2001/673/EC: Commission Decision of 28 March 2001 on State aid implemented by Germany for EFBE Verwaltungs GmbH & Co. Management KG (now Lintra Beteiligungsholding GmbH, together with Zeitzer Maschinen, Anlagen Geräte GmbH; LandTechnik Schlüter GmbH; ILKA MAFA Kältetechnik GmbH; SKL Motoren- und Systembautechnik GmbH; SKL Spezialapparatebau GmbH; Magdeburger Eisengießerei GmbH; Saxonia Edelmetalle GmbH and Gothaer Fahrzeugwerk GmbH) (Text with EEA relevance) (notified under document number C(2001) 1028)
Date: 2001-03-28
Institutions: European Commission
Subjects: Germany, State aid, application of EU law, control of State aid, industrial restructuring, privatisation

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II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 28 March 2001

on State aid implemented by Germany for EFBE Verwaltungs GmbH & Co. Management KG (now
Lintra Beteiligungsholding GmbH, together with Zeitzer Maschinen, Anlagen Geräte GmbH; Land-
Technik Schlüter GmbH; ILKA MAFA Kältetechnik GmbH; SKL Motoren- und Systembautechnik
GmbH; SKL Spezialapparatebau GmbH; Magdeburger Eisengießerei GmbH; Saxonia Edelmetalle
GmbH and Gothaer Fahrzeugwerk GmbH)

(notified under document number C(2001) 1028)

(Only the German text is authentic)

(Text with EEA relevance)

(2001/673/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Management KG,
GmbH, became the Lintra group on privatisation.

now Lintra Beteiligungsholding

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

(2)

Having regard to the Agreement on the European Economic
Area, and in particular Article 62(1)(a) thereof,

Having regard to Council Regulation (EC) No 659/1999 of 22
March 1999 laying down detailed rules for the application of
Article 93 of the EC Treaty (1), and in particular Article 9
thereof,

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

Whereas:

I. PROCEDURE

(1)

eight

the privatisation of

By letter dated 19 January 1995 Germany notified aid
companies: Zeitzer
for
Maschinen, Anlagen Geräte GmbH,
LandTechnik
Schlüter GmbH, ILKA MAFA Kältetechnik GmbH, SKL
Motoren- und Systembautechnik GmbH, SKL Spezialap-
paratebau GmbH, Magdeburger Eisengießerei GmbH,
Saxonia Edelmetalle GmbH and Gothaer Fahrzeugwerk
GmbH (hereinafter called ‘the Lintra subsidiaries’) which
had been brought together into a single holding owned
by the Treuhandanstalt and which, together with the
EFBE Verwaltungs GmbH & Co.
holding

company

(3)

(4)

The privatisation and the associated restructuring project
contained aid measures and the case was registered
under aid N 49/95. The Commission sent questions to
Germany by letters dated 7 February 1995, 31 July
1995 and 13 December 1995. Germany submitted
responses dated 28 April 1995, 12 July 1995, 24
August 1995 and 5 January 1996. By letter dated 23
April 1996 (3) the Commission informed Germany that
it had approved restructuring aid in the context of the
privatisation of Lintra Beteiligungsholding GmbH (here-
inafter called ‘the decision of 13 March 1996’).

On the basis of information received in the course of
notifications of new restructuring aid to subsidiary
companies of the Lintra group in 1998, the Commission
sent a letter dated 25 June 1998 to Germany with
questions. Germany replied by letter dated 8 December
1998 and the annexes thereto were submitted on 14
December 1998. The case was then discussed at various
meetings with the German authorities.

By letter dated 22 June 1999 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 proce-
dure was published in the Official Journal of the European
Communities (4). The Commission called on interested
parties to submit their comments.

(1) OJ L 83, 27.3.1999, p. 1.
(2) OJ C 238, 21.8.1999, p. 4.

(3) Letter to Germany dated 23 April 1996 (SG(96) D/4218), a brief
summary of which was published in OJ C 168, 12.6.1996, p. 10.

(4) See footnote 1.

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(5)

(6)

(7)

The Commission received no comments from interested
parties.

On 18 October 1999 Germany submitted answers to
the questions in the annex to the decision to initiate the
procedure. A meeting between the German authorities
and the Commission took place on 19 November 1999.
After a reminder
from the Commission dated 16
December 1999 and a German request for an extension
of the answer deadline dated 2 February 2000, to which
the Commission agreed by letter dated 9 February 2000,
Germany submitted comments on the initiation of the
procedure by letters dated 10 and 29 March 2000.

On 1 August 2000 the Commission sent Germany a
request to provide all relevant information necessary to
determine how the holding company's expenditure had
been apportioned among the individual subsidiaries and
whether the amount of aid which had remained within
the holding company had been suitably allocated. After
a German request for an extension of the answer dead-
line, the Commission received the German reply on 4
October 2000. After a meeting with the Commission on
12 October 2000, Germany sent additional information
on 31 October 2000.

II. BACKGROUND AND DEVELOPMENT OF

THE

LINTRA GROUP

former Comecon and which needed a complete change
of direction, no industrial
showed serious
interest. Eight of
these undertakings were brought
together to form a single grouping for joint restructuring
and privatisation.

investor

(9)

In 1994 the Bundesanstalt
für vereinigungsbedingte
Sonderaufgaben (BvS) decided to sell these companies as
a whole to a private partnership. The aim was that the
new owners of the Lintra group should partly reorganise
and restructure the separate entities in such a way as to
secure their further development either as independent
competitive companies by means of cooperation with
experienced industrial partners, or to make them attrac-
investor.
tive for further privatisation to an industrial

(10) A public

tender

organised

procedure was

and
Emans & Partner GbR, a partnership under German law,
was selected as investor. The partners were: Dr Hartmut
Emans, Dr Andreas Weise, Dr Hellmut Kirchner, Frie-
drich-Carl Graup and Jörg Gehrhardt. A privatisation
contract was concluded on 25 November 1994. Subse-
quently, the new Lintra Beteiligungsholding GmbH acted
as a financial holding company. In essence, it carried out
the central cash management of the group and members
of the partnership took over managerial responsibilities
within Lintra Beteiligungsholding GmbH and within the
Lintra subsidiaries.

(8)

The privatisation of the State industries of the former
GDR was largely completed by 1993. However, it had
not been possible to find an investor for all undertak-
ings. Especially in the case of a number of enterprises
which were very much geared to the economy of the

(11) At the time of the Commission's approval in 1996, the
Lintra group of companies consisted of a holding
company, Lintra Beteiligungsholding GmbH, and the
following eight industrial subsidiaries:

Company

Main activity

Zeitzer Maschinen, Anlagen Geräte Gmbh (ZEMAG)

Machinery for lignite mining

Land Technik Schlüter Gmbh (LTS)

Tractors and agricultural machines

ILKA MAFA Kältetechnik GMBH

Industrial cooling and refrigerating

SKL Motoren- und Systembautechnik GMBH (SKL-M)

Engines and other machinery

SKL Spezialapparatbau GMBH

Special equipment

Magdeburger
Gießerei GmbH)

Eisengießerei GmbH (formerly

SKL

Foundry products

Saxonia Edelmetalle GmbH

Minting/coinage

Gothaer Fahrzeugwerk GmbH

Vehicles, especially trailers; mechanical engineering

(12) As the privatisation related to the sale of a cluster of historically unrelated companies with more
than 1 000 employees in all, it had to be notified individually and the Commission assessed the
project under the rescue and restructuring guidelines. It was expected that the restructuring period
would come to an end by the end of 1997.

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(13)

The Commission approved the following measures for the Lintra subsidiaries in March 1996:

Measure by the BvS

Loss cover for 1994 by way of a grant

Waiver of the obligation to repay loans provided

Provision of capital by award of grants

Ensuring an approved share capital of DEM 130 million

Loss cover between 1995 and 1997 (by waiver of claim)

Grants for financing the restructuring

Guarantees for financing the restructuring

(million DEM)

186,0

314,3

68,9

175,0

40,0

40,0

Total aid

824,2

(14)

(15)

(16)

The Commission approved the granting of aid to the extent necessary to provide the Lintra
subsidiaries with an equity capital of DEM 130 million by 31 December 1994. For the financial
assistance of the companies during the restructuring phase, the BvS was allowed to cover the annual
deficits of the companies during the period 1995 to 1997 up to a maximum amount of DEM 175
million, whereby the loss cover could amount to up to 100 % in 1995, up to 95 % in 1996 and up
to 90 % in 1997. Beyond that the Commission authorised the BvS until the end of 1997 to award
up to DEM 40 million in the form of grants together with tied guarantees of up to DEM 40 million
for the financing of investments for the restructuring of the Lintra subsidiaries.

The Lintra subsidiaries were originally expected to become profitable by 1998 at the latest. However,
from the outset expected and actual performance widely differed. It would appear that, on presenta-
tion in June 1996 of the annual report for 1995, the BvS recognised relatively shortly after the
Commission approval of the aid that there was a considerable risk of failure of the privatisation plan.
By the end of 1996 the financial situation of the Lintra group had become so critical due to higher
losses than originally expected that the group was faced with an imminent threat of insolvency.

The process of
jointly privatising and restructuring a cluster of eight economically unrelated
companies via a private partnership proved unsuccessful. One of the main reasons for the failure of
the original plan was that the companies' production programme was unsuited to the requirements
of Western markets while the traditional central and east European and CIS markets weakened
rapidly. It was inevitable given the considerable cost of developing new products and introducing
them on to new markets that the companies would run into financial difficulties unless they could
find a stronger industrial partner.
In addition, the Lintra group, which was an uncoordinated
assembly of widely diversified activities, suffered from a lack of proper management capabilities and
financial control. Lintra Beteiligungsholding itself consumed a relatively large part of the resources.

(17) At the beginning of 1997 the BvS stepped in and assumed financial responsibility in order to prevent
the entire group from becoming insolvent. An agreement reached between the BvS and the investors
on 6 January 1997 released the departing investors from any liability under the privatisation contract
in return for payment of DEM 1,5 million. Under the agreement, Lintra Beteiligungsholding was to
continue with the administration and management of the remaining subsidiaries. The BvS was
granted full auditing powers and the right to acquire, at any time, any Lintra subsidiary for the
purchase price of DEM 1,00. A further element of the agreement of 6 January 1997 was that the
principal objective of Lintra Beteiligungsholding GmbH was now to be the resale of the Lintra
subsidiaries or of parts thereof to new investors.

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(18) Once it had taken over control, the BvS assessed each subsidiary's chances of becoming viable

through continued restructuring. It subsequently decided:

(a) to close entities that were clearly not economically viable (Magdeburger Eisengießerei GmbH and

SKL-A);

(b) to sell the profitable Saxonia Edelmetalle GmbH directly without granting further aid;

(c) to continue with the restructuring of ZEMAG, ELKA MAFA, SKL-M, LTS and Gothaer Fahrzeug-
werke in cooperation with Lintra with a view to preparing these potentially viable entities for
resale to industrial partners as soon as possible.

(19) Under a purchase contract concluded between the BvS, Lintra Beteiligungsholding GmbH and the
remaining investors in September 1999, the BvS acquired Lintra Beteiligungsholding GmbH for
DEM 1. The company has been in liquidation since 1 January 2000.

(20)

By letter dated 22 June 1999 the Commission informed Germany that it had decided to initiate the
procedure laid down in Article 88(2) of the EC Treaty. It expressed doubts about the following
points: (a) whether it had been provided by Germany with complete and correct information prior to
its decision of 13 March 1996; (b) the extent to which the aid was used within the scope of the
decision of 13 March 1996; and (c) whether any further aid had been granted to the Lintra group.

III. COMMENTS FROM INTERESTED PARTIES

(21)

The Commission received no comments from interested parties.

IV. COMMENTS FROM GERMANY

(22)

The Commission's decision to initiate the Article 88(2) procedure contained in an annex additional
questions to which Germany answered by letter dated 10 October 1999. By letter dated 10 March
2000, Germany submitted comments on the points raised by the Commission in the decision to
initiate the procedure. In its comments Germany described the main elements of the continued
restructuring of the Lintra group, provided information on the aid granted by the BvS and its further
use within the Lintra group and presented its arguments on the doubts raised in the decision to
initiate the procedure. In its reply to the information request sent to it on 1 August 2000, Germany
argued that the use of aid within Lintra Beteiligungsholding GmbH was covered by the decision of
13 March 1996. The aid approved by the Commission in 1996 for the restructuring of the Lintra
group amounted to DEM 824,2 million, whereas only DEM 658,202 million had actually been
granted to the group. The sole aim of the holding company, which did not pursue any separate
business activity, was to facilitate the restructuring of the subsidiaries. The holding company
centrally provided services in exchange for fees from the subsidiaries and the aid used by the
subsidiaries to refinance these fees was spent on facilitating the restructuring. The services provided
by the Lintra holding company to the subsidiaries would otherwise have had to be contracted for by
the latter externally. Both the notified plan for the restructuring of the Lintra subsidiaries and the
decision of 13 March 1996 expressly referred to the holding structure.

V. ASSESSMENT

A. Complete/correct information

(23)

The doubts expressed in the decision initiating the procedure as to whether Germany had provided
the Commission with complete and correct information related to the following two aspects.

(a) The privatisation of the Lintra subsidiaries was the subject of an investigation by the German
Federal Court of Auditors about which the Commission was not informed at the time of its
decision. As such, an investigation could have been relevant for the Commission's assessment of
the compatibility of the aid. The Commission therefore doubted whether, when initiating the
procedure, it was provided with complete information prior to its decision of 13 March 1996.

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(b) The Commission expressed doubts in the decision initiating the procedure whether the German
authorities might have already known, during the Commission's assessment of the aid, that the
Lintra group had run into serious difficulties and therefore failed to provide the Commission
with correct information.

(24)

Regarding the question whether the Commission was provided with complete information prior to
its decision of 13 March 1996, the Commission notes that the privatisation of the Lintra subsidiaries
was in fact the subject of an investigation by the German Federal Court of Auditors which started in
September 1995 and was concluded by a report on 16 September 1996. Following the initiation of
the procedure, Germany submitted the complete correspondence between the BvS and the Court of
Auditors as well as the final report. The correspondence between September 1995 and March 1996
shows that during this period the Court of Auditors only raised concerns about one of the
contractual provisions, namely on the potential sharing of the BvS in future profits of the subsidia-
ries. A knowledge of the correspondence between the Court of Auditors and the BvS up until March
1996 would not have been a determining factor in the decision. The results of the final report were
presented by the Court of Auditors only in September 1996, i.e. some six months after the decision
of 13 March 1996, and could therefore not have been taken into account by the Commission at the
time it was judging the compatibility of the aid.

(25) With respect to the question whether the Commission was supplied with correct information at the
time of its decision, the Commission notes that the aid measures were notified to it in January 1995
and that in January 1996 Germany provided it with an estimate of the losses for 1995 (DEM 65
million). The BvS had received this estimate from the Lintra group in December 1995. In June 1996
the accountants presented to the BvS the annual accounts for 1995 (in accordance with an
obligation in the privatisation contract to submit the accounts on that date), revealing that, instead of
the DEM 65 million of losses estimated by the Lintra holding company in December 1995, the
actual losses in 1995 had in fact been DEM 115 million. In view of the very high volume of the aid
package approved by the Commission and the amount of the approved loss cover, it seems plausible
that the Commission in its decision accepted a limited viability of the companies during the first few
years of restructuring and would not have taken a different decision had it had more precise figures
on the actual
losses incurred in 1995. Therefore, even though the Commission had partially
incorrect information at the time of its decision, the information would not have been a determining
factor in the decision.

B. Use of authorised aid and further aid measures

(26)

Following the initiation of the Article 88(2) procedure, Germany provided an overview of the use
made of the granted aid. The results are shown in the following table, which indicates that, of the
total aid of DEM 824,2 million authorised by the Commission in 1996, only part (DEM 658,202
million) was granted to the Lintra group. According to the information provided by Germany, of the
amount of DEM 658,202 million granted to the Lintra group, DEM 623,224 million was granted to
the subsidiaries and DEM 34,978 million remained within Lintra Beteiligungsholding (until 31
December 1997).

Measure

Commission approval
of 23 April 1996

Aid granted by
THA/BvS

(million DEM)

Total aid to ensure an approved equity capital of DEM 130 million
on 31 December 1994

569,2

415,437

Loss cover between 1995 and 1997

175,0

175,002

Liquidity loans 1997

Grants for financing the restructuring

Guarantees for financing the restructuring

Investment loan

40,0

40,0

12,0

40,010

7,042

8,711

Total aid

824,2

658,202

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(27) With respect to the provision of equity capital, the Commission, in its decision of 13 March 1996,
approved the provision to the Lintra subsidiaries of an equity capital of DEM 130 million by 31
December 1994. This was to have been achieved by waiving claims to shareholders'
loans of
DEM 314,3 million and by grants of DEM 68,9 million. Furthermore, the BvS was authorised to
cover losses in 1994 up to a maximum of DEM 186 million by awarding grants. The total aid
approved by the Commission to ensure an equity capital of DEM 130 million therefore amounted to
DEM 569,2 million. The Commission concludes that
the equity capital of
DEM 130 million by the BvS to the Lintra group was in accordance with the decision of 13 March
1996, taking account of modifications due to financial clearing within the Lintra group and the
delayed provision of equity capital by the BvS. The total necessary aid required to achieve an
authorised equity capital of DEM 130 million for the Lintra group amounted to only DEM 415,437
million,

instead of the approved DEM 569,2 million.

the provision of

(28) With respect to the loss participation, the Commission, in its decision of 13 March 1996, approved
aid to cover annual deficits during the period 1995 to 1997 of up to DEM 175 million in the form
of waivers of existing claims and up to a maximum of DEM 175 million in total, assuming up to
100 % of the losses in 1995, 95 % in 1996 and 90 % in 1997. The losses were to be covered in the
form of waivers of existing claims. The losses incurred by the Lintra group in 1995 were fully
covered (DEM 115,1 million). The losses for 1996 were only partially offset (DEM 30,9 million out
of a total of DEM 123,8 million) and, in the absence of shareholder loans to the originally assumed
extent, the BvS granted the remaining DEM 29 million from the loss cover obligations to the Lintra
subsidiaries in order to cover annual deficits in 1996.

(29)

(30)

(31)

The amount of DEM 12 million was granted after the known failure of the first restructuring
operation in the form of
liquidity loans to the Lintra subsidiaries in preparation for further
restructuring. Although the first attempt at restructuring the Lintra group had to be regarded as
having failed in December 1996, the BvS decided at that time to continue the restructuring of
potentially viable entities for resale to industrial partners as soon as possible. In this situation, a
liquidity loan of DEM 12 million from the budget that was still available from the first restructuring
of the Lintra group was granted to a number of subsidiaries. It was used to repay overdue bills and
was granted between April and June 1997 to those subsidiaries for which a second restructuring
seemed feasible. As this aid was granted by the BvS after the known failure of the first restructuring
of the Lintra group and in preparation for the second restructuring, it cannot be regarded as being
covered by the decision of 13 March 1996.

For the financing of the restructuring of the Lintra subsidiaries up until the end of 1997, the
Commission, in its decision of 13 March 1996, approved a grant of DEM 40 million and the award
of guarantees amounting to DEM 40 million. The approved grants of DEM 40 million were paid
out in full. The guarantees of DEM 40 million were granted up to an amount of DEM 7,042 million
and supplemented by an investment loan of DEM 8,711 million.

In answer to the question whether any aid measure approved under the decision of 13 March 1996
was used for purposes other than those of the approved restructuring plan, Germany in its letters of
18 October 1999 and 10 March 2000 submitted detailed information on the restructuring measures.
With respect to the development of the individual companies up to the failure of the original
privatisation plan in December 1996, the Commission has noted the following.

(32) Gothaer Fahrzeugwerk GmbH: a comparison between the investments carried out between 1994 and
1997 and the original investment plan of Emans & Partners GbR does not lead to the conclusion
that the originally planned investment projects were not carried out. Although the originally planned
level of capital expenditure was almost achieved,
it is at the same time observable that the
investments were undertaken later than planned. According to the information provided by
Germany, this was due to technically induced preparation and completion times and to the fact that
the final positioning of the company on the market was for a fairly long period insufficiently clear.

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(33)

(34)

ILKA MAFA: regarding ILKA MAFA, the Commission notes that the original investment plan of
Emans & Partners GbR was the least detailed of all the investment plans and, at DEM 6,6 million,
involved the second lowest planned volume of investments. This planned amount for the years 1994
to 1997 exceeded the actual level of investments of DEM 4,5 million. The relatively low investment
was due to the uncertainty which from the outset surrounded the positioning of the company on the
market.

LandTechnik Schönebeck GmbH: until the failure of the first restructuring operation, the imple-
mented investments were essentially carried out within the framework of the original investment
plans. Regarding the investment amount, the originally planned investment volume exceeded the
actual volume of investments during the period 1994 to 1997. This disproportion between planned
and realised investment reflects the problems the company had in repositioning itself on the market,
which it was unable to resolve satisfactorily. For want of sufficient success with the development of
marketable products, much less of the originally planned investment reached the final decision stage.

(35) Magdeburger Eisengießerei GmbH (MEG): although the original investment plans of Emans & Part-
ners GbR provided for a total volume of investments during the period 1994 to 1997 of DEM 5,9
million, the company had until the end of 1996 already carried out investments of up to DEM 6,8
million. The Commission notes that this relatively high investment did not result in any form of
market success. One of the major strategic goals of the reorganisation of MEG was to achieve less
dependency on orders from the SKL companies. The planned repositioning on the market was not
achieved as it was not possible to attract a new customer base. Following the loss of SKL-A as a
customer due to its liquidation and decreasing demand from SKL-M, MEG increasingly came under
pressure and, in November 1997, had to file for insolvency. According to the information provided
by Germany, neither MEG nor the hive-off vehicle set up to continue business operations, Eisengie-
ßerei Magdeburg GmbH (EGM), received any State aid following the initiation of the insolvency
proceedings.

(36)

(37)

(38)

(39)

Saxonia Edelmetalle GmbH: the overview of the investments carried out between 1994 and 1997
shows that the original investment plan was implemented in a modified form, the planned invest-
ment volume for this period of DEM 24,0 million being exceeded by the realised investments of
DEM 26,0 million. The investments implemented resulted in a successful reorientation of the
company on the market. Apart from investments for the improvement of the production of
semi-finished precious metal products, the core investments were carried out in the areas of
reinforcement of wet chemistry for the production of precious metal products, precious metal
recycling and a considerable extension of galvanising technologies. These investment priorities
created the preconditions for the acquisition of the company by a stronger industrial partner,
Vereinigte Deutsche Nickelwerke. The plan of the new shareholders of Saxonia contains, according
to the information provided by Germany, investments totalling DEM 10 million until the end of
2000 without any participation by the BvS.

SKL-A: during the entire period, the planned investment volume exceeded the actual investment and
it is observable that no more investments of any magnitude were carried out after 1995. As it was
not possible to reorient the company towards market requirements with the help of a stronger
industrial partner, the decision was taken in June 1996 to liquidate it.

SKL-M: according to the original investment plans of Emans & Partners GbR, SKL-M had the most
extensive investment programme of all the Lintra subsidiaries, with a total planned volume of
DEM 45,2 million. Although the actual
investments during the period 1994 to 1997 clearly
exceeded original expectations, the planned market orientation of the company was not achieved
satisfactorily. The most extensive capital expenditure was required by the establishment of new
engine test stands. According to the information provided by Germany, the investments into the
construction of four universal test stands, an additional test stand serving research and development
purposes for single-cylinder engines and a research and development test stand were fully imple-
mented. The Commission considers that up until the failure of the first restructuring operation the
original

investment plan was implemented to a substantial degree.

ZEMAG GmbH: a comparison between the investments originally planned by Emans & Partners GbR
and the actual investments carried out between 1994 and 1997 shows that the planned investment
volume exceeds the actual volume of investments by approximately DEM 1,7 million. According to
the information provided by Germany, this decrease in the volume of investments was due mainly to
the uncertainties surrounding the development of the company's crane-building division, where no
strategies or measures for a successful positioning on the market were implemented. At the end of
1997 the company was sold to the investors Jacobi & Lobeck, who stopped the building of cranes
and sold this company division.

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(40)

In conclusion, as regards the use made of the aid within the Lintra subsidiaries, the Commission
considers that, up until the failure of the restructuring operation in December 1996, the aid was
essentially used in accordance with the requirements of the restructuring plans approved by the
Commission. In this respect the Commission has taken into account the fact that the restructuring
plans on which the decision of 13 March 1996 was based were at that time not drawn up in a
particularly detailed form. On the basis of the information submitted by Germany following the
initiation of the procedure and in consideration of the above, the Commission considers that the
following aid amounts, granted to the subsidiaries in the context of the first restructuring operation,
were granted in conformity with the decision of 13 March 1996:

(million DEM)

Company

SKL-M

SKL-A

ZEMAG

ILKA MAFA (DIPA)

LTS

GFW

Saxonia

MEG

Total

Total aid

128,439

25,470

65,617

37,635

168,478

103,086

86,672

7,827

623,224

(41)

In the decision initiating the procedure the Commission also expressed doubts regarding the question
whether any new aid had been awarded to the Lintra group. The Commission notes that, following
the failure of the original restructuring operation, the restructuring process was interrupted at the
beginning of 1997 and the restructuring plans were substantially modified due to circumstances that
were at least partly unforeseeable when the restructuring was approved. From the date on which it
became clear to it that the original restructuring operation had failed, Germany could no longer rely
on the Commission's original approval to justify the granting of aid to the Lintra subsidiaries inter
alia,
in preparation for a second restructuring operation. There were clearly difficulties in the
monitoring of the Lintra privatisation programme by the BvS, and these seem to have been behind
the delayed notification of further aid to the Lintra subsidiaries, granted in anticipation of and in
preparation for a second round of restructuring. The additional information received from Germany
has helped remove the doubts raised in the decision initiating the procedure with respect to an
assumed award of DEM 73,6 million in December 1996, a supplementary investment loan of
DEM 8,711 million and an assumed award of DEM 29 million in December 1998. Germany has
confirmed that all new aid has now been fully declared in the new notifications by former Lintra
subsidiaries. All new aid in the context of the continued restructuring of the subsidiaries will be
assessed separately in the context of the assessment of the second restructuring of former Lintra
subsidiaries.

(42)

In so far as aid granted to the Lintra group was not used for the purposes envisaged under the
approved restructuring plan, it falls outside the scope of the decision of 13 March 1996. It follows
from that decision that all aid should have been used directly for the purpose of restructuring the
Lintra subsidiaries. Neither the notified restructuring plan nor the decision explicitly provides for any
use of aid in Lintra Beteiligungsholding GmbH, which, moreover, would not even have been eligible
for restructuring aid as it was not a company in difficulty. Nor was any use of aid by the subsidiaries
for the purpose of purchasing services from Lintra Beteiligungsholding GmbH expressly provided for
in the restructuring plan or the decision of 13 March 1996. Germany has confirmed that it cannot
rule out that aid may in fact have been used by the subsidiaries to pay for services provided by that

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company. In addition, in reply to the information request Germany provided only a very rough set
of figures on the overall expenses of Lintra Beteiligungsholding GmbH (personnel costs, legal costs,
office rents, etc.) without demonstrating exactly what services the company provided at what time to
which subsidiaries in return for payment. As Germany has been unable to provide enough evidence
in this respect, the Commission must consider that the amount of DEM 34,978 million which
remained within Lintra Beteiligungsholding is not covered by its decision of 13 March 1996.

(43)

The part of the granted aid that remained in Lintra Beteiligungsholding, namely DEM 34,978
million, has not been used in accordance with the provisions of the approved restructuring plan. It
was therefore used by the recipient in contravention of the decision of 13 March 1996 and
constitutes misuse of aid within the meaning of Article 88(2) of the EC Treaty, read in conjunction
with Article 1(g) of Regulation (EC) No 659/1999. The Commission concludes that the amount of
DEM 34,978 million, which remained within Lintra Beteiligungsholding, has been misused.

(44) Germany must recover the misused aid amounting to DEM 34,978 million from Lintra Beteiligung-
sholding GmbH and its subsidiaries. This amount can be broken down into an amount of DEM 12
million of liquidity loans, which was transferred in early 1997 to various subsidiaries, and a residual
amount of DEM 22,978 million, the use of which Germany was unable, in its answer to the request
for information, to give a detailed account of. For the reasons given in recitals 29 and 42 in
particular, the amount of DEM 12 million and that of DEM 22,978 million do not fall within the
scope of the decision of 13 March 1996. Since the aid was originally granted to the Lintra group as a
whole and since that group no longer exists, the Commission is not required to examine to what
extent the individual companies within the group benefited from the aid. The repayment obligation
should accordingly be imposed on all the companies which belonged to the group at the time the aid
was granted.

(45) On the basis of the information provided by Germany, Lintra Beteiligungsholding GmbH undoubt-
edly received the whole aid amount. As regards the DEM 22,978 million, Germany has not proved
that the amount was passed on to the subsidiaries. Under these circumstances the whole amount
must be recovered from Lintra Beteiligungsholding and the subsidiaries. Although Germany has not
enabled the Commission to establish in detail how this part of the aid was actually used, it is
nevertheless considered appropriate to limit the repayment obligation incumbent on each separate
subsidiary to an amount corresponding to its share of the total volume of aid compatible with the
common market which the subsidiaries received. The amount of DEM 12 million can clearly be
linked to those subsidiaries to which it was granted after the failure of the first attempt to restructure
the Lintra group came to light. On the basis of information which Germany has supplied, the
DEM 12 million must be recovered from the individual subsidiaries as follows:

Company

(thousand DEM)

SKL-M

ZEMAG

ILKA MAFA

LTS

GFW

MEG

3 934

4 077

400

130

3 300

159

Total

12 000

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(46) As the information available did not allow the amount of DEM 22,978 million to be apportioned
among the subsidiaries, the Commission decided to ask Germany to provide all relevant information.
On the basis of the information received from Germany in its response to the information request,
the Commission considers that the amount of DEM 22,978 million should be apportioned among
the subsidiaries in proportion to the aid received by them during the restructuring period:

SKL-M

SKL-A

MEG

GFW ILKA MAFA SAXONIA

ZEMAG

LTS

128 439

25 470

7 827

103 086

37 635

86 672

65 617

168 478

20,61

4,09

1,26

16,54

6,04

13,91

10,53

27,03

Aid
(1 000 DEM)

Share
(%)

The misused aid amounting to DEM 22,978 million must accordingly be recovered jointly and
severally from Lintra Beteiligungsholding GmbH, which is liable for the whole amount, and from
each of the Lintra subsidiaries up to the share corresponding to the aid received by each of them. On
the basis of the above proportions, the misused aid must be recovered from each of the subsidiaries
up to the following amounts:

(DEM)

Company

SKL-M

SKL-A

ZEMAG

ILKA MAFA

LTS

GFW

Saxonia

MEG

Total aid

4 735 491

939 068

2 419 271

1 387 586

6 211 711

3 800 736

3 195 559

288 578

Total

22 978 000

Any amount recovered from Lintra Beteiligungsholding can only reduce the liability of each
individual Lintra subsidiary in the same proportions. Any sale of Lintra subsidiaries to investors after
the failure of the first restructuring operation cannot stand in the way of the full application of
Community law and can therefore have no effect on the obligation to recover the aid in question (5).

VI. CONCLUSIONS

(47) On the basis of the information provided by Germany following the initiation of the Article 88(2)
procedure, the Commission concludes that, although Germany failed to provide the Commission
with complete and correct information prior to its decision, this information would not have been a
determining factor in the decision. Consequently, the conditions set out in Article 9 of Regulation
(EC) No 659/1999 for revocation of the decision of 13 March 1996 are not met.

(5) Judgment of the Court of Justice in Case C-303/88 Italy v Commission [1991] ECR 1-1433, at paragraph 60.

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L 236/13

(48)

(49)

The Commission notes that, of the total amount of aid authorised in 1996, i.e. DEM 824,2 million,
the Lintra group received DEM 658,202 million. With respect to the question to what extent the
granted aid was used in accordance with the terms of the decision of 13 March 1996, the
Commission concludes that an amount of DEM 623,224 million was used in accordance with its
decision and is therefore compatible with the common market. On the other hand, the amount of
DEM 34,978 million, which remained within Lintra Beteiligungsholding, was not used in accordance
with the decision of 13 March 1996.

The amount of misused aid totalling DEM 34,978 million must be recovered from Lintra Beteili-
gungsholding GmbH and the Lintra subsidiaries as follows: the amount of DEM 12 million must be
recovered from the Lintra subsidiaries as laid down in recital 45, and the amount of DEM 22,978
million must be recovered jointly and severally from Lintra Beteiligungsholding and each of the
Lintra subsidiaries as laid down in recital 46,

HAS ADOPTED THIS DECISION:

Article 1

Aid amounting to DEM 623,224 million, which was authorised by the Commission for the privatisation
and restructuring of the companies Zeitzer Maschinen, Anlagen Geräte GmbH, LandTechnik Schlüter
GmbH, ILKA MAFA Kältetechnik GmbH, SKL Motoren-und Systembautechnik GmbH, SKL Spezialappara-
tebau GmbH, Magdeburger Eisengießerei GmbH, Saxonia Edelmetalle GmbH and Gothaer Fahrzeugwerk
GmbH (hereinafter called the Lintra subsidiaries), together with the holding company EFBE Verwaltungs
GmbH & Co. Management KG, now Lintra Beteiligungsholding GmbH, was granted in conformity with the
decision of 13 March 1996.

An amount of DEM 34,978 million, which was authorised by the Commission for the restructuring of the
Lintra subsidiaries, has been misused within the meaning of Article 88(2) of the EC Treaty.

Article 2

Article 3

Germany shall take all necessary measures to recover the misused aid referred to in Article 2 totalling

1.
DEM 34,978 million from Lintra Beteiligungsholding GmbH and the Lintra subsidiaries.

An amount of DEM 12 million shall be recovered from the subsidiaries as follows:

(DEM)

Company

SKL-M

ZEMAG

ILKA MAFA

LTS

GFW

MEG

Total aid

3 934 000

4 077 000

400 000

130 000

3 300 000

159 000

Total

12 000 000

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The remaining amount of DEM 22,978 million shall be recovered jointly and severally from Lintra
Beteiligungsholding GmbH, which shall be liable for the whole amount, and from each of the Lintra
subsidiaries up to the following amounts:

(DEM)

Company

SKL-M

SKL-A

ZEMAG

ILKA MAFA

LTS

GFW

Saxonia

MEG

Total aid

4 735 491

939 068

2 419 271

1 387 586

6 211 711

3 800 736

3 195 559

288 578

Total

22 978 000

Any amount recovered from Lintra Beteiligungsholding GmbH shall reduce the liability of each of the
individual Lintra subsidiaries in the same proportions.

Recovery shall be effected without delay and in accordance with the procedures of national law
2.
provided that they allow the immediate and effective execution of the decision. The aid to be recovered
shall include interest from the date on which it was at the disposal of the recipients until the date of its
recovery. Interest shall be calculated on the basis of the reference rate used for calculating the grant
equivalent of regional aid.

Germany shall inform the Commission within two months of the date of notification of this Decision of
the measures taken to comply therewith.

Article 4

This Decision is addressed to the Federal Republic of Germany.

Article 5

Done at Brussels, 28 March 2001.

For the Commission

Mario MONTI

Member of the Commission