98/668/EC: Commission Decision of 1 July 1998 on State aid granted by the Republic of Austria and the Land of Upper Austria to Actual Maschinenbau AG [notified under document number C(1998) 1943] (Only the German text is authentic) (Text with EEA relevance)
Date: 1998-07-01
Institutions: European Commission
Subjects: Austria, State aid, aid for restructuring, common market, large business, mechanical engineering

25.11.98

EN

Official  Journal  of  the  European  Communities

L 316/55

COMMISSION  DECISION

of  1  July  1998

on  State  aid  granted  by  the  Republic  of  Austria  and  the Land of  Upper  Austria  to  Actual
Maschinenbau  AG

(notified  under  document  number  C(1998)  1943)

(Only  the  German  text  is  authentic)

(Text  with  EEA  relevance)

(98/668/EC)

THE  COMMISSION  OF  THE  EUROPEAN  COMMUNITIES,

Having  regard  to  the  Treaty  establishing  the  European
Community,  and  in  particular  Article  93(2)  thereof,

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

the  Agreement  establishing 

to 

By  letter  dated  18  July  1997  the  Austrian  authorities
notified  an  extension  of  the  rescue  aid  until  31  October
1997,  indicating  that,  before  a  final  restructuring  plan
could be drawn up, a number of important decisions had
to be taken concerning, among other things, a transfer of
shares 
firm’s  Hungarian  subsidiary  and  a
composition  arrangement  with  the  present  owners.
Settlement  of  both  matters  was  said  to  be  crucial  to  the
firm  remaining  in  business.

the 

in 

Having  given  the  parties  concerned  the  opportunity  to
submit 
the
their  comments 
abovementioned  Article  93,

in  accordance  with 

Whereas:

By  letter  dated  12  August  1996  the  Austrian  authorities
informed  the  Commission  that  they  intended  to  grant
restructuring aid to Actual Maschinenbau AG, a machine
tool  manufacturer.  On 
the  basis  of  Commission
Recommendation  96/280/EC  of  3  April  1996  concerning
the  definition  of  small  and  medium-sized  enterprises (1),
Actual Maschinenbau is to be considered a large firm. Its
registered  office  is  in  Ansfelden,  which  is  not  in  an
assisted  area.  It  is  active  in  the  manufacture  of  machine
tools.

On 25 October 1996 the Austrian authorities notified the
Commission of a proposal to grant the firm R&D aid as
well.

By letter dated 17 December 1996 Austria withdrew both
notifications  and  informed  the  Commission  that  the
Republic  of  Austria  and  the  Land  of  Upper  Austria
wished  to  grant  rescue  aid  in  the  form  of  a  rescue  loan
worth  ATS  15  million  (ECU  1,1  million),  over  six
months  and  at  an  interest  rate  of  6,8 %.  The  legal  bases
for  the  aid  were  Section  35a  of  the  Arbeitsmarktför-
derungsgesetz  (Labour  Market  Promotion  Act)  and  the
Allgemeine  Förderrichtlinien 
(General  Development
Guidelines)  of  the  Land  of  Upper  Austria.

On 5 February 1997 the Commission decided not to raise
any  objections  to  the  planned  rescue  aid.  The  Austrian
authorities  were 
letter  dated
25  February  1997,  reference  SG(97)  D/1422.

informed  of  this  by 

On  16  September  1997  the  Commission  decided  to
initiate  proceedings  pursuant  to  Article  93(2)  of  the  EC
Treaty  in  respect  of  the  extension  of  the  rescue  aid  until
the end of October of that year, this being tantamount to
a  second  rescue  aid  measure.  It  took  the  view  that  the
extension  of  the  rescue  loan  might  merely  maintain  the
status  quo  and  transfer  the  problems  associated  with
structural  change  to  other,  more  efficient  firms.  It  was
doubtful,  therefore,  whether  an  extension  of  the  rescue
aid  could  be  considered  compatible  with  the  common
market.

The  Austrain  authorities  were  informed  of  this  by  letter
dated  2  October  1997,  reference  SG(97)  D/8079.  They
submitted  their  comments  by  letter  dated  10  November
1997,  in  which  they  acknowledged  that  the  new  rescue
aid  had  been  granted  before  the  Commission  had  stated
its  position  on  the  matter.  They  declared  that  they  had
taken preliminary steps to recover outstanding debts. The
Commission  observed  in  a  letter  dated  21  November
1997 that repayment of the loan had clearly not yet been
ordered and that it assumed that the Austrian authorities
would  inform  it  in  due  course  once  this  was  done,
furnishing  supporting  evidence.  The  Austrian  authorities
confirmed  by  fax  on  10  June  1998  that  the  same  terms
applied  to  the  extended  rescue  loan  as  to  the  authorised
loan,  adding,  however,  that  so  far  the  firm  had  neither
paid  any  interest  nor  repaid  the  loan.

A  Commission  notice  concerning  the  decision  to  initiate
proceedings  and 
interested  parties  to
submit  comments  was  published  in  the  Official  Journal
of  the  European  Communities (2).  No  comments  were
received.

inviting  other 

(1) OJ  L  107,  30.4.1996,  p.  4.

(2) OJ  C  390,  23.12.1997,  p.  11.

L 316/56

EN

Official  Journal  of  the  European  Communities

25.11.98

By letter dated 23 February 1998 the Austrian authorities
informed  the  Commission  that  they  wished  to  grant
Actual  Maschinenbau  restructuring  aid.  They  sent
additional information in a further letter dated 10 March
1998.  The  Republic  of  Austria  intended  to  grant  under
Section  35a  of  the  Arbeitsmarktförderungsgesetz  an  ATS
20  million  (ECU  1,4  million)  loan  over  eight  years,  with
a two-year repayment holiday, repayable in 12 half-yearly
instalments  and  bearing  an  interest  rate  of  3,5 %,  the
gross  grant  equivalent  of  which  within  the  meaning  of
the  Commission  notice  on  the  de  minimis  rule  for  State
aid (3)  came  to  ATS  3,7  million  (ECU  268 000).  On  the
basis  of  its  Allgemeine  Förderrichtlinien,  the  Land  of
Upper  Austria  intended  to  provide  a  grant  amounting  to
ATS 10 million (ECU 725 000) for R&D work which the
Austrian  authorities  deemed  essential 
firm
returning  to  profit.  The  total  cost  of  the  planned  R&D
work came to ATS 83 million, of which ATS 51,9 million
had  already  been  spent  in  1996  and  1997  and  of  which
only  ATS  31,1  million  remained  to  be  spent  in  1998.

the 

to 

to 

In  a  letter  dated  7  April  1998  the  Commission  put  a
number  of  questions 
the  Austrian  authorities,
expressing doubt as to whether the restructuring plan met
the  conditions  of  the  Community  guidelines  on  State  aid
for rescuing and restructuring firms in difficulty (4).  In  its
opinion,  it  was  not  apparent  from  the  forecasts  that  the
firm  would,  as  the  Austrian  authorities  maintained,  be
completely restructured by 1999. It doubted in particular
whether  the  firm’s  capital  base  could  be  considered
adequate  in  the  long  term.  Moreover,  the  forthcoming
operating  results  were  expected  to  be  low,  and  the
assumptions  underlying  the  forecasts  were  not  set  out  in
the  restructuring  plan.  The  Commission  pointed  out  in
particular that, in the absence of further explanation, the
projected  increase  in  turnover  was  implausible.  With
regard  to  the  R&D  work,  it  stated  that  it  could  not  be
concluded  form  the  information  available  that  the  costs
qualified for assistance under the Community framework
for  State  aid  for  research  and  development (5).  In  any
case,  only  future  costs  were  eligible.  Finally,  it  took  the
view  that  there  was  not  enough  evidence  to  support  the
Austrian authorities’ assertion that a new investor willing
to  inject  sufficient  capital  into  the  firm  would  take  the
firm  over.

By  letter  dated  5  May  1998  the  Austrian  authorities
informed  the  Commission  that  the  takeover  negotiations
between  the  present  owners  and  the  investor  had  failed.
They  now  shared  the  Commission’s  doubts  about  the
compatibility  of  the  notified  restructuring  aid  with  the
common  market  and  were  accordingly  withdrawing  the
for  Actual
notification  of 
Maschinenbau  AG.

restructuring  aid 

the 

(3) OJ  C  68,  6.3.1996,  p.  9.
(4) OJ  C  368,  23.12.1994,  p.  12.
(5) OJ  C  45,  17.2.1996,  p.  5.

The  Commission  has  already  explained  in  its  decision  to
initiate  proceedings  in  this  case  that  the  extension  of  the
rescue  aid  constitutes  State  aid  within  the  meaning  of
Article  92(1)  of  the  EC  Treaty  and  Article  61(1)  of  the
EEA  Agreement.

Under  those  provisions,  aid  having  the  features  set  out
therein  is  incompatible  with  the  common  market.

Article  92(2)  and  (3)  of  the  EC  Treaty  and  Article  61(2)
and (3) of the EEA Agreement list the cases in which aid
may,  by  way  of  exception,  be  declared  compatible  with
the  common  market.

The exception pursuant to Article 92(2) of the EC Treaty
and Article 61(2) of the EEA Agreement is not applicable
here.  The  aid  is  neither  aid  having  a  social  character
granted  to  individual  consumers  nor  aid  to  make  good
the  damage  caused  by  natural  disasters  or  exceptional
occurrences,  nor  aid  granted  to  the  economy  of  certain
areas of the Federal Republic of Germany affected by the
division  of  Germany.

The  exception  pursuant  to  Article  92(3)(a)  of  the  EC
Treaty  and  Article  61(3)(a)  of  the  EEA  Agreement  is
likewise  not  applicable  here  inasmuch  as  the  aid  is  not
intended  to  promote  the  economic  development  of  areas
where  the  standard  of  living  is  abnormally  low  or  where
there  is  serious  underemployment.

As  regards  the  exception  pursuant  to  Article  92(3)(b)  of
the  EC  Treaty  and  Article  61(3)(b)  of  the  EEA
Agreement,  the  Commission  has  ascertained  that  the  aid
is  intended  neither  to  promote  the  execution  of  an
important  project  of  common  European  interest  nor  to
remedy  a  serious  disturbance  in  the  economy  of  a
Member  State.

The  regional  component  of  the  exception  pursuant  to
Article  92(3)(c)  of  the  EC  Treaty  and  Article  61(3)(c)  of
the  EEA  Agreement  is  not  applicable  inasmuch  as  the
firm’s registered office is located outside an assisted area.
Indeed, the Austrian authorities have not relied on any of
the  abovementioned  exceptions  to  justify  the  aid.

As  regards  part  of  Article  92(3)(c)  of  the  EC  Treaty  and
of Article 61(3)(c) of the EEA Agreement dealing with aid
to 
the  development  of  certain  economic
activities  or  of  certain  economic  areas,  the  Commission
would refer to the Community guidelines on State aid for

facilitate 

25.11.98

EN

Official  Journal  of  the  European  Communities

L 316/57

rescuing and restructuring firms in difficulty, according to
which  Article  92(3)(c)  of  the  EC  Treaty  may  form  the
basis  for  exempting  rescue  aid  if  the  aid  contributes  to
the development of  economic activities without  adversely
affecting  trading  conditions  to  an  extent  contrary  to  the
common  interest.

indicated 

the  decision 

According  to  the  abovementioned  guidelines,  a  rescue
loan  may  be  granted  only  for  the  time  needed  (generally
not exceeding six months) to devise the recovery plan. As
was  already 
initiate
in 
proceedings,  an  extension  of  the  rescue  aid  would
infringe this general rule. The Commission authorised the
rescue  aid  for  a  period  of  six  months.  The  rescue  loan
was  disbursed  as  follows:  ATS  8  million  on  27  January
1997  and  ATS  7  million  on  13  February  1997.  It  ought
therefore  to  have  been  paid  back  by  the  end  of  July
1997.

to 

extension  will  ultimately  enable  the  firm  to  devise  a
suitable  restructuring  plan.

The  Commission  must  also  take  the  situation  in  the
relevant  market  into  consideration.  The  firm  is  active  in
the  following  four  sectors:  machine  tools  for  the
production  of  plastic  windows,  machine  tools  for  the
manufacture of plastic sections, extrusion of sections and
plastic  injection  mouldings.

is 

to 

strong 

subject 

relevant  machine 

tool  market,  being  highly
The 
international
export-oriented, 
competition. Manufacturers, who are mostly either SMEs
or  fairly  large  firms,  are  concentrated  mainly  in  Central
Europe.  According  to  the  Austrian  authorities,  Actual
Maschinenbau’s  leading  competitors  are  Greiner  GmbH,
TOP  and  Technoplast  in  Austria,  IDE  in  Italy  and
Schwarz  in  Germany.

The  Commission  can  depart  from  the  general  six-month
rule  only  in  well-founded,  exceptional  cases.  When  they
notified  the  extension  of  the  rescue  aid,  the  Austrian
authorities did not, however, present it as being necessary
owing  to  unforeseeable,  extraneous  circumstances.  They
sought  instead  to  justify  it  by  the  need  to  examine
questions  to  do  with  the  transfer  of  shares  in  the
Hungarian  subsidiary  and  the  composition  arrangement
with  the  present  owners.  These  two  interrelated  aspects
ostensibly  formed  part  of  the  efforts  to  find  a  new
investor  with  a  view  to  providing  the  firm  with  an
adequate  capital  base  and 
its  strategic
position.  These  factors  were  therefore  crucial  to  the  firm
remaining  in  business  and  a  precondition  for  devising  a
viable  restructuring  plan  that  would  restore  the  firm  to
profitability  within  a  reasonable  period.

improving 

It  must  be  borne  in  mind,  however,  that  these  questions
should  have  been  resolved,  not  just  recently,  but  before
the  aid  application  was  submitted  at  the  end  of  1996.
The  Austrian  authorities  pleaded,  in  the  course  of
proceedings  pursuant  to  Article  93(3)  of  the  EC  Treaty,
no  exceptional  circumstances  such  as  might  have
warranted  extending  the  rescue  aid.  Nor  did  they  prove
that  the  firm  would  be  capable  in  the  foreseeable  future
of  taking  the  necessary  decisions  which  they  considered
crucial  to  the  firm  remaining  in  business.  What  is  more,
they  notified  the  granting  of  restructuring  aid  by  letter
dated  23  February  1998,  only 
the
notification  by  letter  dated  5  May  1998  on  the  ground
that they shared the Commission’s doubts about the aid’s
compatibility  with  the  common  market.

to  withdraw 

is
Demand  for  the  abovementioned  machine  tools 
strongly  influenced  by  developments  in  the  building
industry  and  in  urban  renewal  and  by  the  share  of  the
overall  window  market  accounted 
for  by  plastic
windows.  The  market  in  plastic  windows  grew  from
1980 onwards above all because of its increasing share of
the  overall  market  and  because  of  the  building  boom.
Since  the  second  half  of  1995,  the  window  market  has
been  affected  by  the  recession  in  the  building  industry.
The  Central  European  market  seems  to  be  saturated  and
there  is  probably  already  a  degree  of  overcapacity.

As  a  result  of  the  rescue  loan,  Actual  Maschinenbau  AG
is  in  receipt  of  funds  totalling  ATS  15  million  which  it
would  not  normally  have  received,  and  hence  has  gained
an  unjustified  financial  advantage  over 
its  unaided
competitors.  The  problems  associated  with  the  structural
change  may  thus  be  transferred  to  other,  more  efficient
operators,  and  this  may  adversely  affect  this  branch  of
industry  in  other  Member  States.

Since no exception is applicable in this case, the extended
recue aid must be regarded as aid which adversely affects
trading  conditions  to  an  extent  contrary  to  the  common
interest.

In  the  Commission’s  opinion  the  extended  rescue  loan  is
accordingly  incompatible  with  the  common  market.

There  was  at  the  time  of  initiation  of  proceedings  by  the
Commission,  and  there  is  now,  insufficient  evidence  to
support  the  contention  that  exceptional  circumstances
justify  an  extension  of  the  rescue  loan  or  that  such  an

The  rescue  aid  authorised  by  the  Commission  on
5  February  1997  expired  at  the  end  of  July  1997.  The
Austrian  authorities  notified  in  their  letter  of  18  July
1997  an  ectension  of  the  rescue  aid  by  a  further  three
the  end  of  October  1997.  They
months  until 

L 316/58

EN

Official  Journal  of  the  European  Communities

25.11.98

(3) of the EC Treaty or Article 61(2) and (3) of the EEA
Agreement  are  satisfied.

Article  2

Austria  is  hereby  required  to  ensure  that  the  rescue  loan
referred to in Article 1 is repaid. The loan shall be repaid
in  accordance  with  the  procedures  and  provisions  of
interest,  at  a  percentage  rate
Austrian 
corresponding  to  the  reference  rate  used  to  calculate  the
net  grant  equivalent  of  regional  aid  in  Austria,  payable
from the date on which the aid was granted until the date
on  which  it  is  actually  repaid.

law,  with 

Article  3

Austria  shall  inform  the  Commission  within  two  months
of  the  date  of  notification  of  this  Decision  of  the
measures  taken  to  comply  therewith.

Article  4

This  Decision  is  addressed  to  the  Republic  of  Austria.

Done  at  Brussels,  1  July  1998.

For  the  Commission

Karel  VAN  MIERT

Member  of  the  Commission

implemented  this  measure  at  the  end  of  July  1997  when
the  authorised  rescue  loan  expired  —  that  is  to  say,
before  the  Commission  had  stated  its  position.  The
implementation  was  therefore  unlawful.  Moreover,  the
aid  was  granted,  not  only  until  October  1997,  but  until
the  present  time.  The  aid  is  incompatible  with  the
common  market.

enjoyed 

financial 

advantage 

The  Commission  must  therefore  take  the  measures
necessary  to  restore  the  statuts  quo  ante,  which,
according  to  the  judgment  of  the  Court  of  Justice  of  the
European  Communities  in  Case  C-142/87,  Belgium  v.
Commission  (Tubemeuse  case) (6),  presuploses  that  the
undue 
by  Actual
Maschinenbau  AG  after  the  expiry  of  the  authorised
rescue 
loan  must  be  eliminated.  According  to  the
judgment  of  the  Court  of  Justice  in  Case  301/87,  France
v. Commission (Boussac case) (7), the rescue loan must be
repaid  in  accordance  with  the  procedures  and  provisions
of  Austrian  law,  with  interest,  at  a  percentage  rate
corresponding  to  the  reference  rate  used  to  calculate  the
net  grant  equivalent  of  regional  aid  in  Austria,  payable
from the date on which the aid was granted until the date
on  which  it  is  actually  repaid,

HAS  ADOPTED  THIS  DECISION:

Article  1

to  Actual  Maschinenbau  AG 

The  extended  rescue  loan  of  ATS  15  million  granted  by
is  unlawful
Austria 
inasmuch  as  it  was  made  available  at  the  end  of  July
1997 before the Commission had stated its position. The
aid  is,  moreover,  incompatible  with  the  common  market
because none of the criteria pursuant to Article 92(2) and

(6) [1990]  ECR  I-959,  at  paragraph  66.
(7) [1990]  ECR  I-307,  at  paragraph  22.