1999/509/EC: Commission Decision of 14 October 1998 concerning aid granted by Spain to companies in the Magefesa group and their successors (notified under document number C(1998) 3211) (Only the Spanish text is authentic) (Text with EEA relevance)
Date: 1998-10-14
Institutions: European Commission
Subjects: Spain, State aid, aid to undertakings, corporation tax, social-security contribution, tax exemption

30.7.1999

EN

Official Journal of the European Communities

L 198/15

COMMISSION DECISION

of 14 October 1998

concerning aid granted by Spain to companies in the Magefesa group and their successors

(notified under document number C(1998) 3211)

(Only the Spanish text is authentic)

(Text with EEA relevance)

(1999/509/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Community, and in particular Article 92 and the first
subparagraph of Article 93(2) thereof,

Having given notice to interested parties, in accordance with
the above provisions, to submit their comments,

Whereas:

I. PROCEDURE

On 16 July 1997 the Commission, after
receiving seven
complaints in February 1997, decided to initiate the procedure
provided for in Article 93(2) of the Treaty in connection with
aid received since 1989 by companies in the Magefesa group
or the companies which were their successors. (In 1989 the
Commission adopted Decision 91/1/EEC (1), in which it found
that aid received by the group, which manufactures household
goods, was incompatible with the common market.)

On the same date,
the Commission asked the Spanish
Government for detailed information on the reimbursement of
incompatible aid received by companies in the Magefesa group
or their successors and on the group’s present structure and its
legal and financial situation.

the Treaty,

the
In accordance with Article 93(2) of
Commission asked the Spanish Government by letter of
6 August 1997 to submit its comments within a month. The
other Member States and third parties were informed in the
Official Journal of the European Communities (2) of the decision to
the
initiate the procedure provided for in Article 93(2) of
Treaty, and were invited to submit their comments.

The Spanish authorities responded by letter of 12 November
1997 to the initiation of the procedure, providing comments
and information.

(1) OJ L 5, 8.1.1991, p. 18.
(2) OJ C 330, 1.11.1997, p. 2.

Two competitors and the trade unions of
the company
Industrias DomØsticas SA (Indosa) submitted their comments
by letters dated 28 November 1997. These were passed on to
the Spanish authorities for their comments by letters dated 17
and 23 December 1997 and 9 January 1998. The Spanish
authorities did not submit comments.

the companies
The receiver responsible for Indosa, one of
which received aid declared incompatible in 1989 and more
recent aid, submitted its comments by letter of 27 November
1997. The substance of these comments was incorporated as
an annex in the Spanish Government’s abovementioned letter
of 24 April 1998.

As the Commission took the view that some issues remained
which had not been clarified by the Spanish authorities’
response to the initiation of the procedure, the latter were sent
a further request
for information by letter of 24 February
1998. With the abovementioned letter of 24 April 1998, the
Spanish authorities provided a complex document including
numerous annexes in support of the information supplied.

II. STRUCTURE OF THE GROUP

The Magefesa group (3)
successors manufacture
and its
household goods such as pressure cookers, saucepans and
stainless
be
represented as follows:

structure may

cutlery. The

group’s

steel

(3) (cid:151) Grupo Magefesa includes the main company, Manufacturas
Generales de Ferreter(cid:237)a (hereinafter referred to as (cid:145)Magefesa(cid:146)),
the industrial companies Cuberta del Norte SA (Cunosa),
Manufacturas
Indosa,
Investigaci(cid:243)n y Dessarrollo Udala SA and Las Mimosas SA
(Inlamisa), through which Magefesa holds a stake in Edificios y
Naves Industriales, SA (Enisa) and Tefal Espaæola SA;

Inoxidables Gibraltar

SA (Migsa),

(cid:151) Grupo Licasa, which includes La Industrial Cuchiller(cid:237)a Alavesa
SA, Licasa Patrimonial SA Manufacturas Gur SA (Gursa),
Alberdi Hermanos SA (Albersa) and Licasa Industrial SA;

(cid:151) similarly, various companies within the group (Magefesa,
formed a commercial group,
through which they

Cunosa, Gursa, Migsa,
Agrupaci(cid:243)n de Empresas
bought their raw materials and marketed their products.

(cid:145)Magefesa(cid:146),

Indosa)

L 198/16

EN

Official Journal of the European Communities

30.7.1999

Basque Country

Andalusia

Cantabria

Ficodesa

Manufacturas Damma

Gemacasa

GROUP’S
SHAREHOLDERS

Magefesa

Udala

Licasa

Licasa Ind.

Indosa

Migsa

Cunosa

Gursa

Albersa

Las Mimosas

Enisa

Tefal

Agrupación de
empresas Magefesa

CMD

IDISUR
SAL

LCC SAL

VITRINOR SAL

(Legend)

Note

Control
Financial aid
Commercial agreement
Successor companies (1)

(1) For the purposes of the present Decision,

(cid:145)successor companies(cid:146) means (without this having legal implications) an economic entity in which
companies set up by former Migsa, Cunosa and Gursa workers continue working in the same plants, using the same machinery and
manufacturing products with the same trade mark as their predecessors.

In December 1985 three intermediary companies were set up
by the authorities of the autonomous communities in whose
territory the manufacturing companies of the Magefesa group
were based, the aim being to provide channels for the aid
which was later declared incompatible (in 1989):

(cid:151) Manufacturas Damma, SA (Manufacturas Damma), based
the
in Andalusia and controlled by the authorities of
Autonomous Community of Andalusia,

(cid:151) Gesti(cid:243)n de Magefesa en Cantabria, SA (Gemacasa), based in
the

authorities of

Cantabria
Autonomous Community of Cantabria,

and controlled by the

(cid:151) Fiducias de la cocina y derivados, SA (Ficodesa)

Basque Country, a private company,
control by the authorities of
Community through ad hoc agreements.

in the
to
the Basque Autonomous

though subject

companies

controlled the use of

These
aid and the
implementation of the (cid:145)action programme(cid:146) while at the same
the Magefesa
time ensuring the continued operation of
companies by preventing creditors from enforcing their claims
financial resources and
through seizure of
they thus
stocks of goods. On the basis of agreements,
marketed all products manufactured by Magefesa
after
acquiring them from each of the companies; at the same time

the companies’

30.7.1999

EN

Official Journal of the European Communities

L 198/17

they administered the funds, raw material and semi-finished
products needed by the industrial companies.

period until Indosa received the expected payments from
the salary guarantee fund (Fogasa) (5) and the Ministry of
Labour,

When the complaints were received in 1997, some of the
(Magefesa,
group’s companies had been declared bankrupt
Indosa and Cunosa), while others were not active (Migsa and
Cursa). In November 1994 the receiver responsible for Indosa
set up Indosa Derio, SL, now known as Compania de Menaje
DomØstico, SL (CMD) in order to provide an outlet for Indosa’s
products. Until 1993, the four manufacturing companies in
the Magefesa group (Indosa, Migsa, Cunosa and Gursa)
employed over 800 workers.

Indosa now has 330 workers and its turnover for 1997 was
approximately ESP 3 000 million. The only industrial company
in the group which is still active,
it manufactures chiefly
pressure cookers and saucepans.

A number of workers formerly employed by Cunosa (now
set up the
bankrupt) and Migsa and Gursa (not active)
Compan(cid:237)a de Cubiertos, SAL (LCC), Idisur, SAL (Idisur) and
Vitrinor, SAL (Vitrinor) (4).

(cid:151) payments actually made by Fogasa and the Ministry of
Labour to the companies of the Magefesa group, or which
they planned to make.

the presumed failure

As mentioned above,
to recover
incompatible aid dating back to 1989 was also taken into
consideration when the Commission decided to initiate the
procedure provided for in Article 93(2) of the Treaty; it then
stated that
it would consider the compatibility of any aid
granted in view of what had happened to the recovery of the
following aid, declared incompatible by Decision 91/1/EEC:

(cid:151) a loan subject to conditions different from those obtaining on the
to the value of ESP 2 085 million, granted by
the payment of compensation to workers

market
Fogasa for
dismissed as a consequence of the (cid:145)action programme(cid:146),

The Agrupaci(cid:243)n de Empresas Magefesa was dissolved on
29 October 1996.

(cid:151) loan guarantees totalling ESP 1 580 (ESP 972 million from
the Basque Government, ESP 512 million from the
Government of the Autonomous Community of Cantabria
and ESP 96 million from the Andalusian Government) (6),

As regards the intermediary companies, Ficodesa was declared
bankrupt in 1995 and Gemacasa and Manufacturas Damma
are not active.

III. AID

The Commission decided to initiate the procedure provided for
by Article 93(2) of the Treaty in respect of the following:

(cid:151) non-payment of

taxes and social contributions by the

Magefesa group and its successors,

(cid:151) Indosa’s continued manufacturing activities, despite having
been declared bankrupt in 1994, and its failure to fulfil its
tax and social security obligations,

(cid:151) the Basque Government’s intention to grant Indosa an ESP
804 million guarantee to back a bridging loan for the

(4) SAL is the acronym of sociedad an(cid:243)nima laboral, a limited company
set up by the workers themselves. LCC, Idisur and Vitrinor were set
up on 9 June 1994, 22 April 1993 and 27 March 1995
respectively.
Idisur concluded a commercial agreement with the
Agrupaci(cid:243)n de Empresas Magefesa on 1 October 1993.

(cid:151) non-refundable grants totalling ESP 1 094 million (ESP 803
million from the Basque Government, ESP 262 million
from the Government of the Autonomous Community of
Cantabria and ESP 29 million (7)
from the Andalusian
Government (8),

(5) Regulated by Royal Decree 505/1985 of 6 March 1985.
(6) Loan guarantees:

(i) ESP 972 million granted by the Basque
Government on the basis of two decisions taken in connection
with Decree 150/1985 of 11 June 1985, as follows: guarantee of
ESP 300 million granted on 21 January 1986 directly to Indosa;
and guarantee of ESP 672 million, granted on 3 June 1986 to
Ficodesa for use by the companies of the Magefesa and Licasa
subgroups based in the Basque Country; (ii) guarantee of ESP 512
million, granted by the authorities of the Autonomous Community
of Cantabria in March 1986 to Gemecasa, for use by Cunosa and
Gursa;
(iii) guarantees totalling ESP 96 million, granted by the
Sociedad para la Promoci(cid:243)n y Reconversi(cid:243)n Industrial de Andaluc(cid:237)a
(Soprea, today known as the Instituto de Fomento de Andaluc(cid:237)a) to
Manufacturas Damma on 14 February 1986 and 5 February 1987
for use by Migsa.

(7) The sum of ESP 39 million, referred to in Decision 91/1/EEC and
in the decision to initiate this procedure, has been corrected on the
basis of documents submitted by the Spanish authorities.

(8) Grants:

(i) grant of ESP 803 million awarded by the Basque
Government on 3 June 1986 to Ficodesa (cid:145)for deployment(cid:146) within
the companies of the subgroups Magefesa and Licasa, based in the
Basque Country, on the basis of decisions adopted under Decree
150/1985 of 11 June; (ii) grant of ESP 262 million awarded by the
Autonomous Community of Cantabria in October 1986 to
Gemacasa, for deployment within Cunosa and Gursa; (iii) grant of
ESP 29 million awarded by the authorities of the Autonomous
Community of Andalusia to Manufacturas Damma on 29 May
1987 under Decree 93/1987, with a view to supporting the social
measures underpinning the relaunch of Migsa.

L 198/18

EN

Official Journal of the European Communities

30.7.1999

(cid:151) subsidisation of

interest payable on loans,

totalling ESP 9

million.

V. SPAIN’S RESPONSE TO THE INITIATION OF THE
PROCEDURE

Spanish Government was

The
the
incompatible aid granted by Fogasa and the Governments of
the Autonomous Communities of
the Basque Country,
Cantabria and Andalusia by the following means:

recover

asked

to

(cid:151) the loan subject to conditions different from those obtaining on
the market to the value of ESP 2 085 million, granted by
Fogasa, was to be converted into loans subject to market
some other
conditions or be terminated; alternatively,
measure was to be taken which would ensure complete
elimination of the aid component,

(cid:151) the loan guarantees totalling ESP 1 580 million were to be

terminated,

(cid:151) the grants totalling ESP 1 094 were to be recovered.

IV. COMMENTS BY INTERESTED PARTIES

The following comments were received from interested third
parties:

(cid:151) a competitor pointed out

the workers’
cooperative set up by a number of workers formerly
employed by Gursa, was using Gursa’s plant free of charge,

that Vitrinor,

contributions

(cid:151) another competitor pointed out that: (i) the incompatible
aid had not been repaid; (ii) Indosa had not paid taxes or
social
adoption of Decision
(iii) Magefesa’s products were being sold at
91/1/EEC;
prices 33 % below those of
the
receivers, appointed by the national authorities and the
authorities of
the autonomous communities concerned,
had allowed all this to take place,

its competitors;

since

(iv)

the

(cid:151) the trade union representatives indicated that Fogasa had
intervened on behalf of the workers, not the company.
They also informed the Commission that the workers had
set up a pension fund using their own resources.

fresh aid,

the companies
The receiver responsible for Indosa, one of
which had received both aid declared incompatible in 1989
and
letter of
its
27 November 1997. The substance of these comments was
incorporated in the form of an annex to the letter of 24 April
1998 from the Spanish Government, referred to in section VI.

comments

submitted

by

(a) Recovery of aid declared incompatible in 1989

As regards the recovery of the aid declared incompatible by
the situation may be summarised as
Decision 91/1/EEC,
follows:

It was decided in 1990 to convert the loan subject to conditions
different from those obtaining on the market, which amounted to
ESP 2 085 million, into a loan subject to market conditions.
However, since the companies failed to respect the terms of
the loan (9), Fogasa again had recourse to enforced collection,
giving rise to the seizure of the trade marks of the Magefesa
group.

As regards the loan guarantees to the total value of ESP 1 580
totalling ESP 1 104
million and the non-refundable grants
million, made
the
Autonomous Communities of the Basque Country, Cantabria
supreme
and Andalusia,
consultative body (cid:151) was consulted in 1990 as to how Spain
should implement Decision 91/1/EEC.

the Council of State (cid:151) Spain’s

the Governments

available

by

of

As regards the loan guarantees, the Council of State ruled that
the Governments of the Autonomous Communities concerned
had to put the guarantees into effect immediately and then
recover the sums concerned from the beneficiaries; as for the
the Autonomous
non-refundable grants,
Communities had to revoke the decisions awarding them, after
which they were to recover the sums already paid.

the Government of

The Governments of the Autonomous Communities took the
following action:

(cid:151) Basque Government: the loan guarantees were put into effect
immediately as recommended by the Council of State, but
between 1989 and 1993,
ESP
1 365 717 623 (including principal and interest). Following
a fruitless
reimbursement, a demand for
enforced reimbursement was made, which did not produce
any results either. The Basque Government decided to
declare null
and void the decision to award the
non-refundable grants, taken in March 1994, that is, more

request

value

the

for

to

of

(9) As explained under (b) of this section, loans subject to conditions
different from those applying on the market were granted within
the framework of a (cid:145)refund agreement(cid:146), under which Fogasa, having
been surrogated by law to the workers’ rights with respect to the
debtor companies, and on the basis of the applicable legislation,
decided not to initiate enforcement procedures immediately, but to
conclude a (cid:145)refund agreement(cid:146). As the (cid:145)refund agreement(cid:146) was not
respected, Fogasa remained at liberty to continue with enforced
recovery.

30.7.1999

EN

Official Journal of the European Communities

L 198/19

than four years after the notification of Decision 91/1/EEC.
A demand for payment was sent to Ficodesa on 25 January
1995, by which time the company had already been
declared bankrupt (on 19 January 1995).

Both types of claim (loan guarantees and grants) were
included in the list of Ficodesa’s creditors. The Spanish
authorities have not
the
ranking of these claims. Since they are public claims, they
should have the same degree of preference as
that
extended to other public claims under the Spanish legal
system,

informed the Commission of

(cid:151) Government of

the Autonomous Community of Andalusia:
having put into effect the loan guarantee of ESP 96 million
and after demanding, unsuccessfully,
that Manufacturas
Damma pay the guaranteed sum, the Instituto de Fomento
de Andaluc(cid:237)a (Institution for the Promotion of Andalusia,
IFA), the owner of Manufacturas Damma, declared the said
loan guarantee irrecoverable on 17 June 1993. As regards
the non-refundable grants to the value of ESP 29 million, the
authorities of the Autonomous Community of Andalusia
stated that although the procedure to cancel the decision
awarding the grant had begun on 21 November 1990, the
recovery procedure had not been carried forward because
Manufacturas Damma had no assets which were free of
charges,

(cid:151) Government of the Autonomous Community of Cantabria: the
loan guarantees were not put into effect immediately, as
recommended by the Council of State, but during the
period 1994-95. The
Spanish authorities have not
provided any detailed information on the refund of grants;
rather, they have confined themselves to pointing out that
Cunosa and Gursa had no assets free of charges and that
any measures taken by Gemacasa to recover aid would
therefore have been fruitless. They have not explained why
the Autonomous
Gemacasa or
Community did not include the incompatible aid granted
to Cunosa in the list of the latter’s creditors.

the Government of

(b) New aid granted after adoption of Decision 91/1/EEC

Payments made by Fogasa and the Ministry of Labour and Social
Affairs

The Spanish authorities have stated that
in the event of
insolvency or bankruptcy of an employer, it is Fogasa which
pays compensation to workers, and is thus subrogated by law
to their rights, for the amounts legally established only. This
means that Fogasa can initiate or pursue enforced collection
procedures against the company to recover the sums it has
paid to workers. Fogasa can choose not to have immediate
recourse to the enforced collection procedure and instead to
conclude a (cid:145)refund agreement(cid:146), the signing of which entails

suspension of
legal collection measures. According to the
Spanish authorities, this is the case particularly when the said
payments have been made to workers after examination of
each case to establish that the workers are indeed entitled to
them. The conclusion of refund agreements is decided on a
case-by-case basis. The decision to conclude them must
combine (cid:145)the efficacy of the subrogatory measure with the
requirements
employment
safeguards(cid:146)
(Section 32 of Royal Decree 505/1985). The
methods and conditions for the conclusion of such agreements
are laid down by Ministerial Order of 20 August 1985.

continuity

business

and

of

information supplied by the Spanish
According to the
authorities, Fogasa and the Magefesa group have not concluded
refund agreements of
the type declared incompatible by
Decision 91/1/EEC, which laid down refund terms different
from those obtaining on the market.

As for the special grants awarded by the Ministry of Labour
and Social Affairs
to Indosa workers whose employment
contracts had been terminated, the Spanish authorities stated
that a total of ESP 437 571 733 was paid on 5 March 1997 to
120 Indosa workers,
to guarantee them more appropriate
unemployment cover and pension rights after the termination
of their contract with Indosa.

Persistent non-payment of taxes and social security contributions

The Spanish authorities have detailed the amount of tax owed
to the National Treasury and the social security contributions
which have remained unpaid since 1989, both before and after
Indosa, Cunosa and Magefesa were declared bankrupt. No
figures have been supplied on the taxes owed to the Vizcaya
Regional Treasury for the period after Indosa was declared
bankrupt. As for Gursa and Migsa, which have now stopped
the measures
operating, a summary has been provided of
adopted by the National Treasury and the Social Security with
regard to the sums owed.
It has also been explained why
Vitrinor and Idisur were not declared responsible for the debts
incurred by Gursa and Migsa respectively, as their successors:
the new companies were
their
predecessors and had been set up by the workers after the
termination of their employment contracts.

independent of

legally

Aid granted to other companies

The regional authorities of Andalusia provided information on
the regional aid received by Idisur.

L 198/20

EN

Official Journal of the European Communities

30.7.1999

VI. ADDITIONAL INFORMATION REQUESTED IN THE
COURSE OF THE PROCEDURE AND THE REPLY FROM THE
SPANISH AUTHORITIES

By letter of 24 February 1998,
further detailed information on the following matters:

the Commission requested

(cid:151) it

requested a list of

the companies
declared
and Cunosa),
including the sum involved and the relative priority of the
claim,

the creditors of
Indosa

(Magefesa,

bankrupt

(cid:151) it asked why,

if

the non-active companies (Migsa and
Gursa) were insolvent, the administration had not initiated
bankruptcy proceedings,
like any diligent creditor. It also
requested information on the conditions under which the
assets of the said companies had been transferred to the
new companies set up by the workers (Idisur and Vitrinor),

(cid:151) as regards Indosa’s (cid:145)bankruptcy followed by continued
activity(cid:146), the Commission asked why the receivers, two of
whom had been appointed on a proposal from the Social
Security and the Vizcaya Regional Treasury, had allowed
Indosa to continue operating after
the declaration of
bankruptcy. It requested copies of any judicial decision or
creditors’ agreement which might legitimise this situation.
It also requested information on the debt contracted with
the National Treasury, the Regional Treasury and the Social
Security following the bankruptcy declaration,

(cid:151) the Spanish authorities were asked to provide information
about any aid granted to Vitrinor and Idisur, which were
set up by former workers using the assets of Gursa and
Migsa respectively.

By letter of 24 April 1998, the Spanish authorities submitted a
complex document including numerous annexes to back up
the information provided.

(a) Recovery of aid declared incompatible in 1989

The Governing Councils of the Autonomous Communities of
Andalusia and Cantabria considered that
the aid declared
incompatible should be repaid by the intermediary companies
i.e. Manufacturas Damma
through which it was channelled,
(Andalusia) and Gemacasa (Cantabria),
since (cid:151) formally
speaking (cid:151) it was they which had received the grants and
benefited by the guarantees. According to the Spanish
action
authorities,
programme Gemacasa became a creditor of Cunosa and Gursa.
The latter companies owed Gemacasa unspecified sums which,
given their critical situation, were never repaid. The Spanish
authorities confirmed that Manufacturas Damma, a creditor of
Migsa, was sold to Migsa for the symbolic price of one peseta

implementation

during

the

the

of

the

incompatible

in June 1993, which meant that no further action was taken to
the
recover
Autonomous Community of Andalusia stated that no measures
were taken to have Manufacturas Damma declared bankrupt
because it was
the
that
company’s sole shareholder to take such action.

it would be imprudent

authorities of

aid. The

felt

for

No further information was provided about the aid granted by
the authorities of the Basque Autonomous Community.

(b) New aid granted after adoption of Decision 91/1/EEC

Payments made by Fogasa and the Ministry of Labour and Social
Affairs

The Spanish authorities submitted a list of the sums paid by
Fogasa to the workers of Indosa, Gunosa, Migsa and Gursa, as
well as confirmation of the payments made by the ministry of
that
Labour
Fogasa approved the following payments over the 1989-1998
period:

to Indosa’s workers. This

information shows

Indosa

Gursa

Cunosa

Migsa

(ESP)

416 455 625

612 972 521

81 813 513

198 413 068

As regards the complaints about the fact that Indosa had asked
Fogasa and the Ministry of Labour and Social Affairs for new
aid and that the Basque Government planned to grant an ESP
1 000 million guarantee for a bridging loan until such time as
the new aid arrived, the Spanish authorities have confirmed
that Indosa asked the Basque authorities in September 1996
for aid to cover the dismissal of 120 workers through early
retirement. As a consequence of the decision to initiate the
procedure provided for in Article 93(2) of the Treaty, in which
decision the Commission reminded the Spanish authorities of
the suspensory effect of Article 93(3), the Basque Government
decided not to grant the guarantee of ESP 804 million.

As regards the intervention of the Ministry of Labour and
the Basque Government
Social Affairs on 9 August 1996,
authorised the termination of 120 employment contracts with
Indosa staff. On 18 November 1996 the Ministry of Labour
granted exceptional aid in order to augment unemployment
benefit and the base for pension contributions. This measure
was based on a Ministerial Order of 5 April 1995 on social
emergencies involving workers. The purpose of the measure
was to allow workers: (i) to benefit from the highest possible
level of unemployment protection throughout the 24 months
following the termination of their contracts; and (ii) to obtain
early retirement under better financial conditions. On 5 March

30.7.1999

EN

Official Journal of the European Communities

L 198/21

1997, ESP 437 471 733 was paid to Indosa workers whose
employment contracts had been terminated. The Spanish
authorities stressed that the payment of this sum was in the
interests of a number of workers who were particularly at risk.

Persistent non-payment of taxes and social security contributions

was their practice not to take action on purely formal grounds,
but only when there was a real possibility of recovering the
funds concerned. They had, at any rate, applied the enforced
collection procedure of seizure to Migsa and Gursa, but it had
proved unsuccessful because neither had any assets free of
charges.

Lists of Indosa’s and Cunosa’s creditors were submitted, along
security
with the
contributions. The latter were as follows.

totals of unpaid

social

taxes

and

The Spanish authorities also provided information about the
seizure procedures applied to Indosa and Cunosa before they
were declared bankrupt at their employees’ instigation.

Amounts owed by bankrupt companies

Social Security

NationalTreasury

RegionalTreasury

(ESP million)

regards

the way in which Idisur and Vitrinor were
As
established, the Spanish authorities stated that Migsa and Gursa
were still the owners of the plants concerned, which had been
leased to new companies,
these having been set up by a
number of former employees.

Indosa (1)

Cunosa

4 602

1 772

210

790

1 898

(cid:151)

(1) The next section deals with the issue of Indosa’s debt under this heading

which has arisen since the declaration of bankruptcy.

Total amount: ESP9 272 million.

Persistent non-payment of taxes and social security contributions after
Indosa’s declaration of bankruptcy

The declaration of bankruptcy includes the following claims by
public bodies:

(ESP)

The taxes and social security contributions which have not yet
been paid by the non-active companies (Migsa and Gursa) are
as follows.

Amounts owed by non-active companies

Social Security

Regional Treasury

Fogasa

National Treasury

(ESP million)

Basque Government

Social Security

National Treasury

Total

4 602 668 983

1 596 191 052

413 935 458

134 102 630

2 800 200

6 749 698 323

Migsa

Gursa

586

2 767

No data available (1)

525

(1) This amount does not

include the debt contracted by Migsa with the
National Treasury. According to the letter from the Spanish authorities of
12 November 1997, the Sistema InformÆtico de Recaudaci(cid:243)n ((cid:145)computerised
collection system(cid:146)) does not register the sums owed because it has been
decided to declare these debts irrecoverable.

Total amount
million.

for

the (cid:145)non-active(cid:146) companies: ESP 3 878

The total
13 150 million, or ECU 78,82 million (10).

for all bankrupt or non-active companies is ESP

The Spanish authorities stated that they had not called for
Migsa and Gursa to be declared bankrupt, as any diligent
creditor would have done, because the procedures preceding
the declaration of bankruptcy were lengthy and costly and it

The total sum, equivalent to ECU 40,17 million, represents
over half of the claims recognised in the context of Indosa’s
bankruptcy procedure (11). The
Spanish authorities have
supplied no information on the relative priority of
these
claims.

In the course of the proceeding under Article 93(2) of the
Treaty, the Spanish Government has not submitted any copies
of a judicial decision establishing bankruptcy in combination
with continued activity. However, the Spanish authorities have
submitted the document
Indosa’s
issued by the meeting of
creditors on 30 January 1995, which did confirm this.

Although the application for the declaration of bankruptcy
to rule that
explicitly called on the court
Indosa should
the court did not give any
continue its industrial activity,
ruling on this matter in its decision of 19 July 1994 declaring

(10) The sums are given in ecu for illustrative purposes only (ECU 1 =

ESP 166,822).

(11) The total sum is ESP 12 439 688 347, which is equivalent to ECU
74,56 million. This sum does not include the aid to Indosa which
was declared incompatible in 1989.

L 198/22

EN

Official Journal of the European Communities

30.7.1999

to appoint

Indosa bankrupt. Six months later, on 30 January 1995, a
the
meeting of creditors was called in order
receivers in bankruptcy. The main creditors (the Social Security
and Vizcaya Regional Treasury) proposed two of the three
receivers to be appointed under Spanish law. The remaining
creditors proposed the third. All three were accepted after a
vote. The legal representative of the instigator of bankruptcy
then asked the creditors to give their views on the fact that
industrial activity was continuing. According to the record of
the meeting, only Fogasa and the Municipality of Derio (12)
said they were in favour of continued activity. No opposing
views were expressed. The record of the meeting contains no
evidence of any opposition by the Social Security, the national
authorities or the authorities of the Autonomous Community,
which, given the scale of their claims, had sufficient votes to
block approval of Indosa’s continued activity.

During the period between the declaration of bankruptcy
(19 July 1994) and April 1997, unpaid social contributions
rose to ESP 1 282 117 590. Although the Spanish authorities
have been requested to inform the Commission of the tax debt
run up during this period with the Vizcaya Regional Treasury,
they have not done so.

The Spanish authorities have confirmed that Indosa has kept
up to date with its tax and social security obligations since
May 1997.

Aid granted to other companies

As regards the granting of other aid, the Spanish authorities
have confirmed that Vitrinor did not receive any aid and also
supplied an updated list of public measures benefiting Idisur.

In view of the special nature of the Idisur case, in which aid
has presumably been granted, at least in part, in the context of
regional aid schemes approved by the Commission, this matter
is not covered by the present Decision and will therefore be
dealt with in the appropriate manner in due course.

VII. LEGAL ASSESSMENT

Article 92(1) of the Treaty lays down the principle that, save
as otherwise provided in the Treaty, any aid which distorts or
threatens
certain
competition
undertakings or the production of certain goods shall, in so far
as it affects trade between Member States, be incompatible
with the common market.

favouring

distort

by

to

group operated on Community markets in the past and was
one of Spain’s main manufacturers in the sector concerned.

According to a (cid:145)viability plan(cid:146) presented by Indosa in early
1996, Magefesa’s products accounted in 1990 for 39 % of the
Spanish market in pressure cookers and 37 % of the market in
saucepans. In 1994, the market shares of these products were
23 % and 13 % respectively.

(excluding those for use at

In the years before the declaration of bankruptcy or the
the companies concerned,
interruption in the activities of
steel kitchenware and
intra-Community trade in stainless
household goods
table) and
stainless steel cutlery (CN codes 7323 93 90, and 8215 20 10)
amounted in 1990 to ECU 251,6 million and ECU 38,6
million respectively, and in 1992 to ECU 281,6 and ECU 38,9
its trade with the
million respectively. Spain declared that
other Member States accounted for the following sums:
in
1990, ECU 17,9 million and ECU 3,2 million respectively, and
in 1992, ECU 17,7 million and ECU 2,6 million respectively.

table)

After Indosa was declared bankrupt in 1994, intra-Community
steel kitchenware and household goods
trade in stainless
(CN code 7323 93 90
(excluding those for use at
amounted to ECU 181,3 million.
In the same year Spain
declared that its trade with the other Member States accounted
for ECU 16,7 million. In 1997, intra-Community trade in these
products rose to ECU 230,6 million. In the same year, Spain
declared that its trade with the other Member States accounted
for ECU 17,5 million.

Article 92(1) of the Treaty states that any aid of the nature
described in that paragraph is, in principle, incompatible with
the common market. Article 92(3) of the Treaty lists the types
of aid which may be considered compatible with the common
market. Compatibility with the common market must be
established in the context of the Community as a whole, not in
that of a single Member State. In order to ensure the proper
functioning of the common market, and bearing in mind the
objective laid down under Article 3(g) of
the
the Treaty,
the Treaty must be
exceptions listed in Article 92(3) of
interpreted strictly when examining aid schemes or authorising
an individual aid measure.

To be precise, these exceptions can be relied on only when the
Commission concludes that,
if no aid were granted, market
forces alone would not suffice to guide the beneficiaries
towards patterns of behaviour conducive to any of
the
objectives referred to in Article 92(3). Making such exceptions
in cases which do not further these objectives or in which aid
is not necessary to achieve this aim would entail granting
advantages to the industries or companies of certain Member
States which would strengthen them financially,
thereby
adversely affecting trading conditions between the Member
States and distorting competition without any justification on
any of the common interest grounds listed in Article 92(3) of
the Treaty.

the Magefesa
The products marketed by the companies of
group are traded between the Member States and there is
competition between manufacturers. Moreover, the Magefesa

(a) Recovery of aid declared incompatible in 1989

(12) Derio (Vizcaya) is the municipality where Indosa is based.

As was stated at the start of the procedure, it is appropriate to
the aid declared incompatible by
look at

the recovery of

30.7.1999

EN

Official Journal of the European Communities

L 198/23

Decision 91/1/EEC when examining the new aid granted to the
same companies. In accordance with the decision of the Court
of Justice of the European Communities of 15 May 1997 in
Case C-355/95 P, Textilwerke Deggendorf v. Commission and
Germany (13),
responsibility, when
the Commission’s
examining new aid, to assess the cumulative effect in terms of
distortion of
the market of new aid and unrecovered
incompatible aid.

is

it

As regards the loan of ESP 2 085 million granted by Fogasa
under conditions different from those obtaining on the market,
it was decided in 1990 to convert it into one based on market
conditions. However, when the companies failed to respect the
terms under which the loan had been granted, Fogasa again
started enforced collection procedures, which resulted in the
seizure of the trade marks of the Magefesa group; enforced
collection procedures are currently still in progress.

As for the loan guarantees totalling ESP 1 580 million and the
non-refundable grants totalling ESP 1 104 million awarded by
the Governments of
the
the information
Basque Country, Cantabria and Andalusia,
provided by the Spanish authorities leads to the following
conclusions:

the Autonomous Communities of

(cid:151) Government of the Basque Autonomous Community: the first
guarantee, to the value of ESP 300 million, was granted to
Indosa on 21 January 1996. The second, to the value of
ESP 672 million, was granted to Ficodesa on 3 June 1986
for use by Indosa and the other companies of the Magefesa
group based in the Basque Country. Without these two
guarantees, Indosa and the other companies would have
been forced to stop operating, because their situation was
such that they could not take out loans in order to stay in
business. As for the grants to the value of ESP 803 million,
it should be recalled that they were awarded to enable the
Magefesa group to pay the part of
the wages and
compensation which Fogasa had not advanced to the
workers, because the sum involved exceeded its overall
maximum limits. Moreover, the aim was to reduce costs
for Indosa and the other companies, not for Ficodesa. In
the Commission’s view, its Decision 91/1/EEC cannot be
considered to have been implemented merely because the
sum of ESP 2 168 717 623 has been included in the list of
Ficodesa’s creditors. Firstly, it should be pointed out that
the Autonomous Community acted
the authorities of
slowly when withdrawing
and
recovering the grants. Secondly, by including the two loans
only in the list of Ficodesa’s creditors and not in Indosa’s
or those of the other companies of the Magefesa group
based in the Basque Country, the authorities of the Basque
Autonomous Community have acted as though Ficodesa
were the sole beneficiary of the incompatible aid and it
were up to Ficodesa alone to pay it back. The reality was
very different, as Ficodesa was only an intermediary
company with no productive capacity of its own, set up
for
the sole purpose of channelling the financial aid
granted by the Government of the Basque Autonomous
Community to Indosa and the other companies of
the
Magefesa group based in the Basque Country.

loan guarantees

the

(13) [1997] ECR I(cid:150)2549.

The above shows that the incompatible aid granted by the
Basque Government has not been duly recovered, as the
companies which received aid have not been required to
repay it,

(cid:151) Government of

to

the

pay

share

of wages

the Autonomous Community of Andalusia:
Manufacturas Damma was only an intermediary without
any manufacturing activity, set up for the sole purpose of
channelling the financial aid granted by the Government of
Andalusia to Migsa, the industrial company belonging to
the Magefesa holding company and based in Andalusia.
totalling ESP 29 million,
The non-refundable grants,
and
enabled Migsa
In
compensation which it owed the dismissed workers.
other words,
it was Migsa, not Manufacturas Damma,
which benefited from reduced expenses. Moreover, Migsa
would have been forced to stop operating if it had not
benefited from loan guarantees totalling ESP 96 million, as
its situation prevented it from obtaining loans to continue
operating. The Commission does not believe that
the
measures taken by the Government of Andalusia comply
fully with its Decision 91/1/EEC. Neither does it share the
Spanish Governments’s view that the incompatible aid was
granted to Manufacturas Damma rather than Migsa and
that it is therefore the latter which should be called on to
repay the aid.

The above shows that the incompatible aid granted by the
Government of Andalusia has not been duly recovered,
since the company which benefited has not been required
to pay back the aid,

(cid:151) Government of the Autonomous Community of Cantabria: for
the same reasons as with the Basque and Andalusian
the
authorities,
Autonomous Community of Cantabria appears not to have
been duly recovered, since the beneficiaries have not been
required to pay back the aid.

incompatible

granted

the

aid

by

In the light of the Deggendorf case, it was appropriate to
look at the recovery of the aid declared incompatible by
Decision 91/1/EEC before examining the new aid granted
to the same companies.

(b) New aid granted after the adoption of Decision

91/1/EEC

Payments made by Fogasa to the workers of Indosa, Cunosa, Migsa
and Gursa between 1989 and 1998 and by the Ministry of Labour
and Social Affairs to Indosa workers

Fogasa’s payments were made on the basis of a subrogation by
law to the rights of
the insolvent company’s employees.
Fogasa’s measures are universally and automatically applicable,
without sectoral restrictions, to any worker who meets the
regulations. Moreover,
requirements

down in the

laid

L 198/24

EN

Official Journal of the European Communities

30.7.1999

according to the
information provided by the Spanish
authorities, Fogasa and the Magefesa group have not concluded
(cid:145)refund agreements(cid:146) like that declared incompatible by Decision
91/1/EEC, which established loan conditions different
from
those applicable on the market.

this exceptional decision was

According to the information available to the Commission, the
special grants made by the Ministry of Labour to workers who
had lost their jobs constituted a public measure to guarantee
level of unemployment benefit.
those workers a better
Moreover,
the
termination of
the Indosa
workers concerned and as a result they received social benefits
legally
topping up the benefits which the company was
It cannot be argued that this measure
obliged to pay out.
benefited the company itself and it does not,
therefore,
constitute aid to Indosa, but rather exceptional aid with an
essentially positive impact on the social
the
workers concerned.

the employment contracts of

situation of

taken after

The Commission’s investigation has not, therefore, established
the existence of an aid component in the above measures.

Persistent non-payment of taxes and social security contributions

According to information supplied by the Spanish authorities,
the companies in the Magefesa group have systematically failed
to meet their tax and social security obligations since 1989 (as
they did prior to that date), despite any forced recovery
procedures which may have been initiated or instigated by the
administration (seizures and payment orders).

It was only on the initiative of the workers themselves that
Indosa and Cunosa were declared bankrupt. The sums owed to
public creditors were included in the list of Magefesa’s, Indosa’s
and Cunosa’s creditors because this is the proper procedure
under Spanish national law to ensure that the Social Security
and the national and regional Treasuries retain the possibility
of recovering at least a proportion of their claims. Cunosa is
currently undergoing liquidation. The Spanish authorities have
submitted written evidence showing that CMD (a branch of
Indosa) and LCC (Cunosa’s successor) were up to date with
their tax and social security payments.

instituted against

The national Treasury and the Social Security declared their
claims on Migsa and Gursa irrecoverable, with the exception of
Gursa’s debts towards the national Treasury. No bankruptcy
proceedings were
two
companies. New companies were set up by a number of the
former employees of Migsa and Gursa: Idisur (22 April 1993)
and Vitrinor
respectively. The new
companies signed agreements with their predecessors on the
use of their machinery and plant. The Spanish authorities have
Idisur and Vitrinor are up to date with
demonstrated that
payments to the national Treasury and the Social Security.

(27 March 1995)

either of

the

exceeded the
estimated sums potentially obtainable by
auctioning off the debtor’s assets. In such cases the decision to
initiate bankruptcy proceedings requires an analysis of the cost
in each individual case. This analysis revealed here, according
to the Spanish authorities, that it was more cost effective to
declare the claims of public creditors irrecoverable than to
initiate bankruptcy proceedings. Apart
from this general
statement, however, they have not presented any comparative
analyses setting out the costs of the various options. Moreover,
even if a cost analysis showed that there were a comparative
advantage in not initiating bankruptcy proceedings, the fact
remains that, in a situation like that described by the Spanish
authorities in which the absence of assets not free of charges
renders any forced recovery procedure (seizure, payment
orders, etc.)
the non-initiation of bankruptcy
proceedings has enabled the companies in question (cid:151) unlike
their competitors (cid:151) to continue operating without meeting
their tax and social security obligations, all this despite their
extremely precarious position. The huge sums of unpaid taxes
and social security contributions resulting precisely from the
continued activity of the companies concerned undoubtedly
exceed the cost of a bankruptcy procedure.

ineffective,

The Commission has also investigated whether the public
creditors behaved in the way they did with a view to
maximising their chances of recovering unpaid taxes and social
security contributions. The Spanish authorities have not stated
the
or suggested that such was the case at any stage of
procedure laid down in Article 93(2) of the Treaty. On the
contrary, the continued operation of the companies concerned
has resulted in a considerable increase in the taxes and social
security contributions remaining unpaid (14). Moreover, Migsa’s
and Gursa’s debts have been declared irrecoverable (Gursa’s
debt with the national Treasury being an exception). In the
cases of Indosa and Cunosa, it was the workers who started
the bankruptcy proceedings.

If the arguments put forward by the Spanish authorities were
accepted, any company without assets free of charges (cid:151) that
is, any company on which forced recovery proceedings would
have no purchase (cid:151) could continue to operate on the market
without fulfilling its tax and social security obligations as long
as other possible creditors did not
instigate bankruptcy
proceedings against it.

taxes and social

Consequently, the Commission concludes that the persistent
and systematic non-payment of
security
since 1989 and up to the declaration of
contributions
the breaking-off of activities constitutes a
bankruptcy or
transfer of public resources to Indosa, Cunosa, Migsa and
Gursa which gives them a competitive advantage, since (cid:151)
unlike their competitors (cid:151) they are not obliged to defray
these costs as would ordinarily be the case. This situation
therefore constitutes aid as described in Article 92(1) of the
Treaty.

The fact that neither the Treasury nor the Social Security have
stated formally that they no longer intend to collect the sums

The Spanish authorities explain that bankruptcy proceedings
initiated because the costs incurred would have
were not

(14) As indicated in the report on the bankruptcy of Indosa submitted
by the bankruptcy commissioner on 4 October 1995, some of the
unpaid taxes date back to 1982.

30.7.1999

EN

Official Journal of the European Communities

L 198/25

owed (which means that the latter still legally constitute a debt
and have not been cancelled) does not detract from the fact
that the companies have been able to operate without fulfilling
their tax and social security obligations (15). Over the same
period,
their competitors have not benefited from such
financial advantages. The sums in question supplied by the
Spanish authorities are as follows:

operating after the declaration of bankruptcy because the
meeting of its creditors, held on 30 January 1995, agreed to
this. The record of
the meeting contains no references to
opposition by the Social Security or the national or regional
Treasuries. Given the size of their claims, these institutions,
together with the other public creditors, had enough votes to
block consent to Indosa’s continued operation.

Social Security

National Treasury

(ESP)

Treasury of
Autonomous-
Community

Indosa

4 602 668 983

210 794 754

1 898 219 433

Cunosa

1 772 814 657

790 999 650

Migsa

586 934 823

To be
determined

Gursa

2 767 769 021

525 401 696

(cid:151)

(cid:151)

(cid:151)

The Commission has not been informed of the total amount of
national taxes not paid by Migsa. It is the responsibility of the
Spanish authorities to supply this information.

Persistent non-payment of taxes and social security contributions after
Indosa’s declaration of bankruptcy

Initiation of the procedure under Article 93(2) of the Treaty
has enabled the Commission to confirm that the allegations
put
forward by complainants regarding Indosa’s persistent
failure to fulfil its tax and social security obligations between
the declaration of bankruptcy on 19 July 1994 and May 1997
were correct and justified. Moreover, this procedure has also
enabled the Commission to establish the existence of aid
within the meaning of Article 92(1) of the Treaty.

Bankruptcy followed by (cid:145)continued activity(cid:146) is not provided for
as such under current Spanish law. Given the nature of the
bankruptcy laws and the size of the public claims, continuing
to operate without meeting tax and social security obligations
further damages the interests of the Treasury and the Social
Security, in that persistent non-payment automatically reduces
the
from the
administration of the assets, such as taxes and social security
contributions, have to be paid first, taking priority over debts
towards other creditors.

bankrupt’s

resulting

assets:

debts

the

The Commission concludes from the documents submitted by
Indosa was able to continue
the Spanish Government

that

(15) Advocate-General Jacobs stated in his opinion of 24 September
1998 in Case C-256/97, D. M. Transport, that it was clear that, in
certain circumstances, continued generous tolerance of the delayed
payment of
a
considerable commercial advantage on the beneficiary company,
and that it could, in extreme cases, amount to debt forgiveness
with regard to those contributions (paragraph 33).

contributions

security

confer

social

could

The Spanish authorities have not provided any explanation as
to why the public creditors did not exercise their right to veto
such consent.

Indosa’s creditors
The above implies that
accepted its continued operation after
the declaration of
bankruptcy as a result of the behaviour of the public creditors
at the meting of 30 January 1995.

the meeting of

The Commission has investigated whether the public creditors
behaved in this way with a view to maximising their chances
of recovering their claims, which totalled ESP 6 749 698 323.
At no stage of the procedure laid down by Article 93(2) of the
Treaty have the Spanish authorities stated or suggested that
this was the case. However, the public creditors, particularly
the Social Security and the Basque Regional Treasury, knew
that if Indosa, which was bankrupt, continued to operate, it
was likely to run up further debts, given its difficult situation
and its tax record (it had avoided paying the Social Security or
the Treasury for years). They should therefore at least have
made continued activity conditional on Indosa’s meeting its
current tax and social security obligations, in order to avoid
running up further debt. Given the nature of bankruptcy laws,
such an increase would automatically reduce the bankrupt’s
assets, as debts arising from the administration of
the
bankruptcy, such as those generated by the non-payment of
take precedence over other
taxes and social contributions,
claims. A private creditor would not have behaved in a way
likely to reduce the chances of recovering his claim.

The behaviour of the public creditors has been influenced by
different aspects of the State’s commitment to guarantee as far
as possible the recovery of their claims against the bankrupt
company. Moreover, the fact that large amounts of taxes and
remained effectively unpaid
social
between July 1994 and April 1997 shows
Indosa’s
continued operation has supported economic activities which
would have been unsustainable in any other way under normal
market conditions.

security contributions

that

The Commission takes the view that the non-payment of taxes
and social
security contributions constitutes a transfer of
public funds to Indosa, giving it a competitive edge; unlike its
competitors, it does not have to cover this particular cost in
the normal way. This analysis is not affected by the fact that

L 198/26

EN

Official Journal of the European Communities

30.7.1999

the beneficiary of this transfer is Indosa in its capacity as the
assets of the bankruptcy, not Indosa the company.

The fact that neither the Treasury nor the Social Security have
formally stated their intention to abandon their claims (which
means that they still constitute debt, legally speaking, and have
not been written off) does not detract from the fact that the
company has been able to operate without meeting its tax and
social security obligations (16). Indosa’s rivals did not enjoy the
same financial advantage during the same period. Moreover,
the debts arising from the non-payment of taxes and social
security contributions after the declaration of bankruptcy are
covered by the administration of the bankruptcy (debts payable
from the bankrupt’s assets) and, under Spanish law, may be
procedures. The
subject
information supplied by the Spanish authorities shows that no
separate enforced collection procedure has been initiated,
despite the considerable size of
the debt arising from the
non-payment of taxes and social security contributions.

collection

separate

forced

to

within

the meaning

under-employment

the development of certain areas, with the exception of San
Roque (Cadiz), none of the areas where Indosa, Gursa and
Cunosa are based (Derio (Vizcaya), Guriezo and Limpias
living or
(Cantabria)) have an abnormally low standard of
serious
of
Article 92(3)(a). Moreover, although the plant is in an assisted
area, as referred to in Article 92(3)(c), the aid granted to these
companies does not have the character of aid designed to
promote the development of certain economic areas, as
provided for in the above Article, because it was granted as
is, aid the granting of which is not
operating aid (that
conditional on investment or job creation). The aid granted in
San Roque (Cadiz) was not part of the regional aid scheme in
that area. However, operating aid in the areas provided for by
Article 92(3)(a) of the Treaty may also be covered by the
derogation set out in that provision where such aid is granted
subject to certain restrictive, controlled conditions, described
below with reference to companies in difficulty.

It may thus be concluded that Indosa’s persistent non-payment
of social security contributions totalling ESP 1 282 117 590, in
addition to the non-payment of an unspecified amount of tax
during the period between the declaration of bankruptcy
(19 July 1994) and April 1997, after all
Indosa’s public
creditors had accepted that
it would continue operating
without any financial guarantees, constitutes aid within the
meaning of Article 92(1) of the Treaty.

As regards the exceptions provided for by Article 92(3)(b), the
aid measures analysed are not concerned with, nor do they
(cid:145)an important project of common
have the character of
serious
(cid:145)to remedy
a project
European interest(cid:146) or
disturbance(cid:146) in the Spanish economy. Moreover, the Spanish
authorities have not
requested any derogation on these
grounds.

a

The Commission has not been informed of the total amount of
tax owed to the regional Treasury of Vizcaya. It is the Spanish
Government’s responsibility to supply this information.

Article 92(3)(c) also provides for an exception to be made for
(cid:145)aid to facilitate
certain economic
the development of
activities(cid:146). The aid granted to Indosa, Cunosa, Migsa and Gursa
falls into the category of aid to companies in difficulty.

The persistent non-payment of
contributions:

taxes and social

security

(cid:151) by Indosa, Cunosa, Migsa and Gursa until the declaration

of bankruptcy or the break in activities,

(cid:151) by Indosa after the declaration of bankruptcy,

is thus considered to constitute aid within the meaning of
Article 92(1) of the Treaty.

This aid was not granted as part of an authorised aid scheme
and should therefore have been notified on an individual basis,
as stipulated by Article 93(3) of
the Treaty. The Spanish
authorities’ failure to meet this requirement means that the aid
was granted illegally. The
exceptions provided for by
Article 92(2) of the Treaty are not applicable in this case, since
the aid was not granted to achieve the objectives set out in
Article 92(2). The Spanish Government has not
invoked
Article 92(3) of the Treaty in connection with the measures
deemed by the present Decision to constitute aid.

As regards the derogations provided for by Articles 92(3)(a)
and (c) of the Treaty for aid designed to promote or facilitate

The aid granted does not fulfil the conditions for a derogation
in conjunction with the
laid down in Article 92(3)(c)
(cid:145)Community
and
guidelines on state
restructuring firms in difficulty(cid:146) (17).

rescuing

aid for

The aid does not meet
the conditions laid down in the
guidelines on rescue aid. Restructuring aid must be linked with
a viable restructuring programme which must be submitted in
In the present case, the Spanish
detail to the Commission.
authorities have not provided any evidence that
the aid
granted to the
linked with a
programme of restructuring designed to restore their long-term
viability. It is worth pointing out that a plan submitted to the
Basque authorities in 1996 by the receivers administering
Indosa’s bankruptcy was not accepted by the authorities
because, among other things, it failed to put forward a realistic
proposal on Indosa’s institutional debt (towards the regional
Treasury, the Social Security, and other agencies).

concerned is

companies

The fact that Indosa now has hopes of a positive cash flow
does not negate the fact that it, and the other companies in
question, were able to continue operating firstly thanks to the
non-recovery of the aid declared incompatible in 1989 and
secondly because it was not compelled to meet its tax and

(16) See footnote 15.

(17) OJ C 368, 23.12.1994, p. 12.

30.7.1999

EN

Official Journal of the European Communities

L 198/27

social security obligations. Had that not been the case,
would have ceased to operate.

it

(cid:151) by Indosa after its declaration of bankruptcy and until May

1997,

The Commission therefore takes the view that
the aid is
incompatible with the common market as referred to in
Article 92(1) of the Treaty because it does not meet any of the
necessary requirements for
the
derogations provided for in Article 92(2) and (3).

the application of any of

When aid is deemed incompatible with the common market,
the Commission requires the Member States to call on the
beneficiary to pay it back (18). Since this is the case with the
measures in favour of Indosa, Cunosa, Migsa and Gursa, which
are the subject of
the aid must be
the present Decision,
recovered.

The aid must be recovered in accordance with the procedures
and provisions laid down in Spanish law, and must include the
interest which has accrued between the date on which the aid
was granted and the date on which it
is actually repaid,
calculated at a rate equal to the percentage value on that date
of the reference rate used to calculate the net grant equivalent
of regional aid in Spain (19).

In accordance with the case-law of the Court of Justice, the
abovementioned provisions must be applied in such a way as
to ensure that it is not in practice impossible to recover the
aid as required by Community law. Any difficulties, of a
procedural or other nature, which may arise in applying the
measure will not affect its legal validity (20),

HAS ADOPTED THIS DECISION:

is illegal, as it was granted by Spain in breach of its obligations
under Article 93(3) of the EC Treaty.

The aid is considered to be incompatible with the common
market within the meaning of Article 92(1) of the Treaty, as it
the necessary conditions
does not meet any of
the
application on any of
the derogations provided for by
Article 92(2) and (3).

for

Article 2

1.
Spain shall take the necessary measures to recover from
the beneficiaries the aid referred to in Article 1 which was
granted to them illegally.

The aid shall be recovered in accordance with the
2.
procedures and provisions laid down in Spanish law. The sums
to be recovered shall include the interest which has accrued
between the granting of the aid and the date on which it is
actually repaid. The interest shall be calculated on the basis of
the reference rate used to calculate the net grant equivalent of
regional aid in Spain.

Article 3

Spain shall
inform the Commission within a period of two
months from the date of notification of the present Decision
of the measures to be taken to comply therewith.

Article 1

This Decision is addressed to the Kingdom of Spain.

Article 4

The aid in the form of the persistent non-payment of taxes
and social security contributions:

Done at Brussels, 14 October 1998.

(cid:151) by Indosa and Cunosa until they were declared bankrupt,

(cid:151) by Migsa and Gursa until their activities were interrupted,

and

For the Commission

Karel VAN MIERT

Member of the Commission

(18) Commission communication of 24 November 1983 (OJ C 318,
24.11.1983, p. 3). See also the Court of Justice’s judgments of
12 July 1973 in Case 70/72 Commission v. Germany [1973]
ECR 813, and 24 February 1987 in Case 310/85 Deufl
v. Commission [1987] ECR 901.

(19) Letter from the Commission to the Member States SG (91) D/4577,
4 March 1991. See also the Court of Justice’s decision of 21 March
1990 in Case 142/87 Belgium v. Commission [1990] ECR I-959.

(20) See the judgment cited in footnote 19, paragraphs 58 to 63.