Embargo VISTA illimité(*)

EUROPEAN COMMISSION Brussels, C(2015), final Embargo VISTA illimité(*) Subject: State Aid / Germany Aid No SA. 41692 (2015/N) Joint Guidelines for the promotion of agri-environment-climate and animal welfare measures in Bavaria: 1) Additional performance activity 03/16 (W16) - Animal friendly mowing in the Programme for Nature Conservation of the Bavarian Ministry for the Environment and Consumer Protection; 2) State Aid clearance for extended circle of beneficiaries: other land managers Sir, The European Commission ('the Commission') wishes to inform Germany that, having examined the information supplied by your authorities on the scheme referred to above, it has decided to raise no objections as the scheme 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) In accordance with Article 108(3) of the TFEU, the Permanent Representation of Germany to the European Union notified the Commission of this scheme by letter of 27 April 2015, registered on the same day. (2) By a letter dated 24 June 2015 the Commission has asked for certain supplementary information. The German authorities provided additional information on 07 July 2015, registered on the same day. (*) Ce timbre porte sur l'ensemble des documents qui composent le dossier. Seiner Exzellenz Herrn Frank-Walter STEINMEIER Bundesminister des Auswärtigen Werderscher Markt 1D 11017 Berlin Commission européenne, B-1049 Bruxelles Europese Commissie, B-1049 Brussel Belgium Telephone: 32 (0) 2 299.11.11

2. DESCRIPTION 2.1. Title (3) Joint Guidelines for the promotion of agri-environment-climate and animal welfare measures in Bavaria: 1) additional performance activity 03/16 (W16) - Animal friendly mowing in the Programme for Nature Conservation of the Bavarian Ministry for the Environment and Consumer Protection; 2) State aid clearance for extended circle of beneficiaries: other land managers. 2.2. Budget (4) Total: EUR 2,31 Mio; Annual: EUR 0,38 Mio. 2.3. Duration (5) From the approval by the Commission until 31 December 2020. 2.4. Legal basis (6) Joint Guidelines of the Bavarian Ministries of Food, Agriculture and Forestry (StMELF) and of the Environment and Consumer Protection (StMUV) on support for agri-environmental, climate protection and animal welfare measures in Bavaria; (7) Haushaltsordnung des Freistaates Bayern (BayHO), (Bavarian financial regulation); (8) Weinverordnung (Wine Ordinance (WeinV 1995)). 2.5. Aid beneficiaries (9) The beneficiaries are: (a) owners of farms with farmyards who cultivate an area of at least 3 ha of agricultural land themselves; for these purposes, ponds count as agricultural land; (b) horticultural and special crop farms, including those below 3 ha land area; (c) vineyards that are listed in the vineyard register and meet the requirements of Section 5(1) and (2) of the Wine Ordinance; (d) pasture and grazing cooperatives; (e) other land managers, including nature conservation organization, recognized hunting associations, landscape conservation associations and other relevant organizations/associations. (10) Local authorities such as rural districts and municipalities are not eligible for aid, nor are land consolidation communities. Large companies are not eligible for aid. (11) The first part (described in recitals (19) to (26)) to of the notification concerns around 1000 beneficiaries. (12) The second part of the notification (described in recitals (27) to (41)) concerns around 20 beneficiaries. 2.6. Form and intensity 2

(13) The support is provided in the form of annual payments for each approval and commitment period. (14) The aid shall not cover transaction costs. Aid shall not be granted for land that has been taken out of productive use. (15) Under the first part (described in recitals (19) to (26)), aid will be granted as a flat rate of 50 EUR per hectare per year, which is meant to compensate for the additional cost resulting from this commitment. (16) Under the second part (described in recitals (27) to (41)), aid will be granted in accordance with the thresholds set out in the Rural Development Programme of Bavaria for the agri-environment-climate measures defined below in recitals (28) to (34), which are meant to compensate for the additional costs and income foregone resulting from these commitments. The European Commission has already approved these commitments in the framework of the aforementioned programme. 2.7. Objectives of the aid scheme (17) The scheme aims to provide support for extensive agricultural methods and to encourage agri-environment-climate objectives. (18) The scheme is divided in two parts: (i) an additional performance activity consisting of animal friendly mowing, as part of the Programme for Nature Conservation of the Bavarian Ministry for the Environment and Consumer Protection; and (ii) a State aid clearance for the extension of the circle of beneficiaries to other land managers for measures approved under the Bavarian Rural Development Programme and which are included in the Programme for Nature Conservation of Bavaria. 2.8. Description of the aid scheme Part I Agri-environment-climate commitment - Mowing (19) The additional performance activity is part of the Programme for Nature Conservation of the Bavarian Ministry for the Environment and Consumer Protection. The activity is a rural development like measure which was not included in the Rural Development Programme of Bavaria 2014 to 2020. (20) The supported land is made up of valuable areas for nature conservation. Considerable declines in bird population and an increased need for wildlife conservation has been reported concerning these areas. (21) The special mowing procedure consists of mowing the supported area (depending on the circumstances) either: (i) from the inside towards the outside or (ii) from one side to the other of the area, in order to protect animals, especially young birds, which are brooding in the respective meadows or grasslands. The young birds have the possibility to flee towards the outer side of the area and then totally out of the area, without being trapped. (22) The need for action derives from the fact that in spite of nature conservation measures to address the challenges of grassland habitat for birds (control for 3

harvest timing, breeding and rearing period management etc.), the number of bird types which brood in the meadows or grasslands are in constant decline in Bavaria. (23) The scheme is additional to the basic measure no. 2.1 "Extensive mowing for nature conservation habitats for meadow type A, grassland habitat for breeding" of the Rural Development Programme of Bavaria. According to this basic measure the meadow owners are obliged not to mow the grassland during specific times of the year because of the bird s breeding period, following which the mowing can be performed. The scheme fits into and is consistent with the Rural Development Programme of Bavaria and complements it with an additional voluntary agri-environment-climate commitment. (24) The extra difficulty of performing the mowing in a special way goes beyond the mandatory standards established pursuant to the EU Regulation No 1306/2013 and the mandatory standards pursuant to the German law. There is no specification in EU or German law regarding the manner of the mowing. Execution of mowing is generally executed from a purely economic point of view from the outside of the meadow towards the inward. When the mowing is carried out in this way, the young birds, as well as other animals, will try to find refuge in the rest of the un-mowed meadow, which generally becomes a death trap for them. The mowing practice proposed hereunder allows these birds and animals to escape from the surface. (25) The commitment represents a voluntary active step towards a sustainable, environmentally sound management of the countryside. It requires active management and goes beyond specific laws (e.g. nature conservation legislation), which function by prohibition of harmful practices. Through this commitment the beneficiary will renounce a commercially efficient mowing technique, in order to respect the environmental commitment undertaken. The aid covers therefore the compensation to beneficiaries due to the loss of income resulting from a less efficient mowing technique. (26) This additional effort is quantified to a flat rate amount of EUR 50 per ha per year. In addition with the payment for the basic measure described in recital (23) above, the aid will amount to a total of EUR 450 per ha. The commitment will be implemented for a period of five years. Part II Agri-environment-climate commitments to other land managers and undertakings in rural areas not active in the agricultural sector (27) The scope of the notification is to obtain State aid clearance for a number of agrienvironment-climate sub-measures approved under the Rural Development Programme of Bavaria, which apply to other land managers and undertakings not active in the agricultural sector. (28) The sub-measures concerned are the numbers 16 to 21 of the measure M10 Environment and Climate Action, approved under the Bavarian Rural Development Programme 2014 to 2020. Description of the sub-measures for State aid clearance: 4

(29) Sub-measure 16: Biotope arable land 1: Extensive use for nature conservation of valuable arable land habitats i. Eligible costs: Extensive arable farming waiving the cultivation of corn, sugar beet, potatoes, clover grass and lucern; min. 2 winter crops (cereals) in the commitment period; rest time after sowing until 30.06 (exceptions to be approved by the conservation Authority); waiving chemical pesticides; waiving fertilization; renunciation of mineral fertilizers and organic fertilizers (except solid manure); reduced crop density (min. 20 cm row spacing); reduced land management unit; conservation of orchard trees, waiver of removal of dead wood trees. ii. Aid amount is in accordance with the amounts and thresholds set in the Rural Development Programme of Bavaria for each respective action (page 398). The maximum aid amount is 420EUR per ha per year. (30) Sub-measure 17: Biotope arable land 2: Fallow arable land preserved for greening and conservation reasons i. Eligible costs: fallow arable land with self-greening; rest time between 15.03 and 31.08.; mulching the area allowed only after 31.08 (exceptions to be approved by the conservation Authority); annual management transition to tillage between the 01.09 and 31.10. ii. Aid amount is in accordance with the amounts and thresholds set in the Rural Development Programme of Bavaria for each respective action (page 415). The maximum aid amount is 700EUR per ha per year. (31) Sub-measure 18: Biotope grassland 1: Development and extensive use of valuable nature conservation grassland habitats i. Eligible costs: main use as a meadow or pasture from the first commitment year and during the entire commitment period; mowing and removal of the crop at least once in each commitment year; compliance with specific mowing times or mowing up to and including 14.06, with rest time between 15.6 and 31.08; waiver of fertilization and renouncing the use of chemical pesticides (exceptions to be approved by the conservation Authority); renunciation of mineral fertilizers and organic fertilizers (except solid manure); reducing the size of the management unit; conservation of orchard trees; waiver of removal of dead wood trees; use of special cutting edges for the mowing and of special machines; use of a motor mower; mowing by hand; raking by hand; sections of old grass on an area of 5 to 20% of the total area; moisture surcharge on wet and damp meadows; rest time between 15.3 or 1.4 until the agreed mowing time. ii. Aid amount is in accordance with the amounts and thresholds set in the Rural Development Programme for each respective action (page 430-431). The maximum aid amount is 680EUR per ha per year. (32) Sub-measure 19: Biotope grassland 2: Fallow grassland for habitat conservation reasons 5

i. Eligible cost: leaving valuable grassland areas fallow for nature conservation purposes and as a habitat for endangered and protected species. ii. Aid amount is in accordance with the threshold set in the Rural Development Programme (page 451), namely 300EUR per ha per year. (33) Sub-measure 20: Biotope grassland 3: Result-oriented use of grassland for preserving lowland and mountain hay meadows i. Eligible cost: demonstrable maintain of at least six acknowledged characteristic species per ha of eligible land. ii. Aid amount is in accordance with the threshold set in the Rural Development Programme (page 462), namely 320EUR per ha per year. (34) Sub-measure 21: Biotope pasture: preservation and improvement of nature conservation for valuable habitats through extensive grazing i. Eligible costs: grazing by sheep, cattle or horses plus waiving all fertilization; waiver of the use of chemical pesticides (exceptions to be approved by the conservation Authority); grazing by cattle in the alpine area (pastures) plus waiving all fertilization (own solid manure is allowed) and avoiding the use of chemical pesticides (exceptions to be approved by the conservation Authority); grazing by goats plus waiving all fertilization; avoidance of the use chemical pesticides (exceptions to be approved by the conservation Authority) and waiving of feeding with basic and concentrates while grazing from 01.05 to 30.09 each year; restricting the land management unit. more than 2 ha. ii. Aid amount is in accordance with the amounts and thresholds set in the Rural Development Programme for each respective action (page 470). The maximum aid amount is 500EUR per ha per year. Common features of the sub-measures: (35) The sub-measures will be implemented for a period of five years. (36) Beneficiaries for all sub-measures are: farmers, groups of farmers, hunting associations, nature conservation and landscape conservation associations which manage at least 0.3 ha of agricultural space; pasture and grazing cooperatives which manage at least 0.3 ha of relevant space. (37) The involvement of other land managers and undertakings in rural areas not active in the agricultural sector is indispensable for these areas which are under the scope of the Bavarian Nature Conservation Programme and which are very difficult to farm. An involvement of other actors from nature protection and landscape services is therefore crucial because they provide essential services for these valuable habitats area which are difficult to farm ecologically. Hunting associations are included among the beneficiaries as they are often in charge for actions of conservation of habitats, as for example the extensive mowing of grassland, the maintaining of fens and meadows. 6

(38) The commitments are voluntary in nature. They contribute to the preservation of the biodiversity, especially in Natura 2000 areas. They are considered as voluntary contractual obligations pertaining to nature conservation. Under these submeasures, the beneficiaries will commit to go beyond the relevant minimum requirements for fertiliser and plant protection products. (39) The number of hectares to which a commitment applies may vary from year to year pursuant to Article 47, para 1 of the EU Regulation 1305/2013. 2.9. Cumulation (40) According to information provided, the cumulation of the present grant with aid received from other public resources to cover the same eligible costs is excluded. The German authorities commit themselves to respect this restriction, as well as to assure that the maximum allowed intensities will be respected. 2.10. Other commitments (41) The aid will cover only those voluntary commitments going beyond the relevant mandatory standards established by the EU legislation 1 and the relevant minimum requirements for fertiliser and plant protection products use, as well as other relevant mandatory requirements established by national law. (42) The implementation of the scheme shall be subject to transparency rules. The German authorities commit to respect the transparency requirements set out in points (128) to (132) of the Guidelines. (43) The aid applications will be transparent, they will include the applicant's name and the size of the undertaking, the description of the activity, including its location and start and end dates, the amount of aid needed to carry it out and the eligible costs. The application for aid will have to precede the start of works on the relevant project. (44) Furthermore the German authorities committed to suspend the payment of the aid if the beneficiary still has at its disposal an earlier unlawful aid that was declared incompatible by a Commission Decision (either concerning an individual aid or an aid scheme), until that beneficiary has reimbursed or paid into a blocked account the total amount of the unlawful and incompatible aid including the corresponding recovery interest. (45) The German authorities have confirmed that companies which are in difficulty within the meaning of the Guidelines on State aid or rescuing and restructuring 1 Chapter I of Title VI of Regulation (EU) No 1306/2013 and Article 4(1) of Regulation (EU) No 1307/2013, points (c)(ii) and (c)(iii) thereof. 7

non-financial undertakings in difficulty 2 are specifically excluded from receiving any aid under the present scheme. 3 (46) The German authorities confirmed that a revision clause will be introduced in the legal basis of the scheme, in order to ensure that the operations foreseen will be adjusted in the case of amendments of the relevant mandatory standards, requirements or obligations beyond which the commitments undertaken under the scheme have to go. (47) The German authorities confirmed that the operations undertaken which extend beyond the rural development programming period 2014-2020 will contain a revision clause in order to allow for their adjustment to the legal framework of the following programming period. (48) The German authorities have confirmed that if the adjustments referred to in recitals (46) and (47) above are not accepted or not implemented by the beneficiary, the commitment will expire and the aid amount will be reduced to the aid amount corresponding for the period until the expiry of the commitment. 3. ASSESSMENT UNDER STATE AID RULES 3.1. Presence of State aid within the meaning of Article 107(1) TFEU (49) Pursuant to Article 107(1) TFEU, aid granted by a Member State or through State resources in any form whatsoever that distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods is incompatible with the internal market, insofar as it affects trade between Member States. (50) The aid scheme confers an advantage on selected recipients as it favours certain undertakings economically active in the German Republic by providing a support for agri-environment and climate commitments. The compatibility conditions of this support scheme will be assessed below, under the application of the new Guidelines. (51) The aid measures in question are financed through the State budget. Therefore, the advantage is deemed to be granted from State resources. (52) According to the case law of the Court of Justice, aid to an undertaking is deemed to affect trade between Member States where that undertaking operates in a market open to trade at EU level. 4 The mere fact that the competitive position of an undertaking is strengthened compared with other competing undertakings, by giving it an economic benefit which it would not otherwise have received in its 2 Communication from the Commission - Guidelines on State aid for rescuing and restructuring nonfinancial undertakings in difficulty OJ C 249, 31.7.2014, p. 1. 3 The definition of undertakings in difficulty applied under the AGRI Guidelines is identical with that applied in the Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty. 4 See in particular the judgment of the Court of 13 July 1988 in Case 102/87 French Republic v Commission of the European Communities, ECLI:EU:C:1988:391. 8

normal course of business, points to a possible distortion of competition. 5 Therefore an aid granted by a Member State to an undertaking may help to maintain or increase domestic activity, with the result that undertakings established in other Member States have less chance of penetrating the market of the Member State concerned. (53) The supported sector is open to competition at EU level and therefore sensitive to any measure in favour of the production in one or more Member States. As there is substantial intra-eu trade in agricultural products in general 6, the notified aid scheme is liable to affect trade between Member States. (54) In the light of the above, the conditions of Article 107(1) TFEU are fulfilled. It can therefore be concluded that the notified scheme constitutes State aid within the meaning of that Article. 3.2. Lawfulness of the aid (55) The German authorities have notified the aid scheme before its implementation, they have declared that the aid scheme will be implemented from 2015, starting with the date of the adoption of the decision by the European Commission. Therefore, Germany has complied with its obligation under Article 108(3) TFEU. 3.3. Compatibility of aid pursuant to Article 107(3)(c) TFEU (56) The aid may be regarded as compatible with the internal market only if one of the exemptions provided for in the TFEU applies. (57) The present notified aid scheme covers aid for the participation of agricultural and non-agricultural undertakings in agri-environment-climate commitments in areas covered by the Bavarian Programme for Nature Conservation. Therefore, the State aid rules in the agricultural sector and forestry are applicable. (58) The Commission has examined the proposed aid scheme in the light of Article 107(3)(c) TFEU and of the Guidelines, therein under Part I, Chapter 3. Common assessment principles and under Part II, Chapter 1, Section 1.1.5.1. Aid for agrienvironment-climate commitments and Section 3.4. Aid for agri-environmentclimate commitments to other land managers and undertakings in rural areas not active in the agricultural sector. 3.4. Application of the AGRI Guidelines (59) Points 207 and 659 of the AGRI Guidelines stipulate that the Commission will consider the aid for agri-environment-climate commitments and the aid for agrienvironment-climate commitments to other land managers and undertakings in rural areas not active in the agricultural sector compatible with the internal market 5 Judgment of the Court of 17 September 1980 in Case 730/79 Philip Morris Holland BV v Commission of the European Communities, ECLI:EU:C:1980:209. 6 In 2013 Germany s import of agriculture products from other EU countries amounted to EUR 60,5 billion (more than 10% of total imports) and the export of agriculture products to other EU countries amounted to EUR 52,5 billion (more than 8% of total exports) (source: http://ec.europa.eu/agriculture/ statistics/factsheets/pdf/de_en.pdf, Eurostat). 9

under Article 107(3)(c) TFEU if it complies a.o. with the common assessment principles of these Guidelines. 3.4.1. Common assessment principles (60) According to point 12 of the AGRI Guidelines, the common assessment principles apply to notifiable aid schemes and individual aid granted in accordance with Article 107(3)(c) TFEU. Pursuant to point 38 of the AGRI Guidelines a notified aid measure can be considered as compatible with the internal market under Article 107(3) of the Treaty when the Commission comes to the conclusion that the design of aid measure ensures that the positive impact of the aid towards an objective common interest exceeds its potential negative effects on trade and competition. (61) The notified aid scheme contributes to a common objective in line with point 43 of the Guidelines. As described in recital (17) above, the objective of the present notified scheme is to encourage agri-environmental-climate commitments, in order to reward voluntary active steps towards sustainable, environmentally sound management of the countryside. This enables to meet societal objectives that would not be met otherwise. (62) The German authorities provided relevant documentation indicating that Part I of the notified aid scheme fits into and is consistent with Rural Development Programme of Bavaria (recitals (23), (24)). The conditions of point 47 and 58 of the Guidelines are therefore met. (63) The sub-measures under Part II of the notified aid scheme belong to the Rural Development Programme of Bavaria. The condition of point 46 of the Guidelines is therefore met. (64) According to the documentation provided by the German authorities and in line with recitals (21), (24), (37) and (38), the aid scheme does not incur a negative impact on environment within the meaning of point 52 of the AGRI Guidelines. (65) As it is shown below in sections 3.4.2 and 3.4.3 of this decision, the scheme complies with the specific provisions of the Guidelines. There is therefore a need for state intervention, in line with point (55) of the Guidelines. (66) The Commission accepts the arguments presented by the German authority concerning the suitability of the form of aid selected, namely direct grant. The aid instrument chosen in Part I of the aid scheme is in line with the specific criteria specified in the Guidelines and presented in section 3.4.2 of the this decision. It can therefore be concluded that points (59) and (60) of the Guidelines are complied with. (67) The rural development sub-measures financed under Part II of this scheme are cofinanced by the Rural Development Programme of Bavaria. It can therefore be concluded that the aid instrument is appropriate, as set out in point 61 of the Guidelines. (68) The German Authorities indicated that the aid encourages undertaking to engage in additional activity in which it would not have engaged otherwise because of the 10

economic losses involved. The conditions of point (66) of the Guidelines are therefore met. (69) As described in recital (43) above, the German authorities assured that the application will fulfil the requirements set out in points (70) and (71) of the Guidelines. The beneficiaries will not include large companies (recital (10)), therefore the point (72) of the Guidelines does not apply. The conditions set out in the Guidelines concerning the incentive effect for the activity described in recital (21) are therefore met. (70) As described in recital (40) above, the German authorities assured that the aid under the notified scheme will not be cumulated with aid received from other local, regional, national or European Union sources to cover the same eligible costs (recital (40)). The risk of cumulation appears therefore avoided. (71) According to point (82) of the AGRI Guidelines, in order for the aid to be proportionate, the Commission considers that the aid amount should not exceed the eligible costs. As demonstrated by the German authorities (recitals (13) to (16)), the maximum aid intensity was set up within the limits of the Guidelines (see below in sections 3.4.2 and 3.4.3 of the decision for the respective supported measures). Therefore, the risk of overcompensation appears to be eliminated and it can be concluded that the requirement of proportionality is met. (72) As demonstrated in recital (17), the aid scheme does not have a direct link to extension of production processes, nor to investment in intensive agriculture. The aid fulfils the specific assessment criteria and the maximum aid intensities (see below in sections 3.4.2 and 3.4.3 of the decision for the respective supported measures). It can, therefore, be concluded that no significant distortion of competition and trade could be identified, in line with point (113) of the AGRI Guidelines. (73) Regarding the transparency requirements stipulated in points (128) to (132) of the AGRI Guidelines, the German authorities have committed to comply with these requirements (recital (41)). 3.4.2. Aid for agri-environment-climate commitments (74) According to point (207) of the Guidelines, the Commission will consider aid for agri-environment-climate commitments compatible with the internal market under Article 107(3)(c) of the Treaty if it complies with the common assessment principles of the Guidelines and with the specific conditions of Part II, Section 1.1.5.1 of the Guidelines. (75) The German authorities have confirmed that the described agri-environment commitments are undertaken by farmers on a voluntary basis and in addition to their usual agricultural activities (recital (25)). The voluntary agri-environment commitments are implemented on permanent grasslands. The conditions of point (208) of the Guidelines are therefore fulfilled. (76) In line with recitals (19) to (22), the German authorities have described the environmental benefit of the measure and demonstrated that the measure aims to promote agricultural practices that make a positive contribution to the 11

environment. Therefore, the conditions of point (209) of the Guidelines are fulfilled. (77) As explained in recital (41), the German authorities have demonstrated that the voluntary commitments go beyond the relevant mandatory standards established either by EU legislation or by national law and that the farmers will commit to go beyond the relevant minimum requirements for fertiliser and plant protection products. Therefore, the conditions of point (210) of the guidelines are fulfilled. (78) The German Authorities will endeavour to ensure that the undertakings that undertake to carry out operations under this scheme are provided with the knowledge and information required to implement them, such as by commitmentrelated expert advice and/or by relevant training. The conditions of point (211) of the Guidelines are therefore fulfilled. (79) The commitments under this measure are taken for a period of 5 years (recital (26)). Therefore, the conditions of point (212) of the Guidelines are fulfilled. (80) The number of hectares to which the commitment applies does not vary from year to year, therefore point (213) of the Guidelines does not apply. (81) The aid covers compensation to beneficiaries for the additional cost resulting from the commitment they make (recital (25), (26)) and is granted annually (recital (13)). Therefore, the conditions set out in point (221) of the Guidelines are fulfilled. (82) The aid amount is below the maximum aid amount for annual crops per hectare per year (recital (26)). Therefore, the conditions of point (228) of the Guidelines are fulfilled. (83) It can be therefore concluded that the requirements of Section 1.1.5.1 of Part II of the AGRI Guidelines are met. 3.4.3. Aid for agri-environment-commitments to other land managers and undertakings in rural areas not active in the agricultural sector (84) According to point (659) of the Guidelines, the Commission will consider aid for agri-environment-climate commitments to other land managers and to undertakings in rural areas not active in the agricultural sector compatible with the internal market under Article 107(3)(c) of the Treaty if it complies with the common assessment principles of the Guidelines, with the common provisions of Chapter 3 of the Guidelines and with the specific conditions of Part II, Section 3.4 of the Guidelines. (85) According to point (660) of the Guidelines, the aid must be granted in accordance with the applicable relevant conditions set out in sub-chapter 1.1.5.1 of Part II of these Guidelines. (86) In line with recitals (28) and (38) from above, the German authorities have described in the Rural Development Programme of Bavaria the environmental benefit of the relevant measures and demonstrated that the measure aims to promote agricultural practices that make a positive contribution to the environment. The Programme was approved by the European Commission. In the 12

current notification the German authorities have demonstrated the rationale of extending the measures concerned (recitals (28) to (34)) to other land managers and undertakings (recital (37)). Therefore, the conditions of point (209) of the Guidelines are fulfilled. (87) As explained in recital (38) the commitments are voluntary, they go beyond the relevant mandatory standards and farmers commit to go beyond the relevant minimum requirements for fertiliser and plant protection products. Therefore, the conditions of point (210) of the guidelines are fulfilled. (88) The German Authorities will endeavour to ensure that the undertakings that undertake to carry out operations under this scheme are provided with the knowledge and information required to implement them, such as by commitmentrelated expert advice and/or by relevant training. The conditions of point (211) of the Guidelines are therefore fulfilled. (89) The commitments under these measures are taken for a period of 5 years (recital (35)). Therefore, the conditions of point (212) of the Guidelines are fulfilled. (90) The German Authorities committed to respect the conditions set out in Article 47 of the EU Regulation 1305/2013 in the cases when the number of hectares to which the commitment applies varies from year to year (recital (39)). The conditions set out in point (213) of the Guidelines are therefore met. (91) The aid covers compensation to beneficiaries for the additional cost and income foregone resulting from the commitment they make (recital (16)) and is granted annually (recital (13)). The conditions set out in point (221) of the Guidelines are therefore fulfilled. (92) The aid amounts for the sub-measures described in recitals (29)ii, (32)ii and (33)ii are approved by the European Commission in the framework of the Rural Development Programme for Bavaria (recital (28)) and they are within the thresholds set out in point (228) of the Guidelines. The conditions set out in point (228) of the Guidelines are therefore fulfilled. (93) The aid amounts for the sub-measures described in recitals (30)ii, (31)ii and (34)ii are approved by the European Commission in the framework of the Rural Development Programme for Bavaria (recital (28)) and they fall within the scope of point (229) of the Guidelines. The conditions set out in point (229) of the Guidelines are therefore fulfilled: i. In line with the Rural Development Programme for Bavaria, for the submeasure described in recital (30)ii, the aid ceiling for the relevant actions specified in the Programme will exceed the regular 600EUR per ha per year threshold foreseen by point (228) of the Guidelines because of the considerable income loss resulting from the undertaken commitment. The amount is substantiated and approved in line with point (229) of the Guidelines. ii. In line with the Rural Development Programme for Bavaria, for the submeasure described in recital (31)ii, the aid ceiling for the relevant actions specified in the Programme will exceed the regular 450EUR per ha per 13

year threshold foreseen by point (228) of the Guidelines because of the considerable effort and costly procedures required to maintain the concerned areas. The amount is substantiated and approved in line with point (229) of the Guidelines. iii. In line with the Rural Development Programme for Bavaria, for the submeasure described in recital (34)ii the aid ceiling for the relevant actions specified in the Programme will exceed the regular 450EUR per ha per year threshold foreseen by point (228) of the Guidelines because of the higher economic loss of goat farming as opposed to sheep farming. The amount is substantiated and approved in line with point (229) of the Guidelines. (94) The German authorities have confirmed that the described agri-environment commitments are undertaken by land managers and undertakings in rural areas not active in the agricultural sector on a voluntary basis and in addition to their usual agricultural activities (recital (38)). The conditions of point (661) of the Guidelines are therefore fulfilled. (95) As explained in recitals (28) and (37) the agri-environment-climate measures in question have been assessed and approved under the Rural Development Programme and they are duly justified in order to attain agri-environment-climate objectives. It is therefore allowed to grant the aid for other land managers and undertakings in rural areas not active in the agricultural activity, as set out in point (662) of the Guidelines. (96) It can be therefore concluded that the requirements of Section 3.4 of Part II of the Guidelines are met. 3.5. Other conditions Duration of the aid scheme (97) As to the duration of the scheme, pursuant to point 719 of the AGRI Guidelines the Commission shall only authorize schemes of limited duration. Schemes covering State aid for measures that can also benefit from EAFRD co-financing under Regulation (EU) 1305/2013 7 should be limited to the duration of the programming period 2014-2020. As stipulated in recital (5), this condition has been met. Outstanding recovery orders (98) The Commission takes note that according to settled case law 8, the German authorities commit to suspend the payment of the notified aid if the beneficiary still has at its disposal an earlier unlawful aid that was declared incompatible by a 7 Regulation (EU) No 1305/2013 of the European Parliament and of the Council of 17 December 2013 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) and repealing Council Regulation (EC) No 1698/2005, OJ L347, 20.12.2013, p. 487. 8 See Judgment of the General Court of 13 September 1995, joined cases T-244/93 and T-486/93, Textilwerke Deggendorf GmbH v. Commission, p. II-2288, paras 51 and 56 et seq.; confirmed by the judgment of the Court of Justice of 15 May 1997, case C-355/95 P, p. I-2575, paras 22 and 26 et seq. 14

Commission Decision (either concerning an individual aid or an aid scheme), until that beneficiary has reimbursed or paid into a blocked account the total amount of unlawful and incompatible aid including the corresponding recovery interest (recital (44)). Revision clause (99) The Commission takes note of the commitment by the German authorities that aid will respect the revision clause for agri-environment-climate commitments, set out in points (724), (725) and (726) of the Guidelines (recitals (46), (47) and (48). Undertakings in difficulty (100) The Commission takes note of the commitment by the German authorities that aid will not be granted to firms in difficulty within the meaning of the Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty (recital (45)). (101) In view of the above considerations showing the respect of the AGRI Guidelines, the Commission considers that the notified aid scheme is compatible with the internal market in accordance with Article 107(3)(c) TFEU. 4. CONCLUSION (102) The Commission has accordingly decided not to raise objections to the scheme on the grounds that it is compatible with the internal market pursuant to Article 107(3)(c) TFEU. (103) If any parts of this letter are covered by the obligation of professional secrecy according to the Commission communication on professional secrecy and should not be published, please inform the Commission within fifteen working days of notification of this letter. If the Commission does not receive a reasoned request by that deadline Germany will be deemed to agree to the publication of the full text of this letter. If Germany wishes certain information to be covered by the obligation of professional secrecy please indicate the parts and provide a justification in respect of each part for which non-disclosure is requested. (104) Your request should be sent electronically via the secured e-mail system Public Key Infrastructure (PKI) in accordance with Article 3(4) of Commission Regulation (EC) No 794/2004 9, to the following address: agri-state-aidsnotifications@ec.europa.eu. Yours faithfully, For the Commission 9 Commission Regulation (EC) No 794/2004 of 21 April 2004 implementing Council Regulation (EC) No 659/1999 laying down detailed rules for the application of Article 93 of the EC Treaty (OJ L 140, 30.4.2004, p. 1). 15

Phil HOGAN Member of the Commission 16