Dutch fight to keep petrol station aid

Date: 10/06/1999

By Peter Chapman

The Hague has launched a last-ditch attempt to convince competition chief Karel van Miert not to outlaw a €57-million state aid scheme designed to prevent hundreds of petrol stations on the country's border with Germany from going out of business.

Dutch officials are urging the Acting Competition Commissioner to abandon plans to overturn the scheme set up in 1997 to help 624 petrol stations hit by the higher excise duties on petrol on the Dutch side of the Netherlands-German border.

A ruling is expected next month on the legality of the system, which was introduced after the Dutch government increased gasoline duties by 11&percent; in July 1997.

The Dutch plea follows Van Miert's January ultimatum, in which he demanded a full explanation of the payments, claiming that they were illegal, distorted EU trade and would almost certainly have to be repaid. He also said the scheme could have allowed companies to make multiple applications.

Dutch government sources say that they have now completed a time-consuming questionnaire about all the petrol stations in the east of the country affected by the scheme. “We had to ask every one of them individually about their organisation. The problem was that the owners of the petrol stations here are not the same ones as in the rest of the country. It took a long time,” said one.

He added that the German government had increased the levels of excise duties on petrol stations on its side of the border, which would decrease the need for subsidies in the long term. In the meantime, he said, there was nothing else the government could do as the issue was “now in the hands of Van Miert”.

Under the Dutch scheme, petrol stations have been eligible for grants of up to €100,000 for the loss of trade caused by motorists slipping over the border into Germany, where duties are still lower.

Van Miert and his officials took a dim view of The Hague's argument that the regime did not have to be notified because the €100,000 hand-outs involved were covered by a special waiver for small 'de-minimis' cash injections. Their patience was further tried by the failure of The Hague to respond to earlier requests for information.

” The Dutch were very annoyed. They said it was very shocking of Van Miert to apply the state aid rules when, in their opinion, they should not have notified the scheme,” said a Commission expert.

He added that the Commission was concerned that the petrol stations were not all owned by different firms, but were run by major oil companies or local entrepreneurs. “That means there is an accumulation effect when you add up the aid they get. We think the whole purpose of the measures is to affect trade. From an internal market point of view, it is very shocking.”

Officials also point out that price differentials in the EU are even greater between Luxem-bourg and its Belgian, German and French neighbours. Dozens of petrol stations line the roads in some Luxembourg towns, supplying fuel to foreigners living over the border.

Reinier Treur, spokesman for Royal Dutch/Shell, acknowledged that owners of 108 of the company's service stations had each applied for, and received, grants. These included seven Shell Nederland-owned affiliates which operate 28 service stations on the border, and 80 privately owned franchised operators.

However, he said, the grants were still “totally insufficient” to offset loss of trade to Germany.