2000/194/EC: Commission Decision of 14 July 1999 on aid granted by Germany to Weida Leder GmbH (Weida), Thuringia (notified under document number C(1999) 3441) (Text with EEA relevance) (Only the German text is authentic)
Date: 1999-07-14
Institutions: European Commission
Subjects: Germany, State aid, control of State aid, infringement of EU law, leather industry, water treatment

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II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 14 July 1999

on aid granted by Germany to Weida Leder GmbH (Weida), Thuringia

(notified under document number C(1999) 3441)

(Only the German text is authentic)

(Text with EEA relevance)

(2000/194/EC)

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 called on interested parties to submit their comments
pursuant to the provisions cited above (1),

Whereas:

in 1995/1996 before notifying the Commission thereof,
in breach of Article 88(3) of the EC Treaty. The case was
therefore registered on 4 March 1997 under NN 30/97.

(3)

By letter dated 2 March 1998, the Commission informed
Germany that it had decided to initiate the procedure
laid down in Article 88(2) of the EC Treaty in respect of
the aid. The Commission Decision to initiate the proce-
dure was published in the Official Journal of the European
Communities (2). The Commission invited interested
parties to submit their comments on the aid. It received
no such comments from interested parties.

I. PROCEDURE

(4)

By letter dated 26 June 1998, Germany informed the
Commission that the firm had filed for bankruptcy on
28 May 1998.

(1)

By letter dated 12 March 1996, registered as received on
21 March, Germany informed the Commission of a
DEM 5 million loan to Weida Leder GmbH (Weida),
Thuringia, which was intended to finance restructuring
measures. By letters dated 11 April, 28 May, 3 July and
26 August 1996 and 6 March 1997, the Commission
requested further information, which Germany provided
by letters dated 25 July, 30 October and 7 November
1996 and 20 January and 26 May 1997. Further infor-
mation was supplied in September 1997 at a meeting
between the Commission and the German authorities.

(2)

The aid was first registered under N 242/96. However,
it emerged from the information provided by Germany
that Thuringia had already made aid available to the firm

II. DETAILED DESCRIPTION OF THE AID

(5) Weida Leder GmbH (Weida) was formed from the
former VEB Lederwerke Weida, which had been trans-
formed into Lederwerke Weida GmbH in 1990. The
main activity of the firm, located in the municipality of
Weida (Thuringia), was to produce leather for the furni-
ture industry. The region has high unemployment
(17 %), and was classified as an Objective 1 area for the
purposes of Community regional policy (areas which are
underdeveloped by Community standards), so that it is

(1) OJ C 256, 14.8.1998, p. 7.

(2) See footnote 1.

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eligible for regional aid under Article 87(3)(a) of the EC
Treaty (1). Until recently, the firm employed 97 people.

Weida is almost the sole user of the plant in terms of the
volumes of waste it feeds into it.

(6)

(7)

(8)

(9)

A first attempt at privatising the firm failed in 1993,
after which the firm's shares were returned to the port-
folio of the Treuhandanstalt. On 1 October 1993, bank-
ruptcy proceedings were initiated.

to establish the firm on the
In order, nevertheless,
market and to find a suitable buyer in the meantime, the
Land of Thuringia launched a rescue that it supported on
a sustained basis for reasons of structural and labour-
market policy as a means of ensuring the continued
existence in the extremely structurally weak area of
eastern Thuringia of the only fully integrated tannery in
the new Länder. On 19 October 1993, Weida Leder
GmbH was established: it took over the assets of the
firm in respect of which bankruptcy proceedings had
been initiated. The firm's shares were wholly owned by
Elster Management GmbH & Co. Investitions- and Betei-
ligungs KG (Elster KG). Because of the interrelationship
between the companies involved, in particular the liabili-
ties situation between Elster KG and the Thuringer
institution governed by
Aufbaubank (TAB), a credit
public law and owned by the Land of Thuringia,
it
cannot be considered that a privatisation has as yet
taken place. Because of the specific nature of the market,
the Thuringian authorities' search for investors has so far
proved unsuccessful. In order to remain in business and
to carry out the restructuring measures planned for the
period leading up to privatisation, the firm has, in recent
years, carried out an investment programme and has
received substantial aid for
this purpose. However,
despite all its financial efforts, Weida has been unable to
consolidate its position. The planned turnover targets
have not been met. The firm's results have also been
unsatisfactory as far as its planned profits are concerned.
Despite further aid intended to secure its liquidity and
allow it to remain in business, the firm filed for bank-
ruptcy on 28 May 1998.

For the purpose of disposing of Weida's waste water and
that of the other firms located on the site, the firm
Abwasserreinigungsanlage
Schlossmühlenweg Weida
GmbH was set up, with 98 % of its shares being owned
by Weida and the remaining 2 % by the municipality of
Weida.

This plant serves exclusively to treat the waste water of
Weida and the other firms renting sites on the business
park. Since the firms concerned are all service firms,
they only produce urban waste water. Consequently,

(1) Commission Decision 94/266/EC, OJ L 114, 5.5.1994, p. 21.

(10)

Between 1993 and 1997, Weida benefited from a
variety of aid measures with the aim of stabilising the
rescue carried out at the end of 1993 and improving its
business structure in the context of negotiations with
potential

investors.

(11) On 21 October 1993 the Land of Thuringia provided an
outright grant of DEM 4,5 million under the SME
investment safeguard programme, which was approved
by the Commission on 26 November 1993 (N 408/
93) (2), by way of initial funding to support the asset
deal resulting from the bankruptcy proceedings.

(12) On 7 March 1994, Thuringia took on a 90 % guarantee
for a DEM 8 million loan (amount of aid: DEM 7,2
million) which the firm needed to consolidate its opera-
tions. On 16 September 1994, the Land entered into a
further 90 % guarantee in respect of a DEM 4 million
loan (amount of aid: DEM 3,6 million). Both guarantees
were underwritten by Bayerische Landesanstalt
für
Aufbaufinanzierung (LfA) on the basis of the Guarantee
Regulation of the Land of Thuringia. The lenders were
Dresdner Bank AG and Thüringer Aufbaubank (TAB), a
public credit institution owned by the Land of Thuringia.
The guaranteed loans were subsequently reallocated to
other purposes on several occasions.
In the end,
DEM 6,5 million was used for investment and DEM 5,5
million for operating expenditure. Because of the time-
limit placed on the guarantee for the TAB loan, the life
of both loans was provisionally limited to 31 December
1997. The reason for this short life was the fact that
efforts were being made to obtain refinancing from a
commercial bank and, given the state of the firm even at
the time when funds were provided for the loan, it could
already be foreseen that it would not be possible to
obtain such refinancing within a reasonable period, so
that it would be necessary to extend the life of the loans
and the guarantees.

(13)

(14)

In addition to these investment and operating loans, the
firm was provided with a further DEM 2 million loan
from the consolidation fund (case NN 74/95) at the end
of 1995 to cover the liquidity shortfalls which had
arisen as a result of the firm's entry onto the market.

Further liquidity support was granted between February
1996 and July 1997 under a credit mandate of the
Thuringia Ministry of Finance in the form of a DEM 5
million loan and a letter of subordination covering
DEM 4 million in claims. The loan was granted up to
31 December 2000 at an interest rate of 8 % per
annum.

(2) By its Decision of 7 April 1998 (NN 142/97; letter SG(98) D/4313
of 2 June 1998), the Commission approved the prolongation of the
said aid scheme for the years 1997 to 2001; however, because of
considerable doubt concerning the compatibility of how this aid
scheme was being implemented, the Commission on 4 December
1998 initiated the procedure laid down in Article 88(2) of the EC
Treaty; Commission Decision C 69/98; Commission letter SG(98)
D/11285 of 4 December 1998.

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(15) Nevertheless, despite this considerable government support, a further DEM 1,5 million loan from
TAB was needed at the end of 1997 to secure the firm's liquidity and enable it to remain in business.
Moreover, the Land of Thuringia, as preferential creditor, issued a further letter of subordination
covering another DEM 2 million in claims in order to avert bankruptcy proceedings in respect of the
company's assets.

(16)

By administrative decisions of 19 January 1995 and 21 October 1996, Weida was awarded
investment grants of DEM 1,84 million and DEM 0,34 million out of the funds of the Commission-
approved joint Federal Government/Länder scheme for improving regional economic structures. The
DEM 0,34 million grant was not paid out because of the initiation of the Article 88(2) procedure.

(17)

The following table gives a complete list of the state aid granted to Weida up to the end of 1997:

State aid

Date granted

Amount of aid
(DEM million)

SME grant, C 69/98 (ex NN 118/98,
ex 408/93 and ex ex N 480/94)

ex

21.10.1993

90 % guarantee for a DEM 8 million loan

7.3.1994

90 % guarantee for a DEM 4 million loan

16.9.1994

4,5

7,2

3,6

Investment grants under
Federal
Government/Länder scheme, 1005/1006/N div.

joint

the

15.12.1995, 10.7.1996, 17.9.1996

1,84

Loan, NN 74/95

TAB loan

TAB loan

12/1995

2.1.1996

11/1997

2,0

5,0

1,5

Total

25,64

(18) Of the approximately DEM 12,9 million investment by Weida's subsidiary in a waste water treat-

ment plant, DEM 11,22 million,

i.e. 87 %, was financed with public money.

(19)

Since this plant was urgently needed for the firm's future operations, the Treuhandanstalt decided on
4 February 1994 to contribute 40 % of the funds needed for its construction. This contribution took
the form of a non-repayable grant of DEM 4,84 million.

(20)

In addition, the Land of Thuringia provided an investment grant of DEM 6,38 million under the
joint scheme for improving regional economic structures.

(21)

The remaining 13 % (DEM 1,344 million) was provided by Weida as a shareholder's loan. This loan
was secured by a 90 % guarantee from LfA. The loan's due date was initially fixed, in accordance
with the loan agreement and in line with the duration of the guarantee, at 31 December 1997, but
subsequently had to be extended owing to the firm's situation (see above). However, because of the
insufficient information provided, the Commission does not have up-to-date figures on the amended
terms of the loan or the guarantee.

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(22)

The following table shows the composition of the aid received by Weida's subsidiary for the
waste-water treatment plant:

State aid

Date granted

Amount of aid
(DEM million)

Investment grant under the joint Federal Government/
Länder scheme

28.11.1994, 17.8.1995,
19.10.1995

Investment grant under the joint Federal Government/
Länder scheme

30.4.1997

Grant from the Treuhandanstalt (THA)/Bundesanstalt für
Vereinigungsbedingte Sonderaufgaben (BvS)

9/1994 to 11/1995

90 % guarantee in respect of a DEM 1,344 million
shareholder's loan from Weida

5,95

0,43

4,84

1,21

Total

12,43

(23)

The aid granted to Weida and its subsidiary Abwasserrei-
nigungsanlage Schlossmühlenweg Weida GmbH totals
some DEM 38 million. As opposed to this, the contri-
bution of its shareholder Elster KG to the financing of
Weida's restructuring was limited to the nominal capital
of DEM 50 000, a DEM 300 000 guarantee taken over
from Mr Jessen, a partner in Elster KG, issued under the
Land guarantee procedure, and a statement of co-obliga-
tion — limited in time — in respect of the investment
grants paid out
the joint Federal
to Weida under
Government/Länder scheme.

(24) When it

initiated the procedure,

the Commission
expressed doubts as to the applicability of the guidelines
on State aid for rescuing and restructuring firms in
difficulty (the guidelines) (1) to firms which are newly
formed with the assets from a bankruptcy. Up to the
time when the proceedings were initiated, no viable
restructuring plan had been presented. Since Weida's
financial situation had apparently worsened despite the
serious doubts
massive
concerning its viability could not be dispelled. In addi-
tion, because the privatisation had still not taken place,
the financing for Weida was still provisional. Also, since
no private investor could be found, it was not possible
to determine whether the proposed amount of aid was
appropriate to the restructuring efforts.

injection of public

funds,

(25)

The Commission also complained of the lack of relevant
information which would have enabled it to assess the
compatibility of the aid with Article 87 of the EC Treaty.

(26)

The relevant market
for Weida Leder GmbH is the
market for tanning products (2). The main product of the
tanning sector is leather, which is made into shoes,
clothing,

leather goods and furniture.

(27) While the leather

industry is showing considerable
growth in some countries of Asia, America and above all
in eastern Europe and these countries have become
important players internationally,
in western Europe
capacity and output have declined steadily. The EU
tanning industry has lost a quarter of its industrial base
and a third of its workers and has shrunk by over 1 000
production units and some 30 000 workers since the
beginning of the 1980s. The greatest loss of production
units has occurred in northern Europe. Germany has
suffered a particularly sharp decline in the number of
tanneries. On the other hand,
the
remaining tanneries
in the Community has almost
doubled (from some EUR 4 000 million to nearly
EUR 8 000 million). EU tanners are adjusting their
production to meet higher quality standards and
improve the fashion content of leather.

the turnover of

(28)

Companies have generally been owned by the same
family for generations, and only 8,5 % fall within the
same size category as Weida (21 to 100 employees).

(29)

(30)

The shoe industry, taking 50 % of EU tannery products,
is the tanning industry's most important market. The
clothing industry accounts for some 20 %, the furniture
industry for some 17 % and leather goods for 13 %.

The EU leather industry has to cope with difficult
economic
growing
in
competition from third countries. There is no prospect
of a marked increase in demand for leather in the

conditions

Europe

and

(1) OJ C 368, 23.12.1994, p. 12.

(2) See Panorama of EU industry 1997, 4-25.

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Community. Since tanners have been faced with further
difficulties as a result of the most recent scandals (e.g.
BSE), which have affected the supply of hides and skins
and pushed up prices rapidly, many small firms with
narrow profit margins will in future have difficulties in
procuring raw materials.

III. COMMENTS FROM GERMANY

(31) After being informed of the initiation of proceedings,
Germany argued that the measures taken by the Land of
Thuringia supported an asset deal resulting from the
firm's bankruptcy which should be rated as a privatisa-
tion. At the same time, it conceded that the role of Elster
KG should be seen as that of a transitional adminis-
trator, and that it must therefore be concluded that the
actual privatisation of the firm had not yet taken place.
Germany also stated that, although there was a rescue
plan for the firm, there was no long-term restructuring
plan because of the lack of a private investor willing to
take over the firm. Since the firm's future direction
would necessarily depend on such an investor, no such
detailed planning could be presented. To that extent, the
rescue plan supporting the takeover of assets would
have to suffice to prove the existence of a restructuring
plan. The Commission's assessment
that neither the
expected overall turnover figures nor the profit figures
could be achieved was also rejected by Germany. Never-
theless, the latter did concede that, on the basis of the
firm's actual results,
the originally planned turnover
targets had to be corrected. The original target of 1996
for the firm to break even would therefore have to be
changed to 1998. However,
this would depend on
achieving a reduction in interest payments to the firm's
banks, something which has not been done.

(32) With regard to the legal bases for the aid granted,
Germany explained that the state guarantees had been
granted on the basis of the Commission-approved guar-
antee scheme administered by LfA and the Land of Thur-
ingia. The THA/BvS financial measures associated with
the setting-up of the waste water treatment plant were, it
was claimed, tantamount to a grant covered by the THA
scheme.

(33)

In conclusion, Germany informed the Commission that
the firm had filed for bankruptcy on 28 May 1998.

from the public purse. Since such preferential treatment
distorts trade between Member States, these measures
fall within the scope of Article 87(1) of the EC Treaty.

Schlossmühlenweg
Since Abwasserreinigungsanlage
Weida GmbH was 98 % owned by, and predominantly
serves the needs of, Weida, the aid granted to it is
examined together with the aid granted to Weida.

The aid provided by Thuringia and THA/BvS was, for
the most part, granted before being notified to the
Commission, in breach of Article 88(3) of the EC Treaty.

Consequently, except where it can be said to have been
granted under an aid scheme approved by the Commis-
sion, it must be examined as ad hoc aid in accordance
with the general rules governing the granting of State
aid.

(35)

(36)

(37)

SME investment safeguard programme of the Land
of Thuringia (C 69/98)

the

under

(38) On 21 October 1993, Thuringia made a grant of
DEM 4,5 million
abovementioned
programme, which was approved by the Commission
on 26 November 1993. In its communication of 26
August 1993 to the Commission, Germany had
expressly stated that the purpose of this aid programme
was not to grant rescue and restructuring aid. However,
Weida Leder GmbH was always to be regarded as a
company in difficulty. Moreover, the aid was granted
before the programme had been approved by the
Commission. It is not, therefore, covered by an approved
aid scheme.

Thuringian fund for the consolidation of firms in
difficulty (NN 74/95)

(39)

In December 1995, the Land of Thuringia granted a
DEM 2 million loan, citing this scheme as the legal
basis. Although the fund is designed to assist in the
rescue and restructuring of SMEs, it is not necessary to
examine in detail whether the conditions of this scheme
were met because it was not approved by the Commis-
sion until 6 February 1996. The aid was therefore
granted without Commission approval and is not
covered by an approved scheme.

IV. ASSESSMENT OF THE AID

(34) Germany's aid to Weida and its subsidiary Abwasserrei-
nigungsanlage Schlossmühlenweg Weida GmbH was
granted out of public funds. It distorts competition in
the single market because it enables the assisted firms to
finance a necessary operating investment almost entirely

Guarantee scheme administered by LfA and the
Land of Thuringia

(40) Germany stated that the 90 % guarantees in respect of
loans of DEM 8 million and DEM 4 million granted on
7 March and 16 September 1994 respectively were

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made under the guarantee scheme administered by LfA
and the Land of Thuringia. It claimed that the guarantee
scheme had contained no indication that the arrange-
ments had not been notified at that time. In response to
its request for information made when initiating the
fully enough
procedure,
informed to be able to assess the compatibility of this
aid.

the Commission was not

Federal Government/Länder

Joint
improving regional economic structures

scheme

for

(41)

The
investment grants of DEM 1,84 million and
DEM 0,34 million were awarded under the joint Federal
Government/Länder
improving regional
economic structures. The DEM 0,34 million grant was
not paid out owing to the initiation of the procedure
under Article 88(2) of the EC Treaty.

scheme

for

(47) When applying the guidelines,

it should be borne in
mind that they are not generally applicable to newly
formed firms (in the context of a rescue) which take
over the assets of
the firm which is the subject of
bankruptcy proceedings. However, this principle is not
applied to aid for firms in the new Länder because the
transition from a planned to a market economy gives
rise to particular problems. Low levels of equity capitali-
sation are typical of firms in the new Länder. It can
therefore be justified to regard a newly formed company
as a firm in difficulty if it organises its business activity
as a continuation of the firm being taken over. Given the
special
aid to firms
growing out of a company whose assets are the subject
of bankruptcy proceedings may be regarded as restruc-
turing aid in certain cases. In such cases, the private
investors involved in the newly formed firm must make
a significant contribution to restructuring from their
own funds.

conversion-related problems,

(42) Weida's subsidiary was awarded investment grants total-
ling DEM 6,38 million for the waste water treatment
plant. These funds were paid out from November 1994
to April 1997. Under the joint scheme, assistance may
also be granted in respect of investment to improve
infrastructure directly serving industry.

(43) Although the aid granted under the joint scheme falls
within the scope of Article 87(1) of the EC Treaty, it
ranks as regional investment aid and is therefore exempt
from the general prohibition on aid under Article
87(3)(a).

(48)

(49)

(44)

(45)

Second THA scheme (1)

The DEM 4,84 million in aid granted by THA/BvS for
setting up the waste water treatment plant was a non-
repayable grant, which is not covered by the THA
scheme.

(50)

It
follows from the above comments that only the
DEM 8,22 million granted under the joint scheme is
covered by an approved scheme. The remaining aid of
DEM 29,85 million was not granted under an approved
scheme. If aid has been granted which is in no way
related to a programme approved by the Commission,
the derogation under Article 87(3)(c) of the EC Treaty
(‘aid to facilitate the development of certain economic
activities ..., where such aid does not affect
trading
conditions to an extent contrary to the common inter-
est’) may be applicable where the main purpose of the
aid in question is the restructuring of a firm in difficulty.

In the present case it must be stated that the financing of
the company is still provisional, since Weida Leder
GmbH has so far not been privatised. Consequently
there is no private participation.

Immediately before the bankruptcy, the tanning firm
Weida Leder GmbH produced mainly leather for the
furniture industry. Although the firm was unable to
become firmly established on the market and there were
no prospects of an improvement, the position of this
sector of the leather industry was regarded as satisfac-
tory in view of the seemingly sufficient level of capacity
utilisation. However, it was not possible to find a private
investor and the firm was financed solely on a trans-
itional basis in order to keep it in business.

The purpose of restructuring aid is to return the assisted
firm to viability in the long term. This demands a
restructuring plan which, on the basis of both physical
and financial restructuring measures (e.g. capital injec-
tions, debt reduction), ensures that the firm becomes
competitive again and is able to survive without State
aid. In the absence of such a plan, the Commission
regards aid merely as operating aid designed to offset
losses. Such aid is not admissible unless a realistic
restructuring plan is submitted subsequently (2). The
firm's viability must be restored without there being any
undue
effects on competition within the
Community. The restructuring plan must therefore be
far-reaching and sound, and it must indicate precisely
which comprehensive measures will restore the firm's
long-term profitability so that it will be in a position to
cover all its costs and to generate a minimum return on
capital. The information at the Commission's disposal

adverse

(46)

Such aid may be considered compatible with the
common market if the criteria laid down in the guide-
lines are met.

(1) Commission Decision E 15/92; this provides solely for guarantees

and loans.

(2) See

concerning Iritecna

the Commission notice

(OJ C 328,
the Commission Decision of 27 July 1994
25.11.1994, p. 2),
concerning Air France/CDC-P (OJ L 258, 6.10.1994, p. 26),
the
judgment of the Court of Justice in Joined Cases C-278/92, C-279/
92 and C-280/92 Spain v Commission, [1994] ECR I-4103 (para-
graph 67), and Article 6, point 6.1(b) of the GATT Subsidies Agree-
ment (OJ L 336, 23.12.1994, p. 156).

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does not demonstrate beyond any doubt that the aid
was granted under a viable restructuring plan with
concrete operational measures which would enable the
Commission to identify the positive financial results of
those measures. Germany actually conceded this in its
reply of 26 June 1998 to the Commission letter on the
initiation of the procedure, stating that in the present
phase it could not present any detailed planning since
the firm's future direction necessarily depended on the
investor.

(51) Nor, consequently, was it possible to demonstrate how
the long-term viability and health of the firm can be
guaranteed within a reasonable timescale and on the
basis of realistic assumptions as to its future operating
conditions. It was also unclear whether and how the
firm intended to bring its cost structure and high finan-
cial charges under control.

(52)

Since the Commission,
in its Decision to initiate the
procedure under Article 88(2) of the EC Treaty, had
explicitly asked Germany to provide all necessary infor-
mation, in particular with regard to a restructuring plan,
it must now take a decision on the basis of the informa-
tion available to it (1).

(53) All forecasts concerning the firm's development have
turned out to be incorrect. Even before the Article 88(2)
procedure was initiated, it was highly unlikely that the
firm would be able in the medium term to repay its
loans totalling DEM 20,5 million on the basis of a
positive cash flow. The forecasts assumed that it would
make a loss of DEM 1,7 million in 1998. In addition,
because of the letters of subordination, part of these
loans effectively constituted equity capital so that any
repayment of these loans would have been possible only
if an equivalent amount of equity capital or sharehold-
er's loans had been forthcoming. Because of its declining
profitability, mounting losses,
falling turnover, and
soaring debt and interest payments, the firm was eventu-
ally forced on 28 May 1998 to file for bankruptcy.

(54) Accordingly, the Commission concludes that the condi-
tions set out in the guidelines are not met. The restruc-
turing aid for Weida cannot therefore be approved.

(1) Case C-47/91 Italian Republic v Commission [1994] ECR I-4635 and
Case C-301/87 French Republic v Commission [1990] ECR I-0307
confirmed by Joined Cases C-324/90 and C-342/90 Federal Republic
of Germany and Pleuger Worthington v Commission [1994] ECR I-
1173.

V. CONCLUSION

(55)

(56)

(57)

The Commission finds that Germany has unlawfully
implemented the aid in breach of Article 88(3) of the EC
Treaty.

The deciding factor in the Commission's assessment was
the fact that there was no investor prepared to take over
the firm and that Germany failed to submit a realistic
restructuring plan which would have enabled the
restoration of the firm's long-term viability. Nor is there
a private contribution, so that it cannot be established
whether the aid granted is in proportion to the restruc-
turing efforts.

The condition set out in the guidelines that the long-
term viability and health of the firm must be restored
within a reasonable timescale and on the basis of real-
istic assumptions as to its future operating conditions
cannot therefore be considered to have been fulfilled, so
that the aid granted to Weida Leder GmbH and its
subsidiary cannot be approved.

(58)

The derogation provided for in Article 87(3)(c) of the EC
Treaty cannot therefore apply to the DEM 29,85 million
in aid granted to Weida Leder GmbH and its subsidiary,

HAS ADOPTED THIS DECISION:

Article 1

The aid which Germany has granted to Weida Leder GmbH,
amounting to DEM 23,8 million, and to Abwasserreinigung-
sanlage Schlossmühlenweg Weida GmbH,
amounting to
DEM 6,05 million, is incompatible with the common market
pursuant to Article 87(1) of the EC Treaty.

Article 2

Germany shall take all the necessary measures to recover
1.
from the recipients the aid referred to in Article 1 and unlaw-
fully made available to the recipients.

law. The aid to be recovered shall

Recovery shall be effected in accordance with the proced-
2.
ures of national
include
interest from the date on which it was made available to the
recipients until the date of its recovery. Interest shall be calcu-
lated on the basis of the reference rate used for calculating the
grant equivalent of regional aid.

8.3.2000

EN

Official Journal of the European Communities

L 61/11

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

Article 3

This Decision is addressed to the Federal Republic of Germany.

Article 4

Done at Brussels, 14 July 1999.

For the Commission

Mario MONTI

Member of the Commission