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Commission finds UK aid schemes involving purchase and leasing of fish quotas not compatible with common market rules
3rd June 2003
At the end of its formal investigation into two aid schemes involving fish quota purchase and lease in the United Kingdom, the European Commission has decided that these schemes are not compatible with common market rules. The quotas, acquired under these schemes set up by the Orkney and Shetland Islands Councils, are leased to local fishermen on preferential terms. As the aid concerned is an operational aid which benefits the fishermen concerned and as such is not allowed under Community rules, it must be brought to an end.
The Commission Decision does not require the recovery of the aid from which fishermen have already benefited. The schemes have attracted criticisms from parties in the UK fisheries sector who believe that they distort competition by providing an unfair advantage to the Orkney and Shetland fishermen and that their creation has triggered an increase in the price of fish quotas in the UK.
Unfair advantage
The objective of these schemes is to ringfence (keep in the community concerned) track records giving entitlements to annual fish quotas for the benefit of the local fleets. They were set up because local fishermen were finding it difficult to obtain financial backing to purchase quotas. These quota schemes enable the fishermen concerned to fish against quotas to which they would otherwise not have had access. The aid backing the schemes constitutes therefore an operational aid.
This aid reinforces the position of the fleets concerned in relation to fishing businesses outside of the Orkney and Shetland islands. As such, the aid provided by the Orkney and Shetland Councils confers an unfair advantage onto these islands' fishermen. Furthermore, the leasing scheme is only available to members of the local fishery organisations.
Since the quotas grant rights to fisheries products that are sold on the EU market, the schemes have affected competition within the Community market.
In view of these elements, the Commission decided that the aid involved in these schemes is incompatible with the rules of the common market. It must therefore be brought to an end by repealing the leasing provisions which confer preferential conditions on local vessels.
Recovery of the aid
Usually, when the Commission Decision is negative in such cases, the recovery of the aid granted is a principle of Community law. However, in these cases, the Commission noted that the parties involved genuinely believed, on the basis of prior qualifications of the funds in the context of co-financing of Community structural funds expenditure, that the funds used could be viewed as private funds.
This created among them a legitimate expectation that no state aid was involved in these schemes. As the principle of legitimate expectation is a general principle of Community law, the Commission has decided not to request the recovery of the aid.
Background
In the UK, national quotas are allocated on the basis of track records which reflect the quantities of fish caught by each vessel over the period 1994 to 1996. Under certain conditions, these track records can be sold independently from the vessels to which they have been allocated. A de facto market has developed in these track records and it is in this context that the Shetland and Orkney Islands Councils set up schemes to acquire track records enabling the leasing of the corresponding quotas to local vessels.
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