2002/896/EC: Commission Decision of 30 January 2002 on the State aid implemented by Germany for Gothaer Fahrzeugtechnik GmbH (notified under document number C(2002) 316) (Text with EEA relevance)
Date: 2002-01-30
Institutions: European Commission
Subjects: Germany, State aid, aid for restructuring, aid to undertakings, control of State aid, metalworking

L 314/62

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Official Journal of the European Communities

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COMMISSION DECISION

of 30 January 2002

on the State aid implemented by Germany for Gothaer Fahrzeugtechnik GmbH

(notified under document number C(2002) 316)

(Only the German text is authentic)

(Text with EEA relevance)

(2002/896/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

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) and having regard to
their comments,

Whereas:

(1)

(2)

(3)

A. PROCEDURE

By letter dated 19 May 1998, Germany provided the
Commission with information on aid that had already
Fahrzeugtechnik GmbH
been granted to Gothaer
(hereinafter
case was
registered under No NN 64/98.

called Gotha Technik). The

By letter dated 28 May 2001, the Commission informed
Germany that it had initiated the procedure laid down
in Article 88(2) of the EC Treaty in respect of a grant of
DEM 3,655 million
f(cid:252)r
by
vereinigungsbedingte Sonderaufgaben (hereinafter called
the BvS). It also ordered Germany to provide it with all
such information as was necessary to enable it
to
examine the compatibility of the grants made under the
relevant scheme.

Bundesanstalt

the

The Commission’s decision to initiate the Article 88(2)
procedure was published in the Official
the
European Communities (2). In it the Commission invited
interested parties to submit their comments. The firm in
receipt of the aid commented by letter dated 27 June

Journal of

(4)

(5)

(6)

2001. The comments were forwarded to Germany by
letter dated 11 July 2001. By letter dated 25 July 2001,
Germany expressed its agreement with the comments.

Germany submitted its comments by letter dated 6 July
2001. By letter dated 1 October 2001, the Commission
put a number of questions, which Germany answered
by letter dated 17 October 2001.

B. DESCRIPTION

Gotha Technik is active in the welding of fine-grained
steel and produces booms and jibs for mobile cranes. It
also runs a training centre for welders. The company is
located in a region eligible for aid under Article 87(3)(a)
of
information
provided, it qualifies as an SME (3).

the EC Treaty. According to the

I. Background

In 1990 ownership of VEB Kraftfahrzeugwerk Gotha
was transferred to the Treuhandanstalt and the firm was
converted into a company with limited liability, Gothaer
Fahrzeugwerk GmbH (hereinafter called old Gotha). At
that time, it produced, repaired and sold vehicles and
vehicle components of the Wartburg type. At the end of
1994, old Gotha was privatised along with seven other
companies by being placed under the ownership of
Lintra Beteiligungsholding GmbH.
results were
unsatisfactory, however, even after privatisation, as can
be seen from the following table:

Its

(DEM million):

Year

1994

1995

1996

1997

Turnover

55 500

113 000

48 200

48 615

Profit

ﬂ13 900

Staff costs

387

500

388

ﬂ12 400

ﬂ5 636

383

362

(1) OJ C 211, 28.7.2001, p. 2.
(2) See footnote 1.

(3) Community guidelines on State aid for small and medium-sized

enterprises, OJ C 213, 23.7.1996, p. 4.

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II. The restructuring

(11) As a high degree of welding expertise is indispensable in
this market, the welding training centre is another key
element of the plan. It is responsible for the initial and
further training of welders, both in-house and external.

(7)

(8)

In old Gotha’s case,

At the end of 1996, when the original privatisation plan
had proved a failure, the BvS stepped in to prevent the
group from going bankrupt.
it
opted for a continuation of the restructuring. As no one
was willing to buy old Gotha as a whole, the BvS tried
to sell
the company’s two production lines, vehicle
production and component production, separately. A
Mr Schwabe made a management buyout offer for two
units of the component production division, namely the
jibs production unit and the training centre (4). The
other production units of the component production
division, such as production for Audi/VW/MAN and cab
production, remained within old Gotha.

(12)

of

that

company

components

switched from the production of
The
individual
tailor-made,
to
high-quality systems. In order to ensure production of
such a high quality that the long-term viability of the
company was assured, investment was largely used to
replace obsolete plant and equipment. Production itself
was optimised and concentrated in two workshops,
having been inefficiently split beforehand.

company,

By contract dated 3 November 1997 (5), old Gotha
transferred assets with a book value of DEM 6,89
million and liabilities of DEM 1,099 million to a newly
Gothas-Forschungs-
created
called
Entwicklungs-Projektierung GmbH (hereinafter
Gothas), owned by old Gotha. By contract dated 18
November 1997 (6), old Gotha sold its shareholding in
Gothas with a par value of DEM 100 000 to the new
investor, Mr Schwabe,
for DEM 1. Gothas was
thereupon renamed Gotha Fahrzeugtechnik GmbH.

Die

2. Costs of the restructuring

(13)

The overall cost of restructuring Gotha Technik came to
DEM 10,915 million. This can be broken down as
follows:

General investment in plant and equipment

Building maintenance

Separation of infrastructure

Working capital

(DEM million)

7,100

1,700

1,115

1,000

1. The restructuring plan

(9)

At the time of the takeover, the new investor drew up a
restructuring plan lasting from 1997 to 2000.

(10) According to the information received, old Gotha’s
market positioning had long been insufficiently clear.
Under the plan, Gotha Technik was to concentrate on
its expertise in welding fine-grained steel. It produces
lattice booms and jibs for mobile cranes between 30
and 300 tonnes. Loss-making activities such as the
production of oil storage tanks and waste containers
were terminated at the end of 1997. Gotha Technik
supplies major crane manufacturers and avails itself of
to
the growing tendency
outsource parts production. In 2000, its customers were
Deutsche Grove GmbH (accounting for 47 % of
turnover),
Liebherr Werk Ehingen GmbH (27 %),
Mannesman Dematic GmbH (15 %), Faun GmbH (10 %)
and Sennebogen GmbH (1 %).

vehicle market

in the

(4) Old Gotha’s vehicle production line was bought by Schmitz
Cargobull AG and Josef-Koch GmbH for DEM 1. The aid granted
the
is being examined in the
in this
investigation of Case No C 31/01, Schmitz-Gotha.

context of

context

(5) Contract for the bringing-in of assets of 3 November 1997, valid

retroactively from 30 September 1997.

(6) Contract

for

the purchase and assignment of

shares of 18

November 1997, valid retroactively from 1 October 1997.

(14) According to the

information provided by
Germany, the public authorities contributed DEM 6,395
million, broken down as follows:

latest

No

Source

Measure

Legal basis

Amount

(DEM million)

1 BvS

Investment
grant

Ad hoc aid

2 Land

Grant

3 Land

SME grant

4 KfW

Loan

NN 123/97, joint
Federal Government/
L(cid:228)nder programme for
improving regional
economic structures,
26th framework plan

NN 142/97, SME
scheme

NN 563/c/94, ERP
reconstruction pro-
gramme (cid:151) east

5 Land

Investment
allowance

N 494/A/95,
Investment Allowance
Act

3,655

1,738

0,315

0,120

0,567

= 6,395

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(cid:151) Measure No 1: as indicated in the decision to initiate
(hereinafter
investigation procedure
formal
the
called the
initiation decision), Gotha Technik
received a grant of DEM 3,655 million from the BvS
when it was sold to the new investor.

equipment (NACE Rev. 1 29.22) (11). The category of
motor vehicle parts and accessories within the transport
is also
equipment
relevant.

industry (NACE Rev. 1.34.3) (12)

(cid:151) Measure No 2: Th(cid:252)ringer Aufbaubank awarded a
DEM 1,738 million grant under a Commission-
approved aid scheme (7).

(17) According to the information submitted, the company’s
turnover in 1998, 1999 and 2000 was generated as
follows:

(cid:151) Measure No 3:

at

of

the

time

according to the
the

information
available
preliminary
investigation, a DEM 200 000 grant was awarded
under an aid scheme by decision of 10 November
1998 (8). By decision of 26 April 1999,
the
company received a further grant of DEM 115 000
under the same scheme. During the course of the
formal
investigation procedure, Germany claimed
that, when the aid was first granted in 1998, the
company’s viability prospects were good.

granted

through Deutsche

(cid:151) Measure No 4: as indicated in the initiation decision,
f(cid:252)r Wiederaufbau (hereinafter called
Kreditanstalt
KfW)
Kreditbank
(hereinafter called DKB) a loan of DEM 1,956
million under an aid scheme. During the course of
the
procedure, Germany
identified the scheme as the ERP reconstruction
programme-east (9). It claimed that the loan had an
intensity of DEM 120 000.

investigation

formal

(cid:151) Measure No 5: by decision of 10 November 1998,
the allowance was granted under an aid scheme (10).
The Commission only learned about it during the
course of the procedure.

(15) According to the latest information, the investor and

other parties contributed DEM 4,341 million.

III. The market

(%)

1998

1999

2000

Jibs and booms production

70,63

77,58

92,27

Welding training centre

Production for Weidemann
GmbH

Production for the
Bundeswehr

Production for VW

Other activities

9,43

7,72

8,99

4,37

4,66

/

5,05

4,33

1,93

4,86

2,31

3,01

1,72

0,86

0,28

(18) As

for

the market

in fine-grained steel, Germany
forwarded information provided by Deutscher Verband
f(cid:252)r Schwei(cid:223)en und artverwandte Techniken (DVS). This
high-strength material
is characterised by its greater
strength and improved elongation at rupture compared
with ordinary steel. Thanks
to improved smelting
technology, yield strengths of 960 Newton/mm2 are
offered, and the introduction of yield strengths of 1 100
Newton/mm2 is envisaged. This material enables the
company to produce components of reduced thickness
and hence lower weight and volume. For the time
is used almost exclusively for
being, fine-grained steel
the production of
improved
production, casting and rolling technology, fine-grained
steel exhibits good weldability and the overall costs of
welding are five times lower than for ordinary steel. In
view of this, DVS is of the opinion that the market for
high-strength fine-grained steel is growing.

cranes. Because of

(16) Gotha Technik is active in the welding of steel and
produces booms and jibs for mobile cranes. These
products fall within the category of general-purpose
machinery and the subcategory of lifting and handling

(7) NN 123/97,

Joint Federal Government/L(cid:228)nder programme for
improving regional economic structures, 26th framework plan,
SG(97) D/7104 of 18 August 1997.

(8) NN142/97, Directive of

the Land of Thuringia in favour of

(19) As for the capacity situation, Germany states that there
is no excess capacity, only undercapacity. Since the
early 1990s, an increasing share of
the added value
generated in this market has been transferred from
crane manufacturers to crane equipment manufacturers.
This is due to increased outsourcing and the transferring
of responsibility for manufacture and quality assurance
to suppliers. Today, almost 50 % of components are

investments by SMEs, SG(96) D/4313 of 2 June 1998.

(11) European Commission, Panorama of European Business 1999, p.

(9) N 563/c/94, SG(94) D/17293 of 1 December 1994.
(10) N 494/a/95, Investment Allowance Act, SG(95) D/17154 of 27

283.

(12) European Commission, Panorama of European Business 1999, p.

December 1995.

385.

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produced by way of outsourcing. The possibility for
limited
crane manufacturers to outsource is, however,
by the need for welding expertise.

information order was therefore issued pursuant
to
Article 10(3) of Council Regulation (EC) No 659/1999
of 22 March 1999 laying down detailed rules for the
application of Article 93 of the EC Treaty (13).

(20) As for market share, it is apparent from the information
received that Gotha Technik operates on the basis of
orders that are outsourced by its customers. Gotha
Technik’s market share is therefore gauged by reference
to the volume of orders that its customers outsource per
the volume of
year. The
outsourcing by the
customers on the
Community market and elsewhere in 2000:

following table

company’s

shows

Company

Community

elsewhere

Total

(DEM million)

Faun GmbH

Grove GmbH

Demag GmbH

Liebherr
GmbH

8,95

34,50

35,00

60,00

16,19

25,50

25,00

90,00

25,14

60,00

60,00

150,00

Total

138,45

156,69

= 295,14

(21) Gotha Technik therefore has a market share of 20 % on
the

and 9,5 % outside

the Community market
Community.

(22) As for the company’s capacity, Germany showed that it
was not expanded during the restructuring. The building
of a new production shop was necessary in order to
increase added value. The main aim of the restructuring
was to enable the company to take over assembly of its
own components. The new production shop covers the
increased need for storage space, assembly itself and
quality control.

IV. Grounds for initiating the Article 88(2)
procedure

(23)

The Commission was inclined to believe that Gotha
Technik had profited from a BvS grant of DEM 6,1
million awarded to old Gotha in 1997. It also believed
that the company had received an additional wage cost
subsidy of DEM 398 000. It suspected, moreover, that
the sale may have involved aid to the investor.

(24) Measures Nos 2 to 4 were granted on the basis of aid
schemes approved by the Commission. For lack of
information, the Commission was unable, however, to
this aid
assess
in the
schemes. An
complied with the

initiation decision whether

terms

the

of

in difficulty (14)

(25) Measure No 1, worth DEM 3,665 million, was
considered to be new aid. It was examined under Article
88(3)(c) of the EC Treaty and under the Commission
notice Community guidelines on State aid for rescuing
(hereinafter
and restructuring firms
called the guidelines). The 1994 guidelines continue to
apply
to the
to non-notified aid granted prior
publication of the 1999 guidelines (15), which is the
case with the aid to Gotha Technik. The Commission
had reservations about whether the plan was capable of
restoring the company’s viability, whether there was
overcapacity on the markets on which the company
operated, and whether the investor contribution was
significant.

C. LEGAL ASSESSMENT

I. Aid within the meaning of Article 87(1) of the
EC Treaty

statement

(26) As stated in the initiation decision, measures Nos 1 to 4
were considered to be aid. Germany did not challenge
this
in its comments. Measure No 5 is
likewise to be considered aid. These measures have
undoubtedly conferred advantages on Gotha Technik by
reducing the costs it normally has to bear. Gotha
Technik, the aid recipient, produces jibs and booms for
cranes, which is an activity involving trade between
Member States.

1. Aid elements in the sale of Gotha Technik

(27) Germany claims that the investor’s offer was the best to
emerge from an open and transparent sales procedure.
As no one was willing to take over old Gotha as a
whole, the BvS tried to sell the company’s component
production division separately. One MBO offer was
received for two units of that division, namely the jibs
production unit and the training centre. The assets and
liabilities of the jibs production unit and training centre
into a new company, owned by old
were brought
the shares in which were transferred to the
Gotha,

(13) OJ L 83, 27.3.1999, p. 1.
(14) OJ C 368, 23.12.1994, p. 12.
(15) See Chapter 7.5 of the 1999 Community guidelines on State aid
for
in difficulty (notice to
Member States including proposals for appropriate measures), OJ
C 288, 9.10.1999, p. 2.

rescuing and restructuring firms

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investor for a consideration of DEM 1. Germany is of
the opinion that no aid was involved in the transaction
as no better price was obtainable on the market.

or content. The Commission accordingly considers that
the sales procedure was not an open one. A sales
procedure that is not open is not an appropriate means
of establishing the market value.

(28)

(29)

To rule out any aid element in the transaction, the BvS
would have had to demand a price corresponding to the
company’s market value. The Commission therefore
verifies whether the sales procedure was an appropriate
one for the purpose of establishing the market value.
According to Commission communication 97/C 209/03
on State aid elements in sales of land and buildings by
public authorities (16) and the Commission’s remarks on
privatisation in the 1993 Competition Report (17), the
sales price is the market price if the sale is effected
through an open and unconditional tender procedure
and the assets go to the highest or only bidder. Bidders
must be given enough time and information to carry
out a proper valuation of the assets. If this procedure is
not used, an independent assessment must be carried
out in order to establish the market value. For lack of
information, the Commission was unable to carry out
such an assessment
It
in the
accordingly issued an information order.

initiation decision.

a

the Commission assesses whether

tender
First,
procedure satisfying the conditions set out in recital 28
took place. It notes that no call for tenders was made in
1997. Germany considered a renewed invitation to
tender unnecessary as the planned sale of the company
had been reported in numerous press articles and was
hence known about in the industry. Moreover, potential
it said, been contacted in writing (18). A
buyers had,
sales procedure is open when it is advertised over a
reasonably long period in the press, so that it can come
to the notice of all potential buyers (19). The contacting
of only five potential buyers is not an appropriate way
likely bidders. And in the light of the
to inform all
information provided in the course of
the formal
investigation procedure
in Case C 31/01 Schmitz
Gotha (20), companies seem to be involved here which
are active more in the vehicle construction sector than
in the sector in which Gotha Technik operates. As for
press articles, Germany has neither submitted a copy of
any such article nor furnished any details of their origin

(16) OJ C 209, 10.7.1997, p. 3.
(17) European Commission,
1993(cid:146), 1994, p. 255.

(cid:145)XXIIIrd Report on Competition Policy

(18) This involved the companies K(cid:228)ssbohrer Fahrzeugwerke, K(cid:246)gel
Fahrzeugwerk AG,
Fahrzeugwerk Bernhardt Krone GmbH,
Fahrzeugbau Langendorf GmbH & Co. KG and Schmitz Cargobull
AG.

(19) Communication on public land sales (see footnote 16), p. 2.
(20) See letter from Germany dated 10 August 2001.

(30)

(31)

it

to component production,

the Commission verifies whether

Consequently,
the
market price was established by way of an independent
assessment. On the basis of an independent evaluation
of the liquidation value of old Gotha carried out in
1997 (hereinafter called the 1997 study) (21), Germany
invokes a liquidation value of zero for the assets taken
over by the investor. The 1997 study contains, among
other things, a liquidity plan for the entire component
production division during the scheduled break-up
period (July 1997 to June 1998) (22). The plan is based
on expected earnings and investment over this period,
less reserves to be used during the year in question.
With respect
shows
liquidity of DEM 4,18 million. According to Germany,
the figure of DEM 4,18 million takes account of the
current assets of production units within the component
production division worth DEM 6,851 million which
were not transferred to the investor but remained within
old Gotha. Germany is therefore of the opinion that
these current assets should not be included in the
calculation of the break-up value of the jibs production
unit and training centre taken over by the investor. In
view of
the liquidation
value of the production units transferred to the investor
is zero and that the price of DEM 1 paid by the investor
is therefore the market price. The Commission would
point out, however, that the figure of DEM 4,18 million
invoked by Germany stems from a liquidity plan which
is not based on the net asset value of the component
individual production units
production division or
within that division. Germany’s hypothesis that
the
figure of DEM 4,18 million covers assets which
remained within old Gotha and which are therefore not
taken into account
implausible. The
Commission accordingly takes the view that Germany’s
contention that
the investor paid the market price
cannot be based on the 1997 study.

this, Germany considers that

therefore

is

In the absence of an open tender procedure and a
suitable independent evaluation, the Commission cannot
assume that the price paid by the investor was indeed
the
the market price.
possibility that
the transaction involved aid to Mr
Schwabe. In view of the fact that the transfer to the new
investor is an essential element of the restructuring of a
company located in one of the new L(cid:228)nder and that the

therefore rule out

It cannot

(21) Forensika GmbH Wirtschaftspr(cid:252)fungsgesellschaft,

(cid:145)Gutachten zur
Ermittlung des Liquidationswertes der Gothaer Fahrzeugwerk
GmbH zum 1.7.1997(cid:146), 1997.

(22) See Annex 4 to the evaluation.

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regards

the Commission will
1994 guidelines are applicable,
the
examine the measure within the framework of
present proceeding. As
the amount of aid
involved, the Commission takes note of the fact that
breaking up the company was the only alternative to
selling it to the new investor. The Commission therefore
considers that the liquidation value best reflects the true
value of old Gotha at the time it was sold. On the basis
of the information obtained in the course of the formal
investigation procedure, the total
liquidation value of
the component production division is DEM 1,173
million (23). The amount of aid granted to the investor
in connection with the transfer can therefore be at most
DEM 1,173 million.
further
In the
information,
the Commission is obliged to use this
figure.

absence of

(34)

2. Aid elements in the shareholding in TBS

(32)

(33)

a

in

5 % stake

In the initiation decision, the Commission was unable to
involved when Gotha
assess whether any aid was
Technische
purchased
Technik
Bildungsst(cid:228)tte GmbH (hereinafter called TBS) from old
Gotha, which was
the BvS. An
controlled
information order was therefore issued. In the course of
the procedure, the Commission learned that, following
an open and unconditional tender procedure, the shares
in the company, with a par value of DEM 200 000, had
been transferred for DEM 1 to the management and to
seven enterprises by contract of 19 June 1998. The
Commission therefore
that no aid was
involved when Gotha Technik acquired its shareholding.

considers

by

3. The BvS grant of DEM 6,1 million

to cover

severance payments

In September 1997, old Gotha received a DEM 6,1
million BvS grant
to
workers made redundant. In the initiation decision, the
Commission expressed the view that Gotha Technik had
also benefited from this aid (24). As the Commission did
not have enough information on the use to which the
aid had been put, it was for the time being regarded as

(23) This value stems

commercial balance sheet in the event of
broken up; see Annex 1 to the 1997 study.

from the new evaluation of old Gotha’s
the company being

(24) According to the contract of sale, old Gotha was to ensure, by
appropriate means, that only 90 employees would be transferred
to Gothas (subsequently Gotha Technik),
in accordance with
Section 613a of the Civil Code. The reduction of old Gotha’s
workforce from 316 to 163 seems to have been effected in order
to comply with this contractual obligation and is
therefore
considered a measure preparatory to the takeover.

aid to both Gotha companies. An information order was
issued.

In response to the order, Germany stated that Section
613a of the German Civil Code was not applicable in
the new German L(cid:228)nder before 1 January 1999.
According to the information furnished,
the aid was
used to make severance payments to workers laid off by
old Gotha. Germany stated that Gotha Technik hired all
90 employees of the jibs production unit and welding
training centre of old Gotha. As, moreover, all claims by
the workers based on seniority were transferred to the
company, no redundancy benefits were to be paid by
Gotha Technik. In view of this, the company received
no aid. The Commission takes
the
question whether Section 613a of the Civil Code was
applicable at the time is of secondary importance, as
Gotha
undertook
contractually to take on the employees. The key element
of the Commission’s assessment is the real use to which
the aid was put, of which it was informed only during
the procedure. As is clear from the
the course of
information received in the course of
the formal
investigation procedure, no aid payments were made to
Gotha Technik. The Commission therefore takes the
view that Gotha Technik cannot be regarded as a
recipient of the aid.

the view that

(now Gotha

Technik)

itself

4. The DEM 398 000 employment grant

to the

(35) According to the information received prior to the
initiation of the procedure, the company clearly received
employment grants totalling DEM 398 000. For lack of
sufficient information, the Commission was, however,
unable to assess in the initiation decision whether these
grants were to be considered aid. It therefore issued an
information order. According
information
furnished during the course of the procedure, a grant of
DEM 170 000 was made under an aid scheme approved
by the Commission (25) and therefore constituted aid. Its
compatibility is examined in recital 41. A grant of DEM
228 000 was made under Section 217 of the German
Social Code, Part III, and hence was not based on an
approved aid scheme. The Commission notes that any
undertaking is entitled to this kind of grant, provided it
complies with the terms of the relevant legislation. As
the measure is not limited to any one undertaking or
sector
general
it
measure (26).

of production,

qualifies

as

a

(25) NN 107/97, Wage cost subsidy (cid:151) east, SG(98) D/1049 of

6.2.1998.
same

(26) The

line was

taken in Case C 35/2000, Saalfelder
Hebezeugbau GmbH; see letter to Germany dated 20 July 2001,
SG(2001) D/28991.

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II. Aid stated by Germany to be existing aid

(36) According to Germany, measures Nos 2 to 5 and the

employment grant are covered by existing aid schemes.

end of 1998 (27). The Commission is therefore of the
opinion that measure No 3 is existing aid. It will be
taken into account
assessing
proportionality.

the purpose of

for

programme),

Government/L(cid:228)nder

(37) As regards measure No 2 (the grant under the joint
the
Federal
in the initiation
Commission was unable to assess,
decision, whether the use of the aid complied with the
terms of the programme in question. An information
order was therefore issued. The investment project is
located in a region falling within Article 87(3)(a) of the
EC Treaty. In the case of Gotha Technik, the maximum
aid intensity comes to 43 % gross. Eligible investment of
DEM 5,765 million was carried out between October
1997 and October 2000. As
the total amount of
including measures 2 to 4 (plus special
regional aid,
depreciation) comes to DEM 3,343 million, the intensity
is indeed 43 %. The aid is therefore existing aid. It will,
however,
assessing
into
proportionality under the guidelines.

account

taken

be

in

the

claim,

formal

decision,

it provided the

company records

Commission
viability

(38) Measure No 3 was awarded under the SME investment
scheme. However, only companies with good prospects
of viability are eligible for aid under this scheme. In the
initiation
expressed
reservations based on the
criterion and
accordingly had doubts about whether measure No 3
complied with the scheme. An information order was
investigation procedure,
issued. During the
Germany claimed that the company had good prospects
of viability from the end of 1998 onwards. To back up
this
for
September 1998 on which the assessment of measure
No 3 had been based at the time. The Commission
notes that old Gotha was threatened with bankruptcy in
1997 and hence was not viable. Old Gotha’s
jibs
production unit was clearly incurring losses when it was
sold to the investor. In 1998, under the new investor,
the company’s turnover notably improved, however,
resulting in an operating profit of DEM 865 000 in
September of
the
that year. Throughout
company had no excess capacity. The asset value grew
from DEM 12,887 million in 1997 to DEM 18,702
million in September 1998. The Commission notes that
the Land guarantee normally provided to banks in such
circumstances was not called in the present case. Hence
it is of the opinion that the company had indeed good
prospects of viability when the aid was granted at the

the year

the

course of

the
(39) As regards measure No 4, during the course of
procedure Germany merely identified the
relevant
scheme as the (cid:145)ERP reconstruction programme (cid:151) east(cid:146)
of the Kreditanstalt f(cid:252)r Wiederaufbau. According to the
the
during
information furnished
procedure, the conditions,
in particular the maximum
aid ceiling of 7,5 % for SMEs located in the new L(cid:228)nder,
were met (28). The aid therefore qualifies as existing aid
and will be taken into account only for the purpose of
the guidelines. As
assessing proportionality under
regards the aid element in the loan, an amount of DEM
120 000 was referred to during the course of
the
procedure. The Commission notes that the only possible
aid element in the loan is an interest subsidy (29). As for
the evaluation of the interest subsidy, the Commission
applies the Community reference interest rate of 4,6 %
applicable at the time. The aid element therefore does
indeed come to DEM 120 000.

(40) As

regards measure No 5,

the
informed of

tax refund,
the
it until after the
Commission was not
procedure was initiated. The conditions,
in particular
the maximum aid intensity of 10 % gross for SMEs
located in the new L(cid:228)nder, were, however, met (30). The
aid, but will
aid therefore
as
nevertheless
the
in
taken
proportionality assessment under the guidelines.

qualifies

account

existing

into

be

(41) As regards the DEM 170 000 employment grant, the
Commission learnt during the course of the procedure
that
it had been awarded under an approved aid
scheme (31). In the light of the information furnished
during the course of the procedure, it is, however, of
the opinion that the conditions are satisfied. Hence the
aid is regarded as existing aid. It will, however, be taken
into account in the proportionality assessment.

(27) This view is borne out by the assessment of the viability criterion

in recitals 45 et seq.

(28) Since eligible investment of DEM 5,765 million was carried out

until July 2000, the intensity comes to 1,27 %.

(29) The public guarantee and the exemption from liability that are
usually provided as security to the banks in such cases were not
requested for Gotha Technik.

(30) Since eligible investment of DEM 5,765 million was carried out

until July 2000, the intensity comes to 9,93 %.

(31) See footnote 25.

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Official Journal of the European Communities

L 314/69

III. New aid

(42) As indicated in the initiation decision, measure No 1,
the BvS grant, was not based on any existing scheme
and is therefore to be regarded as new aid which falls to
be examined in this procedure. Such aid is in principle
incompatible with the common market unless one of
the derogations in Article 87 of the EC Treaty applies.

(46)

the Treaty,

the Commission notes

(43) Germany has not invoked any of the derogations in
Article 87(2) of the Treaty. Nor has it tried to justify the
aid on the basis of the derogations in Article 87(3)(b)
and (d) of the Treaty. As for the derogation in Article
87(3)(a) of
that
Thuringia is an assisted region within the meaning of
that provision. As it states in its guidelines on national
regional aid (32), the Commission is of the opinion that,
in the absence of proof to the contrary, an individual ad
hoc aid payment made to a single firm does not fulfil
the requirements for the grant of regional aid. The
Commission also states in these guidelines that ad hoc
aid to individual firms in difficulty is not to be treated
as regional aid but
falls within the scope of Article
87(3)(c). In view of the primary aim of the aid, which is
to re-establish the viability of a firm, it is therefore the
derogation in Article 87(3)(c) of the Treaty that applies.
The Commission has accordingly verified whether the
aid satisfies the criteria set out in the guidelines on State
aid for rescuing and restructuring firms in difficulty (see
recital 25).

the firm within a reasonable time scale and on the basis
future operating
of
conditions.

realistic assumptions as

to its

the performance of

The Commission notes that
the
company has been better than expected. Breakeven was
achieved in 1998 instead of 1999, as planned. In 2000,
the company achieved a turnover of DEM 36,7 million
and earned an operating profit of DEM 1,175 million.
However,
in the initiation decision the Commission
raised the question whether the obligation to recover
incompatible aid of approximately DEM 7 million from
old Gotha in the context of aid case No C 41/99
(Lintra) (33) might be seen as an additional
liability in
restructuring of Gotha Technik which could
the
influence
the viability criterion.
According to the information furnished during the
course of
the procedure, old Gotha discharged its
recovery obligation (with interest) on 20 June 2001 by
paying a total of DEM 8,827 million. The Commission
accordingly regards the matter as settled.

evaluation of

the

(47)

the Commission considers

the
Consequently,
company will be able to compete on its own merits.
The doubts about viability that
it expressed in the
initiation decision have been allayed by the information
furnished during the course of the procedure.

that

1. Eligibility under the guidelines

3. No undue distortion of competition

(44) According to point 2.1 of the guidelines, the typical
symptoms of a firm in difficulty are diminishing
turnover, increasing losses, declining cash flow and low
net asset value. The Commission notes that old Gotha
was threatened with bankruptcy in 1997 and Gotha
Technik was clearly incurring losses when the sale to
the new investor took place and the aid was granted.
The company is therefore eligible for restructuring aid
under the guidelines.

(48) According to the guidelines, the aid must not unduly
the guidelines
in the event of excess capacity in the
the restructuring plan must provide for a

distort competition. Point 3.2.2(ii) of
stipulates that,
sector,
reduction in the capacity of the aid recipient.

2. Restoration of viability within a reasonable time scale

(49)

(45) According to point 3.2.2(i) of

the
restructuring plan must restore the long-term viability of

the guidelines,

The Commission notes that Gotha Technik is an SME
located in an Article 87(3)(a) region. Gotha Technik
produces booms and jibs for the crane industry, which
is a highly specialised market. According to the latest
information, the company has a share of 20 % of the
Community market
the
Community, benefiting from the growing tendency
among crane manufacturers to outsource the production
of components.

9,5 % outside

and

of

(32) OJ C 74, 10.3.1998, p. 9.

(33) OJ L 236, 5.9.2001, p. 3.

L 314/70

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Official Journal of the European Communities

(50)

(51)

In the initiation decision, the Commission did not have
enough information to be able to verify whether there
was overcapacity on the market or not. On the basis of
the information furnished during the course of
the
procedure, the Commission is of the opinion that the
market is a growth market on which there is no excess
capacity. According to Germany,
the capacity will
remain the same, only its utilisation will be increased.
For lack of information the Commission was, however,
unable to evaluate,
in the initiation decision, whether
the building of a new production shop meant an
formal
increase
in capacity or not. During
investigation procedure, Germany showed that
the
building was necessary in order to increase added value
in line with the restructuring plan without expanding
capacity. Before the present procedure was initiated, it
was stated that
the company was also active in the
welding of aluminium profiles for rail vehicles. For lack
of
the Commission was
in the initiation decision, whether
unable to evaluate,
there are overcapacities in the market
in question.
During the course of the procedure, Germany stated
that
the business of welding aluminium profiles had
never been taken up.

information on the market,

the

the procedure,

In the light of the information furnished during the
the
course of
opinion that
expressed in the
reservations as
initiation decision have been allayed. In its view, the aid
does not unduly distort competition.

the Commission is of

its

4. Proportionality of the aid

(52) According to point 3.2.2(iii) of

the
intensity of
the aid must be limited to the strict
minimum needed to enable the restructuring to be
undertaken. Aid recipients should make a significant
contribution of their own to the restructuring plan.

the guidelines,

(53)

The contribution made by public authorities to the
restructuring comes to a total of DEM 7,738 million.

(54)

or

significant.

1,2 %, was

initiation decision,

In the
the Commission had
reservations about whether an investor contribution of
DEM 200 000,
The
contribution of DEM 3,1 million invoked by Germany
could not be taken into account for lack of information
at that stage. An information order was issued. During
the course of
the procedure an updated table was
received, according to which the investor and banks had
contributed DEM 4,341 million, broken down as
follows:

18.11.2002

(DEM million)

No

Source

Contribution

1

2

3

4

5

Investor

Capital injection

House bank

Loan

GEFA and others

Leasing agreement

DKB

Guarantee for KfW loan
(measure No 4)

Senior executives

Loan

Amou-
nt

0,400

0,500

1,482

1,836

0,123

(cid:151) Regarding contribution No 2, the Commission had
no information about the exact terms before the
initiation decision. According to the information
obtained during the course of the procedure, the
loan in question amounted to DEM 0,5 million at
6,45 % per annum with a term of one year and was
secured by a mortgage on the land in Gotha. The
Commission notes
the company had good
prospects of viability when the loan was granted. It
therefore considers that
the loan qualifies as an
investor contribution.

that

(cid:151) As for contribution No 3,

to

decision. According

the Commission was
likewise not informed about the terms before the
latest
initiation
information, six private firms are involved. The
agreement concerns machinery and equipment and
provides for an interest rate between 5,22 % and
7,09 % and a term between 36 and 60 months.
Hence the Commission is of the opinion that these
agreements
investor
contribution.

considered

can

the

an

be

(cid:151) As

regards contribution No 4,

the Commission
notes that the KfW loan granted through DKB was
granted under an aid scheme. As explained in recital
39, the aid element is DEM 120 000. The question
is whether the part of the loan that is not covered
by the aid scheme can be regarded as an investor
the
contribution. The Commission notes
interest subsidy is the only aid element
in this
case (34). In view of this, the Commission is of the
opinion that
the DKB guarantee for DEM 1,836
million can be considered an investor contribution.

that

course of

(cid:151) As for contribution No 5, the Commission learned
during the
investigation
procedure that it had been granted by seven senior
executives in 1998 at an interest rate of 15 % and
In its
for a term expiring in September 2000.
the Commission has
decision-making practice,

formal

the

(34) No public guarantee or exemption from liability was granted, the
loan being secured only by a mortgage on the land in Gotha.

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Official Journal of the European Communities

L 314/71

as

an

loans

accepted management
investor
contribution where the restructuring was effected by
way of a management buyout. However, Germany
has never clearly stated that
the seven senior
executives actually formed part of the company’s
the Commission
management.
cannot consider the loan an investor contribution.

In view of

this,

(55)

(56)

In the initiation decision, the Commission raised the
question whether the obligation to recover incompatible
aid of approximately DEM 7 million from old Gotha in
the context of aid case C 41/99 (Lintra) could influence
the assessment of
the aid. As
stated in paragraph 46,
the recovery obligation was
discharged by old Gotha on 20 June 2001. The
Commission accordingly regards the matter as settled.

the proportionality of

that,

In view of the above, the investor contribution amounts
to DEM 4,218 million. The Commission would reiterate,
however,
(now Gotha
in the sale of Gothas
Technik) to the investor for DEM 1, there was to be
seen an aid element of DEM 1,173 million (see recital
31). According to the guidelines,
the investor must
contribute to the restructuring from his own resources
or from external commercial financing. To the amount
of this aid to the investor, the investor contribution
does not fulfil this condition. The investor contribution
accordingly amounts to DEM 3,045 million, or 27,9 %
of the restructuring costs. The Commission considers
this amount to be significant within the meaning of the
guidelines. On the basis of the information furnished
during the course of the procedure, the Commission is
of the opinion that its reservations have been allayed. It
accordingly considers that the aid is proportionate to
the restructuring benefits.

D. CONCLUSION

(57)

The Commission finds that Germany has implemented
the aid in breach of Article 88(3) of the EC Treaty.
the aid is compatible with the common
However,
the 1994
market as it complies with the terms of
guidelines,

HAS ADOPTED THIS DECISION:

Article 1

The aid which Germany has
implemented for Gothaer
Fahrzeugtechnik GmbH, amounting to DEM 3,655 million
(EUR 1 686 711,83), is compatible with the common market
within the meaning of Article 87(3)(c) of the EC Treaty.

Article 2

This Decision is addressed to the Federal Republic of Germany.

Done at Brussels, 30 January 2002.

For the Commission

Mario MONTI

Member of the Commission