The European Commission has concluded that Czechia’s support for insurance premiums granted to certain large Czech agricultural companies in 2018 is not in line with EU state aid rules.
Czechia must now recover the incompatible state aid, including interest.
The aid aimed at supporting crop and livestock companies in taking out insurance against natural disasters and adverse weather events.
Insurance is an efficient risk management tool which provides increased security against unforeseeable damage, the European Commission stated.
The aid made this insurance broadly available to the primary agricultural production sector.
State aid rules in Czechia
In January 2021, the commission opened an in-depth investigation to assess whether aid granted by Czechia to certain large agricultural companies in 2018 for insurance premium was in line with EU State aid rules, in particular with the 2014 Guidelines for State aid in agriculture, forestry and rural areas (‘Agricultural Guidelines’).
The in-depth investigation conducted by the commission confirmed that some large agricultural companies were erroneously qualified by the Czech authorities as small or medium-sized enterprises (SMEs).
They therefore received aid without complying with the conditions of the Agricultural Guidelines, according to the commission.
EU state aid rules require that incompatible state aid is recovered without delay, which Czechia is now required to do.
The purpose of the recovery is to restore the situation which existed in the internal market before the aid was paid.
By paying back the unlawful aid, the beneficiary forfeits the advantage which it has enjoyed over its competitors.
To eliminate any advantages incidental to the unlawful aid, interest on the aid amount unlawfully granted is also to be recovered, the commission stated.
