86/509/EEC: Commission Decision of 21 May 1986 on aid granted by the Federal Republic of Germany and the Land of Bavaria to a producer of polyamide and polyester yarn situated in Deggendorf (Only the German text is authentic)

• Published date: 24 October 1986
• Subject Matter: competencia,ayudas concedidas por los Estados
• Official Gazette Publication: Diario Oficial de las Comunidades Europeas, L 300, 24 de octubre de 1986

|

86/509/EEC: Commission Decision of 21 May 1986 on aid granted by the Federal Republic of Germany and the Land of Bavaria to a producer of polyamide and polyester yarn situated in Deggendorf (Only the German text is authentic)

Official Journal L 300 , 24/10/1986 P. 0034 - 0040

*****

COMMISSION DECISION

of 21 May 1986

on aid granted by the Federal Republic of Germany and the Land of Bavaria to a producer of polyamide and polyester yarn situated in Deggendorf

(Only the German text is authentic)

(86/509/EEC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Economic Community, and in particular the first subparagraph of Article 93 (2) thereof,

Having given notice to the parties concerned to submit their comments as provided for in the said Article 93, and having regard to those comments,

Whereas:

I

Upon repeated requests from the Commission, the Federal German Government by letters of 22 March and 25 July 1985 belatedly informed the Commission that financial assistance had been granted to a producer of polyamide and polyester yarn situated in Deggendorf.

The aid was granted between 1981 and the end of 1983 under the joint Federal Government/Laender regional aid programme (Gemeinschaftsaufgabe), and under the Bavarian regional aid programme.

Under the joint Federal Government/Laender aid scheme, a grant of DM 6,12 million was paid for investments amounting to DM 61,2 million, while under the Bavarian regional aid programme a loan of DM 11 million at an interest rate of 5 %, and running for 8 years, was given for parts of the above investment amounting to DM 35,9 million. The aid therefore, represents 28 % of the total investment.

Following an initial scrutiny, the Commission considered that the aid, granted between 1981 and the end of 1983, which had not been notified to the Commission beforehand, was illegal as the German Government had failed to fulfil its obligations under Article 93 (3) of the EEC Treaty. Under the synthetic fibre and yarn aid code, established in 1977, notified to the Member States by letter of 19 July 1977 and published in the Bulletin of the European Communities of July/August 1977 (point 1.5.3.) and of November 1977 (point 2.1.47) and extended in 1979, 1981, 1983 and 1985, all aid proposals, of whatever type, in favour of companies in the synthetic fibre and yarn sector have to be notified to the Commission in sufficient time to enable it to submit its comments and, if necessary, initiate in respect of the proposed measure the procedure provided for in Article 93 (2).

The Commission also considered that the aid did not help to restructure the facility to produce polyamide and polyester yarn within the meaning of the Community's synthetic fibre and yarn aid code, as the assistance led neither to a decrease in capacity nor to a conversion away from synthetic fibres and yarns.

The Commission also took the view that the investment, which had been described as basic rationalization by the German Government, did not seem to concern more than a modernization of the synthetic yarn production and processing plant for the purpose of keeping it in business and at least maintaining - if

Finally, the Commission considered that, in a situation where the other Community synthetic fibre and yarn producers continued to undertake great efforts to adapt to the present market situation by considerably reducing capacities, the aid in question did not promote a development which, from the Community point of view, was adequate to counteract the trade-distorting effects of the aid, and that the aid - by favouring the undertaking in question in a sector where there is a high volume of trade and where competition is very keen - was liable to affect trade between Member States and was therefore incompatible with the common market.

Therefore, the Commission took the view that the aid did not meet the conditions that must be fulfilled for one of the exceptions laid down in Article 92 to apply, and initiated the procedure provided for in the first subparagraph of Article 93 (2) of the EEC Treaty.

By letter of 23 September 1985, it gave the German Government notice to submit its comments. The other Member States were informed on 17 October, and interested parties on 29 October 1985.

II

The German Government, in submitting its comments, by letter of 30 December 1985, under the procedure provided for in Article 93 (2) of the EEC Treay, pointed out that the investment was necessary as yarns in the required quality are not available in sufficient quantity on the international market. Furthermore, a basic rationalization had been carried out under the investment project, which has led to a fully integrated and modern production process securing the 1 400 existing and 110 additional jobs.

The German Government considered that the aid under the two aid systems in question was granted to compensate for the economic disadvantages suffered by the Zonal Border Areas to which the region of Deggendorf belongs, so that the conditions of Article 92 (2) (c) of the EEC Treaty were fulfilled and, furthermore, that it was granted to facilitate the development of the area in question where the standard of living is abnormally low and where there is serious underemployment, so that Article 92 (3) (a) of the EEC Treaty is also applicable. The German Government therefore concluded that the aid is compatible with the common market.

In commenting under the same procedure, three other Member States and four federations of firms in the sector supported the Commission's views and expressed great concern about the support measures. In these comments it was underlined that the sector of polyamide and polyester yarns still suffered from serious problems of overcapacity and depressed prices, and that, in such a situation, aid granted for modernization and - indeed - capacity increases would distort competition in the Community by giving unfair advantages to the...