98/636/ECSC: Commission Decision of 3 June 1998 on financial measures by Spain in respect of the coal industry in 1997 [notified under document number C(1998) 2044] (Only the Spanish text is authentic) (Text with EEA relevance)
Date: 1998-06-03
Institutions: European Commission
Subjects: Spain, cessation of trading, coal industry, control of State aid, industrial restructuring, severance pay

13. 11. 98

EN

Official Journal of the European Communities

L 303/53

COMMISSION DECISION

of 3 June 1998

on financial measures by Spain in respect of the coal industry in 1997

(notified under document number C(1998) 2044)

(Only the Spanish text is authentic)

(Text with EEA relevance)

(98/636/ECSC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Coal and Steel Community,

Having regard to Commission Decision No 3632/93/
ECSC of 28 December 1993 establishing Community
rules for State aid to the coal industry (1), and in particular
Article 2(1) and Article 9 thereof,

Whereas:

The financial measures proposed by Spain for the coal
industry fall within the provisions of Article 1 of Decision
No 3632/93/ECSC and must be approved by the
Commission, in accordance with Article 9, on the basis,
in particular, of the general criteria and objectives laid
down in Article 2 and the specific criteria established by
Articles 3 and 4 of that Decision. In accordance with
Article 9(6) of that Decision, the Commission must assess
whether the measures are in conformity with the 1994 to
1997 phase of the plans to modernise, rationalise, restruc-
ture and reduce the activity of the Spanish coal industry,
as provided for in Decision 94/1072/ECSC (2).

I

II

By letter of 25 March 1997 Spain notified the Commis-
sion, pursuant to Article 9(1) of Decision No 3632/93/
ECSC, of the financial measures which it intended to take
in respect of the coal industry in 1997.

By letters of 4 September 1997, 20 February 1998 and 31
March 1998, Spain also provided the additional informa-
tion requested by the Commission in its letters of 23
April 1997 and 24 October 1997.

Pursuant to Decision No 3632/93/ECSC, the Commis-
rule on the following financial measures
sion must
relating to 1997:

(a) aid of ESP 130 738 million to cover operating losses by

coal undertakings;

(b) aid of ESP 51 244 million to cover exceptional welfare
aid paid to workers who lose their jobs as a result of
the measures to modernise, rationalise, restructure and
reduce the activity of the coal industry;

(c) aid of ESP 9 113 million to cover the technical costs of
closing down mining installations as a result of the
restructure and
measures to modernise,
reduce the activity of the coal industry.

rationalise,

The aid of ESP 130 738 million consists of ESP 116 877
million intended to compensate in full or in part for
operating losses suffered by coal producers and ESP
13 861 million to help with marketing coal.

The aid of ESP 116 877 million to cover operating losses
subdivides into operating aid of ESP 47 347 million
pursuant to Article 3 of Decision No 3632/93/ECSC and
aid of ESP 69 530 million to reduce activity pursuant to
Article 4 thereof.

Of the operating aid of ESP 47 347 million for coal
production totalling 14,6 million tonnes, ESP 46 347
million will be covered by the specific costs included in
the payments for the activities of the national electricity
system, while the remaining ESP l 000 million will be
charged to the public budgets.

Spain proposed to the Commission that part of the aid to
the coal industry for 1997 be entered in mechanisms
to entry in the public
considered strictly equivalent

(1) OJ L 329, 30. 12. 1993, p. 12.

(2) OJ L 385, 31. 12. 1994, p. 31.

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budgets, as provided for by Article 2(2) of Decision No
3632/93/ECSC. This mechanism would consist
in
inserting a clause into Law 12/1996 of 30 December 1996
on the general State budgets for 1997 (1) stipulating that
the specific costs associated with coal mining will be
included in the electricity tariff and setting a value of
4,864 % of the amount invoiced by the electricity distrib-
utors. The Commission considers that entry of the aid in
the public budgets offers better guarantees of transparency
and notes Spain’s undertaking to amend accordingly the
mechanisms proposed as strictly equivalent and applied
in 1997.

The Spanish coal producers which receive operating aid
must reduce their production costs by 2 % per year, at
constant prices, which will contribute to a trend towards a
reduction in production costs at 1992 prices, as provided
for by Article 3(2) of Decision No 3632/93/ECSC. This
reduction, although not very sharp, is in line with the
objective of degression of aid. A sharper reduction would
endanger the survival of the undertakings, which would
have grave social consequences since the mines are in
isolated, economically backward regions.

The inclusion of those measures in the 1994 to 1997
phase of the modernisation, rationalisation, restructuring
and activity-reduction plan approved by the Commission
meets the objectives of the first and second indents of
Article 2(1) of Decision No 3632/93/ECSC, namely to
help to solve the social and regional problems created by
developments in the coal industry in a context of further
progress towards economic viability with the aim of
degression of aid.

timates have been entered in the general State budgets for
1997. In 1997 those undertakings cut production by
7,6 % compared with 1996, in keeping with the principle
of progressive and continuous activity reduction provided
for in Article 4 of Decision No 3632/93/ECSC.

The remaining ESP 20 235 million covered by the
specific costs charged to the national electricity system is
intended for the same undertakings and for others in the
coalfields in north-west, north-east and southern Spain,
which must close before Decision No 3632/93/ECSC
expires.

This aid will help to solve the social and regional prob-
lems created by developments in the coal industry. It
forms part of a closure plan and is therefore in line with
the provisions of Article 4 of Decision No 3632/93/
ECSC.

Spain authorised a premium of 10 % on world market
prices to support the marketing of Community coal in
1997. This measure constitutes support by public author-
ities linked to marketing of coal which gives an economic
advantage to coal undertakings by reducing the costs
which they would normally have to bear. This support
totals ESP 13 861 million. It constitutes aid pursuant to
Article 1(2) of Decision No 3632/93/ECSC.

The measure is justified by the need for a gradual transi-
tion from the old system of regulated prices to prices
freely agreed in the light of the conditions prevailing on
the world market.

Of the aid of ESP 69 530 million to reduce activity,
pursuant to Article 4 of that Decision, ESP 20 235 million
will be covered by the specific costs charged to the
national electricity system, while ESP 49 295 million will
be borne by the public budgets.

In view of the gradual reduction of this premium from
25 % in 1994 to 17 % in 1995, 14 % in 1996 and 10 %
in 1997 and of its complete disappearance with effect
from l January 1998, this marketing aid scheme can be
considered Community aid and, as such, compatible with
the proper functioning of the common market.

The aid totalling ESP 49 295 million from the general
State budget is intended for Hunosa, Minas de Figaredo
SA and Mina de la Camocha SA, all of which lie in the
central Asturian coalfield, for a production of 2,43 million
tonnes of coal. In the case of Hunosa and Minas de
Figaredo, this aid will be paid via the public-sector share-
holder in the undertakings, the Agencia Industrial del
Estado (AIE), of which the revenue and expenditure es-

(1) Bolet(cid:146)n Oficial del Estado No 315, 31. 12. 1996, p. 38 918.

The Commission notes Spain’s undertaking to take the
necessary measures to ensure that by 31 December 1997
at the latest the selling price of Spanish coal will be
agreed freely between the contracting parties, in the light
of conditions on the world market.

In its notification, Spain confirmed that the aid to be
granted will not exceed, for each undertaking or produc-
tion unit, the difference between production costs and
foreseeable revenue.

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Official Journal of the European Communities

L 303/55

The amount of aid notified by Spain for 1997 is 1,5 %
lower than the aid approved by the Commission for 1996,
after comparison with selling prices, taking account of
conditions on the world market. Spain has notified the
Commission that this will be reduced by 4 % per year
from 1998 onwards.

In view of the above and on the basis of the information
provided by Spain, this aid is compatible with the objec-
tives of Decision No 3632/93/ECSC and with the proper
functioning of the common market.

The Commission notes Spain’s undertaking to enter this
aid in the public budgets with effect from l January 1998.

In view of the above and on the basis of the information
provided by Spain, this aid is compatible with the objec-
tives of Decision No 3632/93/ECSC and with the proper
functioning of the common market.

III

The aid of ESP 51 244 million which Spain proposes to
grant will cover compensation for those of the 7 300
workers in Spanish coal undertakings who have to take
early retirement or who lose their jobs under the 1994 to
1997 modernisation,
restructuring and
activity reduction plan for the Spanish coal industry and
for
for early retirement, outside the statutory system,
workers who lost their jobs as a result of the restructuring
before 31 December 1993.

rationalisation,

Part of this aid, amounting to ESP 33 316 million, is to be
granted to Hunosa, Minas de Figaredo SA and Mina de la
Camocha SA and will be charged to the general State
budgets. The payments to Hunosa and Minas de Figaredo
will be made via the AIE.

The remaining ESP 17 928 million of aid are intended for
the other undertakings affected by modernisation, ration-
alisation, restructuring or activity reduction measures and
will be covered by the specific costs charged to the
national electricity system.

Those financial measures relate to action necessitated by
the modernisation, rationalisation and restructuring of the
Spanish coal industry and cannot therefore be considered
to be related to current production (inherited liabilities).

Pursuant to Article 5 of Decision No 3632/93/ECSC, the
aid mentioned explicitly in the Annex to the Decision,
namely the cost of paying social-welfare benefits resulting
from the pensioning-off of workers before they reach
statutory retirement age and other exceptional expendi-
ture on workers who lose their jobs as a result of restruc-
turing and rationalisation, may be considered compatible
with the common market, provided that the amount paid
does not exceed such costs.

IV

The aid of ESP 9 113 million which Spain proposes to
grant is intended to cover part of the loss of value of the
fixed assets of coal undertakings which have to close
down totally or partially, and other exceptional costs
resulting from the progressive closures under the 1994 to
restructuring and
1997 modernisation,
activity reduction plan for the Spanish coal industry.

rationalisation,

Part of this aid, totalling ESP 5 538 million, is to be
granted to Hunosa and Minas de Figaredo SA and will be
covered by the general State budget via the AIE. The
remaining ESP 3 575 million of aid are intended for the
other undertakings restructuring or reducing their activity
and will be covered by the specific costs charged to the
national electricity system.

These financial measures relate to obligations imposed by
the modernisation, rationalisation and restructuring of the
Spanish coal industry and cannot therefore be considered
to be related to current production (inherited liabilities).

it results from the restructuring of

Pursuant to Article 5 of Decision No 3632/93/ECSC, the
aid mentioned explicitly in the Annex to the Decision,
namely exceptional intrinsic depreciation, may, provided
the industry
that
(without taking account of any revaluation which has
occurred since l January 1986 and which exceeds the rate
of inflation) and other additional work and residual costs
arising from closures of
installations, be considered
compatible with the common market on condition that
the amount paid does not exceed such costs.

The Commission notes Spain’s undertaking to enter this
aid in the public budgets with effect from 1 January 1998.

In view of the above and on the basis of the information
provided by Spain, this aid is compatible with the objec-
tives of Decision No 3632/93/ECSC and with the proper
functioning of the common market.

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13. 11. 98

V

Spain will ensure that the aid granted under this Decision
gives
rise to no discrimination between producers,
purchasers and users on the Community coal market.

In view of the above and on the basis of the information
provided by Spain, this aid is compatible with the objec-
tives of Decision No 3632/93/ECSC and with the proper
functioning of the common market.

In accordance with the second indent of Article 3(1) and
with Article 9(2) and (3) of Decision No 3632/93/ECSC,
the Commission must verify that
the aid authorised
relates solely to the purposes set out in Articles 3, 4 and 5
of the Decision. To this end, it must be informed of the
amounts involved and the distribution of payments,

HAS ADOPTED THIS DECISION:

Article 1

Spain is hereby authorised to pay the following aid in
respect of 1997:

(a) operating aid of ESP 47 347 million pursuant

to

Article 3 of Decision No 3632/93/ECSC;

(b) aid for the reduction of activity of ESP 69 530 million
pursuant to Article 4 of Decision No 3632/93/ECSC;

(c) aid of ESP 51 244 million to cover exceptional welfare
aid paid to workers who lose their jobs as a result of
the measures to modernise, rationalise, restructure and
reduce the activity of
industry,
pursuant to Article 5 of Decision No 3632/93/ECSC;

the Spanish coal

(d) aid of ESP 9 113 million to cover the exceptional
technical costs of closing down mining installations as
a result of the measures to modernise, rationalise,
restructure and reduce the activity of the Spanish coal
industry, pursuant to Article 5 of Decision No 3632/
93/ECSC.

Article 2

In accordance with Article 86 of the ECSC Treaty, Spain
shall adopt all appropriate measures, whether general or
particular, to ensure fulfilment of the obligations arising
under this Decision. It shall ensure that the aid authorised
is used exclusively for the purposes intended and that any
unspent, overestimated or incorrectly used aid for any
item covered by this Decision is repaid to it.

Article 3

Spain shall notify the Commission, by 30 September
1998 at the latest, of the amount of aid actually paid in
respect of 1997.

Article 4

This Decision is addressed to the Kingdom of Spain.

Done at Brussels, 3 June 1998.

For the Commission

Christos PAPOUTSIS

Member of the Commission