2001/85/ECSC: Commission Decision of 20 September 2000 authorising France to grant aid to the coal industry for 1997, 1998 and 1999 (Text with EEA relevance) (notified under document number C(2000) 2957)
Date: 2000-09-20
Institutions: European Commission
Subjects: France, State aid, application of EU law, coal industry, control of State aid, production quota

31.1.2001

EN

Official Journal of the European Communities

L 29/45

COMMISSION

COMMISSION DECISION

of 20 September 2000

authorising France to grant aid to the coal industry for 1997, 1998 and 1999

(notified under document number C(2000) 2957)

(Only the French text is authentic)

(Text with EEA relevance)

(2001/85/ECSC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Coal and
Steel Community,

Having regard to Commission Decision No 3632/93/ECSC of
28 December 1993 establishing Community rules for State aid
to the coal industry (1), and in particular Article 2(1) thereof,

Having regard to Commission Decision 95/465/ECSC of 19
July 1995 approving the French coal industry's plan for the
reduction of activity (2),

Whereas:

(1)

(2)

I

By letters of 31 July 1997, 13 August 1998 and 10 May
1999, France notified the Commission,
in accordance
with Article 9(1) of Decision No 3632/93/ECSC, of the
financial aid which it proposed to grant to the coal
industry for 1997, 1998 and 1999 respectively.

The Commission noted that
the aid as notified by
France, which consisted of direct subsidies under the
general State budget and capital injections from a special
Treasury account, did not enable the operating losses for
the current production to be covered. The outstanding
amount of
the losses for the three years has been
covered, according to a memorandum from the French
authorities of 25 March 1998, by loan issues floated by
Charbonnages de France on the financial market.

(4)

(3)

In its letter of
formal notice to France of 26 July
1999 (3), the Commision considered that the conditions
under which these loan issues were floated and the close

(1) OJ L 329, 30.12.1993, p. 12.
(2) OJ L 267, 9.11.1995, p. 46.
(3) OJ C 280, 2.10.1999, p. 3.

links which exist between Charbonnages de France and
the French authorities suggested that the loan issues
floated by the company were tacitly guaranteed by the
French State. The letter of formal notice in particular
stated that the financial position of Charbonnages de
France does not allow it to borrow on the financial
market on the basis of ordinary law without at least a
tacit guarantee from the State. Charbonnages de France
has planned to cease all mining activity in 2005. By that
date, it is not merely unlikely that it will have repaid the
loans currently outstanding, but
it may have issued
others, both because the mining operations are structu-
rally loss-making and to repay previous loans. The
Commission therefore
loans
constituted aid within the meaning of Article 1 of
Decision No 3632/93/ECSC.

considered that

these

factors also suggest

France confirmed the Commission's position in a letter
of 26 October 1999 in reply to the letter of formal
notice of 26 July 1999 and expressly stated that the loan
issues floated by Charbonnages de France could be
regarded as issued on behalf of the French State. Several
convergent
the existence of an
implicit guarantee by the French State for the loan issues
floated by Charbonnages de France, in particular the fact
that, as indicated by the French authorities in their letter
of 26 October 1999, the status of CDF (Charbonnages
de France) as a public undertaking means its rights and
obligations are transferred to the State once it has been
wound up and will entail the French State taking over
the undertaking's debt when it is wound up after mining
activities cease in 2005.

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Official Journal of the European Communities

31.1.2001

(5)

(6)

The Commission therefore concludes that the part of the
loan issues floated by Charbonnages de France to cover
the balance of the operating losses for 1997, 1998 and
1999 which are not covered by direct subsidies and
capital injections constitutes aid within the meaning of
Article 1 of Decision No 3632/93/ECSC.

In the light of the above and the information communi-
cated by France, the Commission is required to take a
decision, pursuant to Decision No 3632/93/ECSC, on
the following financial measures:

the plan for

the production cost and the selling price of coal freely
agreed between the contracting parties in the light of the
prevailing conditions on the world market for coal of
similar quality from third countries. This aid forms part
of
the reduction of activitiy by the
company, which plans to cease all mining activities in
2005. In view of the exceptional social and regional
the reduction of activity by the
consequences of
company, the French Government,
in agreement with
the two sides of industry, has decided to stagger the
closures up to 2005.

(a) for 1997:

— aid amounting to FRF 2 489 million for the
reduction of activity to cover operating losses,

— aid amounting to FRF 3 869 million to cover

exceptional costs;

(b) for 1998:

— aid amounting to FRF 2 578 million for the
reduction of activity to cover operating losses,

— aid amounting to FRF 4 059 million to cover

exceptional costs;

(c) for 1999:

— aid amounting to FRF 2 369 million for the
reduction of activity to cover operating losses,

— aid amounting to FRF 4 135 million to cover

exceptional costs.

(7)

The financial measures envisaged by France for its coal
industry are covered by Article 1 of Decision No 3632/
93/ECSC and must
therefore be approved by the
Commission in accordance with Article 9, which refers
in particular to the general objectives and criteria laid
down in Article 2 and the specific criteria set out in
Articles 4 and 5 of the above Decision. In its assessment,
the Commission checks, in accordance with Article 9(6)
of the Decision, whether the measures are in conformity
with the plans for the reduction of activity which have
been approved by the Commission.

II

(8)

The sums of FRF 2 489 million, FRF 2 578 million and
FRF 2 369 million which France is proposing to grant
to the coal
industry under Article 4 of Decision No
3632/93/ECSC for the years 1997, 1998 and 1999
respectively are intended to cover the difference between

(9)

(10)

(11)

Although coal production has been reduced from
5,361 million tce (1) in 1997 to 3,673 million tce in
1999, a reduction of 30 %, the Commission notes that
the amount af aid has remained relatively stable over
this period. The fall in coal prices on the international
markets and the rise in the production costs — from
FRF 825 per tce in 1997 to FRF 975 per tce in 1999
— have neutralised the effect of reducing the volume of
production to the overall amount of aid. This trend in
the cost of mining coal merely serves to confirm
France's decision to cease all mining by 2005.

In accordance with Article 3(1) of the above Decision,
the Commission has checked that, for the coal mining
years 1997 and 1998, the aid notified per tonne does
the difference
not exceed for each production unit
between production costs and actual
revenue. The
Commission has checked for the coal mining year 1999
that the aid notified by tonne does not exceed for each
production unit the difference between production costs
and foreseeable revenue.

The Commission has furthermore checked whether, in
accordance with Article 2(2) of Decision No 3632/93/
ECSC, the aid proposed by France has been entered in
the Member State's national, regional or local public
budgets or channelled through strictly equivalent mecha-
nisms. As the direct subsidies from the general State
budget and the capital injections have been entered in
the Treasury's special allocation account, these two cate-
gories of aid do comply with the requirements of Article
2(2) of Decision No 3632/93/ECSC. For the loan issues
floated by Charbonnages de France, France has informed
the Commission, in its letter of 26 October 1999, that
the French State will accept responsibility for the interest
on these loans from 2000 onwards. The interest on
these loans due for 1998 and 1999 has been covered by
loan issues floated for those years. As the French author-
ities have provided the Commission with proof, by letter
of 3 July 2000, that the interest due for the year 2000 is

(1) tce = tonne coal equivalent.

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L 29/47

entered in the State budget for 1999, the Commission
considers that the loans meet the requirement of Article
2(2) of Decision No 3632/93/ECSC. In accordance with
the seventh recital of point III of the above Decision, the
requirement in Article 2(2) is intended to provide the
best guarantees of transparency in the aid systems. As
the interest due for the year 2000 has been budgeted
for, that objective may be regarded as fulfilled in as
much as the interest is accessory to the sum of the
loans. As the loan interest is budgeted for, the sum itself
of the loans complies ipso facto with the objective of the
transparency of aid in Article 2(2) of Decision No 3632/
93/ECSC.

In accordance with Article 2(1), second indent, the aid
helps to solve the social and regional problems created
by total or partial reductions in the activity of produc-
tion units.

Except for the sum of FRF 35 million for the year 1997,
and the sum of FRF 45 million for each of the years
1998 and 1999, on the basis of
the information
provided by France, the aid proposed for these three
years is compatible with the objectives of Decision No
3632/93/ECSC and with the proper functioning of the
common market. The Commission will subsequently
take a decision on the balances of FRF 35 million for
1997 and FRF 45 million for the years 1998 and 1999,
in particular in the light of France's replies to the ques-
tions in the Commission's letter of formal notice of 9
February 1999 in the context of complaint No 97/4717
of 26 August 1997 against Charbonnages de France,
which has been lodged by five French undertakings,
including the company Thion et Cie.

(12)

(13)

(14)

This Decision is also without prejudice to the decision
which the Commission will be required to take after
consideration of the complaints submitted against Char-
bonnages de France, in particular Cokes de Drocourt SA,
in the context of the coke market.

III

(15)

The sums of FRF 3 869 million, FRF 4 059 million and
FRF 4 135 million which France proposes to grant to
its coal industry for 1997, 1998 and 1999 respectively
are intended to cover exceptional costs due to moderni-
sation, rationalisation and the restructuring of the coal
industry which are not related to current production
(inherited liabilities).

(16)

In accordance with Article 5 of Decision No 3632/93/
ECSC, this aid covers costs which are expressly referred
to in the Annex to the Decision, namely:

— FRF 631 million, FRF 731 million and FRF 837
million towards the cost of paying social-welfare bene-
fits for 1997, 1998 and 1999 respectively resulting
from the pensioning-off of workers before they reach
statutory retirement age;

— FRF 154 million, FRF 244 million and FRF 157
million as other exceptional expenditure in 1997,
1998 and 1999 respectively on workers losing their
jobs as a result of restructuring and rationalisation;

— FRF 47 million, FRF 67 million and FRF 86 million
towards residual costs for 1997, 1998 and 1999
respectively resulting from administrative,
legal or
tax provisions;

— FRF 143 million, FRF 198 million and FRF 246
million towards additional work in 1997, 1998 and
1999 respectively resulting from restructuring;

— FRF 10 million, FRF 7 million and FRF 12 million
towards mining damage in 1997, 1998 and 1999
respectively attributable to pits previously in service;

— FRF 73 million, FRF 45 million and FRF 45 million
towards exceptional
intrinsic depreciation in 1997,
1998 and 1999 respectively resulting from the restruc-
turing of the industry;

— FRF 2 811 million,

FRF 2 767 million

and
FRF 2 752 million towards
the increase in the
contributions, outside the statutory system in 1997,
1998 and 1999 respectively to cover social security
costs as a result of the drop, following restructuring,
in the number of contributors.

(17)

In accordance with Article 5(1) of Decision No 3632/
93/ECSC, this aid may be regarded as compatible with
the common market if it does not exceed the costs
arising from or having arisen from the modernisation,
industry
restructuring of
rationalisation or
which are not related to current production. Having
checked the data
the Commission
communicated,
concludes that this requirement has been fulfilled. In the
light of the above and on the basis of the information
provided by France, the aid planned for 1997, 1998 and
1999 is compatible with the objectives of Decision No
3632/93/ECSC and with the proper functioning of the
common market.

the coal

IV

(18)

In accordance with the second indent of Article 3(1) and
Article 9(2) and (3) of Decision No 3632/93/ECSC, the
Commission has to check that the aid authorised for
current production is only for the purposes stipulated in
Article 4 of
it must be
the Decision. To this end,
informed of the amounts of such payments and the way
they are broken down for 1999,

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Official Journal of the European Communities

31.1.2001

HAS ADOPTED THIS DECISION:

Article 3

Article 1

France is authorised to apply the following measures in favour
of its coal

industry for 1997:

(a) aid for the reduction of activity, amounting to FRF 2 454
million, intended to cover operating losses. The Commis-
sion will take a decision on a balance of FRF 35 million at
a later date;

(b) aid to cover exceptional costs amounting to FRF 3 869

million.

Article 2

France is authorised to apply the following measures in favour
of its coal

industry for 1998:

(a) aid for the reduction of activity, amounting to FRF 2 533
million, intended to cover operating losses. The Commis-
sion will take a decision on a balance of FRF 45 million at
a later date;

(b) aid to cover exceptional costs amounting to FRF 4 059

million.

France is authorised to apply the following measures in favour
of its coal

industry for 1999:

(a) aid for the reduction of activity, amounting to FRF 2 324
million, intended to cover operating losses. The Commis-
sion will take a decision on a balance of FRF 45 million at
a later date;

(b) aid to cover exceptional costs amounting to FRF 4 135

million.

Article 4

France shall communicate the amounts of aid actually paid
under this Decision for 1999 no later than 30 September
2000.

This Decision is addressed to the French Republic.

Article 5

Done at Brussels, 20 September 2000.

For the Commission

Loyola DE PALACIO

Vice-President