10. 6. 88 Official Journal of the European Communities No L 143/37 COMMISSION DECISION ) of 2 March 1988 on Law No 64 of 1 March 1986 on aid to the Mezzogiorno (Only the Italian text is authentic) (88/318/EEC) . THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Economic Community, and in particular the first subparagraph of Article 93 (2) thereof, Having regard to Council Regulation (EEC) No 1035/72 of 18 May 1972 on the common organization of the market in fruit and vegetables(*), as last amended by Regulation (EEC) No 223/88 (3, and in particular Article 31 thereof, and to the corresponding provisions of the other. Regulations on the common organization of the - markets in agricultural products, Having given the Parties an opportunity to submit their comments in accordance with Article 93, Whereas : 1. By letter dated 2 May 1986 the Italian Government notified to the Commission a new aid scheme for-the Mezzogiorno for the nine-year period 1985 to 1993. The scheme, contained in Law No 64 of 1 March 1986, maintains and increases the aid available under the previous legislation (Presidential Decree No 218 of 6 March 1978) and retains the area coverage of the previous scheme. Under the new scheme, which the Commission understands has not yet been introduced, aid for industrial investment and research is increased, while new aid for services and for innovation by small and medium-sized firms is introduced. The previous relief from social security contributions is continued while certain tax concessions are increased. New State guarantees are to be available for short-term credit extended to cooperatives and small and medium-sized enterprises and for credit given by industrial firms on exports, the latter including exchange risk cover. Bond issues floated by banks authorized to operate in the Mezzogiorno are eligible for subsidies, while the provisions for preferential treatment * of local companies in the award of public contracts are reinforced. Firms in Sardinia will receive a 30 % reduction in air, rail and sea freight rates, and reduced rail tariffs will be available for the transport of agricultural products from other parts of the Mezzogiorno. Finally, the () OJ No L 118, 20. S. 1972, p. 1. () OF No L 23, 28. 1. 1988, p. 1. normal VAT refund is increased by 4 % on capital goods imported or acquired by industrial firms for use in their business. It is planned to vary the intensity of the aid according to - the economic situation measured down to province level. For this purpose the Italian authorities used a composite index composed of six indicators. As a result three zones were defined : zone (A), the least developed, holding 25 % of the population of the Mezzogiormo, zone (B), intermediate holding 61 % of the population, and zone (C), the most developed, holding 14 %. The latter zone comprises the provinces of Frosinone, Latina, Rieti, Rome (Lazio), Ascoli-Piceno (Marche), Chieti, Aquila, Pescara, Teramo (Abruzzo) and Taranto (Puglia). The Italian 'Government informed the Commission of its intention of offering a two-fifths higher grant rate in zone (A) and a one-fifth higher rate in zone (B), leaving zone (C) at the standard rate. This would mean maximum rates in zones (A), (B) and (C) of 73,78 %, 66,4 % and 59,02 % net grant equivalent (nge) respectively. 11 2. The Commission carried out a preliminary examination of the scheme contained in Law 64/86 and Decree 218/78 pursuant to Article 92 (3) of the EEC Treaty. On 28 April 1987 it decided to initiate the Article- 93 (2) procedure against parts of the scheme, but by Decision of 30 April 1987 authorized the implementation of the other parts, including those pursuant to Law 64/86, in most areas of the Mezzogiorno. It informed the Italian Government by letter of 30 April 1987 and the Governments of the other Member States by letters of 21 September 1987, inviting observations. In accordance with Article 93 (2), a notice to interested third parties was also published in the Official Journal of the European Communities (%). The Article 93 (2) procedure was initiated for all parts of the Mezzogiorno against the  subsidiary guarantees of export credits, reductions in the cost of transporting agricultural products from the Mezzogiorno and relief of social security contributions for food processors provided for by Law 64/86 and Decree 218/78. () OJ No C 259, 29. 9. 1987, p. 2.