The Canary Islands Association of Winegrowers and Wineries (Avibo) acknowledged this Friday that it appreciates the latest political decision made by the Cabildo of Tenerife, approved in the plenary session and involving the withdrawal of this public administration from the mixed society Bodegas Insulares de Tenerife, BITSA (a company engaged in producing quality wines under two DOPs, within the Cabildo industry known as Bodega Insular de Tenerife, in Tacoronte).
At the same time, the same local wine industry organisation assures that this will be sufficient for Avibo not to continue before the European Commission with the file on the Cabildo of Tenerife’s non-compliance with competition law. The European Commission had already described the direct and indirect public support given to this anonymous society by the Cabildo as illegal, as it had not been previously notified, and also called it incompatible with competition rules. This occurred under mandates involving the three major parties: CC, PSOE, and PP.
In a note sent to the media, Avibo makes history and states that “in the 1990s, an administrative intervention began in the winemaking, ageing, and sale sector, when the Cabildo of Tenerife started operating in a private economic sector, that of wine, creating a mixed company, participated by the Cabildo and the Tacoronte Town Hall, called Bodegas Insulares de Tenerife, SA (BITSA)”.
In that public company, the Cabildo of Tenerife not only had a majority but also exerted control and direction over it and its employees. Therefore, after two decades of unjustified administrative intervention by the Cabildo in a thriving, profitable, competitive, and exporting economic sector, as is that of quality Canary wines, the association began to claim before the insular public officials such market interference from the Cabildo, year after year, by providing different subsidies, covert capital increases, promotional aids, public employee transfers to carry out work in wineries, and other public aids that only reached this public winery, BITSA, but never the rest of the more than 280 wineries operating in the Canary Islands,” Avibo highlights in the statement.
“After the first years of claims and demands before the Cabildo officials, which were fruitless, and in which the public administration’s withdrawal from an economic sector such as the winemaking one was requested (the only case in Europe where a public administration performs winemaking functions, competing with other private entities on completely unequal terms), and also, facing the insular corporation’s refusal to stop injecting aid to BITSA and to leave that company,” in 2014 Avibo was forced to appeal to community instances, to the European Commission, as the main guarantor of compliance by EU Member States with the rules regulating free competition in the Treaty on the Functioning of the European Union.
In a first resolution by the European Commission, “a Decision of 1 February 2018, it declared that the aids granted by the Cabildo in the previous years (several million-euro subsidies, capital increases -only by the Cabildo and not by private partners-, financing for the acquisition of the bankrupt Bodegas BILMA, from Guía de Isora, or the Wine House, in La Laguna) were illegal state aids, as they had not been notified to the European Commission, although (according to the documents and reports received by the Commission) it declared them compatible with the internal market.
Following this mixed success for Avibo, which managed to bring Cabildo Insular aids to BITSA under the scrutiny of the European Union, the association continued “proving to the European Commission the absolute unfair competition situation BITSA maintained, with the continued aids it received from the Cabildo insular, which, among others, had leased (but without charging any fee) more than 9,000 square metres of land and 3,000 square metres of buildings (facilities, wineries, distillery, and offices) owned by the Cabildo of Tenerife in Tacoronte, without BITSA paying the Cabildo a single euro for the use, possession, and exploitation of Cabildo-owned wineries, in absolute unfair competition with the more than 280 wineries operating in the Canary Islands”.
Therefore, as stated in the press release, the European Commission was requested between 2018 and 2024 to analyse these new state aids by the Cabildo to BITSA. Subsequently, in the latest communication before the European Commission, Avibo requested, pursuant to Articles 107 and 108 of the Treaty on the Functioning of the European Union, to initiate “compliance infringement proceedings for a breach of European competition and state aid regulations”, with the aim of resolving: a) “the illegal and incompatible nature with the European Treaty of the aids denounced between 2014 and 2018 (subsidies, unilateral capital increases, etc.) and, especially, the lease fee exemption denounced since 2018, from which only BITSA benefited and which was not analysed by the Commission in its Decision of 1 February 2018″, and b) “to put an end to the unfair competition situation created by BITSA, distorting the Tenerife wine market due to its dominant influence exerted through the Cabildo of Tenerife and its access to various and substantial illegal and incompatible public aids. Also, to order the return of illegal state aids received or those (like the lease fee) not paid since its establishment in the 1990s”.
After several years of gathering evidence and documents, the European Commission met with the Cabildo of Tenerife officials in March 2023 (PSOE) (before the Permanent Representation of Spain to the European Union), requiring them to cease this unfair competition situation by BITSA, and demanding that the Cabildo Insular charge for the use and exploitation of the Cabildo-owned wineries.
“Faced with the lack of resolution by those Cabildo leaders in 2023, it was finally in July 2024 that, in a face-to-face meeting at the Directorate-General for Competition of the European Commission (with the presence of the Permanent Representation of Spain to the EU, the vice-president and agriculture councillor of the insular Cabildo, Avibo, and the European Commission itself), its director-general formally informed the Cabildo of Tenerife that, should this conduct against competition not cease, it would be obliged to open non-compliance proceedings against the Kingdom of Spain for the continued granting of state aids by the Cabildo to BITSA”.
At that point, “after the intervention of all parties involved, Avibo confirmed that, if the Cabildo began charging a lease fee to BITSA and, within a reasonable time frame, this insular public administration exited the economic wine sector, it was willing not to continue with the non-compliance file, to prevent a depletion of the insular treasury”. This is precisely what is now communicated by Avibo.
At this juncture, the AVIBO association wanted to acknowledge “the work carried out by the current insular Corporation, under the figures of its vice-president Lope Afonso and councillors of Industry and the Primary Sector, Manuel Fernández and Valentín González [all from the PP], who have been responsive to the claims of the wine sector that had been experiencing how brands like Viña Norte and others from BITSA competed with them at much lower prices due to the numerous aids and advantages granted by the Cabildo, in addition to the detriment of market freedom, the consumer, and the efficient use of public resources”.
