2003/283/EC: Commission Decision of 27 November 2002 on the measures implemented by Spain in favour of Refractarios Especiales SA (notified under document number C(2002) 4486) (Text with EEA relevance)
Date: 2002-11-27
Institutions: European Commission
Subjects: Spain, State aid, control of State aid, heat-resisting materials, indebtedness, suspension of payments

30.4.2003

EN

Official Journal of the European Union

L 108/21

COMMISSION DECISION

of 27 November 2002

on the measures implemented by Spain in favour of Refractarios Especiales SA

(notified under document number C(2002) 4486)

(Only the Spanish text is authentic)

(Text with EEA relevance)

(2003/283/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(3)

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

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

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

Whereas:

1. PROCEDURE

(4)

(1)

(2)

By letter dated 20 April 2001 the Commission received
a complaint concerning State aid allegedly granted by
Spain to Refractarios Especiales SA. The complainant
expressed concern regarding a number of
financial
measures from which the company was to benefit and
which would distort
relevant
market.

competition on the

By letters of 3 May (D/51821), 17 July (D/52905) and 4
the Commission requested
October 2001 (D/54067)
Spain to submit information on the different measures.
Reminders to these requests were sent by letters of 20
June (D/52500) and 7 November 2001 (D/54592). By
letter of 23 July 2001 (registered as A/35988 on 25
July 2001) Spain requested an extension of the deadline
for replying. The extension was granted by letter of 20
August 2001 (D/53447). By letters dated 19 June
(registered as A/34832 on 20 June), 13 September
(registered as A/37203 on 17 September) and 27
as A/39427 on 30
November 2001 (registered
November 2001) Spain submitted the
information
requested by the Commission.

On 15 January 2002 the Commission decided to initiate
the procedure laid down in Article 88(2) of the Treaty
with respect to the measures in question, and by letter
of 17 January 2002 (D/228167) it informed Spain of
this decision. The Commission reminded Spain of its
invitation to comment on the decision and asked for
further information by letter of 11 March 2002. Spain
reacted to the decision to initiate the procedure by letter
of 13 March 2002 (registered as A/31982 on 14 March
2002) and answered the questions in the reminder by
letter of 2 May 2002 (registered as A/33339 on 6 May
2002).

to submit

The decision to initiate the procedure was published in
the Official Journal of the European Communities (2) with
an invitation to interested parties
their
comments on the aid. Spain forwarded a copy of the
Commission’s decision to the beneficiary company,
Refractarios Especiales SA (hereinafter Refractarios) only
on 18 March 2002. Refractarios subsequently asked, by
letter of 20 March 2002 (registered as A/32170 on 21
March 2002), for an extension of the deadline to enable
it to respond to the decision initiating the procedure.
The Commission granted an extension by letter of 22
March 2002 (D/51295). The Commission received
comments
including
from three
(D/51501) and 29
Refractarios. By letters of 5 April
April 2002 (D/52067) Spain was invited to comment
on them. Further questions were sent by letters of 21
May (D/52462) and 3 September 2002 (D/54883). The
latter included a copy of the agreement between the tax
authorities and Refractarios, which had been submitted
to the Commission by that party (letter of 18 July 2002,
registered
as A/35709 on 25 July 2002). The
Commission reminded Spain of its questions by letters
of 27 June (D/53342) and 7 October 2002 (D/55591).
Spain provided answers to the questions by letters of 2
July 2002 (registered as A/34994 on 5 July 2002) and 9
October 2002 (registered the same day as A/37400).

interested parties,

(1) OJ C 55, 2.3.2002, p. 33.

(2) See footnote 1.

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2. DETAILED DESCRIPTION OF THE MEASURES

2.2. Measures taken by Spain

2.1. Refractarios Especiales SA

(7)

Refractarios has had recurrent difficulties in paying its
debts, in particular towards the General Social Security
Treasury (hereinafter social security), the Valencia office
of
Finance
(hereinafter tax authorities) and the Wage Guarantee
Fund (hereinafter Fogasa).

the Tax Agency of

the Ministry of

(5)

located in Valencia,

Spain, produces
Refractarios,
specialised heat-resistant ceramics (refractories). It sells
its products mainly to companies in the metallurgy,
cement and ceramics sectors. Currently it has around 89
employees and an annual turnover of around EUR 8
million. Its balance sheet total stood at EUR 11 400 000
at the end of 2000. The company qualifies as an SME in
accordance
recommendation
96/280/EC of 3 April 1996 concerning the definition of
small and medium-sized enterprises (3).

Commission

with

(6)

The table below summarises the company’s results over
the period 1996 to 2001.

(ESP million)

1996

1997

1998

1999

2000

2001

Sales

1 190,5 1 053,5 1 217,1 1 209,5 1 269,6 1 340,8

Operat-
ing
result

Annual
result

(142,5)

(174,5)

(78,2)

(46,9)

17,4

2,8

(55,7)

(179,5)

9,6 (4)

73,9

17,2

0,1

The crisis in steel production in the early 1990s meant
that a crisis also faced the refractories sector, including
Refractarios. The company closed its plant in Asturias,
which produced for the steel sector, and maintained its
plant in Valencia. The relative improvement since 1997
is due to the development of new products sold in
particular to the cement industry. Apart from domestic
sales, the products are exported to other countries in
Europe and to some countries in Africa and America.
The company hopes to export to Asian countries too.
Sales value,
innovative products,
increased by 8,7 % between 2000 and 2001. For 2002
the company expects a further 14 % increase.

in particular

for

(3) OJ L 107, 30.4.1996, p. 4.
(4)

In the auditor’s report attached to the annual accounts, the auditor
explains that the company received ESP 60 million as payment on
account
land on which the factory is located.
Accounting for this item more prudently would have meant that
the company incurred a loss of ESP 50 million instead of
generating a profit of ESP 9,6 million.

for the sale of

2.2.1. Suspension of payments procedure in 1990 to 1992

(8)

A suspension of payments procedure was terminated in
March 1992 with the following agreements dating from
12 September 1991:

(cid:151) social security: a debt of ESP 459 786 309 (EUR
2 763 371) was rescheduled over a 10-year period
with no repayments in the first two years, and no
interest to be paid on the rescheduled amounts (5).
The debt was covered by a mortgage on the land,
buildings, machinery and installations owned by
Refractarios.
the
instalments, calculated on the basis of a commercial
interest rate of 18,24 %, amounts to 36 % of the
initial value (6),

present

value

The

net

of

(cid:151) tax authorities: on similar terms as those for social
security, a debt of ESP 71 701 058 (EUR 430 932)
was rescheduled over a 10-year period with no
repayments in the first two years, and no interest to
be paid on the rescheduled amounts. It was covered
by the same mortgage,

(cid:151) ordinary creditors accepted a debt write-off of
81,5 % on a total debt of ESP 1 080 million (EUR
6 490 931).

(5) Interest was incurred if the agreed instalments were not paid.
(6) Normally, in determining whether or not an interest rate is in line
with market conditions, the Commission makes a comparison with
the value at the relevant time of the reference rate fixed for the
Member State concerned. However, at the time no such rate had
been fixed for Spain. Therefore,
in accordance with the Council
resolution of 20 October 1971 on general regional aid schemes (OJ
C 111, 4.11.1971, p. 1), the Commission must make a comparison
with the average rate of interest in the relevant market, which in
this case is the average rate of interest charged by private banks in
Spain on loans over more than three years. In 1991, according to
statistics published by the Bank of Spain, this rate was 18,24 %.
The Commission has used this rate on several previous occasions
(see for example Decision 91/1/EEC Magefesa (OJ L 5, 8.1.1991,
p. 18) and Decision 96/655/EC La Seda de Barcelona (OJ L 298,
22.11.1996, p. 14)).

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(9)

(10)

(11)

equalled

The mortgage obtained by the social security and tax
authorities placed a charge on the property amounting
to a maximum of ESP 531 487 366 (EUR 3 194 303)
(this
ESP
outstanding
106 000 000 (EUR 637 073) for foreclosure costs. The
total, ESP 637 487 366 (EUR 3 817 377), corresponded
to between 81 % and 85 % of the property’s estimated
value (7). The land was not mortgaged in favour of
other creditors.

debts)

plus

the

The lay-off of workers in Asturias resulted in a debt of
ESP 90 685 363 (EUR 545 030,01) to Fogasa (8). By an
agreement concluded on 19 November 1992, this debt
was rescheduled over an eight-year period with no
payments for the first six months. Quarterly payments
were to gradually increase from around ESP 2 million to
more than ESP 8 million. The total payments would
sum up to ESP 133 171 960 (EUR 800 380), implying a
simple interest rate of 10 %, which corresponded to the
legal
the time. The agreement
contained an obligation on Refractarios to establish a
security in favour of Fogasa in order to guarantee the
debt.

interest at

rate of

2.2.2. Efforts to recover the outstanding debts until 2000

The period up to 2000 showed a mixed picture as
regards
Consequently,
Refractarios at times had difficulties in paying its debts.
there was an
In addition to the financial problems,

company’s

results.

the

(7) According to an estimate made on 3 July 1990 by the Social
Security Executive Recovery Unit, the value of the two plots of
land and buildings that were later brought under the mortgage
amounted to ESP 448 908 000 plus ESP 82 290 000 (totalling EUR
to another
3 192 564). Refractarios’
valuation, carried out on 16 May 1990, which estimated the value
of the second plot at ESP 122 160 000, bringing the total to EUR
3 432 187. The value of
the machinery and installations was
estimated at ESP 220 250 000 (EUR 1 323 729), which brings the
total estimated value to between ESP 751 448 000 and ESP
791 318 000 (EUR 4 516 293 to EUR 4 755 917).

viability plan referred

(8) In the event of insolvency or bankruptcy of the employer, Fogasa
pays compensation to the workers made redundant, and assumes
by law their rights, but only for the statutory amounts. This is laid
down in Royal Decree 505/1985 of 6 March 1985 on the
organisation and operation of the Wage Guarantee Fund (Spanish
Official Gazette No 92, 17.4.1985, p. 10203), by which Spain
transposed Council Directive 80/987/EEC of 20 October 1980 on
the approximation of the laws of the Member States relating to the
protection of employees in the event of the insolvency of their
employer (OJ L 283, 28.10.1980, p. 23). On the basis of Article
32 of the Royal Decree, Fogasa can conclude recovery agreements
with the companies concerned. The detailed arrangements and
conditions for recovery are laid down in the Ministerial Order of
20 August 1985 (Spanish Official Gazette No 206, 28.8.1985,
p. 27071).

(12)

(13)

increasing environmental problem owing to its location
in the centre of Quart de Poblet (Valencia). On the other
hand, a change in the land-use plan that would
significantly raise the value of Refractarios’ property was
under discussion.

Between December 1991 and March 1995 Refractarios
accumulated new social
security debts. The social
security authorities took several measures to recover the
debt. They sought various distraints on the mortgaged
property, totalling ESP 193 905 984 (EUR 1 165 398).
A further distraint obtained on 28 February 1995
concerned two properties; the first had a surface area of
427 m2 and was valued at ESP 13 944 650 (EUR
83 809), the second had an area of 680,9 m2. On 7
June 1995 the procedure for auctioning the land was
initiated but was then suspended after an appeal was
allowed. Following an agreement reached in 1995, on
10 May 1996 all new debts, namely ESP 252 575 951
(EUR 1 518 012), and further interest and surcharges on
this debt up to a maximum amount of ESP 384 million
(EUR 2 307 887),
including ESP 64 million (EUR
384 648) for foreclosure costs, were brought under the
coverage of a second mortgage on the same property.
The social security debt at this time amounted to ESP
712 362 259 (EUR 4 281 383). Together with the debt
towards the tax authorities (see below), the debt covered
by the mortgages amounted to EUR 4 712 315. The
mortgages placed a charge on the property amounting
to a maximum of ESP 932 187 366 (EUR 5 602 559).
Apart from the earlier mortgage and distraints obtained
by the social security authorities,
the property was
further burdened by a distraint in favour of another
creditor for an amount of ESP 6 916 233 (EUR 41 567).

the

time

same

success

In the second half of the 1990s the situation became
more complicated: the crisis in the sector wore off and
in entering more
Refractarios had some
profitable niche markets. At
the
environmental problems due to the company’s location
in the city centre worsened and the change in the
land-use plan remained uncertain, which had a negative
effect on the potential value of the land. The procedures
for changing the land-use plan did not come to a
successful conclusion. The value of the land, buildings
and installations remains unclear: a valuation dated 16
March 1998 ordered by the social security authorities,
assuming a change in the land-use plan, shows a low
value of EUR 3 207 820 (9). Refractarios mentions very

(9) According to the valuation of 16 March 1998 requested by the
social security authorities, the value of land and buildings would be
EUR 1 528 776 if
the land-use plan did not change and EUR
3 207 820 if the land-use plan did change.

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different values for 2000: a valuation at the time of the
agreement with the construction company indicated a
land value of about EUR 6 million, whereas the agreed
price in the sales contract for the land and buildings
(dated 6 June 2002) amounts to EUR 7 747 046.

2.2.3. Suspension of payments procedure in 2000 to 2002

(14)

September

and October

1998
1997
Between
Refractarios accumulated new social security debts.
It
paid its contributions in full as from 1999. The social
security authorities responded by not agreeing to further
postponements and by seeking distraints. Some of the
the social
measures failed,
security authorities obtained repayment of only ESP
33 721 558 (EUR 202 670,65). They did not enforce
the auction of the mortgaged land. The debt at the start
of
second suspension of payments procedure
amounted to ESP 978 750 620 (EUR 5 882 414,16), of
which EUR 4 700 000 was covered by the mortgage.

though, and in the end,

the

in

arose

1998

problems

also became

a problem in 1998. The

(15) As regards the tax authorities, a few new small debts
were incurred in 1996 (one amount) and 1997 (two
and
amounts). Major
Refractarios failed to pay a further two amounts in
1999. The payment of the agreed instalments of the old
debt
tax
authorities set various distraints on machinery in order
claims. After 1999 Refractarios
to recover
complied fully with its tax obligations. The total debt at
the start of the new suspension of payments procedure
amounted to ESP 129 217 530 (EUR 776 613) to which
was to be added interest at some ESP 70 million (EUR
the
420 709) and payments due since the start of
suspension of payments procedure, amounting to ESP
17 874 651 (EUR 107 429). The total amount was
consequently EUR 1 304 751.

their

(16)

for

its debt. Given this breach of

Refractarios did not pay any of the agreed instalments
to Fogasa. Neither did Fogasa obtain a guarantee from
Refractarios
the
agreement, Fogasa was entitled to demand immediate
payment of the full amount. However, it did not force
any payment upon Refractarios. Neither did it charge
further interest. In July 1997 Refractarios asked Fogasa
to renegotiate the debt, but Fogasa did not agree to this
proposal. In 2001, the Social Affairs Tribunal (10), ruled
that
refusal did not comply with the formal
requirements for interrupting the statutory limitation
period. Despite the Commission’s
repeated requests
Spain has not provided any evidence that Fogasa
insisted on the agreed instalments or on payment of the
whole amount until the new suspension of payments
procedure. It is not clear whether Fogasa simply forgot
the debt, or whether it deliberately failed to demand
payment.

this

(10) See recital 18.

(17) On 24 January 2000 Refractarios

started a new
suspension of payments procedure in order to settle its
procedure was
accumulated
debt
concluded on 17 June 2002.
is based on the
following agreements:

This
It

burden.

the

this

and

and

social

security

existing mortgages,

(cid:151) on 6 June 2000 Refractarios and a construction
company reached an agreement whereby the latter
was to buy the company’s current property. Given
the
agreement was
conditional upon other debt agreements between
tax
Refractarios
authorities. The proceeds (ESP 1 289 million, or
EUR 7 747 046) would be used for buying new
land, building a new factory (to be done by the
same
and
settlement of part of the outstanding debts. ESP 527
million (EUR 3 167 333) would be paid directly to
the social security and tax authorities. The existence
of the agreement and the overall sales price were
the
in
mentioned
by
suspension of
court-appointed
in the
and
terms
its
payments procedure. However,
conditions were
public
the
to
known
authorities,

the
auditor

construction

relocation,

company),

drafted

report

not

(cid:151) in February 2002 Refractarios reached an agreement
with the ordinary creditors on a remission of 75 %
of
their claims. These debts amounted to ESP
434 383 557 (EUR 2 610 698) in total,

to

pay

(cid:151) on 26 March 2002 Refractarios and the social
security authorities agreed on a debt rescheduling
the total debt of EUR
and reduction. Out of
EUR
5 882 414,16 Refractarios was
2 763 371,37 immediately after finalisation of
its
construction company. A
transaction with the
further EUR 1 309 748,27 (22 %) was
to be
rescheduled over a period of 10 years with a 3,5 %
annual interest rate and was to remain covered by a
Refractarios’
mortgage
and
machinery. The
the debt, EUR
remainder of
1 809 294,52, was to be remitted. The present value
as a percentage of the original debt is 68,4 %. It was
an explicit
that
Refractarios was punctually to pay the instalments
and its current social security contributions.

condition of

installations

agreement

the

on

tax
and the
(cid:151) on 22 May 2002 Refractarios
authorities agreed on a debt
rescheduling and
remission. Out of a total debt of EUR 1 275 705,87

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(ESP 212 259 597) Refractarios was to pay EUR
621 944,88 (49 %). The remainder (51 %) was to be
remitted. As with the social security authorities, the
agreement contained an explicit condition that
Refractarios was punctually to pay the instalments
and fulfil its current tax liabilities.

(18)

By letter of 13 March 2000, Fogasa demanded that its
claims be included in the suspension of payments
procedure. However, the court-appointed auditor in this
procedure ruled that the debt was time-barred. By letter
of 9 February 2001 Fogasa demanded payment of its
debt direct from Refractarios (ESP 133 171 960 or EUR
800 380). At the same time it again demanded that the
claim be included in the suspension of payments
procedure.
auditor’s
appealed
Fogasa
decision, but lost the case (11).

against

the

(19) As regards the land-use plan, it is noted that in spring
2002 the Department for Public Works, Urban Planning
and Transport of the Regional Government of Valencia
was considering a General Transition Plan for
the
municipality of Quart de Poblet, which also included
changes for Refractarios’ site. In its letter of 2 July 2002
Spain stated that
expected to be
the plan was
definitively approved within two months.

2.2.4. New investment aid

(20)

Finally, Refractarios applied or intended to apply to the
Valencia Finance Institute (IVF)
for a loan of EUR 3
million and a capital injection of EUR 300 000 and to
the Regional Government’s Department for Economic
Affairs for a 20 % (EUR 1 million)
investment grant.
The finance section of Refractarios’ restructuring plan
takes these aid measures into account. However, Spain
confirmed that neither the loan nor the aid had been
granted so far.

(22)

(23)

3. GROUNDS FOR INITIATING THE PROCEDURE
UNDER ARTICLE 88(2)

(24)

(21)

In its decision to initiate the procedure under Article
88(2) (12), the Commission expressed its doubts whether
the Spanish authorities had acted in the same way as a
market economy creditor would have done. These
doubts concerned in particular Fogasa’s failure in 1992

(11) Judgment of 2 July 2001 of Juzgado de lo Social (Social Affairs
Tribunal) No 3, Oviedo, demanda 525/2001, sentencia 503/2001.
The judgment confirms that Fogasa had not done anything to
suspend the limitation period.

(12) See footnote 1.

creditors

apparently

to demand a guarantee for the rescheduled debt and to
take steps to ensure actual repayment. Further doubts
concerned the 1992 agreement between Refractarios
and the tax and social security authorities,
the long
period in the second half of the 1990s during which
in
these
Refractarios’ payments, and possible aid involved in a
new agreement
the
reschedule
Commission had hardly
any information on the
existence of a restructuring plan, it could not ascertain
whether possible aid would comply with the conditions
set out in the Community guidelines on state aid for
rescuing and restructuring firms in difficulty (hereinafter
the rescue and restructuring aid guidelines (13)).

accepted

arrears

debts.

Since

to

4. COMMENTS FROM INTERESTED PARTIES

the decision to initiate the
Following publication of
procedure (14),
the Commission received comments
industry
(a European ceramics
from CØrame-Unie
association),
from a competitor, RHI, and from the
beneficiary, Refractarios. The latter’s comments are
summarised together with the comments from Spain in
section 5.

CØrame-Unie and RHI fully shared the doubts expressed
by the Commission. They stressed the presence of
overcapacity throughout
sector and
argued that any aid would have adverse effects on
competitors and trade within the internal market.
CØrame-Unie provided a substantial number of articles
and documents on the sector.

the refractories

stressing that

and Refractarios,

CØrame-Unie sent a copy of the agreement between the
tax authorities
it
explicitly stated that the tax authorities had taken into
account not only the economic situation and viability of
the company, but also the general and social interest in
maintaining the jobs. CØrame-Unie also pointed out that
the approved composition with creditors did not make
any
to any
restructuring plan and argued that insufficient grounds
were given for the debt relief provisions. In its opinion,
the aid did not comply with the requirements set out in
the rescue and restructuring aid guidelines.

to long-term viability or

reference

(13) OJ C 288, 9.10.1999, p. 2.
(14) See footnote 1.

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5. COMMENTS FROM SPAIN AND FROM
REFRACTARIOS

procedure. Refractarios also argued that the rescheduling
of its debt to Fogasa was advantageous to the latter in
comparison with the outcome for other creditors.

(25)

(26)

the

investigation

Spain and Refractarios held that throughout the period
under
tax
authorities and Fogasa had acted as any private creditor
would have done.
the
measures constituted State aid within the meaning of
Article 87(1) of the Treaty.

In their opinion, none of

security

social

and

Spain and Refractarios produced in support of
their
arguments detailed descriptions of the financial situation
in which the social security and tax authorities would
they had proceeded with
have found themselves if
enforcing their claims to bankruptcy. Given the limited
value of
the land before the possible change in the
land-use plan, and given that the workers’ claims took
priority, bankruptcy would have been financially less
attractive than acting in the way they did.

(27) With respect

to the 1991 agreement, Refractarios
argued that the terms accepted by the public creditors
compared favourably with the terms accepted by a
private preferential creditor, namely Banesto Leasing.
the
This company did not demand the return of
machinery that
it had leased to Refractarios, but
subscribed to the agreement between the company and
its creditors on the same conditions as the ordinary
creditors. For this reason too no State aid within the
meaning of Article 87(1) of the Treaty was involved in
the agreements with the public authorities.

interest

(28) With respect to the reference made in the agreement
between the tax authorities and Refractarios to the
(cid:145)general and social
in maintaining the jobs(cid:146),
Spain explained that this statement could be regarded as
merely formal and, in a way, made necessary by the fact
that the agreement constituted an act outside the usual
scope of the tax authorities’ activities and different from
the normal channels for managing the collection of
claims, although covered by current legislation. It should
be understood as a generic explanation of the reasons
prompting the authorities to act as always in the general
interest.

(29)

Concerning Fogasa, Spain indicated that the Fund was
financed by company contributions which did not
constitute State resources. Spain argued that Fogasa had
taken all possible steps to recover its claim.
In its
opinion, that was shown by the court ruling in the
appeal case when Fogasa demanded that its claim be
payments
the 2000 suspension
included

of

in

(30)

(31)

Refractarios maintained furthermore that any advantages
it had obtained could not have affected trade between
Member States, since its output was less than 0,2 % of
total output in the EU. Moreover, the market structure
was oligopolistic. For these reasons also,
it had not
received State aid within the meaning of Article 87(1) of
the Treaty.

the Commission found that aid was

involved,
If
Refractarios claimed that
should be regarded as
it
compatible with the common market. At the time of
the 1991 agreements the company was in difficulty, the
aid was closely linked to a restructuring programme and
limited to the minimum necessary. Any aid in the 2002
agreements with the public authorities
fulfilled the
criteria of the rescue and restructuring aid guidelines.
Refractarios submitted a restructuring plan with detailed
information on the restoration of its viability and all the
measures planned, and argued that any aid was limited
to the minimum necessary.

(32) Another argument put forward by Refractarios was that
any aid linked to the 1991 agreements with creditors,
or the authorities’ subsequent actions in relation to the
composition with creditors, was time-barred pursuant to
Article 15 of Council Regulation (EC) No 659/1999 of
22 March 1999 laying down detailed rules for the
application of Article 93 of the EC Treaty (15).

low-quality refractories

(33) As regards the market, Refractarios held that, although
in recent years there had been some stagnation in the
in industrialised
demand for
countries, this had been offset by growing demand for
these products from developing countries. Moreover,
Refractarios had over the past 10 years specialised in
higher
and higher priced
products, for which the market was booming.

quality, more durable

(34)

Finally, Refractarios argued that any aid should be
deemed compatible with the common market on the

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

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basis of
the Community guidelines on State aid for
environmental protection (16), since its aim would be to
assist the relocation of activities out of an urban area, as
provided for by point 39 of the guidelines.

(40)

The restructuring plan provides estimates for expected
annual results over the period 2002 to 2006 under
various assumptions. Even in the worst-case scenario the
company would still be profitable each year over this
period.

5.1. Reactions to comments from third parties

7. ASSESSMENT

(35)

Spain did not react to the comments from third parties.

(36)

(37)

(38)

6. THE RESTRUCTURING PLAN

Refractarios’ current restructuring plan has three main
components: 1. relocation; 2. further concentration on
the high-quality segment of the market; and 3. financial
restructuring, based on major debt write-offs.

the
of
Relocation
environmental
the
investment amounts to EUR 7 300 000, of which the
main item is equipment (EUR 3 900 000).

company
the
problems. The

clearly
total

solves
of

cost

The new plant would have a capacity of 10 200 tonnes
per year, of which 8 000 tonnes would be
for
producing tailored refractories and 2 200 tonnes for
non-tailored refractories. This would roughly double
existing
the
proportion dedicated to products with higher value
added and higher gross margins.

significantly

capacity

increase

and

7.1. General considerations

(41) Article 87(1) of the Treaty lays down the principle that,
save as otherwise provided in the Treaty, any aid which
distorts or threatens to distort competition by favouring
certain undertakings or the production of certain goods
shall, in so far as it affects trade between Member States,
be incompatible with the common market.

(42) According to the case-law of the Court of Justice, when
State financial aid strengthens
the position of an
undertakings
compared with
undertaking
other
competing in intra-Community trade, the latter must be
regarded as affected by that aid (17). The products
traded between the
marketed by Refractarios
competition between
and there
Member States
manufacturers. Any aid would strengthen the position
of Refractarios in these markets. The company’s small
turnover compared to that of (some) competitors,
its
small market share and the oligopolistic structure of the
market do not mean that trade between Member States
is not affected. Moreover, the fact that trade is affected
is confirmed by the fact that Refractarios exports part of
its production to other countries.

are
is

(39)

The following table gives a financial overview of the
restructuring for the year 2002:

(43)

Costs

Funding

(EUR ’000)

In order to establish whether Refractarios has benefited
from a selective advantage,
the Commission has to
assess the measures taken by the public creditors and
these measures
their agreements with Refractarios.
and agreements correspond to the way in which a
private
similar
acted under
circumstances, they do not constitute State aid.

creditor would have

If

Land

New plant

Payments to social
security

Payments to the tax
authorities

Payments to ordinary
creditors

Working capital

1 731 Sale of land

5 571 Loan from IVF

2 763 Capital injection

7 747

3 005

301

426 Investment aid

950

679

833

Total 12 003

Total funding 12 003

(16) OJ C 37, 3.2.2001, p. 3.

7.2. The 1991 agreements with the social security
and tax authorities

(44)

The terms under which the social security and tax
authorities accepted the rescheduling of the amounts

(17) Case 730/79 Philip Morris v Commission [1980] ECR 2671,
paragraph 11, and Case T-214/95 Vlaams Gewest v Commission
[1998] ECR II-717, paragraph 50.

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owed to them are certainly favourable to them in
comparison with the payments to ordinary creditors,
who accepted a debt write-off of 81,5 %. However, a
comparison with ordinary creditors is not sufficient to
prove the absence of aid, since the public creditors held
preferential claims and were therefore in a different
position.

(48) Article 32(1) of the Labour Statute provides that wage
debts for the last 30 working days take precedence over
all other claims in so far as they do not exceed twice
the minimum wage. These debts take precedence over
debts guaranteed by mortgage. Article 32(2) and (3)
establishes further privileges for wage debts. Since there
are separate procedures for recovering workers’ claims
which are not delayed by a suspension of payments
procedure, workers also have a de facto (cid:145)super-privilege(cid:146)
in respect of severance pay. The total amount of these
payments in 1991 was estimated at EUR 3 700 000. As
Refractarios argues, it is quite possible that even higher
amounts of compensation might have been negotiated
in practice.

(45)

(46)

(47)

The terms were also favourable in comparison with the
only private preferential
creditor, namely Banesto
Leasing SA. However, the Commission considers that
the positions of Banesto Leasing and the public
preferential creditors cannot be compared and the
argument cannot suffice to prove the absence of aid in
the agreements between Refractarios and the public
creditors.
this
company amounted to ESP 8 919 299 (EUR 53 606),
which is much smaller than the public debts. Secondly,
the cost that Banesto would have incurred to obtain a
higher repayment would have been greater, in relative
terms, than any possible gain. Thirdly, the real value of
the machinery would undoubtedly have been very small
if it had had to be sold under a bankruptcy scenario in
the 1990 to 1992 suspension of payments procedure.

Firstly, Refractarios’

towards

debt

(49)

the

that

absence of

Spain argued
interest was
appropriate compensation for the guarantee constituted
by the mortgage. The General Social Security Law
contained an obligation to apply the legal interest rate
when extraordinary deferments were granted, but this
obligation would not apply in situations where the
social security authorities granted a rescheduling of the
debts of a company which had suspended payments.
The Commission notes, however, that this does not rule
out the possibility that, under a scenario of immediate
enforcement of payments and subsequent bankruptcy,
the public authorities might still have been better off.
The fact that the social security and tax authorities did
not accept any debt
reduction, but only a debt
rescheduling, does not detract from this conclusion.

the valuation of

The balance sheet drawn up by the court-appointed
auditor in the suspension of payments procedure (the
report) and dated 29 October 1990 shows total assets
of EUR 15 486 722, of which land accounts for EUR
6 974 048, buildings EUR 2 344 763, other tangible
fixed assets EUR 2 191 455, intangible fixed assets EUR
2 540, stocks EUR 2 980 058, debtors EUR 1 001 991
and cash/banks EUR 27 464. However, in a bankruptcy
scenario the value that would be realised is estimated at
much less. For example,
the land
carried out for the social security authorities on 3 July
1990 estimates the value of the site in Valencia at EUR
3 200 000. Installations on this site were valued at EUR
1 300 000. The land in Asturias was valued at EUR 1
million and other plots in Valencia at EUR 300 000.
Other assets that would be difficult to realise under a
bankruptcy procedure were intangible fixed assets, but
also stocks: almost half of these consisted of finished
products, whereas the crisis in the sector was in full
swing.
It should also be noted that the amounts for
stocks and in particular for debtors and cash/banks may
well have changed over the year that elapsed between
the drafting of the report and the conclusion of the
agreements with creditors, among other things owing to
the losses sustained during that period. Moreover, the
Commission takes account of the fact that the balance
sheet may contain an upward bias, since the suspension
of payments procedure can be initiated only when it
shows a positive difference between total assets and
total liabilities. Taking all these considerations together,
and
in
the
principle,
the assets under a
September 1991 the value of all
bankruptcy scenario could have been estimated at a
figure close to the value of
the land, buildings and
equipment as estimated by the valuations other than the
one in the report. This would give a total of some EUR
6 million.

applying

creditor

private

In this situation, in order to establish whether the public
creditors acted in accordance with the private creditor
principle, the Commission deems it necessary to make
an estimate of the maximum amount that the tax and
social security authorities could have recovered if they
had not signed the agreements, which would have
meant
into
that
bankruptcy.

company would have gone

the

(50)

Subtracting the payments to workers from the total
value of assets gives a figure of EUR 2 200 000, which
would be available for the preferential creditors in the

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first instance. This represents 69 % of a total debt of
EUR 3 200 000 (18).

7.3. Steps taken by the social security and tax
authorities to recover their claims in the period up
to the commencement of the 2000 suspension of
payments procedure

(51)

(52)

factors

take into account various

This, however, is still a theoretical calculation that does
that can be
not
expected to have a negative impact on the actual
amount which the public creditors would obtain under
a bankruptcy scenario. The actual proceeds of selling
land and installations when forced by bankruptcy may
be much lower still. Moreover, the calculation does not
take into account costs of the bankruptcy procedure and
costs of selling the land. Moreover, the public creditors
would have received their payments only after a
substantial period of time, something which is normal
in such procedures. Confirmation that a lower actual
value can be expected under a bankruptcy scenario is
given also by the fact that the other creditors accepted a
very significant debt waiver. Of course,
the agreed
payments would depend on the future viability of the
company, and with the benefit of hindsight it is clear
that the financial problems were not solved. However,
the mortgage was precisely intended to cover
the
uncertainty, and the risk of further delays in paying the
agreed instalments was at least to some extent covered
by normal application of interest and surcharges when
delays occurred. It must also be noted that the interest
rate to be paid on arrears is the legal rate of interest,
implying a
which at the time stood at around 10 %,
decrease in the present value of the debts in any case.

the

tax authorities between what

Taking all these considerations into account, there was
in
very little difference for the social security and,
particular,
they
expected to obtain in payment under the agreements
and what they could have expected to obtain under a
bankruptcy scenario (19). Therefore,
the Commission
considers that the terms under which the social security
and tax authorities agreed on a debt
rescheduling
correspond to those which a market economy creditor
could have accepted in the circumstances. Consequently,
the Commission concludes that the 1991 agreements
with those authorities are in accordance with the private
creditor principle and do not constitute State aid to
Refractarios.

(18) Refractarios (letter of 15 April 2002, p. 45) argued that in the
event of bankruptcy only 17 % of the debt would have been
repaid, but this calculation is based only on the value of the land
and installations which were later mortgaged.

(19) Another argument put forward by Spain is that if the public
authorities had insisted on a better result, there would have been
fewer resources left for ordinary creditors and these may have
been less inclined to agree to a debt reduction. This argument,
however, is only valid in the eventuality of the public authorities
trying to obtain more than they could reasonably expect under a
bankruptcy scenario.

(53)

(54)

the

that

least

social

the annual accounts at

The Commission notes
security
authorities did not remain passive between December
1991 and June 1995. They charged interest and
surcharges on the new debts that arose and sought
various distraints. And, finally, in June 1995 they started
the procedure for selling the property by auction. By
this time, the total debts amounted to EUR 4 712 315
and were only partly secured by the mortgage. This
total debt
is only slightly lower than the maximum
value of the property arrived at in 1990, when it was
valued at between EUR 4 516 293 and EUR 4 755 917.
from 1994
However,
onwards refer to the potential increase in the value of
the land that would result from a change in the land-use
plan. On the basis of these steps taken, the Commission
concludes that
the social security
authorities was in accordance with the private creditor
principle since it did not significantly depart from the
way in which a private creditor would have acted in
similar circumstances. The acceptance of the agreement
on suspending
an
the
auction and
reached in 1995, can also be
additional mortgage,
justified by the expectation of an increase in the value
of the land following modification of the land-use plan
and by the fact that Refractarios accumulated no further
debts as from April 1995. The Commission therefore
concludes
security
actions of
authorities during this period and the agreement on the
additional mortgage do not constitute State aid to
Refractarios.

the behaviour of

establishing

social

that

the

the

the

The Commission cannot explain the surprisingly low
result of the valuation of the property ordered by the
social security authorities in 1998. It is in sharp contrast
with the valuation commissioned by Refractarios in
2000 and with the selling price stipulated in the
contract with the construction company. However, it is
clear that there would have been a real increase in value
following modification of
land-use plan. The
increase in the debt towards the social security and tax
authorities during the period 1996 to 1998 amounts to
EUR 1 200 000 and EUR 860 000 respectively. The
total increase in debt is more than the expected increase
in value under the 1998 valuation, but less than the
increase in value that eventually took place. Moreover,
the new debts arose during a relatively short period of
time, mainly
initiating
1998.
proceedings for enforced collection, the social security
and tax authorities would not have been able to avoid a
further accumulation of debts.

during

Even

by

(55) Given this mixture of

irregularly growing debts and
hopes for a better economic situation and a change in

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30.4.2003

to distraints

the land-use plan, the Commission concludes that by
and threats of
restricting themselves
foreclosure of the mortgage and not proceeding up to
declaration of bankruptcy (as described in section 2.2.2),
the social security and tax authorities acted in a way
that maximised their chances of recovering the debts
Refractarios owed them. Hence, the Commission finds
no State aid in favour of Refractarios in their behaviour.

7.4. The 2002 agreements

(56)

is

There were no agreements with preferential private
creditors in the suspension of payments procedure to
which the agreements between Refractarios and the
public creditors can be compared. Neither
the
reference in the agreement between the tax authorities
and Refractarios to the (cid:145)general and social
interest in
maintaining the jobs(cid:146) sufficient proof of the existence of
aid, nor is there evidence of aid in the absence of an
explicit evaluation of the company’s future viability or
in the lack of grounds for such an agreement. Therefore,
the Commission deems
it necessary to make an
estimation of the maximum amount that the tax and
social security authorities could have recovered if they
had not agreed, which would have meant the company
going into bankruptcy.

(59)

set 25 % and 50 % below this

1998 valuation, namely EUR 3 200 000. If a second or
third round of bidding were necessary, the starting price
would be
level
respectively. The public authorities could therefore, like
a diligent private creditor, have taken a more cautious
value. The Commission considers that an auction before
modification of the land-use plan would indeed have
involved a significant risk and the value in the sales
contract cannot suffice as a proper estimate. However,
from the sales agreement it must also have been clear
that the 1998 valuation was unrealistically low. So the
proper value at the time may have been estimated at
anything between those two extremes, depending on the
risk aversion of the potential buyer (20).

a

(the

report)

indicates

The balance of assets and liabilities drawn up by the
court-appointed auditor in the suspension of payments
sum of EUR
procedure
3 090 859 for intangible fixed assets, other fixed assets,
stocks, debtors and cash/banks. Under cautious and
pessimistic expectations
the value realised under a
bankruptcy procedure might have been lower. For
example, intangible fixed assets would be very difficult
to realise in a bankruptcy situation and the (cid:145)other fixed
assets(cid:146) may prove of little value when they are no longer
used and are the subject of a forced sale. It should also
be noted that the amounts for stocks and in particular
for debtors and cash/banks may well have changed over
the
actual
year
agreements (21).

between

report

and

the

the

(57) According to Spain,

by

and

covered

to workers

the payments
pay

for
the
severance
salaries
(cid:145)super-privilege(cid:146)
(de jure and de facto) amount to EUR
1 577 031,80. As mentioned earlier, it is quite possible
that even higher amounts of compensation might have
been negotiated in practice. The payments to workers
for salaries could increase even further owing to the
delay between declaration of bankruptcy and approval
of the collective dismissal of the workers by the labour
authority. Spain estimates
this could take five
months and therefore takes into account a further
amount of EUR 892 013.

that

(58)

The main assets of value under bankruptcy were the
land and buildings. The price in the sales agreement was
ESP 1 289 759 146 (EUR 7 751 609). This value was,
however, part of a more comprehensive deal on the
acquisition of new land and the construction of the new
plant which was negotiated in the context of litigation
between the two parties. It was also subject to terms
and conditions unknown to the public authorities. The
the
public authorities may well have expected that
the
agreement was conditional on modification of
land-use plan. Therefore Spain considers it (cid:145)somewhat
risky(cid:146) to base its assessment on the price stipulated in
the sales agreement. Furthermore, as Spain argued, the
auction procedures would have required the authorities
to start the first round of bidding on the basis of the

(60)

The tax authorities agreed on an immediate payment
without further instalments depending on the financial
future of Refractarios. In contrast, the actual value of
security authorities
the agreement with the social
depends partly on the future financial situation of the
company. The agreements do not refer directly to the
restructuring plan or
the
company, but the public authorities were aware that the
losses of the late 1990s had decreased and turned into a
modest profit over 2000. Also, Refractarios was
fulfilling its new obligations. They may have known of

to the future viability of

(20) Refractarios

argues

authorities based their
the public
expectations of recovery on the original valuation made in 1990,
which indicated a value of EUR 4 516 293.

that

(21) The report is dated 12 September 2000. Refractarios’ profits for
2000 and 2001 amounted to EUR 104 000 and EUR 768 402
respectively. The annual accounts were approved only on 27 June
2002, so they would have been unknown to the social security
and the tax authorities at
their agreements with
Refractarios. A private creditor would probably have made a
global analysis, but would not have had the figures for the annual
results either.

the time of

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particular

more recent developments, such as the increase in sales,
Actual
innovative
in
developments have in the meantime confirmed this
considerable increase over 2001 and the expected sales
figure for 2002 again shows a strong increase.

products.

of

(61) On the other hand,

the

the report drawn up by the
court-appointed auditor in 2000 refers to a loan from
the IVF, a capital
injection and investment aid as a
major source of finance for the relocation. The fact that
these measures had not been granted casts some doubt
the debt
on the viability of
rescheduling. However, there has been no confirmation
of a refusal to grant such measures either. Furthermore,
both the social security and the tax authorities included
a clause in the agreements requiring Refractarios to pay
its
of
invalidation of the agreements. Lastly, the social security
authorities had the agreed instalments secured by means
of a mortgage to be established on the new property.

company after

punctually,

obligations

current

pain

on

(62)

(63)

(64)

Taking the above elements together, under cautious and
pessimistic assumptions and in accordance with the
private creditor principle, the total amount available for
the claims held by the social security and tax authorities
can be estimated at a value very close to the net present
value of the actual amounts they received under the
agreements. The net present value to the tax authorities
as a percentage of the original debt is significantly lower
than the net present value to the social
security
authorities. This may reflect a clever negotiating strategy
on the part of Refractarios, in which it put maximum
pressure on the relatively smaller creditor. In any event,
the Commission has to base its decision in the first
place on the facts.

It must be noted that in the event of bankruptcy the
public authorities would collect their claims only after
significant delay. Furthermore, the differences between
the recovery expectations and the actual negotiated
terms. Given the
in absolute
amounts
uncertainties, the delay and the costs of a bankruptcy
procedure,
the
agreements between Refractarios and the social security
and tax authorities are in accordance with the private
creditor principle.

the Commission

concludes

small

that

are

Consequently, the Commission finds no State aid in the
agreements between the
and tax
authorities on the one hand and Refractarios on the
other.

security

social

7.5. Further investment aid

(65)

Spain confirmed that it had not granted any investment
aid, and there is no evidence of
the contrary. The
Commission cannot therefore assess such aid. The fact
that Refractarios announced applications for aid of this
type and that the amounts are mentioned in the report
and the viability plan does not change this finding. The
Commission notes, however, that a substantial part, if
not all, of the investment may not qualify as initial
investment within the meaning of point 4.4 of
the
guidelines on national regional aid, since it appears to
concern a relocation without any fundamental change
the production process (22). The
in the product or
Commission also notes that the viability plan provides
for only a small capital injection by other private parties
(EUR 300 500), which raises doubts as to whether a
possible capital injection by a public authority (such as
the abovementioned loan of EUR 3 005 000 from the
IVF) would be in line with the private investor principle.
The Commission will therefore ask Spain to inform it of
any investment aid granted to Refractarios in relation to
the relocation and of any capital
injection by public
authorities over the next three years.

7.6. Fogasa

(66)

The Commission notes that Fogasa is an independent
body set up by the Spanish authorities and governed by
Spanish law. It is attached to the Ministry of Labour and
Social Affairs. The Ministry appoints the chair and four
out of 14 members of the Governing Council and also
the Secretary General, who is responsible for the Fund’s
management. The payment and destination of the funds
is determined by law. The Court of Justice has ruled in
several judgments that parafiscal charges may constitute
State aid (23). On various occasions the Commission has
made it clear that
funds by Fogasa may
constitute State aid, and this has also been confirmed by
the Court (24).

the use of

(22) OJ C 74, 10.3.1998, p. 9.
(23) For example Case C-78/76 Steinike and Weinlig v Germany [1997]

ECR 595.
for

(24) See,

example,

the Magefesa case, Commission Decision
91/1/EEC (cited in footnote 6)
and Commission Decision
1999/509/EC of 14 October 1998 (OJ L 198, 30.7.1999, p. 15)
(confirmed by the Court on 2 July 2002 in Case C-499/99
Commission v Spain, not yet published); the La Seda de Barcelona
case, Commission Decision 96/655/EC (cited in footnote 6); and
the Tubacex case, Commission Decisions 97/21/ECSC, EC (OJ L 8,
11.1.1997, p. 14) and 2001/142/EC (OJ L 52, 22.2.2001, p. 26)
and Court judgment in Case C-342/96 Spain v Commission [1999]
ECR I-2459.

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(67)

(68)

Fogasa does not award loans to firms in liquidation or
in difficulty, but settles all valid claims put forward by
employees with money which it pays out and then
recovers from the firms concerned. The Commission
does not object to Fogasa having settled the valid claims
of certain employees of Refractarios to wages due and
severance pay in the early 1990s. In this respect, the
agreement does not contain any element of State aid.
Such action to protect employees’ rights is consistent
such
with Directive
payments are part of the normal costs of business and,
therefore, when the company continues its activities
after
the
resulting debt to Fogasa should be paid in accordance
with the market creditor principle.

suspension of payments procedure,

80/987/EEC (25). However,

the

to

the

debt

Fogasa were

The Commission cannot rule out the possibility that the
rescheduling of
terms of
agreement on the
Refractarios’
by
justified
expectations that much less would have been recovered
in the event of bankruptcy, an eventuality that might
have resulted from less favourable rescheduling terms.
Although this agreement is dated more than half a year
the suspension of payments
after the conclusion of
procedure, Refractarios’ economic position was
still
weak and the crisis in the sector was not yet over. The
interest charged by private banks on
average rate of
loans of more
duration was
years’
17,28 % (26), which was considerably higher than the
simple
the
agreement. However, under
Spanish legislation a
creditor cannot impose a higher interest rate on arrears
than the legal interest rate, so it is the latter that the
The
Commission
Commission therefore
aid in the
agreement.

take
into
finds no State

rate of 10 % payable under

account (27).

than three

interest

should

creditor would not have forgotten its claim and, when
the agreement, would
faced with the breaches of
undoubtedly have acted to obtain further security and
additional interest for the late payments. The fact that in
1995 the social security authorities were able to obtain
a further mortgage demonstrates that this was a feasible
option, even if the value of such a mortgage would have
been uncertain given the real value of the property. In
conclusion, Fogasa’s inaction has given rise to State aid.

(70)

Refractarios’ failure to furnish a guarantee and to pay
the agreed instalments gave Fogasa the right to claim
immediately the full amount of
the original debt. A
private creditor may not have used this ultimate remedy
at the first occasion, but would at some point in time,
and in any event well before the end of the limitation
the debt. The
enforced payment of
period, have
Commission deems that this moment would at the latest
have been June 1995. At that point in time the arrears
reached the amount of some EUR 100 000. Moreover,
on 7 June 1995 the social security authorities also took
to the arrears Refractarios had
action with respect
accumulated with them,
starting the procedure for
auctioning off the land under the mortgage. Spain has
maintained that this was how a private creditor would
have acted. The arrears with Fogasa concerned a much
smaller amount than the arrears with social security, but
Fogasa had not yet obtained a guarantee, unlike the
social security and tax authorities. It should therefore
have acted earlier rather than later than the social
the Commission
security
considers the full amount of the debt to Fogasa as State
aid, at least from June 1995 onwards.

authorities. Consequently

(71)

The aid is illegal, because the Commission was not
informed pursuant to Article 88(3) of the Treaty before
it was put into effect.

7.7. Compatibility of the aid granted by Fogasa

it did not make any effort

(69) However, Fogasa’s failure to demand additional interest
when the agreed instalments were not paid, its failure to
insist on a guarantee for the rescheduled debt, the fact
that
to secure actual
payments until
the new suspension of payments in
2000, and its failure to do anything to avoid the risk of
the debt being time-barred, cannot be justified under the
market creditor principle. Such negligence definitely
does not correspond to the behaviour of a private
creditor under market conditions. A diligent private

(72)

(25) See footnote 8.
(26) See footnote 6.
(27) See in particular the Court’s judgment in Tubacex, cited in footnote

24 above.

The Commission has examined whether the exceptions
laid down in Article 87(2) and (3) of the Treaty apply.
The exceptions in Article 87(2) could serve as a basis
for deeming the aid to be compatible with the common
market. However, the aid (a) does not have a social
character and is not granted to individual consumers, (b)
is not intended to make good the damage caused by
natural disasters or exceptional occurrences and (c)
is
not required in order to compensate for the economic
disadvantages caused by the division of Germany.
Neither does it qualify for the exceptions in Article
to
87(3)(a),

the Treaty that

(b) and (d) of

refer

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promotion of the economic development of areas where
the standard of living is abnormally low or where there
is serious underemployment,
to projects of common
European interest and to the promotion of culture and
heritage conservation.

(73) Neither did Spain attempt
grounds enumerated above.

to justify the aid on the

the

after

concluded

agreement

years after which the Commission no longer has the
powers to recover aid had expired. It has to be stressed
that the first action by the Commission was the request
for information sent on 3 May 2001, i.e. less than 10
years
between
In accordance with settled
Refractarios and Fogasa.
case-law (28), such a letter means that the Commission
had by that time investigated the case with a view to
assessing the measures. Moreover,
the aid is due to
Fogasa’s failure to take action to recover its claim at
least from June 1995 onwards. Therefore, the aid is not
affected by the limitation period laid down in Article 15
of Regulation (EC) No 659/1999 and the incompatible
aid should be recovered from the beneficiary.

(74) As far as the first part of

the exception in Article
87(3)(c) of the Treaty is concerned, namely for aid to
facilitate the development of certain economic activities,
the Commission notes that the aid was not aimed at
assisting R&D activities or
investment by an SME.
Neither did the aid pursue environmental objectives; the
environmental problems due to Refractarios’
location
arose mainly in later years and there is no direct link
between the aid and any action to alleviate those
problems. Neither does it appear likely that the purpose
of the aid was to rescue and restructure Refractarios.
The
claim
demonstrates that the aid did not serve any purpose at
all. The most likely purpose may have been to avoid an
immediate financial crisis for the company. In that case
the aid could be classed as rescue aid. However, no
condition was attached to the aid that would suffice to
fulfil the requirements which the Commission usually
applies to such aid, notably the condition that a (new)
restructuring plan be submitted within a certain period
of time. The aid cannot therefore be found compatible
with the common market on this ground.

tried to recover

Fogasa

that

fact

its

(75)

Refractarios argued that any aid resulting from the 1991
agreements with creditors would be compatible with the
common market as restructuring aid to a firm in
difficulty. This, however, does not apply to the aid
granted by Fogasa: the aid does not derive from the
agreement with Fogasa, but from Fogasa’s failure to take
action to ensure compliance with the 1992 agreement.
As explained above, this aid arose at least from June
1995 onwards. It cannot be linked to implementation of
the restructuring. Such behaviour did not involve setting
any conditions as regards the restoration of viability and
could certainly not be regarded as constituting the
minimum aid necessary in such a situation. Considering
the Commission
these and all
concludes that the aid is incompatible with the common
market.

the above arguments,

(77)

(78)

(79)

(80)

8. CONCLUSIONS

The Commission finds that the terms under which the
tax and social security authorities agreed on a debt
rescheduling in the context of
the suspension of
payments procedure of 1990 to 1992 are in accordance
therefore
with the private
concludes that these agreements do not constitute State
aid to Refractarios.

creditor principle.

It

The Commission finds that the efforts made between
1992 and 2000 by the
security and tax
authorities to recover their claims from Refractarios are
It
in accordance with the private creditor principle.
therefore concludes that their actions do not constitute
State aid to Refractarios.

social

The Commission finds that the terms under which the
tax and social security authorities agreed on a debt
the suspension of
rescheduling in the context of
payments procedure of 2000 to 2002 are in accordance
with the private
therefore
concludes that these agreements do not constitute State
aid to Refractarios.

creditor principle.

It

least

at
constitutes

to secure,
aid.
State

Fogasa’s failure to act at least from June 1995 onwards
claim on
to recover, or
Refractarios,
is
aid
incompatible with the common market and has to be
recovered from the beneficiary. In order to restore the
situation that would have existed if the aid had not been
granted, the calculation of the amount to be recovered
shall include interest from the date on which it was at

its
This

(76)

The Commission does not agree with Refractarios when
it argues that any aid related to the rescheduling of debt
was time-barred and that the limitation period of 10

(28) Judgment of the Court of First Instance in Case T-95/96 Gestevision

Telecinco v Commission [1998] ECR II-3407.

L 108/34

EN

Official Journal of the European Union

30.4.2003

the disposal of
its
the beneficiary until
recovery. Interest shall be calculated on the basis of the
reference rate used for calculating the grant-equivalent
of regional aid,

the date of

Article 4

1.
Spain shall take all necessary measures to recover from
the beneficiary the aid referred to in Article 2 and unlawfully
made available to the beneficiary.

HAS ADOPTED THIS DECISION:

Article 1

The agreements concluded in 1991 between the General Social
Security Treasury and the Tax Agency of
the Ministry of
Finance on the one hand and Refractarios Especiales SA on the
other, the actions taken by those authorities to recover their
claims during the 1990s, and the agreement concluded in
2002 between the General Social Security Treasury and
Refractarios Especiales SA do not involve State aid to that
company within the meaning of Article 87(1) of the Treaty.

Article 2

The failure of the Wage Guarantee Fund to act to recover the
amount owed it by Refractarios Especiales SA from June 1995
onwards constitutes State aid to that company within the
meaning of Article 87(1) of the Treaty.

Article 3

The State aid referred to in Article 2 is incompatible with the
common market.

Recovery

shall be

effected without delay

2.
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 beneficiary
until the date of its recovery. Interest shall be calculated on the
basis of
the
grant-equivalent of regional aid.

rate used

calculating

reference

the

for

Article 5

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

Article 6

This Decision is addressed to Kingdom of Spain.

Done at Brussels, 27 November 2002.

For the Commission

Mario MONTI

Member of the Commission