27.

The objections in question raise two subsidiary questions: (aa) The first concerns the question of the period regarded as decisive for the valuation of the shares concerned, (bb) The second concerns the method used for this valuation. (aa) The answer to the question of the period to be regarded as decisive for the valuation of the new BV shares in connection with the decision as to the existence of an aid depends essentially on the time of the performance of the acts by which the agreement was implemented and the State intervention manifested itself in the form of the guarantee, since even if it is accepted that the agreed value of DM 125 per share corresponded to the actual value of the new BV shares in the period before the conclusion of the Memorandum, so that at that time there was no need for an aid in the form of a guarantee, such a need may have arisen subsequently if the value of the BV shares had fallen considerably at the time the agreements made according to the Memorandum were implemented. Conversely, it is also true that there can be no question of an aid if any difference between the agreed and the actual value of the BV shares, noted at the time the Memorandum was concluded, had been made up by the time the agreements were implemented because the quotation for the shares had risen significantly. In justification of their view that the period prior to the conclusion of the Memorandum was the most appropriate, the applicants refer to the binding nature of the agreement between Krupp and BV, in particular with regard to the valuation of the shareholding in KAE and of the new BV shares transferred in consideration thereof. But the question arising in this case is not whether the valuation of the new BV shares was binding on the parties, but whether that valuation, whether binding or not, corresponded to the actual value of the new shares. In order to answer this question, for the reason mentioned above account must be taken of the actual circumstances (for example the quotation for BV shares) as they had eventually developed in the period in which the most important operations in implementation of the planned transaction were undertaken, in particular those forming the State intervention now under consideration as aid (establishment of the GbR, raising of a credit in the case of Hibeg, giving of a guarantee by Land Bremen). If for this period a difference emerges between the agreed rate and the actual value of the new BV shares, the State intervention to cover that difference, irrespective of when it arose and which party to the contract benefited from it, may be regarded as an aid. For the sake of completeness I shall also consider whether the agreements contained in the Memorandum were binding. That question, considered in detail by the parties in both the written and the oral procedure, must be examined under German law, which applies in this case to the preliminary agreements and other documents drawn up before the contract was entered into. According to German law the binding nature of the content of preliminary agreements is to be assessed on the basis of the intention of the parties. ( 25 ) Thus in principle a preliminary agreement expressly envisaging the formal conclusion of a contract cannot be assumed to contain binding agreements for the parties since such an express provision presupposes the contrary; if the preliminary document contains no such express provision, German courts examine the circumstances so as to be able to decide in each individual case whether those involved wished to give binding force to what was agreed. ( 26 ) If the preparatory agreement, as in this case, concerns complicated transactions or particularly large sums, the German courts assume, in certain cases, that there is tacit agreement that the creation of mutual rights and duties is to be dependent on the formal conclusion of a contract. ( 27 ) It is impossible to infer from the wording of the Memorandum that those involved intended to be bound, either with regard to the transfer of a 74.9% share in KAE's capital or with regard to the increase in BV's nominal capital and the issue price and price of sale of the new shares. Thus it is stated in the preamble to the Memorandum that it is intended to bring in to BV 74.9% of KAE's capital as a contribution in kind against the allocation of new shares to be issued by BV after increasing its capital. ( 28 ) In Point 1 of the Memorandum it is envisaged that after signature Krupp will provide BV with certain documents such as KAE's articles and memorandum of association, its annual accounts and auditors' reports and a list of deliveries and orders received by the company, needed by BV in order to obtain a clear picture of the situation of the undertaking to be acquired before being finally bound. Point 2.3 of the Memorandum envisages that the parties will regularly agree upon the steps which appear advisable to implement effectively the contribution of the share of KAE's capital and the increase in capital. According to Point 5.1 of the Memorandum the agreement as to the contribution of the share in KAE is to be concluded after the increase in BV's nominal capital. Finally Point 11 envisages that the Memorandum will become operative only after the assent of the parties' supervisory boards. Thus the content of the Memorandum is not binding as regards cither the contribution of the share of KAE's capital, or the increase in BV's capital connected therewith, or the valuation of the new shares. That is also confirmed by the fact that no mention was made in the invitation to the general meeting either of the Memorandum or any other commitment entered into by or to Krupp, but that the whole transaction was described therein as a ‘plan’ for the amalgamation of KAE and STN, a subsidiary company of BV. In all those circumstances the applicants' argument as to the decisive time for the valuation of the new BV shares must be rejected. (bb) As concerns the objection with regard to the incorrect valuation of the new BV shares, there is nothing in the documents before the Court to show that that valuation was based on incorrect assessments of facts or documents. The applicants simply claim that by not taking as its basis the criteria specified by them, the Commission had used a wrong method of valuation and had thus reached incorrect conclusions with regard to the existence of an aid. In this connection it should be observed that the question of the valuation of the new BV shares, in view of its fundamental significance, is discussed in detail in the statement of reasons on which the contested decision was based. The decision mentions in detail the points which, in the applicants' view, ought to have formed the basis for determining the value of the new BV shares (section V.1 of the decision, sec Point 23 above). It also gives the reasons why the Commission did not regard these points as appropriate and did not use the method advocated by the plaintiffs. In particular: (i) The contested decision first states why the price of DM 80 per share is, in the Commission's opinion, the highest price which could have been demanded in a public issue of new shares on normal market conditions. The Commission states that the stock market price represents a genuine market evaluation of the share value and that the issue price of new shares usually needs to be below the market price of the shares if the issue is not to fail. That means that with a stock market price of roughly DM 80 the issue price of the new shares would have needed to be below DM80. (ii) The Commission then rejects the German Government's arguments, repeated by the applicants before the Court, for valuing the new BV shares at more than DM 125 per share and states that the transaction could have taken place at that value only because the difference between DM 80 and DM 125 per share was covered by a guarantee; the German Government had been unable to supply bank analyses or reports to support that valuation. The argument that in 1990 the share price had averaged DM 130.80 did not take account of the fact that since 1981 the share price had been consistently below DM 100 except for the periods between the end of 1985 and the end of 1986 and from the beginning of 1989 until the end of 1990. That had been subsequently confirmed by the fact that from the end of 1991 until February 1993 the price of BV shares had been fluctuating around DM 80. Moreover all market expectations about future profits would be reflected immediately in the share price. The same reasoning applied to the synergy effects supposed to result from the incorporation of KAE into BV. These effects would be taken into account immediately by the stock market. The trend of the BV share price since the end of 1991, which fluctuated around DM 80, did not show any evidence of such synergy effects. As regards the German Government's argument that a big block of shares was more attractive to an investor than single shares, the Commission thinks that it would be hard to imagine that that could explain the difference between a price of DM 80 and DM 125 per share. It should also be borne in mind that a new share issue runs the risk of having the effect of reducing the share price. Finally, as regards the approval of the GbR's balance-sheet by two independent accountants in which the value of the 2800000 new BV shares is, according to the German Government's argument, shown as DM 350000000, the Commission states that accountants, while establishing an opening balance-sheet, have to proceed in such a way that ‘if there is any market value, established for example by a stock exchange, that value is to be referred to. But if, as is the case with the Bremer Vulkan shares, there is a recent established price which differs from the stock market price, accountants are allowed to take that price into account for their valuation. Accordingly, the accountants only referred to the price of DM 350000000 recently paid for the 2800000 Bremer Vulkan share package, which was established by Krupp and Bremer Vulkan in collaboration with the Bremen Senate through Hibeg and the bank consortium, so that one cannot talk in terms of an independent valuation of the accountants. They only mirrored the valuation of the parties involved’(section VI of the decision). Thus the contested decision appears to have given a sufficient statement of the reasons on which it was based, as the Commission has quoted the statements and relevant arguments of those concerned, on the basis of the assessment of which it reached its decision.