(58) Such measures are in principle prohibited under Article 87(1) of the Treaty. They may only be deemed compatible with the common market if they qualify for one of the derogations provided for in the Treaty. The aid to aquaculture and fisheries undertakings must be analysed in the light of the 1997 Guidelines, as was done in the course of the preliminary investigation.

(59) The Commission initiated the formal investigation procedure for certain measures adopted to assist fish farmers after the events of December 1999 because it had not been able to establish that overall, with the cumulative effect of the different aid measures, including those which it had already approved, there had not been over-compensation for the damage suffered.

(60) The formal investigation procedure related to the following aid measures:

— exemption from social security contributions during the first quarter of 2000 (for one, two, or three months according to the damage suffered),

— reduction of financial charges for fish farmers directly affected by the storm or the oil pollution,

— exemption from State fees for the year 2000 for concessions in the six departments affected by the events (Atlantic coast departments from Finistère to Gironde).

(61) Going by the additional information provided, in the case of the exemption from social security contributions and the reduction of financial charges, the procedure set up by France, with the creation of a compensation unit in each department concerned, with representatives of the State services concerned, banking establishments and professionals, really was designed to avoid risks of over-compensation. France points out that investigating each case individually ensured that the aid was adjusted to the situation of each undertaking, thereby avoiding over-compensation.

(62) In view of this information the Commission finds that France established an appropriate procedure allowing over-compensation to be avoided. It therefore finds that the only objective of this aid was indeed to compensate for damage suffered as a result of the two exceptional occurrences, the storm of December 1999 and the wreck of the

Erika

.

(63) The exemption from social-security contributions and the reduction of financial charges must therefore be deemed compatible with the common market under Article 87(2)(b) of the Treaty.

(64) The exemption from State fees will be analysed in section C.1 below, since the measure was applied to all French fish-farmers, contrary to the information at the Commission’s disposal prior to initiation of the formal investigation procedure. France informed the Commission in its letter of 21 June 2000 that the marine aquaculture concessions and the water intake authorisations in the departments concerned were exempt from payment of the State fee for the year 2000. Since France made no further mention of this exemption in its subsequent letters to the Commission, which described in detail the content of the measures implemented, the Commission asked France by letter of 21 June 2001 whether the exemption had in fact been applied, and if so asked France to supply the relevant information. In its reply of 13 August 2001 France stated that the fish farmers of the departments of Finistère, Morbihan, Loire-Atlantique, Vendée, Charente-Maritime and Gironde had in fact been granted exemption from the State fee payable in 2000, without mentioning that these departments were not the only ones to which the exemption had been applied. Not until it responded to the initiation of the formal investigation procedure did France state that the measure was a general one applying to all French fish farmers, like the reduction in social security contributions.