11. 7.90 Official Journal of the European Communities NoC 169/11 
STATE AID 
C 12/90 
(Belgium) 
(Articles 92 to 94 of the Treaty establishing the European Economic Community) 
(90/C 169/08) 
Commission communication pursuant to Article 93 (2) of 
the EEC Treaty to other Member States and interested 
parties regarding aid which the Brussels Regional Auth­
orities (Belgium) have decided to grant to Volkswagen 
Bruxelles SA. 
In the following letter, the Commision informed the 
Belgian Government of its decision to open the 
procedure. 
Following serveral requests for information by the 
Commission, your authorities informed the Commission 
by letter from its Permanent Representation dated 6 
December 1989 of the intention of the Brussels Regional 
Authorities to provide aid in support of six investment 
projects that Volkswagen Bruxelles SA would realize. 
The request for assistance for these projects was filed in 
1988 and obtained a favourable decision on 27 June 
1989. The aid would be awarded in the form of a grant 
of 8 % of the investment sum of each project as well as 
an exoneration from property taxes (precompte 
immobilier) for five years. The investment projects 
concern different sections of the production line of the 
company (pressings, pre-assembly and assembly of 
bodies, paint shop, final assembly, etc.). The investment 
sum of each project falls below the notification threshold 
foreseen by the approved aid scheme in question, i.e. the 
expansion law of 17 July 1959, as well as below the'ECU 
12 million threshold foreseen in the Community 
framework for State aids in the motor vehicle sector. 
Furthermore, the Commission was informed of seven 
other similar investment projects which were filed in 
1987 and approved on 20 October 1988, i.e. before the 
Community framework entered into force. 
By letter of 22 December 1989, the Commission 
informed your authorities that the six projects approved 
after 1 January- 1989 would have to be considered in 
their totality, given that they concern one line of 
production of the same assembly plant, and that taken 
together they exceed the notification threshold of ECU 
12 million foreseen in the framework. Although the letter 
of 6 December 1989 did not follow the form of a notifi­
cation under the automobile framework, the Commission 
nevertheless considered exceptionally that it constituted a 
notification under this framework and invited your auth­
orities to complete this notification. By letter of 8 March 1990 your authorities completed the 
notification by supplying additional information. 
The investments, which will be realized between June 
1988 and 31 December 1990, aim at the re-arrangement 
of buildings, energy installations, new equipment and 
tooling for different assembly departments as well as 
production control equipment. In particular, the 
investments are linked with the production of the new 
Passat model, while before, the plant was only producing 
the Golf model. 
The total investment cost amounts to Bfrs 1 409 million 
or ECU 33 million and the aid in form of grants adds up 
to Bfrs 112,7 million, or ECU 2,7 million. The value of 
the exoneration during five years from property tax is 
not known. The impact of the investments on capacities 
and production could not be quantified. The investment 
will not create additional employment. 
The company concerned is a subsidiary of Volkswagen 
AG located in Brussels (Foret) employing in 1988 5 400 
persons and producing in 1987 210 000 vehicles of which 
95 % were exported mainly to Germany, Holland, 
France and Italy. 
On the basis of the Commission's decision of 17 June 
1975, the public assistance to be awarded under the 
general aid scheme initiated by Law of 17 July 1959 
constitutes aid within the meaning of Article 92 (1) of 
the EEC Treaty. The aid which relieves the company 
from part of the investment cost and from property taxes 
which it would normally have to bear, threatens to 
distort competition and affects intra-Community trade in 
cars. 
Under the guidelines for appreciation of aids accom­
panying the automobile framework the aid in question 
can be classified as investment aid for innovation, 
modernization or rationalization. The Commission 
foresaw in the guidelines that it would, in such cases, 
take a strict attitude towards aid for modernization and 
innovation. These are activites to be undertaken by the 
companies themselves and normally financed from their 
own resources or by commercial loans on part of their 
normal company operation in a competitive market envi­
ronment. Aid for fundamental rationalization will have 
NoC 169/12 Official Journal of the European Communities 11. 7. 90 
to be carefully examined in order to verify that it brings 
about a necessary, radical change in the structure and 
organization of the company's activities and that the 
financing required goes beyond that which companies 
should normally be expected to finance from own 
resources. 
The investment project in question seems not to qualify 
for the above exception, given that Volkswagen is a 
financially sound and profitable company well able to 
meet the whole burden of the investment cost, and the 
project in question concernes the introduction of a 
second model in one plant which is a quite common 
event in the industry. As such, the Commission does not 
see any necessity to provide aid in favour of this 
investment project of Volkswagen. 
Consequently, the Commission has decided to initiate 
the procedure provided for by Article 93 (2), first 
sentence, of the EEC Treaty with respect to the 
proposed aid measures in favour of Volkswagen 
Bruxelles SA. 
Within the same procedure, the Commission gives 
hereby your Government notice to submit its comments 
within one month from the date of this letter, and to 
provide all the information necessary for the appraisal of 
the case. The Commission is also, by means of publication of the 
present letter in the Official Journal of the European 
Communities, giving notice to the other Member States 
and third parties concerned to submit their comments. 
The Commission reminds your Government that 
according to the provisions of Article 93 (3) of the EEC 
Treaty no aid measure can be put into effect before the 
Article 93 (2) procedure has resulted in a final decision. 
The Commission draws the attention of your 
Government to its letter of 3 November 1983 sent to all 
Member States regarding their obligations as they arise 
from the provisions of Article 93 (3) of the EEC Treaty 
and to the communication published in the Official 
Journal of the European Communities No C 318 of 24 
November 1983, page 3, on the basis of which any aid 
provided illicitly, that is without waiting for the 
Commission's final decision resulting from the Article 93 
(2) procedure could be subject to a recovery order. 
The Commission hereby gives the other Member States 
and interested parties notice to submit their comments on 
the measures in question within two months from the 
date of publication of this notice to: 
Commission of the European Communities, 
200 rue de la Loi, 
B-1049 Brussels. 
The comments will be communicated to Belgium.