2000/317/EC: Commission Decision of 8 July 1999 on State aid which Italy plans to grant to Fiat Auto SpA for its plant at Piedimonte San Germano, Cassino (Notified under document number C(1999) 2267) (Text with EEA relevance) (Only the Italian text is authentic)
Date: 1999-07-08
Institutions: European Commission
Subjects: Italy, Latium, State aid, application of EU law, control of State aid, motor vehicle industry

6.5.2000

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Official Journal of the European Communities

L 110/1

II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 8 July 1999

on State aid which Italy plans to grant to Fiat Auto SpA for its plant at Piedimonte San Germano,
Cassino

(Notified under document number C(1999) 2267)

(Only the Italian text is authentic)

(Text with EEA relevance)

(2000/317/CE)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Community, and in particular the first subparagraph of Article
88(2) thereof,

Having regard to the Agreement on the European Economic
Area, and in particular Article 62(1)(a) thereof,

Having
comments
provisions (1),

invited the parties

concerned to submit

in

accordance with

the

their
abovementioned

Whereas:

I. PROCEDURE

(1) Between October

and December 1997 the

Italian
Government notified the Commission, pursuant
to
the Treaty, of six planned measures
Article 88(3) of
under which it proposed to grant State aid to Fiat Auto
SpA (Fiat) (2), one of which concerned the plant at
Piedimonte San Germano, Cassino, Lazio (Fiat Cassino),
registered by the Commission under N 729/97 on 29
October 1997. Requests for further information and a
number of reminders were sent to the Italian authorities

(1) OJ C 113, 24.4.1999.
(2) Four of

these measures

related to motor vehicle production:
Cassino-Piedimonte San Germano, Mirafiori Carrozzeria (C 5/99, ex
N 728/97), Pomigliano (C 4/99, ex N 727/97) and Rivalta (C 8/99,
ex N 834/97); while two concerned enginge production: Termoli
(C 7/99, ex N 730/97) and Mirafiori Meccanica (C 9/99, ex N
838/97).

to elicit the data required for a Commission decision. On
23 April 1998 a meeting was held with representatives
of the Italian authorities and Fiat to clarify various points
connected with examination of the case. Finally,
in a
the Italian authorities
letter of 20 November 1998,
supplied partial replies to the questions raised by the
Commission.

(2) By letter of 2 March 1999 the Commission informed
Italy that it had decided to initiate the procedure laid
down in Article 88(2) of the Treaty in respect of the
proposed aid measures, allowing Italy one month to
supply all the documents, information and data required
to assess the compatibility of the aid with the common
market.
In the absence of any reply, the Commission
would reach a decision on the basis of the information in
its possession.

(3) The decision to initiate the procedure was published in
the European Communities (3), and
the Official
interested parties were invited by the Commission to
submit comments.

Journal of

The Commission has not received any comments from
interested parties.

(4) Representatives of the Commission went to Mirafiori on
24 February 1999 to discuss the Fiat Cassino plan among
other matters. Finally, on 17 May 1999 an on-site visit
was arranged at Cassino.

(3) See footnote 1.

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II. DETAILED DESCRIPTION OF THE AID MEASURE

(5) The aid proposed by the Italian authorities would be
granted to Fiat, which has plants in Italy, Poland, Turkey
and South America. In 1997 Fiat produced 2,8 million
vehicles of
the Alfa Romeo, Ferrari, Fiat, Lancia and
Maserati makes, 1,8 million of which in Italy. In 1997 it
employed around 62 000 people in Italy, 7 000 of them
at Cassino, where cars of the Fiat make are produced. A
significant share of Fiat’s sales, roughly one third,
is
recorded in other Member States.

(6) The investment notified is at Fiat Cassino,

in an area
qualifying for assistance under Article 87(3)(c) of
the
Treaty, where the maximum aid intensity for large firms
is 10 % net grant equivalent (nge). The investment started
it amounted to
in 1993 and was completed in 1997;
ITL 677,8 billion (present value:
ITL 548,7 billion, or
EUR 233 million) and enabels the new Fiat Bravo/Brava
models
following very
extensive modifications to the plant, production capacity
has fallen from 1 750 to 1 400 cars per day with the
elimination of a half shift.

to be produced. However,

(7) According to the Italian authorities,

the aid, worth a
nominal
ITL 56,4 billion (EUR 29 million) would be
granted under the approved scheme provided for by Law
No 488 of 19 December 1992 on the refinancing of Law
No 64/86 (4) (Law No 488/92), approved by Commission
decision of 24 March 1995. The discounted aid intensity
would thus be 3,52 % nge or 4,30 % gross grant
equivalent (gge).

(8) The Commission

decided

formal
investigation procedure in respect of the proposal aid
measure,
Italian Government
accordingly, for the following reasons in particular:

informed

initiate

and

the

the

to

(9) The Commission enjoined Italy to supply within one
the
information required to assess
the aid measure in question and to

the
month all
compatibility of
provide certain specific documents, including:

(a) a location study demonstrating that the project was

geographically mobile;

(b) a cost-benefit analysis based on the identification of a
reference (comparator) plant in a non-assisted area of
the Community in order to compare the operating
costs (labour, components/materials, rent,
inventory
carrying costs,
telecommunications,
inward and outward transport, training, etc.), over a
period of
from the beginning of
commercial production and the investment costs
building/construction,
purchase,
(including
machinery/equipment,
supplier
and
tools
tooling, etc.) in both locations;

energy/water,

three years

dies,

land

(c) data on the production capacity of the group before

and after the investment.

In the absence of any reply, the Commission would reach
a decision on the basis of
the information in its
possession.

III. COMMENTS BY ITALY

(10) On 9 April 1999 the Italian authorities requested an
extension of the deadline for their reply, and on 16 April
they sent a letter to the Commission containing the
information
the
necessary
examination of the six cases notified between October
and December 1997 for which the Commission had
decided to initiate the formal investigation procedure on
3 February 1999.

conclude

deemed

to

(a)

it had doubts as to the nature of some of
investments, which possibly in fact
modernisation of the production lines;

the
involved a

(b)

it had doubts, given the approved scheme that was
being applied, about
investments
made between the end of February 1993 and 1 May
1994;

the eligibility of

(c)

it had doubts about the need for the aid, and in
particular the alleged mobility of the investment;

(d)

it had doubts about the level of aid that could be
since the Italian authorities had not
authorised,
provided the necessary information for a cost-benefit
analysis (CBA).

the economic reality of

(11) First, the Italian Government stressed what it saw as the
failure of the study carried out by the Commission to
the decision on plant
reflect
location,
the interconnected
themes of mobility and performance of the cost-benefit
analysis. The comments made in this context go beyond
the specific case of Fiat Cassino and relate to all of the
six Fiat cases mentioned.

in particular as

regards

(12) As far as the assembly plants are concerned (5),

Italy
noted that Fiat had in particular drawn up a coherent
investment programme for the period 1993 to 1998
after
the
two scenarios:
investments concerned giving preference to production in
its Italian plants or, alternatively,
to its Polish plants
(maximising transfers of production to Tichy and

carrying out

considering

(4) Italian Official Gazette No 299 of 21 December 1992.

(5) Cassino, Mirafiori Carrozzeria, Pomigliano and Rivalta.

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Bielsko-Biala). The diagrams attached to the letter of 16
April 1999 illustrate the capacity allocations to each
plant according to the scenario under consideration. A
number of studies carried out by Fiat demonstrated that
the option of installing production capacities in Poland
for segment B, C and D vehicles of the Fiat and Alfa
Romeo makes would have been more profitable than the
option which Fiat finally decided on and which limited
production in Poland exclusively to segment A. By
investing the same or only slightly higher amounts in
Poland, it could have obtained a higher return thanks to
lower labour costs, cheaper transport
to the markets
being served (6) and lower component costs, since Fiat’s
network of
suppliers, which was already well
organised, would have been further developed.

local

(13)

turnover,

Italy pointed out
that Fiat could have achieved the
workforce reduction necessary for relocating production
to Poland through staff
in particular by
deciding not to replace the many workers that were due
to retire given the shape of
the
various plants belonging to the group. On the other
hand, a fall in employment in areas of Italy in industrial
decline or in the south of the country would have been
seen as a negative consequence by Fiat as well.

the age pyramid at

(14) The expected regional aid would not be sufficient

to
offset
the additional costs entailed by the decision to
carry out this investment in Italy, but it was undoubtedly
a factor in the decision.

(15) The Italian Government therefore believed that the Fiat
Cassino, Mirafiori Meccanica, Pomigliano and Rivalta
projects satisfied the geographical mobility criterion.

The Fiat Cassino project was mobile for the general
reasons already given.
Italy added that the real choice
that Fiat had to make for the Bravo/Brava models was
between (i) allocating 1 200 cars per day to Fiat Cassino
and 200 to the Rivalta plant and (ii) allocating 1 000
cars per day to Fiat Cassino and an equivalent (7) of 400
cars per day to the Bielsko-Biala plant.

(16) Second, Law No 488/92 did not allow aid to be granted
in the six cases concerned to a single horizontal aid
programme, requiring instead that grant applications be

(6) The markets of central Europe (Germany, France, Belgium and the

Netherlands) and eastern Europe.

(7) The number of cars produced per day in Poland would in fact have
been 374, because more days are worked there than in Italy: when
spread over a year, the production of 374 cars per day for 246
working days is equivalent to the production of 400 cars per day
for 230 working days.

times,

these cases was

separated. Because six sites were interested in the first
two calls for applications used to select projects eligible
for aid, Fiat submitted six separate applications. The six
therefore notified to the Commission
cases were
separately. The handling of
further
complicated by the fact that the projects were notified at
two different
in October 1997 and December
1997. This
led the Commission to apply the two
different versions of the Community framework for State
relevant
aid
to the motor
the
Community framework)
notification (8). Under the first of these, the comparator
site in the cost-benefit analysis had to be located in a
non-assisted region of
the
second allows the use of a comparator site situated in
Europe or the countries of central and eastern Europe.

the Community, whereas

(the
the time of

in force at

industry

vehicle

(17) This artificial distinction did not reflect

of

the

and

overlooked

investments

the investment programme and of

the economic
reality
the
interdependence of the different production plants and
the resulting synergies. The Italian authorities therefore
considered it impossible to apply the two CBA methods
separately, as required by the Commission, since such an
approach was not consistent with the integrated nature
of
the resulting
financial calculations. The cost-benefit analyses should
have been examined together by the Commission. The
letter of 16 April 1999 provided a set of data on the
basis of which cost-benefit analyses could have been
carried out for the Mirafiori Carrozzeria, Rivalta, Cassino
and Pomigliano plants, in comparison with Bielsko-Biala,
in a context of optimum allocation of production
between Italy and Poland.

(18) Nevertheless, in response to the Commission’s decision to
initiate the procedure with regard to the Fiat Cassino
project, in which it stated that the relevant Community
framework prohibited reference to an alternative site in
an assisted area of the Community, Italy prepared two
cost-benefit analyses comparing the plants at Cassino and
Rivalta for production of the Bravo/Brava model. One
was based on the assumption that mobile production
amounted to 200 cars per day and the other on 300 cars
per day. The period for which the comparative operating
disadvantages were calculated was identical: 1995 to
1997. Italy pointed out that Rivalta was not located in an
assisted area at the time of the investment decision.

concluded

(19) The cost-benefit analyses carried out by the Italian
Government
comparative
disadvantage of Cassino was 15,4 % (on the basis of the
200 cars per day assumption) or 15,2 % (on the basis of
the 300 cars per day assumption); this was sufficient to
authorise the aid under examination, which would have
an intensity of 3,52 %.

that

the

(8) OJ C 123, 18.5.1989, p. 3 and OJ C 279, 15.9.1997, p. 1.

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the

concerned,

(20) Third, as far as investments made between February
Italian
1993 and May 1994 are
authorities pointed out that Ministerial Order No 527 of
20 October 1995 (9), which laid down the arrangements
to be
for implementing Law No 488/92, allowed it
to
applied retroactively for a period of 24 months
investments in respect of which the initial request for aid
had been presented to the authority responsible after 20
August 1992. Since Fiat presented the first request for
aid under Law No 64/86 of 11 July 1994,
the
investments could be considered eligible going back to
July 1992. They in fact began in 1993 and should
therefore be deemed eligible in full.

(21) Fourth, Italy stressed that no investment covered by the
notification was
connected with modernisation of
production of the Tipo or Tempra model. Those models
were mentioned in the letter of 20 November 1998, in
reply to a question by the Commission, solely in order to
illustrate the differences between the old production
techniques, which involved a high degree of automation,
and the new ones, which followed the principles of
integrated manufacturing.

(22) The Italian authorities

stressed that

the project was
accompanied by a reduction in production capacity at
the Cassino plant and that it did not therefore have a
significant effect on competition since it did not involve
any increase in capacity.

IV. ASSESSMENT OF THE AID

(23) The measure notified by the Italian authorities for Fiat
Cassino constitutes State aid within the meaning of
Article 87(1) of the Treaty. It would be financed by the
State or
since it
through State resources; moreover,
represents a significant proportion of the project funding,
it is likely to distort competition within the Community,
giving an advantage to Fiat over other companies not
receiving aid. Finally,
is
characterised by extensive trade between Member States.

the motor vehicle market

(24) The State aid in question,

to be granted under the
approved scheme provided for in Law No 488/92,
is
intended for a firm operating in the motor vehicle
production and assembly sector. The proposal should
the relevant
therefore be examined in the light of
Community
Italian
the
that
Government notified the plan on 28 October 1997, the
relevant
framework is that of 1989, as amended and
subsequent
confirmed
extended.
framework (10), which has applied since 1 January 1998

framework. Given

This

the

by

is

Italian Official Gazette No 292 of 15 December 1995.

(9)
(10) OJ C 284, 28.10.1995, p. 3.

that,

and point 2.6 of which expressly states
(cid:145)the
preceding framework, which entered into force on 1
January 1996 for two years, will serve as a basis for the
assessment of aid proposals which were notified before 1
November 1997 but which have not yet been declared
compatible by the Commission or are the subject of
proceedings under Article 93(3) of the Treaty initiated
before
that
understanding of the matter in the course of the present
proceedings.

contested

date(cid:146).

Italy

that

not

has

(25) The Commission also notes

that

exceeds EUR 17 million. The

the aid would be
granted under an approved scheme and that the cost of
the project
Italian
authorities have therefore complied with the notification
requirement. However, the Commission deplores the long
the ministerial order
delay between the signing of
granting the aid in question, on 20 November 1996, and
the official notification at the end of October 1997.

(26) Article 87(2) of the Treaty identifies a number of types of
aid which it declares to be compatible with the common
market. Given the nature and purpose of the aid and the
geographic location of the investment, the project does
not fall within any of the categories listed in points (a),
(b) and (c) of that paragraph. Paragraph 3 of the same
Article defines types of aid that may be considered to be
compatible with the common market. Their compatibility
the
to be assessed in the overall context of
has
Community and not in a purely national context. To
safeguard the smooth running of the common market
and comply with the principles laid down in Article 3(g)
of the Treaty, exceptions such as those in Article 87(3)
must be interpreted strictly. Looking first at Article
87(3)(b) and (d),
the aid in question is clearly not
intended for a project of common European interest or
for a project likely to remedy a serious disturbance in the
Italian economy. Nor is it intended to promote culture
and heritage conservation. Turning to the exemption
provided for in Article 87(3)(a) and (c), only point (c) is
relevant as Cassino is located in an area which qualifies
for assistance under this provision.

the proposed regional

aid
To determine whether
measures are compatible with the common market under
the exemption provided for in Article (3)(c) of the Treaty,
the Commission must therefore check compliance with
the conditions
specified in the relevant Community
framework.

(27) The Commission accepts

regions

that new investment

in
disadvantaged
regional
can
development. It thus takes a generally favourable attitude
towards
the
structural disadvantages suffered by the depressed regions
of the Community. However, when assessing regional aid

aid to investment granted to redress

contribute

to

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proposals, the Commission must compare the benefits in
terms of regional development (e.g. contribution to the
long-term development of
the region by creating or
safeguarding steady jobs, and linkages with the local and
Community economy) with any adverse effects on the
sector as a whole (such as the creation or maintenance of
substantial excess capacity). The purpose of such an
assessment is not to deny the essential contribution made
by regional aid to Community cohesion but to ensure
that other factors affecting the Community, such as a
development of the sector at Community level, are taken
into account. It is thus standard Commission practice to
proceed as
aid
follows when examining
measures for the motor vehicle industry, in the light of
the relevant Community framework.

regional

officials of the Competition Directorate-General and the
by
Italian
representatives of Fiat.

authorities, who were

accompanied

(29) The plant in question is located in a region qualifying for
assistance under Article 87(3)(c) of the Treaty, at least in
the early 1990s, for which regional aid could normally
be authorised up to a net grant equivalent of 10 % for
large firms.

(1) The Commission establishes

first

and foremost
whether regional aid may be granted. To this end, it
considers in particular whether the region in question
is eligible for aid under Community law and whether
the investor could have chosen an alternative site for
its project, so as to demonstrate the need for the aid,
with particular
the
project.

reference to the mobility of

(30)

In order to demonstrate the need for regional aid, the
Italian authorities must, among other things, show that
the project is mobile, that is to say that there exists an
economically viable alternative location for the project or
there were no other new or
parts of
existing industrial
site within the group capable of
receiving the proposed investment, the firm would be
compelled to carray out
in the sole plant
available, even in the absence of the aid.

the project.

its project

If

(2) The Commission checks the eligibilty of the costs

relating to the mobile aspects of the project.

(3) It then checks that the planned aid is in proportion
to the regional problems it is intended to help solve.
To this end, it checks that the project promotes the
long-term development of
the region and usually
carries out a cost-benefit analysis.

(4) Finally, it considers the question of a (cid:145)top-up(cid:146), which
is an increase in the allowable aid intensity intended
as a further incentive to the investor to invest in the
region in question. Such top-ups are authorised on
condition that the investment does not increase the
capacity problems facing the motor vehicle industry.

(31) As stated in recital 15, the Italian Government notes that
the choice that Fiat had to make for the Bravo/Brava
models was between (i) allocating 1 200 cars per day to
Fiat Cassino and 200 to Rivalta and (ii) allocating 1 000
cars per day to Fiat Cassino and an equivalent of 400
cars per day to Bielsko-Biala. This capacity allocation, for
which there is an economic logic, is partly confirmed by
diagrams showing (a) the Cassino plant, with a capacity
of 1 400 cars per day, used entirely for the production of
Fiat segment C and D cars, the Rivalta plant, producing
Fiat models in segments C and D, and a Polish plant,
with a capacity of 2 000 cars per day, used for
producing 700 Fiat segment A cars per day and (b) the
Fiat Cassino plant, with a capacity of 1 400 cars per day,
used for producing only 1 000 Fiat segment C and D
cars per day, the Rivalta plant, not producing any Fiat
models in segments C and D, and a Polish plant, with a
capacity of 2 000 cars per day, used to full capacity,
among other things for producing Fiat segment C and D
cars.

(5) The sum of the figures established in the last two
stages of the calculation represents the total amount
of aid that the Commission may authorise within the
regional ceiling.

(32) The Commission consulted independent experts on this
subject (IMO-Leuven) who accompanied it on a visit to
the Fiat Cassino plant.

(28) The procedure is familiar to the Italian Government and
to Fiat, which have been involved in many previous
instances of aid to the motor vehicle industry. The
Commission
the
methodological questions raised at the meetings between

appropriate

supplied

replies

to

(33) The Commission

also

that,

notes

although

the
documentation supplied by the Italian authorities shows
that Fiat had studied the overall mobility of the Mirafiori
Meccanica, Rivalta, Cassino and Pomigliano projects, the
real economic alternative would not have required it to
transfer production capacity simultaneously from those
it would have been possible to
four

Italian plants;

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relocate only part of the capacity (in particular according
to the platforms involved) of one or more of those plants
in a technically and economically rational manner.

(34) The capacity of the Cassino plant is in fact currently
1 200 cars per day. A capacity of 1 400 cars per day
would require an additional part-shift.

(35) The Commission concludes that the mobile part of the
investment at Cassino is limited to 220 cars per day, i.e.
the difference between options (i) and (ii) in recital 31 as
far as the Cassino plant alone is concerned.

(36) The fact that the investment at Fiat Cassino began more
than a year before the initial request for aid was made
would normally mean, as the Commission stated when it
gave notice of its decision to initiate the procedure, that
the aid was not necessary to the implementation of the
project. However, in keeping with Commission decisions
of 18 November 1997 (11), 30 September 1998 (12), and
7 April 1998 (13), there are very specific aspects in the
follow-up to Law No 64/86 and the implementation of
Law No 488/92 which may, exceptionally, justify a time
lag between the start of a project and the request for aid.
It also has been ascertained that, when the investment
began in February 1993, Fiat was
firmly expecting
regional aid to be granted. Obviously, it had no way of
knowing exactly how much aid might be available.

by the expiry of the previous Law No 64/86 and the
In the case of the
delay in enacting Law No 488/92.
project under consideration,
the investment started in
February 1993 and Fiat submitted the application for aid
to the Italian authorities in July 1994. The Commission
concludes that the whole of the investment of ITL 677,8
billion is eligible for regional aid under Law No 488/92.

(40) However,

the Commission can allow only mobile

investment.

(41) The direct

the project

consequences of

(nominal
investment of ITL 677,8 billion and maintenance of some
1 100 jobs at Fiat) as well as the secondary effects
represent significant benefits for the local economy. The
the proposed aid, which
Commission concludes that
part-finances the project, will contribute to the long-term
development of the Cassino area.

(42) The relevant Community framework requires the project
notified to be compared with an analogous project
carried out in a non-assisted region of the Community, in
order to identify the additional costs arising from the
structural shortcomings of the assisted region chosen for
the investment. The Italian Government claims that the
application of
the
economic choice Fiat faced. In its view, the Commission
should carry out an assessment that takes account of the
integrated nature of
the
the projects:
Commission should use the comparator sites that the
investor actually considered,
in this case Poland and
Tichy/Bielsko-Biala.

this principle does not

in other words,

reflect

(37) The Commission therefore concludes that the regional
the

implementation of

aid was necessary for
investment project at Fiat Cassino.

the

(43)

in increased production capacity,

(38) The Commission has checked that the costs were eligible
under the relevant aid scheme. Although the investment
does not result
the
the notified project
Commission takes the view that
constitutes an initial investment within the meaning of
since it
the guidelines on national
involves a fundamental change in the structure of
It can find no evidence of
production at
modernisation.

regional aid (14)

the plant.

If, in the case of Fiat Cassino, the Commission were to
authorise the use of comparator sites not situated in
non-assisted regions of the Community, it would violate
It would be using a
the principle of equal treatment.
from that
method of assessment completely different
applied in other cases
to the same
procedure, i.e. in all the cases examined in the light of
the relevant Community framework in force prior to
for which the comparator site had to be in a
1998,
non-assisted
Commission Decision
96/666/EC (15).

legally subject

area,

as

in

(39)

It also notes that under Order No 527/95 investment
expenditure may be allowed retroactively, going back as
much as two years prior to the initial application for
regional aid. This is an exceptional procedure introduced
as a transitional measure to fill the legal vacuum caused

(11) OJ C 70, 6.3.1998, p. 7.
(12) OJ C 409, 30.12.1998, p. 7 and OJ C 384, 12.12.1998, p. 20.
(13) OJ C 240, 31.7.1998, p. 3.
(14) OJ C 74, 10.3.1998, p. 9.

(44) Moreover, at the time when Fiat carried out its study of
possible sites, which was also when it took into account
the possibility of obtaining State aid, in early 1993 at the
latest, the Commission’s practice required the use of a
comparator
site located in an area not eligible for
regional aid. The Italian authorities and Fiat were familiar
with this methodology at the time, for example in the
case of Fiat Mezzogiorno (16), a typical example of the
application of the cost-benefit analysis. The only aid Fiat

(15) OJ L 308, 29.11.1996, p. 46.
(16) Case C 45/91 (ex N 255/91).

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could have taken into consideration in the financial
analysis relating to the location decision would have been
that based on a comparison between the plant which
from regional aid and an
might potentially benefit
alternative
the
in a non-assisted
site
Community. Reference to an alternative plant in Poland,
as called for by Italy, became possible only after the entry
the relevant Community framework in
into force of
January 1998,
the investment
some five years after
decision was taken.

region of

(45)

In conclusion, the Commission cannot accept the Italian
Fiat’s
that
Government’s
integrated investment programme should be based on a
comparison of the Italian options with sites in Poland.

analysis of

argument

the

(46) The

requires

framework

relevant Community

the
operating and investment costs to be compared only in
respect of the mobile part of the project. If it had been
possible to use the real alternative site (which is not the
case),
the best solution for the Commission’s analysis
would have been to carry out a more general comparison
in order to identify more precisely the additional costs
resulting from the decision to locate more capacity at
Fiat Cassino.

(47)

(48)

It is clear from the information supplied by the Italian
authorities that the plant at Rivalta (17) which at the time
of the investment decision was located in a non-assisted
area of the Community where the Fiat Bravo model is
also produced, can serve as a comparator site for the
cost-benefit analysis needed in order to assess the aid
intensity that can be authorised by the Commission.

Italy nevertheless submitted two different cost-benefit
analyses to the Commission: the first, which Italy regards
as valid,
is based on the assumption that mobile
production amounts to 200 cars per day, while the
second is based on an assumption of 300 cars per day.
The resulting disadvantages for Fiat Cassino are very
similar and work out at 15,4 % and 15,2 % respectively.
Given the preceding conclusion that genuinely mobile
capacity is limited to 200 cars per day, the Commission
takes the view that the cost-benefit analysis should be
two assumptions. The
based on the
the
Commission experts have
the
information supplied by Italy to calculate
the net
the project at Fiat
additional costs for carrying out
Cassino instead of Rivalta, for a maximum output under
normal conditions of 200 cars per day. The advantages
and
years,
beginning with the start of commercial production.
Commercial production of the Bravo/Brava models began

assessed over

disadvantages

accordingly

first of

studied

three

are

(17) The letter setting out details of the investment project at Cassino
(recital 17) seems to refer mistakenly to Arese as a comparator
site.

the

in 1995;
the
cost-benefit analysis thus began in 1995. These principles
have not been contested by Italy.

reference period for

three-year

in particular

(49) The Commission has to take its decision on the basis of
the information in its possession,
that
provided by the Italian authorities in response to its letter
of 3 February 1999 enjoining them to supply the
necessary data and documentation. The letter of 16 April
1999 contains statements that are not substantiated or
sufficiently detailed or the consequences of which are not
precisely worked out. The Commission cannot include
such elements
the comparative
in its assessment of
disadvantages of Fiat Cassino with respect to Rivalta since
it has to construe the exemptions provided for in Article
87(3) strictly.

(50) The Commission takes issue with the cost-benefit analysis

supplied by Italy on a number of points.

First, as regards inward transport costs, there appears to
be a mathematical error in the calculation of the unit
cost disadvantage over the reference period.

Second, the extremely thorough investigations carried out
by the Commission and the data gathered, in particular
during the visit to Cassino, have pinpointed uncertainties
regarding the financial repercussions of the choice facing
Fiat between using labour and investing in automation.

One of Fiat’s basic problems is the difficulty in finding
skilled workers who are able to look after the technical
maintenance of modern production facilities (e.g. robots).
The Commission notes that the project reduces the level
of automation at
the Fiat Cassino plant. Furthermore,
careful examination of the investments that were to be
made at Fiat Cassino and Rivalta has revealed that the
Italian authorities arrived at two different assessments of
the disadvantages of
investing at Cassino for mobile
production of 200 cars per day. The Commission takes
the view here that the amount of the mobile investment
to be taken into consideration for Rivalta is a nominal
ITL 130 billion (present value: ITL 107,1 billion), in line
with the most recent detailed assessments supplied by the
Italian authorities.

According to the Commission experts, the investments
that would have been made at Fiat Cassino and Rivalta
would have resulted in greater difference in assembly
times than those indicated by Fiat. However, given the
nature of
the
production time would not have exceeded 28 hours per
vehicle. The Commission has corrected accordingly the
labour requirements at Rivalta for the production of 200
cars per day.

specified for Rivalta,

the investments

L 110/8

EN

Official Journal of the European Communities

6.5.2000

Third, the intensities of the disadvantage and of the aid
must be calculated in relation to investments that are
deemed eligible by
the Commission, with special
reference to mobility. These amount to ITL 208,6 billion
(discounted).

(51) The corrections introduced by the Commission produce
cost-benefit results that differ greatly from those of the
Italian authorities. According to the Commission,
the
disadvantage of Fiat Cassino compared with Rivalta
works out at over 40 %.

(52) The nominal aid of

ITL 56,4 billion is equivalent

to
the applicable
discounted aid of
discount rate of 14 %. The intensity of the planned aid is
thus in fact 11,3 % gge, or 9,5 % nge. The regional
maximum is 10 % nge for large firms.

ITL 23,6 billion at

(53)

the sensitivity of

the motor industry,

In view of
the
Commission usually examines the effects on competition
of every investment project,
looking in particular at
variations in production capacity on the relevant market
in the group concerned. Under the terms of the relevant
Community framework, the allowable intensity can then
be increased by an adjustment factor (top-up) of 0 to 3
percentage points.

In this particular case,
analysis obviate the need for such an examination.

the results of

the cost-benefit

Government plans to grant for Fiat Cassino is therefore
compatible with the common market under Article
87(3)(c) of the Treaty,

HAS ADOPTED THIS DECISION:

Article 1

The State aid that Italy plans to grant to Fiat Auto SpA for the
plant at Piedimonte San Germano (Cassino), up to a maximum
of ITL 23,6 billion, discounted at the rate of 14 % (base year
1993), is compatible with the common market under Article
87(3)(c) of the Treaty.

The aid is accordingly authorised.

Article 2

in June each year until

Italy shall present,
is
completed, a report on the state of progress and financial
implementation of the project and general compliance with the
conditions set out in the notification of the aid in question.

the project

Article 3

This Decision is addressed to the Italian Republic.

V. CONCLUSIONS

Done at Brussels, 8 July 1999.

The aid intensity notified by Italy is less than both the
disadvantage identified by the cost-benefit analysis and
the regional maximum. The regional aid that the Italian

For the Commission

Karel VAN MIERT

Member of the Commission