2002/898/EC: Commission Decision of 9 April 2002 on the State aid implemented by Germany for SKL Motoren- und Systembautechnik GmbH (notified under document number C(2002) 1342) (Text with EEA relevance)
Date: 2002-04-09
Institutions: European Commission
Subjects: Germany, State aid, aid for restructuring, control of State aid, mechanical engineering, privatisation, redemption

18.11.2002

EN

Official Journal of the European Communities

L 314/75

COMMISSION DECISION

of 9 April 2002

on the State aid implemented by Germany for SKL Motoren- und Systembautechnik GmbH

(notified under document number C(2002) 1342)

(Only the German text is authentic)

(Text with EEA relevance)

(2002/898/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),

Whereas:

I. PROCEDURE

(1)

(2)

By letter dated 9 April 1998, Germany informed the
Commission about
several aid measures granted in
favour of SKL Motoren- und Systembautechnik GmbH
(hereinafter (cid:145)SKL-M(cid:146)) as part of its second restructuring.

The restructuring project contained aid measures that
were registered under aid number NN 56/98. The
Commission requested additional
information from
Germany by letters dated 23 June 1998, 2 March 1999,
28 September 1999, 26 October 1999, 15 December
1999 and 28 February 2000. Germany replied by letters
dated 28 September 1998, 6 January 1999, 1 April
1999, 10 May 1999, 29 September 1999, 4 October
1999, 19 October 1999, 10 February 2000, 14
February 2000, 28 February 2000 and 22 March 2000.
On 2 March 2000 the Commission received an
amended notification ((cid:252)berarbeitete Notifizierung)
from
Germany.

(3)

By letter dated 22 March 2000, Germany notified to the
Commission a proposed asset deal between SKL-M and

(4)

(5)

(6)

(7)

(8)

MTU Motoren- und Turbinen-Union Friedrichshafen
GmbH (hereinafter MTU). Further information on the
asset deal was provided by Germany on 13 April 2000
and 17 May 2000.

Additional details were provided in meetings with
representatives of the German Government, SKL-M and
the investor MTU on 11 November 1999 and 7
December 1999.

By letter dated 8 August 2000,
the Commission
informed Germany that it had decided to initiate the
procedure laid down in Article 88(2) of the EC Treaty in
the aid and the notified asset sale. The
respect of
Commission decision was published in the Official
Journal of the European Communities (2). The Commission
called on interested parties to submit their comments.

The Commission received no comments from interested
parties.

On 16 October 2000, 6 April and 17 October 2001
Germany submitted its comments on the opening of the
procedure. It also withdrew its notification of the asset
deal (ex N 153/2000).

On 19 September 2001 the Commission decided to
require Germany pursuant
to Article 10 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 (3)
to supply the missing information
necessary to assess the compatibility of
It
sought in particular information that would allow it to
determine whether MTU might have benefited or might
benefit
in the future from the State aid granted to
SKL-M. It also asked Germany to forward a copy of this
decision to the beneficiary.

the aid.

(1) OJ C 27, 27.1.2001, p. 5.

(2) See footnote 1.
(3) OJ L 83, 27.3.1999, p. 1.

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(9)

On 9 November 2001 the Commission reminded
Germany that, if no further information were provided,
it would, pursuant to Article 13 of Regulation (EC) No
659/1999, take a decision on the basis of the available
information.

(10)

In response to the information injunction, Germany
submitted comments on 23 January 2002, 26 February
2002 and 11 March 2002.

II. DESCRIPTION OF THE AID

1. Background prior to the second restructuring

(11)

(12)

SKL-M is based in Magdeburg, Saxony-Anhalt.
It
develops and manufactures engines for ships and the
energy sector, produces spare parts and provides repair
services. Saxony-Anhalt is an area eligible for regional
aid under Article 87(3)(a) of the EC Treaty.

SKL-M belonged to a group of eight eastern German
companies which were privatised in 1994 as EFBE
Verwaltungs GmbH & Co. Management KG (EFBE), now
Lintra
The
Beteiligungsholding GmbH ((cid:145)Lintra(cid:146)).
restructuring plan under Lintra was regarded as having
failed at
In January 1997 the
Bundesanstalt f(cid:252)r vereinigungsbedingte Sonderaufgaben (BvS,
the successor
to the Treuhand privatisation agency)
decided to continue the restructuring of SKL-M with a
view to preparing it for sale at a later date.

the end of 1996.

2. The second restructuring

(13)

In 1997 SKL-M had some 295 employees and a
turnover of DEM 63 million. Since it did not meet the
relevant employee thresholds and financial ceilings for
two consecutive years,
it does not rank as an SME
within the meaning of Commission Recommendation
96/280/EC of 3 April 1996 concerning the definition of
small and medium-sized enterprises (4).

(14) A repetition of a public invitation to tender for SKL-M
was deemed not necessary by the BvS since the interest
in finding an industrial partner for SKL-M had been
reported in several press articles and virtually all
potential
for SKL-M had been
contacted. In mid-1996 the only interested parties were
Waukesha Engine Division Dresser Industries Inc/USA
the
(Waukesha)

and MTU. Owned 88,35 % by

industrial partners

(4) OJ L 107, 30.4.1996, p. 4; see in particular the Annex (Article 1(1)

and (6)).

DaimlerChrysler Group, MTU is one of
the leading
In 1997
engine manufacturers worldwide.
diesel
Waukesha announced that it was no longer interested.
MTU remained
a
sole
restructuring plan for SKL-M.

candidate proposing

the

(15) On account of the unresolved problems with the State
aid for LINTRA, MTU was not prepared to take over
SKL-M directly.
interim solution
(interimistische (cid:220)bernahme) was sought by the BvS and
MTU until a definitive decision had been taken on all
the State aid for SKL-M.

Therefore,

an

token

DEM 1)

from Lintra

(16) On 5 November 1997 all SKL-M shares were transferred
BVT
(for
Industrie-Beteiligungsgesellschaft Magdeburg mbH (BVT)
and Wikom Gesellschaft f(cid:252)r Wirtschafts-kommunikation
und Know-how-Transfer mbH (Wikom). BVT and
Wikom act only as trustees for the BvS and the investor
MTU. SKL-M has since been jointly managed by BVT,
MTU and the BvS.

to

(17)

Furthermore,
concluded:

three

supplementary agreements were

(cid:151) a basic agreement (Grundsatzvereinbarung) between
MTU,
the BvS, BVT and SKL-M whereby in
particular MTU receives an option to buy the shares
of SKL-M. Either MTU would acquire all the shares
for DEM 1 before 1 December 1999 or,
subsequently,
for an (cid:145)appropriate price(cid:146) before 31
December 2001,

and

SKL-M which

(cid:151) a financing agreement between the BvS, the Land of
Saxony-Anhalt
basically
determines how the restructuring aid is to be paid.
The main element of aid was the granting of loans
totalling DEM 54,9 million for loss compensation
and investments. The BvS promised that these loans
would eventually be converted into grants, subject
to approval by the Commission,

It states that

the terms governing joint use of

(cid:151) a joint venture agreement between MTU and SKL-M
setting out
the
existing know-how of the two enterprises and the
development, production and sale of a new type of
engine.
the industrial
property of each party is identical, with the result
that no licensing fees are to be paid by either party.
If the joint venture is terminated, MTU is entitled to
acquire all the know-how created before and during
the period of cooperation for a price which is to be
determined on the basis of the development budget.

the value of

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L 314/77

3. The restructuring plan

(21)

The total restructuring costs for SKL-M were given by
the period
Germany
1997-2003:

as DEM 266 million for

(18)

(19)

the

the

core of

The strategic partnership between SKL-M and MTU
forms
restructuring plan. The
operational restructuring includes: (i) improvements to
the production programme (development of new SKL-M
engines and converting MTU’s diesel engines into gas
engines); (ii) modernisation of production; (iii) access to
MTU’s supply and distribution network; (iv) increase in
productivity and improvement of the cost structure.

The cooperation was designed to assist SKL-M in
modernising its production programme. A new series of
gas and diesel engines was
to be developed and
produced jointly with MTU. R&D and production were
to be coordinated so as to reduce costs and improve
competence on both fronts. In this way, the company
was to be able to overcome the disadvantages associated
with its small size (development of new products, access
to the market and boosting of customer confidence).
Furthermore, SKL-M was to have access to MTU’s cash
management system.

(in DEM)

Purpose

Amount

Loss cover 1997-2002

Investments 1997-2002 in: Assets

Know-how

R&D measures

Skilling

Repayment of debts

Working capital increase

74 733 000

44 477 000

109 000 000

4 281 000

1 247 000

15 427 000

16 934 000

(20) According to the restructuring plan, turnover was to
increase from DEM 63 million in 1997 to DEM 152
million in 2003. The number of employees was to be
reduced from 295 in 1997 to 266 in 2003. A positive
operating result was expected in 2003.

(22)

The investment costs include an MTU licence allowing
SKL-M to use MTU engines as the basis for the new
series of gas engines. The amount of DEM 109 million
was calculated on basis of the R&D costs of MTU (5).

(5) R&D costs of DEM 252 million; a 3 % licensing fee on SKL-M’s
total turnover in the relevant products over a period of 25 years
(total expected turnover of DEM 3,6 billion).

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(23) According to Germany, the public contribution to the restructuring costs comprises:

Aid (DEM)

Form

Source

Granted

Purpose

Ad hoc aid measures paid out in full

45 400 000

Several loans/7,5 % p.a. (to be
converted into grants)

9 500 000

Several loans/7,5 % p.a. (to be
converted into grants)

BvS/Land

BvS/Land

9 000 000 (6) Postponed and reduced liability

BvS

arising from land sale

(3 934 000

676 000) (7)

Postponed repayment of rescue
loan and interest

BvS/
LINTRA

November
1997

Loss cover 1997(cid:151)1999

November
1997

Investments
1997(cid:151)1999

November
1997

April/May
1997

Loss cover 1996

Rescue loan to meet
overdue liabilities from
1996

Aid schemes previously approved by the Commission

12 233 000

Several grants and investment
allowances (8)

Land

1997(cid:151)
2002

R&D investment/staff
training

76 133 000

Total

(6) The measure amounted to DEM 12,117 million, of which Germany intended only DEM 9 million as State aid in respect of

the restructuring costs.

(7) This measure need not be assessed in the present decision since it was assessed in Case C 41/99 LINTRA
Beteiligungsholding GmbH. It forms part of the DEM 8,41 million which Germany had to recover from SKL-M in line with
the Commission decision. In the present case it is to be included in the assessment of the proportionality of the aid
(OJ L 236, 5.9.2001, p. 3 (Lintra Decision)).

(8) Richtlinie (cid:252)ber die Gew(cid:228)hrung von Zuwendungen zur Qualifizierung von Besch(cid:228)ftigten in KMU mit Mitteln des ESF und des
Land Sachsen-Anhalt (N 188/95)/Richtlinie (cid:252)ber die Gew(cid:228)hrung von Zuwendungen an KMU zur Beteiligung an Messen und
Ausstellungen
Investitionen
(N 186/96)/Investitionszulagegesetz (N 702/97).

Gemeinschaftsaufgabe

Rahmenplan

649/98)/26.

F(cid:246)rderung

zur

der

der

(N

(24)

The private contribution to the restructuring costs comprises:

Private contribution
(DEM)

Form

Source

Date

(20 333 000)

Loss cover/depreciation (9)

Investor

Until 2002

3 203 000

Accumulated depreciation allowance

Cash flow of SKL-M

Until 2002

3 571 000

Loan at commercial rate

(cid:145)Hausbank(cid:146)/investor

Until 2002

5 173 000

Equity financed out of cash flow

SKL-M/ investor

Until 2002

27 188 000

Shareholder resources

109 000 000

Licensing fees forgone

1 165 000 MTU test stand

189 966 000

Total

Investor

Investor

Investor

Until 2002

n.a.

1999

(9) Depreciation was included in the total restructuring costs but was not regarded as an investor contribution.

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L 314/79

4. Change in the original restructuring plan

(cid:151) whether the restructuring plan submitted would be

implemented in full;

(25) On 2 March 2000 Germany notified a change in the
restructuring plan and explained that an asset deal
between SKL-M and MTU was envisaged. According to
this information, MTU was to take over the assets
(including 220 employees) and current
liabilities of
SKL-M at their market price. The sales contract was
signed on 24 March 2000. The entry into force
sales
(retroactively as of 1 January 2000) of
contract was suspended pending a positive decision by
the Commission by 15 May 2000. On 17 May 2000
Germany informed the Commission that this deadline
had been extended to 25 May 2000.

this

5. Market analysis

(26)

SKL-M develops and manufactures engines for ships and
the energy sector, produces spare parts and provides
repair services. Its products fall within the categories of
transport equipment (NACE code 17), electric motors,
generators and transformers
(NACE code 31) and
machinery for mechanical power (NACE code 29) (10).
They can be further subdivided into diesel engines for
seaborne use
engines,
on-board power and emergency power aggregates) and
gas and diesel engines (for decentralised energy systems).

and auxiliary drive

(drive

(27) Geographically, the most important markets for SKL-M
are Germany, the rest of Europe, South-East Asia and
the Near East. According to the information provided
by Germany, SKL-M has a market share of about 2 % in
Germany, while its share of the world market is below
1 %.

(28) According to Germany,

there is overcapacity on the
market for diesel engines. The established diesel engine
manufacturers are also entering the gas engine market.
However, according to information submitted by MTU,
this is a growth market.

(29)

its

steadily

reduced

capacity

and
SKL-M has
discontinued a number of activities since 1993 in order
to improve cost structures. It was to cut back its output
(old product programme) while
of diesel
starting to produce gas engines.
the
(1997/88
production capacity of 143 589 hours
engines) was to be increased slightly to 146 082 hours
(2002/239 engines).

In addition,

engines

6. Opening of the investigation procedure

(30)

By letter dated 8 August 2000,
the Commission
informed Germany that it had decided to initiate the
procedure laid down in Article 88(2) of the EC Treaty
since it was not clear:

(10) Panorama of EU Industry 1999.

(cid:151) whether

the

aid would

not

unduly

distort

competition;

(cid:151) whether the full amount of the loan of DEM 12 117
million granted by the BvS in the form of a partial
debt waiver and a deferred repayment was to be
considered State aid with an intensity of 100 %;

(cid:151) whether the beneficiary would make an appropriate

contribution from its own resources;

(cid:151) whether the investor MTU was chosen on the basis
of a open, transparent and unconditional bidding
procedure and whether it
therefore benefited or
would benefit in the future from State aid granted to
SKL-M.

Furthermore, the Commission notes that SKL-M filed for
insolvency on 16 June 2000, that MTU withdrew from
the cooperation agreement with SKL-M and that
the
sales contract signed on 24 March 2000 between MTU
and SKL-M did not enter into force.

The Commission also observes that the aid measures for
the first restructuring of SKL-M, which were considered
incompatible in the Lintra decision, needed to be taken
into account in the assessment of the private investor
contribution to the restructuring costs (11).

III. COMMENTS FROM GERMANY AND INTERESTED
PARTIES

the

to the

response

initiation of

formal
In its
investigation procedure, Germany stated that, at
the
time the aid was granted, a restructuring plan had been
restored SKL-M to
submitted which would have
long-term viability
distorting
unduly
without
It further stated that the investor would
competition.
have provided a
contribution to the
restructuring cost and drew attention to comments by
the receiver of SKL-M indicating that MTU took over
the know-how that had been developed in cooperation
with SKL-M for a price of DEM 6,71 million, whereas
the development costs were DEM 12,015 million.

substantial

(31)

(32)

(33)

(11) On 28 March 2001 the Commission took a partly negative
decision in respect of aid granted to Lintra and its subsidiaries.
Germany was required to recover DEM 34,978 million from
Lintra and its subsidiaries. The incompatible aid granted to SKL-M
totalled DEM 8,41 million.

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(34) On 5 March 2002 Germany submitted the comments of
MTU on the initiation of the procedure. MTU states that
it was the best bidder in an open,
transparent and
unconditional bidding procedure. It takes the view that
it did not directly or indirectly benefit from the aid
granted to SKL-M. As to the know-how, it states that
the price paid was in line with market conditions. This
position was also taken by MTU in two letters to the
BvS dated 1 October 2001 and 21 November 2001.
Copies of
to the
letters were
these
Commission on 5 March 2002.

forwarded

(35) Germany also withdrew the notification of the planned
asset sale (ex N 153/2000), stating that it would not
press ahead with the sale of SKL-M to MTU.
It also
stated that all the aid measures granted would be taken
into account in the insolvency proceedings of SKL-M. It
also provided information indicating that the receiver of
SKL-M plans to sell
the assets via a public tender
procedure.

(DEM 45,4 million + DEM 9,5 million)
into grants,
subject to the Commission’s approval. In addition, the
loans were granted to a company which, as explained
below, was in difficulty. Therefore,
it was foreseeable
that it would not be able to repay these loans. Under
the circumstances, the full amount of the loans has to
be considered as aid.

(39) However,

the

in its decision to initiate

formal
investigation procedure, the Commission raised doubts
as to whether, instead of the amount of DEM 9 million,
the full amount of DEM 12,117 million granted by the
BvS in the form of a partial debt waiver and a deferred
payment was not to be regarded as aid towards the
restructuring of SKL-M. Germany has not provided any
evidence that
the remaining amount of DEM 3,117
million was actually paid back by the investor. It follows
that
the full amount of DEM 12,117 million was
granted to a company in difficulty. This amount is thus
regarded as State aid to the restructuring of SKL-M.

IV. ASSESSMENT OF THE AID

(40) Accordingly, the amount of ad hoc State aid within the
meaning of Article 87(1) to be assessed in the present
decision is EUR 34,26 million (DEM 67,017 million).

1. State aid within the meaning of Article 87(1) of
the EC Treaty

(36) According to Article 87(1) of the EC Treaty, any aid
granted by a Member State or through state resources in
any form whatsoever which distorts or threatens to
distort competition by favouring certain undertakings or
the production of certain goods is, in so far as it affects
incompatible with the
trade between Member States,
common market. Pursuant to the established case law of
the courts of the European Community, the criterion of
trade being affected is met if the recipient firm carries
out an economic activity involving trade between
Member States.

(37)

The Commission notes that aid was granted through
state resources to an individual company and that it
favoured the company by reducing the costs it would
normally have had to bear
the
restructuring plan. Moreover, the recipient of the aid,
SKL-M, develops and manufactures engines that are the
subject of intra-Community trade. As the aid threatens
to distort competition,
falls within the scope of
Article 87(1) of the EC Treaty.

in carrying out

it

(38) As to the amount of

the aid to be assessed in the
present decision, the Commission observes that the BvS
loans totalling DEM 54,9 million
agreed to convert

(41) A derogation from the fundamental ban on aid under
from either Article 87(2) or

Article 87(1) can result
Article 87(3).

(42) Germany did not state that the aid was compatible with
Article 87(2). It is also evident that this provision does
not apply.

(43)

relevant. Article 87(3)(a) empowers

This case is caught by Article 87(3), whereby the
Commission may allow State aid in certain specified
circumstances. The derogations in Article 87(3)(b),
(d)
and (e) were not invoked in the present case and are
indeed not
the
Commission to approve State aid intended to promote
the economic development of areas where the standard
of living is abnormally low or where there is serious
underemployment. The Land of Saxony-Anhalt
falls
within this provision. In this case, however, the main
purpose of the aid was to promote the development of
a certain economic sector rather than the economic
development of a region. Thus the restructuring aid
according to the restructuring plan submitted should be
assessed under Article 87(3)(c) and not under Article
87(3)(a).

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2. Restructuring aid to SKL-M

doubts as to whether the restructuring plan would be
fully implemented and whether, therefore, it was based
on realistic assumptions.

(44)

In its Community guidelines on State aid for rescuing
and restructuring firms in difficulty (12) (the guidelines),
the Commission spelled out in detail the criteria for
assessing aid for restructuring a company.

(49)

(45) According to point 2.1. of

the guidelines,

typical
symptoms of a firm in difficulty are deteriorating
profitability or increasing size of
losses, diminishing
turnover, declining cash flow and low net asset value.
The Commission notes
that SKL-M has been a
loss-making enterprise since its privatisation in 1994.
The difficulties were apparent in 1997, when the aid
was granted and the restructuring plan drawn up. The
losses in 1999 were DEM 28 million. Therefore, the
company is considered to be a firm in difficulty.

did

From the information provided it appears that
the
investor MTU never gave a clear commitment to take
over SKL-M. The agreements signed in November 1997
gave MTU only an option to acquire the shares of
SKL-M. MTU was not prepared to take over the shares
before the Commission took a positive decision on all
the
the aid granted to SKL-M. At
German
stronger
not
authorities
commitment from MTU, while they granted the illegal
aid to SKL-M. Moreover, MTU did not provide the
financial resources or take the restructuring measures
which were necessary to restore SKL-M to long-term
viability, as had been envisaged in the restructuring
plan. Thus the company has recorded losses ever since
1997. The Commission cannot therefore conclude that
the
realistic
assumptions and was such as to restore the company’s
long-term viability.

the same time,
require

restructuring

plan was

based

on

a

(46)

(47)

formal

investigation
In its decision to open the
procedure,
the total
the Commission noted that of
public contribution to the restructuring costs an amount
of DEM 12,233 million was granted on the basis of
approved aid schemes. The measures respect the ceilings
and conditions laid down in the schemes. At this stage,
therefore, this aid is considered to be existing aid within
the meaning of Article 1(b)(ii) of the Regulation (EC) No
659/99. Its compatibility need not therefore be assessed
by the Commission in this decision but it is to be taken
into account in the assessment of the proportionality of
the aid pursuant to point 3.2.2(iii) of the guidelines.

2.1. Restoration of viability

The granting of restructuring aid is conditional on the
submission of a detailed restructuring plan capable of
restoring the long-term viability and health of the firm
within a reasonable time scale and on the basis of
realistic
operating
conditions.

assumptions

future

its

to

as

(48) When initiating the formal investigation procedure, the
Commission noted that
the
restructuring plan submitted was
the
cooperation
if the plan were
between MTU and SKL-M and that,
implemented in full, it could restore SKL-M to long-term
viability. However, since it appeared that MTU was not
prepared to take over SKL-M, the Commission raised

the main element of

(12) OJ C 368, 23.12.1994, p. 12. These guidelines were revised in
1999 (OJ C 288, 9.10.1999, p. 2). The 1999 version of the
guidelines does not apply because all
the aid measures were
granted prior to publication of the 1999 guidelines (see Section 7
of the 1999 version).

(50)

(51)

(52)

that MTU withdrew from the

The Commission’s doubts are further confirmed by the
cooperation
fact
agreement with SKL-M.
the asset sales
contract concluded with SKL-M did not enter into force.
This
suddenly left SKL-M without an investor and
insolvency proceedings against SKL-M were instituted in
September 2000.

In addition,

2.2. No undue distortion of competition

adverse

The restructuring must contain measures to offset as far
as possible
since
otherwise the aid would be contrary to the common
interest and not eligible for exemption pursuant
to
Article 87(3)(c) of the EC Treaty.

effects on competitors

This means that, where a firm is active in a market in
the EU on which an objective assessment of demand
and supply conditions shows that there is a structural
excess of production capacity,
the restructuring plan
must make a significant contribution, proportionate to
the amount of aid received, to the restructuring of the
industry serving the relevant market by irreversibly
reducing or closing capacity. In cases where there is no
structural
the
Commission will normally not require a reduction of
it must be
capacity in return for the aid. However,
satisfied that the aid will not be used to enable the
to expand production capacity during the
recipient
implementation of
the restructuring plan unless the
contrary would endanger its survival. Such an exception
must, however, be explicitly invoked and justified.

production

capacity,

excess

of

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Official Journal of the European Communities

18.11.2002

(53)

The markets where SKL-M operates are undergoing a
information
change. According to the
period of
submitted by Germany,
there is overcapacity on the
market for diesel engines, whereas the market for gas
engines has not yet been fully exploited.

could not determine the overall
restructuring costs.
Without this, it could not be ascertained whether the
alleged investor
considered
(cid:145)significant(cid:146) within the meaning of the guidelines.

contribution could be

(60)

(61)

(54) Under the restructuring plan submitted, SKL-M was to
increase its output of gas engines.
Its production
capacity was also to be expanded slightly. Germany
explained that the increase in SKL-M’s output would be
due to an improvement of the test stand facilities, which
were previously a production bottleneck.

(55) Germany did not, however,

indicate that a slight
for the survival of
increase in capacity was essential
the
SKL-M or provide an objective assessment of
for gas
demand and supply situation in the market
therefore conclude
engines. The Commission cannot
that a relaxation of the principle of a proportionate
capacity reduction would be justified.
It does not
therefore appear that the restructuring plan contained
sufficient measures
to counterbalance any possible
negative effects on competitors.

2.3. Proportionality to restructuring costs and benefits

(62)

(56)

(57)

The amount and intensity of the aid must be limited to
the strict minimum needed to enable the restructuring
to be undertaken and must be related to the benefits
anticipated from the Community’s point of view.
Therefore,
significant
investors must make
contribution to the restructuring costs from their own
resources.

the

a

to

contribute

significantly

The Commission also had doubts as to whether the
investor would
the
restructuring costs. In fact it appeared that a major part
of the investor contribution was to be granted in form
of
forgone licensing fees which formed part of a
cooperation and cross-licensing agreement with SKL-M
and which were stated to be worth DEM 109 million. In
the agreement
the
industrial property of each party has the same value and
so there is no need for licensing fees. Therefore the
Commission doubted whether the fees forgone by MTU
could be regarded as contribution by the aid beneficiary
to the restructuring costs.

it was expressly stipulated that

(58) Moreover,

the Commission doubted whether SKL-M
would benefit
the investor
from the other parts of
contribution, as there was no clear commitment on the
part of MTU to acquire the shares of SKL-M or to take
over the firm by means of an asset sale. The only
element of the investor contribution was an engine test
stand said to be worth DEM 1,2 million.

(59) As

there was

the investor
some uncertainty about
contribution to the restructuring costs, the Commission

In its response to the initiation of
the investigation
procedure, Germany holds to its view that the value of
the property rights transferred by MTU is to be regarded
as an investor contribution.

available

the licensing agreement
The Commission notes that
between MTU and SKL-M is actually a cross-licensing
arrangement under which both parties make their
industrial property
to each other. The
agreement also expressly states that, since the industrial
property of each party has the same value, there is no
need for a licensing fee (Section 4 of the Agreement).
therefore conclude that, by
The Commission cannot
offering the licences to SKL-M,
the investor made a
significant contribution to the restructuring costs from
its own resources.

the investor
The Commission’s other doubts about
contribution have been confirmed in the course of the
investigation procedure.
It appears that a substantial
part of the promised investor contribution was never
made. Since MTU is not taking over the shares or assets
of SKL-M, there are serious doubts as to whether any
outstanding contribution will be made.

(63) Moreover, when initiating the

formal

investigation
procedure, the Commission noted that the aid granted
to SKL-M in 1997 via Lintra was to be assessed as part
of aid case C 41/99 Lintra Beteiligungsholding GmbH.
In the present case this amount is to be taken into
account when assessing the contribution made by the
investor to the restructuring costs.

(64) On 28 March 2001 the Commission took a partly
negative decision in respect of the aid for Lintra and its
subsidiaries. Germany was required to recover DEM
34,978 million from Lintra and its subsidiaries. The aid
granted unlawfully to SKL-M amounts to DEM 8,41
million.

(65) Germany has not provided any information on the
extent
to which this amount should be taken into
account when ascertaining whether the aid is limited to
the strict minimum needed and whether
the aid
beneficiary makes a significant contribution to the
restructuring plan (from its own resources). It informed
the Commission, however, that all the aid measures for
SKL-M will be or were already registered as claims in
the insolvency proceedings of SKL-M, which were
instituted on 1 September 2000.

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(66)

the

public measures

Consequently,
the only investor contribution actually
made is the test stand stated to be worth DEM 1,2
million.
second
The
for
restructuring amount
to some DEM 87,6 million,
including the aid measures deemed to be incompatible
with the common market and amounting to DEM 8,41
million, which must be recovered as a result of the
Lintra decision, and the DEM 12,23 million granted
under schemes previously approved by the Commission.
Thus,
in
proportion to the restructuring costs and benefits.

it cannot be concluded that

the aid is

(67)

The Commission cannot
criterion in the guidelines is met.

therefore conclude that

this

3. Aid to the investor MTU

(68)

The Commission doubted whether the investor MTU
was chosen on the basis of a procedure comparable to
an open bid. It was, therefore, unclear whether MTU did
or would benefit from the restructuring aid granted to
SKL-M in three different ways: directly, by way of the
joint venture agreement or by way of the planned asset
deal or share deal.

(69) As to the question whether the planned asset deal or
share deal
involved aid, Germany indicated that MTU
had decided not to take over the shares or assets of
SKL-M. Germany therefore withdrew its notification of
the asset deal.

State

(70) According to Article 8 of Regulation (EC) No 659/1999,
the Member
concerned may withdraw the
notification in due time before the Commission has
In cases where the
taken a decision on the aid.
Commission has
investigation
formal
initiated the
procedure, it must close that procedure.

(71)

Since Germany has withdrawn the notification,
the
Commission, acting in accordance with Article 88(2) of
investigation
the EC Treaty,
procedure as regards the notified asset sale between
SKL-M and MTU and the question whether an aid
element is included in the purchase price.

is closing the formal

the Commission notes on basis of

(72) As to the procedure by which MTU was chosen as the
investor,
the
information available to it that the BvS had contacted
industrial partners for SKL-M prior to the
potential
cooperation agreement signed with MTU in November
1997. However,
sold to MTU
SKL-M was not
immediately, but MTU was given the opportunity to
manage SKL-M jointly with the BvS and BVT, provided
that SKL-M received State aid. MTU was also given the

opportunity to acquire the shares of SKL-M at a later
stage on favourable conditions (see recital 16). The
Commission thus maintains that the procedure selected
does not constitute an open bidding procedure.

(73)

that

response to the initiation of

In its
the procedure,
Germany forwarded information from MTU indicating
that no cash-concentration system or clearing system
existed between the two companies. MTU also pointed
out
transactions between them were concluded
under market conditions. It further explained that the
know-how taken over was not yet marketable and that
the price paid was in line with market conditions. It
expressed the same view in two letters to the BvS dated
1 October 2001 and 21 November 2001, copies of
which were forwarded to the Commission. MTU also
submitted a copy of a letter dated 4 November 1999 in
which it promised to pay SKL-M’s bank DEM 6.71
million if it acquired the know-how.
In 1998 SKL-M
had assigned its potential claim on MTU to the bank.
Germany also indicated that investments carried out in
cooperation with MTU remained with SKL-M after the
cooperation had been discontinued.

(74) Germany also forwarded information from the receiver
the know-how developed
of SKL-M indicating that
jointly by MTU and SKL-M was acquired by MTU in
June 2000 for DEM 6,71 million. According to the
receiver, with the inclusion of
the
development of the know-how had represented a loss of
DEM 5,30 million for SKL-M.

the sales price,

(75) On basis of the information provided, the Commission
notes that
the subsidised investments undertaken by
SKL-M during the restructuring remained with it. This is
confirmed by a stocktaking carried out by the receiver
when the insolvency proceedings were instituted. The
that no cash-concentration
Commission also notes
system or clearing system existed between SKL-M and
MTU.

(76)

In the Commission’s view, MTU did not
therefore
benefit from the restructuring aid in the form of a direct
transfer of funds.

(77) Despite an information injunction pursuant to Article
10(3) of Regulation (EC) No 659/1999 and a reminder
sent on 9 November 2001, Germany did not provide
sufficient information to enable the Commission to rule
out the possibility that MTU benefited by way of the
joint venture agreement from the aid which was granted
to SKL-M for loss cover during the restructuring period.

(78) According to Article 13 of Regulation (EC) No
therefore take a
the Commission must

659/1999,
decision on basis of the information available.

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(79)

(80)

(81)

(82)

(83)

(84)

(85)

industrial know-how brought

Section 4 of
the joint venture agreement concluded
between SKL-M and MTU in November 1997 states that
the
two
companies has the same value. Section 5 states that, if
the agreement
to
acquire the know-how developed under the cooperation
agreement for a price to be determined on the basis of
the development budget.

is terminated, MTU has the right

in by the

It appears from the available information that MTU
exercised its right under Section 5 of the joint venture
agreement to take over the know-how developed with
SKL-M under the agreement.

The price of DEM 6,71 million paid by MTU for the
know-how was established on basis of the development
costs estimated in 1997. The actual development costs
of the know-how for SKL-M were DEM 5,30 million
more than the price paid. The losses were at least partly
covered by the restructuring aid granted to SKL-M.

The Commission notes that MTU is of the opinion that
the know-how was not yet marketable. MTU expressed
this opinion in two letters to the BvS dated 1 October
2001 and 21 November 2001, copies of which were
forwarded to the Commission on 5 March 2002.

The Commission further notes that back in November
1999 MTU promised to pay SKL-M’s bank DEM 6,71
million if it took over the know-how developed under
the cooperation agreement.

from the
It would also point out
above-mentioned statements by and letters from MTU,
Germany did not provide any objective information on
the actual or expected market value of the know-how.

apart

that,

of

costs of

know-how,

value
taken into

the
account
know-how.

In absence of any objective information on the actual or
the
expected market
Commission has
actual
the
From the
the
development
information provided, it appears that the development
costs were not
covered by the price paid. The
Commission must therefore take the view that the aid in
question, which was used to cover the losses resulting
from the development of the know-how, might have
been used in the interests of MTU rather than in the
interests of SKL-M.

in line with the market economy investor principle and
the involvement of MTU was not based on a
that
procedure comparable to an open bid, the Commission
is of
the information
available, that the transfer of the know-how could rank
as a transfer to MTU of state resources amounting to
DEM 5,30 million.

the opinion, on the basis of

V. CONCLUSION

(87)

(88)

The Commission finds that Germany has unlawfully
implemented the aid in question in breach of Article
88(3) of the Treaty.

The amount of aid incompatible with the common
market is EUR 34,26 million (DEM 67,017 million). It
must be recovered from the aid recipient. In view of the
fact that, on the basis of the available information,
it
cannot be ruled out
that MTU benefited from the
transfer of know-how, an amount of EUR 2,71 million
(DEM 5,30 million), corresponding to the difference
between the development costs and the price paid, must
be recovered jointly and severally from SKL-M and
MTU,

HAS ADOPTED THIS DECISION:

Article 1

implemented for SKL
The State aid which Germany has
Motoren- und Systemtechnik GmbH, amounting to EUR 34,26
million (DEM 67,017 million),
incompatible with the
common market.

is

Article 2

The procedure initiated in respect of the measure notified by
Germany on 22 March 2000 and concerning an asset deal
between SKL Motoren- und Systembautechnik GmbH and
MTU Motoren- und Turbinen-Union Friedrichshafen GmbH is
hereby closed.

Article 3

1.
Germany shall take all necessary measures to recover the
aid referred to in Article 1 and unlawfully made available to
the beneficiary.

(86)

Bearing in mind that SKL-M is a State-controlled
company, that its decision to give MTU an option to
acquire
a price based on the
development budget and to assume a cost risk was not

the know-how at

2.
Of the amount mentioned in Article 1, EUR 2,71 million
(DEM 5,30 million) shall be recovered jointly and severally
from SKL Motoren- und Systemtechnik GmbH and MTU
Motoren- und Turbinen-Union Friedrichshafen GmbH.

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law provided that

3.
Recovery shall be effected in accordance with the
they allow the
procedures of national
immediate and effective execution of the decision. The aid to
be recovered shall include interest from the date on which it
was at the disposal of the beneficiary until the date of its
the
recovery.
reference rate used for calculating the grant equivalent of
regional aid.

Interest shall be calculated on the basis of

Article 5

This Decision is addressed to the Federal Republic of Germany.

Article 4

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

For the Commission

Mario MONTI

Member of the Commission

Done at Brussels, 9 April 2002.