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COM (85) 660 
 
 
 
Vol. 1985/0 239 
  
 
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der genannten Verordnung freigegeben. 
COMMISSION OF THE EUROPEAN COMMUNITIES
COM85Ï 660 final
Brussels, 22 November 1985
MEMORANDUM
on the financial aids granted by the Federal Republic of Germany,  
France and Belgium tot the coal industry in  
19 8  5
and
on the additional financial aids granted by  
the United Kingdom to the coal industry in  
1 9 8 4
(Commission Communication to the Council)
COMC85) 660 final

CONTENTS
Page
PART ONE
Memorandum on the financial aids granted by Belgium, the 
Federal Republic of Germany and France to the coal industry 
in 1985
CHAPTER I
Introduction 1/1
CHAPTER II
The situation in the common market for coal in 1985 and trends
in aid to the coal industry 1/2
1. Situation in the common market for coal 1/2
2. Financial situation of the coal industry in Belgium, the
Federal Republic of Germany and France 1/4
3. Financial aids granted by Belgium, the Federal Republic of
Germany and France to the coal industry in 1985 1/5
4. Compatibility of the financial aid set aside for 1985 with
the proper functioning of the common market 1/8
CHAPTER III
Conclusions i/H
Annex
Outline of the aids set aside for 1985 and examination of their 
compatibility with the provisions of Decision No 528/76
I. Aid not related to current production A/1
II. Aid for current production 4/5
Tables
PART TWO
Additional aid granted to the British coal industry in 1984 
INTRODUCTION
I. Additional aid set aside in 1984 for the British coat 
industry
II. Summary
Tables11/1 
11/5

PART ONE
Memorandum 
on the
financial aids granted by Belgium, the Federal Republ 
Germany and France to the coal industry in
1 9  8 5

-  1/1  -
CHAPTER I
INTRODUCTION
1. This Memorandum examines solely those financial aids set aside by 
Belgium, the Federal Republic of Germany and France for coalmining 
in 1985 for their compatibility with the provisions of Commission 
Decision No 528/76/ECSC (1) and with the proper functioning of the 
common market. British financial aids are not considered because the 
United Kingdom Government is unable to provide the Commission with 
details of the planned aid measures before November owing to the 
coal miners' strike which lasted almost a year and did not end until 
March. The financed measures planned by the United Kingdom Government 
for 1985/1986 will hence be discussed in a separate Memorandum in 
November 1985.
2. The 1985 Memorandum follows the same pattern of that of the previous 
years. The main section is devoted to the economic and financial 
problems of undertakings and to the competitive situation in the coal 
market. These findings are then used to examine the compatibility of 
aid to current production with the proper functioning of the common 
market in accordance with Article 3(1) of Decision No 528/76. The 
Annex lists the individual measures and examines their compatibility 
with the other provisions of the Decision.
3. Pursuant to Article 2 of Decision No 528/76, the Commission has received 
details of aid measures for 1935 from the following governments:
- the German Government by letter of 7 November 1984
the French Government by letter of 24 May 1985
the Belgian Government by letter of 14 June 1985.
4. As the above dates show, Governments were late in sending information 
for 1985, for under Article 2 of the Decision the Commission should 
have been notified by 1 November 1984. The delay was due to the fact 
that the Belgian and French Governments, which had difficulty in 
calculating the aid for 1985, submitted their information very late.
The United Kingdom Government also had to apply for additional aid 
for 1984. As indicated in Part Two of this Report, the aid estimates 
for 1984 were not sufficient to cover the losses of the NCB. Additional 
aid had therefore to be granted.
(1) OJ No. L 63 of 11 March 1976, p. 1

-  1/2  -
The Commission draws the attention of the Member States to the Late 
approval of the governmental notifications. The result is that the 
Commission has not been able to decide which of the aids proposed 
by the governments comply with the criteria of Decision No 528/76/ECSC. 
It is very regrettable that the procedure for approval can only be 
executed after the event. The Commission will take measures to ensure 
that the planned review of the aid system will avoid late notifications 
after 1986.
Where the Commisson obtained knowledge from the reports of Member 
State governments of economic facts which are covered by the obligation 
of professional secrecy under Article 47 of the ECSC Treaty, these have 
not been included in the Memorandum.
The following estimate of output was used to calculate the amount of 
aid per tonne for 1985 (million tonnes, t = t):
Federal Republic of
France
BelgiumGermany 85.3
15.4
6.6
Total 107.3
The following exchange rates were used to convert aid amounts expressed 
in national currencies into ECU (average for first quarter of 1985) :
1 ECU = DM 2.23
= FF 6.81
= BFR 44.7
CHAPTER II
THE SITUATION IN THE COMMON MARKET FOR COAL IN 1985 
__AND_TRENDS IN FINANCIAL AID TO THE COAL INDUSTRY
Situation in the common market for coal
The Memorandum describes only the most significant features of energy 
and coal market developments in 1985 which have a bearing on the 
granting of aid and on the competitiveness of Community coal. The 
figures refer to estimates available at the time of writing (June 1985).

- 1/3 -
The Community's real gross domestic product wilt rise by about 2% 
to 2.5% in 1985 and, as a result, total primary energy consumption 
will be 2.8% higher than in 1984. As regards individual energy sources, 
the signs are that oil and gas consumption will fall slightly while 
consumtion of nuclear energy is likely to be more than 20% higher 
than in 1984. Inland deliveries of hard coal are expected to rise by 
36 million tonnes (14.5%) to 284 million tonnes in 1985 following the 
collapse of the miners' strike in the United Kingdom in the spring. 
Power-station demand for coal in the Community is likely to rise by 
some 20 million tonnes with demand in other industries and the domestic 
sector rising by 1 million tonnes respectively. Coal consumption in 
coking plants will, however, remain stable since steel demand in 1985 
will be at the level of the previous year. There will be little change 
in the level of consumer supplies which fell by 14 million tonnes in 1984.
Coal supplies in the Community will be 40 million tonnes higher in 1985 
than in 1984; production will rise by 39 million tonnes and imports by 
1 million tonnes.
Coal producers' stocks in the Community are likely to fall in 1985 (by 
5.5 million tonnes for coal and 2 million tonnes for coke); total stocks 
of coal and coke, including the strategic stocks in the Federal Republic 
of Germany, will stand at around 44.5 million tonnes at the end of the 
year.
There has been a downward trend in the price of coal on the world market 
since the first quarter of 1983. This continued in 1984 although it 
became less marked.
Table A
Development of imported coal pri ces
US$ per tonne
Quarterly average,  (1)Power-station coal As at„ .  .  .(2) Coking coal
(free-at-frontier (ARA cif prices)
cif prices)
I 1983 54.60 02.01.1983 76.25
II 1983 51.30 01.04.1983 68.95
III 1983 48.95 01.07.1983 67.05
IV 1983 49.80 01.10.1983 65.95
I 1984 45.75 02.01.1984 66.20
II 1984 45.40 01.07.1984 64.45
III 1984 44.90 01.10.1984 64.30
IV 1984 43.60 02.01.1985 62.75
T 1985 45.30 01.04.1985 62.70
(1) Decision No
(2) Decision No77/707/ECSC
73/287/ECSC

- 1/4 -
In addition to the trend in the price of coal on the world market, on 
which Community firms have to align in many sales contracts, it is the 
exchange rate of the US Dollar which determines the undertaking's revenue 
(expressed in national currency). In general, the US Dollar rose sharply 
in 1984/1985 and the price of imported coal rose. This had a favourable 
effect on the revenue per tonne of Community undertakings. However, 
developments in production costs will mean a further slight deterioration 
in the revenue situation in 1985. Consequently, coal mining companies 
will again be unable, in 1985, to withstand the pressure of competition 
from imported coal off their own bat. Aid is thus required to ensure 
their economic survival.
2. Financial situation of the coal industry in Belgium, the Federal Republic 
of Germany and France
Reference is made first of all to the development of the cost and 
revenue situation in 1984. Complete calculations have been obtained 
from the undertakings this year and thus a comparison can be made 
with the previous year.
Table B
Financial situation of undertakings
1 )Production costs Revenue2)Difference
Ecu/t Increase Ecu/t Increase Ecu/t
19831984%19831984% 1983 1984
Federal Republic 
of Germany 102108+ 5.9 8996+ 8.3 - 13 - 12
Belgium 106107+ 0.8 7473- 1.4 - 32 - 34
France 9899+ 0.9 6667+ 1.5 - 32 - 32
Total costs including capital service and depreciation.
Because of the way in which subsidies are entered in company accounts the losses 
per tonne are not fully comparable with the subsidies per tonne shown in 
Table 2 in the Annex, which are calculated by the method laid down in 
Decision No. 528/76.
The figures in Table B show that production costs in the coal industry in 
all the three countries rose in 1984, because wage increases and the costs 
of materials were higher than the increase in productivity.
./.

- 1/5 -
Increases in revenue were recorded in the Federal Republic of Germany and France in
1984 but in Belgium there was a slight deterioration.
In 1985 a further increase in production costs on the same scale as in previous years 
can be expected, as the factors which cause production costs to rise (increase in 
material costs, wages and interest) will continue unchanged in this year.
For the matter of the revenues from Community coal in 1985 one can suppose that world 
market prices for coal are falling slightly and therefore the undertakings of the 
Community hardly have any possibility to increase their revenues.
Financial aid given by Belgium, the Federal Republic of Germany and France to the 
coal industry in 1985
Aid granted under Article 4 and 5 of Decision no. 528/76 is compatible with the common 
market provided it does not exceed certain limits. Aid under Article 4 is for social 
security benefits and under Article 5 it is intended to help cover inherited liabili­
ties. The explanations which are given in the Annex on pages A/1 and A/3 show that, 
as regards aid under Article 4 of Decision no. 528/76, the permissible limits were 
exceeded only in the Federal Republic of Germany. This is due to the fact that the 
method of financing miners' sickness and pension insurance was changed by the 1983/84 
budget Laws. Some of the contributions to miners' pension insurance are now paid by 
the general health insurance scheme under the equalization of burdens arrangements. 
This exceeding has been examined in the frame of other aids for current production 
and also with the proper functioning of the common market (see table 2 of the annex 
and page 1/10). The figures are given in Table 1 in the Annex. A comparison between
1985 and 1984 shows an increase of 1.7 % and 3.5 % in Belgium and the Federal Republic 
of Germany and a drop of 1 % in France in social security benefits under Article 4.
There was a 22.5 % increase in aid to cover inherited liabilities under Article 5 
in France; this is the result partly of pit closures and rationalization measures 
and partly increased costs in some categories of inherited liabilities (costs for 
closures, drainage, pensions, concessionary coal, etc.). In the Federal Republic of 
Germany, however, there was a substantial reduction C42.9 %) in this aid.
Aids to current production are those direct and indirect measures which are defined 
in Articles 7 to 12 of Decision no. 528/76 and which provide the criteria for judging 
the proper functioning of the common market. Details of these measures and of the 
amounts involved are available in the Annex (pp. A/5 et seq.) and Table 2.

-  1/6  -
Table C below provides an overall view of the trends in aid envisaged in 1985 
vis-à-vis 1984 :
Table C
Breakdown of aid
Totalsum Amountsper tonne
M ECU ECU
19841) 1985 19842> 1985
Federal Republic of Germany 375. 7 (1,064.8)3) 10.31 (12.48)3)
Belgium 214.4 231.2 34.03 35.03
France 558.3 567.8 33.63 36.87
Tota l 1,648.4 (1,863.8)3) 15. 29 (17.37)3)
Of the total sum the fol-
lowing were allocated to:
- amounts in excess of
Article 4 limits - (228.3) - (2.13)
- indirect measures 49.3 44.8 0.46 0.42
- aid to coking coal 590.2 681.2 4.29 6.35
- di rect measures 924.3 909.5 8.57 8.48
breakdown :
- Article 7 (Investment) 124.7 105.3 1.16 0.98
- Article 8 (Personnel) 89.6 85.5 0.83 0.80
- Article 9 (Stocks) 2.3 - 0.02 -
- Article 10 (Strategic reserves) 62.3 60.5 0.58 0.56
- Article 12 (Loss coverage) 645.4 658.2 5.99 6.14
Calculations for 1984 are based on the following exchange rates 
(average for the whole year)
1 ECU - DM 2.24
- FF 6.87
- BFR 45.4
Calculations for 1984 are based on actual production levels 
(million tonnes, t-t)
Federal Republic of Germany 84.9
France 16.6
Belgium 6.3
Total 107.8
Including amounts exceeding the limits laid down by Article 4 of 
Decision 528/76.

P
- 1/7 -
While the sums per tonne for the Federal Republic of Germany are correct statis­
tically, in the context of an international comparison under the provisions 
of Decision no. 528/76, they are only partly valid for comparison with the 
other Community countries. This is due to the Third Electricity-from-Coal 
Law, whereby power stations buy steam coal from the coal industry at break­
even prices. The additional cost incurred by using Community coal is offset 
by increasing electricity prices. In 1984, this offset levy amounted to some 
DM 2.000m ECU (10.52 ECU per tonne). A figure of DM 2.100m (11.04 ECU per 
tonne) is estimated for 1985. This sum is not, however, included in the list 
of aids. It is legally not considered as State aid; however, the economic 
effect of this parafiscal Levy, which primarily benefits coal-fired power 
stations, can be regarded as a coal subsidy.
It should also be mentioned in this context that, partly with the involvement 
of the government, special agreements have been concluded in Belgium, France 
and the United Kingdom between Community coal producers and public electricity 
companies, albeit not on a legal basis. In these agreements purchasing prices 
are fixed which in some cases are above the world market prices. This results 
in financial aid to the coalmining industry of these countries which does 
not come out of government budgets. Quantification of the financial advantages 
that the coalmining industry derives from these special agreements is practically 
impossible in that for all power station locations the exact price parity 
between national coal and imported coal cannot be determined.
Federal Republic of Germany
Aid to the German coal mining industry in 1985 (1,064.8m ECU) will be 21.6% 
higher than in 1984 (675.7m ECU), The increase is solely attributable to 
the fact that the aid limits laid down in Article 4 of Decision 528/76 were 
exceeded.
Belgium
The aid set aside in Belgium for 1985 (231.2m ECU) is 7.8% higher than in 
1984 (214.4m ECU). The increase is mainly in coking coal aid. Aid in Belgium 
is raised by credit from a finance company (Société Nationale pour la Restruc­
turation des Secteurs Nationaux) so as to lessen the burden on the government 
budget.
France
The aid proposed in France for 1985 (567.8m ECU) is 1.7% higher than in the 
previous year (558.3m ECU).
The reasons for and circumstances surrounding the aid measures in the three 
countries in 1985 have been explained above. The measures are discussed from 
the viewpoint of their compatibility with the various criteria laid down in 
Decision no. 528/76 in the Annex (see Chapter II, pp. A/5 et seq.), At this 
point the measures must also be examined for their compatibility with the 
proper functioning of the common market in accordance with Article 3(1) of 
the Decision.
./.

-  1/8  -
4. Compatibility of the financial aid set aside for 1985 with the proper functioning 
of the common market
a) General aspects
a^) The amounts of aid per tonne for 1985 given in Table C on page 1/6 
show that in Germany the amount is relatively small and that there 
is a large gap between it and the amounts granted by Belgium and France.
:  This was explained on page 1/1. This difference in amounts is not to
be regarded as indicating a distorsion of competition between coal 
producers. Although intra-Community trade in coal will amount to more 
:  than 13 million tonries in 1985 the common market for coal consists 
essentially of national markets which rarely give rise to competition 
from several Community producers. There are only a few "contested" 
areas in which several producers offer their products at the same time,, 
but the quantities of coal sold in these areas are relatively small.
Price adjustments by Community producers on offers from other Community 
producers accounter for only 0.8 million tonnes in 1984. In view of 
this, it may generally be assumed that the differences in the amounts 
of aid granted will not disrupt competition in 1985 either.
a^) Supplies of coal and coke in the Community in 1985 will be assured
at all times. Pit closures in 1985 as part of rationalization measures 
will have no effect on supplies.
Pit-head stocks, current production and imports cover the overall demand 
for coal.
It is therefore clear that aid granted in 1985 will not jeopardise 
supplies.
a^) According to the estimates available, there will be little change in 
intra-Community coal trading in 1985.
Table D
Coal deliveries to other Community countries
1,000 tonnes
Year Federal Republic Belgium France
of Germany
1984 9,485 850 500
1985 8,300 800 415

- 1/9 -
Table D shows that deliveries from Belgium and France to other Commu­
nity countries are extremely low and consequently have little impact 
on competition between Community producers. Deliveries from the Federal 
Republic of Germany will be some 1.2 million tonnes lower than in 1984.
Deliveries of German coal, which normally account for some 60% of total 
deliveries in intra-Community trade, mainly concern coking coal for 
coking plants in other Community countries. These deliveries, which 
in the past few years have steadily declined, depend on developments 
in the steel industry and are in competition with coking coal imported 
from non-member countries, rather than with other Community producers.
It can be concluded from the foregoing that aid measures will have 
little influence on intra-Community trade in view of the lack of com­
petition between producers.
a^) Output will be further rationalized in 1985. Two operational installations 
in the French coalfields of Nord/Pas-de-CaLais and Lorraine and two 
in the Centre-Midi and one colliery in the Ruhr coalfield were closed.
Part of a working field belonging to this colliery has, however, been 
taken over by a neighbouring colliery. Closures are being phased so 
as to avoid regional and social problems.
The aim of investment aid and subsidies granted under Article 5 of 
Decision no. 528/76 is to rationalize Community coal production, remove 
the burden resulting from pit closures and maintain the competitiveness 
of those pits selected to ensure future supplies.
b) Particular aspects affecting the trends in coal prices
Changes in prices of some grades of coal in a number of selected Community 
coalfields can be seen in the following Table E.
./.

fl
-  1/10  -
Table E
Trend in national coal list prices
(in national currency per tonne)
DateSteam coal Coking coal
1.7.84 15.1.35 1.7.85 1.7.84 15-1.85 1.7.85.
Fed. Rep. of 
Germany
RAG DM 
Saar DM 
Aachen DM1 )278- 2 
309.-278.-”
309.-278.-”  
325. -263.50 
288.—  
281.—263.50
288.—
281.—263.50
305.—
300.—
Belgium Bfrs4,150.-1)1 )4,250.- 4,250.-1) 3,850.— 3,950.— 3,950.—
France
Lorraine FF632.-1)1 )670.- ; 670.-1) 605.- 641.— 641.—
High-volatile, nuts 5 High-volatile, nuts 2
As can be seen from the above table, list prices for Community coal were 
increased in mid-January 19S5 in Belgium and France and the 1st of July in the 
German coalfields Saar and Aachen.
In practice, the actual prices calculated by Community producers are lower 
than the list prices. Only on this realistic basis can the proper functioning 
of the common market for coal be assessed.
The Commission keeps a watch on the trends in the prices of steam coal 
and coking coal both on the world market and on the common market for coal.
As stated above (page 1/3 et seq.), world market prices have been falling 
since mid-1983. The Commission assumes that it will take a certain amount 
of time for the prices of Community coal to be aligned with the new price 
conditions on the world market since list prices cannot be constantly altered 
at short notice.
c) Conclusions as to the proper functioning of the common market
On the basis of the above considerations, the Commission concludes that 
in 1985 the proper functioning of the common market will not be disturbed 
by the aids granted by Belgium, the Federal Republic of Germany and France.
./.

-  1/11  -
CHAPTER III 
Conclusions
1. The Commission has examined whether the measures proposed by each country for 
1985 comply with the provisions of Decision No. 528/76 and concludes that the 
aids proposed by Belgium, the Federal Republic of Germany and France relating 
to current production in 1985 do so comply.
2. In its analysis of coal market trends, the Commission has established that
the quantity of coal consumed in the Community in 1985 will increase. The compe­
titive position of Community coal has worsened as a result of falling coal 
prices on the world market but improved as the Dollar exchange rate had risen.
For Belgium, the Federal Republic of Germany and France as a whole, aid rose 
by 13.1%from 1,648.4m ECU in 1984 to 1,863.8m ECU1 in 1985. The average amount 
of aid per tonne produced rose from 15.29 ECU to 17.37 ECU, i.e. by 13.6%.
Including the amounts by which aid limits in Article 4 were exceeded in the 
Federal Republic of Germany.

ANNEX
Survey of financial aids to the coal industry 
planned by the Federal Republic of Germany, France and Belgium
in 1985
Examination of the compatibility of the measures 
envisaged with Decision No. 528/76/ECSC
Tables

- A/1 -
Introduction
The following text sets out the aids planned for 1985 and examines their compatibility 
with the various provisions in Decision No 528/76.
I. Aids not related to current production
These are related to social measures and the covering of inherited liabilities 
deriving from earlier pit closures.
A. Description and assessment of financial measures in the social security field
Article 4 of Decision No 528/76/ECSC states that contributions by Member States 
to the financing of social security benefits shall be considered compatible 
with the common market, provided that, for undertakings in the coalmining in­
dustry, they bring the ratio between the burden per miner in employment and 
the benefits per person in receipt of benefit into line with the corresponding 
ratio in other sectors.
This section is concerned solely with the amount of financial aid given in 
the social sector and, where appropriate, with cases where the limits set in 
Article 4 of Decision No 528/76/ECSC have been exceeded.
A1) GERMANY, FRANCE, BELGIUM
In Germany, DM 8,525m have been earmarked in 1985 to cover the deficit 
in the pension fund for the mining industry as a whole, some 80X - 
DM 6,820m - of which goes to the coal industry.
According to the French Government, state payments to the French coalmining 
industry in connection with social security benefits amount to FF 9,993.5m 
in 1985. The details are shown in the following table:

- A/2 -
Origin Amount of subsidy 
(FF million)Purpose
State ;,5,050.9 Disability and old-age pensions insurance
Regular contribution amounting to 22% of 
wages subject to contribution plus additional 
State adjustment
Seneral 630.1 Disability and old-age pensions insurance
System Regular contribution to cover part of the 
"exceptional expenditure" (amount fixed by 
law)
Senera l 1,608.8 Insurance against industrial accidents and
System occupational diseases
Regular repayment of inherited liabilities
Seneral 
System1,315.0 Sickness insurance 
Treatment benefits
Seneral 1,338.7 Disability and old-age pensions insurance
System "Exceptional, expenditure" in coalmining 
industry within the meaning of Article 4 
of Decision 528/76
Tota l 9,993.5
The Belgian authorities will contribute an estimated Bfrs. 42,860.6m to finan­
cing social security benefits for the Belgian mining industry in 1985 
Full details are set out in the table below :
Source Amount of State subsidies 
(Bfrs million)Purpose
State 29,349.0 (1) Old-age and survivors' pensions insurance 
Regular contribution required by law
State 5, 730.5 Disability pensions insurance 
Disability pensions
State 7, 781.1 Occupational diseases
Î>ü% of the expenditure arising from miners 
pneumoconiosis
Tota l 42,860.6
Commission estimate.

- A/3 -
According to the Commission's calculations the limits set by Article 4 
of Decision 528/76 have been exceeded in the Federal Republic of Germany.
This is due to the fact that the method of financing miners' sickness and 
pension insurance was changed by the 1983/84 budget laws. Some of the con­
tributions to miners' pension insurance are now paid by the general health 
insurance scheme under the equalization of burdens arrangements.
(i) In Germany, the undertakings' actual welfare expenditure is 
DM 509m (8.3%) lower than the normal expenditure defined in 
Article 4.
(ii) In France, the State subsidy to Charbonnages de France - FF 1,388.7m - 
means that the effective social security contribution and the "normal 
expenditure" are covered.
(iii) In Belgium, the undertakings' actual social expenditure is Bfrs 
240.8m higher than the normal expenditure defined in Article 4.
A^) Summary of financial measures in the social security sector
As Table 1 in the Annex shows, in 1985 the State authorities in Belgium, 
the Federal Republic of Germany and France will contribute some 2% more 
to the social security side of the coal industry than they did in 1984, 
the total amounting to 5,485m ECU.
B. Description and assessment of the financial measures to cover inherited liabilities
Pursuant to Article 5 of Decision No 528/76 measures taken by Member States 
to assist the undertakings to cover inherited liabilities arising from pit 
closures in previous years which are not related to current production and 
the sale of coal shall be compatible with the common market provided that the 
amounts involved in such measures do not exceed the amount of such costs, i.e. 
the inherited liabilities. Sums in excess thereof represent direct aid to current 
production and are to be regarded as aids under Articles 7 to 12 of Decision 
No 528/76.
./.

- A/4 -
) GERMANY
For 1985 the Federal Government has planned the following measures to cover 
inherited liabilities :
DM mi 1 lion
- closure premiums 4.5
- aid for water-control costs 150.0
- aid to cover expenditure resulting from
contraction 2.1
Total 156.6
(- 70.2m ECU)
All the above items represent liabilities inherited by the undertakings, 
i.e. those resulting from the closure of pits in previous years, and therefore 
do not relate to current production.
These measures are aids already granted in previous years.
Through the German Coal Mining Association (Aktionsgemeinschaft Deutscher 
Steinkohlenbergbau) the Federal Government pays the undertakings concerned 
a premiurn of DM 20/t of annual capacity for the closures carried out to 
rationalize production. The aid covers only a small fraction of the under­
takings' actual closure costs.
The DM 150.0m for water control costs will be paid to the Ruhr mining industry 
specifically to cover the financial burden arising from closures since 
31 December 1966. As a result of pit closures, the Ruhr coalmining industry 
bears the heavy burden of constantly rising contributions to water control 
associations and the Ruhr Pumping Association (Pumpgemeinschaft Ruhr).
The aid does not exceed the actual additional costs to be borne by the 
undertakings.
The DM 2.1m to cover expenditure resulting from contraction is additional 
to the closure premiums which (as mentioned above) do not cover the actual 
costs of the closures. This measure concerns liabilities arising out of 
pit closures since 31 December 1972. The aid is spread over a period of 
five years in the form of a flat-rate payment of DM 30 for every tonne 
by which annual capacity is reduced, but not exceeding the actual costs 
borne by the undertakings as a result of the contraction costs.
All the above measures clearly satisfy the requirements of Article 5(1) 
of Decision No 528/76. The total sum involved in the measures is 70.2m 
ECU in 1985 and is included in Table 1 of the Annex.

- A/5 -
b2> FRANCE
For1985, the French government has allocated a sum of FF 2,689.2m (394.9m 
ECU) as aid towards covering inherited liabilities borne by Charbonnages 
de France. This sum in aid is intended to cover the following inherited 
liabilities :
FF million
- contribution to early retirement pensions 43.6
- premiums, lump sums for retrained personnel, 
cost of housing for those retiring early,
cost of maintaining roadways 1,238.8
- financial liabilities in respect of those 
retiring early, lump sum payments and
additional old-age pension scheme 706.5
- concessionary allowances 700.3
Total 2,689.2
(- 394.9m ECU)
Broken down between coalfields as follows :
- Nord/Pas-de-Calais 1,726.5
- Lorraine 324.1
- Centre-Midi 624.1
The Commission estimates that the actual liabilities borne by the Charbonnages 
de France are the same as the sum granted in aid.
B^) Summary of the measures to cover inherited liabilities
As can be seen from Table 1, planned State aid to cover inherited liabilities 
in 1985 in the countries examined will be 4.4% up on 1984 and will total 
465m ECU.
. Financial aids relating to current production
All aids that are not social measures within the meaning of Article 4 of De- 
ceision No 528/76, or aids to cover inherited liabilities within the meaning 
of Article 5, are aids to current production.
Aid to current production may be granted directly or indirectly to undertakings.
A. Indirect financial aid to current production in the coal mining industry
Indirect financial aid covers all measures which Member Governments announce 
in accordance with the first paragraph of Article 2(1) of Decision No 528/76 
but which do not come into the category of the direct measures defined 
in Articles 7 to 12 of the Decision. Indirect measures are reported to 
the Commission under Decision 528/76 and assessed according to the provisions 
of the ECSC Treaty.

- A/6 -
The Federal Republic of Germany, France and Belgium have announced indirect 
measures to aid current production in the coal industry for 1985. All the 
measures discribed below were taken in previous years as well.
A -| ) 2Ê§£liË!i2Q_2Î_!iiË_ÇêEQ!âüx._.!3£iSiâ[i_âL!ÇL££Ë0£ti_!2Êâsyres
For 1985, the Federal Government has provided for special depreciation 
facilities in respect of expansion and rationalization measures in the 
underground sector of the coal industry- These special depreciation al­
lowances total DM 35.0m (15.7m ECU). The measure is based on paragraph 
51 of the Income Tax Law and on paragraph 81 of the Income Tax Regulation 
and will give the German coal industry no competitive advantages vis-à- 
vis other Community coal producers, since the balance sheets of German 
coal mining undertakings in any case show losses which are partially re­
duced or offset by direct aids.
In 1985 the Be(gian Government plans indirect financial measures in the 
following sectors :
- expenditure on season tickets or cheap holiday 
tickets for miners
- subsidies to the Mine:s' National Pensions Fund 
to compensate tor new expenditure on welfare 
arising from the increase in the miners' annual 
holiday allowance, the introduction of new 
sickness benefits and longer annual holiday 
(Articles 37.12 and 32.14 in the budget of the 
Economic Affairs Ministry)
Total
(12.?m ECU)
The Frêne h Government: plans a State subsidy of FF 115m (16.9m ECU) for 
the research programme of the Centre d'Etudes et de Recherche des Char­
bonnages de France (CERCHAR) iri 1985.
A^) Assessment_of_indi rect_ f lQancial_ai^_to_the_coa l_j_ndust ry_
The Commission has examined the abovementioned measures, which have been 
in force for several years, and does not consider that they violate the 
ban imposed on subsidies by Article 4(c) of the ECSC Treaty.Bfrs million 
16.1
527.6
543.7

A/7 -
A^) §2!5!D2EX_2i_iQS!.iE2£iJJ9£§§y£§£
For the relevant figures, see Table 2, section A.2 at the end of thfs 
Annex. In 1985 direct aid to the coal industry fell to 44.8m ECU from 
49.4m ECU in the previous year.
B. Di£eçt_finançj_al_aid_to_current_groducti_on_in_the_coalmini_ng_industrj/
B1>  £ederal_republk_of_germany
a) IÎ12_Ë££2Q£_£2_h!!li££i_diEE£Î_ÎiQïiQ£i2i._i!Îâ_Ï2_£yEEËG£_E£2ÇÎy£3:i2G_iQ_£[l2  
§££G§G_£2§iGÌGÌG9_ÌGdy§Ì£Z_Ì£_£2GE£ÌÌ!£Ì£_yÌì!2_ì!l£J2£2£Ì2Ì2G£_2Ì  
Articles 7 to 12 of DecisionNo 528/76
The Federal Government proposes to continue in 1985 the direct aids 
already granted in 1984.
Legal basis 
under Decision 
528/76MeasuresAmount of aid
Tota l Per t production
DM m m ECUDM ECU
Art. 7(1) and (2) 
Art. 7(3) (3)Investment aid 
Promotion of innovation145.5
60.065.2
26.91.71
0.700.76
0.32
Art.  8 Mineworkers' bonuses 190.085.2 2.230.99
Art. 10 Aid to security stocks 135.060.6 1.580.71
Tota l 530.5237.8 6.22 2.78
In addition to the aids mentioned above, the Federal and Lander Govern­
ments.are to grant coking coal aid to the value of DM 1,300m (583m 
ECU; as aid to production in accordance with Decision No 73/287.
The investment aid of 65.2m ECU is intended for investment projects 
in pits, coking plants, briquetting plants and pithead power stations. 
In 1985, total investment in the German coal industry will come to 
some 270m ECU. Investment aid will represent just under 25% of total 
investments.
Provisional figures.

- A/8 -
In the context of the Community's coal policy guidelines, this investment  
aid is to be regarded as positive since it will promote the long-term  
stabilization of production in the German coalfields. The aid conforms  
to the provisions of Article 7(1) of Decision No 528/76.
The 26.9m ECU to promote innovation is intended to ensure that research  
results are applied to production as quickly as possible. The aid is lower  
than the costs borne by the undertakings and is granted in respect of  
individual projects which, when completed, are likely to prove their economic  
worth to coalmining in the medium term. The purpose and amount of this  
aid show that it is compatible with Article 7(3)(3) of Decision No 528/76.
Mineworkers' bonuses, amounting in 1985 to85.2m ECU, have been paid since  
1956. A bonus of DM 10 is paid for every shift worked underground. This  
bonus ensures that the qualified mineworkers which the German coal industry  
needs if it is to increase its output stay in coalmining. The measure  
therefore satisfies Article 8 of Decision 528/76.
The 60.5m ECU in aid towards maintaining long-term security stocks is  
a measure introduced by the Federal Government in order to increase  
the security of energy supplies. For this purpose, the German Coal  
Mining Emergency Association (Notgemeinschaft Deutscher Steinkohlenbergbau)  
bought up 10 million tonnes of coal and coke. The Federal Government covers  
only part of the actual current cost of maintaining these stocks in 1985  
by granting aid of DM 135m. The purpose and amount of the aid show that  
it satisfies Article 10 of Decision No 528/76f
The foregoing remarks show that the financial measures planned by the  
Federal Government for 1985 in favour of the German coalmining industry  
satisfy Articles 7, 8 and 10 of Decision 528/76.
b) ÎÜË_ÊiîêQT_to_which_direçt_financial_aids_to_current_groduction in the  
5ê£ïâQ_£2§i!DiQiQa_iQdust r^_are_çomëinbiiIâïïh”thë”ËE2i®f:""fûnctTônTnq"  
2i_î.[lË_22E!!D2D_!!!§£!S2^ ~ ”
Any assessment of the extent to which German aids are compatible with  
the proper functioning of the common market must consider all the direct  
and indirect aids for current production in 1985 (Article 3(2) of Deci­
sion 528/76).

- A/9 -
The relevant figures are given in Table 2 at the end of this Annex.
By this method of calculation, the total proposed aid under the German 
measures amounts to 836.5m ECU, or 9.80 ECU/t. In comparison with 1984, 
aids per tonne have fallen by roughly 5 %. However, if one included the 
amounts by which the limits set by Article 4 of Decision No 528/76 are 
exceeded, this is 12.48 ECU/t, i.e. 21 % higher than in 1984.
As regards the compatibility of German aids for current production 
with the proper functioning of the common market, reference is made 
to the comments in the main body of this document (see p. 1/8 et seq.).
b2) FRANCE
a) The_extent to_which_di rect_f inanc 2al_a 2ds_to_current_groduct i_on_ 2n 
tEi_^£®n£ti_£2li!!!i0i!2S-i!2iy5l£Z_§££_ii2!DE3tible_w2th_the_gro vis ions 
of A£t i^les_7_to_12_of_Decision_528/76
The French Government plans no new aids in 1985, but is to continue 
with the aids instituted in previous years; this involves only loss­
covering aid.
Legal basis 
under Decision MeasuresAmount of aid
Total Per t production
FF million MioECU FF ECU
Art. 12 A) Cover for the losses by 
the central administra­
tion of Charbonnages de 
F rance
B) Cover for the coalfields' 
operating losses
Total467. 6 
3,283.968 .7 
482. 230 -36 
213. 244- 46 
31. 31
3,751 .5 550.9243. 60 35. 77
^  Including a portion of the coking coal aid.
As regards the significance of the aid granted in 1985 in accordance 
with Decision No 528/76, the total amount (FF 3.751.5m) will be less 
Charbonnages de France's anticipated total losses. The amount of aid 
therefore conforms to the provisions of Article 12 of the Decision.

- A/10 -
The following points are relevant in connection with aid to the indi­
vidual coalfields :
- in 1985, aid to the Nord/Pas-de-Calais and Centre-Midi coalfields  
will be calculated on the basis that the closure of further pits  
will bring a reduction in production, with 428 jobs lost. The aids  
will prevent severe economic and social disruption in areas where  
there are not yet adequate opportunities for re-employment. The aids  
to these coalfields therefore satisfy Article 12(1)(1) and Article (12(2)  
of the Decision.
- Charbonnages de France's output planforthe Lorraine coalfield aims  
at a certain degree of stabilization, since the coalfield is an impor­
tant source of coking coal for the steel industry. The aid granted  
for this purpose conforms with Article 12(1)(2) and Article 12(3)  
of the Decision.
b) Ihe_extent_to_whiçh_direct_aids_to_current_groduction_in_the_French  
£2â!ïïiQiG9_lQdustr£_are_comgatible_with_the_ero|Der_funçtioQing_of_the  
common market
Total direct and indirect aid to current production amounts to 567.8m 
ECU (36.87 ECU/t; see Table 2), 9.6% up on the 1984 level of 3 3j63 ECU/t.
As regards the compatibility of French aids with the proper functioning  
of the common market (Article 3(1) of Decision 528/76) reference is  
made to the comments in the main body of this document (see pp. 1/8  
et seq.).
b3) BELG IUM
a ) Iti£_££££G£_£o_whi£b_dj_rect_financ 2aj__aids_to_current_groduct ion in 
£!2®_§£i9i2!3_£22i!DiDiGa_iQdustr^_are_comgatible_with_the_gro v is ions 
of _Art i^ es_ 7 _ to _ 1 2 _ o f _D ecisiorj_528/76
'  In 1985, the Belgian Government intends to provide the following direct
aid :
./.

T
- A/11 -
Legal basis 
under Decision 
528/76MeasuresAmount of aid
Total per t production
Bfrs m mECU Bfrs ECU
Art. 7(2) Investment aid 588.0 13.289 2.00
Art. 8 Recruitment of skilled 
workers14.6 0.3 2 0.04
Art. 12 Meeting operational 
losses4,796.3 107.3727 16.26
Total 5, 398.9 120.8818 18.30
In addition to the above aids, coking coal aid (Decision 73/287) of Bfrs 4,389.9m 
(98.2m ECU) will be granted for current production from the Campine coalfield. 
Total direct Belgian aid amounts to Bfrs 9,788.8m.
Investment for the Campine coalfield plays a particularly important role since 
the Campine coalfield has to maintain the supply of coking coal which the 
Belgian steel industry needs. Belgian investment aid is therefore compatible 
with Article 7(2) of Decision No 528/76.
Aid for recruiting and training skilled workers (Bfrs 14.6m) has proved 
necessary in order to attract into Belgian coalmining suitably qualified 
labour which can operate modern plant and machinery properly. The aid therefore 
complies with Article 8 of the Decision.
The aid paid to the Campine coalfield to cover losses amounts to Bfrs 4,796.3m 
will almost make up the difference between costs and returns. This almost 
complete covering of the difference is necessary because the coalfield is 
meant to supply Belgian steel industry with coking coal and must therefore, 
maintain its output. The purpose and amount of aid granted to cover losses 
in respect of the Campine coalfield therefore satisfy the tests of 
Article 12(1)(2) and Article 12(3).
b) The extent_to_which_direct_aids_to_current_groduction_in_the_Bel 2ian
£2§iO?lQlC!9_i ndustry_are_comgat i^le_wi^h_the_groger_functioning_of_the
common_market
In the Belgian coalmining industry, aids to current production total 
231.2m ECU (35.03 ECT/t) for 1985 (see Table 2). Comparison with the 1984 
figure (34.03 ECU/t) shows an increase per tonne of 2.9 % in 1985.
As regards the compatibility of Belgian aids to current production with 
the proper functioning of the common market, reference is made to the 
comments in the main body of this document (see pp. 1/8 et seq.).

Table 1
Aid not relating to current production
(m ECU)
Social security measures pursuant to 
Art. 4 of Decision 528/76Aids to cover inherited liabilities pursuant 
to Art. 5 of Decision 528/76
Totai . Infringements Total Infringements
1984 1985of Art. 4 (1984)___________n 
1285 .of
 Art. 5 (1985.)
Federal Republic of Germany .  2,953.6 3,058.3 228.3 123.0 70.2 —
Belgium 943.3 958.9 — — — —
France
\1,482.6 1,467.5 322.4 394.9
Total 5 ,379.5 5,484.7 228.3 445.4 465/1 ~

I ■ > »
Table 2
Aid for current production in 1985 (1)
A. Aids under Decision 528/76 
1. Infringement of Art. 4 
of Art. 5
Total
per tonne of productionUnitFed. Rep. of Germany .  France Belqium Total
m ECU 
m ECU(228.3) !
j- -
m ECU j -  T  
ECU j (2.68) ! : -
2. Indirect measures
per tonne of production! i
m ECU ! 15.7 \ 16.9 
ECU j 0.18 :  1.1012.2
1.8544.8 ;
0.42 !I
3. Direct measures Art. 7
Art. 8 
Art. 9 
Art. 10 
Art. 11 
Art. 12
Total
per tonne of productionm ECU |  92.1 
m ECU ; 85.2 
m ECU ' - i - 
m ECU | 60.5 I  
m ECU -  i -  
m ECU i - i 550.913.2
0.3
107.3105.3 j
85.5  j
60.5 
658.2
m ECU 
ECU237.8
2.79550.9 
35.77120.8
18.30909.5
8.48
3. Coking coal aid (Decision 
73/278)
per tonne of productionm ECU 
ECU583.0
6.83- 98.2
14.88681.2
6.35
C. Totals (A +  B)
Totals
per tonne of productionm ECU 
ECU836.5
9.80
(1,064-. 8) (2> 
(  12.48)(2)567.8
36.87231.2
35.031,635.5 
15.25 ,
(1,863.8)(3) 
(17.37) (3)|
(1) Planned figures
(2) Including the amounts by which limits set by Article 4 of Decision No 528/76 have been exceeded. Aid under the Third 
Electricity-from-Coal Law totals DM 2.100 m (see page 1/7). If this amount (941.7m ECU) is added to aid for current 
production, total aid for the Federal Republic of Germany stands at 2,006.5m ECU or 23.52  ECU/t.
(3) Including the amounts by which the limits set by Article 4 have been exceeded in the Federal Republic of Germany.
If the amount of aid under the Third Electricity-from-Coal Law is added, the average rate of aid is 26.15 ECU/t.

1
PART T  W  0
Additional financial aids to the  
British coal industry in  
1  ,9 8 4

- II/1 -
INTRODUCTION
1. In the "Memorandum on the financial aids granted by the Member States to  
the coal industry in 1984 and on the additional financial aids granted by  
the Member States to the coal industry in 1983" (C0MC85) 61 final of 8 March  
1985) the Commission set out the aids granted by the German, French, Belgian  
and British Governments to the coal industry in 1983 and examined their com­
patibility with the provisions of Decision 528/76/ECSC.
2. As the British Government informed the Commission by letters of 21 June 1985  
and 31 July 1985, the aids envisaged for 1984 were not sufficient to solve  
the problems affecting the British coal industry owing to the strike. It  
was necessary to increase the aids provided for in Artile 12 of Decision  
528/76/ECSC.
3. This increase is described and examined below. This is done with reference  
to the figures given in the "Memorandum on the financial aids granted by
the Member States to the coal industry in 1984 and on the additional financial  
aids granted by the Member States to the coal industry in 1983".
4. The following exchange rate was used to convert national currencies into 
ECU :
1 ECU - UKL 0.59.
5. Tables 1 and 2 in the Annex to Part Two of this Memorandum contain revised-
figures for the aid granted to the coal industry of all coal-producing Member  
States in 1984.
I.  Additional aids granted to the British coal industry in 1984  
Aids to current production
a) Compatibility of direct aids to current production granted to the British  
coal industry with the provisions of Articles 7 to 12 of Decision 528/76
As set out on page A/14 of the "Memorandum on financial aids granted by  
the Member States to the coal industry in 1984" (C0MC84) 61 final of  
8 March 1985), under Article 12 of Decision 528/76/ECSC the British Government  
had reported aids of UKL 513.2 million to cover losses.

- 11/2 -
In its Letters of 21 June 1985 and 31 July 1985 the British Government  
applied to the Commission to increase the original amounts of aid as  
follows :
Original amount Change New amount
(million UKL) (million UKL) (million UKL)
Cover for pit operating
losses, total 513.2 + 1,711.8 2,225.0
Per tonne produced, in UKL 10.37 44.95
The increase in British aids to cover pit operating losses proved neces­
sary because losses on pit operations in the 1984/85 coal marketing year  
were sharply increased owing to the unforeseeable strike in the industry.  
According to the information available to the Commission on the actual  
position of costs and revenue in 1984, the following picture of the NCB's  
revenue position emerges for the 1984/85 coal marketing year (million UKL):
1) Operating losses 1,667
2) Extraordinary social and
welfare charges, less  
extraordinary revenue 35
3) Interest charges 520
4) Other losses  3
Total 2,225
This increase in aids covers 1984 losses in their entirety; it is conse­
quently compatible with the provision of Article 12(1)(1) of the Decision.
b) Compatibility of the direct financial aids to current production by the  
British mining industry with the proper functioning of the Common Market
The figures in Table 2 in the Annex show total aids of 3,783.1 million ECU  
(■ 76.43 ECU/t) for 1984 as having been set aside for the United Kingdom  
coal industry in respect of its current production. The amount of aid  
originally envisaged for 1984 amounted to 18.22 ECU/t. Compared with  
1983 the revised (1984) rate of aid per tonne is substantially higher  
owing to losses incurred during the strike.
With regard to the compatibility of the total UK aids to current production  
with the proper functioning of the Common Market, the following points  
apply :
1. The United Kingdom's total imports of coal from other Community coun­
tries rose by 1.1 million t in 1984 compared with the previous year,  
while in the same period British deliveries of coal to other Community  
countries fell by 2.5 million t.
2. Trade in coal between the United Kingdom and the other Community coun­
tries showed no sign that in 1984 distorsions of competition occurred  
between the British mining industry and the mining industries of other  
Community countries.
./.

- I1/3 -
3. List prices of UK coal were as follows (UKL/t) :
Steam coal
15.1.1984 1.7.1984
Scotland :  Nuts 5 62.10 62.10
South Yorkshire 59.70 59.70
As can be seen from the above table, the list prices for Community  
coal were unchanged. No indirect aids to industrial users of coal  
were involved in this.
4. Points 1 and 2 lead to the conclusion that the increase in British  
aids for 1984 is compatible with the proper functioning of the Common  
Market.
II. Conelusion
Aids to the British coal industry applied for under Decision 528/76/ECSC in  
respect of current production are set out in the following table :
Legal basis  
under Decision  
528/76MeasureAmount of aid
Tota l per t production
Mi llion UKL Million ECU UKL ECU
Article 8 Recruitment of  
skil led workers 7.0 11.9 0.14 0.24
Article 12 Meeting pit operating  
losses
Tota l2,225.0 3,771.2 44.95 76.19
2,232.0 3,783.1 45.09 76.43

Table 1
Aid not relating to current production
(m.ECU)
Social security measures pursuant to  
Art. 4 of Decision 528/76Aidsto cover inherited liabilities pursuant  
to Art. 5 of Decision 528/76
Tota l Infringements  
of Art. 4 (1984)Tota l Infringe ments  
of Art. 5 (1984) 1983 1984 1983 1984
Federal Republic 6f Germany 3,053.7 2,953.6 — 107.8 123.0 —
Belgium 924.5 943.3 — — — —
France1,514.8 1,482.6 — 303.9 322.4 —
1)United Kingdom103.7 102.8 — 421.2 446.3 —
Total for the Community 5,596.7 5,482.3— 832.9 891.7—
The United Kingdom has an integrated security system. The figures shown on this line refer only to the special  
miners' pension fund, which exists side-by-side with the general social security system.
1

Table 2
Aid for current production in 1984
A. Aids under Decision 528/76  
1. InfFingements of Art. 4  
of Art. 5
Total
per tonne of productionUnitFed. Rep. of Germany France United Kinadom Belgium l  Community
m ECU 
m ECU— —— — —
m ECU 
ECU — — — — —
2. -Indirect measures
per tonne of productionm ECU 
ECU22.3
0.2614.8
0.89 —12.2
1.9549.3
0.31
"Direct measures  
Article 7  
Article 8  
Article 9  
Article 10  
•Article 11  
Article 12
Total
per tonne of productionm ECU 
m ECU 
m ECU 
m ECU 
m ECU
I t  ecu111.6
89.3
62.3
542.611.9
3,771.213.1 
0.3 " 
2.3
102.8124.7
101.5
2.3
62.3
4,416.6
m ECU 
ECU263.2
3.10542.6
32.693,783.1
76.43118.5
18.814,707.4
29.93
3. Coking coal aid (Decision  
73/287)
per tonne of productionm ECU 
ECU590.2
6.950.9
0.0583.6
13.27674.7 
.  4.29
C. Totals (A + B)
Totals
per tonne of productionm ECU 
ECU875.7 2) 
10.31558.3
33.633,783.1
76.432143.
34.035,431.4'
34.53°'
Planned figures
^  Aid under the Third Electricity-from-Coal Law totals DM 2,000m ■ 892.9m ECU (see the Memorandum on the financial aids  
granted by the Member States to the coal industry in 1984 and on the additional financial aids granted by the Member  
States to the coal industry in 1983, page 1/7 (Doc. C0M(85) 61 final)). If this amount (892.9m ECU) is added to aid for  
current production, total aid for the Federal Republic of Germany stands at 1,768.6m ECU or 20.83 ECU/t.
^  If the amount of aid under the Third Electricity-from-Coal Law is added, the average rate of aid is 40.21 ECU/t.