2000/524/EC: Commission Decision of 18 January 2000 on the State aid granted by Germany to Linde AG (notified under document number C(2000) 64) (Text with EEA relevance) (Only the German text is authentic)
Date: 2000-01-18
Institutions: European Commission
Subjects: Germany, State aid, control of State aid, energy industry, exchange of information, gas

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II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 18 January 2000

on the State aid granted by Germany to Linde AG

(notified under document number C(2000) 64)

(Only the German text is authentic)

(Text with EEA relevance)

(2000/524/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(3)

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

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

Whereas:

I. PROCEDURE

(1)

(2)

In May 1998,
in the course of its contacts with the
German authorities, the Commission became aware of
the existence of several transactions involving the Treu-
handanstalt (THA), its successor, the Bundesanstalt fur
vereinigungsbedingte Sonderaufgaben (BvS) and the
companies UCB Chemie GmbH (JCB) and Linde AG
(Linde). These transactions basically concerned the
conditions under which carbon monoxide was to be
supplied to an amine production site acquired by UCB
from Leuna Werke GmbH (LWG) after a privatisation
procedure.

Subsequently, by letter dated 7 August 1998 (A/36142),
the German authorities informed the Commission of the
background to these transactions and the aid measures
involved. By letter dated 18 September 1998 (D/16578),
the Commission requested further information, which
was provided by letter dated 3 December 1998 (A/
38804). The case was registered as NN 16/99 on 10
February 1999.

(1) OJ C 194, 10.7.1999, p. 15.

(4)

(5)

(6)

(7)

By letter dated 30 March 1999 (SG(99)D/2353, OJ C
194, 10 July 1999, p. 15), the Commission informed
Germany that it had decided to initiate the procedure
laid down in Article 88(2) of the EC Treaty in respect of:

— a DEM 9 million grant to Linde for the construction
of a new carbon monoxide production plant;
— the conditions under which carbon monoxide is

currently being supplied to UCB.

By letter dated 25 May 1999 (A/33985), the German
authorities submitted their comments.

The Commission received no comments from other
interested parties.

II. DESCRIPTION OF THE MEASURES

II.1. Recipient

Linde is an affiliate company of the Linde Group, a
worldwide conglomerate with over 120 subsidiaries and
employing more than 32 000 workers.
In 1998 the
Linde Group had a turnover of DEM 10 738 000 000
and a balance sheet total of DEM 9 371 000 000. It
operates
sectors: engineering and
contracting, materials handling, refrigeration engineering
and industrial gases.

in four business

Linde's headquarters are located in Höllriegelskreuth,
Munich. In 1998 the company achieved a turnover of
DEM 4 554 000 000 and employed 12 499 workers.
Linde is currently the second-largest supplier of indus-
trial gases in Europe. Industrial gases are those gases

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which are delivered to the end-user in relatively large
quantities, often by pipeline direct
from the gas
producer. They are used as intermediate products in the
production of a wide range of chemicals, in medicine
and for R & D purposes.

(8)

(9)

II.2. The privatisation of chemical production in

Leuna (Saxony-Anhalt)

In 1993 the THA decided to sell LWG's Leuna-based
amine production operation to UCB, a subsidiary of
Union Chimique Belge, a Belgian pharmaceutical and
chemicals group that operates throughout the world.
Union Chimique Belge employs more than 8 000
workers of whom around half work in the pharmaceu-
ticals sector and the rest in the chemicals and film
sector. Nearly one third of those employees work in
Belgium. UCB itself achieved a turnover of DEM 6 619
million in 1998, and employed 79 workers.

Amine production constitutes only a small part of the
Leuna chemical conglomerate. According to the infor-
mation provided by the German authorities, the sale was
effected after an open, basically unconditional and trans-
parent
tender procedure. UCB, which was the only
bidder, paid a purchase price of DEM 6,6 million. The
THA assumed the costs arising out of the inherited debt
burden and site clearance (2).

(10)

Carbon monoxide is required for amine production, as it
is for many other chemicals. UCB therefore made the
purchase conditional upon THA's undertaking to guar-
antee the supply of carbon monoxide.

(11)

The THA (3) undertook to provide carbon monoxide at a
‘market price’ agreed for a 10-year period provided that
UCB:

— did not conclude a contract for the supply of carbon

monoxide with another producer; or,

— did not decide to build a carbon monoxide produc-
tion facility for its own use. However,
the THA
would make a grant of DEM 5 million available for
this eventuality under the privatisation contract.

(12) No information was provided on how this ‘market price’
was to be determined. However, it should be noted that
at the time the THA was concluding such long-term
supply contracts with new investors because the supply
situation for the chemicals sector was clearly rather
uncertain. According to the German authorities, without
such supply guarantees most producers would not have
been prepared to establish themselves at the location
concerned and consequently the THA would not have
been able to fulfil

its privatisation task.

(2) In its Decisions (see Decisions in Cases NN 108/91, E 15/92 and
NN 768/94 — Germany — Treuhand) the Commission has recog-
nised the unique and unprecedented background to THA activity in
connection with the transition from a centrally planned to a market
economy. It therefore also accepts that the elimination of ecological
damage caused before 1 July 1990 does not constitute State aid.
(3) This Decision is without prejudice to any aid granted in connection

with the privatisation agreement of 22 April 1993.

(13) When it concluded the contract with UCB on the amine
production plant,
the THA was hoping to find an
investor to take over the carbon monoxide production
plant. This hope was disappointed. Since the carbon
monoxide production plant had been neither restruc-
tured or modernised, production costs were far above
the market level. The public authorities were therefore
running the plant at an annual loss of some DEM 3,5
million. In 1996, the BvS decided to cancel the loss-
making contract for the supply of carbon monoxide and
proposed that UCB should itself produce the carbon
monoxide it
In
accordance with the privatisation contract, UCB would
receive a grant of DEM 5 million for this.

its amine production.

required for

(14) However, UCB rejected the proposal. As a result, the BvS
was forced to look for another investor. The only
investor interested in taking over production was Linde,
which had been established in the area since 1994. In
June 1997 an agreement was concluded between the
BvS, LWG, UCB and Linde for the supply of carbon
monoxide.

II.3. The agreement between the BvS, LWG, UCB

and Linde

(15) According to this agreement, Linde would build a new
carbon monoxide production plant within 18 months.
The new plant would be incorporated into Linde's
existing facilities in Leuna. The building cost would be
to which Linde would contribute
DEM 12 million,
DEM 3 million from its own funds. During the
construction period, Linde would use the existing facili-
ties and would supply UCB with carbon monoxide on
the same terms as those agreed between the THA and
UCB under the 1993 privatisation contract.

(16) Under

this agreement,

the BvS contributed DEM 9
million to the costs of building the new facility.
According to the German authorities,
this amount
consisted of the DEM 5 million grant agreed between
the THA and UCB under the privatisation contract, plus
an additional amount of DEM 4 million.

(17)

that
Since the Commission had serious misgivings
elements of state aid might be included in:
the
(i)
DEM 9 million grant awarded to Linde AG for carbon
monoxide production, and (ii) the ‘market price’ agreed
between UCB and Linde, it decided to initiate the proce-
these
dure laid down in Article 88(2)
measures.

in respect of

III. GERMANY'S RESPONSE TO THE INITIATION OF THE

ARTICLE 88(2) PROCEDURE

(18)

By letter dated 25 May 1999, the German authorities
responded as follows to the initiation of the procedure:

— given the specific nature of carbon monoxide, this
gas must be produced in the place where it
is
consumed. Therefore, such a product cannot affect
trade,

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— since there is no carbon monoxide market in the
customary sense, the purchase price can only be
based on current costs at the existing facilities. An
entirely separate carbon monoxide plant would be
much more costly,

— Linde is not enjoying favourable treatment for the

following reasons:

(i) the old carbon monoxide plant was not sold. It
still belongs to LWG. So there was no obligation
to call for tenders. Since Linde was building its
own carbon monoxide plant, there was no obli-
gation to call for tenders for this either;

(ii) Linde's prices are based on investment costs plus

an adequate return;

(iii) since Linde was not obliged to build a new
carbon monoxide plant and there were no other
interested parties, there can be no question of
Linde receiving preferential treatment,

— nor can UCB have received preferential treatment,
since UCB is paying Linde a higher price for carbon
monoxide than that paid to the BvS. This price is, in
any event, higher than that paid in other countries
(United States) (4),

— the supply guarantee was a precondition for UCB
taking over amine production. On the basis of this
guarantee, the carbon monoxide price was to remain
unchanged at [...] (*) for a period of 10 years. This
price was no longer economically sustainable for
BvS,

— LWG examined the possibility of producing carbon
monoxide itself, but the investment costs were too
high. Carbon monoxide is produced on the basis of a
synthesis gas that has to be purified in a steam
reformer. The only alternative
to LWG's own
production was to utilise a steam reformer available
in the vicinity. Since Linde had previously acquired a
steam reformer from LWG, Linde proposed to the
BvS and to UCB7 that
it should become UCB's
carbon monoxide supplier. Carbon monoxide would
then be supplied to UCB at the price of [...] (*) This
price was to apply from the date on which the
agreement between BvS, UCB and Linde was signed
(June 1997) until Linde actually started to operate
the new carbon monoxide facility, and for [...] (*)
after that date. It would be reviewed in line with
normal practice. According to the German authori-
ties (letter A/33985 dated 25 May 1999, received on
28 May 1999), UCB decided to accept Linde's offer,
since Linde was able to supply more carbon
monoxide than LWG because of the new production

(4) According to a recent report, the price of CO in the United States
is currently DEM 250/1 000 Nm3 (See European Chemical News,
29 March 1999, pp 28 to 29).
(*) The exact figures are confidential.

plant. The possibility of increasing production in the
future was an important consideration for UCB.
Linde therefore offered UCB a contract for [...] (*).

— The price of [... ] (*) was agreed for a period of [...] (*)
There is no provision for a control mechanism
because no typical market price exists.

— Linde has invested DEM 12,586 million, of which
DEM 9 million was provided by the public authori-
ties (DEM 0,45 million as an investment allowance
(Investitionszulage) and the rest as an ad hoc grant
from the BvS). The investment costs related primarily
to the building of a new carbon monoxide produc-
tion facility.

IV. ASSESSMENT OF THE MEASURES

IV.1. The relevant market

(19)

The relevant product market is one on which industrial
gases, particularly hydrogen, oxygen and nitrogen, are
supplied by pipeline right up to, or to the vicinity of, the
plant itself. Direct supply is a separate market since
tankers or cylinders generally cannot provide enough
gas for large-scale customers.

(20) Gas supply plants can be built anywhere. In this field of
activity, large-scale producers are active worldwide. The
relevant geographic market is at least the Community
market.

(21)

Linde is engaged in the direct supply of industrial gases.
These products are traded within the Community (5) The
following figures show that other competitors are active
on this market:

Company

Market share

Linde

Messer Griesheim

Air Liquide

BOC

Air Products

18 %

6 %

50 %

8 %

15 %

(22)

Carbon monoxide is a highly toxic gas used in the
chemical
industry. The amount of carbon monoxide
needed by UCB can only be supplied by pipeline or by
direct suppliers. It is expensive to transport and there-
fore production must be located near the purchaser.

(5) In 1997 the value of

intra-Community trade in industrial gases

(NACE 24.11) was EUR 244 749 400 (Eurostat).

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(23)

(24)

In 1994 Linde inaugurated the world's largest industrial
gases centre in Leuna, and in 1998 it took over the
entire supply of industrial gases to the Mitteldeutsche
Erdoelraffinerie
in Leuna. MIDER, which
belongs to the French mineral oil group Elf Aquitaine,
receives hydrogen, oxygen, and nitrogen from Linde.
The supply contract amounts to over DEM 1 billion.

(MIDER)

Compared with the exceptional costs of building new,
separate facilities, Linde was in the advantageous posi-
tion of being able to incorporate carbon monoxide
production into its existing hydrogen production facili-
ties which are linked with MIDER.

(25) Although UCB is currently Linde's only customer for
carbon monoxide,
it cannot be ruled out that in the
future Linde will also supply carbon monoxide to other
companies based in the same industrial triangle. Here it
is worth noting that Buna, Leuna and Bitterfeld are
trying to attract chemical
investment. The companies
already established, in addition to UCB, Linde and Elf
Aquitaine,
for example, Elf Atochem SA,
Rhone-Poulenc SA and Domo SA.

include,

(26)

(27)

(28)

Linde can supply gas at a reasonable price and these
companies may prefer this source of supply to other
sources on the grounds of reliability and economy.

For these reasons, any aid granted to Linde for the
building of a new carbon monoxide production facility
is capable of distorting competition.

IV.2. Measures which constitute State aid:

the

DEM 9 million grant to Linde

IV.2.1. State aid character of the measure

that

to its

The DEM 9 million grant awarded by the BvS to Linde
constitutes aid within the meaning of Article 87(1) of
the EC Treaty, since it has enabled the company to add a
carbon monoxide production unit
existing
hydrogen plant without having to bear the costs thereof.
is preferable to
for certain reasons it
The fact
produce carbon monoxide in the place of consumption
does not alter this assessment. First, Linde has an advan-
tage over its competitors, because of better investment
conditions for building a new carbon monoxide produc-
tion facility. Second, for the aforementioned reasons,
any support granted to the sole carbon monoxide
supplier in the Leuna area will have direct effects on
other producers'
for which carbon
end products
monoxide is required (such as UCB's amine production).
These end products are traded within the Community.

(29)

The German authorities claim that
the guarantee to
supply carbon monoxide to UCB was the only way of
selling the amine production facilities.

(30) As regards this argument, it should be noted that this
was normal practice in the early 1990s, since it was the
only way to sell parts of
integrated conglomerates,
which could not be privatised as a whole. The supply
situation at the chemical plant sites would otherwise
have been too uncertain. Without such guarantees most
producers would therefore not have agreed to buy part
of the site and consequently the THA would have been
its privatisation task.
unable to fulfil

(31) However, the guarantee to supply UCB entered into in
1993 does not justify the grant of State aid to Linde in
1997 in connection with the construction of a new
carbon monoxide production facility.

(32)

First, it is difficult to regard the award of the DEM 5
million grant (in accordance with the 1993 privatisation
contract) as part of the supply guarantee. For as far as
UCB was concerned, such a grant was not a requirement
under the supply guarantee assumed by the THA. Under
the contract, UCB was entitled to an adequate supply of
carbon monoxide, even without such a grant. Even less
can such a supply guarantee be invoked to justify the
award of a DEM 9 million grant to Linde. Secondly, the
original 1993 arrangement did not envisage the poss-
ibility of a third party being commissioned to build new
facilities and receiving a DEM 9 million grant for this
purpose. In fact, the agreement only gave UCB the right
to explore supply conditions which might be more
advantageous, including the building of its own facilities.
However, there was never any question of a third poss-
ibility, which the German authorities, in their comments
on the initiation of the Article 88(2) procedure rightly
call an alternative solution, namely of a third company
to build a new carbon monoxide
receiving support
facility. The agreement concluded between the BvS,
LWG, UCB and Linde in June 1997 must therefore be
regarded as a new agreement, different from the 1993
privatisation contract.

(33)

Finally, it should be noted that the German authorities
have not produced concrete or sufficient evidence to
show that no companies other than Linde would have
agreed to supply UCB. They merely assert that Linde was
the only interested investor.

IV.2.2. Assesment of
measure

the compatibility of

the State aid

(34) Having established that

the DEM 9 million grant
awarded to Linde constitutes State aid within the
meaning of Article 87(1) of the EC Treaty, the Commis-
sion must examine whether
this measure can be
exempted on the basis of the EC Treaty.

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(35) As regards the nature of the aid granted to Linde, with
the exception of the investment allowance of DEM 0.45
million, the aid was not granted under a Commission-
approved scheme but pursuant to national measures
which the Commission had not approved and of which
it should have been notified in advance in accordance
with Article 88(3) of the Treaty. This aid is consequently
unlawful.

(36) Article 87(1) of the EC Treaty provides that aid meeting
the criteria laid down therein shall be incompatible with
the common market.

(37)

In the present case, the derogations under Article 87(2)
of the EC Treaty are not applicable since the aid does
not pursue any of the objectives listed in that paragraph.
Nor have the German authorities attempted to invoke
those derogations.

(38) Article 87(3) of the EC Treaty lists the types of aid that
may be considered to be compatible with the common
market. Compatibility must be determined in the
context of the Community as a whole and not of a
single Member State, or a region thereof.

(39)

To ensure that the common market functions normally
and to abide by the principle established in Article 3(g)
of the EC Treaty, the derogations listed in Article 87(3)
of the EC Treaty should be construed narrowly when an
aid scheme or any individual aid award is scrutinised. In
particular, the derogations may be applied only if the
Commission establishes that, without the aid, market
forces would not in themselves be sufficient to induce
the recipients to act in such a way as to achieve any of
the desired objectives.

(40) As regards the derogations under Article 87(3)(b) and (d)
of the EC Treaty, the aid is not intended to promote the
execution of an important project of common European
interest or to remedy a serious disturbance in the
German economy, and does not have the characteristics
of such projects. Nor is it intended to promote culture
or heritage conservation.

(41) As far as the derogation under Article 87(3)(c) of the EC
Treaty is concerned, the German Land of Saxony-Anhalt
is not located in an area which qualifies for regional aid
under this provision.

culty (6), which were in force when the aid was granted.
Linde is not a firm in difficulty within the meaning of
those guidelines, and the DEM 9 million grant does not
constitute rescue or restructuring aid.

(43)

The regional aid map of a Member State indicates the
assisted areas of the Member State concerned and the
maximum aid intensities permitted in each assisted area
for initial
investment or job creation. According to
Germany's regional aid map, Saxony-Anhalt is an area
eligible under Article 87(3)(a) of the EC Treaty.

(44) Article 87(3)(a) provides

that aid to promote the
economic development of areas where the standard of
living is abnormally low or where there is serious under-
employment may be considered to be compatible with
the common market.

(45)

To guarantee effective control of regional aid while
helping to achieve the objectives set out in Article 3 of
the Treaty,
in particular under points (g) and (k), the
Commission sets a maximum population ceiling in
assisted areas for each Member State. The ceiling for
Saxony-Anhalt is 35 % of the eligible costs.

(46) Aid for initial investment is calculated as a percentage of
the investment's value. This value is established on the
basis of a uniform set of items of expenditure (standard
base) corresponding to the following elements of the
In
investment:
Linde's case, the standard base is the following:

land, buildings and plant/machinery.

Buildings

Plant/machinery

(DEM million)

1,809

10,777

12,586

Total

(47)

(48)

The Commission has to check whether the aid granted
within that limit can be regarded as compatible with the
common market within the meaning of the derogation
laid down in Article 87(3)(a) of the EC Treaty.

Since the German authorities are providing DEM 9
million of the eligible investment costs of DEM 12.586
million, the permitted aid ceiling has been substantially
overshot. According to the information provided by the
German Government, DEM 0,45 million was granted
under the Investment Allowance Law (Investitionszula-
gegesetz) (7) and therefore does not need to be re-exam-
ined by the Commission. The German authorities have
also indicated that direct investment subsidies have been
granted under the joint Federal/Länder programme for
improving regional economic structures (Gemeinschaft-
saufgabe zur Verbesserung der regionalen Wirtschafts-
struktur). Finally, the German Government states that
the investment subsidies granted by the BvS amount to
no more than DEM 855 million (DEM 9 million minus
DEM 450 000).

(42)

In certain circumstances, Article 87(3)(c) of
the EC
Treaty also allows the Commission to authorise the
granting of rescue or restructuring aid to firms in diffi-
culties, in accordance with the Community guidelines on
State aid for rescuing and restructuring firms in diffi-

(6) OJ C 368, 23.12.1994, p. 12.
(7) Investment Allowance Law (Investitionszulagegesetz). Measures under
this law qualify as regional
investment aid under Article 87(1) of
the EC Treaty and have been approved by the Commission (aid
scheme N 494/A/95).

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(49) With the exception of

the investment allowance of
DEM 0,45 million, the aid in question has not been
awarded under Commission-approved regional
aid
schemes, but on the basis of ad hoc decisions taken by
the competent authorities. In such cases, the impact of
the
the aid has to be examined in the context of
Community as a whole. The Court of Justice confirmed
this
(Judgement of 14
September 1994 in Joined Cases C-278/92, C-279/92
and C-280/92 Spain v. Commission (8) and Pyrsa Judge-
ment of 14 January 1997 in Case C-169/95 Spain v.
Commission (9).

interpretation in Hytasa

(50) An individual aid measure may be classed as regional aid
compatible with the common market where it effectively
contributes to the long-term development of the area
concerned and does not have effects that are detrimental
to the common interest and competitive conditions in
the Community. Such aid may therefore be considered
to be compatible with the common market where it
does not affect trading conditions to an extent that is
contrary to the common interest.

(51)

Since the grant to Linde is directly linked to a specific
investment project, i.e. the construction of a new carbon
monoxide production facility in Leuna, and since it
represents a percentage of the eligible investment costs,
it can be regarded as investment aid.

(52)

The investment costs are eligible under the guidelines on
national regional aid (10) (‘guidelines’), since they relate to
investment and such aid is calculated as a
an initial
percentage of the investment's value expressed in terms
of
the standard base (11), Linde's contribution to the
financing of the project is over 25 % of the total project
costs. Consequently, the investment fulfils the criteria
laid down in the guidelines.

(53) Moreover,

the new
the Commission considers that
carbon monoxide production facility makes a positive
contribution to the development of the Saxony-Anhalt
region and in particular to the renewal and improve-
ment of the Leuna area which, together with Buna and
Bitterfeld, forms the main industrial area in this region.
The investment will also increase the efficiency of the
region's chemical production. Finally, the Commission
has found no overcapacity of carbon monoxide at

(8) ECR [1994] I-4103.
(9) ECR [1997] I-135.
(10) OJ C 74, 10.3.1998, p. 9.
(11) See footnote 9 point 4.5 of the guidelines.

Community level. Linde's carbon monoxide production
will be easily absorbed by the market.

It must consequently be concluded that the part of the
aid under examination which,
in conformity with the
cumulation rules (12) does not exceed the maximum
intensity of 35 % of the eligible investment costs, does
not affect trading conditions to an extent that is contrary
to the common interest and can therefore be deemed
compatible with Article 87(3)(a) of the Treaty.

This being so, and in view of the fact that the invest-
ment costs total DEM 12,586 million, the amount of
investment aid (including the investment allowance of
that
DEM 0,45 million) may not exceed 35 % of
amount, i.e. DEM 4 404 750. The Commission accord-
ingly concludes that this part of the aid is compatible
with the common market.

the aid (DEM 439 520) which,
The remainder of
according to the cumulation rules (13) exceeds
the
maximum intensity of 35 % of the eligible investment
costs, constitutes State aid which is incompatible with
the
the common market, since it satisfies none of
preconditions necessary for one of
the derogations
provided for in Article 87(2) and (3) to be applied.

IV.3. Measures in relation to which the Commission
has found no element of State aid: the ‘market
price’ paid by UCB to Linde

The Commission finds that, according to the informa-
tion provided by the German Government, the price
currently paid by UCB to Linde for supplies of carbon
monoxide […] (**) is based on actual costs. This price is
higher than the price UCB had agreed to pay LWG in
the 1993 privatisation contract.

The German Government also indicated that because of
the special characteristics of carbon monoxide there is
no way of checking whether this price corresponds to a
normal market price.

The German authorities also referred to current prices in
the United States (14), This price is substantially lower
than the one agreed between UCB and LWG.

(54)

(55)

(56)

(57)

(58)

(59)

(60) Here it should be noted that in the end these two
operators had to agree on the price. The German author-
ities have confirmed that
the price is based on the
production cost plus a ‘normal profit margin’. The
Commission tried to obtain information on the market
price of CO, but it proved extremely difficult to find any
reliable data. In its notice on the initiation of proceed-
ings, the Commission expressly asked third parties for
information on this matter. However, no comments
were received from other interested parties.

(12) Point 4.18 of the guidelines on national regional aid states that the
aid intensity ceiling shall apply to the total aid: (i) where assistance
is granted concurrently under several regional schemes; (ii) whether
the aid comes from local, regional, national or Community sources.

(13) See footnote 11.
(**) The exact figures are confidential.
(14) Industrial gas prices in the Member States differ from those prevai-
ling in the United States. But prices in Germany are relatively high
even by Community standards.

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(61) Although the Commission was unable to identify an
element of State aid in this transaction,
it should be
noted that the agreed price was a part of an overall
agreement. This states,
that Linde would
supply UCB at a given price level, and that it would
receive a DEM 9 million grant for the construction of a
new carbon monoxide production facility (15).

in essence,

on the basis of the reference rate used for calculating the
net grant equivalent of regional aid in Germany (17).

(67)

the European Communities,

In accordance with the case law of the Court of Justice
the aforementioned
of
provisions must be applied in such a way that the aid
can actually be recovered. Any difficulties of a proce-
dural or other nature which may arise in applying the
measure will not affect its legal validity (18),

V. CONCLUSION

It must consequently be concluded that the part of the
aid under examination which,
in accordance with the
cumulation rules, does not exceed the regional aid
ceiling of 35 % of the eligible investment costs, does not
affect trading conditions to an extent that is contrary to
the common interest and can therefore be deemed
compatible with Article 87(3)(a) of the EC Treaty.

HAS ADOPTED THIS DECISION:

Article 1

(62)

(63)

of

aid

the

under

remainder

The
examination
(DEM 4 395 250) which, in accordance with the cumu-
lation rules, exceeds the regional aid ceiling of 35 % of
the eligible costs, constitutes State aid which is incom-
patible with the common market, since it does not
satisfy any of the necessary preconditions for one of the
derogations provided for in Article 87(2) and (3) of the
EC Treaty to be applied.

(64) As regards the prices for the supply of carbon monoxide
to UCB, the Commission has not identified any element
of State aid therein.

(65) When aid is deemed incompatible with the common
market, the Commission requires the Member States to
recover it from the recipient (16). For this reason, the aid
amount of DEM 4 395 250 which, according to the
cumulation rules, exceeds the regional aid ceiling of
35 % of the eligible investment costs, and which is the
subject of this Decision, must be recovered.

(66)

The aid must be recovered in accordance with the
procedures and provisions laid down in German law,
and must include interest from the date on which it was
its actual recovery, calculated
unlawfully granted until

(15) In accordance with general legal principles, agreements remain valid
so long as there is no change in the basic conditions and expecta-
tions which existed when they were concluded (rebus sic stantibus).
Had the agreed price been influenced by the grant amount,
it
would be reasonable to expect Linde to try to renegotiate the
price, in order to take account of the change in the economic and
the ‘normal profit margin’
financial assumptions
mentioned by the German authorities) which results from the obli-
gation to repay the amount of aid found to be incompatible.
(16) Commission communication of 24 November 1983 (OJ C 318).
See also the Judgement of
Justice in Case 70/72
Commission v. Germany [1973] ECR 813 and Case 310/85 Deufil
GmbH and Co. KG v Commission ECR [1987] 901.

(in particular

the Court of

The aid granted to Linde AG by Germany in the form of a
grant for the construction of a carbon monoxide production
facility in Leuna (Saxony-Anhalt)
is compatible with the
common market as regards the portion which, in accordance
with the cumulation rules, does not exceed the 35 % ceiling
laid down for national regional aid in Saxony-Anhalt.

Article 2

The aid granted to Linde AG by Germany in the form of a
grant for the construction of a carbon monoxide production
is incompatible with the
facility in Leuna (Saxony-Anhalt)
common market under Article 87(1) of
the EC Treaty as
regards the portion which, in accordance with the cumulation
rules, exceeds the 35 % ceiling laid down for national regional
aid in Saxony-Anhalt.

Article 3

1.
Germany shall take all necessary measures to recover
from the recipient the aid referred to in Article 2 and unlaw-
fully made available to the recipient.

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

(17) Letter from the Commission to the Member States SG (91) D/
4577, 4 March 1991. See also the Judgment of
the Court of
Justice in Case 142/87 Belgium v. Commission ECR [1990] I-959.
Justice in Case 142/87 Belgium v.

(18) Judgment of

the Court of

Commission ECR [1990] I-959, points 58 to 63.

L 211/14

EN

Official Journal of the European Communities

22.8.2000

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

Article 4

This Decision is addressed to the Federal Republic of Germany.

Article 5

Done at Brussels, 18 January 2000.

For the Commission

Mario MONTI

Member of the Commission