2002/267/EC: Commission Decision of 23 October 2001 on the measure and State aid implemented by Spain for Santana Motor (Text with EEA relevance) (notified under document number C(2001) 3061)
Date: 2001-10-23
Institutions: European Commission
Subjects: Spain, State aid, application of EU law, control of State aid, investment aid, motor vehicle industry

L 92/26

EN

Official Journal of the European Communities

9.4.2002

COMMISSION

COMMISSION DECISION

of 23 October 2001

on the measure and State aid implemented by Spain for Santana Motor

(notified under document number C(2001) 3061)

(Only the Spanish text is authentic)

(Text with EEA relevance)

(2002/267/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(3)

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

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

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

Whereas:

On 3 May 1999 the Commission raised further ques-
tions with a view to gaining a better understanding of
Santana's objectives and identifying the public financing
involved. A visit was made to Linares (province of Jaén,
Andalusia) on 26 and 27 May 1999, after which a
meeting was held in Brussels on 29 July 1999, chiefly to
discuss questions relating to the regional aid. By letters
dated 1 July, 30 July and 17 November 1999 and 4
January 2000, the Spanish authorities supplied partial
replies to the questions raised by the Commission,
which requested additional
information on 22 March
2000. The Spanish authorities responded to that request
on 17 April 2000, and a meeting was held in Brussels
on 12 May 2000. Following this, Spain addressed on 24
May 2000 a letter to the Commission amending the
initial notification.

(4)

(5)

I. PROCEDURE

(1)

(2)

After learning through press reports that a public guar-
antee covering a bank loan had been granted to Santana
Motor SA (hereinafter Santana) by the Regional Govern-
ment of Andalusia, the Commission sent Spain requests
for additional information on 2 July, 9 October and 8
December 1998. Letters from Spain dated 11 August
and 23 November 1998 and 12 February 1999 enabled
the Commission to establish that the guarantee in ques-
tion had been granted in June 1998. The case was
consequently registered as unnotified aid under number
NN 24/99.

A meeting was held on 13 April 1999 between repre-
sentatives of the Spanish authorities, Santana and the
Commission. During the meeting, a number of docu-
ments were handed to the Commission, including the
company's medium-term strategic plan. This referred to
injection by a
planned investment aid and a capital
public body for which compliance with the market
economy investor principle was not clearly demon-
strated.

By letter dated 28 July 2000, registered on 31 July
2000, Spain informed the Commission of its intention
to implement the aid measures in favour of Santana, in
accordance to Article 4(6) of Council Regulation (EC) No
659/1999 (2).

to Article 88(2) of

The Commission decided on 17 August 2000 to initiate
proceedings pursuant
the Treaty
(decision to open the formal investigation procedure), as
it found that there were doubts as to the compatibility
of the measures with the common market. The Commis-
sion sent a fax to the Spanish Permanent Representation
on the same date informing it of its decision to initiate
proceedings. The text of the decision was then commu-
nicated to Spain by letter dated 22 August 2000, regis-
tered by the Spanish authorities on 23 August 2000.
Spain submitted its comments on the initiation of
proceedings on 25 September 2000.

(1) OJ C 328, 18.11.2000, p. 19.

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

9.4.2002

EN

Official Journal of the European Communities

L 92/27

(6)

(7)

(8)

(9)

On 30 October 2000 Spain brought before the Court of
Justice an action for annulment of
the Commission
decision to initiate proceedings, claiming that the time
limit of 15 working days for the Commission to take a
decision had not been respected.

By letter dated 22 November 2000, the Commission
asked Spain to comment on press reports according to
which the capital injection had already been carried out.
In its reply of 28 December 2000, Spain confirmed that
it had.

The Commission decision to initiate the procedure was
published in the Official Journal of the European Communi-
ties (3). The Commission invited interested parties to
submit their comments on the aid. No comments were
received.

II. DETAILED DESCRIPTION OF THE AID

The planned aid was to be granted to the publicly
owned Santana group. The Santana group is active in
the motor vehicle industry mainly through two compa-
nies, the abovementioned Santana Motor SA and its
subsidiary Santana Motor Andalucía SL.
It generated
turnover of ESP 59,5 billion in 1998 and of ESP 65,2
billion (EUR 392 million) in 1999. The Santana group
sold 42 700 vehicles in 1999: 8 400 were Suzuki
models (the Swift and the Baleno, for example) imported
and sold on the European markets, while 34 300
vehicles were produced at the Linares plant, mainly the
Samurai and Vitara four-wheel drive models. Santana
achieves some 60 % of
its sales outside Spain, with
major outlets in France, Italy and the United Kingdom
(1997 figures).

(10)

In 1998 the company developed a strategic plan for the
period 1998-2006, the main objectives of which were
to:

(a) enable Santana to match the industry's competitive-

ness standards;

(b) draw up a product, sales and production programme
linked to a coherent investment and financing plan;

(c) diversify the company's activities in order to increase

its independence;

(d) achieve the necessary profitability; and

(e) find a partner with a view to privatisation.

Other aims, such as safeguarding jobs, were also set out.

(11)

The strategic plan presented by Spain provided for the
commercial
launch of several vehicles between 1998
and 2002, including restyling and producing new (e.g.
diesel) engines for the Suzuki four-wheel drive models
and producing a new model designated YR 8-Jimny.
Projects that are independent of Suzuki were also envis-
aged, with development of the PS 10, a four-wheel drive
vehicle descending from an old Santana-Land Rover
model, and, under a licence with Chatenet, manufacture

(3) See footnote 1.

of a light cabin quadricycle called the Stella. The activi-
ties of component suppliers were also to be developed,
for example the production of moulds and dies in a
specialised workshop. Close cooperation with Suzuki
was to continue also in importing and distributing
models such as the Swift, the Alto, the Wagon R and the
Baleno.

(12) A number of

investments were planned within this
general framework. The largest one is referred to as ‘Plan
15 000’ and involves investments totalling ESP 13 336
million, spread mainly over the period 1998-2002 and
broken down as follows:

Project

Jimmy YR 8

PS 10

Chatenet — Stella

Tooling and dies workshop

(ESP million)

Amount

9 175

2 700

200

100

Modification of models and engines

1 003

Miscellaneous

158

Total

13 336

(13)

(14)

(15)

(16)

(17)

In addition to Plan 15 000, Spain stated that an extra
ESP 3 500 million was to be invested in restyling
models over the period 2003-2006.

These investments do not
capacity.

involve any increase in

To finance the company's strategic plan, two measures
were planned by the Spanish authorities:

(a) a capital

injection to be made by Soprea, a
subsidiary of the Instituto de Fomento de Andalucía
(IFA) and the company's sole shareholder; and

(b) regional

investment aid.

The capital injection provided for in Santana's strategic
plan for 1998-2006 totalled ESP 3,9 billion to be
granted in three equal instalments between 1999 and
2001. The capital was to be provided entirely by Soprea.

Regional aid was planned to be granted to Santana
under the ‘Régimen de ayudas a la inversión y a la
investigación y desarrollo’
(investment and R&D aid
scheme) approved by the Commission on 13 March
2000. The initial requests for aid were made in April
and July 1999 in respect of three investment projects
within Plan 15 000: the Jimny project, development of
the PS 10 and production of the Chatenet-Stella. In its
letter of 24 May 2000, Spain stated that this aid would
amount to ESP 1 977 million.

L 92/28

EN

Official Journal of the European Communities

9.4.2002

(18)

Furthermore, an individual public guarantee was granted
to Santana by the Regional Government of Andalusia to
cover a credit line to be used for purchasing equipment
necessary for producing the Jimny. The credit
line,
granted to Santana in June 1998 by a consortium of
banks (4) was used to borrow ESP 1 700 million. The
general terms for drawing on that credit line were as
follows:

a factor that is external to the plan and beyond the
control of its authors.

(24) As regards the PS 10 project, the Spanish authorities
affirm that during the preliminary phase of the proce-
dure the Commission did not refer to any aid element in
the capital injection, and always considered the aid to
the PS 10 project as compatible aid.

(a) life of the loans: seven years;

(b) amortisation: over four years following a three-year

grace period;

(c) interest rate: the Mibor rate at the date the loan

tranches were drawn plus 0,175 %.

(19)

Spain considers these to be market conditions. On the
other hand, the price charged to Santana for the public
guarantee is 0,05 % per quarter, whereas the Spanish
authorities estimate the market price of such a guarantee
at between 0,5 % and 0,8 % per year, having due regard
to Santana's financial situation. Consequently, regional
aid of up to ESP 57 million has been granted to Santana
in relation to the public guarantee covering the credit
line.

(25) As

regards

the Spanish
the Chatenet-Stella project
authorities point out that the quadricycle does not fall
under the Community framework for State aid to the
motor vehicle industry (6) (hereinafter ‘the motor vehicle
framework’), as its characteristics correspond to those of
a motorcycle, as shown by the technical description
contained in the strategic plan.

(26) With regard to the other investments,

the Spanish
authorities point out that the letter of 24 May 2000
amending the initial notification only included the
investment relating to the tooling and dies workshop
and excluded the remaining investments.

(20)

The total nominal amount of
ESP 2 034 million
million).

(present

the aid is therefore
value (5):
ESP 1 675

(27)

The assessment of the alleged aid measures considers
first the capital injection and subsequently the regional
measures.

IV. ASSESSMENT OF THE AID

III. COMMENTS FROM SPAIN

The capital injection

(21) On 25 September 2000 the Spanish authorities sent
their comments on the initiation of proceedings. Those
comments have been taken into account by the
Commission.

(22)

In their comments, the Spanish authorities first assert
that the decision to initiate proceedings after a lengthy
in the investment
preliminary phase caused delays
schedule,
leading to the postponement of the PS 10
project and the non-implementation of the investments
aimed at increasing the share of components purchased
in Europe. Such delays, together with the adverse evolu-
tion of the yen/euro exchange rate, were held respon-
sible for Santana's underperformance with respect to the
targets set out in the strategic plan.

(23) With regard to the capital injection, the Spanish authori-
ties state that the Commission had not assessed the
content of the strategic plan when it decided to initiate
proceedings, but
to observing the
confined itself
consequences of the yen/euro exchange rate a posteriori,

(28)

(29)

In assessing whether a transaction between a Member
State and a public undertaking constitutes a normal
commercial transaction or whether it consists wholly or
partly of State aid, the Commission must follow the
market economy investor principle. In accordance with
that principle, a capital injection does not involve State
aid where it is made in circumstances which would be
acceptable to a market economy investor operating
under normal market conditions (7).

The Court of Justice also stated in its judgment of 21
March 1991 in Case C-305/89 Italy v Commission (8)
that ‘although the conduct of a private investor with
which the intervention of the public investor pursuing
economic policy aims must be compared need not be
the conduct of an ordinary investor laying out capital
with a view to realising a profit in the relatively short
term, it must at least be the conduct of a private holding
company or a private group of undertakings pursuing a
structural policy — whether general or sectoral — and
guided by prospects of profitability in the longer term’.

(4) Caja de Ahorros y Pensiones de Barcelona; Argentaria — Caja Postal
y Banco Hipotecario SA; Caja de Ahorros y Monte de Piedad de
Córdoba; Dexia, Banco Local SA; Caja Provincial de Ahorros de
Jaén.

(5) Base year: 1998; discount rate: 6,20 %.

(6) OJ C 279, 15.9.1997, p. 1.
(7) See for example the Commission communication to the Member
States — Application of Articles 92 and 93 of the EEC Treaty and
of Article 5 of Commission Directive 80/723/EEC to public underta-
kings in the manufacturing sector (OJ C 307, 13.11.1993, p. 3).

(8) [1991] ECR I-1603.

9.4.2002

EN

Official Journal of the European Communities

L 92/29

(36)

(37)

(38)

(39)

(40)

(41)

(42)

(43)

(30)

(31)

(32)

(33)

(34)

The Commission must therefore consider whether it is
likely that the strategic plan presented by Santana will
lead to long-term profitability of
the company, and
whether the measures envisaged in the strategic plan
would have induced a market economy investor to
provide the capital necessary for its implementation.

The Commission notes that, given Santana's dependence
on imports from Japan, particular attention must be paid
to the impact of foreseeable exchange-rate fluctuations
on the targets set out in the strategic plan, as well as to
possible measures to counterbalance such fluctuations.

the Commission must

In its assessment,
take into
account all relevant information that was available to
market economy investors at the time when the decision
on the capital injection was taken. The Spanish authori-
ties notified the intention of carrying out the capital
injection at a meeting held on 13 April 1999, and
provided documentation dating from January 1999 in
which the capital injection was indicated as part of the
strategic plan. Based on these facts, the Commission
concludes that the relevant time as regards the decision
on the capital

injection is the beginning of 1999.

The Commission notes that the capital
injection was
formally approved by Santana's shareholders on 22
December 1999. However, the Commission does not
consider this date as the relevant date for the assessment.
This is because the December 1999 vote only ratified a
decision that had already been taken by Santana's sole
shareholder, Soprea. Additionally, the actual date of the
formal ratification of the capital injection was probably
influenced by the need to notify the measure to the
Commission, and thus may not represent the timing that
a private investor would have followed when deciding to
invest.

The company's annual accounts show a net profit of
ESP 111 million in 1997 and of ESP 3 million in 1998.
However, the positive results derive from extraordinary
profits that offset operating losses (ESP 1 448 million in
1997 and ESP 1 233 million in 1998). The strategic
for 1999
plan forecasts higher operating
in 2000
(ESP 3 735 million), a sharp improvement
(losses of ESP 45 million), and a return to operating
profits as from 2001, reaching ESP 3 092 million in
2006.

losses

(35) Among the factors that were to lead to improved profit-
ability, mention was made of a sharp increase in sales
(from 38 000 vehicles per year in 1998 to around
60 000 from 2001 onwards), diversification of the range
(among other things with the production of the new
Jimny, PS10 and Stella models), and less dependence on
Suzuki (increasing the share of components purchased
in Europe, and production of
the PS10 and Stella
models).

The increase in production volumes was to be achieved
through the new Jimny model (36 000 units per year in
2005 and 2006), the PS 10 (more than 9 000 units per
year from 2001 onwards) and the Stella (3 500 units per
year
In addition to its own
to import and distribute
production, Santana was
around 13 000 vehicles per year (mainly the Baleno and
Gran Vitara models) produced by Suzuki.

from 2004 onwards).

The Commission consulted an independent automotive
expert who considered that the sales forecast in the
strategic plan was acceptable and would lead to satisfac-
tory profitability in the medium term. The experts
regarded the yen/euro exchange rate as the main risk
factor in the strategic plan.

the PS10 and Stella models. However,

The Commission notes that some degree of indepen-
dence from Suzuki could be achieved through produc-
tion of
the
company would still be highly dependent on compo-
nents and finished products supplied by Suzuki. This
would imply
that profitability would be highly
dependent on import prices, and in particular on fluctu-
ations of the Japanese yen.

The Commission notes that Santana did not make use of
to reduce the risk
financial
in order
instruments
connected with fluctuations
rate
exchange
between the euro and the Japanese yen.

in the

The Commission consulted an independent
financial
expert in order to assess the significance of Santana's
currency exposure and to quantify the potential costs
associated with hedging such exposure.

expert

financial

independent

The
considered that
Santana was exposed to foreign-exchange risk and that
in terms of currency
companies similar to Santana,
exposure, location, size, and financial expertise, would
normally hedge by concluding forward foreign-exchange
contracts or (less likely) currency option contracts of the
standard call or put type.

The costs associated with the above financial contracts
are not large compared with the size of the transaction
they secure: the cost of forward contracts is low, while
the cost of option contracts depends on the chosen
strike price.

The independent financial expert stressed that the above
financial instruments are usually used to reduce or elimi-
nate the currency risk in the short term (up to one year),
but cannot eliminate the long-term currency risk that is
associated with Santana's business. The financial expert
considered that companies usually do not hedge their
currency positions for very long periods, but rather
assess the size of their currency exposure in the light of
the expected profitability of the investment opportuni-
ties they have. Indeed, investors undertake riskier invest-
ments if the profitability prospects are sufficiently high.

L 92/30

EN

Official Journal of the European Communities

9.4.2002

(44) On the basis of

the foregoing considerations,

the
Commission has analysed whether Santana's profitability
prospects were high enough to compensate for the
foreign-exchange risk it was facing. Using the profit-
ability figures given in the January 1999 strategic plan,
the Commission calculated that Santana's expected
return on capital invested was higher than what other
companies in the automotive industry set as their
targets. These profitability prospects were clearly suffi-
cient
to compensate for the higher risk facing the
company.

The Commission also analysed Santana's return on
capital invested using stricter estimates of profitability.
Firstly,
it used the revised profit figures as communi-
cated in the letter of 24 May 2000, where profitability
after 2003 was reduced to take account of additional
investments for new models. Secondly, the Commission
excluded from the profit calculation certain financial
items that, although accruing with certainty to the
company, were by nature more similar to extraordinary
items than to the result of normal operations. The return
on investment resulting from this calculation was still
higher than what other companies in the automotive
industry set as their targets.

In the assessment of Santana's exposure to foreign-
exchange risk, the Commission also looked into the
management of provisions by the company.
In the
course of 1997 and 1998 provisions for general risks
were decreased, and the sums transferred to the profit
and loss account as extraordinary profits. The Commis-
sion has assessed whether such management of provi-
sions
could have weakened Santana's position in
managing its foreign-exchange risk.

that,

although

concluded

The Commission
not
commendable from the point of view of prudent
management, the decrease in provisions could not have
weakened Santana's position with regard to foreign-
exchange risk. This is because provisions do not elimi-
nate or reduce foreign-exchange risk; they only antici-
pate estimated financial losses in the company's books.
However high the provisions, the risk is never limited to
their amount. For
replace
this reason,
for managing foreign-
currency hedging as a tool
exchange risk.

they cannot

(45)

(46)

(47)

(48)

with the company's currency exposure. Indeed, at the
time the investment decision was taken in early 1999,
Santana offered good chances of returning to profit-
ability in the long term on the basis of plausible fore-
casts regarding the evolution of the yen/euro exchange
rate.

(50)

(51)

The Commission consequently takes
the view that
Soprea, in making the capital injection in favour of its
subsidiary Santana on the basis of the company's stra-
tegic plan, was behaving as a market economy investor.
The
examination therefore
complies with the market economy investor principle
and does not constitute State aid within the meaning of
Article 87(1).

injection under

capital

Looking at the events that occurred after the point when
the capital injection was made, the Commission notes
that during the first half of 1999 the exchange rate
remained relatively stable at a level compatible with the
targets set out in the strategic plan. During the second
half of 1999 and in the course of 2000, however, the
euro depreciated significantly with respect to the main
international currencies,

including the Japanese yen.

(52) A number of measures were decided by Santana at the
beginning of 2000, in order to offset the negative effects
of the depreciation of the euro, and were communicated
to the Commission by letter dated 24 May 2000. Never-
theless, the adverse effects on Santana of the deprecia-
injection had been
tion of the euro after the capital
decided were particularly strong and the company failed
to achieve the targets set out in the strategic plan. While
volatility on the international currency markets and fluc-
tuations of the euro were expected, partly as a conse-
quence of the creation of the common currency, the
extent of the depreciation that actually took place could
not have been forecast at the time the strategic plan was
drawn up and implemented.
It cannot, therefore, be
taken into account in determining whether the market
economy investor principle was complied with when the
capital

injection into Santana was made.

the Commission concludes

In the light of the foregoing considerations and of the
reports from the independent automotive and financial
that a market
experts,
economy
required
investor would probably have
sounder short-term management of the currency risk,
forward foreign-exchange and
through the use of
currency option contracts. A market economy investor
could have asked for such change in hedging policy to
be implemented at little cost to the company.

(53)

(49) At the same time, the Commission concludes that a
market economy investor would have agreed to take
part
injection, since the profitability
prospects of Santana's strategic plan were sufficiently
positive to compensate for the long-term risk connected

in the capital

Regional aid measures

The measures in the form of investment aid and a public
guarantee granted to Santana constitute State aid within
the meaning of Article 87(1) of the Treaty. They would
be financed by the State or through State resources;
moreover, given that they represent a significant propor-
tion of the project funding, they are likely to distort
competition within the Community, giving an advantage
to Santana over other companies not receiving aid.
Finally, Santana is active in the motor vehicle industry,
and the market for motor vehicles is characterised by
extensive trade between Member States. It is clear that
the measures constitute an individual application of an
approved scheme; they nevertheless have to be notified,
pursuant to Article 88(3) of the Treaty, in accordance
with the procedural rules in the State aid field.

9.4.2002

EN

Official Journal of the European Communities

L 92/31

(54) Article 87(2) of the Treaty lists certain types of aid that
are compatible with the common market. In view of the
nature and purpose of the aid, and the geographical
location of the firm, subparagraphs (a), (b) and (c) are
not applicable to the plan in question. Article 87(3)
specifies other forms of aid which may be regarded as
compatible with the common market. The Commission
notes than the project is located in the region of Anda-
lusia, which qualifies
for assistance under Article
87(3)(a), with a maximum regional ceiling of 50 % net
grant equivalent (nge).

(55)

(56)

(57)

the proposed measures are
To determine whether
compatible with the common market under the exemp-
tion provided for in Article 87(3)(a) of the Treaty, the
Commission must check compliance with the conditions
specified in the motor vehicle framework.

The Commission notes that the public guarantee was
granted to cover a bank loan financing investment
linked to production of the Jimny model. It accordingly
concludes that the public guarantee must be examined
as regional
in conjunction with the
investment grants.

investment aid,

If

The Commission establishes first and foremost whether
regional aid may be granted. To this end, it considers in
particular whether the investor could have chosen an
alternative site for its project, so as to demonstrate the
need for the aid, with special reference to the mobility of
there were no other new or existing
the project.
industrial site within the group capable of receiving the
proposed investment, the firm would be compelled to
carry out its project in the sole plant available, even in
the absence of aid. Mobility may be demonstrated by the
investor on the basis of studies it has carried out with a
view to taking the final location decision. The alternative
site need not necessarily be
located within the
Community. However, the Commission checks that it is
a plausible option, with special reference to the relevant
markets.

(58)

the costs
The Commission checks the eligibility of
relating to the mobile aspects of the project. It then
checks that the planned aid is in proportion to the
regional problems it is intended to overcome. To this
end, it usually carries out a cost-benefit analysis, except
where the intensity of the planned aid is lower than the
ceiling indicated in the motor vehicle framework.

(59)

The Commission has assessed the compatibility of the
regional aid with the common market for each of the
investment projects: the PS 10 project, the
individual
Chatenet-Stella project and the
remaining projects
(notably the Jimny project).

(60)

(61)

(62)

The PS 10 is a motor vehicle within the meaning of the
motor vehicle framework. After examining the data
provided by the Spanish authorities and visiting the
plant, the Commission concludes that the investments
for production of the PS 10 are independent of the
other investments included in the strategic plan.

the project

The total cost of
is ESP 2 700 million
(EUR 16 million) and the planned aid amounts to
ESP 405 million (EUR 2,4 million). These amounts are
thresholds above which notification is
below the
compulsory under an approved scheme (9). Therefore,
the project is not individually notifiable.

The Chatenet-Stella project involves an investment of
ESP 200 million (EUR 1,2 million) and concerns the
production under licence of a light cabin quadricycle.
the
After examining its
Commission concludes that the Stella is not a motor
vehicle and therefore does not fall within the scope of
the motor vehicle framework. As a consequence, the aid
to the project must be assessed under the regional aid
guidelines.

technical characteristics (10),

(63)

The regional aid element
(EUR 0,18
million) was granted under an approved scheme and is
therefore compatible with the common market.

in the project

(64)

The regional aid planned for the remaining projects
consists firstly of direct investment aid amounting to
ESP 1 542 million (present value: ESP 1 255 million).
Secondly, State aid is involved in the loan guarantee,
which enabled productive equipment to be purchased
for the Jimny assembly line.
In accordance with the
analysis set out in the decision initiating proceedings,
the Commission concludes that Santana could have
secured the loan in question even without a public
guarantee. However, the Commission finds that the price
of 0,05 % per quarter charged to Santana for the public
guarantee is lower than the market price. On the basis of
information provided by the Spanish authorities, the
Commission estimates the market cost of a guarantee
identical to that granted to Santana at between 0.5 %
and 0.8 % per year.

(9) The thresholds are EUR 50 million for the nominal cost of

the

investment project or EUR 5 million total gross aid.

(10) The Stella specifications

for unladen mass, engine power and
maximum speed are in line with the technical characteristics laid
down in Article 1(3) of Council Directive 92/61/EEC of 30 June
1992 relating to the type-approval of two or three-wheel motor
vehicles (OJ L 225, 10.8.1992, p. 72). This Directive was last
amended by Parliament and Council Directive 2000/7/EC (OJ L
106, 3.5.2000, p. 1).

L 92/32

EN

Official Journal of the European Communities

9.4.2002

(65)

(66)

(67)

The difference between the cost of the public guarantee
and the market price for an identical guarantee thus
amounts to a maximum of ESP 57 million (EUR 0,34
million) for the duration of the project. The additional
data provided by the Spanish authorities in their letter of
in
22 December 1999 do not alter this assessment,
particular because the examples given relate to loans
contracted in July and September 1999, i.e. over a year
after the public guarantee was obtained. The Commis-
sion has to assess the aid according to the specific
conditions obtaining at the time it was granted.

The aid for the remaining projects therefore amounts to
a total of ESP 1 312 million in present value. This aid
should have been notified to the Commission under
Article 88(3) of the Treaty. The public loan guarantee
first
was granted to Santana in June 1998 without
having been authorised by the Commission, and must
therefore be deemed illegal.

(70)

Total mobile investments (Jimny project plus tooling
and dies workshop) amount to ESP 8 306 million in
present value, while the total aid planned (regional aid
and bank guarantee) amounts to ESP 1 312 million in
present value. The resulting intensity of the aid is 15,8 %
gross grant equivalent (gge).

(71) As for the proportionality of the aid, the motor vehicle
framework states that if the intensity of the planned
regional aid is not more than 20 % of the regional
ceiling for the period 2000-2006, a cost-benefit analysis
will not be required by the Commission in so far as the
new regional maps have lower ceilings than those for
the period 1994-1999.

(72) According to the new regional map for Spain approved
on 14 April 2000, Linares is located in an assisted area
under Article 87(3)(a) of the Treaty where regional aid
can normally be allowed up to a ceiling of 50 % nge
(69 % gge) for large firms. The old ceiling was 60 % nge.
This means that
the threshold above which a cost-
benefit analysis is required is 13,8 % gge.

In the decision initiating proceedings, the Commission
analysed whether the project
in question is mobile,
particularly taking into account the fact that Santana has
only one assembly plant, at Linares. Although this situa-
tion is not unique, it is unusual for motor vehicle manu-
facturers. In accordance with the analysis set out in the
decision initiating proceedings, the Commission takes
the view that the recipient of the aid is a business group
bringing together Santana and Suzuki and that this busi-
ness group did have the alternative of choosing other
Suzuki plants in the world for producing the vehicles
and then supplying the Community market by means of
imports.

(73)

(74)

for

the Jimny project

The Commission notes that the aid with an intensity of
15,8 % gge which the Spanish authorities have planned
than the
to grant
threshold above which a cost-benefit-analysis is required.
Therefore, Spain would still have to demonstrate the
proportionality of the aid by means of a cost-benefit
analysis.

is higher

Insofar as the total amount of the regional aid granted to
Santana does not exceed 13,8 % of the eligible invest-
ment, a cost-benefit analysis is not necessary and the aid
involved can be deemed compatible with the common
market. The maximum amount of aid that can be
granted is ESP 1 146 228 000 in present value. Any aid
granted to Santana over and above that amount is to be
considered incompatible.

(68)

the Jimny
The Commission therefore concludes that
project
is mobile. The mobile investments involved
amount to ESP 9 175 million (present value: ESP 8 213
million). A linked investment in the tooling and dies
workshop amounting to ESP 100 million (present value:
ESP 93 million) is also to be regarded as mobile since it
has been demonstrated that the company could have
subcontracted this activity.

(69) Other investments included in the strategic plan are not
mobile. These are: the investment relating to modifica-
tion of models and engines (ESP 1 003 million), miscel-
laneous activities (ESP 158 million), and a number of
measures to modernise the industrial processes and the
product range over the period 2003-2006 (ESP 3 500
million). These investments cannot therefore be taken
into consideration in calculating the allowable aid inten-
sity, and the Spanish authorities' letter of 24 May 2000
amending the notification did not in fact include these
investments in the computation of the aid intensity.

V. CONCLUSIONS

(75)

The Commission finds that Spain has unlawfully imple-
mented the aid linked to the public guarantee covering a
bank loan granted to Santana by the Regional Govern-
ment of Andalusia in breach of Article 88(3) of the
Treaty.

(76) However, the Commission finds that the regional aid
that Spain has planned to grant to Santana is partially
compatible with the common market under Article
87(3)(a) of the Treaty for the following reasons: the aid
amounting to ESP 405 million for the PS 10 project is
not individually notifiable. The Stella project does not
relate to the manufacture of a motor vehicle within the
meaning of the motor vehicle framework. Since it is
granted under an approved scheme, the aid amounting

9.4.2002

EN

Official Journal of the European Communities

L 92/33

to ESP 30 million is compatible with the common
market. The aid for the Jimny project is compatible
insofar as it does not exceed 13,8 % of the eligible
investment of ESP 8 306 million in present value (calcu-
lated using a discount rate of 6,2 % from base year
1998). The maximum amount of aid that can be granted
is ESP 1 146 228 000 in present value.

amounting to ESP 8 306 million in present value (calculated
using a discount rate of 6,2 % from base year 1998).

Implementation of
the aid, amounting to not more than
ESP 1 146 228 000 in present value (calculated using a
discount rate of 6,2 % from base year 1998), is accordingly
authorised.

(77)

The capital injection of ESP 3 900 million was carried
out in accordance with the market economy investor
principle and therefore does not constitute aid.

(78) Any additional State aid for the investment projects in

question is incompatible with the common market.

(79)

the characteristics of

In view of
the
Commission calls on the Spanish authorities, pursuant
to point 2.3 of the motor vehicle framework, to present
to the Commission a detailed report on the implementa-
tion of the project,

the projects,

HAS ADOPTED THIS DECISION:

Article 1

injection made by Soprea, a subsidiary of

the
The capital
Instituto de Fomento de Andalucía (IFA), into Santana Motor
SA and amounting to ESP 3 900 million does not constitute
aid within the meaning of Article 87(1) of the Treaty.

for
The State aid which Spain has planned to implement
Santana Motor SA at Linares for the PS10 and Stella projects is
compatible with the common market.

The State aid which Spain has planned to implement
for
Santana Motor SA at Linares for the Jimny and related projects
is compatible with the common market within the meaning of
Article 87(3)(a) of the Treaty, up to a maximum intensity of
the eligible investment
13,8 % gross grant equivalent of

Article 2

Any State aid in addition to the aid referred to in Article 1 that
Spain plans to grant to Santana Motor SA for the Jimny and
related projects is incompatible with the common market.

Article 3

Spain shall inform the Commission, within two months of the
date of notification of this Decision, of the measures it has
taken to comply with it.

Article 4

Spain shall present, in December each year until the project is
completed, a report on the state of progress and financial
implementation of the project and general compliance with the
conditions set out in the notification of the aid in question.

This Decision is addressed to the Kingdom of Spain.

Article 5

Done at Brussels, 23 October 2001.

For the Commission

Mario MONTI

Member of the Commission