ARCHIVESHISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(81)598
Vol.1981/0182

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(81)598 final
Brussels/23October1981
REPORTFROMTHECOMMISSION TOTHECOUNCILB
ontheapplication ofCommission Decision528/76/ECSC
regardingtheCommunitysystem*ofmeasurestakenby
theMemberStatestoassistthecoal-mining industry
/
•)
I :
\.>^--* Λ,Ο..-.«5
COM(81)598final

INTRODUCTION
1.Bywayofanintroduction tothe "background leading uptoCommission
Decision No528/76/iiESC^>itshould bepointed outthatatthe "beginning
ofthesixties -asaresult ofcompetition frorr .oil -theCommunity 's
coal-mining companies were inavery difficult position where sales were
concerned and ,asaresult ,were forced toclose down alarge number ofpits .
Thepitclosures andtheresulting laying-off ofworkers assuming such
proportions in1964/65that social unrest inthecoal-mining areas wason
thecards andpolitical action wasrequired .Itwasnecessary toadjust
output tothesales potential ,andtherate ofclosure ofpits hadtobe
1slowed down inorder torelieve regional andsocial problems .During this
process ofadjustment ,thecoal-mining firms received subsidies from thecompe -
\
tent national authorities inorder toremain financially viable .As,pursuant
toArticle 4(c)of,theEC3C Treaty ,subsidies arenotallowed ,in1965 the
HighAuthority adopted Deeinion No3/65^-pursuant tothefirst paragraph of
Article 95ofthe3CSC Treaty -whereby State aidcould begranted tothefirms
ifthis facilitated theprocess ofadjustment andifthesubsidies were approved
bytheHigh Authority beforehand .
2,Thecompetitive andfinancial ,position oftheCommunity 'scoal-mining firms
scarcely improved intheperiod ofoperation ofDecision Ho3/65from 1965
to1970 ,andsubsidies were still required .However ,experience acquired as
aresult ofapplying Decision No3/65enabled theCommission toamend the
Decision onanumber ofpoints rather than simply extending itsperiod of
validity .ThenewDecision (.No3/74^)still adhered totheprinciple of
• ■
l)Commission Decision No528/76/BCSC of25February 1976 regarding the
Community system ofmeasures taken bytheMember States toassist the
coal-mining industry (OJNoL63of11March 1976 ).
?)Protocol onenergy problems of21April 1964(OJNo69of1964 ).
3)OJNo31ofFebruary 1965 »p.480 .
4)OJNoL3of5January 1971 »p»7*
C

-2-
adjusting output tosales conditions while avoiding serious disturbances
tothesocial conditions prevailing inthecoal-mining areas .
This Decision wasinforce until 31Decmeber 1975 *
3.Thehope that theCommunity coal --mining industry cculd achieve ;financial ;
balance between costs andearnings by1975 wasnotrealized .Onthecontrary ,
losses pertonne rosefromsome 3EUAin1970 toalmost 5SUAin,1975«*The"
» - k
firms were notviable .;unless they were subsidized ,-,andasitseemed likely . ■
that subsidies would beneeded for .theforeseeable future ,there needed tobe .\
alegal basis forgranting theaidinquestion .Thequestion therefore arose ':
aqtowhether theperiod ofvalidity ofDecision No3/71should beextended
orwhether anewDecision should beadopted . : . ■• i
V ,
4.Events ontheworld oilmarket in1973 /74ledtheCommission andthe
Council toabandon theobjective ofadjusting Community production tothe
sales potential -onthegrounds ofthesecurity ofsupply ingeneral -in
\ ffavour ofincreasing coal consumption andstabilizing output intheCommunity >
iinder satisfactory economic conditions .Asaresult ,Decision ITo3/75haulto
bereplaced byanewDecision with adifferent emphasis .
TheCommission therefore adopted Decision No528/76/ECSC of25February 197^ '
which sets outthenewapproach andcriteria andconditions whereby aidmay
2 . ......begrafted .Themost important aspect ofthenewapproach wasthat subsidies
1)Comparable figures (3U-6 ).TheUnited Kingdom isnottaken into account
asitwasnotamember oftheCommunity in1970 *
2)Inorder tomake iteasier fortheMember States' Governments toapply
Decision No528/76andtoolarify thesystem ofaids asawhole ,theCommission
adopted Decision No2514/76/ECSC of30September 1976 which provides guidelines
for the notifications tobemade tothe Commission and the aid calculation
procedure (Decision No2514/76/ECSC regarding theCommunity system ofmeasures
taken bytheMember States toassist thecoal-mining industry .

-toadjust 'output 'tosales potential would "beallowed only inthecase of
coalfields with alowlevel ofproductivity ,while coalfields with ahigh
level ofproductivity could receive subsidies tostabilise orincrease their
production capacity .Inaddition ,theestablishment ofthesystem ofaids for
nlengthy period oftime' waspart ofthenewapproach ,with aview tomaking
iteasier for firms totake decisions concerning investment andproduction ,
Asaresult ,theperiod ofvalidity ofDecision Wo528/76wassetattenyears
from 1976 to1985 . .• '
5.Given the circumstances in1975 »itwas impossible toforecast towhat extent ,
thecompetitive andfinancial situation ofthecoal-mining undertakings would
change inthe following tenyears .Neither wasitpossible toforesee exactly
howuseful the new Decision and implementing Decision would prove tobe.That
iswhy :
-Section Vofthepreamble toDecision 528/76lays down that "theCommissioa
will inform the Council during 1980 ofhowthis Decision isbeing applied ";
-Article 18(2)ofDecision 528/76provides forthepossibility ofrevoking
(oramending theDecision five years after itsentry into force should any
new developments render this necessary .
6.Theexperience gained from thepractical implementation ofDecision 528/76
between 1976 and 1930 isdescribed below .Chapter Iistherefore ageneral
survey ofdevelopments inthe coal market and incompetition insofar asthey
affected aids.Chapter IIdescribes theaims ofDecision 528/76andthe
difficulties ?tobeovercome ifthe aims were tobeachieved .Chapter III deals
with the problems arising inconnection with thepractical application ofthe
Decision andChapter IVsets outtheconclusions . '

CHAPTER I
Chan ,-resinthe coal market and inthe financial situation oftheundertaking
ofthe Community 'scoal-mining industry
7.Various measures introduced bytheCommunity andtheMember States •Governments
toreduce oilconsumption orincrease coal consumption ,andparticularly the
changes intherelative prices ofdifferent energies together with theconse­
quent consumer reaction ,helped toincrease coal consumption intheCommunity
between 1975 and1980 .Whilst theCommunity 'stotal primary energy consumption
-864million toein1975 -rose only slightly (by8fc)to932million toein
1980 ,coal consumption during thesame period rose from 282million t(tonne
fortonne )tosome 316million t,i.e. by12%Although thereal increase in
coal consumption mayappear modest itshould beremembered that itmarks a
significant change intrend ascoal consumption intheCoiimmity hadfallen
bySOmillion tintheperiod 1970 to1975 *This change incoal consumption is
reflected invarying degrees throughout theCommunity .
8.The -useofcoal inpower stations ^hascontributed significantly tothenew
trend .Theconsumption ofpower station coal intheCommunity hasincreased
sorapidly from 1?5million tin1975 "to181million in1930 that itmorethan
compensated forthedrop inthedemand forcoke (duemainly tothecrisis
inthesteel industry )andother sectors .This means that itwasdeliveries of
power station coal that predominated andbrought about arestructuring ofthe
coal market .^Deliveries topower stations ■'accounted for44$°ftotal coal
supplies toallconsumers intheCommunity in1975 »compared with 58/0iri193C .
9.Therevival oftheCommunity coal market wasnotdueentirely toCommunity
coal production .Thequantities ofcoal imported rose form 41million tin1975
(14%oftotal consumption )tosome 74million tin1980 (25$oftotal consumption .
l)Secluding electricity generated privately byindustry

and theemphasis shifted from coking coal tosteam coal .Between 1975
and19?0 coking coal imports into theCommunity rose by11million
(i.e. C/\%)whereas imports ofsteam coal rose by22million t(i.e,113 /j)»
10.This increase incoal imports into theCommunity canbeascribed toseveral
factors :
/
-i'orpurely technical reason ^,Community production couJd nothave kept up
with therise indemand (+34million tintheperiod 1975 to1980 ).
-Some Community coal issold atworld market prices andsome athigher prices .
Asselling atworld market prices means heavy losses forCommunity producers
andanequivalent requirement insubsidies -itisnotpossible forfinancial
reasons tosell unlimited amounts ofCommunity coal .
/
-Imported steam coal isgetting steadily cheaper than heavy fuel oil.In1980
.theprice ofheavy fueloiltoindustrial consumers wassome$135/tce^
whereas imported steam coal cost around ft5^/t.Ascoal wassubstituted for
fuel oil ,imported coal wasinaposition totake advantage ofthelarge
market potential .Sofax ithasalso remained more flexible with regard to
supplies .
\
11.Whereas hitherto fuel oildetermined thecompetitxvity ofCommunity coal ,
since 1975/76there hasbeen afundamental change inthefactors determining
competitivity .Asaresult ofheavy price increases intheperiod 1975 to
1980 ,fuel oilhaslost itsedge vis-a-visCommunity coal .However ,Community
(l)Beginning ofJanuary 1980 }price free atconsumer spremises .

-6-
prooucers were unable toalign prices forsteam ooal onthehigh fuel ,oil
prices ,asimported coal hasentered themarket asanewcompetitor .Having
account edfor25/®ofthe;market in1980 ,imported steam andcoking coal are
•' ^ i
still determining price levels .inthecoal market asa.whole ..Price changes
forimported coal aregiven inTable Abelow .
' » ' .
Table A
Chan /"cninthe price ofimported coal
(Average cifprices forimports into theCommunity )
>•. Cokin /rcoal -. !Pouer *station coal
1975 ; 61.70 ; .. ,
1976 • '63.10 >' ..
1977 62.10 V . 31.30 (
1978' . 61.90 . ; 33.70
1979 65.30 , 37.90'
1980 - 69.20 I50.20
(l-)Indicative cifprice ' '
. ,
12.Cor.auuaity producers ,areforced toalign their prices ontheprice ofimported
coal .Itistrue that this alignment hasallowed relatively bigincreases in
■returns per tonne expressed inUSdollars ,ascanbeseen from Table Bbelow .
But ,asTable 3also shows ,trends inexchange rates between national currencies
andtheUSdollar"' have putCommunity producers atafurther disadvantage .
During theperiod 1975 to1930 ,theparities ofthecurrencies oftheCommunity ra
four conl-nroduc tngcountries have risen ag&ine fcthe doll:ir .As?aresult ,the
i
increase inreturns por toilne ofCommunity coal isconsiderably lower when
calculated linational currencies -particularly those oftheFederal Republic
of 'Cc/'ifianv andBelgium -than when expressed inIJ3 -dollars . ' ' -

-7-
'Tali!g?
\ -
i.vIky ofch. -'-.n. -rusinreturn -per tonne nVtained byundertaking in
the Cororrunity *scoal industry 0975 -100)
1030
Calculated inUS/ Calculated in 'national
__________________ . currencies
Fedoi'ul 3epublic of \
Germany 182 13?(l)
' - *
^elgiui » 126 '99
France • ; , 161 • > 156
United Kiugdorn ■ 216 ,211
(l)According totheinformation received from German undertakings ,andincompli­
ance with their' electricity generating laws ,aids tocoking coal endadditional
•"•:reincluded inthe returns .
The above figures show that the Community *scoal industry isinintensive prise
competition with imported coal andthat thereturn per tonne has tohetailored :
tothemarket situation .Inother words itwisnotpossible tomake returns keep
upwith increased production costs .
i v - ...
13*Forseveral reasons -such asfairly high wags increases ,stagnating productivity ,
theeffects ofinflation ,etc.-theproduction costs ofthe Corronunity 'scoal
industry rose faster than returns intheperiod 1975 to19SC,Table Ccompares
production coats and returns ., -
'' '
1 Table C .
Index ofc}i?n.r.a iv >costs -j:1returns per tonne intie CoaTiunity cor..l-.ranin. -~
- industry
(Basis :national currencies )
(1975 -100)
1930
Profit ;
P'-doral Republic of 134 132 (l)
'Cernany .
Belviui -; 139 99
^ranoc . ■ I64 .. 156 Tatioe .
United Kingdom . 2/,8 * .211
1)According totheinformation received from German ur.dertaki.igs ,.jidircontplia-ac .«
with thethird electricity generating law,aids tocoking coal andaddition ?.!
receipts are inolided inthe returns .

TheiVstuit ofthedivergence between thecosts andr'eturns wasbigger lossetij
i.,o.j-itbecame .inorea'jiugli' difficult tocover costs outofreturns ,in12°C
theproportion ofthe pertonne ofcoal -produced 'covered .bythereturns
V:T,H T 'V'
.91 'j.intheFederal Republic ofOermay (l)
:■■■4'3 ,j.n-Belgiua
71 in .France . 'j.
v ;J V3 i.'~theUnited Kingdom " .'', . ,
*
Theno .riVfe-rage .figures arenot ,ofcourse ,representative ofthe-'situation itsr> ■,
j-.f)'' tv,e.cortr :andreturns ofthefirisc *individual pits ,since this situation
vuri'.s :considerably,' and -theCox;uis3ioh does nothave atits -disposal the -opcratiiig
- " '• ' ... '■ ■1 '!: - ; . - '
.data for •theindividual pits .However ,itmart be -assumed that isignificnt lowers­
(ort;epart of .marginal pits not onl^absorb ,acomparatively large proportion of .
subsidies butalso eatinto theprofits of,thefewprofitable pito ,where the 331.10
fir*hasboth ilbssmakiru ;'andprofitable pits ., >
(l,Thoreturns "include theaids tocolziag coal andadditional receipts in >.ncnrde>..ao
with' the ;third electricity generating lay.-Ifthese aids were subtracted 'from ,
returns ,it .isestimated that German undertakings would cover only &)%ofcosts .
14«-"begrowing tendency forcompanies toniake' losses necessarily ledtoaids oexng
increase !tokeep theundertakings viable -(seetable D).Aids were sohigh in
190O 'thiit certain governments found itdifficult tomake thenecessary sums ayailabl
outoftheir exchequers ,o"sbudgets hadbeen pared dow& because ofthegenerally
unsatisfactory economic ,climate .Aids covered only part of .thecompanies' actual
,-losses . ., ■ ...

-9-
Λ-».·ΙΟ -Λτ*
Trend infinancial measures ^"taken bythe Member States toaid current production
i inthe Community's coal -mining industry
(EUA/t)
.\
Federal
Republic gf
GermanyBelgium FranceUnited .
Kingdom Community
1975 (3)' 3.52 14.54 7.96 0.43 . 2.70
1976 (4) 2.62 23.08 13.55 0.23 3.00
1977 (4) 4.17 29.83 19.42 O.45 4.42
1978 (4) 10.00 36.46 24.46 I.52 7.39
1979 (4) 12.46 50.45 25.90 2.29  ?.34 '
1980 (5) 11.75 47.33 r 25.64 2.32 8.87
(1)Including aids tocoking coal tutexcluding aids tocover inherited liabilities
(2)Nottaking into account therequirements ofthethird electricity generating
law. -
(3)Calculated inaccordance with Decision No3/71. '
14)Actual payments inaccordance with Decision No528/76.
(5)Forecasts .
3)Total sums Kill.mA
l?75 (3) 3-50.3 117.3 134.5r*T Os *·'■' 720.9
1976 (4) 253.6 166.2 296.9 27.0 741.7
1977 (4) 379.9 ' 211.8 413.6 54.5 1.059.3
197B (4) '8?V r 240,6 .431,8 185.2 1.806.0
1979 (4) ' 1.162.3 ■307.8 431.6 276.0 2.227.7
1980 (3) 1.093.7 90S ."> 461.4 237.4 2.145.7
ê

-10-
CHAPTER II
Achieving theobjectives ofDecision No523/76
The beneficiaries ofthe financial measures are the undertakings ofthe
Community 'scoal-mining industry asdefined inArticle 80ofthe ECSC Treaty ,
i.e. undertakings engaged inproduction .Trade ,transport and consumption are
notcovered byDecision 528/76.
Where the economic activities ofthe undertakings engaged inproduction are
concerned ,thescope ofDecision 528/76islimited -itcovers mines only
(i.e. opencast orunderground coal production ).
Decision 528/76therefore pursues objectives solely concerned with thecoal
producers' production orcompetitivity problems ,i.e. :
-maintenance ,extension orrationalization ofthe production capacity ofpits
orcoalfields which ,having regard totheir location inrelation tomarkets ,
totheir reserves ofqualities indemand ortheir potential for improved
production ,appear best able tosupply the Community 'slong-term energy coal
and coking coal requirement under satisfactory economic conditions ;
(Article l(l)oftheDécision )
-further adaptation ofthe production ofpits orcoalfields having alow
economic return tomarket conditions insuch away astoavoid causing
serious economic and social disturbances inthose regions where re-employ -
ment possibilities arestill inadequate ^
(Article l(2)oftheDécision )
-maintaining the proper functioning ofthe Common Market incoal .
(Article 3oftheDécision ).
The oi'o'u'vation ::'-.cloyconcern thvrealisation fthe ebjoe li/oa,aiul L=it
i.->nocousc.ry fox -rv:.r>jr.sofcontent andlogic totake theains of.irticlcl )
and (r1)together .

-11-
Achieving theobjectives setout inArticle l(l )and (2)
lo.ThoCommunity 'smost productive coal-mining areas areintheUnited Kingdom ,
theFederal Republic ofGermany andLorraine inFrance .TheCampine coalfield
inBelgium isbeing kept going toprovide coking coal forthesteel industry .
Production inthese areas intheperiod 1975 to1980 v;a? fairly constant
ifonecompares 1975production (243.0million t)with1980 (238.4 million t)"*".
This istheoverall trend fortheabove regions which naturally also include
lowyield mines .Some ofthelatter have been closed down inthecourse of
rationalization ,ascanbeseen from thenumber ofactive mines (which dropped
from 297in1975 to267in1980 ).
Thereason fortheslight drop inproduction ,inthehighly productive areas
isthat theincreased output ofthebetter mines was notquite sufficient to
balance theoutput lost through uneconomic mines being closed down .The -opening
upofnewmines does notkeop pace with theclosure ofuneconomic mines .This
canhardly beexpected /,in-practice asittakes much longer toopen upanew
mine than toclose down old ones .
17.Particularly extensive trimming measures were needed inthesouthern Belgian
andFrench Centre-Midi ,andNqrd/Pas-de-Calais coalfields .Inthese less pro­
ductive areas output /from 13.6 million tin1975 to8.6million in1980 ,and
thenumber ofproductive pits dropped from 34to17.
1°.This means that intheperiod 1976 to1980 atotal of47pits wasclosed
intheCommunity asawhole .Thenumber ofunderground workers onthebooks
dropped slightly from 341500in1975 to303300inI960 .
l)Production dropped slightly meanwhile buthadrecovered by1980 .

-12-
Recent events mthe United .Kindom coal industry show the scale ofdiffi­
culties that can arise not only over redundancies but atthe mere announcement
ofthe intention tomove workers from mines that are running down toothers
that are toremain inproduction .
Under Article 56ofthe liCSC Treaty the Commission ,between 1976 and 1930 ,
provided atotal of8Q.5nillion I3CU insubsidies toalleviate the en.ploy:r.en1 :
consequences ofpit closures .
]€>.The undertakings themselves made great efforts toincrease productivity by
increasing investment .Expressed inconstant 1970 prices ,investment inthe
Communi ty mines rose from 330.0 million 3UA in1975 "to693.3 million in1930 .
This means that investment per tonne ofproduction more than doubled -from
1.26 to2.32 KUA.The investment credits made available tothe coal-mining in­
dustry bythe Commission have also (nominally )almost doubled from 161million
ETTA in1975 to294 million in1980 .
However ,the effect onproductivity has been small .Average output per man-hour
inthe Community hasrisen from 407 kgin1975 "to4^5 kgin1930 (only 4»4/&which
gives anincrease ofless than \c]operyear).
This stagnation inproductivity isdue totwo factors :
-some ofthe investment made between 1975 and 1980 hasnotyet worked through
tothe production level ,asthe object ofthe investment was tomake upfor
the lack ofinvestment prior to1975 and thereby create the basis forstabi­
lizing production .Incoal mining this takes along time .
-Onapurely technological level there arelimits toincreasing productivity .
Inallcoalfields 95to98%ofthe winning andsupport operations are now
mechanized .

20.Bnoflc.'ric condition *?hiV <^net improved satisfactorily inthe Comnunity*s oool-
tjninj industry .They have infact deteriorated# However ,asalready mention --!
i.iSMpter I|itit -not thesubsidy system butthesituation .onthe market un<!
theconditions ofcompetition that aretoblame forunsatisfactory returns ,
t'-jconcerns the increase inproduction costs ,the small increases inproductivity
,fo'jthe on-:' hand and thehigher wages and equipment prices ontheother raised
real costs bySf .intheFederal Republic ofC!erma«iy and 33^inthe ,United Sin^lon
during theperiod 197Jto1?5C.'Initsmedium-tern guidelines forcoul ^howevvr ,
the CoDi'ission has assrur.ed that real costs would remain stable .«
v»/ • •, - :
Y .-.i-'t'i.ininr the proper f'netionin ;:ofthe Common t.*ar?r?t innoal
21.Twofactors are p-iriicularly important for ensuring theproper functioning o_
thr-.C'*u.i-.!on Karket inc-oal ini.ccordjnce with Article 3,ofDecision t
-• levol .ofaidsj " * .
-poiipetition between the Cooraunity 'scoal producers .
1 '
22# AivN ri'ould lujaohigher "than absolutely nt'iceocary *aart'.should not co!u jrtv!:.iti *•
indirect subsidization ofindustrial connlasers (Article 3(3))•
•• ' ' ■ ' ' ■
The Cnnninsion fsmono^an^a for theperiod 197^to12-C c/.ithefinancial aid
(l)Tcdr -juri-tora cuilelinea forcoal f.X?7>Τ5ΒΓ .ΓΤ.Τ C?'Ccf3Januâry 1975

-M- :.:.-'
- ; - ''' l) ■'
.awarded bythe I-Ie;:.ber 'States tothe coal-mining industry ,include ,th2results
'■>finr.ljr.ar ^of .thepermit Sedlevel ofaids andrelative prices ,The •i-r ■ 1
S-XV ;that aids have ,nlways 'been lowr than tliepermitted .Tcsral *: ■
Sua:idler tocover lo.icea'wfire' inmanycases much lower than tielosses .Inother
word /.-1theundertaking -hadto.bear part oftheloss themselves .
Prices for Community .coal "have never been lower ,than those for ,comparable competing
imported .energy carriers .Thecriterion of -avoiding direct subsidies toindustrial
consumers has therefore been met. •-.'• 'J'
23#When oxhninj measure -?.-toassist thecoal industry ,intra-Co:a:!iunity trade ,andthe
,ctc.te ofcompetition between producers anast betaken into consideration (Article 2
/n\\ ' ;' .' " 'i?1 , •, V
Ascan beseen from table 3 -vpage 8)there ,arerelati vely bigdifferences between
the amounts ofaidper -tonne granted bythedifferent Member States .,This .could
distort competition between producers .Infact ,from ,the information ..the under -;
takings have provided for the Commission ,nosuch distortion h.i,s :;occurred Iscaiv e
thorphan been less competition between producers .This isillustrated bythe ■'
» . •- ' ■
followiag criteria ^
'• ' * . ' *' •.\ .
-'"ho amounts ofcoal sold ataligned prices resulting from competition "betwen
coal producers 'inthe Common Marlcet incoal were small and have decreased
further from 1.5million toin1975 (O.Cjo ofCommunity production )to0,7 -million
.•JT-*' v i
I111775 (0,2/«ofproduction ).Hotall -'thefigures for 1?8C have been i-eoelvid y.-t
but from those available itisclear that there has been afurther decrease , ,
(l)1976 ,CQK(77)127
1911 ,cc»:(77)570^70,CO!.'(77)357
•"?!?, coi.:(8c)349
19-0, .CGK(B1)96 -

-13
-TV':wno'«t ofcor * 'idt'iin the Community h.tsharlly CLCM^^Xl-otwfi^n
5?75 '0-5.3 million t)and1110 (l%5t)joal/.tosfattoru fcv-■•:«1tor?d
niijhtty #S-sc :uneofdifficulties inthesteel industry the' haoiurt ofco'-cinj
coal irulc 'aar decreased Whilst the amount ofsteam cor-1 hcuj increased ,
Fro-ij this itisclear thit,«afar ascaa beseen ,the aide hs.ve notdistyrted
v
competition hetweei producers ,and thecriteria ofI^cisioa 5-3/75hhve there­
..,fore l'tân met. •
- ' . · > ·. .- .ν
r • '
24m From developments oyer • last few/ears ,?£'described inCh?.pter II,itaey
•lieconcluded that theexpectation :;-erobodiei' inDecision >23/7^hiv?l2en ful 1-
•fin -a.•i' • '

-1f,-
C"/-Pa,:]T?TI~
Froblem ;:arising inthe practical application ofDecision No528/76
25.Under the Decision Member States 'Governments have to
apply tothe Commission by 1November ofeach year forauthorization oftheir
aid programmes for the following year .
Inpractice ,the Member States' applications frequently arrive well after
1November and authorizations are equally delayed .The delays insending communi­
cations bythe MemberS '-tee 'Governments are due tovarious technical andpolitical
factors .
The technical problems arise out ofthe fact that the financial forecasts which
have tobemade each autumn for the following year inthe coal-mining industry
depend onproduction levels ,returns ,wages ,productivity ,the cost ofmaterials ,
etc.
Politics also enter into the equation since experience ,inthelast few years
has shown that Member au Governments tend todelay decisions onthe amount
ofaid they intend togive their industry orpostpone having tomake binding
commitments tothe coal undertaking 'sbecause such decisions represent political
commitments which might have far-reaching consequences .
However valid these arguments may be,itmust besaid that forreasons ofprin­
ciple theauthorization ofaids after they have actually been paid must not be
allowed tobecome standard practice .Prior authorization bythe Commission is
necessary ,for instance inorder todetect ingood time and prevent the
distortion ofcompetition .Infuture ,therefore ,delays incommunicating aid
•plans tothe Commission must beavoided ,
26.Insome instances thepractice ofgranting subsidies hasraised problems which
affect theapplication ofDecision 528/76;these arecaused not bytheDecision
itself but bythe whole question ofsubsidization .

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-Social welfare inthe coal-mining industry isorganized differently inthe
different Member States ,Inthe Federal Republic ofGermany ,inPrance andin
Belgium there arespecial insurance schemes for the ooal industry whereas coal
miners inthe United Kingdom come under thenational insurance system .Under
the integrated systems thesooial costs borne bycoal-mining undertakings ,
expressed asaproportion ofproduction costs ,arerelatively lower than those
under aspeoial scheme .This canaffect competition andthelevel ofsubsidies .
But none ofthis can bealtered ,since thesooial insuranoe systems ofthe
various oountries ,together with theadministrative structures andlegal bases ,
have been inforce over along period and must beregarded asafact oflife .
-Some measures (e.g. loan guarantees ,liquidity aids,interest rebates ,speoial tax
rules foramortization ,revaluation offixed assets ,eto.)have been introduced
which influence production costs .However nobody -not even the Commission -can
quantify the consequences interms ofcosts .
-Insome cases charges have been laid ontheconsumers ofooal (e.g. thethird
eleotricity generating lawinGermany and special requirements forutility
companies inother countries touseooal).Suoh measures transfer financial
advantages indirectly toindigenous coal production ,and reduce considerably
transparency and comparability ofnational funding within the framework of
Deoision 528/76.Inlegal terms #oharges imposed upon consumers arenotaids,and,
therefore ,not covered bythe Decision .
-Limiting aids solely tocoal production oreates the problem familiar toall
coal producers ofdrawing aline inthe cost accounts between the undertaking *s
mining andother activities .CEPCEO 'sworking party oncosts andreturns has
established principles that are standardized asfar aspossible andare used
inpractioe .Unfortunately ,however ,ithastobesaid that there axe nostandard

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•methods foraccounting forCommunity aids .Aninternational comparison of
profits inthe coal-lining industry ofthevariour ;Comrr.unity countries wooil
therefore beoflimited significance .3xperience hasshown that theonly vqlid 1
comparison arethose -between relative levels . '
27,Aytbeabove observations .ehowj practice .with regard tosubsidies ,hascaused
'certain problems anddifficulties ,butthese have arisen not asaresult ofthe
Wayinwhich Decision No523/76isframed batbecause ofthevery nature and
characteristics oftheaids .thesignificance andsuitability oftheDecision are
innowaydiminished bythis . .

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CHAPTER I>/
Conc liasion
Since 1976 when Deoision 528/76entered into force thefinancial position
ofthe coal mining industry inthe European Community worsened significantly
ascan beseen from the foregoing .Hence ,the problems ofthe Community 's
energy supply and thesituation onthe world ooal market have undergone profound
ohanges .Ingiving itself new energy objectives for 1990 »the Community has be­
guntoadapt itsstructure anditsconditions ofsupply and consumption .It,
therefore ,seems logioal totake ,inthe context ofacoherent energy policy ,a
fresh look atall questions related toacommon coal policy .Asthis will
take some time ,the Commission does not intend ,atthis moment ,topropose
anymodifications ofthe system ofmeasures taken bythe Member States toassist the
ooal mining industry .