WRITTEN QUESTION P-3451/01

by Theodorus Bouwman (Verts/ALE) to the Commission

(6 December 2001)

Subject: Threatened closure of the Wärtsilä factory in Zwolle and suspected secret agreements on job guarantees in connection with the takeover of the Wärtsilä factory in Trieste

The Finnish engine manufacturer Wärtsilä has recently decided to transfer the whole of its production, in spite of the fact that it makes a profit and has a full order book, from its establishment at Zwolle (Netherlands) to its establishment in Trieste (Italy). This means the immediate loss of 700 jobs and possibly the disappearance of hundreds more jobs with suppliers. Since this closure is not being done directly because of trading results, it is to be feared that improper motives may be involved.

Millions of guilders have been provided in recent years by national and local authorities and the European Investment Bank in subsidies and development loans. In addition to the serious loss of jobs, this relocation also means an enormous loss of capital and the draining away of know-how developed thanks to Dutch development loans.

In the short term, will the Commission investigate and report on what agreements have been made between the Italian Government and Wärtsilä in connection with the latter's takeover of the former state undertaking in Trieste agreements on guaranteed jobs (for the 1 800 staff) or other agreements which in some way led to the improper relocation of production from one Wärtsilä establishment to another?

Will the Commission also examine what financial and non-financial incentives were provided by the Italian government, via European funds or otherwise, in order to facilitate this improper relocation of production?

Does the Commission agree that this is an instance of the improper use of financial and other incentives and an example of subsidy shopping? If so, will the Commission take counter-measures, including the suspension of the relocation pending its investigation?

Answer given by Mr Monti on behalf of the Commission

(16 January 2002)

The Commission is not aware of any agreements having been concluded between the Italian authorities and Wärtsilä, but it will seek information from the Italian authorities. Should any such agreements include state aid measures, it will examine them in the light of Article 87 (former Article 92) of the EC Treaty. The Wärtsilä establishment at San Dorligo della Valle is located in a region eligible for regional aid pursuant to the exemption provided for in Article 87(3)(c) of the EC Treaty. Under its decision of 20 June 2001, the Commission can authorise regional aid amounting to 8 % of the investment, measured in terms of net grant equivalent (nge). Moreover, it may be that the provisions approved by the Commission relating to employment, training or other types of aid are applicable here. Such aid measures are compatible with the EC Treaty if they are based on aid schemes approved by the Commission or are exempted under the relevant rules (training/SME/de minimis).

As for incentives under European funds, the Commission can state that Wärtsilä did not receive any aid from the European Regional Development Fund (ERDF) but from the European Social Fund (ESF) as part of the 1997-1999 SPD in support of vocational training.

Given that the Commission has not found proof of the illegal use of financial or other incentives, it cannot reply to the Honourable Member's last question. The general purpose of Commission aid is to alleviate the negative effects on competition of aid granted by national authorities. Subsidy shopping is one example of the negative impact of state aid on competition and should, therefore, be avoided. If an investigation shows that Wärtsilä received aid incompatible with the Treaty, the Commission will take the necessary measures and will, where appropriate, recover the aid illegally paid. It does not have the power to demand that Wärtsilä suspend its relocation decision, even during the investigation.