The European Commission has called for an end to subsidies for Germanys distilleries

The European Commission has called for an end to subsidies for Germany's distilleries

Subsidies from Branntweinmonopol, the German government’s alcohol monopoly, to farm distilleries producing spirits from their own crops must end by December 2013, the European Commission has proposed.

From that date, the usual European Union (EU) restrictions on government handouts will apply: these generally ban operating subsidies.

Under today’s (24 June) proposal, smaller distilleries, including companies working closely with them and small fruit cooperative distilleries, can receive these subsidies until December 2017.

The Commission said it would allow payments to be phased out “to ensure that the process is gradual”.

The monopoly was established under Kaiser Wilhelm II in 1918, but has not been a true monopoly, since the European Court of Justice ruled in 1976 that Germany must allow the free import of spirits.

However, it has continued to subsidise German distilleries under a special derogation from EU state aid rules. This special authorisation was due to expire this December - instead of asking ministers to renew it, the Commission wants the payments to end, albeit gradually.