2003/147/EC: Commission Decision of 16 October 2002 on the State aid implemented by Portugal for Opel Portugal Comércio e Indústria de Veículos (Text with EEA relevance) (notified under document number C(2002) 3742)
Date: 2002-10-16
Institutions: European Commission
Subjects: Portugal, State aid, control of State aid, investment project, motor vehicle industry, regional aid, vocational training

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on the State aid implemented by Portugal for Opel Portugal Comércio e Indústria de Veículos

COMMISSION DECISION

of 16 October 2002

(notified under document number C(2002) 3742)

(Only the Portuguese text is authentic)

(Text with EEA relevance)

(2003/147/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Commu-
nity, and in particular the first subparagraph of Article 88(2)
thereof,

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

Having called on interested parties to submit their comments
pursuant to the provisions cited above (1) and having regard to
their comments,

(4)

Whereas:

their comments on the aid. The Commission received
comments from interested parties. It forwarded them to
Portugal, which was given the opportunity to react; its
comments were received by letter dated 30 May 2002.

II. DETAILED DESCRIPTION OF THE AID

Opel Portugal is a subsidiary of the United States auto-
that
motive group General Motors (hereinafter GM)
manufactures motor vehicles at its Azambuja plant, in
the Lisbon region. The notified project concerns the
production of a new small passenger and commercial
vehicle, the Corsa Combo, based on the Opel Corsa plat-
form. The vehicle, production of which started in 2001,
replaces ageing models based on the old Corsa platform.

I. PROCEDURE

(1)

(2)

By letters dated 2 March, 10 April and 31 May 2001,
the Portuguese authorities notified a plan to grant
training aid and regional aid to Opel Portugal Comércio
e Indústria de Veículos, SA (hereinafter Opel Portugal).
The Commission requested further information on 19
July 2001 and the Portuguese authorities replied on 3
October. It carried out an on-site visit to the plant in
Azambuja on 26 November 2001 and sent a request for
further information on 30 November,
to which the
Portuguese authorities replied on 28 January 2002.

The Commission decided on 27 March 2002 to initiate
the procedure laid down in Article 88(2) of the Treaty
(decision to open the formal
investigation procedure)
since it found that there were doubts as to the compat-
ibility with the common market. Portugal submitted its
comments on the opening of the procedure on 24 May
2002.

(3)

The Commission decision to initiate the procedure was
published in the Official Journal of the European Commu-
nities (2), with an invitation to interested parties to submit

(1) OJ C 151, 25.6.2002, p. 2.
(2) See footnote 1.

(5)

Two distinct measures relating to training aid and
regional aid are planned in favour of Opel Portugal.

(a) Training aid

The project

(6)

(7)

training programme

The training project in question is Opel Portugal's voca-
tional
(the
programme), which runs from 2000 to 2003. The Portu-
guese authorities have provided the Commission with
detailed information concerning the training to be
provided and the costs involved.

its workforce

for

According to the information provided by the Portu-
guese authorities,
the programme includes 327 365
hours of training, of which 253 099 are general training
and 74 266 specific training. The training is provided by
Opel Portugal directly, as well as by other training insti-
tutions accredited by the public body Inofor (Instituto
para a Inovação na Formação).

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(8)

The eligible training costs as notified to the Commission are as follows (amounts expressed in euro):

(in EUR)

TYPE OF EXPENDITURE

General training

Specific training

Total costs

Trainee costs (including travel expenses)

Trainer costs

Non-teaching staff

Preparatory work

Operating expenses

Equipment rental and depreciation

Monitoring and evaluation

External training

(*) Business secret.

[…] (*)

[…] (*)

[…] (*)

[…] (*)

[…] (*)

[…] (*)

[…] (*)

[…] (*)

[…] (*)

[…] (*)

[…] (*)

[…] (*)

[…] (*)

[…] (*)

[…] (*)

[…] (*)

[…] (*)

[…] (*)

[…] (*)

[…] (*)

[…] (*)

[…] (*)

[…] (*)

[…] (*)

Total

5 506 584

1 284 628

6 791 212

(9)

(10)

According to the Portuguese authorities, there are two
types of course: courses providing general training, and
courses providing a mix of general and specific training.
Courses involving only general training provide the reci-
pients with general skills that can be useful in a range of
employment areas and are, therefore, transferable. Exam-
ples are production team leadership, quality and process
skills, basic manufacturing skills, IT training, leadership,
health and safety, language and plant-based training.

functioning

job, e.g.
specific machine

Courses involving both general and specific training
focus on qualifications that are more directly linked to
specific tasks that the workers have to perform in their
training concerning assembly opera-
current
tions,
and painting
processes. According to the Portuguese authorities, these
courses involve a general training component in so far
as they develop transferable qualifications in the realm
of ‘technical and relational know-how’. The Portuguese
authorities mention as examples of general skills devel-
oped through these courses the ability to interpret
instructions, the ability to follow a given sequence of
tasks, safety awareness, quality awareness and problem-
solving.

(12)

(13)

(Decreto Regulamentar) No 12-A/2000 of 15 September
2000 and Legislative Order (Despacho Normativo) No
42-B/2000 of 20 September 2000.

to Opel
The Portuguese authorities plan to grant
Portugal training aid amounting to EUR 3 414 010, of
which EUR 3 028 621 (or 55 % of the eligible costs) is
considered
and
to
EUR 385 389 (or 30 % of eligible costs) as aid to
specific training.

training

general

aid

be

to

Grounds for initiating the procedure

In its decision of 19 December 2001 to initiate the
procedure (4), the Commission expressed doubts as to
whether the courses notified by the Portuguese authori-
ties as providing both general and specific training
ranked as general training. It asked for further informa-
tion on these courses and for a more detailed breakdown
of eligible costs for the courses notified as providing
both general and specific training.

Legal basis and amounts of aid

(11)

The legal basis for the proposed aid is provided by
Commission Regulation (EC) No 68/2001 (3) and by the
following Portuguese acts: Order in Council
(Portaria)
No 229/2001 of 19 March 2001; Implementing Decree

(b) Regional investment aid

The project

(14)

The investment project is located at the Azambuja plant,
in the Lisbon region. Azambuja is an Article 87(3)(c)
area whose regional aid ceiling in 2000 was 47,68 % net
(approximately 65,80 % gross grant
grant equivalent
equivalent). In 2001 and 2002 the corresponding figures
were 40,76 % nge (approximately 56,25 % gge) and
33,84 % nge (approximately 46,70 % gge).

(3) OJ L 10, 13.1.2001, p. 20.

(4) See footnote 1.

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(15)

The project is in two phases. In the first phase (from
August 1998 to end 1999) a new water-based paintshop
was installed to replace the previous one, which did not
meet the required quality and environmental standards.
In the second phase (from 2000 to December 2003) the
production lines for the production of the new Corsa
Combo model are being installed. Capacity at the Azam-
buja plant will
increase from some 60 000 to some
70 000 units per year. However, GM's capacity at
European level will decrease in the relevant period, also
as a result of the ongoing ‘Olympia’ restructuring plan.

(16) According to the Portuguese authorities, the project is
mobile, and the GM group has considered an alternative
site in Gliwice, Poland, as a viable alternative.

(17) Opel

intends to invest EUR 124 299 613 in nominal
terms (EUR 108 701 829 in present-value terms, base
year 1998, discount rate 6,42 %). The entire investment
has been considered eligible by the Portuguese authori-
ties.

(18)

The Portuguese authorities have provided a comparison
of the costs and benefits of the location in Azambuja
with those of the alternative location in Gliwice. The
cost benefit analysis (hereinafter CBA)
indicates a net
cost handicap of EUR 40 449 401 for the location in
Azambuja as compared with the location in Gliwice,
for the project of
resulting in a ‘handicap intensity’
37,21 %.

(19)

(20)

Legal basis and amounts of aid

The notified aid is granted under approved schemes
provided for in the following legislation: PEDIP II (Legis-
lative Decree No 177/94) (5), PEDIP-TRANSIÇÃO (Legis-
lative Decree No 348–A/99) and the tax benefit scheme
(RBF: Legislative Decree No 409/99) (6).

a

It

loan

includes:

repayable

Total aid of EUR 38 333 000 gge in nominal terms is
planned.
of
(i)
EUR 18 471 000, which the Portuguese authorities have
notified as a direct grant since they retain the option of
(ii) a
converting the loan into a grant in the future;
contribution to interest-rate payments on a loan of up to
EUR 2 460 000; (iii) tax benefits in the form of reduced
tax on profits of up to EUR 17 402 000. The actual
to
value
amounts
the
EUR 35 297 017. The resulting aid intensity of
regional aid measure is 32,5 % gge.

regional

total

the

aid

of

(5) Approved by Commission Decision of 29 March 1994 in Case

N 1/94.

Grounds for initiating the procedure

(21)

In its decision of 19 December 2001 to initiate the
procedure (7), the Commission expressed doubts as to
In order to allay these
the mobility of
doubts,
it asked for additional clarification and docu-
ments on the timing of the approval of the project in
Azambuja.

the project.

(22)

The Commission also expressed doubts about the CBA
in connection with the following points:

— the need for additional investments in the old paint-
shop in Azambuja […](*), in the event of the alterna-
tive option of carrying out the project in Gliwice
being taken up: these additional investments should
have been accounted for in the CBA as additional
costs under that alternative option,

— the estimate of the land sale revenue for the Azam-
buja site under the alternative option: the Commis-
sion doubted that Opel Portugal could have obtained
a net income of EUR 8 083 469 in 2002 from the
sale.

III. COMMENTS FROM INTERESTED PARTIES

(23)

The Commission received comments from the company
Duarte & Marques LDA on 19 April 2002 which
referred to alleged utilisation by Opel Portugal for indus-
trial purposes (a vehicle park) of an area of approxi-
mately 12 hectares intended for agricultural and envir-
onmental use. According to Duarte & Marques LDA, this
fact constituted sufficient grounds to question the legiti-
macy of the State aid for Opel Portugal. The Commis-
sion forwarded these comments to Portugal on 23 April
2002.

IV. COMMENTS FROM PORTUGAL

(24)

The Portuguese authorities sent their comments on the
opening of the procedure on 24 May 2002 and their
views on the comments from interested parties on 30
May. The Commission has taken these comments and
information into account.

(a) Training aid

(25) As regards the training aid, the Portuguese authorities
provided information on the criteria for distinguishing
training. These criteria
between specific and general
define specific training in a residual way: a course, or a
module within a course, is defined as specific if none of
the criteria that define general training is met.

(6) Approved by Commission Decision of 8 September 1999 in Case

N 97/99.

(7) See footnote 1.

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(26)

The Portuguese authorities provided a detailed list of the
criteria applied in identifying general training elements
within courses notified as providing both general and
specific training. The criteria are: ability to interpret
instructions and to communicate information/instruc-
tions; ability to follow a defined work sequence; aware-
ness of on-the-job safety and safety for customers;
compliance with quality standards; attention in handling
products; ability to control one's own work; ability to
detect problems and avoid mistakes; creativity in formu-
lating work-improvement proposals; ability to rectify
mistakes on the spot; collaboration with colleagues and
willingness to help whenever necessary; active participa-
tion in team work with a view to improving standards;
speed of execution of tasks in line with quality standards;
understanding of the importance of standards to attain
the objectives set; awareness of working time and cycle
times.

(27) According to the Portuguese authorities, these criteria
indicate that the courses can be ranked in part as general
training because they develop ‘technical and relational
know-how’ that is not exclusively geared to the worker's
current position and can be transferred to other enter-
prises or fields of work.

(28)

Lastly, the Portuguese authorities provided a breakdown
of eligible costs highlighting, on the one hand, the costs
imputed to courses notified as providing general training
only and, on the other, the costs imputed to courses
notified as providing both general and specific training.

(b) Regional investment aid

(29)

(30)

Regarding the regional
investment aid, the Portuguese
authorities first reaffirmed that the project was mobile.
To support
they provided a document
proving that the decision to build the new paintshop in
Azambuja was taken by GM in October 1997.

this claim,

Secondly, the Portuguese authorities provided additional
information on the investments made in the period
1996-98 to improve the emission levels in the old paint-
shop. They also gave a figure of EUR 2 882 331,52 for
the maximum additional
investment necessary for the
paintshop to comply with the statutory emission limits.
According to them, the government could have financed
50 % of this amount as State aid for the investment
necessary to attain environmental goals, in accordance
with the 1994 Community guidelines on State aid for
environmental protection (8).

(31)

Thirdly, the Portuguese authorities provided additional
evidence and information regarding the valuation of the
land where the Azambuja plant is located, including an
explanatory note from the independent consultant who
gave a valuation of the former Ford Lusitania site, a
valuation of the site carried out in 2002 by another
independent consultant and reports by independent
companies assessing the environmental conditions at the
Opel site.

(c) Comments from interested parties

(32) On 30 May the Portuguese authorities sent their views
on the comments from interested parties. They claimed
that the site referred to in those comments was not the
site on which the project notified to the Commission
would be carried out. To prove this point, they provided
a layout of the plant indicating the relevant areas. They
also stated that
the matter had been referred to a
national court and that no judgment had yet been given.

V. ASSESSMENT OF THE AID

(33)

The measure notified by Portugal
in favour of Opel
Portugal constitutes State aid within the meaning of
Article 87(1) of the Treaty. It would be financed by the
State or through state resources. Furthermore, as it
constitutes a significant proportion of
the project
funding, the aid is liable to distort competition in the
Community by giving Opel Portugal an advantage over
competitors not receiving aid. Lastly, there is extensive
trade between Member States in the automobile market.

(34) Article 87(2) of the EC Treaty lists certain types of aid
that are compatible with the EC Treaty. In view of the
nature and purpose of the aid and the geographical loca-
tion of the firm, subparagraphs (a), (b) and (c) are not
applicable to the project in question. Article 87(3) speci-
fies other forms of aid which may be regarded as
compatible with the common market. The Commission
notes that the project is located at Azambuja,
in the
Lisbon region, which qualifies
for assistance under
Article 87(3)(c).

(35)

The aid in question is intended for Opel Portugal, which
manufactures and assembles motor vehicles. The firm is
therefore part of the motor vehicle industry within the
meaning of the Community framework on State aid to
the motor vehicle industry (hereinafter the motor vehicle
framework) (9).

(8) OJ C 72, 10.3.1994, p. 3.

(9) OJ C 279, 15.9.1997.

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(36)

The motor vehicle framework specifies that all aid which
the public authorities plan to grant to an individual
project under authorised aid schemes for a firm oper-
ating in the motor vehicle industry must, in accordance
with Article 88(3) of the Treaty, be notified before being
granted if either of the following thresholds is reached:
(i) total cost of the project: EUR 50 000 000, or (ii) total
gross aid for the project, whether State aid or aid from
Community instruments: EUR 5 000 000.

(41)

The Commission points out that the distinction between
specific training and general training actions is laid down
in Article 4 of the Regulation. Specific training is defined
in Article 2 as training involving tuition directly and
principally applicable to the employee's present or future
position in the assisted firm and providing qualifications
which are not, or only to a limited extent, transferable
to other firms or fields of work.

(37)

Both the total cost of the project and the amount of aid
in
exceed the respective notification threshold. Thus,
notifying both the training aid and the regional aid
proposed for Opel Portugal, the Portuguese authorities
have complied with Article 88(3) of the Treaty.

(42) General training is defined in Article 2 as training invol-
ving tuition which is not applicable only or principally
to the employees' present or future position in the
assisted firm but which provides qualifications that are
largely transferable to other firms or fields of work and
thereby substantially improve the employability of the
employee.

is allegedly using for

(38) At the outset, the Commission considers that the fact
that Opel Portugal
industrial
purposes an area intended for agricultural and environ-
mental use is not relevant to the assessment of the case.
This is because the layout of the plant demonstrates that
the area whose use is being disputed is clearly distinct
from the area where the project under examination is
located. Consequently, the Commission concludes that
the two measures, training aid and regional aid, are to
be assessed in the light of the relevant rules.

(a) Training aid

(39)

Pursuant to point 3.6. of the motor vehicle framework,
training aid to companies in the motor vehicle sector
must be assessed under Commission Regulation (EC) No
68/2001 of 12 January 2001 on the application of Arti-
cles 87 and 88 of the EC Treaty to training aid (10) (here-
inafter, the Regulation). According to Article 5 of the
Regulation, training aid fulfilling the conditions of the
Regulation is not automatically exempted if the amount
of aid granted to one enterprise for a single training
project exceeds EUR 1 000 000. As a consequence, this
aid must be notified and assessed under that Regulation.
The Commission notes that the proposed aid in this case
amounts to EUR 3 414 010, that it is to be paid to one
is a single
enterprise and that
project.
the notification
It
requirement applies to the proposed aid and that the aid
has to be assessed in the light of the Regulation.

the training project

therefore considers

that

(43)

The eligible costs in the context of the training aid
project are listed in Article 4(7) of the Regulation. The
Commission notes that, as required by Article 4, the
authorities have provided documentary
Portuguese
evidence in the form of a costed training plan which has
enabled the Commission to identify the total amount of
eligible costs. It also notes that the total eligible cost of
the notified training programme is EUR 6 791 212, of
which total eligible personnel costs (excluding travel
expenses) are EUR 3 118 560.

(44) Under Article 4(2) and (3), training aid is compatible
with the common market if it complies with the aid
intensities set out therein,
in relation to eligible costs.
Under the terms of the Regulation, the maximum aid
intensities that can be authorised for the project in ques-
tion, which is carried out by a large firm in an Article
87(3)(c) area, are 30 % for specific training and 55 % for
general training.

(45)

The Commission notes that the Portuguese authorities
have distinguished between two types of course: courses
providing general training and courses providing a mix
of general and specific training.

(40) Under Article 3(1) of the Regulation,

individual aid is
compatible with the
common market within the
meaning of Article 87(3)(c) if it fulfils all the conditions
of the Regulation.

(10) OJ L 10, 13.1.2001, p. 20.

(46) After assessing the information provided by the Portu-
guese authorities,
the
courses notified by them as providing exclusively general
training (amounting to 183 040 hours of training) have
to be regarded as general training within the meaning of
the Regulation.

the Commission considers that

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(47) As for the courses providing a mix of general and
specific training (amounting to 70 059 hours of general
training and 74 266 hours of specific training),
the
Commission cannot accept
the definition of general
training proposed by the Portuguese authorities. They
argued that, although the focus of the training is to
provide qualifications that are directly applicable to the
employee's present position within the company, such
courses provide at the same time transferable qualifica-
tions that could be used in other firms or fields of work.
However, this element is not sufficient for such courses
to be regarded as providing general training.

(48)

(49)

Firstly, the Commission notes that specific training may
help to enhance the general qualifications of employees.
it is very likely that training involving tuition
Indeed,
directly and principally applicable to the employee's
present position within the company also contributes
indirectly to an improvement in general knowledge of,
say, production processes, safety and quality awareness
and team work. However, these qualifications are inci-
dental
the training, which
provides qualifications that are not, or only to a limited
extent, transferable to other firms or fields of work.

to the main content of

Secondly, according to Article 4(5) of the Regulation, in
cases where the aid project involves both specific and
general training components which cannot be separated
for the calculation of the aid intensity and in cases where
the training aid
the specific or general character of
project cannot be established, the intensities applicable
to specific training apply.

(50)

(51)

(52)

The Commission notes that, according to the informa-
tion provided, the Portuguese authorities have identified
general training components within the courses notified
as providing both general and specific training, by ascer-
taining whether a particular module within a course
provided elements of general training. It was only if no
general training elements were identified that the module
was classified as specific training.

The Commission considers that the mere presence of a
general training component within a module does not
rule out the possibility that the module provides mainly
training of a specific nature. By defining specific training
only in a residual manner, the Portuguese authorities
have regarded as general training modules that provide
qualifications which are transferable to other firms or
fields of work only to a limited extent and that involve
tuition directly and principally applicable to the employ-
ee's present position.

identify the different

The Commission concludes therefore that the criteria for
distinguishing between general and specific training
components proposed by the Portuguese authorities do
not
training components as
required by the Regulation. Since the courses notified by
the Portuguese authorities as providing both general and
specific training involve tuition directly and principally
applicable to the employee's present position and
provide qualifications which are not, or only to a limited
extent, transferable to other firms or fields of work, the
Commission concludes that such courses cannot qualify
for training aid in respect of general training.

(53) On the basis of the information provided by the Portuguese authorities in their letter of 24 May

2002, the Commission has calculated that eligible training costs are as follows:

(in EUR)

TYPE OF EXPENDITURE

General training

Specific training

Total costs

Trainees' costs (including travel expenses)

[…] (*)

[…] (*)

[…] (*)

Trainer costs

[…] (*)

[…] (*)

[…] (*)

Non-teaching staff

[…] (*)

[…] (*)

[…] (*)

Preparatory work

[…] (*)

[…] (*)

[…] (*)

Operating expenses

[…] (*)

[…] (*)

[…] (*)

Equipment rental and depreciation

[…] (*)

[…] (*)

[…] (*)

Monitoring and evaluation

[…] (*)

[…] (*)

[…] (*)

External training

[…] (*)

[…] (*)

[…] (*)

Total

3 760 103,82

3 031 108,19

6 791 212,01

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(54)

The allowable aid intensity for general training is equal
to 55 % of eligible costs, resulting in allowable aid for
general training of EUR 2 068 057. The allowable aid
intensity for specific training is equal to 30 % of eligible
costs, resulting in allowable aid for specific training of
EUR 909 332.

guese authorities. Among the documents provided by
the Portuguese authorities is a letter dated December
1997 from the Portuguese Economics Minister to Opel
Portugal confirming the interest of
the Portuguese
government in supporting the investment project.

(b) Regional investment aid

(55) According to the motor vehicle framework, the Commis-
sion is to ensure that the aid granted is both necessary
for the realisation of the project and in proportion to
the gravity of the problems it is intended to resolve.
Both tests, necessity and proportionality, must be satis-
fied if the Commission is to authorise State aid in the
motor vehicle industry.

(56) Under point 3(2)(a) of

the framework,

in order to
demonstrate the necessity for regional aid, the aid reci-
pient must clearly prove that it has an economically
viable alternative location for its project. If there were
no other industrial site, whether new or in existence,
capable of receiving the investment in question within
the group, the undertaking would be compelled to carry
out its project in the sole plant available, even in the
absence of aid. Therefore, no regional aid may be
is not geographically
authorised for a project
mobile.

that

(57)

(58)

(59)

The Commission has, with the help of its external auto-
motive expert, assessed the documentation and informa-
tion provided by Portugal with a view to establishing
whether the project is mobile.

Internal GM documents indicate that in April and May
1997 the possible closure of the Azambuja plant in
2001 (end of life of the old Combo model) was consid-
ered by GM's top management. Capacity for the planned
55 000 new Combo models per year could have been
made available at
(built between
October 1996 and August 1998) by adapting the
existing facilities and introducing a third shift.

the Gliwice plant

In June 1997 the GM group considered the option of
not closing the Azambuja plant and investing in a new
paintshop and the production of the new Combo model
as from 2001. Internal GM documents indicate that State
aid was deemed crucial in securing the investment for
Azambuja. Negotiations with the Portuguese authorities
on the new investment project started in the summer of
1997.

(61)

(62)

(63)

The paintshop investment started in August 1998, while
the offer of support from the Portuguese authorities was
finalised in October 1999/February 2000, the contract
being signed in June 2000.

the above information,

In view of
the Commission
concludes that Gliwice was effectively considered as a
viable alternative to Azambuja for the project under
consideration.

Regional aid intended for modernisation and rationalisa-
tion, which are generally not mobile, is not authorised
in the motor vehicle sector. However, an expansion or
transformation involving a radical change in production
structures on the existing site could be eligible for
regional aid.

(64) During the on-site visit to the Azambuja plant on 26
November 2001, the Commission, aided by its external
automotive expert, was able to verify that the investment
project in question involved a radical renovation of an
existing plant, together with the complete renewal of a
model. The paintshop is completely new, and the level
of change in the bodywork and assembly lines is signifi-
cantly higher than what is common for normal retooling
for a new model. For example, production is now much
more automated than with the old model, involving a
fourfold increase in the number of robots employed. As
a consequence,
the
the Commission considers
project
in question is a transformation within the
meaning of the motor vehicle framework.

that

(65) Accordingly, the Commission concludes that the project
is mobile in character and can therefore be considered
eligible for regional aid since the aid is necessary to
attract the investment to the assisted region.

(66)

Regarding eligible costs, the Commission notes that they
amount to EUR 108 701 829 at 1998 prices, with a
discount rate of 6,42 %, as communicated by the Portu-
guese authorities.

(60) GM approved the plan for a new paintshop in Azambuja
it was clear that the
in October 1997. At that stage,
project would receive public support from the Portu-

(67) According to point 3(2)(c) of the motor vehicle frame-
work, the Commission needs to satisfy itself that the
planned aid is in proportion to the regional problems it
is intended to resolve. For that, a CBA is used.

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1.3.2003

(68) A CBA compares, with regard to the mobile elements,
the costs which an investor would bear in order to carry
out the project in the region in question with those it
would bear for an identical project in a different loca-
tion, which makes it possible to determine the specific
assisted region concerned. The
handicaps of
Commission authorises regional aid within the limit of
the regional handicaps resulting from the investment in
the comparator plant.

the

(69)

(70)

(71)

In accordance with point 3(2)(c) of the motor vehicle
framework, the operational handicaps of Azambuja as
compared with Gliwice are assessed over three years in
the CBA since the project in question is an expansion
project, not a greenfield site. The period covered by the
CBA is 2001 to 2003, i.e. three years from the begin-
ning of production in compliance with point 3(3) of
Annex I to the motor vehicle framework.

The CBA provided by the Portuguese authorities in their
letter of 28 January 2002 indicates a net cost handicap
of EUR 40 449 401 for the location in Azambuja in
comparison with the location in Gliwice, with a resulting
‘handicap intensity’ of 37,21 %.

The Commission has, with the help of its external auto-
motive expert, evaluated the notified CBA with a view to
ascertaining to what extent the proposed regional aid is
in proportion to the regional problems it is intended to
resolve. Taking into account the additional information
received from Portugal
following the opening of the
procedure, the CBA was modified with respect to some
elements detailed below.

(72) As regards the additional

investment that would have
been necessary in the old paintshop in Azambuja, if the
project had been carried out in Gliwice, the Commission
considers that the figure of EUR 2 882 331,52 is accep-
table […](*).

(73)

The Commission cannot, however, accept the Portuguese
claim that only half of this figure should be taken into
account in the CBA because 50 % of the investment
would have been financed through State aid. Indeed, it is
to include
the Commission's
possible subsidies in the calculation of
the regional
handicap for the purposes of the CBA. Therefore, the
Commission concludes that an additional investment of
EUR 2 882 331,52 should be taken into account in the
CBA as an additional cost
in the alternative option
(Gliwice).

standard practice not

plant and was formerly owned by the car producer Ford
Lusitania. The consultant affirms that the estimation of
the residual value of the land reported in the study was
carried out as a theoretical exercise in order to demon-
strate that it would not have been profitable to demolish
the existing building and to divide the site into different
plots for subsequent development.

(75)

The consultant also affirms that, in his opinion, the esti-
mate best representing the market value of the land was
that in a second scenario presented in the study, refer-
ring to the sale of the land on the open market to a
buyer who would not use the existing installations. In
their letter of 24 May 2002, the Portuguese authorities
affirm that the estimates of the land revenues have been
based on this second scenario. In line with principles of
prudence, the Portuguese authorities have reduced by
30 % the values per square metre reported in the study
for the purposes of the CBA.

(76) Given the new information, the Commission considers
that the estimate of a net income of EUR 8 083 469 in
2002 for the sale of the land where the plant is located
is acceptable and that it has been calculated on the basis
of market criteria and in line with the necessary princi-
ples of prudence.

(77) Against this, the Commission cannot accept the estimate
of the value of the land in September 2001 that is
contained in a different study dated 18 April 2002. The
result of this study was clearly not available to Opel
in
Portugal when the decision to locate the project
Azambuja was taken. In its assessment, the Commission
must take into account as far as possible all the relevant
information available to Opel Portugal at the time of the
location decision. However,
that
affected the price of the land are not relevant for the
assessment of the case.

subsequent events

(78) As for the possible impact of environmental damage on
the land value, the Portuguese authorities assert that no
decontamination of the site would be necessary if the
land were sold. The plant possesses up-to-date systems
for ensuring the environmental protection of the land,
including since 1993 two stations for the treatment of
residual water. An independent report dated December
2001 and provided by the Portuguese authorities states
that the level of contamination of the area previously
used for stocking residuals is well below the ‘Dutch stan-
dards’. The Commission concludes, therefore, that the
costs of decontaminating the land in the event of its sale
would not be relevant.

(74) As regards the land where the Azambuja plant is located,
the Commission has assessed the additional information
provided by the Portuguese authorities after the opening
of the procedure. Among the new information, there is
an explanatory note from the consultant who carried
out the valuation of the site that is located next to the

(79)

The modifications included in the analysis produce cost-
benefit results that differ from those initially notified by
Portugal. The modified CBA indicates a net cost
handicap for Azambuja of EUR 37 567 069 at 1998

1.3.2003

EN

Official Journal of the European Union

L 55/73

(80)

(81)

(82)

prices (compared with the figure initially notified of
EUR 40 449 401). The resulting handicap ratio for the
project is 34,56 % (compared with the 37,21 % initially
notified).

Lastly, the Commission considered the question of a
‘top-up’, which is an increase in the allowable aid inten-
sity intended as a further incentive to the investor to
invest in the region in question. The documentation
provided shows that the capacity of GM Europe will
decrease in the period 1998 to 2003. The group is
undergoing a restructuring process (the Olympia plan)
involves capacity reduction at European level.
that
Consequently,
resulting
the ‘regional handicap ratio’
from the CBA is increased by two percentage points
(negligible impact on competition for an investment
project in an Article 87(3)(c) region), resulting in a final
ratio of 36,56 %.

passenger and commercial vehicle is compatible with the
common market within the meaning of Article 87 of
the
Treaty:

— as

the

regards

training aid, up to a maximum of
EUR 2 977 389, of which EUR 2 068 057 corresponds to
an aid intensity of 55 % of EUR 3 760 104 of eligible costs
for general training and EUR 909 332 to an aid intensity
of 30 % of EUR 3 031 108 of eligible costs for specific
training;

— as

for

the

the

aid,

regards

regional

amount of
EUR 35 297 017 gross grant equivalent at present values,
with a base year of 1998 and a discount rate of 6,42 %
(EUR 38 333 000 gross grant equivalent in nominal terms).
This amount corresponds to an aid intensity of 32,5 % of
the eligible investment of EUR 108 701 829 at present
values (EUR 124 299 613 in nominal terms).

VI. CONCLUSION

Article 2

The Commission considers that the training aid for the
project
in question is compatible with the common
market since it does not exceed EUR 2 977 389, of
which EUR 2 068 057 corresponds to an aid intensity
of 55 % of EUR 3 760 104 of eligible costs for general
training and EUR 909 332 corresponds to an aid inten-
sity of 30 % of EUR 3 031 108 of eligible costs for
specific training.

to Opel Portugal

It takes the view that the regional aid which Portugal
plans to grant
therefore fulfils the
criteria necessary for it to be considered compatible with
the common market under Article 87(3)(a) of the Treaty.
The aid intensity of the project (32,5 % gge) is less than
both the disadvantage identified by the cost-benefit/top-
up analysis (36,56 %) and the regional aid ceiling.

Any State aid in addition to that referred to in Article 1 that
Portugal plans to grant to Opel Portugal Comércio e Indústria
de Veículos for the project relating to the production of the
Opel Corsa Combo model shall be incompatible with the
common market.

Article 3

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

Article 4

(83) Any additional State aid for the investment project in
question is incompatible with the common market,

This Decision is addressed to the Portuguese Republic.

HAS ADOPTED THIS DECISION:

Article 1

The State aid which Portugal is planning to implement for Opel
Portugal Comércio e Indústria de Veículos in respect of the
the Corsa Combo
project

relating to the production of

Done at Brussels, 16 October 2002.

For the Commission

Mario MONTI

Member of the Commission