Embargo VISTA Illimité(*)

EUROPEAN COMMISSION

Brussels, C(2015)final Embargo VISTA illimité(*)

Subject: State Aid / Cyprus - Aid No SA.40476 (2015/N) - State aid scheme for promotion actions of agricultural products in the internal market and third countries Sir, The European Commission (hereinafter: "the Commission") wishes to inform Cyprus that, having examined the information supplied by your authorities, it has decided not to raise any objections to the above-mentioned scheme as it is compatible with the Treaty on the Functioning of the European Union (hereinafter: "TFEU"). In taking this decision the Commission has relied on the following considerations:

1. PROCEDURE (1) The present aid scheme was notified in accordance with Article 108(3) TFEU by letter from the Permanent Representation of Cyprus to the European Union of 12 January 2015, registered as received on the same day.

(2) The notification was registered under SA.40476 (2015/N).

(3) The Commission requested additional information by letter dated 29 January 2015, which the authorities of Cyprus provided by letter sent via email on 3 April 2015, registered on the same day. The authorities of Cyprus provided a further clarification via email, which was registered as received on 29 April 2015.

2. DESCRIPTION 2.1 Title

(4) State aid scheme for promotion actions of agricultural products in the internal market and third countries.

(*) Ce timbre porte sur l'ensemble des documents qui composent le dossier.

H.E. Mr Ioannis Kasoulides Minister for Foreign Affairs Dimostheni Severi Avenue Nicosia Cyprus

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

2.2 Objective of the aid

(5) With the present notification the authorities of Cyprus wish to replace State aid scheme SA.37818 (2014/N), which the Commission had approved with Decision C(2014) 1694 final of 24 March 2014.1 The objective of the aid scheme is to promote agricultural products and quality products, which improve the efficiency, competitiveness and professionalism of agriculture in the Union and thereby contribute to its long-term sustainability. The authorities of Cyprus have confirmed that the scheme will have no negative impact on the environment within the meaning of point (52) of the European Union Guidelines for State aid in the agricultural and forestry sectors and in rural areas 2014 to 2020 (hereinafter: "the Guidelines").2

(6) The promotion activity must be designed either to inform the public about the characteristics of agricultural products, for example, by organising competitions, by participating in trade fairs and public relations activities, by the vulgarisation of scientific knowledge, or by publications with factual information or to encourage economic operators or consumers to buy the agricultural product in question by way of promotion campaigns.

(7) The promotion campaign must be focused on products covered by quality schemes or it must be generic in character and for the benefit of all producers of the type of product concerned.

(8) The promotion campaign must comply with Article 2 of Directive 2000/13/EC of the European Parliament and of the Council of 20 March 2000 on the approximation of the laws of the Member States relating to the labelling, presentation and advertising of foodstuffs,3 and, where appropriate, respect the specific labelling rules.

(9) It is noted in the scheme that aid cannot be directly linked to the quantities exported, for the establishment and operation of a distribution network or to other current expenditure linked to the export activity, or favour domestic products over imported goods.

2.3 Legal basis

(10) Decision No 75.791 of 3.10.2013 of the Council of Ministers prolonging the existing aid scheme.

2.4 Form of the aid

(11) In kind or on the basis of reimbursement of real costs incurred by the beneficiary. However, aid for promotion campaigns will be granted only in kind by means of subsidised services.

2.5 Duration

(12) The scheme will be put into effect after its approval by the Commission and its duration will be until 31 December 2020.

1 OJ C 156, 23.5.2014, p. 23. 2 OJ C 204, 1.7.2014, p. 1. 3 OJ L 109, 6.5.2000, p. 29. 2

2.6 Budget

(13) The budget for 2015 is € 100 000 whereas for the whole duration of the aid scheme it amounts to € 1 000 000.

2.7 Beneficiaries

(14) Beneficiaries are SMEs, their registered and representative of the sector associations/organisations and recognised producer groups/organisations/associations, active in the production and/or processing and/or marketing of agricultural products.

(15) Only SMEs as defined in Annex I of Commission Regulation (EU) No 702/2014,4 are eligible beneficiaries for expenses for the organisation of and participation in competitions, trade fairs or exhibitions.

(16) Furthermore, it is noted that the aid must be accessible to all those eligible in the area concerned, based on objectively defined conditions. Where the promotion measure is undertaken by producer groups or other organisations, participation must not be subject to membership of those groups or organisations and any contribution in terms of administration fees for the group or organisation must be limited to the cost of providing the promotion measure.

2.8 Description of the measure

Promotion in the internal market

(17) The eligible activities and costs for the granting of aid in the framework of the promotion of agricultural products within the internal market are the following:

(A) regarding the expenses for the organisation of and participation in competitions, trade fairs or exhibitions within the Union, the maximum eligible aid differs depending on whether the beneficiary participates in a fair, where the Ministry of Energy, Commerce, Industry and Tourism participates, inside the Ministry’s stand or the beneficiary participates with his own stand in fairs irrespective whether the Ministry participates in them as well.

(1) in cases where the beneficiaries participate with their own stand inside the Ministry’s stand:

(i) 100% aid for the rent for the exhibition premises, the construction and the equipment of the stand and the shipping, customs clearance and return of the exhibits and the publication in the exhibition catalogue,

(ii) 70% aid for accommodation costs for one person during the day preceding the exhibition and during the exhibition (maximum daily allowance € 120),

4 Commission Regulation (EU) No 702/2014 of 25 June 2014 declaring certain categories of aid in the agricultural and forestry sectors and in rural areas compatible with the internal market in application of Articles 107 and 108 of the Treaty on the Functioning of the European Union, OJ L 193, 1.7.2014, p. 1.

(iii) 70% aid for the travel costs (economy class plane ticket) for one person,

(iv) 70% aid for the cost of the publication of a notice in printed publications and on websites regarding the organisation of the event,

(v) up to € 1200 aid for the costs of promotional material (posters, banners, brochures, leaflets) for each beneficiary per year. It is understood that the amount of the aid cannot exceed the actual expenditure of the promotional material.

(2) in cases where the beneficiaries participate or are organisers with their own stand at fairs inside the EU, irrespective of whether the Ministry also takes part:

(i) 70% aid for the rent for the exhibition premises (up to 15 m2), the construction and the equipment of the stand and the shipping, customs clearance and return of the exhibits and the publication in the exhibition catalogue. In case the company wishes to rent a larger space, it will incur the additional expenses,

(ii) 70% aid for accommodation costs for one person during the day preceding the exhibition and during the exhibition (maximum daily allowance € 120),

(iii) 70% aid for the travel costs (economy class plane ticket) for one person,

(iv) 70% aid for costs of the publication of a notice in printed publications and on websites regarding the organisation of an event.

The maximum amount of aid in the aforementioned case is € 4.500 per fair.

(B) 70% aid for costs of publications in print and electronic media, websites, spots in electronic media, on radio or television, aimed at presenting factual information about producers from a given region or producers of a given product, provided that the information is neutral and that all producers have equal opportunities to be represented in the publication.

(i) quality schemes open to agricultural products from other Member States.

(ii) agricultural products (without reference to their brand name) and their nutritional benefits and suggested uses for them.

(D) aid for the costs for consumer-targeted promotion campaigns organised in the media or at retail outlets as well as for all promotion material which is distributed directly to consumers. The aid intensity for promotion campaigns focussed on products covered by quality schemes amounts to 50% of the eligible costs whereas the aid intensity for generic promotion campaigns amounts to 70% of the eligible expenses.

(18) It is noted that promotion activities within the Union referred to in recital (17)(C) and (17)(D) above and in particular promotion activities which are generic in 4

character and for the benefit of all producers of the type of product concerned, must not mention any particular undertaking, brand name or origin. Promotion campaigns referred to in (17)(D) must not be earmarked for products of one or more particular company or companies.

(19) However, the restriction on the reference to origin does not apply to promotion activities and promotion campaigns referred to in recital (17)(C) and (17)(D), focussed on products covered by quality schemes, provided the following conditions are fulfilled:

(a) where the promotion activity focuses on Union-recognised denominations, it may refer to the origin of products provided that the reference corresponds exactly to that registered by the Union;

(b) where the activity concerns products covered by quality schemes other than schemes for Union-recognised denominations, the origin of the products may be mentioned provided it is secondary in the message. In order to determine whether the reference to origin is secondary, the competent national authority (Ministry of Energy, Commerce, Industry and Tourism – Department for the Promotion of Agricultural Products) will take into account the overall amount of text and/or the size of the symbol including images as well as the general presentation referring to the origin as compared with the text and/or symbol referring to the key sales pitch, that is to say, the part of the promotion not focused on the origin of the product.

Promotion in third countries

(20) The eligible activities for the granting of aid in the framework of the promotion of agricultural products in third countries are the following:

(A) 70% aid for the cost of public relations works, promotion and advertising, in particular to draw attention to intrinsic features and advantages of Community products, notably the quality and safety of food, specific production methods, nutritional and health aspects, labelling, animal welfare and respect for the environment,

(B) 70% aid for the cost of information campaigns, in particular on Community systems of protected designations of origin (PDOs), protected geographical indications (PGIs) and traditional speciality guaranteed (TSGs) and of organic farming, and other Community schemes for quality standards and labelling of agricultural products and foodstuffs, as well as on the graphic symbols laid down by applicable Community legislation,

(C) participation in competitions, trade fairs or exhibitions of international importance, in particular by means of stands aimed at enhancing the image of Community products. The maximum eligible aid differs depending on whether the beneficiary participates in a fair, where the Ministry of Energy, Commerce, Industry and Tourism participates, inside the Ministry’s stand or the beneficiary participates with his own stand in fairs irrespective whether the Ministry participates in them as well.

(1) in cases where the beneficiaries participate with their own stand inside the Ministry’s stand:

(ii) 70% aid for accommodation costs for one person during the day preceding the exhibition and during the exhibition (maximum daily allowance € 120),

(iii) 70% aid for the travel costs (economy class plane ticket) for one person,

(iv) up to € 1200 aid for the costs of promotional material (posters, banners, brochures, leaflets) for each beneficiary per year. It is understood that the amount of the aid cannot exceed the actual expenditure of the promotional material.

(2) in cases where the beneficiaries participate with their own stand at fairs in third countries, irrespective of whether the Ministry also takes part:

(ii) 70% aid for accommodation costs for one person during the day preceding the exhibition and during the exhibition (maximum daily allowance € 120),

(iii) 70% aid for the travel costs (economy class plane ticket) for one person,

The maximum amount of aid in the aforementioned case is € 4.500 per fair.

(D) 70% aid for costs of studies of new markets, necessary for the expansion of market outlets.

(E) 70% aid for costs of impact assessment of the information and promotion measures.

(21) Eligible is also the promotion of quality products defined as products fulfilling the criteria established pursuant to Article 16 of Regulation (EC) No 1305/2013 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD), for Union-recognised denominations (e.g. protected designations of origin (PFO), protected geographical indications (PGI), in accordance with the provisions of Council Regulation (EU) No 1151/2012, or other designations of origin which are protected under Community legislation) or for national or regional quality labels and the biological products, which fulfil the conditions of Council Regulation (EC) No 834/2007 of 28 June 2007, which repealed Council Regulation (EEC) No 2092/91.5

(22) It is prohibited to give aid under this scheme, which:

(a) is granted to particular undertaking or to commercial brands, and

5 20.7.2007, OJ L 189/1. 6

(b) risks endangering sales of or denigrates products from other Member States.

(23) The authorities of Cyprus confirmed that the scheme complies with the conditions of Regulation (EC) No 3/2008. Thus, the aim of such actions is to emphasise the advantages of Union products in particular as regards the quality, nutritional value and safety of foodstuffs, labelling, animal welfare and respect for the environment.

(24) Furthermore, every communication and promotion message targeting consumers and others within the framework of the scheme should be grounded in the intrinsic features of the relevant product or its characteristics. These messages should be in compliance with the applicable legislation in the third countries, to which they refer.

(25) In addition, these actions will have to comply with the provisions of Article 2 of Directive 2000/13/EC i.e., where appropriate, respect the specific labelling rules which have been laid down for various products (such as wine, dairy products, eggs and poultry).

(26) It is noted that, where the advertising campaign is earmarked for Union- recognised denominations, reference may be made to the origin of the products provided that the reference corresponds exactly to those references which have been registered by the Union. In the case of national or regional quality labels, the origin of the products may be mentioned provided it is secondary in the message.

(27) In order to assess whether the origin is indeed secondary in the message, the competent national authority will take into account the overall importance of the text and/or symbol, including pictures and general presentation, referring to the origin and the importance of the text and/or symbol referring to the unique selling point of the advertisement, i.e. the part of the advertising message which does not focus on origin.

(28) Under Part B of Annex II of Commission Regulation (EC) No 501/2008,6 the list of third countries within which the aid for promotion measures described in recital (20) above can take place is the following:

A. Countries

- Australia

- Azerbaijan

6 Commission Regulation (EC) No 501/2008 of 5 June 2008 laying down detailed rules for the application of Council Regulation (EC) No 3/2008 on information provision and promotion measures for agricultural products on the internal market and in third countries, OJ L 147, 6.6.2008, p. 3, as amended by Commission Regulation (EC) No 1313/2008 of 19 December 2008, OJ L 344, 20.12.2008, p. 61, Commission Implementing Regulation (EU) No 1085/2011 of 27 October 2011, OJ L 281, 28.10.2011, p. 5, Commission Implementing Regulation (EU) No 737/2013 of 30 July 2013, OJ L 204, 31.7.2013, p. 26, and Commission Implementing Regulation (EU) No 796/2014 of 23 July 2014, OJ L 218, 24.7.2014, p. 1.

- Albania

- Armenia

- Georgia

- Switzerland

- Kazakhstan

- China

- Belarus

- Moldova

- South Korea

- India

- Japan

- Norway

- New Zealand

- Uzbekistan

- Russia

- Serbia

- Ukraine

B. Geographic Zones

- Africa

- North America

- Southeast Asia

- Latin America

- Middle East

Horizontally applicable provisions of the aid scheme

(29) Value added tax (VAT) is eligible for aid under this scheme only where it is not- recoverable from other sources. Therefore, upon the issuance of invoices beneficiaries must ask that the amount of VAT is indicated separately on the invoice.

(30) Cyprus has committed to provide representative samples of the promotion material at a later stage and in any case before the launching of the promotion campaign.

(31) Beneficiaries have to submit an application to the Ministry of Energy, Commerce, Industry and Tourism – Department for the Promotion of Agricultural Products (competent national authority) within the set deadlines containing the following:

(32) The application must contain a table with the foreseen expenses.

(33) Audited financial statements of the last two years must be attached to the application since no aid will be granted on the basis of unaudited financial statements.

(34) A declaration must also be attached whereby it will be affirmed that neither the beneficiary nor any other natural or legal person which is part of the undertaking, has an outstanding debt to the state. Should there be an outstanding debt, then the aid will be offset with that debt.

(35) A declaration must also be submitted indicating whether or not the beneficiary has been granted or will be granted or will apply for a loan under the JEREMIE program for the same eligible expenses. If the beneficiary has been granted, will be granted or will apply for such a loan, the beneficiary must indicate the eligible expenses covered by the loan in order for the competent authority to assess whether the allowed maximum intensity rate has been exceeded.

(36) In trade fairs where the beneficiary intends to participate inside the Ministry’s stand, the beneficiary will have to submit the filled in 'participation form' to the Department for the Promotion of Industrial Products of the Ministry, which is the authority responsible for the organisation of the Ministry stands.

(37) The foreseen aid will be granted after the completion of its activity as long as all the required documents in originals or certified copies have been submitted (invoices, payslips, electronic ticket, boarding passes, samples of promotional material etc.).

(38) The beneficiary will be granted the aid as long as his authorised representative has travelled to and is present at the fair. If the beneficiary is represented by his agent in the country where the fair takes place, relevant original invoices issued in the name of the beneficiary must be submitted to the Ministry.

2.9 Transparency

(39) The authorities of Cyprus will publish the full text of the final State aid schemes online on the site www.mcit.gov.cy. The aid schemes will not be put in place before they are published online. The information will remain available online for at least 10 years.

2.10 Incentive Effect

(40) As detailed in recitals (31)-(38) above, beneficiaries must make a comprehensive application in order to be eligible for aid. In addition, no activity that preceded the approval of the scheme by the competent authority is eligible for aid and promotion activities included in the application cannot have been proposed for inclusion or have been definitively included in another aid scheme with national or Union funding.

2.11 Cumulation

(41) It is prohibited to cumulate State aid with aid under de minimis for the same eligible expenses, unless such cumulation does not result in exceeding the highest aid intensity applicable to this type of aid under the Guidelines. The granting of aid under the scheme will also be subject to the other rules in points (99)-(107) of the Guidelines on the cumulation of aid.

2.12 General Exclusions

(42) The payment of any aid under the notified scheme to any undertaking that has benefited from earlier unlawful aid declared incompatible by a Commission Decision, will be suspended 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) In cases where the beneficiary of the aid is an undertaking in difficulty within the meaning of point 35(15) of the Guidelines, it will be excluded from the scheme.7

3. ASSESSMENT 3.1 Application of Article 107(1) TFEU

(44) For Article 107(1) of the TFEU to apply, the aid must be granted by a Member State or through State resources in any form whatsoever. It must constitute economic advantage for the beneficiaries. Further, it must be selective, in the sense that it must be granted to certain undertakings, and the aid must be liable to distort competition and affect inter-state trade within the Union.

(45) The aid measure in question is financed via subsidised services or on the basis of reimbursement of real costs incurred by the beneficiary, from the resources of the central government on the basis of decisions taken by the Department for the Promotion of Agricultural Products of the Ministry of Energy, Commerce, Industry and Tourism, which is the competent authority. Therefore it is granted by the central government of Cyprus through State resources.

(46) The aid measure favours primary producers of agricultural products and undertakings active in processing and marketing of agricultural products, which are entities involved in an economic activity and for the purposes of Article 107(1) TFEU are considered undertakings.8 The scheme confers on the

7 See OJ C 244, 1.10.2004, p. 2. 8 Judgment in Höfner and Elser, C-41/90, ECLI:EU:C:1991:161, paragraph 21. 10

beneficiaries an economic advantage as they are enabled to embark on promotion activities at reduced costs. Normally they would have had to bear these costs themselves in the normal course of business, and as such this type of aid distorts the conditions of competition.9

(47) In addition, in benefiting only the sector of agriculture in Cyprus, the aid is selective. As the Court has confirmed a measure may constitute State aid even when it concerns an entire economic sector.10

(48) Further, according to the case law of the Court of Justice, aid to an undertaking is liable to affect trade between Member States where that undertaking operates in a market open to intra-Union trade. The beneficiaries of the aid at issue operate in the highly competitive market of agricultural products. It should be noted in this regard that the imports of Cyprus in agricultural products from the rest of the EU was worth 290 mio EUR in 2004 and the exports were 71 mio EUR.11 These amounts ranged for the years 2005 to 2012 from 437 to 787 mio EUR for the imports and from 115 to 142 mio EUR for the exports.12 The aid measure is thus capable of distorting competition and affecting trade between Member States and it therefore constitutes aid within the meaning of Article 107(1) TFEU.

(49) In light of the above, the conditions of Article 107(1) of the TFEU are fulfilled. It can therefore be concluded that the proposed measure constitutes State aid within the meaning of that Article. The aid may only be considered compatible with the internal market if it can benefit from one of the derogations provided for in the TFEU.

3.2 Compatibility with the internal market pursuant to Article 107(3)(c) TFEU

(50) In the present case, Article 107(3)(c) of the TFEU provides the appropriate basis for compatibility. Under that provision, aid to facilitate the development of certain economic activities or of certain economic areas may be considered to be compatible with the internal market where such aid does not adversely affect trading conditions to an extent contrary to the common interest.

(51) In the agricultural sector, this derogation applies to aid which complies with the Guidelines. It follows from point (452) of the Guidelines that the Commission will consider aid for the promotion of agricultural products compatible with the internal market under Article 107(3)(c) of the TFEU if it complies with the common assessment principles of the Guidelines and with the conditions set out in Section 1.3.2 of Part II of the Guidelines.

3.2.1. Common Assessment Principles

(52) According to points (38) and (452) of the Guidelines, the common assessment principles apply to aid granted in accordance with Article 107(3)(c) TFEU.

9 See inter alia Case C-156/98 Germany v Commission [2000] ECR I-6857, para. 30. 10 Judgment in Unicredito Italiano, C-148/04, ECLI:EU:C:2005:774, paragraphs 44-8; Judgment in Italy v Commission, C-66/02, ECLI:EU:C:2005:768, paragraphs 94-8. 11 Source: European Commission, Directorate General for Agriculture and Rural Development, Statistical and economic information, Annual Reports, 3.7.14 EU trade in agriculture, see http://ec.europa.eu/agriculture/statistics/agricultural/index_en.htm. 12 Ibid. 11

(53) The notified aid scheme contributes to a common objective in accordance with points (43) and (44) of the Guidelines. As described in recital (5) above, the aim of the notified aid scheme is to promote agricultural products and quality products, which improve the efficiency, competitiveness and professionalism of agriculture in the Union and thereby contribute to its long-term sustainability. There is further a presumption that it contributes to the objectives of rural development, since the Commission has gained sufficient experience in this respect, as provided for in point (48) of the Guidelines. Lastly, as provided for in recital (5) above, the authorities of Cyprus have confirmed that no negative impact on the environment within the meaning of point (52) of the Guidelines can be identified.

(54) In falling under Part II of the Guidelines, the notified aid scheme fulfils the principles of a need for State intervention on the basis of point (55) of the Guidelines, of the appropriateness of aid on the basis of point (57) of the Guidelines, and of the avoidance of undue negative effects on competition and trade on the basis of point (113) of the Guidelines.

(55) As analysed in recitals (67) and (70) below, the aid amount will not exceed the eligible costs whereas the eligible costs are calculated accurately and the maximum aid intensities foreseen in Section 1.3.2 of Part II of the Guidelines are respected. In addition, as described in recital (29) above, VAT is not eligible for aid, except where it is not-recoverable under national VAT legislation. Furthermore, the aid scheme does not allow for a cumulation of the aid provided for in recital (41) above. Thus, it is in line with points (82), (84), (86), (99) and (100) of the Guidelines and the principle of proportionality of the aid is respected.

(56) As to the principle of transparency, points (128), (131) and (132) of the Guidelines are relevant here. These requirements are fulfilled as provided for in recital (39) above, whereby the authorities of Cyprus commit to publish all the necessary information on a comprehensive website. The indicated site is www.mcit.gov.cy.

(57) In conformity with point (66) of the Guidelines, the scheme has an incentive effect if it changes the behaviour of undertakings in such a way that they engage in additional activity contributing to the development of the sector, in which they would have normally not engaged in without aid or would have engaged in a different or restricted manner. As stated in recital (40), given the fact that, in the absence of the aid the beneficiaries would not have embarked on promotion activities (recitals (17)-(28)), the State intervention has an incentive effect.

(58) According to points (70)-(71) of the Guidelines, the project should not start prior to the aid application and this application has to comprise at least the name of the applicant, its size and the eligible costs. As described in recitals (31)-(38) above, the conditions set out in points (70)-(71) of the Guidelines regarding the incentive effect are met.

3.2.2. Conditions set out in Section 1.3.2 of Part II of the Guidelines

(59) Pursuant to point (453) of the Guidelines, aid for promotion measures applies to the whole agricultural sector while the beneficiaries of aid for the organisation of competitions, trade fairs or exhibitions, referred to in point (464)(a) must be limited to SMEs. As provided for in recital (14) beneficiaries are SMEs, their 12

registered and representative of the sector associations/organisations and recognised producer groups/organisations/associations, active in the production and/or processing and/or marketing of agricultural products. Also, recital (15) expressly limits eligible beneficiaries for expenses for the organisation of and participation in competitions, trade fairs or exhibitions to SMEs.

(60) According to point (454) of the Guidelines, the promotion activity must be designed either to inform the public about the characteristics of agricultural products, for example, by organising competitions, by participating in trade fairs and public relations activities, by the vulgarisation of scientific knowledge, or by publications with factual information or to encourage economic operators or consumers to buy the agricultural product in question by way of promotion campaigns. As stated in recital (6) this scheme complies with this condition.

(61) Recital (7) reiterates the requirements of point (455) of the Guidelines. Thus, a promotion campaign under this scheme must be focused on products covered by quality schemes or it must be generic in character and for the benefit of all producers of the type of product concerned.

(62) In compliance with point (456) of the Guidelines, recital (8) confirms that a promotion campaign under this scheme must comply with Article 2 of Directive 2000/13/EC and, where appropriate, respect the specific labelling rules.

(63) Point (457) of the Guidelines requires Member States to send representative samples of promotion material when notifying an aid or an aid scheme for a promotion campaign, or at least take a commitment to provide such samples at a later stage and in any case before the launching of the promotion campaign. The authorities of Cyprus have committed to furnish such samples prior to the launching of promotion campaigns, as stated in recital (30).

(64) Point (458) of the Guidelines is not applicable to this scheme given the fact that the overall budget of the scheme for the whole of its duration is € 1 000 000 according to recital (13).

(65) According to point (459) of the Guidelines where the promotion measure is undertaken by producer groups or other organisations, participation must not be subject to membership of those groups or organisations and any contribution in terms of administration fees for the group or organisation must be limited to the cost of providing the promotion measure. As shown in recital (16), the scheme complies with this condition.

(66) In light of point (460) of the Guidelines aid for promotion measures must be granted in kind or on the basis of reimbursement of real costs incurred by the beneficiary. On the basis of recital (11) this scheme complies with this condition. In addition the said recital shows that the scheme is aligned with point (461) of the Guidelines, which allows aid for promotion campaigns in particular to be granted only in kind by means of subsidised services. According to point (462) of the Guidelines, where the aid is granted in kind, the aid must not include direct payments to the beneficiaries but must be paid to the provider of the promotion measures.

(67) Pursuant to point (464) of the Guidelines, the eligible costs for the promotion of agricultural products within the Union are the following: 13

(a) concerning the organisation of and participation in competitions, trade fairs and exhibitions, provided that aid is accessible to all those eligible in the area concerned, based on objectively defined conditions:

(i) participation fees;

(ii) travel costs and costs for the transportation of animals;

(iii) costs of publications and websites announcing the event;

(iv) the rent of premises and stands and costs of their installation and dismantling;

(v) symbolic prizes up to a value of EUR 1 000 per prize and per winner of a competition;

(b) the costs of publications in print- and electronic media, websites, and spots in electronic media, on radio or television, aimed at presenting factual information about producers from a given region or producers of a given product, provided that the information is neutral and that all producers have equal opportunities to be represented in the publication;

(i) quality schemes as referred to in point (282) of the Guidelines open to agricultural products from other Member States and third countries;

(ii) generic agricultural products and their nutritional benefits and suggested uses for them;

(d) the costs for consumer-targeted promotion campaigns organised in the media or at retail outlets as well as for all promotion material which is distributed directly to consumers.

The scheme complies with this provision, as shown in recital (17).

(68) Point (465) of the Guidelines provides that the promotion activities for the dissemination of scientific knowledge and factual information, referred to in point (464)(c) of the Guidelines, and for consumer-targeted promotion campaigns, referred to in point (464)(d), and in particular promotion activities which are generic in character and for the benefit of all producers of the type of product concerned, must not mention any particular undertaking, brand name or origin. In addition, promotion campaigns referred to in (464)(d) must not be earmarked for products of one or more particular company or companies. As shown in recital (18), the aid scheme prohibits mentioning any particular undertaking, brand name or origin while with regard to promotion campaigns under point (464)(d) it further makes clear that they must not be earmarked for products of one or more particular company or companies.

(69) However, as shown in recital (19), in accordance with point (466) of the Guidelines the above prohibition foreseen in point (465) of the Guidelines does not apply for promotion activities and promotion campaigns focussed on products covered by quality schemes, provided the following conditions are fulfilled: 14

(a) where the promotion activity focuses on Union-recognised denominations, it may refer to the origin of products provided that the reference corresponds exactly to that registered by the Union;

(70) Pursuant to point (467) of the Guidelines, the aid intensity for eligible costs, referred to in point (464)(a) to (c), will be up to 100 % of the eligible costs. On the basis of point (468) of the Guidelines, the aid intensity for promotion campaigns focussed on products covered by quality schemes, referred to in point (464)(d) in conjunction with point (455), may not exceed 50 % of the eligible costs of the campaign. If the sector contributes at least 50 % of the costs, irrespective of the form of the contribution, for example special taxes, the aid intensity may be up to 100 %. Furthermore point (469) of the Guidelines states that the aid intensity for generic promotion campaigns, referred to in point (464)(d) in conjunction with point (455), may cover up to 100 % of eligible costs. Recital (17) indicates that the aid intensity for activities falling under point (464)(a) to (c) will not exceed 100% of the eligible costs and it will in any case not exceed the actual expenditure of the promotional material. As for activities falling under point (464)(d), the aid intensity for promotion campaigns focussed on products covered by quality schemes will be up to 50% of the eligible costs whereas that for generic promotion campaigns will reach up to 70% of the eligible expenses. Thus, the scheme complies with the foreseen aid intensities under the Guidelines.

(71) With specific regard to promotion in third countries, point (470) of the Guidelines states that aid for such activities will be compatible with the internal market if it is in line with the conditions laid down in Regulation (EC) No 3/2008.13 As stated in recital (23), the authorities of Cyprus confirmed that the scheme complies with the conditions of Regulation (EC) No 3/2008. This is further shown in recitals (23)-(24) and (26). Also, the activities eligible for promotion in third countries are among those foreseen in Article 2 of Regulation (EC) No 3/2008. As for the aid intensities provided for in recital (20), they are in line with Article 13 of Regulation (EC) No 3/2008.

(72) Furthermore, as shown in recitals (23)-(27), the scheme is in compliance with Regulation (EC) No 3/2008 as well as with the provisions of Regulation (EC) No 501/2008. This is particularly the case with regard to the emphasis on the quality, nutritional value and safety of foodstuffs, labelling, animal welfare and respect for the environment. Furthermore, every communication and promotion message

13 Council Regulation (EC) No 3/2008 of 17 December 2007 on information provision and promotion measures for agricultural products on the internal market and in third countries, OJ L 3, 5.1.2008, p. 1.

targeting consumers and others within the framework of the scheme, will be grounded in the intrinsic features of the relevant product or its characteristics. These messages will be in compliance with the applicable legislation in the third countries, to which they refer. Promotion activities have also to comply with Article 2 of Directive 2000/13/EC. Where the advertising campaign is earmarked for Union-recognised denominations, reference may be made to the origin of the products provided that the reference corresponds exactly to those references which have been registered by the Union. In the case of national or regional quality labels, the origin of the products may be mentioned as a secondary in the message. In the assessment of compliance with that requirement the competent national authority will take into account the overall importance of the text and/or symbol, including pictures and general presentation, referring to the origin and the importance of the text and/or symbol referring to the unique selling point of the advertisement, i.e. the part of the advertising message which does not focus on origin. What is more, as indicated in recital (28), the aid is for actions in countries listed in Part B of Annex II to Regulation (EC) No 501/2008.

(73) Point (470) of the Guidelines also states that the Commission will not declare compatible State aid for promotion which:

(a) is granted to particular undertakings or to commercial brands;

(b) risks endangering sales of or denigrates products from other Member States.

As provided for in recital (22), aid which would fall under (a) or (b), is prohibited.

3.2.3. Undertakings in difficulty

(74) Pursuant to point (26) of the Guidelines undertakings in difficulty are in principle excluded from the scope of the scheme. As described in recital (43) above, Cyprus committed to exclude undertakings in difficulty from this State aid scheme. Therefore, the scheme complies with the aforementioned point of the Guidelines.

3.2.4. Outstanding recovery order

(75) The Commission notes that the Cypriot authorities made a commitment, as noted in recital (42) above in accordance with point (27) of the Guidelines and therefore the scheme complies with the Deggendorf principle.14.

3.2.5. Export aid

(76) In line with point (27) of the Guidelines, it is indicated in recital (9) that the aid scheme will not be directly linked to the quantities exported, for the establishment and operation of a distribution network or to other current expenditure linked to the export activity, or favour domestic products over imported goods. It should anyway be noted that aid towards the cost of participating in trade fairs, or of studies or consultancy services needed for the launch of a new or existing product on a new market in principle does not constitute export aid.

14 Judgment of 13 September 1995, Textilwerke Deggendorf v Commission, T-244/93 and 486/93, ECLI:EU:T:1995:160, paragraphs 51-60.

4. CONCLUSION (77) The Commission has accordingly decided not to raise any objections to the aid on the grounds that it is compatible with the internal market pursuant to Article 107(3)(c) of the TFEU.

(78) 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.

(79) Your request should be sent via the secured e-mail system Public Key Infrastructure (PKI) to: [email protected].

Yours faithfully, For the Commission

Phil HOGAN Member of the Commission