2003/643/EC: Commission Decision of 13 May 2003 on the State aid implemented by Germany for Kahla Porzellan GmbH and Kahla/Thüringen Porzellan GmbH (Text with EEA relevance) (notified under document number C(2003) 1520)

Article 1

1. The State aid implemented by Germany for Kahla Porzellan GmbH under measure 8 - income from exploiting the company's real estate to be used to repay loans guaranteed by the Treuhand - is incompatible with the common market.
2. The following State aid granted by Germany to Kahla/Thüringen Porzellan GmbH is incompatible with the common market:
(a) measure 11: a capital participation by TIB;
(b) measure 12: a shareholder loan from TIB;
(c) measures 13, 14, 23 and 30: 90 % guarantees of the Land of Thuringia;
(d) measure 15: a grant from the Land of Thuringia;
(e) measure 16: an equity loan from a State-owned bank;
(f) measure 21: a loan from a State-owned bank;
(g) measure 26: employment promotion grants;
(h) measure 27: measures for employee integration, fair attendance and advertising;
(i) measure 32: measures for research and development, employee integration, fair attendance and cost reduction.

Article 2

1. Germany shall take all necessary measures to recover from the recipient the aid referred to in Article 1 and unlawfully made available to the recipient. If the aid has already been paid back, recovery shall be effected to the extent that the amount paid back is smaller than the amount including interest calculated on the basis of the reference rate for regional aid applicable on the date on which the aid was granted.

2. Recovery shall be effected without delay and in accordance with the procedures of national law provided that they allow the immediate and effective execution of the decision. The aid to be recovered shall include interest from the date on which it was at the disposal of the recipient until the date of its recovery. Interest shall be calculated on the basis of the reference rate used for calculating the grant equivalent of regional aid.

Article 3

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

Article 4

This Decision is addressed to the Federal Republic of Germany.
Done at Brussels, 13 May 2003.
For the Commission
Mario Monti
Member of the Commission
(1) OJ C 272, 23.9.2000, p. 45 and OJ C 26, 30.1.2002, p. 19.
(2) OJ C 185, 30.6.2001, p. 45.
(3) OJ C 26, 30.1.2002, p. 19.
(4) In the event of the bankruptcy of companies formerly held by the THA, their real estate was to be transferred back to the THA, which in turn had to incorporate its value into the estate in bankruptcy.
(5) Confidential information, 30 to 40 % higher than the price previously paid by the TIB.
(6) N 213/93, OJ C 302, 9.11.1993, p. 6.
(7) ERP-Existenzgründungsprogramm, N 108c/1994, SG (94) D/17293 of 1.12.1994; OJ C 390, 31.12.1994, p. 14.
(8) ERP-Aufbauprogramm, N 108b/1994, SG (94) D/17293 of 1.12.1994; OJ C 390, 31.12.1994, p. 13.
(9) KfW-Mittelstandsprogramm, NN 109/93, SG (94) D/372 of 14.1.1994, OJ C 373, 29.12.1994, p. 3.
(10) ERP-Umweltprogramm, N 563d/94, SG (94) D/17530 of 5.12.1994; OJ C 390, 31.12.1994, p. 16.
(11) See footnote 7.
(12) 23. Rahmenplan der Gemeinschaftsaufgabe zur Verbesserung der Wirtschaftsstruktur, N 157/94, SG (94) D/11038, 1.8.1994.
(13) N 561/92, SG (92) D/16623 of 24.11.1992 and N 494/A/1995, SG (95) D/17154, 27.12.1995.
(14) Submitted as Annex 17 to the letter of 15 March 2001, registered as received by the Commission on 26 March 2001 (A/32477).
(15) Data extracted from the website of Cerame-Unie (http://www.cerameunie.org).
(16) Panorama of EU Industry 1997, 9-20; NACE (Revision 1). See also Commission Decision 1999/157/EC in Case C 35/97 Triptis Porzellan GmbH (OJ L 52, 27.2.1999, p. 48).
(17) OJ C 68, 6.3.1996, p. 9.
(18) OJ L 10, 13.1.2001, p. 30.
(19) OJ C 368, 23.12.1994, p. 12 and OJ C 288, 9.10.1999, p. 2.
(20) "The plan of Auffanggesellschaft Kahla has to be seen against the background of the special structural policy conditions obtaining in the Land of Thuringia, in particular the efforts of the regional government to safeguard jobs within the limits of the funding possibilities" (Das Konzept der Auffanggesellschaft Kahla muß unter den speziellen strukturpolitischen Bedingungen des Landes Thüringen gesehen werden, insbesondere unter dem Aspekt der Bemühungen der Landesregierung, im Rahmen von Förderungsmöglichkeiten bestehende Arbeitsplätze zu erhalten), report by Röls Bühler Stüpges Hauck & Partner, transmitted as Annex 1 to the letter of 31 January 2000, registered as received on 3 April 2000 under No A/32839.
(21) See footnote 19.
(22) "Zielsetzung der TIB ist die Erhaltung und Schaffung industrieller Arbeitsplätze im Freistaat Thüringen", report by Arthur Andersen, submitted as Annex 2 to the letter of 31 January 2000, registered as received on 3 April 2000 under No A/32839.
(23) "There are, however, a number of risks which might result in the plan failing" ("Es bestehen jedoch eine Vielzahl von Risiken, die zum Scheitern des Konzepts führen können") and "A decision in favour of a participation in Kahla/Thüringen Porzellan GmbH can therefore be recommended in principle, bearing in mind the continuing high risk. But this will mean at the same time having to say 'no' to other Thuringian porcelain manufacturers so as not to further jeopardise the plan's success" (Eine Entscheidung für eine Beteiligung an der Kahla/Thüringen Porzellan GmbH kann daher grundsätzlich befürwortet werden, wenn man sich des verbleibenden, hohen Risikos bewußt ist. Es bedeutet zugleich aber auch eine Absage an andere thüringische Porzellanhersteller, um den Erfolg des Konzepts nicht weiter zu gefährden), Arthur Andersen report (see footnote 23).
(24) It will be recalled that the acquisition of Kahla II's assets was financed predominantly by aid.
(25) Following the extension of the procedure Germany altered its stance, stating that the loans under measures 16 and 17 were not aid since, despite their having nominally been granted under an approved aid scheme, they had been paid direct to Mr G. Raithel.
(26) Although, as is explained in recital 163, these are not applicable to aid granted during the period 1994-96. Footnote 10 of the 1999 restructuring guidelines codifies the Commission's approach, stating that the only exceptions to the rule that a newly created company is not eligible to receive rescue or restructuring aid are "any cases dealt with by the BvS in the context of its privatisation remit and other similar cases in the new Länder involving companies emerging from a liquidation or a take-over of assets occurring up to 31 December 1999".
(27) C 69/98, SG (98) D/11285 of 4.12.1998.
(28) "The calculations in the business plan show that the company ... [is] not in a position to bear the costs of restructuring, which are enormous compared with the projected turnover, on its own" (Die Berechnungen des Geschäftsplanes zeigen, daß die Auffanggesellschaft (...) nicht in der Lage (ist), die im Verhältnis zum geplanten Umsatz enormen Finanzierungskosten den Umstrukturierungsprozeß alleine zu tragen), Röls Bühler Stüpges Hauck & Partner report (see footnote 21).
(29) "The purpose of our study is to assess the capacity and need for reorganisation of the company whose activity is being continued within the Auffanggesellschaft, having particular regard to the jobs that can be safeguarded in the long term and the financial resources available to TIB as a potential shareholder" (Ziel unser Arbeiten sollte sein, die Sanierungsfähigkeit und Sanierungswürdigkeit des in der Auffanggesellschaft fortgeführten Unternehmens unter besonderer Berücksichtigung der dauerhaft erhaltbaren Arbeitsplätze und der von der TIB als potentiellem Gesellschafter zur Verfügung zu stellenden Finanzmittel zu beurteilen), Arthur Andersen report (see footnote 23).
(30) All loans from private banks of which the Commission has been informed were covered by 90 % State guarantees.
(31) "The purchaser may rescind the entire contract without any financial consequences [...] if [...] the financing referred to below is not confirmed by 31.12.1994; he may also do so if the financing is only partly forthcoming" (Der Käufer hat das Recht ohne weitere Kostenfolge [...] vom gesamten Vertrag zurückzutreten, wenn [...] die nachfolgende Finanzierung nicht bis zum 31.12.1994 zugesagt ist; dies gilt auch, wenn die Finanzierung nur teilweise zustande kommt). The financial measures in this contract concern ERP and KfW loans of DEM 2,5 million, a TIB participation worth DEM 7,95 million, bank loans amounting to DEM 13,35 million and a 90 % Land guarantee for DEM 20 million (sale contract between the administrator in bankruptcy of Kahla I and Günter Raithel, negotiated on 26.1.1994).
(32) C 36/2000, Graf von Henneberg Porzellan GmbH.
(33) "Since Kahla is currently undergoing reconstruction and will certainly still need the whole of 1996 in which to consolidate, an early transfer of production volumes is out of the question" (Da auch Kahla sich aktuell im Wiederaufbau befinde und zur Konsolidierung sicherlich noch das volle Jahr 1996 benötige, sei an eine frühere Verlagerung von Produktionsmengen kaum zu denken), PME report dated 24 August 1995.
(34) OJ L 83, 27.3.1999, p. 1.
(35) NN 25/95, SG (96) D/11031 of 16.12.1996.
(36) OJ C 71, 11.3.2000, p. 14, point 3.2.
(37) NN 25/95, SG (96) D/11031 of 16.12.1996.
(38) N 408/93, SG (93) D/19245, 26.11.1993 (OJ C 213, 19.8.1992, p. 2).
(39) C 69/98, SG (2002) D/34461 of 19.6.2002 (not yet published).
(40) ERP-Eigenkapitalhilfeprogramm, N 213/93, SG (93) D/16665 of 13.10.1993.
(41) ERP-Existenzgründungsprogramm, N 108c/1994 (see footnote 6). ERP-Aufbauprogramm, N 108b/1994 (see footnote 7). KfW-Mittelstandsprogramm, NN 109/93 (see footnote 8).
(42) ERP-Umweltprogramm, N 563d/94 (see footnote 9).
(43) NN 117/92, SG (95) D/341 of 13.1.1995.
(44) Registered under number A/33865 on 29.7.1994.
(45) "The beneficiaries of measures pursuant to Article 124h of the Employment Promotion Act in the area of decontamination and improvement of the environment shall be public law entities, and in particular territorial authorities (towns, districts, municipalities, etc.) and public undertakings owned by the Treuhandanstalt" (Träger der Massnahmen nach § 124 h AFG im Bereich Umweltsanierung und Umweltverbesserung sind juristische Personen des öffentlichen Rechts, vor allem die Gebietskörperschaften (Städte, Kreise, Gemeinde u.a.), sowie Regiebetriebe der Treuhandanstalt). Letter dated 29.7.1994 (see footnote 50).
(46) "In other words, measures which are in the interest of a particular company are ineligible for aid" (Das bedeutet, dass Massnahmen die im Interesse eines Unternehmens sind, nicht förderfähig sind). Letter dated 29.7.1994, referred to in footnote 50.
(47) See also the decision in Case C 36/2000, SG (2001) D/292014.
(48) N 660/93, SG D/21632 of 31.12.1993 and N 477/91, SG (91) D/22704 of 25.11.1991.
(49) OJ C 334, 12.12.1995, p. 4.
(50) NN 107/97, in force since 1 April 1997, approved by letter SG (98) 1049 of 6.2.1993.
(51) NN 331/96, SG (97) D/482, of 23.1.1997.
(52) Reports on the auditing of the annual accounts of Kahla/Thüringen Porzellan GmbH for 1997, 1998 and 1999.
(53) See footnotes 16 and 17.
(54) See footnote 35.
(55) OJ C 74, 10.3.1998, p. 9.
(56) See footnote 48.
(57) Point 7.5 of the 1999 restructuring aid guidelines states that "the Commission will examine the compatibility with the common market of any rescue or restructuring aid granted without its authorisation and therefore in breach of Article 88(3) of the Treaty ... on the basis of the Guidelines in force at the time the aid is granted".
(58) See, in particular, Table 5.
(59) Judgment of the Court of Justice of the European Communities in Case 17/99 France v Commission [2001] ECR I-2481, paragraph 27.
(60) See footnote 57.
(61) The loan agreement provided by way of secondary security for the same mortgages as in Table 10 and for the assignment of Mr G. Raithel's life assurance policy worth DEM 1,8 million.
(62) OJ L 83, 27.3.1999, p. 1.

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