The Productschap Tuinbouw (product board for Horticulture, abbreviated hereinafter as: the PT) has adopted two regulations that provide for levies on the supply of and trade in flower cultivation products. Some of the revenue from these levies is intended to finance advertising campaigns promoting flower cultivation products (hereinafter: the measure). In its decision of 15 July 2011 the European Commission found that this constitutes state aid that is compatible with the internal market.

State aid test

The PT is a public-law organisation of enterprises and employees who are active in, among other things, the flower cultivation sector, which is established pursuant to the Industrial Organisation Act  and engages in activities for this sector as a whole. The PT collects, among other things, the levies used to finance the advertising campaigns promoting flower cultivation products, so-called parafiscal levies. Since there can only be a case of state aid if the aid is financed using state resources, the Commission investigates whether these levies can be regarded as state resources.

It follows from established case law that parafiscal levies are only not regarded as state resources if the following conditions are satisfied:

(i)             the particular measure was adopted by the professional organisation and does not serve as an instrument to implement government policy;

(ii)           the goals of the particular measure’s objectives is fully financed using the contributions of the enterprises of the sector;

(iii)          how financing takes place and the percentage / amount of the contributions are decided by the professional organisation of the business sector by employer and employee representatives, without any state interference;

(iv)         the contributions must be used to finance the measure without any possibility of state interference.

Since the PT has concluded an agreement with the Ministry of Economic Affairs, Agriculture and Innovation on the financial structure of the measure, the Commission feels that the Dutch government is able to interfere in the settlement of the financing of the measure and of the possible aid for which the levies collected may be used. This means that the levies can be seen as state resources.

The Commission then found that the measure benefits the undertakings in the flower cultivation sector. After all, their market position is improved by the advertising campaigns. This results in a distortion of competition. Since there is also a large intra-Community trade in agricultural products, the measure also affacts trade between the member states. The measure can therefore be regarded as state aid.

Compatibility of the aid

The Commission then investigated on the basis of Article 107 (3) (c) of the TFEU whether the state aid is compatible with the common market. In doing so the Commission applies § VI.D of the Community guidelines for State aid in the agriculture and forestry sector 2007 to 2013. These guidelines make a distinction between advertising campaigns within the EU and outside it.

Advertising campaigns within the EU

State aid for advertising campaigns of a general nature within the EU is compatible if the following conditions are satisfied:

a)             the advertising campaign must be general in nature and benefit all producers of the particular type of product;

b)             the origin of the product may not be cited in such advertisements;

c)              the advertisement may be made by producer groups or other organisations, regardless of their size;

d)             the advertising campaign must satisfy particular requirements for the labelling and presentation of foodstuffs.

e)             the aid intensity may be up to 100%.

The advertising campaigns will be provided by Bloemenbureau Holland (Flower Council Holland). Although the names and logos of levying organisations may appear in advertisements, no reference may be made to the origin of the products. Since the name of the official marketing agency contains the word “Holland”, the Dutch authorities were required to promise the Commission that the name and logos of Bloemenbureau Holland would be altered so that no reference is made to the origin of the products. As such, the Commission felt that the aforementioned conditions were satisfied and the measure was permissible to the extent it relates to advertising campaigns within the EU.

Advertising campaigns outside the EU

With regard to advertising campaigns outside the EU, the Commission pointed out that these campaigns may be financed as well. The condition applies however that the informational and promotional activities may not be geared to brand names or the specific origin of a product (see: Article 1 of Regulation 3/2008). The origin of a product included in the campaign with a name that is given pursuant to Community regulation (see: Regulation 510/2006) may, incidentally, be indicated. The advertising campaign in third countries may not involve advertisements focused on particular enterprises, nor may it include advertisements that threaten to jeopardise the sale of products from other member states or that present products from other member states in a bad light.  The Commission found that these conditions were also satisfied.

Finally, the Commission tests whether the levies constitute a discriminatory tax measure. The Dutch authorities have promised however that if foreign producers and dealers have already paid a similar levy in their own country, the PT will refund the Dutch levy.

The Commission’s conclusion was that the easure is compliant with the Community guidelines for State aid in the agriculture and forestry sector 2007-2013, and therefore compatible with the internal market.

tags: agriculture, flower cultivation products, state aid, Commission, PT, Productschap Tuinbouw, parafiscal levy, advertising, advertising campaign, third countries, designation of origin, Bloemenbureau Holland, TFEU

Eric Janssen