98/687/ECSC: Commission Decision of 10 June 1998 on German aid to the coal industry for 1997 (notified under document number C(1998) 2046) (Only the German text is authentic) (Text with EEA relevance)
Date: 1998-06-10
Institutions: European Commission
Subjects: Germany, State aid, aid system, aid to industry, coal industry, control of State aid

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COMMISSION

COMMISSION DECISION

of 10 June 1998

on German aid to the coal industry for 1997

(notified under document number C(1998) 2046)

(Only the German text is authentic)

(Text with EEA relevance)

(98/687/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:

I

By letter of 30 September 1996, Germany notified the
Commission, in accordance with Article 9(1) of Decision
No 3632/93/ECSC, of the aid it intended to grant to the
coal industry in 1997. By letters of 15 October 1996, 5
June 1997, 22 October 1997, 27 January 1998 and 4
March 1998, Germany submitted the additional informa-
tion requested by the Commission.

In accordance with Decision No 3632/93/ECSC,
the
Commission gives its opinion on the following financial
measures:

(a) operating aid within the meaning of Article 3 of the

Decision totalling DEM 6 364 million;

(b) for the reduction of activity within the meaning of
Article 4 of the Decision totalling DEM 3 217 million;

(c) within the meaning of Article 3 of the Decision total-
ling DEM 87 million to maintain an underground
labour force (‘Bergmannspr(cid:132)mie');

(d) within the meaning of Article 5 of the Decision total-
ling DEM 200 million to assist
the undertakings
Ruhrkohle AG, Saarbergwerke AG, Preussag Anthrazit
GmbH and Sophia Jacoba GmbH to cover excep-
tional costs;

(e) within the meaning of Article 5 of the Decision total-
ling DEM 609,2 million to assist the undertakings
Ruhrkohle AG, Saarbergwerke AG and Sophia Jacoba
GmbH to cover exceptional costs to enable the under-
takings to cover the costs arising from or having
arisen from the restructuring of
industry
which are not related to current production.

the coal

The financial measures proposed by Germany for the coal
industry comply with the provisions of Article 1(1) of
Decision No 3632/93/ECSC. In accordance with Article
9(4), the Commission is therefore required to give an
opinion on those measures. For this purpose, it checks
whether those measures conform to the general objectives
and criteria defined in Article 2 and the specific criteria
defined in Articles 3 and 4 of the Decision and whether
they are compatible with the functioning of the common
market. Furthermore, in accordance with Article 9(6) of
the Decision, the Commission has to decide whether the
measures are compatible with the modernisation, ration-
alisation and restructuring plan which the Commission
approved by Decision No 94/1070/ECSC (2) on aid to the
coal industry in 1994.

By letter of 5 May 1998, the coal producer RJB Mining
plc, an undertaking within the meaning of Article 80 of

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

(2) OJ L 385, 31. 12. 1994, p. 18.

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the aid to the coal

the ECSC Treaty, lodged a complaint with the Commis-
sion against
industry planned by
Germany in 1997 and 1998. In the complainant’s view,
the aid can be expected to impair the normal functioning
of the market and of competition and is therefore incom-
patible with the Treaty, in particular Articles 2 and 4
thereof.

annual sales volume covered by the aid are to be given.
Only the volumes actually supplied may be the subject of
aid. Any amount of aid overpaid will be recovered.

The aid for the sale of coal for power stations falls under
the fifth electricity from coal Law of 12 December
1995 (1).

II

As the German notification indicates, the financial meas-
ures totalling DEM 9 581 million indicated in section I(a)
and (b) are aid for the sale of coal and coke to the
Community steel industry totalling DEM 2 581 million
and aid for coal for power stations totalling DEM 7 000
million. This aid is defined by Germany as sales aid.

the period 1995 to 1997,

The aid for the sale of coal and coke to the Community
steel industry will be granted, as explained in the German
notification of 5 October 1995, as part of a limited three-
year payment. For
this
amounted to DEM 8 065 million, of which DEM 5 010
million was provided from the Federal budget and DEM
2 700 million from the budget of the State of North
Rhine-Westphalia. The Federal Government’s annual
contribution will be reduced from DEM l 760 million for
the 1995 financial year to DEM 1 650 million for the
1996 financial year and then to DEM 1 600 million for
the 1997 financial year. The contribution from the State
of North Rhine-Westphalia is to be reduced from DEM
948,5 million for 1995 to DEM 889,2 million for 1996
and then to DEM 862,3 million for 1997. The contribu-
tion from the Saar is to be replaced by a debt-register
entry totalling DEM 355 million to be charged to the
Federal budget to assist the undertaking Saarbergwerke
AG, of which DEM 118,4 million is to offset losses for
1995 and the same amounts are to offset losses for 1996
and 1997. Those sums will be paid out as from the 1996
financial year and will be the subject of a final settlement
in 1998.

The payment on the basis of these aid rules is to be
regarded as a maximum amount. At the end of the three-
year period, the exact difference between the agreed price
and the production costs per tonne for the entire sale will
be determined by means of a final settlement. Unlike
under the earlier rules, no more advance estimates of the

Under that Law, the coal companies must submit proof of
the use made of the flat-rate amounts paid to them by
providing notification of the volumes supplied to thermal
power stations in 1997. According to the Law, the average
aid contribution per tonne may not be greater than the
difference between the average production costs and the
price of coal imported from third countries and delivered
to a thermal power plant. This rule excludes the poss-
ibility of exceeding the maximum amount due to an
increase in sales.

The aid was limited in 1996 to a maximum of DEM
7 500 million and then in 1997 to DEM 7 000 million.

The Commission finds, after consideration of the infor-
mation provided by Germany, that the planned amounts
of aid per tonne notified in the framework of the rules on
sales aid do not exceed the difference between the
production costs and the revenue to be expected on the
basis of prices freely agreed between the contracting
parties and, for coal produced in the Community, do not
lead to prices for delivery to plants which are lower than
those for coal of similar quality from third countries.

For the aid actually paid, an annual settlement is to be
made, if necessary, before the end of 1998 on the basis of
the actual costs and revenue and the volume actually sold.

the two measures described,

In its assessment of
the
Commission assumes that, whatever principles Germany
has laid down for the award of aid to coal undertakings
within the meaning of the ECSC Treaty — in this case
sales aid — the measures, since they cover a large part of
these undertakings’ production costs, are, whatever market
the products concerned are intended for, de facto aid to
current production, which falls under Articles 3 and 4 of
Decision No 3632/93/ECSC.

III

to Article 3 of
The operating aid proposed pursuant
Decision No 3632/93/ECSC is intended to assist
the
mines of the undertakings Ruhrkohle AG, Saarbergwerke
AG and Preussag Anthrazit GmbH. In the case of Ruhr-
kohle AG, the aid is to assist the Friedrich Heinrich/
Rheinland, Niederberg, Walsum, Lohberg/Osterfeld,
Prosper/Haniel, Westerholt, Auguste Victoria, Blumen-
thal/Haard and Heinrich Robert mines. In the case of
Saarbergwerke AG, the measure is intended to assist the

(1) BGBl. I, p. 1638.

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Ensdorf and Warndt/Luisenthal mines. In the case of
Preussag Anthrazit GmbH, the aid is planned for the
Ibbenb(cid:129)ren mine. This aid totalling DEM 6 364 million
is intended to cover the difference between production
costs and the selling price freely agreed between the
contracting parties on the basis of
the conditions
prevailing on the world market for coal of similar quality
from third countries.

to Article 3(3) of

On the basis of the information provided by Germany
the abovementioned
and pursuant
Decision, the Commission notes that the costs at constant
prices fell by 15 % between 1996 and 1992. There is a
significant difference between the average production
costs, which were DEM 269 per tonne of coal equivalent
(tce) in 1996, and the world market prices of DEM 80 per
tonne of coal equivalent for similar qualities. This differ-
ence may, however, be reduced to a certain extent over
the next few years as production concentrates on the most
productive pits.

The cost reduction recorded exceeds the cost reduction
notified by Germany in the framework of the modernisa-
tion, restructuring and rationalisation plan which the
Commission approved by Decision 94/1070/ECSC.

The Commission furthermore believes that the principle
of reducing the aid which Germany has included in legis-
lation and budgetary provisions following the approval of
the abovementioned plan will help to boost this trend.

The aim is to minimise the aid. Pursuing the principle
applied by Germany that aid is only to be paid for
production which is supplied for electricity generation
and to the Community iron and steel industry, Germany
undertakes to sell the production intended for use by
industry and as domestic coal at prices which cover the
production costs.

Commission was informed, for 1997. This sum covers the
difference between the production costs and the average
selling price for 647 000 tonnes of sized anthracite which
that undertaking has sold to industry and as domestic
coal.

The Commission will
take its decision following the
current examination of the sale of sized anthracite by that
undertaking in the United Kingdom. On the basis of
complaints and its own subsequent investigations, the
Commission sent a letter of formal notice to the German
Government on 2 August 1997 notifying it officially of
the contents of the complaints and asking it to comment
on the behaviour of the undertakings referred to and to
state the position of the German Government (1).

Germany gives its assurance pursuant to the provisions of
Article 86 of the ECSC Treaty that the aid will be limited
to what is absolutely essential, taking account of social
and regional considerations relating to the decline of coal
mining in the Community, and that it will not provide an
economic advantage, either directly or indirectly, for any
activity other than coal mining, e.g. for industrial activ-
ities relating to the mining or processing of coal from the
Community.

the Commission has taken account of

In its assessment of the operating aid pursuant to Article
3 thereof,
the
urgent need, as indicated in the second indent of Article
to minimise the
2(1) of Decision No 3632/93/ECSC,
social and regional impact of the restructuring of coal
mining. It also takes note, in accordance with the second
subparagraph of Article 3(2), of the trend towards a reduc-
tion in production costs at constant prices. It must also be
added that
restructuring policy announced by
Germany in the Agreement of 13 March 1997 between
the coal-producing States of North Rhine-Westphalia and
the Saar, the German coal industry, workers’ representa-
tives and the Federal Government should enable the
production costs and aid to be further reduced.

the

Having examined the information provided by Germany,
the Commission finds that the proposed amounts of aid
per tonne notified in the context of these rules on sales
aid do not exceed the difference between production costs
and the revenue to be expected on the basis of the prices
freely agreed between the contractual partners and will
not lead to prices for delivery to plants of coal produced
in the Community which are below those for coal of
similar quality from third countries.

The Commission does not have any objections to the aid
which Germany proposes granting for 1,28 million
tonnes of sized anthracite produced by the undertaking
Preussag Anthrazit GmbH which is intended for the
generation of electricity. However, it is not yet able to
take a decision pursuant to Article 3 of Decision No
3632/93/ECSC on the sum of DEM 65 million which
Germany proposes granting to this undertaking, as the

Subject to a decision on the sum of DEM 65 million on
the basis of the information provided by Germany and
the undertakings given (see section VIII), the aid proposed
for 1997 is compatible with Decision No 3632/93/ECSC,
in particular Articles 2 and 3 thereof.

(1) OJ C 258, 23. 8. 1997, p. 2.

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IV

and to the Community iron and steel industry, Germany
undertakes to sell the production intended for use by
industry and as domestic coal at prices which cover the
production costs.

intended to cover

The aid totalling DEM 3 217 million proposed for the
reduction of activity pursuant to Article 4 of Decision No
3632/93/ECSC is
the difference
between production costs and the sales price freely agreed
on the basis of the conditions prevailing on the world
market for coal of similar quality from third countries and
to assist the mines of the undertaking Ruhrkohle AG, in
particular
the Sophia-Jacoba, F(cid:129)rst Leopold/Wulfen,
Ewald/Huo, Haus Aden/Monopol and Westfalen mines.
In the case of the undertaking Saarbergwerke AG, the
measure is intended for the G(cid:148)ttelborn/Reden mine.

This aid is part of a programme for the complete or
partial closure of the abovementioned mines.

Apart from the closure of the Sophia-Jacoba mine, which
is part of the German modernisation, rationalisation and
restructuring plan which the Commission approved on 13
December 1994, the abovementioned closures are part of
the Agreement of 13 March 1997 which will reduce
production capacity by 16 million tonnes (34 % of total
production capacity) and lead to the shedding of 33 000
jobs between 1997 and 2002.

the

3632/93/ECSC,

In accordance with the provisions of Article 4 of Decision
No
Sophia-Jacoba mine was
completely closed down in 1997. The G(cid:148)ttelborn/Reden,
Ewald/Hugo and Westfalen mines will be completely
closed down before the abovementioned Decision expires.
The amalgamation of mines will result in partial closures
that will provide a persistent and presumably significant
reduction in mining activity before the Decision expires.
In accordance with the second indent of Article 2(1) of
Decision No 3632/93/ECSC, this aid will help to solve
the social and regional problems associated with the
complete or partial reduction of activity.

The fall in production of 17 % in 1996 compared with
1992 is in conformity with the objectives notified in the
modernisation,
rationalisation and restructuring plan
which the Commission approved by Decision 94/1070/
ECSC.

The Commission does not have any objections to the aid
which Germany proposes granting for 125 000 million
tonnes of sized anthracite produced by the undertaking
Sophia-Jacoba GmbH which is intended for the genera-
tion of electricity. However, it is not yet able to take a
decision pursuant to Article 4 of Decision No 3632/93/
ECSC on the sum of DEM 12 million which Germany
proposes granting to that undertaking, as the Commission
was informed, as part of the aid to the undertaking Ruhr-
kohle AG for 1997. This sum covers the difference
between the production costs and the average selling
price for 120 000 tonnes of sized anthracite which that
undertaking has sold to industry and as domestic coal.

The Commission will
take its decision following the
current examination of the sale of sized anthracite by that
undertaking in the United Kingdom. On the basis of
complaints and its own subsequent investigations, the
Commission sent a letter of formal notice to the German
Government on 2 August 1997 notifying it officially of
the contents of the complaints and asking it to comment
on the behaviour of the undertakings referred to and to
state the position of the German Government (1).

Subject to a decision on the sum of DEM 12 million on
the basis of the information provided by Germany and
the undertakings given (see section VIII), the aid proposed
for 1997 is compatible with Decision No 3632/93/ECSC,
in particular Articles 2 and 3 thereof.

V

to German miners

to DEM 10 per underground shift,

The aid totalling DEM 87 million to cover extra
(‘Bergmannspr(cid:132)mien'),
payments
which amount
is
intended to provide an incentive for qualified staff to
work underground and to help rationalise production.
According to the German notification, this aid to miners
is a pecuniary benefit and therefore helps to reduce the
production costs of the mining undertakings accordingly.
It is therefore aid which must be examined on the basis of
Article 3 of Decision No 3632/93/ECSC.

The aim is to minimise the aid. Pursuing the principle
applied by Germany that aid is only to be paid for
production which is supplied for electricity generation

The proposed aid helps to maximise productivity and
therefore facilitates the restructuring and rationalisation of
mining. It therefore also helps to achieve the objective

(1) See previous footnote.

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referred to in the first indent of Article 2(1) of Decision
No 3632/93/ECSC, i.e. to make, in the light of coal prices
on international markets,
towards
economic viability with the aim of achieving digression of
aids.

further progress

In its assessment of the aid, the Commission has taken
account, in accordance with the second indent of Article
2(1) of Decision No 3632/93/ECSC, of the urgent need to
minimise the social and regional impact of restructuring.

in accordance with the provisions of
The aid helps,
Article 3 of the abovementioned Decision, to achieve a
slight improvement in the viability of the undertakings
concerned since the increase in productivity as a result of
the maintenance of a qualified underground labour force
reduces production costs.

In the light of the above and on the basis of the informa-
tion provided by Germany and the undertakings given by
Germany as indicated in section VIII, the aid proposed
for 1997 is compatible with the objectives of Decision No
3632/93/ECSC, in particular Articles 2 and 3 thereof.

VI

The aid totalling DEM 200 million to assist the undertak-
ings Ruhrkohle AG,
Saarbergwerke AG, Preussag
Anthrazit GmbH and Sophia Jacoba GmbH to cover
exceptional costs is intended to cover additional drainage
costs in mines closed down as part of restructuring and
near to working pits. Since little or no water is pumped
out of the closed-down mines, some of the water which
has nothing to do with the existing production flows into
the working pit nearby, thereby giving rise to additional
costs.

The aid therefore complies with the objectives given in
Article 2(1) of Decision No 3632/93/ECSC.

VII

The aid totalling DEM 609,2 million to assist the under-
takings Ruhrkohle AG, Saarbergwerke AG and Sophia
Jacoba GmbH to cover exceptional costs is intended to
cover the costs arising from or having arisen from the
restructuring of the coal industry which are not related to
current production (inherited liabilities).

This aid is the result of agreements reached between the
mining undertakings, the Federal Government, the State
Governments of North Rhine-Westphalia and the Saar,
the trade unions representing the mining industry and
the electricity generators during the negotiations (‘Kohler-
unde') held on 11 November 1991.

resulting

social-welfare

It is intended to cover the following costs: the costs of
paying
from the
benefits
pensioning-off of workers before they reach statutory
retirement age, other exceptional expenditure on workers
who lose their jobs as a result of restructuring and ration-
alisation, the payment of pensions and allowances outside
the statutory system to workers who lose their jobs as a
result of restructuring and rationalisation and to workers
entitled to such payments before the restructuring, supply
of free coal to workers who lost their jobs as a result of
restructuring and rationalisation and to workers entitled
to such supply before the restructuring. From a technical
and financial viewpoint, it is intended to cover additional
underground safety work resulting from restructuring and
exceptional intrinsic depreciation provided that it results
from the restructuring of the industry.

This aid, which is specifically provided for in II(b) of the
Annex to Decision No 3632/93/ECSC, covers expendi-
ture, resulting from restructuring, on the supply of water
and the removal of waste water. To meet the requirements
of Article 5 of the Decision, the special aid may not
exceed the expenditure.

This aid to cover the costs expressly referred to in I(a), (b),
(c), (d), (f) and (k) of the Annex to Decision No 3632/93/
ECSC may not exceed the said costs if it is to be in
conformity with the provisions of Article 5 of the above-
mentioned Decision.

The Commission has examined the agreements between
the public authorities and the undertakings concerned
and, as part of an audit, the information given with regard
to costs and has ascertained that the aid does not exceed
the earmarked resources.

This will make it possible to reduce the pressure on the
undertakings concerned, which will reduce their financial
imbalance and enable them to continue their activities.

The Commission has
information
regarding the costs as part of an audit and has ascertained
that the aid does not exceed the earmarked resources.

examined

the

This will make it possible to reduce the pressure on the
undertakings concerned, which will reduce their financial
imbalance and enable them to continue their activities.
The aid therefore complies with the objectives given in
Article 2(1) of Decision No 3632/93/ECSC.

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VIII

HAS ADOPTED THIS DECISION:

in the light of

The Commission notes that Germany has inserted into
regulations the measures needed to ensure that the aid
granted under this Decision does not exceed the differ-
ence between production costs and selling price (no
charge being made for delivery) freely agreed between the
contracting parties
the conditions
prevailing on the world market in any undertaking or
production unit. The aid per tonne of current production
may not cause prices for Community coal to be lower
than those of coal of a similar quality from third coun-
tries. Germany will also take care to ensure that the aid
does not distort competition or produce discrimination
between coal producers or between coal buyers and users
in the Community.

This Decision does not pre-empt
the Commission’s
opinion on the restructuring plan for the period from
1998 to 2002, which will be the subject of a later Decision
by the Commission pursuant to Article 8 of Decision No
3632/93/ECSC.

To enable the Commission to examine whether the
production units which receive operating aid under
Article 3 of Decision No 3632/93/ECSC actually generate
a trend towards a reduction in production costs at world
prices, Germany undertakes to notify the Commission no
later than 30 September of each year of the production
costs for the production units concerned during the
previous year and of all information pursuant to Article 9
of Decision No 3632/93/ECSC. If any of these produc-
tion units do not meet the conditions laid down in Article
3(2) of Decision No 3632/93/ECSC, Germany will
propose to the Commission pursuant to Article 4 of the
Decision to include them either in a plan for closure by
23 July 2002 or, on exceptional social and regional
grounds, in a plan entailing a gradual, significant reduc-
tion in capacity.

The Commission is required,
in accordance with the
second indent of Article 3(1) and Article 9(2) and (3) of
Decision No 3632/93/ECSC, to verify whether the aid
granted for current production achieves the objectives set
out in Articles 3 and 4 of the Decision. Germany must
therefore provide notification no later than 30 September
1998 of the level of aid actually paid in 1997 and of any
changes to the sums originally notified. In this annual list,
Germany will provide all information required for veri-
fying compliance with the criteria laid down in the above-
mentioned Articles,

Article 1

Germany is hereby authorised to take the following meas-
ures to assist the coal industry:

(a) operating aid as defined in Article 3 of Decision No
3632/93/ECSC totalling DEM 6 299 million. The
Commission will take a decision at a later date on the
remaining sum of DEM 65 million to assist
the
undertaking Preussag Anthrazit GmbH;

(b) aid for the reduction of activity as defined in Article 4
of Decision No 3932/93/ECSC totalling DEM 3 205
million. The Commission will take a decision at a
later date on the remaining sum of DEM 12 million
to assist the undertaking Sophia Jacoba GmbH;

(c) aid as defined in Article 3 of Decision No 3632/93/
ECSC totalling DEM 87 million to maintain an
underground labour force (‘Bergmannspr(cid:132)mie');

(d) aid as defined in Article 5 of Decision No 3632/93/
ECSC totalling DEM 200 million to assist the under-
takings Ruhrkohle AG, Saarbergwerke AG, Preussag
Anthrazit GmbH and Sophia Jacoba GmbH to cover
exceptional costs;

(e) aid as defined in Article 5 of Decision No 3632/93/
ECSC totalling DEM 609,2 million to assist
the
undertakings Ruhrkohle AG, Saarbergwerke AG and
Sophia Jacoba GmbH to cover exceptional costs to
enable the undertakings to cover the costs arising
from or having arisen from the restructuring of the
coal industry which are not related to current produc-
tion.

Article 2

the ECSC Treaty,
In accordance with Article 86 of
Germany undertakes to take all appropriate measures,
whether general or particular, to ensure fulfilment of its
obligations arising from this Decision. Germany shall
ensure that the aid granted is used only for the specified
purposes and that, if the expenditure is cancelled, has
been overestimated or
recover
is
payment of any items referred to in this Decision.

incorrect,

shall

it

Article 3

Germany shall provide information no later than 30
September 1998 about payments actually made during the
1997 financial year and shall forward the information
pursuant to Article 9 of Decision No 3632/93/ECSC.

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This Decision is addressed to the Federal Republic of Germany.

Article 4

Done at Brussels, 10 June 1998.

For the Commission

Christos PAPOUTSIS

Member of the Commission