(1) By letter dated 15 June 2004, the Commission was informed by a citizen of the United Kingdom of aid granted by the Shetland Islands Council, the public authority in the Shetlands Islands of the United Kingdom to the fisheries sector, which possibly concerned illegal State aid. By letters dated 24 August 2004, 4 February 2005, 11 May 2005 and 16 December 2005, the Commission requested the United Kingdom to provide information about such aid. The United Kingdom provided the Commission with further information by letters dated 10 December 2004, 6 April 2005, 8 September 2005 and 31 January 2006.
(2) By letter dated 13 September 2006, the Commission informed the United Kingdom of the decision to initiate the procedure laid down in Article 88(2) of the EC Treaty in respect of the aid. The United Kingdom provided its comments on the aid by letter dated 16 October 2006. Following the requests from the Commission dated 31 January 2007 and 5 February 2008, additional information was provided by letters dated 4 September 2007 and 27 February 2008.
(3) The Commission decision to initiate the procedure was published in the
Official Journal of the European Union
on 30 November 2006(3). The Commission invited any interested parties to submit their comments on the aid. The Commission received no comments from interested parties.
II. DETAILED DESCRIPTION
(4) The Shetland Islands Council made payments to the fisheries sector under the scope of two general aid measures named ‘Aid to the Fish Catching and Processing Industry’ and ‘Aid to the Fish Farming Industry’, which actually consisted of several different types of aid schemes. Amongst these schemes were the so-called Loan assistance schemes (‘the scheme’).
(5) Aid has been granted to salmon farmers, by way of loan assistance granted through the Fish Farming Association and to fish processors, by way of loan assistance granted through the Fish Processors' Association.
(6) The Salmon Farming Loan Assistance was established in 2000 for the purpose of providing working capital loans to individual salmon farming companies to on-grow fish to a harvestable size. The loans granted under the scheme vary from GBP 87 000 to GBP 250 000, those amounts representing a maximum of 75 % of the costs of buying smolts (young salmon). The total amount of the loans granted is GBP 3 477 130.
(7) The loans were made to companies that could demonstrate viability through the production of an acceptable business plan and financial projections for a period covering at least three years. The loans were subject to interest at rates generally corresponding to the applicable UK base rate plus 2 %. In order to secure the loan, it was granted under the condition that the lender took the ‘right of title’ on the smolts, thus securing the loan on the basis of the sale value of the adult fish.
(8) Under the Loan scheme for fish processing, five loans were granted during the period from 1996 to 2002. The loans varied from GBP 73 000 to GBP 200 000, with a total of GBP 698 300. The loans were made to companies that during the period of the loan undertook to provide professionally audited accounts, to work to the relevant national and Community standards on hygiene, health and safety, and to be a member of the Shetland Fish Processors' Association.