1999/647/EC: Commission Decision of 16 December 1998 on German aid in favour of Addinol Mineralöl GmbH i.GV and the newly established separate hive-off vehicle Addinol Lube Oil GmbH & Co. KG (notified under document number C(1998) 3867) (Text with EEA relevance) (Only the German text is authentic)
Date: 1998-12-16
Institutions: European Commission
Subjects: Germany, State aid, aid for restructuring, aid to industry, industrial restructuring, oil industry

6.10.1999

EN

Official Journal of the European Communities

L 260/19

COMMISSION DECISION

of 16 December 1998

on German aid in favour of Addinol Mineral(cid:246)l GmbH i.GV and the newly established separate
hive-off vehicle Addinol Lube Oil GmbH & Co. KG

(notified under document number C(1998) 3867)

(Only the German text is authentic)

(Text with EEA relevance)

(1999/647/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 called on interested parties to submit their comments
pursuant to the provision cited above and having regard to
their comments,

Whereas:

I

By decisions of 20 November 1996 (1) and 4 June 1997 (2), the
Commission approved rescue aid for Addinol Mineral(cid:246)l GmbH
(hereinafter
referred to as Addinol Old). By letter of 4
the Commission requested further details
September 1997,
after press articles had referred to rumours concerning Addinol
Old’s privatisation. The German authorities replied by letter of
1 October 1997. During a visit by Commission representatives
the
to Berlin on 12 December 1997,
German
f(cid:252)r
the
Government
vereinigungsbedingte Sonderaufgaben (BvS) answered questions
arising from recent press reports. Following the talks in Berlin,
the German authorities communicated additional information
regarding new aid measures of DEM 59 900 000 and a
restructuring plan by letter of 18 February 1998.

representatives of
Bundesanstalt

and

the

its disposal,

information at

On the basis of
the
Commission decided on 25 February 1998 to open
proceedings under Article 93(2) of the EC Treaty because of
doubts as to the compatibility with the common market of the
aid measures. The decision and the grounds therefor were
communicated to Germany in a letter of 17 March 1998, the
contents of which were published in the Official Journal of the
European Communities (3). The Commission accordingly changed
the case number to C 18/98.
interested third
parties were invited to submit comments within a month of
publication.

In addition,

further

of 23 April 1998,

By letter of 2 April 1998, registered on 3 April 1998, and by
letter of 15 April 1998, registered on 16 April 1998, Germany
responded to the Commission’s letter of 17 March 1998. By
the Commission requested
letter
supplementary information. Germany answered by letter dated
8 May 1998, registered on 11 May 1998. At a meeting on 13
May 1998 between representatives of the Commission and the
Federal German Government,
information was
provided by the German Government. Additional questions
were sent to the German Government on 15 June 1998 and
the answers were sent by the German Government on 29 June
1998, registered on the same day. Germany sent
further
answers on 13 July 1998. The Commission asked further
questions on 4 August 1998. These questions were answered
by a letter dated 14 August 1998, registered on 17 August
1998, and a letter dated 18 August 1998, registered on 28
August 1998. Finally,
to
Germany on 7 September 1998 which were answered on 18
September, registered on the same day, and on 30 September
registered on 1 October 1998. Germany provided
1998,
additional
information on 1 October 1998 (registered on 2
October 1998), on 16 October 1998 (registered on 19
October 1998), on 28 October 1998 (registered on 29
October 1998) and on 4 November 1998 (registered the same
day).

the Commission put questions

In response to the opening of the procedure, Fina Deutschland
GmbH (Fina) submitted comments on 16 July 1998. On 4
August 1998,
the Commission put questions to Fina. The
questions were answered by letter of 26 August 1998,
registered on the same day.

By letter dated and registered on 20 July 1998, Germany
declared they did not require a translation of the letter from
Fina and by letter dated 10 August 1998, registered on 11
August 1998, Germany gave its comments to the letter from
Fina.

According to information available to the Commission, part of
the aid (loans of DEM 7 000 000) has already been granted
although no decision has yet been taken by the Commission
regarding its compatibility with the common market.

(1) State aid measure N 783/96, letter of 4 December 1996.
(2) State aid measures N 225/97 and NN 70/97,

letter of 20 June

1997.

(3) OJ C 186, 16.6.1998, p. 7.

II

Addinol Old was set up on 1 June 1990 after the splitting-up
of the former State enterprise VEB Hydrierwerk Zeitz. The

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6.10.1999

privatisation took place in 1994 (the privatisation contracts
were signed on 2 May 1994 and 16 August 1994), and the
enterprise was taken over by IUG (Innovative Umwelttechniken
GmbH).

Addinol Old comprised Addinol Mineral(cid:246)l GmbH and the two
subsidiaries
Addinol
Vertriebs
Addinol
Dienstleistungs GmbH.

GmbH

and

On 23 October 1997, Addinol Old petitioned for the opening
of bankruptcy proceedings (Gesamtvollstreckung). A separate
hive-off vehicle (Auffanggesellschaft) was set up under the
name of Schmier(cid:246)l Krumpa GmbH & Co. KG on 15 December
1997. It was later renamed Addinol Lube Oil GmbH & Co. KG
(hereinafter: Addinol Lube). The Auffanggesellschaft took over
part of the stocks of Addinol on 16 December 1997. The
assets
take over
Auffanggesellschaft will
and
equipment)
(premises,
Addinol
the
of
from the
GmbH
Dienstleistungs
Gesamtvollstreckung. Addinol Lube is owned by an investment
company, BVT Holding GmbH & Co. KG (24 % of the shares)
and three managers (76 % of the shares), Mr Wildegger, Mr
Streletz and Dr Koehn. The Auffanggesellschaft is an SME.

the necessary
subsidiary

administrator

7 % interest rate and a term until 30 April 1997. Addinol Old
suffered an acute liquidity crisis in the autumn of 1996, and as
of the end of 1996 BvS was searching for a new investor. The
term of the first rescue loan had to be extended and a further
rescue aid measure was needed as the search for an investor
second aid measure
took longer
authorised comprised loans totalling DEM 18 000 000 (with
7 % interest rate, to be paid back by 30 June 1997) of which
just DEM 12 000 000 was actually paid out.

than anticipated. The

regional

In the context of the restructuring, Addinol Old and Addinol
Lube will receive new aid measures totalling DEM 59 900 000
in the form of grants. The BvS will provide DEM 29 950 000
and the Land Sachsen-Anhalt will provide DEM 29 950 000.
Since DEM 12 850 000 of the DEM 29 950 000 provided by
the Land Sachsen will be financed by funds under
the
approved
Gemeinschaftsaufgabe
Verbesserung der regionalen Wirtschaftstruktur (GA-Mittel), the
total amount of aid measures for the Auffangl(cid:246)sung notified
and to be authorised by the Commission amounts
to
DEM 47 050 000. This amount includes a DEM 3 000 000
loan (financed 50 % by BvS
the Land
Sachsen-Anhalt) to the Gesamtvollstreckungsverwalter that was
already paid out in December 1997 and that was mentioned in
the opening of the procedure.

and 50 % by

scheme

aid

Addinol Old was active in the lubricants sector.
Its main
products were oils of all kinds, particularly base oils, oils for
private cars and diesel motors, and hydraulic transmission oils.
The Auffanggesellschaft, Addinol Lube, only blends and sells
lubricating oils; it does not refine oil any longer. Addinol Old
had a turnover in respect of lubricating oil of DEM 43 945 000
in 1997. Around 70 % of
the turnover was achieved in
Germany, almost 20 % of the turnover was made in Estonia. In
1997, Addinol Old had more than 500 employees. Addinol
Lube has today 75 employees (12 in the subsidiary Addinol
Mineral(cid:246)l Marketing O(cid:220) in Estonia) and forecasts a turnover of
around DEM 36 000 000 in 1998. Addinol is located in the
German State of Sachsen-Anhalt.

The DEM 59 900 000 aid measures will be spent on the
following purposes:

(cid:151) DEM 28 600 000 investment financing,

(cid:151) DEM 10 700 000 loss compensation,

(cid:151) DEM 5 000 000 losses of old blending facilities during

transitional period (1998),

III

(cid:151) DEM 4 300 000 working capital,

Addinol received several aid measures in the past.

(cid:151) DEM 11 300 000 closure of old plant.

In the framework of the privatisation, Addinol Old received a
grant of DEM 91 700 000 from BvS to cover losses in the
period 1994 to 1996. The Land Sachsen-Anhalt took over a
100 % guarantee for an investment loan of DEM 40 000 000
as well as the costs for the removal of burdens of the past
from the time before 1 July 1990 (DEM 220 600 000 of old
debts,
incurred before 1 July 1990, were waived; DEM
25 000 000 of old debts remained as an obligation within the
company). In its decision of 5 June 1997, the Commission
found that all
these measures were covered by Treuhand
regimes (4).

Due to difficulties encountered by Addinol Old, BvS granted
rescue aid of DEM 10 000 000 in the form of a loan with a

(4) See decisions of the Commission with regard to the aid regimes of

the Treuhandanstalt NN 108/91, E 15/92 and N 768/94.

the new blending facility is

The DEM 5 000 000 for losses of the old blending facilities
until
constructed and the
DEM 11 300 000 for the closure of the old plant will be paid
to Addinol Old. The rest of the DEM 59 900 000 will be paid
to the Auffanggesellschaft (Addinol Lube).

By letter of 18 September 1998, Germany informed the
Commission that more aid is needed in order to finance the
losses of
the Leuna
the old blending facilities. Therefore,
Werke GmbH, which is owned by BvS, waived DEM 9 300 000
claims against Addinol Old. It has not been decided yet if the
Leuna Werke GmbH will be compensated by BvS or the Land
Sachsen-Anhalt. This DEM 9 300 000 was no part of
the
opening procedure and is not the subject of this decision. By
letter dated 4 November 1998,
this
additional aid was withdrawn.

the notification of

6.10.1999

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Official Journal of the European Communities

L 260/21

IV

As mentioned above, one comment on the opening of the
procedure was received by the Commission.

Fina is a subsidiary of the Petrofina Group.
It is based in
Frankfurt am Main and mainly active on the markets for the
supply, sale and marketing of refined fuels and the markets for
production, sale and marketing of lubricant products, including
both retail sales through service stations and sales to industrial
and commercial customers, in Germany. Fina is also active in
the marketing of petrochemicals and related products.
In
its turnover was DEM 2 743 000 000 and its profits
1997,
were DEM 1 700 000. In 1997, Fina employed 249 persons,
against 275 in 1996.

in which
Fina has submitted that the market of lubricants,
Addinol Lube is operating,
is facing a significant decline.
According to Fina, the market was down 4,4 % in terms of
volume during the first four months of 1998. Furthermore,
Fina considers Addinol Lube to be a local player which has no
access to new technologies and therefore will not be able to
compete on a technology intensive and international market.
Another problem for Addinol Lube will be that no partner
with industrial experience is involved in the restructuring plan.
Finally, Addinol Lube depends mostly on third parties for its
raw materials while
its main competitors are vertically
integrated.

According to Fina, prices of Addinol were up to 20 % lower on
certain deals than competitors. They alleged that
this cost
advantage was achieved by aggressive marketing policies that
were financed by aid measures,
in particular the rescue aid
measures of DEM 28 million. As a result of this aid, Addinol
Lube had a cost advantage which has enabled the company to
double its market share during the 1994 and 1998 period.
However, even upon request, no proof could be provided for
the new restructuring
this claim by Fina. Fina fears that
measures of DEM 59 900 000 will mean a continuation of the
market
Lube.
Furthermore, Fina considers that the market of blending and
additives products is in overcapacity. Finally, Fina considers
that a subsidy of DEM 60 million is likely to severely distort
the market since the total turnover of Fina on the lubricants
market is some DEM 70 million.

by Addinol

distorting

followed

strategy

Fina mainly states in this respect that the investor contribution
to the restructuring plan is too low.

for

Republic. Germany refutes the argument that only companies
that are vertically integrated can be successful on the market.
Addinol Lube has
technological
international alliances
cooperation and has substantial exports. As regards the partner
with industrial experience, the German authorities claim that
the three investors are former managers of the company and
that the customers of Addinol Lube are the industrial partners.
Germany also refutes Fina’s argument that Addinol Old had
aggressive marketing on the basis of subsidised prices. The
same will be true for Addinol Lube in the future. With regard
to the alleged doubling of market share, Germany provided
data according to which the market share of Addinol Old on
the German market declined from 4,51 % in 1995 to 4,24 % in
1997. In some segments, Addinol Old was able to increase
market share, e.g.
in the motor oil segment from 2,69 % to
there were no price dumping
3,3 %. Germany asserts that
practices as Addinol has also lost some customers in the
period in which the alleged distortion of competition has taken
place. Furthermore,
the State aid measures do not distort
competition as the market shares of Addinol Lube in Germany
and internationally are insignificant. Finally, Germany states
that
restricted to the minimum needed for
restructuring.

the aid was

Germany has stressed in several other letters that the investor
contribution can be considered significant.

V

In its opening of procedure, the Commission raised various
doubts as
the two already approved rescue aid
measures and the new aid measures in the context of the
Auffangl(cid:246)sung.

regards

(a) Approved rescue aid measures

the Commission expressed its doubts that

Since the Guidelines for rescue and restructuring (OJ C 368,
23.12.1994) state that rescue aid should be in principle a
one-off operation and Addinol Old has already twice received
rescue aid,
the
rescue aid paid and authorised in 1996 and 1997 was
compatible with the common market. The Commission argued
further that Germany breached assurances given at the time of
the Commission’s second decision, namely that they would not
provide the firm with any further rescue aid. Germany had in
fact granted additional aid (DEM 3 000 000 by BvS/Land
Sachsen-Anhalt)
to the Gesamtvollstreckungsverwalter of
Addinol Old in December 1997.

Fina concludes from this that the criteria laid down in the
Community rescue and restructuring Guidelines are not
fulfilled and that the restructuring aid for Addinol Lube should
not be authorised.

(b) New aid measures

In a letter dated 10 August 1998, Germany responded as
follows to the comments made by Fina: Addinol Lube will be
viable in the future and will have access to raw materials (such
as base oil) from the refinery Koramo Kolin AG in the Czech

With regard to the new aid measures of DEM 59 900 000, the
Commission expressed its doubts that:

(cid:151) the restructuring plan will enable the firm to be viable in

the long term,

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(cid:151) the aid provided is limited to the strict minimum needed,

Germany has claimed back the paid out parts of
the two
rescue aid measures from the administrator of bankruptcy
proceedings.

(cid:151) the investors’ contribution can be considered significant.

VI

VII

At the time of the approval of the first (November 1996) and
second aid measure (May 1997), BvS and Land Sachsen-Anhalt
believed that the respective rescue aid measures could save the
company and avoid bankruptcy. The Commission has no
evidence that it was foreseeable at these two respective points
in time that Addinol Old would have to initiate bankruptcy
proceedings in December 1997.

In its

answer

The second package of rescue aid measures was approved by
the Commission after Germany had assured the Commission
that it would refrain from any future granting of rescue aid. In
the opening of procedure it was found that this assurance had
been broken by Germany since Addinol Old received a loan of
DEM 3 000 000 after the initiation of bankruptcy proceedings
in December 1997.
to the opening of
proceedings, Germany argues that the DEM 3 000 000 was in
fact not rescue aid but pre-financed restructuring aid. It is used
for the continuation of the production of the old blending
facilities. The amount of DEM 3 000 000 is included in the
overall aid amount of DEM 59 900 000 for Addinol Lube. This
argument seems plausible since the restructuring plan was
already developed and finished in October 1997 and the
Auffanggesellschaft was established in December 1997. It was
imperative for the creation of the new company that Addinol
Old continued production in order not to lose customers. In
December 1997, the restructuring concept of the consultants
Arthur D. Little was already finished and as can be seen from
the
details),
DEM 5 000 000 is reserved for the continuation of operations
of the old blending facilities. It is necessary to continue the
production of the old blending facilities until the new blending
facilities are constructed (by about the end of 1999 according
to the restructuring plan). The DEM 3 000 000 paid out in
December 1997 is part of
this amount and constitutes
restructuring aid.

below for more

restructuring

plan

(see

The aid measures for Addinol Old and Addinol Lube must be
regarded as aid within the meaning of Article 92 of the EC
Treaty. Since they were granted through State resources by a
Member State, they distort or threaten to distort competition
by favouring certain undertakings and they affect
trade
between Member States.

restructuring aid. Therefore,

The new aid measures provided by BvS and Land Sachsen
Anhalt were notified as
the
Commission considers in particular the derogation as provided
for in Article 92(3)(c) of the EC Treaty,
(cid:145)aid to facilitate the
development of certain economic activities, where such aid
does not affect trading conditions to an extent contrary to the
common interest(cid:146) since the predominant objective of the aid is
the restructuring of a firm in difficulty. Such aid may be
considered compatible with the common market if the criteria
of the Community Guidelines on state aid for rescuing and
restructuring firms in difficulty (the Guidelines) are met.

to

not

newly

applied

founded

exceptions

are made

The problem with applying the guidelines is that they are
usually
companies
(Auffangl(cid:246)sung) that are taking over or renting the assets of
the company for which liquidation proceedings have been
in favour of
initiated. However,
companies in the new German L(cid:228)nder since the transition from
special
a planned economy to a market economy poses
problems. The low amount of equity capital
is a typical
example for problems of companies in transition like Addinol
Lube. These problems may justify treating new firms as
companies in difficulties. Considering this special situation and
the special role of BvS in this transition process, aid to
companies who take over companies for which liquidation
procedures have been initiated can in certain cases be regarded
as restructuring aid. In these cases, the private investors who
take over
the newly founded company must contribute
substantially to the restructuring.

analysed

aid had been given. As

The Commission had opened procedures against the already
approved rescue aid measures because it suspected that further
rescue
the
DEM 3 000 000 that was paid out
in December 1997
constitutes pre-financed restructuring aid. Therefore, Germany
has kept
rescue aid.
Accordingly, the doubts concerning the repetitive award of
rescue aid measures, which were the sole reason for opening
the procedure against the old rescue aid, have been resolved by
Germany.

its promise not

to grant

further

above,

Commission’s

However, it has to be pointed out that Germany did not await
the
the
DEM 3 000 000 and thus breached its obligations under
Article 93(3) of the EC Treaty.

approval

paying

before

out

If the Commission is to approve the aid on the basis of the
restructuring Guidelines for Addinol Old and Addinol Lube, a
restructuring plan will need to satisfy certain conditions:

Restructuring plan and restoration of viability

All restructuring plans must restore the long-term viability and
health of the firm within a reasonable timescale and on the
basis of
future operating
conditions. In principle, no repetitive aid may be given.

realistic assumptions as

to its

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L 260/23

Germany has provided a detailed restructuring plan prepared
by the consultants Arthur D. Little for Addinol Lube. The core
of the plan is that Addinol Lube ceases to refine oil itself and
focuses on the blending of high-quality lubricants, particularly
motor oils. For this purpose, a completely new oil-blending
plant will be built (investment costs of DEM 28 600 000). In
order not
to lose customers, Addinol Lube will use the
blending facilities of Addinol Old until the construction of the
new blending plant is completed. Afterwards the productions
facilities of Addinol Old will be completely dismantled and
irreversibly closed. The operations of Addinol Lube differ
substantially from Addinol Old since Addinol Lube does not
refine oil any more. The projected profit and loss account for
the years 1998 to 2002 forecasts profits from the year 2001
onwards.

The oil needed as input will be delivered from the refinery
Koramo Kolin AG. Koramo Kolin AG has developed
high-quality base oils that are the basis for Addinol Lube’s
specialty oils. By focusing on blending and closing down the
old refinery, the company will focus on its core competencies
and reduce the high costs that were caused by the unprofitable
refining activities.

One of the main assumptions of the restructuring plan is that
Addinol Lube will be able to increase turnover by roughly
70 % between 1998 and 2002. This turnover increase is a
central point in the restructuring plan developed by Arthur D.
Little and is an essential condition for Addinol Lube to reach
long-term viability. Germany argues
increase is
feasible for various reasons, in particular:

that

this

1. Addinol Lube is operating in profitable niches in the

lubricant market;

2. Addinol Lube is known for its high-quality products and
strong expertise in developing,

its
producing and selling high-quality lubricants;

reliability and has

3. once the aid for

the new company is approved,

the
uncertainty of suppliers and customers will diminish and
Addinol Lube will be able to acquire more customers. A
lot of contracts in the past (e.g. with [(cid:133)] (*)) could not be
concluded due to the uncertain future of the company and
customers’ fear of losing a supplier;

4.

the strong growth of turnover of Addinol Old’s products in
Estonia also indicates that the company has a promising
export potential.

factors such as price and demand increases over which the
the market
company has no substantial
assumptions made are generally acknowledged.

influence,

if

for

that

the market

lubricant oils

in
Germany confirms
Germany declined by 3,8 % in the first four months of 1998,
compared to 1997. These rather pessimistic prospects as
regards the planned turnover increase in these markets are
industry experts within the
confirmed by an evaluation of
Commission. They describe the motor oil markets as being
mature markets with low profit margins. According to
information by the Wood Mackenzie European Downstream
Oil Service of February 1998, the lubricant market will shrink
in OECD countries between 1996 and 2005 by 6 %. Therefore,
the restructuring plan is based on external factors and those
external factors are not generally acknowledged.

Even if one disregards the fact that it is formally not possible
to explain the return to viability by external
the
chances of Addinol Lube increasing turnover as planned are
very low.

factors,

1. The market for motor oils that accounts for more than
50 % of the turnover (5) of Addinol Lube shrank by 10,5 %
in Germany between April 1997 and April 1998. The
restructuring plan explicitly foresees that
the turnover
increase by Addinol Lube will be achieved mainly by an
increase of 72 % in the motor oil market. One of
the
problems of this particular market seems to be that the
time span between one oil change and the next for cars is
getting longer and longer due to the improved quality of
the oils. Therefore, the negative growth rates seem not just
to reflect a seasonal phenomenon but more a structural
problem of the market. Germany argues that only some
niches in the motor oil segment in which Addinol Lube is
not operating are in decline. However,
it was unable to
demonstrate that Addinol Lube is operating in high growth
segments in the motor oil market and other lubricant
markets. It merely plans to do so in the future. Therefore,
the implicit argument of Germany that Addinol is mainly
operating in profitable market niches is not convincing.

2.

It
is not enough for a company to have good-quality
products and to have strong expertise in research and
development. Addinol Lube is competing with major
industrial groups, like Shell, Exxon and Mobil, who are all
capable of producing high-quality products. Therefore, the
qualities attributed to Addinol Lube can be considered to
be a condition sine qua non to compete on the market at
all.

According to the restructuring Guidelines, the improvement in
viability must mainly result from internal measures contained
in the restructuring plan and may only be based on external

3.

It is likely that Addinol Lube would receive more orders if
the legal uncertainty as regards the company’s future was
to a
resolved. However,
company is also just a prerequisite to compete on the

legal certainty with respect

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

(5) This refers to the time span between 1998 and 2002 in which
Addinol, according to the restructuring plan, stops refining and
selling base oil.

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6.10.1999

market and does not support the assumption of a 70 %
turnover increase in a mature or declining market.

2. The restructuring plan is highly leveraged on State aid
which means that if any unforeseen difficulties arise,
the likelihood of further aid is rather high. Taking that
into account together with the previous history of the
firm,
the Commission doubts whether the principle
’one time last time’ can be assured.

4. As regards the export potential of the company, Germany
argues that 40 % of the current turnover of Addinol Lube
is achieved by exports, particularly via its
subsidiary
(Addinol Mineral(cid:246)l Marketing O(cid:220)) in Estonia. According to
Germany, these countries have double digit growth rates (it
was not specified in which market segments these growth
rates were achieved). However, the possibility of achieving
increases in market shares, even in Eastern
substantial
Europe, was doubted by Commission experts. There are
already major international and local competitors on these
markets. Furthermore, Addinol Lube points out
that its
products are also represented in Russia at Lukeoil gas
the company
stations. Due to the crisis
acknowledged that it was not possible to increase turnover
on the Russian market in the second half of 1998. Given
the economic situation in
the current perspectives of
Russia it
turnover
is very unlikely to make substantial
increases in the future in this market. The same rather
pessimistic considerations apply to Addinol Lube’s efforts
to enter other markets, e.g. in Asia. Therefore, the expected
sales increase will most likely not be accounted for by
export activities.

in Russia,

There are other indications that the long-term viability is
very questionable.

1. As will be shown in more detail below, the investors
are contributing DEM 5 000 000 to the restructuring
costs of DEM 64 900 000. Since the aid has to be
restricted to the minimum needed, the Commission has
to assume that Addinol Lube has undertaken all efforts
to increase its contribution to the restructuring plan
and has particularly tried to get additional
financial
resources from private banks or other private investors.
Considering the fact that Addinol Lube has not had to
take over the debts of the old company and that it is
receiving DEM 59 900 000of State aid, it is difficult to
see why the company is not able to raise more private
capital
than DEM 5 000 000. Even the general
reluctance of private banks in eastern Germany to give
loans
to grant
financial support. A profit-oriented investor like a bank
would always finance investment with a promising
outlook. Comparable
in the new German
cases
L(cid:228)ndershow that banks give credit to companies, even
companies in difficulties (6). The apparent unwillingness
of private banks and other financial
institutions to
provide more money can be considered as a sign that
they have doubts as regards the future prospects of the
company.

explain the unwillingness

cannot

(6) For example, in the case of Blema Kircheis, NN 157/97.

the

regards

increase

turnover

themselves.

that will not

An updated assessment of the restructuring plan by Arthur
D. Little on 16 October 1998 does not change this picture.
The uncertainty as
is
confirmed by this study: Arthur D. Little argues that
Addinol Lube is too focused on the motor oil business
where market prospects are bad. The turnover increase
realised in 1998 is partly due to special
that was
circumstances
First,
repeat
Addinol Lube sold the remaining oil from the old refinery.
resulted from the
turnover effect
Secondly, a special
unforeseen effect that Addinol sold base oil from Koramo
Kolin AG to third parties. All in all, these special effects
account
of which
DEM 4 800 000 comes from the selling of base oils of
Koramo Kolin AG. Arthur D. Little assessed that, without
those special effects and on the basis of the whole year
1998, the updated financial data are more or less the same
as were originally foreseen in the restructuring concept.
Therefore, the basic assumptions described above are still
valid and the turnover increase of 70 % still has to be
achieved to its full extent by Addinol Lube. The study by
Arthur D. Little does not say anything about the chances
of Addinol Lube achieving this turnover increase.

for DEM 13 100 000 turnover

The fact that Addinol Lube did not have losses in 1998 is
from special
also due to the fact
effects, like the selling of the remaining oil reserves of the
Leuna refinery. It is no proof that Addinol Lube is already
profitable again.

it could benefit

that

also

updated

includes

assessment

The
information
according to which Addinol Lube has achieved a 12 % cost
reduction in the purchase of material. On this basis, one
could argue that the turnover increase is not necessary
anymore. However, part of
this cost reduction (e.g. oil
input from the remaining reserves of the Leuna refinery) is
also just temporary.

that

the end of

its assessment

the concerns of

Given this background, it is confusing that Arthur D. Little
states at
the blending
is still a plausible and sound strategy for the
concept
development of Addinol Lube. However,
that does not
the Commission as regards the
dispel
the other
turnover increase. The study, as well as all
information provided by Germany, does not provide
convincing arguments or strong indications that Addinol
Lube is realistically able to achieve that
increase. Such
arguments and indications are necessary since the planned
current market
development

contrary

the

to

is

6.10.1999

EN

Official Journal of the European Communities

L 260/25

assumptions. Even on the basis of all the information in
the
the modified
Commission considers
return to long-term
viability is not secured.

assessment by Arthur D.

Little,

that

the

The Commission concludes that
Guidelines is not satisfied.

this condition of

the

Aid in proportion to the restructuring costs and benefits

The amount and intensity of the aid must be limited to the
to be
strict minimum needed to enable
undertaken and must be related to the benefits anticipated
from the Community’s point of
aid
beneficiaries will normally be expected to make a significant
restructuring plan from their own
contribution to the
resources, or from external commercial financing.

view. Therefore,

restructuring

As can be seen from the table below, the sum of finances
granted to Addinol Lube and Addinol Old in the framework of
the restructuring plan is equal
to the sum needed for
restructuring (7):

Finances

Grants by Land
Sachsen-Anhalt (includes
DEM 12,85 million
GA-Mittel)

DEM
million

29,95

Restructuring measures

Continuation of old
blending facilities for a
limited period

DEM
million

5

Grants by BvS

29,95

Investment

Losses until 2002

Working capital

Dismantling of the old
refinery of Addinol Old

Equity capital

Sales price for assets,
including the price
for Addinol
Dienstleistungs-GmbH

Equity capital of
investors

Capital contribution of
investors

1

4

Total

64,9

28,6

10,7

4,3

11,3

1

4

64,9

The overall restructuring costs amount to DEM 64 900 000
of which DEM 53 600 000
the
Auffanggesellschaft (Addinol Lube) and DEM 11 300 000 is

reserved

for

is

reserved for Addinol Old. The amount of DEM 11 300 000
the old
will be spent on the closure and dismantling of
refinery and blending facilities. Germany argues that due to
environmental regulations it is necessary to dismantle the old
facilities. The production facilities (both the refinery and the
blending facilities) of Addinol Old will be irreversibly closed.
The DEM 53 600 000 for the Auffanggesellschaft includes the
DEM 5 000 000 that is paid to Addinol Old. However, this
amount is reserved for the continuation of the old blending
facility until
the new blending facility is constructed and
completely operational (end of 1999) and must therefore be
attributed to Addinol Lube (8). The new investors
are
contributing DEM 5 000 000 to the Auffanggesellschaft,
therefore the investor contribution amounts to 9,3 %.

to the

investors

committed

themselves

to keep the company in operation at

The
following
obligations: to keep 40 jobs until 31 December 2002 (the
penalty for non-compliance being DEM 4 170 per month per
least until 31
job),
December 2002 (the penalty for non-compliance being 20 % of
the amount they received from the state) and the obligation to
pay to the State 80 % of
the profits made by selling the
company (before 21 December 2002).

Germany argues that not just 63 jobs at Addinol Lube will be
secured through the granting of State aid but 250 jobs in the
region. The region Merseburg in which Addinol Lube is
located suffers from very high unemployment
(27 %), even
compared to other regions in the new German L(cid:228)nder. The
region Sangershausen which is located next
to the region
Merseburg suffers from the highest unemployment rate in the
new German L(cid:228)nder(28,4 %). Therefore, Germany argues that
the State aid to Addinol Lube will also help to create
high-value jobs which will alleviate the structural problems in
the region to a certain extent.

This investor contribution of 9,3 % is extremely low, especially
if one considers that the company has received various aid
measures in the past. Even if one takes into account that the
investors holding the majority of the shares (76 %) are private
persons, clearly a 9,3 % investor contribution cannot be
considered significant. Addinol Lube is an Auffanggesellschaft
which does not have to bear the old debts and losses of
It is a new company for which the State is
Addinol Old.
financing a completely new DEM 28 600 000 production
facility. Yet, Addinol Lube is not able to attract more capital
from banks or other financial institutions.

By letter of 4 November 1998, Germany announced that the
investors are planning to increase their contribution to
DEM 5 000 000. The aid from Germany would be reduced by
the same amount. The new contribution will be financed or
guaranteed by Philips Industrial Electronics which is to build
the new blending facility. Philips still needs to decide internally

(7) In the notification and in the opening of procedure,

the
restructuring concept was envisaged to be DEM 60 900 000. The
State aid measures amounted to DEM 59 900 000 and the investor
contribution to DEM 1 000 000. The investors have since decided
to contribute DEM 4 000 000 more.

(8) A contract

(Sanierungsvereinbarung) was concluded between BvS,
Addinol Old and Addinol Lube. It deals with the modalities of the
aid payments and the obligations of
In the
framework of this contract, the Gesamtvollstreckungsverwalter of
Addinol Old will contribute DEM 3 500 000 to the dismantling of
the old production facilities.

the investors.

L 260/26

EN

Official Journal of the European Communities

6.10.1999

on this contribution. As no definitive commitment has been
made so far, this amount cannot be included in the investor
contribution. This kind of
last-minute action is also not
credible since Addinol Lube has had plenty of time in the past
to increase that contribution. Germany also informed the
receive a loan of
Commission that Addinol Lube will
DEM 500 000 from [(cid:133)] (*)for the purchase of inputs for the
period until the Commission approval of the aid. After the
approval by the Commission, that amount could be increased.
The contribution from [(cid:133)] (*)can hardly be considered a
it merely
contribution to the
constitutes short-term financing and is not included in the
financial restructuring plan. For example, no State aid measure
was reduced in return.

restructuring plan since

loss

In its letter of 16 October, Germany included a report of the
consultant Arthur D. Little with a modified assessment of the
restructuring plan of Addinol Lube. According to that report,
Addinol will not need a
compensation of DEM
10 700 000 but significantly less. Germany has however not
reduced the aid measures.
In the restructuring plan, no
maximum amount of loss compensation was fixed that would
be adapted to the actual
the
Commission has to assume that a higher loss compensation is
paid by Germany than actually needed. The aid is not
restricted to the minimum needed.

incurred. Therefore,

losses

The Commission concludes
Guidelines is not satisfied.

that

this

condition of

the

Since two of the conditions of the Guidelines are not fulfilled,
the derogation under Article 92(3)(c) of the EC Treaty cannot
be applied to the aid measures of DEM 59 900 000 for
Addinol Old and Addinol Lube. Germany did not await the
Commission’s approval before paying out part of the aid and
thus failed to comply with its obligations under Article 93(3)
to the abovementioned
of
DEM 3 000 000
further
to Addinol Old
DEM 4 000 000 to Addinol Old which was paid out in April
1998 in the form of an interest-bearing loan,

the EC Treaty. This applies

and

the

2.
The restructuring aid planned by Germany in favour of
Addinol Mineral(cid:246)l GmbH i.Gv. and Addinol Lube Oil GmbH &
Co. KG of DEM 40 050 000 notified on 1 October 1997 and
18 February 1998 is incompatible with the common market.

3.
The restructuring aid from Germany in favour of Addinol
Mineral(cid:246)l GmbH i.Gv. and Addinol Lube Oil GmbH & Co. KG
of DEM 7 000 000 notified on 1 October 1997 and 18
February 1998 is incompatible with the common market.

Article 2

1.
Germany shall take the necessary measures to recover
from the respective real and final recipients the aid referred to
in Article 1(3) and unlawfully made available to them.

2.
Recovery shall be effected in accordance with the
procedures and provisions of German law. The sums to be
recovered shall bear interest from the date on which they were
made available to the recipients. Interest shall be calculated on
the basis of
the reference rate used for calculating the
grant-equivalent of regional aids.

Article 3

Germany shall
inform the Commission, within two months
following notification of this Decision, of the measures taken
to comply with it.

Article 4

HAS ADOPTED THIS DECISION:

This Decision is addressed to the Federal Republic of Germany.

Article 1

Done at Brussels, 16 December 1998.

1.
The rescue aid from Germany in favour of Addinol
Mineral(cid:246)l GmbH i.Gv. of DEM 22 000 000 notified on 28
October 1996 and 9 April 1997 is compatible with the
common market.

For the Commission

Karel VAN MIERT

Member of the Commission