State aid: Estonia to recover incompatible aid from agricultural company AS Tartu Agro
The European Commission has found that agricultural company AS Tartu Agro received incompatible aid from Estonia through the rent of agricultural land at a rate below market price. Estonia must now recover this illegal aid from AS Tartu Agro.
AS Tartu Agro is an Estonian private company, which produces milk, meat and cereals.
In 2017, following a complaint by a competitor, the Commission opened an in-depth investigation to establish whether a land lease contract between the Estonian Ministry of Rural Affairs and AS Tartu Agro was in line with EU State aid rules. The lease contract had been signed in 2000 between the Estonian Ministry of Rural Affairs and AS Tartu Agro for a duration of 25 years and is therefore still valid.
The Commission’s investigation revealed that the lease of land involved State aid, as the lease fee paid by AS Tartu Agro was, and still is, below the market price. On this basis, the Commission found that the lease contract gives an undue and selective advantage to AS Tartu Agro over its competitors.
The Commission therefore concluded that the contract amounts to incompatible aid under EU State aid rules, and that AS Tartu Agro now has to return the illegal advantage received. The amount is estimated to be around EUR 1.2 million.
Estonia will now determine the amount to be recovered, in line with the methodology set out under the Commission decision.
Under EU State aid rules, public interventions in favour of companies can be considered free of State aid when they are made on terms that a private operator would accept under market conditions (the market economy operator principle – MEOP). If this principle is not respected, public interventions involve State aid within the meaning of Article 107 of theTreaty on the Functioning of the European Union, as they confer an economic advantage to beneficiaries with respect to their competitors.
As a matter of principle, EU State aid rules require that incompatible State aid be recovered without delay in order to remove the distortion of competition created by the aid. There are no fines under EU State aid rules and recovery does not penalise the company in question. It simply restores equal treatment with other companies.
The non-confidential version of the decision will be made available under the case number SA.39182 in the State Aid Register on the Commission’s competition website and will be published in the Official Journal of the European Union, once any confidentiality issues have been resolved. New publications are listed in the State Aid Weekly e-News.