2002/827/ECSC: Commission decision of 2 July 2002 on the granting by Spain of aid to the undertaking González y Díez SA in 1998, 2000 and 2001 (Text with EEA relevance.) (notified under document number C(2002) 2441)
Date: 2002-07-02
Institutions: European Commission
Subjects: Spain, State aid, aid for restructuring, coal industry, control of State aid

L 296/80

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Official Journal of the European Communities

30.10.2002

COMMISSION DECISION

of 2 July 2002

on the granting by Spain of aid to the undertaking González y Díez SA in 1998, 2000 and 2001

(notified under document number C(2002) 2441)

(Only the Spanish text is authentic)

(Text with EEA relevance)

(2002/827/ECSC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Coal
and Steel Community,

Having regard to Commission Decision No 3632/93/ECSC of
28 December 1993 establishing Community rules for State aid
to the coal industry (1), and in particular Articles 2(1) and 9
thereof,

Whereas:

I

(4)

(1)

(2)

(3)

By Decision 2002/241/ECSC of 11 December 2001 on
the granting by Spain of aid to the coal
industry in
2001 (2), the Commission authorised part of the pro-
posed aid to González y Díez SA and announced that it
would decide on the balance once it received the
additional information requested from Spain.

By letter of 13 December 2001 the Commission invited
Spain, pursuant to Article 88 of the Treaty, to submit its
comments on the use of the aid granted to González y
Díez SA in 1998, 2000 and 2001 to cover exceptional
costs of restructuring in conformity with Article 5
of Decision No 3632/93/ECSC. Spain replied to the
Commission by letters of 28 February 2002 and 24 April
2002.

3 918 049,35

The Commission must analyse whether the aid of
EUR
and
(ESP
EUR 2 786 246,34 (ESP 463 592 384) granted by Spain
to González y Díez SA in 1998 and 2000 respectively
under Article 5 of Decision No 3632/93/ECSC was used
by that undertaking for the purposes authorised by the

651 908 560)

Commission. Furthermore, in conformity with Decision
No 3632/93/ECSC, the Commission must decide on the
following aid granted to González y Díez SA in respect
of 2001:

(a)

(b)

aid

operating
6 704 295,70
(ESP 1 115 500 944) for 2001 under Article 3 of
Decision No 3632/93/ECSC;

EUR

of

aid of EUR 2 367 817,00 (ESP 393 971 600) for
2001 to cover exceptional costs under Article 3 of
Decision No 3632/93/ECSC.

The financial measures proposed by Spain for González
y Díez SA fall within the scope of Article 1 of Decision
No 3632/93/ECSC. The Commission must therefore
decide on these measures in accordance with Article 9(4)
of the Decision. The Commission’s assessment will be
based on the compliance of the measures with the
general criteria and objectives laid down in Article 2 and
with the specific criteria established by Articles 3, 4 and
5 of the Decision, and on their compatibility with the
proper functioning of the common market. In addition,
in accordance with Article 9(6) of the Decision, the
Commission must check whether the measures notified
conform with Spain’s modernisation, rationalisation,
restructuring and activity-reduction plan which the
Commission approved in Decision 98/637/ECSC (3).

II

(5)

On 11 June 1999, Minas la Camocha SA published its
annual report for 1998. As reported in the press on
the company board referred to ‘the
12 June 1999,
purchase in 1998 of a 100 % stake in González y Díez
SA for a total of ESP 784 million, financed by a bank

( 1) OJ L 329, 30.12.1993, p. 12.
( 2) OJ L 82, 26.3.2002, p. 11.

(3) OJ L 303, 13.11.1998, p. 57.

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L 296/81

loan’. The press also reported that, in 1998, González y
Díez SA achieved profits of ESP 700 million through
cutting coal production by 48 000 tonnes, for which
the company had received aid totalling ESP 652 million.
Moreover, at the end of December 1998, González y
Díez SA transferred funds amounting to ESP 700 million
to Minas la Camocha SA.

(9)

Having examined the accounts of González y Díez SA for
1998, the Commission considers that the aid totalling
ESP 651 908 560 granted to the company to cover the
technical costs of closing down extraction installations
corresponding to an annual production capacity of
48 000 tonnes was not used to cover the costs that have
resulted or result from the restructuring of the coal
industry, defined in the Annex to Decision No 3632/93/
ECSC.

(6)

(7)

(8)

By letter of 15 July 1999, the Commission asked Minas
la Camocha SA and González y Díez SA to forward their
annual reports for 1998. The Commission received the
reports on 26 July 1999. It examined Minas la Camocha
SA’s annual report for 1998 and concluded that the
undertaking had acquired 100 % of
the shares in
González y Díez SA on 23 July 1998 at a cost of
ESP 784 439 000 pesetas. The balance sheet of Minas la
Camocha SA showed financial assets on 31 December
1998 amounting to ESP 784 439 000 in the form of
‘holdings in associated companies’. Its liabilities include
ESP 700 million in ‘debts with associated companies’.
Note 15 in the report states that González y Díez SA
transferred funds totalling ESP 600 million and ESP 100
million on 29 December 1998 and 30 December 1998
respectively to Minas la Camocha SA.

that

The annual report of González y Díez SA for 1998
shows
the company received State aid of
ESP 651 908 560 as compensation for reducing coal
production by 48 000 tonnes per annum. The operating
account for 1998 shows exceptional operating profits
of ESP 700 015 591. The report also shows that, on
29 December 1998 and 30 December 1998, funds
totalling ESP 600 million and ESP 100 million respect-
ively were transferred to Minas la Camocha SA.

According to its annual report, on 11 November 1998
González y Díez SA signed a rider to the contract of
13 March 1998 with Unión Eléctrica Fenosa SA reducing
by 48 000 tonnes the quantity of coal it had to supply
to Térmica de Soto de la Barca, which thus amounts to
238 000 tonnes per annum for the period 1999–2000.
The report makes no reference to closure of installations
as a consequence of this cut in production and mentions
changes made to the exploitation systems which had
resulted in a reduction in the activities of open-cast
subcontractors, with González y Díez SA itself having
carried out virtually all the coal extraction activities.

(10) The Commission considers that the gross profits from
González y Díez SA’s current operations in 1998
amounting to ESP 932 911 952 and the net profits for
the year amounting to ESP 700 015 591 are the result
of using aid destined to cover exceptional restructuring
costs (Article 5 of Decision No 3632/93/ECSC) as
operating aid (Article 3 of Decision No 3632/93/ECSC).
The use of this aid as operating aid is incompatible with
the first indent of Article 3(1) of Decision No 3632/93/
ECSC, which provides that the aid per tonne may not
exceed, for each undertaking or production unit, the
difference between the production cost and the selling
price. The company generated abnormally high profits
of ESP 700 015 591. The profits for 1998 are much
higher than those for the preceding years, which
to ESP 141 084 825 in 1997 and
amounted
ESP 65 722 182 in 1996. The profits for 1998 amount-
ed to ESP 50 420 961 on 30 June 1998, i.e. before the
acquisition by Minas la Camocha SA of 100 % of the
shares of González y Díez SA. Moreover, account must
be taken of the fact that these operating profits result
from the grant of operating aid authorised by the
Commission under Article 3 of Decision No 3632/93/
ECSC totalling ESP 1 366 000 000 in 1998.

(11) The Commission considers

the

that

transfer of
ESP 600 million and ESP 100 million by González y
Díez SA to Minas la Camocha SA on 29 and 30 Decem-
ber 1998 respectively was made possible by the profits
González y Díez SA earned in 1998 from the aid
to cover exceptional costs of closure. Consequently,
the
of
ESP 651 908 560 was used for the purchase of González
y Díez SA by Minas la Camocha SA.

Commission

considers

that

the

aid

(12) The Commission considers that the acquisition by Minas
la Camocha SA of González y Díez SA would not have
taken place on 23 July 1998 if there had not been the
prospect of receiving extraordinary income. According
to the annual reports, the value of the company acquired
(González y Díez SA) is twice that of the purchasing

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company (Minas la Camocha SA). Furthermore, Minas
la Camocha SA’s financial structure is very weak: its
assets totalling ESP 22 443 136 000 on 31 December
1998 are 46 times greater than its equity on the same
date totalling ESP 481 403 000. Moreover, Minas la
Camocha SA is covered by a closure plan and receives
aid for the reduction of activity under Article 4 of
Decision No 3632/93/ECSC.

2000 and 34 000 tonnes in 2001. By letter of 17 July
2001, the Commission asked Spain to refrain from
In spite of this
paying the aid scheduled for 2001.
request, Spain proceeded with payment.

(13) By letter of 25 October 1999, the Commission asked
Spain to provide additional information on the measures
taken by González y Díez SA in 1998 to close down
installations together with a justification of the costs of
such measures. It also requested information on the
utilisation of aid totalling ESP 651 908 560 to cover
exceptional costs of closure and on the possible utilis-
ation of such aid for the acquisition by Minas la Camocha
SA of González y Díez SA The information in question
had to be audited by an external firm.

(14) By letter of 2 December 1999, Spain forwarded to the
Commission the information provided by González y
Díez SA and stated that it would examine the issues
raised by the Commission. González y Díez SA, for its
part, acknowledges the accuracy of the Commission’s
information and accepts that the operating profits for
1998 included aid of ESP 651 908 560 destined to
cover exceptional costs of closure. However, González y
Díez SA stresses that it does not share the Commission’s
interpretation as to the use of the aid. With regard to the
transfer of ESP 600 million and ESP 100 million to
Minas la Camocha SA at the end of 1998, González y
Díez SA explained that this concerned two loans which
were repaid with interest before 2 August 1999. As to
the exceptional costs of closure, the company report
does not provide an explanation of the exceptional costs
resulting from the restructuring of González y Díez SA.
to expenditure of
On the
loans and
ESP 319 896 354 for the repayment of
subsidies not related to restructuring, expenditure of
ESP 232 589 000 by way of investment in equipment
for
of
ESP 158 973 459 in investment for the modernisation
of underground workings, none of which are related to
the closure of the installations.

open-cast working,

expenditure

contrary,

refers

and

it

(15)

463 592 000

Spain continues to grant González y Díez SA aid of
and
ESP
ESP 393 971 600 in respect of 2001 to cover excep-
tional costs of reducing production by 38 000 tonnes in

respect

2000

of

in

(16) By letters of 7 September 2000 and 24 April 2001, the
information
Commission asked Spain for additional
about the aid it had granted in 1998 and 2000 or
planned to grant in 2001 to González y Díez SA
destined to cover exceptional closure costs. Spain replied
by letter of 29 June 2001 and also provided the
Commission with a technical and financial report pre-
pared by González y Díez SA. The Commission, con-
sidering this report to be unsatisfactory, questioned
several aspects of the justification of these costs by letter
of 17 July 2001.

(17)

Following Decision 2002/241/ECSC the Commission
invited Spain to comment in accordance with Article 88
of the Treaty on the utilisation of the aid granted in
1998, 2000 and 2001 to González y Díez SA to cover
the exceptional costs of closure. By letter of 13 December
2001, it set a deadline of 15 working days for a reply.
By letter of 9 January 2002, Spain asked for an extension
of this deadline, to which the Commission agreed by
letter of 18 January 2002.

(18) By letters of 28 February 2002 and 24 April 2002,
Spain forwarded to the Commission the technical reports
from González y Díez SA dated 13 February 2002 and
26 February 2002 respectively. These reports were
accompanied by a technical and financial audit of plant
closure
658 700 000
in connection with an annual
(EUR 3 958 866,73)
reduction in production capacity of 120 000 tonnes in
1998, 2000 and 2001.

totalling

costs

ESP

(19) The Commission’s analysis of the data notified by Spain
shows that
the costs of closing down production
installations equivalent to an annual capacity reduction
of 120 000 tonnes in 1998, 2000 and 2001 amount to
EUR 3 958 866,73 (ESP 658 700 000). The aid of
EUR 9 072 112,69 (ESP 1 509 472 542) granted in
1998, 2000 and 2001 exceeds the costs of plant closure
totalling EUR 5 113 245,96 (ESP 850 772 542,30).

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(20)

In view of the above and on the basis of the information
provided by Spain, the aid totalling EUR 5 113 245,96
(ESP 850 772 542,30) is not compatible with Article 5
of Decision No 3632/93/ECSC and consequently is not
compatible with the proper functioning of the common
market.

(21)

Part of
the aid, amounting to EUR 2 745 428,96
(ESP 456 800 942,90), was granted for 1998 and 2000
and must be repaid to Spain by González y Díez SA.

(28) González y Díez SA has set an average selling price for
2001 of approximately EUR 51/tce (ESP 8 480/tce) for
its coal production
the sale of 200 000 tonnes of
(147 400 tce) to power stations. Compared with the
average production cost of EUR 92/tce (ESP 15 307/tce)
envisaged for 2001, the Commission notes that the
notified aid corresponds to the difference between the
cost of production and the selling price freely agreed by
the contracting parties in the light of the conditions
prevailing on the world market.

(29)

(22) The balance of EUR 2 367 817,00 (ESP 393 971 600)
which Spain notified to the Commission in respect of
2001 is not consistent with Article 5 of Decision
No 3632/93/ECSC. The payment by Spain of
this
amount in anticipation of a Commission decision must
be seen as an unjustified cash advance under Article 9(5)
of Decision No 3632/93/ECSC. Consequently, the aid to
be refunded must include interest charged at the market
rate.

III

the

the

2002/241/ECSC

Commission
In Decision
did not
rule on aid totalling EUR 6 704 295,70
(ESP 1 115 500 944), pending the communication to it
by Spain of information on the utilisation by González
y Díez SA of
sum of EUR 9 072 112,70
(ESP 1 509 472 544) granted by Spain to cover excep-
tional costs of restructuring. Spain communicated this
information to the Commission by letters of 28 February
2002 and 24 April 2002, so that the Commission can
now decide on the aid to current production totalling
EUR 6 704 295,70 (ESP 1 115 500 944) in respect of
2001 (Articles 3 and 4 of Decision No 3632/93/ECSC).

(23) The aid of EUR 6 704 295,70 (ESP 1 115 500 944)
which Spain plans to grant González y Díez SA for
2001 is intended to offset all or part of the operating
losses of its production units.

(30) The aid to cover González y Díez SA’s operating losses
has been included in the general State budget for
2001. Spain notified the Commission of its Council of
Ministers’ approval of the allocation of this aid to
individual undertakings. The approval was published in
the Boletín Oficial del Estado (4).

(24) This aid is intended to cover the difference between the
cost of production and the selling price freely agreed
between the contracting parties in the light of the
conditions prevailing on the world market.

(25) The amount notified comprises operating aid of
EUR 5 850 488,28 (ESP 973 439 343) under Article 3
of Decision No 3632/93/ECSC and aid for the reduction
of activity of EUR 853 807,42 (ESP 142 061 601) under
Article 4 of the Decision.

(31) The inclusion of this measure in the modernisation,
rationalisation, restructuring and activity-reduction plan
notified by Spain and the degressive nature of the aid
and the sums scheduled for 2001 are in line with the
objectives laid down in the first and second indent of
Article 2(1) of Decision No 3632/93/ECSC and, more
specifically, contribute to resolving the social and
regional problems relating to the development of the
coal industry.

(26) The operating

aid of

EUR 5 850 488,28 (ESP
973 439 343) is intended to cover operating losses in
respect of planned total production of 166 000 tonnes
for 2001.

(27) The aid for

reduction of activity amounting to
EUR 853 807,42 (ESP 142 061 601)
is intended to
cover operating losses in respect of planned production
of 34 000 tonnes in 2001. Spain indicated that the
undertaking would close this production capacity before
the end of 2001.

aid

amounting

(32) On the basis of the information provided by Spain,
the
6 704 295,70
to
(ESP 1 115 500 944) which Spain has planned to grant
González y Díez SA in respect of 2001 is compatible
with Articles 3 and 4 of Decision No 3632/93/ECSC
and with the proper functioning of the common market.

EUR

(4) BOE No 83, 6.4.2001, p. 13055.

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IV

(33) The aid granted by Spain to the coal industry is restricted
to the production of coal for use in electricity generation.
Spain is committed to ensuring that coal sold to the
industrial and domestic sectors by González y Díez SA
is sold at prices (without compensation) that cover the
costs of production.

(34)

Spain must ensure that the aid granted to current
production under this Decision does not give rise to
any discrimination between coal producers, between
purchasers or between users on the Community coal
market.

(35)

Spain must ensure that, in accordance with the third
indent of Article 3(1) of Decision No 3632/93/ECSC,
aid to cover the difference between the cost of pro-
duction and the selling price per tonne does not cause
selling prices for Community coal to be lower than those
for coal of a similar quality from non-member countries.

(36) Within the framework of Article 86 of the Treaty, Spain
must ensure that the aid is limited to that which is
strictly necessary in the light of the social and regional
considerations which characterise the decline of the
Community’s coal industry. The aid may not give any
economic advantage, whether directly or indirectly, to
production for which no aid is authorised or to other
activities distinct from coal production. In particular,
Spain must ensure that aid granted to undertakings
under Article 5 of Decision No 3632/93/ECSC to cover
the technical costs of closure is not used by the
undertakings as aid to current production (Articles 3
and 4 of the Decision), that the closure of capacity for
which the aid is intended is definitive and that
it
is carried out in optimum conditions of safety and
environmental protection.

(37)

In accordance with the second indent of Article 3(1) and
with Article 9(2) and (3) of Decision No 3632/93/ECSC
the Commission must verify that the aid authorised for
current production is used exclusively for the purposes
laid down in Articles 3 and 4 of the Decision. Spain
must notify the Commission, no later than 30 September
2002, of the amount of aid actually paid to González y
Díez SA during 1998, 2000 and 2001, and declare any
corrections made to the amounts originally notified.
When submitting this annual statement of aid paid,
Spain must also supply the Commission with all the
information necessary for verification of the criteria set
out in the Articles in question.

(38)

(39)

In approving the aid, the Commission has recognised
the need to soften, as far as possible, the social and
regional impact of the restructuring of the coal industry,
given the economic and social situation relating to the
mines affected.

In view of the above, and on the basis of the information
provided by Spain, the aid and the measures proposed
for the coal industry are compatible with the objectives
of Decision No 3632/93/ECSC and with the proper
functioning of the common market,

HAS ADOPTED THIS DECISION:

Article 1

The State aid totalling EUR 5 113 245,96 (ESP 850 772 542)
granted by Spain to González y Díez SA to cover exceptional
restructuring costs in 1998, 2000 and 2001 pursuant to
Article 5 of Decision No 3632/93/ECSC is incompatible with
the common market.

Article 2

Spain shall adopt all necessary measures to recover from
1.
González y Díez SA the aid for 1998 and 2000 mentioned in
Article 1, totalling EUR 2 745 428,96 (ESP 456 800 943).

2.
Recovery shall take place within two months, in accord-
ance with the procedures laid down by national law, provided
they allow immediate, effective implementation of
this
Decision. The aid to be recovered shall be liable to interest
charges at the market rate payable from the date on which it
was placed at the disposal of the recipient to the date of
recovery thereof.

The aid totalling EUR 2 367 817 (ESP 393 971 600)
3.
which Spain granted to González y Díez SA in respect of 2001
to cover exceptional restructuring costs in accordance with
Article 5 of Decision No 3632/93/ECSC is not authorised.

Article 3

Spain is hereby authorised to pay the following aid to González
y Díez SA in respect of 2001:

(a)

operating aid of EUR 5 850 488,28 (ESP 973 439 343)
under Article 3 of Decision No 3632/93/ECSC;

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(b)

aid for the reduction of activity of EUR 853 807,42
(ESP 142 061 601) under Article 4 of Decision No 3632/
93/ECSC.

in full, by the undertaking which received it, within one month
of notification of this Decision to Spain. González y Díez SA
shall pay interest charges at the market rate on this amount.

Article 4

Article 6

In accordance with Article 86 of the ECSC Treaty, Spain shall
adopt all appropriate measures, whether general or particular,
to ensure fulfilment of the obligations resulting from this
Decision. It shall ensure that the aid authorised is used for the
purposes intended and that any unspent, overestimated or
incorrectly used aid for any item covered by this Decision is
repaid to it.

Spain shall notify the Commission, by 30 September 2002 at
the latest, of the amount of aid actually paid to González y
Díez SA in respect of 2001.

Article 7

This Decision is addressed to the Kingdom of Spain.

Article 5

Done at Brussels, 2 July 2002.

In accordance with Article 9(5) of Decision No 3632/93/ECSC,
any payment made by Spain to González y Díez SA in
anticipation of authorisation by the Commission in excess of
the aid authorised for this undertaking in 2001 shall be repaid

For the Commission

Loyola DE PALACIO

Vice-president