Information from the Commission - Community Guidelines on State aid for rescuing and restructuring firms in difficulty (Notice to Member States including proposals for appropriate measures)(Text with EEA relevance)
Date: 1999-10-09
Institutions: European Commission
Subjects: EU Member State, State aid, aid for restructuring, aid system, control of State aid

C 288/2

EN

Official Journal of the European Communities

9.10.1999

COMMUNITY GUIDELINES ON STATE AID FOR RESCUING AND RESTRUCTURING FIRMS IN DIFFICULTY

(Notice to Member States including proposals for appropriate measures)

(1999/C 288/02)

(Text with EEA relevance)

1. INTRODUCTION

(1) The Commission adopted its original Guidelines on State
aid for rescuing and restructuring firms in difficulty (1) in
1994. Their validity was extended until 31 December
1999 (2). In 1997, the Commission added specific rules
for agriculture (3).

(2) The Commission wishes through this version of

the
the text of which builds om previous
Guidelines,
versions,
to make certain changes and clarifications
prompted by a number of factors. First, completion of
the internal market calls for a closer watch to be kept on
State aid. The sixth and seventh surveys on State aid in
the European Union in the manufacturing and certain
other sectors (4) reveal an increase in the volume of ad
hoc aid, chiefly for rescuing and restructuring firms in
difficulty, without taking into account aid granted in the
new German L(cid:228)nder by the Treuhandanstalt or the Bundes-
anstalt f(cid:252)r vereinigungsbedingte Sonderaufgaben. The advent
of
the single currency will also speed up the trend
towards increased intra-Community trade, which will
make the impact of rescue and restructuring aid on
competitive conditions within the Community felt all
the Commission
the more
committed itself
the single
market (5) to further tightening the rules on rescue and
restructuring aid, while taking account of the role of
appropriate levels of aid in cushioning the social
effects of restructuring. The Commission therefore set
about clarifying the rules applicable to rescue and
the
restructuring
Guidelines according to which it will examine such aid.

addition,
in its action plan for

framing more

keenly.

strictly

and

aid

In

for

to certain conditions.

instance, by social or

(3) State aid for rescuing firms in difficulty from bankruptcy
and helping them to restructure may only be regarded as
legitimate subject
It may be
regional policy
justified,
considerations, by the need to take into account the
beneficial role played by small and medium-sized enter-
prises (SMEs) in the economy or, exceptionally, by the
desirability
competitive market
structure when the disappearance of firms could lead
to a monopoly or to a tight oligopolistic situation.

of maintaining

a

(1) OJ C 368, 23.12.1994, p. 12.
(2) OJ C 67, 10.3.1999, p. 11.
(3) OJ C 283, 19.9.1997, p. 2. See also the footnote relating to the

heading of Chapter 5.

(4) COM(1998) 417 final; COM(1999) 148 final.
(5) CSE(97) 1 final.

2. DEFINITIONS AND SCOPE OF THE GUIDELINES AND
LINKS WITH OTHER TEXTS ON STATE AID

2.1. CONCEPT OF (cid:145)A FIRM IN DIFFICULTY(cid:146)

(4) There is no Community definition of what constitutes (cid:145)a
firm in difficulty(cid:146). However, for the purposes of these
Guidelines, the Commission regards a firm as being in
difficulty where it is unable, whether through its own
resources or with the funds it is able to obain from its
owner/shareholders or creditors, to stem losses which,
without outside intervention by the public authorities,
will almost certainly condemn it to go out of business
in the short or medium term.

(5) In particular, a firm is, in any event and irrespective of
its size, regarded as being in difficulty for the purposes
of these Guidelines:

(a) in the case of a limited company (6), where more
than half of its registered capital has disappeared (7)
and more than one quarter of that capital has been
lost over the preceding 12 months; or

(b) in the case of an unlimited company (8), where more
than half of its capital as shown in the company
than one
accounts has disappeared and more
quarter of
the
preceding 12 months; or

that capital has been lost over

(c) whatever the type of company concerned, where it
fulfils the criteria under its domestic law for being
the subject of collective insolvency proceedings.

(6) This refers in particular to the types of company mentioned in the
first subparagraph of Article 1(1) of Council Directive 78/660/EEC
(OJ L 222, 14.8.1978, p. 11), as amended in particular by Directive
90/605/EEC (OJ L 317, 16.11.1990, p. 60).

(7) By analogy with the provisions of Council Directive 77/91/EEC (OJ

L 26, 30.1.1977, p. 1).

(8) This refers in particular to the types of company mentioned in

Article 1 of Directive 90/605/EEC.

9.10.1999

EN

Official Journal of the European Communities

C 288/3

(6) The usual

excess

capacity,

declining

signs of a firm being in difficulty are
increasing losses, diminishing turnover, growing stock
inventories,
cash flow,
mounting debt, rising interest charges and falling or nil
net asset value. In acute cases the company may already
have become insolvent or may be the subject of
collective insolvency proceedings brought under
its
domestic law. In the latter case, these Guidelines apply
to any aid granted in the context of such proceedings
which leads to the firm continuing in business. In any
event, a firm in difficulty is eligible only where, demon-
strably, it cannot recover through its own resources or
with the funds it obtains from its owners/shareholders or
creditors.

(7) For the purposes of these Guidelines, a newly created
firm (9)
is not eligible for rescue or restructuring aid,
even if its initial financial position is insecure. This is
the case, for instance, where a new firm emerges from
the liquidation of a previous firm or merely takes over
such firm’s assets (10).

(8) A company belonging to a larger business group is not
normally eligible for rescue or restructuring aid, except
the company’s
where it can be demonstrated that
difficulties are its own and are not
the result of an
arbitrary allocation of costs within the group, and that
the difficulties are too serious to be dealt with by the
group itself.

2.2. DEFINITION OF RESCUE AND RESTRUCTURING AID

(9) Rescue aid and restructuring aid are covered by the same
set of guidelines, because in both cases the public auth-
orities are faced with a firm in difficulties and the rescue
and the restructuring are often two parts of a single
operation, even if they involve different processes.

(10) Rescue aid is by nature temporary assistance. It should
make it possible to keep an ailing firm afloat for the
time needed to work out a restructuring or liquidation
plan and/or for the length of time the Commission needs
to be able to reach a decision on that plan.

(9) The creation by a company of a subsidiary merely as a vehicle for
receiving its assets and possibly its liabilities is not regarded as the
creation of a new firm.

(10) The only exceptions of this rule are any cases dealt with by the
Bundesanstalt f(cid:252)r vereinigungsbedingte Sonderaufgaben in the context of
its privatisation remit and other similar cases in the new L(cid:228)nder,
involving companies emerging from a liquidation or a take-over of
assets occurring up to 31 December 1999.

(11) Restructuring, on the other hand, will be based on a
feasible, coherent and far-reaching plan to restore a
firm’s long-term viability. Restructuring usually involves
one or more of the following elements: the reorgani-
sation and rationalisation of the firm’s activities on to
a more efficient basis, typically involving the withdrawal
from loss-making activities, the restructuring of those
existing activities that can be made competitive again
and, possibly, diversification in the direction of new
restructuring (capital
and viable activities. Financial
injections, debt reduction) usually has to accompany
the physical
restructuring. Restructuring operations
within the scope of these Guidelines cannot, however,
be limited to financial aid designed to make good past
losses without tackling the reasons for those losses.

2.3. SCOPE

(12) These Guidelines apply to firms in all sectors (except
those covered by the ECSC Treaty), without prejudice
to any specific rules relating to firms in difficulty in
the sector concerned (11). Chapter 5 incorporates the
specific rules for agriculture adopted in 1997.

2.4. APPLICABILITY OF ARTICLE 87(1) OF THE EC TREATY

(13) State aid for rescuing or restructuring firms in difficulty
will, by its very nature, tend to distort competition. In so
far as it affects trade between Member States,
it falls
within the scope of Article 87(1) of the EC Treaty.

(14) Aid for restructuring can take different forms, such as
capital injections, debt write-offs, loans, relief from taxes
or social security contributions, or loan guarantees. For
expressly stipulated
it
rescues, however, unless
otherwise in some other Community text on State aid,
assistance should be limited to loans or loan guarantees
(see points 23 to 27).

is

(15) The

of

aid

the

source

can be

of
government (12), central, regional and local, and any
(cid:145)public undertaking(cid:146), as defined in Article 2 of
the
1980 Commission Directive 80/723/EEC of 25 June
relations
1980 on the

transparency of

financial

level

any

(11) Specific rules of this nature exist for shipbuilding (Regulation (EC)
No 1540/98, OJ L 202, 18.7.1998, p. 1), the motor vehicle industry
(OJ C 279, 15.9.1997, p. 1) and the aviation sector (OJ C 350,
10.12.1994, p. 5).

(12) Including in the case of aid co-financed from Community funds.

C 288/4

EN

Official Journal of the European Communities

9.10.1999

between Member States and public undertakings (13).
restructuring aid may
for example, rescue or
Thus,
come
public
companies
from State
investment companies (14).

holding

or

(16) To determine when injections of new capital by public
authorities
into companies which they own involve
the criterion applied is the (cid:145)market-
elements of aid,
economy private investor(cid:146) principle (15). This provides
that in circumstances where a rational private investor
operating in a market economy would have made the
finance available the provision or guarantee of funding
to a company is not regarded as involving aid.

(17) Where funding is provided or guaranteed by the State to
an enterprise that is in financial difficulties, however, it
must be deemed likely that the financial transfers involve
State aid. Therefore, such financial transactions must be
communicated to the Commission in advance, where
a general
through the notification of
appropriate
scheme,
the
Treaty (16). The presumption of aid is stronger in cases
where
a Community-wide or EEA-wide
structural excess of production capacity on a market in
which the recipient firm is active or where the industry
as a whole is in difficulties.

in accordance with Article 88(3) of

there

is

(18) The assessment of rescue or restructuring aid should not
be affected by changes in the ownership of the business
aided.

(20) The Commission considers

that aid for

rescue and
restructuring may contribute to the development of
economic activities without adversely affecting trade to
an extent contrary to the Community interest
the
conditions set out in these Guidelines are met. Where
the firms to be rescued or restructured are located in
assisted areas,
take the regional
considerations referred to in Article 87(3)(a) and (c)
into account as described in points 53 and 54.

the Commission will

if

2.6. OTHER PROVISIONS OF COMMUNITY LAW

(21) It

should be stressed that

the Commission cannot
restructuring firms in
authorise aid for
difficulty where the terms and conditions of
the aid
infringe Treaty provisions other than Articles 87 and
88 or secondary legislation.

rescuing or

3. GENERAL CONDITIONS FOR THE AUTHORISATION OF
RESCUE AND/OR RESTRUCTURING AID NOTIFIED INDI-
VIDUALLY TO THE COMMISSION

(22) This chapter deals exclusively with aid measures that are
notified individually to the Commission. Under certain
conditions,
the Commission may authorise rescue or
restructuring aid schemes: those conditions are set out
in Chapter 4.

2.5. COMPATIBILITY WITH THE COMMON MARKET

3.1. RESCUE AID

compatible with the

(19) Article 87(2) and (3) of the Treaty provide for the possi-
bility of aid falling within the scope of Article 87(1)
being regarded as
common
from cases of aid to make good the
market. Apart
damage caused by national disasters or exceptional
occurrences (Article 87(2)(b)), which are not covered
here, the only basis whereby aid for rescuing or restruc-
turing firms in difficulty can be deemed compatible is
Article 87(3)(c). Under this provision the Commission
has the power to authorise (cid:145)aid to facilitate the devel-
opment of certain economic activities (. . .) where such
aid does not adversely affect trading conditions to an
extent contrary to the common interest.(cid:146)

(23) In order to be approved by the Commission, rescue aid

as defined in point 12 must:

(a) consist of liquidity support in the form of loan guar-
antees or loans (17). In both cases, the loan must be
granted at an interest rate at least comparable to
those observed for loans to healthy firms, and in
particular
the
Commission;

adopted by

reference

rates

the

(13) OJ L 195, 29.7.1980, p. 35, as amended by Directive 93/84/EEC

(OJ L 254, 12.10.1993, p. 16).

(14) See judgment of the Court of Justice of 22 March 1977 in Case
78/76 Steinike und Weinlig v Germany, [1977] ECR 595; CrØdit
Lyonnais/Usinor-Sacilor, Commission press release IP(91) 1045.
(15) See the Communication on public undertakings in the manufac-

turing sector (OJ C 307, 13.11.1993, p. 3).

(16) See in particular point 27 of the Communication on public under-

takings in the manufacturing sector.

(17) An exception may be made in the case of rescue aid in the banking
in order to enable the credit institution in question to
sector,
in
temporarily carrying on its banking business
continue
accordance with the prudential
legislation in force (Council
Directive 89/647/EEC of 18 December 1989 on a solvency ratio
institutions, OJ L 386, 30.12.1989, p. 14). Any aid
for credit
granted in a form other than that described in subparagraph (b),
for example a capital
injection or a subordinated loan, will be
taken into account when any compensatory measures under a
restructuring plan are examined in accordance with points 35 to
39.

9.10.1999

EN

Official Journal of the European Communities

C 288/5

(b) be linked to loans that are to be reimbursed over a
period of not more than twelve months after
disbursement of the last instalment to the firm (18);

approved; such aid will have to be assessed on its own
merits.

(c) be warranted on the grounds of

social
difficulties and have no unduly adverse spillover
effects on other Member States;

serious

3.2. RESTRUCTURING AID

3.2.1. Basic principle

(d) be accompanied on notification by an undertaking
on the part of
the Member State concerned to
communicate to the Commission, not later than six
months after the rescue aid measure has been auth-
orised, a restructuring plan or a liquidation plan or
proof
the loan has been reimbursed in full
and/or that the guarantee has been terminated;

that

(e) be restricted to the amount needed to keep the firm
in business for the period during which the aid is
authorised (for example, covering wage and salary
costs or routine supplies).

(24) The rescue aid will initially be authorised for not more
than six months or, where the Member State concerned
has submitted a restructuring plan within that period,
until the Commission reaches its decision on the plan.
In duly substantiated exceptional circumstances and at
the
the
the Member State
Commission may extend the initial six-month period.

request of

concerned,

(25) Rescue aid is a one-off operation designed to keep a
company in business
for a limited period, during
which its future can be assessed. On the other hand,
repeated rescues that would merely maintain the status
quo, postpone the inevitable and in the meantime shift
the attendant economic and social problems on to other,
more efficient producers or other Member States cannot
be allowed.

(26) If

State

the Member

to communicate

the
fails
information stipulated in (d) of point 23 before the
six-month deadline expires and does not make a duly
substantiated request for the deadline to be extended, the
Commission will
initiate proceedings under Article
88(2).

(27) The approval of rescue aid does not necessarily mean
that aid under a restructuring plan will subsequently be

(18) Reimbursement of the loan linked to the rescue aid may possibly
be covered by the restructuring aid subsequently approved by the
Commission.

(28) Aid for

restructuring raises particular

competition
concerns as it can shift an unfair share of the burden
of structural adjustment and the attendant social and
economic problems onto other producers who are
managing without aid and to other Member States.
The general principle should therefore be to allow the
grant of restructuring aid only in circumstances in which
it can be demonstrated that it does not run counter to
the Community interest. This will only be possible if
is certain that any
strict criteria are met, and if
distortions of competition will be offset by the benefits
flowing from the firm’s survival (in particular, where it is
clear that the net effect of redundancies resulting from
the firm going out of business, combined with the effects
on its suppliers, would exacerbate local, regional or
national employment problems or, exceptionally, where
the firm’s disappearance would result in a monopoly or
tight oligopolistic situation) and, where appropriate,
there are adequate compensatory measures in favour of
competitors.

it

3.2.2. Conditions for the authorisation of aid

(29) Subject to the special provisions for assisted areas, SMEs
and the agricultural sector (see points 53, 54 and 55 and
Chapter 5), the Commission will approve aid only under
the following conditions:

(a) Eligibility of the firm

(30) The firm must qualify as a firm in difficulty within the
meaning of these Guidelines (see points 4 to 8).

(b) Restoration of viability

(31) The grant of the aid is conditional on implementation of
the restructuring plan which must be endorsed by the
Commission in the case of all individual aid measures.

(32) The restructuring plan, the duration of which must be as
short as possible, must restore the long-term viability of
the firm within a reasonable timescale and on the basis
of
operating
conditions. Restructuring aid must therefore be linked
to a viable restructuring plan to which the Member
State concerned commits
itself. The plan must be
submitted in all relevant detail to the Commission and

assumptions

realistic

future

to

as

C 288/6

EN

Official Journal of the European Communities

9.10.1999

a market

in particular,

survey (19). The
include,
improvement
in viability must derive mainly from
internal measures contained in the restructuring plan
and may be based on external factors such as variations
in prices and demand over which the company has no
the market assumptions made are
great
generally acknowledged. Restructuring must involve the
abandonment of activities which would remain struc-
turally loss-making even after restructuring.

influence if

It should take account,

(33) The restructuring plan should describe the circumstances
that led to the company’s difficulties, thereby providing a
basis for assessing whether the proposed measures are
the
appropriate.
present state of and future prospects for supply and
demand on the relevant product market, with scenarios
reflecting
intermediate
assumptions and the firm’s specific strengths and weak-
nesses. It should enable the firm to progress towards a
new structure that offers it prospects for long-term
viability and enables it to stand on its own feet.

best-case, worst-case

inter alia, of

and

(34) The plan should provide for a turnaround that will
enable the company, after completing its restructuring,
to cover all its costs including depreciation and financial
charges. The expected return on capital
should be
enough to enable the restructured firm to compete in
the marketplace on its own merits.

(c) Avoidance of undue distortions of competition

(35) Measures must be taken to mitigate as far as possible any
adverse effects of the aid on competitors. Otherwise, the
aid should be regarded as (cid:145)contrary to the common
interest(cid:146) and therefore incompatible with the common
market.

(36) This condition usually takes the form of a limitation on
the presence which the company can enjoy on its market
or markets after the end of the restructuring period.

(19) The items of information which the Commission needs in order to

examine the aid satisfactorily are listed in Annex I.

relevant market(s)
there

Where the size of the relevant market(s) (20) is negligible
at Community and at EEA level, or the firm’s share of
is negligible
the
should be
is no undue distortion of
considered that
condition should accordingly be
competition. This
to small or
regarded as not normally
medium-sized
except where otherwise
provided by rules on State aid in a particular sector.

enterprises,

applying

it

(37) The

compulsory

reduction of

the
limitation or
company’s presence on the relevant market(s) represents
a compensatory factor in favour of its competitors. It
should be in proportion to the distortive effects of the
aid and, in particular, to the relative importance of the
firm on its market or makets. The Commission will
determine the extent of the limitation or reduction on
the basis of the market survey attached to there struc-
turing plan and, where the procedure has been initiated,
on the basis of
information supplied by interested
parties. The reduction in the firm’s presence is to be
put into effect through the restructuring plan and any
conditions attached thereto.

(38) A relaxation of

the need for compensatory measures
may be contemplated if such a reduction or limitation
is likely to cause a manifest deterioration in the structure
of the market, for example by having the indirect effect
of creating a monopoly or a tight oligopolistic situation.

(39) Compensatory measures

can take different

forms
according to whether or not the firm is operating in a
market where there is excess capacity.
In assessing
whether or not
there is excess capacity on a given
market, the Commission can take into account all the
relevant data in its possession:

excess of production capacity

(i) where there is a Community-wide or EEA-wide
in a
structural
the restructuring
market served by the recipient,
plan must make a contribution,
in proportion to
the amount of aid received and its impact on that

its

the products’ characteristics,

substitutes considered by the consumer

(20) As defined in point 7.6 of the multisectoral framework on regional
aid for large investment projects (OJ C 107, 7.4.1998, p. 7): (cid:145)The
relevant product market(s) for determining market share comprises
the products envisaged by the investment project and, where
(by
appropriate,
their prices and their
reason of
intended use) or by the producer
the
production
geographic market
comprises usually the EEA or, alternatively, any significant part
of
the conditions of competition in that area can be
the EEA. Where
sufficiently distinguished from other areas of
appropriate the relevant market(s) may be considered to be
global(cid:146). A footnote states that, where the investment concerns
the production of intermediate goods, the relevant market may
be the market for the final product if most of the production is
not sold on the open market.

(through flexibility of

installations).

relevant

The

it

if

9.10.1999

EN

Official Journal of the European Communities

C 288/7

rate of output, or

market, to the improvement of market conditions by
irreversibly reducing production capacity. A capacity
reduction is irreversible when the relevant assets are
rendered permanently incapable of achieving the
previous
are permanently
converted to another use. The sale of capacity to
competitors is not sufficient in this case, except if
the plant is sold for use in a geographic market in
which its continued operation is unlikely to have
significant effects on the competitive situation in
the Community. The capacity reduction requirements
must contribute to a reduction in the recipients
firm’s presence on its market or markets;

(ii) where,

is

on

the

the

such

there

other

hand,

required. Where

Commission will

no
Community-wide or EEA-wide structural excess of
served by the
production capacity in a market
nevertheless
recipient,
examine whether compensatory measures
should
be
compensatory
any
measures involve a reduction in the capacity of the
firm concerned, the necessary reduction could be
achieved through the hiving-off of
assets or
subsidiaries. The Commission will have to examine
the
the
Member State concerned, whatever form they take,
and determine whether they are sufficient in scope
to mitigate the potentially distortive effects of the aid
on
necessary
compensatory measures, the Commission will take
account of the state of the market, and in particular
its level of growth and the extent to which demand
is met.

compensatory measures proposed

competition.

examining

the

by

In

(d) Aid limited to the minimum

(40) The amount and intensity of the aid must be limited to
the strict minimum needed to enable restructuring to be
undertaken in the light of the existing financial resources
of the company, its shareholders or the business group
to which it belongs. Aid beneficiaries will be expected to
make a significant contribution to the restructuring plan
from their own resources, including through the sale of
assets that are not essential to the firm’s survival, or
from external financing at market conditions. To limit
the distortive effect, the amount of the aid or the form
in which the aid is granted must be such as to avoid
providing the company with surplus cash which could
be used for aggressive, market-distorting activities not
linked to the restructuring process. The Commission
will accordingly examine the level of the firm’s liabilities
after restructuring, including the situation after any post-
ponement or reduction of its debts, particularly in the
following
context of
collective insolvency proceedings brought against
it
law (21). Neither should any of the aid
under national
go to finance new investment that is not essential for
restoring the firm’s viability.

continuation in business

its

(21) See the third paragraph of point 6.

(41)

event,

it must be demonstrated to the
In any
Commission that
the aid will be used only for the
purpose of restoring the firm’s viability and that it will
not enable the recipient during the implementation of
the restructuring plan to expand production capacity,
restoring
except
viability without unduly distorting competition.

in so far as

is essential

this

for

(e) Specific conditions attached to the authorisation of aid

(42) In addition to the compensatory measures described in
points 35 to 39, and in the event that such provisions
have not been adopted by the Member State concerned,
the Commission may impose any conditions and obli-
gations it considers necessary in order to ensure that the
aid does not distort competition to an extent contrary to
the common interest. For example, it may require the
Member State:

(i) to take certain measures itself

(e.g.

to open up

certain markets to other Community operators);

(ii) to impose certain obligations on the recipient firm
(e.g. to refrain from acting as price leader on certain
markets);

(iii) to refrain from granting other types of aid to the
recipient firm during the restructuring period.

(f) Full implementation of restructuring plan and observance

of conditions

(43) The company must fully implement the restructuring
plan that has been accepted by the Commission and
must discharge any other obligations laid down in the
Commission Decision. The Commission will regard any
failure to implement the plan or to fulfil the other obli-
gations as misuse of the aid.

(44) Where restructuring operations cover several years and
involve substantial amounts of aid, the Commission may
require payment of the restructuring aid to be split into
instalments and may make payment of each instalment,
subject to:

(i) confirmation, prior to each payment, of the satis-
factory implementation of each stage in the restruc-
turing plan,
in accordance with the planned
timetable; or

C 288/8

EN

Official Journal of the European Communities

9.10.1999

(ii) its approval, prior to each payment, after verification
that the plan is being satisfactorily implemented.

(g) Monitoring and annual report

(45) The Commission must be put in a position to make
certain that the restructuring plan is being implemented
properly, through detailed regular reports communicated
by the Member State concerned.

contain all

(46) In the case of aid to large firms, the first of these reports
will normally have to be submitted to the Commission
the aid.
not later than six months after approval of
Reports will
to the
subsequently have to be sent
Commission at least once a year, at a fixed date, until
the objectives of the restructuring plan can be deemed to
have been achieved. They must
the
information the Commission needs in order to be able
the restructuring
to monitor
programme,
to the
company and its financial position and the observance
laid down in the
of any conditions or obligations
decision approving the aid. They must
in particular
include all relevant
information on any aid for any
purpose which the company has received, either on an
individual basis or under a general scheme, during the
restructuring period (see points 90 to 93). Where the
Commission needs timely confirmation of certain key
items of
information, e.g. on closures or capacity
reductions, it may require more frequent reports.

the implementation of
timetable
the

payments

for

(47)

In the case of aid to small or medium-sized enterprises,
transmission each year of a copy of the recipient firm’s
balance sheet and profit and loss account will normally
be sufficient, except where stricter conditions have been
laid down in the decision approving the aid.

3.2.3.

(cid:145)One time, last time(cid:146) condition

(48) In order to prevent firms from being unfairly assisted,
restructuring aid should be granted once only. When
planned restructuring aid is notified to the Commission,
the firm
the Member State must
concerned has in the past already received restructuring
aid, including aid granted before entry into force of these
Guidelines and any unnotified aid (22). If so, and where
less than 10 years has elapsed since the restructuring

specify whether

(22) With regard to unnotified aid, the Commission will take account in
its analysis of the possibility that the aid could have been declared
compatible with the common market other than as restructuring
aid.

period came to an end (23) or implementation of the plan
has been halted, the Commission will normally (24) allow
further restructuring aid only in exceptional and unfore-
seeable circumstances for which the company is not
responsible (25). An unforeseeable circumstance is one
which could in no way be anticipated when the restruc-
turing plan was drawn up.

(49) The application of this rule will in no way be affected by
any changes in ownership of the recipient firm following
the grant of aid or by any judicial or administrative
procedure which has the effect of putting its balance
sheet on a sounder footing, reducing its liabilities or
wiping out
is the same
its previous debts where it
firm that is continuing in business.

(50) Where a firm over assets of another

firm, and in
particular one that has been the subject of one of the
procedures listed in point 49 or of collective insolvency
law, and has itself
proceedings brought under national
the
already
time(cid:146)
purchaser is not subject
requirement,
three
conditions are met:

restructuring
to the (cid:145)one time,
the
that

received rescue or

following

aid,
last

provided

(a) the purchaser is clearly separate from the old firm;

(b) the purchaser has acquired the old firm’s assets at
market prices (thereby avoiding any shifting to the
new company of aid paid to the old one);

(23) Unless otherwise specified, the restructuring period will normally
come to an end when the deadline for implementation of the
various measures provided for in the restructuring plan expires
(see the sixth indent in point IV of Annex I).

(24) Given the degree of

liberalisation and specific features of each

sector, two situations should be noted:
(cid:151) in the air transport sector, entirely liberalised since 1997, the
Commission will apply the (cid:145)one time, last time(cid:146) principle within
the limits and conditions of the guidelines on State aid in the
aviation sector.

(cid:151) in other

if

sectors,

liberalisation of
Community markets that were previously closed to competition
have created new economic conditions, derogations may be
considered.

effects of

the

the

(25) For the purposes of this paragraph, aid granted before 1 January
1996 to enterprises in the former GDR and declared compatible
with the common market by the Commission is not taken into
account. In addition, the paragraph does not apply to cases of aid
to such enterprises notified before 31 December 2000. However,
the Commission considers that restructuring aid should normally
only need to be granted once and will examine such cases in the
light of this principle.

9.10.1999

EN

Official Journal of the European Communities

C 288/9

(c) the winding-up or court-supervised administration
and purchase of the old company are not merely
devices aimed at evading application of
the (cid:145)one
time,
time(cid:146) principle (the Commission could
determine that this is the case if, for example, the
difficulties encountered by the purchaser were clearly
foreseeable when it took over the assets of the old
company).

last

(51) It

should, however, be stressed here that,
initial

since it
the
the assets cannot be authorised under

constitutes
purchase of
these Guidelines (see also point 7).

investment, aid for

aid for

3.2.4. Amendment of the restructuring plan

(52) Where restructuring aid has been approved, the Member
State concerned may, during the restructuring period,
ask the Commission to agree to changes being made
to the restructuring plan and the amount of the aid.
The Commission may allow such changes where they
meet the following conditions:

(a) the revised plan must still show a return to viability

within a reasonable timescale;

(b) if the amount of the aid is increased, any requisite
compensatory measures must be more extensive than
those initially imposed;

(c) if the proposed compensatory measures are smaller
than those initially planned, the amount of the aid
must be correspondingly reduced;

(d) the new timetable

for

implementation of

the
compensatory measures may be delayed with
respect
to the timetable initially adopted only for
the Member
reasons outside the company’s or
State’s control. If that is not the case, the amount
of the aid must be correspondingly reduced.

3.2.5. Restructuring aid in assisted areas

(53) Economic and social cohesion being a priority objective
of the Community under Article 158 of the EC Treaty
and other policies being required to contribute to this
objective under Article 159 (26), the Commission must
into account
take the needs of regional development

(26) Article 159 of the EC Treaty provides inter alia that (cid:145)the formu-
lation and implementation of the Community’s policies and actions
and the implementation of
the internal market shall take into
account the objectives set out in Article 158 and shall contribute
to their achievement(cid:146).

region to prop up companies

when assessing restructuring aid in assisted areas. The
fact that an ailing firm is located in an assisted area does
not, however,
justify a permissive approach to aid for
restructuring: in the medium to long term it does not
help a
artificially.
Furthermore, given the limited resources available to
promote regional development it is in the regions’ own
best interest to apply these scarce resources to develop as
soon as possible alternative activities that are viable and
sustainable. Finally, distortions of competition must be
minimised even in the case of aid to firms in assisted
areas.

(54) Thus, the criteria listed in points 29 to 52 are equally
applicable to assisted areas, even when the needs of
In assisted areas
regional development are considered.
however, and unless otherwise stipulated in rules on
State aid in a particular sector, the conditions for auth-
orising aid may be
the
implementation of compensatory measures. If regional
the required capacity
development needs
reduction will be smaller
than in
non-assisted areas and a distinction will be drawn
between areas eligible for regional aid under Article
87(3)(a) of the Treaty and those eligible under Article
87(3)(c) so as to take account of the greater severity of
the regional problems in the former areas.

in assisted areas

stringent as

justify it,

regards

less

3.2.6. Aid for restructuring small and medium-sized

enterprises

(55) Aid to firms in the small to medium-sized category (27)
tends to affect trading conditions less than that granted
to large firms. This also applies to aid to help restruc-
turing, so that the conditions laid down in points 29 to
47 are applied less strictly: the grant of restructuring aid
to SMEs will not usually be linked to compensatory
measures (see points 35 to 39), unless this is otherwise
stipulated in rules on State aid in a particular sector; and
the requirements regarding the content of reports will be
less stringent (see points 45, 46 and 47). On the other
hand, the (cid:145)one time, last time(cid:146) principle (points 48 to 51)
applies in full to SMEs.

3.2.7. Aid to cover the social costs of restructuring

(56) Restructuring plans normally entail reductions in or
abandonment
Such
retrenchments are often necessary in the interests of
from any
rationalisation and efficiency, quite apart

activities.

affected

the

of

(27) As defined in the Commission recommendation of 3 April 1996
concerning the definition of small and medium-sized enterprises
(OJ L 107, 30.4.1996, p. 4).

C 288/10

EN

Official Journal of the European Communities

9.10.1999

capacity reductions that may be required as a condition
for granting aid (particularly in cases where there is a
Community-wide or EEA-wide
excess of
production capacity (cid:151) see points 35 to 39). Whatever
the reason for them, such measures will generally lead to
reductions in the company’s workforce.

structural

(57) Member States’ labour legislation may comprise general
social security schemes under which redundancy benefits
to
and early retirement pensions
redundant employees. Such schemes are not
to be
regarded as State aid falling within the scope of Article
87(1) in so far as the State deals direct with employees,
and the company is not involved.

are paid direct

for

general

contractual

social
the government

employees,
frequently provide for

(58) Besides direct redundancy benefit and early retirement
support
provision
to
schemes
cover the cost of benefits which the company grants
and which go beyond its
to redundant workers
such
statutory or
obligations. Where
limi-
schemes are available generally without sectoral
and
predefined
any worker meeting
tations
automatic eligibility conditions, they are not deemed to
involve aid under Article 87(1) for firms undertaking
restructuring. On the other hand,
if the schemes are
used to support restructuring in particular industries,
they may well involve aid because of the selective way
in which they are used (28).

to

(59) The

a

itself

bears

company

obligations

under
legislation or collective agreements with
employment
trade unions,
to provide redundancy 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. That being so, any contribution by the State
to these costs must be counted as aid. This is true
regardless of whether the payments are made direct to
the firm or are administered through a government
agency to the employees.

to even out differences in the obligations placed on
companies by national legislation.

aid

commonly

retirement,

(61) Besides meeting the cost of redundancy payments and
in
is
early
connection with a particular
restructuring case for
training, counselling and practical help with finding
alternative employment, assistance with relocation, and
professional
employees
wishing to start new businesses. The Commission consis-
tently takes a favourable view of such aid.

training and assistance

provided

for

(62) The type of aid described in points 56 to 61 should be
clearly identified in the restructuring plan, since aid for
social measures exclusively for the benefit of redundant
employees is disregarded for the purposes of determining
the extent of the compensatory measures referred to in
points 35 to 39.

(63) In the common interest, the Commission will ensure in
the context of the restructuring plan that social effects of
the restructuring in Member States other than the one
granting aid are kept to the minimum.

4. AID SCHEMES FOR SMES

4.1. GENERAL PRINCIPLES

(64) The Commission will authorise aid schemes for rescuing
and/or restructuring small or medium-sized enterprises
in difficulty only where the firms concerned correspond
to the Community definition of SMEs. Subject to the
following specific provisions, the compatibility of such
schemes will be assessed in the light of the conditions set
out in Chapters 2 and 3. Any aid which is granted under
a scheme and does not meet one of those conditions
must be notified individually and approved in advance
by the Commission.

(60) The Commission has a positive approach to such aid, for
it brings economic benefits above and beyond the
interests of
facilitating structural
change and reducing hardship, and often only serves

the firm concerned,

(28) In its judgment of 26 September 1996 in Case C-241/94, (France v
Commission [1996] ECR I-4551), (Kimberly Clark Sopalin), the Court
of Justice confirmed that the system of financing on a discretionary
basis by the French authorities, through the National Employment
Fund, was liable to place certain undertakings in a more favourable
situation than others and thus to qualify as aid within the meaning
of Article 87(1) of the Treaty. (The Court’s judgment did not call
into question the Commission’s conclusion that
the aid was
compatible with the common market.)

4.2. ELIGIBILITY

(65) Unless otherwise stipulated in rules on State aid in a
particular sector, awards of aid, under schemes auth-
orised from now on, to small or medium-sized enter-
prises will be exempted from individual notification
only where the enterprise concerned meets at least one
of the three criteria set out in point 5. Aid to enterprises
that do not meet any of those three criteria must be
notified individually to the Commission so that it can
assess whether they qualify as firms in difficulty.

9.10.1999

EN

Official Journal of the European Communities

C 288/11

4.3. CONDITIONS FOR THE AUTHORISATION OF RESCUE

AID SCHEMES

(i) in exceptional and unforeseeable circumstances
for which the company is not responsible;

(66) In order to be approved by the Commission, rescue aid
schemes must satisfy the conditions set out in (a), (b), (c)
and (e) of point 23. Condition (d) set out in point 23 is
replaced by the following,
this
Chapter:

for the purposes of

(d) Rescue aid may be granted for not more than six
months, during which time and analysis must be
made of the firm’s position. Before the end of that
period the Member State should either approve a
restructuring plan or a liquidation plan, or demand
reimbursement of
the loan and the aid corre-
sponding to the risk premium from the beneficiary.

Any rescue aid granted for longer than six months must
be individually notified to the Commission.

(ii) where a firm takes over assets of another firm
itself already received rescue or

which has
restructuring aid;

(e) Amendment of the restructuring plan: any changes to
the plan must comply with the rules set out
in
point 52.

4.5. COMMON CONDITION FOR THE AUTHORISATION OF
RESCUE AND/OR RESTRUCTURING AID SCHEMES

restructuring operation,

(68) Schemes must specify the maximum amount of aid that
can be awarded to any one firm as part of a rescue
and/or
including where the
plan is modified. Any aid exceeding that amount must
be notified individually
to the Commission. The
maximum amount of aid may not be more than
EUR 10 million, including any aid from other sources
or under other schemes.

4.4. CONDITIONS FOR THE AUTHORISATION OF RESTRUC-

TURING AID SCHEMES

4.6. MONITORING AND ANNUAL REPORTS

(67) The Commission will

authorise

aid
schemes only if the grant of aid is conditional on full
implementation by the recipient of a restructuring plan
that has been approved by the Member State concerned
and meets the following conditions:

restructuring

(69) Points 45, 46 and 47 do not apply to aid schemes.
However, a condition of approval will be that reports
are presented on the scheme’s operation, normally on
an annual basis, containing the information specified in
the
standardised
instructions
reports (29). The reports must also include a list of all
beneficiary firms indicating, for each of them:

Commission’s

on

(a) Restoration of viability: the criteria set out in points 31

to 34 apply;

(a) the company name;

tends

recipient

to distort competition less,

(b) Avoidance of undue distortions of competition: since aid
to SMEs
the
principle set out in points 35 to 39, namely that
the
relevant
market(s) should be reduced, does not apply unless
it is otherwise stipulated in rules on State aid in a
particular
nevertheless
provide that recipient firms must not increase their
capacity during the restructuring plan;

firm’s presence on the

Schemes

should

sector.

(b) its

sectoral code, using the NACE (30)

two-digit

sectoral classification codes;

(c) the number of employees;

(d) annual turnover and balance sheet value;

(e) the amount of aid granted;

(c) Aid limited to the minimum necessary: the principles set

out in points 40 and 41 apply;

(f) where appropriate, any restructuring aid, or other
support treated as such, which it has received in
the past;

(d) (cid:145)One time,

last time(cid:146)-principle: the rule laid down in
points 48 to 51 applies. However, Member States
must notify measures individually to the Commission
where an exception is made to this principle:

(29) See letter to the Member States of 22 February 1994: Competition

law in the European Communities, Vol. IIA.

(30) Statistical classification of economic activities in the European
Community, published by the Statistical Office of the European
Communities.

C 288/12

EN

Official Journal of the European Communities

9.10.1999

(g) whether or not the beneficiary company has been
insolvency
the restructuring

wound up or
proceedings before the end of
period.

to collective

subject

any awards of such aid, does not apply to the agri-
cultural sector (production, processing and marketing).
In that sector and under aid schemes authorised from
now on, awards of aid to SMEs that do not fulfil the
conditions set out
in the point may nevertheless be
exempted from individual notification.

5. PROVISIONS APPLICABLE TO AID FOR RESTRUCTURING
IN THE AGRICULTURAL SECTOR (31)

5.1. CAPACITY REDUCTIONS

5.4. CAPACITY REDUCTIONS

is

for

compensatory measures

(70) Points 35 to 39, and 55 and 67(b) provide that the
requirement
not
normally applied in the case of small and medium-sized
enterprises, unless otherwise stipulated in sector-specific
State aid rules. In the agricultural sector, the Commission
will normally
in
accordance with the principles set out in points 35 to
39, to be carried out by all recipients of restructuring
aid, whatever their size. However, Member States may
alternatively apply the special rules for agriculture set
out in points 73 to 82.

compensatory measures,

require

5.2. DEFINITION OF EXCESS CAPACITY

(71) In the agricultural sector and for the purposes of these
Guidelines, structural excess capacity is defined by the
Commission on a case-by-case basis taking account in
particular of:

(a) the extent and trend for

the relevant product
category over the past three years of market stabili-
sation measures, especially export refunds and with-
drawals from the market, development of world
market prices, and the presence of sector limits in
Community legislation. Primary products subject to
production quotas shall be deemed not
to have
excess capacity;

(b) as regards fisheries and aquaculture,

the specific
features of
the sector and the Community rules
governing it, and in particular the Guidelines for
the examination of State aid to fisheries and aqua-
culture (32)
(EC) No
and Council Regulation
2468/98 (33).

5.3. ELIGIBILITY FOR RESCUE AND RESTRUCTURING AID

SCHEMES

(72) Point 65, concerning eligibility for rescue and restruc-
turing aid schemes for SMEs and more specifically the
exemption from the requirement to notify individually

(31) Covering, for the purposes of the Guidelines, all operators involved
in the production of, and/or trade in, products of Annex I to the
Treaty, including fisheries and aquaculture, but having due regard
to the specific features of the sector and the Community rules
governing it.

(32) OJ C 100, 27.3.1997, p. 12.
(33) OJ L 312, 20.11.1998, p. 19.

(73) The Commission will, at the request of the Member State
concerned,
to the general
concerning capacity
provisions of
reduction, apply the following provisions for operators
in the agricultural sector.

these Guidelines

an alternative

and as

(a) General case

(74) Where there is a structural excess of production capacity,
the requirement of
irreversibly reducing or closing
capacity set out in points 35 to 39 applies. However,
this
in the case of primary agricultural production,
requirement
the
that
capacity reduction or closure continues for at least five
years, as follows:

is replaced by the requirement

(i) for measures

targeted on particular products or
operators the production capacity reduction must
normally attain 16 % (34) of
for which the
restructuring aid is effectively granted;

that

(ii) for other measures not so targeted the abovemen-
tioned capacity reduction must normally attain
8 % (34) of
the value of output of products with
structural excess for which the restructuring aid is
effectively granted.

(75) In determining eligibility for, and amounts of, restruc-
turing aid, no account shall be taken of the burdens of
related
compliance with Community
provisions applicable at the level of individual operators.

quota

and

(b) Special case for small agricultural enterprises (SAEs)

(76) For the purposes of these Guidelines SAEs are defined as
those operators in the agricultural sector with no more
than 10 annual work units.

(34) For

restructuring aid granted in assisted areas,

including less
the capacity reduction requirement will be

favoured regions,
reduced by two percentage points.

9.10.1999

EN

Official Journal of the European Communities

C 288/13

level

(77) For SAEs, the requirement of irreversibly reducing or
closing capacity may be deemed to be achieved at the
involving
relevant market
(not
exclusively or even any of
the
restructuring aid). Subject to compliance with common
agricultural policy provisions, Member States may
choose whatever capacity reduction system they wish
to apply to SAEs. In such cases, Member States must,
as a general rule, demonstrate that:

the beneficiaries of

necessarily

(i) for measures targeted on particular products or
operators the system would in the relevant Member
State, reduce production capacity of product(s) with
structural excess by 10 % (34) of
that which the
restructuring aid is effectively granted;

this capacity
(ii) for other measures not so targeted,
reduction must attain 5 % (34) of
the value of
output of products with structural excess for which
the
actually granted. This
reduction may be either products which actually
benefit
from the restructuring aid or any other
Annex I products with structural excess.

restructuring aid is

The Member State must also demonstrate that
the
capacity reduction would be supplementary to any
applicable in the absence of the restructuring aid.

(78) Where the capacity reduction is not sought at the level
of the beneficiary of the aid, measures to achieve the
reduction must be implemented no later than two years
after the threshold set out in points 79, 80 and 81 has
been attained.

(c) Particular circumstances for all operators in the agricultural

sector

(79) In this sector even very small amounts of aid are capable
of fulfilling the conditions of Article 87(1) of the Treaty.
the practical problems
in recognition of
However,
associated with capacity reduction at
the level of
primary agricultural production (and indirectly in the
processing and marketing of products under Annex I
of the Treaty), yet recognising the common interest to
the
be eligible for exemption under Article 87(3)(c),
all
Commission,
other
to
conditions, will waive
reduction
requirements in the following situations:

adherence
the

to
capacity

subject

(i) for measures aimed at any particular category of
totality of

products or operators, where

the

decisions taken in favour of all beneficiaries over any
consecutive twelve-month period does not involve a
quantity of products which exceeds 3 % of the total
annual production of such products in that country;

(ii) for other measures not so aimed, where the totality
of decisions taken in favour of all beneficiaries over
any consecutive
twelve-month period does not
involve a value of product which exceeds 1,5 % of
the total annual value of agricultural production in
that country.

(80) At

the request of

the Member State concerned,

the
geographic references under (i) and (ii) of point 79
may,
for any measure, be determined at a regional
level. In all cases, measurement of the production of a
shall be based on normal
country (or a region)
production levels
the
previous three years), and, as regards the quantity or
the value of production of beneficiaries, be represen-
tative of that of their enterprises prior to the decision
to grant aid.

(in general,

average of

the

(81) Exemption from the capacity reduction requirement shall
in no case imply tolerance of investment aid related to
activities subject to sectoral limits.

(82) In cases where the limits for exemption from capacity
to points 79, 80 and 81 are

reduction pursuant
exceeded:

(i) the capacity reduction to be achieved shall be
determined on the basis of total aided capacity, not
only that part exceeding the thresholds;

(ii) as

regards beneficiaries other

than SAEs which
already have been accepted for aid prior to the
thresholds being attained,
the capacity reduction
may be achieved through measures analogous to
those for SAEs under points 76, 77 and 78.

5.5.

(cid:145)ONE TIME, LAST TIME(cid:146) CONDITION

to the agricultural

(83) The principle that restructuring aid should be granted
once only also applies
sector.
However, by way of derogation from points 48 to 51
and 67, as regards individual awards of aid and rescue
and restructuring schemes concerning primary agri-
cultural production,
the period during which further
aid may not be granted except in exceptional and unfore-
seeable circumstances for which the company is not

C 288/14

EN

Official Journal of the European Communities

9.10.1999

responsible is reduced to five years. Derogations from
this principle do not need to be notified individually to
the Commission, provided that
they are made in
accordance with conditions set out in the scheme and
approved by the Commission. Amendments to rescue
and restructuring schemes which are intended to take
account of market developments that were not
fore-
seeable at the time the schemes were approved by the
Commission will be examined on a case-by-case basis.

6.1.

INDIVIDUAL NOTIFICATION OF ANY AID FOR
TANGIBLE
INVESTMENT DURING THE RESTRUC-
TURING PERIOD

(88) Where a large enterprise receives
restructuring aid
the grant of any
these Guidelines,
examined under
other investment aid during the restructuring period,
even in accordance with a scheme that has already
been authorised, is liable to influence the Commission’s
assessment of the extent of the compensatory measures
required.

5.6. MONITORING AND ANNUAL REPORT

(84) The rules set out in Chapters 3 and 4 apply to moni-
toring and annual reports in the agricultural sector,
except for the obligation to supply a list of all aid bene-
ficiaries and certain items of information on each of
them (points 69(a) to (g)). The latter obligation does
not apply to schemes for SAEs.

(85) Where recourse has been had to the provisions of points
73 to 82, the report must also include data showing
either:

(a) the quantity (or value) of production which has
effectively benefited from the restructuring aid, and
data on capacity reduction achieved pursuant
to
those points; or

(b) that

the conditions for exemption from capacity
reduction according to points 79, 80 and 81 have
been fulfilled.

5.7. DEFINITION OF (cid:145)ASSISTED AREAS(cid:146)

(86) For the purposes of these Guidelines, (cid:145)assisted areas(cid:146) (see
points 53 and 54) shall also include, for operators in the
agricultural sector,
the less favoured areas defined in
Council Regulation (EC) No 1257/1999 of 17 May
from the
1999 on support
European Agricultural Guidance and Guarantee Fund
(EAGGF) and amending and repealing certain Regu-
lations (35).

rural development

for

6. APPROPRIATE MEASURES UNDER ARTICLE 88(1)

that

(87) The Commission is proposing, under Article 88(1) of the
Treaty,
the Member States adopt appropriate
measures as set out below, with regard to their existing
aid schemes. The Commission will make authorisation of
any future scheme conditional on compliance with the
provisions below.

(89) During the period for restructuring such an enterprise,
any aid intended to encourage tangible investment
regional development,
(whether
to promote
environmental protection or
any other objective)
awarded after 30 June 2000 must be notified indi-
vidually, unless it is covered by the de minimis rule (36).

it be

6.2. NEED TO INFORM THE COMMISSION OF ANY AID

GRANTED TO THE RECIPIENT FIRM

(90) Where a large enterprise receives

of

implementation

restructuring aid
the
examined under these Guidelines, monitoring of
satisfactory
Commission’s
decisions on such aid requires a large measure of trans-
parency with regard to any further aid which the firm
might receive, even in accordance with a scheme that
has already been authorised and even where such aid is
not subject to individual notification under points 88
and 89.

the

(91) With effect from 30 June 2000, notifications of aid for
for
restructuring a large
information, all other aid of any kind which is planned
to be granted to the recipient firm during the restruc-
turing period, unless it is covered by the de minimis rule.

enterprise must

indicate,

(92) Likewise, the reports to be submitted in accordance with
points 45, 46 and 47 of these Guidelines must indicate
any other aid granted to the recipient firm during the
period covered, and any other aid which is planned to be
granted to the recipient firm during the restructuring
period, unless it is covered by the de minimis rule.

(93) The Commission

the

reserves

initiate
proceedings under Article 88(2) of the Treaty against
all aid to a particular firm if the grant of aid under
approved
the
liable
schemes
requirements of these Guidelines.

circumvent

right

to

to

is

(35) OJ L 160, 26.6.1999, p. 80.

(36) OJ C 68, 6.3.1996, p. 9.

9.10.1999

EN

Official Journal of the European Communities

C 288/15

6.3. ADAPTATION OF EXISTING RESCUE OR RESTRUC-
TURING AID SCHEMES IN THE LIGHT OF THESE
GUIDELINES

(94) Member States must adapt

their existing rescue and
restructuring aid schemes which are to remain in
operation after 30 June 2000 in order to bring them
into line with these Guidelines, and in particular with
the requirements of Chapter 4, after that date.

(95) To enable the Commission to monitor the adaptation
process, Member States must let it have a list of all
such schemes before 31 December 1999. They must
subsequently, and in any event before 30 June 2000,
provide it with sufficient information to enable it to
check that the schemes have indeed been modified in
accordance with these Guidelines.

7. ENTRY INTO FORCE; DURATION AND REVIEW OF THE
GUIDELINES

7.1. AMENDMENT OF THE REGIONAL AID GUIDELINES

(96) Point 4.4 of the Guidelines on national regional aid (37) is
hereby amended by deleting the text
from the word
(cid:145)unless(cid:146) up to the end of that point. That text excluded
from the scope of (cid:145)initial investment(cid:146) the purchase of an
from a firm in difficulty, and thus
establishment
disqualified it for regional aid. That exclusion therefore
no longer operates. However, where an establishment is
purchased from a firm in difficulty, it must be demon-
strated in particular that
the condition laid down in
point 4.5, namely that the transaction takes place at
market conditions, has been fulfilled.

7.3. AID TO SMES

(98) Aid for rescuing and restructuring SMEs individually
notified before 30 April 2000 will be assessed in the
light of the guidelines in force before adoption of this
those guidelines, which was
text. The extension of
notified to Member States and published in the Official
Journal of the European Communities on 10 March 1999
(see footnote 2) is therefore renewed for such aid.

(99) Any scheme is nevertheless subject to the appropriate
measure referred to in points 94 and 95 where the
scheme is intended to remain in operation after 30
June 2000.

7.4. AID TO LARGE ENTERPRISES

(100) Subject to the provisions set out below, the Commission
will assess the compatibility with the common market of
any aid for rescuing or restructuring large enterprises, on
the basis of these Guidelines once they are published in
the Official Journal of the European Communities.

However, notifications registered by the Commission
before that date will be examined in the light of the
criteria in force at the time of notification.

7.5. NON(cid:150)NOTIFIED AID

(101) The Commission will examine the compatibility with the
restructuring aid
its authorisation and therefore in

common market of any rescue or
granted without
breach of Article 88(3) of the Treaty:

7.2. ENTRY INTO FORCE AND DURATION

(97) Subject to the provisions set out below, these Guidelines
shall enter into force on the date of their publication in
the Official Journal of the European Communities. They shall
remain in force, unless otherwise stipulated in any new
decision, for five years.

(a) on the basis of these Guidelines if some or all of the
aid is granted after their publication in the Official
Journal of the European Communities;

(b) on the basis of the Guidelines in force at the time the

aid is granted in all other cases.

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

C 288/16

EN

Official Journal of the European Communities

9.10.1999

NOTIFICATION FORM FOR INDIVIDUAL GRANTS OF RESTRUCTURING AID

ANNEX I

I. Information on the company

(cid:151) Company name;

(cid:151) Legal status;

(cid:151) Sector in which it operates, with corresponding NACE code;

(cid:151) Names of the main shareholders and extent of their holdings;

(cid:151) List of shareholders’ agreements (creation of a hard core, purchase option, etc.);

(cid:151) If the company belongs to a group, copy of the full, up-to-date organisation chart of the whole of the group,

showing the links between its members (capital and voting rights);

(cid:151) If the company originates from a purchase of assets following liquidation or court-supervised administration

proceedings, also give the above details for the firm(s) concerned;

(cid:151) Location of all main production sites throughout the world, with workforce;

(cid:151) If the company is treated as an SME, the Member State must supply evidence that it fulfils all the criteria of the
Community definition. If that is the case, it must explain why the company does not qualify for a restructuring
aid scheme for SMEs (either there is no such scheme or the company does not meet the eligibility criteria);

(cid:151) A copy of the last three profit and loss accounts (if possible) or at least of the most recent one;

(cid:151) A copy of any court decision appointing an administrator or opening an investigation into the company.

II. Market surveys

The Member State must supply a copy of the survey of the market(s) served by the firm in difficulty, with the name
of the organisation which carried it out. The market survey must give in particular:

(cid:151) a precise definition of the market covered by the survey;

(cid:151) the names of the company’s main competitors with their shares of the world, Community or domestic market, as

appropriate;

(cid:151) the evolution of the company’s market shares in recent years;

(cid:151) an assessment of total production capacity and demand at Community level, concluding whether or not there is

excess capacity on the market;

(cid:151) Community-wide forecasts for trends in demand, aggregate capacity and prices on the market over the five years

ahead.

III. Description of the aid

(cid:151) Demonstrate that the company’s difficulties are its own and are not the result of an arbitrary allocation of costs

within a group;

(cid:151) State whether the company has already received rescue aid and, if so, give the approval date and attach the

Member State’s commitment to submit a restructuring or liquidation plan;

(cid:151) State whether the company or any of its subsidiaries in which it holds not less than 25 % of the capital or the
voting rights have in the past already received restructuring aid or aid regarded as such. If so, give the references
of the previous Commission decisions;

9.10.1999

EN

Official Journal of the European Communities

C 288/17

(cid:151) Indicate the form to be taken by the aid and the total amount of the financial benefit involved;

(cid:151) Describe the compensatory measures proposed with a view to mitigating the distortive effects on competition at

Community level;

(cid:151) Specify all the aid of any kind which the firm is likely to receive before the end of its restructuring period, unless

it is covered by the (cid:145)de-minimis(cid:146) rule.

IV. Restructuring plan

The Member State must supply a restructuring plan drawn up in accordance with points 29 to 47 and containing at
least the following information:

(cid:151) presentation of the different market assumptions arising from the market survey;

(cid:151) analysis of the reason why the firm has run into difficulty;

(cid:151) presentation of the proposed future strategy for the firm;

(cid:151) description of the different restructuring measures planned and their cost;

(cid:151) comparative assessment of the economic and social consequences, at regional and/or national level, of disap-

pearance of the firm in difficulty and of implementation of the restructuring plan;

(cid:151) timetable for implementing the different measures and final deadline for implementing the restructuring plan in

its entirety;

(cid:151) very precise description of the financial arrangements for the restructuring:

(cid:151) use of capital still available,

(cid:151) sale of assets or subsidiaries to help finance the restructuring,

(cid:151) financial commitment by the different private shareholders and the main lending banks,

(cid:151) amount of public assistance and demonstration of the need for that amount,

(cid:151) where appropriate, grant of repayable loans or insertion of a (cid:145)better fortunes(cid:146) clause to secure reimbursement

of the aid;

(cid:151) projected profit and loss accounts for the next five years with estimated return on capital and sensitivity study

based on several scenarios;

(cid:151) record of the discussion on the planned restructuring held with the trade unions representing the firm’s

employees;

(cid:151) name(s) of the author(s) of the restructuring plan and date on which it was drawn up.

V. Undertaking by the Member State

The Member State must undertake to give, in the reports on restructuring aid that has been allowed, all relevant
information on aid of any kind granted to the firm receiving restructuring aid, whether under a scheme or not, until
the restructuring period comes to an end.

C 288/18

EN

Official Journal of the European Communities

9.10.1999

ANNEX II

NOTIFICATION FORM FOR RESCUE AID

Essential information on the company

Company name:

Legal status:

Sector in which it operates:

Workforce (consolidated where appropriate):

Operating costs and financial charges over the last 12 months:

Maximum amount to be loaned:

Name of lender:

Essential supporting documents to be supplied

(cid:151) latest profit and loss account with balance sheet, or court decision opening an investigation into the company under

national company law;

(cid:151) an undertaking by the Member State to submit to the Commission, within not more than six months of the date of
approval of the rescue aid, either a restructuring plan, or a liquidation plan, or proof that both the loan and the aid
have been reimbursed in full;

(cid:151) a liquidity plan for the six months ahead, indicating the amounts to be borrowed in the short term;

(cid:151) a copy of the offer of a loan (linked to the rescue aid) to the firm in difficulty, specifying the conditions for the

payment of the amounts loaned and the terms of reimbursement;

(cid:151) a copy of the draft guarantee covering the loan in question where it is to be guaranteed.