Commission Decision (EU) 2025/1270of 25 November 2024on the measures on SA.39182 (2017/C) (ex 2017/NN) (ex 2014/CP) Alleged illegal aid to Tartu Agro AS implemented by Estonia(notified under document C(2024) 8047)Only the English text is authentic

32025D1270

Den Europæiske UnionAfgørelse2025

European Union

§ Article 16

Article 16 of the Regulation (EU) 2015/1589.

, namely the principles of legitimate expectations and legal certainty are unfounded. The principle of the protection of legitimate expectations concerns any person who can entertain expectations which are justified and well founded, having received precise, unconditional and consistent assurance from the competent institution of the European Union

See Judgment of the Court of Justice of 24 March 2011, ISD Polska and Others v Commission, C-369/09 P, ECLI:EU:C:2011:175, paragraph 123 and case law citied therein.

(501) Firstly, the Commission notes that it has no discretion to waive the recovery of the unlawful aid.

(502) Secondly, regarding Estonia’s accession to the EU and the enforcement of the State aid rules in Estonia, the Commission notes that the principle of legitimate expectations cannot be extended to the point of generally preventing a new rule from applying to the future effects of situations which arose under the earlier rule

Judgment of the Court of 11 December 2008, C-334/07 P, Commission v Freistaat Sachsen, ECLI:EU:C:2008:709, paragraph 43; Judgment of the Court of 14 January 1987, C-278/84, Germany v Commission, ECLI:EU:C:1987:2, paragraph 36 and Judgment of the Court of 20 September 1988, C-203/86, Spain v Council, ECLI:EU:C:1988:420, paragraph 19.

. Further, as shown in recitals 468 and 469, measures that have taken place before Estonia’s accession are considered existing aid only if they comply with conditions of Article 1(b) of the Regulation (EU) 2015/1589. Those conditions are known, clear, precise, stable, certain and predictable. Therefore, the Commission concludes that Estonia’s accession to the EU does not establish legitimate expectations or legal certainty that would prevent the Commission to recover the aid.

(503) Further, the Commission considers that due to the exceptional features of the contract, namely the 25 years duration without an index condition, and conditions referred to in recitals 62 and 64, Tartu Agro AS should have taken into account the possibility that the lease contract provided an advantage differing from normal market conditions. In particular, taking into account the claim presented by Tartu Agro AS that the lease contract was made and compatible because of its strategic importance to Estonia (recital 191), Tartu Agro AS should have considered that the compatibility of aid can be assessed solely by the Commission, while no aid notification took place.

(504) Thirdly, regarding Tartu Agro AS’s claim that a delay in giving the final decision could in this case establish a legitimate expectation on Tartu Agro AS’s part so that it would prevent the Commission from recovery, the Commission notes that it contacted the Estonian authorities on this measures on 14 August 2014 after receiving a complaint on 24 July 2014, the measures have never been subject to the Commission’s prior authorisation

See Judgment of the Court of Justice of 20 March 1997, Land Rheinland-Pfalz v Alcan Deutschland, C-24/95, ECLI:EU:C:1997:163, paragraph 25; and Judgment of the Court of Justice of 8 December 2011, France Télécom v Commission, C-81/10 P, ECLI:EU:C:2011:811, paragraphs 58-60.

, it concerns the sector that is vulnerable for distortions of competition as there operates mainly SMEs and where the Commission has established Guidelines since the initial lease contract (recital 476), the measures concern operative aid that is prima facia not compatible with the internal market and the Commission established its doubts in the opening decision. Consequently, Tartu Agro AS cannot effectively claim that it would have had reasonable grounds for believing that the Commission’s doubts would not exist. Furthermore, in line with the case law

Judgment of the General Court of 30 April 2002, Government of Gibraltar v Commission of the European Communities, T-195/01 and T-207/01, ECLI:EU:T:2002:111, paragraph 129.

, the mere fact that there is a long period since the initial lease contract and the Commission decision to open an investigation cannot in itself confer on that measure the objective nature of existing aid, if it does constitute aid.

(505) In light of recitals 500 to 504, the Commission concludes that a recovery is not against general principles of Union law.

5.5.3.

Quantification of the advantage

(506) Pursuant to Article 16(1) of the Regulation (EU) 2015/1589, Estonia is required to take all necessary measures to recover the aid from Tartu Agro AS. The Estonian authorities must quantify:

(a) the aid to be recovered based on the methodology set out in the Decision (section 5.5.4); and

(b) the exact amount of interest to be recovered from the date when the aid was made available to Tartu Agro AS until the recovery.

(507) As concluded in section 5.2.6, the measures referred to in recital 28 provide for an advantage as the rental fee has been below the benchmark price (recital 422).

(508) Although the rental fee is due twice a year, the advantage may be quantified annually (see recital 421).

(509) The limitation period was interrupted on 14 August 2004 by the action of the Commission on that date (recital 497). Therefore, Estonia has to recover the aid received by Tartu Agro AS from 14 August 2004 until 31 December 2019 (see recitals 29 and 240).

(510) Further, when quantifying the advantage payments made before 1 January 2011, the date when Estonia became a member of the euro area, payments must be converted to euro values using the appropriate conversion rates, i.e. the Commission’s official monthly accounting rate, at the time of the transaction

The European Commission’s official monthly accounting rate for the EUR/EEK rate is 15,6466 since February 1999.

(511) The quantification of the advantage must be based on the annual difference between the market price of rental fees benchmark and the annual rental fee actually paid by Tartu Agro AS. Adjustments and transformations referred to in recitals 390 and 415 must be made before calculating the difference.

(512) The Commission notes, for clarity, as regards the claims of Tartu Agro AS, that the following adjustments must not be made:

(a) the obligation to pay the land tax is not to be added to the paid rental fee (section 5.2.3.3.2.6.3);

(b) the commitment for maintenance expenses, i.e. the obligation to pay annual maintenance expenses referred to in recital 68(b) (section 5.2.3.3.2.6.4); and

(513) For 2004, the market price must be based on the Uus Maa report estimate (see recitals 128(b), 331, 332 and 404). Even if the Commission followed a reasonable, coherent and prudent approach as explained in recitals 404 and 428 the market benchmark fee is EUR 10 per ha.

(514) In 2004, and still following a reasonable, coherent and prudent approach, the appropriate market of rental fees price benchmark is be decreased by 20 %, considering the maximum range of valuations accuracy (recital 410). The annual advantage is the difference between:

(a) the annual rental fee actually paid by Tartu Agro AS in line with recital 511; and

(b) the market price of rental fees benchmark in line with recitals 513 and 517.

(515) The following table (see Table 21) demonstrates the annual advantage in 2004 in line with recitals 506 to 518.

Table 21

Demonstration of the calculation of the annual advantage in 2004

YearPaid rental feeThe commitment for investments actually paid by Tartu Agro AS

Market benchmark fee

(EUR/ha) (Uus Maa)

Hectares

(CAP eligible land)

Market benchmark (EUR/ha) (Uus Maa report)Difference

(recital 85)

(recital 99)

C = D 0,8 E

(recital 87)

(recital 331)

F = C – (A+B)2004[…][…]23367,842920,9810,00[…]

(516) From 2005, the appropriate market price of rental fees benchmark must be based on the realised land lease prices based on the Land Board’s data in line with recital 335 as shown in recital 110. Although the Commission has systematically selected prudent approach when it has assessed the measures (see eg. recitals 346 and 388), the Land Board data must be reduced by 10 % in order to ensure that only a manifest error in the lease price is considered generating an advantage taking into account that the most recent expert report, the Domus report, states that the accuracy of its the valuation is ± 10 % (recital (b). The Commission considers that, as the market price of rental fees benchmark is not based for a theoretical price but prices from open and unconditional public bidding procedure (recital 314), the aforementioned margin the market benchmark fee must be tolerated.

(517) As from 2005, the appropriate market price of rental fees benchmark must be:

(a) decreased by 10 % due to the reasons explained above (see recital 516); and

(b) fixed every five years since 2005 for the following five years, i.e. the annual adjusted market price of rental fees benchmark must be calculated for the years 2005, 2010, 2015.

(518) The annual advantage is the difference between:

(a) the annual rental fee actually paid by Tartu Agro AS in line with recital 511; and

(b) the market price of rental fee benchmark in line with recitals 513 and 517.

The following table (see Table 22) demonstrates the annual advantage between 2005 and 2019 in line with recitals 506 to 518.

Table 22

Demonstration of the calculation of the annual advantage from 2005-2019

YearPaid rental feeThe commitment for investments actually paid by Tartu Agro ASMarket benchmark fee (EUR/ha) (land board)Hectares (CAP eligible)

Market benchmark (EUR/ha) (The Land board)

Fixed every five years

Difference

(recital 85)

(recital 99)

C = D 0,9 E

(recital 87)

(recital 111)

F = C – (A+B)2005[…][…]91813,23[…]34,60[…]2006[…][…]90673,50[…]34,60[…]2007[…][…]90673,31[…]34,60[…]2008[…][…]90607,62[…]34,60[…]2009[…][…]90596,67[…]34,60[…]2010[…][…]95893,89[…]36,58[…]2011[…][…]95196,37[…]36,58[…]2012[…][…]95557,57[…]36,58[…]2013[…][…]95357,44[…]36,58[…]2014[…][…]95811,94[…]36,58[…]2015[…][…]283772,68[…]107,63[…]2016[…][…]283776,22[…]107,63[…]2017[…][…]283874,02[…]107,63[…]2018[…][…]283489,13[…]107,63[…]2019[…][…]282979,50[…]107,63[…]

(519) Under Article 16(2) of the Regulation (EU) 2015/1589, the recovery interest must be calculated from the date when the aid was put at the disposal of to the beneficiary until its effective recovery. The aid is made available to Tartu Agro AS twice a year, on 1 July and 1 December of each year, because the rent payment was due on those days (see recital 496).

5.5.4.

Methodology for the quantification of the recovery amount

(520) The amount to be recovered, as demonstrated in section 5.5.3, must be calculated by the Estonian authorities based on the annual difference between the appropriate market price of rental fees benchmark and the rental fee actually paid by Tartu Agro AS as follows:

n. max 2025n2005a x MpLnx haCn – Rpn

Where for 2004:

(a) MpLn is, in line with recital 322, the appropriate market price estimate-based average of the Uus maa report (EUR/ha);

(b) haCn is, in line with recital 339 the number of the leased hectares that were eligible to receive CAP support in 2004 as shown in recital 87;

(c) a is, in line with recitals 416 and 513, a factor of 0,80 in order to consider the maximum range of valuations accuracy;

(d) Rpn is the rent payment actually paid by Tartu Agro AS, including the commitment for investments that were actually financed by Tartu Agro AS, in 2004, as adjusted in line with recitals 390 and 415 and shown in recital 99;

Finally, since for 2004 and due to the prescription period, recovery can only be implemented as from 14 August 2004, a prorate per month should be applied.

Where for 2005 to 2019:

(a) MpLn is, in line with recital 322, the appropriate market price estimate based average of the Land Board’s medium user charges (EUR/ha) in all counties as shown in recital 111 that is fixed every five years since 2005 until Estonia has put the end to the measures;

(b) haCn is, in line with recital 339 the number of the leased hectares that were eligible to receive CAP support in a given year n since 2005 as shown in recital 87;

(c) a is, in line with recital 513, a factor of 0,9 in order to ensure that only a manifest error in the lease fee is considered generating an advantage;

(d) Rpn is the rent payment actually paid by Tartu Agro AS, including the commitment for investments that were actually financed by Tartu Agro AS, in a given year n, as adjusted in line with recitals 390 and 415 and shown in recital 99.

CONCLUSION

(521) The Republic of Estonia has unlawfully implemented the measures on the case in question (recital 28) in breach of Article 108(3) of TFEU (recital 469).

(522) The aid in form of a rent of agricultural land for a rental fee below the market price in favour of Tartu Agro AS is incompatible with the internal market (recital 485) and must be recovered from 14 August 2004 until 31 December 2019 (recitals 497 and 509) together with the recovery interest (recital 499).

(523) The exact amount of aid to be recovered from Tartu Agro AS must be determined by the Estonian authorities in collaboration with the Commission. within the framework of the recovery procedure.

HAS ADOPTED THIS DECISION:

Article 1

The State aid, which the Republic of Estonia has implemented since 14 August 2004 until 31 December 2019 in the form of a lease of agricultural land for a rent below the market price in favour of Tartu Agro AS, unlawfully put into effect in breach of Article 108(3) of Treaty on the Functioning of the European Union, is incompatible with the internal market.

Article 2

The Republic of Estonia shall recover the aid referred to in Article 1 from Tartu Agro AS.

Article 3

The sums to be recovered shall bear interest from the date on which they were put at the disposal of Tartu Agro AS until their actual recovery. The interest on the sum to be recovered shall be calculated on a compound basis in accordance with Chapter V of Regulation (EC) No 794/2004, as amended.

Article 4

Recovery of the aid granted under the measure referred to in Article 1 shall be immediate and effective.

Article 5

The Republic of Estonia shall ensure that this Decision is implemented within four months following the notification of this Decision.

Article 6

Within two months following notification of this Decision, the Republic of Estonia shall submit the following information:

(a) the total amount (principal and recovery interest) to be recovered from the beneficiary;

(b) a detailed description of the measures already taken and planned to comply with this Decision; and

Article 7

The Republic of Estonia shall keep the Commission informed of the progress of the national measures taken to implement this Decision until recovery of the aid referred to in Article 1 has been completed. It shall immediately submit, on simple request by the Commission, information on the measures already taken and planned to comply with this Decision. It shall also provide detailed information concerning the amounts of aid and recovery interest already recovered from the beneficiary.

Article 8

This Decision is addressed to the Republic of Estonia.

The Commission may publish the amounts of aid and recovery interest recovered in application of this Decision without prejudice to Article 30 of Regulation (EU) 2015/1589.

If the Decision contains confidential information which should not be published, please inform the Commission within fifteen working days of the date of receipt. If the Commission does not receive a reasoned request by that deadline, you will be deemed to agree to publication of the full text of the decision. Your request specifying the relevant information should be sent electronically to the following address:

European Commission

Directorate-General Competition

State Aid Greffe

B-1049 Brussels

Stateaidgreffe@ec.europa.eu

Done at Brussels, 25 November 2024.

For the Commission

Margrethe Vestager

Executive Vice-President

Metadata

Type: Afgørelse
År: 2025
Ikrafttrædelsesdato: 1. januar 1970