The European Commission has said it is to investigate whether winegrowers' co-operatives in the German region of Rheinland-Pfalz have been receiving illegal aid from the local authorities.
According to the Commission, the regional authorities of three districts in the Mosel-Saar-Ruwer area and the local authority of Schweich paid state aid for the acquisition of business shares in co-operatives in 2000, a move which it believes breaks European Union rules on state aid for companies.
An initial investigation, prompted by a complaint, has shown that the local authorities paid €155,460 to winegrowers in order to help them buy shares in the various co-operatives over a five-year period.
As well as committing to acquiring the shares in the co-operative, each winegrower also had to commit their entire vineyard to the co-operative, and pledge to deliver all grapes, must and wine to it. The stated aim was to help concentrate on just a handful of large co-operatives, thus stabilising prices.
But according to the Commission, the measure appears to be mainly designed to assist winegrowers in the relevant district by enabling them to acquire the shares at lower cost. It also assists co-operatives by obliging winegrowers to deliver their grapes and/or wine, thus giving these co-ops a commercial advantage in relation to other private sector wineries.
EU regulations do allow individual governments to grant aid to companies in the agricultural sector in order to facilitate the closure of production, processing and marketing capacities (as part of Brussels' ongoing efforts to reduce Europe's agricultural capacity and, consequently, the size of the CAP budget) and the German authorities argued that they made the payments in accordance with these rules.
The Commission disagrees - or at least has "serious doubts on the compatibility of the measure with the Common Market" - because the aid measure does not comply with the conditions for the closing of production set out in the EU guidelines. It added that information sent to the Commission by a plaintiff seemed to confirm this suspicion by suggesting that the measure would not be in the general interest of the wine sector.
Hence the decision to begin a formal investigation of the aid payments, and the setting of a one month deadline for Germany to send all the relevant documents to the Commission. The Commission said it would endeavour to conclude its examination within 18 months, although it did not say what the likely reprisals would be if the payments were eventually found to contravene EU rules.