1999/720/EC, ECSC: Commission Decision of 8 July 1999 on State aid granted by Germany to Gröditzer Stahlwerke GmbH and its subsidiary Walzwerk Burg GmbH (notified under document number C(1999) 2264) (Text with EEA relevance) (Only the German text is authentic)

• Articles: 10

Article 1

The payment of DEM 6,9 million by Germany to Gröditzer Stahlwerke GmbH (Gröditzer) in order to cover the cost of measures under paragraph 249 of the Employment Promotion Act does not constitute state aid within the meaning of Article 4(c) of the ECSC Treaty.

Article 2

The following measures which Germany has taken in respect of Gröditzer in order to finance a social plan and additional measures for the benefit of redundant Gröditzer employees are compatible with the common market in coal and steel:

(a) financing in the form of loans granted by Gröditzer's successive public shareholders, namely the Treuhandanstalt, EREL and BMGB, which amounted to DEM 26,1 million;

(b) a sum of DEM 28,3 million paid by BMGB.

Article 3

Investment aid granted to Gröditzer totalling DEM 44,9 million constitutes state aid compatible with Article 87(a) of the EC Treaty; this aid breaks down as follows:

(a) DEM 8,4 million under the joint Federal Government/Länder scheme for the improvement of regional economic structures (Gemeinschaftsaufgabe Verbesserung der regionalen Wirtschaftsstruktur) in 1994

(b) DEM 3,6 million in investment aid in the form of tax concessions under the Investment Allowances Act (Investitionszulagengesetz) in the years 1992 to 1995

(c) DEM 32,9 million in bank loans carrying a 100 % guarantee from the Treuhandanstalt and the Bundesanstalt für Vereinigungsbedingte Sonderaufgaben (BvS), shareholder loans granted by Gröditzer's successive public shareholders in the years 1992 to 1996, and regional aid paid under the joint Federal Government/Länder scheme for the improvement of regional economic structures in the years 1997 to 1999.

Article 4

Investment aid to Gröditzer amounting to DEM 83,2 million, consisting of bank loans carrying a 100 % guarantee from the Treuhandanstalt or the BvS, shareholder loans granted by the Gröditzer's successive public shareholders in the years 1992 to 1996, and regional aid under the joint Federal Government/Länder scheme for the improvement of regional economic structures paid in the years 1997 to 1999 are incompatible with the common market under Articles 87 and 88(2) of the EC Treaty.

Article 5

Measures taken by Germany in respect of Gröditzer totalling DEM 155,5 million, comprising investment aid of no more than DEM 14,3 million and operating aid of no more than DEM 141,2 million (being a payment of DEM 17,0 million under the privatisation agreement and funding of DEM 124,2 million financed by means of bank loans carrying a 100 % guarantee from the Treuhandanstalt or the BvS and by means of shareholder loans granted by Gröditzer's successive public shareholders), constitute state aid incompatible with the common market in coal and steel.

Article 6

The aid that Germany plans to grant to Gröditzer under Article 9(2) of the agreement of 27 February 1997 governing the sale of shares in Gröditzer to Georgsmarienhütte GmbH, amounting to DEM 3,3 million, in the form of loan as advance payments against regional aid to be received, is incompatible with the common market in coal and steel.

Article 7

1. Germany shall take the measures necessary to recover from the recipient the aid referred to in Articles 4 and 5, which was granted to it unlawfully.

2. Recovery shall be effected in accordance with the procedures of national law in so far as national law does not render it impossible or unduly difficult. The sums to be recovered shall bear interest from the date on which they were made available to the recipient until their actual recovery, at the reference rate used for calculating the grant equivalent of regional aid.

3. For the purposes of this Article the term "recipient" comprises not only Gröditzer but any other undertaking to which assets have been transferred in such a way as to deprive paragraph 1 of effect.

Article 8

Walzwerk Burg GmbH benefits under an existing aid arrangement. Accordingly, no further procedural steps are envisaged.

Article 9

Germany shall inform the Commission, within two months of notification of this Decision, of the measures taken to comply with it.

Article 10

This Decision is addressed to the Federal Republic of Germany.

Done at Brussels, 8 July 1999.

For the Commission

Monika WULF-MATHIES

Member of the Commission

(1) OJ L 362, 31.12.1991, p. 57.

(2) OJ L 338, 28.12.1996, p. 42.

(3) OJ C 395, 31.12.1997, p. 5.

(4) See footnote 3.

(5) "Stellungnahme zur Finanzmittelverwendung für die Jahre 1991 bis 1996 der Gröditzer Stahlwerke GmbH, Gröditz".

(6) Under the arrangements governing the Treuhandanstalt, aid to Treuhandanstalt companies in non-sensitive sectors did not have to be notified if in the period 1992 to 1994 the company employed less than 1500 people and net aid amounted to less than DEM 150 million. In 1995 these thresholds changed to 250 employees and DEM 50 million. Burg had an average workforce of 125, and the total aid paid to it from 1992 to 1997 was DEM 56 million.

(7) Judgment of the Court of First Instance of the European Communities in Joined Cases T-129/95, T-2/96 and T-97/96 Neue Maxhütte v Commission, 21 January 1999, not yet reported.

(8) The main products of the ring-rolling mill are coils, flanges and tyres; of the foundry, machine parts; and of the forge, bars, forgings, hollow forgings, and crankshafts.

(9) OJ C 307, 13.11.1993, p. 3.

(10) Case T 129/96 [1998] ECR II-629.

(11) Commission letter SG(91) D/17825, 26.10.1991; Commission letter SG(92) D/17613, 8.12.1992, and communication regarding aid measure E 15/92, 15.10.1992; and Commission letter SG(95) D/1062, 1.11.1995.

(12) Notice in case C 35/94, (OJ C 1, 17.1.1997, p. 7).

(13) SEC(95) 1309 final, p. 10 to 11.

(14) OJ C 320, 13.12.1988.

(15) See most recently OJ C 368, 23.12.1994, p. 12.

(16) See most recently OJ C 74, 10.1.1998, p. 9.

(17) Commission letter SG(95) D/341, 13.1.1995.

(18) The KPMG liquidation report describes the situation on 30 June 1996. Privatisation did not take place until February 1997, so that there is a small difference between the figures given and the figures for privatisation. The public seller considered in the report, EREL, had also been succeeded in the meantime by BMGB.

(19) Joined Cases C-278/92, C-279/92 and C-280/92 Spain v Commission [1994] ECR 1-4103.

(20) Same judgment, paragraph 26.

(21) This division was the result of the decision to dissolve the Treuhand in 1994; its activities were shared between three separate organisations. The Guarantees were transferred to the BvS, while management, and shareholdings, were transferred to EREL, and later BMGB.

(22) An exact valuation of the shareholder loans would require a thorough analysis of the undertaking and its prospects.

(23) The cost of the privatisation of Gröditzer amounted to DEM 340 million, including DEM 286 million for agreements ahead of privatisation providing for: a waiver of shareholder loans, DEM 198 million; redemption and continuation of guaranteed loans, DEM 53 million; grants towards social measures, DEM 28 million; non-recovery of subsidies under paragraph 249h of the Employment Promotion Act, DEM 7 million, and other items comprising the balance. The total is made up of this figure and the new aid of DEM 38 million and DEM 16 million.