2003/730/EC: Commission Decision of 13 December 2000 on State aid which the Netherlands is planning to implement in the form of development assistance for two general cargo vessels and two pulp and paper carriers to be built by Bodewes/Pattje for use in Indonesia (Text with EEA relevance) (notified under document number C(2000) 4185)
Date: 2000-12-13
Institutions: European Commission
Subjects: Netherlands, State aid, control of State aid, shipbuilding

15.10.2003

EN

Official Journal of the European Union

L 264/25

II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 13 December 2000

on State aid which the Netherlands is planning to implement in the form of development assis-
tance for two general cargo vessels and two pulp and paper carriers to be built by Bodewes/Pattje
for use in Indonesia

(notified under document number C(2000) 4185)

(Only the Dutch text is authentic)

(Text with EEA relevance)

(2003/730/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

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

Having regard to Council Regulation (EC) No 1540/98 of 18
July 1998 establishing new rules on aid to shipbuilding (1), and
in particular Article 3(5) thereof,

Having called on interested parties to submit their comments
pursuant to those provisions (2),

Whereas:

I. PROCEDURE

(1)

(2)

By two letters dated 14 April 1999, the Dutch authori-
ties notified the Commission of their plan to grant aid in
the form of development assistance to Indonesia for the
purchase of two general cargo vessels and two pulp and
paper carriers. By letters dated 7 May and 11 October
1999, the Commission requested additional information
that was supplied by letters dated 15 September 1999
and 3 December 1999.

By letter SG (2000)D/101519 dated 16 February 2000,
the Commission informed the Dutch Government that it
had decided to initiate the procedure provided for in
Article 88(2) of the EC Treaty.

(3)

(4)

(5)

(6)

The Commission decision to initiate the procedure was
published in the Official Journal of the European Commu-
nities (3). The Commission called on interested parties to
submit their comments.

The Commission received no comments from third
parties.

II. DETAILED DESCRIPTION OF THE AID

The proposed aid is to be granted under a general export
financing scheme for Dutch exports to Indonesia in the
form of subsidised loans or grants for projects that are
not commercially viable.

The two general cargo vessels (each 8 600 gt) are
destined for Bagasuna Samudera Gemilang, a small inde-
pendent chartering and transport company based in
Jakarta. The pulp and paper carriers (each 9 000 gt) are
destined for PT Riau Lintas Samudera, a small privately
owned shipping company in Sumatra. In both cases, the
ships will be built by Pattje Shipyards bv, which
submitted a bid in response to a private, restricted inter-
national invitation to tender issued by the buyers. The
total contract value in each case is NLG 60 million. The
development assistance in each case takes the form of a
grant of NLG 15 million, corresponding to an aid inten-
sity of 25 %. According to the Dutch authorities, the
Indonesian companies would not be able to buy the
vessels without the grants. The projects will help to
improve the quality, size and capacity of the Indonesian
fleet and thus contribute towards the country's economic
development.

(1) OJ L 202, 18.7.1998, p. 1.
(2) OJ C 101, 8.4.2000, p. 11.

(3) See footnote 2.

L 264/26

EN

Official Journal of the European Union

15.10.2003

(7)

The Commission decided to initiate the Article 88(2)
procedure because it had doubts whether the condition
in Article 3(5) of Regulation (EC) No 1540/98 requiring
offers of development assistance to be open to bids from
different yards had been respected.

(8)

(9)

(10)

(11)

III. COMMENTS FROM THE NETHERLANDS

The Netherlands submitted comments by letters dated 7
April, 3 July and 3 October 2000, with the last letter
confirming information provided at bilateral meetings
held with the Commission departments on 25 July, 4
September and 15 September 2000.

In their comments, the Dutch authorities reiterated that
the relevant Dutch scheme had been published and was
well known to Dutch shipyards. The scheme has been
officially notified in the Dutch State Gazette and has
been published in both Dutch and English by means of
brochures that have been widely distributed at home and
abroad and on Ministry websites. Regular information
meetings about developing-country markets are also
organised by the Ministry of Economic Affairs.

The Dutch authorities have also reiterated that, under
their development assistance scheme, support is available
to all Dutch companies but that the developing-country
buyer is responsible for issuing tenders and awarding
contracts. They emphasised that yards generally identify
projects themselves and then apply for development
assistance and that it is not the role of the authorities to
interfere in commercial negotiating procedures.

However, in order to allay the Commission's concerns,
the Dutch authorities have undertaken to make some
changes to their internal procedures so as to provide
greater transparency regarding practical projects in the
shipbuilding sector while, at the same time, preserving
their non-interventionist role in the identification of
projects and in the buyer's decision-making process.

In future cases, they will take active steps to draw the
attention of different yards to the possibility of develop-
shipbuilding projects.
ment assistance for particular
Under the new procedure (which cannot be applied
retroactively to the present cases), a shipyard would be
required to inform the Dutch authorities of a possible
application for aid at least one month in advance of
submitting the formal application. Within 48 hours of
receiving this ‘pre-notification’, the authorities would fax
summary details of the project (type of vessel, indicative
contract value and name and address of developing-
country buyer) to all shipyards in the Netherlands that
had the necessary shipbuilding capacity. Upon receipt of

the formal aid application, the Dutch Ministry of Foreign
Affairs will forward a confirmation of receipt to the
developing-country buyer. This letter will expressly state
that aid is available to all Dutch shipyards. It will also
enclose a copy of the English version of the brochure
explaining the Dutch scheme. Finally, the Dutch authori-
ties have undertaken that no decision on an application
will be taken within two months of receipt of the formal
application.

(12) As regards the two specific projects, the Dutch authori-
ties explained that the aid should not be regarded as
hidden operating aid to Pattje. The yard is part of the
Bodewes shipbuilding group, which is profit-making
(with profits equivalent to between 2,5 % and 5 % of
turnover) and is working at full capacity (with a full
orderbook until the end of 2001). The Dutch authorities
have verified that
the contract price is in line with
market prices by comparing these prices with those of
similar Dutch-built ships for EEA buyers which have
been granted normal contract-related production aid.

(13)

The Dutch authorities also argued that there had not
been any distortion of competition. In evidence, they
pointed out that there had been no reactions to the noti-
fication of the aid to the OECD or to the Commission's
initiation of the Article 88(2) procedure. Furthermore,
they provided documentary evidence showing that there
had been both Dutch and international competition for
the projects.
that
Bodewes/Pattje are members of Conoship, the joint sales
and market organisation for a number of Dutch ship-
yards which were thus all aware of the aid possibilities
for the projects.

they pointed out

In that context,

Assessment of the aid

(14)

The aid granted for the vessels in question must be
assessed under Article 3(5) of Regulation (EC) No 1540/
98 establishing new rules on aid to shipbuilding as it
concerns aid granted as development assistance to a
developing country.

(15) According to Article 3(5) of the Regulation, aid granted
as development assistance to a developing country may
be deemed compatible with the common market if it
complies with the terms laid down for that purpose by
OECD Working Party 6 in its agreement concerning the
interpretation of Articles 6 to 8 of the Understanding on
export credits for ships, hereinafter referred to as the
‘OECD criteria’. The Commission must verify the parti-
cular development content of
the proposed aid and
satisfy itself that it falls within the scope of the OECD
criteria.

15.10.2003

EN

Official Journal of the European Union

L 264/27

(16) As indicated when the procedure was initiated,

the
Commission considers that the projects comply with the
OECD criteria and have a genuine development content.
In particular, it notes that:

— requirement

that

the flag must not be a flag of

convenience is met,

— Indonesia is on the list of countries eligible for devel-

opment assistance,

— the owners of the vessels are registered in Indonesia
and are not non-operational subsidiaries of a foreign
company,

— the vessels will be used only in Indonesian waters
and cannot be resold without the approval of the
Dutch government,

— the aid intensity is not less than 25 %.

(17) However, Article 3(5) also stipulates that the Commis-
sion should also satisfy itself that the offer of develop-
ment assistance for the particular project is open to bids
from different yards. The Commission had doubts
whether
this condition was respected and therefore
decided to initiate the procedure laid down in Article
88(2).

(18)

(19)

Those doubts have, however, now been allayed.

The information provided by the Dutch authorities as
part of the procedure gave the impression that other
yards were not informed about the particular projects
since such action was not in line with general Dutch
procedures for development assistance. Nevertheless, it is
clear from the additional information made available to
the Commission that several other Dutch shipyards were
aware of
the projects to be assisted through their
membership of Conoship. This joint sales and market
organisation of 10 yards located in the north of Holland
informs all members about possible projects and assists

them with their grant applications. Conoship has
confirmed in writing that all members were made fully
aware of
It can therefore be
concluded that the development assistance was effec-
tively open to bids from different yards.

this particular project.

Conclusion

(20)

In the light of the above, it can be concluded that the
proposed aid fulfils all
the conditions laid down in
Article 3(5) of Regulation (EC) No 1540/98 and is there-
fore compatible with the common market,

HAS ADOPTED THIS DECISION:

Article 1

The State aid which the Netherlands is planning to implement
as development assistance for developing countries in the form
of grants with an aid intensity of 25 % in connection with the
sale by Bodewes/Pattje bv of two general cargo vessels and two
pulp and paper carriers to Indonesia is compatible with the
common market.

Implementation of the aid is accordingly authorised.

This Decision is addressed to the Kingdom of the Netherlands.

Article 2

Done at Brussels, 13 December 2000.

For the Commission

Mario MONTI

Member of the Commission