299/1999/ECSC: Commission Decision of 22 December 1998 on German aid to the coal industry for 1999 [notified under document number C(1998) 4569] (Only the German text is authentic) (Text with EEA relevance)
Date: 1998-12-22
Institutions: European Commission
Subjects: Germany, State aid, aid to industry, coal industry, financial aid

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Official Journal of the European Communities

5. 5. 1999

COMMISSION DECISION

of 22 December 1998

on German aid to the coal industry for 1999

(notified under document number C(1998) 4569)

(Only the German text is authentic)

(Text with EEA relevance)

(1999/299/ECSC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Coal and Steel Community,

Having regard to Commission Decision No 3632/93/
ECSC of 28 December 1993 establishing Community
rules for State aid to the coal industry (1), in particular
Article 2(1) and Article 9 thereof,

Having regard to Commission Decision of 2 December
1998 on German aid to the coal industry for 1998 (2),

Whereas:

The financial measures proposed by Germany for the coal
industry fall within the scope of Article 1(1) of Decision
No 3632/93/ECSC. In accordance with Article 9(4), the
Commission is therefore required to give an opinion on
these measures. For this purpose, it checks whether they
conform to the general objectives and criteria defined in
Article 2 and the specific criteria defined in Articles 3 and
4 of the Decision and whether they are compatible with
the functioning of the common market. Furthermore, in
the Commission has to
accordance with Article 9(6),
decide whether the notified measures are compatible with
the plan for modernisation, rationalisation, restructuring
and the reduction of activity approved by the Commis-
sion in its Decision of 2 December 1998.

I

II

By letters of 25 September 1998, 2 December 1998 and
14 December 1998, Germany notified the Commission,
in accordance with Article 9(1) of Decision No 3632/93/
ECSC, of the aid it intended to grant to the coal industry
in 1999.

In accordance with the provisions of Decision No 3632/
93/ECSC,
the Commission gives its opinion on the
following financial measures for 1999:

(a) operating aid within the meaning of Article 3 totalling

DEM 5 141 million;

(b) aid for the reduction of activity within the meaning of

Article 4 totalling DEM 3 220 million;

(c) aid within the meaning of Article 3 totalling DEM 73
million to maintain an underground labour force
(Bergmannspr(cid:132)mie);

(d) aid within the meaning of Article 5 totalling DEM
11,3 million to assist the undertaking RAG Aktienge-
sellschaft to cover exceptional costs;

(e) aid within the meaning of Article 5 totalling DEM
748 million to assist the undertakings RAG Aktienge-
sellschaft and Sophia Jacoba GmbH to cover the costs
arising from or having arisen from the restructuring of
the coal
industry which are not related to current
production (inherited liabilities).

(1) OJ L 329, 30.12.1993, p. 12.
(2) OJ L 109, 27.4.1999, p. 14.

to Article 3,

The aid pursuant
totalling DEM 5 141
million, is intended for the operation of the mines owned
by the undertakings RAG Aktiengesellschaft, Preussag
Anthrazit GmbH, Dr Arnold Sch(cid:132)fer GmbH and Merch-
weiler GmbH.

In the case of RAG Aktiengesellschaft, the aid is intended
in particular to assist
the mines Friedrich Heinrich/
Rheinland, Niederberg, Walsum, Lohberg/Osterfeld,
Prosper/Haniel, Westerholt, Auguste Victoria, Blumen-
thal/Haard and Heinrich Robert. The measure is also
intended for the mines Ensdorf and Warndt/Luisenthal,
which have been owned by RAG Aktiengesellschaft since
1 January 1998. In the case of Preussag Anthrazit GmbH,
the measure is intended for the site at Ibbenb(cid:129)ren.

This aid is intended to cover the difference between
production costs and the sales price freely agreed on the
basis of the conditions prevailing on the world market for
coal of similar quality from third countries. It will permit
the undertakings and production sites to take the meas-
ures required to achieve a gradual reduction in production
costs.

According to the information supplied by Germany, the
average production costs in the mines covered by Article
3 should in real terms be 8,2 % lower in 1999 than in
1995 at 1992 prices, namely DEM 246 per
tce as
compared with DEM 268 per tce. The reduction in
production costs is in accordance with the aims of the

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plan for modernisation, rationalisation, restructuring and
the reduction of activity, as approved by the Commission
in its Decision of 2 December 1998.

measure is also intended for the G(cid:148)ttelborn/Reden mine,
which has been owned by RAG Aktiengesellschaft since 1
January 1998.

If the conditions in Article 3 cannot be met by an under-
taking, the Commission may, in its assessment of the
notified measures, require Germany to justify any devia-
tions from the 1998–2002 restructuring plan as amended
by Germany and approved by the Commission on 2
December 1998 and,
if necessary, propose corrective
measures such as the inclusion of mines belonging to the
undertaking in question in the closure plan in accordance
with Article 4 of Decision No 3632/93/ECSC.

In its assessment of the operating aid pursuant to Article
3 of Decision No 3632/93/ECSC, the Commission has
also taken account of the need to minimise the social and
regional impact of the restructuring of coal mining in
regions which are already affected by above average struc-
tural unemployment.

The fact is that unemployment in 1998 in the coalfields
of the Ruhr stands at about 15 % (district of Duisburg
15,8 %, Recklinghausen 13,7 %, Gelsenkirchen 16,4 %),
which is far above the West German average of 9,7 %. In
the Saar too, unemployment is above average in the coal-
mining areas (Saarbr(cid:129)cken 13,9 %, Saarlouis 11 %).

The coalmining areas are also target areas for Community
regional support (Objective 2 regions whose industrial
development is lagging behind) and at the same time
areas to be developed within the meaning of Article
92(3)(c) of the EC Treaty.

On the basis of the information provided by Germany
and the undertakings given (see section VI of
this
Decision), the operating aid proposed for 1999 is compat-
ible with Decision No 3632/93/ECSC,
in particular
Articles 2 and 3 thereof.

The abovementioned closures are part of the agreement of
13 March 1997 which will reduce production capacity by
10 million tce in comparison to 1997 (21 % of total
production capacity) and lead to the shedding of 30 000
jobs between 1998 and 2002.

Pursuant to Article 4 of Decision No 3632/93/ECSC, the
production sites G(cid:148)ttelborn/Reden, Ewald/Hugo and
Westfalen will be completely closed down before the
abovementioned Decision expires on 23 July 2002. The
Commission notes that the undertaking RAG Aktienge-
sellschaft has decided to bring forward the closure of the
Ewald/Hugo mine to 30 April 2000 (instead of July 2002)
in the light of the aid ceiling and the fall in the prices of
coal on the world market.

According to the information supplied by Germany, the
production decrease between 1995 and 1999 is expected
to be 15,2 %, or 8,6 million tce. The number of
employees should fall by 25 680 or 25,5 % between 1995
and 1999.

The Commission notes that the planned reduction in
production capacity is in line with the aims of the plan
for modernisation, rationalisation, restructuring and the
reduction of activity which it approved by Decision of 2
December 1998.

The aid for the reduction of activity proposed for 1999 is
compatible with Decision No 3632/93/ECSC, and in
particular Articles 2 and 4 thereof.

IV

III

intended to cover

The aid totalling DEM 3 220 million proposed for the
reduction of activity pursuant to Article 4 of Decision No
3632/93/ECSC is
the difference
between production costs and the sales price freely agreed
on the basis of the conditions prevailing on the world
market for coal of similar quality from third countries. In
the context of the undertaking RAG Aktiengesellschaft, it
will assist the mines F(cid:129)rst Leopold/Wulfen, Ewald/Hugo,
Haus Aden/Monopol and Westfalen in particular. The

The aid totalling DEM 73 million to cover extra
payments to German miners (Bergmannspr(cid:132)mie), which
amount to DEM 10 per underground shift, is intended to
provide an incentive for qualified staff to work under-
ground and to help rationalise production. According to
the German notification, this aid to miners is a pecuniary
benefit. Although the extra payments are not part of the
production costs of the coalmining undertakings, the aid
helps to reduce the undertakings’ wage costs. It is there-
fore ‘aid' within the meaning of Article 1(2) of Decision
No 3632/93/ECSC, which must be examined on the basis
of Article 3 of that Decision.

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The proposed aid helps to maximise productivity and
thus facilitates the restructuring and rationalisation of
mining. It therefore also helps to achieve the objective
referred to in the first indent of Article 2(1) of Decision
No 3632/93/ECSC, namely, in the light of coal prices on
international markets, to make further progress towards
economic viability with the aim of achieving degression
of aids.

In its assessment of the aid, the Commission has taken
account, in accordance with the second indent of Article
2(1) of the abovementioned Decision, of the need to
minimise the social and regional impact of restructuring.

expenditure, resulting from restructuring, on the supply
of water and the removal of waste water. To meet the
requirements of Article 5 of the Decision, the special aid
may not exceed the expenditure.

The Commission has examined the agreements between
the public authorities and the undertakings concerned
and, as part of an audit, the information given with regard
to costs and has ascertained that the aid does not exceed
the earmarked resources.

The aid helps, in keeping with Article 3 of Decision No
3632/93/ECSC, to improve slightly the deficient competi-
tiveness of the undertakings concerned, since the increase
in productivity due to the maintenance of a qualified
underground labour force reduces production costs.

This will make it possible to reduce the pressure on the
undertakings concerned, which will reduce their financial
imbalance and enable them to continue their activities.
The aid therefore complies with the objectives given in
Article 2(1) of Decision No 3632/93/ECSC.

Germany gives its assurance that the aid, together with
any other aid for current production, will not exceed the
difference between production costs and expected income
in any undertaking or production unit.

In the light of the above and on the basis of the informa-
tion provided by Germany, the aid to maintain an under-
ground labour force (Bergmannspr(cid:132)mie) proposed for
1999 is compatible with the objectives of Decision No
3632/93/ECSC, in particular Articles 2 and 3 thereof.

V

The aid to assist the undertakings RAG Aktiengesellschaft
and Sophia Jacoba GmbH to cover exceptional costs in
accordance with Article 5 of Decision No 3632/93/ECSC
amounts to DEM 759,3 million.

This financial measure includes, firstly, aid amounting to
DEM 11,3 million to cover exceptional costs to assist the
undertaking RAG Aktiengesellschaft.

The aid is intended to cover additional drainage costs in
mines closed down as part of restructuring and near to
working pits. Since little or no water is pumped out of the
closed-down mines, water which has nothing to do with
existing production flows into the working pit nearby,
thereby giving rise to additional costs.

This aid, which is not related to current production and is
specifically provided for in section I(i) and section II(b) of
the Annex to Decision No 3632/93/ECSC, covers

abovementioned

The
includes,
secondly, aid to cover exceptional costs amounting to
DEM 748 million to assist the undertakings RAG Aktien-
gesellschaft and Sophia Jacoba GmbH.

financial measure

The aid is intended to cover the costs arising from or
having arisen from the restructuring of the coal industry
which are not related to current production (inherited
liabilities).

A portion of this aid, amounting to DEM 609 million, is
the result of decisions taken by mining undertakings and
electricity producers, the Federal Government, the State
Governments of North Rhine-Westphalia and the Saar
and the trade union representing the mining industry
during the negotiations (‘Kohlerunde') on 11 November
1991. The remaining DEM 139 million is the result of
new closures decided on 13 March 1997.

It is intended to cover the following costs, except the
costs of social benefits which the State has taken on as a
special contribution within the meaning of Article 56 of
the ECSC Treaty: the costs of paying social-welfare bene-
fits resulting from the pensioning-off of workers before
they reach statutory retirement age, other exceptional
expenditure on workers who lose their jobs as a result of
restructuring and rationalisation, the payment of pensions
and allowances outside the statutory system to workers
who lose their jobs as a result of restructuring and rationa-
lisation and to workers entitled to such payments before
the restructuring, supply of free coal to workers who lost
their jobs as a result of restructuring and rationalisation
and to workers entitled to such supply before the restruc-
turing. From a technical and financial viewpoint, it is

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intended to cover additional underground safety work
resulting from restructuring and exceptional
intrinsic
depreciation, provided that it results from the restruc-
turing of the industry.

This aid to cover the costs expressly referred to in section
I(a), (b), (c), (d), (f) and (k) of the Annex to Decision No
3632/93/ECSC may not exceed the said costs if it is to be
in conformity with Article 5 of
the abovementioned
Decision.

Germany gives its assurance pursuant to the provisions of
Article 86 of the ECSC Treaty that the aid will be limited
to what is absolutely essential, taking account of social
and regional considerations relating to the decline of
it will not
coalmining in the Community, and that
provide an economic advantage, either directly or indir-
ectly, for any activity other than coalmining, such as for
industrial activities relating to the mining or processing of
coal from the Community.

The Commission has
information
regarding the costs as part of an audit and has ascertained
that the aid does not exceed the earmarked resources.

examined

the

This will make it possible to reduce the pressure on the
undertakings concerned, which will reduce their financial
imbalance and consequently enable them to continue
their activities. The aid therefore complies with the objec-
tives set out in Article 2(1) of Decision No 3632/93/
ECSC.

VI

In the light of the aim to minimise the aid and in
accordance with its own principle that aid is only to be
paid for production which is supplied for electricity
generation and to the Community iron and steel industry,
Germany undertakes to sell the production intended for
use by industry and as domestic coal at prices (net prices
without discounts) which cover the production costs.

The Commission notes that Germany has included in
regulations the measures needed to ensure that the aid
granted under this Decision does not exceed the differ-
ence between production costs and the selling price for
delivery to user undertakings freely agreed between the
contracting parties on the basis of
the conditions
prevailing on the world market. The aid per tonne of
current production may not cause prices for Community
coal to fall below those of coal of a similar quality from
third countries. Germany will also take care to ensure that
the aid does not distort competition or produce discrim-
ination between coal producers or between coal buyers
and coal users in the Community.

Furthermore, the Commission would remind Germany
that an essential feature of the aid rules is that the aid
must be in the Community interest and must not disturb
the functioning of the common market.

To enable the Commission to examine whether the
undertakings which receive operating aid under Article 3
of Decision No 3632/93/ECSC actually generate a trend
towards a reduction in production costs at world prices,
Germany undertakes to notify the Commission no later
than 30 September of each year of the production costs of
each production unit during the previous year and to
transmit all information pursuant to Article 9 of Decision
No 3632/93/ECSC. Should it not be possible to any great
extent to meet the conditions laid down in Article 3(2) of
Decision No 3632/93/ECSC, Germany will propose the
necessary corrective action to the Commission, such as a
review of the classification of mines pursuant to Articles 3
and 4 of Decision No 3632/93/ECSC.

The Commission is required,
in accordance with the
second indent of Article 3(1) and Article 9(2) and (3) of
Decision No 3632/93/ECSC, to verify whether the aid
granted for current production achieves the objectives set
out in Articles 3 and 4 of the Decision. Germany must
therefore communicate, no later than 30 September 2000,
the level of aid actually paid in 1999 and any changes to
the sums originally notified. In this annual list, Germany
is
information required for verifying
compliance with the criteria laid down in the abovemen-
tioned Articles.

to provide all

In approving the aid, the Commission has taken account
of the need to minimise the social and regional impact of
restructuring,

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HAS ADOPTED THIS DECISION:

Article 2

Article 1

Germany is hereby authorised to take the following meas-
ures to assist the coal industry:

(a) operating aid as defined in Article 3 of Decision No

3632/93/ECSC totalling DEM 5 141 million;

(b) aid for the reduction of activity as defined in Article 4
of Decision No 3632/93/ECSC totalling DEM 3 220
million;

(c) aid as defined in Article 3 of Decision No 3632/93/
ECSC totalling DEM 73 million to maintain an
underground labour force (Bergmannspr(cid:132)mie);

(d) aid as defined in Article 5 of Decision No 3632/93/
ECSC totalling DEM 11,3 million to assist the under-
taking RAG Aktiengesellschaft to cover exceptional
costs;

(e) aid as defined in Article 5 of Decision No 3632/93/
ECSC totalling DEM 748 million to assist the under-
takings RAG Aktiengesellschaft and Sophia Jacoba
GmbH to cover exceptional costs to enable the under-
takings to cover the costs arising from or having
arisen from the restructuring of
industry
which are not related to current production.

the coal

In accordance with Article 86 of
the ECSC Treaty,
Germany undertakes to take all appropriate measures,
whether general or particular, to ensure fulfilment of the
obligations arising from this Decision.

Germany shall ensure that the aid granted, as referred to
in Article 1, is used only for the specified purposes and
that any unused, overestimated or misused expenditure in
relation to any items referred to in Article 1 is repaid to
Germany.

Article 3

Germany shall provide information no later than 30
September 2000 about payments actually made during the
1999 financial year and shall forward the information,
pursuant to Article 9 of Decision No 3632/93/ECSC.

Article 4

This Decision is addressed to the Federal Republic of
Germany.

Done at Brussels, 22 December 1998.

For the Commission

Christos PAPOUTSIS

Member of the Commission