1999/646/EC: Commission Decision of 25 November 1998 on measures by Germany to assist InfraLeuna Infrastruktur und Service GmbH (notified under document number C(1998) 3840) (Text with EEA relevance) (only the German text is authentic)
Date: 1998-11-25
Institutions: European Commission
Subjects: Germany, State aid, aid to industry, chemical industry, industrial restructuring, privatisation

6.10.1999

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L 260/1

II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 25 November 1998

on measures by Germany to assist InfraLeuna Infrastruktur und Service GmbH

(notified under document number C(1998) 3840)

(only the German text is authentic)

(Text with EEA relevance)

(1999/646/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

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

Having given notice to the parties concerned to submit their
comments, in accordance with that Article,

Whereas:

I. PROCEDURE

On 15 April 1997 the Commission wrote to the German
Government, informing it that on 12 March it had decided to
initiate proceedings under Article 93(2) of the EC Treaty. The
proceedings related to DEM 765 million which InfraLeuna
Infrastruktur und Service GmbH (hereinafter referred to as
f(cid:252)r
(cid:145)InfraLeuna(cid:146)) was
Vereinigungsbedingte Sonderaufgaben (hereinafter (cid:145)the BvS(cid:146)),
and DEM 300 million which was to be provided by the Land
of Saxony-Anhalt;
the Commission was concerned that the
money might constitute state aid and, if so, that it might not
be compatible with the common market.

from the Bundesanstalt

to receive

The Commission’s decision to initiate proceedings was
announced in the Official Journal of the European Communities;
the notice called on Member States and interested parties to
submit observations (1). The German Government submitted its
observations on the decision in a letter of 14 August 1997.

(1) OJ C 196, 26.6.1997, p. 3.

The Commission had received observations opening the
proceedings, from one Member State, three trade associations
and four companies;
it passed these on to the German
Government by letter of 28 August. The German Government
replied by letter of 17 November.

In letters dated 14 May 1997, 1 December 1997 and 18
March 1998, the Commission put a number of questions to
the German Government that had arisen in connection with
the case. The German Government replied in its letter of 14
August 1997 and in further letters on 9 January and 10 July
1998. In order to clarify the case further, meetings between
the German authorities and the Commission took place in
Leuna on 7 and 8 July 1997 and in Brussels on 30 April and
28 July 1998.

II. FACTS

On the basis of the letters cited here and the information
supplied by the German Government at
the meetings just
referred to, the facts of the matter can be stated as follows.

1. Background

The case concerns the privatisation of the infrastructure at the
Leuna chemical complex in Saxony-Anhalt, a region which
the EC
for assistance under Article 92(3)(a) of
qualifies
Treaty (2).

(2) Commission

decisions

aid measures N 464/93,
state
SG(94) D/5633 of 22 April 1994, and N 613/96, SG(97) D/488 of
23 January 1997, which apply until the end of 1999.

on

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is known as the (cid:145)chemical

Chemicals was one of
the main industries in the former
German Democratic Republic, using a workforce of about
90 000. It was based in Saxony and Saxony-Anhalt, forming
what
triangle(cid:146). Production was
concentrated in a few very large state-owned enterprises,
which were interlinked and dependent on one another for
supplies of raw materials, intermediate products, energy and so
on. The chemicals
industry in Leuna was an important
component in the chemical triangle, employing 26 000 people.

(cid:145)the Treuhand(cid:146)) sought

After the unification of Germany in 1990, the Treuhandanstalt
privatisation agency (hereinafter:
to
privatise the chemicals industry. The first step was to create
economic units of a size that might interest a potential buyer.
In 1990, the Treuhand set up Leuna Werke AG on the Leuna
site, as the immediate successor to the old state enterprise
((cid:145)Volkseigener Betrieb(cid:146)). At the beginning of 1994, the form of
the company was changed, with Leuna Werke AG becoming
Leuna-Werke GmbH (hereinafter (cid:145)LWG(cid:146)); and in June 1994 a
new company was hived off under the name Leuna-Werke
Standortservice GmbH (hereinafter (cid:145)LWS(cid:146)), whose object was to
provide, on site,
the infrastructure and supply the services
necessary for the manufacturing operations. These included
roads, pipe bridges, fire-fighting services, waste dump, fresh
water
laboratory services,
communications, and energy, gas and water supplies.

supply, waste-water

collection,

2. The Treuhand’s efforts at privatisation

The Treuhand initially planned to sell the entire Leuna site
with the existing infrastructure as a single enterprise, and in
1991 and 1992 Leuna Werke AG was offered for sale, in an
international, open, transparent and unconditional tendering
procedure. However, no investor was found who was prepared
to take over a chemicals operation on this scale. In addition,
the plant was in a dilapidated condition, so that a buyer would
investment and extensive
have had to undertake substantial
anti-pollution measures.

The Treuhand then changed its approach, and decided to split
up the product
lines and privatise them separately. The
separate units were offered for sale in open, transparent and
unconditional procedures; by the end of 1994 there had been
97 privatisations. The various chemical product lines were sold
to a range of investors including UCB, Rhone Poulenc and
Dow. The biggest chemical investors on the site were Linde
AG, which took over the production of industrial gases, and
Caproleuna, a wholly-owned subsidiary of the Domo Group,
[(cid:133)] (*), which took over the production of Caprolactam.

Most of
lines were sold and the volume of
production grew substantially; the site infrastructure, however,

the product

remained in the hands of the Treuhand, which in turn assigned
it to its subsidiary, LWS.

For the continued operation of the infrastructure, there were
roughly two alternatives: either it could be run by the public
sector (in the shape of the Land, the local authority, or a public
utility); or a private buyer could be found. In 1992, in order to
evaluate the needs of the site and to identify the best solution,
the Treuhand commissioned studies of
from
site
internationally recognised consultants. At
the same time it
made repeated attempts to persuade the Land of Saxony-Anhalt
and the municipality of Leuna to take over the infrastructure.
The negotiations were ultimately broken off when it became
clear that neither the Land nor the municipality was prepared
to take on the operation of the facilities.

the

in taking over the infrastructure and that

Consequently, the only options left were for the infrastructure
to be sold to a private investor or for the Treuhand itself to go
on operating it. The Treuhand had to bear in mind that the
earlier calls for tenders had shown that investors generally had
no interest
the
number of enterprises qualified to run it was small, given the
size of the site and the specialised manufacturing going on
there. It was not clear, either, whether as regards the site it
would make more sense to sell the entire infrastructure to a
single investor or to separate the different parts and sell them
off to different investors.

therefore,

to companies

the Treuhand began making direct
In 1992,
approaches
that possessed the necessary
technical know-how and specific knowledge of the chemicals
industry. Companies that were important in the industry, and
especially companies already operating there, were taken to
visit the site; LWS allowed interested parties full freedom to
inspect its books, under agreements known as (cid:145)due diligence(cid:146) (3)
agreements (4), and gave them copies of
the consultants’
studies. In this way, the Treuhand hoped to stimulate interest
in the site among companies and to involve them in the
search for a workable solution.

Between the end of 1992 and the end of 1994, the Treuhand
negotiated with three serious candidates for the sale of the
entire infrastructure: with a consortium consisting of Thyssen,
VEW and Steag; with Mannesmann AG; and with the French
Compagnie GØnØrale des Eaux. But the negotiations came to
nothing, and no acceptable offer was made. No one was
prepared to take on the entire infrastructure, so that
the
facilities of little commercial interest, such as roads and pipe
bridges, would have remained in the hands of the Treuhand.

(*) Parts of this text have been edited to ensure that confidential
information is not disclosed; those parts are enclosed in square
brackets and marked with an asterisk.

(3) The English term is used in the German text.
(4) Interested parties were given full access to all business papers so as
to enable them to make offers, but had to undertake not to misuse
the knowledge thereby acquired.

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Nor would the potential buyers accept any safeguards to
provide protection against what would be a de facto monopoly
in such things as energy and water supplies, and they refused
to bear the risks for site development and consumption if large
customers preferred to make their own arrangements.
It
became clear that if any of the potential buyers were to take
over the entire infrastructure the privatisation operation at the
site would be a great deal more expensive and, indeed, that its
success might be endangered.

At the beginning of 1994, alongside its efforts to privatise the
the Treuhand opened
infrastructure as a single package,
negotiations with various
regarding the sale of
investors
separate lots. However, these efforts too had to be broken off
without success at the end of 1994: many of the potential
buyers demanded impracticable guarantees of turnover; several
lots proved unsaleable; it was not possible to coordinate the
individual awards; and there was no discernible economic
advantage either to the Treuhand or to the site.

a

roads,

cluster of dissimilar

accordingly become
and legally
independent chemical production plants. Site servicing is a
great deal more complex than what is needed on conventional
the measure of mutual
because of
industrial
estates,
dependence which exists,
infrastructure
variety of
the
networks, especially pipelines and pipe bridges, and the links
with such things as
railways, waste-water disposal
systems and energy supplies. The manufacturers on the site are
dependent on supplies of various raw materials, and need an
efficient infrastructure to deliver them. Because of the lack of
assured availability of power, gas, etc., the buyers of privatised
firms frequently made it a condition that the Treuhand, or
later the BvS, should guarantee the provision of particular
services. As the privatisation process progressed, therefore, an
extremely complex structure of contracts emerged under which
the BvS was bound by extensive supply obligations to a variety
of investors. But after 40 years of a planned economy the
existing facilities were in a dilapidated condition and in need
of thoroughgoing renovation and overhaul. Yet at the same
time as renovation went ahead, privatisation and development
had to continue and new firms had to be accommodated on
the site.

a

an

and

scheme

integrated

Thyssen-Sonnenberg

renovation and maintenance work. The
for

Early in 1994, faced with the prospect that the negotiations
under way at the time would fail, the Treuhand convened what
was called a (cid:145)site conference(cid:146), which was intended to carry the
privatisation process forward and to sound out any impetus
for new approaches. The companies on the site were asked
to develop ideas and to discuss them. Other participants
were
Westdeutsche
Instandhaltungsgesellschaft, who were interested in carrying
conference
out
infrastructure
produced
corporation,
in which the firms on the site would take
holdings, and which would not merely manage and reorganise
the infrastructure but would also be responsible for developing
the site and privatising the remaining land and product lines.
However, although the scheme was designed jointly, the firms
were very reluctant
to take shares in this site-management
corporation. Ultimately, only Linde and Caproleuna proved
willing to enter into negotiations. In October 1994 a statement
of intent was agreed, and in November a preliminary contract
was concluded for the purchase of 51 % of the shares in the
infrastructure corporation, which had yet to be established.
The corporation was set up legally on 15 February 1995,
under the name InfraLeuna Infrastruktur und Service GmbH,
and began operations on 1 January 1996. On 22 May 1996
the privatisation agreement with Linde and Caproleuna was
from 1 January 1996.
signed, with retroactive
effect
Caproleuna and Linde each took 25,5 % of
the shares in
InfraLeuna, while 49 % remained with the Treuhand’s successor
organisation, the BvS. The price paid was DEM 1,53 million,
equal
is
intended to persuade other investors on the site to take the
shares held by the BvS so that, if possible, all of them will
ultimately participate in InfraLeuna.

InfraLeuna’s DEM 3 million capital.

to 51 % of

It

It was in the interests of the firms already present that the
infrastructure should be provided at an attractive price, and
that
firms on the site should ensure them a
supply of the particular intermediate products or raw materials
they needed and provide outlets for their own products.

the range of

InfraLeuna is

the investors.

The scheme arrived at is the one most likely to meet the
special needs of the site and to do justice to the interest of the
BvS and of
to manage the
restructuring and undertake the investment needed to improve
to continue
and modernise the site infrastructure.
development of the site and to seek new investors so that the
remaining industrial sections of the site and product lines can
be sold. Suitable buildings and land inside the site have been
transferred to InfraLeuna for this purpose, amounting to a
total of some 190 ha available for newcomers. It is also to
provide
infrastructure and the necessary
services at the site, allowing the exchange and transport of
goods and ensuring supply to the firms. This phase of the
restructuring is to be completed by 31 December 2000.

the operational

is

It

3. The scheme

The Treuhand organised the privatisation on the basis of the
found it, and Leuna has
characteristics of

the site as it

in a mechanism approaching that of

The investors are required to plan and organise their own
infrastructure,
a
cooperative society. Their involvement ensures that InfraLeuna
has the necessary expertise and know-how. Thus they are in a
position to judge which products will fit best into the overall
pattern so that
firms on the site can be
expanded sensibly. Their closeness to the site ensures that the
services offered can be tailored to real needs, superfluous
facilities avoided, and costs kept down. Their membership of

the structure of

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the company makes them suppliers as well as consumers; they
in keeping prices low, while nevertheless
have an interest
covering the costs of the facilities and services offered. They
also have a greater interest in the additional integration effects
which can be secured if fresh arrivals contribute to successful
and balanced development of the site, improving sales of their
own products and ensuring inexpensive supplies of
the
materials they need for their own business.

The scheme offered the BvS the possibility of transferring its
privatisation function and all
to
InfraLeuna. InfraLeuna has also taken over supply and service
contracts concluded by LWS and LWG in connection with the
privatisations, releasing them from their supply obligations
towards the investors on the site.

related obligations

its

Thus the respective interests of the parties were the basis of
the scheme and an essential condition of its success: the BvS
was under an obligation to carry out its public mandate to
privatise the site and to perform the contracts it had concluded
in the course of privatisation, while the firms on the site
needed a functioning infrastructure at an acceptable price and
a process of rational settlement of new investors. The BvS
consequently had an interest
costs of
development as low as possible and in securing a guarantee
that
its
monopoly position. Such a guarantee could be given only by
firms which had located on the site themselves, since it would
be against their own interests to raise the prices of InfraLeuna’s
services and to establish and exploit monopolies.

infrastructure manager would not misuse

in keeping the

the

In addition to being the only firms on the site interested at this
stage in acquiring shares in InfraLeuna, Caproleuna and Linde
the task. As established
were also the right partners for
chemicals firms they possessed sufficient expertise to be able
to canvass and negotiate with firms that might be interested in
setting up on the site, and had extensive knowledge of
structure of the chemicals industry, its technical and economic
aspects, and its development. They were in a position to judge
and plan the effects of the integration of new arrivals, and had
the necessary contacts, experience and qualified staff. As the
largest manufacturing companies on the site, they had a strong
in seeing InfraLeuna develop successfully within a
interest
short time: Caproleuna is a large or at least medium consumer
of almost all
further
cooperative integration effects from any new firms that might
move in. Linde can expect greater sales of industrial gases only
if the site develops well.

the services offered and can expect

InfraLeuna is consequently not designed to make a profit, but
instead is governed by the low-profit principle. This means
that it is required to organise its business in such a way that
its costs are covered and its cash flow is sufficient to cover
It can distribute no
current reinvestment and maintenance.

more than 10 % of its capital as dividends to the shareholders.
Any remaining profit must be retained in the company.

On 1 January 1996, InfraLeuna employed 906 people. But the
number of employees is steadily being cut down to 600. In
1996, InfraLeuna achieved a turnover of DEM 437 million and
in 1997, the figure was DEM 409 million. Ordinary activities
resulted in losses of DEM [(cid:133)] (*) in 1996 and DEM [(cid:133)] (*)in
1997, while the ongoing repair work and restructuring
measures brought net annual
losses of DEM [(cid:133)] (*)in 1996
and DEM [(cid:133)] (*) in 1997. Cash flow totalled DEM [(cid:133)] (*)in
1996 and DEM [(cid:133)] (*) in 1997.

4. InfraLeuna’s activities in detail

4.1. Investment and restructuring

In the first place, the existing facilities have to be repaired,
modernised, and adapted to the real needs of the site and to
the safety and environmental standards laid down by law or
imposed by the authorities. A large proportion of the existing
networks and facilities are completely obsolete, neglected and
oversized, and can be operated only at a heavy loss owing to
the high level of unused capacity and similar factors. The rail
network is to be cut back from 156 km to 55 km,
the
drinking water network from 90 km to 31 km, and the road
network from 120 km to 20 km. The BvS, in collaboration
with Caproleuna, Linde and experts, has worked out a
programme of measures for the site stretching over the period
from 1 January 1995 to 31 December 2000, and this has
become a business plan forming an integral part of
the
privatisation contract. The business plan details every measure
and investment needed for reconstruction, restructuring, the
repair of environmental damage, and so on. InfraLeuna will
also make its specialised knowledge available so that changes
to the plans which prove necessary as restructuring progresses
can be made in full knowledge of the facts. The measures are
InfraLeuna is to be able to operate the facilities
vital
economically in the long term.

if

4.2. Site clearance

Site clearance comprises all measures taken to dismantle plant
and technical facilities, to demolish buildings, to remove and
dispose of rubble, excavated material, building materials, plant
and stored substances, and to fill and level
the site. The
clearance plan forms part of the business plan, which also calls
for excavation of
is made
necessary by the planned use of the area. On most sections
there are buildings and plant which have served for the
production of chemicals for decades and which in view of
their ramshackle and contaminated condition are no longer

subsurface rubble where this

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usable. The costs of demolition and disposal are substantial;
they frequently cannot be estimated in advance, and are
usually several times higher than the price of the land. If it did
not clear the site first, InfraLeuna would not be able to interest
investors in the possibility of locating there and could not sell
those plots. The bulk of the restructuring and clearance work
is being put out
to Community-wide tender in accordance
with Directives 92/50/EEC (5), 93/36/EEC (6) and 93/37/EEC (7)
on procedures for the award of public contracts. For other
orders and contracts InfraLeuna obtains at least three estimates.

distribution),
based on the following principles:

InfraLeuna has to apply a system of charges

(cid:151) the low-profit principle,

(cid:151) costs

to be allocated in accordance with recognised
a
all

consumers

on

to

commercial
principles
non-discriminatory basis,

4.3. Canvassing and new settlement

(cid:151) prices to be differentiated on the basis of the quantities

and services provided,

is

taking over

responsibility for

further
the
InfraLeuna
privatisation of the site from the BvS.
It is conducting an
intense advertising campaign for the site in the specialist press,
and distributing information packages and brochures it has
prepared among potential buyers.
is negotiating with
investors and trying to persuade them to buy plots at the site
and to invest there.

It

Land is sold at the market price for developed industrial sites.
The German Government has given the Commission three
valuations by independent valuers. The valuers concluded that
an average price of more than DEM 25 per m† would not be
obtainable, as there was a surplus of industrial sites in the new
L(cid:228)nder.

4.4. Provision of infrastructure

InfraLeuna has also taken over from the BvS the responsibility
for providing the necessary infrastructure and services on the
site. This includes roads, the supply of electricity and steam,
the supply of drinking water, fresh water and cooling water,
waste-water disposal,
electricity-supply
cabling,
fire-fighting services, posts and telecommunications,
provision of bridges to carry pipes for the supply of gases and
liquids between the different production lines, waste disposal
site, and so on.
InfraLeuna also receives revenue from the
rental and leasing of sections of buildings in its ownership.

laboratory services,

Those using the services pay charges to InfraLeuna. Pipes and
cables are laid at the expense of the recipient firms and are
their property; the recipients pay a fee for the use of pipe
bridges. When it calculates its prices InfraLeuna is required to
comply with certain principles laid down in the privatisation
contract. It may not give preference to its own shareholders or
place other firms at a disadvantage. In what are known as the
(cid:145)core(cid:146) areas, which are areas of business where it
is in a
monopoly position (the road network, the rail network, pipe
bridges, water supply and disposal, and power generation and

(5) OJ L 209, 24.7.1992, p. 1.
(6) OJ L 199, 9.8.1993, p. 1.
(7) OJ L 199, 9.8.1993, p. 54.

(cid:151) prices to be governed by sliding-scale clauses in accordance

with practice in the industry,

(cid:151) account to be taken of the necessary reinvestment ratios

and financing costs (8),

(cid:151) supplies and services to be provided on an arm’s-length

basis.

In other areas, InfraLeuna is to supply its services at prices
negotiated with the recipient. Here, too, it is prevented from
advantaging or disadvantaging individual recipients.

5. Funding of InfraLeuna

the Land of Saxony-Anhalt

The scheme,
including the business plan, was submitted for
appraisal by the BvS Steering Committee (9); the end result is
that InfraLeuna is to receive total funding of DEM 1,13 billion.
Altogether, the BvS is to provide DEM 730 million of this,
while
to provide DEM
300 million for investment under the nationwide regional aid
scheme (10). The Commission had previously
authorised
investment costs of DEM 100 million for the year 1995 in
Decision 96/545/EC concerning aid proposed by Germany to
Buna GmbH, S(cid:228)chsische Olefinwerke GmbH, Leuna-Werke
GmbH, Leuna-Polyolefine GmbH, and BSL Polyolefinverbund
GmbH (11).

is

(8) Capital costs are also taken into account in the price calculations,

in line with recognised commercial principles.

(9) The Steering Committee (Leitungsausschu(cid:223)), is an independent body
of the BvS which assesses schemes and carries out checks to ensure
that public resources are properly used.
It is appointed by the
Federal Ministry of Finance and consists of independent auditors.
At the relevant time its members were experts from Roland Berger
and C&L.

(10) The 24th outline plan adopted under

Federal
Government/L(cid:228)nder
a
Commission-approved aid scheme (N 531/95, SG(96) D/4868 of
22 May 1996).

the
(Gemeinschaftsaufgabe),

programme

Joint

(11) OJ L 239, 19.9.1996, p. 1.

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Breakdown of InfraLeuna’s total funding

Measure

Amount
(in million DEM)

Investment/restructuring (1)

Site clearance (1)

Cash flow compensation (1)

Working capital

Total

800

250

50

30

1 130

(1)

The privatisation contract provides for flexible use of resources between
these headings; the following transfers are allowed: between clearance and
losses, DEM 50 million; between clearance
and investment, DEM
100 million, and between investment and losses, DEM 50 million. This
means that the budget for loss compensation can be increased by a total of
DEM 100 million, to DEM 150 million.

Initially, in the business plan, the BvS, Caproleuna and Linde
estimated the restructuring and investment costs at DEM
960 million. But after careful study of
the catalogue of
measures they had drawn up, the Steering Committee came to
the conclusion that these costs were exaggerated, and reduced
them by DEM 160 million, to DEM 800 million. The business
plan called for investments totalling DEM 550 million by the
beginning of 1998. Owing to delays, however, only DEM
275 million was actually invested by that time, so that the
programme is running late, but the remaining measures are
still being taken.

The BvS undertook to provide a total of DEM 250 million for
site clearance. For the year 1996 it also granted InfraLeuna a
further DEM 135 million under paragraph 249h of
the
Employment Promotion Act (12). In the event that this funding
for costs of materials was not spent in its entirety in the year
1996, the BvS undertook to pay InfraLeuna the difference,
provided that it was used for the same measures (13). When the
Commission
the
proceedings,
assumption that the money taken up under the Employment
Promotion Act in 1996 would total DEM 100 million, and
concluded that the extra to be considered would amount to
DEM 35 million. In the event, the sum taken up in 1996 was
only DEM 35,4 million, so that the difference to be made up
by the BvS amounted to DEM 99,6 million. Following
negotiations, the BvSsucceeded in having its liability reduced to

it worked

initiated

on

(12) State aid measure NN 117/92. Measures under paragraph 249h of
the Employment Promotion Act
(Arbeitsf(cid:246)rderungsgesetz, AFG)
are intended to repair environmental damage and to prevent
hazards resulting from such environmental damage on former
industrial sites in the new L(cid:228)nder. The provision allows subsidies
towards wage and other costs; the measures also serve to create
employment, especially for unemployed young people, older
people and the handicapped. The Commission found that
the
provision of public funds for the repair of environmental damage
brought about before 1 July 1990 did not constitute state aid, in
line with the transfer date provision in the first Treuhand
Decision, and that the schemes to assist young people and in the
framework of social services were not services for which there was
competition. The Commission held that the measures in question
did not constitute state aid.

(13) The flexibility ceilings for transfers to investment or losses would
increase correspondingly, and in addition the flexibility ceilings
could be raised by the value of the measures taken in 1996 using
funding under paragraph 249h of the Employment Promotion
Act.

DEM 38 million, so that the financing it is to provide for site
to a maximum of DEM
clearance measures will amount
288 million. According to information supplied by the
German Government, spending on site clearance will turn out
about DEM 100 million lower
than the cost originally
calculated. Here InfraLeuna has had the benefit of a substantial
fall in prices.

Under paragraph 12 of the privatisation contract, the BvS is
bound to make good any losses or negative cash flow arising
during the restructuring phase. The approximate cash flow
currently forecast on this basis for the period 1996 to 2000 is
a positive DEM 36,8 million.

The BvS is providing InfraLeuna with working capital of DEM
30 million.

the

funding provided by the Land of
Furthermore,
if
Saxony-Anhalt should turn out
to be less than the DEM
300 million planned, the BvS has undertaken to make up the
difference under certain strict conditions.

The privatisation contract also provides that InfraLeuna has no
responsibility under public law or liability under private law
for damage caused by the operation of the plant or the use of
the land before 1 July 1990 (known as (cid:145)inherited liabilities(cid:146)
(Altlasten)). It is also freed from 90 % of any liability for the
cost of protection against hazards arising as a result of damage
caused before 1 July 1990, and the cost it may be called on to
bear in this connection is limited to DEM 5 million. The
German authorities estimate the total expenditure needed here
at approximately DEM 150 million.

Breakdown of funding by source (1)

BvS

Investment/restructuring

Land
of Saxony-Anhalt

Investment/restructuring

BvS

BvS

BvS

Total

Site clearance

Loss compensation/negative cash
flow

Working capital

(in million DEM)

400

300

288

50

30

1 068

(1)

The table does not
include the DEM 100 million for investment and
restructuring granted by the BvS in the past, the funding under paragraph
249h of the Employment Promotion Act, and the exemption from inherited
liabilities granted by the BvS.

6. Payment and monitoring the use of funds

The privatisation contract regulates the granting and provision
of funds by the BvS. The BvS is to lodge a sum of DEM
657 million in an account with the Landeszentralbank Berlin
((cid:145)the Bank(cid:146)). This sum is to be entered in InfraLeuna’s capital

6.10.1999

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Official Journal of the European Communities

L 260/7

reserve. InfraLeuna does not have sole disposal of the account.
The BvS is also to give InfraLeuna a claim for DEM 73 million,
which falls due only when the sum in the account
is
exhausted. The money in the account with the Bank and
InfraLeuna’s claim on the BvS bear interest of 3,5 % per annum
is likewise available to
to offset
InfraLeuna.

inflation, and this interest

Acting in accordance with the liquidity schedule in the
business plan, InfraLeuna is to ask the BvS to transfer money
to its own business account. Departure from the business plan
is possible only with the agreement of
the BvS; cases of
disagreement are to be settled by a conciliation and arbitration
procedure laid down in Article 27 of the privatisation contract.
InfraLeuna’s resources must remain outside the buyers’ group
finances. The BvS may refuse to pay if it has reason to doubt
whether the funding is being properly used.

InfraLeuna must report to the BvS every quarter, showing how
the money provided has been used. The use of the funding
allocated for the compensation of losses must be documented
every six months. The documents submitted must be verifiable;
the BvS is to be allowed access to InfraLeuna’s premises and
papers at any time, and is entitled to have the documents
examined by an independent expert. Differences of opinion
regarding the use of
the money are to be settled by the
conciliation and arbitration procedure in Article 27. The
arbitrator
either a certified public accountant
nominated by the chairman of the board of the Institute of
Certified Public Accountants (Institut der Wirtschaftspr(cid:252)fer),
in
D(cid:252)sseldorf, or the Federal Audit Office (Bundesrechnungshof).

to be

is

a tax audit. InfraLeuna will then repay the entire compensation
for losses it has received from the BvS, using the funds in the
account with the Bank;
the BvS will make an equivalent
payment to InfraLeuna to be entered as revenue and attracting
tax.

9. The relevant markets

that

The Commission had to consider whether
trade between
Member States might be affected. There would certainly be
trade between Member States in the products manufactured on
the measures might distort
the site, which meant
competition. Domo produces synthetic carpet fibres on the
site, which is a product in a sensitive industry and is within
the scope of
the code on aid to the synthetic fibres
industry (14). If aid were to be given, therefore, the code might
require a capacity reduction in return. However, as far as the
services of
it was rather
doubtful whether
there would be trade between Member
States.

InfraLeuna itself were concerned,

III. OBSERVATIONS SUBMITTED BY OTHER
INTERESTED PARTIES
ON THE INITIATION OF PROCEEDINGS

it

initiated proceedings

After
observations
associations and four companies.

from one other Member State,

the Commission received
three trade

7. Closure of accounts, repayment and incentive clause

When restructuring operation is complete,
InfraLeuna is to
submit a final account which BvS is free to verify by any
means at its disposal. Funds remaining in the account with the
Bank and funds called by InfraLeuna but not used by the end
of the restructuring phase are to be repaid to the BvS.

The BvS is required to pay 25 % of the returned money to
each of the buyers, as an incentive to achieve savings. But the
sum payable to each may not exceed DEM 20 million, so that
savings in excess of a total of DEM 80 million would not
result in any increase in the incentive payments.

8. Neutralisation of losses carried forward beyond the

restructuring operation

InfraLeuna must not be enabled to take advantage of further
concessions in addition to the compensation of losses by the
BvS after the restructuring operation is complete, by carrying
forward losses for purposes of corporation tax or local trade
tax. At
the
current carry-forward of losses will be established by means of

the restructuring phase,

the end of

therefore,

It calculated that

The Member State argued that the chemicals industry in the
region had already received substantial state aid in the past and
that strict criteria should be applied in the case of InfraLeuna
there could be no indirect advantage for
to ensure that
S(cid:228)chsische Olefinwerke and Buna.
the
funding paid out would amount to state aid per job of DEM
1,78 million, easily exceeding the aid intensity permitted in the
case of large enterprises, namely 35 %.
It was unclear how
much money would be used to attract new investors and
whether investors in Leuna would qualify for other forms of
aid. The Member State acknowledged that the scope for trade
between Member States in industrial gases was small. But
producers of industrial gases other than Linde ought to have
the same opportunities as Linde to compete in the region and
establish air separation units in Saxony-Anhalt at the same
intensity of state aid. Otherwise it shared the Commission’s
misgivings and pointed out that the Community code on aid
to the synthetic fibres industry applied to the production of
polyamide fibres, so that financial assistance might well entail
a reduction in capacity.

The other observations submitted supported the doubts the
Commission had expressed when it initiated the proceedings.
The trade associations drew attention to the distorting effect
on trade
fibres between
Member States. They pointed to the sensitivity of the industry,

in caprolactam and polyamide

(14) OJ C 346, 30.12.1992, p. 2.

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Official Journal of the European Communities

6.10.1999

in which capacity utilisation had been running at only 71 % in
1996. They stressed the indirect effect that the aid towards the
production of caprolactam could have on the production of
polyamide fibres if a single producer were to produce both
products. As it seemed highly unlikely that InfraLeuna could
be profitable, the measures being taken by the BvS could be
regarded only as a means of enabling the manufacturers on the
Leuna site, specially Linde and Caproleuna, to reduce their
production costs and thereby increase their competitiveness.
According to the trade associations’s information, spending on
services of this kind often accounted for up to 30 % of the
total cost of the final product. They feared that InfraLeuna
would offer its services below cost and that final consumers
would enjoy those services without having to provide them
themselves or to pay an appropriate price to a supplier. They
were especially concerned at the prospect of compensation of
losses of up to DEM 150 million, which would lead to
manifest distortion of competition. They contended that the
measures ran directly counter to the efforts of the European
chemicals industry to maintain and improve its international
competitiveness.

competitors pointed out

a
that Caproleuna was
The
wholly-owned subsidiary of
the Domo group [(cid:133)] (*). The
Beaulieu group accounted for about 54 % of all European
polyamide carpet fibre production. Aid to InfraLeuna would
result
in the
in an unjustified and lasting improvement
thus adversely affecting the
competitiveness of Caproleuna,
competitiveness of other manufacturers, and would help Domo
[(cid:133)] (*) to consolidate its dominant position on the market.
The fear was expressed that the measures would very probably
affect the prices of caprolactam and its intermediate products.

Two of the interested parties also feared that Caproleuna and
Linde would offload advertising costs onto InfraLeuna. They
the site that had appeared in
referred to advertising for
European chemical news. InfraLeuna had there used the names of
Caproleuna and Linde to advertise the site.

In its reply the German Government argued that there could
be no distorting effect on competition, as the payments to
InfraLeuna served to cover spending on services of general
interest and on hazard protection.

The measures being financed were a necessary condition for
the continued operation of the site, for the privatisation of the
plant and land, and consequently for
the completion of
privatisation which the BvS had a public mandate to carry out.
The elimination of inherited liabilities, site clearance, and the
provision of infrastructure had no effect on competition, as the
state measures merely served to bring the land and the plant to
a point where it could be privatised.

The German Government contended that as no advantage was
conferred and there was no effect on competition, there was
no state aid within the meaning of Article 92(1) of the EC
Treaty. All of InfraLeuna’s infrastructure and supply facilities
were to be used jointly and concurrently by a large number of
firms, against payment, and none would serve for particular

repairs

lines only. Plant of

product
that kind would have to be
provided by the firms involved themselves, on their own
responsibility and at their own expense. Taking over the cost
of providing an efficient
infrastructure in Leuna could not
affect competition, because competitors at other locations in
market-economy systems never had to bear comparable costs,
and the companies on the Leuna site were not being relieved
of costs that
firms usually had to bear. Quite the reverse:
without state assistance no investor would have been prepared
to bear the expense of overhauling the infrastructure in Leuna,
that had accumulated over
given the backlog of
decades. There was simply no possibility that a private party
might take over the inherited installations in their dilapidated
condition
and
the
replacement work necessary. The case had no precedent in
western Europe, and the necessity for the measures that were
being taken arose directly out of the circumstances of the
planned economy and the mismanagement which had taken
place. A further ground for maintaining that no advantage had
been conferred was that the financing was confined to the
absolute minimum, and all measures taken had been examined
to ensure that they were necessary and proportionate; where
required they had been put out to public tender. The prices
that final consumers would be paying for InfraLeuna’s services
were ordinary market prices, and would cover costs.

undertake

clearance,

disposal

and

Consequently, an assessment on the basis of the jobs preserved
was not possible either, as the financial contribution was being
made in performance of public obligations, and bore no
relation to the preservation of employment.

The shareholders in InfraLeuna could not earn a return of
more than 10 % on the capital they had subscribed. Because of
the restricted financial prospects this offered, it could not be
expected of them that they should invest substantial capital of
their own in InfraLeuna. The functioning of the plan rested
instead on a balance between conflicting interests which were
only indirectly of a material nature, so that payment of the
price for
services constituted a
InfraLeuna’s
proportionate consideration, and no further contribution could
be expected.

the use of

Investors wishing to settle in Saxony-Anhalt would find
comparable terms at other sites, and there was nothing to
prevent them from taking advantage of such terms because
there was in fact a surplus of industrial sites.

so that

The German Government contended that, contrary to the
misgivings which had been expressed, the loss-compensation
arrangement was not operating aid which would help to keep
unprofitable plant in operation. InfraLeuna had the exceptional
task of keeping the installations
in operation during the
restructuring process
the necessary services were
available on the site. This involved enormous additional costs
by
the
normal
installations were obsolete and oversized, and so could not be
operated efficiently, and also because in order to maintain
such as bypasses,
them special
alternative circuits, etc. Thus
losses
merely served to bridge the difficult period necessary to enable
InfraLeuna to operate in the long term efficiently, economically

steps had to be taken,

the compensation of

comparison with

operation,

because

6.10.1999

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Official Journal of the European Communities

L 260/9

items had been decided because at

and without
further assistance. The flexibility between the
the time the
budget
privatisation contract was concluded it was not possible to
estimate the scale of the different risks. On the basis of a
worst-case scenario, it was agreed for safety to allow for an
increase to DEM 150 million.

The German Government denied that the funding was being
misused by including Caproleuna and Linde in the advertising
for the site. InfraLeuna’s advertising mentioned the names of
firms that were already operating successfully on the site. It
was hoped that this would promote and consolidate the image
of the site as a location for the chemicals industry. Agreements
of this kind had been concluded not only with Caproleuna and
Linde but also with Chemtec Leuna and Leuna Harze GmbH,
and it was expected that
similar agreements would be
concluded with Leuna Polymer, Atochem and Spezialchemie
Leuna GmbH. InfraLeuna and the firm involved would each
bear half of the cost.

In pursuance of this principle, then, the effects of the measures
must be considered one by one in order to determine whether
there is state aid within the meaning of Article 92(1).

1. The costs of site clearance

in 1996,

site
The BvS is making DEM 288 million available for
Including funding of DEM 35,4 million received
clearance.
under the Employment Promotion Act
therefore,
InfraLeuna has a total of up to DEM 323,4 million at its
disposal for site clearance. The use made of the money has to
be documented every quarter, under paragraph 14(3) of the
privatisation contract. In the course of the proceedings, the
German Government has
assured the Commission that
InfraLeuna puts the clearance work out to tender or, where
that is not a legal requirement, calls in at least three reliable
estimates.

IV. ASSESSMENT

It has to be settled whether or not the measures are within the
scope of Article 92(1) of the EC Treaty. Article 92(1) states
that aid is incompatible with the common market
is
granted by a Member State or through state resources, favours
certain undertakings or the production of certain goods, and
thereby distorts or threatens to distort competition, in so far as
it affects trade between Member States.

it

if

Article 92(2) and (3)
prohibition.

lays down exceptions to this general

by

the

assistance

given to InfraLeuna

The
Land of
Saxony-Anhalt and the BvS is granted through state resources.
The Land of Saxony-Anhalt is part of the federal structure of
Germany and, as a constituent state of the federation, shares in
public authority. The BvS is likewise a public body. It finances
its activities with public money, and acts as a public institution
whose terms of reference require it to privatise the enterprises
in its keeping on behalf of the authorities and in the public
interest.

is intended to prevent trade between Member
Article 92(1)
States from being affected by state aid. The Court of Justice of
the European Communities has repeatedly held that the only
question here is
its
form or aims (15). A measure will
therefore be
motivation,
caught by Article 92(1) only if it really affects trade between
Member States and distorts competition.

the measure, and not

the effect of

(15) Case 173/73 Italy v Commission [1974] ECR 709; Case 310/85

Deufil v Commission [1987] ECR 901.

The decision to carry on and privatise the chemicals industry
sites in the former German Democratic Republic was taken at
the time of unification or shortly thereafter. If investors were
to be attracted to the Leuna site it was essential that the site be
cleared and cleaned; the Treuhand accordingly approved an
outline clearance plan and began work. Under paragraph 10 of
the privatisation contract,
the obligation to clear the site
passed to InfraLeuna, and led to the present clearance plan.
required to
During the restructuring phase InfraLeuna is
dismantle, demolish, clear and dispose of
the obsolete or
superfluous plant, equipment and other objects on the site.
The Commission observes that most of the buildings are badly
contaminated and that
to be
excavated below ground level and contaminated soil removed
after demolition.

in some cases

rubble has

From the information supplied by the German Government, it
is clear that the site would have had to be cleared in any
event, regardless of the identity of the buyers or the business
they carried on, and that site clearance had been decided on
before the transfer to InfraLeuna. In addition, the work is not
being carried out in order to favour a particular undertaking,
but rather in order to render the land on the chemicals site
usable. Purchasers buy the land at a price of about DEM 25
per m2, which corresponds to the market price for comparable
ready-to-use services industrial sites in the new L(cid:228)nder (16). It is
clear, therefore, that the assumption of the cost of clearance by
the public authorities does not favour InfraLeuna or the buyers
of the land (17).

The conclusion must therefore be that the DEM 288 million
made available for site clearance does not fall within the scope
of Article 92(1).

(16) See Commission Communication on state aid elements in sales of
land and buildings by public authorities (OJ C 209, 10.7.1997,
p. 3).

(17) See also Decision 95/253/EC (OJ L 159, 11.7.1995, p. 21).

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2. The costs of environmental damage

The conclusion must therefore be that only part of the DEM
150 million cost of releasing InfraLeuna from liability for
environmental damage constitutes state aid, and the amount
involved is impossible to quantify. It is, however, compatible
with the common market.

the privatisation contract, BvS releases
In paragraph 17 of
InfraLeuna from any liability for the cost of environmental
damage already in existence before the date on which the
management of the assets is actually transferred, or which is
caused by a factor already in existence at that date but which
itself arises as a result of industrial exploitation during the
restructuring phase. This paragraph 17 provides
the
environmental damage is to be investigated by an independent
valuer, and that the BvS must approve the plan of costs and
measures presented by InfraLeuna before it is put in to effect.
Here,
three
InfraLeuna is required to obtain at
estimates for each measure from three competent contractors;
the BvS is entitled to collaborate in the drafting of the tenders,
to supervise progress and to approve the finished work. In the
course of the proceedings Germany estimated the cost at DEM
150 million.

least

that

too,

for

resources

improvement

environmental

the Commission found that

When it approved the transfer date in the first Treuhand
decision (18),
the provision of
public
and
protection measures caused before 1 July 1990 did not
constitute state aid. Firms in the new L(cid:228)nder could not be held
responsible for pollution of the environment occasioned under
the system of the former German Democratic Republic, when
they had had no say in the matter. The Commission and the
German Government have agreed that the greater part of the
pollution in evidence was caused before 1 July 1990 and that
it is not possible to quantify the remainder, which derives
from the operation or existence of the plant after that date.
Firms in the new L(cid:228)nder could not adapt their plant to the
standards of the old L(cid:228)nder immediately on 1 July 1990. The
closure of plant and adaptation to the legal requirements
would take time, while the pollution caused would inevitably
continue.

firms or

Under point 3.2.2 of the Community guidelines on state aid
for environmental protection (19), such aid for investment to
repair past damage to the environment may not fall under
Article 92(1) of
the EC Treaty in cases where the person
responsible for the pollution cannot be identified or called to
account, in that the aid does not confer a gratuitous financial
benefit on particular
industries. However, with
reference to InfraLeuna the Commission took into account that
the company would be released from a statutory obligation as
owner of the polluted land. The Commission therefore applied
point 3.4 of the guidelines: here, an exception can be made to
the (cid:145)polluter pays(cid:146) principle laid down in point 1.2 of the
Community guidelines and in Article 130r(2) of the EC Treaty,
and the aid can instead be allowed as operating aid, relieving
InfraLeuna of the costs resulting from pollution. Moreover, the
unquantifiable part does not favour the buyers, since they pay
a market price to acquire the land.

(18) State aid measure NN 108/91, SG(91) D/17825, 26.9.1991.
(19) OJ C 72, 10.3.1994, p. 3.

3. The costs of investment and restructuring

During its investigations the Commission proceeded on the
assumption that the investment and restructuring contributions
from the BvS and the Land of Saxony-Anhalt might have the
effect of
favouring final consumers and InfraLeuna and its
members.

the one that

it had inherited.

The German Government argued that the contributions to the
restructuring and investment should not be classed as aid as
they did not have the effect of favouring certain undertakings
or the production of certain goods and hence did not restrict
trade between Member States. They
competition or affect
remedied past omissions and represented costs which no
undertakings in western Europe other than in the new L(cid:228)nder
had to bear. An infrastructure had to be created which served
only to perform public tasks in the sense of the provision of
basic public services and hence did not favour any particular
undertaking or the production of any particular good. The BvS
had been unable to influence the situation on the ground and
had had to accept
It was
accordingly obliged to privatise the product lines piecemeal
and the infrastructure en bloc. Under the restructuring, only
DEM 38 million would be used for building entirely new
facilities. This included parts of the central waste-water system
(DEM 15 million), a central freight clearance building (DEM
4,5 million), a central service centre for tank cleaning (DEM
13 million), a gas reduction and distribution system (DEM
2,9 million), and various pipe bridges, etc. These facilities
would be available, against appropriate payment, to all firms
on the site. On the other hand some DEM 115 million would
be needed for replacement investment (such as for adapting
facilities
to bring them up to environmental and safety
standards, scaling-down in line with requirements). In keeping
with the BvS’s public mandate,
infrastructure repair and
construction for the site was a sine qua non for its privatisation.
In view of the state of the plants and the related costs, no
private investor had been willing to take them over without a
substantial contribution from the public purse. For instance,
DEM 547 million was needed for modernisation,
including
renovation. But because of overlaps it was not always easy to
draw a clear line between the different items. Simply for rail,
fresh water, waste water, sewerage, road, drinking water and
fire-fighting services, requirements totalled DEM 171,7 million
for
capitalisable
investment. Thus the only other option had been for the BvS
to continue to operate the infrastructure. That being so, the
BvS would have had to assume all costs, bearing the risk of the
restructuring failing and of having to run the plants itself. The
expenditure was
and the
responsibility of, the public authorities, the BvS having merely

renovation and DEM 277 million for

a matter

entirely

thus

for,

6.10.1999

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Official Journal of the European Communities

L 260/11

transferred its responsibility for restructuring and reorganising
the plants to a private operator.

and various customers and described the cost calculations used
in various fields. This satisfied the Commission that the prices
charged for InfraLeuna’s services do fall within the normal
range and are by no means especially favourable.

3.1. Favouring of final consumers/pricing

The Commission proceeded on the assumption that producers
on the site would be favoured indirectly if InfraLeuna offered
its services at below cost. It was unclear to what extent the
cost of renovation would be borne by the resident production
companies. An unjustified cost
in the
Commission’s view, have led to a distortion of competition
that would have affected trade between Member States.

reduction would,

also

had misgivings

about whether
The Commission
InfraLeuna’s obligation to abide by the low-profit principle
might lead to customers being further favoured, since prices
might be kept artificially low, an advantage not enjoyed by
consumers elsewhere.

The Commission accordingly examined how InfraLeuna set its
the privatisation contract,
prices. Under Article 15 of
InfraLeuna is in principle required to offer its services to all
undertakings, favouring or disfavouring none. The privatisation
contract distinguishes between so-called (cid:145)core(cid:146) areas, in which
InfraLeuna holds a monopoly, and other areas of activity. To
rule out the possibility of abuse of a monopoly position, the
price calculation for these monopoly areas is explicitly laid
down.
InfraLeuna is required to divide all costs, applying
recognised business principles, among all customers. This
includes depreciation, financing, reinvestment and maintenance
costs. Prices must be differentiated according to quantity and
service, and sliding-scale formulae must be used, paying due
regard to the
areas,
InfraLeuna must offer its services on the terms and at the
It may negotiate
prices normally obtaining in the industry.
them freely, but here too it must
the
low-profit principle.

low-profit principle.

take account of

In the other

convinced the Commission that

in combination with the underlying
The above provisions,
overall plan,
sufficient
safeguards were in place to rule out any direct favouring of
customers. In the areas where it has a monopoly, InfraLeuna is
required to pass on all its costs to its customers. By including
depreciation in the price calculation, any increases in value and
all maintenance and restructuring costs are passed on to
consumers, who thus share the costs through the prices
payable. The Commission notes that any subsidising of prices
by payments from the authorities is ruled out, as rates are
calculated independently
and in
particular from the loss compensation payments, and reflect
only actual expenditure irrespective of the origin of the funds.
The price calculations also include the opportunity cost of
interest payments in accordance with recognised commercial
principles, and the costs entailed by InfraLeuna’s activities
(including
the
costs).
proceedings,
submitted to the
Commission numerous supply contracts between InfraLeuna

the German Government

from these payments,

development

course

the

of

In

The Commission discussed with the German Government the
possibility of introducing the pricing system described above
for InfraLeuna’s other areas of activity as well. It perceived in
particular a risk of price subsidisation through the loss
compensation payable inasmuch as the privatisation contract
required InfraLeuna only to supply (cid:145)on the terms normally
obtaining in the industry and at the most favourable prices
possible(cid:146). The German Government
this
connection that the strict price provisions in respect of the
monopoly were intended as an additional safeguard to prevent
any abuse of the monopoly position through unjustified price
increases, thereby keeping prices down. There was no such
risk in the other areas of activity. InfraLeuna faced competition
there, which compelled it to align itself on its competitors and
fix prices accordingly. Introducing the pricing system would be
superfluous and would simply be an additional burden. The
the monopoly
desired result of preventing any abuse of
position and keeping prices down could be achieved in these
areas by market forces alone.

remarked

in

accepted

The Commission
the German Government’s
arguments in part. Basically it was in the members’ interests to
offer InfraLeuna’s services at a cost-covering price, but it had
to be remembered that the members were at the same time
consumers of those services and hence had at least as great an
interest in being able to obtain them as cheaply as possible. In
to the
the Commission’s view it was
system’s operation that an additional safeguard be built
in
which might help to rule out any price subsidisation and
which gave the members an incentive actually to set prices at
a cost-covering level. The Commission and the German
Government agreed that the exclusion of any lump-sum loss
compensation was an appropriate means to this end. This
would rule out both the inclusion of any loss compensation
when calculating prices and costs, and the subsidising of prices
through such loss compensation.

therefore essential

also

examined whether

InfraLeuna’s
The Commission
obligation to apply the low-profit principle represented a
lightening of
the burden on resident companies that was
relevant
from an aid point of view and likely to restrict
competition. Setting a price can, in principle, be regarded as
aid where it is attributable to action by the Member State
concerned and where the requirements of Article 92 of the EC
Treaty are met. In such a situation the Member State, or the
entity under its control, does not apply the price like an
ordinary economic agent but uses it to confer a pecuniary
advantage on a company, foregoing the profit which it could
normally realise (20).

(20) Joined Cases 67, 68 and 70/85 Kwekerij Bebroeders van der Kooy

BV and others v Commission [1988] ECR 219.

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The Commission therefore had to decide whether
the
commitment to the low-profit principle was attributable to
government action and hence was to be classed as (cid:145)aid granted
by a Member State or through state resources(cid:146). Account had to
be taken here of the fact that InfraLeuna took the form of a
quasi-cooperative society, of the particular circumstances in
which it had been set up, and of the fact that only a minority
shareholding was in public ownership. Under German law the
peculiarity of the cooperative as an organisational form is that
it (cid:145)seeks to promote the trade or business of
its members
through the common conduct of their business activities(cid:146) (21).
The main objective, then, is to facilitate the economic activity
of the parties through cooperation and common organisation
rather than to promote the realisation of profit through the
society’s activities, although this is not ruled out altogether.
The BvS, in conjunction with the other members, deliberately
opted for this course in order to ease the site’s privatisation.
The scheme is based on the cooperative ideal and will work
only if,
the investors
themselves provide the necessary services on the site at a low
cost. The current minority stake of the public authorities is
only a transitional measure of a temporary nature pending the
sale of the BvS’s shares to other investors.

through cooperation in InfraLeuna,

The Commission found on balance that the commitment to
the low-profit principle did not constitute conferring an
advantage attributable to action by the German Government.
Rather it is an essential precondition for the working of the
privatisation plan and has to be seen in the context of the
notion of the cooperative, as rooted in German law.

3.2. Favouring of InfraLeuna

the funds. The facilities

InfraLeuna receives the financial support direct and can freely
dispose of
it owns are being
modernised with the help of public resources to bring them up
to a state-of-the-art standard. The question arises, however,
whether InfraLeuna was favoured from an economic point of
view by the grants, as economic advantage flows not only
from the fact of ownership itself, but also from the economic
the thing owned and the opportunities
exploitability of
available for turning it to advantage.

In answering this question,
the Commission took into
consideration the fact that InfraLeuna’s objects are narrowly
defined,
its activities being limited to the provision of
infrastructure services and the privatisation of the remaining
industrial sites. The conduct of its affairs has to be entirely
subordinated to this goal. Any divestiture, sale or lease of
individual businesses or parts thereof requires a unanimous
resolution of
therefore
dispose freely of its property, tied as this is to its objects. It is
also bound by the low-profit principle. The use of any profits

the members.

InfraLeuna

cannot

(21) Paragraph 1 of
the Act concerning commercial and industrial
cooperatives
und
betreffend
(Gesetz
Wirtschaftsgenossenschaften (cid:151) GenG).

Erwerbs-

die

to increase its capital
to,
extension of, or departure from this principle again requires a
unanimous members’ resolution.

ruled out. Any amendment

is

the above,

In the light of
the Commission came to the
conclusion that InfraLeuna was not to be regarded as favoured
from an economic point of view by the measures. InfraLeuna
does not derive any actual economic benefit from the plants
by maintaining and modernising them, because they are
governed entirely by its objects and because it is obliged as a
matter of principle to earn low profits from its activities. In
order to improve monitoring and prevent facilities from being
sold and used for purposes other than those for which they
were intended, the Commission considers that the BvS should
retain at least a 1 % share in InfraLeuna pending completion of
the restructuring drive.

3.3. Favouring of the members

site

and

end-users of

developers, operators

The fact that Caproleuna and Linde were at one and the same
time
the
infrastructure caused particular difficulties when it came to
assessing the aid measures. It was to be feared that they might
unduly exploit their position as members to the detriment of
other resident companies in order to create, with the help of
public resources, an infrastructure on the site that was
specifically tailored to their needs. Nor could it be ruled out
that superfluous plants might be built at inflated prices, as the
Commission was unable for the time being to determine to
what extent the uses to which the resources were put would
be monitored. There was also a risk that Caproleuna and Linde
from their participation in
might earn substantial profits
InfraLeuna without giving any commensurate quid pro quo.

3.3.1. Favouring of shareholders as customers of InfraLeuna

The Commission considered first of all to what extent the
members might be able to obtain preferential
terms (for
example,
lower prices than other purchasers) for the use of
InfraLeuna’s services. It should be noted here that InfraLeuna is
to a ban on discrimination, being prohibited from
subject
distinguishing between customers and from applying anything
other than objective criteria to the services it renders. The ban
on discrimination may be modified only by a unanimous
members’ resolution. There is a further control mechanism in
the form of InfraLeuna’s membership structure. InfraLeuna will
ultimately be completely privatised, with the BvS selling its
thus ensuring the
shares
investors on the site,
spreading of
in fact,
submitted binding offers and up to 4 % of the BvS’s shares are
currently up for sale. Steag and MEAG will each take 12,25 %,
Rhodia GmbH 10 %, and InfraLeuna Beteiligungs GmbH will
also
InfraLeuna
Beteiligungs GmbH was founded by five investors on the site
exclusively for the purpose of buying the shares. None of the

interests. Various companies have,

InfraLeuna’s

10 % of

to other

acquire

shares.

6.10.1999

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Official Journal of the European Communities

L 260/13

is

to

Linde

linked

undertakings
or Caproleuna. The
effectiveness of the respective purchase agreements is subject
to the suspensive condition of approval of the privatisation
plan by the Commission. This bundling of the various interests
ensures that no single member receives favourable treatment,
since the membership structure allows members to monitor
one another and obliges them to take balanced account of the
others’ points of view.

by

are

contracts

concluded

The Commission concluded that the existing mechanisms are
indeed likely to prevent a member from taking advantage of its
position in order to secure a preferential status for itself.
Customer
InfraLeuna’s
management, acting on instructions from the members’ general
meeting. Under the articles of association, the management
needs prior consent in the form of a unanimous members’
resolution before it can conclude contracts with members of
InfraLeuna if
the contract exceeds DEM
1 million a year or DEM 5 million over the contract’s lifetime.
A system of two-way checks has thus been put in place, and
decision-making by the members’ general meeting is shaped by
the various positions and interests and must take these into
account.

the total value of

Since the Commission considers one of the key difficulties of
this case to be the possibility that a member might
take
advantage of its position, the monitoring system as described
must in its opinion be consolidated. The following points must
be acted on:

(cid:151) Article 11 of InfraLeuna’s articles of association must be
amended so as to provide that Article 6(5)(a) of those
articles (requirement of prior unanimous consent of the
members’ general meeting for the conclusion of contracts
with members) may be amended or deleted only by a
unanimous members’ resolution. A provision must be also
added to InfraLeuna’s articles of association stating that
this clause may not be amended for a period of at least 15
years after the restructuring is completed,

(cid:151) the value threshold on the requirement

for unanimous
consent does not go far enough, as it may be possible to
circumvent the rule using certain contractual provisions.
The provision in Article 6(5)(a)
limiting the unanimous
consent requirement to contracts with members where the
total value exceeds DEM 1 million a year or DEM 5 million
over the contract’s lifetime must therefore be deleted so
to the requirement of
that all contracts are subject
unanimous consent,

(cid:151) Article 13(4) and Article 3 of

InfraLeuna’s articles of
association must be amended to provide that the limitation
on
binding
commitment to the low-profit principle must remain in
place for at
the restructuring is
completed,

least 15 years after

InfraLeuna’s

distribution

profit

and

(cid:151) as was explained, monitoring rests on the basic principle
that the members’ general meeting ensures a spread of
interests. To guarantee this, a member or a related or

ancillary company must not be allowed to acquire more
than 24,5 % of the shares in InfraLeuna for at least 15
years after the restructuring is completed.

3.3.2. Favouring as shareholders

The Commission examined to what extent Caproleuna and
Linde would be favoured in their capacity as shareholders by
the contributions from the BvS and the Land. It had to be
borne in mind here that
the members had paid only the
nominal value (DEM 1,53 million) for their 51 % shareholding,
the fixed assets, and
whereas it had to be assumed that
possibly the shares
increase in value
themselves, might
substantially as the measures went forward, and this could be
realised by selling them. Since any such increase in value
would be due solely to payments from the public purse, the
Commission saw the possibility of making a sizeable profit
through selling assets and shares or through dividends as an
advantage to the members that might be relevant from an aid
point of view.

The Commission established that, as far as their usability was
concerned, InfraLeuna’s fixed assets were strictly confined to
their prescribed purposes and required the unanimous consent
of the members’ general meeting before they could be sold.
Under paragraph 15(2) of the privatisation contract, InfraLeuna
is obliged to run the facilities for a period of 15 years from the
transfer date (1 January 1996). Plant is always written off by
the straight-line method over a long period, depending on its
lifetime, and so the book value does not tally with the actual
value. This
the
shareholders’ obtaining an additional advantage from selling
the assets, as they will have been written off, that is to say,
their value will be minimal after more than 15 years of use.
Moreover, the cost of dismantling individual plants is so high
that the scrap value, especially after 15 years, will scarcely
cover it. The dividends earned by the members from their
participation in InfraLeuna are limited to no more than 10 %
of its capital, and in the event of a transfer of shares to other
shareholders
to use still apply to the
purchaser.

the possibility of

the restrictions as

to rule out

seems

scrap value

The Commission concluded that in these circumstances the
possibility of the shareholders being favoured could essentially
be ruled out. Realising the net asset value of the plants was de
facto impossible as the demolition costs would, as a rule,
exceed the
and hence would scarcely be
recoverable. Any sale of assets would, moreover, provide only
the company and not the members with resources, the use of
to the restrictions described earlier as
which was subject
regards distribution among members. Even if an asset’s book
value were to increase, it appears impossible for this to lead to
any appreciable increase in the market value of the company’s
shares beyond their nominal value, as an increase in the
effective earning-power value is excluded by the commitment
to the low-profit principle,
the maximum
dividend to 10 % of the capital, and the continuing restrictions
as to use placed on a purchaser. This prevents the members
from appropriating, through the payment of large dividends,
the value of the state-aided assets and makes the acquisition of

the limiting of

L 260/14

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Official Journal of the European Communities

6.10.1999

shares unattractive to an investor outside the site. The
Commission also took into account that from a fixed-interest
investment in the capital markets a minimum dividend of 4 to
5 % can be earned, and that with greater risk-taking 10 % is
easily attainable. In 1997 a dividend of up to 40 % could be
earned from shares. Consequently, and bearing in mind that
the likelihood of InfraLeuna’s turning in a profit, and hence
making a dividend payment,
the
investment is therefore rather risky, a maximum dividend of
10 % is appropriate.

fairly slim and that

is

the above,

any unjustified

advantage whatsoever,

the Commission concluded that

In view of
the
members were not favoured from an economic point of view.
To exclude
the
Commission has asked Germany to have the market value of
the shares assessed by an independent expert. The valuation
must be based on InfraLeuna’s capitalised value over 15 years
and non-distributed profits. The price that purchasers pay for
shares must correspond to the market value determined in this
way. If the market value of the shares were actually found to
be higher than their nominal value, Caproleuna and Linde AG
In addition,
would have to pay the difference to the BvS.
InfraLeuna must be obliged to run the facilities for 15 years
after the restructuring is completed (31 December 2000).
Article 15(2) of the privatisation contract therefore needs to be
changed accordingly, thereby ensuring that the value of the
facilities after more than 15 years of use will indeed be so far
reduced as to rule out the possibility of making a profit from
any sale.

3.3.3. Favouring as site developers

they met

in such a way that

The Commission feared that Caproleuna and Linde in their
influence the construction of
role as site developers might
installations
their own
requirements, thereby placing them at an advantage. Nor was
it apparent to what extent expenditure would be monitored to
check the necessity of individual measures and the scale of the
costs. In the Commission’s opinion there was a risk that either
Caproleuna and Linde or the contractors who carried out the
work might claim excessive costs and in so doing waste public
money. A further problem area was
to
Caproleuna and Linde of incentives amounting to 25 % of any
funds not spent and returned to the BvS.

the payment

The Commission established first of all that Caproleuna and
Linde had only limited influence over the implementation of
the restructuring and investment measures. The necessary
measures had been decided on before InfraLeuna was formed
signed. The
the privatisation contract was
and before
Commission was therefore satisfied that
the business plan
attached to and forming part of the privatisation contract set
forth all
the restructuring
programme had accordingly been laid down before the
concluded. The business plan
privatisation contract was

the planned measures and that

describes in detail the individual measures, the relevant sites,
the particular part of a building, etc., including the estimated
costs. Employees of Caproleuna, Linde and the BvS took part
in formulating the business plan, as did a number of
independent experts. The BvS’s Steering Committee carried out
an audit, which resulted in the costs as originally estimated
being reduced from DEM 960 million to DEM 800 million (22).
Revisions of and amendments to the business plan may be
decided on by the members’ general meeting by a simple
majority. However, there are checks and balances in that the
BvS can oppose the modified business plan. In this event, the
members’ general meeting must
reach unanimity on the
changes to the plan. Should agreement not be reached, the
difference will be settled in an objective mediation and
arbitration proceeding under paragraph 27 of the privatisation
contract.

In the light of the above mechanisms and the fact that the
investment and restructuring programme was laid down before
privatisation,
it would be
the Commission concluded that
basically impossible for Caproleuna and Linde to tailor the
requirements. This will be
installations
monitored in any event, as the German Government has been
asked to submit quarterly investment reports, checked by an
independent expert beforehand as regards the costs and the
necessity of the measures.

to their

special

of

quality

considerations.

Paragraph 11(3)(a)

As far as the ongoing control of expenditure is concerned, the
Commission established that InfraLeuna applies the provisions
of
the
the law on public contracts, and in particular of
Commission’s public procurement Directives. For contracts
which, under those provisions, do not have to be put out to
public tender, InfraLeuna has to seek at least three bids from
competent tenderers unless the contracts are only very minor.
This was expressly confirmed by the German Government.
InfraLeuna has to take the award decision on the basis of cost
the
and
privatisation contract provides in this respect that in the event
of two or more bids being equal, firms in the new L(cid:228)nder must
be given preference. The German Government has given an
assurance
clause will be deleted in
accordance with the Commission’s position of 7 July 1997 and
Germany’s communication of 9 September 1997. As already
indicated,
to quarterly
review by the BvS. Any increase in the amounts provided for
in the business plan may be opposed by the BvS, with the
result that the members’ general meeting subsequently has to
agree to it unanimously. In the absence of a consensus, the
mediation and arbitration procedure under paragraph 27 of
the privatisation contract has to be initiated. If the BvS comes
to the conclusion that funds have not been used properly or
costs have been overestimated, an attempt must first be made
to bring about an agreement between the members, failing

InfraLeuna’s expenditure is

this goodwill

subject

that

(22) InfraLeuna’s business plan lists in detail all measures, together with
their expected cost. Unlike in the case of other privatisation
schemes, the BvS’s Steering Committee was therefore able for the
first
the
time to analyse in depth the need for and cost of
individual measures. The Commission accordingly assumes that a
necessary adjustment was carried out to reduce excessive costs to
a reasonable level.

6.10.1999

EN

Official Journal of the European Communities

L 260/15

which the mediation and
paragraph 27 of the privatisation contract must be initiated.

arbitration procedure under

In the Commission’s opinion the BvS has introduced the
control mechanisms needed to enable it, not only as a member
but also as provider of financing for the necessary investment,
to exercise absolute, precise and continuous control over the
scale and suitability of the investment and the restructuring
measures through its right of approval and opposition. The
provisions on putting contracts out
to tender and seeking
several bids constitute an additional guarantee that costs will
not be exceeded and that contracts will be executed at market
prices.

to limit

Lastly, the Commission views the incentive arrangements as a
reduction. The
further control mechanism aimed at cost
promise to allow Caproleuna and Linde to share in any savings
to that which is absolutely
helps
necessary and therefore warrants approval
In
Decision 96/545/EC, for instance, the Commission authorised
such an incentive payment to the Dow Chemical Company as
aid (23).

the measures

in principle.

The Commission then examined both sets of circumstances to
see whether they were comparable and whether the incentive
arrangements in favour of Caproleuna and Linde might be
admissible, as in the case of Dow. Basically, the funds made
available to the investors in both cases amounted to a payment
from the public purse. Dow took over the production plants
from the Treuhand with a view to restructuring them and
ultimately operating them at a profit. However, it also put in a
substantial amount
the
financial contribution by Caproleuna and Linde is equivalent
only to their nominal stake. On the other hand, they cannot
expect any return from their investment in InfraLeuna apart
from uncertain dividends amounting to 10 % of the capital at
most.

from its own resources, whereas

Germany argued that unlike in the Dow case, where the
advantage was mainly, though not solely, on the side of the
investors, the participation of the investors in the InfraLeuna
case mainly benefited the public purse. The BvS paid the
incentives as a consideration for this benefit. Caproleuna and
Linde made their know-how available and were entrusted by
the BvS with the development of the site, establishing new
investors there and providing the infrastructure. They were
also making substantial
and human resources
financial
available. Throughout almost the whole of 1995 a team of
independent advisers hired by the BvS, Caproleuna and Linde
was engaged in drawing up the necessary investment measures
and preparing a cost analysis. Moreover, savings were to be
made under the guidance of Caproleuna and Linde and the
participation of both was therefore altogether desirable. They
were the two largest
investors on the Leuna site and had
implementing restructuring and
considerable experience of
investment measures, experience which could be put to good
the time
use. Against

this background the Treuhand at

(23) See footnote 11.

proposed that they should both share in all savings, the size of
the share being both big enough to serve as an attractive
incentive, but not so big as to be out of proportion to the
overall volume of the measures. Subsequently a ceiling of DEM
20 million each was finally agreed on. Therefore, in the case of
Caproleuna and Linde the incentive was to be regarded as a
success-dependent reward for the contribution made by the
investors.

is based on the

scheme
the real advantage to all

The Commission, however, could not accept this argument.
fundamental
The
InfraLeuna
those involved,
assumption that
including investors and members,
in providing the
lies
to the site. The
infrastructure and attracting new firms
underlying principle implies that an adequate consideration
must be paid for the use of the services to cover all the costs,
including development costs. Only if this principle, repeatedly
put forward by the German Government, is applied can the
Commission conclude that the measures do not constitute an
advantage to the parties that is relevant from the aid point of
view. Allowing incentive payments would be at odds with this
system. First, the German Government was unable to give a
proper account of what the investors were actually providing,
either
in terms of quality or quantity. The Commission
therefore held that the investors were not providing something
to warrant payment of a consideration in return. On the
contrary, the state funding constitutes a one-sided payment
feature of aid.
from the public purse. This is an essential
Secondly,
represents an economic
the incentive payment
advantage for investors that is not admissible as aid since,
unlike in the Dow case, Linde and Caproleuna are not making
a substantial contribution to the scheme as a whole.

The Commission accordingly concludes
payment cannot be accepted.

that

the incentive

The conclusion on point 3 overall is that the DEM 700 million
intended for investment and restructuring does not constitute
aid. To ensure that this remains so, certain conditions and
requirements have to be fulfilled.

4. Working capital

The BvS is placing DEM 30 million at InfraLeuna’s disposal as
working capital during the restructuring phase. Evidence of the
uses to which the working capital is put must be furnished
quarterly in the form of documents on the basis of which the
BvS can verify the amount of and need for any expenditure.
As long as InfraLeuna is able to cover expenditure using its
own income, public funds ought not to be disbursed.

The Commission has reservations in principle about making
working capital available, as the reduction in costs may lead to
an advantage being conferred and hence to a distortion of
competition within the Community.

L 260/16

EN

Official Journal of the European Communities

6.10.1999

regarded

InfraLeuna

cannot be

In the Commission’s opinion, however, providing working
capital should be assessed in exactly the same way as covering
investment and restructuring costs from the public purse.
Consequently
as being
favoured, as it cannot use the resources to its own advantage
but must employ them for the company objects as referred to
above. Final consumers are not favoured either, as the costs
paid with the help of the working capital provided are to be
included in calculating prices, with the result that no price
there is no possibility of
reduction is possible. Similarly,
the
being
InfraLeuna’s
abovementioned control mechanisms, where appropriate in the
form which the Commission considers necessary, are sufficient
to prevent the funds from being used for purposes other than
those for which they were intended.

favoured,

members

since

The conclusion therefore has to be that the DEM 30 million
working capital for InfraLeuna does not constitute aid.

5. Loss compensation

InfraLeuna is a complicated structure, founded on a balance
between various
interests and designed to rule out any
favouring of or discrimination against individual participants.
The Commission welcomes the scheme and takes a basically
favourable view of
it. Nevertheless, despite the balanced
control system, there remains a risk that freely available loss
compensation might be misused to subsidise prices.
In the
Commission’s opinion the scheme can be viewed favourably as
a whole only if price subsidisation is definitively ruled out by
prohibiting loss compensation. As the Commission sees it,
compensation for losses is not even necessary. The German
Government stated that
loss compensation was agreed on
mainly for safety,
to cover various individual risks whose
occurrence and extent could not be foreseen when the contract
to such
was
(cid:145)precautionary(cid:146) cover, and the actual figures show that the risks
have not materialised.

concluded. The Commission cannot agree

The Commission’s conclusion has to be that loss compensation
cannot be authorised. Should it prove necessary,
it must be
notified separately to the Commission and approved by it.

6. The particular concerns of third parties

the objections raised by third
The Commission finds that
the measures
parties are unfounded. The vast majority of
constitute not aid, but indirect support for individual firms, so
the possibility of reducing production costs and improving
competitiveness can be ruled out. A capacity reduction under
the Community code on aid to the synthetic fibres industry is
accordingly not necessary.

In addition, almost all the services offered are geographically
limited infrastructure services. Misuse of the resources made
available and overstating of individual cost factors are ruled
out by the wide-ranging system of checks. InfraLeuna’s plan of
advertising the site using firms on the site and naming them in
the advertisements is unobjectionable in the Commission’s
opinion, provided that the firms bear a reasonable share of the
cost. As costs are shared 50/50 by InfraLeuna and the firm
concerned, this condition is met.

The Commission dismisses concerns
that competitors of
Caproleuna and Linde will be prevented from establishing
themselves in the area. In the new L(cid:228)nder, and especially in the
Land of Saxony-Anhalt, there is an overabundance of industrial
sites just waiting to be bought, where competitors can set up
in business on the same terms as Caproleuna and Linde.

itself

regards

in Leuna

establishment

and possible
As
participation in InfraLeuna as a member,
the Commission
would point out that the privatisation contract provides for
protection against competitors. Under paragraph 6(2) of the
contract, members are entitled to object if the BvS exercises its
option of selling plots to direct competitors of InfraLeuna or
of the other members. Paragraph 3(4) of the contract stipulates
that a direct competitor of a member may purchase shares in
InfraLeuna only with the express consent of all members. This
is important from the point of view of the BvS’s call option
(paragraph 3(5) of the contract), which obliges Caproleuna and
Linde each to sell 1 % of their shares to an investor of the
BvS’s choice.

into a private limited company is normal

The Commission would point out in this connection that a
general need to obtain permission for the admission of new
members
in
company law. In addition, however, all but 4 % of the shares
are already earmarked for sale, so the protection against
competitors in paragraph 3(4) is scarcely relevant. Since it is
the Commission therefore considers the
so commonplace,
clause unobjectionable.

When it comes to the right of objection under paragraph 6(2)
of the contract, however, the Commission takes a different
view. A general exclusion of competitors such as this clause
seems to allow cannot be justified. On the contrary, in view of
the interests concerned and the
the balanced nature of
principle of non-discrimination to which InfraLeuna
is
committed, such a blanket exclusion would be incompatible
with the overall scheme.

7. Conclusion

the Commission views

Overall,
scheme underlying
InfraLeuna favourably. The public authorities faced a difficult
the existing
task in privatising the chemical

site. First,

the

6.10.1999

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Official Journal of the European Communities

L 260/17

conditions on the site had to be taken into account. Secondly,
they had to keep pace with new developments, to satisfy the
needs of the firms established on the site and to fulfil the
obligations they had assumed in the course of privatisation.
After years of
the
infrastructure, the scheme which the Treuhand/BvS has come
to be the best
in the Commission’s view,
up with seems,
solution.
their
to fulfil
the public authorities
obligation to privatise undertakings in the new L(cid:228)nder and
bring the task to completion.

trying to find a private investor

It allows

for

The investigations have shown that the planned measures do
not confer an advantage on any of the parties involved so long
as the conditions imposed by the Commission are adhered to.
The measures contribute to InfraLeuna’s viability, and a
balanced cash-flow will be
achieved during the period
the restructuring phase, with the
following completion of
result
InfraLeuna can be regarded as
assured in the long term.

the financing of

that

The Commission further notes that the cost of investment and
restructuring measures may need to be increased. Should the
implementation of additional measures prove necessary or
should the cost of
investment and restructuring measures
increase owing to external factors, up to DEM 100 million of
the amount earmarked for site clearance may be used for
investment or restructuring. The resources may be reallocated,
however, only with the agreement of the BvS, which must
assess whether the measures are necessary and appropriate.
Any further transfer between budgets is ruled out,

HAS ADOPTED THIS DECISION:

Article 1

The following payments made by Germany to InfraLeuna
Infrastruktur und Service GmbH (hereinafter referred to as
(cid:145)InfraLeuna(cid:146)) do not constitute aid within the meaning of
Article 92(1) of the EC Treaty:

Payments for investment and
restructuring, up to

Payments for site clearance, up to

Working capital up to

Total

DEM 700 million

DEM 288 million

DEM 30 million

DEM 1 018 million

Article 2

unquantifiable

An
rectifying
of
environmental damage totalling DEM 150 million constitutes
aid within the meaning of Article 92(1) of the EC Treaty; it is,

costs

part

the

for

however, compatible with the common market. The remaining
part does not constitute aid.

Article 3

Germany shall ensure that all services set up and offered by
InfraLeuna are made available, against an appropriate charge,
to
a
on-site
non-discriminatory basis.

producers without

exception,

on

all

Article 4

Linde AG,

Germany shall ensure that the privatisation contract between
InfraLeuna,
the
Bundesanstalt
Sonderaufgaben
(hereinafter (cid:145)BvS(cid:146)) and the articles of association of InfraLeuna
are amended as specified below:

Caproleuna GmbH and

vereinigungsbedingte

f(cid:252)r

1. The privatisation contract, and in particular paragraph 12
thereof, shall be amended to exclude the assumption of
loss compensation by the BvS amounting to DEM
50 million.

2. The privatisation contract, and in particular paragraph 3
thereof, shall be amended so as to state that
for the
duration of the restructuring (until 31 December 2000)
the BvS shall hold at least 1 % of the shares in InfraLeuna.

3. The privatisation contract shall be further amended in
such a way that for the duration of the restructuring and
for a period of 15 years thereafter, none of the members
may hold more than 24,5 % of the shares. Germany shall
ensure that the shareholdings of Caproleuna GmbH and
Linde AG are reduced to 24,5 % in each case.
In the
second sentence of paragraph 3(5), the words (cid:145)at the end
of the restructuring phase(cid:146) shall be deleted in order that
the BvS may exercise its call option at any time. The first
sentence of Article 3(3) shall be amended so as to state
that no purchaser may acquire more than 24,5 % of
InfraLeuna’s capital.

4. The

(cid:145)goodwill(cid:146)

clause

in paragraph 11(3) of

the

privatisation contract shall be deleted.

5. The privatisation contract, and in particular paragraph
11(3)(b) thereof, shall be amended in such a way that, of
the amount made available by the BvS for site clearance,
InfraLeuna may use up to a maximum of DEM
100 million for investment and restructuring, provided
always that the implementation of additional investment
and restructuring measures proves necessary or that the
cost of investment and restructuring measures increases
factors. The resources may be so
owing to external

L 260/18

EN

Official Journal of the European Communities

6.10.1999

reallocated, however, only with the agreement of the BvS.
The BvS shall examine the necessity and suitability of the
measures in cooperation with an independent expert. Any
further transfer shall be ruled out.

2.
Pursuant to Article 93(3) of the EC Treaty, Germany shall
give notice of any deviations from the amended contract and
any tax or other advantages granted.

6. The third subparagraph of paragraph 14(4) of

the

privatisation contract shall be deleted.

Article 7

7.

second sentence of paragraph 6(2) of

In the
the
privatisation contract, the words (cid:145)or to direct competitors
of InfraLeuna(cid:146) shall be deleted.

8. Paragraph 15(2) of

the privatisation contract shall be
amended in such a way that InfraLeuna is obliged to run
the facilities for at least 15 years after completion of the
restructuring (31 December 2000).

9. Article 11 of InfraLeuna’s articles of association shall be
amended in such a way that Article 6(5)(a) of
those
articles may be amended or deleted only by a unanimous
InfraLeuna’s articles of
resolution.
association,
the
contract exceeds DEM 1 million a year or DEM 5 million
over the contract’s lifetime(cid:146) shall be deleted.

In Article 6(5)(a) of
the words (cid:145)where the total value of

10.

InfraLeuna’s articles of association shall be amended in
to the
InfraLeuna’s
such a way that
low-profit principle, the ban on discrimination (Article3)
and the prohibition on the distribution of dividends
(Article 13(4)) shall remain unchanged for at least 15
years after completion of the restructuring.

commitment

Article 5

shares

in
Germany shall ensure that any purchaser of
InfraLeuna pays the market price. The market value of the
shares
shall be assessed by an independent expert. The
valuation shall be based on InfraLeuna’s capitalised value over
15 years
the
privatisation contract as well as the articles of association shall
be amended accordingly.
If the market value of the shares
turns out to be higher than their nominal value, Germany shall
ensure that Caproleuna GmbH and Linde AG will pay the
corresponding difference to the BvS.

and non-distributed profits.

If necessary,

Germany shall submit

1.
to the Commission half-yearly
reports on the progress of restructuring and the amount of aid
actually awarded under the various items in the privatisation
contract, so as to allow it to verify that this Decision is being
complied with. They shall be submitted during the first half of
the year following the reporting period.

Germany shall also submit

to the Commission the
2.
evidence referred to in paragraphs 10(3) and 11(3) of
the
privatisation contract, the evidence referred to in paragraph
14(3), and quarterly investment reports which shall be checked
in advance by an independent expert as to the necessity and
appropriateness of the costs. The final statement referred to in
paragraph 14(4) shall also be submitted to the Commission.

Article 8

Germany shall refrain from granting any further funds to
InfraLeuna in support of the restructuring plan which is the
subject of this Decision.

Article 9

Germany shall inform the Commission within two months of
the date of notification of this Decision of the measures which
it has taken to comply therewith.

Article 10

This Decision is addressed to the Federal Republic of Germany.

Done at Brussels, 25 November 1998.

Article 6

Germany shall send the Commission a copy of

1.
amended contract within one month of its being concluded.

the

For the Commission

Karel VAN MIERT

Member of the Commission