Greece ordered to recover aid granted to cereal producers

By Kacey Culliney contact

- Last updated on GMT

The EU Commission said the aid given to Greek cereal producers in 2008 distorted competition
The EU Commission said the aid given to Greek cereal producers in 2008 distorted competition

Related tags: European union

Greece must recover aid given to cereal producers and agricultural cooperatives in 2008, the European Union’s General Court has ruled.

In 2008, Greek authorities granted 100% state-guaranteed loans amounting to €150m ($207m) together with interest-rate subsidies to 57 Unions of Agricultural Cooperatives (UACs). The loans were intended to be passed on to the producers of the cereals purchased or received by these UACs to ensure a minimum income for farmers amid low maize and wheat prices. Prices of both commodities dropped significantly following a surplus in production.

Distorted competition

Following an investigation, the EU Commission said the aid entailed a “distortion of competition” ​and affected trade between EU states, given the substantial intra-community trade in cereals.

It said the loans “conferred an advantage, selectively, since they were intended to increase the income of Greek farmers by artificially increasing the price of cereals sold to the UACs and, moreover, the UACs and the producers were the only beneficiaries of the loans”.

The selective financial advantages obtained, though relatively minor, could not have been obtained under normal market conditions, the Commission said. “By means of the interest-free loan, together with a state guarantee, the producers could – despite the surplus situation – sell their stock of cereals to the UACs, and do so at a price which they could not have obtained if no loan subject to such conditions had been made to the UACs.”

Greece attempted annulment on first ruling

The Commission first ordered Greece to recover the aid in January 2012 but Greece sought the annulment of this decision.

However, the General Court of the EU “dismissed this action in its entirety” ​and on April 9, confirmed the EU Commission’s decision to recover all aid associated with these loans - the interest-rate subsidy and State guarantee of the loans.

“The court finds that the contested decision is clear and sufficiently reasoned, since it contains all the information necessary to allow the determination of the nature of the aid to be recovered, the mount of that aid and the beneficiaries concerned by the recovery,”​ the ruling read.

Greece could appeal the EU Commission’s decision again before the Court of Justice. It has until June 9 to file an appeal. The full ruling can be found HERE​.

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