2001/1/EC: Commission Decision of 15 February 2000 on the State aid implemented by the Federal Republic of Germany for Dessauer Geräteindustrie GmbH (Text with EEA relevance) (notified under document number C(2000) 515)
Date: 2000-02-15
Institutions: European Commission
Subjects: Germany, State aid, control of State aid, heating, infringement of EU law

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II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 15 February 2000

on the State aid implemented by the Federal Republic of Germany for Dessauer Geräteindustrie
GmbH

(notified under document number C(2000) 515)

(Only the German text is authentic)

(Text with EEA relevance)

(2001/1/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Communities, and in particular the first subpara-
graph of Article 88(2) thereof,

Having regard to the Agreement on the European Economic Area, and in particular Article 62(1)(a) thereof,

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

Whereas:

I. PROCEDURE

(1)

(2)

(3)

By letter dated 26 May 1998, registered on 29 May 1998 under NN 63/98, Germany informed the
Commission of aid for Dessauer Geräteindustrie GmbH (DGI) pursuant to Article 88(3) of the Treaty.
By letter dated 23 June 1998, the Commission asked supplementary questions which were answered
by letters dated and registered on 7 August and 22 September 1998 respectively. Further informa-
tion was submitted in letters dated 11 November 1998 (registered on 12 November), 6 December
1998 (registered on 7 December), 18 January 1999 (registered that same day) and 21 January 1999
(registered that same day) and 27 January 1999 (registered on 28 January).

On 18 February 1998 the Commission had received information from Germany, confirmed on 5
March 1999, that the company was facing impending insolvency.

By letter dated 18 May 1999, the Commission informed Germany of its decision to initiate the
procedure under Article 88(2) of the EC Treaty in respect of those aid measures. By letter dated 25
June 1999, registered on 29 June, Germany replied to the initiation of the procedure and informed
the Commission that insolvency proceedings (Insolvenzverfahren) for DGI had been opened on 30
March 1999.

(1) OJ C 213, 24.7.1999, p. 12.

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(4)

The Commission decision to initiate the formal investigation procedure was published in the Official
Journal of the European Communities (2). The Commission invited interested parties to submit their
comments on the aid measures. The comments it received were forwarded by letters dated 22
September and 18 November 1999 to Germany, which was given the opportunity to react.

II. DETAILED DESCRIPTION

A. Recipient

(5)

(6)

(7)

(8)

(9)

DGI is the legal successor to Dessauer Gasgeräte GmbH. It develops, manufactures and distributes
gas and electric stoves (both free-standing and built-in models), gas heating appliances and safety
enclosures for electrical equipment. Since December 1994 it has operated as a holding company for
four subsidiaries: Dessauer Umform-Oberflächentechnik GmbH, Dessauer Gasgeräte GmbH, Dessauer
Schaltschrankbau GmbH and Dessanova Vermögensverwaltungs GmbH.

In 1998 DGI employed 234 people and recorded losses of some DEM 7 million on a turnover of
DEM 33,48 million. It qualifies as an SME within the meaning of the Community guidelines on State
aid for small and medium-sized enterprises (3).

Its main site is at Dessau, Saxony-Anhalt, where the unemployment rate is 23,7 %. Up to 99 % of the
company's sales are in the German market and the remaining 1 % in other EU Member States.

B. Privatisation

In December 1994 DGI was privatised, with retroactive effect from 1 January 1994, after an open,
transparent and unconditional competitive tendering procedure. The undertaking was sold for
DEM 10 million to the highest bidder, Mr Michael Schröer.

By the end of 1994 turnover had fallen by 60 % and it was agreed that the purchase price would be
reduced to DEM 1. In the context of the privatisation, the Treuhandanstalt (THA) took several
measures in favour of the company amounting to DEM 71,05 million. These measures were covered
by THA scheme E 15/92 (4), which had been approved by the Commission.

(10)

In addition, during the period from 1993 to 1995, the company received grants amounting to
DEM 3,95 million under an approved Federal Government/Länder scheme for improving regional
economic structures (5).

(11) On 30 October 1996 Mr Schröer sold 45 % of the shares to Mr Jürgen Franz Berger and 35 % to Mr

Lothar Karl Riegel for DEM 1 each, while keeping 20 % of the shares himself.

(2) See footnote 1.
(3) OJ C 213, 23.7.1996, p. 4.
(4) E 15/92, SG (92) D/17613 of 8 December 1992. Under point 3 of the scheme, when no bidder is prepared to offer
a positive price but the THA nevertheless decides to go through with the sale, aid may be granted if closure of the
undertaking would be the cheaper solution. Such sales at negative prices must be notified to the Commission in cases
where the firm employs more than 1 000 workers. DGI employed fewer than 1 000 people and did not exceed the
scheme's threshold, so that the measures were covered by the scheme.

(5) 21. Rahmenplan der Gemeinschaftsaufgabe zur Verbesserung der regionalen Wirtschaftsstruktur: Measures covered by
investment aid under Article 87(1) of the EC Treaty and were approved under the

this scheme qualify as regional
exemption laid down in Article 87(3)(a) (N 292/92).

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C. Restructuring

1. Difficulties

(12)

The expansion in turnover between 1991 and 1993 was the result of the conversion from city gas to
natural gas in the new Länder. Turnover decreased considerably in 1994 as the conversion was
completed. In 1995 it fell again by 30 % compared with the previous year. In 1996 the first
measures were taken to increase productivity and reduce costs.

(13) A further problem was a technical defect in production which had appeared in 1993, forcing the
company to recall stoves it had manufactured (6). The defect in the stoves involved a serious health
and safety risk, so remedial action had to be taken immediately. The overall cost of removing
defective products comes to DEM 14,55 million. DGI's insurer, Colonia Versicherung AG, will cover
20 % of these costs (7).

(14)

(15)

In the past the company concentrated on the low-price segment of the market in the new Länder. Its
traditional market is saturated and subject to strong competition from cheap suppliers in eastern
Europe. DGI intends to establish itself as a supplier of higher-value products, which requires a shift
towards the development of modern, high-quality products.

In order to obtain liquidity, DGI sold real estate which was bought by the Bundesanstalt für
vereinigungsbedingte Sonderaufgaben (BvS - the successor to the Treuhand privatisation agency) on
13 March 1997 for DEM 5,4 million (8). Of this amount, DEM 4,45 million was paid out and the
remaining DEM 0,95 million was used to offset an outstanding claim the BvS had on DGI
the remaining debt of DEM 1,93 million was
amounting to DEM 2,88 million. Payment of
deferred (9). The Commission notes that, in the report on DGI's insolvency proceedings, the total
amount of this deferred debt is given as DEM 2,66 million.

2. Restructuring plan

(16)

The restructuring plan covered the years 1997 to 2000. According to the information submitted by
Germany, the overall restructuring costs amounted to DEM 27,1 million and concerned a number of
different aspects:

— new product orientation and related product innovation

— plant automation and modernisation

— cost reductions;

— increases in productivity.

(17)

The ‘Herd 2000’ programme was supposed to enable DGI to manufacture a wider range of
modern-design gas and electric stoves. As regards safety enclosures for electrical equipment, the aim
was to tailor production to demand, taking greater account of customers' wishes and reducing
delivery times. Through this new product orientation in its main relevant markets, DGI expected to
position itself at the upper end of the market.

(18) Much of the existing production plant was not state-of the-art and therefore had to be modernised.
The plan included the purchase, automation and modernisation of equipment and machinery in
order to rationalise production and reduce costs.

(6) By October 1998, 27 000 stoves had been checked. The company expects to complete the operation by the end of

2000.

(7) As DGI assigned its claim against Colonia Versicherung AG to the BvS, the amount covered by Colonia will be

transferred direct to the BvS.

(8) This sale complies with the Commission communication on State aid elements in sales of land and buildings by
public authorities (OJ C 209, 10.7.1997). The sale was made under market conditions and the market value was
established by an independent asset assessor (architect Mr Heinz Spies, appointed by the Dortmund Chamber of
Commerce and Industry) on the basis of generally accepted market indicators and valuation standards.

(9) It was agreed that this amount should be paid back in two instalments, on 30 June 1999 and 30 June 2000, subject
to interest (two points above the official discount rate of the Deutsche Bundesbank). The payment was covered by a
personal guarantee given by Mr Schroer amounting to DEM 1 million and a further DEM 0,931 million secured by
the company on inventory and stocks.

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(19)

The closure of the site in Merenberg/Reichborn was the first measure taken to reduce costs. The
company also intended to reduce the purchase price of materials by up to 10 % by renegotiating
with suppliers, to cut staff costs through flexible working hours and to reduce debts by practising
greater discipline in payments.

(20) DGI intended to increase its productivity by introducing a series of measures: prospective payment
system, daily control of stocks, demand-based product availability, cost projection principle, unit cost
calculation system, optimisation of business processes, team work and bonuses, performance-related
pay and a reorganisation of management and its objectives.

(21)

The information submitted by Germany attributing the company's collapse to, among other things,
the inability to obtain additional finance implies that further restructuring steps were taken the
details of which have not been communicated by Germany.

(22) Overview:

3. Restructuring costs

Payment of deferred debt (1)

Removal of defective products

Investments:

— Product innovation

Measures

‘Herd 2000’

Enclosures

— Factory automation

Hardware and software

Communications

— Deformation technology

Machines and installations

Tool production

— Surface engineering

Machines and installations

Environment, waste disposal

— Assembly technology

Testing technology

— Storage and shipment

Lift trucks and vehicles

Means of loading and transport

Tools for component production

Reconstruction/reorganisation

(million DEM)

Amount

1,93

14,55

4,20

0,40

0,98

0,15

0,40

1,25

0,47

0,35

0,36

0,15

0,10

0,42

1,39

Total

27,10

(1) According to the report on the insolvency proceedings, this amount is effectively DEM 2,66 million.

(23)

The original restructuring costs, as notified by Germany, included the sum of DEM 13,2 million, for
which a private bank loan and a guarantee by the Land of Saxony-Anhalt were required.
In
subsequent correspondence, Germany explained that neither the loan nor the guarantee had been
granted. In its view, this implied that the original level of necessary restructuring costs had been
overstated by DEM 13,2 million.

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(24) However, the statement attributing the company's collapse to, among other things, the failure to
obtain a loan of DEM 13,2 million implies that the overall restructuring costs were considerably
higher than those presented in the revised overview and totalled around DEM 40,3 million. This
means that the information submitted by Germany in support of the revised account was either
incomplete or misleading and in any case did not correspond to the economic reality.

D. Financial measures

(25)

The financial measures break down between the BvS, the Land of Saxony-Anhalt and the investors as
follows:

Financial contribution by the BvS

Type

Costs of removing defective products not covered by Colonia
Versicherung AG

Grant

Loan

Deferral of payment (1)

(million DEM)

Amount

5,00

6,64

1,93

Total

13,57

(1) According to the information provided to the Commission, the deferred payment amounts to DEM 2,66 million. In this case,

the BvS's total financial contribution comes to DEM 14,3 million.

(26)

The BvS financed the costs of removing the defective products, which totalled DEM 14,55 million,
through a grant of DEM 5 million and an interest-free loan of DEM 9,55 million. This loan was
secured on DGI's claims against its insurance company, Colonia Versicherung AG, which were
assigned to the BvS. After a settlement the insurance would cover 20 % of the total costs, some
DEM 2,91 million. The loan would be reduced by that amount, which would consequently form
part of the investor's own contribution.

Financial contribution by the Land of Saxony-Anhalt

Type

Investment grants (1)

Investment allowances (2)

(million DEM)

Amount

3,38

0,27

Total

3,65

(1) Investitionszuschüsse granted under the 27. Rhamenplan der Gemeinschaftsaufgabe zur Verbesserung der regionalen Wirt-
schaftsstruktur (1998-2001). Measures covered by this scheme qualify as regional investment aid under Article 87(1) of the EC
Treaty and were approved under the exemption laid down in Article 87(3)(a)(N 100/98).

(2) Investitionszulagegesetz: Measures covered by this Law qualify as regional investment aid under Article 87(1) of the EC Treaty

and were approved by the Commission under the exemption laid down in Article 87(3)(a) (N 494/A/95).

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Financial contribution by investors

Credit from Commerzbank and Deutsche Bank (1)

Type

Revenues from sale of real estate

20 % of costs of removing defective products (2)

(million DEM)

Amount

2,52

4,45

2,91

Total

9,88

(1) Repayment of the credit is secured against the registration of mortgage debts and the assignment of entitlements.
(2) The DEM 2,91 million covered by Colonia Versicherung AG will be transferred direct to the BvS.

(27)

The above figures show that total assistance from the public authorities amounted to at least
DEM 17,22 million, of which DEM 3,38 million was made available in the form of investment
grants and DEM 0,27 million in the form of investment allowances, both approved aid schemes. Aid
measures amounting to at least DEM 13,57 million, namely the payment deferral and the grant and
loan for the removal of defective products, are not covered by approved aid schemes and must
therefore be assessed by the Commission.

E. Market analysis

1. Gas and domestic electrical appliances

(28)

(29)

The company's main relevant market is at least Europe-wide. There are no barriers to trade and, as
far as technical harmonisation is concerned, Community legislation on electrical appliances is
applicable in the EFTA countries which have signed the EEA Agreement. As a rule, large European
manufacturers have a strong presence in their respective ‘home’ territories. However, the integration
of EU and EFTA States and the resulting removal of barriers to trade mean that markets are no
longer national

in scope (10).

The Community remains one of the largest markets for manufacturers, but Europe's importance is
declining in comparison with Asia. Competition from outside the Community, especially from Asian
and east European producers, which is already having a negative effect on Community manufactur-
is likely to increase. Because of the general market trend, concentration is
ers' market share,
proceeding apace, with a growing number of acquisitions and joint ventures and the emergence of
pan-European products and operations.

(30) Germany is the major European producer for both electrical and non-electrical heating appliances.
Together with Italy, it has modestly optimistic consumption prospects, with expected growth rates of
around 2,5 % for the next few years. The general trend is towards product innovation, end-user
comfort, environmental protection and energy saving (11).

(31)

This market is saturated and suffers from overcapacity (12). Modest growth rates of around 2 % to
3 % are expected in the European markets in the coming years.

(32) According to the information submitted in response to the opening of the formal investigation
procedure, the market for stoves has been declining for some years and is dominated by eastern
European producers, who are able to offer much lower prices.

(10) Commission Decision of 21 June 1994, Case No IV/M.458 (OJ C 187, 9.7.1994, p. 14).
(11) Panorama of EU Industry 1997, Vol.2, 13-60, NACE (Revision 1) 29.7.
(12) Letter from DG III dated 17 February 1999 (ref. 01520).

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2. Industrial safety enclosures

(33) DGI's secondary activity is the production and distribution of enclosures constructed for indoor use
to provide protection for personnel against incidental contact with the enclosed equipment and to
provide a certain degree of protection to the equipment against dirt, dust and corrosion. This market
is closely linked to that of the equipment it encloses (switching equipment). Growth in this market
has slowed down in the past five years because of overcapacity in electricity generation and the
decline in investment (13).

III. INITIATION OF THE FORMAL INVESTIGATION PROCEDURE

(34) On 24 April 1999 the Commission initiated the formal

It requested
information since a return to profitability seemed highly unlikely, mainly because the plan to restore
the company's viability did not seem to be based on realistic assumptions. The information
submitted by Germany on the overall restructuring costs was either incomplete or misleading and
did not seem to correspond to the economic reality. Not least, the market was saturated and suffered
from overcapacity, but the plan made no provision for any appreciable capacity reduction.

investigation procedure.

IV. COMMENTS FROM INTERESTED PARTIES

(35)

In response to the publication of the letter addressed to Germany in the Official Journal of the
European Communities in July 1999, the Commission received comments from DGI's receiver and
from the United Kingdom. These comments were forwarded to Germany, which was given the
opportunity to react.

V. ASSESSMENT

(36) On 18 May 1999 Germany was requested by means of an information injunction to provide the
Commission within one month with enough information to assess the measures under investigation.
The Commission regrets that the German authorities did not respond to the injunction. In accord-
ance with Article 13(1) of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down
detailed rules for the application of Article 88 of the EC Treaty (14), the assessment will therefore be
based on the information available.

A. Aid within the meaning of Article 87(1) of the EC Treaty

(37)

(38)

(39)

Financial measures from State resources taken in support of a company in difficulty in the
abovementioned sector may tend to distort competition and affect trade between Member States. The
individual measures must be examined under Article 87(1) of the EC Treaty.

The sale of real estate to the BvS cannot be regarded as aid because it was carried out under market
conditions and in accordance with the Commission communication on State aid elements in sales of
land and buildings by public authorities (15).

Investment grants amounting to DEM 3,38 million were made available under a scheme approved
by the Commission and fell below that scheme's thresholds (16). Investment allowances amounting to
DEM 0,27 million were also based on an approved aid scheme and fell below the corresponding
thresholds (17). Consequently, the Commission need not assess these measures, although they will be
taken into account in evaluating proportionality.

(13) Panorama of EU Industry 1997, Vol.2, 15-8, NACE (Revision 1) 31.20.
(14) OJ L 83, 27.3.1999.
(15) OJ C 209, 10.7.1997.
(16) Investitionszuschüsse granted under the 27. Rahmenplan der Gemeinschaftsaufgabe zur Verbesserung der regioalen
funds may cover up to 50 % of the necessary

Wirtschaftsstruktur (N 100/98): Under point 2.5 of the scheme,
investments.

(17) Under the Investitionszulagegesetz, up to 10 % of the eligible investments of SMEs made by the end of 1998 may be

covered by investment allowances. From 1999 on, this limit is increased to 20 %.

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(40)

The deferred payment of either DEM 1,93 million or DEM 2,66 million, the grant of DEM 5
million and the loan of DEM 6,64 million are considered to be new aid. State resources were used
for these measures and there is a distortion or a threat of distortion of competition and a threat of
trade between Member States being affected. The measures also conferred advantages on the
company which, given its difficult situation, it would not have received from a private investor. The
new aid for restructuring DGI which is not covered by approved aid schemes and must be assessed
by the Commission totals at least DEM 13,57 million.

B. Exemptions under Article 87(3)(c) of the EC Treaty

(41) Under Article 87(1) of the EC Treaty, State aid granted to certain undertakings is incompatible with
the common market where it affects trade between Member States and distorts or threatens to distort
competition in the common market. Such aid is generally incompatible with the common market
unless it falls within the scope of the exemptions laid down in Article 87(2) or (3).

(42)

(43)

The exemptions in Article 87(2) do not apply in the present case as the aid does not have a social
character, is not granted to individual consumers, does not make good the damage caused by natural
disasters or exceptional occurrences, and is not granted to the economy of certain areas of the
Federal Republic of Germany.

Further exemptions are laid down in Article 87(3)(a) and (c). In this case, Article 87(3)(c) is relevant
because the main objective of the aid is not regional development but the restoration of the
long-term viability of a company in difficulty. Under this provision, the Commission has the
discretion to permit State aid granted to promote the development of certain economic sectors
where such aid does not adversely affect trading conditions to an extent contrary to the common
interest. The Commission spelled out the preconditions for exercising this discretionary power in its
guidelines on rescue and restructuring aid (18). It considers that none of the other Community
guidelines or frameworks, such as those on research and development, small and medium-sized
enterprises or employment and training, could apply here.

1. Restoration of viability

(44)

The granting of restructuring aid requires a feasible, coherent and far-reaching restructuring plan
capable of restoring the firm's long-term viability within a reasonable timescale and on the basis of
realistic assumptions. As regards DGI, the current plan was put into effect in 1997 and was to be
fully implemented by 2000. The Commission notes that the expected results have not been achieved.

(45) Overview

1997

1998

1999

2000

(million DEM)

Turnover (net)

35,779

33,481

36,222

45,205

Personnel costs

13,767

13,684

10,176

11,000

Material costs

19,843

17,328

18,006

22,275

Depreciation

2,768

2,920

3,200

3,350

(18) JO C 368 de 23.12.1994.

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1997

1998

1999

2000

(million DEM)

Other costs

10,694

9,450

7,977

8,415

Operating result

– 11,293

– 9,901

– 3,137

0,165

Extraordinary income

5,668

3,090

0,700

0,700

Extraordinary expenditure

2,349

0,150

0,050

0,050

Provisions

Interest

4,700

—

—

—

0,661

0,190

0,450

0,470

End-of-year result

– 13,335

– 7,151

– 2,937

0,345

(46) An analysis of the figures shows that turnover decreased in 1998 and was supposed to recover in
1999 and then to increase by 25 % in the last year of the restructuring plan. The plan relied mainly
on the success of the new stoves and custom-tailored safety enclosures to be developed by DGI,
which were to give a considerable boost to turnover, thus restoring long-term viability. In view of
the state of the market, this assumption did not seem realistic and was based on external factors over
which the company had no influence.

(47)

(48)

The report on DGI's insolvency proceedings clearly states that the company's market strategy was
wrong and that it was unrealistic to offset falling demand for stoves with the expected success of a
new stove. As regards the custom-tailored safety enclosures, the report states that entry into this
market, which was dominated by a competitor, was not based on realistic price assumptions (19).

The restructuring plan submitted in support of the revised account of the restructuring costs was
either incomplete or misleading. Overall restructuring costs were considerably higher than those
presented in the revised account, which were understated by DEM 13,2 million. The company's
planned return to long-term viability was therefore not based on the economic reality.

(49)

The Commission concludes that the plan was not based on realistic assumptions and was therefore
not suitable to restore DGI's long-term viability.

2. No undue distortions of competition

(50) Under the restructuring plan, measures must be taken to offset as far as possible adverse effects on
competitors; otherwise, the aid granted in the context of privatisation would be contrary to the
common interest and ineligible for exemption under Article 87(3)(c).

(51) Where an objective assessment of the demand and supply situation indicates structural overcapacity
in a relevant market in the Community, the restructuring plan must make a contribution, propor-
tionate to the amount of aid received, to the restructuring of the industry serving the relevant market
by irreversibly reducing or closing capacity.

(19) In this area, a turnover of DEM 15 million to DEM 18 million was expected for 1998, but a figure of only DEM 5

million was actually achieved.

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(52) Measures to adapt production were taken in the context of restructuring (20). Germany states that,
after implementation of the restructuring plan, the company's annual production would have been
reduced by 8 500 units. This would have been achieved mainly by transferring part of production to
the Czech Republic. Since the relevant market is at least Europe-wide, the Commission cannot
consider a transfer of production to another European country as a permanent capacity reduction
within the meaning of the guidelines. Moreover, according to Germany, total output after adaptation
represents capacity utilisation of only 54 %. It is therefore clear that the company's potential capacity
remains unaltered and that the reduction is by no means permanent.

(53)

The Commission notes that both the main and secondary markets in which DGI is active are
saturated and suffer from overcapacity. Nevertheless, DGI did not plan any reduction in capacity and
was expecting to increase turnover. Even allowing for the fact that DGI is an SME located in an
assisted area under Article 87(3)(a) (21), the Commission cannot rule out the possibility that competi-
tors may have been adversely affected in view of the manifest overcapacity on the relevant markets.
It also notes that DGI employs 234 people and only just meets the criteria for an SME within the
meaning of the Community guidelines on State aid for small and medium-sized enterprises (22).

3. Aid in proportion to restructuring costs and benefits

(54)

The amount and intensity of the aid must be limited to the strict minimum needed to enable
restructuring to be undertaken and must be related to the benefits anticipated from the Community's
viewpoint. Therefore, the investors must make a contribution to the restructuring plan from their
own resources. Moreover, the way in which the aid is granted must be such as to avoid providing the
company with surplus liquidity which could be used for aggressive, market-distorting activities not
linked to the restructuring process.

(55) DGI was granted liquid resources totalling DEM 15,29 million. The payment deferral does not have
any liquidity effect. However, the recipient benefits from aid measures amounting to at least
DEM 17,22 million.

(56) According to the revised account submitted by Germany,

to
DEM 27,11 million. However, they seem to have been understated by some DEM 13 million and
should total DEM 40,31 million. It is therefore impossible to determine whether the financial aid to
cover these costs was sufficient for the restructuring exercise.

the restructuring costs amount

(57)

The investors have undertaken to contribute a total of DEM 9,88 million from their own resources.
As the overall restructuring costs are uncertain, it is difficult to evaluate the proportionality of the
investors' own contribution, which seems to cover 24 to 36 % of the restructuring costs.

4. Full

implementation of the restructuring plan

(58)

The company must fully implement the restructuring plan submitted to the Commission. Germany
has not informed the Commission to what extent the restructuring plan was implemented before
insolvency proceedings were opened, although this was specifically required when the investigation
procedure was initiated and the information injunction issued. In view of the missing information
and the fact that the restructuring period was from 1997 to 2000 and the company filed for
insolvency on 3 March 1999, the Commission considers that this condition of the guidelines has not
been met.

(20) These included transferring production of spare parts to other companies, outsourcing maintenance activities and

adapting several areas of production.

(21) Case C 169/95 Spain v Commission [1997] ECR I-135.
(22) See footnote 3.

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(59)

The Commission finds that Germany has unlawfully implemented the aid for Dessauer Geräteindus-
trie GmbH in breach of Article 88(3) of the Treaty and that the aid is incompatible with the
common market,

VI. CONCLUSIONS

HAS ADOPTED THIS DECISION:

Article 1

The State aid which Germany has implemented for Dessauer Geräteindustrie GmbH, amounting to at least
EUR 6,93 million (DEM 13,57 million), plus interest, is incompatible with the common market. According
to the information available, the aid consists of the following measures:

— loan from the Bundesanstalt für vereinigungsbedingte Sonderaufgaben (BvS) amounting to EUR 3,39

million (DEM 6,64 million),

— grant from the BvS amounting to EUR 2,55 million (DEM 5 million),
— the repayment of a deferred debt to the BvS which amounts to EUR 0,98 million (DEM 1,93 million)
according to Germany, or EUR 1,36 million (DEM 2,66 million) according to the report on DGI's
insolvency proceedings, whichever sum is correct, together with the interest due thereon.

Article 2

Germany shall take all necessary measures to recover from the recipient the aid referred to in Article

1.
1 and unlawfully made available to it.

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

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

Article 3

This Decision is addressed to the Federal Republic of Germany.

Article 4

Done at Brussels, 15 February 2000.

For the Commission

Mario MONTI

Member of the Commission