2003/225/EC: Commission Decision of 19 June 2002 on the programme of the Land of Thuringia for investments by small and medium-sized enterprises and its implementation (notified under document number C(2002) 2143) (Text with EEA relevance)
Date: 2002-06-19
Institutions: European Commission
Subjects: State aid, Thuringia, aid system, aid to undertakings, control of State aid, investment, small and medium-sized enterprises

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II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 19 June 2002

on the programme of

the Land of Thuringia for investments by small and medium-sized

enterprises and its implementation

(notified under document number C(2002) 2143)

(Only the German version is authentic)

(Text with EEA relevance)

(2003/225/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

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

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

26 August 1993, registered as received on 30 August
1993, Germany formally ruled out the possibility of aid
being granted to firms in difficulty. The ruling out of
such aid was expressly mentioned in the Commission’s
decision, and the Commission’s authorisation of
the
scheme was limited to such undertakings as are not in
difficulty.

Having
comments (1), and having regard to the comments received,

interested

submit

parties

called

on

to

their

Whereas:

1. PROCEDURE

(1)

On 27 October 1993,
the Commission decided to
authorise the Thuringia programme for SME investment
(KMU-Investitionsprogramm des
Landes Th(cid:252)ringen)
(hereinafter referred to as (cid:145)the scheme(cid:146)) (2). An amended
version was notified in 1994 and authorised by the
Commission on 7 October 1994 (3).

(2)

The notified scheme covering the period 1994 to 1996
provided for productive investment aid. In a letter dated

(1) OJ C 73, 17.3.1999, p. 10.
(2) OJ C 335, 10.12.1993, p. 7 (cid:151) Aid N 408/93 (cid:151) SG(93) D/19245

of 26.11.1993.

(3) OJ C 364, 20.12.1994, p. 7 (cid:151) Aid N 480/94 (cid:151) SG(94) D/14255

of 10.10.1994.

(3)

(4)

the

same

conditions

the Commission expressed doubts as

the Commission
By decision of 8 April 1998,
authorised an extension of
the aid scheme for the
period 1997 to 2001, subject to certain amendments to
laid down (4). At
time,
the
to
however,
whether the scheme as applied in the past conformed to
the
the
Commission. The doubts are based on information
given by Germany in the annual reports for 1994 and
1995 and on information for 1995 and 1996. In the
light of this information, the Commission could not rule
out the possibility that aid had been granted for the
rescue and restructuring of firms in difficulty.

approved

notified

version

and

by

to

the Commission

ordered Germany
Consequently,
(injunction to supply information within the meaning of
the judgment of the Court of Justice in the (cid:145)Italgrani(cid:146)
case (5)
the necessary information to
enable the Commission to decide whether the aid was
granted in accordance with the approved scheme, to list
the cases where aid was granted to firms which, at the

to provide all

(4) Aid NN 142/97 (cid:151) SG(98) D/04313 of 2.6.1998.
(5) Case C (cid:151) 47/91 Italian Republic v Commission [1994] ECR I-4635.

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time the aid was granted, should have been regarded as
in difficulty and to inform it under what
firms
conditions the aid was granted.

(9)

In the letter, the Commission also asked Germany to
forward a copy of the letter to the aid recipients.

(5)

(6)

(7)

(8)

(10)

(11)

(12)

In its
comments of 7 August 1998, Germany
acknowledged that the authorised aid scheme did not
restructuring aid to be granted.
allow rescue or
However, Germany also stated that, in granting the aid,
to determine
automatic checks were not carried out
whether
in good health.
recipient
Furthermore, the letter did not provide information on
the relevant cases or on the conditions under which the
aid was granted, as the information injunction had
required.

firm was

the

The Commission was therefore unable to determine
whether the scheme was applied in accordance with the
notified and approved version.

By letter dated 4 December 1998 (6) the Commission
informed Germany that
it had decided to initiate
proceedings under Article 88(2) of the EC Treaty in
order to examine the application of the scheme in the
past and all the cases in which it was applied. In the
decision to initiate proceedings, the Commission noted
that Germany did not provide the information on the
relevant
individual cases required in the information
the scheme was applied in an
injunction and that
improper manner. On the basis of the abovementioned
Court judgment, the Commission therefore decided to
assess the conformity of
the manner in which the
scheme was applied in the past as if new aid were
involved. The Commission accordingly gave Germany
notice under the Article 88(2) procedure to submit its
observations and to supply whatever
information it
considered necessary for an assessment of the aid and
its application in individual cases.

The Commission’s decision to initiate proceedings was
published in the Official
the European
Communities (7). The Commission gave interested parties
notice to submit any comments
they had on the
measures. No comments from interested parties were
received by the Commission.

Journal

of

By letters dated 5 March 1999, registered as received on
8 March 1999, and 6 May 1999, registered as received
on 10 May 1999, Germany submitted its comments on
the proceedings. By letter dated 26 September 2001,
registered as
in
response to a request made by the Commission,
Germany provided further information on the number
of firms still in existence in 2001 that had received aid
under the scheme.

received on 29 September 2001,

2. DESCRIPTION OF THE AID

economy and to promote new SMEs

The purpose of
the aid scheme is to promote the
modernisation and development of existing SMEs facing
economic difficulties in making the transition to the
market
in
manufacturing industry. The types of investment eligible
for this purpose (recital 11 in the original notification of
1 July 1993) are productive investment (excluding the
a
and
acquisition
restructuring programme.
In its letter of 26 August
1993, Germany stated that restructuring did not mean
measures for the rescue and restructuring of firms in
difficulty, but related to investment
in economically
sound firms for the purposes of setting up a new
establishment, extending or modernising an existing
establishment or introducing a new production process.

investment

under

land)

of

In the letter, the Commission required Germany, within
one month of receiving the letter, to submit all the
documentation, information and data necessary for it to
assess whether the aid and the individual aid cases were
It listed individually the specific items of
compatible.
information to be submitted to it. It also pointed out
that, if it did not receive the information, it would take
a decision based on the facts in its possession and that,
in the absence of the information needed to reach a
finding of compatibility, it would regard as incompatible
with the common market every individual grant of aid
made under the scheme.

(13)

The total amount estimated for this aid programme was
initially EUR 24 million, but
this was subsequently
increased to EUR 42 million. Aid for initial investment
is granted in the form of a subsidy and is limited to
EUR 2,5 million per project,
the
regional ceiling applicable to the Land of Thuringia. The
maximum ceiling is 35 % in the case of large firms, plus
an extra 15 percentage points in Article 87(3)(a) areas
for SMEs within the meaning of the definition given in
the Community guidelines on State aid for small and

taking account of

(6) SG(98) D/11285.

(7) Loc. cit. (see footnote 1).

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medium-sized enterprises applicable at the time when
the aid scheme was approved by the Commission (the
1992 guidelines) (8).

(14) A total of 62 grants were made to 61 firms under the

aid scheme (9).

(15) Under the scheme, the granting of aid is contingent
upon the presentation of a long-term business plan.

relation to the planned investment), the total amount of
public aid that had been granted to the firm in the last
three years prior to the granting of
the aid to be
examined, and the financial situation of the firm at the
time when the aid was granted. In its abovementioned
letter, the Commission also pointed out to Germany
that it would decide on the overall aid scheme and all
individual cases of application regardless of whether the
aid was or was not granted to a firm in difficulty.

3. GROUNDS FOR INITIATING THE FORMAL
INVESTIGATION PROCEDURE

4. COMMENTS FROM GERMANY

(16)

The reasons which prompted the Commission to initiate
the formal investigation procedure under Article 88(2)
of the EC Treaty on the application of the aid scheme
hitherto (10) and on all
individual cases of application
are based in particular on the finding that, contrary to
the information provided by its authorities, Germany
granted aid to firms in difficulty.
Insofar as the aid
scheme was improperly applied to firms in difficulty, its
modalities are, for the following reasons, not compatible
with the Commission’s policy on aid for
in
difficulty:

firms

(cid:151) the

aid

scheme

individual
does not
notification of aid for firms in difficulty or for firms
operating in sensitive industries,

require

submission

(cid:151) it does not make the granting of aid dependent on
the
a
restructuring plan designed to ensure the restoration
the firm within an
of
appropriate period, and

the economic viability of

implementation

and

of

(cid:151) it does not restrict the aid to the amount required

for achieving this goal.

In its letter informing Germany of
the initiation of
the Commission called on
Article 88(2) proceedings,
Germany to inform it of the cases in which aid under
the scheme was granted for firms which, at the time the
aid was granted, were to be regarded as healthy, or to
firms which, at the time the aid was granted, were to be
regarded as being in difficulty. The desired information
related in particular to details on the size of the firm,
the extent of the aid (amount and intensity of the aid in

(8) OJ C 213, 19.8.1992, p. 8.
(9) According to the letter of 5 March 1999,

in which Germany
corrected the number of cases stated in the annual reports for
1994 and 1996.

(17)

(18)

By letter dated 5 March 1999, Germany submitted two
tables showing that, at the time the aid was granted, 30
firms could be regarded as firms in difficulty and 31 as
healthy firms (11). Since one of the healthy firms was
granted aid twice,
the number of grants of aid for
healthy firms rises to 32. This assessment is the result of
an examination of the situation of the firms at the time
the aid was approved by the German authorities. By
letter dated 26 September 2001, Germany corrected the
tables, stating that one of the firms previously regarded
as being in difficulty had to be regarded as a healthy
firm. This means that, in a total of 29 cases, aid was
granted to firms in difficulty, while in 33 cases it was
granted to a total of 32 healthy firms.

The examination of the individual cases of application
by Germany was carried out
in cases where the
recipient firms were still in operation, on the basis of a
questionnaire on the number of
the
balance-sheet total, the equity return, the annual deficit,
turnover, the ratio of outside capital to total capital,
cash flow and capacity utilisation. The information
provided by Germany in a letter dated 6 May 1999
covers either the last three years prior to the granting of
aid or, in the case of newly set-up companies, the year
after the granting of aid.

employees,

(19) According to the letter of 5 March 1999, however,
Germany was in certain instances not in a position to
present data on the intensity of the aid granted, the
number of
total or
turnover, or to provide information on possible official
aid from other public resources. This information is
lacking both with regard to the firms regarded as

the balance-sheet

employees,

(10) I.e. up to 8.4.1998, the date on which the aid scheme in its

(11) A number of

the firms receiving aid under the scheme are

amended version was approved.

currently being examined by the Commission.

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healthy (list
II) and to those regarded as being in
difficulty (list I). In the case of some of the firms listed,
the information is omitted on the grounds that
the
firms in question were at the time new firms. Germany
did not offer any other explanations as to why it was
unable to provide the information requested by the
Commission.

(20) Germany did not put

forward any other arguments

regarding the application of the aid scheme.

(21)

In its letter of 26 September 2001, Germany informed
the Commission that, of
the 32 firms regarded as
healthy, 23 were still operating on the market. The
information on firms in difficulty indicates that, of the
29 recipients firms, only four are still operating on the
market.

5. ASSESSMENT OF THE AID

firms

granted and their future prospects, these firms should
in difficulty. The
have been classified as
Commission notes that
this examination included an
assessment of the profitability, turnover, excess capacity,
cash flow, debt and net asset value. It therefore notes
that Germany based its examination on the criteria laid
down in the 1994 guidelines on State aid for rescuing
and restructuring firms in difficulty. It is also evident
from these data that Germany also granted aid to firms
in difficulty which are to be regarded as large firms
the Commission’s 1992
within the meaning of
definition.

(25)

In the notification of the aid scheme in its initial version
and in the
amended version of 1994, Germany
originally complied with its obligations under Article
the EC Treaty. However, by improperly
88(3) of
applying the aid scheme in a manner not covered by
the authorisations of 1993 and 1994, Germany created
de facto a series of unnotified and hence unlawful
individual cases of application.

A. Lawfulness of the aid

(26)

(22)

In its Decisions of 27 October 1993 and 7 October
1994,
the Commission approved the aid scheme as
compatible with the common market under Article
87(3)(a) of the EC Treaty for the following reasons: the
Land of Thuringia is recognised as an assisted region
the aid
under Article 87(3)(a) of
intensity provided for in the scheme is acceptable in
view of the economic difficulties in the region and the
need to promote the development and creation of jobs,
particularly in SMEs; lastly, only firms in manufacturing
industry with good survival prospects are eligible.

the EC Treaty (12)

(23)

The Commission specifically checked that the scheme
would not be applied to firms in difficulty.

(24)

the aid was granted,

Contrary to what Germany stated in the letter of 26
in the
August 1993, however,
period from 1994 to 1996, to firms in difficulty, 86 %
of which have in the meantime declared bankruptcy, as
confirmed by Germany during the course of
the
proceedings in its comments of 5 March 1999, 8 May
1999 and 26 September 2001 (13). Germany acknow-
ledged that,
following an ex post examination of the
economic situation of the firms at the time the aid was

(12) OJ C 373, 29.12.1994, p. 3 (cid:151) Aid N 464/1993 (for the period

1994 to 1996).

(13) According to the letter sent by the German authorities on 26
September 2001, only 27 firms were still operating in 2001, four
of which are to be regarded as firms in difficulty and 23 as
healthy.

(27)

(28)

The Commission regrets in particular that Germany did
not comply with its express statement to it that it would
not apply the aid scheme to firms in difficulty. Such aid
is not covered by the Commission’s authorisations and
hence must be regarded as unlawful.

that Germany

Furthermore, Germany states that, in certain instances, it
did not have the necessary information available to
ensure,
in granting aid, that the regional ceilings and
cumulation rules and the correct application of the SME
bonus were complied with. The Commission therefore
cannot
notes
correct
application of
to healthy firms.
aid scheme
However, it is incumbent on Member States to ensure
compliance with the conditions under which an aid
scheme is authorised and, if necessary, to provide proof
thereof. Since full
information was not provided, the
Commission has come to the conclusion that this aid
too is not covered by the Commission’s authorisations
and must accordingly be regarded as unlawful.

prove

the

the

judgment was issued. On the basis of

The Commission’s first task was to determine which aid
was granted outside the framework of the scheme. For
this purpose, an injunction within the meaning of the
(cid:145)Italgrani(cid:146)
the
the Commission then
to it,
information available
decided that an unspecified number of individual grants
of aid were not made in accordance with the provisions
of the scheme, and it accordingly initiated proceedings
in respect of these individual cases. Since, in the light of
the information available, the possibility at least seemed

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to exist in all individual cases of aid that the grants were
the
not made in accordance with the provisions of
scheme, and in the absence of a final
the
list of
individual grants of aid that were allegedly made in
Commission
compliance with
the
the aid
simultaneously initiated proceedings against
scheme as a whole because of its improper application.
The Commission’s aim was to carry out a general and
abstract examination of
the improperly applied aid
scheme as a whole and, on that basis, to determine
directly its compatibility with the EC Treaty.

scheme,

the

(29) During the proceedings, Germany submitted to the
Commission a list of 62 grants of aid that were
allegedly made in compliance with the scheme to 61
firms. Germany indicated the cases in which, in its view,
the aid was granted to firms in difficulty (29),
thus
acknowledging that such aid was not covered by the
scheme. Germany also indicated the cases in which, in
its view, the aid was granted to healthy firms (33 grants
of aid to 32 firms), and submitted some, albeit
incomplete, information on these 33 cases.

(30)

This
information should have been presented in
response to the information injunction. Its presentation
after the initiation of proceedings means that it was
all
submitted
the
late.
the Commission
circumstances of
decided, despite
to
the 33 individual cases
examine whether each of
indicated by Germany was or was not in fact covered
by the aid scheme.

the case, however,
the

initiation of proceedings,

account

Taking

into

(31) According to the information provided by Germany, the
33 relevant cases of aid to the 32 recipient
firms
involved the following firms which, at the time the aid
was granted, were allegedly healthy:

1. FEFA Fenster & Fassaden Produktions GmbH,

Zeulenroda

2. Th(cid:252)ringer D(cid:228)mmstoffwerke GmbH, Bad Berka

7. WEMAG Werkzeuge Maschinen Kunststofftechnik

GmbH, Nordhausen

8. Wilhelm
Eisenberg

Steinberg

Pianofortefabrik

GmbH,

9. M(cid:246)belwerkst(cid:228)tten R. N(cid:252)tzel, Zeulenroda

10. SAPA

Leichtmetallguss

S(cid:246)mmerda

GmbH,

S(cid:246)mmerda

11. WEGRA-Anlagenbau GmbH, Westenfeld

12. Metallwerk Langensalza GmbH, Bad Langensalza

13. York Travelware GmbH, Kindelbr(cid:252)ck

14. Rh(cid:246)nmetall GmbH, Dermbach

15. NTI New Technology Instruments GmbH, Kahla

16. Stahl-

und

Anlagebau

Gr(cid:252)ssing

GmbH,

Kambachsm(cid:252)hle (14)

17. Metallgestaltung Hans Reiche, Gotha

18. Schlossbrauerei Schwarzbach GmbH

19. GEFO Folienbetrieb GmbH, Gera

20. Bike Systems GmbH & Co Th(cid:252)ringer Radwerk KG,

Nordhausen

21. Metzgerei Holger Bennewitz

22. Meder Reed GmbH,
Gro(cid:223)breitenbach

Fux, Hof, Werlich GbR,

23. Fein-Elast Umspinnwerk GmbH, Zeulenroda

24. B(cid:228)ckerei und Konditorei Bretschneider

3. Marit GmbH, Vertriebsgesellschaft
und Floristik-Artikel, Bad Salzungen

f(cid:252)r G(cid:228)rtnerei-

25. S(cid:228)gewerk Crawinkel GmbH

4. Schlacht- und Verarbeitungs GmbH, Jena

26. Wiegand GbR

27. Hausger(cid:228)te Altenburg GmbH

5. Topogramm Gesellschaft

f(cid:252)r Erderkundung und

Rauminformation mbH, Altenburg

28. Analytik Jena GmbH

6. Konstruktion-Holz-Werk Saubert KHW GmbH &

Co. KG, Serba-Trotz

(14) This firm received aid twice under the scheme.

29. Oplibell Produktions GmbH

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30. Apparate- und Industrieanlagenbau Gr(cid:252)ssing GmbH

31. Kunststoffverarbeitung Tiefenort GmbH

Thuringia, e.g. under the investment allowance scheme.
However, the Commission did not specifically request
this information when it initiated the proceedings.

32. Kahla/Th(cid:252)ringen Porzellan GmbH, Kahla (15).

(36)

(32)

(33)

(34)

In the following cases, Germany states that it is not in a
position to check the circumstances under which the aid
was granted, either because the firm has been wound up
or because the firm is no longer operating or no
information is available. In such cases, the Commission
cannot, on the basis of the information available to it,
assess whether the aid is covered by the scheme.

In particular, in the healthy firms category, Germany is
not in a position to give information on the intensity of
the aid granted to the following two firms, since the
information is not contained in the documents on the
granting of the aid:

(cid:151) Marit GmbH, Vertriebsgesellschaft
und Floristik-Artikel, Bad Salzungen,

f(cid:252)r G(cid:228)rtnerei-

(cid:151) Topogramm Gesellschaft

f(cid:252)r Erderkundung und

Rauminformation mbH, Altenburg.

Germany does not therefore, in these two cases, have
the necessary information to be able to indicate whether
the aid intensity specified in the scheme was complied
with. Consequently,
the Commission is not able to
establish whether the relevant aid is covered by the
scheme.

In the case of the following three firms, Germany is
similarly unable to indicate whether they are SMEs,
since
in the
documents on the granting of the aid:

information is not

contained

this

(cid:151) Marit GmbH, Vertriebsgesellschaft
und Floristik-Artikel, Bad Salzungen,

f(cid:252)r G(cid:228)rtnerei-

(cid:151) Topogramm Gesellschaft

f(cid:252)r Erderkundung und

Rauminformation mbH, Altenburg,

(cid:151) Kahla Porzellan GmbH, Kahla.

(35) Germany has not provided information in respect of
any of the grants of aid on whether aid under another
investment
the
investment assisted under the programme of the Land of

aid programme was

granted for

to the

the Commission notes
the

that
the
To
summarise,
application of
firms Marit,
scheme
Topogramm and Kahla (16) was unlawful. The other
cases in which the scheme was applied to firms which,
at the time the aid was granted, were healthy, are, in the
Commission’s view, covered by the approved scheme,
provided that the amount of public aid to promote the
relevant
investment does not exceed an intensity of
35 % gross in the case of large firms and firms whose
status is unknown (cf. recital 34) and 50 % gross in all
other cases. Aid that does not comply with this
condition is unlawful. By contrast, aid which does
comply with this condition does not need to be
investigated further with a view to its compatibility with
the common market.

B. Existence of State aid

(37) On the question of whether the 29 grants of aid to
firms which, according to Germany, were in difficulty
and to healthy firms not falling within the scope of the
scheme constitute State aid, the Commission’s view is as
follows:

(38)

(39)

it

is non-compliance with a
In the present case,
condition contained in an aid scheme which is being
examined by the Commission. Its examination therefore
relates more to the question of compatibility with the
common market than to the question of whether or not
State aid is involved.

The aid scheme is an instrument through which the
Member State grants benefits to firms which fulfil the
conditions laid down in the scheme. Germany has not
granted any ad hoc aid and has not notified each case
individually to the Commission. Consequently,
the
Commission is required, because of the nature of the
measure itself, and on the basis of its powers under the
EC Treaty, Council Regulation (EC No 659/1999 of 22
March 1999 laying down detailed rules
the
application of Article 93 of the EC Treaty (17) and the
Justice (18), to carry out a
case law of the Court of

for

(15) This firm was initially on the list of firms in difficulty. In its letter
of 26 September 2001, Germany corrected the list and stated that
Kahla was to be regarded as an economically healthy firm at the
time the aid was granted. This individual case is currently the
subject of proceedings under Article 88(2) of
the EC Treaty
(C 62/2000), and the present Decision is without prejudice to the
decision which the Commission will take on the case.

(16) See footnote 15.
(17) OJ L 83, 27.3.1999, p. 1.
(18) Case 248/84 Germany v Commission [1987] ECR 4013, paragraph
17 et seq.; Case C-47/91 Italy v Commission [1994] ECR 1-4635,
paragraph 20 et seq.; Case C-75/97 Belgium v Commission [1999]
ECR 1-3671, paragraph 48; Joined Cases C-15/98 and C-105/99
Italy and Sardinia Lines v Commission [2000] ECR I-8855,
paragraph 51.

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general and abstract examination. The Commission is
not examining individually whether there is State aid in
each of
the
existing scheme.

the cases falling outside the scope of

procedure pursuant to Article 88(2) of the EC Treaty,
Germany did not provide information showing that
some of
fall within the scope of
application of Article 87(1) of the EC Treaty.

the aid does not

the

scheme.

elements necessary for

(40) Germany introduced and applied the aid scheme in
order to achieve a very precise and clearly defined
establishing
effect. All
whether an aid scheme contains State aid are contained
in the
Furthermore, given the particular
circumstances of the case, examination of the question
of whether the aid granted under the scheme constitutes
State aid would probably not produce any different
result in each individual aid case, particularly as regards
healthy firms or firms in difficulty. In the case of firms
in difficulty, the aid would normally be considered State
the EC
aid within the meaning of Article 87(1) of
Treaty. The Member State notified the original scheme
as State aid, and the scheme was approved by the
Commission as such. The Member State subsequently
granted aid outside the scope of application of
the
approved scheme.

(41)

(42)

The Commission takes the view that it would have had
to check the existence of State aid in each of these
unlawful cases individually only if Germany had so
requested. Each request would have had to be
accompanied at least by all the information required to
enable the Commission to assess each case individually,
the information would normally have had to be
i.e.
provided to the Commission as part of
the full
notification of an individual grant of aid under Article
88(3) of the EC Treaty. Germany is aware of the doubts
which the Commission stated with regard to these cases.
If it had considered that some aid should have been
assessed individually in view of its specific features, it
would have been required to provide all the details to
to the
the Commission and to make
Commission all
an
the
individual assessment.

information required for

available

The aid scheme provides for aid to promote productive
investment by firms operating in Thuringia. The aid
granted stems from resources of the Land of Thuringia.
Since the scheme makes it possible to improve the
competitiveness of the recipient firms, whether or not
they are viable, and since some of the measures may
scheme
affect
comprises State aid within the meaning of Article 87(1)
of
the EEA
Agreement.

the EC Treaty and Article 61(1) of

trade between Member States,

the

(44)

(45)

(46)

C. Compatibility of the aid with the common
market

to compensate for

The derogations and exemptions for measures falling
within the scope of Article 87(1) of the Treaty are set
out in Article 87(2) and (3). However, Article 87(2), and
in particular Article 87(2)(b), is not applicable, since the
scheme is designed to promote the development of
SMEs in Thuringia and not to make good the damage
caused by natural disasters or exceptional occurrences
or
the economic disadvantages
caused by the division of Germany. Nor does Germany
invoke the application of these exemption provisions.
Furthermore, the Commission takes the view that the
State aid is not covered by the derogation provided for
is not
in Article 87(3)(b) of
intended to promote the execution of an important
project of common European interest or to remedy a
serious disturbance in the economy of a Member State.
Lastly,
the scheme is not eligible for the derogation
provided for in Article 87(3)(d) of the EC Treaty, since it
is not
culture and heritage
conservation.

the EC Treaty, since it

intended to promote

The scheme is intended for firms situated in an assisted
region under Article 87(3)(a) of the EC Treaty, with the
the
exception of
assisted region in question, the Commission confirmed
in 1994 (19) the maximum intensity of investment aid
of 35 % gross for large firms and 50 % gross for SMEs.

in sensitive industries. For

firms

If aid was

Insofar as the aid was granted for initial investment, it
must be assessed on the basis of the criteria governing
regional aid.
rescuing or
restructuring a firm in difficulty, its compatibility with
the common market must be assessed under the rules
governing aid for rescuing and restructuring firms in
difficulty.

intended for

(43) Whether

in response to the information injunction
within the meaning of the (cid:145)Italgrani(cid:146) case or under the

(19) Aid N 464/93 (cid:151) SG(94)D/1551 of 4.2.1994 (OJ C 373,

29.12.1994, p. 3).

(47)

The scheme was applied during the period from 1994
to 1996.

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(a) Compatibility with the rules on regional aid

to establish whether the aid as a whole is compatible
with the common market as regional aid.

(48)

(49)

In the case of the firms Marit and Topogramm and in
the other cases where the scheme was applied to firms
that were healthy at the time the aid was granted, which
are not covered by the approved scheme, since the total
amount of aid for the relevant investments exceeds the
intensity of 35 % gross in the case of large firms and
firms of unknown status and 50 % gross in other cases,
the compatibility of the aid with the common market
must be assessed under the provisions applicable at the
time when the scheme was improperly applied (20) in
accordance with the Commission notice on the
determination of the applicable rules for the assessment
of unlawful State aid (21). The assessment is carried out
on the basis of the information at the Commission’s
disposal.

aid

systems (23).

In that Annex,

Since the aid is aid for initial investment, the assessment
basis is the Commission’s 1988 communication on the
method for the application of Article 92(3)(a) and (c) to
regional aid (22)
in conjunction with point 18 in the
Annex to the Commission’s 1979 communication on
regional
(cid:145)initial
is defined as investment in fixed assets in
investment(cid:146)
the creation of a new establishment, the extension of an
existing establishment or in engaging in an activity
involving a fundamental change in the product or
(by
production process of an existing establishment
or
rationalisation,
means
modernisation).
Investment in fixed assets by way of
takeover of an establishment which has closed or which
would have closed had such takeover not taken place,
may also be deemed to be initial investment.

restructuring

of

(50)

For the period in question and without prejudice to the
specific provisions governing investment aid for firms in
sensitive industries, an aid scheme for initial investment
in an assisted region is deemed compatible with the
common market if it does not result in the intensity
ceiling specified in recital 45 (50 % for SMEs and 35 %
for large firms) being exceeded, even if
the aid is
combined with other regional aid. In the unlawful cases
referred to in recital 48, this compatibility condition is
not met. In those cases, therefore, the Commission is
not able, on the basis of the information at its disposal,

(20) In any case, the application of the currently applicable rules on
regional aid would not result in any more favourable assessment
of the recipients than application of the rules contained in this
Decision.

(21) OJ C 119, 22.5.2002, p. 22.
(22) OJ C 212, 12.8.1988, p. 2.
(23) OJ C 31, 3.2.1979, p. 9.

(51) However, if Germany has all the necessary information
available, but if the intensity ceiling and/or cumulation
ceiling is exceeded, the surplus amount of the aid is
incompatible with the common market.

(b) Compatibility with the rules on restructuring aid

(52)

(53)

In assessing the compatibility of
the aid with the
common market in the 29 cases in which Germany
acknowledges having granted aid to firms in difficulty,
the Commission takes account of
that a
restructuring plan was presented in none of these cases
and that
the information in its possession does not
show that any such plan existed when the aid was
granted.

the fact

In its reply to the request for information and to the
decision to initiate proceedings, Germany confirmed
that, contrary to its previous assurance, the scheme had
been applied to firms in difficulty, several of which
must be regarded as large firms. The Commission must
therefore examine whether the investment aid granted
to firms in difficulty can be deemed compatible with the
common market.

(54) Under the Commission’s usual practice up to 1999,
investment in firms in
regional aid to promote initial
difficulty could be granted under a regional scheme,
without prior notification (24). This was on condition
that the aid was taken into account in assessing the
compatibility of planned aid for restructuring firms in
difficulty under the implementing provisions for aid for
rescuing and restructuring firms in difficulty (25).

(24) The Commission changed this practice when in 1999 it adopted
the guidelines on State aid for rescuing and restructuring firms in
difficulty (OJ C 288, 9.10.1999, p. 2) and proposed appropriate
measures under Article 88(1) of the EC Treaty. Since then, any
investment aid for a large firm in difficulty has had to be notified
individually.
(25) See page 21 of

the guidelines on national regional aid. The
examination relates particularly to determining the strict minimum
necessary to allow the viability of the firm to be restored; in this
respect, any investment aid granted under a restructuring project
must be regarded as forming part of the total aid, and the aid as a
whole must not exceed the strict minimum necessary for restoring
viability.

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(55)

of

of

the

approved

application

In the present case, the aid for firms in difficulty was
not granted under an approved regional aid scheme. On
the aid is explicitly excluded from the
the contrary,
scheme.
scope
Consequently,
required to
the Commission was not
check whether the investment aid in question could be
regarded as forming part of the restructuring aid as a
whole. Furthermore, given the large number of cases in
which firms in difficulty received aid through unlawful
application of the scheme, the Commission considers
the aid cannot be
that
established.

regional purpose of

the

18. Th(cid:252)ringer Motorenwerke

und Getriebetechnik

GmbH, Nordhausen

19. Hewitt Industriekeramik, Triplis

20. UNI PUSH Motoren und Getriebetechnik GmbH,

P(cid:246)ssneck

21. Feuerverzinkerei Heldrungen GmbH, Heldrungen

(56) According to the information provided by Germany, the
following recipient firms were in difficulty at the time
the aid was granted:

22. AWA Antriebstechnik GmbH, Weimar

1. Graf von Henneberg Porzellan GmbH

2. WEIDA Leder GmbH

3. ALPA GmbH Textilwerk Triebes

4. KMP Kunststoff

und Metallproduktion GmbH,

Hohleborn

5. Porzellanambiente Reichenbach GmbH

23. Kyffh(cid:228)user Maschinenfabrik Artem GmbH, Artem

24. ALZI Metallveredelung GmbH, W(cid:252)nschendorf

25. G(cid:246)ltzsch-M(cid:252)hle Spezialpapierfabrik Greiz

26. TPM Pralinenmanufaktur GmbH, Issaroda

27. MAT Maschinen-

und Automatisierungstechnik

GmbH, Gro(cid:223)ruderstedt

6. Th(cid:252)ringer Kleiderwerk Alfred Platz GmbH, Gotha

28. Stentex GmbH, Gera

7. Bergwerksmaschinen Diellas GmbH, Diellas

29. GD Gotha Druck und Verpackung GmbH & Co KG.

8. Franz G(cid:246)tz KG, Gotha

9. Modedruck Gera GmbH

10. Spezialverpackungen Polymen GmbH, Gera

11. Forstbetriebsgemeinschaft Katzh(cid:252)tte GmbH

12. Barbarossa Brauerei GmbH, Artern

13. Zeuro M(cid:246)belwerk GmbH, Zeulenroda

14. LMG Leichtmetallgiesserei GmbH, Gera

15. Artluminare Leuchten GmbH, Stadlilm

16. Radisch Textilbetriebs-GmbH, Neustadt/orta

(57)

(58)

The Commission takes the view that individual aid to
promote investment in firms in difficulty can be deemed
compatible with the common market only if it complies
with the rules governing aid to firms in difficulty. As
stated in paragraph 101(b) of
the 1999 Community
guidelines on State aid for rescuing and restructuring
the Commission will examine the
firms in difficulty,
compatibility with the common market of any rescue or
restructuring aid granted without its authorisation and
therefore in breach of Article 88(3) of the Treaty (cid:145)on the
basis of the guidelines in force at the time the aid is
granted(cid:146).

The aid being examined was granted in the period 1994
to 1996. Consequently, the rules applicable to the aid
granted in breach of Article 88(3) of the Treaty are the
1994 Community guidelines on State aid for rescuing
(hereinafter
and restructuring firms
referred to as the (cid:145)1994 guidelines(cid:146)). The Commission
believes that those guidelines express clearly its usual
practice on restructuring aid at the time the aid was
granted under the scheme.

in difficulty (26)

17. Creaplat GmbH, Schlotheim

(26) OJ C 368, 23.12.1994, p. 2.

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(59)

(60)

(61)

In order
to draw a distinction between a firm in
difficulty and a healthy firm, the Commission defined (cid:145)a
firm in difficulties(cid:146) as follows in point 2.1 of the 1994
guidelines: a firm which is (cid:145)unable to recover through
its own resources or by raising the funds it needs from
shareholders or borrowing(cid:146). The typical symptoms of a
firm in difficulty are (cid:145)deteriorating profitability or
increasing size of losses, diminishing turnover, growing
inventories,
cash-flow,
capacity,
increasing debt, rising interest charges and low net asset
value(cid:146). This definition forms the basis of this Decision
and confirms the approach adopted hitherto by the
Commission.

declining

excess

(63)

present any information on the specific cases of
individual grants that would allow the Commission to
determine that the various conditions were met.

a

(cid:145)coherent

The aid scheme provides only for the prior presentation
of
long-term business plan(cid:146), without
requiring any analysis of the circumstances that brought
about the firm’s decline or realistic assumptions that
would enable the long-term viability of the firm to be
restored. In fact, Germany acknowledged that it had not
even checked whether
could
the
realistically, at the time the aid was granted, expect their
viability to be restored within a reasonable period of
time.

recipient

firms

the recipient

The Commission notes in this respect that, in carrying
out an ex post examination of
firms,
showing that 29 such firms (27) were in difficulty at the
time the aid was granted, Germany essentially based its
assessment on the same indicators. The Commission
also notes that, if Germany had applied this scheme in
its approved form and had in addition carried out this
examination in due time, it should have notified these
cases individually to the Commission.

been

accordance with

in difficulty,
in

To the extent that the aid scheme was used for rescuing
its modalities
and restructuring firms
should
the
have
abovementioned guidelines in order to be compatible
with the common market. In the case of rescue aid, the
in order to be deemed compatible, have
aid should,
been in the form of a loan on market
terms or a
guarantee enabling the firm to remain in operation on
the market for the limited period necessary for drawing
up a restructuring plan. However, this condition was
not met, since the aid took the form of grants. In the
case of
the scheme should have
provided for a realistic, coherent and far-reaching
restructuring plan designed to restore the long-term
viability of the firm, taking account of the circumstances
that brought about the firm’s difficulties and the market
situation in the relevant
foreseeable
development. Furthermore, under the 1994 guidelines,
the scheme should have included measures to prevent
undue distortions of competition and to ensure that the
amount and intensity of the aid were in proportion to
the costs and benefits of the restructuring.

restructuring aid,

sector and its

(64) Given the lack of provisions such as the requirement
that aid to firms in difficulty be individually notified,
and in particular the restriction of the amount of aid
granted to the strict minimum necessary to allow
restructuring, and in view of the lack of the necessary
information on individual grants of aid,
the rules
applicable, at the time the aid was granted, to rescue
and restructuring aid for firms in difficulty were not
complied with. Lastly, since most of the recipient firms
which Germany subsequently acknowledged to have
been in difficulty have since declared bankruptcy, it was
long-term business plan
not possible for the coherent,
required
fully
to
in
implemented.

guidelines

1994

the

be

(65)

that

The Commission would point out
it requested
Germany to provide it with all the documents, data and
information necessary for assessing whether the aid and
all the individual grants made under the scheme were
compatible with the common market. It also pointed
out that, if it did not have the necessary information for
assessing the compatibility of the individual grants of
it would deem them incompatible. Consequently,
aid,
the Commission takes the view that
the individual
grants of aid are incompatible with the common market
in the cases in which the aid scheme allowed the
granting of aid for rescuing and restructuring firms in
difficulty.

6. CONCLUSIONS

(62)

The Commission notes that the aid scheme does not
contain any such provision and that Germany did not

(27) Most of which have since declared bankruptcy.

(66) With the exception of the Marit and Topogramm cases,
the aid for firms that were healthy at the time the aid
was granted is covered by the existing scheme, provided
that
the total amount of official aid granted to the
relevant investments does not exceed the intensity of

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If

cases.

35 % gross in the case of
large firms and firms of
unknown status (see recital 34) and 50 % gross in all
other
this condition is met, no further
examination of their compatibility with the common
market is required. The other individual cases in which
the scheme was applied, including the 29 grants of aid
to firms which, at the time the aid was granted, were in
difficulty, are not covered by the approved scheme.

the individual grants of aid indicated, whether or not
they were granted under the scheme.

(74)

The Commission would also point out
this
Decision is without prejudice to any decisions it has
taken or will take in respect of the individual cases of
application that are currently or have been the subject
of proceedings under Article 88(2) of the EC Treaty,

that

(67)

The aid granted from 1994 to 1996 for investment by
small and medium-sized enterprises on the basis of the
improper application of the programme of the Land of
Thuringia constitutes State aid within the meaning of
Article 87(1) of the EC Treaty.

HAS ADOPTED THIS DECISION:

Article 1

(68)

the aid scheme in the
The improper application of
period 1994 to 1996 and the individual cases resulting
from its application are unlawful.

The programme of the Land of Thuringia for investment in
SMEs (hereinafter referred to as (cid:145)the scheme(cid:146)) constitutes State
aid within the meaning of Article 87(1) of the EC Treaty.

(69)

The cases in which the scheme was unlawfully applied
to healthy firms and the improper application of the
scheme to healthy firms are incompatible with the
common market.

Article 2

The application of the scheme in breach of its provisions is
unlawful.

(70) Where the improper application of the scheme allowed
rescue aid to be granted to firms in difficulty, all the
relevant individual grants of aid are incompatible with
the common market.

(71)

(72)

that

the improper application of

To the extent
the
scheme allowed restructuring aid to be granted to firms
in difficulty without compliance with the relevant
requirement,
criteria (cid:151) individual
prevention
competition,
restriction to the strict minimum (cid:151) all the relevant
individual grants of aid are incompatible with the
common market.

notification
of

distortions

undue

of

established
In accordance with the Commission’s
practice, any aid unlawfully implemented and deemed
incompatible with the common market must, pursuant
to Article 87 of
the Treaty, be recovered from the
recipient. This practice was confirmed by Article 14 of
the
Regulation (EC) No 659/1999, which states that
Member State
all necessary
concerned must
measures to recover the aid from the beneficiary and
inform the Commission accordingly.

take

(73)

This Decision concerns the aid scheme as improperly
applied and all relevant
individual grants of aid and
must be implemented immediately, with recovery of all

Insofar as firms in difficulty were aided, the aid scheme and all
the relevant individual grants of aid are incompatible with the
common market.

Insofar as it promoted initial
investment by economically
healthy firms, the aid scheme and all the relevant individual
grants of aid are compatible with the common market,
provided that the maximum intensities specified in Article 3
the aid which exceeds the
are not exceeded. That part of
permitted maximum intensity is
incompatible with the
common market.

Article 3

Where it is combined with other regional aid, the aid for
initial investment must not exceed the maximum intensity of
35 % gross for large firms and 50 % gross for SMEs.

Article 4

Germany shall take all necessary measures to recover from the
beneficiaries the illegally granted aid referred to in Article 2.

Recovery shall be effected without delay and in accordance
with national procedures, provided that
they allow the
immediate and effective execution of this Decision. The aid to
be recovered shall include interest from the date on which the
unlawful aid was at the disposal of the beneficiaries until the

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date of its recovery. Interest shall be calculated on the basis of
the reference rate used for calculating the grant equivalent of
regional aid.

Article 6

This Decision is addressed to the Federal Republic of Germany.

Article 5

Done at Brussels, 19 June 2002.

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