WRITTEN QUESTION E-3097/96 by Christoph Konrad (PPE) to the Commission (18 November 1996)

Subject: The Commission's approval of the payment of subsidies to SKET by BvS, successor to the Treuhand

1. Is the Commission aware that BvS, successor to the Treuhand, has disbursed DM 180 million of the DM 352 million for which the Magdeburg company SKET Schwermaschinenbau GmbH has already applied?

2. Is the Commission aware that most of this DM 180 million is being used solely to pay the wages of the employees, who number over 2000?

3. Will this knowledge prompt the Commission to reconsider the possible official approval of the application for DM 352 million?

4. Will the Commission accelerate its official decision-making in view of the fact that a petition for SKET's bankruptcy has been filed?

5. When is the Commission likely to take its decision?

Answer given by Mr Van Miert on behalf of the Commission (13 December 1996)

1. By letter of 23 April 1996 the German government notified a new restructuring plan in favour of SKET Schwermaschinenbau Magdeburg GmbH (SMM) and its subsidiairies Drahtziehmaschinenfabrik Grüna (DZM) and Entstaubungstechnik Magdeburg (ETM) for the period of 1996 to 1998, which amounted to DM 352 million. These measures included preliminary measures of DM 90 million, which had been awarded for the period of January until April 1996 in order to avoid bankruptcy until the new restructuring concept had been decided upon by the supervisory board of the company. The further amount of DM 262 million was to be awarded until 31 December 1998.

By letter of 12 September 1996, following the decision of 30 August 1996 to extend Article 93(2) proceedings to the new restructuring concept, the Commission reminded the German government of the suspensory effect of Article 93(3) EC Treaty. Further, it drew attention to the communication to the Member States ((OJ C 318, 24.11.1983. )), in which it was stipulated that any aid granted unlawfully, ie without prior notification or without awaiting the Commission's final decision under the procedure, may have to be recovered from the beneficiary.

In October the German government notified the Commission that the new restructuring concept could not be put into effect. After press reports that SKET had filed for bankruptcy, the Commission called on to the German government to notify the amount of the financial obligation of SKET towards the BvS. The Commission has not yet received official confirmation by the German government of the bankruptcy.

2. According to information available to the Commission, SKET employed approximately 2,080 people at the end of 1995, of whom approximately 380 at the subsidiairies. SMM alone had planned personnel costs for 1996 of DM 122 million. Even though there are no data on precise utilisation of the funds it would seem logical that most of the funds are used to pay salaries.

3. The Commission based its decision of 30 August 1996 ((OJ C 289, 9.10.1996. )) to extend Article 93(2) proceedings to the measures to be taken in favour of SKET under the restructuring concept of 23 April 1996, on the doubts as to the long-term viability of the undertaking and as to the proportionality of the aid. Meanwhile the German government has declared it cannot pursue the notified restructuring concept.

The Article 93(2) proceedings are not yet terminated. The Commission has received observations by interested parties on which the German government will be given the opportunity to voice its opinion. Only after the completion of the procedure will the Commission be able to decide on the merits of the case.

4. The Article 93(2) proceedings concerning SKET (state aid No C 16/95) concern all measures taken by BvS in favour of the company since the intended privatization of Oestmann & Borchert Industriebeteiligungen in 1994. The extension of proceedings refers also to those measures which have been taken instead of privatization during the years 1994 and 1995, and differ from the opening decision ((OJ C 215, 19.8.1995. )). Other Member States and interested parties have to be heard on all the notified measures (for the details the Commission refers to its answer under 3). The decision will be taken following the normal calendar for handling such a case. Community rules do not provide for quicker decision taking in case of bankruptcy.

5. The Commission will take its final decision concerning the notified aid in favour of SKET after the formal proceedings mentioned above have reached their conclusion. It aims to take the decision early in 1997.