The European Commission has approved, under EU State aid rules, three French schemes worth €100 million in total, to support the fisheries sector affected by the
withdrawal of the United Kingdom from the EU and the consequent quota share reductions foreseen in the provisions of the EU-UK Trade and Cooperation Agreement (TCA). These are the first support measures approved by the Commission in the context of inter-institutional discussions on the proposed Brexit Adjustment Reserve (‘BAR').
While today's decisions do not prejudge whether the support measures will eventually be eligible for BAR funding, which will be assessed once the BAR Regulation will have entered into force, they already provide France with legal certainty that the Commission considers them compliant with EU State aid rules, irrespective of the ultimate source of funding.
Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “The fisheries sector is one of the most affected by Brexit, requiring fishermen and downstream market operators in affected Member States to re-organise and adapt to the new situation. The three French schemes approved today, with a total budget of €100 million, are the first measures to support the sector in the context of the proposed Brexit Adjustment Reserve. We will continue to work closely with all Member States concerned to enable swift and effective solutions to mitigate the impact of Brexit, in line with State aid rules”.
The French support measures
In March 2021, France notified to the Commission, under EU State aid rules, three schemes to support the fisheries sector affected by the consequences of the withdrawal of the United Kingdom from the EU:
- The first scheme, with a total budget of €80 million, aims at partially compensating the fixed costs of the vessels forced to stay at berth due to the quota reductions envisaged in the TCA or to the lack of access to UK waters or other third country waters due to Brexit, as well as the remuneration of crewmembers. It applies to the period 1 January 2021 to 30 June 2021, and may be extended until 31 December 2021. The public support will take the form of direct grants to small and medium-sized enterprises (SMEs) active in France in the fisheries sector. The amount of the estimated losses to be compensated will be calculated based on objective criteria, taking as reference the turnover for the year 2019 multiplied by the number of days when the ship remains at berth and a factor discounting costs not borne by beneficiaries during the period at berth, which will not be compensated. The scheme will be open for applications until 31 December 2022.
- The second scheme, with a total budget of €12 million, aims at compensating part of the loss of revenues suffered by the French fishing fleet, from 1 January to 31 March 2021, in order to increase the resilience of the sector. The loss of revenues is mainly due to quota reductions envisaged in the TCA, to lack of access to UK waters or other third country waters, or to negative impacts on trade patterns and logistics. The public support will take the form of direct grants to SMEs active in France in the fisheries sector. The scheme will be open until 31 December 2022.
- The third scheme, with a budget of €8 million, aims at compensating part of the loss of revenues for the same reasons suffered by French fishmongers, from 1 January to 31 March 2021, in order to increase the resilience of the sector. The public support will take the form of direct grants to SMEs and large enterprises active in France in the wholesale and processing of fish, crustaceans and molluscs. The scheme will be open until 31 December 2022.
The Commission's assessment
The Commission assessed the measures under Article 107(3)(c) of the Treaty on the Functioning of the European Union (TFEU), which allows Member States to support the development of certain economic activities or regions, under certain conditions.
The Commission found that the three schemes enhance the sustainability of the fisheries sector and its ability to adapt to new fishing and market opportunities arising from the new relationship with the United Kingdom. Therefore, these measures facilitate the development of this sector and contribute to the first objective of the Common Fisheries Policy, to ensure that fishing and aquaculture activities are environmentally sustainable in the long term.
In particular:
- With respect to the first scheme, the compensation is contingent on the fact that vessel owners and fishers have temporarily ceased their fishing activity for at least 25 days between 1 January 2021 and 30 June 2021. This period may be prolonged until 31 December 2021. This will reduce the pressure on the sector and on the fish stocks due to the quota share reductions foreseen in the provisions of the TCA.
- With respect to the second scheme, France will compensate, for a limited period of at most three months, vessel owners and fishers for their Brexit related loss of revenues. Such measure is exceptionally justified in order to support beneficiaries in the immediate aftermath of the implementation of the TCA, for the losses suffered in the first three months of 2021, during which they continued their activities despite the losses as measures to compensate them for a temporary cessation were not yet available.
- With respect to the third scheme, France will compensate, for a limited period of at most three months, the fishmongers who depend on raw material that can no longer be supplied due to lack in supply resulting from Brexit. Such measure constitutes appropriate support in order to facilitate an orderly transition during the time needed for such companies to find alternative suppliers or to implement other structural measures. In particular, such measure is exceptionally justified for the first three months of 2021, in the immediate aftermath of Brexit and of the implementation of the TCA.
The Commission concluded that the measures constitute an appropriate form of support in order to facilitate an orderly transition following the withdrawal of the UK from the EU. They are targeted at supporting the French fisheries sector during the time needed for market participants to adapt to the changed market conditions and do not lead to overcompensation.
The measures are proportionate by limiting support to the loss of revenues resulting from the withdrawal of the United Kingdom from the EU and by being transitional in nature.
On this basis, the Commission approved the three schemes under EU State aid rules.
Background
On 25 December 2020, the day after the conclusion of the negotiations on the Trade and Cooperation Agreement with the UK, the Commission proposed the creation of a €5 billion Brexit Adjustment Reserve (BAR) to help Member States counter the adverse economic and social consequences of the withdrawal of the UK from the EU. The Commission proposal is a strong signal for European solidarity to those regions and economic sectors most directly affected by Brexit.
With the legislative procedure ongoing, the Commission has made clear that EU State aid rules fully apply to BAR-financed support measures, as Member States will have discretion as to how to use the funds. In this respect, the involvement of the Commission is important to guarantee a level playing field between Member States and avoid a harmful subsidies race.
The non-confidential version of these decisions will be made available under case numbers SA.62421, SA.62426 and SA.62427 in the State Aid Register on the competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.
Photo by Ilovetheeu, Wikimedia commons.