ARCHIVESHISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(78)532
Vol.1978/0194

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(78)532final
Brussels.26October1978
PROPOSITION' OPCOUNCILREGULATION(EEC)
ONCOMMUNITY AIDFORINDUSTRIAL RESTRUC­
TURINGANDCONVERSION OPERATIONS
(Submitted "bytheCommissiontotheCouncil)
xvVKAVA^"vV-rfs.S•*)*1
_*.-,-
\* ~–*,
: §3
^**1
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COM(78)532final

EXPLANATORY MEMORANDUM
"Aityis . .
1.Theexistence ofexcess production capacity together with the
emergence ofanewinternational division oflabour have ledcertain
sectors ofindustry intheCommunity toundertake restructuring
programmes inorder toestablish ,atastabilized orreduced level
ofproduction ,adegree ofcompetitiveness which will enable the
undertakings concerned toface uptointernational competition
without special protection® ,
Inmost cases ,thestate ofthemarket issuch that these undertakings
cannot themselves find thenecessary resources forrestructuring#
.This is .particularly thecase inthesectors ofshipbuilding ,andtextile
andsynthetic fibres ,Inother sectors ,such asrefining ,thenecessary
-redevelopment operations ,encounter difficulties of,-financement .
2®TheCommunity 'sfinancial aidhasatwofold aim :firstly ,itis
directed atrestructuring programmes which invest inrationalization
research ,modernization ofequipment and ofproduction andmanagement
andsales techniques ;secondly ,itisaimed atconversion programmes
which will help toensure that jobs aremaintained either inthe
sector itself orinanyother activity ,where this isjustified by
theemployment situation intheregion where theundertaking to
be .restructured issituated® 'Inboth cases .,Community aids must ,
serve thecommon objectives defined atCommunity level (Article 2)®
3".TheCommunity isable tosupport restructuring andconversion operations
from theappropriations entered intheBudget forrestructuring andcon­
version measures onbehalf ofcertain industrial sectors incrisis only
where thenational authorities contribute tosuch operations through
their existing aidschemes orthrough procedures which permit recourse
toother Community instruments (Article 2).

METHODS AND PROCEDURES
1.Aids take the form ofinterest rebates orinvestment premiums inaccor­
dance with the method.8 set out inArticle 3«They complement national
aidmeasures and aid available through ether Community instruments ,
inparticular theERDF (Article 2).
2.Interest rebates are a^ailbale inprinciple onloans financed bythe
EIB ^/and "byCommunity loans /(Article 2),
3»TheCommission ,acting inaccordance with theprovisions ofthis Regu­
lation (Article ll)andconsulting theCommittee setupforthis
purpose (Article 7)?defines theprocedure forgranting aidanaexamines
applications foraid «First ofall ,the sectors eligible for aidare
designated byadecision ,ofthe Council ,acting onaqualified majority .
4.The use ofCommunity funds issubject tothe rules onthe financial
control oftheimplementation oftheBudget (Article 5)'

Draft
•-COUNCILREGULATION(EEC)No/78
of.1978
ONCOMMUNITYAIDFORINDUSTRIAL RESTRUCTURING AND
'"CONVERSION OPERATIONS "
THECOUNCILOFTHEEUROPEANCOMMUNITIES,
Havingregardto"theTreatyestablishingtheEuropeanEconomic'Community,
andinparticularArticle235thereof,
Havingregardtotheproposalfrom.theCommission,
HavingregardtotheOpinionoftheEuropeanParliament,■'
HavingregardtotheOpinionoftheEconomicandSocialCommittee,
WhereastheEuropeanCouncil,~.atitsmeetingheldon5and6December1977
inBrussels,decidedthat,inordertoadapttheEuropeanproduction
machinetothenewconditionsprevailing ontheCommunityandworld
markets,solutionstothestructuralproblemscommontoallMember
Statesshouldincreasingly hesoughtatCommunitylevel;whereas,at
itsmeetingheldonJand8April1978inCopenhagen,theEuropean
CouncilstressedthatthemainaimoftheCommunity'sstructuralpolicy
should "betorestorethecompetitiveness ofundertakings ;
.1. ' ■
Whereasitisgenerallyrecognized "thai;structuralchangesarefacilitated
"bysustainedeconomicgrowthand"bytheexpansionofinternational trade
inafreemarketsystem;whereasithasalsobeenrecognizedthatfor
economicandsocialreasonspublicinterventionisjustifiedinspecial
casesinorderthatstructural "changescaitbecarriedoutrationally;
whereassuchaotionmustbeconsideredcasebycase;
Whereas,incertainsectors,thefinancialsituationoftheundertakings
inquestionandthesocialandregionalconsequences ofrestructuring
aresuch"thatstructures'cannot "beadapted-withoutassistancefromthe

-2-
public sector }andwhereas theCommunity dimension oftheproblems and
the fact that theCommunity' sresponsibilities intrade relations are
bound upwith the reestablishment ofthe competitiveness ofthese sectors
mean that restructuring must beintegrated intio Community policies }
Whereas ,therefore ,there isaneed both forselective Community aids to
stimulate undertakings byinvestment inaccordance with these policies and
forCommunity aids forconversion investments linked with restructuring ,
such astocreate ,inthe areas concerned ,jobs for redundant workers in
the sectors inquestion }
Whereas ,since theTreaty does not provide theCommunity with thenecessary
powers ,action must betaken under Article 235oftheTreaty ;
Whereas abroad framework must bedefined for the scope ofintervention
andforthecriteria andprocedures fortheCommunity aids which could be
introduced ineach ofthe sectors designated bytheCouncil andforwhich
restructuring plans will bedrawn upatCommunity level }
Whereas this general framework must becomplemented byguidelines specifying
theprocedures forandthecriteria governing thegrant ofaids in
accordance with theaims ,situation andcharacteristics ofeach sector ;
Whereas theCommunity aids granted onthebasis ofthese guidelines must
also beconsistent with themeasures onstate aids adopted both bythe
Council andbythe Commission ;
Whereas itisessential toensure consistency andcoordination between
aidmeasures carried outpursuant tothis Regulation andaidcarried
outunder the other financial instruments oftheCommunity ,bethey in
thesame sector orinthesame region ,sothat alltheavailable means
canberationally combined toachieve maximum efficiency ;whereas
suitable coordination must also beensured tothe same endbetween all
types ofCommunity aidandnational aid;whereas ,"toachieve this ,the
Community mayactunder "this Regulation only totheextent that the /

nationalauthorities themselvesaremakingeveryefforttoachievethe
Communityobjectivesinthesectorinquestion; *
WhereastheCommissionmustensure,inconjunctionwiththeMemberStates,
theproperadministration ofinvestments "benefitingfromCommunityaid«wH.
effectively monitortheoperation,
HASADOPTEDTHISREGULATION :
Article1
.+ ..
1.Thepurposeoftheaidsgrantedshallbetoassist,ineachofthesectors
referredtoinparagraph2,'theeffortdeployedbyindustrytofinance
investmentsfortherestructuring ofindustrialundertakings .
2.TheCouncil,actingonaproposal,fromtheCommission ,shalldecide,by
'aqualifiedmajorityonthosesectbrstowhichaidmaybegranted.
3«Theaidsmayalso,undertheconditionslaiddowninArticle2(2),be
directedtowardsinvestmentsforconversiontoothersectors,i.e.in­
vestmenttohelpundertakings changetoothertypesofactivity,or
tocreateintheareasconcernedandinotherfieldsofactivity,new
jobsintendedprimarilyforworkersmaderedundantbyrestructuring
operationsorbythetotalorpartialclosureofsuchundertaking .
■ , •r'' .- .
4«TheinvestmentprojectseligibleforaidunderthisRegulationmustnot
~haveinvlovedthecommencement ofanyconstruction work.
Article2
1.Asregardsrestructuring operations ,priorityshallbegiven,withinthe
meansavailable,toprojectswhichserveCommunityobjectivesandcontri­
butetostableemployment,havingdueregardtothescaleofthefinancial
effortrequired,thefinancingpotentialoftheundertaking ,accessto
othersourcesoffinanceandtonationalaidsand,whereapplicable ,the
possibilityofaidfromotherCommunityfinancialsources,thiswitha
Viewtothecombinedandmostefficientuseofallresources.

-4-
2..However,iftheemploymentsituationintheareaorregionofthe
undertaking to"berestructured issoseriousastojustifyCommunity
aidandifjobshavenotbeenfoundforthelabourmaderedundant,the'
budgetaryresourcesgovernedbythisRegulation maybeusedforaids
toinvestmentprojectsforconversiontoothersectors,providedthatno
otherassistancehasbeenprovidedfromotherCommunityfinancialin­
struments ,inparticulartheEuropeanRegionalDevelopment Fund.In
extremelyserioussituations ,however,aidunderarticle1§3,maybe
grantedinrespectofprojectsreceivingotherformsofCommunityaid.
3.TheCommunitymaygrantaidunderthisRegulationonlyiftheMember"
Atatesconcernedbytheinvestmentoperationwhichmaybeeligiblefor
financialaidunderthisRegulationhasimplementeditsownsystemsof
aidandhastakenthenecessarystepstoobtainaidfromCommunity
Funds. '
Article3
1.TheaidreferredtoinArticle1maytaicetheformofinvestment
-
premiumsorinterestrebatesonallorpartofloans.Interestrebates
shall,inprinciple ,begra.ntedonlyfinancingoperationscarriedout
withthehelpoflaonsfromCommunitybodies.
2.Interestrabatesshallbegrantedforapartofloansnotexceeding50%
o»fthecostofeligibleinvestment ,andinthecaseofconversion ,the
saidpartshallnobexceed25,000EUCparjobcreated.Therabateshall
\beforaperiodof5yearsandamountto3percentagepoints,butshall,
inanycase,notexceed40fooftherateofinterestpayableonthe
loan.Exceptionally ,therebatemayberaisedtothelowerof5percen­
tagepointsortwothirdsofthereleventrateofinterestforthesame
periodof5yearsforconversioninvestmentundertaken :
a.intheleastfavouredregionsorinregionsorzonesparticularly
affectedbyrestructuring ;
b.bysmallandmediumsizedentreprises

Investmentgrantsshallnotexceedthegrant-equivalent ofthemaximuminteres
thatcouldhaveJbeengrantedunderthetermsofsub-paragraph 2ofthis
article.TherataofdiscountandthereferenceratewhichshallToeused
forthepurposeofthiscalculation shallbstherateofinterestwhich
wouldhave"beenchargedbytheEIBforaloandisposedinseveralcurrencies.
TheCommissionshall,inrespectofeachsectordesignatedbytheCouncil
pursuanttoArticle1,makeapolicystatementdefiningthecriteriagover­
ningthegrantofaid.
* Article4
TheaidsshallbedecideduponbytheCommissioninaccordancewiththe-
procedurereferredtoinArticle8.Applications totheCommissionfor
aidshallbemadedirectlybytheinvestorsorthroughtheintermediary
oftheMemberStates.TheCommissionshall,ineachcase,seektheopinion
oftheMemberStateconcerned .
Requestsforaidmayalso,wheretheyaremade'inconjunctionwithan
applicationforaloan,besubmittedwiththeloanapplication through
theEuropean .Investment Bank,*whichshallforwardthemtotheCommission .
Theseapplications shallstate: ...
fortheinvestments referredtoinArticle2:.' -•
-thenameoftheundertaking }
/-thenameandlocationoftheplantj. . ■
-thesectorofactivity! "
-thesite,theamount,thenatureandtheimplementation schedule
oftheinvestments ;
-theeffectsonemployment ;
-themarket ,prospects; ■'
-thecostoftheinvestmentnecessary ;
-thefinancingplanandconditionsincludingtheamountofandmethods
governingnationalaidsand,whereapplicable,otherCommunityaids.

•Theinvestorsshallsupplyanyadditionalinformation whichthe
Commissionmaydeemnecessaryandshallaccepttheinspectionsrequired
toensuretheproperimplementation oftheprojects.Acontract
shall "beconcludedtothiseffect "betweentheinvestortowhomthe
£,.aidisgrantedandtheCommission.Thiscontractshallalsoestablish
theproceduresforpaymentoftheaid.
Article5
Ifaninvestment whichhasreceivedaidhasnot"beencarriedoutas'
planned,-oriftheconditionsofthisRegulationarenotfulfilled,
theaidmay"bereducedorcancelled "bydecisionoftheCommission,
takenafterconsulation oftheCommitteereferredtoinArticle7»
inaccordancewiththeproceduresetoutinArticle8(3).
MemberStatesshallmakeavailabletotheCommissionallinformation
requiredfortheapplication ofthisRegulationandshalltakeall
stepstofacilitatesuchsupervision astheCommission mayconsider
useful,includingon-the-spotchecks.
Notwithstanding verification carriedoutbyMemberStatesin
accordancewithnationallaws,regulations andadministrative
provisions,andwithoutprejudicetotheprovisionsofArticle206
oftheTreatyortoanyinspectionarrangedpursuanttoArticle209(c)
oftheTreaty,thecompetentauthorities oftheMemberStateshall,
attherequestoftheCommissionandwiththeagreementoftheMember
State,carryouton–the–spotchecksorenquiriesabouttheoperations
financed.TheCommission mayfixtimelimitsforcarryingoutsuch
checks.

4*Theobjectiveof"theseor>-the–spotchecksorenquiriesaboutoperations
financedshall"betoverify:
(a)theexistenceofsupportingdocumentaryevidenceanditsconformity
withtheoperationsfinanced;
(b)theconditionsunderwhichtheoperationsfinancedareexecuted
andchecked;
,(c)theconformityoftheprojectsimplementedwiththeoperations
financed.
5.TheCommission maysuspendpaymentofaidforaparticularprojectif
aninspectionrevealseitherirregularities orasubstantial change
inthecharacterdrconditionsoftheprojectforwhichtheCommission'
approvalhadnotbeensought# .._
Articleo
Themeasuresnecessaryfortheimplementation ofthisRegulationshall
beadoptedbytheCommissioninaccordancewiththeprocedurelaiddown
inArticle8(4)•
ν -'.' - ' '''
Article7
!•AnAdvisoryCommitteeisherebysetupcomposedofrepresentatives of.
theMemberStatesandchairedbyarepresentative ,ofthe.Commission .
2.WithintheCommitteethevotesofMemberStatesshallbeweightedin
accordancewithArticle148(2)oftheTreaty#TheChairmanshallnot
vote. ,
Article8
1#Where*theprocedurelaiddownin"thisArticleis"to"befollowed^"the
;ChairmanshallreferthemattertotheCommitteeeitheronhisown
initiativeorattherequestoftherepresentative ofaMember
-State.;

2#The representative ofthe Commission shall submit drafts ofthe
decisions to "betaken# TheCommittee shall deliver itsOpinion on
thedrafts within thetime limit which theChairman mayfixaccording
totheurgency ofthequestions under consideration# To "beadopted
anOpinion must receive 41votes#
3#Where arequest aidissubmitted under Article 4*theCommission shall "*
consult theCommittee ;iftheCommittee delivers anOpinion opposing the
Commission 'sdraft ,theCommission shall re–examine itsdraft inthe
light ofthearguments adduced bytheCommittee .TheCommission may
withdraw ,amend orconfirm thedraft :itshall adopt thedecision accor­
dingly .
4#Forquestions relating tomeasures inimplementation ofthis Regulation
ortothepolicy statement referred toinArticle 3(4),theCommission
shall consult theCommittee .TheCommission decisions shall apply im­
mediately .However ,ifadecision isnot inaccordance with theOpinion
^oftheCommittee ,itshall forthwith becommunicated bytheCommision
tothe Council .Inthat event the Commission shall defer the application
Λofthedecision which ithas adopted fornotmore than twomonths from
thedate ofsuch communication .TheCouncil ,acting byqualified majority ,
may take adifferent decision within this period .
/" •
..Article 9
Thelist ofprojects which have received aid shall bepublished inthe
Official Journal ofthe European Communities#
Article 10
Theprovisions ofthis Regulation shall notprejudice theapplication
ofArticles 92to94oftheTreaty ,inparticular Article 93(3)#
~ Article 11
Before 1July each year ,theCommission shall present areport tothe
European Parliament andtothe Council ontheimplementation ofthis
Regulation during thepreceding year#

Article12
ThisRegulationshallenterintoforoeonthedayfollowingitspublication
intheOfficialJournaloftheEuropeanCommunities .