# CE2004084EN.01058501.xml

| 3.4.2004 | EN | Official Journal of the European Union | CE 84/585 |
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3.4.2004

EN

Official Journal of the European Union

CE 84/585

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(2004/C 84 E/0662)

WRITTEN QUESTION E-0423/04

by Ilda Figueiredo (GUE/NGL) to the Commission

(17 February 2004)

Subject:   Closure of the Brax factory in Portugal

Subject:

Brax Portuguesa, clothes-making factory, Ltd., situated in Serzedo, Vila Nova de Gaia, has just closed its doors, throwing 450 workers on the dole. The Brax multinational, funded by German capital, has already opened new factories in Romania and other candidate countries. The documentation which was handed out to the Portuguese workers reveal that the company states that it has not paid salaries for the last two months, and does not intend to pay them in subsequent months. It should be noted that the company used Portuguese workers from Brax Portuguesa to train Romanian workers. Now it is sacking the former, quite illegally and unacceptably, although it is retaining the factory building and other significant property next to the factory. Brax Portuguesa obtained Community funding, and will undoubtedly continue to do so in Romania and elsewhere.

The Commission:

| 1. | Is it going to demand that the Brax Group reimburse the Community funding it received, if it persists in closing down its Portuguese operations? |
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1.

Is it going to demand that the Brax Group reimburse the Community funding it received, if it persists in closing down its Portuguese operations?

| 2. | Is it going to refuse to give the Brax Group any further Community funding, whatever country it is in, if it keeps the Portuguese factory shut? |
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2.

Is it going to refuse to give the Brax Group any further Community funding, whatever country it is in, if it keeps the Portuguese factory shut?

Answer given by Mr Dimas on behalf of the Commission

(16 April 2004)

(16 April 2004)

The Commission informs the Honourable Member that the provisions in force with regard to the obligations of enterprises which have benefited from Community funding are as follows:

| — | For the period covered by the 2000-2006 Community Support Frameworks (CSF), the following provisions apply in respect of the Structural Funds:






  — | firstly the Commission has laid down provisions in the Guidelines on national regional aid (1998) which oblige beneficiaries of aid to maintain any funded investment for a period of five years. The Directorate-General for Competition (DG COMP) holds that the period of five years for maintaining the investment laid down in point 4.10 of the guidelines starts when the investment for which the aid is granted has been completed, i.e. from the moment when the investment is used in the enterprise; |
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For the period covered by the 2000-2006 Community Support Frameworks (CSF), the following provisions apply in respect of the Structural Funds:

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firstly the Commission has laid down provisions in the Guidelines on national regional aid (1998) which oblige beneficiaries of aid to maintain any funded investment for a period of five years. The Directorate-General for Competition (DG COMP) holds that the period of five years for maintaining the investment laid down in point 4.10 of the guidelines starts when the investment for which the aid is granted has been completed, i.e. from the moment when the investment is used in the enterprise;

| — | secondly, and by the same token, the General Regulation governing the Structural Funds (1999) provides that the Fund's funding of productive activities is dependent on the activities not relocating within five years of the funding decision; |
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secondly, and by the same token, the General Regulation governing the Structural Funds (1999) provides that the Fund's funding of productive activities is dependent on the activities not relocating within five years of the funding decision;

| — | thirdly, major projects (i.e. valued at over EUR 50 million) can be cofinanced under a European regional development fund (ERDF) programme only if a specific application is made to the Commission and the Member States fill in a questionnaire which includes a question on the risk of relocation. The Commission take this into account when deciding on the level of ERDF cofunding (which can be up to 35 % in Objective 1 regions) to be granted or, as the case may be, refused. |
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thirdly, major projects (i.e. valued at over EUR 50 million) can be cofinanced under a European regional development fund (ERDF) programme only if a specific application is made to the Commission and the Member States fill in a questionnaire which includes a question on the risk of relocation. The Commission take this into account when deciding on the level of ERDF cofunding (which can be up to 35 % in Objective 1 regions) to be granted or, as the case may be, refused.

| — | With regard to the period covered by the 1994-1999 CSF, the five-year rule entered into force only in 1998. It should, however, be borne in mind that Regulation (EEC) No 4253/88 (1) was already in force, Article 24 of which provides for aid to be reduced or cancelled if scrutiny of an operation confirms the existence of an irregularity or a major change which affects the nature or conditions of implementation of the operation or measure and for which the Commission's approval has not been requested. The Commission must verify this under the terms of its partnership with the Member State. |
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With regard to the period covered by the 1994-1999 CSF, the five-year rule entered into force only in 1998. It should, however, be borne in mind that Regulation (EEC) No 4253/88 (1) was already in force, Article 24 of which provides for aid to be reduced or cancelled if scrutiny of an operation confirms the existence of an irregularity or a major change which affects the nature or conditions of implementation of the operation or measure and for which the Commission's approval has not been requested. The Commission must verify this under the terms of its partnership with the Member State.

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| — | The rules for the current period of programming will apply to the accession countries when they join the Union. |
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The rules for the current period of programming will apply to the accession countries when they join the Union.

| — | In any event, it is up to the Member State to take any legal action on the basis of the agreements entered into with the enterprise when the aid was granted. Therefore, if a beneficiary has not complied with the Community rules on State aid, it must reimburse the authorities which granted the aid. |
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In any event, it is up to the Member State to take any legal action on the basis of the agreements entered into with the enterprise when the aid was granted. Therefore, if a beneficiary has not complied with the Community rules on State aid, it must reimburse the authorities which granted the aid.

| — | As the Member State's partner, the Commission has already drawn its attention to the case specifically alluded to by the Honourable Member so that it can ascertain whether the enterprise has fulfilled its obligations. |
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As the Member State's partner, the Commission has already drawn its attention to the case specifically alluded to by the Honourable Member so that it can ascertain whether the enterprise has fulfilled its obligations.

| — | If an enterprise relocates from one region to another in the same country, from one Member State to another or from a Member State to an accession country whilst complying with the rules and regulations in force, neither the Commission nor the Member State have the right to refuse it a grant in the place of relocation if it meets the requirements for aid. |
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If an enterprise relocates from one region to another in the same country, from one Member State to another or from a Member State to an accession country whilst complying with the rules and regulations in force, neither the Commission nor the Member State have the right to refuse it a grant in the place of relocation if it meets the requirements for aid.

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(1)  Council Regulation (EEC) No 4253/88 of 19 December 1988, laying down provisions for implementing Regulation (EEC) No 2052/88 as regards coordination of the activities of the different Structural Funds between themselves and with the operations of the European Investment Bank and the other existing financial instruments, OJ L 374, 31.12.1988.

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