1999/671/EC: Commission Decision of 22 December 1998 concerning aid granted by Germany to Riedel-de Haën AG (notified under document number C(1998) 4566) (Text with EEA relevance) (Only the German text is authentic)
Date: 1998-12-22
Institutions: European Commission
Subjects: Germany, State aid, aid to undertakings, chemical industry, investment aid, redemption

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Official Journal of the European Communities

L 267/51

II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 22 December 1998

concerning aid granted by Germany to Riedel-de Haën AG

(notified under document number C(1998) 4566)

(Only the German text is authentic)

(Text with EEA relevance)

(1999/671/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Communities, in particular the first paragraph of Article 93(2),

Having regard to the Agreement on the European Economic
Area,

in particular Article 62(1)(a),

Having given notice in accordance with Article 93(2) of the EC
Treaty to interested parties to submit their comments, and
having regard to those comments,

Whereas:

1. Procedure

By letter of 3 April 1996, two private individuals lodged a
complaint with the Commission to the effect that Riedel-de
Haën AG (hereinafter referred to as ‘Riedel-de Haën’) (1), Seelze,
Germany had received State aid amounting to DEM 8 million
(ECU 4 million) for investment in a special-waste incinerator.
The complainants provided the Commission with further
particulars by letters of 28 April 1996, 24 September 1996, 4
February 1997, 2 March 1997 and 2 February 1998. They
alleged that the company intended to incinerate its industrial
wastes on its premises after the port authorities of Antwerp

and other cities had refused permission on environmental
grounds for incineration at sea by the incineration ship Vesta.
This was confirmed by a press report (2). According to the
complainants, the company maintained that the new plant was
a bromine-recovery plant. They knew, however, that there had
been such a plant on the company's premises for the previous
25 years.

By letters of 22 April, 28 June and 25 November 1996, the
Commission called on Germany to give its views and to supply
further information on the aid to Riedel-de Haën so that it
could verify what kind of grants were involved and whether
they were compatible with the common market. Germany
replied by letters of 4 June and 30 September 1996 and 8
January 1997, confirming that the company had received two
grants amounting in all to DEM 8 million (ECU 4 million).
After Germany had first stated that the aid was granted for a
bromine-recovery plant, it subsequently explained that the aid
was in fact
incorporating a
bromine-recovery plant.

for a residue-processing plant

By letter of 16 September 1997, the Commission notified
Germany of its decision to initiate the procedure under Article
93(2) concerning the grants of aid amounting to DEM 8
million (ECU 4 million). It concluded that one of the grants had
not been made under the approved Economy and Environment
Scheme (Programme ‘Wirtschaft und Umwelt’), while the
second grant was not covered by any approved rules and
neither of
the grants appeared to be compatible with the
Community Guidelines on State aid for environmental protec-
tion (3). This was notified to Germany by letter of 2 October

(2) ‘Waste disposal problems

for Riedel’, Landkreis-Zeitung West, 11

(1) In appropriate contexts,

‘Riedel-de Haën’ should be understood as

referring to Riedel-de Haën GmbH.

October 1989.

(3) OJ C 72, 10.3.1994, p. 3.

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1997. By letters of 7 November 1997 and 19 March 1998,
Germany gave its views on those questions and reservations
but responded to the Commission's requests for information
only in very general terms.

Development and other costs estimated at DEM 1,9 million
(ECU 0,9 million), with trial-operation costs amounting to
DEM 2,5 million (ECU 1,2 million).

The Commission's Decision was published in the Official Journal
of the European Communities (1). In that Decision, it gave other
parties concerned notice to submit their comments. By the
deadline, 19 January 1998, it had received no comments. On
14 April 1998 solicitors acting for AlliedSignal, Riedel-de
Haën's parent company, set out the company's position.

By letter of 24 June 1998 the Commission asked Germany to
provide the information necessary for it to decide whether the
grants of aid were compatible with the common market. It was
made clear that Germany was being given its last chance to
provide this information; if they failed to do so, the decision
would be taken on the basis of the information at the Commis-
sion's disposal.

Following a meeting with Germany and representatives of
Riedel-de Haën held in Brussels on 28 July 1998, Germany and
Riedel-de Haën responded with a joint letter of 28 August
1998. In that letter they considered the position adopted by
Riedel-de Haën in its letter of 14 April 1998. This position was
fully taken into consideration by the Commission. The
following analysis of Germany's position incorporates the
Commission's analysis of Riedel-de Haën's position.

2. Aid

Each year Riedel-de Haën generates 1 300 tonnes of liquid
waste containing halogenated hydrocarbon compounds. This
waste was previously disposed of by specialised businesses in
special-waste
company began
constructing a recycling plant so that it could dispose of the
liquid waste on site. The plant is not yet operational.

In 1994 the

incinerators.

Germany initially assessed the cost of the project at DEM 21,4
million (ECU 10,7 million) but adjusted this to DEM 20,6
million (ECU 10,3 million) by letter of 28 August 1998. This
figure incorporates investment, development and other costs as
well as operating costs.

The company's investment costs are estimated at DEM 16,3
million (ECU 8,1 million), of which DEM 14,2 million (ECU
7,1 million) were invested by 24 June 1998. The following
table provides a breakdown of the various costs: [... (2) (3)] (*).

(1) OJ C 385, 19.12.1997, p. 9.
(2) *
(3) *
(*) Parts of this text have been edited to ensure that confidential infor-
mation is not disclosed; those parts are enclosed in square brackets
and marked with an asterisk.

The accuracy of those figures was verified by a firm of account-
ants.

Riedel-de Haën was granted the following investment aid:

1. a grant of DEM 4 million (ECU 2 million) from the Lower
Saxony Economic Assistance Fund (letter of 25 April 1994)
as part of the Economy and Environment Scheme, which
had been approved;

2. a grant of DEM 4 million (ECU 2 million) from the Federal
Foundation for the Environment (letter of 20 May 1994)
under a scheme which at the time had not been approved
by the Commission.

According to Germany,
million (ECU 1,4 million) have been paid over.

instalments amounting to DEM 2,9

3. Comments of the German authorities

By letter of 28 August 1998, Germany submitted the
comments set out below.

It maintained that the plant was used exclusively for environ-
mental protection purposes.

Moreover, it was alleged that the Economy and Environment
Scheme had already been authorised by the Commission and
declared to be compatible with the common market. A copy of
it and the
the Scheme,
the Commission's authorisation of
the
notice authorising it published in the Official
European Communities were appended.

Journal of

The Federal Foundation for the Environment's aid was in prin-
ciple compatible with the Community Guidelines.

Moreover, the grants could also be considered aid for research
and development within the meaning of
the Community
framework for aid for research and development (4).

In addition, Germany expressed the view that the Commission
could not require the aid to be repaid since the company's
legitimate expectations must be met.

Germany presented an excerpt from the Commercial Register
entry for Riedel-de Haën AG and Riedel-de Haën GmbH, the
annual report for 1997 and a list of the company's fixed assets,
in particular the plant producing halogenated hydrocarbon,
together with a plan of the production site in Seelze.

(4) OJ C 83, 11.4.1986, p. 2.

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A table of the project costs and a breakdown of those costs
viewed from various standpoints were also presented. The
accuracy of the data had been verified by a firm of accountants.
To this data was appended a comparison of
the costs,
contrasting the current supply costs with the costs of supplies
in the new plant. A firm of accountants had verified part of the
costs forming the basis of those calculations.

Explanations were also provided by Germany regarding the
operations of the incineration and recycling plant and the
difference between the old and new bromine-recovery plant. A
second environmental
impact assessment on Riedel-de Haën
from 1995 was also provided, together with the report of an
expert on the generation of contaminants by the new plant, as
well as supplementary materials. A Riedel-de Haën brochure
entitled Recycling plant for bromine residues — verification of envir-
onmental compatibility was also lodged.

A copy of
(BimSchV) (1) and Technical
appended to the foregoing documents.

the 17th Federal Emission Protection Order
‘Air 86’ was
Instructions (TA)

In addition, a copy of Riedel-de Haën's application for aid
under Council Regulation (EEC) No 1973/92 (2) which estab-
lishes the LIFE programme, a copy of the Commission's refusal
and a copy of the company's letter and reply were presented.

A copy of Riedel-de Haën's applications for aid to the Lower
Saxony Economic Assistance Fund and the Federal Foundation
for the Environment was also appended.

The results of the environmental impact assessment were also
notified.

4. Assessment

4.1. The recipient of the aid

Riedel-de Haën is a former subsidiary of Hoechst AG and since
4 November 1996 has belonged to the American group Allied-
Signal Inc., Morristown, New Jersey.

In 1997 it had an average of 1 256 employees and generated
turnover amounting to DEM 409,2 million (ECU 204,6
million) with total assets of DEM 459,1 million (ECU 229,5
million). When measured according to the Commission
Recommendation of 3 April 1996 concerning the definition of
small and medium-sized enterprises (3), Riedel-de Haën is a
large enterprise.

The company is located outside the assisted areas in Lower
Saxony.

It is a chemical enterprise operating in the following fields:
inorganic chemicals, laboratory chemicals, organic chemicals,
technical preservation products, electrochemicals, luminescent

(1) The 17th Order for the implementation of

the Federal Law on
emission protection for incinerators for waste and similar com-
bustible materials.

(2) OJ L 206, 22.7.1992, p. 1.
(3) OJ L 107, 30.4.1996, p. 4.

pigments, photographic dyes, pharmaceuticals and medicinal
products.

4.2. Aid

The Lower Saxony Economic Assistance Fund and in the
Federal Foundation for the Environment are public institutions
that finance their grants of aid, including the present grants,
from State resources.

By letter of 28 August 1998, Germany called in question the
status of the Foundation as a State institution. In response to
this, the Commission again brought out the points which were
relevant to its decision: the Foundation was set up by a federal
law (4);
its capital, amounting to over DEM 2,5 billion
(ECU 102 billion), derived from the privatisation of the former
State enterprise Salzgitter AG. Paragraph 2 of the Law states
that the Foundation's object is to provide financial support for
environmental projects, particularly when they are imple-
mented by SMEs. Under Paragraph 5(2) of the Law, the Foun-
dation's board members are appointed by the Federal Govern-
ment and they decide, inter alia, what assistance will be granted.
In granting aid, the Foundation does not have a generally
applicable and automatic procedure on the basis of objective
criteria and in actual fact it is the German authorities who, with
the assistance of the board, take the decision according to their
discretion. Lastly, under Paragraph 3 of the Law, the Founda-
tion is audited by the Federal Court of Auditors. Having regard
to all those circumstances and to the fact that Article 92(1)
applies to ‘any aid granted by a Member State or through State
resources in any form whatsoever’, the Commission concludes
that the Foundation's assistance constitutes State aid within the
meaning of Article 92(1). In fact, Germany has in the mean-
time notified the Foundation's amended rules under Article
93(3), which have been authorised by the Commission as State
aid compatible with the common market.

In the various sectors of its activities Riedel-de Haën competes
with chemical enterprises in other Member States. Its products
feature in intra-Community trade. In 1997 it generated 52 % of
its turnover on foreign markets, 67 % of that being in Europe.
The aid lowers its investment costs considerably, giving it an
advantage over competitors from other Member States who do
not receive such investment aid and is liable to prejudice their
competitive position.

Regarding bromine recovery, Riedel-de Haën may well be in
competition with other businesses that operate this kind of
plant. In a study presented by Germany (5), it was estimated
that at
least 10 bromine-recovery plants were needed in
western Europe. The grants of aid give Riedel-de Haen an
advantage over businesses in other Member States that also
have that kind of plant but no aid and are liable to affect their
competitive position adversely.

(4) Law of 18 July 1990 on the establishment of the Federal Founda-

tion for the Environment, BGBI. 1, p. 1448.

(5) ‘Study of

the transferability of

the plant developed by Riedel-de
Haën AG., Seelze for the recovery of residues’, by Professor Hesse,
Hanover, 9 September 1993.

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Both grants of aid are thus liable to distort trade between
Member States and therefore constitute State aid within the
meaning of Article 92(1).

4.3. Obligation of notification

Aid from the Lower Saxony Economic Assistance Fund

On 1 December 1993 Riedel-de Haën applied to the Lower
Saxony Economic Assistance Fund for financial support. By
letter of 25 April 1994 the Fund made a grant under the
Economy and Environment Scheme of DEM 4 million (ECU 2
million) towards project costs amounting to DEM 21,4 million
(ECU 10,7 million). It was intended that the investment should
be completed on 31 December 1996. According to Germany,
at this time funding amounting only to DEM 8,2 million (ECU
4,1 million) had been expended on the project, of which
DEM 6,5 million (ECU 3,2 million) was accounted for by
investment costs. Under the aid contract, Riedel-de Haën there-
fore should not have received the full amount of the DEM 4
million (ECU 2 million).

In its Decision initiating the procedure under Article 93(2), the
Commission has already expressed its finding that the Fund's
grant was not made on the terms fixed in the Economy and
Environment Scheme that the Commission authorised on 13
September 1991 for the period 1991 to 1994. Under the
Scheme, the Fund was entitled to provide aid for investments
for environmental projects. The thrust is clearly on develop-
ment and demonstration projects which involve ‘ecological
added value for the Community’. Under point 2 of the Scheme
‘only expenditure which basically exceeds existing legal require-
ments may be regarded as eligible for assistance’.

In spite of being requested to do so by the Commission,
Germany has not indicated which part of the investment mani-
festly exceeds the legal requirements (1).
It is thus unclear
whether parts of the project were eligible within the meaning
of the Scheme and, if so, which parts. It is clear that the Fund
has not acted in accordance with point 2 of the Scheme. At the
meeting held in Brussels held on 28 July, the German delega-
tion furthermore confirmed that no special
investment was
required in order to exceed existing legal requirements.

Regarding the comments sent by Germany by letter of 28
August 1998, the Commission sees no reason to review its
examination of the Scheme and refers Germany to the Decision
it has already adopted. The fact is that a review of that exam-
ination would merely confirm that Decision.

(1) In this connexion, see also Part 4.5 of this Decision

The Economy and Environment Scheme for Lower Saxony thus
provided no grounds for the Fund to grant Riedel-de Haën the
aid in question. The grant must therefore be considered an
individual grant of aid and as such should have been notified
by Germany under Article 93(3). The aid was therefore granted
unlawfully.

Aid from the Federal Foundation for the Environment

On 10 September 1993 Riedel-de Haën applied to the Founda-
tion for financial support. Since the Foundation, in its exam-
ination, proceeded on the basis of an application of 10
September 1993 it may be that
the company altered its
application to a subsequent date. By letter of 20 May 1994 the
Foundation granted aid amounting to DEM 4 million (ECU 2
million).

The Commission has already found in its Decision initiating the
procedure under Article 93(2) that the aid does not come
under an authorised scheme. Germany has not disputed this
view. It follows that Germany has failed to comply with its
duty of notification under Article 93(3) for this aid, too. The
aid was therefore granted unlawfully.

The Commission further points out that the Foundation made
the grant of aid conditional on the company's providing from
its own funds DEM 15,7 million (ECU 7,6 million) of the
probable costs of the project amounting in all to DEM 19,7
million (ECU 9,8 million). The aid granted by the Fund reduces
the burden on the company in so far as the condition has not
been fulfilled.

4.4. Exemptions

The aid specified in Article 92(1)
is incompatible with the
common market. Article 92(2) and (3) sets out the conditions
to be met if aid is to be considered compatible with the
common market.

The Commission has examined whether the grants of aid
amounting to DEM 8 million (ECU 4 million) qualify under
the latter provisions for exemption from the general prohibi-
tion on aid.

Article 92(2) does not apply since the assistance does not
constitute aid having a social character, granted to individual
consumers, aid to make good the damage caused by natural
disasters, or aid granted to the economy of certain areas of
Germany affected by the division of Germany.

Article 92(3)(a) and the exemptions for regions in Article
92(3)(c) are not applicable since the company is not located in
an assisted area.

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Moreover, there are no grounds for granting an exemption
under Article 92(3)(b) since, in the Commission's opinion, the
project does not meet the criteria normally applicable for it to
be treated as an important project of common European
interest and the aid is not intended to remedy a serious disturb-
ance in the economy of a Member State.

Likewise,
there is no question of exemption under Article
92(3)(d) since the aid is not intended to promote culture or
conserve heritage.

The only provisions that might be applicable are the first part
of Article 92(3)(c), under which aid to facilitate the develop-
ment of certain economic activities can be exempted where it
does not adversely affect
trading conditions to an extent
contrary to the common interest.

4.5. Compatibility with the Community Guidelines

Germany maintains that the aid is to be considered investment
made for environmental protection. The conditions on which
investment can be considered aid for environmental protection
such as is compatible with the common market are laid down
in Community Guidelines.

The current Community Guidelines were published on 10
March 1994. Since both grants of aid were made after that
date, namely on 25 April and 20 May 1994, the Commission
considered them in the light of the current Community Guide-
lines.

Germany argues that the plant is not for production purposes
but is exclusively intended for environmental protection. More-
over, the company is not under an obligation to construct a
residue-processing plant. Consequently, they conclude that it
was permissible to grant the total project costs — namely
investment costs including development and other costs — as
aid for environmental protection.

The Commission cannot share this standpoint. In its view, the
new plant does
indeed involve the production process.
Riedel-de Haën's production creates hazardous liquid wastes
that it is under an obligation to dispose of; disposal can thus be
considered part of
the production process. The new plant
enables the waste to be disposed of on-site and is thus part of
the production process. Moreover, the bromine-recovery plant,
which forms a significant part of the processing plant, recovers
major quantities of bromine that can be directly returned to the
production process.

opment and other costs or the costs of trial operations. More-
over, point 3.2.1 states unequivocally that ‘the eligible costs
must be strictly confined to the extra investment costs neces-
sary to meet environmental objectives. General
investment
costs not attributable to environmental protection must be
excluded’. It was therefore necessary for Germany to establish
which part of the investment costs were attributable to envir-
onmental protection.

Proceeding on those principles, the Commission has concluded
that the following aid could be considered aid for environ-
mental protection:

1.

investment to help firms adapt to new mandatory standards
or to promote quicker compliance with those standards;

2.

investment to support measures that lower emissions and
significantly exceed mandatory standards;

3.

investments that, notwithstanding the absence of mandatory
standards, are adopted on the basis of agreements whereby
companies intensify their efforts to reduce environmental
pollution, notwithstanding the absence of a statutory obliga-
tion or before such an obligation comes into effect.

Investment aid to help firms adapt
standards

to new mandatory

With regard to the first category, the Community Guidelines
provide in point 3.2.3.A that,
‘in keeping with the “polluter
pays” principle, no aid should normally be given towards the
cost of complying with mandatory standards in new plant’.

The Commission points out that the residue-processing plant
forms a new investment, not the replacement of existing plant.
Furthermore, Riedel-de Haën was already operating a bromine-
recovery plant. According to Germany's information, this plant
had been decommissioned as early as 1985 and, from a tech-
nical standpoint, was significantly inferior to the new plant
integrated into the residue-processing plant. Consequently, the
Commission does not consider the new plant as a replacement
for the existing plant.

the

that

thus

entire

follows

residue-processing plant
It
undoubtedly constitutes new plant for the purposes of the
Community Guidelines. It is therefore impossible to authorise
the aid as investment to adapt to new mandatory standards
since this is contrary to the ‘polluter pays’ principle.

Investment
to
mandatory standards

aid

firms

going

significantly

beyond

Under point 3.2.1 of the Community Guidelines, aid for invest-
ment can be granted for investment in land, buildings, plant
and equipment. Under those provisions only the investment
costs of DEM 16,3 million (ECU 8,1 million) might possibly be
considered aid for environmental protection, but not the devel-

Germany maintains that the aid constitutes an incentive to
improve on mandatory standards. However, the Commission,
in its position of 28 August 1998, concluded that Germany
granted the aid only partly for this objective.

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The general emissions standards for projects of this nature are
laid down in the 17th Federal Emission Protection Order. The
Order requires the Land authorities to adopt decisions laying
down the applicable environmental standards,
taking into
account the characteristics of each individual project. In the
present case the Government of the Land of Lower Saxony
fixed the mandatory standards in a decision of 15 March 1991
applicable to Riedel-de Haën's site and confirmed them in its
decision of 11 August 1996 granting the authorisation.

The requirements laid down by the Land Government of Hann-
over in its decision go beyond the requirements of the Order.
While the decision fixes mean values for emissions in terms of
half hourly readings, the emission mean values in the Order are
only fixed for daily readings. Germany therefore considers that
the company is improving on the requirements laid down in
mandatory standards.

The Commission does not share this view. Since the decision
requires the company to comply with mean values,
those
values are obviously the mandatory standards. The only part of
the investments eligible for aid is that part relating to the
in the
measures going beyond the mandatory standards
decision.

The Commission therefore requested Germany to state whether
a significant reduction in emissions below the prescribed mean
values was linked to increased costs and,
if so, how much.
However, Germany has failed to indicate which part of the
investment served to improve on the standards, either those
fixed in the decision or in the Order. In fact, at the meeting in
Brussels on 28 July 1998 the German delegation confirmed
that no special investments were needed to comply with the
values specified in the decision that improved on the values in
the Order.

Consequently, the Commission cannot authorise the assistance
as investment aid to encourage firms to improve on mandatory
standards since Germany has failed to establish that there are
any investment costs eligible for aid.

Aid in the absence of mandatory environmental standards

By letter of 28 August 1998, Germany maintained that the aid
had been granted for environmental protection in fields in
which there were no mandatory standards.

They claimed that the company had hitherto disposed of its
residues in a special-waste incinerator. Recycling the residues
instead of incinerating them would generate significantly lower
levels of gaseous and solid wastes. Regarding hazardous wastes,
the Order prescribed threshold values for concentrations only
but not for the relevant quantities. Consequently, the invest-
ment would result in an appreciable improvement in environ-
mental performance in a field in which there are no mandatory
standards.

Under point 3.2.3.C of the Community Guidelines, in fields in
which there are no mandatory standards or other legal obliga-
tions on firms to protect the environment, firms undertaking

investment that will significantly improve on their environ-
mental performance or match that of firms in other Member
States in which mandatory standards apply may be granted aid
subject to the same condition of proportionality as for going
beyond existing standards, as indicated in point 3.2.3.B of the
Guidelines.

Under point 3.2.3.B of the Community Guidelines, the level of
aid actually granted for exceeding standards must be in propor-
tion to the improvement of the environment that is achieved
and to the investment necessary for achieving the improve-
ment. It follows that aid cannot be granted if, in comparison to
the plant
that would in any case have been installed, an
improvement in the environment does not occur or the invest-
ment is made on commercial grounds and not in order to
achieve an improvement in environmental conditions.

i.e.

are

taxes

and levies,

this part of

the
the essential purpose of
In order words,
Community Guidelines is to allow State aid for the purpose of
encouraging a firm to carry out supplementary investment to
secure an improvement in environmental performance. For
this, both positive financial incentives, i.e. aid, and disincen-
considered appropriate
tives,
(Community Guidelines, point 1.2). The ultimate objective of
investment incentives in this sphere is to facilitate a gradual
improvement in the quality of the environment (Community
Guidelines, point 1.5.1). The Community Guidelines are not
intended to allow the grant of State aid for a general invest-
ment which a company would in any case have made on
business grounds.
the
Community Guidelines that the eligible costs must be strictly
confined to the extra investment costs necessary to meet envir-
onmental objectives.

is laid down in point 3.2.1 of

It

On the basis of the objectives fixed in point 3.2.3.C of the
Community Guidelines, the Commission concludes that in the
case of a new plant a firm's comparable, non-equivalent activi-
ties cannot form the basis for assessing aid for environmental
protection; nor can a firm's processes that are least harmful to
the environment while only just above the statutory minimum.
That would be directly contrary to the objective of
the
Community Guidelines. Instead, the environmental impact of a
particular plant must be compared with the impact of a similar
and comparable plant which the firm would in all likelihood
have contemplated on economic considerations.

Applying those principles, the Commission concludes that a
comparison between disposal in a residue-processing plant and
an incinerator is only justified if the company would have
made the investment on environmental grounds, not on
economic considerations. It is only on those conditions that
the aid forms an incentive for environmental protection, not a
general
in the Commis-
sion's view there is sufficient evidence for an economic objec-
tive for this investment.

incentive for investment. However,

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As has been mentioned above, the company is under an obliga-
tion to dispose of
its noxious liquid waste. According to
Germany,
the liquid waste must be incinerated since final
disposal is impossible. Incineration can be carried out in local
special-waste incinerators. Because of
their high bromine
content, the residues can only be incinerated in small quantities
as supplements to other wastes.

Proceeding on the basis of the abovementioned considerations,
the Commission must
thus verify whether Riedel-de Haën
intended, on environmental grounds, to make specified invest-
ments in the residue-processing plant, which increased the
investment costs, while it must be assumed,
in view of the
plant's environmental impact, that the company would in any
event have installed it on purely economic grounds.

In future incinerator operators might possibly refuse to dispose
of such wastes because waste with a high bromine content
leads to significant deterioration in the plant. It can therefore
be assumed that
the disposal costs of waste with a high
bromine content will rise appreciably in the near future. The
new plant would mean that the company was not dependent
upon the price policy of the operator of the special-waste
incinerator and would be able to avoid dependence by having
the company dispose of its liquid waste itself.

According to the expert report submitted by Germany, gaseous
and solid wastes are reduced because,
in the incineration
process, 11 % by volume of oxygen concentration in dry waste
gases occurs while in a residue-processing plant the oxygen
concentration is usually 3 % by volume. Riedel-de Haën's plant
operates with an oxygen concentration of 3 % by volume. The
amount of waste gases generated by this plant is in fact an
operational characteristic and thus does not produce any
improvement over other plant of this kind.

In addition the recovery plant will enable Riedel-de Haën to
recycle significant quantities of substances each year including
330 tonnes of bromine, 440 tonnes of potassium chloride and
160 tonnes of potassium fluoride and to use them again
directly in the manufacturing process. This could allow the
company to reduce its production costs appreciably.

The Commission points out that Germany has tried to argue
that these are necessary costs for an appreciable improvement
in environmental terms in a field where there are no manda-
tory standards. It has, however, failed to prove that, by opting
to invest in a residue-processing plant, the investment was
made exclusively or mainly for the purposes of environmental
protection.

Lastly, the company will save the costs of transporting its
liquid waste from its site to the special-waste incinerator.
According to Germany, considerable costs are involved.

The Commission is consequently unable to regard this support
as investment aid for environmental protection in fields where
there are no mandatory standards, since Germany has failed to
prove the existence of eligible investment costs.

The Commission cannot agree with Germany's view that the
advantages for the environment provided by the plant are that
disposal of
the residues in the special-waste incinerator is
cheaper than processing in special plant. Germany has merely
provided the Commission with an imprecise calculation to the
effect that additional costs of [...] * per year would be incurred.
The conclusive nature of this calculation and its accuracy have
not been established, however, nor have they have been
confirmed by the firm of accountants in its verification, which
merely stated that the accuracy of the costs of disposal of the
residues in 1996 and 1997 had been duly established.

Moreover, Riedel-de Haën would be the only German company
with a bromine-recovery plant. According to a report lodged
by Germany,
the company would be able to dispose of
bromine residues for small and medium-sized enterprises. The
view taken in the report was that ‘if the project were carried
out, it would be highly interesting to many businesses’. The
new plant is designed to process [...] * tonnes of residues per
year. Germany has established that in 1996 and 1997 only
liquid wastes could be disposed of. The
[...] * tonnes of
company could therefore acquire new business, with additional
income and economies of scale.

Operating aid

Under point 3.4 of the Community Guidelines, in accordance
with long-standing policy, the Commission does not normally
approve operating aid which relieves firms of costs resulting
the
from the pollution or nuisance they cause. However,
Commission may make an exception to this principle in certain
well-defined circumstances. In the field of waste management,
the public financing of the additional costs of selective collec-
tion, recovery and treatment of waste for the benefit of busi-
nesses as well as consumers may involve State aid. Under point
1.5.3 of the Community Guidelines, such plant can be operated
by semi-public bodies whose service costs are met by
consumers. Taking account of all the circumstances of the case,
on the basis of the existing information and in view of the
nature of the procedure and on the basis of the preceding
analysis, the Commission considers that the aid at issue in this
procedure could not have been granted on the basis of point
3.4 of the Community Guidelines.

4.6. Other considerations

Those considerations establish clearly that Riedel-de Haën, in
investing in the recycling plant, was motivated by economic,
not environmental, considerations. A comparison of the quant-
ities of harmful residues from such plant with those of an
incinerator is thus inappropriate.

By letter of 19 March 1993, Riedel-de Haën asked the Commis-
sion for aid under
the LIFE programme. According to
Germany, the programme was not in fact financed by the
Commission because funding was lacking but the company
assumed that the Commission had recognised the project's
innovatory characteristics.

L 267/58

EN

Official Journal of the European Communities

15. 10. 1999

The repayment must be made in accordance with the proced-
ures and rules of German law, in particular those concerning
interest on the State's outstanding claims, to the effect that
interest is payable from the time when the unlawful aid was
granted. This measure is necessary in order to restore the
financial advantages
original situation by making good all
received by the assisted enterprise from the point when the aid
was unlawfully paid,

HAS ADOPTED THIS DECISION:

Article 1

The aid of DEM 4 million from the Lower Saxony Economic
Assistance Fund and the aid of DEM 4 million from the
Federal Foundation for the Environment have been granted
unlawfully to Riedel-de Haën AG, Seelze, and are not compat-
ible with the common market.

Article 2

Germany shall take the necessary measures to recover the aid
paid to Riedel-de Haën AG or its successor. If this proves
take the necessary measures to
impossible, Germany shall
recover the aid specified in Article 1 from Riedel-de Haën
GmbH.

The aid shall be recovered in accordance with the procedures
and rules of German law. Interest shall be payable on the sums
recovered from the time when they were granted until actual
repayment is made. The rate shall be that used by the Commis-
sion during the period in question to calculate the net grant
equivalent of regional aid.

Article 3

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

This Decision is addressed to the Federal Republic of Germany.

Article 4

Done at Brussels, 22 December 1998.

For the Commission

Karel VAN MIERT

Member of the Commission

However, the Commission certainly did not recognise this as
an innovatory project and accordingly, by letter of 30 July
1996, refused the application while in fact adding that if the
plan were amended there would be a prospect of Community
assistance in the succeeding year.

Germany also took the view that the aid for R&D could be
exempted. However, the Commission considers that there is no
justification for this aid. It refers to the brochure produced by
Riedel-de Haën Recycling plant for bromine residues — verification
of environmental compatibility, according to which the technology
in question had been developed as early as 1989 by a US
engineering firm. Nevertheless, State aid was granted on 25
April and 20 May 1994. Moreover, Germany has failed to
demonstrate that there are any costs that could be considered
the
for
eligible
Community Guidelines.

research and development

aid under

5. Conclusions

It is clear that both grants of aid are at odds with the applicable
Community Guidelines on State aid for environmental protec-
tion and therefore, in relation to the environmental-protection
criterion, are not compatible with the common market.

The project must be considered a general investment project.
Riedel-de Haën is a large enterprise located outside an assisted
area. However,
investment aid for such a firm cannot be
exempted under Article 93(3)(c).

These grants of aid, which are not covered by exempting
provisions, adversely affect trading conditions to an extent
contrary to the common interest. Moreover, they would give
Riedel-de Haën an unjustified advantage over its competitors
that do not receive assistance.

The aid is not compatible with the common market since it
was unlawfully granted for the purposes of Article 93(3) and
does not fulfil the conditions for the exempting provisions in
Article 92(2) and (3).

The grants of aid must therefore be terminated and repaid, in
accordance with the terms set out by the European Court of
Justice in its judgment in Case C-301/87 (1). Repayments to be
effected must make good the distortion of competition
resulting from the grant of the aid, notwithstanding any formal
restructuring carried out within the group. If for any reason the
repayment cannot be made by Riedel-de Haën AG or its
successor, the aid must be recovered from the group's subsidia-
ries continuing the business and/or exploiting the productive
assets acquired by Riedel-de Haën through the aid, namely
Riedel-de Haën GmbH.

(1) [1990] ECR I-307, paragraph 22.