2000/318/EC: Commission Decision of 28 July 1999 on State aid which Italy plans to grant to Fiat Auto SpA for its plant at Pomigliano d'Arco (Naples) (Notified under document number C(1999) 2916) (Text with EEA relevance) (Only the Italian text is authentic)
Date: 1999-07-28
Institutions: European Commission
Subjects: Campania, Italy, State aid, application of EU law, control of State aid, motor vehicle industry

6.5.2000

EN

Official Journal of the European Communities

L 110/9

COMMISSION DECISION

of 28 July 1999

on State aid which Italy plans to grant to Fiat Auto SpA for its plant at Pomigliano d’Arco
(Naples)

(Notified under document number C(1999) 2916)

(Only the Italian text is authentic)

(Text with EEA relevance)

(2000/318/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
comments
provisions (1),

invited the parties

concerned to submit

in

accordance with

the

their
abovementioned

Whereas:

I. PROCEDURE

(1) Between October

and December 1997 the

Italian
to
Government notified the Commission, pursuant
Article 88(3) of
the Treaty, of six planned measures
under which it proposed to grant State aid to Fiat Auto
SpA (Fiat) (2), one of which concerned the plant at
Pomigliano d’Arco, Naples (Campania), (Fiat Pomigliano).
The Commission registered this measure on 28 October
1997 under N 727/97. Requests for further information
and a number of reminders were sent
to the Italian
authorities to elicit the data required for a Commission
decision. On 23 April 1998 a meeting was held with
representatives of the Italian authorities and Fiat to clarify
various points connected with the examination of the
case. Finally, in a letter of 20 November 1998, the Italian
authorities supplied partial replies to the questions raised
by the Commission.

(2) By letter of 3 March 1999 the Commission informed
Italy that it had decided to initiate the procedure laid

(1) OJ C 113, 24.4.1999, p. 16.
(2) Four of

these measures

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

down in Article 88(2) of the Treaty in respect of the
proposed aid measures, allowing Italy one month to
supply all the documents, information and data required
to assess the compatibility of the aid with the common
market.
In the absence of any reply, the Commission
would reach a decision on the basis of the information in
its possession.

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

Journal of

The Commission has not received any comments from
interested parties.

(4) Representatives of the Commission went to Mirafiori on
24 February 1999 to discuss the Fiat Pomigliano plan
among other matters. On-site visits were made on 18
May 1999 to Pomigliano and on 22 June 1999 to the
Fiat plants at Tichy and Biesko-Biala in Poland.

II. DETAILED DESCRIPTION OF THE AID MEASURE

(5) The aid proposed by the Italian authorities would be
granted to Fiat, which has plants among other places, in
Italy, Poland, Turkey und South America. In 1998 Fiat
produced 2,7 million vehicles of the Alfa Romeo, Ferrari,
Fiat, Lancia and Maserati makes. In 1997 it employed
around 62 000 people in Italy, 7 500 of
them at
Pomigliano, where Alfa Romeo cars are produced. A
significant share of Fiat’s sales, roughly one third,
is
recorded in other Member States.

(6) The investment notified is at Pomigliano,

in an area
qualifying for assistance under Article 87(3)(a) of
the
Treaty, where the maximum regional aid intensity for
large firms
(nge). The
is 40 % net grant equivalent
investment started in March 1995 and is to be completed

(3) See footnote 1.

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6.5.2000

in May 2000; according to the Italian authorities, the
estimated cost is ITL 659 billion (present value: ITL 476
billion, or around EUR 247 million). The investment is in
production of the Alfa 156 model, which belongs to
segment D, and a new Alfa Romeo segment C car,
codenamed (cid:145)model 937(cid:146).

machinery/equipment,
tools
tooling, etc.) in both locations;

and

dies,

supplier

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

and after the investment.

(7) According to the Italian authorities,

the aid, worth
ITL 56,4 billion (EUR 30,6 milllion) at present values,
would be granted under the scheme provided for by Law
No 488 of 19 December 1992 (4) on the refinancing of
approved by
Law No 64/86 (Law No 488/92),
Its intensity
Commission decision of 24 March 1995.
would be 12,3 % nge or 10,08 % gross grant equivalent
(gge).

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

III. COMMENTS BY ITALY

(8) The Commission

decided

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

informed

initiate

and

the

the

to

(a)

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

(b)

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

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

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

(a) a location study demonstrating that the project was

mobile;

(b) proof that the social and other consequences of a
decision to close Fiat Pomigliano would not have
prevented production being transferred to other sites;

(c) a cost-benefit analysis based on the identification of a
reference (comparator) plant in a non-assisted area of
the Community in order to compare the operating
costs (labour, components/materials, rent,
inventory
carrying costs,
telecommunications,
inward and outward transport, training, etc.) over a
three years running from the start of
period of
commercial production, and the investment costs
building/construction,
(including

energy/water,

purchase,

land

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

conclude

deemed

to

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

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

giving

to the

according

concerned

considering

each plant

carrying out
preference

Italy
noted that Fiat had in particular drawn up a coherent
investment programme for the period 1993 to 1998
the
two scenarios:
after
investments
to
by
production in its Italian plants or, alternatively, to its
Polish plants
(maximising transfers of production to
Tichy and Bielsko-Biala). The diagrams attached to the
letter of 16 April 1999 illustrate the capacity allocations
for
scenario under
consideration. A number of studies carried out by Fiat
demonstrated that
installing production
capacities in Poland for segment B, C and D vehicles of
the Fiat and Alfa Romeo makes would have been more
profitable than the option which Fiat finally decided on
and which limited production in Poland, exclusively to
segment A. By investing the same or only slightly higher
it could have obtained a higher
amounts in Poland,
return thanks to lower labour costs, cheaper transport to
the markets being served (6), and also lower component
costs since Fiat’s network of local suppliers, which was
already well organised, would have been further
developed.

the option of

(5) Cassino, Mirafiori Carrozzeria, Pomigliano and Rivalta.
(6) The markets of central Europe (Germany, France, Belgium and the

(4) Italian Official Gazette No 229 of 21 December 1992.

Netherlands) and eastern Europe.

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(13)

turnover,

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

the age pyramid at

(14) The expected regional aid would not be sufficient

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

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

(16) The Pomigliano project was mobile for

the general
Italy added that the real choice
reasons already given.
that Fiat had to make for the Alfa 156 model was
between (i) locating the entire capacity at Pomigliano and
(ii) locating 60 % of the capacity at Pomigliano and 40 %
in Poland.

(17) Law No 488/92 did not allow aid to be granted in the
cases concerned to a single horizontal aid programme,
requiring instead that grant applications be separated.
Because six sites were interested in the first two calls for
applications used to select projects eligible for aid, Fiat
submitted six separate applications. The six cases were
therefore notified to the Commission separately. The
handling of these cases was further complicated by the
fact that the projects were notified at two different times,
in October 1997 and December 1997. This led the
Commission to apply the two different versions of the
Community framework for State aid to the motor vehicle
industry (the relevant Community framework), in force at
the time of the notification (7). Under the first of these,
the comparator site in the cost-benefit analysis had to be
located in a non-assisted region of
the Community,
whereas the second allows the use of a comparator site
situated in Europe or the countries of central and eastern
Europe.

(18) This artificial distinction did not reflect

the economic
the
reality
interdependence of the different production plants and
the resulting synergies. The Italian authorities therefore

investments

overlooked

and

the

of

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

the investment programme and of

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

grounds,

the Community,

(19) Nevertheless, in response to the Commission’s decision to
initiate the procedure with regard to the Fiat Pomigliano
project, in which it stated that the relevant Community
framework prohibited reference to an alternative site in
Italy prepared a
an assisted area of
cost-benefit analysis comparing the plants at Pomigliano
and Arese for production of segment C and D Alfa
Romeo models. Before it was rejected in favour of the
Polish option on profitability
the Arese
alternative was considered by Fiat since the withdrawal
from production of the Lancia Y 10 and Alfa 164 models
created plenty of available space at
that plant. A
cost-benefit analysis comparing the Pomigliano and Arese
plants was therefore carried out on the assumption that
capacity for producing 500 Alfa 156 cars per day would
be installed, and the comparative operating disadvantages
over the period 1997 to 1999 were calculated. Because
production of model 937 was to be launched in the year
2000, only the investments for the Alfa 156 model were
taken into consideration in the cost-benefit analysis. Italy
pointed out that Arese was not located in an assisted area
at the time of the investment decision.

(20) The cost-benefit analysis carried out by the Italian
comparative
Government
disadvantage of Pomigliano was 16,58 %, sufficient
to
authorise the aid under examination, which would have
an intensity of 12,39 % gge.

concluded

that

the

(21) The Italian authorities pointed out that Fiat would not
increase its production capacity in Europe during the
period covered by the project.

IV. ASSESSMENT OF THE AID

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

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receiving aid. Finally the motor vehicle market
characterised by extensive trade between Member States.

is

(26) To determine whether

the proposed regional

aid
measures are compatible with the common market under
the exemption provided for in Article 87(3)(a) or (c) of
the Treaty,
check
compliance with the conditions specified in the relevant
Community framework.

the Commission must

therefore

(23) The State aid in question,

is

This

framework. Given

to be granted under the
approved scheme provided for in Law No 488/92,
is
intended for a firm operating in the motor vehicle
production and assembly sector. The proposal should
the relevant
therefore be examined in the light of
Community
Italian
the
that
Government notified the plan on 28 October 1997, the
framework is that of 1989, as amended and
relevant
subsequent
confirmed
extended.
framework (8), which entered into force on 1 January
1998 and point 2.6 of which expressly states that, the
preceding framework, which entered into force on 1
January 1996 for two years, will serve as a basis for the
assessment of aid proposals which were notified before 1
November 1997 but which have not yet been declared
compatible by the Commission or are the subject of
proceedings under Article 93(3) of the Treaty initiated
that
before
understanding of the matter in the course of the present
proceedings.

contested

date.

Italy

that

not

has

the

by

(24) The Commission also notes

that

exceeds EUR 17 million. The

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

(27) The Commission accepts

to

regions

contribute

that new investment

aid to investment granted to redress

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

regional

(1) The Commission establishes

first

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

reference to the mobility of

location of

the investments,

(25) Article 87(2) of the Treaty identifies a number of types of
aid which it declares to be compatible with the Treaty
but, given the nature and purpose of the aid and the
geographical
it does not
apply to the project in question. Paragraph 3 of the same
Article defines types of aid that may be considered to be
compatible with the common market. Their compatibility
has
the
to be assessed in the overall context of
Community and not in a purely national context. To
safeguard the smooth running of the common market
and comply with the principle laid down in Article 3g of
the Treaty,
the exceptions in Article 87(3) must be
interpreted strictly. Looking first at Article 87(3)(b) and
intended for a
(d),
project of common European interest or for a project
likely to remedy a serious disturbance in the Italian
intended to promote culture and
economy. Nor is it
heritage
exemptions
to the
provided for in Article 87(3)(a) and (c), the Commission
notes
located in an area which
qualifies for assistance under point (a).

the aid in question is clearly not

conservation. Turning

that Pomigliano is

(8) OJ C 284, 28.10.1995, p. 3.

(2) The Commission checks the eligibility of the costs

relating to the mobile aspects of the project.

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

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

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

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

authorities, who were

accompanied

appropriate

supplied

replies

to

(32) The Commission

also

that,

notes

although

Italian plants.

the
documentation supplied by the Italian authorities shows
that Fiat had studied the overall mobility of the Mirafiori
Meccanica, Rivalta, Cassino and Pomigliano projects, the
real economic alternative would not have required it to
transfer production capacity simultaneously from those
four
It would have been possible to
relocate only part of the capacity (in particular according
to the platforms involved) of one or more of
those
plants. For example, Fiat could have transferred in a
technically and financially rational manner the capacity
for producing only 200 Alfa 156 cars per day from
Pomigliano to Biesko-Biala without installing in Poland
additional capacity for producing the Fiat Marea and
Bravo/Brava models.

(29) The plant in question is located in a region qualifying for
assistance under Article 87(3)(a) of the Treaty, for which
regional aid could normally be authorised up to a net
grand equivalent of 40 % for large firms.

(33) The Commission consulted independent experts on this
subject (IMO-Leuven) who accompanied it on a visit to
the Fiat Pomigliano, Tichy and Biesko-Biala plants.

(30)

(31)

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

the project.

If

In its letter of 16 April 1999, the Italian Government
states that the choice that Fiat had to make for producing
the Alfa 156 model was between (i) locating the entire
capacity, namely 500 cars per day, at Fiat Pomigliano
and (ii) locating 60 % of the capacity (300 cars per day)
at Fiat Pomigliano and the remaining 40 % in Poland.
This capacity allocation, for which there is an economic
is partly confirmed by diagrams showing (i) the
logic,
Pomigliano plant with a capacity of 1 200 cars per day,
used entirely for the production of segment C (9) cars
(700 cars per day, according to the Commission) and
segment D (10) cars (500 cars per day according to the
the Alfa Romeo make, and a Polish
Commission) of
plant, with a capacity of 2 000 cars per day, used for
producing 700 Fiat segment A cars per day and (ii) Fiat
Pomigliano, with a capacity of 1 200 cars per day, used
for producing only 1 000 Alfa Romeo cars per day in
according to the
Segment C (700 cars per day,
Commission)
and segment D (300 cars per day,
according to the Commission), and a Polish plant, with a
capacity of 2 000 cars per day, used to full capacity,
among other things for producing Alfa Romeo segment
D cars. There are no plans for producing Alfa Romeo
segment C cars at any other Italian plant.

(34) The Commission concludes that the project is mobile as
regards the production of 200 Alfa 156 cars per day,
while the investment for model 937 does not satisfy the
mobility requirement.

(35) The fact that the investment at Fiat Pomigliano began
more than a year before the request for aid was made
would normally mean, as the Commission stated when it
gave notice of its decision to initiate the procedure, that
the aid was not necessary to the implementation of the
in keeping with the Commission
project. However,
decisions of 18 November 1997 (11), 30 September
1998 (12) and 7. April 1998 (13), there are very specific
aspects in the follow-up to Law No 64/86 and in the
Law No 488/92 which may,
implementation of
justify a time lag between the start of a
exceptionally,
project and the request
It has also been
ascertained that, when the investment began in March
1995, Fiat was firmly expecting to be granted aid under
Law No 488/92. Obviously, it had no way of knowing
exactly how much aid might be available.

for aid.

(36) The Commission therefore concludes that the regional
the

implementation of

aid was necessary for
investment project at Fiat Pomigliano.

the

(37) The Commission has checked that the costs were eligible
under the relevant aid scheme. Although the investment
the
does not result

in increased production capacity,

(9) Model 937 belongs to segment C.
(10) The Alfa 156 model belongs to segment D.

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

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Commission takes the view that
the notified project
constitutes an initial investment within the meaning of
the guidelines on national regional aid (14). Rather than
modernisation, it involves a fundamental change in the
structure of production at the plant.

(38)

It also notes that under Order No 527/95 investment
expenditure may be allowed retroactively, going back as
much as two years prior to the initial application for
regional aid. This is an exceptional procedure introduced
as a transitional measure to fill the legal vacuum caused
by the expiry of Law No 64/86 and the delay in enacting
the project under
In the case of
Law No 488/92.
consideration, the investment started in March 1995 and
Fiat submitted the application for aid to the Italian
authorities in May 1996. The Commission concludes that
the whole of the investment of ITL 659 billion is eligible
for regional aid under Law No 488/92.

(39) However,

the Commission can allow only mobile
investment, assessed on the basis of
the plant and
machinery necessary for producing 200 Alfa 156 cars
per day.

(40) The direct consequences of

the project, among other
things the maintenance of jobs at the plant, as well as the
secondary effects, for example on local suppliers of goods
and services, represent significant benefits for the local
economy. The Commission concludes that the proposed
aid, which part-finances the project, will contribute to
the long-term development of the Pomigliano area.

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

this principle does not

in other words,

reflect

(42)

If, in case of Fiat Pomigliano, the Commission were to
authorise the use of comparator sites not situated in
non-assisted regions of the Community, it would violate
It would be using a
the principle of equal treatment.
from that
method of assessment completely different
applied in other cases
to the same
procedure, i.e. in all the cases examined in the light of

legally subject

the relevant Community framework in force prior to
for which the comparator site had to be in a
1998,
non-assisted
Commission Decision
96/666/EC (15).

area,

as

in

(43) Moreover, at the time when Fiat carried out its study of
possible sites,
the possibility of
taking into account
obtaining State aid, in 1993 to 1994 at the latest, the
Commission’s practice required the use of a comparator
site located in an area not eligible for regional aid. The
Italian authorities and Fiat were familiar with this
methodology at the time, for example in the case of Fiat
Mezzogiorno (16), a typical example of the application of
the cost-benefit analysis. The only aid Fiat could have
taken into consideration in the financial analysis relating
to the location decision would have been that based on a
comparison between the plant which might potentially
benefit from regional aid and an alternative site in a
non-assisted region of the Community. Reference to an
alternative plant in Poland, as called for by Italy, became
possible only after the relevant Community framework
entered into force in January 1998, some four years after
the investment decision was taken.

(44)

(45)

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

analysis of

argument

the

It is clear from the information supplied by the Italian
authorities that the plant at Arese, which at the time of
the investment decision was located in a non-assisted
area of the Community where Fiat considered at one
time locating production of the Alfa 156 model, can
serve as a comparator site for the cost-benefit analysis
needed in order to assess the aid intensity that can be
authorised by the Commission.

(46) The Commission experts have accordingly studied the
information supplied by Italy in order to calculate the net
additional costs of carrying out
the project at Fiat
Pomigliano instead of Arese.

(47) Since the project involves an expansion, the advantages
and drawbacks are assessed over three years, beginning
with the start of commercial production. Commercial
production of the Alfa 156 began in 1997; the three-year
reference period for the cost-benefit analysis thus began
in 1997. These principles have not been contested by
Italy.

(48) The Commisson has to take its decision on the basis of
that
the information in its possession,
provided by the Italian authorities in response to its letter

in particular

(14) OJ C 74, 10.3.1998, p. 9.

(15) OJ L 308, 29.11.1996, p. 46.
(16) OJ C 37, 11.2.1993, p. 15.

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of 3 February 1999 enjoining them to supply the
necessary data and documentation. The letter of 16 April
1999 contains statements that are not substantiated or
sufficiently detailed or the consequences of which are not
precisely worked out. The Commission cannot include
the comparative
in its assessment of
such elements
disadvantages of Pomigliano with respect to Arese since
it has to construe the exemptions provided for in Article
87(3) strictly.

(49)

In general, as
revealed by the cost-benefit analysis
prepared by the Italian authorities, the disadvantages of
Fiat Pomigliano arise from the extra costs of
labour,
the Commission
transport and investment. However,
takes issue with the cost-benefit analysis supplied by Italy
on a number of points.

for

calculating

(1) First, the reference rate used by the Commission, in
particular
is
11,90 %, the reference rate applying in Italy at the
time the project studies were carried out
(around
Italy, on the other hand, has applied a
1994).
discount rate of 13,08 % without providing sufficient
justification.

discounted

values,

(2) Second, the relevant Community framework requires
the operating and investment costs to be compared
with reference to the mobile part of a project only. It
has already been established that the mobile part of
this project corresponds to the production of only
200 cars per day. However, the Italian authorities
based their
analysis on production
assumptions of 500 cars per day at Pomigliano and
Arese.

cost-benefit

(3) The Commission considers that

the alternative of
producing 500 cars per day at Arese is unrealistic.
Such a decision would have meant calling into
question the profitability of the Fiat Pomigliano plant
itself. The Italian authorities have not satisfactorily
demonstrated either that Fiat actually did give serious
consideration to such an alternative;
they
constantly stressed that the real choice facing Fiat
was between maximising production in Poland and
maintaining capacity in Italy.

instead,

retrospectively accounts for the approximate nature
of some of the assessments made by the Commission
in the
investment disadvantages,
something for which it cannot be held responsible.

study of

the

(6) The Commission recognises that the application of a
40 % coefficient
to the investment advantages and
disadvantages may not precisely reflect the industrial
reality of a project based on the transfer of 200 cars
per day instead of 500 cars per day. On the other
hand, since the Italian authorities have not reacted on
this point despite having been enjoined to do so, and
following the visit
to Fiat Pomigliano and the
meeting held in Poland on this specific topic, the
Commission takes the view, with the support of its
experts, that the application of a 40 % coefficient to
the investment disadvantages is justified. Accordingly,
the amount of the investments considered eligible by
the Commission has in turn been limited to 40 % of
the investments deemed eligible under Law No
488/92, giving an amount of
ITL 195,6 billion
(present value (cid:151) base year 1995).

thus
introduced by the Commisson
(50) The corrections
produce results
that differ greatly from the initial
cost-benefit analysis. The disadvantage of Fiat Pomigliano
compared with Arese, as determined by the Commission,
works out at 17,3 %.

(51) The nominal aid of

ITL 104,5 billion notified by the
Italian authorities on 18 May 1999 corresponds to a
present value of
the applicable
reference rate. The intensity of the planned aid is thus in
fact 31,6 % gge. which is less than the maximum of 40 %
nge for regional aid in the Pomigliano area.

ITL 61,9 billion at

(52)

the sensitivity of

the motor industry,

the
In view of
the effects on competition of
Commission examines
every investment project,
at
looking in particular
variations in production capacity on the relevant market
in the group concerned.

(4) The Commission therefore has to apply a coefficient
of 40 % (the ratio between 200 cars per day and 500
cars per day) to the figures arrived at in the study for
the operating advantages and disadvantages.

The product market concerned by the project for Fiat
Pomigliano is the market in motor cars. In accordance
with the relevant Community framework, the relevant
geographic market is the European Economic Area.

(5) As

as

far

investments

are
first of

concerned,
that
all

the
the
its
Commission would stress
examination was
further hindered by the delay
between the start of the investment (1995) and the
point when it had access to usable data (1999). In
order to be able to carry out a thorough analysis, the
Commission should have been able to visit Fiat
Pomigliano and Arese before the project began. The
such checks could not be carried out
fact

that

The letter transmitted by Italy on 20 November 1998
provides data on the car production capacities of plants
belonging to the Fiat group, both before and after the
project. There is no evidence of any increase in capacity.
The Commission therefore concludes that the intensity
allowable for
the project can be increased by an
adjustment factor (top-up) of 3 percentage points.

L 110/16

EN

Official Journal of the European Communities

6.5.2000

(53) Lastly,

the Commission notes

although Fiat
Pomigliano is located in an area covered by Article
87(3)(a) of the Treaty, no further operating aid may in
any event be granted in the motor vehicle industry.

that,

V. CONCLUSIONS

(54)

intensities of

the disadvantage and of

In the light of the extremely thorough analysis conducted
by the Commission, with the assistance of its experts, the
final
the aid
proposed by Italy work out at 17,3 % and 31,6 % gge
respectively of the investments deemed eligible by the
Commission. Given that the allowable intensity may be
the
increased by a top-up of 3 percentage points,
Commission concludes that the regional aid which the
Italian Government plans to grant to Fiat Pomigliano is
compatible with the common market under Article
87(3)(c) of the Treaty up to a maximum intensity of
20,3 % gge.

(55) Since the eligible investments amount, according to the
Commission’s calculations,
the
maximum amount of aid allowed is ITL 39,6 billion at
present values (base year 1995, at a discount rate of
11,90 %).

to ITL 195,6 billion,

(56) Any additional State aid for the investment project in
question is incompatible with the common market.

(57)

the

In view of
the
characteristics of
Commission calls on the Italian authorities, pursuant to
the relevant Community framework,
point 2.3 of
to
present
to the Commission a detailed report on
implementation of the project,

the project,

HAS ADOPTED THIS DECISION:

Article 1

The State aid that Italy plans to grant to Fiat Auto SpA for the
is compatible with the
plant at Pomigliano d’Arco (Naples)

common market under Article 87(3)(c) of the Treaty, up to a
maximum intensity of 20,3 % gross grant equivalent of eligible
investments amounting to ITL 195,6 billion, discounted at the
rate of 11,90 % (base year 1995).

The aid, amounting to not more than ITL 39,6 billion at
present values, discounted at the rate of 11,90 % (base year
1995), is accordingly authorised.

Article 2

Any State aid in addition to the aid referred to in Article 1
to Fiat Pomigliano shall be
that
incompatible with the common market.

Italy plans

to grant

Article 3

Italy shall inform the Commission, within two months of the
date of notification of this decision, of the measures it has
taken to comply with it.

Article 4

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

Article 5

This Decision is addressed to the Italian Republic.

Done at Brussels, 28 July 1999.

For the Commission

Karel VAN MIERT

Member of the Commission