Today, the Commission launched a probe into the potential misuse of subsidies for investments to be …
Today, the Commission launched a probe into the potential misuse of subsidies for investments to be undertaken in the hotel sector in Sardinia. According to the information at the Commission`s disposal, the Italian authorities paid out subsidies amounting to a total between €8 and 10 million prior to even having received an application for such payments. In these circumstances the Commission needs to investigate whether the payments still had the requisite incentive effect, i.e., whether they stimulated regional investments that would not have been undertaken otherwise.
When the Commission approved the aid scheme according to the Guidelines on national regional aid(1), the award of individual aid to hotel investment projects was to be dependent on a prior application for such aid. Aid could thus not be given for projects that had been conceived and whose execution started without even an application for aid. The Commission fears that this requirement has been breached in the instant case and that the aid might thus not have stimulated the regional investments as required under the Guidelines on national regional aid.
The Commission considers payments that ocurred without any prior application may constitute a misuse of the aid approved as case N272/98. Such misuse gives raise to the opening of a distinct State aid proceeding under Article 16 of the Regulation n. 659/99(2).
Background
The approved aid scheme N272/98 provides for grants in favor of initial investments in the hotel industry in Italy – Regione Sardegna. The scheme has been approved in 1998 and the Commission has considered the general scheme in line with EU State aid provisions for the award of regional aid.
The Italian authorities adopted implementing regulations to the scheme with by means of a variety of administrative decisions. These implementing regulations were never brought to the attention of the Commission. According to these regulations aid can be awarded – albeit on an exceptional basis even in case of investment project on which work had commenced before the date of application for the aid.
As a result of these provisions the Italian authorities have, in 2002, awarded aid for at least 28 investments projects that were started before the date of application for the aid. The total aid disbursed in this way amounts to between €8 and 16 million.
(1) OJ 10.3.98, C 74.
(2) Council Regulation n. 659/99 laying down detailed rules for the application of Article 93 EC [now Art. 88], OJ L 83, 27.3.1999
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
