ARCHIVESHISTORIQUES
DELACOMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (78)175
Vol.1978/0058

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(78)175final.
Brussels,2Kay1978•
DRAFTCOMMISSION DECISION
establishing Communityrulesforaidsandinterventions
"byMemberStatesinfavouroftheironandsteelindustry
(submittedtotheCouncilbytheCommission)
COU(78)175final.

COMUTTTTYTHOLESFORAIDSANDITFTSRVEUTIONS 3YMBBRSTATESII'TFAVOUR
OFTHEIRONArTDSTEELIFDUSTRY
.1
EXPLANATORY '1/TEM3RANIXJM .; .■'.
1•Introduction '
Thecharacteristics ofthecrisisfacingthesteelindustryarewellknown.
Theadverseconjuncturalsituationhasaffectedtheindustrythroughout
theworld"buttheCommunityindustryhas"beenamongstthemostseriously
■affectedasaresultofitslossofcompetitiveness,whichisdueto-
■certainstructuralweaknessesandmoreparticularly totheexistenceof
manyplantsusingobsoleteequipmentandtechniques ,andofmore'modern-'
plantswhichhavefrequentlynotreachedoptimalcapacitylevels,aswell•
■< . -
astotheunfavourable locationofmanyplants..
'''' s -
.'TheCommissionhasalreadytakenaotiontoimprovethemarketsituation
intheshortterm"bytheintroduction ofminimumpricesforcertainpro­
ductsand"inothercasesofguidelinesforpricesanddeliverieswithin"
.theCommunityaswell,asbyactiontochecktheadverseEffectsonthe
Communitypricelevelof"importsfromthirdcountries.These -short-term
measurescannothoweverresolvethedeep-seatedstructuralproblemsand
theCommissionhasthereforealso.-takenstepstoprepareadetailed
restructuring planfortheindustry,ataskonwhichitiscurrently
engaged,andtopromoteitsrestructuring byCommunityaidstoinvestment,
pursuanttoArticle54oftheECSC.Treaty.Ithasfurthersoughtto',
mitigatetheeffectsoftherestructuring ontheindustry'sworkersby
expandingitsreconversionactivitiespursuanttoArticle56.'
i , . ' . .-
Itisvitalthattheimplementation ofthe.Community'srestructuring ,
policyshouldnotbeimpededbymeasurestakenbyMemberStatesindivi­
dually.Equally,however,theCommunityisnotitselfinapositionto
meetalltheindustry'srequirementsforassistance..Asacounterpartto
theinitiativestakenbytheCommissionaframeworkmustnowbedeveloped -'
withinwhichnationalmeasureswill-reinforceratherthanfrustrateaction
takenat.Communitylevel. •
,';,;. '.• "
ι

ThedraftDecisionoftheCommissionwhichwouldestablishsuchaCommu­
nityframeworkforMemberStates'aidsandinterventions infavourofthe
steelindustry,isthereforeanintegralpartoftheindustrial ,restructu­
ringpolicywhichisbeingelaboratedbytheCommunity.
2.ThenecessityforaDecisionunderArticle95.1
1)Thegravityofthecrisisinthesteelindustryissuchthatvirtually
allcommunityundertakings aremakinglossesandhavebeendoingsofor
sometime.DespitetheCommission'seffortstostrengthenpricelevels
withintheCommunitythefinancesofsteelundertakings areboundto'
remainunderpressureintheyearsahead.
Becauseoftheconsiderable importanceoftheindustryintheCommunity's
economyasaproducerandanemployer,MemberStateswillthereforein­
creasinglyfindthemselvesobligedtointervenetosupporttheindustry
bothtoenableittosurvivethecrisisandtopromoteitsrestructuring .
Thesenationalaidsandinterventions willbeinthecommoninterest,-
providedthattheycontributetotherealisationofCommunityobjectives .
2)ThfeECSCTreaty'sprovisionsonnationalaidsandinterventions donot
offertheCommissionthenecessaryflexibilityinitsappraisalsofsuch
measures.Article4(c)prohibitsspecificaidsandsubsidieswithoutany
possibilityofderogationexceptintherarecasewhereanactionbya
MemberStatedamagesitsownsteelindustry.TheCommissionisthenem­
poweredbyvirtueofthesecondsubparagraphofArticle67(2),subject
ofcertainconditions,toauthorizeaidsinthesecircumstances .The
otherprovisionsofArticle67concernactionshavinganappreciable
effectoncompetitionandtakenundertheMemberStatesreservedpowers
(i.e.theirgeneraleconomic,industrial,regional,socialand'other
policies).ThisarticleempowerstheCommission,afterconsulting -the
Consultative CommitteeandtheCouncil,tomakerecommendations toin­
dividualMemberStatesincertaincircumstances :thoseinwhichanaction
isliabletoprovokeaseriousdisequilibrium orinwhichitallowsspe­
cialbenefitstoorimposesspecialchargesonsteelundertakingsin
comparisonwiththeotherindustriesinthesamecountry.

3)While theCommission isprepared tousethese powers ofrecommendation
where necessary andappropriate itdoes notconsider that tney consui -
/tute aninstrument sufficiently comprehensive andflexible tomeet the
requirements ofthepresent situation .Recourse toArticle 95isre­
quired inorder to"enable theCommission toensure that actions taken
under reserved powers arecompatible with ,thecommon interest andto
.authorize aids andsubsidies that would otherwise beprohibited oy
,.Article 4(c)oftheTreaty .
4)Thedraft Decision ,ofcourse ,only applies toaids andinterventions in
favour ofsteel undertakings andinrespect ofthose oftheir activities
which aresubject totherules oftheECSC Treaty .Aids whose purpose is
tofacilitate conversion toproducts towhich theTreaty ofRome applies
are not subject tothis Decision . ■ - ,
1 . i ,
3.Theprinciples ofthedraft Decision (Article l) ,
Theobjective ofthedraft decision is,asalready indicated ,toprovide
aframework ensuring that national aids andinterventions will becompa­
tible with theCommunity 'soverall policies forrestructuring thesteel
industry andthat they donotdistort competition toanextent contrary
tothecommon interest ,while atthe same time offering Member States the
necessary flexibility tocope with avariety ofcircumstances .
Thepresent legal framework oftheTreaty does notafford theflexibility
required forthese objectives tobeattained .Itistherefore necessary
bymeans ofaCommunity instrument tocreate newrules providing ,onthe
onehand ,forthesupervision' andcontrol ofaids andinterventions in
favour ofthesteel industry ,where these arefinanced from national
sources and ,ontheother hand ,forthenecessary Community appreciation
ofsuch action asMember States maytake within their reserved powers
andwhich mayhave similar effects oncompetition toaids andinter­
ventions .
' 1 ■
The ,draft decision thus ,makes provision forallaids andinterventions ,
notmerely forthose that arespecific tosteel .Itshould benoted in
particular that theterms ofArticle 1aresuch that its .provisions
apply to: ■,

(i)aids'andinterventions forregional'^unoses.
TheCommissionrecognizestheimportanceofregionalaidsand
interventions fortheregionaldevelopmentoftheCommunity.
'Equally,howev-er,itwouldquestionwhethersuchaidsandinter­
ventionsarealwaysintherealinterestoftheregionsconcerned
whentheyareaccordedtoindustriesindifficulties ;certainly
thereisastrongpossibilitythattheycould,intheshortterm,
-beattheexpenseofotherregionswheretheindustryislocated'
andwhoseproblemsmaybeevengreater.Thislatterpossibility
isof^articularsignificance inthecaseofthesteelindustry
muchofwhoseproductionislocatedinaidedregions(theMezzo-
giorno,Scotland,Wales,Lorraine,Wallonia,theSaar).Inthe
caseofanindustry,suchassteel,whichsuffersfromanexcess
ofproductivecapacity,itwouldclearlybeunacceptable for
MemberStatestohave'completediscretiontouse'theirregional
aidssystemstosupportincreasesinthecapacityofcertainplants,
which,weretheynotlocatedinaidedregions,wouldbesubjectto
controlbytheCommission .ThedraftDecisionnevertheless provides
that,initsappraisalsofaidsandinterventions ,theCommission
willtakefullaccountofregionalconsiderations .
(ii)aidsandintervention ?infavourofundertakings inPubl\cownership.
»
Inthepresentcircumstances ofthesteelindustry,itisextremely
'unlikelythataprivateentrepreneur wouldbewilling,or.indeed
able,toprovidefinancetothissector,withoutsomeinducement
intheformofaidorintervention byaMemberState.Inthecase
ofpublicundertakings ,however,theprovisionofsuchfinance,on
commercialorrelativelycommercialterms,may•beanalternative
tothe.grantofaidsorsubsidies.Tothisextent,therefore,it
isevidentthattheprovisionofsuchfinancemustbesupervised
bytheCommunity. _
Afailuretosubmitthefinancialrelationship ofthe'statewithits
■publicsteelundertakings tothecontrolprovidedforinthedecision
wouldrenderthelatterineffective andinequitablesincecertain
MemberStateswouldineffectbepermittedtobypassitsprovisions .

(iii)aidsaridinterventions grantednotonly"bycentralgovernmentscut
alsobylocalorregionalauthorities and"byr?arastatalorganisations
orinstitutions . . _
ThejudgmentoftheCourtofJusticeincase.78/76oonfirmsthatthe
termsemployedinArticle1oftheDecision,thatis"aidsandinter­
ventions...financedorprovidedbyMemberStatesorthroughState
resources",aregeneralandapplytoallmeasuresofthiskindwhether
financedbytheStateitself ,orbylocalauthoritiesorparastatal
institutions .Asinthecasesofregionalaidsandinterventions
andofpublicly-owned undertakings ,thisgeneralapplicability to
allpublicauthoritiesofthedraftDecisionisessentialifthe
■ *
Decisionistobefullyeffectiveandnottodiscriminate against
thesteelindustryinsomeMemberStates,sincethedegreetowhich
aidsandinterventions areadministered bycentralGovernmentsvaries
betyfeenMemberStates. < ■.
4.ThemainprovisionsofthedraftDecision
Article2 r
Thisarticleconcernsaidsandinterventions insupportofinvestmentby
thesteelindustry. .■ ■ " .
Aidsandinterventions wouldberestrictedtoinvestmentprogrammes,or
projectsformingpartofsuchprogrammes,whichhavebeennotifiedtothe
CommissionasrequiredbyDecisionno22-66oftheHighAuthority,as
amendedbyDecisionno2237/73(ECSC)oftheCommission.TheseDecisions
unlessmodifiedinthefuture,requireundertakingstonotifytothe
Commission : <
(0investmentprogrammesforsteelfurnacesorforconvertorsfor
steelproduction }and .•
(ii)anyotherinvestmentprogrammesconcerningnewplantorreplacement
orconversionworkwhoseestimatedtotalcostexceeds5millionunits
ofaccount.
Thebulkofprogrammeswhichdonotmeeteithercriterioninvolves

programmesofroutinereplacementand.maintenanceandshouldnotbenefit
fromaidsorinterventions .TheCommissionconsidersthatasageneral
principle,aidsandinterventions shouldnottieusedtosupportroutine
investmentofthekindthatwouldinanycasebecarriedout"bytheun­
dertakingconcerned.-
The.Commissionwouldexamineeachaidorintervention proposalonthe
basisoftheDecision'sobjectivessetoutinArticle1(l)&ndofthe
conformityoftheinvestmentprogrammawiththeGeneralObjectivesfor
steel,talcingaccountofanyreasonedopinionissuedbyitonthepro­
grammeinquestion.Theamountandintensityofaidorintervention would
moreoverhavetobejustifiedbysectoralorregionalconsiderations .
(Theaidsceilingscontainedinthecoordinationsolutionforgeneral
regional ,aidssystemswouldofcoursehavetoberespected.)
Article3 -
Thisarticleauthorisesaidsandinterventions tocompensateundertakings
•forthesocialandothercostsincurredbytheminrespectofthetotal
orpartial .closureofsteelplant;-....
.TheCommissionwouldmonitortheeffectsofthisgeneralauthorization
throughareportingprocedureunderwhichMemberStateswouldinformit
twiceayearaftertheeventofanydecisionstaken.
Article4
' ■ ./ '
Thisarticleconcernsaidsandinterventions grantedoveraperiodof
timetoenableundertakings orplantswhicharenotcompetitive tomain­
tainproductionortoreduce,itinanorderlymanner.Aidsandinter­
ventionsofthistypearenecessaryifadrasticrundownofthesteel
industry,withveryadverseeffectsonemployment,istobeayoided.The
objectiveoftheseaidsandinterventions mustbetoensureanorderly
adjustmentofproductivecapacitytodemandfortheindustry'sproducts,
bothinglobaltermsandforindividualproducts.
.
Aids-andinterventions ofthiskindshouldthereforenotbesuchas
simply ,topreserveexistingstructures,whichwouldentailparticularly -
seriousdistortionsofcompetition,butshouldonlybegivensubjectto
thenecessaryrestructuring beingundertakenandshouldbelimitedto
thatwhichisnecessarytoenabletherestructuring tobecarriedout.
Therestructuring mustbecompatiblewiththeGeneralObjectivesforSteel.

-7-
Thecriteriasetoutinthisarticlearebased,ontheseconsiderations .
Inviewoftheimportanceoftheseaidsandinterventions foremployment
theCommissionwilltakeparticularaccountofregionalproblemsinits
appraisalsofplansforaidsandinterventions underthisarticle.-
Article5 v ■ .
ThisarticleprovidesfortheextremecaseinwhichaMemberStaxehas
tointerveneonanemergencybasistorescueanundertaking whoseinsol­
vencyisimminent.Aidsandinterventions forthispurposeare,asinthe
caseofthoseprovidedforinArticle4»likelytohaveparticularly ad­
verseeffectsoncompetition bypreventingthedisappearance oftheleast
competitivecapacityincircumstances wherecapacityhastobereducedin
aggregate.
Thearticlethereforeprovidesthatsuchaidsandinterventions should
belimitedtocaseswheretheyarerequiredinorder^tocopewithacute
socialproblemsandthattheyshouldbeafirststeptowardsamorede–
;finitive _solution _totheundertaking'sproblems.Thissolutionwouldingeneralinvolveeithertheclosureoftheenterpriseoritsrestructuring .
Inaddition,inordertoavoiddistortionsofcompetitionsubsequentto
therescue,theintensityofaidsandinterventions shouldbeaslowas
possible.Thearticlethereforeprovidesthatactionshouldnormallycon­
sistofaguaranteeorofaloanatacommercialrateofInterest.
Article6
Thefirstparagraphofthisarticleestablishesaprocedureforexamining
thoseaidsandinterventions onwhichtheCommissionmusttake,position
priortO'theirimplementation .Thisprocedureisessentiallythesameas
thatprovidedforinArticle93oftheEECTreaty.
,ItwillbenotedthattheCommissionisrequiredtostateitsposition
asrapidlyaspossiblehavingregardtotheurgencyofeachcase.This....especiallyprovisionisincluded/forthecasewhenemergencymeasureshave"tobe
takenpursuanttoArticle5..
ThesecondparagraphempowerstheCommissiontorequire'repaymentof
aidsorinterventionsputintoeffectcontrarytotheprovisionsofthe
■■' ■-•/• ■

Decision;thisappliestothefailuretorespecteitherthecriteriaor
theproceduresofthedraftDecision.■' ,
Article7
This-articleinstitutessimilarproceduresandcriteriaforallaidsand
interventions whichMemberStatesmightwishtointroduce •
'butwhichdonotmeettheparticularprovisionsofthedraft
Decision. <
Article8
Thi&articleprovidesforregularconsultations betweentheCommission
andtheMemberStatesoritheoperationoftheDecisionandonindividual
aidandintervention plans.
Article9
ThisarticleprovidesforthedraftDecisiontobeinforceforaperiod
ofaboutthreeyears.Attheendofthisperioditmaybeappropriate to'
extenditsvalidityortoamenditinthelightofexperienceandofthe
progressachievedinrestructuring theindustry.

DRAFT
COMMISSION DECISION \
establishing Communityrulesforaidsandinterventions "byMemberStates
infavouroftheironandsteelindustry .
■yheCommissionoftheEuropeanCommunities , '
HavingregardtotheTreatyestablishing theEuropeanCoalandSteel
Community,andinparticularArticles2to5»4-6,54»67^0"*'^le
firstandsecondparagraphsof-Article95thereof, .
•*'' ί■whereas»*•••••••••
Havingconsulted "theConsultative Committeeandwiththeunanimous *assent
oftheCouncil,
\ • •
1
HASADOPTEDTHISDECISION:
1
4

Article 1
1.Theorderly functioning ofthecommon market requires that theadjustment
ofthesteel industry 'scapacity toprospective demand ismad^inanor­
derly manner andthat theindustry 'scompetitiveness isrestored "bythe
extension ,modernisation andrationalisation ofthose plants offering ■
thebest prospects ofviability andtheclosure ofother plants .
2.Aids andinterventions infavour ofthesteel industry ,financed orpro­
'vided byMember States orthrough State resources inanyform whatsoever ,
maybeconsidered compatible with theorderly functioning ofthecommon
.market ifthey satisfy theprovisions ofthis Decision andifthey donot
affect competition andtrade between' Member States toanextent contrary
tothecommon interest .Such aids andinterventions shall only beput in­
toeffect inaccordance with theprocedures established herein .
■ ' . ■' .< , ' .■" '■ .«
Article 2 ' -
1.Aids andinterventions insupport of .investment inthe steel industry
maybeconsidered compatible withx theorderly functioning ofthecommon
market ifthey meet thefollowing criteria ,that istosay
-theCommission hasreceived prior notification ofthe investment pro­
gramme concerned asrequired byHigh Authority Decision No22-66 of
\
16November 1976 oninformation tobefurnished byundertakings about
their investments (l),asamended byCommission Decision No2237/73
;(ECSC )(2)orbyanysubsequent Decision ;
;-theamount andintensity ofaidorintervention inanyform whatsoever
...arejustified either bytheimportance oftherestructuring effort in-
evolved orbythestructural problems oftheregion where theinvest­
ment istobeundertaken saidare "limited tothat which isnecessary for
this purpose ;
-theinvestment programme conforms totheGeneral Objectives forsteel ,
having regard toanyreasoned opinion that theCommission mayhave
issued onthe'investment' programme concerned .
1)OJNo219 ,29.11.1966 ,i>.3728/66
2)OJNoL299,17.8.1973 ,p.28

-3-
2.Thenetgrantequivalentofaidsandinterventionsshallbecalculated
■inthemannersetoutintheCommission' S'Communication totheCouncil
of23Julie1971onGeneralRegionalAidsSystems(l)subjecttoanyamend­
mentssubsequently madetothismethodofcalculation.,
Article3
1.Aidsandinterventions todefraythecostsresultingfromthepartialor
totalclosureofsteelplantsmaybeconsideredcompatiblewiththeor­
derlyfunctioningofthecommonmarket.
2.Thecostseligibleforsuchaidsand,interventions shallbethefollowing
.-Paymentstoworkersmaderedundantorretiredbeforelegalretirement
age,wheresuchpaymentsarenottobemetbycontributions pursuant ,
toArticle56(0(°)or(2)(b)oftheTreaty;
-paymentsduetothirdpartiesinrespectofthetermination ofcon­
(tracts,inparticularforthesupplyofrawmaterials;
-expenditure incurredfortheredevelopment ofthesiteofclosedsteel
*plantforalternativeindustrialuse.
3.MemberStatesshall,witheffectfrom submitsix-monthly
;.'reportstotheCommissiononaidorintervention decideduponinthe
courseoftheprevioussixmonths.Thesereportsshallcontainthe
followinginformation oneachclosure: -
-anidentification oftheundertakingorplantclosed;
–theamountandprecisenatureofeligibleexpenditure duetothe
closure;
–theamount,natureandotherparticularsoftheaidorintervention .
(1)OJNoC111,4.II.I97I..
./

Article4'
1.,Aidsandinterventions tofacilitatethecontinuedoperationofcertain
undertakings orplantsmaybeconsideredcompatiblewith,thedrderly
functioningofthecommonmarketiftheymeetthefollowingcriteria,
Vthatistosay/
.-theyformanintegralpartofarestructuring programmedesignedto
assisttheproductionunitinquestiontobecomecompetitive andable
tooperatewithoutaid,thesaidrestructuring programmebeingcompa­
tiblewiththeGeneralObjectivesforsteel;
-theyareoflimiteddurationorprogressively reduoedatasufficient
rateforthemtobeeliminatedwithinareasonableperiod,havingre­
gardtotherestructuring programmeundertaken ;
-iheyarelimitedinintensityandamounttothatwhichisabsolutely
necessaryinordertoenablecontinuedoperationduringtheperiodof
therestructuring ;and .'
-theydonot,inthecaseofsupporttariffs,appreciablyaffectcompe­
titiononthetransport ,marketconcerned. -
2.Initsexaminationof^achproposaltheCommissionshalltakeaccountof
theproblemsfacingtheproductionunitorunitsinquestionandthere­
gionorregionsconcerned.
Article5
Emergencyaidandinterventionintendedasatemporarysolutionforthe
rescueofanundertakingpendingadefinitivesolutiontotheproblemsof
theundertakingconcernedmaybeconsideredcompatiblewiththeorderly
functioningofthecommonmarketonlyincaseswheretheyarerequiredin
ordertocopewithacutesocialproblems.Otherthaninexceptionaland
fullyjustifiedcases,suchmeasuresshallbeintheformofastateguaran­
teeorofaloanatacommercialrateofinterest.
Article6 v
1.TheCommissionshallbeinformedfinsufficienttime*toenableittosub–
mititscomments,ofanyplanstograntoralteraidsandinterventions
pursuanttoArticles2,4a-nd5«TheMemberStateconcernedshallonly
putitsproposedmeasuresintoeffectwiththeapprovalofandsubjectto

anyconditions laid down by "theCommission .TheCommission shall make its -
•views known assoon aspossible having regard totheurgency ofthecase .
If,after giving notice totheparties concerned tosubmit their comments ,
theCommission finds that theaidorintervention isincompatible with
theprovisions ofthis Decision ,itshall inform theMember State concerned
ofitsdeoision .When aperiod oftwomonths from thedate ofreceipt of
thenotification oftheplan inquestion hasexpired without theCommis­
sion having initiated theprocedure herein provided fororotherwise having
made itsviews known ,^hemeasures maybeputinto effect ,provided that
theMember State hasgiven prior notice to/theCommission ofitsintention
sotodo*
2.Where aMember State has put into effect aids orinterventions contrary ,
totheprovisions ofthis Decision ,theCommission maybymeans ofade­
cision addressed tothat State require therepayment orother withdraiiial
Ioftheaid orintervention mquestion .
Article 7
1.Allplans proposed byMember States which involve anaction within the
meaning ofArticle 67(l)oftheTreaty shall benotified totheCommis­
sion insufficient time toenable ittasubmit itscomments thereon .The
proposed plans shall only beputinto effect with theapproval ofand
subject toanyconditions laid down bytheCommission .
2.TheCommission shall evaluate such plans in'thelight notonly of
Article 67(2)and (3)oftheTreaty ,butalso ofthegeneral objectives
and ,asappropriate ,oftheparticular provisions ofthis Decision /
3«When aperiod oftwomonths from thedate ofreceipt ofthenotification
oftheplari inquestion hasexpired without theCommission having initia­
tedtheprocedure provided forinparagraph 4orotherwise having made
itsviews known ,themeasures inquestion maybeputinto effect ,pro­
vided that theMember State hasgiven prior notice totheCommission of
itsintention todoBO. ' " •
4-Where theCommission reaches anegative opinion ontheplans inquestion ,
itmay ,after consultating theConsultative Committee andtheCouncil ,
address thenecessary recommendation' totheMember State concerned .

Article8
TheCommissionshallprepareregularreportsontheoperationofthisDeci­
sionfordiscussionwithexpertsfromtheMemberStates.Itmayalsoseek
theviewsoftheseexpertsintheoaseofthemoreimportantaidandinter­
ventionplansnotifiedtoitbeforetakingapositionontheseplans.
Article9
ThisDecisionshallapplyuntil30June1981.
Article10
ThisDecisionshallbebindinginitsentiretyanddireotlyapplicablein
allMemberStates.
Doneat .1978
FortheCommission