1999/226/ECSC: Commission Decision of 1 July 1998 concerning aid which the Region of Friuli Venezia Giulia plans to grant to the steel company Servola SpA (notified under document number C(1998) 1941) (Only the Italian text is authentic) (Text with EEA relevance)
Date: 1998-07-01
Institutions: European Commission
Subjects: Friuli-Venezia Giulia, State aid, aid to industry, environmental protection, investment aid, iron and steel industry

27. 3. 1999

EN

Official Journal of the European Communities

L 83/69

COMMISSION DECISION

of 1 July 1998

concerning aid which the Region of Friuli Venezia Giulia plans to grant to the
steel company Servola SpA

(notified under document number C(1998) 1941)

(Only the Italian text is authentic)

(Text with EEA relevance)

(1999/226/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 2496/96/
ECSC of 18 December 1996 establishing Community
rules for State aid to the steel industry (1), and in particular
Article 6(5) thereof,

Having invited the interested parties to submit
comments, and taking account of those comments (2),

their

Whereas:

I

By letter of 28 June 1996 the Commission informed the
Italian authorities of its decision to initiate proceedings
under Article 6(4) of Commission Decision No 3855/91/
ECSC (replaced from 1 January 1997 by Commission
Decision No 2496/96/ECSC, hereinafter referred to as
‘the Steel Aid Code') in respect of part of the aid which
the Autonomous Region of Friuli Venezia Giulia planned
to grant to the steel undertaking Servola SpA (hereinafter
referred to as ‘Servola').

From the information available to the Commission,
which was based essentially on the statements of the
Italian authorities
the
Commission draws the following conclusions.

in the documents

submitted,

that part of the investments, totalling some ITL 10 billion
which, according to the information submitted, was for
environmental protection in the form of dust control at
the plant, precipitation of dust generated at the cast-iron
transfer stage and cleaning of
the ‘torpedoes', related
mostly to plants that entered into service in 1991/92.

Because the environmental standards, i.e. the standards
which the ITL 10 billion investment was intended to help
attain, were adopted only in July 1990, the requirement
in Article 3 of the abovementioned Decision that aid may
be authorised only if plants entered into service at least
two years before the entry into force of the environmental
standards in question has not been complied with.

The Commission also had serious doubts as to the
compatibility with the common market of another part of
the notified investments, totalling some ITL 4 billion,
aimed at reducing dust and noise levels by resurfacing
roads and yards at the site. It took the view that this type
of
investment cannot be deemed eligible within the
meaning of Article 3 of the Decision as roads and yards at
an industrial steelworks do not appear to correspond to
the concept of ‘plants' as referred to in Article 3.

The Commission decided not to object to the remaining
aid totalling ITL 23,94 billion.

II

Under draft Regional Law No 166, approved by the
Regional Executive on 22 May 1995, the Autonomous
Region of Friuli Venezia Giulia proposed to assist Servola
to bring its Trieste plant into line with environmental
standards. The assistance took the form of a capital
contribution of ITL 8,5 billion towards environmental-
protection investments of at least ITL 37,9 billion. The
investments were aimed in particular at curbing smoke
and dust emissions, reducing noise and improving water
recovery.

Having analysed the notified aid and investments, the
Commission decided to initiate proceedings under Article
6(4) of Decision No 3855/91/ECSC in view of the fact

(1) OJ L 338, 28. 12. 1996, p. 42.
(2) OJ C 273, 19. 9. 1996, p. 4.

The Commission invited the Italian Government
to
submit its comments on the proceedings, and informed
other Member States and interested parties by publishing
the decision initiating proceedings.

By letter dated 17 October 1996,
the Commission
received comments from the British Iron and Steel
Producers Association
then
forwarded to the Italian authorities by letter of 23
December 1996.

(BISPA) which were

In its letter, BISPA expressed support for the initiation of
it
the proceedings by the Commission. In particular,
considered that no aid could be authorised for plants
installed in 1991 or 1992 as the environmental standards
had already entered into force in 1990. The aid for

L 83/70

EN

Official Journal of the European Communities

27. 3. 1999

resurfacing roads and yards does not relate to plants as
defined in Article 3 of
the Steel Aid Code since,
according to the interpretation given by the Commission,
plant means only machinery and equipment.

Commission considers that, in view of the said Guide-
lines, the additional aid is applicable solely to that part
of the investment which exceeds the investment needed
in order to comply with the minimum environmental
standards.

BISPA therefore asked the Commission to declare the aid
in question incompatible with the common market for
coal and steel, pursuant to Article 4(c) of the ECSC Treaty.

III

The Italian Government responded to the initiation of
proceedings and the comments from third parties by
letter dated 20 October 1997 in which, after first noting
the Commission’s position, it altered the eligible invest-
ments and the aid referred to in the notification,
announcing that it would withdraw the aid objected to by
the Commission (ITL 14 billion) and requesting approval
of ITL 7,2 billion of aid for the other investments not
disputed in the decision initiating proceedings.

It is also clear that some of the notified investments will
lead to significant
in environmental
improvements
in particular the ‘Still' equipment used to
protection,
S 0,2 mg/l, whereas
5 mg/l and H
clean waste water (NH3
2
the current statutory limits in Italy are 15 mg/l for the
former and 1 mg/l for the latter). The same is true of the
planned primary dust extraction in the sintering plant (25
mg/m3 for dusts and 250 mg/m3 for nitrogen oxides, the
statutory limits being 50 mg/m3 and 400 No
x

).

The Italian Government therefore requested approval for
aid totalling ITL 7,2 billion for the other environmental
protection investments, totalling ITL 23,94 billion (1), that
had not been objected to in the initiation of proceedings.

The Commission would point out that, whenever a steel
undertaking decides to introduce environmental standards
that are stricter than required by law, investors must, in
order to obtain the additional aid provided for in the
Community Guidelines on State aid for environmental
protection, demonstrate, inter alia, that they have freely
decided to comply with the stricter standards, which call
for additional investment, and that there is a less costly
solution which complies with the minimum environ-
mental protection standards imposed by national law.

In addition, contrary to the calculation method referred to
by the Italian authorities according to which the higher
level of aid provided for in the Community guidelines is
the
based on the

environmental

investment,

total

for

It is clear that, in the present case, the amount of the
investment which exceeds the amount
environmental
needed for compliance with national minimum standards
is ITL 17,2 billion. This amount covers, in particular, the
dust extraction equipment
the sintering plant,
involving a cost of ITL 8 billion rather than ITL 1,5
billion; the ecological equipment for the coking plant,
costing ITL 9 billion instead of ITL 2 billion; the ecolo-
gical equipment for removing dust from the conveyor
belts; the coal and ore storage bunkers (an extra ITL 1
billion of investment) and, lastly, the reduction in NH
3
levels in the water used in the production cycle (an extra
ITL 800 million of investment).

The chief justification in the present case for the high
level of extra investment is due to the fact that the steel-
works are located in the centre of Trieste and that Servola
therefore invests far more than required by the minimum
standards in force.

In view of the foregoing,
it must be concluded that,
although Servola could have reduced the amount of most
of the notified investments and still complied with the
environmental standards provided for in Italian law, the
proposed aid cannot be approved. The higher
level
cannot, contrary to the suggestion put forward by the
Italian authorities, take account of the total investments,
but only that part in excess of the investment required to
comply with the minimum standards. Accordingly, the
State aid may not exceed a total of ITL 6,171 billion, i.e.
ITL 5,160 billion in aid (equal to 30 % of ITL 17,2
billion of investment), plus ITL 1,011 billion in aid (equal
to 15 % of the remaining ITL 6,740 billion of invest-
ment).

The Commission points out, lastly, that no further aid
may be authorised in the present case, in particular aid for
small and medium-sized enterprises, in view of the fact
that, at 31 December 1997, Servola employed 746
persons.

IV

(1) Basic plan 37 970

Excluding investment –14 000
Total = 23 940.

Having noted the irrevocable decision of
the Italian
authorities to cancel the aid objected to by the Commis-
sion in its decision initiating proceedings, this Decision

27. 3. 1999

EN

Official Journal of the European Communities

L 83/71

concerns only the remaining State aid proposals, against
which, since they are considered compatible with the
Community environmental standards in force at the time
of the notification, the Commission has decided not to
raise any objections,

HAS ADOPTED THIS DECISION:

Article 2

The Italian Government shall inform the Commission,
within two months of the notification of this Decision, of
the total aid actually granted to Servola SpA to enable the
Commission to verify that the maximum amount has not
been exceeded.

Article 3

This Decision is addressed to the Italian Republic.

Article 1

Done at Brussels, 1 July 1998.

The environmental investment aid which the region of
Friuli Venezia Giulia plans to grant to Servola SpA and
which may not exceed ITL 6,171 billion gross is compat-
ible with the common market for coal and steel.

For the Commission

Karel VAN MIERT

Member of the Commission