Commission Decision of 2 October 2001 on German aid to the coal industry for the period from 1 January 2002 to 23 July 2002 (Text with EEA relevance) (notified under document number C(2001) 3005)
Date: 2001-10-02
Institutions: European Commission
Subjects: Germany, State aid, application of EU law, coal industry, control of State aid

27.2.2002

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Official Journal of the European Communities

L 56/27

COMMISSION

COMMISSION DECISION

of 2 October 2001

on German aid to the coal industry for the period from 1 January 2002 to 23 July 2002

(notified under document number C(2001) 3005)

(Only the German text is authentic)

(Text with EEA relevance)

(2002/171/ECSC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(a) operating aid within the meaning of Article 3 of the

Decision totalling DEM 1 917 million;

Having regard to the Treaty establishing the European Coal and
Steel Community,

Having regard to Commission Decision No 3632/93/ECSC of
28 December 1993 establishing Community rules for State aid
to the coal industry (1), and in particular Article 9(4) thereof,

Whereas:

I

(1)

(2)

(3)

By letter of 22 November 2000, Germany notified the
Commission, in accordance with Article 9(1) of Decision
No 3632/93/ECSC, of the financial measures it intended
to take for the coal

industry in 2002.

Decision No 3632/93/ECSC expires on 23 July 2002.
Accordingly, the Commission can, in accordance with
the aforementioned Decision, only decide on aid to be
granted to the coal industry up to 23 July 2002. Conse-
quently, by letter of 30 January 2001 the Commission
asked Germany to specify the amounts for each type of
aid to be granted in the period from 1 January to 23
July 2002.

The information requested by the Commission was
transmitted by letter of 16 July 2001. Germany calcu-
lated the amounts of aid for the period from 1 January
to 23 July 2002 on the basis of a theoretical model in
which the number of days of coal production in the
aforementioned period was related to the number of
days of coal production during the whole of 2002.

(4)

Pursuant to Decision No 3632/93/ECSC, the Commis-
sion is required to take a decision on the following
financial measures:

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

(b) aid for the reduction of activity within the meaning
the Decision totalling DEM 785

of Article 4 of
million;

(c) aid within the meaning of Article 3 of the Decision
totalling DEM 33 million to maintain an under-
ground labour force (Bergmannsprämie);

(d) aid to cover exceptional costs within the meaning of
the Decision totalling DEM 1 320

Article 5 of
million.

(5)

In addition to the abovementioned amounts, the inten-
tion is to grant a cross-subsidy of DEM 200 million
from the non-coal sector of RAG AG. This commitment
of the undertaking forms part of an agreement (coal
agreement) concluded on 13 March 1997 between the
German Government and the regional governments of
North Rhine-Westphalia and Saarland and the coal
industry after consultation with the coalminers' trade
unions and the electricity sector. The German Govern-
ment guarantees the amount required to reach the level
of the planned cross-subsidy, with RAG AG paying the
German Government an amount equal to 0,25 % of this
guarantee per half-year. Any sums received under this
guarantee scheme must be paid back from the future
profits of RAG AG deriving from its non-coal activities.

(6)

In its letter of 22 November 2000 Germany confirmed
that RAG AG would for 2002 transfer DEM 200
million from its non-coal sector to the coal sector. The
statements made by Germany in no way indicate that
the amount specified has to be taken up from the
the
German Government's guarantee. Accordingly,

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amount does not include an aid component within the
meaning of Article 4(c) of the ECSC Treaty. Moreover,
the price to be paid by RAG AG for the German
Government's guarantee is commensurate with any
advantages which the undertaking could draw from it.

(11)

likely to drop by about 6 % and in 2002 by about
4 % (*).

These reductions in production costs are the result, in
particular, of the gradual closure of the least profitable
production units that do not meet the criteria laid down
in Article 3 of Decision No 3632/93/ECSC. In accord-
ance with the plan for the modernisation, rationalisation
and restructuring of and reduction of activity approved
by the Commission in its Decision 2001/361/ECSC, the
Friedrich Heinrich/Rheinland and Niederberg mines will
be amalgamated in 2002. Production at the Niederberg
site will be discontinued and the two remaining coal-
fields will be attached to the Friedrich Heinrich/Rhein-
land mine. After amalgamation, the production capacity
of the mines should be reduced to some 3,5 million
tonnes, a reduction estimated at 2 million tonnes
compared with 2000. The amalgamated mines should
employ 3 800 underground workers, a reduction of
around 1 000 posts compared with 2000.

The reduction in production costs will help to improve
industry.
the economic viability of the German coal
Although the level of costs remains high, the continuous
efforts which have led to a significant and sustained
reduction in production costs mean that coal mining is
less unprofitable and uncompetitive.

conditions

and economic

The Commission has carried out a detailed analysis of
the geological
situation
specific to each production unit. Although there are
certain variations between the production costs of the
various production units,
the situation for each site
considered individually does not differ significantly from
the situation and development of the coal industry as a
whole. The terms and conclusions of the analysis of the
data relating to the whole of the German coal industry
therefore also apply mutatis mutandis to each of the
various production units.

(12)

(13)

(14) Although the coal agreement of 1997 provided for an
output of 37 million tce (3)
the additional
measures concerning reduction of activity will cut
production in 2002 to less than 28,5 million tce.

in 2002,

(15)

(16)

The German restructuring measures have helped,
in
accordance with Article 2(1), first indent, of Decision No
3632/93/ECSC, to achieve degression of aid in the coal
industry.

In accordance with Article 3(1), first indent, of Decision
No 3632/93/ECSC, Germany is taking the necessary
measures to ensure that the amount of aid per tonne
does not exceed for each production unit the difference
between production costs and foreseeable revenue.
Moreover, Germany undertakes, to ensure, in accordance

(*) The Commission Decision contains data regarding Deutsche Stein-
kohle AG that must be regarded as confidential. They have been
replaced by percentages solely for the purpose of this publication.

(3) tce = tonnes coal equivalent.

(7)

The financial measures proposed by Germany as referred
to in point 4 come under the provisions of Article 1(1)
of Decision No 3632/93/ECSC.
In accordance with
Article 9(4),
the Commission is required to give its
approval for these measures. For this purpose, it checks
whether they conform to the general objectives and
criteria defined in Article 2 and the specific criteria
defined in Articles 3, 4 and 5 of the Decision and
whether they are compatible with the functioning of the
common market. Furthermore,
in accordance with
Article 9(6) of the Decision, the Commission has to
decide whether the notified measures are compatible
with the plan for the modernisation, rationalisation and
restructuring of and reduction of activity in the German
coal
industry which the Commission authorised by
Decision 1999/270/ECSC (1) and Decision 2001/361/
ECSC (2).

II

(8)

The amount of DEM 1 917 million that Germany is
proposing to grant to the coal industry under Article 3
of Decision No 3632/93/ECSC for the period from 1
January to 23 July 2002 is intended to cover the differ-
ence between production costs and the selling price for
coal freely agreed between the contracting parties on the
basis of the conditions prevailing on the world market
for coal of similar quality from third countries.

(9)

This aid is granted only to cover operating losses linked
to production capacities meeting the conditions laid
down in Article 2(1),
indent, and Article 3 of
first
Decision No 3632/93/ECSC.

(10)

The measures relating to restructuring, rationalisation,
modernisation and reduction of activity in the coal
industry taken since 1994 have enabled significant
progress to be made in reducing production costs for
coal. For production capacities
receiving aid under
Article 3 of Decision No 3632/93/ECSC, production
costs, expressed at constant 1992 prices, dropped by
15 % between 1994 and 2000. In 2001, these costs are

(1) OJ L 109, 27.4.1999, p. 14.
(2) OJ L 127, 9.5.2001, p. 55.

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with Article 3(1), third indent, of the Decision, that the
amount of operating aid per tonne does not cause deliv-
ered prices for Community coal to be lower than those
for coal of a similar quality from third countries.

(22)

In accordance with Article 4(2) of Decision No 3632/
93/ECSC, exceptional social and regional grounds justify
the postponement of the closure of certain production
units beyond the date of expiry of the ECSC Treaty.
These measures form part of a plan for the gradual and
continuing reduction of activity providing for a signifi-
cant reduction in production before the expiry of the
abovementioned Decision.

(17)

the modernisation,

Should it transpire that certain production capacities
could not meet the conditions laid down in Article 3 of
Decision No 3632/93/ECSC, Germany will give the
reasons for any deviations from the forecasts given in
the plan for
rationalisation and
restructuring of and reduction of activity in the coal
industry and from the economic and financial forecasts
submitted to the Commission in connection with the
notification of aid relating to 2002. Where appropriate,
Germany will propose to the Commission, on its own
initiative, the necessary corrective measures,
including
measures to reduce production capacity.

(18) On the basis of the information provided by Germany,
and having regard to the obligations of the German
Government set out in recitals 36 to 44 of this Decision,
the operating aid planned for the period from 1 January
to 23 July 2002 is compatible with Decision No 3632/
93/ECSC, and in particular Articles 2 and 3 thereof.

(23)

In accordance with Article 3(1), first indent, of Decision
No 3632/93/ECSC, Germany is taking the necessary
measures to ensure that the amounts of aid per tonne do
not exceed for each production unit
the difference
between production costs and foreseeable revenue.
Moreover, Germany undertakes to ensure, in accordance
with Article 3(1), third indent, of the abovementioned
Decision,
the amount of aid for reduction of
capacity per tonne does not cause delivered prices for
Community coal to be lower than those for coal of
similar quality from third countries.

that

(24) On the basis of the information provided by Germany,
and having regard to the obligations on the German
Government set out in recitals 36 to 44 of this Decision,
the aid for reduction of capacity planned for the period
from 1 January to 23 July 2002 is compatible with
Decision No 3632/93/ECSC, and in particular Articles 2
and 4 thereof.

(19)

(20)

(21)

III

The
sum of DEM 785 million that Germany is
proposing to grant to the coal industry under Article 4
of Decision No 3632/93/ECSC for the period from 1
January to 23 July 2002 is intended to cover the differ-
ence between production costs and the selling price of
coal freely agreed between the contracting parties on the
basis of the conditions prevailing on the world market
for coal of a similar quality from third countries.

In accordance with Article 4(1) of the abovementioned
Decision, this aid is granted only for the purpose of
covering the operating losses
linked to production
capacities which are unable to meet the conditions laid
down in Article 3(2) of the Decision.

(25)

The aid is intended to cover operating losses linked to
production capacities closed down in the amalgamation
of
the Friedrich Heinrich/Rheinland and Niederberg
mines and the operating losses of production units to be
closed down after 2002 in accordance with Decision
2001/361/ECSC. All of
reductions
combined should bring about a concentration of
production at those sites offering, in terms of produc-
tion costs, the best prospects of improving economic
viability.

capacity

these

IV

The aid measures totalling DEM 33 million are intended
to fund the payments to miners in the German coal
industry (Bergmannsprämie) for the period from 1 January
to 23 July 2002. This is an incentive scheme, amounting
to a sum of DEM 10 per underground job, aimed at
encouraging skilled workers to work underground and
rationalising production. According to the notifications
submitted by Germany, this aid covers a cash benefit for
miners. Although this payment to miners is not involved
directly in the calculation of the production costs of the
undertaking, the aid intended to cover this payment
relieves the wage burden on the undertaking. Accord-
ingly, this payment relates, in the broad sense, objec-
tively to a component of the production costs of the
undertaking concerned and as
such constitutes aid
within the meaning of Article 1(2) which has to be
examined in accordance with the provisions of Article 3
of Decision No 3632/93/ECSC.

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(26)

(27)

(28)

The proposed aid facilitates the restructuring and ratio-
nalisation of the coal industry by allowing productivity
levels to be raised as far as possible. This aid therefore
helps to achieve the objective referred to in Article 2(1),
first indent, of Decision No 3632/93/ECSC, namely to
in the light of coal prices on international
make,
markets,
further progress towards economic viability
with the aim of achieving degression of aid.

This aid will help to some extent, in accordance with the
provisions of Article 3 of Decision No 3632/93/ECSC,
to make the coal industry more competitive by helping
to reduce the costs of coal mining, thanks to increased
productivity achieved by maintaining a skilled under-
ground labour force.

In accordance with Article 3(1), first indent, of Decision
No 3632/93/ECSC, Germany undertakes to ensure that
the combination of the Bergmannsprämie with other aid
for current production does not exceed,
for each
production unit, the difference between production costs
and foreseeable revenue.

workers before they reach statutory retirement age;
other exceptional expenditure on workers who lose their
jobs as a result of restructuring and rationalisation; the
payment of pensions and allowances outside the statu-
tory system to workers who lose their jobs as a result of
restructuring and rationalisation and to workers entitled
to such payments before restructuring; the supply of free
coal to workers who lose their jobs as a result of restruc-
turing and rationalisation and to workers entitled to
such payments before restructuring. On the technical
and financial levels, the aid is intended to cover addi-
tional underground safety work resulting from restruc-
turing and exceptional
intrinsic depreciation provided
that it results from the restructuring of the industry.

(33)

These costs correspond to the categories defined in the
Annex to Decision No 3632/93/ECSC and more specifi-
cally the costs mentioned in points I(a) to (d), (f) and (k).
In accordance with Article 5(1) of the abovementioned
Decision, the amounts of aid proposed by Germany for
the period from 1 January to 23 July 2002 do not
exceed the costs incurred.

(29) Having regard to the above and on the basis of the
information provided by Germany, the aid proposed for
the period from 1 January to 23 July 2002 for the
Bergmannsprämie is compatible with the objectives of
Decision No 3632/93/ECSC, and in particular Articles 2
and 3 thereof.

(34)

The reduction in pressure on the undertaking receiving
aid made possible by the covering of these costs will
reduce its financial imbalance and enable it to continue
its activities. The aid therefore complies with the objec-
tives of Article 2(1) of Decision No 3632/93/ECSC.

(30)

(31)

V

The amount of DEM 1 320 million that Germany is
proposing to grant to the coal industry under Article 5
of Decision No 3632/93/ECSC for the period from 1
January to 23 July 2002 is intended to cover the costs
arising from or having arisen from the modernisation,
industry
rationalisation and restructuring of
which are not related to current production (inherited
liabilities).

the coal

(35) Having regard to the above, and on the basis of the
information communicated by Germany,
the aid to
cover exceptional costs for the period from 1 January to
23 July 2002 is compatible with the objectives of
Decision No 3632/93/ECSC, and in particular Articles 2
and 5 thereof.

VI

The closure of three mines in 2000, namely the West-
falen, Göttelborn/Reden and Ewald/Hugo mines, justify
this relatively high amount of aid. The amalgamation of
the Auguste Victoria and Blumenthal/Haard mines in
the Friedrich Heinrich/Rheinland and
2001 and of
Niederberg mines in 2002 also leads to a rise in excep-
tional costs.

(36) Given that the aim is to minimise aid, and pursuing the
principle applied by Germany that aid is only to be paid
for production which is supplied for electricity genera-
tion and to the Community iron and steel
industry,
Germany undertakes to sell the production intended for
use by industry and as domestic coal at prices (net prices
without discounts) which cover the production costs.

(32)

This aid is intended to cover the following, with the
exception of the costs of social benefits borne by the
State by way of the special contribution referred to in
Article 56 of the ECSC Treaty: the cost of paying social
welfare benefits resulting from the pensioning-off of

(37)

In accordance with Article 2(2) of Decision No 3632/
93/ECSC, the aid must be entered by Germany in the
national, regional or local public budgets or channelled
through strictly equivalent mechanisms.

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(38)

(39)

(40)

(41)

(42)

(43)

The Commission would remind Germany that an essen-
tial feature of the aid rules is that the aid must be in the
Community interest and must not disrupt the proper
functioning of the common market. Germany will also
take care to ensure that
the aid does not distort
competition or produce discrimination between coal
producers or between coal buyers and users in the
Community.

It also gives its assurance, pursuant to the provisions of
Article 86 of the ECSC Treaty, that the aid will be
limited to what is absolutely essential taking account of
the economic considerations linked to the necessary
restructuring of the coal industry, on the one hand, and
the social and regional considerations relating to the
decline of coalmining in the Community, on the other.

The aid must not provide an economic advantage, either
directly or indirectly, to production for which aid is not
authorised or to any activity other than coalmining, for
example, industrial activities relating to the mining or
processing of coal from the Community.

To enable the Commission to examine whether the
production units which receive operating aid pursuant
to Article 3 of Decision No 3632/93/ECSC actually
generate a trend towards a reduction in production costs
at world prices, Germany undertakes to notify the
Commission no later than 30 September of each year of
the production costs of each production unit during the
previous year and of all the information pursuant to
Article 9 of Decision No 3632/93/ECSC.

the

If, in particular, the conditions laid down in Article 3(2)
of
abovementioned Decision cannot be met,
Germany will propose the necessary corrective action to
the Commission such as a review of the classification of
production capacities pursuant to Articles 3 and 4 of the
Decision.

in accordance with the
The Commission is required,
second indent of Article 3(1) and Article 9(2) and (3) of
Decision No 3632/93/ECSC, to verify whether the aid
granted for current production achieves only the objec-
in Articles 3 and 4 of
tives set out
the Decision.
than 30
serve notification no later
Germany will
September 2003 of the level of aid actually paid in the
period from 1 January to 23 July 2002. It will serve
notification of any changes to the sums originally noti-
fied. In this annual list, it will provide all information
required for verifying compliance with the criteria laid
down in the abovementioned Articles.

(44)

In approving the aid, the Commission has taken account
of the need to minimise the social and regional impact
of restructuring,

HAS ADOPTED THIS DECISION:

Article 1

Germany is hereby authorised to take the following measures
to assist the coal industry for the period from 1 January to 23
July 2002:

(a) operating aid as defined in Article 3 of Decision No 3632/

93/ECSC totalling DEM 1 917 million;

(b) aid for the reduction of activity as defined in Article 4 of
Decision No 3632/93/ECSC totalling DEM 785 million;

(c) aid as defined in Article 3 of Decision No 3632/93/ECSC
totalling DEM 33 million to maintain an underground
labour force (Bergmannsprämie);

(d) aid as defined in Article 5 of Decision No 3632/93/ECSC
totalling DEM 1 320 million to cover exceptional costs.

Article 2

Germany shall ensure that the aid granted is used only for the
purposes specified in its notifications of 22 November 2000
and 16 July 2001 and that any unused, overestimated or
misused expenditure in relation to any items referred to in
Article 1 is repaid to it.

Article 3

Without prejudice to the obligations under Article 9(1), (2) and
(3) of Decision No 3632/93/ECSC, Germany shall provide
information no later than 30 September 2003 about payments
actually made during the period from 1 January to 23
July 2002.

This Decision is addressed to the Federal Republic of Germany.

Article 4

Done at Brussels, 2 October 2001.

For the Commission

Loyola DE PALACIO

Vice-President