94/1068/EC: Commission Decision of 27 July 1994 concerning aid granted to the Volkswagen Group for investments in the new German Länder (Text with EEA relevance)

• Articles: 6

Article 1

The following aid to the various investment projects of Volkswagen AG in the new Laender awarded by Germany are compatible with Article 92 (3) (c) of the EC Treaty and Article 61 (3) (c) of the EEA Agreement:

- aid granted to Saechsische Automobilbau GmbH (Mosel I) in the form of direct investment grants (Investitionszuschuesse) of up to DM 95,4 million, all of which was granted unlawfully before the payment stop, and tax breaks (Investitionszulagen) of up to DM 24,2 million, of which DM 19,0 million was granted unlawfully before the payment stop,

- further aid in the form of loss coverage for Mosel I to be provided by the Treuhandanstalt up to an amount of DM 363,1 million, of which DM 145,7 million was already paid unlawfully before the payment stop,

- aid in the form of loss coverage to Barkas (Chemnitz I) provided by the Treuhandanstalt up to an amount of DM 59 million, which was granted unlawfully before the payment stop,

- aid in the form of loss coverage by the Treuhandanstalt in Motorenwerke Chemnitz (Chemnitz I) up to an amount of DM 18 million, which was granted unlawfully before the payment stop,

- aid in the form of direct investment grants (Investitionszuschuesse) of up to DM 5,8 million and tax breaks (Investitionszulagen) of up to DM 2 million to Motorenwerke Chemnitz or Volkswagen Sachsen (Chemnitz I),

- aid proposed for Volkswagen Sachsen GmbH for its cylinder head facility at Eisenach in the form of direct grants (Investitionszuschuesse), tax breaks (Investitionszulagen) and special depreciation (Sonderabschreibungen) of up to DM 10,55 million in total.

Article 2

The purchase price of DM 68 million to be paid by Volkswagen to the Treuhandanstalt for Motorenwerk Chemnitz (Chemnitz I) under Articles VI and VII of the basic agreement of 18 October 1990 between the Treuhandanstalt and Volkswagen shall be deemed not to contain any State aid provided the basic agreement is amended as follows; the purchase price will be increased by DM 1 million for each month of continued engine production after June 1994, payable monthly in advance; from this increase a deduction may be made for the cost of the investment made in order to keep the factory operational, taking the form of normal depreciation of the equipment until the end of 1995; the increase in the purchase price shall not be payable if the plant produces only spare parts for engines or the new 1,4/1,6 l engine after 1994.

Article 3

Germany shall recover from Saechsische Automobilbau GmbH DM 16 173 000 in direct grants (Investitionszuschuesse), being the difference between the amount of direct grants for Mosel I declared in the first indent of Article 1 to be compatible with the common market and the amount of aid already paid to the company, and shall charge interest on this amount from 28 October 1991 (date of payment of the aid) at the percentage value on that date of the reference rate used for the calculation of the net grant equivalent of the various types of aid in the Federal Republic of Germany.

Article 4

The following aid to the various investment projects of Volkswagen AG in the new Laender awarded by Germany are incompatible with the common market within the meaning of Article 92 of the EC Treaty and Article 61 (1) of the EEA Agreement and may not be granted:

- the proposed loss coverage for Mosel I in excess of the figure referred to in Article 1, amounting to an additional DM 66,9 million,

- the proposed investment aid for Mosel I in excess of the figure referred to in Article 1, amounting to an additional DM 17,8 million in the form of direct investment grants (Investitionszuschuesse) and DM 3,8 million in the form of tax breaks (Investitionszulagen);

- the proposed aid to Mosel I in the form of interest payments by the Treuhandanstalt for the outstanding loss compensation payments to the amount of DM 20,5 million.

Article 5

Germany shall inform the Commission within one month of the date of notification of this Decision of the measures taken to comply therewith.

Article 6

This Decision is addressed to the Federal Republic of Germany.

Done at Brussels, 27 July 1994.

For the Commission

Hans VAN DEN BROEK

Member of the Commission

(1) OJ No C 68, 17. 3. 1992, p. 14, opening a one-month deadline for comments from third parties.

(1) There is no disagreement as to the applicability of the Community framework after 31 March 1991, as Commission approval of the application of the regional aid scheme to the new Laender after 31 March 1991 was subject to compliance with the various Community framework in operation.

(2) OJ No L 188, 20. 7. 1990, p. 55 (see Article 1).

(3) The proposed aid to the Volkswagen Group was registered on 2 July 1991 as non-notified aid under Nos NN 75/91, NN 77/91, NN 78/91 and NN 79/91.

(1) Aid No N 313/93, OJ No C 214, 7. 8. 1993, p. 9.

(1) Letter SG(91) D/17825 of 26 September 1991.

(1) The sales contract for Mosel I contains a clause on the sale of Chemnitz which refers to such a payment of DM 1 million per month in the event of continuation of the 'old' EA 111 engine.

(1) Case 77/72 Capolongo v. Maya, [1973] ECR 611.

(2) Aid No NN 11/91, Commission Decision of 31 July 1991.

(1) See, for example, Commission Decision NN 108/91 of 26 September 1991, SG(91) D/17825, concerning certain financing and other measures within the area of activities of THA.

(2) OJ No L 367, 16. 12. 1989, p. 62, OJ No L 25, 28. 1. 1989, p. 92, and OJ No L 220, 11. 8. 1988, p. 30.