2003/264/EC: Commission Decision of 21 December 2000 on the State aid implemented by Germany for Förderanlagen- und Kranbau Köthen GmbH and Kranbau Köthen GmbH (Text with EEA relevance) (notified under document number C(2000) 4403)
Date: 2000-12-21
Institutions: European Commission
Subjects: Germany, State aid, control of State aid, financial aid, hoisting equipment, industrial restructuring

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COMMISSION

COMMISSION DECISION

of 21 December 2000

on the State aid implemented by Germany for Förderanlagen- und Kranbau Köthen GmbH and
Kranbau Köthen GmbH

(notified under document number C(2000) 4403)

(Only the German text is authentic)

(Text with EEA relevance)

(2003/264/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

enjoined Germany to submit information by means of
an information injunction.

Having regard to the Treaty establishing the European Commu-
nity, 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 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)

By letter dated 9 December 1997, Germany informed
the Commission of aid from the Bundesanstalt für verei-
nigungsbedingte Sonderaufgaben (BvS) and the Land of
Saxony-Anhalt for Förderanlagen- und Kranbau Köthen
GmbH and Kranbau Köthen GmbH. The aid was regis-
tered under No NN 191/97.

(2)

By letter dated 16 March 1998,
the Commission
informed Germany that it had decided to initiate the
formal investigation procedure in respect of the aid and

(3)

(4)

(5)

(6)

The Commission decision to initiate the procedure was
published in the Official Journal of the European Commu-
nities (2). In response to the initiation proceedings, the
Commission received comments from interested parties
which were forwarded to Germany.

By letters dated 26 and 28 August 1998, Germany
informed the Commission of
further aid to Kranbau
Köthen GmbH. As the decision initiating the formal
investigation procedure contained an extension clause,
this new aid was also included in the same procedure.

The case was discussed with representatives of
the
German authorities in Berlin on 13 November 1998.
Further information was submitted by letter dated 3
March 1999. The case was discussed again with the
German authorities during a meeting in Berlin on 29
March 1999, at which the German authorities requested
that examination of the case be delayed until further
information was submitted to the Commission. This
information was received by letter dated 21 May 1999
and by letter dated 26 May 1999.

The Commission received further
information from
Germany on 1 July 1999 and by letters dated 12 July,
10 September, 29 September and 6 October 1999. The
case was discussed again with the German authorities in
Brussels on 21 October 1999, and the Commission sent
Germany a letter outlining the main problems with the
information was
case on 26 October 1999. Final
submitted by Germany on 24 November 1999, 21
March, 27 April, 18 May, 30 June, 26 July and 27
September 2000.

(1) OJ C 338, 6.11.1998, p. 4.

(2) OJ C 338, 6.11.1998, p. 4.

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(7)

(8)

(9)

(10)

(11)

II. DESCRIPTION

The recipient undertaking

The aid beneficiary is an economic unit consisting of
two legal persons each separately constituted under
German company law (1): Förderanlagen- und Kranbau
Köthen GmbH (FKK) and Kranbau Köthen GmbH
(Kranbau Köthen or KK).

and

cranes

industrial

FKK is based in Köthen, Saxony-Anhalt. It designed and
manufactured
conveyancing
systems. FKK was privatised in December 1992 after an
open public tender procedure by sale to the Ludwig
Willenborg Verwaltungsgesellschaft mbH & Co., KG.
This was the first privatisation of the recipient under-
taking. FKK filed for bankruptcy proceedings on 22 July
1997 and proceedings were opened on 1 September
1997.

Kranbau Köthen is based at the same site as FKK. It
designs and makes specialist cranes, has 169 employees
and […] (*). It is wholly owned by FKK. Prior to the
transfer of business and assets, Kranbau Köthen was a
commercially inactive ‘shell company’ set up on 28 June
1997. Kranbau Köthen took over assets as well as those
contracts of FKK which had not yet been started.

In 1998, Kranbau Köthen was, subject to specific condi-
tions, privatised to the Georgsmarienhütte Group (GMH
Group) (described below), which is not an SME. Legal
ownership of the shares has remained with FKK. Because
of its relation to the GMH Group, any aid to Kranbau
Köthen cannot be assessed as aid to an SME (2). Several
the State aid measures implemented for Kranbau
of
Köthen relate to the privatisation to the GMH Group.

Economic development of the recipient undertaking
since 1992

It

from 1994 onwards.

(12) Germany states that FKK began experiencing difficulties
in 1993 and 1994. The company made continuous
losses
suffered from the
following problems: mismanagement, overstaffing and
in loss-making activities such conveyor
involvement
systems manufacturing,
inadequate financial resources
on the part of the investor and inadequate implementa-
tion of the restructuring plan. In 1995, these difficulties
led to the BvS and the Land of Saxony-Anhalt inter-
vening in the restructuring by way of concerted action.

(13) Germany states that basic preconditions for successfully
restructuring FKK were the selection of a new industrial
partner and the replacement of the existing manage-
ment. Negotiations with a Finnish company came to
nothing. The shareholder also refused to comply with
the demand of the BvS that the management of FKK be
replaced. This resulted in 1996 in the target turnover for
FKK […]* not being achieved, but with full overhead
costs […]* being incurred. Steps to reduce the workforce
meant
In
1997, FKK went bankrupt.

financing redundancy measures […]*.[…]*.

(14)

crane

In 1997,
in the course of FKK's bankruptcy, Kranbau
Köthen was set up as a subsidiary of FKK to take over its
potentially profitable
construction operation.
According to information submitted by Germany in
November 1999, a restructuring plan for the crane
FKK had already been
construction operation of
prepared in 1997 by the administrator in bankruptcy of
FKK. The restructuring measures were intended to
address the difficulties which were inherent
in the
ongoing economic operation and which remained
despite both the creation of a new legal personality for
the undertaking and the settlement of outstanding liabil-
ities. Basic capital was provided to cover acquisition of
key assets of the crane construction operation from FKK
and to carry out contracts taken over from FKK.

The prospective new owner of Kranbau Köthen

(15)

The prospective new owner of Kranbau Köthen is the
GMH Group. This group is active in the production,
processing and further processing of iron, steel, stainless
steel and other raw materials and supplies. The sole
shareholder and manager of the group is Dr Jürgen
Großmann. The Group has plants in Germany and
Austria, two scrap recycling companies as well as several
steel works within the Community. According to
Germany, it has a workforce of some 5 000 and […]*. It
is not an SME.

(1) The Court of Justice has stated: ‘In competition law, the term 'under-
taking' must be understood as designating an economic unit... even
if that economic unit consists of several persons natural or legal’
(Case 170/83 Hydrotherm v Andreoli [1984] ECR 2999); similarly
Case T-234/95 DSG Dradenauer Stahlgesellschaft, judgment of the
Court of First Instance of 29 June 2000, at paragraph 124 (not yet
reported).

(*) Parts of this text have been edited to ensure that confidential infor-
mation is not disclosed; those parts are enclosed in square brackets
and marked with an asterisk.

(2) See Community guidelines on State aid for small and medium-sized

enterprises, OJ C 213, 23.7.1996, p. 4.

The main element concerned a holding phase during
which the crane operation was removed from the main
body of FKK and set up on a stand-alone basis provided
with basic capital. Preliminary restructuring measures
were also implemented during this period and an indus-
trial partner was sought. Once a suitable industrial
partner, i.e. the GMH Group, had been found in August
1998, supplementary steps were introduced to complete
the restructuring plan.

(16)

The plan consists of the following steps: Kranbau Köthen
is to concentrate on the design and manufacture of
for use on specific
specialist non-mobile cranes (i.e.
sites). This includes the design and construction of entire
cranes as well as the manufacture and supply of spare
parts and also the provision of associated services such
as converting cranes. The restructuring is to last from
1997 to 2001. The key measures include cost reduction,
continued reduction of the workforce, building up the
necessary financial means for financing contracts, acqui-
sition of the basic assets from FKK to carry on the crane
construction operation, acquisition of other industrial
property rights to allow Kranbau Köthen to develop and

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modernise its product range, and, finally, improving the
facilities taken over from FKK which were in part run
down and obsolete.
these organisational
In addition,
measures are accompanied by auxiliary financial restruc-
turing such as provision of basic capital and finance to
carry out contracts.

(17) According to the German authorities, KK will also profit
from its integration into the GMH Group, which will
provide KK with the necessary and crucial experience in
production and distribution as well as training.

(18)

The envisaged turnover for 2000 and for 2001 will most
likely be reached, in particular in the light of the recent
successful
[…]*.
According to the information submitted in September
2000, there are now enough orders to fully employ the
production capacity of KK until mid-2001.

acquisition of

large orders

three

(19)

The costs of the restructuring between 1997 and 2001
are as follows:

Table 1

Costs of restructuring Kranbau Köthen

(22)

(in DEM million)

Measure

[...] (*)

[...] (*)

[...] (*)

[...] (*)

[...] (*)

[...] (*)

[...] (*)

[...] (*)

[...] (*)

[...] (*)

[...] (*)

[...] (*)

(20)

(21)

[…]*. The viability of this restructuring plan has in the
meantime been further validated by the most recent
audited annual report of KK. […]*.

The Commission notes that its assessment has to be
based on the data available at the time the restructuring
measures for KK were implemented, i.e. in 1997. With
the GMH
the subsequent entry of the new investor,
Group, the initial restructuring plan necessarily under-
went substantial modifications reflecting this new situa-
tion. Therefore the following figures, in so far they are
actual (1), already take note of these changes, whereas
the forecast data for the period 2000 to 2002 are still
based on the restructuring plan as it stood in 1997. All
figures are in DEM million.

(1) The figures for 1998 and 1999 are based on the company records

as testified by independent auditors.

Table 2

Financial performance of Kranbau Köthen (1)

(in DEM million)

Restruc-
turing plan

1998
(actual)

1999
(actual)

2000
(planned)

2001
(planned)

2002
(planned)

[...] (*)

[...] (*)

[...] (*)

[...] (*)

[...] (*)

[...] (*)

[...] (*)

[...] (*)

[...] (*)

[...] (*)

[...] (*)

[...] (*)

[...] (*)

[...] (*)

[...] (*)

[...] (*)

[...] (*)

[...] (*)

[...] (*)

[...] (*)

[...] (*)

[...] (*)

[...] (*)

[...] (*)

(1) The table contains selected data only and is not arithmetically

complete.

FINANCE

Financial measures for FKK (first aid package)

The communication informing the Commission of the
measures for FKK lists measures by the Treuhand Anstalt
(Treuhand) for FKK prior to and in the course of its
privatisation in 1992. Between 1993 and 1994 inade-
quate implementation of an earlier restructuring plan led
to serious cash flow problems. At the start of 1995 the
continued existence of FKK was highly uncertain. There-
fore,
in March 1995, a package of financial measures
was agreed between the BvS, the Land of Saxony-Anhalt
and the then private investor. The following measures
were implemented for FKK up to and including 1995:

Table 3

State financial measures implemented for FKK

A. Before 1992 privatisation

1. Loans for the social plan

2. Guarantees

3. Waiver of credits

4. Loans

B.

In context of 1992 privatisation

5. Takeover of impending losses

6. Takeover of costs of social plan

(in DEM million)

Information as at
28.8.1998

14,243

37,262

45,921

5,000

Subtotal: 102,426

6,963

1,780

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7. Waiver of loans for the social

plan

8. Direct investment grants

9. Loss cover

C.

In the 1995 concerted action

10. Loans

11. Guarantees (1)

12. Waiver of liabilities

(in DEM million)

Information as at
28.8.1998

14,243

0,569

13,655

Subtotal: 37,210

Financial measures from private sources imple-
mented for Kranbau Köthen

(24) A private contribution first became possible on condi-
tional privatisation of Kranbau Köthen to the GMH
Group in July 1998. On the basis of the information
supplied in November 1999 and thereafter, the private
contribution to the costs of the new restructuring plan is
stated to be DEM 3 million by way of cash contribution,
the arranging of a loan of DEM 1,879 million for
Kranbau Köthen and the provision of DEM 9,5 million
by way of guarantee facilities (totalling DEM 14,379
million) These contributions were provided without State
aid.

8,200

1,626

6,800

(25) Germany also asserts that there are additional private
contributions from the workforce of Kranbau Köthen
consisting of a waiver of wage and salary payments
amounting to DEM 3 million as well as a know-how
transfer from the GMH Group to Kranbau Köthen said
to be worth DEM 3,4 million.

Subtotal: 16,626

Total

141,636

RELEVANT MARKET

(1) These guarantees are stated to be a prolongation of the guarantee

awarded before the privatisation in 1992.

Financial measures

implemented

for Kranbau

Köthen (second aid package)

(23)

In its communication of 9 December 1997, Germany
submitted initial information concerning State financial
measures implemented for KK from 1997 onwards.
According to the latest
the second aid
consists of DEM 30,9 million and is intended to cover
the restructuring period from 1997 to 2001:

information,

Table 4

State financial measures implemented for Kranbau Köthen

Measure

(in DEM million)

Investment grant — BvS and Land of Saxony-
Anhalt

10,500

Grant for taking over the assets of FKK

5,800

Credit/finance facilities

Restructuring aid total

Other aid: Land ‘Joint
investment allowances

task’

resources and

11,500

27,800

3,100

Total

30,900

(26)

(27)

Kranbau Köthen develops, plans and produces immobile
specialist cranes and the relevant spare parts and conver-
sions on a one-off basis.

The Commission does not have any precise information
on the niche market for immobile specialist cranes on
which KK operates. There is at any rate no evidence of
overcapacity on this niche market. The Commission
notes that the general crane market is fiercely competi-
tive. There were grounds to believe there may be overca-
pacity in this larger sector (1). According to information
provided to the Commission by the German Statistisches
Bundesamt (Federal Office for Statistics), turnover in the
overall market for cranes and conveyancing systems in
Germany grew strongly from DEM 20,5 billion in 1998
to DEM 21,9 billion in 1999.

(28)

The market for specialised cranes covers at least the
European Economic Area (2). There is lively cross-border
trade within the Community in this sector.

GROUNDS FOR INITIATING THE FORMAL INVESTIGATION

(29)

The formal investigation procedure was initiated because
the nature and purpose of the aid granted to Kranbau

(1) See page 57,

‘Statistisches Handbuch für den Maschinenbau’
Ausgabe 1997, prepared by the Verband Deutscher Maschinen- und
Anlagenbau e.V.

(2) See the Commission Decision of 17 August 1999 in Merger Case

No IV/M.1594 — Preussag/Babcock Borsig — recital 16.

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Köthen and described by Germany were initially unclear
and, insofar as the information was clear, the aid did not
seem to comply with the criteria set out in the Guide-
lines on State aid for rescuing and restructuring firms in
difficulty (the Guidelines) (1).
In initiating the formal
investigation procedure, the Commission also stated its
concern that there might be overcapacity in the sector.

(30) As far as an assessment as rescue aid is concerned,
several measures did not comply with the conditions set
out in the Guidelines because at the time of the award
the generally accepted maximum period of six months
was clearly exceeded by two of them. No explanation
was offered which could be taken into account
in
granting an exception.

(31) As far as an assessment as restructuring aid is concerned,
there was initially no analysis of the problems which
gave rise to the difficulties, nor any indication of a
restructuring plan to address them. There was no infor-
mation as to capacity development, and the absence of
an investor made it hard to ascertain whether
the
company was not being kept artificially alive. This also
meant that, at the time, there was no sufficient private
contribution to the restructuring costs.

(32)

(33)

III. COMMENTS FROM INTERESTED PARTIES AND

GERMANY

In April 1997, a Member of the European Parliament
forwarded to the Commission a complaint against FKK
from a west German competitor. The complaint was
withdrawn without explanation on 1 April 1999. The
publication of
the letter to Germany in the Official
Journal of the European Communities in November 1998
elicited another complaint against Kranbau Köthen from
another west German competitor. This complaint was
also withdrawn without explanation on 27 April 1999.
Comments were also received from a Dutch customer of
Kranbau Köthen in its support.

The abovementioned comments were forwarded to
Germany. By letter dated 3 March 1999, Germany
rejected the complaints and referred to their withdrawal.
In November 2000, two further letters from third parties
were received. Because they were received so late in rela-
tion to the one-month deadline set by the initiation of
the formal investigation procedure, the Commission was
unable to take them into account for the purposes of
this Decision.

(35) Germany has demonstrated to the Commission in suffi-
cient detail that two measures granted by the BvS as part
of the concerted action in 1995, namely a loan worth
DEM 8,2 million and the waiver of
liabilities worth
DEM 6,8 million, were intended to settle a claim against
the BvS. Under a specific clause in FKK's privatisation
agreement of 1992, the BvS could in certain circum-
stances be held responsible for not having providing the
resources
privatised company with all
provided for in the privatisation contract. In 1994,
it
emerged that this had been indeed the case, and the
missing capital resources were estimated at DEM 15
million. This estimate was later confirmed by outside
experts.

capital

the

(36)

Therefore, in order to avoid a legal challenge, the BvS in
1995 provided a total of DEM 15 million to FKK by
way of
the two measures mentioned above. The
Commission concludes that the settling of a reasonable
and justified claim can be regarded as normal commer-
two measures
cial behaviour. Consequently,
adopted in 1995 do not constitute State aid.

these

(37) All the remaining resources made available by Germany
to the recipient undertaking as part of the first and
second aid packages involve conferring economic bene-
fits on a specific undertaking in difficulty which it is
unlikely to have received from private commercial
sources. The measures are therefore liable to constitute
aid. By its nature such aid is likely to distort competi-
tion. Given the nature of the assistance and the existence
of cross-border trade within the common market in the
relevant markets in which the recipient undertaking was
and is active, whether as FKK or Kranbau Köthen, the
relevant aid — with the exception of
the two aid
measures worth DEM 15 million implemented in 1995
— falls within the scope of Article 87(1) of the EC
Treaty.

IV. ASSESSMENT

Applicability of Article 87(1) of the EC Treaty

State aid falling within the scope of Article 87(1) of
the EC Treaty which is compatible with the
common market

(34) Article 87(1) of the EC Treaty provides that State aid
granted to specific undertakings is incompatible with the
common market where such aid affects trade between
Member States and where there is an actual or threa-
tened distortion of competition in the common market.

(1) OJ C 368, 23.12.1994, p. 12. A new version of the Guidelines was
published in 1999 in OJ C 288, 9.10.1999, p. 2. The new Guide-
lines are not applicable here, since the aid measures were imple-
mented before the new Guidelines were published (see section 7 of
the 1999 Guidelines).

(38) Measures falling within the scope of Article 87(1) of the
EC Treaty are generally incompatible with the common
market unless they fall within the scope of the deroga-
tions in either Article 87(2) or Article 87(3) of the EC
Treaty. In any event, Member States are obliged under
to notify such aid to the Commission
Article 88(3)
before it is granted.

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(39)

It gives

is relevant.

the
In this case Article 87(3)
Commission discretionary power to permit State aid in
certain specified circumstances. These include, under
Article 87(3)(c), aid to facilitate the development of
certain economic activities where such aid does not
adversely affect trading conditions to an extent contrary
to the common interest. In the guidelines, the Commis-
sion spelled out in detail the preconditions for the appli-
cation of the derogation provided for in Article 87(3)(c)
of the EC Treaty.

(40) Article 87(3)(a) also empowers

the Commission to
approve State aid to promote the economic development
of areas where the standard of living is abnormally low
or where there is serious underemployment. The new
German Länder fall within the scope of this provision (1).
In this case, however, the main purpose of the aid is to
rescue or restructure a company in difficulty rather than
to promote the economic development of a region. Even
if a successfully rescued or restructured company may
contribute to the development of a region,
the aid
should be assessed under Article 87(3)(c) rather than
under Article 87(3)(a).

Financial measures in support of FKK — first aid
package

(41) According to Germany's letter of 28 August 1998, FKK
received a total of DEM 141,636 million under the first
aid package, including the DEM 15 million granted in
1995 found not to constitute State aid. The Commis-
sion's assessment on the basis of the information at its
disposal is as follows:

(42) As

for

that

regards

the loans

the Commission notes

the social plan totalling
DEM 14,243 million granted before the 1992 privatisa-
the obligations a
tion,
company itself has under employment
legislation or
collective agreements to provide redundancy benefits
and/or early retirement pensions are part of the normal
costs of a business which a firm has to meet from its
own resources, therefore any contribution by the State
to these costs must be counted as aid. In this sense, the
loans constitute aid.

(43) However, the loans and guarantees awarded to Kranbau
Köthen before its privatisation under the Treuhand-
Regime NN 108/91 (2) comply with the terms of this
approved scheme (3), regardless of their amounts.

(1) See the Commission decision regarding aid case N 464/93.
(2) SG (91) D/17825, 26.9.1991.
(3) The Treuhand-Regime NN 108/91 covers loans and guarantees
granted to companies by the Treuhand as a first step towards their
privatisation and does not provide for any thresholds.

(44)

The waiver of credits amounting to DEM 45,921
million accorded before the privatisation in 1992 relates
to old debts (Altschulden) dating from before 1 July
1990 and are therefore not considered aid, according to
the Treuhand-Regime NN 108/91 (4).

(45) As regards the measures implemented under the privati-
sation in 1992, the Commission notes that the direct
investment grants are based on an approved aid
scheme (5) and therefore need not be assessed by the
Commission. As concerns the waiver of loans for the
social plan, these waivers relate to aid measures, the
repayment of which had never been envisaged, given the
difficult situation of the company. Since loans and guar-
antees for the rescue and restructuring of firms in diffi-
culty have an intensity of 100 %, the waiver of repay-
ment of those measures can be deemed not to constitute
new aid.

(46)

The rest of the aid measures implemented under the
privatisation are stated to be covered by the Treuhand-
Regime E 15/92, a scheme approved by the Commis-
sion (6). According to the information available to the
Commission,
the company was sold to the highest
bidder following an open, unconditional bidding proce-
dure. No information on the purchase price has been
provided. However, since loss cover and the takeover of
impending losses was agreed to in the privatisation, the
Commission considers that the company was sold at a
negative price (7). In this case, since the company did not
have more than 1 000 employees, according to the
information submitted by Germany, the aid measures
comply with the terms of this scheme (8) regardless of
their amounts.

(47)

The only measure implemented in the course of the
concerted action of 1995 which might constitute State
aid is the extension of an existing guarantee. This guar-
antee was originally provided before the privatisation in
1992 and covered by the relevant Treuhand-Regime.
Since this measure fell under an approved scheme and
was anyway considered to have an intensity of 100 % of
the guaranteed amount,
the Commission does not
consider the prolongation to be additional aid.

(4) The Treuhand-Regime NN 108/91 states that ‘The waiving of claims
on companies dating from before 1 July 1990 and which are the
result of arbitrariness in the previous planned economy does not
constitute State aid’.

(5) Investment grants (Investitionszuschüße) granted under the joint
Federal Government/Länder programme for
improving regional
economic structures (Gemeinschaftsaufgabe zur Verbesserung der
regionalen Wirtschaftsstruktur). Measures under that scheme are
deemed to be regional
investment aid and have been approved
under the derogation in Article 87(3)(a) of the EC Treaty.

(6) SG (92) D/17613, 8.12.1992.
(7) Point four of the Treuhand-Regime E15/92 states: ‘It is the Commis-
sion's opinion that negative prices may involve a grant with which
the buyer can (…) cover losses of the company in question’.

(8) Point three of the Treuhand-Regime E15/92 says that awards of
loans and guarantees had to be notified, in the case of privatisations
of companies at a negative price, when the undertaking employed
more than 1 000. The information provided by Germany states that
the company had a workforce of 718 in 1992. The measures were
thus covered by this scheme.

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Financial measures in support of Kranbau Köthen —
second aid package

(54)

(48)

The second aid package for Kranbau Köthen was
restructuring the undertaking between
intended for
1997 and 2001. The conditions
for eligibility for
restructuring aid are set out in section 3.2 of the Guide-
lines. The aid in question satisfies all of the conditions
contained therein:

Production bottlenecks will remain, in particular in the
cutting area, which determines the number of cranes
which can be completed. Given the nature of the opera-
tion, i.e. the supply of individual, made-to-order cranes
and parts, the capacity of Kranbau Köthen is hard to
there is no
quantify. However, as was stated earlier,
evidence of overcapacity on the niche market on which
KK operates.

Restoration to long-term viability

(49) A crucial precondition for the application of the guide-
lines is that long-term viability must be restored within a
reasonable period and on the basis of realistic assump-
tions. The restructuring plan addresses the problems of
the crane construction operation of the recipient under-
taking. The various internal restructuring measures as
described above have effectively reduced the production
costs of KK. The company has also benefited from the
external factor of an improved market situation.

(50)

KK will also benefit considerably from its integration
into the GMH Group, which will provide it with the
necessary and crucial experience in production and
distribution as well as training. The integration of KK
into the GMH Group will also give KK access to new
clients, both within that group and outside, as well as
access to finance. The fact that new clients will increas-
ingly be won through KK's integration into the GMH
Group has in the meantime been proven by recent infor-
mation on the company's order book and profitability.

(51)

The actual and projected performance data in conjunc-
tion with the improved order book of Kranbau Köthen
support
the conclusion that viability can now be
restored within a reasonable period. This condition is
therefore satisfied.

No undue distortions of competition

(52) Aid beneficiaries may not use aid to increase capacity
and,
in the event of sectoral overcapacity, a capacity
reduction is expected. At the time of the initial notifica-
tion there was concern about indications of potential
overcapacity in the crane construction sector. As the
restructuring already began during the bankruptcy of
FKK, the productive capacity is relevant. The modernisa-
tion of
the crane construction operation has been
achieved by increasing efficiency, but without increasing
the overall production capacity of the recipient under-
taking.

(53) Also it is noted that KK did not take over all of the
production lines of its predecessor company FKK, but
only some selected ones. Hence, both the site and work-
force of the recipient undertaking have decreased. There-
fore, overall capacity has already been effectively reduced
by the non-continuation of several of FKK's former
production facilities.

(55)

Finally, the Commission notes that on the market on
which it operates, KK faces competition from subsidi-
aries of much larger firms. The aid to KK should there-
fore have only minimal distortive effects. In the light of
the benefits, the restructuring aid under the second aid
package will therefore not result in any undue distor-
tions of competition. This condition is therefore satisfied
as well.

Proportionality of aid

(56)

The aid must be restricted to the minimum required to
carry out the restructuring and be in relation to the
overall restructuring costs. The beneficiary must make a
substantial contribution to the costs of restructuring the
firm in difficulty. Where the restructuring aid is granted
to a firm in difficulty which owes its entire existence to
State funding, this contribution must come from external
private funding, since otherwise, contributions from the
immediate aid beneficiary may derive indirectly from
aid.

(57) Germany's assertion that management costs […]* have
been transferred from the GMH Group to Kranbau
Köthen cannot be accepted as a reduction of the restruc-
turing costs
faced by Kranbau Köthen. Although
Germany describes the involvement of GMH manage-
ment personnel as a ‘know-how’ transfer, it is unclear to
what extent any know-how, industrial property or intel-
lectual property has been transferred or licensed to
Kranbau Köthen. The transfer appears rather to consist
of
costs
incurred by one company in the course of acquiring
another company and integrating it
into the parent
company are not generally regarded as costs of restruc-
turing the target company.

services provided. However, management

(58)

(59)

contribution. Nevertheless,

The contribution by the workforce in terms of reduced
salaries and wages cannot be regarded as a significant
private
the Commission
they demonstrate the
welcomes
commitment of the workforce to make the restructuring
a success, while at the same time helping to reduce the
financing needs of the company.

these measures as

the cash contribution and financial

In any event, the value of the other elements, in parti-
cular
facilities
provided by the GMH Group involve a investor contri-
bution […]*. This is a significant contribution. This
condition is therefore satisfied.

L 97/80

EN

Official Journal of the European Union

15.4.2003

(60)

(61)

Full implementation of the restructuring plan

This aid consists of the following measures:

The company in receipt of restructuring aid must fully
implement
the restructuring plan submitted to and
accepted by the Commission. The implementation of the
reports
plan will be monitored through annual
submitted by Germany to the Commission.

(a) grants from the Bundesanstalt

für vereinigungsbedingte
Sonderaufgaben (BvS) and the Land of Saxony-Anhalt
amounting to DEM 16,3 million (EUR 8,33 million).

(b) a back-to-back guarantee by the BvS amounting to

DEM 11,5 million (EUR 5,88 million).

V. CONCLUSION

Article 2

implemented the

The Commission finds that measures implemented for
FKK in 1995 and amounting to DEM 15 million do not
constitute State aid. The Commission considers that
Germany unlawfully
second aid
package registered as aid C 15/98 (ex NN 191/97) in
breach of Article 88(3) of the EC Treaty. However, the
second aid package, although unlawfully implemented,
fulfils the criteria set out in the guidelines on restruc-
turing aid and is therefore compatible with the common
market,

HAS ADOPTED THIS DECISION:

Article 1

The ad hoc restructuring aid which Germany has implemented
for the economic unit Förderanlagen- und Kranbau Köthen
GmbH and Kranbau Köthen GmbH, amounting to DEM 27,8
million (EUR 14,21 million), is compatible with the common
market, subject to the conditions set out in Article 2.

The restructuring plan must fully be implemented. All
1.
necessary measures shall be taken to ensure that the plan is
implemented.

Germany shall submit an annual report to the Commis-

2.
sion on the implementation of the plan.

If the conditions set out in paragraphs 1 and 2 are not

3.
fulfilled, the aid may be recovered.

This Decision is addressed to the Federal Republic of Germany

Article 3

Done at Brussels, 21 December 2000.

For the Commission

Mario MONTI

Member of the Commission