Report from the Commission on the implementation in 2000 of Commission Decision n° 2496/96/ECSC of 18 December 1996 establishing Community rules for State aid to the steel industry (Steel Aid Code)
Date: 2001-03-21
Institutions: European Commission
Subjects: aid for restructuring, aid to industry, economic policy, environmental protection, industrial policy, iron and steel industry, tax relief

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 21.3.2001
COM(2001) 151 final

REPORT FROM THE COMMISSION

on the implementation in 2000 of Commission Decision n° 2496/96/ECSC of 18
December 1996 establishing Community rules for State aid to the steel industry (Steel
Aid Code)

REPORT FROM THE COMMISSION

on the implementation in 2000 of Commission Decision n° 2496/96/ECSC of 18
December 1996 establishing Community rules for State aid to the steel industry (Steel
Aid Code)

1.

1.1.

1.2.

1.3.

Article 8 of Commission Decision n° 2496/96/ECSC of 18 December 1996
establishing Community rules for State aid to the steel industry1 (hereinafter referred
to as the Steel Aid Code) requires the Commission "to draw up annual reports on the
for the
implementation of this Decision to the Council and, for information,
European Parliament and the Consultative Committee".

General overview

This report covers all decisions in 2000 of the Steel Aid Code2. Under the Code, the
Commission took decisions concerning 17 cases, five of which were approved without
opening the investigating procedure, eight were the object of final decisions and the
other four of a decision to initiate proceedings.

The cases that the Commission approved without raising any objections concerned
research and development activities carried out by undertakings in Belgium and in
Germany and two cases consisted of environmental tax schemes, in Germany and
Sweden. The cases that proved to be more problematic were those of investment aid
for environmental protection. In three of those cases, the Commission took an initial
decision to initiate proceedings and in one case involving five companies it took a final
negative decision. It also took two partially negative decisions in two other such cases.

The Commission also took a new decision concerning the Spanish company
Tubacex, reversing its initial decision taken in 1997, which had been annulled by the
European Court of Justice. It now decided that the debt rescheduling made in favour
of the company by public institutions was in line with the practice of a private
creditor in similar circumstances and that no aid was involved. In the case of the
French company Myriad, the Commission decided to close proceedings taking note
that, in the time since the opening of the procedure, the company had paid back the
unduly received aid accrued with the due interests. In two cases of tax credits for
foreign investments made by steel companies, it took a negative decision concerning
the Spanish law and initiated proceedings in the case of the French law. The
Commission also took a final negative decision concerning the regional aid that
Germany had granted to Salzgitter. In the case of Cockerill, it took a final negative
decision, considering that the employment aid granted by Belgium was illegal and
incompatible with the common market.

1

2

OJ L 338, 28.12.19996, p.42.
The monitoring of the implementation of individual decisions taken under Article 95 of the ECSC treaty
are the object of separate reports according to the rules of such decisions, the two reports for 2000 having
been approved by the Commission on 3 May and 31 October.

2

2.

Member States' reports

Under Article 7 of the Steel Aid Code,
the Member States reported to the
Commission on aid paid under the Code to the steel industry in 1999. Once again, the
Commission reminds Member States of their obligation to send their reports in good
time.

3.

Summary description of aid cases

3.1.

BELGIUM

3.1.1.

Sidmar

in Belgium,

On 15 February, the Commission took a final decision concerning the proposal by
to grant aid to Sidmar in relation to 6
the Flemish Government
investment projects resulting in the improvement of environmental protection. Whilst
€
approving the aid for five of the projects (
0.608 million), it took a negative decision
on one (
1.9 million), which referred to the construction of a circular cooler for one
of the sintering plants. The reason for the negative decision was that the Belgian
proposal did not ensure that all the advantages that the company would get from the
investment had been deducted from the eligible basis for the aid.

€

3.1.2.

Sidmar and ALZ

On 12 July, the Commission decided not to raise objections to aid that the Flemish
Government had granted to Sidmar and ALZ for research and development projects
carried out by those companies in the past recent years. Belgium failed to notify the
the
projects in advance, but after assessing the aid to the different projects,
Commission concluded that the rules set in the R&D Framework had been complied
3.2 million in favour of
with and was able to approve the aid. This amounted to
Sidmar, for 11 projects carried out by its R&D centre OCAS NV and to
0.48
million in favour of ALZ for one project.

€

€

3.1.3. ALZ

0.745 million,
On 31 October, the Commission approved aid of the amount of
representing an intensity of 38% of the costs, towards a R&D project carried out by
ALZ. The project concerns the "concurrent development of a refractory lining and of
processing conditions for optimised VOD refining of stainless steel" and is carried
out in collaboration with the University of Leuven.

€

3.1.4. Cockerill

On 15 November, the Commission took a final negative decision concerning the
employment aid, amounting to
13.8 million, that Belgium granted to Cockerill in
relation to a redistribution of working hours and creation of 150 jobs in order to keep
the same level of working hours. It ordered the recovery of the aid already paid and
the immediate suspension of payments not yet made.

€

The aid was granted illegally, without prior notification to the Commission. It was
granted in the form of social security reductions by the Federal Government and of
direct grants by the Regional Government of Wallonia.

3

3.2.

GERMANY

3.2.1. Ecological tax scheme

On 15 February, the Commission decided to raise no objections to the application of
it
the ecological tax reform in Germany to the steel industry, considering that
complies with the environmental guidelines and the Steel Aid Code. The
Commission had first approved the German scheme in April 1999 and in its 2000
decision it maintained its approval up to 2002.

3.2.2.

Stahlwerke Bremen

On 13 June, the Commission decided to open the investigation procedure on aid
€
(
0.623 million) that the German authorities intend to grant to Stahlwerke Bremen,
in relation to investments that the company is carrying out and that will have a
positive effect on environmental protection. In applying the criterion set the Annex to
the Steel Aid Code that requires that investments necessary for economic reasons or
made because of the age of the installations are not eligible for aid, the Commission
has doubts about the eligibility of the investments for environmental aid. It also has
doubts that, if the aid was assessed under the rules, all the economic advantages that
the company derives from the investment would have been deducted from the costs
considered eligible for aid.

3.2.3.

Salzgitter

On 28 June, the Commission adopted a final negative decision concerning the aid
that the German authorities granted to Salzgitter (Preussag Stahl) and ordered its
repayment. The aid was granted from the 1980s to 1995 as tax incentives, under a
1971 German law, which provided for such incentives for companies located along
the border with the German Democratic Republic and Czechoslovakia. The
Commission had approved that law as an aid scheme compatible with the EC treaty.
However, the ECSC treaty does not provide for the possibility of such regional
derogations and the aid was therefore incompatible.

3.2.4. Georgsmariënhütte

The Commission decided to open the investigation procedure concerning a
management service contract concluded between Gröditzer and Georgsmariënhütte
(GMH), with the support of BvS, the public authority for privatisation of companies
in former East Germany. Under the contract, Gröditzer is to pay a fee of
1.3 million
per year to GMH.

€

Because at the moment of the contract, Gröditzer was on the brink of bankruptcy and
the payment of the annual fee is guaranteed by BvS, the Commission has doubts that
such a contract does not involve elements of State aid.

4

3.2.5.

Saarstahl

0.153 million, to
On 18 October, the Commission approved aid, amounting to
Saarstahl for a R&D project, denominated "improved materials and steels for
thixoforging". The project is carried out jointly by seven participants, including other
industrial companies and the Universities of Aachen and Hanover.

€

The project, with a budget cost of
research and received a grant with an intensity of 50%.

0.306 million, was considered as industrial

€

3.3.

SPAIN

3.3.1. Tubacex

On 31 October, the Commission decided to revoke its 1997 negative decision
concerning measures in favour of Tubacex. Initially the Commission had concluded
that the rescheduling of social security debts and repayment agreements with the
Wage Guarantee Fund constituted incompatible aid. However, in the light of a
judgement of the European Court of Justice, the Commission reviewed its previous
decision and concluded that no aid was involved, the Spanish authorities having
acted like a private creditor in similar circumstances.

3.3.2. Tax credits on foreign investments

On 31 October, the Commission took a final negative decision on tax credits for
foreign investments provided for in the Spanish corporate tax law and considered
them incompatible with the Steel Aid Code.

Contrary to the position taken by the Spanish authorities, the Commission did not
consider that these provisions constitute general measures as they only benefited
companies carrying out certain activities.

3.4.

FRANCE

3.4.1. Myriad

On 4 October, the Commission took a decision by which it closed the proceedings
initiated against regional aid that the French authorities had paid to the company,
taking note that the situation had meanwhile been regularised. Indeed, after the
opening of the procedure the company, on its own initiative, paid back the aid
received illegally accrued with interests, the total amounting to

2.14 million.

€

3.4.2. Tax credits on foreign investments

On 31 October, at the same time that it took a final negative decision concerning the
tax credits for foreign investments provided for in the Spanish corporate tax law, the
Commission took a decision to initiate proceedings against similar provisions
existing in the French law.

3.5.

ITALY

5

3.5.1.

Five companies

1.88
On 29 November, the Commission adopted a final negative decision on aid (
million) that the Italian had notified in September 1999 in favour of five undertaking
towards investments they carried out between 1986 and 1994 for investments in
energy conservation.

€

The five undertakings are Acciaierie e Ferriere Leali SpA; Acciaierie e Ferriere
Beltrame, Vicenza SpA; Acciaierie e Ferriere Beltrame, S. Giorgio Nogaro SpA;
Lucchini, Mura SpA; Lucchini, Lovere SpA. The investments were considered by
the Commission as not eligible for State aid because they were carried out at a time
when such a type of investment was clearly excluded from environmental aid and the
notified aid, more than ten years after the investments were made, would not have an
incentive effect as required by the environmental guidelines and by the Code.

3.5.2. Lucchini and Siderpotenza

On 21 December, the Commission took a final decision on aid notified by the Italian
authorities in favour of Lucchini and Siderpotenza. It approved aid to Siderpotenza,
amounting to
further
€

0.574 million and took a negative decision on a

€

€

0.105 million to Siderpotenza and on

698 million to Lucchini.

In concluding the incompatibility of the aid, the Commission considered that the
investments in question had been made for economic reasons and were not aimed at
improving the environment. Moreover,
the detailed criteria to assess aid for
environmental purposes were not met in the case in question.

3.6.

AUSTRIA

3.6.1. Voest Alpine Linz

On 11 April, the Commission decided to open proceedings concerning a proposal by
the Austrian authorities to grant aid to Voest Alpine, Linz. The aid, amounting to
€
is to help finance the cost of a new wastewater treatment and
purification installation that the company is investing in and that will bring it into
line with the new environmental standards.

2.17 million,

The Commission has doubts about the reason for the investment in view of the age of
its old installation.

3.7.

SWEDEN

3.7.1. CO2 taxation scheme

On 21 December, the Commission approved the prolongation of the Swedish scheme
of CO2 tax relief for ECSC steel companies, until the end of 2000. Although the
earlier Commission's approval was limited to 1999, the Swedish authorities had
continued to apply the aid scheme in 2000. Whilst giving its approval,
the
Commission reminds Sweden of its obligation to comply with notifying obligations
under Article 6.1 of the Code.

6

DECISIONS TAKEN IN 2000 UNDER THE STEEL AID CODE

ANNEX

COMMISSION OFFICIAL
JOURNAL
L129, 30/5/2000

AMOUNT

€

(

million)*
0,608 (p)
1,9 (n)
Sidmar: 3,2

ALZ: 0,48

0,745

13,8

MEASURE

OBJECT

grant

grant

grant

environment

R&D

R&D

social sec. reductions
plus grant

employment

DECISION
partial
(15/02)
no objections
(12/7)
no objections
(31/10)
negative
(21/12)

C 272, 23/9/2000

C44, 10/2/2001

not yet publ.

n.a.

tax refund

environment

no objections
(15/02)

C 134, 13/05/2000

Stahlwerke Bremen

0,623

grant

environment

open procedure C 310, 28/10/2000

n.a.

n.a.

tax relief

regional

service fee

management
contract
R&D

0,153

grant

debt rescheduling

tax exemption

loan and
social sec. Debt
foreign investment

(13/06)
negative
(28/6)
open procedure
(19/07)
no objections
(18/10)

L 323, 20/12/2000

C 3; 6/01/2001

C44, 10/2/2001

No aid
(31/10)
negative
(31/10)

L 52, 22/2/2001

L 60, 1/3/2001

grant

tax exemption

aid reimbursed
with interests
foreign invest.

close procedure
(4/10)
open procedure
(31/10)

C 27, 27/01/2001

not yet publ.

MEMBER
STATE
B

D

E

F

I

COMPANY
(Aid N°)
SIDMAR

(C57/99)

SIDMAR and ALZ

(NN139/98)

ALZ

(N518/00)

COCKERILL

(C76/99)

Ecological tax
(N 625/99)

(C34/2000)

SALZGITTER

(C10/99)

GMH

(C43/00)
Saarstahl
(N 594/00)

TUBACEX

(C9/95)
tax credits foreign
investments
(C57/97)
Myriad
(C45/99)
tax credits foreign
investments
(C61/00)
five companies(1)
(C13/2000)
Lucchini and
Siderpotenza

(C25/2000)

n.a.

n.a.

1,6

n.a.

1,88

Lucch: 6,98
Sid:0,574 (p)
0,105 (n)

grants

grants

environment

environment

negative
(29/11)
Lucchini: negative
Siderpotenza: partial

(21/12)

not yet publ.

not yet publ.

open procedure
(11/4)

C 190, 8/7/2000

A

Voest Alpine Linz

2,17

grant

environment

(C24/2000)

SWE

CO2 taxation
(NN 71/2000)

n.a.

tax refund

environment

no objections
(21/12)

not yet publ.

* The amounts in bold correspond to aid; the amounts in italic correspond to measures where the aid has not been quantified, or does not constitute aid.
(p) refers to aid object of a positive decision; (n) refers to aid object of a negative decision.
(1) The five undertaking directly concerned by case C 13/2000 were: Acciaierie e Ferriere Leali SpA; Acciaierie e Ferriere Beltrame, Vicenza SpA;
Acciaierie e Ferriere Beltrame, S Giorgio Nogaro SpA; Lucchinin, Mura SpA; Lucchini Lovere SpA. SpA;

7