2001/685/EC: Commission Decision of 13 February 2001 on the State aid implemented by Germany for KataLeuna GmbH Catalysts (Text with EEA relevance) (notified under document number C(2001) 403)
Date: 2001-02-13
Institutions: European Commission
Subjects: Germany, State aid, anti-pollution device, control of State aid, industrial restructuring

L 245/26

EN

Official Journal of the European Communities

14.9.2001

COMMISSION DECISION

of 13 February 2001

on the State aid implemented by Germany for KataLeuna GmbH Catalysts

(notified under document number C(2001) 403)

(Only the German version is authentic)

(Text with EEA relevance)

(2001/685/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 62(1)(a) thereof,

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

Whereas:

I. PROCEDURE

aid measures

By the notification of the aid by letter dated 8 January
1999, the Commission was informed that Germany had
implemented
for KataLeuna GmbH
Catalysts. By letters dated 19 March, 7 May, 26 August,
28 September, 26 October, 8 December and 30
December 1999, Germany provided the Commission
with further information.

By letter dated 16 March 2000,
the Commission
informed Germany that it had decided to initiate the
procedure laid down in Article 88(2) of the EC Treaty in
respect of the aid.

The Commission decision to initiate the procedure was
published in the Official
the European
Communities (2). The Commission invited interested
parties to submit their comments on the aid.

Journal

of

The Commission received comments from interested
parties. It forwarded them to Germany, which was given
the opportunity to react, its comments being received

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

by letter dated 24 July 2000. Additional
information
was received from Germany by letters dated 11 August,
4 September and 30 November 2000.

II. DETAILED DESCRIPTION OF THE AID

KataLeuna GmbH Catalysts (3) (hereinafter referred to as
(cid:145)KataLeuna(cid:146)) was legally established on 1 October 1994
when it was split off from Leuna-Werke GmbH.

KataLeuna produces catalysts.
It is situated in Leuna,
Saxony-Anhalt, which is an Article 87(3)(a) region. In
1999 KataLeuna employed 85 people. According to the
notification,
in research,
development and production in the field of industrial
catalyst systems.

specialises

company

the

The areas where catalysts are used are the chemical
(24 %),
the mineral oil
industry
environmental protection (36 %) and polymerisation
(16 %).

industry

(24 %),

chemical

The relevant market segment for KataLeuna is above all
that of
catalysts, or more particularly
hydrogenation/selective hydrogenation catalysts, which
in 1998 had a world market volume of DEM 600
Million.

three

1998

produced

KataLeuna

products:
In
nickel-based hydrogenation catalysts, palladium-based
selective
nickel-based
absorption masses. The breakdown of sales was as
follows: Germany[(cid:133)]* %; Europe (without Germany)
[(cid:133)]* %; and outside Europe [(cid:133)]* %.

hydrogenation

catalysts

and

(1) OJ C 142, 20.5.2000, p. 26.
(2) See footnote 1.

(3) Formerly Leuna-Katalysatoren GmbH. The company was the legal

entity in Leuna-Werke producing catalysts.

* Business secret.

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Official Journal of the European Communities

L 245/27

(10)

(11)

(12)

is

second

privatisation, which

KataLeuna’s
the
subject-matter of this decision (4), took place when the
Bundesanstalt f(cid:252)r vereinigungsbedingte Sonderaufgaben
(Federal Office for Unification-related Special Tasks (cid:151)
BvS) sold all
to CRI Deutschland
GmbH (hereinafter referred to as (cid:145)CRI(cid:146)), a subsidiary of
CRI International, USA, under a contract dated 24 July
1998. The purchase price was DEM 1,3 Million, which
has been paid.

its shares (100 %)

(cid:151) Cooperation with other companies

in the Shell
group in the form of using the same technologies
and know-how. Considerable importance will be
attached to the intra-group supply chain. [(cid:133)]*

(cid:151) Comprehensive modernisation

production
facilities. This will involve a substantial increase in
total capacity. The investments would be completed
by the end of 2000, the new capacities coming on
stream from the beginning of 2001.

of

In the context of seeking an investor for the second
privatisation, discussions were held with 15 interested
companies in the chemical sector, detailed discussions
were held with three companies and negotiations were
held with two companies. After one of the companies
withdrew, CRI was left as the highest/only bidder.

of 49 % in Criterion,

CRI International is a US-based entity wholly owned by
the Royal Dutch/Shell group of companies.
It was
established on 1 January 1995 to bring together the
global catalyst interests of Shell (including joint venture
shares
50 % in Zeolyst
International and 50 % in CRI-MET) in a single entity.
The main activities of CRI International are research and
servicing and
development, manufacture
regeneration/recycling of catalysts for the refining and
chemical industries. CRI Catalysts is globally focused in
order to respond quickly to customer requirements and
to provide state-of-art catalyst products and services.
The consolidated turnover of CRI International in 1998
was USD [(cid:133)]* million and its profit USD [(cid:133)]* million.

and sale,

(cid:151) A financing plan according to which KataLeuna
should achieve a positive cash flow in 2001 and a
profit in 2003.
In the notification it is explained
that with the existing product range it should be
possible to increase annual turnover to DEM [(cid:133)]*
Million once the investments have been carried out
and the distribution network expanded. With the
planned expanded product range an annual turnover
of around DEM [(cid:133)]* Million can be achieved within
ten years.

(14) As regards the development of capacity, the notification
indicates that the existing facilities enable a production
of 200 to 300 tonnes a year.

(15) At present KataLeuna

operates

three production

facilities:

(13)

CRI has submitted a restructuring plan for KataLeuna.
The plan consists of the following elements:

(cid:151) The employment of at

least 75 people until 31
December 2002. Of these, at least [(cid:133)]* should be
working in R&D and at least [(cid:133)]* should have a
science degree or comparable academic qualification.
Up until 31 December 2002 a contractual penalty
will be payable if the number of employees drops
below the above figure.

(cid:151) Pursuit of a marketing and sales strategy aimed at
broadening the client and product base and at
expanding into new geographic markets using
contacts of CRI and Shell. Turnover is to be divided
in future along the lines of Europe [(cid:133)]* %, USA
[(cid:133)]* % and Asia [(cid:133)]* %.

(16)

(4) In the Commission decision opening the formal

investigation
procedure, it is stated (recitals 40 to 46) that the aid linked to the
first privatisation was compatible with the common market as it
complied with the 1992 and 1995 Treuhand regimes. Therefore,
only aid linked to the second privatisation is assessed in this
decision. See footnote 1, pp. 31 and following.

(cid:151) A nickel contact facility with a capacity of [(cid:133)]*
tonnes a year [(cid:133)]* tonnes produced in 1997).

(cid:151) An argillaceous

facility with a
earth contact
maximum capacity of [(cid:133)]* tonnes a year depending
on the products
and materials used (capacity
utilisation rate in 1997: [(cid:133)]* %).

(cid:151) A precious metal contact facility with a capacity of
[(cid:133)]* tonnes a year (1997 production: [(cid:133)]* tonnes).

Consequently, the current maximum total capacity of
the facilities is [(cid:133)]* tonnes a year.

CRI intends to install a new facility for the production
of heavy-metal catalysts with a capacity of [(cid:133)]* tonnes
facility with a
a year and a precious-metal catalyst
capacity of [(cid:133)]* tonnes a year. For the precious metal
facility,
the
installations will be used after thorough modernisation
and some installations will be new. The restructuring
plan thus provides for a total capacity of [(cid:133)]* tonnes a

and part of

buildings

existing

the

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year. The increase in capacity due to restructuring
would accordingly be more than 100 %.

Other public financing:

(17) As

regards

the restructuring,

the
the financing of
contractually agreed investment amount
is DEM 70
Million. Investments are to be carried out between 1998
and 31 December 2002 (30 Million by 31 December
1999 and 40 Million by 31 December 2002, subject to
payment of a contractual penalty). As is explained in the
notification,
the modernisation investments are to be
completed by the end of 2000.

(18) According

to

the

related
notification
documentation provided by Germany, the financing of
the second privatisation is divided between public
bodies and the investor as follows:

and

the

Financing by the investor:

Purchase price

DEM 1,3 million

Inherited liabilities agreement

DEM [(cid:133)]* million

Capital increase

Reserve capital

GA (5) compensation

Financing by the BvS:

Investments

Loss compensation

Inherited liabilities

Exceptional guarantees

GA (6) compensation

DEM [(cid:133)]* million

DEM [(cid:133)]* million

DEM [(cid:133)]* million

Total DEM 26,8 million

DEM 13,744 million

DEM 10,0 million

DEM 5,0 million

DEM 2,0 million

DEM 1,7 million

Redundancy costs

DEM 0,586 million

Dismantling, demolition

Infrastructure

DEM 3,0 million

DEM 2,0 million

Compensation from the first privatisation DEM 0,827 million

Investments from the first privatisation

DEM 17,6 million

Total

DEM 56,457
million

(5) Approved scheme under the (cid:145)Gemeinschaftsaufgabe(cid:146) (joint Federal
Government/L(cid:228)nder programme for improving regional economic
structures).
(6) See footnote 5.

Contributions from Land and Federal
Government for R&D in 1998 (7)

DEM 0,670 million

GA (8) contributions (investment grants) DEM 22,457 million

Investment allowances (9)

DEM 6,700 million

Total

DEM 29,827
million

(19)

(20)

(21)

Consequently, the total amount of public contributions
is, according to the notification and the subsequent
documentation provided by Germany, DEM 86,284
million, DEM 81,284 million of which is considered to
be aid (10), while the investor’s contribution is DEM
26,8 million. The total cost of the second privatisation
is therefore DEM 113,084 million.

investigation
In the decision opening the
procedure, the Commission noted that KataLeuna’s total
production capacity would be increased from the
current [(cid:133)]* tonnes a year to [(cid:133)]* tonnes a year, i.e.
an increase of more than a 100 %.

formal

if

The Community guidelines on state aid for rescuing and
restructuring firms in difficulty (11) (hereinafter referred
there is no
to as (cid:145)the guidelines(cid:146)) stipulate that,
structural overcapacity in the relevant market, the aid
may be used only for the purpose of restoring the
company’s viability and it may not enable the recipient
during the implementation of the restructuring plan to
expand production capacity, except
in so far as is
essential for restoring viability without thereby unduly
distorting competition.

(22)

The Commission noted in the decision opening the
procedure that the information in its possession had not
allowed it to establish that there was no overcapacity in
those sectors of catalyst markets in which KataLeuna
was going to operate after its restructuring and that the

(7) Approved scheme entitled (cid:145)F(cid:246)rderung von Forschung, Entwicklung
und Innovation in kleinen und mittleren Unternehmen in den
neuen Bundesl(cid:228)ndern(cid:146)
(promotion of research, development and
innovation in SMEs in the new German L(cid:228)nder), aid N 331/96;
decision communicated to Germany by letter dated 23 Januar
1997, SG(97) 0482.
scheme

24th
framework plan,
aid N 530/95 and N 531/95; decisions
communicated to Germany by letters dated 22 May 1996, SG(96)
4868 and 28 June 1996, SG (96/5950.

(cid:145)Gemeinschaftsaufgabe(cid:146),

(8) Approved

under

the

(9) Approved scheme under the Investitionszulagengesetz (Investment
Allowance Act) 1996, aid N 494/A/95; decision communicated to
Germany by letter dated 11 April 1996, SG (96)3794.

(10) The public funding aimed at eliminating inherited liabilities is not
the Commission

considered to be aid. See paragraph 69 of
decision initiating the formal investigation procedure.

(11) 1994 version: OJ C 368, 23.12.1994, p. 12; 1999 version: OJ

C 288, 9.10.1999, p. 2.

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(23)

(24)

aid would not unduly distort competition in those
markets.

The Commission further noted that
the investor’s
contribution to the restructuring was 24 %, and the aid
intensity 72 % (12). The Commission therefore had
doubts about whether the aid was limited to the strict
minimum needed
to be
undertaken and whether the investor contribution could
be considered significant as provided in the guidelines.
Moreover,
the investment
seemed to be more in the nature of a new investment
than of a restructuring measure, the Commission had
doubts about the true nature of the project.

restructuring

in view of

to enable

the fact

that

(28)

for

the reasons

Consequently,
the
Commission had doubts about the absence of undue
distortion of
the
proportionality of the aid to the restructuring costs and
benefits and the nature of the investment in question.

competition caused by the aid,

set out above,

market with the associated threat of higher prices. In
addition, KataLeuna’s actual turnover in 2000 was at
lending additional
least 50 % higher than in 1999,
weight
there was more than
enough room in the market for at least one, smallish
competitor.

to the conclusion that

the

also

since

Catalysts

it believed Germany’s

CRI
Commission’s
contested
calculation resulting in an investor contribution of 24 %
and stated that
calculation
resulting in an investor contribution of at least 33 % to
be more accurate. With regard to the question of the
nature of the operation,
it stressed that the operation
was clearly a simple restructuring. There were no new
elements
customers,
manufacturing processes, types of equipment, suppliers
and employees all remained the same both before and
after
the restructuring. A new building shell was
necessary in order to meet health and safety standards.
Much of the new equipment was simply an updated
version of similar equipment that had existed before the
privatisation. The business was not manageable with
unsafe and environmentally unsound buildings and
equipment.

technology,

the

III. COMMENTS FROM INTERESTED PARTIES

(25)

The Commission received comments on the opening of
the procedure from the United Kingdom and CRI
Catalysts.

(26)

(27)

The United Kingdom welcomed the Commission’s
investigation and stressed the importance of ensuring
that State aid guidelines were properly implemented by
Member States. It explained that, following consultations
with its chemical sector, it was of the opinion that aid
granted by Germany had given KataLeuna an unfair
competitive advantage which had had a detrimental
impact on competition in this market and a distorting
effect on competition in the European industry.

CRI Catalysts referred in its comments to public and
third-party information on the hydrogenation catalyst
market. The annual growth rates
indicated by the
information were in the 4 to 5 % range. Hence
KataLeuna’s current market share was only [(cid:133)]* %.
Furthermore,
the long-term KataLeuna business plan
indicated sales growing to a maximum of USD [(cid:133)]*
million, resulting in an ultimate market share of only
[(cid:133)]* %. This supported the conclusion that KataLeuna’s
impact on
business plans would have very little
competition in this large, growing market. CRI Catalysts
stressed that customers had expressed serious concerns
about
industry and the
numerous takeovers that had occurred in recent years
to
and that
competition in that it amounted to a reversal of the
in the
trend towards

they viewed KataLeuna as a benefit

fewer and fewer competitors

concentration of

the

the

(12) See footnote 10.

IV. COMMENTS FROM GERMANY

(29) Germany’s comments focused on four issues: the market
situation, the nature of the project as restructuring, the
aid calculation and the increased investor contribution.
Germany submitted documentation to the Commission
in support of its arguments.

(30) As regards the market situation, Germany explained that
it was in general correct to say, as the Commission had
done when opening the procedure, that overcapacities
existed in some segments of the catalyst markets. By
way of example it cited catalysts for the motor vehicle
industry. However, Germany stressed that KataLeuna
was not active in these sectors, nor would it be under
the
activities were
restricted to the sector of chemical catalysts and within
sector mainly to the area of hydrogenation
that
In this sector there were no overcapacities.
catalysts.
KataLeuna focused on market niches and tailor-made
catalysts to meet the specific requirements of individual
customers.

restructuring plan. KataLeuna’s

the

opening

decision

procedure

(31) Germany noted that the Commission’s calculations in
the
regarding
KataLeuna’s market share, based as they were on market
the hydrogenation catalyst
shares in subsegments of
market, were inaccurate and potentially misleading. An
accurate definition of market shares on this basis was
very difficult as it was almost impossible to allocate
existing
different
capacities
subsegments. For this reason, market shares could only

production

the

to

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realistically be defined on the basis of wider market
segments, such as the hydrogenation catalyst sector.

(32) Germany explained that some catalyst producers had
built additional capacities particularly in the area of
chemical catalysts in recent years and would continue to
do so in the near future. This showed in Germany’s
opinion that the relevant market could not suffer from
overcapacities but rather that the building of additional
capacities was necessary in order to meet the increasing
demand for catalysts used in chemical processes. This
view was borne out by highly favourable market
forecasts and by the expected increase in demand for
chemical catalysts. The market would accordingly grow
further, by an amount greatly exceeding KataLeuna’s
planned increase in turnover.

(33) Germany also explained that the catalyst markets were
highly concentrated, being characterised by a few big
suppliers with high market shares. The possibility of
establishing an additional supplier
in these markets
could only be positive for competition and would also
benefit consumers.

(34) According to Germany,

also

explained

outset. Germany

the increase in KataLeuna’s
capacity was limited to the minimum strictly necessary
to ensure the company’s viability. An increase of that
size had been provided for in the restructuring plan
from the
that
production capacities could never be fully (100 %)
utilised in the catalyst industry. This was due to the
production processes, which required regular production
stops in order to equip and reorganise the facilities after
production of
order. The
production of hydrogenation catalysts was essentially
production of small batches and not mass production of
homogenous goods. In addition, it was not profitable to
produce that kind of product
in large quantities for
storage and a degree of flexibility of production was
needed owing to seasonal fluctuations in demand.

each customer-specific

seen as

the project was

(35) As regards the nature of the project, Germany stated
that
a genuine
to be
restructuring measure which fulfilled the requirements
of the guidelines. When CRI took over KataLeuna, the
company’s activities continued without interruption on
the existing basis. KataLeuna was carrying on with the
same staff performing the same duties,
the existing
orders, the existing contracts with the same suppliers,
the same production and product
the same
existing facilities using the same processes and raw
materials and under the same technical conditions. In

range,

parallel with this
the
restructuring plan drawn up by CRI was gradually being
implemented.

continuation of

activities,

(36) Germany explained that the restructuring plan consisted

of the following elements:

1.

Internal measures of the company

(cid:151) reduction in staff numbers; reinforcing the scientific
areas and employing new marketing personnel with
appropriate experience;

(cid:151) marketing/distribution: developing new strategies,
use of
the distribution channels and contacts of
CRI/Shell, penetration into new markets as part of
the Shell group, expansion of the customer base;

(cid:151) product range: adaptation of the existing range by
discontinuing unprofitable lines and concentration
on new products and promising market segments;

(cid:151) concentration on research into and the development
of new high-quality products and new processes by
reinforcing the company’s R&D activities.

2.

Investments

(cid:151) modernisation of the existing facilities in order to

satisfy safety and environmental standards;

(cid:151) in cases where modernisation was not economical,
demolition of the old facilities and replacing them
with
and
environmental standards.

new facilities which met

safety

3. Financial measures

(cid:151) injection of capital (by CRI and the BvS) and loss

compensation.

(37) According to Germany,

investments were only one
aspect of the restructuring of the company and formed
an integral part of
the whole restructuring plan.
Investments alone could not ensure the company’s
long-term viability,
as
product-range reorganisation, new marketing strategies
and financial restructuring being essential
in order to
reach that goal. Consequently,
the restructuring plan
complied with the guidelines and the project was to be
considered a genuine restructuring measure.

other measures

such

(38) Germany pointed out

the
that
investments had been devoted to replacing outdated
facilities which could no longer be used owing to the
risk they posed to the health and safety of workers.

the lion’s

share of

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Modernisation
facilities without
replacement was not practicable and would have cost
even more than investing in new facilities.

these

old

of

(39) As regards the aid calculation, Germany partly contested
the Commission’s calculation of the aid amount.

(44)

costs under the present plan but were to be assigned to
the period before the second privatisation.

Secondly, in its letter of 30 November 2000 Germany
explained that the dismantling and demolition measures
concerned mainly buildings 7671 (built in 1940) and
in 1944) and consisted of demolition
8320 (built
measures and soil decontamination. It pointed out that
the soil west of building 7671 had been heavily
contaminated by heavy metals and that the endangering
of workers could not be ruled out owing to the
possibility of transmission of the hazardous substances
through soil and air. Building 8320 was used in the
production of heavy metal
catalysts which also
contained dangerous substances. In addition, the state of
the building was so bad and its structural integrity so
impaired that there was a real danger of it collapsing.
The building could no longer be used for the company’s
production activities.

(45) According to Germany, KataLeuna had decided in
August 1998 to stop all production activities in those
buildings because of the risk to the health and safety of
workers. The dismantling and demolition measures were
for health and safety
therefore absolutely essential
reasons, and even if
the
provisions on inherited liabilities, their cost would have
to be borne by the authorities
the
privatisation. They could not therefore be considered to
be aid to the second privatisation.

they did not

regardless of

fall under

(46)

(47)

the

into

during

entered

contracts

Regarding the exceptional guarantees of up to DEM 2
million, Germany explained that these were linked to
supply
first
privatisation. The taking-over of these costs by the BvS
was directly linked to the
first privatisation and
therefore they were not to be considered restructuring
costs of the second privatisation. The same applied in
Germany’s
the DEM 0,827 million
compensation from the first privatisation. These costs
had no connection with the second privatisation but
dated back to the first privatisation.

view to

first
Regarding the DEM 17,6 million from the
privatisation to be used for
investments, Germany
explained that, when the first privatisation failed, DEM
17,6 million was still available in the form of liquid
assets. The aid granted for the first privatisation was
compatible with the common market since it complied
with the provisions of the Treuhand regime. When the
privatisation contract was concluded with CRI, the BvS
wanted to use these assets to finance the new plan.

(40)

(41)

(42)

(43)

Regarding the financing of investments, Germany stated
that, while the privatisation contract stipulated that CRI
had to invest a minimum of DEM 70 million, additional
investments were envisaged, bringing the total up to
DEM 86,6 million. CRI would, however,
invest more
than the amount stipulated in the privatisation contract
(DEM [(cid:133)]* million in all) and those investments would
be carried out before the end of 2000. For that reason,
the amount of the reserve capital to be paid by the
investor had been corrected accordingly to DEM [(cid:133)]*
million, in keeping with the privatisation contract.

investments

Regarding the DEM 2 million of
in
infrastructure which, according to the restructuring
plan, were to be financed by the BvS, Germany
explained that that commitment by the BvS to finance
the infrastructure would not be carried out. Since
Commission Decision 1999/646/EC of 25 November
InfraLeuna
1998 on measures by Germany to assist
Infrastruktur und Service GmbH (13) stated that
the
financing of the provision of infrastructure by the BvS
via InfraLeuna was not considered to be aid,
the
measures in question would be financed by the budget
of
in accordance with the Commission
decision. The DEM 2 million of public financing of
infrastructure in the restructuring plan had therefore
been dropped as being general infrastructure measures
to be carried out by InfraLeuna.

InfraLeuna,

Regarding the dismantling and demolition costs of DEM
3 million, Germany advanced two separate arguments as
to why
considered
restructuring costs under the present restructuring plan.

should not

these

costs

be

restructuring plan. The measures

Firstly,
in a letter dated 11 May 2000 Germany
explained that the dismantling and demolition measures
were in any case necessary and not directly linked to
the
consisted in
demolishing and dismantling old facilities and buildings
which had become obsolete owing to the capacity
reductions carried out before the second privatisation.
They were measures to be carried out by a public body.
to be considered restructuring
Their costs were not

(13) OJ L 260, 6.10.1999, p. 1.

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However, this was not to be considered new aid since it
stemmed from the free resources of a company created
by approved aid. It was therefore not to be considered a
contribution by the BvS to the second privatisation.

(48) As regards the increased investor contribution, Germany
investor CRI had contributed
than was

explained that
significantly more
provided for in the privatisation contract.

restructuring

to the

the

(49)

Firstly, Germany explained that in 1999 and 2000 CRI
had contributed an additional DEM [(cid:133)]* million to
KataLeuna’s R&D activities.

(55)

(50)

Secondly, Germany explained that CRI had placed at
KataLeuna’s disposal
two marketing and production
from other European locations and had
managers
provided
information
areas
the
support
technology, health and safety and management, inter alia
by transferring marketing/sales personnel from the USA.
These measures had cost DEM [(cid:133)]* million in 1999
and 2000 and had been financed by CRI.

of

in

(51)

Thirdly, CRI had invested DEM [(cid:133)]* million, i.e. DEM
[(cid:133)]* million more than the maximum of DEM 86,6
million provided for in the privatisation contract.

(56)

(52) As a fourth point Germany explained that the additional
total losses for the restructuring period would be greater
than expected. These additional
losses of DEM [(cid:133)]*
million would be born exclusively by CRI. They had
been caused mainly by increased interest costs, the GA
contributions having been financed by bank loans
pending the Commission’s favourable decision.

(57)

(53)

as

an investor

In addition, as regards the original
loss compensation
provided for in the privatisation contract, Germany
explained that that part of the losses which under the
contract was to be borne by the investor needed to be
taken into account
contribution.
According to the original planning these losses would
have amounted to DEM [(cid:133)]* million. Under
the
privatisation contract the loss compensation to be paid
by the BvS during the restructuring period came to
DEM [(cid:133)]* million. Germany claimed that
the DEM
[(cid:133)]* million of losses originally intended to be borne
by the investor should be taken into account as an
investor contribution to the restructuring.

V. ASSESSMENT OF THE AID

any form whatsoever which distorts or threatens to
distort competition by favouring certain undertakings or
the production of certain goods shall,
in so far as it
affects trade between Member States, be incompatible
with the common market. Pursuant to the established
case-law of the European Courts, the criterion of trade
being affected is met if the recipient firm carries on an
economic activity involving trade between Member
States.

resources

aid, CRI,

The Commission notes that the notified aid is being
to an individual
granted through State
company and favours it by reducing the costs it would
normally have to bear if it wanted to carry out the
notified restructuring project. Moreover, the recipient of
the
company CRI
through its parent
International, is a company the activities of which are
research and development as well as manufacture and
supply of catalysts
the refining and chemical
industries, which are economic activities involving trade
between Member States. The aid in question therefore
falls within the scope of Article 87(1) of the EC Treaty.

for

the

restructuring of

The notified project concerns
the
company according to the restructuring plan submitted
by
that
restructuring aid for firms in difficulty must be assessed
pursuant to the Community guidelines on State aid for
rescuing and restructuring firms in difficulty.

Commission

investor.

notes

The

The Commission notes
the new Community
that
guidelines on State aid for rescuing and restructuring
in difficulty came into force on 9 October
firms
1999 (14). According to point 101 of the guidelines, the
Commission will examine the compatibility of any
non-notified aid on the basis of the new guidelines if
some or all of the aid is granted after their publication
and on the basis of the guidelines in force at the time
the aid is granted in all other cases. Since in the present
case all the aid was granted before the new guidelines
were published, the aid must be examined on the basis
of the 1994 version of the guidelines (15).

(58)

the Commission
In accordance with the guidelines,
considers that a rescue and restructuring measure within
the meaning of Article 87(3)(c) of the EC Treaty may
contribute to the development of economic activities
without adversely affecting trade in a manner which
the
interests
conflicts with the Community’s
conditions laid down in the guidelines are met.

if

(54) According to Article 87(1) of the EC Treaty, any aid
granted by a Member State or through state resources in

(14) See footnote 11.
(15) See footnote 11.

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(59) According to point 2.1 of

the guidelines,

typical
symptoms of a firm in difficulty are deteriorating
profitability or increasing size of
losses, diminishing
turnover, declining cash flow and low net asset value.
The Commission notes that KataLeuna has been making
losses ever since it was set up in 1994. The losses in
around DEM [(cid:133)]* million and the
1998 were
liquidation value of
the company on 31 December
1997 was DEM ﬂ4,8 million. The company is therefore
considered to be a firm in difficulty and aid for its
to be assessed according to the
restructuring falls
guidelines.

(60)

of

to

the

public

contributions

The Commission notes that, of the total of DEM 86,284
million
second
restructuring, DEM 29,827 million will be aid granted
on the basis of approved schemes. This aid is therefore
considered to be existing aid within the meaning of
Article 1(b)(ii) of Council Regulation (EC) No 659/1999
of 22 March 1999 laying down detailed rules for the
application of Article 93 of the EC Treaty (16), and its
common market does not
compatibility with the
therefore need to be assessed by the Commission in this
decision. However, the DEM 29,827 million of existing
aid is taken into account in assessing the proportionality
of the aid pursuant to point 3.2.2(iii) of the guidelines.

(61)

in line with its
The Commission further notes that,
practice regarding the restructuring of east German
enterprises, the privatisation of a company should be
carried out by open tendering procedure to allay any
suspicions that it involves state aid to the investor. The
this decision concerns the
Commission stresses that
restructuring aid to KataLeuna only, without prejudice
to any aid to the purchaser as such.

Absence of undue distortion of competition

(62) According to the guidelines, the aid must not unduly
distort competition. Point 3.2.2(ii) of
the guidelines
stipulates that, in the event of structural overcapacity in
the sector, the restructuring must involve a reduction of
there is no
capacity in the company concerned.
structural overcapacity in the relevant market, the aid
may be used only for the purpose of restoring the
company’s viability and it may not enable the recipient
during the implementation of the restructuring plan to
in so far as is
expand production capacity, except
essential for restoring viability without thereby unduly
distorting competition.

If

(63)

It is noted that in this case the present total production
capacity will be increased by more than 100 %. The
expanded capacity will be available from the beginning
of 2001.

(64)

(65)

(66)

The Commission noted in its decision opening the
procedure that the information in its possession at that
time had not allowed it to establish that there was no
overcapacity in those sectors of catalyst markets in
which KataLeuna was going to operate
its
restructuring and that the aid would not unduly distort
competition in those markets.

after

In this market

The Commission notes that KataLeuna operates in the
chemical catalyst market
in the market segment of
hydrogenation catalysts, the global value of which is
around DEM 600 million.
the three
largest producers (Engelhard, S(cid:252)d Chemie and Synetix)
largest
cover 75 % of
(including Degussa-H(cid:252)ls) 82 %. The remaining 18 % of
the market
firms, such as
Procatalyse SA, BASF, W.R. Grace, Activated Metals &
Chemicals, Boreskov Institute, Kawaken Fine Chemicals,
Nikki Universal and N.E. Chemcat.

is divided among several

the market, and the

four

is

the

that

industry

information in the Commission’s possession
The
confirms
highly
catalyst
concentrated. There were 31 companies in the chemical
hydrogenation catalyst sector in 1997, and only 27 in
1999. The trend towards concentration is expected to
continue and maybe
is
becoming increasingly difficult to maintain the technical
service levels needed for a smaller number of
larger
clients, without both critical mass and diversity. The
effect in the catalyst industry is consistent for all players,
who will need to sell globally in multiple segments and
industries in order to survive.

even to accelerate, as

it

is not

is important

(67) According to the information in the Commission’s
the most widely used
possession, hydrogenation is
limited by
It
catalytic process
in industry.
end-user industry definitions and it
in
refining, chemicals, fine chemicals/pharmaceuticals and
is also used by the polymer industry. In the chemical
hydrogenation catalyst market there are basically two
sub-segments:
industrial
hydrogenation processes. The growth rate across all
segments is close to 4,5 % (17). In the USA, the chemical
processing catalyst market is expected to grow by over
8 % a year. The average growth rate for chemical
catalysts during the period from 1990 to 1998 was
4,5 %.

oleochemical

and

(16) OJ L 83, 27.3.1999, p. 1.

(17) See table in paragraph 68.

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(68)

The development of
for
chemical hydrogenation during the period 1999 to
2005 is as follows (USD million) (18):

the global catalyst market

the production line before running a new order. The
actual operating capacity of a plant is therefore only 50
to 70 % of the theoretical maximum.

Sub-segment

1999

2002

2005

Oleochemical hydrogenation

166

Industrial hydrogenation

Other

88

67

Total

321

183

100

78

361

201

116

88

405

(73)

In a letter dated 21 October 1999, Germany explains
that the planned future capacity of KataLeuna will be
utilised as follows:

(69) According

specialises
in
to Germany, KataLeuna
in the area of
operating in niche markets, above all
customers’
to
produced
catalysts
(cid:145)tailor-made(cid:146)
specifications. Because of
the production techniques
used, production in the oleochemical hydrogenation
sub-segment
far as KataLeuna is
concerned. Consequently, KataLeuna operates in the
industrial hydrogenation subsegment, which is the one
with the best growth prospects.

ruled out as

is

(70)

(71)

The Commission notes that KataLeuna’s turnover of
DEM [(cid:133)]* million in 1999 translates into a [(cid:133)]* %
share of the total hydrogenation catalyst market and a
industrial
[(cid:133)]* %
hydrogenation. KataLeuna’s forecast turnover for 2005
is DEM [(cid:133)]* million, which translates into a [(cid:133)]* %
share of the total market and a [(cid:133)]* % share of the
market for industrial hydrogenation catalyst systems.

the market

share

for

of

The Commission notes
that world production of
finished chemical catalysts may be estimated at around
90 000 tonnes a year, give or take 10 %. The total
worldwide capacity utilised may be estimated at around
120 000 to 130 000 tonnes a year. Since producers
view information on capacity as highly confidential,
there is no compiled information on capacity by catalyst
producer (19). Given that KataLeuna’s capacity will be
[(cid:133)]* tonnes a year,
this translates into a share of
[(cid:133)]* % of worldwide capacity.

(74)

(72) According to the information in the Commission’s
possession, catalyst producers rarely maintain dedicated
fixed-bed catalyst
manufacturing lines or units
industry,
manufacture.
catalyst
In
production lines are campaigned. This means
that,
because of
the high-toll manufacturing environment,
coupled with small catalyst volume runs, producers
produce a few thousand tonnes, then stop and clean out

chemical

the

for

(18) Source: The Catalyst Group.
(19) Source: The Catalyst Group.

(cid:151) a portion ([(cid:133)]* %) of

are undergoing

the proposed KataLeuna
capacity will be focused on new types of catalyst
development within the
that
KataLeuna R&D department. For
these types of
catalyst,
there is no capacity available anywhere.
This would continue to be a source of novel
for new applications and new market
catalysts
segments;

(cid:151) a portion ([(cid:133)]* %) of
capacity will be
production for
in-house
independent catalyst producers
produce their proprietary catalysts;

the proposed KataLeuna
focused on custom catalyst
customers who, despite having
to
to scale up and

catalyst R&D departments,

look

(cid:151) a portion ([(cid:133)]* %) of

the proposed KataLeuna
capacity will be focused on exporting catalysts to
the Americas
and the Pacific Rim. Grouping
KataLeuna products with other CRI catalysts can
give
and help
customers
KataLeuna expand its export market;

export

value

these

(cid:151) a significant portion (at least [(cid:133)]*) of the proposed
KataLeuna capacity will be devoted to producing
catalysts
companies
in conjunction with sister
within the Shell/CRI group.

It observes, however,

The Commission notes
that maximum technical
production capacity alone is not
indicative because,
the actual
owing to the catalyst production process,
operating capacity of a plant is only 50 to 70 % of the
theoretical maximum.
that,
according to the information in its possession, there are
no structural overcapacities in this market. In view of
the particular circumstances surrounding this case, it is,
moreover, very important to note that the market is a
growth one. Therefore, according to the guidelines,
although capacity reductions are not required, the aid
may be used only for the purpose of restoring the
company’s viability and it may not enable the recipient
during the implementation of the restructuring plan to
expand production capacity, except
in so far as is
essential for restoring viability without thereby unduly
distorting competition.

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L 245/35

(75)

The Commission notes
the restructuring plan
that
provides for expansion of the existing capacity of [(cid:133)]*
tonnes a year to [(cid:133)]* tonnes a year.

taking into account

(76) According to Germany’s letter of 26 August 1999,
KataLeuna expects to produce some [(cid:133)]* tonnes a year
with the planned facilities,
the
necessary flexibility in production (possibility of peak
periods)
and the product mix reflecting different
customers’ needs. In Germany’s opinion, an output of
[(cid:133)]* tonnes a year with the same product mix would
not be sufficient to achieve a positive operating result.
Whereas a [(cid:133)]* tonnes a year output would generate a
DEM [(cid:133)]* million profit, 1 000 tonnes a year would
result in a similar loss. This is because the fixed costs,
the R&D costs and the cost of replacing worn-out
machinery will
the
amounts produced. The production of at
least [(cid:133)]*
tonnes a year is needed in order to cover these costs
and to be able to produce positive results. For this
reason, the planned expansion of production capacities
is crucial to the success of the restructuring plan and to
the company’s long-term viability.

remain the same regardless of

(77) According to the information in the Commission’s
possession, the actual operating capacity of a plant is
only 50 to 70 % of
theoretical maximum.
the
Consequently, the actual planned production of [(cid:133)]*
tonnes a year with facilities having a total capacity of
is consonant with the general
[(cid:133)]* tonnes a year
information in the Commission’s possession. Moreover,
the calculation with a production of [(cid:133)]* tonnes a year
has been made on the basis of KataLeuna’s expected
maximum turnover from 2007 onwards, i.e. DEM [(cid:133)]*
million, whereas the negative result with a production
of
[(cid:133)]* tonnes a year has been calculated using a
turnover of DEM [(cid:133)]* million. The Commission notes
that the negative result indicated with the turnover of
elements
DEM [(cid:133)]* million and the
corresponds to the profit/loss forecast of KataLeuna for
the period 2002 to 2007 submitted with the
notification.

stable

cost

the

relevant

characteristics of

(78) As regards the fixed cost elements of the restructuring
plan, the Commission notes that these cost elements
match the
sector.
Relatively high maintenance costs and high costs of
research and development are normal, essential elements
of catalyst production. Maintenance is necessary owing
to the constant interruptions to the production process.
Investment
remaining
in R&D is a prerequisite for
competitive in this global market and for being able to
offer products which meet the specific requirements of
different customers.

(79) Under these circumstances it does not appear to be
possible to re-establish the company’s profitability by
lowering the fixed cost elements. The Commission
therefore considers that it has no reason to doubt that
the actual production of [(cid:133)]* tonnes a year is to be
considered the minimum necessary to restore the
company’s long-term viability. Consequently, since the
restructuring plan provides
expansion of
production capacity to the extent necessary for restoring
the company’s viability, the Commission has to assess
whether this expansion of capacities unduly distorts
competition.

the

for

(80)

The Commission notes that the chemical hydrogenation
catalyst market is a global and highly concentrated one
where the three largest providers cover 75 % of a
market consisting, in 1999, of 27 suppliers. According
to the information in the Commission’s possession, this
trend towards concentration is likely to continue owing
to the global nature of the business.

(81)

(82)

capacity for

to a
KataLeuna’s production capacity is equivalent
[(cid:133)]* % share of worldwide
chemical
hydrogenation catalysts. Its DEM [(cid:133)]* million turnover
in 1999 translates into a [(cid:133)]* % share of
the total
hydrogenation catalyst market and a [(cid:133)]* % share of
the market
In 2005,
KataLeuna’s
is expected to be DEM [(cid:133)]*
million, which translates into a [(cid:133)]* % share of the
for
total market and a [(cid:133)]*share of
industrial hydrogenation.
turnover
It
will break down in future as follows: Europe [(cid:133)]* %,
USA [(cid:133)]* % and Asia [(cid:133)]* %.

industrial hydrogenation.

for
turnover

is expected that

the market

The Commission notes that the relevant market is the
market for chemical hydrogenation catalysts. According
to the information in the Commission’s possession,
calculating market shares on the basis of sub-segments
is very difficult and can be misleading as it is almost
impossible to allocate existing production capacities to
the various sub-segments with a sufficient degree of
accuracy. Producers view information on production
capacities as highly confidential and there are no
breakdowns of production capacity by producer. Players
are active in several segments. The Commission finds
that there is substitutability of supply in these markets.
Substitutability of supply exists where undertakings sell
a wide variety of products or products which differ
considerably quality-wise. These various products are
assigned to a single product market if most suppliers are
in a position to sell them immediately without incurring
substantial extra costs.

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14.9.2001

(83)

The Commission notes that KataLeuna’s current share
both of worldwide capacity ([(cid:133)]* %) and of the relevant
market, i.e. the chemical hydrogenation catalyst market
([(cid:133)]* %), is modest. The expected future market share
for 2005 is [(cid:133)]* %. In addition, the Commission takes
that
comment
note of Germany’s
KataLeuna’s presence in the market as an additional
supplier should have a positive impact on competition
and on the market structure in view of the global and
concentrated nature of the market.

to the

effect

(84)

For the reasons indicated, the expansion of KataLeuna’s
capacity to [(cid:133)]* tonnes a year does not unduly distort
competition in the relevant market.

(85)

set out

the reasons

For
in recitals 63 to 84 the
Commission considers that the notified aid fulfils the
condition in point 3.2.2(ii) of the guidelines according
to which the aid may not unduly distort competition.

Proportionality of the aid

(86) According to the guidelines

the aid must be in
proportion to the restructuring costs and benefits. Point
3.2.2(iii) of the guidelines stipulates that 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 point of
view. Aid beneficiaries
significant
contribution of their own to the restructuring plan.

should make

a

(87)

the

that

investor’s

contribution

In its decision opening the procedure the Commission
noted
the
restructuring was 24 % and the aid intensity 72 % (20).
The Commission therefore had doubts as to whether the
aid was limited to the strict minimum needed to enable
restructuring to be undertaken and whether the investor
contribution could be considered significant as provided
in the guidelines.

to

(89)

(90)

(91)

(92)

(93)

Firstly, as regards the financing of investments, Germany
states that, although the privatisation contract only
commits CRI
to investing a minimum of DEM 70
million, additional investments are provided for in the
contract, bringing the total up to DEM 86,6 million.
According to the privatisation contract, investments on
this scale increase the amount of reserve capital to be
paid by CRI.

The Commission notes that Germany has submitted by
its letter of 4 September 2000 a detailed investment
plan for KataLeuna which indicates that the actual status
of investments carried out by the end of August 2000
was DEM 76 million. The total amount of planned
investments
remaining
is DEM [(cid:133)]* million. The
investments, DEM [(cid:133)]* million, were to be carried out
by the end of 2000.

Consequently,
the Commission notes that, since the
investments exceed the minimum indicated in the
privatisation contract and reach the amount of DEM
86,6 million, which, according to the privatisation
contact, increases the amount of reserve capital to be
paid by the investor to DEM [(cid:133)]* million, this increase
will be taken into account
the
in the calculation of
investor contribution to the cost of the restructuring.

Secondly, as regards the DEM 2 million of investments
in infrastructure which, according to the restructuring
plan, are to be financed by the BvS, Germany explains
that
this commitment by the BvS to finance the
infrastructure has been dropped since the measures in
the budget of
financed out of
question will be
InfraLeuna,
in accordance with Commission Decision
1999/646/EC.

that,

in accordance with
The Commission notes
Commission Decision 1999/646/EC,
InfraLeuna has
taken over from the BvS responsibility for providing the
necessary infrastructure and services on the Leuna
chemical complex site. In Article 1 of that decision it is
stated that payments made by Germany to InfraLeuna of
up to DEM 1 018 million do not constitute aid within
the meaning of Article 87(1) of
the EC Treaty.
Therefore, since the infrastructure is to be provided by
InfraLeuna and will not be financed by the BvS,
in
accordance with the
above-mentioned Commission
decision the DEM 2 million earmarked for infrastructure
investment will not be considered to be aid to the
second privatisation.

(88)

The Commission notes
that Germany made several
comments on the calculation of the amount of aid and
on the increased investor contribution.

(94)

(20) The DEM 5 million of public funding aimed at eliminating
inherited liabilities was not considered to be aid. See the
Commission decision opening the formal investigation procedure.

Regarding the dismantling and demolition costs of DEM
3 million, Germany submits on the basis of
two
different sets of arguments that these measures cannot
be considered to be aid to the second privatisation.
Firstly,
the measures are not directly linked to the
restructuring plan and their costs are to be assigned to

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L 245/37

the period before the second privatisation. Secondly, the
costs of these measures would have to be borne by the
authorities anyway owing to the danger the buildings
pose to workers’ health and safety.

The Commission notes that
it already stated in the
decision opening the procedure that demolition and
are
dismantling works, when carried out on-site,
normally to be financed by the investor in question. If
these measures are financed by public contributions, a
company is released from the costs it would normally
have to bear and therefore public contributions to these
measures are considered to be aid. The fact that the
demolition and dismantling of the buildings in question
needs to be carried out since production in them is no
longer possible owing to the health and safety hazards
they pose for KataLeuna’s workers does not alter the
position. On the contrary, it is KataLeuna’s obligation as
an employer to make sure that the health and safety of
its workers is not put in jeopardy by the state of the
installations on the site. The financing of measures that
guarantee safe working conditions is normally borne by
the company in question and not by the public purse.
For this reason, public contributions to these measures
are considered to be aid.

Regarding the exceptional guarantees of up to DEM 2
million and the DEM 0,827 million compensation from
the first privatisation, Germany explains that these costs
have no connection with the second privatisation but
date back to the first privatisation and are therefore not
to be considered restructuring costs of
the second
privatisation.

The Commission notes that CRI took over KataLeuna
its assets and liabilities. These include the
with all
exceptional guarantees and compensation dating back to
the failed first privatisation. Consequently, they would
normally be financed by the investor in question. Since
these liabilities are being taken over by a public body,
the company is being released from costs it would
normally have
reason, public
contributions to these measures are considered to be
aid.

to bear.

this

For

first
Regarding the DEM 17,6 million from the
privatisation to be used for
investments, Germany
explains that this is not to be considered new aid as it
originates from the free resources of a company created
by the compatible aid linked to the first privatisation. It
is therefore not to be considered a contribution by the
BvS to the second privatisation.

The Commission notes
for
restructuring must always be linked to a detailed

earmarked

that

aid

(95)

(96)

(97)

(98)

(99)

It

is an integral part of

restructuring plan worked out with the investor in
the project and
question.
approval of the aid presupposes also approval of the
project for which the aid is intended. Therefore, if the
specific project for which the aid is approved fails, the
aid linked to it also loses its legitimacy and cannot as
such be used freely for other projects as approved aid.

(100)

the

In addition, the Commission stresses that, as explained
in the decision opening the procedure,
first
privatisation involved a plan which included activities in
two locations, KataLeuna in Leuna and Chemie GmbH
in Bitterfeld-Wolfen. When the first privatisation failed,
the two locations were separated and the investor under
the first plan carried on with the activities in Bitterfeld,
whereas the BvS made further attempts to privatise
KataLeuna. Consequently,
the first and the second
privatisation were entirely separate and what is more
concerned different companies.

(101) As regards Germany’s argument

that

first privatisation. Germany

the DEM 17,6
million was part of
the free resources of KataLeuna
created by the aid linked to the first privatisation, the
Commission notes that, according to the January 1999
notification, the DEM 17,6 million was part of the total
amount of DEM 55,8 million earmarked for investments
and loss compensation under the contract concerning
the
in the
notification that this amount was deposited in a special
bank account from which money was released for the
above purposes. However, since almost no investments
were carried out, most of the money was never released,
leading to considerable savings for the BvS. Therefore,
when the
considerable
amount of money set aside for investments and loss
compensation was still left over.

first privatisation failed,

explains

a

(102) Consequently, the Commission notes that the DEM 17,6
million was not free resources of KataLeuna but money
set aside under the privatisation contract
for certain
purposes involving two companies in different locations
which was never paid out since the investments it was
meant
for were never carried out. This money was
controlled and managed by the BvS and was considered
as having being saved by the BvS when the first
privatisation failed.

(103) For these reasons, the DEM 17,6 million contribution by
the BvS to investments carried out in the course of the

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second privatisation is considered to be new aid for
restructuring.

Financing by the BvS:

(104) As regards the increased investor contribution, Germany
lists four different categories of additional measures that
should be considered investor contributions
to the
second privatisation.

(105) Regarding the additional contribution of DEM [(cid:133)]*
the additional
million to research and development,
investment amount of DEM [(cid:133)]* million and the
additional losses of DEM [(cid:133)]* million, the Commission
considers
these can be considered an investor
contribution to the second privatisation and they will
the
therefore be
restructuring as such.

included in the

costs of

total

that

(106) However, as regards the costs of DEM [(cid:133)]* million for
management and personnel and the DEM [(cid:133)]* million
of losses to be borne under the privatisation contract by
the investor, the Commission takes the view that these
amounts are not to be considered an additional investor
contribution to the second privatisation. Coverage of
losses of DEM [(cid:133)]* million and reinforcement of the
management, marketing and distribution activities of
in the privatisation
KataLeuna were provided for
contract and are therefore already covered by the
original investor contribution indicated in that contract.

(107)

In the light of the considerations in recitals 86 to 103,
the Commission notes
the
that
restructuring may be broken down as follows:

the total cost of

Investments

DEM 13,744 million

Loss compensation

DEM 10,0 million

Exceptional guarantees

DEM 2,0 million

GA compensation

DEM 1,7 million

Redundancy costs

DEM 0,586 million

Dismantling, demolition

DEM 3,0 million

Compensation from the first privatisation DEM 0,827 million

Investments from the first privatisation

DEM 17,6 million

Total

DEM 49,457
million

Other public financing considered to be aid:

Contributions from Land and Federal
Government for R&D in 1998 (21)

DEM 0,670 million

GA (22) contributions (investment grants) DEM 22,457 million

Investment allowances (23)

DEM 6,700 million

Total

DEM 29,827
million

Financing by the investor:

Other public financing not considered to be aid:

Infrastructure

DEM 2,0 million

Purchase price

DEM 1,3 million

Inherited liabilities

DEM 5,0 million

Inherited liabilities agreement

DEM [(cid:133)]* million

Capital increase

Reserve capital

DEM [(cid:133)]* million

DEM [(cid:133)]* million

GA compensation

DEM [(cid:133)]* million

Research and development

DEM [(cid:133)]* million

Additional investments

DEM [(cid:133)]* million

Additional losses

DEM [(cid:133)]* million

Total DEM 44,64 million

Total

DEM 7,0 million

(108) Consequently, the total cost of the restructuring is DEM
130,924 million. The amount of public contributions is
DEM 86,284 million, DEM 79.284 million of which is
considered to be aid (24), and the investor contribution

(21) See footnote 7.
(22) See footnote 8.
(23) See footnote 9.
(24) DEM 29,827 million of

approved schemes.

the aid is granted on the basis of

14.9.2001

EN

Official Journal of the European Communities

L 245/39

is DEM 44,64 million. The aid intensity is therefore
60 % and the investor contribution 34 %.

(109) When it opened the procedure,

It

in cases

the Commission
expressed doubts about the nature of the project as a
restructuring exercise as it seemed to be more in the
the Commission’s
nature of new investment.
for new
opinion that,
investments form a major part of
the restructuring
costs, this fact should be reflected in the amount of the
investor contribution. This opinion is based on the fact
that, in the case of pure investment projects in assisted
areas, regional aid ceilings apply, whereas under the
guidelines much higher aid amounts are allowed.

is
in which costs

the

(110) The Commission notes that the investor has raised its
contribution to 34 % of the costs of the restructuring. It
comments made by
acknowledges, moreover,
Germany and CRI to the effect that the lion’s share of
the investments was used to replace outdated facilities in
order to enable adaptation to safety and environmental
standards and production of such quality and quantities
as would ensure the company’s long-term viability. This
was not possible with the existing facilities, some of
which dated back to the 1960s.

(111) The Commission considers that in this case the investor
contribution of 34 % is to be considered significant
within the meaning of the guidelines and sufficient in
that it takes into account the fact that investments form
a major part of the restructuring costs.

the Commission considers that

(112) Therefore, for the reasons set out in paragraphs 90 to
111,
the notified aid
fulfils the condition in point 3.2.2(iii) of the guidelines
according to which the aid must be in proportion to the
restructuring costs and benefits.

(113) Germany is required to provide the Commission, during
the period 2000 to 2005 with yearly reports on the
progress that is being made with the restructuring. The
reports must be provided by the end of March of the
year following the report period. They must contain all
relevant information needed to enable the Commission
to monitor
company,
implementation of the agreed restructuring plan and the
company’s financial position.

the aid by the

receipt of

CONCLUSION

(114) The Commission regrets that Germany has unlawfully
implemented the aid in question in breach of Article
88(3) of the EC Treaty. However, it notes that, since the
aid complies with the 1994 Community guidelines on
rescuing and restructuring firms
State aid for
in
difficulty,
it is compatible with Article 87(3)(c) of the
Treaty,

HAS ADOPTED THIS DECISION:

Article 1

The State aid totalling EUR 25,287 million (DEM 49,457
million) which Germany has implemented and will implement
for KataLeuna GmbH Catalysts, Leuna, Saxony-Anhalt,
is
compatible with the common market within the meaning of
Article 87(3)(c) of the EC Treaty.

Article 2

The State aid referred to in Article 1 may be used only for the
restructuring of KataLeuna GmbH Catalysts in accordance with
the restructuring plan notified to the Commission.

Article 3

Germany shall provide the Commission, during the period
2000 to 2005, with yearly reports on the progress that is
being made with the restructuring. The reports
shall be
provided by the end of March of the year following the report
period. They shall contain all relevant information needed to
enable the Commission to monitor receipt of the aid by the
company, implementation of the agreed restructuring plan and
the company’s financial position.

Article 4

This Decision is addressed to the Federal Republic of Germany.

Done at Brussels, 13 February 2001.

For the Commission

Mario MONTI

Member of the Commission