L 4/40 Official Journal of the European Communities 8. 1. 98 COMMISSION REGULATION (EC) No 20/98 of 7 January 1998 laying down rules for the application of Council Regulation (EC) No 2200/96 as regards aid to producer organizations granted preliminary recognition THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Community, Having regard to Council Regulation (EC) No 2200/96 of 28 October 1996 on the common organization of the market in fruit and vegetables ('), as amended by Commission Regulation (EC) No 2520/97 (3, and in par- ticular Article 48 thereof, Whereas Article 14 of Regulation (EC) No 2200/96 states that new producer organizations or those which have not been recognized under Council Regulation (EEC) No 1035/72 (%), as last amended by Commission Regulation (EC) No 1363/95 (%), may be allowed a transitional period of no more than five years in which to meet the condi- tions for recognition laid down in Article 11 of Regula- tion (EC) No 2200/96; whereas Regulation (EC) No 478/97 (°) establishes the conditions for granting prelim- inary recognition to producer organizations; Whereas, in order to encourage the formation of producer organizations, Article 14 of Regulation (EC) No 2200/96 also states that Member States may grant two sorts of aid to producer organizations granted preliminary recognition in the five years following such preliminary recognition, one to cover the costs of their formation and administra- tive operation and one to cover part of the investments required to attain recognition and set out in their recogni- tion plans; Whereas, to facilitate the correct application of the system of aid to cover the costs of formation and administrative operation, that aid should be granted at a flat rate; whereas that flat-rate aid should be subject to a ceiling in order to comply with budgetary constraints; whereas, to take account of the differing financial needs of producer organizations of different sizes, that ceiling should be ad- justed in line with the marketable production of the producer organizations; whereas, since the rules contained in Commission Regulation (EEC) No 2118/78 () are no longer applicable, that Regulation should accordingly be repealed; OJ L 297, 21. 11. 1996, p. 1. OJ L 346, 17. 12. 1997, p. 41. OJ L 118, 20. 5. 1972, p. 1. OJ L 132, 16. 6. 1995, p. 8. OJ L 75, 15. 3. 1997, p. 4. OJ L 246, 8. 9. 1978, p. 11. Whereas the selection criteria laid down by the Commis- sion pursuant to Article 8 of Council Regulation (EC) No 951/97 of 20 May 1997 on improving the processing and marketing conditions for agricultural products (") should be applied to investments eligible under this Regulation in order to ensure consistency between the various measures financed by the Community, until such time as the new agricultural policy guidelines for fruit and veget- ables introduced by Regulation (EC) No 2200/96 are implemented,; Whereas the aid provided for in this Regulation should be discontinued once the producer organization is recog- nized by the Member State; whereas, however, to take account of the multiannual financing of investments, those qualifying for investment aid under this Regulation can be carried over to operational programmes as referred to in Article 15 of Regulation (EC) No 2200/96; Whereas, in the event of mergers, the aid may continue to be granted to the producer organizations resulting from the merger; Whereas, in order to ensure that the aid provided for in this Regulation is applied properly, the Member State in question should check that the grant of the aid is duly justified, account being taken of any previous grants of aid for the launching of producer organizations and of any movements of producers between producer organizations; whereas the Member States must also ensure that dupli- cate Community or national financing is not granted for measures qualifying for Community financing under this Regulation; Whereas procedures should be laid down for controls and penalties; Whereas Article 14 (7) of Regulation (EC) No 2200/96 provides a special scheme for Portugal; whereas provisions should be laid down to ensure compliance with that special scheme; Whereas the Management Committee for fresh Fruit and Vegetables has not delivered an opinion within the time limit set by its chairman, () OJ L 142, 2. 6. 1997, p. 22.