Commission Decision of 13 February 2001 authorising the United Kingdom to grant aid to the coal industry, covering the period from 17 April 2000 to 31 December 2000 (Text with EEA relevance) (notified under document number C(2001) 401)
Date: 2001-02-13
Institutions: European Commission
Subjects: State aid, United Kingdom, aid system, coal industry, competition law

3.5.2001

EN

Official Journal of the European Communities

L 122/23

II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 13 February 2001

authorising the United Kingdom to grant aid to the coal industry, covering the period from 17
April 2000 to 31 December 2000

(notified under document number C(2001) 401)

(Only the English text is authentic)

(Text with EEA relevance)

(2001/340/ECSC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Community,

Having regard to Commission Decision No 3632/93/ECSC of
28 December 1993 establishing Community rules for State aid
industry (1), and in particular Article 9 thereof,
to the coal

Whereas:

I

(1)

(2)

(3)

By letters of 24 November and 14 December 2000, the
United Kingdom notified to the Commission, in accord-
ance with Article 9(1) of Decision No 3632/93/ECSC,
the coal
financial aid which it proposed to grant
industry for the year 2000, and more precisely for the
period from 17 April 2000 to 31 December 2000.
Following a request from the Commission of 15 January
2001, the United Kingdom notified additional informa-
tion on 16 January 2001.

In the light of the information submitted by the United
Kingdom,
the financial measure it envisages is aid
amounting to GBP 59,078 million to cover operating
the period from 17 April 2000 to 31
losses for
December 2000 at six production units.

That
financial measure is covered by Article 1 of
Decision No 3632/93/ECSC, and the Commission must
therefore take a decision on it pursuant to Article 9(4) of
that Decision. The Commission's approval is subject to
the general objectives and criteria laid down in Article 2

and the specific criteria set out in Article 3 of Decision
No 3632/93/ECSC and must be compatible with the
proper functioning of the common market. In addition,
in its assessment the Commission must check, in accord-
ance with Article 9(6) of Decision No 3632/93/ECSC,
the measures are in conformity with the
whether
restructuring plan of
the the United Kingdom coal
industry which was approved by Commission Decision
C(2000)3709 final of 15 November 2000, approving
the modernisation, rationalisation and restructuring plan
industry, covering the
for the United Kingdom coal
period from 17 April 2000 to 23 July 2002 (hereinafter
referred to as ‘the restructuring plan’) (2).

II

(4)

The sum of GBP 59,078 million which the United
Kingdom is proposing to grant to the coal industry in
accordance with Article 3 of Decision No 3632/93/
ECSC is intended to cover the difference between the
freely
production cost and the selling price of coal
agreed between the contracting parties in the light of the
prevailing conditions on the world market for coal of
similar quality from non-member countries.

(5)

The proposed aid is intended for the following units:

— GBP 13,560 million for the Maltby production unit

of RJB Mining Plc,

— GBP 3,207 million for the Rossington production

unit of RJB Mining Plc,

(1) OJ L 329, 30.12.1993, p. 12.

(2) OJ L 43, 14.2.2001, p. 27.

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Official Journal of the European Communities

3.5.2001

— GBP 14,722 million for the Harworth production

unit of RJB Mining Plc,

— GBP 23,187 million for the Selby production unit of

RJB Mining Plc,

— GBP 3,932 million for the Hatfield production unit

of Hatfield Coal Company Ltd,

— GBP 0,470 million for the Blenkinsopp production

unit of Blenkinsopp Collieries Ltd.

The proposed aid is intended to allow those production
units to improve their economic viability by reducing
their production costs. In accordance with the restruc-
turing plan adopted by the United Kingdom, the effort
made towards reducing production costs should be eval-
uated over a reference period of three consecutive years.
This method should ensure that the development of
production costs is not evaluated by reference to a
period of activity that is not representative of the oper-
ating conditions of the production units concerned. In
order to prevent any discrimination among coal produ-
cers, the units must fix the reference period themselves,
between 1 January 1994 and 31 December 2000.

According to the restructuring plan,
the production
units have prospects for improving their economic viabi-
lity if it can be considered that their production costs
will not exceed a threshold of GBP 1,15/GJ (1) in 2002.
This cost level should enable the companies concerned
to continue operating without the need for any financial
support beyond 2002.

It appears from the data communicated by the United
Kingdom authorities that the development of production
costs between the reference period determined in
accordance with recital 6 and the year 2002 is as
follows, at
constant 1999 prices: Maltby […] (*);
Rossington […]; Harworth […]; Selby […]; Hatfield […];
Blenkinsopp […].

Moreover, the production costs, at constant 1999 prices,
should in 2002 be at a level equal to or below the
threshold of GBP 1,15 per GJ referred to in recital 7.
Only the production costs at […] unit will be slightly
above this threshold, with GBP 1,16 per GJ in 2002.
However,
level of
the […] unit will reach the cost
GBP 1,15 per GJ from 2003.

(6)

(7)

(8)

(9)

(10) Moreover, according to estimates made for the period
up to 2004, the production units should continue to
improve their economic viability through new reduc-
tions in production costs. In this regard, the Commis-
sion notes that the costs of several production units
should by 2004 reach a level very close to […] per GJ.

(12)

(13)

(14)

(15)

viability and, specifically, to achieve the objectives set
out in recital 7. In drawing up this report, the expert
took into account the geological and technical condi-
tions in which the units operate and the quality of the
coal which they produce. The report concluded that the
various measures envisaged are consistent and realistic
with a view to achieving the estimated production costs
worked out for each of the production units referred to
in recital 5.

For these reasons, the United Kingdom considers that
the modernisation,
rationalisation and restructuring
measures of the various production units will lead to an
their economic viability. The units
improvement of
should be able to reach the threshold of GBP 1,15 per
GJ production cost, enabling them to continue their
activities beyond 2002 without any further public
subsidy.

III

In accordance with Article 3(2) of Decision No 3632/
93/ECSC, the aid which the United Kingdom proposes
to grant is intended to improve the economic viability of
the production units concerned by reducing their
production costs.

The Commission considers the reductions in production
costs as indicated in recital 8 to be significant. In order
to assess the extent of these reductions, the Commission
has taken account of the difference between average
production cost calculated for the reference period (see
recital 6) and the target cost for 2002, determined at
GBP 1,15 per GJ. While the reduction in costs calcu-
lated for […] is below the average of the other produc-
tion units, the absolute cost level of […] in 1998 was
only slightly higher (less than […] per tce) than the
selling price of coal extracted in this unit.

The sums of aid should help to improve the viability of
the production units to enable them to continue their
activities beyond 2002 without further public subsidy.
In accordance with the restructuring plan approved by
the Commission in its Decision C(2000) 3709 final, the
production costs of the […] units should in 2002 not
exceed the threshold of GBP 1,15 per GJ referred to in
recital 7. The extent to which this threshold is exceeded
by the […] unit, whose production costs in 2000 are
GPB 1,16 per GJ, is negligible and cannot have any real
effects in terms of competitveness. In fact, the produc-
tion cost will be reduced to GBP 1,15 per GJ from
2003.

(11) At the request of the United Kingdom authorities, a
technical report was drawn up by an independent expert
to assess whether the modernisation, rationalisation and
restructuring measures envisaged for the various produc-
tion units would enable them to improve their economic

(1) 1 tonne coal equivalent (tce) = 29,302 gigajoules (GJ).
(*) Confidential

information.

(16)

In accordance with Article 3(1)(i) of Decision No 3632/
93/ECSC, the aid per tonne as notified does not exceed,
for each production unit, the difference between produc-
tion costs and foreseeable revenues, as calculated on the
basis of the financial information for the period covered
by the aid, that is from 17 April 2000 to 31 December
2000.

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Official Journal of the European Communities

L 122/25

(17)

(18)

(19)

(20)

(21)

rationalisation and restructuring
The modernisation,
measures implemented by each production unit, and in
particular the temporary nature of the financial support
necessary to achieve these measures, will allow the aid to
be degressive,
in accordance with Article 2(1)(i) of
Decision No 3632/93/ECSC.

The Commission notes that for each production unit an
auditor has stated that the financial data notified by the
United Kingdom accurately depict
company's
accounts. The auditor also stated that the forecasts had
been drawn up using the accounting standards that were
in use before the period covered by the aid.

the

In the light of the foregoing and on the basis of the
information provided by the United Kingdom, the aid
proposed for the period from 17 April 2000 to 31
December 2000 for the production units referred to in
recital 5 is compatible with Decision No 3632/93/ECSC,
and in particular with Articles 2 and 3 of that Decision.

IV

The United Kingdom must ensure that the proposed aid
does not cause any distortion of competition and does
not discriminate between coal producers, purchasers or
consumers in the Community.

In accordance with Article 3(1)(iii) of Decision No 3632/
93/ECSC and with the relevant provisions of Commis-
sion Decision C(2000) 3709 final, the United Kingdom
is required to take all the necessary measures to ensure
that the amount of the aid granted to each production
unit will not cause delivered prices for Community coal
to be lower than those for coal of a similar quality from
non-member countries.

(22) Moreover, in accordance with Article 2(2) of Decision
No 3632/93/ECSC,
the aid must be entered in the
United Kingdom's national, regional or local public
budgets and must comply with strictly equivalent mech-
anisms.

(23)

In accordance with Article 3(1)(ii) and Article 9(2) and
(3) of Decision No 3632/93/ECSC, the Commission is to
check that
the aid authorised is used only for the
purposes stipulated in Article 3 of that Decision. At the
latest by 30 September 2001, the United Kingdom must
notify the amounts of aid actually paid during the year
2000 and declare any corrections made to the amounts
originally notified. Any information required to ascertain
that the criteria laid down in Article 3 of Decision No
3632/93/ECSC have been complied with must be
provided along with this annual breakdown.

(24)

The United Kingdom should justify any deviations from
the restructuring plan and from the economic and finan-
cial
forecasts notified to the Commission on 24
November and 14 December 2000. In particular, should
it turn out that the conditions laid down in Article 3(2)

(25)

of Decision No 3632/93/ECSC cannot be satisfied, the
United Kingdom is responsible for proposing the requi-
site corrective measures to the Commission.

The restructuring plan provides that the total amount of
aid that could be granted by the United Kingdom to the
coal industry in the period from 17 April 2000 to 23
July 2002 may not exceed GBP 110 million. By its
Decision C(2000)4056 final of 13 December 2000 (1),
the Commission has already authorised the grant of aid
amounting to
to the Longannet production unit
GBP 17,462 million, covering the period from 17 April
2000 to 31 December 2000. The Commission notes
that the aid authorised by Decision C(2000)4056 final,
aggregated with that covered by the present Decision,
does not exceed the maximum sum of GBP 110 million
laid down in the restructuring plan,

HAS ADOPTED THIS DECISION:

Article 1

The United Kingdom is authorised, subject to Article 3 of
Decision No 3632/93/ECSC, to grant operating aid amounting
to GBP 59,078 million for the Maltby, Rossington, Harworth,
Selby, Hatfield and Blenkinsopp production units for the period
from 17 April 2000 to 31 December 2000.

Article 2

The United Kingdom shall ensure that the authorised aid is
used only for the purposes declared and that any expenditure
relating to any of the items covered by this Decision that is
cancelled, overestimated or misused,

is reimbursed.

Article 3

By 30 September 2001 at the latest, the United Kingdom shall
communicate to the Commission, in addition to the informa-
tion referred to in Article 9 of Decision No 3632/93/ECSC, the
amounts of aid actually paid during the 2000 financial year.

Article 4

This Decision is addressed to the United Kingdom of Great
Britain and Northern Ireland.

Done at Brussels, 13 February 2001.

For the Commission

Loyola DE PALACIO

Vice-President

(1) Not yet published in the Official Journal.