2000/200/EC: Commission Decision of 25 November 1999 concerning an aid scheme implemented by Portugal with a view to reducing the debt burden of intensive stock farms and assisting recovery in the pig-farming sector (notified under document number C(1999) 4861) (Only the Portuguese text is authentic)
L 66/20 EN Official Journal of the European Communities 14. 3. 2000 COMMISSION DECISION of 25 November 1999 concerning an aid scheme implemented by Portugal with a view to reducing the debt burden of intensive stock farms and assisting recovery in the pig-farming sector (notified under document number C(1999) 4861) (Only the Portuguese text is authentic) (2000/200/EC) THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Community, and in particular the first subparagraph of Article 88(2) thereof, Having regard to Council Regulation (EEC) No 2759/75 of 29 October 1975 on the common organisation of the market in pigmeat (1) and Council Regulation (EEC) No 2777/75 of 24 October 1975 on the common organisation in poultrymeat (2), as last amended by Regulations (EC) No 3290/94 (3) and (EC) No 2916/95 (4), and in particular Articles 21 and 19 thereof, on interested parties to submit their Having comments (5), called Whereas: I Procedure (1) Decree-Law No 146/94 of 24 May 1994 includes, in Chapter I, a credit line for reducing the debt burden of intensive stock farms and, in Chapter II, a credit line for assisting recovery in the pig-farming sector. The Decree-Law was published in the Portuguese Official Gazette (6). the credit Commission sent Portugal a letter pursuant to Article 88(3) of the Treaty, asking it to confirm, within 15 working days, the existence of the aid, its entry into force, any budgetary implications it might have and lines. By letter of 23 details of one of gave authorities December 1996 the confirmation of the existence of Decree-Law No 146/94 on State aid in the form of credit lines for reducing the debt burden of intensive stock farms and assisting recovery in the pig-farming sector. The measures were accordingly entered, under NN 65/97, in the register of unnotified State aids. Portuguese firms of (3) (4) (5) By letter of 23 May 1997, recorded as received on 27 May 1997, the Portuguese Permanent Representation sent the Commission the information it had requested in its letters of 26 November 1996 and 5 May 1997. By letter of 10 October 1997 the Commission notified its decision to initiate proceedings under Portugal of Article 88(2) of the Treaty against the aids in question. In the letter, the Commission also gave notice to Portugal to submit its comments within one month of the date of the letter. in Article 88(2) of Journal The Commission’s Decision to initiate the proceedings the Treaty was provided for published in the Official the European of Communities (7). The Commission invited the other Member States and other interested parties to submit their comments on the aids in question within one month of the publication of the Decision in the Official Journal of the European Communities. (2) On 26 November 1996, since it had received no notice of the State aid from the Portuguese authorities, the (6) Portugal submitted its comments by letter dated 13 January 1998. (1) OJ L 282, 1. 11. 1975, p. 1. (2) OJ L 282, 1. 11. 1975, p. 77. (3) OJ L 349, 31. 12. 1994, p. 105. (4) OJ L 305, 19. 12. 1995, p. 49. (5) OJ C 83, 18. 3. 1998, p. 5. (6) DiÆrio da Repœblica, Series I-A, No 120 of 24 May 1994. (7) The Commission did not receive any comments from other interested parties. (7) See footnote 5. 14. 3. 2000 EN Official Journal of the European Communities L 66/21 II Credit line for assisting recovery in the pig-farming sector Description of the aids (12) The purpose of this credit line is to provide pig farms inputs with financial resources for the acquisition of (intermediate consumption). (8) The purpose of Decree-Law No 146/94 of 24 May 1994 is to overcome what are regarded as grave structural difficulties in the pig and poultry sector, a sector which does not qualify under operational programmes co-financed by the EAGGF Guidance Section. The Decree-Law introduces two measures: a credit line (available to pig-, poultry- and rabbit-farmers) and a in respect of pig-breeding and fattening in closed circuit). (available only credit line Credit line for reducing the debt burden in the intensive stock-farming sector (13) The aid was granted in the form of an interest-rate subsidy for bank loans. The loans were for a period of up to four years and were repayable annually. The interest-rate subsidy, expressed as a percentage of the interest rate applicable under the contract concerned, varied from year to year and was degressive from the first year onwards (first year 10 %, second year 8 %, third year 6 % and fourth year 4 %). (14) There was a limit of PTE 7,632 billion on the overall amount of the loans. (9) The objectives of the credit line for reducing the debt burden in the intensive stock-farming sector were as follows: III - to enable to debts renegotiate towards beneficiaries related their stock-farming credit institutions where there was proof that such debts in modern were facilities, environmental protection that had taken place between 1 January 1985 and 31 December 1993, connected with investments animal health and - to make available to those beneficiaries resources for the settlement of unpaid debts towards suppliers of capital goods, debts which had fallen due between 1 January 1992 and 31 December 1993. (10) The aid was granted in the form of an interest-rate subsidy for bank loans. The loans were for a period of up to five years and were repayable annually from the second year onwards. The interest-rate subsidy changes annually and is degressive from the first year onwards (first year 60 %, second year 45 %, third year 30 %). From the fourth year onwards the interest-rate subsidy ceases to apply to the loans. The subsidy was calculated in relation to the reference rate of 13 % specified in Decree-Law No 359/89 of 18 November 1989 (8). Reasons for initiating proceedings under Article 88(2) of the Treaty (15) The reasons which prompted the Commission’s decision to initiate proceedings under Article 88(2) of the Treaty can be summed up as follows. (16) (17) The Commission took the view that the credit line for reducing the debt burden in the intensive stock-farming sector did not, in the light of the Community guidelines applicable at the time (9), satisfy the requirements for being regarded as aid for rescuing or restructuring firms in difficulty. By virtue of point 2. 2 of the said guidelines, Member States may continue to apply special types of aid in the these Commission rules agricultural sector. for Complying with the special rules for the restructuring of firms in the agricultural sector means fulfilling three requirements: the aid must relate to investment already carried out; the aid (possibly combined with earlier aid in the case of these investments) must not exceed a certain rate and the firms must offer certain guarantees in terms of viability and be in danger of bankruptcy. (11) There was a limit of PTE 28 billion on the overall amount of the loans. (18) The Commission took the view that granted by satisfied the Portugal requirements but not the other two. the credit first of line these (8) The national reference rate is currently 8 %. (9) OJ C 368, 23. 12. 1994, p. 12. L 66/22 EN Official Journal of the European Communities 14. 3. 2000 (19) recovery that, since the credit The Commission felt line for in the pig-farming sector was assisting intended for the acquisition of inputs, it concerned not investments but short-term loans (crØdits de gestion). The satisfy the principal measure in question did not of Community requirement practice, namely that should have a maximum duration of one year. applicable virtue by it authorities stated that the meaning of áthe Commission that since it was took into consideration, however, established a posteriori that the upper limits had been exceeded, those limits had not been complied with when the aid was grantedí was not clear. According to the Portuguese authorities, the Commission was raising the precise moment when the formal question of non-compliance with the as opposed to the basic question of compliance with the maximum amounts. limits was recorded, IV (23) Arguments put forward by Portugal (20) letter By Portuguese of 13 January 1998 the Government submitted its comments on the measures described under Section III. the limits sectoral The Commission concluded that the aid scheme did not comply with under Council Regulation (EC) No 950/97 (10). According to the Portuguese authorities, the Commission appeared to be applying to the aid scheme for agricultural holdings the sectoral specified in that Regulation, on the grounds that those limits were part of the agricultural structures policy. This requirement was not, however, part of the guidelines and, as the Portuguese authorities saw it, was not applicable. limits (21) Commenting generally, the Portuguese authorities stated that the aids in question were Portugal’s only measure in favour of intensive stock-farming, a sector which was experiencing major difficulties as a consequence above all of three factors: (24) With regard to the viability of the firms, the Portuguese authorities pointed out the Commission criteria that referred to viability only, without specifying whether this meant economic or financial viability. The said authorities further took the view that it could not be assumed that the banks’ scrutiny would be limited to an examination of the financial situation of the firm. - the early opening up of agricultural frontiers, with the in prices brought about by sharp falls unrelenting pressure of imports, - high interest rates charged by banks, especially where borrowers belonged to the farming sector, - high feed prices as a result of drought (and, consequently, in 1993 and a poor harvest) Portugal’s geographical remoteness in relation to the other Member States. The Portuguese authorities added that, in spite of the aid, the market situation for intensive stock-farming had failed to improve. From 1993 Portugal moved from self-sufficiency to being a net importer of 20 % of its domestic requirements in that sector. Credit line for reducing the debt burden in the intensive stock-farming sector (22) The Portuguese authorities underlined the fact that the Commission recognised áthat the amount of the aid is below the maximum rates normally allowed by the the Portuguese Commission ( )í. In this respect, Credit line for assisting recovery in the pig-farming sector (25) The Commission did not receive any comment from the Portuguese authorities regarding this measure. V Assessment of the aids Applicability of Article 87(1) of the Treaty (26) Under Article 21 of Regulation (EEC) No 2759/75 and Article 19 of Regulation (EEC) No 2777/75, Articles 92 to 94 (now Articles 87 to 89) of the Treaty apply to the production of, and trade in, the products referred to in Article 1(1) of those Regulations. (10) OJ L 142, 2. 6. 1997, p. 1. 14. 3. 2000 EN Official Journal of the European Communities L 66/23 (27) Under Article 87(1) 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 is incompatible with the common market. competition, without any justification as regards the Community interest and, at the same time, to permit undue advantage to operators in certain Member States. (28) (29) The Community produces 22,31 million tonnes of meat and other products derived from pigs, poultry and rabbits (11). Portugal’s production is 0,54 million tonnes. trade in these There is an appreciable amount of products between Portugal the Community: in 1997 Portugal’s imports and exports of these products totalled 75 900 tonnes and 4 100 tonnes respectively. In terms of value the exports were worth EUR 6,0 million and the imports EUR 160,5 million. and the rest of The measures in question are therefore likely to affect trade in pig and poultry products between Member States since the aid favours operators in one Member State and not in the others. The measures have a direct and immediate effect on the production costs of intensive stock farms in Portugal. Consequently they give these farms an economic advantage denied to farms in other Member States which do not have access to such aids. They accordingly distort, or threaten to distort, competition. (30) In the light of the above the measures must be regarded as State aids covered by Article 87(1). Possible derogations under Article 97 of the Treaty (31) (32) (33) is possible It incompatibility laid down in Article 87(1). to derogate from the principle of The exceptions to that incompatibility, which are set out in Article 87(2), are manifestly not applicable in this case, however, and were not invoked by the Portuguese authorities. sectoral The derogations provided for in Article 87(3) must be aid strictly interpreted when regional or programmes or individual instances of the application of general aid schemes are examined. They can be granted only where the Commission can establish that the aid is necessary for the achievement of one of the objectives concerned. To grant those derogations to aid not to permit trade between Member States, and of distortion of condition would be fulfilling that (34) By virtue of Article 87(3)(c), aid may be regarded as compatible with the common market if it is intended to facilitate the development of certain economic activities or of certain economic areas and does not adversely affect trading conditions to an extent contrary to the common interest. (35) It is in the light of that provision that the aid must be assessed. Credit line for reducing the debt burden in the intensive stock-farming sector The Commission first of all examined whether the credit line was in conformity with the Community guidelines on State aid for rescuing and restructuring firms in difficulty (12) which were in force when the aids were granted and at the beginning of the procedure provided for in Article 88(2). The guidelines were, however, amended when new Community guidelines (13) came into force on 1 January 1998. In the interests of legal certainty the assessment of for the purposes of a final decision, based on the rules in force when the procedure under Article 88(2) was initiated. the measure is, By virtue of Point 2. 2 of the 1994 guidelines, Member States may request that the special rules for this type of aid be applied to the agricultural sector. Portugal did not inform the Commission of the rules it wished to see applied as regards scrutiny of the measures. The Commission’s scrutiny must accordingly cover all aspects of rescue and restructuring aid and the special rules applicable to the agricultural sector. the guidelines, in particular (36) (37) (38) (39) Rescue aid must: - consist of guarantees or interest rates, liquidity help in the form of loan loans bearing normal commercial (11) Source: Eurostat (1997). (12) See footnote 9. (13) OJ C 283, 19. 9. 1997, p. 2. L 66/24 EN Official Journal of the European Communities 14. 3. 2000 - be restricted to the amount needed to keep a firm in business (for example, covering wage and salary costs and routine supplies), - be paid only for the time needed (generally not exceeding six months) to devise the necessary and feasible recovery plan, to viability in the long term. Similarly, although the sector concerned suffers from structural overcapacity at Community level, no measure appears to have been adopted with a view to reducing capacity. Moreover, at no stage in the proceedings did the Portuguese authorities request that the measures be scrutinised in the light of the general rules governing aid for the restructuring of firms in difficulty. - be warranted on the grounds of social difficulties and have no undue adverse effects on the industrial situation in other Member States. serious (45) such aid in the sector, case of The Commission then examined the aids in the light of the special rules, set out at 2. 2 of the 1994 guidelines, applicable to the restructuring of firms in difficulty in this being the Commission the agricultural practice sector in the concerned (15). The purpose of the rules in question is to ensure that the only agricultural holdings or firms which receive aid for restructuring are those which, are the in principle viable but which, by virtue of implementation of a measure intended to bring about a permanent structures (investment), are facing financial difficulties as a result of factors that are external to the firm. in agricultural improvement (46) The special rules are as follows: - the aid must concern loans taken out to finance investments already made, - the aggregate grant equivalent of any aid awarded when the loans were taken out, plus the new aid, may not exceed the rates generally allowed by the Commission, namely 35 % (75 % in the case of less-favoured areas within the meaning of Article 21(2) of Regulation (EC) No 950/97) in the case of investment in primary agricultural production, and 55 % (75 % in the case of Objective 1 areas) for investment in the processing and marketing of agricultural products complying with the sectoral limits laid down by the Commission. At present the sectoral limits are those specified in the guidelines for State aid in connection with investments in the processing agricultural products (16), and marketing of in the cost of money, - the aid must be granted in response to adjustments to the interest rates on new loans, made to take the account of changes amount of the aid must be less than or equal to the change in the rates or the new loans, or must concern farms that offer viability guarantees, in particular in cases where the financial burdens resulting from existing borrowings are such that the farms are at risk, possibly of bankruptcy. (40) The Commission is not in possession of the information needed to verify compliance with the second and fourth indents of recital 39. In its opinion, however, the aid does not satisfy the remaining criteria. (41) In the case of the requirement set out in the first indent the minimum subsidised interest rate (40 % x 13 % = is well below the Community reference rate 5,2 %) applicable to Portugal in 1994 (15,33 %, i. e. the interest rate for regional aid (14). Moreover, the duration of the aid (the subsidy is payable for three years) is well in excess of the normal six-month period applicable under Community rules. (42) In the light of the above, the credit line in question does not meet the Community requirements applicable to aid for rescuing firms in difficulty. (43) of The Commission is of the opinion that the general rules governing aid for the restructuring of firms in difficulty do not apply to the case at hand because they call for the drawing up and implementation of a plan for the The restructuring strict the requirements which the said plan must feature as regards restoring viability, in particular a reduction in capacity in sectors where there is overcapacity, and appreciable contribution on the part of the recipients of the aid to the restructuring effort, and the elimination of adverse effects on competitors, were not taken into account by the Portuguese authorities. recipient firms. (44) scrutinised In no case do the legislative provisions specify the drawing up, for each firm, of restructuring plans, plans which must include measures likely to lead (14) OJ C 74, 10. 3. 1998, p. 9. (15) Precedents: N 904/95, N 21/96, N 864/96 and N 813/97. (16) OJ C 29, 2. 2. 1996, p. 4. (47) (48) (49) 14. 3. 2000 EN Official Journal of the European Communities L 66/25 (52) Regarding the requirement set out in the first indent of recital 46, access to the credit line was restricted to firms which had taken out loans in connection with their economic activities and with investment taking place over a given period, in order to cover financial costs deriving therefrom. The investment relates to the modernisation and environmental health protection. The Commission therefore takes the view that this requirement was satisfied. facilities, animal health of the representativeness the analysis had been carried out, Since the Portuguese authorities did not indicate on the what basis Commission does not have the information needed to the assess infringement of that according to information provided by the Portuguese authorities themselves, the limits were not complied with in 13 % of the cases involving farming areas other than less-favoured farming areas. of It notes, however, extent rule. that and the that combined Turning now to the requirement set out in the second indent of recital 46 the Member State must be able to the demonstrate of restructuring aid granted and any investment aid previously granted does not exceed the maximum rates applicable (35 % normally and 75 % in the case of less-favoured farming areas). Since the credit line was restricted to agricultural production firms the maximum rates for processing firms are not applicable. effect the the intensity of Concerning aid granted in connection with this credit line it should be recalled that the national aid is in the form of an interest-rate subsidy. According to the method normally used by the Commission the net grant equivalent of the interest-rate subsidy available under Decree-Law No 146/94 is 21,8 %, based on the current value of the difference between the interest rates actually applied and what is regarded as the reference market to calculate the grant equivalent, the Commission took into account not only the interest-rate subsidy in relation to the reference rate of 13 % used by the Portuguese authorities, but also the difference between this rate and the Community reference rate (interest rate for regional aid) applicable in Portugal when the aid was granted: 15,33 %. In order rate. (50) When, at the beginning of the proceedings under Article 88(2), the Commission stated that the aid was less than the maximum rates it normally allowed, it was referring solely to the aid element of the credit line and not to the aggregate of the aid element of the credit line and any investment aid received earlier, which must be less than 35 % of (75 % in the case of less-favoured farming areas). the total cost (51) The Portuguese authorities pointed out that an analysis had shown that all of the aid approved in the context of the credit line complied with the maximum aggregate grant equivalent of 75 % in less-favoured farming areas and that 87 % of the aid approved in connection with the credit line complied with the maximum aggregate grant equivalent of 35 % in farming areas other than less-favoured farming areas. (53) Accordingly, as the Commission sees it, if an ex post analysis is needed to verify compliance with this limit it must be concluded that the limit was not a criterion for approving the aid and, when the measure was implemented, the limit was not complied with in 13 % of the approved cases in farming areas other than less-favoured farming areas. (54) (55) The Commission accepted, however, the argument put forward by the Portuguese authorities to the effect that, when they were in force, the special rules applicable to the restructuring of firms operating in the sector of primary agricultural production did not normally take limits on investment under into account the sectoral Regulation (EC) No 950/97. In the light of the foregoing the Commission takes the view that the requirement set out in the second indent of recital 46 has not been satisfied in the cases where the aggregate grant equivalent of the investment aid line exceeded the maximum received and the credit amount the recipients could legitimately have received under the special rules applicable to the restructuring of firms in difficulty in the agricultural sector. (56) In order to comply with the third indent of recital 46 the measure must be intended for agricultural holdings which present guarantees of viability. (57) (58) The Portuguese authorities initially stated that, since this was a measure for the restructuring of bank loans, they had taken the view that the guarantee of viability had automatically already been verified by virtue of the analysis carried out by the banks prior to the granting of the loans. its established accordance with In the Commission considers that, as a rule, scrutiny by a financial a consolidating loan cannot replace scrutiny with a view to verifying that a firm is economically viable within the institution prior granting of practice to the L 66/26 EN Official Journal of the European Communities 14. 3. 2000 meaning of the abovementioned Community guidelines or of special rules applicable to the agricultural sector. The scrutiny carried out by the banks is aimed above all at verifying whether the financial situation of the firm is such as to suggest that the loan can be expected to be repaid normally. While this is of course essential to the economic viability of a firm, it is not sufficient for the purposes of guaranteeing the viability of a firm within the meaning of the Community guidelines or the special rules applicable to the agricultural sector. Credit line for assisting recovery in the pig-farming sector (64) Since it is a measure aimed at helping producers to acquire pig-farming inputs (in particular feedingstuffs and other operating costs), line must be this credit regarded as a short-term (áseasonalí) loan. (59) (60) (61) (62) (63) The Commission does, however, recognise the practical difficulties long-term associated with assessing the economic viability of agricultural holdings. Under the circumstances, financial viability may constitute a good indicator of it may reasonably be felt that only a limited number of financially viable holdings will not also be economically viable. viability. Similarly economic By virtue of this third criterion the Commission must, in its scrutiny, also take into consideration the origins of the financial difficulties faced by firms. Aid to firms which, although viable, are in difficulty cannot be regarded as compatible with the common market unless their financial difficulties stem from factors that are external to them and not from factors that are inherent in their internal management. the fact the origin of Information supplied by the Portuguese authorities suggests that the difficulties faced by agricultural holdings relates mainly to external factors, that customs barriers were in particular: abolished earlier the Act of Accession of Portugal; the high interest rates applicable to the agricultural sector; and the high prices of raw the 1993 drought. That materials as a result of information suggests that in most cases the economic difficulties stem from factors that are external to the firms. than required under The Commission is accordingly in a position to draw the conclusion that the measure under consideration complies with the criterion, relating to the viability of the recipient firms, set out in the third indent of recital 46. To conclude, the Commission takes the view that the credit line for reducing the debt burden of intensive stock farms does not satisfy the special rules applicable to the restructuring of in difficulty in the agricultural sector in cases where the aggregate grant equivalent of the investment aid received and the credit line exceeded the maximum amounts which the recipients could legitimately have received on the basis of the special rules applicable to the restructuring of firms in difficulty in the agricultural sector. firms sector form of subsidised short-term loans (65) At the time of the granting of the aid the Commission’s policy consisted in not objecting to State aid granted in to the the agricultural (áoperating loansí), provided their duration did not exceed one year and, in addition, the loan was not restricted to a single product or a single operation. Within the limit of eligible expenditure the practice does not impose limits on the intensity of the aid, nor does it, at the level of individual recipients, prevent the subsidised loan from being renewed on an annual basis. (66) In 1996 the Commission adopted a communication on State aids involving subsidised loans in the agriculture sector (crØdits de gestion) (17). On 18 June 1997 the Commission decided to suspend its application owing to practical difficulties which had arisen in the course of its implementation. (67) A practical consequence of that suspension was the fact that the Commission’s previous policy in that respect had again become applicable. Accordingly, on 2 October 1997, when proceedings were initiated under Article 88(2), the rules in force were those described at recital 65. By subsequent decision of the Commission the Community guidelines were again applicable from 30 June 1998. (68) The aid granted via the credit line concerned, which consists of an interest-rate subsidy for bank transactions relating to subsidised short-term loans (with a net grant equivalent of 3,1 %) does not, in accordance with the satisfy the established policy of requirements for being regarded as compatible with the common market, since the period covered by the interest-rate subsidy (four years) is well in excess of the maximum period authorised in such cases (one year). the Commission, (69) In the absence of any other legal basis on which the credit line might be authorised it must be regarded as operating aid at odds with the Commission’s established policy on State aids (Judgment of the Court of First (17) OJ C 44, 16. 2. 1996, p. 2. 14. 3. 2000 EN Official Journal of the European Communities L 66/27 Instance of 8 June 1995 in Case T-459/93 Siemens v Commission (18)). Since this is a type of State aid which, by its very nature, is not intended to promote durable the development of direct the improvement of the conditions of production of the products in question in relation to other operators in the same sector in the European Union who do not receive comparable aid. the sector or region concerned, is consequence a measure such of Conclusion (70) As regards the derogations under Article 87(3)(a) and (c) the case of aid to promote or in the development of certain economic activities or of certain economic areas the Commission concludes, on the basis of the abovementioned scrutiny and in the light of the Community rules applicable, that the aid in question is likely to have an adverse effect on trading conditions to an extent contrary to the common interest. facilitate (71) a by covered concern products falling solely within the competence of Consideration must also be given to the fact that the aids common organisation of the market and that there are limits on the powers of Member States to intervene in the operation of those market organisations, this being a matter the Community. By virtue of a well-established precedent of the Court of Justice of the European Communities (see in particular the judgment of 26 June 1979 in Case 177/78 Pigs and Bacon (19)), common organisations of the market must be regarded as comprehensive and exhaustive systems which preclude any measures by Member States which could derogate from them or adversely affect them. (74) (75) (76) the Treaty, Article 88(3) of granted in other words without waiting for the unlawfully, Commission to decide on their compatibility with the common market. they were Furthermore, for the reasons set out above, they are incompatible with the common market in that they fall within the scope of Article 87(1) of the Treaty and cannot benefit from any of the derogations specified in paragraphs 2 and 3 of that Article. exercise the Commission must In the event of incompatibility of aid with the common market, its power recognised in the judgment of the Court of Justice of 12 July 1973 in Case 70/72 Commission v Federal Republic of Germany (20) and confirmed by the judgments of 24 February 1987 in Case 310/85 Deufil v Commission (21) and of 20 September 1990 in case C-5/89 Commission v Federal Republic of Germany (22) and order the Member State aid unlawfully paid. Recovery is also mandatory under Article 14(1) of Council Regulation (EC) No 659/1999 of 2 March 1999 laying down detailed rules for the application of Article 93 of the EC Treaty (23). Recovery is necessary to restore the previously existing situation, and to eliminate the financial benefits the recipients of the unlawfully paid aid were able to enjoy unduly from the date on which the aid itself was paid. from the beneficiaries to recover any that the fact the credit In the case of line for reducing the debt burden of firms in the intensive stock-farming sector, the measure could taking into account perhaps have been regarded as compatible with the common market if the limits pursuant to the special rules for the restructuring of firms had been applied, reimbursement must concern the 13 % of cases where the limits were exceeded in farming areas other than less-favoured farming areas. (72) The aids in question must therefore be regarded as infringing Community rules and do not qualify under any of the derogations provided for in Article 87(3). (77) In the case of the credit line for assisting recovery in the pig-farming sector the aid granted must be recovered in its entirety. VII (78) Conclusions The aid must be repaid in accordance with the to be procedures of Portuguese law. The amount recovered must from the granting of the aid until repayment actually takes place. The interest must be calculated on the basis of the market rate, with reference to the rate used for calculating the grant equivalent for regional aid (24). interest payable include (73) Since the aids which are the subject of this Decision were not notified to the Commission in accordance with (18) [1995] ECR II-1675. (19) [1979] ECR 2161. (20) [1973] ECR 813. (21) [1987] ECR 901. (22) [1990] ECR I-3437. (23) OJ L 83, 27. 3. 1999, p. 1. (24) See footnote 14. L 66/28 EN Official Journal of the European Communities 14. 3. 2000 (79) This Decision is without prejudice to any consequences the which the Commission may draw as financing of the common agricultural policy by the European Agricultural Guidance and Guarantee Fund (EAGGF), regards HAS ADOPTED THIS DECISION: Article 1 The credit line which, under Chapter I of Decree-Law No 1. is available for reducing the debt 146/94 of 24 May 1994, intensive stock farms is incompatible with the burden of common market together with the in the cases where, investment aid received, the grant equivalent exceeds 35 % in farming areas other than less-favoured farming areas. The credit line which is provided for in Chapter II of 2. Decree-Law No 146/94 of 24 May 1994 for assisting recovery in the pig-farming sector is incompatible with the common market. Article 3 1. Portugal shall take all the necessary measures to recover from the recipients the aids referred to in Article 1 which have already been granted unlawfully. 2. Recovery shall be effected in accordance with the procedures of national law. The amount to be recovered shall include interest from the date on which the aid was made available to the recipients until the date of its recovery. Interest shall be calculated on the basis of the reference rate used for calculating the grant equivalent of regional aid. Article 4 Portugal shall inform the Commission, within two months of notification of this Decision, of the measures taken to comply with it. Article 5 This Decision is addressed to the Portuguese Republic. Done at Brussels, 25 November 1999. Article 2 Portugal shall cancel the aid schemes referred to in Article 1. For the Commission Franz FISCHLER Member of the Commission