1999/686/EC: Commission Decision of 25 February 1998 concerning aid which Germany intends to grant under the 26th framework plan of the joint scheme for improving regional economic structures with a view to promoting teleworking (26. Rahmenplan der Gemeinschaftsaufgabe 'Verbesserung der regionalen Wirtschaftsstruktur') (notified under document number C(1998) 585) (Text with EEA relevance) (Only the German text is authentic)
Date: 1998-02-25
Institutions: European Commission
Subjects: Germany, State aid, control of State aid, regional development, teleworking

21. 10. 1999

EN

Official Journal of the European Communities

L 271/25

II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 25 February 1998

concerning aid which Germany intends to grant under the 26th framework plan of the joint
scheme for improving regional economic structures with a view to promoting teleworking (26.
Rahmenplan der Gemeinschaftsaufgabe ‘Verbesserung der regionalen Wirtschaftsstruktur’)

(notified under document number C(1998) 585)

(Only the German text is authentic)

(Text with EEA relevance)

(1999/686/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

II

Having regard to the Treaty establishing the European
Community, and in particular Articles 92 and 93 thereof,

Having regard to the Agreement establishing the European
Economic Area, and in particular Article 62(1)(a) thereof,

Having given notice to the other Member States and the parties
concerned to submit their comments within a stated period, in
accordance with Article 93(2) of the EC Treaty,

Whereas:

I

The joint (Federal Government/Länder) scheme for improving
regional economic structures (Gemeinschaftsaufgabe ‘Verbes-
serung der regionalen Wirtschaftsstruktur’) is the main regional
aid scheme in Germany. The relevant provisions implementing
this general scheme during certain periods are laid down in
so-called framework plans (Rahmenpläne). The 26th frame-
work plan, covering the period 1997-2000 (2001), was noti-
fied to the Commission on 19 February 1997 pursuant to
Article 93(3). The Commission approved all the amendments
introduced by this plan, except those relating to the promotion
of investment in teleworking. Germany informed the Commis-
sion that
the
Commission had given its approval.

the plan would not be implemented until

On 30 July 1997 the Commission initiated the procedure
provided for in Article 93(2) of the EC Treaty with regard to
the provisions of the 26th framework plan of the joint Federal
Government/Länder scheme for improving regional economic
structures concerning the intensities of aid to promote tele-
working (section II, point 2.4). Germany was informed of the
decision by letter dated 18 August 1997 (SG(97) D/7104). The
other Member States and interested parties were invited to
submit their comments by way of publication in the Official
Journal of the European Communities (1).

Germany submitted its observations by letter dated 17
September 1997. The Commission received no comments
from third parties or the other Member States.

(1) OJ C 341, 11.11.1997, p. 4.

investment

in teleworking jobs would be
Under the plan,
eligible for regional
investment aid provided that both the
company investing and the place where the teleworker would
be located are in an assisted area. The maximum aid intensity
would be established according to the region where the
investing company to which the teleworking job will be linked
is located. Consequently, in cases where a company located in
an assisted area falling under Article 92(3)(a) invested in tele-
working jobs in an area falling under Article 92(3)(c), the aid
intensity for the Article 92(3)(a) region would apply. The
maximum aid intensity in the regions of eastern Germany
falling under Article 92(3)(a) is 35 % gross (50 % in case of
investments by SMEs); in assisted areas of western Germany
falling under Article 92(3)(c), the maximum permissible aid
intensity is 18 % gross (28 % in case of investment by SMEs).

L 271/26

EN

Official Journal of the European Communities

21. 10. 1999

in opening the procedure, noted that the
The Commission,
principal aim of the provisions governing regional investment
aid is to promote job creation, improve incomes and foster
demand in disadvantaged regions and that, consequently, the
maximum aid intensities for investment aid should be deter-
mined by reference to the region where the investment was
located and the teleworking carried out. It also took the view
that the possibility of promoting teleworking jobs in an Article
92(3)(c) region to the same extent as in an Article 92(3)(a)
region could mean that the intended incentive effect in the
most disadvantaged regions would not be achieved through
this type of investment.

III

Germany is of the opinion that investment in teleworking jobs
would be most effective in the area where the investing
company is located. Therefore, such investment should always
qualify for the aid intensities permissible in the area where the
investor, and not the job, is located, provided that both areas
are assisted area. Companies located in an Article 92(3)(c)
assisted area and investing in teleworking jobs in Article
92(3)(a) areas would consequently benefit only from the lower
intensity applicable at their place of establishment.

Germany also maintains that there is no risk of aid being
diverted from an Article 92(3)(a) area to an Article 92(3)(c)
area. Since aid for investment in different Länder would always
necessiatate the cooperation of, and co-financing from, at least
two Länder, the competent authority in the Article 92(3)(a) area
could always make sure that no aid was abusively diverted in
favour of job creation in the other Land.

Lastly, Germany argued that the positive impact of teleworking
on innovation and competitiveness would invariably benefit
the investing company, with the amount of investment at the
location of the teleworking job generally being rather limited. If
certain services supplied by specialised workers were not avail-
able in an Article 92(3)(a) area, a company investing in such an
area would be obliged to offer them the opportunity to work at
their place of residence in an Article 92(3)(c) area in order to
obtain their services.

IV

The provision whereby aid intensities for investment in tele-
working jobs that exceed the maximum level are allowed in the
region where the teleworking job would be located cannot be

deemed compatible with the common market. The particularly
high aid intensities permissible with a view to promoting
regional development
in disadvantaged areas falling under
Article 92(3)(a) are designed to provide and effective remedy
for the abnormally low standard of living and serious level of
underemployment in those areas. Consenquently, only meas-
ures that contribute towards a higher standard of living and job
creation in an Article 92(3)(a) area are eligible for investment
aid up to an intensity permissible solely for such an area.
Investment made by companies in such disadvantaged areas
with a view to installing the technical equipment and links for
teleworking jobs in another assisted area eligible only for assis-
tance under Article 92(3)(c) does not increase the level of
employment and the general standard of living in the Article
92(3)(a) area. Employment increases only in the area where the
employee is located and the main impact on regional per capita
GDP is felt primarily at
the location where the employee
spends his income.

It is true that access to skilled manpower can be a crucial factor
determining the innovativeness and competitiveness of compa-
nies investing in Article 92(3)(a) regions. If such specialists are
not available on the local job market and cannot be tempted to
move from other areas by the offer of attractive wages, tele-
working opportunities are clarly an option for connecting the
company to resources that already exist in more developed
areas.

However, the main impact this has on regional per capita GDP
and on the level of employment would be felt in regions where
the teleworker is located, provided there is no serious underem-
ployment, and where he spends his income. This observation
forms the basis for the Commission recommendation on
promoting teleworking in disadvantaged regions so as to
enable employees to offer their services to companies in more
developed regions without leaving their place of residence. In
this way, the population in disadvantaged regions could be
stabilised and regional GDP increased by the teleworker's
income (1).

Germany apparently assumes that the authorities in an Article
92(3)(a) region would always expect from the authorities in the
region where the job was to be located a contribution towards
investment aid reflecting the scale of investment undertaken
there.

The provision in question would therefore allow Article
92(3)(c) regions to grant aid for promoting teleworking jobs in
their region at an intensity permissible only in Article 92(3)(a)
regions. Such an option would, however, diminish the intended
incentive effect of the increased level of investment aid in the
most disadvantaged regions and could contribute towards a
scenario whereby investment would go primarily into jobs for
less skilled employees while better skilled employees who,

(1) Study on the White Paper in: Social Europe, 3/95.

21. 10. 1999

EN

Official Journal of the European Communities

L 271/27

because of their position on the labour market, have no need
to move to a less attractive area would remain in more devel-
oped regions. As a result, it would mainly be persons earning
above average wages and with skills in the engineering, soft-
ware, management and consultancy sectors who would have
no incentive to move to disadvantaged regions and thereby to
contribute towards a balanced socio-economic development of
those regions.

V

The Commission therefore concludes that the provision of the
26th framework plan of
the joint scheme for improving
regional economic structures that permits aid intensities for
investments in teleworking jobs in excess of the maximum
intensity allowed in the region where the relevant job would be
located is not compatible with the common market and should
not, therefore, be put into effect,

Article 2

The arrangement referred to in Article 1 shall not be imple-
mented. Germany shall recover any aid that may have been
granted while the arrangement described in Article 1 was being
provisionally applied. Repayment shall be made in accordance
with the procedures and provisions of German law, together
with interest, based on the interest rate used as reference rate in
the assessment of regional aid schemes, running from the date
on which the aid was granted (and including that date).

Article 3

Germany shall inform the Commission within two months of
being notified of this Decision of the measures taken to comply
herewith.

Article 4

HAS ADOPTED THIS DECISION:

This Decision is addressed to the Federal Republic of Germany.

Article 1

In so far as it permits aid intensities for investments in tele-
working jobs in excess of the maximum intensity in the region
where a teleworking job is to be located, the 26th framework
plan of the joint scheme (Gemeinschaftsaufgabe) for improving
regional economic structures
is not compatible with the
common market.

Done at Brussels, 25 February 1998.

For the Commission

Karel VAN MIERT

Member of the Commission