the

Guidelines (recital (40)).

Undertakings in difficulty

(92) The Commission notes that undertakings in difficulty cannot be eligible for

the aid (see recital (41)). The provisions of point 26 of the Guidelines are

thus complied with.

Deggendorf

(93) No aid will be granted to undertakings which are subject to an outstanding

recovery order following a previous Commission decision declaring an aid

illegal and incompatible with the internal market (see recital 42). The

provisions of point 27 of the Guidelines are thus complied with.

15

Conclusion

The Commission has accordingly decided not to raise objections to the aid on the

grounds that it is compatible with the internal market pursuant to Article 107(3)(c) of the

Treaty on the Functioning of the European Union.

If this letter contains confidential information which should not be disclosed to third

parties, please inform the Commission within fifteen working days of the date of receipt.

If the Commission does not receive a reasoned request by that deadline, you will be

deemed to agree to the disclosure to third parties and to the publication of the full text of

the letter in the authentic language on the Internet site:

http://ec.europa.eu/competition/elojade/isef/index.cfm.

Your request should be sent electronically to the following address:

European Commission,

Directorate-General Competition State Aid Greffe

B-1049 Brussels

Stateaidgreffe@ec.europa.eu

Yours faithfully,

For the Commission

Margrethe VESTAGER

Executive Vice-President