2002/283/EC: Commission Decision of 21 December 2000 on State aid granted by Finland to Ojala-Yhtymä Oy (Text with EEA relevance) (notified under document number C(2000) 4400)
Date: 2000-12-21
Institutions: European Commission
Subjects: Finland, State aid, application of EU law, control of State aid, financial aid, industrial plot, precision engineering, purchase

20.4.2002

EN

Official Journal of the European Communities

L 105/19

COMMISSION DECISION

of 21 December 2000

on State aid granted by Finland to Ojala-Yhtym(cid:228) Oy

(notified under document number C(2000) 4400)

(Only the Finnish and Swedish texts are authentic)

(Text with EEA relevance)

(2002/283/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

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

Having regard to the Agreement on the European Economic
Area, and in particular Article 61(1)(a) thereof,

(5)

(6)

Finland submitted its comments by letter dated 29 May
2000.

The Commission decision to initiate the procedure was
published in the Official
the European
Communities (3). The Commission invited interested
parties to submit their comments on the measure.

Journal

of

Having regard to Council Regulation (EC) No 659/1999 of 22
March 1999 laying down detailed rules for the application of
European
Article
Community (1), and in particular Article 7(3) thereof,

establishing

Treaty

the

the

93

of

(7)

The Commission received no comments from interested
parties.

Having called on interested parties to submit their comments
pursuant to the provisions cited above (2),

II. DESCRIPTION OF THE AID

Whereas:

(8)

The aid measures regarding which the Commission
decided to initiate the Article 88(2) procedure are as
follows:

I. PROCEDURE

(1)

(2)

(3)

(4)

By letter of 29 October 1999 (registered on 5
November 1999) Finland notified the Commission that
the
aid to
Ojala-Yhtym(cid:228) Oy (Ojala-Yhtym(cid:228)) in connection with an
investment to be made in the area of Piippola.

Finnish authorities had granted State

The Commission requested additional information from
Finland by letter dated 2 December 1999. Finland
replied by letter of 23 December 1999 (registered on 7
January 2000).

According to the information received from Finland,
part of the planned aid had already been granted to the
company at the time of the notification. Therefore, the
case was registered as non-notified aid.

the Commission
By letter dated 17 April 2000,
informed Finland that
it had decided to initiate the
procedure laid down in Article 88(2) of the EC Treaty in
respect of the aid.

(cid:151) a five-year interest-free loan of FIM 4 million (EUR
672 751,70) granted by the Municipality of Piippola
on 12 July 1999,

(cid:151) a possible aid element in the purchase price of FIM
10 000 (EUR 1 681,87) paid by Ojala-Yhtym(cid:228) on
12 July 1999 for a plot of land of approximately
50 000 m2 from the Municipality of Piippola.

(9)

turnover

Ojala-Yhtym(cid:228) is a Finnish manufacturer of custom
precision mechanics. The company has 202 employees
and its
in 1998 was FIM 173 million.
Ojala-Yhtym(cid:228) is an affiliate company within the Ojala
group, which currently employs over 620 people and
achieved a turnover of FIM 500 million in 1999. It is
not, therefore, an SME.

(10)

is located in Piippola, Finland,
The assisted project
where Ojala-Yhtym(cid:228) began manufacturing tools during
the first quarter of the year 2000.

(1) OJ L 83, 27.3.1999, p. 1.
(2) OJ C 278, 30.9.2000, p. 2.

(3) See footnote 2.

L 105/20

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Official Journal of the European Communities

20.4.2002

(11) According to the information supplied by the Finnish
authorities, Ojala-Yhtym(cid:228)’s investment is as follows:

similar projects. As evidence of this, Finland produced
issued by a notary public on 3 May
an affidavit
2000 (4). The statement reads as follows:

Type of investment

Amount

(in FIM ’000)

Land

Building

Machinery

10

5 000

8 000

(12) According to Finland, the investment will create 20 jobs

(19)

by 2002.

(13)

The five-year interest-free loan of FIM 4 million (EUR
672 751,70) was granted by the Municipality of
Piippola. The loan was granted on 12 July 1999, with
an initial
tranche of FIM 2 million released on 13
September 1999. As security for the FIM 4 million, the
Municipality of Piippola took a charge by way of a
senior mortgage, to the value of FIM 4 million, on the
five-hectare plot it sold to Ojala-Yhtm(cid:228), on which the
industrial property is to be built.

(cid:145)I certify between 40 and 80 real estate transactions a
year and, on the basis of my experience and in my
opinion,
above
corresponds to the market price at the time in view of
the location and surface area of the property and the
state of the market.(cid:146)

purchase

referred

price

the

to

The factory established by Ojala-Yhtym(cid:228) in Piippola,
the Siikalatva area, will create the
which is part of
conditions for the future development of the area and
for maintaining its population. Unemployment
in
Piippola remains in the region of 15 to 17 %. The 20 or
so new jobs brought
in by Ojala-Yhtym(cid:228) are in
production, but they will have the knock-on effect of
creating 60 to 80 jobs in other service and business
sub-sectors. Finland has provided statements bearing out
these
Siikalatva
considerations
and the Piippola College of
Development Centre
Handicrafts and Applied Art.

from both

the

(14) Ojala-Yhtym(cid:228) has also applied for a grant of FIM
1 million from the TE-keskus (the Employment and
body
Economic Development
supporting new investments in development areas).
If
the loan of FIM
Ojala-Yhtym(cid:228) is awarded the grant,
4 million would then be reduced by FIM 1 million.
Finland has not yet taken any decision to grant this
assistance, which may constitute aid, or provided
notification of it.

Centre,

public

a

(15)

In addition, Ojala-Yhtym(cid:228) has purchased a plot of land
of 50 000 m2 from the Municipality of Piippola for the
sum of FIM 10 000 (EUR 1 681,87). The contract of
sale was concluded on 12 July 1999. The selling price
was not determined on the basis of an unconditional
bidding procedure or an independent valuation carried
out prior to the negotiations on the sale.

(20)

The Piippola factory will specialise in the manufacture
of deep-drawing and compressor tools and die-casting
moulds. These tools and moulds will be principally used
in Ojala-Yhtym(cid:228)’s other factories.

(21)

Piippola

differs
tool
from other
The
factory
state-of-the-art design and
manufacturers with its
manufacturing possibilities. With the multifaceted 3D
design programmes
is possible to design tools
effectively and simulate their operation. The production
equipment is extensively computer-driven. The powerful
modern equipment used in the new factory makes it
possible to competitively manufacture tools previously
made in Korea, China and Taiwan.

it

III. COMMENTS FROM FINLAND

(16)

The
comments
summarised as follows:

received

from Finland

can

be

(22)

There has been cooperation on staff recruitment and
training with the Piippola College of Handicrafts and
Applied Art; By the end of 2000 the factory will
employ about 20 people; by the end of the investment
period the number of staff will rise to about 30 to 40.
The factory will be a major employer in Piippola.

(17)

(18)

There will be no distortion of competition,
Ojala-Yhtym(cid:228)’s
replace imports from Korea, China and Taiwan.

factory investment

since
in Piippola will

(23) At the level of the region, the number of new jobs
corresponds to the number of
jobs offered by new
companies setting up in the region in a whole year. In
terms of manufacturing jobs, the new jobs correspond

The Municipality of Piippola sold Ojala-Yhtym(cid:228) the
five-hectare plot at
the
Siikalatva region and the Pohjois-Pohjanmaa province
for business activities and
have building land to sell

the market price. Piippola,

(4) Mr Viljo Lotvonen, manager of Osuuspankki in Pyh(cid:228)nt(cid:228) from 1974
and notary public appointed by Muhos district court (subsequently
Oulu district court).

20.4.2002

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Official Journal of the European Communities

L 105/21

to about four to five years’ worth. For these reasons,
is extremely
Ojala-Yhtym(cid:228)’s direct
significant for the area.

impact on jobs

(27)

In view of the above, the Finnish authorities are of the
opinion that the setting up of the Ojala-Yhtym(cid:228) factory
in Piippola will also have considerable impact on the
Piippola College of Handicrafts and Applied Art.

(24) Many central services have left the area in recent years.
For example, in the Municipality of Piippola there are
no longer any privately run eating establishments and
many commercial services have been discontinued.

(25)

(26)

Thanks to the new jobs in the Ojala-Yhtym(cid:228) tool
factory it will be possible to halt the area’s population
drain,
increase private demand and in this way
fundamentally improve the supply of services and boost
the development of the area.

to Ojala-Yhtym(cid:228)

The interest subsidy granted by the Municipality of
Piippola
the
implementation of the project and, therefore, has a key
effect on accelerating the boost the project will give
development in the area.

important

for

is

IV. ASSESSMENT OF THE AID

(28) Article 87(1) of the EC Treaty stipulates that, except
where otherwise provided,
aid which distorts or
threatens to distort competition by favouring certain
undertakings or the production of certain goods is,
insofar as
trade among Member States,
incompatible with the common market.

it affects

(29) Where financial aid from the State strengthens the
position of an enterprise in relation to its competitors in
the Community,
it must be regarded as affecting
competition.

(30)

The table below shows production figures in Europe:

Machine tool production

(Without parts and accessories, at current value)

Country

1990

1991

1992

1993

1994

1995

1996

1997

1998

(EUR million)

1999
(estimated)

Austria

Belgium

Czech Republic

Denmark

Finland

France

290

224

(cid:151)

67

40

287

222

(cid:151)

61

41

277

171

(cid:151)

45

55

202

143

117

55

42

169

178

130

38

62

920

831

555

498

556

218

189

155

61

104

601

188

209

192

50

129

652

166

212

233

53

141

642

219

243

274

54

155

703

257

245

248

59

161

761

Germany

6 872

7 155

5 925

4 616

4 502

5 579

5 955

5 993

6 776

7 097

Italy

2 889

2 820

2 389

1 799

1 961

2 557

2 963

3 040

3 255

3 538

Netherlands

Portugal

Spain

Sweden

106

28

800

252

91

26

611

164

89

25

472

151

82

22

337

129

78

24

381

150

95

26

506

163

101

27

632

235

125

29

720

225

140

39

848

194

130

40

912

195

Switzerland

1 822

1 637

1 326

1 163

1 490

1 634

1 626

1 754

1 885

1 917

United Kingdom

1 179

947

735

572

720

755

853

1 177

1 009

872

CECIMO (14)

15 489

14 893

12 307

9 761

10 419

12 619

13 811

14 510

15 794

16 432

Index

100,0

96,2

79,5

63,0

67,3

81,5

89,2

93,7

102,0

106,1

Source: CECIMO, the European Committee for the Cooperation of the Machine Tool Industries.

L 105/22

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Official Journal of the European Communities

20.4.2002

(31)

The table below shows the destination of the machine tools in 1997:

Production + Imports = Exports + Apparent consumption

where production = 100 in 1997 (estimated value)

Country

Production

Imports

=

Exports

Apparent
consumption

Total

To EU

To outside EU

Austria

Belgium

Czech Republic

Denmark

Finland

France

Germany

Italy

Netherlands

Portugal

Spain

Sweden

Switzerland

United Kingdom

CECIMO (14)

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

135

122

64

167

78

99

26

31

182

303

39

123

16

104

44

101

133

85

110

82

52

57

61

63

86

49

52

37

30

20

29

153

105

29

33

32

51

28

71

60

80

86

68

66

38

47

36

58

45

22

37

32

48

42

27

48

35

40

134

89

79

157

96

147

69

70

129

332

79

143

30

136

78

Source: CECIMO, the European Committee for the Cooperation of the Machine Tool Industries.

(32)

The Commission, therefore, considers that any State aid
granted for the benefit of Ojala-Yhtym(cid:228) may affect
trade.

The loan

(33)

the end of

The granting of a loan of FIM 4 million, without
interest and with repayment at
the loan
period (four years), constitutes state aid within the
meaning of Article 87(1) EC. The aid element
is
estimated at FIM 1 400 000, which represents 7,99 %
(gross) of the eligible costs. Since this measure has not
been granted within the framework of a regional
scheme authorised by the Commission,
it constitutes
individual ad hoc aid.

(34)

If the Employment and Economic Development Centre
awards the grant of FIM 1 million, the loan is to be
reduced by the same amount. The aid measure would
then include an aid element estimated by the Finnish
authorities at FIM 1 050 000. However, as indicated

above, no granting decision has been taken nor has
Finland notified its intention to grant
this aid. The
Commission takes
to be a fact. This decision
contains no assessment of the compatibility of the aid
the Finnish
It
with the single market.
authorities to announce their intention to grant aid,
where required.

is the job of

this

The land sale

(35) According to the Commission Communication on state
aid elements in sales of land and buildings by public
authorities (5), Member
the
Commission of intended sales of land where there is no
unconditional bidding procedure or an independent
the Commission can
so that
valuer’s
establish whether the transactions contain a state aid
element.

States must

assessment,

notify

(5) OJ C 209, 10.7.1997, p. 1.

20.4.2002

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Official Journal of the European Communities

L 105/23

(36)

In their reply to the Commission’s announcement that it
was initiating the Article 88(2) procedure, the Finnish
authorities stated that the price paid for the land (FIM
i.e. EUR 0,03, per m2) was the current market
0,20,
price. As
the
supporting evidence, Finland quotes
following two purchases of land by the Municipality of
Piippola:

general,
forest ground without any trees is basically
worthless, particularly if it is situated close to a swamp
and a rubbish dump, as in this case. A swamp has
basically no value. The value of the trees growing in a
given area depends on the quality of the land and trees.

(cid:151) 2 510 m2 at FIM 0,40/m2 on 31 August 1999,

(cid:151) 1 000 m2 at FIM 1/m2 on 31 August 1999.

(41) Ojala-Yhtym(cid:228) acquired the plot of land as forestland.
Finland has confirmed that the company assumed all the
the land.
costs connected with the development of
Therefore, the estimated value of the advantage should
comprise only the value of any trees in the area.

(37) However, this information is not sufficient to dispel the
Commission’s doubts as to whether the sale of a plot of
land to Ojala-Yhtym(cid:228) includes a State aid element, for
the following reasons:

(cid:151) the Finnish authorities have not submitted evidence
showing that the conditions laid down in the above
Communication are met. Therefore, the selling price
cannot be deemed to constitute a market price
within the meaning of the Communication or be
covered by the presumptions laid down in it. The
Commission should,
therefore, have been given
prior notification of the price of the land,

(cid:151) the Finnish authorities have not

submitted any
evidence from an independent valuer; a notary
public is not an (cid:145)independent valuer(cid:146) within the
meaning of the Communication,

(cid:151) in one of the two transactions quoted by the Finnish
authorities the seller was the Finnish State. Since the
Finnish authorities do not indicate whether the price
was set on the basis of either an unconditional
valuer’s
bidding procedure or
assessment, it is difficult to consider it a fair market
price,

an independent

(cid:151) the buyer

second transaction was

the
in the
Municipality of Piippola. Here
is not
inconceivable that the land sale came with other
obligations for the Municipality of Piippola attached,

too it

(42) According to figures from the Finnish Forest Research
Institute, the average wood volume of
forests in the
Pohjanmaa area is approximately 163 m3/hectare. Of
for
this
approximately 121 m3/hectare on average.

163 m3/hectare,

pine wood

accounts

(43) According to the Forest Management Associations, the
selling price of pine logs varies from 284,4 FIM/m3 to
291,1 FIM/m3 depending on the mode of sale.

(44) Assuming,

for

the sake of argument,

the highest
possible value of the five-hectare plot of land sold to
Ojala (6), the market value of the trees growing on it
can be estimated at FIM 232 836. When the FIM
this leaves a
10 000 paid for the land is deducted,
financial advantage of FIM 222 836, which represents
gross aid intensity of 1,68 % relative to the value of the
investment (including the revised value of the land).

(45) Where financial aid from the State strengthens the
position of an enterprise in relation to its competitors in
the Community,
it must be regarded as affecting
competition.

(cid:151) no data have been provided on comparable
transactions involving private parties in the same
area.

The compatibility of the aid

(38)

Consequently, the response from Finland has not taken
away the doubts as to whether the price of FIM 0,20/m2
includes a State aid element.

(46)

(39) Although Finland responded to the Commission’s
inquiries and sent detailed data on the transaction, the
information is not conclusive. The aid element has,
therefore, been estimated in accordance with the
following assumptions.

(40) According to the information available, the value of a
plot of
forestland in Finland depends mainly on the
value of the trees growing in the area in question. In

The aid consists of direct grants from the Municipality
of Piippola for an investment in the area. Piippola is an
assisted area within the meaning of Article 87(3)(c) of
the EC Treaty (7). The regional aid ceiling for this area is
20 % NGE. Paragraph 2 of the Guidelines on National
Regional Aid (8)
the
(the Guidelines)
Guidelines apply to all sectors of the economy, apart
from those where sector-specific rules apply. Since

states

that

(6) 121 m3 of pine wood per hectare, worth FIM 291,1/m3;

the
remaining 42 m3 per hectare being spruce wood worth FIM
270,1/m3.

(7) At the time when the aid was granted, Piippola was classified as

area 2, as it is for the period 2000 to 2006.

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

L 105/24

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Official Journal of the European Communities

20.4.2002

(47)

(48)

manufacturing of metal components is not covered by
to be assessed
any sector-specific rules,
according to the provisions of the Guidelines.

the aid is

The Commission notes that part of the aid has already
been paid to the beneficiary Ojala-Yhtym(cid:228) Oy and that
it was not granted under any approved regional scheme.
The aid, therefore, counts as ad hoc aid that has to be
assessed on its own merits. The Commission is required
in particular to examine the impact of the aid in the
context of the Community as a whole.

In recent years unemployment

In Finland, rural areas like Piippola are experiencing net
emigration with the population falling by 1 % to 2 % a
in the area has
year.
persistently remained in the region of 15 %. According
to the information submitted by the Finnish authorities,
Ojala-Yhtym(cid:228)’s tool-manufacturing unit in Piippola will
introduce a completely new line of business to the area,
technology,
incorporating world-class
and will, in this way, create new jobs. Looked at from
the point of view of the area and the municipality, the

state-of-the-art

jobs to be created are significant in both quantitative
and qualitative terms.

(49)

Finland has confirmed that the investment will directly
create 20 new jobs. In addition, between 60 and 80
jobs will be created indirectly.

in

(50) According to the Finnish authorities, by 2003 the Ojala
Group’s Piippola factory will be the most modern
in Finland. Tools will be
tool-manufacturing unit
European
with
cooperation
manufactured
manufacturers of electronics and telecommunications
components
ensures
high-quality products. The company’s business plan
indicates that the investment corresponds to growing
increase the company’s
international demand and will
market share.

cost-efficient way

in a

that

(51) According to figures from the European machine tool
builders confederation,
the apparent consumption in
in the period 1992 to
Europe of machine tools fell
1995. However, over the period 1996 to 1999 the
sector experienced steady growth (in EUR million):

Apparent consumption of machine tools

Without parts and accessories; at current value

Country

1990

1991

1992

1993

1994

1995

1996

1997

1998

(EUR million)

1999
(estimate)

Austria

Belgium

Czech Republic

Denmark

Finland

France

275

272

(cid:151)

107

131

341

284

(cid:151)

92

73

385

296

(cid:151)

64

38

215

142

89

67

35

209

157

142

76

68

210

167

152

117

121

327

185

157

91

124

197

200

183

86

123

226

254

235

142

148

251

219

219

130

130

1 777

1 566

1 217

757

837

985

1 225

1 091

1 316

1 356

Germany

4 899

5 201

3 939

2 548

2 372

3 654

3 765

4 146

5 126

5 737

Italy

2 349

2 210

1 788

1 121

1 421

2 093

2 197

2 135

2 493

2 781

Netherlands

Portugal

Spain

Sweden

Switzerland

261

112

857

299

694

215

109

654

172

573

United Kingdom

1 226

1 005

244

105

562

125

442

846

126

124

279

76

333

528

108

74

333

225

425

686

188

222

81

480

324

544

65

383

251

549

901

194

95

573

317

523

351

128

766

400

618

930

1 491

1 192

310

111

930

386

650

887

CECIMO (14)

13 259

12 495

10 051

6 440

7 133

9 836

10 651

11 353

13 395

14 097

Index

100,0

94,2

75,8

48,6

53,8

74,2

80,3

85,6

101,0

106,3

Source: CECIMO, the European Committee for the Cooperation of the Machine Tool Industries.

20.4.2002

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Official Journal of the European Communities

L 105/25

(52)

regional

the above, and considering that

In view of
the aid
intensity (7,99 % gross plus 1,68 % gross) is well below
the
can be
threshold of 20 % gross,
concluded that
the state aid granted by Finland to
Ojala-Yhtym(cid:228) will facilitate the regional development of
the area, without adversely affecting trading conditions
to an extent contrary to the common interest.

it

(53)

The aid can, therefore, benefit from an exemption under
Article 87(3)(c) of the Treaty.

HAS ADOPTED THIS DECISION:

Article 1

The state aid which Finland has granted to Ojala-Yhtym(cid:228) Oy,
comprising FIM 1 400 000, plus an aid element included in a
land transaction that
the Commission estimates at FIM
222 836, is compatible with the common market within the
meaning of Article 87(3)(c) of the Treaty.

Article 2

V. CONCLUSION

This Decision is addressed to the Republic of Finland.

(54)

The Commission finds that
the aid in question was
unlawfully granted by Finland in breach of Article 88(3)
of the Treaty. The Commission nonetheless considers
that the State aid granted by Finland to Ojala-Yhtym(cid:228)
will
the area,
without adversely affecting trading conditions to an
extent contrary to the common interest,

facilitate the regional development of

Done at Brussels, 21 December 2000.

For the Commission

Mario MONTI

Member of the Commission