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C 307/6 EN Official Journal of the European Communities 7.10.


C 37/98 (ex NØ124/98)

(98/C 307/08)
(Text with EEA relevance)

(Articles 92 to 94 of the Treaty establishing the European Community)

Commission notice pursuant to Article 93(2) of the EC Treaty to other Member States and
interested parties concerning a French notification of development aid to the French Polynesia.
The aid is to be granted in relation to the sale of two cruise vessels from Chantiers de
l’Atlantique to Renaissance Financial, who will deploy the vessels in the French Polynesia

By the letter reproduced below, the Commission FPO. Despite the advantage from the aid, the
informed the French Government of its decision to open preliminary budget for those vessels will balance only if
the procedure provided for pursuant to Article 93(2) of the capacity utilisation is more than 75Ø%. In fact the
the EC Treaty. first five years a deficit of FRF 50 Million is expected
each year. Therefore, it is argued that the project is not
viable without the aid. In accordance with the fiscal
scheme, the operator must use the vessels for a period of
minimum seven years in the FPO after they have been
‘The Commission hereby inform France that after having ordered. If this is not respected the operator must
examined the information submitted by your authorities reimburse the aid.
concerning the above mentioned aid project, the
Commission has decided to initiate the procedure
provided for in Article 93(2) of the EC Treaty.

Your authorities argue that the regional authorities in

FPO have the objective to develop tourism, in particular
On 10 February 1998 the French Government notified cruises. The aim is to increase the growth rate of tourism
pursuant to Articles 4(7) and 11(2) of the Seventh from the current 3,2Ø% p.a. to approximately 9Ø% p.a. in
Directive on Aid to ShipbuildingØ(Î) the development aid year 2010. It is argued that the present project is
to the French Polynesia. By letter dated 23 February especially suitable to help fulfil this goal. The two vessels
1998 the Commission asked for further information and with 350 cabins each will triple the capacity of cruise
by letter dated 20 March your government provided trips by the end of 1999, and it is claimed that the local
more information. authorities in FPO have expressed a very favourable
attitude to the project.

The proposal concerns development aid which is to be

granted in relation to the sale of two cruise vessels from The vessels have a contract value of [.Ø.Ø.] each. The aid
Chantiers de l’Atlantique to Renaissance Financial (RF). intensity is 41,6Ø%. The aid is granted as a tax
The vessels will be deployed in the French Polynesia concession exempting investors from a tax of 41,6Ø% on
(FPO). their profits originating from other activities, if the
investors reinvest the profits in the vessels intended for
the French Polynesia. The aid is granted under a fiscal
schemeØ(Ï), which was approved by the Commission by
letter of 27 January 1993Ø(Ð). In the approval it was
RF is resident in Paris and the company is a subsidiary of stated that the application of the scheme was subject to
the American company Renaissance Cruise Inc. RF was the Community rules and frameworks on aid for various
established in 1997 with the objective to acquire and purposes and for various sectors.
operate the two vessels. It is argued that in the absence
of the aid, the operator cannot acquire the vessels on
normal market conditions because the normal interest
rate would be too high to allow the exploitation in the

(Ï)ÙThe Law of 11 July 1986 amended, concerning productive

(Î)ÙCouncil Directive 90/684/EEC as prolonged by Council investments in the overseas departments and territories.
Regulation (EC) No 2600/97. (Ð)ÙSG(93) D/1300.
7.10.98 EN Official Journal of the European Communities C 307/7

According to Article 4(7) of the Seventh Directive on resident in the FPO. Therefore, the Commission has
Aid to Shipbuilding aid granted as development doubts that the aid proposal complies with the OECD
assistance to a developing country shall not be subject to Understanding.
the ceiling. It may be deemed compatible with the
common market if it complies with the terms laid down
for that purpose by OECD Working Party No 6 in its
Agreement concerning the interpretation of Articles 6 to
8 of the Understanding on Export Credits for ships or Whilst tourism is a priority sector in development terms
corrigendum to the said Agreement. The Commission in the pacific region, in the light of the specific
must be given prior notification of any such individual conditions of its application, at this stage the
aid proposal. It shall verify the particular development Commission is not convinced that the project contains a
content of the proposed aid and satisfy itself that it falls genuine development content. Also, the development aid
within the scope of the Agreement mentioned above. content in FPO appears to be limited since the
immediate beneficiary of the aid is the investors who
benefit from the tax exemption. The recipients of the
quantifiable aid (i.e. [.Ø.Ø.]) are not resident in the
developing country. It appears that the FPO will only
profit if extra passengers visit the FPO and they will
mainly benefit from the money spent by the tourists
The Agreement concerning the interpretation of the while they visit the islands. In addition, the operator
OECD Understanding requires among other things that expects a capacity utilisation of less than 75Ø% at least in
the donor must give appropriate assurances that the real the first five years and will accumulate losses of 50
owner is resident in the beneficiary country and that the million FF in the process. The operator must use the
beneficiary company is not a non-operational subsidiary vessels for a minimum of seven years in FPO after they
of a foreign companyØ(Ñ). have been ordered. The Commission has doubts that the
viability of the project is poor considering the fact that
French private enterprises invest their profit in the
vessels. In general it must be expected that the investors
would only invest in the project if a profit is foreseen.

In addition in Case C-400/92 concerning German devel-

opment aid to the Chinese company Cosco the Court
established that the Commission shall verify the devel- In the light of the answer given by the French
opment content of the project separately from the Government the Commission considers that is is doubtful
OECD criteria. In the Cosco case the development aid that the development aid is compatible with the
could not be approved because Cosco was an enterprise conditions laid down in Article 4(7) of Directive
who did not need the aid in order to contribute to 90/684/EEC as last prolonged by Regulation (EC) No
China’s development. Furthermore, it is precisely the 2600/97. More specifically, at this stage it is doubtful
examination of this particular content which enables the that the conditions in the OECD Understanding are met
Commission to ensure that aid based on Article 4(7) and and that the development content can be verified.
intended to reduce the cost of vessels for certain
developing countries pursues, in the light of the specific
conditions of its application, a genuine development
objective and does not, despite of the fact that it
complies with the OECD criteria, constitute aid in In view of the above the Commission has therefore
favour of a shipyard in a Member State which must be decided to initiate the procedure provided for in Article
subject to the ceilingØ(Ò). 93(2) of the EC Treaty.

The French Government shall take note that any

recipient of an aid granted before an approval by
In the case in question the aid will be granted to a Commission, may have to refund the aid in accordance
company residing in Paris. The OECD Understanding with the procedures and provision of the law of the
requires that the real owner is resident in the beneficiary Member State concerned, in particular those relating to
country. The Commission considers that the interpre- arrears of State liabilities. The amount will have to be
tation of this clause must be that the owner shall be repaid with interest charged on the amount of aid paid
to the company concerned from the date of payment at
(Ñ)ÙCommission letter to Member States SG(89) D/311 of the percentage value of that date of the reference rate
3 January 1989. used for the calculation of the net grant equivalent of the
(Ò)ÙJudgement of 5 October 1994 — Case C-400/92, I-4701. various types of aid in that Member State.
C 307/8 EN Official Journal of the European Communities 7.10.98

The Commission hereby gives notice to the French European Commission,

Government to submit all the comments necessary to Directorate-General for Competition (DG IV),
asses the compatibility of the aid within one month of State Aid Directorate,
the date of this letter.’ Rue de la Loi/Wetstraat 200,
B-1049 Brussels;
Fax (32-2) 296Ø98Ø17.
The Commission hereby gives notice to Member States
not involved in the case and other parties concerned to
submit their comments within one month of the date of These comments will be communicated to the French
this notice to: Government.

CØ35/98 (ex NØ783/97 and NØ160/98)

(98/C 307/09)

(Text with EEA relevance)

(Articles 92 to 94 of the Treaty establishing the European Community)

Commission notice pursuant to Article 93(2) of the EC Treaty to other Member States and
interested parties concerning an Italian notification of regional investment aid under Italian Law
488/92 for the creation of two new shipyards (Oristano and Belvedere Marittimo)

By the letter reproduced below, the Commission By letter SGØD/55737 of 15 December 1997 the
informed the Italian Government of its decision to open Commission asked for additional information and stated
the procedure provided for pursuant to Article 93(2) of that an operation of this nature could possibly be
the EC Treaty. contemplated only on condition that, as stipulated in
Article 6 of the Directive on shipbuilding, the new
capacity is directly linked to a corresponding irreversible
reduction in other capacities over the same period.
‘By letter No 7715 of 17 November 1997, registered by
the Commission on 18 November 1997, the Italian
Government notified the Commission of a plan to grant
investment aid under Law 488/92 for the construction of By letter No 1579 of 6 March 1998, registered on
a new shipyard at Oristano (Sardinia). 12 March 1998, the Italian authorities acknowledged
that they were unable to provide a precise list of
shipyards deleted from the Italian Special Register of
shipyards or to state whether the capacity of recently
closed yards corresponded to the new capacity that was
The shipyard is to build twin-hull or single-hull fast
to be created. The project promoters provided, for their
ferries using existing technology originating in Australia
part, a list of small yards that had shut down or ceased
and already used by another Italian shipyard specialised
shipbuilding activities in the more or less recent past.
in this type of vessel. The initial objective is to build one
vessel, representing 80Ø000 man-hours of labour, per
year. Since Sardinia is an Objective 1 region, investment
aid may be granted there up to a maximum of 50Ø% nge
plus 15Ø% gge. The investment cost of the project is By letter No 1582 of 6 March 1998, registered on
ITL 83,9Ø% billion and the nominal amount of the aid, 12 March 1998, at the same time as their answer to the
which has been set at 89Ø% of the maximum allowed, is request for additional information on the Oristano yard,
ITL 53,4 billion. the Italian authorities notified the Commission of a