2004/165/EC: Commission Decision of 27 November 2002 on the aid scheme implemented by Germany: Thuringia consolidation programme (notified under document number C(2002) 4357) (Text with EEA relevance)
Date: 2002-11-27
Institutions: European Commission
Subjects: Germany, State aid, Thuringia, aid to undertakings, control of State aid, small and medium-sized enterprises

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II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 27 November 2002

on the aid scheme implemented by Germany: Thuringia consolidation programme

(notified under document number C(2002) 4357)

(Only the German text is authentic)

(Text with EEA relevance)

(2004/165/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

initiate the procedure laid down in Article 88(2) of the
EC Treaty in respect of the aid scheme.

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

(4)

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 Article 88(2) of the EC Treaty,

Whereas:

1. PROCEDURE

rules

governing

the Thuringia

consolidation
The
programme (hereinafter referred to as the rules) entered
into force on 20 July 1993 (1). The Thuringian
authorities took the view that the rules complied with
the
the
Community's 1992 guidelines on state aid for small and
medium-sized enterprises (2) (hereinafter referred to as
the SME guidelines) and so did not notify them under
Article 88(3) of the EC Treaty.

de minimis

introduced

provisions

in

The Commission decision to initiate the procedure was
published in the Official
the European
Communities (3). The Commission called on interested
parties to submit their comments on the scheme but did
not receive any comments from interested parties.

Journal

of

By letter dated 2 March 1999, Germany requested an
extension of the deadline for submitting its comments,
which the Commission granted by letter dated 11 March
1999. Germany's comments were sent by letters dated
29 March, 19 August and 26 August 1999.

(5)

Germany submitted its final comments by letter of 26
November 2001.

2. DESCRIPTION OF THE MEASURE

2.1. Title and legal basis

On 16 January 1996 the rules were replaced by the
Thuringia loan programme for small and medium-sized
enterprises.

(6)

By letter dated 26 January 1999 (ref. SG(99) D/580), the
Commission informed Germany that it had decided to

The aid is granted by the public-sector Thüringer
Aufbaubank (Thuringia Reconstruction Bank), acting on
behalf of the Thuringia Ministry for Economic Affairs
and Transport on the basis of Sections 23, 44 and 44a
of the Land Budget Order, in accordance with the rules
on the Thuringia consolidation programme.

(1) Thüringer Staatsanzeiger No 33/1993, p. 1414.
(2) OJ C 213, 19.8.1992, p. 2.

(3) OJ C 108, 17.4.1999, p. 26.

(1)

(2)

(3)

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2.2. Recipients

with a grace period of two or three years. The relevant
minister can approve exceptions to these conditions.

(7)

(8)

(9)

(10)

(11)

set out

The rules are directed at
small and medium-sized
enterprises (SMEs) defined according to the ‘turnover'
the ‘independence'
and ‘employees' criteria, but not
in the 1992 SME guidelines (4),
criterion,
including firms administered by the Treuhandanstalt.
the foodstuffs industry is
The eligibility for aid of
the rules
expressly provided for under point 3 of
(steel,
(Recipients);
industry,
the motor
fibres,
shipbuilding,
agriculture,
industry)
fisheries, transport and the coal
are not excluded. In exceptional cases (by decision of
the relevant minister), aid may also be granted to firms
which exceed the turnover and employee thresholds laid
down in the SME guidelines.

the
synthetic

sensitive

sectors

other

2.3. Duration

The rules on the Thuringia consolidation programme
entered into force on 20 July 1993 for an unlimited
period and were replaced on 16 January 1996 by the
Thuringia loan programme for small and medium-sized
enterprises.

2.4. Objective

The aid is granted by the Thüringer Aufbaubank in the
form of soft loans, which are paid to the recipient firm
via its main bank at the latter's primary risk. The main
bank may receive a guarantee of up to 60 % of the
amount of the loan (the rules do not provide for a fee).
The Thüringer Aufbaubank and the main bank may
charge a processing fee of 0,1 % of the amount of the
loan.

The rules are directed at
firms with liquidity and
profitability problems and are designed to allow the
rescheduling of short-term indebtedness at subsidised
rates. Rescheduling at
the Thüringer
Aufbaubank is ruled out.

the expense of

Loans are granted on condition that the firm submit a
viable overall consolidation plan which, taking account
of the rescheduling loan, makes it likely that profitability
can be restored on a long-term basis. The plan must
and
indicate
existing liquidity and profitability problems,
together
with the contributions which the recipient and its main
bank will make.

consolidation requirements

firm's

the

(12)

The loans are granted for between three and twelve
years at an interest rate of between 5 % and 8 % and

(4) OJ C 213, 19.8.1992, p. 2.

2.5. Intensity

(13)

Point 5 of the rules (Nature, scope and amount of the
payment) refers expressly to the aid's de minimis nature.

advantage

from the

interest-rate

(14) According to the wording of the rules, the amount of
is
aid resulting
calculated on the basis of the difference between the
effective interest rate and an accepted reference rate. No
account is taken of the aid element resulting from the
the recipient
the special-risk status of
guarantee or
firms. There is no direct limit on the amount of the
loan; however, the amount of aid granted to the firm
(i.e. the aid element resulting from the soft loan only)
may not exceed the de minimis threshold laid down in
the SME guidelines.

(15) According

a

to

letter

dated
7 December 1998, a total of 741 loans amounting to
DEM 312,4 million were granted from 1993 to 1996;
some 80 of these loans went to the foodstuffs industry.

from Germany

2.6. Cumulation

(16)

Public financial aid already granted to a firm must be
declared when it applies for a loan.

2.7. Grounds for initiating the procedure

(17)

(18)

(19)

The procedure was initiated on the grounds that the
rules were also directed at firms in difficulty and,
in
applying the de minimis provisions, did not take account
of the aid intensity resulting from the guarantee or the
special difficulties of recipient firms. In as much as the
rules were aimed at firms in difficulty and the de minimis
amounts were exceeded, the Commission took the view
that
should be
applied.

the relevant Community guidelines

Furthermore, sensitive sectors were not excluded from
the rules, even though the de minimis provisions do not
apply to such sectors, for which special provisions exist.

For all these reasons, the rules and the cases in which
they were applied where the de minimis threshold or the
de minimis scope were exceeded constituted state aid

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within the meaning of Article 87(1) of the EC Treaty
(formerly Article 92(1))
that had been granted or
implemented unlawfully.

(25)

the

concerned with
In as much as
restructuring firms
the Commission's
in difficulty,
practice to date has been to require the following main
conditions for compatibility:

rules were

(20) As is clear from the objectives and wording of the rules,
the scheme was devised for firms in difficulty. Germany
contested this interpretation, arguing that
the loans
were granted by the main banks at their primary risk
and that — after deduction of the 60 % guarantee —
the banks' risk would in any event be 40 %. According
to Germany, this residual risk could not be covered by
any other guarantee. It argued that a bank would not
normally be prepared to grant a loan to a firm in
difficulty without
and bank
security.

guarantees

sufficient

(a) submission and implementation of a restructuring
plan capable of restoring the long-term viability of
the firm;

(b)

limitation of the aid to the strict minimum required;

(c) a significant contribution from the recipient

firm

and its shareholders;

(d) compliance with the special rules governing the
the

principle

requiring
sectors,
sensitive
notification of individual cases;

in

(21)

This argument cannot be considered sound,
following reasons:

for the

(e)

individual notification of aid to large firms;

(a)

firms in difficulty are not excluded from the scheme.
case
circumstances
In identical
(Thuringia loan programme for SMEs),
firms in
difficulty were found to have received aid;

similar

in a

(b) the scheme allows rescheduling of the liabilities of
firms in difficulty towards their main bank or other
financial institutions. In the Commission's view, this
rescheduling of the liabilities of firms in difficulty
under the rules had,
in some cases, considerably
reduced the risks to which the banks had originally
been exposed.

(f)

restructuring aid to be granted only once in so far
as there are no unforeseen circumstances for which
the company is not responsible.

(26)

The rules did not require individual notification of aid
for large firms, did not prohibit repeated restructuring
aid, did not include special rules for sensitive sectors
and did not
to the minimum
the aid amount
limit
necessary to achieve the objective.

(27) As

the granting of
restructuring aid was
far as
concerned,
the Commission accordingly had doubts
about the compatibility of the rules with the common
market.

(22)

The Commission therefore took the view that the rules
were directed at
firms in difficulty and had to be
assessed on the bases of the applicable provisions.

3. COMMENTS FROM GERMANY

(23) As

firms

the rescue of

in difficulty (this
regards
possibility is not
formally excluded from the rules,
though it seems rather unlikely in reality), established
practice has been to make
it a precondition of
compatibility with the common market that rescue aid
be granted either in the form of public loans on market
terms or
in the form of a state guarantee on a
private-sector loan. This condition was not met in the
case in point since the loans in question were soft loans.

(28)

Contrary to what was indicated in the decision initiating
proceedings, Germany put the number of consolidation
loans granted in the period from 1993 to 1995 at 485,
amounting to a total of EUR 112,2 million. The figure
of 741 mentioned in the decision initiating proceedings
included, according to Germany, a further 248 loans
granted in 1996 under the Thuringia loan programme
for SMEs. This programme is the subject of proceedings
in case C 87/98 (ex NN 137/98).

(24)

In as much as it was possible for rescue aid to be
granted, the Commission accordingly had doubts about
the compatibility of the rules with the common market.

(29) Germany agreed with the Commission that

the aid
intensity had been calculated only on the basis of the
aid element contained in the soft loan. The reason for
it said, was that from 1993 to early 1996 the
this,
German authorities did not know that the aid element

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associated with the guarantee should have been taken
into account in the case of firms in difficulty.

7 December 1998, some 80 loans were made to firms
in the foodstuffs industry.
is not clear from the
documents provided by Germany what criteria were
used to define the sensitive sector of agriculture or firms
in difficulty.

It

(30)

loans under

and marketing of

consolidation programme

In so far as consolidation loans were granted in sensitive
sectors, Germany considered the
the
Thuringia
to have been
granted in accordance with the Community SME
guidelines in force at the time. In Germany's view, the
special aid rules contained in the 1996 Community
guidelines for state aid in connection with investments
in the processing
agricultural
products (5) were applicable only as from 1998. They
had
to
Commission Decision 1999/183/EC of 20 May 1998
concerning state aid for the processing and marketing of
German agricultural products which might be granted
on the basis of existing regional aid schemes (6), with
the consequence that no special rules applied to the
food and tobacco industry between 1993 and 1995 and
this sensitive sector did not have to be taken into
consideration in the granting of loans.

applicable

pursuant

become

1998

in

(31) Germany contested the Commission's view that

the liabilities of

the
reduced by the
main bank's own risk could be
rescheduling of
firms in difficulty.
Instead, the 40 % co-liability on the part of the main
bank constituted a genuine risk on its part. If such a
loan were transferred to another, private bank at the
main bank's primary risk, a rescheduling of the main
bank's existing loan commitments by the Thüringer
Aufbaubank was possible only without
the latter's
co-liability. The possibility of rescheduling the existing
the firm's main bank with
loan commitments of
co-liability on the part of the Thüringer Aufbaubank
was ruled out.

(32) Germany does acknowledge in its comments that the
Thuringia consolidation programme was directed at
both viable firms and firms in difficulty. However,
provided that the aid intensity of a loan, taking account
remained below the
of any other de minimis aid,
to be
rules
considered the
ceiling,
de minimis
compatible with the de minimis provisions.

it

(33) Germany provided the Commission in its letters of
26 August 1999 and 26 November 2001 with lists of
all consolidation loans granted from 1993 to 1995.
These individual lists show that three loans were granted
to firms in difficulty in 1994, and nine in 1995. They
also show that only two loans were granted in 1994,
and two in 1995, to firms in the sensitive sector of
agriculture, although, according to Germany's letter of

4. ASSESSMENT OF THE MEASURE

4.1. Existence of state aid

(34) Although any financial payment to a firm alters the
conditions of competition to some extent, not all aid
has a perceptible impact on trade and competition
between Member States. Against this background, the
notification requirement under Article 88(3) of the EC
Treaty does not apply to aid that does not exceed an
absolute maximum amount and, as de minimis aid, does
not fall within the scope of Article 87(1) of the EC
Treaty.

(35) A definition of what the Commission understood by
de minimis aid was first set out
in the 1992 SME
guidelines (7). The scope of the de minimis provisions is
defined at point 3.2 of the guidelines as payments of
EUR 50 000 to any one firm in respect of a given broad
type of expenditure (e.g. investment and training) over a
three-year period. Therefore, one-off payments of aid of
up to EUR 50 000 in respect of a given type of
expenditure and schemes under which the amount of
aid that a given firm may receive in respect of a given
type of expenditure over a three-year period was limited
to that
figure were no longer considered notifiable
under Article 88(3) (formerly Article 93(3)) of the EC
Treaty. However, there had to be an express condition in
the grant decision or scheme that any further aid which
the same firm might receive in respect of the same type
of expenditure from other
sources or under other
schemes did not take the total aid received over the
EUR 50 000 limit. It was made clear in point 3.2 that
the de minimis facility was not available in sensitive
sectors (steel, shipbuilding, synthetic fibres, the motor
fisheries, transport and the coal
industry, agriculture,
industry).

(36)

The 1996 Commission notice on the de minimis rule for
state aid (8) amended the de minimis provisions of the

(5) OJ C 29, 2.2.1996, p. 4.
(6) OJ L 60, 9.3.1999, p. 61.

(7) See footnote 2.
(8) OJ C 68, 6.3.1996, p. 9.

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rule was

1992 SME guidelines. The ceiling for aid covered by the
set at EUR 100 000 over a
de minimis
three-year period beginning when the first de minimis
aid was granted. This ceiling applied to all types of
public assistance considered to be de minimis aid and did
not affect the possibility of the recipient obtaining other
aid under schemes approved by the Commission.

(37)

The provision did not apply to the industries covered by
the ECSC Treaty, to shipbuilding, to transport or to aid
towards expenditure in connection with agriculture or
fisheries.

the de minimis rule, albeit still

(38) Article 1 of Commission Regulation (EC) No 69/2001
of 12 January 2001 on the application of Articles 87
and 88 of the EC Treaty to de minimis aid (9) extended
the scope of
to the
exclusion of aid granted to the transport sector and to
linked to the production, processing or
activities
marketing of products listed in Annex I
to the EC
Treaty. Similarly, the Regulation does not apply to aid
for export-related activities, i.e. aid directly linked to the
quantities exported, to the establishment and operation
of
current
expenditure linked to an export activity. Lastly, aid
contingent upon the use of domestic over imported
goods is also excluded from the scope of the Regulation.

distribution network or

to other

a

(39) Article 2 of

the Regulation stipulates that

the total
de minimis aid granted to any one enterprise must not
exceed EUR 100 000 over any period of three years.
This ceiling applies irrespective of the form of the aid or
the objective pursued.

(40)

July

applied

from 20

1993
the question arises whether

Since Regulation (EC) No 69/2001 entered into force
only on 2 February 2001, whereas the rules under
to
examination
16 January 1996,
the
this Decision, can
Commission,
apply the Regulation retroactively to financial assistance
paid before it entered into force or whether
the
de minimis rule in the 1992 SME guidelines in force in
the relevant period should be taken into account
(consecutio legis).

for the purposes of

to

all

thus

apply

subject

to the

immediately

granted before its entry into force. However, its wording
its application to previous cases,
does not rule out
which in any event
control
are
mechanism under Article 3. The Commission has
reached the conclusion that, given the absence of any
other express provision, Regulation (EC) No 69/2001
should apply to de minimis aid granted before its entry
into force. For one thing, the Regulation, in so far as it
exempts a particular category of measure from the
notification requirement, is a procedural regulation and
pending
should
proceedings. For another, the immediate application of
the Regulation is in line with the underlying objectives
of procedural simplification and decentralisation. Only
in respect of aid not caught by the Regulation and thus
not eligible for exemption on this basis will
the
Commission take account of the provisions that were in
force when the aid was granted. Since the Regulation is,
in principle, more generous
de minimis
predecessors and since the latter apply in any event to
cases where the aid concerned is not exempt under the
Regulation,
legitimate
expectation and legal certainty are suitably accounted
for. From an economic standpoint,
the Commission
takes the view that a financial measure which cannot be
classed as aid within the meaning of Article 87(1) of the
EC Treaty under Regulation (EC) No 69/2001, in force
today in an integrated market, cannot in the past have
given rise to any aid in a less integrated market. It will
the financial
therefore base its further assessment of
measures on Regulation (EC) No 69/2001, which does
not rule out the possibility of the provisions in force at
the time the measures were implemented being applied,
provided that the measures concerned are not exempt
under Regulation (EC) No 69/2001.

legal principles of

the general

than its

(42)

The proceedings initiated thus cover both the rules at
issue and the cases of application which do not fall
within the scope of Regulation (EC) No 69/2001 or the
other relevant de minimis provisions and the cases which
do fall within the scope of the Regulation or of the
other
in which
cumulation with other aid has led to the de minimis
ceiling being exceeded.

relevant de minimis provisions but

(41)

Commission Regulation (EC) No 69/2001 does not
indicate whether it is applicable to the assessment of aid

(9) OJ L 10, 13.1.2001, p. 30.

(43) Aid for the transport sector and for all activities relating
to the manufacture, processing or marketing of
the
goods listed in Annex I to the EC Treaty are excluded
from the scope of Regulation (EC) No 69/2001 and of
the previous de minimis provisions.

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(44)

The Commission therefore takes the view that all the
consolidation loans granted to the foodstuffs industry
fall outside the scope of Regulation (EC) No 69/2001 or
of the other de minimis provisions in so far as they were
granted for
the goods listed in
Annex I to the EC Treaty and must thus be classed in
the sensitive agricultural sector.

the manufacture of

(45) Germany's argument that the special aid rules contained
in the 1996 Community guidelines for state aid in
connection with investments in the processing and
marketing of agricultural products were applicable only
as from 1998 is immaterial here since the special rules
did not affect the scope of the de minimis provisions (10).

(46)

(47)

(48)

the

residual

In the Commission's view,
scope of
Regulation (EC) No 69/2001 or the relevant previous
de minimis provisions might be exceeded because failure
to take account of the aid element contained in the
guarantee might mean that,
in granting consolidation
loans, the ceilings laid down in the Regulation and the
de minimis provisions might be exceeded. The rules do
not offer any assurance that the de minimis ceiling of
EUR 100 000 over a period of three years laid down in
Article 2(2) of Regulation (EC) No 69/2001 or the
previously applicable ceiling was complied with in every
instance. There is in particular no guarantee that it was
complied with where the rules were applied to firms in
difficulty, involving as they do a high risk of default.

In the Commission's view, the beneficiaries under the
in
rules were exclusively or at
difficulty.

largely firms

least

For
the purpose of differentiating between firms in
difficulty and other firms, the Commission included an
explanation of what is meant by a firm in difficulty in
point 2.1 of the 1994 Community guidelines on State
aid for rescuing and restructuring firms in difficulty (11)
(hereinafter referred to as the 1994 guidelines). This
definition
the Commission's
decision-making practice in the preceding years, as

confirmed

essentially

of

the

Journal

(10) These guidelines entered into force on their publication in the
European Communities. By Decision
Official
1999/183/EC, the Commission found that national aid schemes in
Germany were incompatible with the common market within the
meaning of Article 87(1) of the EC Treaty in so far as they did not
comply with the guidelines and appropriate measures for State aid
(in connection with investments in the processing and marketing
of agricultural products) which were communicated to Germany
by letter SG(95) D/13086 of 20 October 1995.

(11) OJ C 368, 23.12.1994, p. 12.

described in its Eighth Report on Competition Policy
published in 1979 (recitals 227 to 229) (12).

(49)

The definition of a firm in difficulty which the
Commission will use here
is given in the 1994
guidelines as a firm which is ‘unable to recover through
its own resources or by raising the funds it needs from
shareholders or borrowing. […] The typical symptoms
are deteriorating profitability or
increasing size of
losses, diminishing turnover, growing inventories, excess
increasing debt, rising
capacity, declining cash flow,
interest charges and low net asset value. In acute cases
the company may already have become insolvent or
gone into liquidation.'

(50) According to the wording of point 1 of

the rules
(Objective of the aid), they are intended for firms which
are experiencing liquidity and profitability problems as a
result of
financial and earnings
position. The Commission interprets this to mean that
such firms can in any event include those in need of
recovery which meet the definition of firms in difficulty.

their often difficult

(51) Germany argues that, in the event of a guarantee being
called in, the main bank's own liability was 40 % and
that there was no possibility of this risk on the part of
the main bank being covered by the liability of another
public source. The main bank's own risk represented an
appropriate incentive for the lender to carry out proper
checks concerning the borrower's creditworthiness so as
to reduce the risk of default.

(52)

This argument is not convincing as evidence that the
consolidation programme was not applied to firms in
difficulty. According to their wording,
the specific
purpose of the rules was to grant consolidation loans
in financial difficulties.
and guarantees
Although the likelihood of the recipient actually being a
firm in difficulty was reduced by the risk which the

to firms

(12) As

regards non-notified aid, paragraph 101(b) of

the 1999
Community guidelines on state aid for rescuing and restructuring
firms in difficulty (Notice to Member States including proposals for
appropriate measures; OJ C 288, 9.10.1999, p. 2) lays down that
the Commission will examine for
its compatibility with the
common market any rescue or restructuring aid granted without
its authorisation and therefore in breach of Article 88(3) of the EC
Treaty on the basis of the guidelines in force at the time the aid
was granted. The Commission accordingly assessed the rules on
the basis of the decision-making practice set out in its Eighth
Report on Competition Policy (published in 1979) and on the
basis of the 1994 guidelines.

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main bank still ran, the granting of aid to firms in
difficulty was by no means ruled out by the wording of
the rules.

Commission, in order to allow it to give its opinion on
the matter.

(53)

the

the

rules

since

granting of

The Commission also takes the view that it could be
in particular in the
advantageous for the main bank,
to participate in granting
firms in difficulty,
case of
loans under
a
consolidation loan improved the overall liquidity of the
recipient firm and reduced the risk of default on loans
previously granted by the main bank.
It may in fact
make economic sense for a bank to reduce a high risk
of default in respect of existing loans by ensuring that
its
new funds are made available to the firm for
restructuring. This
the
associated risk is partly assumed by the State.

is particularly true where

(54) After all, the individual

lists sent by Germany of aid
granted or disbursed under the rules show that firms in
difficulty were assisted. Germany also acknowledged in
its
consolidation
programme was directed at both viable firms and firms
in difficulty.

comments

Thuringia

that

the

(55)

The aid element of
the guarantee should have been
taken into account in the calculation of the loans' aid
intensity, especially bearing in mind the risk of default
in the case of firms in difficulty.

(58) Under the Commission notice on the application of
Articles 87 and 88 of the EC Treaty to State aid in the
form of guarantees (14), the cash grant equivalent of a
loan guarantee in a given year can be:

(a) calculated in the same way as the grant equivalent
of a soft loan, the interest subsidy representing the
difference between the market rate and the rate
obtained thanks to the State guarantee after any
premiums paid have been deducted, or

(b) taken to be the difference between the outstanding
sum guaranteed, multiplied by the risk factor (the
probability of default) and any premium paid,
i.e.
(guaranteed sum × risk) – premium; or

(c) calculated by any other objectively justifiable and

generally accepted method.

(59)

This confirmed the Commission's long-held view that, if
at the time of the loan decision the probability of the
borrower being unable to pay is evidently very high, the
intensity of
to the sum
the aid can be equivalent
actually secured by the guarantee.

(60)

Furthermore, the aid element of the guarantee can, even
in the case of viable firms, result in the de minimis
ceiling being exceeded.

(56)

(57)

This assessment
is not affected either by Germany's
statement in its comments that the German authorities,
between 1993 and early 1996, did not know that the
aid element associated with the guarantee and the
loans to
particular risks involved in the granting of
firms in difficulty should have been taken into account
in calculating the aid intensity.

(61)

the

rules

In the Commission's
and their
view,
application involve aid within the meaning of Article
87(1) of the EC Treaty in so far as they do not fall
within the scope of Regulation (EC) No 69/2001 or do
fall within the scope of the Regulation but exceed the
de minimis ceiling. The same applies in respect of the
other de minimis provisions in force at the time the
measures were implemented.

The Commission cannot accept
this argument since
back in 1989 it sent a letter to Member States pointing
out that, in its view, all guarantees given by the State
fell within the scope of Article 87(1) of
the EC
Treaty (13). The German authorities should, in granting
guarantees to firms facing liquidity difficulties, at least
have had doubts as to whether the measures involved
aid and they should have notified the measures
to the
contained in the

in good time

scheme

in view of

(62) Where applied to firms in difficulty, the rules allowed
recipient firms to receive from a private bank financial
resources which,
their financial situation,
they would not otherwise have received from private
credit
the loan terms
normally applied by the latter. These financial resources
made it possible for recipient
firms to avoid being
forced out of the market. If the firm had been forced
out of the market, either existing overcapacities would

institutions on the basis of

(13) Commission letter to Member States SG(89) D/4328 of 5 April

1989.

(14) OJ C 71, 11.3.2000, p. 15.

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have been reduced or the market shares made available
would have been acquired by competitors, which could
in either case have improved their profitability. The
consolidation loans do not preclude loans being granted
to firms which produce goods or provide services that
may be the subject of intra-Community trade. It must
therefore be
financial measures
concerned by the proceedings are liable to affect trade
between Member States.

assumed that

the

(63)

Even viable firms would not have obtained such finance
from private banks on the terms offered and were
therefore able to improve their market position vis-à-vis
competitors within the common market as a result of
the working capital
loans provided. This applies in
particular to viable firms operating in sensitive sectors.
Community markets in sensitive sectors are faced with
overcapacity. The financial advantage conferred on the
specific firms by the consolidation loans led to their
position being strengthened vis-à-vis other competitors,
with the result that trade between Member States could
be affected.

(64)

The rules thus might have distorted or threatened to
distort competition.

(65)

The Commission accordingly concludes that the rules
and their application constitute state aid within the
meaning of Article 87(1) of the EC Treaty for firms
involved in intra-Community trade.

(66) On the basis of the arguments presented by Germany,
the Commission takes the view that the private bank, as
a
the
consolidation loan in a manner which distorts
competition.

lender, did not profit

from the grant of

(67)

In the Commission notice on the application of Articles
87 and 88 of the EC Treaty to state aid in the form of
if a State
the Commission assumes that,
guarantees,
guarantee is given ex post in respect of a loan or other
financial obligation already entered into without
the
terms of this loan or financial obligation being adjusted
or if one guaranteed loan is used to pay back another,
non-guaranteed loan to the same credit institution, then
there may also be aid to the lender,
in so far as the
security of the loans is increased.

(68) Although, according to the wording of point 1 of the
rules, the firms' existing liquidity problems are to be
resolved by means of a rescheduling of short-term
loan, Germany
indebtedness on the basis of a soft

existing

loan commitments by

indicated in its comments that a rescheduling of the
main bank's
the
Thüringer Aufbaubank was possible only without the
latter's co-liability. This means that no guarantee could
be given ex post by the Thüringer Aufbaubank in respect
of a loan or other financial obligation already entered
into nor could one guaranteed loan be used to pay back
another, non-guaranteed loan to the
credit
institution.

same

(69)

Since the main bank's existing loan commitments could
not be rescheduled with co-liability on the part of the
to
Thüringer Aufbaubank,
contain any element of aid to the lender. The mere fact
that stabilisation of a firm in difficulty benefits all
its
creditors is an accepted consequence of aid and does
not in itself represent aid within the meaning of Article
87(1) of the EC Treaty to those creditors.

the rules do not appear

4.2. Lawfulness of the aid

(70)

The Commission regrets
in granting the aid,
Germany acted in breach of Article 88(3) of the EC
Treaty.

that,

4.3. Compatibility of the aid with the common
market in so far as the scope of application of
Regulation (EC) No 69/2001 or of the other relevant
de minimis provisions was exceeded

(71)

The Commission assessed the rules on the assumption
that they were directed both at viable firms and at firms
in difficulty.

(72)

In as much as aid was granted to firms in difficulty, it
constituted restructuring or rescue aid as defined in the
Commission's Eighth Report on Competition Policy
published in 1979 and in the 1994 guidelines (15),
confirmed by the guidelines adopted in 1999 (16).

that

in agriculture,

(15) Under point 2.2 of the 1994 guidelines, they applied only to the
extent
they were consistent with the special rules in the
sensitive sectors. At the time in question, there were special aid
textiles and
rules
clothing, synthetic fibres, the motor industry, transport and the
coal industry. In the agricultural sector, as an alternative to these
guidelines, special Commission rules for rescue and restructuring
aid could still be applied to individual recipients at the discretion
of the Member State concerned.
(16) See point 101 of the guidelines.

shipbuilding,

fisheries,

steel,

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(73)

it
In so far as the aid was granted to viable firms,
constituted operating aid within the meaning of
the
Commission communication of 1979 on regional aid
systems (17) and of the Commission communication of
1988 on the method for the application of Article
These
92(3)(a)
communications were confirmed by the 1998 guidelines
on national regional aid (19).

aid (18).

regional

and

(c)

to

requirements and existing liquidity and profitability
problems,
together with the contributions which the
recipient and its main bank would make. To the extent
that the plan satisfied these conditions, the rules met the
first two criteria listed above.

(74)

The compatibility of the rules will be examined in the
light of the relevant provisions applicable (20).

(77)

The wording of the rules does not prohibit the repeated
grant of restructuring aid or limit the amount of aid to
the strict minimum required to achieve the objective;
Germany did not indicate whether these criteria were
taken into account in the granting of aid.

(75)

In so far as the restructuring of firms in difficulty is
involved, it should be noted that, in accordance with the
Commission's practice and the 1994 guidelines,
the
following criteria had to be met as a precondition for
compatibility of the aid with the common market:

(78)

The rules did not provide for individual notification of
aid for large firms or
require compliance with the
special rules for sensitive sectors.

(a) submission and implementation of a restructuring
plan capable of restoring the long-term viability of
the firm;

(79)

The Commission therefore finds that, to the extent that
the rules provide for
restructuring aid to firms in
difficulty, such aid is not compatible with the common
market.

(b) a significant contribution from the recipient

firm

and its shareholders;

(c)

limitation of the aid to the strict minimum required;

(d) compliance with the special rules governing the
the

principle

sensitive
requiring
sectors,
notification of individual cases;

in

(e)

individual notification of aid to large firms;

(f)

restructuring aid to be granted only once in so far
as there are no unforeseen circumstances for which
the company is not responsible.

(76) Under the rules, aid was granted on condition that the
firm submit a viable overall consolidation plan which,
taking account of the rescheduling loan, made it likely
that profitability could be restored on a long-term basis.
The plan had to indicate the firm's consolidation

(17) OJ C 31, 3.2.1979, p. 9.
(18) OJ C 212, 12.8.1988, p. 2.
(19) OJ C 74, 10.3.1998, p. 9.
(20) OJ C 119, 22.5.2002, p. 22.

(For the definitions applied,

the
Commission refers to the provisions specified. It examined the aid
to viable firms in the light of its 1988 communication on the
method for the application of Article 92(3)(a) and (c) to regional
the 1998
aid.
guidelines on national regional aid.)

Its assessment is not affected by application of

(80)

In so far as the rescue of firms in difficulty is involved,
the established policy in this
it must be noted that
respect was to make it a precondition of compatibility
with the common market that rescue aid be granted
either in the form of public loans on market terms or in
the form of a State guarantee on a private-sector loan.
This condition was not met in the case in point, since
the loans in question were soft loans.

(81)

To the extent that the provision of rescue aid under the
rules is involved,
this aid is incompatible with the
common market.

(82)

In as much as loans were granted to economically viable
firms, they constituted operating aid, which had to be
the
light of
assessed by the Commission in the
provisions on regional aid that applied to the rules.

(83)

Thuringia is an assisted area under Article 87(3)(a)
(formerly Article 92(3)(a)) of
the EC Treaty. The
Commission communications on regional aid of 1979
and 1988 (21) allowed the Commission exceptionally to
approve certain types of operating aid in assisted areas
in view of the particular difficulties they faced, on the
following conditions:

(21) See footnotes 16 and 17.

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(a)

the aid had to be limited in time and designed to
overcome the structural handicaps of firms located
in Article 92(3)(a) regions;

(b)

such that

it had to contribute to durable and balanced
economic development and not give rise to sectoral
overcapacity at Community level
the
resulting Community sectoral problem was more
serious than the original regional problem; in this
context a sectoral approach was required whereby
the Community rules and guidelines applicable to
shipbuilding,
certain sectors of
and
fibres,
synthetic
involved in
agriculture, and to industrial
be
processing
to
observed; under
and
rules
guidelines, operating aid could not be granted in the
sectors concerned;

industry (steel,
textiles

firms
products were

these Community

agricultural

clothing)

and

(c)

the aid had to be granted in accordance with the
rules on aid to firms in difficulty;

(d)

in the course of

the
in addition,
Commission developed a practice of requiring aid to
be degressive.

the 1990s,

(84) According to the wording of the rules, they were not
limited in time. On 16 January 1996 the rules were
replaced by the 1996 Thuringia loan programme, which
in turn came to an end on 1 June 1999 (22). The
Commission concludes that the duration of the rules at
issue
to an end on
31 May 1999.

in these proceedings

came

(85)

The objective of the rules was to make it easier for
already privatised firms or firms operating for the first
time under the new conditions of the market economy
in a region which seriously lags behind in development
terms to participate fully in the single market. However,
the Commission's practice required that aid should
contribute to balanced economic development and not
give rise to sectoral overcapacity. Sensitive sectors were
thus excluded from receiving operating aid.

because, at the time they were applicable, this practice
the Commission had not been fully
on the part of
developed and because,
in eastern
Germany
following German
early
in
unification, the Commission did not insist on aid being
the uncertain development
degressive because of
situation.

in many cases

years

the

(87)

In so far as the rules enabled aid to be granted to viable
firms in non-sensitive sectors,
the operating aid was
consistent with the Commission' practice at the time
and is therefore compatible with the common market.

(88) However, the rules are incompatible with the common
market in so far as aid to viable firms in the sensitive
sectors is involved, since the Community rules and
guidelines applicable to sensitive sectors prohibit
the
granting of operating aid to viable firms.

(89)

(90)

(91)

The Commission takes the view that the exemptions
under Article 87(2) of the EC Treaty do not apply in
this case as the rules do not pursue any of the aims
listed there. Nor did Germany claim that
those
exemptions applied (23).

for

aid

that,

apart

assessing

from the
The Commission concludes
and
for
guidelines
restructuring firms in difficulty, no special provisions
concerning aid with horizontal objectives pursuant to
Article 87(3)(c) of the EC Treaty are applicable to the
rules since they do not pursue one of
the special
objectives and Germany has not argued that this is the
case.

rescuing

In the Commission's view,
the aid is equally not
intended to promote an important project of common
European interest or to remedy a serious disturbance in
the economy of a Member State. Nor does it promote
conservation. The Commission
culture or heritage
therefore concludes that neither Article 87(3)(b) nor
Article 87(3)(d) of the EC Treaty applies to the rules.

(86)

The rules do not provide for aid to be degressive.
the measures in
However,
question are incompatible with the common market

this does not mean that

(22) It was replaced by a new de minimis loan programme which
appears prima facie to comply with the de minimis provisions
applicable.

(92)

Some of the individual cases covered by the rules may
investigation
have been the subject of other formal

(23) As regards application of the exemption under Article 87(2)(c) of
the EC Treaty, the Commission refers to the Court of Justice ruling
of 19 September 2000 in Case C 156/98 Germany v Commission
the German
(not yet published) concerning Section 52(8) of
Income Tax Law.

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proceedings under Article 88(2) of the EC Treaty. This
decision does not apply to them.

HAS ADOPTED THIS DECISION:

5. CONCLUSION

The rules governing the Thuringia consolidation programme
(hereinafter referred to as the rules) establish state aid within
the meaning of Article 87(1) of the EC Treaty.

Article 1

(93)

(94)

The aid scheme is unlawful. Aid that exceeded the scope
of Regulation (EC) No 69/2001 or, where it was not
caught by the Regulation, exceeded the scope of the
other applicable de minimis provisions in force at the
time
granted
the
unlawfully.

implemented was

scheme was

The aid scheme is incompatible with the common
market,
in that it allows rescue aid to be granted at
subsidised interest rates outside its de minimis scope,
allows restructuring aid to be granted without restricting
it to the minimum necessary and without ruling out its
repetition, does not require notification of restructuring
aid to large firms in difficulty or of individual cases in
the sensitive sectors, and does not rule out aid to viable
firms in the sensitive sectors.

The rules do not establish state aid if the payments fall within
the scope of Regulation (EC) No 69/2001 or, where this is not
the case, within the scope of the de minimis provisions in force
at the time the rules were implemented and, in combination
with other de minimis aid, do not exceed the relevant de minimis
ceilings of Regulation (EC) No 69/2001 or the other relevant
de minimis provisions.

The rules do not establish aid within the meaning of Article
87(1) of the EC Treaty if the payments were for firms not
involved in producing goods or providing services
for
intra-Community trade.

To the extent that the rules are caught by Article 87(1), they
involve unlawful aid.

Article 2

(95) Accordingly, application of the rules beyond the scope
of Regulation (EC) No 69/2001 or of the other relevant
de minimis provisions to firms in difficulty and in
respect of operating aid to viable firms in the sensitive
sectors was incompatible with the common market.

In so far as the rules establish operating aid for viable firms
outside the sensitive sectors,
they are compatible with the
common market.

Article 3

(96)

The rules are compatible with the common market in so
far as they allow operating aid to viable firms outside
the sensitive sectors.

In so far as the rules establish operating aid for firms in the
sensitive sectors,
they are incompatible with the common
market where they fall within the scope of Article 87(1) of the
EC Treaty.

(97)

is

the Commission's

It
long-established practice to
require recovery from the aid recipient of aid which,
under Article 87 of the EC Treaty, has been unlawfully
granted and is incompatible, provided that the aid is not
covered by de minimis provisions. This practice was
confirmed by Article 14 of Council Regulation (EC)
No 659/1999 of 22 March 1999 laying down detailed
the EC
the application of Article 93 of
rules for
Treaty (24). Article 14 of
the Regulation requires
Member States to take all necessary measures to recover
the aid from the beneficiary. To clarify the number of
the Commission
cases where recovery is
considers that Germany should draw up a list of all
firms not covered by the scope of Regulation (EC)
No 69/2001,

required,

(24) OJ L 83, 27.3.1999, p. 1.

Article 4

In so far as the rules establish rescue and restructuring aid for
firms in difficulty, they are incompatible with the common
market where they fall within the scope of Article 87(1) of the
EC Treaty.

Article 5

that have been the

This Decision does not apply to those cases covered by the
rules
subject of other Commission
proceedings or of a final Commission decision. Germany shall
draw up a list of the cases concerned.

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Article 6

In this connection, Germany shall also devise a method to
identify the aid element in the guarantee.

Germany shall take all necessary measures to recover from the
beneficiaries the aid referred to in Articles 3 and 4 and
unlawfully made available to them.

Recovery shall be effected without delay and in accordance
with the procedures of national law provided that they allow
the immediate and effective execution of the Decision. The aid
to be recovered shall include interest from the date on which it
was at the disposal of the beneficiaries until the date of its
recovery.
the
reference rate used for calculating the grant equivalent of
regional aid.

Interest shall be calculated on the basis of

Article 7

Germany shall, in implementing this Decision, draw up a list
of the firms concerned which fall outside the sectoral scope of
the aid element
Regulation (EC) No 69/2001 or which,
contained in the guarantee and other de minimis aid granted
during the relevant period are included, received aid exceeding
the ceiling laid down in that Regulation.

if

In implementing this Decision, Germany shall draw up a list of
all firms in difficulty which were assisted under the rules and
are not caught by Regulation (EC) No 69/2001 and shall
indicate the criteria on which the classification is based.

In implementing this Decision, it shall draw up a list of firms
which were assisted under the rules and are not caught by
Regulation (EC) No 69/2001 but which were not involved in
producing goods or providing services for intra-Community
trade and shall indicate the criteria applied.

Article 8

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

Article 9

This Decision is addressed to the Federal Republic of Germany.

Done at Brussels, 27 November 2002.

For the Commission

Mario MONTI

Member of the Commission