28. 6. 90 Official Journal of the European Communities NoC 158/3 
STATE AID 
C 11/90 
(Germany) 
(Articles 92 to 94 of the Treaty establishing the European Economic Community) 
(90/C 158/03) 
Commission communication pursuant to Article 93 (2) of 
the EEC Treaty to other Member States and interested 
parties regarding aid which Germany has decided to 
grant to the firm Heinrich Reinhold KG. 
In the following letter, the Commission informed the 
German Government of its decision to open the 
procedure. 
On 24 November 1989, the Permanent Representation 
of Germany notified a project of the German authorities 
to grant an aid in the form of a subvention and a soft 
loan for the investments that the company Reinhold 
carried out in the years 1987 till 1989. 
Further information concerning the beneficiary and the 
aids were supplied, on request of the Commission, on 
26 January and 28 February 1990. 
The main information included in the documents 
concerns the productions matter of the investments 
(polypropylene and poly amide yarns), the nature of the 
investment (production facilities), the aim of the 
investments (production capacity increase), the total cost 
of the investments (DM 3 440 000), the commercial 
reasons for the investments (saving the market share) and 
the financial conditions of the company (highly charged 
by financial burdens). 
The intervention of the federal and local public auth­
orities consists of a 10 % grant (i.e., DM 344 000) on 
the grounds of the Investment Allowance Law approved 
by the Commission by letter of 7 December 1987. At the 
same time, a loan amounting to DM 1,8 million is to be 
granted from the budget of Bavaria under the Bavarian 
regional assistance programme approved by the 
Commission by letter dated 27 December 1988; the loan 
is to be for eight years, with a two-year grace period, at 
a 4 % interest rate. 
In both of its abovementioned letters, the Commission 
expressly drew the attention of your authorities to the 
need to respect the rules arising from the sectoral disci­
plines on State aids. 
Taking into account the total amount of the investments 
and a reference rate of 9 %, the net grant equivalent of 
the different aids is worth about 14,2 %. 
The EC market for yarns of polyamide and polypro­
pylene is highly competitive, it is characterized by 
stagnant demand, capital intensive investments and 
reduced margins which are linked, for what concerns the 
price of the raw materials, to the volatile rate of the US 
dollar on the exchange markets. The flow of intra-Community trade of polyamide yarns 
accounted for ECU 80 million in 1988 (ECU 70 million 
in the period from January to September 1989). Polypro­
pylene fibres are also traded: ECU 110 million in 1988 
and ECU 80 million in the period from January to 
September 1989. The sales of the company Reinhold KG 
in 1989 to the other Member States account for about 
ECU 2 million. 
According to the information in possession of the 
Commission, the aids supplied to the company Reinhold 
KG are likely to affect the intra-Community trade of an 
highly sensitive productive sector, and, therefore, they 
are incompatible with the common market rules stated in 
Article 92 (1) of the Treaty. 
The discipline concerning State aids to the synthetic 
fibres industry, introduced in 1977, renewed every two 
years since then and most recently in 1989 (communi­
cation to the Member States of 6 July 1989) totally 
applies to the production of the company Reinhold KG. 
The discipline reduces the range of the acceptable 
exceptions to the general restrictions on State aids to the 
only case of incentives for disinvestments from the sector 
towards other productions, while it expresses an overall 
unfavourable consideration for all measures which have 
the effect of increasing the net production capacity of 
synthetic fibres. For this reason none of the exceptions 
listed in Article 92 (3) EEC can apply. 
In the light of these observations, the Commission would 
inform the German Government that after considering 
the project of aids it has initiated the procedure laid 
down in Article 93 (2) of the EEC Treaty in their 
respect. 
The Commission hereby gives the German Government 
notice, as pan of that procedure, to submit its comments 
within one month from the date of this letter. In their 
notification the Federal authorities indicate that the 
increased capacity of Heinrich Reinhold KG is required 
to meet a rising demand for its products. The 
Commission invites the Federal authorities to provide 
economic data to sustain this point of view. 
Your authorities should also provide all relevant infor­
mation concerning the mentioned aid measures to be 
granted and in particular to confirm that no investment 
grant under the joint action 'Improvement of the 
regional economic structures' will be granted. 
NoC 158/4 Official Journal of the European Communities 28. 6. 90 
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) EEC procedure has resulted in a 
Commission final decision. 
The Commission draws your Government's attention to 
its letter of 3 November 1983 sent to all Member States 
regarding their obligations under Article 93 (3) of the 
EEC Treaty and to the communication published in the 
Official Journal of the European Communities No C 318 
Commission communication pursuant to Article 93 (2) of 
the EEC Treaty to other Member States and interested 
parties concerning aids which Germany has decided to 
grant to the firm Textilwerke Deggendorf GmbH. 
In the following letter, the Commission informed the 
German Government of its decision to open the 
procedure. 
By letter of the German Permanent Representation dated 
13 October, received on 19 October 1989, your 
Government informed the Commission of the intention 
to grant investment aids in favour of the company 
Textilwerke Deggendorf GmbH. 
Further information concerning the beneficiary and the 
aids were supplied, on request of the Commission, on 
9 March 1990; an extension of up to 4 May 1990 of the 
time to formulate a decision of the Commission was 
agreed by the German authorities on 2 April 1990. 
The intervention of the Federal and local authorities to 
be supplied via the Investitionszulagengesetz, approved 
by the Commission by letter of 7 December 1987, and 
the Bayerisches regionales Forderprogramm, approved 
by the Commission by letter dated 27 December 1988, 
provides for a 10 % grant for investment amounting to 
DM 45,2 million and for soft loans of DM 6 and 14 
million for a period of 8 and 12 years respectively at 5 °/o 
interest rate and two years of repayment delay. 
Taking into account the total amount of the investments 
and a reference rate of 9 °/o, the net grant equivalent of 
the different aids is worth about 13,41 %. of 24 November 1983, page 3 on the basis of which any 
aid provided illicitly, i.e., without waiting for the 
Commission's final decision resulting from the Article 93 
(2) EEC 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 one month 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 the Federal 
Republic of Germany. 
In both of its abovementioned letters the Commission 
expressly drew the attention of your authorities to the 
need to respect the rules arising from the sectoral 
disciplines on State aids. 
The investments matter of the aids concern the 
production of stockings and intermediate (DM 24 
million) and the preparation of combined (polyurethan 
and polyamid) elastic threads (DM 21,2 million). 
The EC market for yarns of polyamid is highly 
competitive, it is characterized by stagnant demand, 
capital intensive investments and reduced margins. The 
flow of intra-Community trade of polyamid yarns 
accounted for ECU 80 million in 1988 (ECU 70 million 
in the period from January to September 1989). The 
Deggendorf company is active both on the foreign and 
the domestic markets of polyamid threads, intermediate 
and women stockings. 
Accordingly, the aids supplied to the Textilwerke 
Deggendorf GmbH company do affect intra-Community 
trade and do fall under Article 92 (1) of the EEC Treaty. 
The discipline concerning State aids to the synthetic 
fibres industry, introduced in 1977, renewed every two 
years since then and most recently in 1989 (communi­
cation to the Member States of 6 July 1989) applies to 
the production of polyamid yarns of the Deggendorf 
GmbH company. The discipline reduces the range of the STATE AID 
C 14/90 
(Germany) 
(Articles 92 to 94 of the Treaty establishing the European Economic Community) 
(90/C 158/04)