2002/824/EC: Commission decision of 9 April 2002 on State aid C 72/2001 (ex N 361/2001) which Germany plans to grant to Hamburger AG (Text with EEA relevance.) (notified under document number C(2002) 1340)
Date: 2002-04-09
Institutions: European Commission
Subjects: Germany, State aid, control of State aid, development plan, pulp and paper industry, right of establishment

L 296/50

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Official Journal of the European Communities

30.10.2002

COMMISSION DECISION

of 9 April 2002

on State aid C 72/2001 (ex N 361/2001) which Germany plans to grant to Hamburger AG

(notified under document number C(2002) 1340)

(Only the German text is authentic)

(Text with EEA relevance)

(2002/824/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Com-
munity, 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:

I. PROCEDURE

(1)

(2)

By letter dated 31 May 2001, registered as received on
12 June 2001, Germany notified its intention to grant
investment aid under the multisectoral framework on
regional aid for large investment projects (2) (hereinafter
called the multisectoral framework) to Hamburger AG.
The proposed aid was registered under the number
N 361/01.

The Commission acknowledged receipt, informed Germ-
any that the notification was considered incomplete and
asked additional questions by letter dated 22 June 2001
(D/52559). Germany replied by letter dated 17 July
2001, registered as received on 20 July 2001, and by
letter dated 30 July 2001, registered as received on
31 July 2001. The notification was still considered
incomplete and further questions were sent by letter
dated 2 August 2001. Germany replied by letter dated
15 August 2001, registered as received on 17 August
2001. By letter dated 21 August 2001, the Commission
informed Germany that the notification was now con-
sidered complete and that a final position would be
adopted within two months from the date of registration
of the letter containing the complete information.

(3)

(4)

(5)

(6)

(7)

(8)

the Commission
By letter dated 4 October 2001,
informed Germany that it had decided to initiate the
procedure laid down in Article 88(2) of the EC Treaty in
respect of the aid.

The Commission decision to initiate the procedure
was published in the Official
Journal of the European
Communities (3). The Commission invited interested par-
ties to submit their comments on the aid.

By letter dated 21 December 2001, registered as received
on the same day, Germany responded to the initiation
of the procedure.

The Commission received comments from seven inter-
ested parties. It forwarded them to Germany, which was
given the opportunity to react. Germany’s observations
were sent by letter dated 31 January 2001, registered as
received on the same day.

II. DETAILED DESCRIPTION OF THE AID

2.1. The recipient

The recipient of the aid will be Hamburger AG, Pitten,
Austria. Hamburger AG is part of the Hamburger group,
which is owned by Prinzhorn Holding. Hamburger AG
is active in the industrial production of paper.

2.2. The project

Brandenburg,

The new investment project will be located in Schwarze
Pumpe,
under
an
Article 87(3)(a) of the EC Treaty in which the maximum
allowable aid intensity for large undertakings is 35 %
gross.

assisted

area

( 1) OJ C 342, 5.12.2001, p. 9.
( 2) OJ C 107, 7.4.1998, p. 7.

(3) See footnote 1.

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Official Journal of the European Communities

(9)

The project comprises the construction of a new plant
for the production of white and brown corrugated base
paper. The construction of the plant reportedly [...] (*).
The start of production is planned for [...] at the earliest,
and [...] at the latest.

(10) The new plant will mainly produce testliner [...]. Ham-
burger AG already produces brown grade in its plants in
Austria and Hungary and white grades of very high
quality in its plant in Rieger, Bavaria.

(11) The purpose of the construction of the new plant is
firstly to fill the gap between brown grades and high
grades, and secondly to be close to the east European
markets. These markets, in particular Poland, the Czech
Republic and the Baltic countries, are thought to have
good growth potential.

(12) The planned production capacity of the new plant is [...]
tonnes of testliner a year, beginning with [...] tonnes in
the first year, [...] tonnes in the second year and achieving
full capacity in the third year. For the first five years it is
planned to produce [...] of brown grades and [...] of
white grades. However, switching from the production
of one to the other can be done very quickly. Both types
will be recycled fibre based.

(13) The new plant will also be equipped with a corrugator
of [...] tonnes a year capacity. [...] of the plant’s total
production of [...] tonnes of corrugated base paper
together with [...] tonnes obtained from outside sources
will undergo processing into corrugated paperboard
there. In addition, [...] tonnes of the plant’s production
of corrugated base paper will be delivered to another
converting plant owned by the Hamburger group in
Poland, so that [...] tonnes of the plant’s total production
will be used within the group.

(14) Most of the production of corrugated base paper ([...]
tonnes) will go to independent corrugators and con-
verters. The target market for the brown testliner consists
of Germany, Poland, the Czech Republic and the Baltic
and Benelux countries. The target market for the white
testliner will extend across the whole of Europe. The [...]
tonnes of corrugated paperboard will be sold within a
radius of 200 km around the production plant.

(15) The costs of the project can be broken down as follows:

(*) Business secret.

L 296/51

(EUR ’000)

Item

Total

Eligible

Land

Buildings

Plant, machinery

Tools

Intangibles

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

Total

153 388

153 388

(16) The construction of the new plant will

increase the
corrugated base paper production capacity of the Ham-
burger group from [...] tonnes in 2000 to [...] tonnes in
2005. The Hamburger group had a share of [...] in the
market for corrugated base paper in the European
Economic Area in 2000.

(17) According to the notification, the project will lead to the
creation of 277 permanent jobs (194 in the corrugated
paper producing factory, 57 in the corrugated paper-
board producing factory and 26 for transport and other
activities). Germany has notified the creation of 356
indirect jobs in an assisted area, mainly in the fields of
raw materials supply and transport services.

2.3. Aid measures

a

grant

amounting

non-reimbursable

(18) The proposed aid consists of investment aid in the form
of
to
EUR 31 582 500 awarded under the 29th framework
plan of the joint Federal Government/Länder programme
for improving regional economic structures, approved
by the Commission (4). Furthermore, an investment
premium amounting to EUR 22 103 148 is to be
granted on the basis of the 1999 Investment Premium
Law, approved by the Commission (5).

(4) 29. Rahmenplan der Gemeinschaftsaufgabe ‘Verbesserung der

regionalen Wirtschaftsstruktur’.

(5) Investitionszulagengesetz 1999, C 72/98 (ex N 702/97),
SG (98) D/12438 of 30.12.1998 and SG (2001) D/286551 of
2.3.2001.

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2.4. Reasons for initiating the formal investigation
procedure

III. COMMENTS FROM INTERESTED PARTIES

(19) The Commission considered that the relevant product
market was the market for corrugated base paper. On
the evidence available the Commission moreover at that
stage considered the relevant market to be in relative
decline as the average annual growth of apparent
consumption in this market was significantly below the
average annual growth of manufacturing industry as a
whole. The competition factor was thus provisionally
set at 0,75. Moreover the Commission provisionally set
the capital-labour factor at 0,8.

(20) The Commission had doubts in particular regarding the
creation of 356 indirect jobs as announced by Germany.
It doubted whether the total number could be taken into
account as they might not all be created in adjacent
assisted regions. In all, 139 of the indirect jobs claimed
by Germany were expected to be located in Poland
and the Czech Republic. The Commission questioned
whether these jobs could be taken into account as the
Czech Republic and Poland are not Member States of
the European Union. Moreover, the Czech Republic has
no border with the Land of Brandenburg and is thus not
an adjacent region.

(21) Germany had claimed that 40 indirect jobs would be
created by a new company making recycled paper that
Hamburger AG would establish at Schwarze Pumpe.
The Commission proceeded on the basis that this project
should be considered part of the main project and that
the jobs should therefore be included in the calculation
of the direct jobs and not of the indirect jobs. It therefore
provisionally considered that the project at issue would
lead to the creation of 177 indirect jobs. The regional
impact factor was therefore provisionally set at 1,25.
However doubts also existed as to whether all the jobs
created in the transport field could be taken into account,
as they might not all be created in adjacent assisted
regions. This might lead to the regional impact factor
being lowered to 1,0.

(22)

In its decision to initiate the procedure the Commission
calculated the formula for the project as follows: either
35 × 0,75 × 0,8 × 1,25 = 26,25 % or
35 × 0,75 × 0,8 × 1,0 = 21 % depending on the regional
impact factor. The Commission thus had doubts whether
the amount of EUR 53,7 million (DEM 105 million),
equivalent to an aid intensity of 35 %, which Germany
intended to grant to Hamburger AG for its investment
in Schwarze Pumpe, Brandenburg, was in conformity
with the maximum allowable aid intensity calculated on
the basis of the multisectoral framework.

(23) After the procedure was initiated,

the Commission
received comments from seven interested parties. The
comments were made by competitors as well as by an
association of the Spanish paper industry, an association
of the American forest and paper industry and the
French Government. The comments were forwarded to
Germany by letters dated 20 December 2001 and 11
and 16 January 2002 to give it the opportunity to react.
An answer from Germany was received on 1 February
2002.

(24) All interested parties express their concern about the
capacity situation in the relevant market. The sector for
corrugated base paper is already faced with structural
overcapacities. According to one competitor, overcapac-
ities are particularly high in Germany. In the years
2000 to 2002, capacities are expected to increase further
owing to new plants and extensions of already existing
plants, and as market growth is slowing down this
situation will worsen.

(25)

Even if the percentage growth in eastern Europe is
relatively high, the increase in volume will be low as the
overall level of paper consumption is modest. According
to one competitor, the future growth rates of the market
presented by Germany are overestimated. The American
Forest and Paper Association points out that the pro-
jected capacity expansions in the next two years are
significantly out of proportion to demand projections.

(26) One competitor has misgivings because the market is
characterised by medium-sized companies and family
businesses. The new project of Hamburger AG will lead
to significant excess capacity and will
thus have a
detrimental effect on the market and lead to serious
distortions.

(27) Two competitors maintain that the sector is highly
capital
intensive and that value added is low. The
planned aid for the project will help Hamburger AG to
significantly reduce its production costs and conse-
quently to lower its prices (by around 10 % according to
one competitor).

(28) As regards the supply of recycled paper, one competitor
points out that already this year there has been a
shortage of recycled paper over a longish period. In
particular, east European countries such as Poland and
the Czech Republic from which Hamburger wishes to
obtain most of its raw materials are already net importers
of recycled paper. The competitor therefore expects not
enough raw material to be available for the new plant.

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L 296/53

(29) Two competitors consider that the creation of direct
jobs is exaggerated. One competitor points to the figure
of 17 plus 14 jobs for sales and 22 jobs for finance and
management control, which in its opinion is far too
high. Another competitor indicates that in particular the
number of jobs related to the corrugator is too high.

(30) Two competitors addressed the issue of indirect job
creation. In their opinion the number is significantly
overestimated. No new jobs will be created in the field
of recycled paper as this already accounts for a large
proportion of total production. Moreover, a large part
of the transport will be done by rail and not by road,
thus creating fewer jobs than claimed by the German
Government. In any event, the number of jobs created
in the field of transport seems too high. One of the
competitors also points to the high number of jobs
allegedly created in the field of maintenance and energy,
arguing that most of the jobs will probably not be
created in an adjacent assisted area.

IV. COMMENTS FROM GERMANY

(31)

In its comments on the initiation of the procedure,
Germany explains that the establishment of the new
company making recycled paper is an independent
project carried out by H&H Recycling GmbH. H&H
Recycling GmbH used to be 75 % owned by Hamburger
AG. For strategic reasons, Hamburger AG decided to
end its involvement in activities related to the recycling
of paper and on 4 October 2001 sold its share in H&H
Recycling GmbH to RWE Umwelt Services Deutschland
GmbH. In the notification, the collection of waste paper
by this new company had been estimated at around [...]
tonnes a year, leading to the creation of 40 new jobs.
However, not all this amount will be purchased by
Hamburger AG as the various types of recycled paper
produced by the plant are not all needed by it. The new
company will also supply other companies and was
therefore never regarded as part of Hamburger AG’s
project.

(33) Regarding the evolution of the market and the assess-
ment of the competition factor, Germany argues that
the multisectoral framework provides for a period of
five years for the calculation of average annual growth.
The relevant period for the project at issue is therefore
1996 to 2000. Over this period, average annual growth
amounted to 10,04 %. Germany stresses that the invest-
ment is taking place in the sub-sector of waste-based
papers, i.e. corrugated base paper made of recycled fibre,
in which, in recent years, the average annual growth was
higher than for corrugated base paper as a whole.
Moreover, Germany points out that the below-average
growth rate is due, not to the evolution of the market,
but to political intervention. Because of political inter-
vention, prices for recycled paper had dropped signifi-
cantly from 1995 to 1996, which resulted in lower
prices for corrugated base paper. According to Germany
the market
took three years to recover from this
intervention.

(34) Germany confirms that all

indirect jobs created by
road transport will be located in the assisted region.
Concerning the indirect jobs related to rail transport,
Germany admits that not all of the indicated 33 jobs
may be located in an assisted region, but at least 10 jobs
will.

(35) As regards the question whether the alleged indirect job
creation in the Czech Republic can be taken into account
for the assessment of the regional impact of the project,
Germany argues that
the five new German Länder
should be regarded as a single assisted area pursuant to
Article 87(3)(a) of the EC Treaty so that a common
border exists with the Czech Republic. As to the indirect
jobs created in Poland, Germany points out that a
regional map at the NUTS II level has been drawn
for this country and encourages the Commission to
reconsider its position as to whether the indirect jobs
created there can be taken into account for the regional
impact factor.

(36) According to Germany at least 164 indirect jobs will be
created in the assisted region and adjacent assisted
regions, not counting the jobs created in Poland and the
Czech Republic.

(32) As regards the jobs created by H&H Recycling GmbH,
Germany explains that the expected supply of [...] tonnes
of recycled paper to Hamburger AG will lead to the
creation of 10 jobs. This is confirmed by a letter of
intent provided by the company.

(37) Germany also submitted comments on the third-party
observations. As regards the calculation of the compe-
tition factor, it points out that the future development
of apparent consumption only plays a minor role in
this context. The relevant period for determining the
evolution of the market comprises the last five years.
Germany stresses that in 2000 apparent consumption
grew by 6,1 % in volume terms.

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(38) As regards the capacity situation in the market, Germany
explains that large projects like the investment at issue
normally take one to three years until they reach the
production stage. According to calculations submitted
by Germany based on the assumption of an average
annual growth rate of 2,8 % in the years to come, there
will be no overcapacity in the market until 2003 even
after production in the new plant has started. The same
holds true for the year 2004.

V. ASSESSMENT OF THE AID

3.1. Notification requirement

(44) Total project costs amount to EUR 153 million, the
cumulative aid intensity is 35 % of the eligible investment
costs and the aid per job created is EUR 193 881.
Therefore, according to point 2.1 of the multisectoral
framework, the aid is notifiable individually and has to
be assessed accordingly.

(39) Germany recalls that the new plant will produce white
and brown testliner depending on the market conditions.
The white testliner produced in the new plant will be of
[...] quality, which is a quickly growing market segment.

(45)

Prior to any assessment of proposed aid, the multisec-
toral framework requires that the relevant market first
be defined.

(40) Germany draws attention to the fact that two competi-
tors complaining about overcapacities are themselves
planning to increase their production capacities signifi-
cantly between now and 2004.

(46) The relevant product market for determining the market
share comprises the product envisaged by the investment
project and, where appropriate, its substitutes.

3.2. The relevant market

(41) As regards the situation on the market for recycled
paper, Germany points out that it is a net exporter of
recycled paper (2,6 million tonnes). This surplus will
probably be reduced to 1,7 million tonnes by 2010
because demand will outstrip supply, the proportion of
total sales accounted for by recycled paper being already
high (more than 60 %). However, Germany will remain
the biggest net exporter of recycled paper in the EU. In
other European countries supply will grow faster than
demand so that there is no detrimental effect on the
market for recycled paper and prices will remain stable.
These findings are confirmed by Jaakko Pöyry.

(42) As regards the direct job creation, Germany explains
that the higher number of jobs in relation to total
capacity of the project at issue compared with a project
that the
of a competitor may be due to the fact
installations of Hamburger AG will have a smaller width.
Thus capacity will be lower although the same number
of employees are needed to operate the installations.
Another reason may be that a plant has close links with
the parent company so that fewer staff are needed in the
field of sales, management control, etc.

(43) Concerning the regional impact of the project, Germany
points out that it has provided the Commission with
calculations and confirmations by future partner com-
panies. As regards the jobs related to transport, Germany
indicates that not only the final product but also the raw
materials have to be transported.

(47)

In the present case, the investment concerns the pro-
duction of brown and white testliner on the basis of
recycled paper. Testliner belongs to the product group
of corrugated base paper. Corrugated base paper can be
classified into the following three categories: waste-
based papers, semi-chemicals and kraftliner. The testliner
produced in the plant in question is 100 % recycled fibre
based and thus falls into the category of waste-based
papers. Semi-chemicals are special products, while
kraftliner is made from cellulose (e.g. wood).

(48)

In 1999 the share of waste-based papers in total
consumption of corrugated base paper amounted to
74 %. Semi-chemicals had a share of 6 % and kraftliner
a share of 20 %.

(49) Corrugated base paper comes under NACE code 21.12,
which covers the whole range of manufacture of paper
and paperboard. Corrugated base paper is an intermedi-
ate product used in the manufacture of corrugated
paperboard and paper. White and brown corrugated
paperboard is used as packaging material and as raw
material for packages in several fields.

(50)

Some of the testliner produced in the plant in question
is processed on site into corrugated paperboard, but
most is sold on the market to independent converters
and corrugators. The main activity of the new plant is
therefore the production of testliner.

(51)

In the light of the above, the Commission considers the
market for corrugated base paper to be the relevant
product market. No separate NACE classification exists
for this market.

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L 296/55

(52) According to the multisectoral framework, the relevant
geographic market comprises usually the EEA or, alter-
natively, any significant part of it if the conditions of
competition in that area can be sufficiently distinguished
from other areas in the EEA.

(53) Germany considers that the relevant geographic market
comprises at least the EEA. In its view, owing to the

location of the new plant on Germany’s eastern border,
eastern Europe should be considered part of the relevant
market as well. Inasmuch as reliable data on the east
European market are difficult to obtain and the east
European market is tiny compared with the EEA market,
the Commission bases its analysis on the EEA market
and considers the EEA to be the relevant geographic
market.

3.3.

Evolution of the market

(54) Germany submitted the following data on apparent consumption of corrugated base paper in the
EEA based on statistics provided by the European Association of Makers of Corrugated Base
Papers (6):

1994

1995

1996

1997

1998

1999

2000

Average

Average

annual change annual change
1994 to 1999 1995 to 2000

Volume (million
tonnes)

16 873 16 928 17 121 18 307 18 915 19 022 20 193

2,43

1,36 %

Value (EUR million) 5 886 7 740 5 465 5 679 6 178 6 295 8 104

1,35

0,70 %

(55) According to Germany, consumption of corrugated base
paper is expected to grow by an annual average of 2,8 %
in volume terms in the EEA over the next ten years (7).

intensity of 35 % gross corresponds to the admissible
aid ceiling for a large undertaking in the region where
the project is located.

(56) Data on apparent consumption of corrugated base paper
in eastern Europe are difficult to obtain. The market is
estimated at around 1,5 million tonnes in 1999 (exclud-
ing Russia and the CIS). The average annual growth rate
of consumption in volume terms is expected to be
around 5,2 % over the next ten years (8).

(59) A range of adjustment factors then have to be applied to
that percentage figure in accordance with three specific
assessment factors in order to calculate a maximum
allowable aid intensity for the project in question,
namely the competition factor (T), the capital-labour
factor (I) and the regional impact factor (M).

3.4. Multisectoral framework assessment

C o m p e t i t i o n f a c t o r ( T )

(57) Under the multisectoral framework, the Commission, in
order to determine the maximum allowable aid intensity
for the proposal to award aid, has to identify the
maximum aid intensity (regional aid ceiling) which a
company could obtain in the assisted area concerned
within the context of the authorised regional aid system
valid at the moment of notification.

(58) Owing to the fact that Hamburger AG is to be considered
a large undertaking, the maximum allowable aid inten-
in the present case is 35 % gross (9). The
sity (R)
Commission accordingly notes that the proposed aid

( 6) Groupement Ondulé Statistique 1991-2000.
( 7) Study by Jaakko Pöyry Consulting.
( 8) Study by Jaakko Pöyry Consulting.
( 9) OJ C 340, 27.11.1999, p. 8.

(60) The Commission notes that the market share of Ham-
burger AG does not exceed 40 % in the relevant market
and will not exceed this percentage as a result of the
new investment.

(61) The authorisation of aid to companies operating in
sectors that are in structural overcapacity poses particu-
lar risks of a distortion of competition. Any capacity
expansion not offset by capacity reductions elsewhere
will exacerbate the problem of structural overcapacity.
The sector or subsector will be established at the lowest
available segmentation of the NACE classification.

(62) The NACE code corresponding to the production of
corrugated base paper is 21.12, which comprises the
whole range of manufacture of paper and paperboard.
In the light of the above considerations, the Commission
finds that the relevant sector is the corrugated base
paper subsector.

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(63) No separate NACE classification exists for the sub-
sector of corrugated base paper. Corrugated base paper
accounts for only a small part of the relevant NACE
code. The Commission therefore considers that capacity
data concerning NACE code 21.12 are not representative
for the purpose of appraising the capacity situation for
corrugated base paper. Pursuant to point 3.4 of the
the Commission bases its
multisectoral
assessment of the competition factor on the data for
apparent consumption and considers whether the invest-
ment is taking place in a declining market.

framework,

(64)

For this purpose the Commission compares apparent
consumption of
the products in question with the
growth rate of EEA manufacturing industry as a whole.
A market is deemed to be declining if, over the last five
years,
the average annual growth rate of apparent
consumption of the product is more than 10 % below
the annual average of EEA manufacturing industry as a
whole, unless there is a strong upward trend in the
relative growth rate of demand for the product. The
market is deemed to be absolutely declining if
the
average annual growth rate of apparent consumption
over the last five years is negative.

(65) As pointed out above, Germany argues that the Com-
mission should consider a period of five years,
i.e.
1996 to 2000, for the assessment of the development
of apparent consumption and not a six-year period. The
multisectoral framework refers to the average annual
growth rate of
is
the practice of the Commission to look at apparent
consumption over a period of six years in order to
calculate five growth rates (10).

five years. Therefore it

the last

(66) Germany provided figures on apparent consumption of
the products in question for the EEA from 1994 to
2000. According to these data, the average annual
growth rate of apparent consumption of corrugated base
paper was 1,35 % for the period 1994 to 1999 and
0,70 % for the period 1995 to 2000. The average annual
growth rate of EEA manufacturing industry as a whole
came to 5,81 % and 6,16 % for the years 1994 to
1999 and 1995 to 2000 respectively. Consequently,
in accordance with point 7.8 of
the multisectoral
framework, the market for corrugated base paper is
considered to be in relative decline as the average annual
growth rate is significantly (more than 10 %) below that
of manufacturing industry as a whole.

(67) As regards Germany’s argument that the average annual
growth of corrugated base paper made from recycled
fibres is above the average annual growth of corrugated
base paper as a whole,
it should be noted that the
Commission defined the relevant market as being that
for corrugated base paper, and pursuant to the multisec-
toral framework it is the evolution of this market that
has to be taken into account for the purpose of assessing
the competition factor.

( 10) See Commission decision of 8.5.2001, Wacker Chemie; Com-
mission decision of 3.7.2001, Kronoply; Commission decision
of 2.10.2001.

(68)

In the light of the above considerations, the Commission
applies a competition factor of 0,75.

C a p i t a l - l a b o u r f a c t o r ( I )

(69) The capital-labour factor aims at adjusting the maximum
aid intensity with a view to favouring those projects
which effectively and better contribute to the reduction
of unemployment through the creation of a relatively
large number of new jobs.

(70) According to Germany the project will

lead to the
jobs, broken down as

creation of 277 permanent
follows:

Field

Direct jobs

Factory for the production of corrugated
base paper

194

— Factory management

— Production

— Mechanics/energy/construction

— Buying department

— Sales department

— Finance/management control

— Electrical engineering, measuring and reg-

ulating technology

— Energy

Corrugator

— Factory management

— Production

— Buying department

— Sales department

Transport etc.

4

97

30

3

17

22

17

4

57

9

33

1

14

26

Total

277

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(71)

In its decision to initiate the procedure, the Commission
took the view that the project concerning the establish-
ment of a company making recycled paper should be
regarded as a satellite project and that it should be
included in the calculation of the capital-labour factor.
On the basis of the information submitted by Germany
in response to the decision to initiate the procedure, the
Commission considers that the establishment of the
company making recycled paper can be regarded as an
independent project.

(72) Germany submitted data on capacities and the number
of employees of comparable projects to justify the
number of direct jobs created by the project at issue.
The Commission considers that this number is reason-
factor for an investment of
able. The adjustment
EUR 153,4 million which results in the creation of 277
jobs
of
EUR 553 790 per job. In accordance with point 3.10.2
of the multisectoral framework, the capital-labour factor
(I) for the adjustment of the maximum aid intensity for
the project at issue is calculated at 0,8.

corresponding

ratio

one

the

to

is

R e g i o n a l i m p a c t f a c t o r ( M )

(73) The regional

impact

factor takes into account

the
beneficial effects of a new aided investment on the
economies of the assisted regions. The Commission
considers that job creation can be used as an indicator
of a project’s contribution to the development of a
region. A capital-intensive investment may create a
significant number of indirect jobs in the assisted region
concerned and any adjacent assisted region. Job creation
in this context refers to jobs created directly by the
project together with jobs created by first-tier suppliers
and customers in response to the aided investment.

(74) According to the notification, the project will lead to the
creation of 356 indirect jobs. They are expected to be
created in the following fields:

Field

Indirect jobs

Supply of raw materials

Transport

Maintenance

Energy

Training and temporary staff

Services etc.

Customer

161

107

26

15

9

8

30

Total

356

(75) According to Germany the most important source of
indirect job creation is the supply of raw materials, i.e.
the supply of recycled paper and starch. The total
demand for recycled paper by the new plant is expected
to amount to [...] tonnes a year.

(76) Germany claimed 109 indirect jobs in the supply of
recycled paper created by companies located in Poland
and the Czech Republic. Hamburger AG expects to
obtain [...] tonnes of recycled paper a year from sources
located in these two countries within a radius of 200 km
around the new plant. According to Germany and based
on calculations provided by a recycling company, an
additional demand for [...] tonnes of recycled paper will
lead to the creation of 109 jobs in Poland and the Czech
Republic. In this context Germany provided a list of five
recycling companies located in the Czech Republic and
of seven recycling companies located in Poland.

(77) Around one third of the alleged 109 jobs, i.e. around 36
jobs, are expected to be created by suppliers located in
the Czech Republic, and around two thirds, i.e. 73 jobs,
by suppliers located in Poland.

(78)

In addition, the project at issue is expected to lead to the
creation of 30 new jobs by a customer of Hamburger
AG located in Poland producing corrugated paper
products. Owing to the increased security of supply of
raw materials and reduced freight charges resulting from
the construction of the new plant, the company is
expected to expand its production. This is confirmed by
a letter of intent provided by the company.

(79) As regards the approximately 36 jobs allegedly created
in the Czech Republic, it has to be noted that the Czech
Republic has no common border with the Land of
Brandenburg and is therefore not an adjacent assisted
region within the meaning of the provisions. Indirect
jobs created with first-tier suppliers in this country are
therefore not taken into account for the calculation of
the regional impact factor.

(80)

In addition, Germany points to the creation of indirect
jobs by suppliers of recycled paper and by a customer of
the new plant located in Poland. It has to be noted that
Poland is not a Member State of the European Union. In
Article 63 of the Europe Agreement, which entered into
force in February 1994, it is stated that, during the first
five years after the entry into force of the Agreement,
any public aid granted by Poland must be assessed taking
into account the fact that Poland must be regarded as an
area identical to those areas of the Community described
in Article 87(3)(a) of the EC Treaty. This provision has

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Official Journal of the European Communities

30.10.2002

just been prolonged (11). When it initiated the procedure,
the Commission doubted whether the jobs created by
first-tier suppliers and customers located in Poland could
be taken into account for the calculation of the regional
impact factor.

(86)

(81)

In its notification Germany stated that the establishment
of a new company making recycled paper at Schwarze
Pumpe which will supply [...] tonnes of recycled paper
to the new plant would lead to the creation of 40 indirect
jobs. According to the latest information submitted and
as stated above, this company will now supply at least
[...] tonnes of recycled paper, which will lead to the
creation of 10 indirect jobs. Therefore 10 indirect jobs
related to this project are taken into account.

(82) Twelve jobs are supposed to be created by a company

supplying starch.

(87)

(83) The second important source of indirect job creation
is the field of transport services (107 indirect jobs).
According to Germany an amount of [...] tonnes (raw
materials,
final products, waste disposal) has to be
transported every year. The transport of [...] tonnes will
be done by the plant’s own transport services. The
transport of [...] tonnes is expected to be carried out by
a private haulage company. Germany provided a letter
of intent and estimates by this company pointing out
that the transport of [...] tonnes will lead to the creation
of 70 new jobs (51 permanent full-time drivers and 19
office workers and mechanics). The remaining [...]
tonnes are expected to be transported by railway.
According to estimates by Germany, which have been
confirmed by a private railway company, this will lead
to the creation of 33 jobs. Moreover, Germany presented
estimates by a private company that it will create four
jobs in shunting activities related to the operation of the
new plant.

(84) The Commission considers that the presented estimates
of indirect jobs created in the field of transport services
are reasonable. However, when it initiated the procedure
it doubted whether they would all be created in adjacent
assisted regions. Germany admits that in the field of rail
transport not all jobs may be created in adjacent assisted
regions, but at least 10 will. Therefore in the field of
transport 84 indirect jobs are taken into account for the
calculation of the regional impact factor.

(85) A further 26 jobs originate from the permanent mainten-
ance of the facilities, 15 from the supply of energy, nine
from training and temporary staff in case of a production
standstill and eight from services related to the activities
of the new plant (cleaning, catering, offices supplies,
etc.).

( 11) Decision No 2/2001 of the EU-Poland Association Council of

7 May 2001, OJ L 215, 9.8.2001, p. 38.

indirect

taken into account,

If the jobs created by suppliers and customers in Poland
(73 for the supply of recycled paper and 30 by a
job
customer) are not
creation amounts to 164 jobs. If these jobs are taken
into account, a total of 267 indirect jobs will be created.
In accordance with point 3.10.3 of the multisectoral
framework and compared with the 277 direct jobs
created by the project, these figures correspond to a
medium degree of indirect job creation (between 50 %
and 100 %) for each job created by the aid recipient in
both cases. The regional impact factor is consequently
set at 1,25.

M a x i m u m a l l o w a b l e a i d i n t e n s i t y

is

aid

intensity

calculated

the foregoing,

the maximum allow-
In view of
follows:
as
able
35 % × 0,75 × 0,8 × 1,25 = 26,25 % gross. The proposed
aid of EUR 53,7 million, equivalent to an aid intensity
of 35 % gross,
to
Hamburger AG for its investment in Schwarze Pumpe,
Brandenburg, is therefore not in conformity with the
maximum allowable aid intensity calculated on the basis
of the multisectoral framework.

that Germany intends to grant

3.5.

Ex post monitoring

(88)

(89)

In view of the sensitive nature of the large mobile
investments involved, it is essential that a mechanism
exists which helps to ensure that the level of aid actually
disbursed to the recipient conforms to the Commission
decision.

For each aided project approved by the Commission
under the multisectoral framework, the Commission
requires either that any aid contract between the relevant
authority of the Member State and the aid recipient
contains a reimbursement provision in the event of non-
compliance with the contract or that the final significant
payment of the aid (e.g. 25 %) will be made only when
the aid recipient has satisfied the Member State that the
execution of the project is in compliance with the
Commission decision and on condition that the Com-
mission, on the basis of information provided by the
Member State concerning implementation of the project,
has, within 60 working days, indicated its agreement or
raised no objections to the final payment of the aid.

(90) The Commission notes that the proposed decision to
grant aid to Hamburger AG contains a reimbursement
provision in the event of non-compliance by the aid
recipient with the decision granting the aid.

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L 296/59

(91) The Commission notes that the final significant payment
of the aid will be made only when Hamburger AG has
satisfied the Member State that the execution of the
project is in compliance with the Commission decision.

(92) The Commission further notes that the undertaking
concerning ex post monitoring given by Germany com-
plies with the obligations laid down in point 6 of the
multisectoral framework,
in particular as regards the
obligation to communicate to the Commission a copy
of the decision granting the aid as well as an annual
report on the project and the other information and
documents to which point 6.4 of the multisectoral
framework refers.

VI. CONCLUSION

(93)

In the light of the above considerations the Commission
concludes that the part of the notified aid exceeding the
maximum allowable aid intensity calculated for this
project in accordance with the provisions of the multi-
sectoral framework does not fulfil the conditions to be
considered compatible with the common market,

HAS ADOPTED THIS DECISION:

Article 1

The State aid which Germany plans to grant to Hamburger
AG, amounting to EUR 53 685 648, is incompatible with the
common market
to which it exceeds the
maximum allowable aid intensity for the project at issue of
26,25 %.

to the extent

The aid may accordingly not be granted above an intensity
ceiling of 26,25 %.

Article 2

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

Article 3

This Decision is addressed to the Federal Republic of Germany.

Done at Brussels, 9 April 2002.

For the Commission

Mario MONTI

Member of the Commission