2000/129/EC: Commission Decision of 20 July 1999 on State aid implemented by the Federal Republic of Germany for Lautex GmbH Weberei und Veredlung (notified under document number C(1999) 3026) (Text with EEA relevance) (Only the German version is authentic)
Date: 1999-07-20
Institutions: European Commission
Subjects: Germany, State aid, aid for restructuring, aid to undertakings, privatisation, textile industry

15.2.2000

EN

Official Journal of the European Communities

L 42/19

COMMISSION DECISION

of 20 July 1999

on State aid implemented by the Federal Republic of Germany for Lautex GmbH Weberei und
Veredlung

(notified under document number C(1999) 3026)

(Only the German version is authentic)

(Text with EEA relevance)

(2000/129/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

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

the first

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) and having regard to
their comments,

Whereas:

I. PROCEDURE

((cid:145)Lautex(cid:146)). The

(1) By letter dated 27 January 1997, registered as received
on the same day, Germany informed the Commission
that it had implemented aid measures for Lautex GmbH
case was
Weberei und Veredlung
registered as N 90/97. By letter dated 15 April,
the
Commission informed Germany that it had decided to
initiate an investigation procedure in respect of
this
re-registered as C 23/97.
state aid. The case was
Germany replied by letter of 20 May, which was
received by the Commission on 21 May. On 2 June
Germany asked for certain passages to be deleted from
the Commission’s
letter of 15 April before it was
the European
published in the Official
Communities. The Commission decision to initiate the
the
procedure was published in the Official
European Communities (2). The Commission
invited
interested parties to submit their comments on the aid
measures.

Journal of

Journal

of

(2) The Commission received comments from interested
parties.
It forwarded them by letter dated 14 August
1997 to Germany, which was given the opportunity to
Its comments were received on 10 September.
react.

by

was

Further

discussed

The matter
Commission
representatives and the German authorities at a meeting
comments were
in Berlin in December.
submitted on 27 January 1998. By letter dated 6 March,
Germany submitted details of the amended aid package
to be granted in connection with the privatisation of
the Commission
Lautex. By letter dated 17 August,
informed Germany of
its decision to extend the
procedure to the new aid package and in an official
letter called upon it to provide information.

(3) The Commission decision to extend the procedure was
also published in the Official
the European
Communities (3). The Commission invited interested
parties to submit their comments on the aid measures.

Journal of

(4) The Commission received comments from the Maron
Group (see recital 11) by letter dated 1 March 1999,
registered as received on 2 March. During a meeting in
Brussels on 2 March, at which the case was discussed
with the Commission, these comments were presented
to the German representatives. Comments were also
received from the Daun Group (see recital 10) by letter
dated 18 March, registered as received on 22 March.
These
forwarded to the German
authorities by letter of 14 April, to which they did not
react.

comments were

(5) The German authorites submitted further particulars by
letters of 25 September, 27 November and 9 December
1998, and 19 March and 12 April 1999, registered as
received respectively on 28 September, 30 November
and 10 December 1998, and 23 March and 13 April
1999.

(6) The Commission also received a letter from the German
authorities on 23 June 1999 indicating that an investor
had dropped out. By fax dated 15 July, the withdrawal
of an investor (the Daun Group) was confirmed and it
was announced that a new restructuring plan was being
developed for Lautex and that information on this plan

(1) OJ C 192, 24.6.1997, p. 11.
(2) OJ C 192, 24.6.1997, p. 11.

(3) OJ C 387, 12.12.1998, p. 4.

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Official Journal of the European Communities

15.2.2000

would be provided. The letter and the fax reached the
the final deadline
Commission after 7 May 1999,
(following several extensions) for replying to the official
letter requesting information.

Maron Group

II. RELEVANT UNDERTAKINGS

Lautex

(7) The aid recipient, Lautex,

is a textile firm with its
registered office in Saxony, Germany (4). Lautex has
weaving and warehousing facilities at its Neugersdorf
site and finishing facilities at Leutersdorf. It employed
some 360 people in 1998, and the projected turnover
for 1998 was some DEM 56,9 million (the most recent
outturn figure of DEM 57,029 million is for 1997). The
1997 balance-sheet
show assets of DEM
89,921 million. Lautex does not therefore satisfy the
small- and medium-sized
Commission’s criteria for
enterprises
laid down in the Community
guidelines on State aid for SMEs (5).

figures

(SME)

(8) Lautex succeeded Lautex AG, a holding company set up
in 1990 to incorporate Oberlausitzer Textil GmbH,
Neugersdorf, Osts(cid:228)chsische Textil GmbH, Zittau, and
Spreetextilien GmbH, Neusalza-Spremberg.
In 1990
Lautex AG had 10 200 employees, nine spinning mills,
32 weaving mills, six finishing plants, seven industrial
power plants, three fleece processing plants and printing
In 1991 the number of weaving mills was
works.
reduced by two.
into
Lautex (610 employees) and TGO Textil GmbH (808
employees).

In 1992 Lautex AG was split

(9) On 6 November 1997 Lautex was privatised by sale to
the Daun Group. On 22 April 1998 another investor,
the Maron Group, acquired half
in
Lautex.

the share capital

Daun Group

interests.

It operates

(10) The first investor, the Daun Group, is a conglomerate
based in Germany in which Mr Claus E. Daun, a
in several
businessman, has
geographic and product markets, including textiles. The
Group has some 11 600 employees and an annual
turnover of DEM 1,4 billion.
Its subsidiaries include
Lauffenm(cid:252)hle GmbH (with which, according to one
to
version of
cooperate). This firm is based in Baden-W(cid:252)rttemberg,
has some 450 employees, achieved a turnover of some
DEM 125 million in 1998 and is engaged in spinning,
weaving and finishing.

restructuring plan, Lautex was

the

(4) The unemployment rate in the region concerned is 22,1 %. If the
secondary employment market is also included, this figure is 6,1 %
higher.

(5) OJ C 213, 27.7.1996, p. 4.

(11) The second investor, the Maron Group, is a group of
companies in which Mr Elard Maron, a businessman,
has a controlling interest. It operates in the textile sector
and includes the former Erba GmbH, a producer of shirt
and blouse
fabrics based in Forchheim, western
Germany. Erba GmbH succeeded the failed Erba AG
(insolvency proceedings were started in 1992), a large
spinning and weaving firm which employed some
3 000 people. Erba GmbH was declared insolvent in
1996. The Maron Group acquired the weaving mill and
incorporated it into Mileta AS, another member of the
Maron Group with its registered office in the Czech
Republic. In 1997 it took over the production of shirt
and blouse fabrics from the former Erba GmbH. It also
owns a dye works in the Czech Republic, Milerba SRO,
where the Erba Lautex fabrics are dyed. It is not known
what further interests the Maron Group has. No data
have been provided on the numbers employed by the
Maron Group or on its turnover or assets.
It is not
known whether and to what extent the Maron Group is
active in other product or geographic markets.

III. PRIVATISATION

(12) The Daun Group was

authorities. According

selected as an investor by
management consultants KPMG acting on behalf of the
German
the German
authorities, KPMG conducted an extensive research for
investors. Four bids were submitted for the
potential
entire Lautex company and two for selected assets. No
quantitative comparison of the bids was provided by
Germany.

to

(13) On 6 November 1997,
price

sale

a

a

at

Berlin

successor

organisation

the company was privatised
of DEM 434 783, with
by
GmbH
Beteiligungs-Management-Gesellschaft
((cid:145)BMGB(cid:146)),
the
Treuhandanstalt, transferring 90 % of the shares to Daun
& Cie AG and the remaining 10 % to Mr Claus E. Daun.
The Daun Group agreed to increase the Lautex share
capital of DEM 50 000 by DEM 6 million, of which
DEM 2 million was actually paid in. When the
privatisation and the sale to the Daun Group was
notified, Germany made no reference
to another
investor.

to

(14) On 22 April 1998, the Maron Group, through Mr Elard
Maron, acquired DEM 3 million of the Lautex share
capital, of which DEM 2 million was paid in.
In
addition, assets of Erba GmbH, part of
the Maron
Group, were transferred to Lautex. Lautex then changed
its name to Erba Lautex GmbH Weberei und Veredlung
but retained its legal personality (hereinafter the term

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Official Journal of the European Communities

L 42/21

(cid:145)Lautex(cid:146) also includes the name Erba Lautex GmbH
Weberei und Veredlung). Mr Elard Maron and Mr
Hans-J(cid:252)rgen Hyrenbach were appointed joint managing
directors of Lautex; Mr Hyrenbach is also the managing
director of Laufenm(cid:252)hle GmbH, a member of the Daun
Group. The German authorities provided no reasons for
the involvement of another investor or information as
to how the Maron Group was selected to be the second
investor in Lautex.

IV. RESTRUCTURING

(15) The information concerning the restructuring of Lautex
after privatisation has been amended by Germany on
several occasions,
in particular in May 1997, March,
September, November and December 1998 and even
subsequently. The changes to the restructuring plan and
the resulting altered information are presented in stages
below.

(16) The German authorities state that the problems faced by
Lautex were due to the transition from a centrally
planned to a social market economy, the loss of markets
in the former Comecon States, the need to find new
markets, general neglect and the need to meet new
environmental
inefficiencies
standards. Additional
resulted from the fact that Lautex operated at several
sites. These circumstances are cited as
for
Lautex never having made a profit.

reasons

(17)

restructuring was

is unclear from the information submitted by the
It
German authorities when the current restructuring of
Lautex began. A restructuring plan was allegedly drafted
in 1993, but the plan which was to form the basis of
the
radically changed in 1995.
Germany has neither justified the changes nor indicated
their extent. A few measures were implemented between
1993 and 1995, when the current plan took effect.
Since the German authorities have not provided more
the supposedly
precise information and in view of
the Commission
radical
assumes that the current restructuring began in 1995.

changes made

that year,

(19)

(20)

(21)

representatives was planned for
Europe, North America and Asia;

the markets

in

(b) the physical manufacturing base was improved in
particular by the expansion of the dyeing facilities
and the replacement of obsolete plant
in the
weaving mills. The weaving preparation facility was
and
extended,
introduced.
energy-saving
Improvements were made to the finishing operation,
production bottlenecks were removed and new
technologies were introduced.

yarn
systems

controls

while

were

feed

range

In January 1997, Germany presented the restructuring
plans for Lautex as modified in 1995. They involved
expansion of the sales network, simplification of the
the dyeing and
and extension of
product
processing facilities for viscose fibres such as Polynosic
and Tencel. The purpose of additional investment was
to improve flexibility and quality in both the weaving
and finishing operations. At the same time, unspecified
improvements would be made to meet environmental
Supplementary
and
in 1996
information in March 1998 confirmed that
substantial
to
had
restructure the finished products warehouses, expand
the
new finishing
machines and build a new finishing hall in Leutersdorf.

requirements.

hank-dyeing

undertaken

investment

facilities,

acquire

safety

work

been

In addition, the future market strategy was outlined. At
that time Lautex was concentrating on the production
of shirt and blouse fabrics, outer fabrics, workwear
fabrics and raw fabrics. It was hoping for profits from
the growth in non-iron shirt and blouse fabrics, where it
intended
to
high-priced fashion products for the European market.
According to the German authorities, the new capacity
for processing viscose fibres would give Lautex access to
new markets. A strategic alliance was
to
consolidate the outward processing operation.

on producing mid-

concentrate

sought

to

In May 1997,
procedure,
following information:

in response to the opening of
provided
authorities

the German

the
the

(18) By 1994 the following changes had been made at
Lautex on the basis of the 1993 restructuring plan:

(a) at company management level, computer systems
were introduced to plan production. In addition, the
acquisition of an independent sales department in
Berlin led to the building up of a marketing
network, and the creation of a network of sales

(a) at management level, new works managers were to
be recruited for the weaving and finishing plants. At
the Berlin sales
the distribution level, part of
operation had been sold off. The original plan to
use sales representatives in Germany was abandoned
in favour of a sales team directly employed by the
company;

(b) at production level,

improvements to the internal
logistics had resulted in increased throughput times
in the weaving and finishing plants. These measures,

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Official Journal of the European Communities

15.2.2000

together with the replacement of
weaving machines and the lengthening of
working week
productivity could be increased by 45 % (6);

the obsolete
the
that

hours, meant

144

to

(c) as regards market strategy, a reduction in raw fabric
production capacities and in outward finishing
capacities was announced. The production of outer
fabrics was also to be reduced.

(24)

(22) Further information was submitted in March 1998 in
connection with the privatisation. The modifications to
the restructuring plan included steps to incorporate
Lautex into the Daun Group and other changes which
were intended to put an end to the failure of previous
levels had not been
plans (projected sales and cost
attained):

regards

(a) at management level, the administrative functions of
Lautex and Lauffenm(cid:252)hle GmbH would be merged.
sales, Lautex would use the Daun
As
Group’s
that of
Lauffenm(cid:252)hle GmbH. The intention was that part of
the Lautex sales team would be taken over by
Lauffenm(cid:252)hle GmbH;

sales network,

in particular

(b) at production level, a new cutting machine would
eliminate bottlenecks in weaving preparations. The
existing outdated looms were to be replaced by
modern ones. The introduction of a new quality
control system and unspecified investment in the
finishing
mentioned.
were
Air-conditioning was also to be installed in the
weaving mill in order to avoid production stoppages
and improve quality;

sector

also

the

production

(c) as regards market strategy, Lauffenm(cid:252)hle GmbH
of
on
concentrate
would
fabrics, whereas
homogeneous mass-produced
fashionable
Lautex would
short-run products. The main market
for Lautex
would be the shirt and blouse sector, and the
finishing of outer fabrics and workwear would be
discontinued. Outward processing capacity would
also be reduced.

primarily

produce

(23) The modified

plan

unspecified
also
cooperation with an unnamed east European partner
and cooperation at management level with a competing
firm, Erba GmbH, which at that time had no connection

envisaged

with Lautex. The intention was
capacities of Erba GmbH to be concentrated at Lautex.

the finishing

for

In September 1998 the German authorities provided
Lautex
information
restructuring plan which were
to the
involvement of the Maron Group:

to
the
attributable

changes

further

of

(a) at management level, Mr Elard Maron, the former
managing director of Erba GmbH, would join Mr
Hans-J(cid:252)rgen Hyrenbach, managing
of
Lauffenm(cid:252)hle GmbH, as joint managing director of
Lautex. The employment of a new expert in the
production area was expected to lead to cost
reductions. As regards purchasing operations,
the
proven bargaining power of the Daun Group should
result in further cost savings;

director

(b) at production level, unspecified plant and machinery
from the failed Erba GmbH would be transferred to
Lautex. It also appeared that the Erba GmbH design
team would also be transferred to Lautex (although
this is not clear from the employee figures cited).
Unspecified synergies with the Daun Group would
take up unused finishing capacity. The yarn dyeing
operation would be transferred to Milerba SRO;

(c) as regards market strategy, the reputation of Erba
GmbH in the relevant markets is said to justify the
expected increase in Lautex sales in the area of
high-quality shirt and blouse fabrics. The German
the number of other firms
authorities note that
operating in this sector in the Community has been
reduced from 10 to three within eight years. This
sector is described as a market niche in which
Lautex can escape the competitive pressure of
for
suppliers.
low-cost
high-quality products is also said to justify the
significant price increases by Lautex.

The market

foreign

(25)

In November 1998 further substantial
investment of
over DEM 22 million up to 2002 was announced. This
information was, however, only to be gleaned from
the type of
table headings: a fuller description of
measures and the need for them was not provided.

(26) The Commission finds that the latest information from
Germany does not make it clear whether there will be
further additions to the present restructuring plan or
whether a new restructuring plan will be developed after
the withdrawal of the Daun Group.

(6) The information received in November 1998 contradicts this,
referring to a reduction of the working week from 168 hours to
144 hours.

(27) No precise information is provided as to the impact of
restructuring on Lautex production capacity.

the

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L 42/23

According to the information provided by the German
authorities in September 1997, weaving mill capacity
had already been reduced in the period 1990 to 96
(from 100 million running metres in 1990 to nine
million running metres in 1996). Finishing capacity is
also said to have been reduced, but it is not stated by
how much. No details were given as to when and how
the capacity reductions had occurred.
It was asserted
that no further reduction in capacity was possible.

(28)

acquisition of new machines,

In November 1998 the German authorities stated that
between 1996 and 1998 capacity had been reduced
from 9,14 million running metres a year to 7,2 million
running metres a year. This had been achieved despite
the
complete
technological overhaul of the firm, the elimination of
bottlenecks and the reorganisation of the lower capacity.
there were
The German authorities
methodological
finishing
difficulties
capacity.

stated
in quantifying

that

the

(29) According to the information submitted in April 1999,
Lautex also reduced capacity in 1998. By scrapping 20
looms, capacity was reduced from 7,67 million running
metres in 1996 to 7,618 million running metres in
1999. The looms were said to have been (cid:145)irreversibly
scrapped(cid:146). However,
the Lautex publicity material
presented at the March 1999 meeting with the German
authorities and the investor states that Lautex has an
annual output of 9 million running metres (7).

Restructuring costs

(30)

In its letter announcing the opening of the procedure
and in that announcing its extension, the Commission
referred to the lack of
information on the overall
restructuring costs.

(31) The letter of 27 November 1998 contained tables listing
and

restructuring

the overall

Lautex (8)

costs of

(7) The company’s publicity material contained in the brochure
(cid:145)Innovation TEXTIL Oberlausitz(cid:146) gives an annual output of 9 million
the Lautex website at
metres.
http://www.erba-lautex.de/engFrame.htm gives
of
10 million metres.

should also be noted that

capacity

It

a

(8) At a meeting in Brussels on 2 March 1999,

the German
representatives were made aware of the lack of precise information
concerning the overall costs of the restructuring and were informed
that the Commission would be calculating them on the basis of the
tables contained in the letter of 27 November 1998. The
information subsequently submitted referred on this point to the
letter of 9 December 1998; however,
letter contained no
information on this subject.

that

information as to how those costs were to be financed.
However, the tables were produced in 1992, when the
current restructuring process had not yet begun. The
following table summarises
those submitted by the
German authorities, but only for the relevant period
1995 to 2002 (9):

RESTRUCTURING COSTS

1995 to 2002

(in DEM million)

Investment

Loss cover

Debt servicing

Total current assets

Total current account

Increase in reserves

34,406

75,433

28,097

28,341

9,850

32,093

Total

208,220

servicing,

(32) The need for the individual items in the table was not
explained (except for investment, which was shown as
the only company cost). No more detailed information
was provided as to how these items were calculated or
as to how the organisational restructuring of the firm
was taken into account. The figure for loss cover does
not tally with earlier information, which shows losses of
DEM 59,672 million for 1995 to 2002 (10). As regards
debt
stated that
Lautex’s external
liabilities were taken over by the
Bundesanstalt f(cid:252)r vereinigungsbedingte Sonderaufgaben
(BvS) and that on privatisation the
latter waived
repayment of all the financial assistance it had granted.
However, debt servicing is envisaged for 1995 to 98
and 2001-2, with no explanation given as to the origin
or the size of the liabilities involved. The remaining
headings relate to financial restructuring measures but
no information has been provided as to how they arose
or how the amounts were calculated.

the German authorities

V. FINANCING THE RESTRUCTURING

(33) The intention is that the restructuring of Lautex will be
financed from both public and private sources. The
subsidisation
the
restructuring aid originally notified in January 1997 and
subsequently modified.

from public

relates

funds

to

(9) Assuming that the present restructuring of Lautex started in 1995.
(10) See below: (cid:145)Restoration of long-term viability(cid:146).

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State aid measures specified in the original
notification

Amended measures, details of which were provided
in March 1998

(34) The January 1997 notification covered the following

(36) Upon privatisation, the measures notified in 1997 were

measures to assist the restructuring of Lautex:

amended as follows:

(a) a DEM 5,202 million interest-free shareholder loan

(a)

from the BMGB, to run until 31 March 1998;

granting of

the
30,9 million to cover losses from 1997 to 2000;

an additional

sum of DEM

(b) a DEM 8,7 million shareholder

loan from the
BMGB, with interest payable at 7,33 %, to run until
31 March 1998;

(b) a

discharge
22,389 million;

from bank

liabilities

of DEM

(c) a

repayment waiver

in

respect

of DEM

(c) a DEM 6,5 million BMGB guarantee, at a charge of

159,27 million;

0,5 %, to run until 31 March 1999;

(d) the extension to 31 March 1999 of a DEM
3,5 million guarantee granted in 1992, at a charge
of 0,5 %.

(35) The total aid amounts to DEM 24 million. In its March
1998 letter, Germany conceded that part of the aid had
been disbursed in 1997 without Commission approval
and that
repayment was waived on privatisation.
However, no indication was given as to the value that
was put on these aid measures in the context of
privatisation.

(d) a repayment waiver in respect of

the guarantee

charge of DEM 0,312 million.

(37) According to Germany’s letter of March 1998, total aid
amounted to DEM 212,871 million.
figure
is unclear whether or not

for
However,
includes any or all of the aid granted in 1997.

Lautex
it

this

(38) A final analysis of all the documentation submitted to
the Commission by Germany shows that Lautex was
granted the following aid in 1996 and 1997:

(in DEM million)

1996

1997

Privatisation

Form

Amount

Form

Amount

Form

Amount

Loans

Grants

Loans

0,531

0,969

0,117

Loans

0,217

Loans

Guarantee (extension)

(3,500) (1)

Grants

Discharge from bank
liabilities

12,700

30,900

22,389

Total

1,617

Total

0,217

Total

65,989

(1) This amount must be disregarded because it represents the prolongation of a measure deemed to have been awarded at 100 %

intensity under an approved aid scheme.

Grand total

67,823

(39)

In detail, the measures specified in the above table for
1996 consist of
the following aid from BMGB to
Lautex:

(a)

loans of DEM 0,531 million in support of
redundancy programme;

the

(40) For 1997 the following aid measures are involved:

(a)

loans of DEM 0,217 million to promote vocational
training;

(b)

loans of DEM 0,117 million to promote vocational
training;

(b) extension of

an existing

guarantee of DEM

3,5 million, at a charge of 0,5 %.

(c) grants

of DEM 0,969 million
(measures under

promote
the Employment

to

employment
Promotion Law).

(41)

In the privatisation contract
following measures:

the BvS agreed to the

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L 42/25

(a)

loans of DEM 12,7 million to cover losses for
1997 (11), of which DEM 3,988 million was
interest-free and DEM 8,712 million carried interest
at 5,54 %. These loans were disbursed in instalments;

(e) waiver of

claims

from a guarantee of DEM

0,312 million.

(b) grants of DEM 30,9 million, paid in instalments
(DEM 8,9 million on 31 December 1997,
two
instalments of DEM 8 million each on 30 June
1998 and 31 December 1998, and DEM 6 million
on 30 June 1999);

(44) After 1995 the firm was granted aid totalling DEM
include the

73,742 million.
repayment waiver of DEM 159,583 million (13).

(This amount does not

(c) a

discharge
22,389 million (12).

from bank

liabilities

of DEM

Aid measures falling under Treuhand schemes

(42)

In the period 1996-97 Lautex received an investment
allowance (Investitionszulage) of DEM 0,226 million
from the Land of Saxony. For the period 1998 to 2000
DEM
further
5,693 million are being made available by the Land of
Saxony.

investment

allowances

totalling

(45) According to the notification of 27 January 1997, aid
measures falling under Treuhand schemes totalled DEM
174,4 million. Of this amount DEM 124,9 million had
allegedly been granted up to 1994 and, according to
information received, a further DEM 49,5 million was
approved in 1995 and disbursed in 1995 and 1996.
According to the information from Germany, i.e. after
the procedure was initiated in May 1997, financial aid
granted to Lautex between 1990 and the end of 1995
and falling under Treuhand schemes
totalled DEM
173,658 million:

(43) The privatisation contract waived the obligation to
repay several of the abovementioned aid measures. The
following waivers totalling DEM 159,583 million were
agreed by the BvS:

(a)

loans of DEM 33,43 million;

(b) guarantees totalling DEM 26,335 million;

(a)

loans of DEM 110,636 million (DEM 75,176 million
from 1991, DEM 16,527 million from 1994 and
DEM 3,24 million and DEM 15,693 million from
1995);

(c) various

grants
113,893 million.

and

loans

totalling

DEM

(b)

loans of DEM 46,13 million (DEM 22,872 million
and DEM 10,558 million from 1995 and DEM
12,7 million from 1997);

(c)

loans of DEM 0,334 million (DEM 0,117 million
from 1996 and DEM 0,217 million from 1997) to
promote vocational training;

(46) At a meeting in Brussels on 2 March 1999,

the
representatives of the German authorities admitted that
they would have to check which of the aid measures
the relevant
disbursed in 1996 actually fell under
the last of which expired on 31
Treuhand schemes,
December
information
submitted
an amount of DEM
177,794 million was involved. This also includes the aid
granted in 1996 (14). Since no explanation was given as
to why the aid measures granted after 1995 are
included in this sum, the Commission will take them
into account for the period 1996 to 2002.

1995. According
in April 1999,

the

to

(d)

loans of DEM 2,171 million for
the 1996
redundancy programme (DEM 1,64 million from
1992 and DEM 0,531 million from 1996);

(11) According to the letter of 27 November 1998, losses amount to
DEM 5,202 million. No explanation has been given as to why this
loan exceeds losses by DEM 7,498 million.

(12) No information was provided on these bank liabilities. It is not
clear whether the discharge relates to private or public bank
liabilities.

(47) An analysis of the information provided by the German
authorities shows that Lautex was granted the following
aid by the THA/BvS/BMGB in the period 1991 to 1995:

(13) These waivers relate to measures implemented since 1991.
(14) In particular grants of DEM 0,531 million for

the 1996

redundancy programme.

L 42/26

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Official Journal of the European Communities

15.2.2000

1991

1992

1994

1995

Form

Amount

Form

Amount

Form

Amount

Form

Amount

(in DEM million)

Loans

75,176

Loans

1,640

Loans

16,527

Loans

Guarantee

Guarantee

Guarantee

Guarantee

18,295

4,875

4,887

3,500

Loans

Loans

Loans

15,693

10,558

22,872

3,240

Total

75,176

Total

33,197

Total

16,527

Total

52,363

Grand total

177,263

(a) On 17 December 1991, Lautex AG was granted a

(iv) a loan of DEM 3,24 million on 8 September

loan of DEM 75,176 million.

1995 to cover losses in 1994.

(b) On 1 July 1992 Lautex received loans totalling DEM
1,64 million for the redundancy programme. Also
in 1992, several guarantees were taken over for the
firm:

(e)

In the period 1992 to 1995 the firm also received
investment allowances (Investitionszulagen) of DEM
1,018 million from the Land of Saxony (16).

(i)

(ii)

on 8 April 1992 two guarantees of DEM
18,295 million and DEM 4,875 million were
taken over to secure investments;

(48) Consequently, between 1991 and 1995 Lautex received

aid totalling DEM 178,281 million.

another guarantee of DEM 4,887 million, also
to secure investments, was taken over on 15
December 1992;

Private financing

(iii) a guarantee of DEM 3,5 million was taken over

on 10 December 1992.

(c)

In 1994 the
loans
16,527 million to cover losses in 1995.

firm received

of DEM

(d)

In 1995 Lautex was granted four different types of
loans totalling DEM 52,363 million:

(49) The first private financing operation for Lautex took
place at the time of privatisation. According to the letter
of March 1998, the investor acquired Lautex for DEM
0,435 million, waived various claims totalling DEM
0,26 million and was to make a cash injection of DEM
6 million. After the merger of Erba and Lautex, this
capital sum was divided between the investor groups, so
that each would contribute DEM 3 million. In fact, the
investors have paid in DEM 2 million each. The
remaining DEM 2 million will become due if
the
Commission takes a positive decision. This has been
confirmed several
the
investor contribution might total DEM 6,695 million.

times by Germany. Therefore,

(i)

a loan of DEM 15,693 million on 3 July 1995
to cover losses in 1995;

(ii)

a loan of DEM 10,558 million on 3 July 1995
to cover losses in 1996;

(iii) a loan of DEM 22,872 million on 3 July 1995

for restructuring measures in 1996 (15);

(50) The Commission would point out that, at a meeting on
2 March 1999, Mr Elard Maron stated that the assets of
Erba GmbH, amounting to DEM 9,686 million, should
also be considered as a capital contribution by the
investor. This statement is confirmed by the German
authorities in their latest letter of 12 April 1999. A
table contained in the same letter presents for the first
time two more amounts as investor contributions: one
in
of DEM 3,465 million to cover bank liabilities

(15) These loans were paid in instalments throughout 1996.

(16) DEM 0,313 million in 1992, DEM 0,175 million in 1993, DEM

0,82 million in 1994 and DEM 0,448 million in 1995.

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Official Journal of the European Communities

L 42/27

accordance with the privatisation contract, and one of
DEM 8,795 million, which is described as investment.
The letter gives no further details about
the two
amounts.
is not known whether these additional
contributions will be made by only one investor or both
of them, and in what proportions.

It

(54)

VI. RELEVANT MARKET

in Lauffenm(cid:252)hle and subsidiaries

(51) Lautex operates in the textile industry. It weaves and
finishes outer
fabrics, shirt and blouse fabrics, and
workwear. The Daun Group,
through its production
facilities
in South
in the textile
Africa and Zimbabwe, also operates
industry. The Maron Group has production facilities in
the Czech Republic. Because of the lack of information
from Germany as regards the investor groups, nothing
is known about their interests in other textile firms. The
Commission notes that at the beginning of 1998 Lautex
exported 4,6 % of
to third countries and
17,7 % to other EU Member States, with the rest being
sold within Germany.

its output

The industry is continuing to restructure in the face of
price
lacklustre
competition (19). In addition, several firms have left the
market in which Lautex operates.

demand

intense

global

and

to

It is noted that Lautex is geared exclusively to producing
for the clothing market. Its market strategy, despite the
numerous changes it has undergone, is directed solely at
this area. The assessment of this downstream market is
important for determining competitive pressures in that
part of the upstream textile market geared to supplying
it. According
the
information
Commission, the downstream market is characterised by
intense competition;
in the near future
in addition,
employment
is expected to decrease and growth is
expected to be slight. Demand has declined annually by
2 % since 1990. The clothing industry will continue to
and
face difficult
consumption
improve
significantly (20). The
impact of overproduction on
textile markets is potentially catastrophic for both textile
and clothing producers throughout the world (21).

conditions
expected

economic
not

in Europe

available

to

to

is

(52) Markets for woven and finished fabrics are to be found
initiated the
the Community. When it
throughout
procedure,
the textile
the Commission found that
industry was suffering from recession and overcapacity.
Germany also indicated that overcapacity existed in the
sector in which Lautex operated (17). This view was also
in
held by third parties who submitted comments
response to the notice announcing the opening of the
procedure.
In December 1998 Germany revised its
statement concerning overcapacity, maintaining that as
from 1997 there was no longer any overcapacity on the
Community textile market.

VII. INITIATION AND EXTENSION OF THE PROCEDURE

(55) When initiating the procedure, the Commission found
that the measures notified constituted aid within the
meaning of Article 87(1) of the EC Treaty. Since the aid
was intended as restructuring aid, it had to be assessed
on the basis of Article 87(3)(c) and the Community
guidelines on state aid for rescuing and restructuring
firms in difficulty ((cid:145)the guidelines(cid:146)) (22).

(53) By nature,

intensive.
the textile industry is capital
Nevertheless, keen competition exists from low-wage
countries with less stringent rules on environmental
protection. Forecasts
for Community manufacturers
were and still are pessimistic (18). Since the procedure
was initiated, there have been signs that in the period
1994 to 1995 the situation had generally improved on
the textile market. However, it is unclear whether this
positive trend is continuing. One report suggests that
the improvement may have been short-lived, with
growth decelerating in 1996 to well below the
longer-term trend
some
improvement in 1997. Further capacity rationalisation is
expected in the German textile industry in particular.

registering

before

value

(17) See letter of September 1997.
(18) See (cid:145)Business trends survey(cid:146), August 1996, European Observatory
for Textiles and Clothing;
(cid:145)Textile Outlook International: Asian
crisis (cid:151) the impacts spread far and wide(cid:146), Economist Intelligence
Unit (1 July 1998).

(56)

be

avoided

letter of 15 April 1997,

In its
the Commission
expressed doubts as to the cogency of the proposed
the
restructuring measures and the correctness of
assumptions made.
It also doubted whether undue
distortion of competition by the proposed aid measures
could
structural
overcapacity in the industry, no permanent capacity
reduction was proposed. In view of the misgivings as to
whether the restructuring measures were appropriate,
the Commission was unable
to take a view on
proportionality. Finally, there was doubt as to whether
the rescue plan was being fully implemented. Given the
lack of conclusiveness of the restructuring plan and the

despite

since,

the

(19) See (cid:145)World Textile Fibers

to 2001(cid:146), Freedonia Industry and

Business Research Studies, The Freedonia Group Inc., Ohio, USA.

(20) See (cid:145)Panorama of EU Industry 97(cid:146), European Commission, report
prepared by the European Observatory for Textiles and Clothing.
NACE (Revision 1) 17, Vol. I, 4-17 to 4-23.

(21) See (cid:145)Textile Outlook International: World(cid:146), Economist Intelligence

Unit, 1 July 1998.

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

L 42/28

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Official Journal of the European Communities

15.2.2000

absence of a private investor,
the Commission was
concerned that a privatisation carried out in the course
of
in it being
amended.

the restructuring plan might

result

to

the

but

have

been

steps

amended

individual

(57) Privatisation involved new aid measures for Lautex, and
the information subsequently submitted did not allay
the abovementioned concerns. The restructuring plan
was
in the
restructuring process were not described and no analysis
of the firm’s difficulties was provided. The 1997 targets
proved
the
achievement of an operating profit was postponed from
1998 until 2000. A capacity reduction was now also
supposed to be carried out, although no explanation
was given as to how this was suddenly possible, and the
issue of permanence was not addressed. Since overall
restructuring costs were not known, the Commission
could not assess the proportionality of the measures.
Lastly, the privatisation of the firm did not dispel the
doubts concerning full implementation of the recovery
plan. The procedure was therefore extended.

overoptimistic

and

VIII. COMMENTS FROM INTERESTED PARTIES

Journal of

(58) The publication of the letter to the German Government
the European Communities (23)
in the Official
elicited complaints from a European trade association
and a British trade association. An unsolicited letter
from a western German competitor was sent in April
1997 alleging predatory pricing. Reference was also
made to overcapacity on the market. Copies of these
letters were forwarded to the German authorities for
comment. They replied in September 1997, denying
that predatory pricing had occurred.

(59) After it was announced that the procedure was being
the Daun Group and the Maron Group
extended,
submitted comments to the Commission. The Maron
Group letter contained information on the merger
between Erba and Lautex and on Erba’s activities. In its
letter the Daun Group expressed its dissatisfaction with
firm’s
the
unsatisfactory
it was
and
withdrawing from the privatisation contract. These
comments were also forwarded to Germany, which was
given the opportunity to react. By letter of 22 April,
registered as received by the Commission on 29 April,
the deadline by
the Germany authorities asked for
to be
which they had to submit

described
stated

their comments

privatisation

situation

process,

that

the

extended until 7 May. The Commission agreed by letter
dated 3 May, but there was no reaction from Germany.

IX. ASSESSMENT ON THE BASIS OF THE
INFORMATION AVAILABLE

several

extended.

In spite of

(60) On 17 August 1998 Germany was required by the
Commission to furnish it within one month with
sufficient information to enable it to assess the measures
under investigation. At Germany’s request, this deadline
was
the
information submitted as a reaction to the official letter
was misleading, often contradicted previous statements
and was insufficient to dispel the doubts expressed by
the Commission when initiating and extending the
procedure. In accordance with Article 13(1) of Council
Regulation (EC) No 659/1999 of 22 March 1999 laying
down detailed rules for the application of Article 88 of
the EC Treaty (24), the Commission therefore bases the
following assessment on the information available.

requests

X. AID MEASURES TO BE ASSESSED

requesting

(61) The Commission also finds that Germany’s most recent
letter, which refers to information to be communicated
in the future, arrived after expiry on 7 May 1999 of the
final extension of the deadline stipulated in the official
new
letter
information.
restructuring plan be notified in the
the
Commission reserves the right to assess this separately.
The announcement that at a later date information will
be communicated on a future, as yet undeveloped,
blueprint or plan in no way affects the assessment of
the present situation.

a
future,

Should

(62) The financial assistance for Lautex constitutes aid within
the meaning of Article 87(1) of the EC Treaty since it is
paid out of public funds and entails advantages for
Lautex which a firm in difficulty would not have
received from a private investor. Furthermore,
in the
sector concerned it may affect trade between Member
States and therefore distort competition in the common
these measures constitute new aid,
market. Some of
which has to be assessed by the Commission. Lautex
has not yet made a profit and is a firm in difficulty.

(23) See footnote 2.

(24) OJ L 83, 27.3.1999, p. 1.

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Official Journal of the European Communities

L 42/29

Aid covered by Treuhand schemes

(63) According to Germany’s latest letter, aid totalling DEM
177,794 million is covered by Treuhand schemes. An
analysis of the information provided showed that Lautex
received aid totalling DEM 178,281 million from 1991
to 1995. On the basis of the information provided, the
Commission made the following assessment:

(a) Loans totalling DEM 75,176 million and made to
Lautex in 1991 are covered by an approved aid
scheme, Treuhand scheme NN 108/91 (25), and meet
its conditions (26).

Investment Allowance

(d) The investment allowances of DEM 1,018 million
granted in the period 1992 to 1995 are based on
the
Law (Investitions-
zulagengesetz) (31), an approved aid scheme, and
therefore do not need to be assessed by the
firm’s
Commission.
restructuring began in 1995, an allowance of
DEM 0,57 million had already been granted.
Consequently, the amount of DEM 0,448 million
granted in 1995 has to be taken into account when
proportionality is assessed.

assumed that

the

is

If

it

(64) The

list

that

shows

aid measures

totalling DEM
124,9 million are covered by Treuhand schemes. A
further sum of DEM 1,018 million is based on an
approved aid scheme. This leaves an amount of DEM
52,363 million that has to be assessed as ad hoc aid.

provide

agreements

(b) As regards the loans of DEM 1,64 million for the
redundancy programme granted on 1 July 1992, the
Commission takes the view that
the obligations
which a firm has under employment legislation or
collective
redundancy
to
benefits and/or early retirement pensions are part of
the normal costs of a business which a firm has to
meet from its own resources. This being so, any
contribution by the State to these costs must be
counted as aid. However, these loans are covered by
Treuhand scheme E 15/92 (27) and therefore do not
need to be assessed here. The same scheme covers
both the guarantees of DEM 31,557 million granted
in 1992 and the loans of DEM 16,527 million
granted in 1994 to cover losses in 1995. These
measures meet the conditions of this scheme (28).

Aid granted after 1 January 1996

(65) The information set out shows that since 1996 Lautex
has received aid totalling DEM 73,742 million. The
Commission’s assessment of this aid is as follows:

(a) According to point 3.2.5 of the guidelines, the loans
of DEM 0,531 million granted for the redundancy
programme are to be regarded as aid, and an
therefore be made of whether
examination must
they satisfy the criteria laid down in the guidelines.

(c) The loans of DEM 52,363 million granted in 1995,
allegedly in accordance with Treuhand scheme
N 768/94 (29), which had been approved by the
Commission, exceed the threshold laid down by
DEM 2,363 million. This aid should have been
notified to the Commission (30) and therefore has to
be assessed as ad hoc aid.

(25) SG(91) D/175825, 26 September 1991.
(26) Treuhand scheme NN 108/91 covers loans and guarantees granted

by the Treuhand to firms undergoing privatisation.

(27) SG(92) D/17613, 8 December 1992.
(28) See point 3 of Treuhand scheme E 15/92, which provides that the
granting of loans and guarantees has to be notified if the firm
employs more than 1 500 workers and the total commitment
(Gesamtobligo) exceeds DEM 150 million. The aid measures fall
within the limits laid down in the scheme and were thus covered
by it.

(29) SG(95) D/1062, 1 February 1995.
(30) Treuhand scheme N 768/94 states that all loans in excess of DEM
50 million which are granted to firms with over 250 employees
must be notified to the Commission.

in

1996,

granted

training

general measures paid direct

(b) With regard to the loans of DEM 0,117 million for
vocational
the
Commission notes the absence of information on
their purpose and use. They are not therefore to be
regarded as
to
the company being involved.
employees without
Such a measure, which assists a firm by reducing
the costs it normally has to bear if it wishes to train
its employees in a way which is relevant to its work
or if it wishes to give its employees the opportunity
of undergoing training themselves must be regarded
as aid.

(c) The grants of DEM 0,969 million to promote
employment
(AFG-Ma(cid:223)nahmen) are based on the
Employment Promotion Law (Arbeitsf(cid:246)rderungs-
gesetz), which is an approved aid scheme and
therefore does not need to be assessed by the

(31) Measures under this Law qualify as regional

investment aid in
accordance with Article 87(1) of the EC Treaty and were approved
by the Commission as a derogation from Article 87(3)(a) of the
EC Treaty (approved aid scheme N 494/A/95).

L 42/30

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Official Journal of the European Communities

15.2.2000

Commission. Nevertheless, they will be taken into
account when proportionality is assessed.

respect of
additional aid.

these measures does not constitute

(d) Of the measures taken in 1997 to assist Lautex, the
vocational
training loans of DEM 0,217 million
count as aid which has to be examined by reference
to the criteria laid down in the guidelines. The
extension of
the guarantee of DEM 3,5 million
relates to a 1992 guarantee covered by Treuhand
scheme E 15/92. Since this measure forms part of
an approved scheme and was considered to have an
intensity of 100 % of the amount guaranteed, the
Commission does not consider the extension to be
additional aid. As a result,
that amount can be
disregarded.

to which the BvS agreed under

taken from 7 November 1997
(e) The measures
onwards,
the
privatisation contract and which comprised loans of
DEM 12,7 million, grants of DEM 30,9 million and
a
of DEM
22,389 million (32), are considered to be new aid
measures.
In this case an examination has to be
made of whether a derogation under Article 87(3)(c)
of the EC Treaty is applicable.

from bank

discharge

liabilities

investment

(66) This list shows that since 1992 Lautex has clearly
received aid totalling DEM 252,023 million (34). Of this
total, DEM 123,26 million is covered by Treuhand
schemes. This aid and the
allowances
totalling DEM 0,57 million were granted in 1995 before
the current restructuring started, so that they will be
disregarded by the Commission when proportionality is
of DEM
assessed.
to be
126,553 million granted since 1995 needs
evaluated. Of
this, DEM 7,336 million was granted
under approved aid schemes and do not therefore need
to be assessed by the Commission. However, these sums
are to be taken into account when proportionality is
assessed. Measures totalling DEM 119,217 million count
as new aid measures and have to be assessed by the
Commission.

This means

that

the

aid

(67) The Commission also notes

the

lack of precise
information on the circumstances in which the investors
to
were selected and therefore reserves
comment on additional, as yet unquantified aid elements
which may have been granted during the privatisation
process.

the right

(f) The investment allowances of DEM 5,919 million
made available by the Land of Saxony are based on
an approved aid scheme and do not therefore need
to be assessed by the Commission; however, they
must be taken into account when proportionality is
assessed.

XI. ASSESSMENT OF THE RESTRUCTURING AID

(g) Part of the waiver of DEM 159,583 million agreed
on privatisation, namely DEM 93,665 million (33),
relates to aid covered by Treuhand schemes. The
waiver of DEM 65,928 million relates to measures
not
and
approved
repayment of which had never been intended, given
the firm’s difficult situation. Since aid for the rescue
in difficulty has an
and restructuring for
firms
in
intensity of 100 %,

the waiver of

repayment

schemes

covered

aid

by

(68) According to Article 87(1) of the EC Treaty, State aid
granted to certain undertakings which distorts or
threatens to distort competition is, in so far as it affects
incompatible with the
trade between Member States,
common market. In view of the nature of the aid in
question and the condition of the textile industry, it is
clear that the aid package in question falls within the
generally
scope
incompatible with the
it
qualifies for one of the derogations in Article 87(2) or
(3).
is relevant because it
allows the Commission to approve State aid in certain
according to Article
include,
circumstances. These

aid
common market unless

In this case, Article 87(3)

of Article

87(1).

Such

is

(32) No information was presented as to whether these were private or
public funds or as to what purpose was served by the liabilities
discharged on privatisation.

(33) The loans of DEM 75,176 million granted in 1991 and of DEM
16,527 million granted in 1994 are covered by Treuhand
schemes. Since the Commission has no knowledge of guarantees
granted outside the Treuhand schemes, the waiver of claims from
a guarantee clearly relates
to the guarantee assumed under
Treuhand scheme E 15/92.

(34) The Commission notes that the financial measures designed to
cover overall restructuring costs, which are contained in a table
submitted on 27 November 1998, exceed the total amount of aid
indicated as having been granted to Lautex plus the investors’
contribution, which is given as DEM 6 million in the table. Since
no explanation was provided on whether these measures were
financed from public or private sources, the Commission cannot
discount
the possibility that Lautex may have benefited from
additional aid.

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87(3)(c), aid to facilitate the development of certain
economic activities where such aid does not adversely
affect trading conditions to an extent contrary to the
common interest. The
down the
preconditions for a positive exercise of discretion by the
Commission.

guidelines

lay

(69) On the basis of Article 87(3)(a), the Commission may
approve aid to promote the economic development of
areas where the standard of living is abnormally low or
where there is serious underemployment. This provision
is applicable to the new German L(cid:228)nder (35).
In the
present case, however, the main purpose of the aid is to
restructure a company in difficulty and not to promote
the economic development of an area. Even if a
successfully restructured company may contribute to the
the aid should be assessed
development of the area,
under Article 87(3)(c) and not under Article 87(3)(a).

(70) The notification made by Germany in January 1997 was
concerned with restructuring aid.
the measures
notified are to be considered compatible with the
common market, they must meet the conditions laid
down in point 3.2 of the guidelines. The Commission
doubts whether the aid meets all those conditions.

If

XII. RESTORATION OF LONG-TERM VIABILITY

(71) The restructuring plan must

restore the long-term
viability of the firm within a reasonable timescale and
on the basis of realistic assumptions. In order to assess
the Commission needs
the soundness of
information on the
the
proposed internal measures and their expected effect.

firm’s present difficulties,

the plan,

additional

in response to its letter
(72) The Commission notes that,
the procedure, Germany
announcing the opening of
the
concerning
provided
information
restructuring measures. However,
no
there was
indication as to how these measures could resolve the as
yet unidentified problems of the firm, how much they
would cost, when they were likely to be implemented
and whether they were necessary.

(35) See Commission decision on Case N 464/93.

(73) The main explanation given for the problems which
eventually led to the difficulties indicated by Germany in
November 1998 is the firm’s transition from a centrally
planned economy to a market economy. Lautex was
originally a bulk producer whose traditional markets
were in the eastern bloc countries. When those markets
collapsed, the firm was compelled in 1992 to change its
strategy and make substantial job cuts. This gave rise to
costs
firm’s
redundancy programme,
restructuring and the necessary investment.

the

the

for

restructuring measures,

(74) The November 1998 letter contained information on
the
they were
described only in vague terms. The information related
mainly to objectives without explaining the individual
steps to be taken in order to achieve them. Hardly any
reference was made to the expected financial
impact
and no timetable was provided.

although

(75) The restructuring plan for Lautex has undergone several
has
fundamental
constantly modified information previously supplied,
and this has simply given rise to further questions (36).

addition, Germany

changes.

In

(76) The Commission notes that the original 1993 plan for
Lautex, which was amended in mid-1995, envisaged an
operating profit by 1998. In the letter of May 1997,
this was postponed until 1999. According to the
amended version submitted in March 1998,
an
operating profit could not be expected until 2000.
the firm will
According to more recent
achieve an extremely modest operating profit only in
2001. It must also be noted that targets set by the firm
for particular product
frequently not
achieved.

information,

areas were

(77) These

constant amendments make

the plan seem
unreliable. The firm is going through a continuous
restructuring process for which apparently large sums of
aid are being used, without the firm ever having made a
profit. The aid seems to be keeping the firm artificially
alive, in breach of the (cid:145)one time, last time(cid:146) principle. The
steadily deteriorating results achieved by the firm
throughout
serious
doubts as to its long-term viability.

restructuring process

raise

the

(36) For example, the information on the development of capacity, the
transfer of plant and machinery to Lautex from Erba GmbH and
the description of Lautex as an outward processor has been
changed on several occasions.

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Overview (37)

(in DEM million)

1995

1996

1997 (1)

1998

1999

2000

2001

2002

Turnover

61,571

64,998

57,029

70,787

71,943

80,688

81,554

82,379

Cost of materials

40,987

50,767

45,583

53,972

50,389

53,803

53,132

52,142

Manpower costs

14,983

18,857

17,446

17,213

16,795

16,692

17,022

17,362

Depreciation expenditures

5,464

3,083

2,338

2,832

3,402

4,004

3,927

3,950

Other operating costs

10,221

10,759

7,620

6,550

6,265

6,663

6,790

6,946

Operating result

ﬂ 10,084 ﬂ 18,468 ﬂ 15,958

ﬂ 9,780

ﬂ 4,908

ﬂ 0,474

0,683

1,979

(1) Final figures.

(78) The

have

results

submitted are

supporting figures

also being
constantly changed. The figures for both turnover and
operating
revised
downwards in the above period. The latest information
anticipates a turnover of DEM 56,7 million and losses
of DEM 11,3 million for 1998 (38), which are
respectively much lower and much higher than the
original figures.

constantly

been

to the restructuring of

amount of aid received,
the
industry by irreversibly reducing capacity. A genuine
contribution is made when, as part of reduction of
capacity, assets leave the sector concerned; this may also
mean that they are physically destroyed. Should further
restructuring aid be granted, an appropriately modified
restructuring plan must meet the same conditions.

(79) Accordingly,

the Commission has doubts as to the
credibility of both the original and the amended
information. It also notes that the restructuring period
has been gradually lengthened.

XIII. UNDUE DISTORTION OF COMPETITION

(80) Under

the

further

guidelines,

of
a
restructuring aid is that measures are to be taken to
offset as far as possible adverse effects on competitors.
Otherwise, the aid would be (cid:145)contrary to the common
interest(cid:146).

condition

(82) The segment of

framework on regional aid for

the textile market on which Lautex
operates seems to be in difficulties and to be on the
brink of excess capacity (39). The Commission notes that
the view expressed by Germany in December 1998 is
in the
clearly based on the methodology set out
large
multisectoral
investment projects (40). Point 1.4 of
framework
explicitly states that it does not apply to restructuring
aid cases. For this reason, the Commission does not
accept Germany’s revised view that there is no excess
capacity in the segment of the textile market on which
Lautex operates. This means that Lautex should reduce
capacity in proportion to the aid granted, although this
condition may be less strictly applied in an Article
least demonstrate that
88(3)(a) area, or
capacity is not being or has not been increased.

should at

that

(81) As far as the production capacity of an aid recipient is
concerned, this means that aid may generally not be
used to increase capacity as part of a restructuring
process. Furthermore, where there is a structural excess
of production capacity in a relevant market
in the
Community served by the recipient, the restructuring
plan must make a contribution, proportionate to the

(37) The figures are taken from the letter of 6 March 1998, which
gives the latest figures for 1995 and 1996, and from the letter of
27 November 1998, which contains the last amended version and
an overview.

contradictory
(83) The Commission
concerning
statements by
capacity at Lautex. The fullest details regarding capacity

the German authorities

the many

notes

(39) The Commission notes that in two recent decisions (Rawe GmbH
& Co., N 394/98, and Palla Creativ Textiltechnik GmbH, NN
it reached the negative conclusion that it did not have
57/98)
evidence that the textile market was in overcapacity. However, in
those cases both firms had carried out capacity reductions, so that
it was not necessary to make a positive evaluation of the state of
the market.

(38) The most recent consolidated figures relate to 1997.

(40) OJ C 107, 7.4.1998, p. 7.

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were given in the letter of November 1998. However,
the calculations purporting to show a capacity reduction
solely to organisational
are misleading and relate
changes.
reductions which
predate the restructuring are irrelevant.

Furthermore,

capacity

how these measures will

to
improve
performance, it was impossible for the Commission to
determine whether the aid was limited to the strict
minimum needed to restore the firm to long-term
viability.

help

to

(84) The increase in productivity achieved by the removal of
bottlenecks and the implementation of modernisation
measures suggests that weaving capacity may have been
increased. The Commission notes the comments about
capacity.
the
calculating
However,
modernisation
thoroughgoing
programmme and the installation of additional finishing
facilities strongly suggest
that productivity has been
increased in this area as well. Similar comments apply
to the warehousing facilities.

difficulties

finishing

the

of

(85) The information about

the investors does not reveal
whether
their
competitors.
cooperation in a joint venture could also lead to
problems under Article 81 of the EC Treaty.

they are,

they are

If

(86) The Commission cannot conclude that the aid will not

result in an undue distortion of competition.

(89) The additional details subsequently provided did not
information either. Although a
remedy the lack of
general explanation of the problems which gave rise to
the difficulties was finally provided, the overall costs of
the restructuring remain unclear. There is no indication
of how the costs listed in the table contained in the
letter of 27 November 1998 relate to the restructuring
measures notified. Several particulars contradict
the
information submitted to the Commission on an earlier
occasion (41).
In addition, no information has been
provided on the need for the measures or on the
calculation of the amounts.

If

(90) The Commission notes the lack of clarity as to how the
restructuring was
the overall costs of
financed.
restructuring Lautex since 1995 do indeed amount to
DEM 208,22 million as stated in the table submitted by
Germany, then according to the information submitted
to the Commission the firm has been granted aid
totalling DEM 126,553 million since that year and the
remaining costs are to be borne by the investors.

XIV. PROPORTIONALITY OF AID

(91)

the above,

In view of
the information submitted is
insufficient to ascertain whether the aid was limited to
the
the
restructuring.

strict minimum needed

undertake

to

(87) A further requirement laid down in the guidelines is
that the amount and intensity of the aid be limited to
the strict minimum needed to enable restructuring to be
undertaken and related to the benefits anticipated from
the Community’s point of view. Therefore, aid recipients
will normally be
significant
contribution to the restructuring plan from their own
resources. Furthermore, to limit the distortive effect, the
form in which the aid is granted must be such as to
avoid providing the firm with surplus cash which could
be used for market-distorting activities.

expected to make

a

Inadequacy of the restructuring finance

Investors’ contribution

(92) According to the letter of March 1998, the investors’
contribution amounts to DEM 6,695 million. However,
if, as stated in the letter of November 1998, the overall
restructuring costs amount to DEM 208,22 million, the
investors would bear only some 3,2 % of those costs. If
this were so, the total amount of aid plus the investors’
contribution would not cover those costs. Furthermore,
investors’
the
contribution is made conditional on a positive decision
by the Commission calls into question the significant
role of the investors in restructuring the firm.

that payment of part of

fact

the

(88) When both initiating the procedure and extending it,
the Commission referred to the lack of
information
regarding the overall costs of the restructuring. Without
an exact description of the problems faced by Lautex,
without more detail on the specific restructuring steps
and the associated costs and without clear indications as

(41) The information on Lautex’s losses does not tally with the figures
contained in the table submitted on 27 November 1998. A
further discrepancy exists between the debt-servicing data and the
statement that Lautex’s financial liabilities were either taken over
by the BvS or waived upon privatisation.

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(93) As regards the Erba GmbH assets of DEM 9,686 million,
which were listed as a further contribution on the part
of the investors, the Commission does not accept it as
such for the following reasons:

of unexplained data. For this reason, the Commission
cannot consider the investor contribution to the overall
restructuring costs to be significant within the meaning
of the guidelines.

(a) There is no description of the assets of Erba GmbH
or any indication of how the stated value was
determined.

Form of the aid

(b) Since Erba GmbH was a going concern, with Mr
Elard Maron as its managing director, and bearing in
mind not only that Mr Elard Maron became a major
Lautex shareholder and,
together with one other
managing director, assumed managerial control of
the firm, but also that the financial risk of trading
by the legal person of Lautex under another name is
eliminated as a result of sufficient aid, the economic
reality of the situation is that the transfer of assets
to Lautex cannot be seen as such but as a partial
takeover by the Maron Group with no additional
transfer
injection by investors. Accordingly,
does not rank as a contribution by the investors.

this

(94) Even if this amount were admissible, the investors’ share
in the overall restructuring costs would amount to DEM
16,318 million,
i.e. 7,8 % of the costs shown in the
table submitted in November 1998. In view of the size
of the investors, even this share cannot be considered
significant.

of

first

quite

clearly

amount

liabilities

contradicts

assumption

(95) As regards the other two new amounts included in the
last letter dated 12 April 1999 (DEM 3,465 million for
and DEM
bank
the
8,795 million as investments), it is noted that neither
amount had been mentioned previously by Germany.
The
the
information provided to date on the liabilities under the
privatisation contract. No further explanation of either
amount is given in the letter. It is thus unclear whether
the additional amounts indicated are from just one
investor or from both of them and in what proportion.
According to information from Germany,
the Daun
Group has withdrawn from the privatisation contract. It
is,
it will make any further
contribution to the restructuring costs. This could also
contribution,
mean a
respect has been
although no information in this
provided.

therefore, unlikely that

reduction in the

investors’

(97) The form in which the aid is granted must be such that
it cannot easily be used for market-distorting activities.
The modified aid package includes a loan of DEM
12,7 million that was disbursed in instalments in 1997
and a grant of DEM 30,9 million. This grant was
converted into a loan which is being disbursed in
several instalments (42). This fact is relevant in view of
the comments submitted by one of the interested parties
after the opening of the procedure to the effect that
Lautex had engaged in predatory pricing.

(98)

If 1995 is assumed to be the start of
the current
restructuring measures, the firm has since received aid
totalling DEM 104,164 million (43). The fact remains
that the total costs of the restructuring are not known,
that the restructuring plan has been repeatedly amended
and that there are serious doubts as to whether the
rescue plan is being implemented in full. Although
the
some of
that Lautex may have been
possibility still exists
provided with surplus
for
market-distorting activities.

the aid was paid out

cash that was used

in instalments,

(99) The Commission cannot

the
condition of proportionality laid down in the guidelines
has been met.

therefore establish that

XV. FULL IMPLEMENTATION OF RESTRUCTURING
PLAN

(100) The firm in receipt of restructuring aid must

fully
implement the restructuring plan that was submitted to
and accepted by the Commission. Although the doubts
the plan
concerning
originally submitted were in part based on the absence
of a private investor at the time, the changes in the
those doubts even
restructuring plans cannot dispel

implementation of

full

the

(96)

the official

letter requesting information,
In view of
meetings with the German authorities
the
extensions of the deadlines for presenting information,
the Commission cannot
the vague
information concerning the contributions indicated and

take account of

and

(42) According to the letter dated 27 November 1998, the loan is
payable in four instalments: DEM 8,9 million on 31 December
1997, DEM 8 million by 30 June 1998, DEM 8 million by 31
December 1998 and DEM 6 million by 30 June 1999.

(43) The discharge of bank liabilities totalling DEM 22,389 million has

no effect on liquidity.

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the plan,

the vagueness of

today. Because of
the
repeated amendments, the absence of a timetable for the
individual steps in the restructuring and the repeated
extensions of the restructuring period, it is that much
harder to ascertain whether the plan is being fully
implemented. Furthermore, the letter to the Commission
from one of the investors, Daun & Cie AG, stating its
intention to withdraw from the privatisation contract
has given rise to very serious doubts about
the full
implementation of
the restructuring plan. The clear
conclusion to be drawn from the information of 14 July
the Daun
1999, which confirms the withdrawal of
to
Group and
the
additions
elaboration of
restructuring plan or
a new
restructuring plan for Lautex,
is that the present plan
will not be fully implemented in its amended form.

announces

further

the

(f)

loans of DEM 0,117 million in 1996 for vocational
training;

(g)

loans of DEM 0,217 million in 1997 for vocational
training;

(h)

loans of DEM 12,7 million to cover losses for 1997,
agreed on privatisation;

(i) grants of DEM 30,9 million, agreed on privatisation;

(j) discharge from bank liabilities of DEM 22,389 million,

agreed on privatisation.

XVI. CONCLUSIONS

Article 2

(101) The Commission finds that Germany has unlawfully
granted aid to Lautex in breach of Article 88(3) of the
EC Treaty and that the aid is incompatible with the
common market,

HAS ADOPTED THIS DECISION:

Article 1

The State aid which Germany has implemented for Erba
Lautex GmbH Weberei
Veredlung, Neugersdorf,
und
amounting to at least DEM 119,217 million (EUR 60 954 684)
plus
incompatible with the common market.
According to the information available, the aid consists of the
following measures:

interest,

is

take all necessary measures to recover
1.
Germany shall
from the recipient
the aid referred to in Article 1 and
unlawfully made available to the recipient as well as all other
aid for Lautex which cannot be specified because of missing or
unclear information.

Recovery shall be effected in accordance with the
2.
procedures of national
law. The aid to be recovered shall
include interest from the date on which it was at the disposal
of the recipient until the date of its recovery. Interest shall be
the reference rate used for
calculated on the basis of
calculating the grant equivalent of regional aid.

Article 3

(a)

loans of DEM 15,693 million to cover losses for 1995,
granted on 3 July 1995;

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

(b)

loans of DEM 10,558 million to cover losses for 1996,
granted on 3 July 1995;

Article 4

(c)

loans of DEM 22,872 million for restructuring measures in
1996, granted on 3 July 1995;

This Decision is addressed to the Federal Republic of Germany.

(d)

loans of DEM 3,24 million to cover losses for 1994,
granted on 8 September 1995;

Done at Brussels, 20 July 1999.

(e)

loans of DEM 0,531 million in 1996 for the redundancy
programme;

For the Commission

Mario MONTI

Member of the Commission