WRITTEN QUESTION E-0057/01

by Hiltrud Breyer (Verts/ALE) to the Commission

(22 January 2001)

Subject: Examination of illegal subsidies to the Georgsmarienhütte steelworks

1. In 1993 the Land of Lower Saxony granted Georgsmarienhütte steelworks (formerly Klöckner, now Georgsmarienhütte GmbH) over DEM 80 million. This payment was judged illegal by the EU. At the start of the year 2000 the Lower Saxony Government reported that DEM 46 million including interest had been paid back by the steelworks.

(a) Can the Commission confirm that at the start of the year 2000 the amount of DEM 46 million was paid back by the steelworks to the Land of Lower Saxony?

(b) Is it true that the Commission judges the remainder of the amount paid as illegal?

2. Parallel with the aid granted by Lower Saxony, Landkreis Osnabrück and the town of Georgsmarienhütte purchased land from the steelworks at exorbitant prices (approximately DEM 20 million). With the reclamation of this land it has emerged that both municipalities have been left with considerable deficits which were figured in from the outset as undisclosed subsidies. Has the Commission included these real estate transactions in the examination of illegal subsidies?

3. The Hüttenbahn railway line has been sold backwards and forwards between the steelworks and Landkreis Osnabrück or its transport undertaking VLO, with a sizeable profit for the steelworks each time. Has the Commission included these transactions in the examination of illegal subsidies?

4. Does the Commission plan, if it has not already done so, to follow up the information in this question and to set in train any necessary action? Will it notify any such action to MEP Breyer?

Answer given by Mr Monti on behalf of the Commission

(16 March 2001)

1. Following proceedings initiated in November 1993(1) pursuant to Article 6(4) of Commission Decision No 3855/91/ECSC of 27 November 1991 establishing Community rules for aid to the steel industry(2), DEM 15 243 million in aid for Georgsmarienhütte GmbH (GMH) was authorised by Commission Decision No 95/437/ECSC of 1 February 1995(3).

On 15 July 1997 the Commission decided to initiate proceedings pursuant to Article 6(5) of Decision No 2496/96/ECSC of 18 December 1996, establishing Community rules for State aid to the steel industry(4) in respect of DEM 61,64 million in aid paid by the Land of Lower Saxony to Georgsmarienhütte.

In its Decision of 29 July 1998, the Commission ruled that the aid was incompatible with the ECSC Treaty and the common market(5).

On 3 November 1998 Georgsmarienhütte Holding GmbH lodged an appeal against this Decision with the Court of First Instance of the Communities (T-181/98). The case is still pending.

Under Article 2 of the Decision, Germany was required to recover the aid together with interest. The amount of aid to be repaid was reduced by DEM 24 496 million to DEM 37 144 million provided that the sale of the Westerkamp site was cancelled.

In January 2000 the German government sent the Commission information from which it appeared that GMH had repaid aid amounting to DEM 46 million, including interest to the Land of Lower Saxony. On 8 May 2000 it sent the Commission further information from which it appeared that the sale of the Westerkamp site had been cancelled.

On that basis, the Commission can confirm that the aid deemed incompatible has been repaid by Georgsmarienhütte Holding GmbH to the Land of Lower Saxony. No other aid for Georgsmarienhütte was deemed unlawful in the Commission Decision of 29 July 1998.

2. As stated in the Commission Decision of 29 July 1998, GMH sold to the Niedersächsische Landesentwicklungsgesellschaft mbH (NILEG) in February 1994 several real estate assets for a total of DEM 14,5 million. The sale, as part of this transaction, of the Westerkamp site at a loss price of DEM 24 496 million was deemed unlawful aid that was compatible neither with the ECSC Treaty nor with the common market (answer to Question 1).

Other land transactions between the Osnabrück rural district, the town of Georgsmarienhütte and the GMH steelworks were not included in the Commission's examination of the aid.

3. The German authorities have not yet notified the Commission of any repeated sale, between the Osnabrück rural district or its transport undertaking VLO and Georgsmarienhütte, of the Hüttenbahn railway line, at a profit to the steelworks.

4. The Commission will ask the German government for further information on these land sales. If assessment of the information shows that initiation of the proceedings provided for in Article 6(5) of Decision No 2496/96/ECSC establishing Community rules for State aid to the steel industry is necessary, the Commission will initiate such proceedings.

In that event, the initiation of proceedings would be announced in the Official Journal of the Communities.

(1) OJ C 71, 9.3.1994.

(2) OJ L 362, 31.12.1991.

(3) OJ L 257, 27.10.1995.

(4) OJ L 338, 28.12.1996.

(5) OJ L 83, 27.3.1999.