WRITTEN QUESTION P-3478/98

by Daniela Raschhofer (NI) to the Commission

(12 November 1998)

Subject: Investigation into the state aid for the Lenzing Lyocell plant in the Austrian province of Burgenland

In mid-October, the Commission announced that it would be carrying out an investigation into the aid granted by Austria to the Lenzing Lyocell plant in the province of Burgenland.

I should like to ask the Commission the following questions concerning the investigation procedure and the background to its actions:

1. What information or tips resulted in the aid granted being investigated at this particular moment in time? Where did the information come from that Lenzing GmbH & Co KG Austria had bought the land on which to build its plant at a price other than the normal market price?

2. Was the aid agreement between the Federal Province of Burgenland, representing WIBAG, and Lenzing GmbH & Co KG Austria authorised?

3. What substantive objections exist which make an investigation necessary? What amounts were granted as state aid for the Lenzing plant in Burgenland, and for what purpose?

4. Which parts of the agreement, or which particular types of aid (such as direct payments, guarantees provided, provision and assignment of infrastructure, etc.), are being investigated to ensure conformity with EU legislation?

5. What method of calculation and what legal basis underpin the maximum authorised national ceiling of 40 %? When will the investigation be completed, and when may we expect to know the Commission's final decision?

6. What would be the consequences for the Lenzing GmbH & Co KG Austria if it were to be proved that the aid granted was not in conformity with EU competition legislation?

Answer given by Mr Van Miert on behalf of the Commission

(25 November 1998)

1. Austria forwarded to the Commission application forms for European regional development fund (ERDF) co-financing on two large-scale investment projects at the Heiligenkreuz business park in Burgenland. In these documents, Austria referred to the investment of Lenzing Lyocell GmbH & Co KG (LLG) at the business park, which raised questions related to the application of state aid rules. In the light of this information and the additional information submitted upon request, the Commission decided on 14 October 1998 to initiate formal investigations. The Commission will inform interested parties by publishing this decision in the Official journal.

The Commission has so far not drawn a final conclusion whether LLG paid a market price for the land at the Heiligenkreuz business park. At present, and on the basis of the information available, the Commission only doubts whether the price of land could be considered as a market price.

2. The Commission has not approved a specific aid contract between Land Burgenland and LLG. The Commission therefore asked Austria to prove that Land Burgenland provided state aid to LLG under approved or existing aid schemes.

3. The reasons for the investigation are the following. The Commission has doubts whether Austria provided all the committed and proposed aid in accordance with approved or existing schemes. Moreover the Commission cannot exclude that the investment aid may exceed the regional aid ceiling of 40 % net. Furthermore the Commission cannot exclude that possible guarantees, the price of land at the Heiligenkreuz business park, possible free of charge company-specific infrastructure development, and prices for basic process utilities contain state aid elements, and if so, whether these state aids would be covered by approved or existing schemes.

The Commission understands that, as to the first investment phase, Austria committed to investment aid measures of ATS ECU 801 million (ECU 57,8 million), environmental aid of ATS ECU 76,3 million (ECU 5,5 million), and training aid of ATS ECU 10,4 million (ECU 0,8 million). To the second investment phase, Austria proposed state aid of similar extent. Furthermore, Austria proposed aid if LLG would transfer a pilot plant and the research and development (R& D) department from another site to the site in Land Burgenland.

4. The measures which the Commission is investigating are a grant on purchased land, a grant under the regional business promotion act of Land Burgenland, the commitment of Land Burgenland for further investment aid, grants under article 51 a of the labour market promotion act, grants under article 12 (5) of the environmental state aid act, a dormant partnership capital provided by WiBAG, training aid of Land Burgenland and AMS investment aids proposed by Land Burgenland for an expansion of capacity and for a transfer of facilities from another site to the site at the business park guarantees to secure grants and loans, the price of land at the business park, possible company specific infrastructure development, and prices for basic process utilities.

5. In order to calculate the aid intensity the Commission compares the present value of granted investment aid to the present value of eligible investment costs. The legal basis for the regional aid threshold of 40 % net is the European economic area (EEA) decision on 11 May 1994(1).

6. State aid granted unlawfully and not compatible with the common market must be recovered from the recipient. The amounts recovered will include interest calculated on the basis of the reference rates used to calculate the grant-equivalent for the purposes of regional aids, running from the date on which the aid was payable to the recipient until the date of actual recovery.

(1) OJ C 199, 21.7.1994.