The European Commission has launched an investigation into the aid paid to German producers of grain brandy.

This is in response to the refusal by the German authorities to comply with a Commission recommendation in June, where German authorities were asked to reform the Spirits Monopoly Law as regards grain brandy, by discontinuing operating aid being granted to industrial producers and agricultural producers of grain brand.

As it stands, the Commission argues that the scheme constitutes aid for German producers that is not available to producers in the other Member States and has not been justified since 1989, when a Community regulation clearly defined grain brandy as an industrial product.

The Commission has now decided to institute formal investigation procedures against Germany.