2003/626/EC: Commission decision of 27 November 2002 on the aid scheme implemented by Germany — Thuringia loan programme for small and medium-sized enterprises (notified under document number C(2002) 4358) (Text with EEA relevance.)
Date: 2002-11-27
Institutions: European Commission
Subjects: State aid, Thuringia, control of State aid, small and medium-sized enterprises

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COMMISSION DECISION

of 27 November 2002

on the aid scheme implemented by Germany — Thuringia loan programme for small and
medium-sized enterprises

(notified under document number C(2002) 4358)

(Only the German text is authentic)

(Text with EEA relevance)

(2003/626/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Com-
munity, 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 Article 88(2) of the EC Treaty,

(3)

(4)

The Commission decision to initiate the procedure
was published in the Official
Journal of 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.

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. By letter of 8 March 1999, the Commission asked
for clarification of information submitted by the German
authorities in the proceedings concerning aid to Korn
Fahrzeuge und Technik GmbH (C 36/99, ex NN 29/
98) (4).

Whereas:

1. PROCEDURE

(5)

Germany’s comments were sent by letters dated
29 March, 19 August and 26 August 1999.

(1)

The rules governing the Thuringia loan programme for
small and medium-sized enterprises (hereinafter referred
to as the rules) entered into force on 16 January 1996
for an unlimited period of time (1). In the opinion of the
Land authorities, the rules complied with the de minimis
provision introduced in the Community’s 1992 guide-
lines on state aid for small and medium-sized enter-
prises (2) (hereinafter referred to as the SME guidelines),
and so were not notified under Article 88(3) of the EC
Treaty.

(2)

By letter dated 1 February 1999 (ref. SG(99) D/760), the
Commission informed Germany that it had decided to
initiate the procedure laid down in Article 88(2) of the
EC Treaty in respect of the aid scheme.

(6)

(7)

By letter dated 15 March 2001, the Commission request-
ed further statistical data on the application of the rules
after 1998. Germany provided the data by letter of
19 April 2001, in which it informed the Commission
that the rules had been replaced by a new set of rules on
1 June 1999. The new state aid scheme is not concerned
by this assessment.

Discussions took place between representatives of the
Commission and Germany on 24 April 2001 in Brussels.
Germany submitted its final comments by letter of
1 February 2002.

( 1) Thüringer Staatsanzeiger No 7/1996, p. 390.
( 2) OJ C 213, 19.8.1992, p. 2.

(3) OJ C 108, 17.4.1999, p. 29.
(4) A loan had been granted to Korn Fahrzeuge und Technik GmbH

under the rules at issue in this case.

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2. DESCRIPTION OF THE MEASURE

2.1. Title and legal basis

profitability and liquidity requirements. They are granted
for up to three years at an interest rate of between 4,5 %
and 8 % and with a grace period of up to three years.

(8)

(9)

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

2.2. Recipients

As provided for in point 3 of the rules (Recipients), the
aid is intended for small and medium-sized enterprises
(SMEs), as defined in the relevant Community guidelines,
and for the liberal professions directly serving industry.
It may also be granted to large enterprises in exceptional
cases and subject to approval by the relevant minister.
Where aid is to be granted to enterprises operating in
sensitive sectors, point 3 of the rules stipulates that the
Commission’s approval is required on a case-by-case
basis. However, the report on the implementation of the
rules in 1997 indicates that this condition was not met
in some cases (e.g. Ferkelaufzucht GmbH, Spedition
Rothe GmbH, Dreistreif Kaffeerösterei, Fleisch- und
Wurstwaren GmbH, Meininger Privatbrauerei Müller
and PAFAHG Mischfutter GmbH).

(13) Under point 5 (Nature, scope and amount of

the
payment), the amount of the loan may not exceed the
amount directly required to resolve the firm’s difficulties.

(14) Under point 2(b) (Object of the aid), consolidation loans
are intended for firms with liquidity and profitability
difficulties. Their purpose is to convert short-term
liabilities into long-term soft loans. The possibility of
rescheduling the existing loan commitments of the firm’s
main bank or of other financial institutions with co-
liability on the part of the Thüringer Aufbaubank is
ruled out.

(15) Consolidation loans are granted on condition that the
firm submit a viable overall consolidation plan which,
taking account of the consolidation loan, makes it likely
that the difficulties can be remedied on a long-term
basis. The plan must indicate the firm’s consolidation
requirements, the contributions which the recipient and
its main bank will make, and any public aid that has
already been granted.

2.3. Duration

(16) These loans are granted for between three and 10 years
at an interest rate of between 4,5 % and 8 % and with a
grace period of up to two years.

(10) The rules entered into force on 16 January 1996 for an
unlimited period and were replaced on 1 June 1999 by
a new aid scheme for Thuringia’s loan programme
(Thüringer Aufbaubank’s consolidation and operating
loan programme) (5).

2.4. Objective

(11) The rules are in two sections, one for working-capital
loans and one for consolidation loans, thereby merging
what were previously separate programmes.

(12) According to point 2(a) of the rules (Object of the aid),
working-capital loans are intended for firms which do
not have sufficient collateral. They enable working
capital to be financed, including in the form of prefinan-
cing and interim financing. The firm can receive start-up
aid, expansion aid or aid to help safeguard its activities,
in particular in order to avert risks to its operation or
existing jobs. These loans are granted on condition that
the firm presents a medium-term plan to meet its

( 5) Thüringer Staatsanzeiger No 22/1999, pp. 1236 and 1237.

(17)

It is also the case with consolidation loans that the
amount of the loan may not exceed the amount required
to remedy the firm’s difficulties (point 5 of the rules).

(18) Aid under both sections is granted by the Thüringer
Aufbaubank in the form of soft loans, which — as a rule
and in all known cases — are paid to the recipient via
the main bank at the latter’s primary risk. The bank may
receive a guarantee of up to 60 % of the amount of the
loan at a fee of 1 % per annum of this amount. The
Thüringer Aufbaubank and the main bank receive a
processing fee of 0,1 % of the amount of the loan.

2.5.

Intensity

(19)

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

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(20) Under the rules, the aid element of a soft loan is
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
guarantee or the special-risk status of the recipient firms.
The loan amount has no upper limit. The amount of aid
which a firm may receive (i.e. the aid element resulting
from the interest subsidy) may not exceed the de minimis
ceiling laid down by the relevant de minimis provision.

(21) The rules make express provision for the amount of the
interest subsidy to be altered in relation to the reference
rate so that the loan amount deemed necessary can be
approved.

2.6. Cumulation

(22) Under point 4 of the rules, public financial aid already
granted to a firm must be declared when it applies for a
loan. No practical consequence of this requirement is
apparent.

2.7. Grounds for initiating the procedure

(23) Given that, in calculating the aid amount, the rules did
not take account of the aid elements linked to co-liability
or the special difficulties of recipient firms, they were
based on an incorrect application of the de minimis
provision. Contrary to what the rules state, firms in
sensitive sectors also received aid, with the result that
they came to be applied in sensitive sectors even though
these were not covered by the relevant de minimis
provision.

(24)

It was possible for the soft loans enjoying co-liability on
the part of the Thüringer Aufbaubank to exceed the de
minimis ceilings and thereby constitute state aid within
the meaning of Article 87(1) of the EC Treaty and
Article 61(1) of the EEA Agreement for the recipient
firms. This aid enabled recipient firms to remain in
business or expand their activities. In the Commission’s
view,
the measures were liable to affect
competition.

therefore,

referred to as the ‘1994 guidelines’). This was true at
least as far as the consolidation loans were concerned
but also, to a lesser degree, for the working-capital loans
in so far as they were used for consolidation purposes.

(26) During the preliminary investigation, Germany disputed
the assertion that the rules were applicable to firms in
difficulty, stressing that the loans were granted at the
primary risk of the main bank with a residual risk —
after deduction of the 60 % guarantee — of 40 %. This
risk could not be covered by liability from another
source. According to the information received from the
German authorities, a bank could not normally grant a
loan to a firm in difficulty without sufficient security.

(27) However, the Commission considered this argument to
be inconclusive since firms in difficulty were not ex-
cluded from the loan programme. A comparison of
1997 lists of aid recipients under certain approved
schemes for firms in difficulty in Thuringia (NN 74/95
and N 370/97) with firms benefiting in 1997 from the
loan programme under consideration revealed that some
firms received aid under two schemes (e.g. Automatisie-
rungs- und Elektronik GmbH, Allenburger Automaten
und Metallgießerei GmbH and Dreistreif Kaffeerösterei).

(28) Moreover, the Commission considered, as far as the
consolidation and working-capital
loan programmes
were concerned, that the risks to which banks had
originally been exposed had, in some cases, been con-
siderably reduced as a result of the rescheduling of the
commitments of
firms in difficulty under the loan
programme.

(29) The Commission decided at that stage to assume that
the rules — with the exception of working-capital loans
granted in cases involving the start-up or expansion of
firms — were aimed at firms in difficulty.

(25)

It was clear from the wording of the rules that the
programme applied to firms in difficulty (as defined in
the 1994 Community guidelines on State aid for rescu-
ing and restructuring firms in difficulty (6), hereinafter

(30)

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

In as much as the rules were aimed at firms in difficulty,
their purpose was, according to point 2(a) (working-
capital loans), to avert risks to the firm’s operation or
existing jobs or, according to point 2(b) (consolidation
loans), to bring about a restructuring of the firm. In
both cases, it was necessary to examine the scheme’s
compatibility with the common market in the light of
the 1994 guidelines.

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(31)

In as much as the rules are concerned with rescuing
firms in difficulty, a condition for the compatibility of
rescue aid with the common market under the 1994
guidelines is that the aid in question be granted in the
form of either a state loan on market terms or a
guarantee for a private loan. This condition was not met
in this case because the aid took the form of soft loans.
Since, moreover, the rules did not provide for individual
notification of aid to large firms or firms in sensitive
sectors, as required by the 1994 guidelines, did not rule
out aid to large firms and were indeed applied in a
sensitive sector, the Commission had doubts as to their
compatibility with the common market.

(32)

In as much as the rules are concerned with restructuring
firms in difficulty, the Commission stressed that the
1994 guidelines laid down the following main con-
ditions for compatibility:

(a)

a restructuring plan aimed at restoring the firm’s
long-term viability must be submitted and carried
out;

(35)

In as much as the working-capital aid granted under the
programme was directed at economically viable firms
and promoted the start-up or expansion of firms, it was
deemed by the Commission to constitute operating aid,
which had to be assessed in the light of the relevant
provisions on regional aid. Such aid must meet the
following conditions:

(a)

it must be limited in time and must be degressive;

(b)

it must be granted only in regions covered by
Article 87(3)(a) of the EC Treaty;

(c)

it may not be granted to sensitive sectors.

(36) The Commission concluded that the rules were not
limited in time, were not degressive, did not, in terms of
their effect, rule out the possibility of being applied in
sensitive sectors and, in view of their unlimited duration,
might apply to regions which were no longer covered
by the exemption in Article 87(3)(a) of the EC Treaty.

(b)

aid must be limited to the amount needed to
achieve that objective;

(37) The Commission therefore also had doubts in this
respect about the compatibility of the loan programme
with the common market.

(c)

the recipient firm and its shareholders must make
an appropriate contribution;

(d)

the specific rules applicable to sensitive sectors
must be complied with and, as a general rule,
individual cases notified;

(e)

aid to large firms must be notified individually;

(f)

save in unforeseen, exceptional cases where the
firm was not responsible, restructuring aid must be
granted only once;

(g)

a detailed report on the scheme’s implementation
in respect of SMEs must be submitted.

(33) The loan programme does not provide for individual
notification of aid to large firms or prohibit the repeated
grant of restructuring aid. While the 1994 guidelines
require individual notification of aid granted to sensitive
sectors, the report for 1997 submitted by Germany
indicates that this provision was not complied with in
all cases.

3. COMMENTS FROM GERMANY

(38)

In its comments, Germany puts the total number of
loans granted in the period from 16 January 1996
to 1 June 1999 at 624, amounting to a total of
EUR 124,6 million.

(39) Germany does acknowledge that the Thuringia loan
programme was directed at both viable firms and firms
in difficulty. However, provided that the aid intensity,
including other de minimis aid, remained below the de
minimis ceiling,
it considered the programme to be
compatible with the de minimis provision, irrespective of
whether the recipient was a firm in difficulty or not.

(40) On the individual cases referred to by the Commission,
the German authorities submitted the following com-
ments:

(41) Altenburger Automaten und Metallgießerei GmbH was
granted loans/equity from the consolidation fund in
1995 (7). The firm subsequently fared well, with the
result that, when the consolidation loan was granted (in
June 1997), it could not be considered to be in difficulty.

(34) Consequently, the Commission had doubts as to the
compatibility of the loan programme in the area of
restructuring aid.

(7) This is clearly a reference to case NN 74/95.

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(42) Dreistreif Kaffeerösterei received finance from the con-
the end of 1996 (8). When the
solidation fund at
consolidation loan was granted (end of 1997), the firm
was not in difficulty.

(49)

(43) Automatisierungs- und Elektronik GmbH received a
consolidation loan of DEM 500 000 on 22 June 1995.
The firm was not in difficulty at the time. In Februa-
ry 1997 it received equity of DEM 500 000 financed
from the consolidation fund (9). This enabled it
to
overcome its difficulties. A further consolidation loan of
DEM 150 000 was subsequently granted to it.

(44) Overall, Germany takes the view that the firms in
question were not in difficulty at the time the consoli-
dation loans were granted under the rules and that the
de minimis ceilings were not exceeded in any of these
cases.

(45)

For 1996 and 1997 the aid intensity was calculated
solely on the basis of the interest subsidy since it was
not until after this period that, following a discussion in
autumn 1997 between representatives of Germany and
the Commission, both the interest subsidy and the aid
element associated with the guarantee were included in
the calculation.

(46) The guarantee required the payment of a separate fee of
1 % per annum for each of the loan amounts in question.
Germany originally took the view that such a guarantee
did not involve any aid element if a risk premium
calculated on market terms were paid. Since it felt this
to be the case with the loan programme, it did not
consider it necessary to calculate the aid intensity in
respect of guarantees.

(47) However, developments in 1996 and 1997 meant that
the risk premium charged was not sufficient to cover the
risk and that the guarantee acquired its own specific aid
intensity.

(53)

(48)

In Germany’s view, the method of calculating the aid
intensity for guarantees was finally established in a letter
from the Commission (D/54570) dated 11 November
1998 (10).

(8) This is clearly a reference to case NN 74/95.
(9) This is clearly a reference to case NN 74/95.
( 10) According to this letter, the aid intensity should be deemed to be
0,5 % of the guaranteed loan amount in the case of viable firms,
but up to 100 % of the guaranteed loan amount in the case of
firms in difficulty.

From 1 January 1998, the aid intensity for guarantees
was calculated in accordance with the Commission’s
instructions, with the result that the de minimis ceilings
were not exceeded after that date. According to Germ-
any, from January 1998 the aid intensity of 0,5 % for
guarantees was applied to viable firms. For firms in
difficulty, the aid intensity was calculated at 100 %
according to a list of individual cases for 1999.

(50) According to Germany, the 40 % co-liability on the part
of the main bank constituted a genuine risk on its part.
The possibility of this risk being covered by a guarantee
from another public source was ruled out. As was
apparent from the list of aid granted in 1997, the 40 %
co-liability on the part of the main bank was a minimum
commitment.

(51)

If the loan were transferred to another bank at the main
bank’s primary risk, there was no possibility of the main
bank’s existing loan commitments being rescheduled
with co-liability on the part of the Thüringer Aufbau-
bank. Overdraft facilities existing at the main bank and
enabling cash to be withdrawn had, therefore, to be
maintained in full for the duration of the guaranteed
loan.

(52) Nevertheless, by letter of 27 July 1999 relating to Case
C 36/99 (Korn Fahrzeuge und Technik GmbH), Germany
indicated that loans under the loan programme at issue
could be secured either by means of guarantees up to
80 % under the ‘Rules of the Free State of Thuringia on
the granting of guarantees by the Thüringer Aufbaubank
to business and the liberal professions’ (11) or by a
guarantee under the rules at issue here. It was therefore
possible to guarantee loans under the rules by up to
80 %.

In as much as operating aid was granted to viable firms,
that both working-capital and
Germany points out
consolidation loans were limited over
time. The
maximum duration of a working-capital loan was three
years, while that of a consolidation loan was ten. The
loan programme was degressive in that loans were fully
repayable by the prescribed deadline according to an
amortisation schedule. If the firm operated in a sensitive
sector, the loan programme required individual notifi-
cation. Thuringia was a less-favoured region within the
meaning of Article 87(3)(a) of the EC Treaty.

(11) Aid N 117/96 (OJ C 288, 23.9.1997, p. 5).

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(54) As regards sensitive sectors, Germany stresses that
the loan programme required loans granted to firms
operating in a sensitive sector to be notified individually.

4. ASSESSMENT OF THE MEASURE

(55)

In Germany’s view, examination of the Spedition Rothe
GmbH, Dreistreif Kaffeerösterei GmbH and Meininger
Privatbrauerei Müller cases revealed that notification of
the loans granted to these firms was not necessary
because they did not operate in a sector to which special
Community rules applied.

(56) Only since 1998 had the special aid rules under the 1996
guidelines for State aid in connection with investments in
the processing and marketing of agricultural prod-
ucts (12) been applicable pursuant to Commission De-
cision 1999/183/EC of 20 May 1998 concerning State
aid for the processing and marketing of German agricul-
tural products which might be granted on the basis of
existing regional aid schemes (13). Consequently, there
were no special aid rules applicable to the food, drink
and tobacco industry.

(57) Germany concedes that the individual notification re-

quirement was not met in the following cases:

(a) Getreidemühle Hans-Georg Hirn (loan commit-

ment of 5 June 1996);

(b)

PAFAHG Mischfutter GmbH (loan commitment of
7 November 1997);

(c)

Ferkelaufzucht GmbH (loan commitment of
29 April 1997).

(58) The notification procedure was launched in respect of
aid to Ostthüringer Obst- und Gemüsezentrale Laasdorf
(NN 108/98, ex N 801/97), Hohenölsener Fleisch- und
Wurstwaren GmbH (N 628/97), Molkerei Großbraun-
shain GmbH (NN 35/98, ex N 796/97) and AGK Fleisch-
und Wurstwaren Kölleda (N 799/97).

(59) During the discussions on 24 April 2001, Germany
stated that in certain individual cases loans under the
working capital section of the rules had been granted to
firms in difficulty in combination with other aid under
approved schemes.
In such cases, the approved aid
scheme required the existence of a restructuring plan
ensuring the long-term viability of the firm.

4.1. Existence of state aid

(60) Although any financial payment to a firm alters the
conditions of competition to some extent, not all aid
has a discernible 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.

(61) A definition of what was to be understood by de minimis

aid was first set out in the SME guidelines (14).

the

guidelines

as payments

(62) The scope of the de minimis provision is defined at
point 3.2 of
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 li-
mit. 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 industry, agri-
culture, fisheries, transport and the coal industry).

(63) The 1996 Commission notice on the de minimis rule for
State aid (15) amended the de minimis provision of the
SME guidelines. The ceiling for aid covered by the de
minimis rule was set at EUR 100 000 over a 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.

( 12) OJ C 29, 2.2.1996, p. 4.
( 13) OJ L 60, 9.3.1999, p. 61.

(14) See footnote 2.
(15) OJ C 68, 6.3.1996, p. 9.

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(64) 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.

(65) 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 (16) extended
the scope of the de minimis rule, albeit still to the
exclusion of aid granted to the transport sector and
to activities linked to the production, processing or
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 a distribution network or to other 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.

(66) 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.

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 regu-
lation and should thus apply immediately to all pending
proceedings. For another, the immediate application of
the Regulation is in line with its 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 than its de minimis predecessors and
since the latter apply in any event to cases where the aid
concerned is not exempt under the Regulation, the
general
legal principles of 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 therefore base
its further assessment of the financial 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.

(67)

Since Regulation (EC) No 69/2001 entered into force
only on 2 February 2001, whereas the rules under
examination applied from 16 January 1996 to 1 June
1999, the question arises whether the Commission, for
the purposes of this Decision, can apply the Regulation
retroactively to financial assistance paid before it entered
into force or whether the de minimis rule in the 1992
SME guidelines and the Commission’s de minimis notice
in force in the relevant period should be taken into
account (consecutio legis).

(69) The proceedings initiated thus cover both the rules at
issue and the cases of application which do not fall
within the sectoral scope of Regulation (EC) No 69/
2001 or other de minimis provisions and the cases which
do fall within the sectoral scope of the Regulation or of
other relevant de minimis provisions but in which the de
minimis ceiling is exceeded.

(68) Regulation (EC) No 69/2001 does not indicate whether
it is applicable to the assessment of aid granted before
its entry into force. However, its wording does not rule
out its application to previous cases, which in any event
are subject to the control 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

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

(70) 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.
The Commission therefore takes the view that loans
granted to firms in the foodstuffs industry are not caught
by the Regulation or its predecessors in so far as they
cover the manufacture, processing or marketing of
goods listed in Annex I to the EC Treaty.

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(71) 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 (17).

The typical symptoms are deteriorating profitability or
increasing size of losses, diminishing turnover, growing
inventories, excess capacity, declining cash flow, increas-
ing debt, rising interest charges and low net asset value.
In acute cases the company may already have become
insolvent or gone into liquidation.’

(72)

In the Commission’s view, the residual scope of Regu-
lation (EC) No 69/2001 or the other relevant de minimis
provisions might be exceeded because failure to take
account of the aid element contained in the guarantee
or the method of calculating that aid element might
mean that, in granting 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 is complied with in every instance.
There is in particular no guarantee that it is complied
with where the rules are applied to firms in difficulty,
involving as they do a high risk of default.

(73)

In the Commission’s view, the beneficiaries under the
rules were largely firms in difficulty.

(74)

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 (18).

(75) A firm in difficulty is defined as a firm which is ‘unable
to recover through its own resources or by raising the
funds it needs from shareholders or borrowing. [...]

( 17) These guidelines entered into force on their publication in the
Official Journal of the European Communities. By Decision 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.
( 18) As regards non-notified aid, paragraph 101(b) of the 1999
Community guidelines on State aid for rescuing and restructuring
firms in difficulty (OJ C 288, 9.10.1999, p. 2) lays down that the
Commission will examine 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 is granted. The Commission accordingly examined
the rules on the basis of the 1994 guidelines.

(76) According to the wording of the rules, the purpose of
the working-capital loans (point 2(a)) is to provide start-
up aid, expansion aid or aid to safeguard a firm’s
activities,
in particular in order to avert risks to its
operation or existing jobs, while consolidation loans
(point 2(b)) are intended for firms which are experiencing
liquidity and profitability problems as a result of their
often difficult financial and earnings position.

(77) Germany argued 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.

(78) This argument is not convincing as evidence that the
rules are not applied to firms in difficulty. According to
their wording, the specific purpose of the rules is to
grant in particular consolidation loans but also working-
capital loans and guarantees to firms in financial diffi-
culties. Although the likelihood of the recipient actually
being a firm in difficulty was reduced by the risk which
the main bank still ran, the granting of aid to firms in
difficulty was by no means ruled out by the wording of
the rules.

(79) Germany moreover conceded that loans under the rules
could be secured either by up to 80 % by means of
guarantees under the ‘Rules of the Free State of Thuringia
on the granting of guarantees by the Thüringer Aufbau-
bank to business and the liberal professions’ or by a
guarantee under the rules.

(80) The argument that firms in difficulty are excluded by the
fact that the banks bear an own commitment of 40 % is
thus incorrect in the Commission’s view.

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(81) The Commission also takes the view that it could be
advantageous for the main bank, in particular in the case
of firms in difficulty, to participate in guaranteeing loans
under the rules since the granting of a working-capital
or consolidation loan improves the overall liquidity of
the recipient firm and reduces 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 acting in
such a way as to ensure that new funds are made
available to the firm for its restructuring. This is
particularly true where the associated risk is partly
assumed by the State.

(82) After all, the individual lists sent by Germany of aid
granted or disbursed under the rules show that firms in
difficulty were assisted.

(83) The Commission is unable to share Germany’s view that
the individual firms mentioned in the decision initiating
proceedings (Automatisierungs- und Elektronik GmbH,
Altenburger Automaten und Metallgießerei GmbH and
Dreistreif Kaffeerösterei) were not in difficulty. All of
these firms were granted funds from the Thuringia
consolidation fund before receiving loans under the
rules at issue. Consequently, they were undergoing a
in the
process of restructuring assisted by state aid,
course of which further funds were granted to them
under the rules. In the Commission’s view, however,
only one restructuring operation was involved, with the
result that the firms must continue to be regarded as
firms in difficulty even though their immediate financial
difficulties were resolved as a result of the aid. Funds
granted under the rules should therefore be regarded as
renewed restructuring aid or as a means of consolidating
an existing restructuring plan.

(84) Germany’s assertions, especially in the case of Auto-
matisierungs- und Elektronik GmbH, that a firm which
initially was not in difficulty was granted a consolidation
loan and then received payments from the consolidation
fund (in order to resolve its difficulties) before being
granted a further consolidation loan and was neverthe-
less still not in difficulty do not strike the Commission
as convincing.

(85) After all, Germany conceded in its comments that the
rules were aimed at both viable firms and firms in
difficulty.

(86) The aid element of the guarantee should have been taken
into account in calculating the aid intensity of the loans
provided. This is particularly true, bearing in mind the
risk of default in the case of firms in difficulty.

(87) This assessment is not affected either by Germany’s
statement in its comments that the German authorities
did not know that the aid element associated with the
guarantee and the particular risks involved in the
granting of loans to firms in difficulty should have been
taken into account in calculating the aid intensity in
1996 and 1997.

(88) 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 (19).

(89) The German authorities should, in granting loan guaran-
tees to firms facing liquidity difficulties, at least have had
doubts as to whether the measures involved aid and they
should have notified the measures contained in the
scheme in good time to the Commission, in order to
allow it to give its opinion on the matter (20).

(90) Under the Commission notice on the application of
Articles 87 and 88 of the EC Treaty to state aid in the
form of guarantees (21), 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

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

1989.

(20) This is particularly true in the light of the Commission Decision
concerning state aid case C 19/95 — Germany, negative final
decision on state guarantees for measures to restructure large
firms in difficulty under the State guarantee schemes of the
Länder of Saxony-Anhalt, Lower Saxony, North Rhine-Westphal-
ia, Rhineland-Palatinate, Bavaria, Bremen, Mecklenburg-Western
Pomerania, Schleswig-Holstein and Saxony (letter SG(96)
D/3694 of 3 April 1996), in which the Commission commented
extensively on the aid nature of guarantees.

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

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(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 x risk) — premium, or

(96)

(c)

calculated by any other objectively justifiable and
generally accepted method.

Even viable firms would not obtain such finance on the
terms offered and are therefore able to improve their
market position vis-à-vis competitors within the com-
mon market as a result of the working-capital loans
provided. This applies in particular to viable firms
operating in sensitive sectors. Markets in sensitive sectors
are faced with overcapacity. The financial advantage
conferred on these specific firms by the loans leads
to their position being strengthened vis-à-vis other
competitors in intra-Community trade, with the result
that trade might be affected.

(91) The Commission confirms its view set out

in the
abovementioned notice that where, as in the present
case, guarantees are granted under an aid scheme,
the second method should be the standard form of
calculation.

(92)

It also confirms its 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 the
aid can be equivalent to the sum actually secured by the
guarantee.

(93)

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

(94)

In the Commission’s view, the rules and their 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
under Article 2(2). The same applies to the other de
minimis provisions in force at the time the measures
were implemented.

(95) Where applied to firms in difficulty, the rules allow
recipient firms to receive from a private bank financial
resources which,
in view of their financial situation,
they would not otherwise receive from private credit
institutions on the basis of the loan terms normally
applied by the latter. These financial resources make it
possible for recipient firms either to avoid being forced
out of the market or to improve their market position.
If the firm had been forced out of the market, either
existing overcapacities would have been reduced or the
market shares made available would have been acquired
by competitors, which could in either case have im-
proved their profitability. The loans covered by these
proceedings may be granted to firms which produce
goods or provide services which may be the subject of
intra-Community trade. It must therefore be assumed
that the financial measures concerned by the proceedings
are liable to affect trade between Member States.

(97) The Commission thus 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.

(98) On the basis of the arguments presented by the German
authorities, the Commission takes the view that the
private bank, as a lender, did not profit from the grant
of the consolidation loan in a manner which distorts
competition.

(99)

In the Commission notice on the application of
Articles 87 and 88 of the EC Treaty to state aid in the
form of guarantees, the Commission assumes that, if a
state 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.

(100) Although, according to the wording of point 2(b) of the
rules, the firms’ existing liquidity problems are to be
resolved by means of a rescheduling of short-term
indebtedness on the basis of a soft loan, Germany
indicated in its comments that a rescheduling of the main
bank’s existing loan commitments by the Thüringer
Aufbaubank was possible only without the latter’s co-
liability.

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

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4.2. Lawfulness of the aid

(106) The compatibility of each of these fields of application
will be examined in the light of the relevant provisions
applicable (26).

(102) The Commission regrets that,

in granting the aid,
Germany incorrectly applied Regulation (EC) No 69/
2001 and acted in breach of Article 88(3) of the EC
Treaty.

4.3.1. Restructuring aid under the rules

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 one of the other
relevant de minimis provisions was exceeded

(103) On examining the loan programme, the Commission
finds that it was directed at both viable firms and firms
in difficulty.

(104) In so far as the aid was granted to firms in difficulty, it
constituted restructuring or rescue aid,
to use the
terminology of the 1994 guidelines, as confirmed by the
1999 guidelines (22).

(105) In so far the aid was granted to viable firms, it constituted
operating aid within the meaning of the Commission
communication of 1988 on the method for the appli-
cation of Article 92(3)(a) and (c) to regional aid (23). This
communication was confirmed and fleshed out by the
1998 guidelines on national regional aid (24), as amended
in 2000 (25).

( 22) Under point 2.2. of the 1994 guidelines, they applied only to the
extent that they were consistent with the special rules in the
sensitive sectors. At the time in question, there were special aid
rules in agriculture, fisheries, steel, shipbuilding, textiles and
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.
On 1 January 1998 the Community guidelines on state aid for
rescuing and restructuring firms in difficulty entered into force.
They differed from the 1994 guidelines only in respect of the
agricultural sector (OJ C 283, 19.9.1997, p. 2).

( 23) OJ C 212, 12.8.1988, p. 2.
( 24) OJ C 74, 10.3.1998, p. 9.
( 25) OJ C 258, 9.9.2000, p. 5.

(107) In so far as the restructuring of firms in difficulty is
involved, it should be noted that, in accordance with the
1994 guidelines, the following criteria had essentially to
be met as a precondition for compatibility of the aid
with the common market:

(a)

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

(b)

a significant contribution from the recipient firm
and its shareholders;

(c)

limitation of the aid to the strict minimum required;

(d)

(e)

compliance with the special rules governing the
sensitive sectors, requiring the notification of indi-
vidual cases;

restructuring aid to be granted only once in so far
as there are no unforeseen circumstances for which
the company is not responsible; from 1995, the
Commission’s practice has been to require individ-
ual notification of repeated restructuring aid to one
and the same firm where the previously granted
restructuring aid exceeded EUR 1 million (27);

(f)

individual notification of aid to large firms.

(108) Working-capital loans are granted under the rules on
condition that there is a medium-term strategy for
ensuring profitability and liquidity requirements. Fur-
thermore, the firm and the main bank must make an
appropriate contribution from their own funds. A
restructuring plan is not required.

(26) OJ C 119, 22.5.2002 (For the definitions applied, the Com-
mission 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
aid. Its assessment is not affected by application of the 1998
guidelines on national regional aid).

(27) See,

for example, Commission decision SG(96) D/1946 of
6 February 1996 on State aid case NN 74/95 — Thuringia
consolidation fund for firms in difficulty.

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(109) Consolidation loans are granted under the rules on
condition that the firm submit a viable overall consoli-
dation plan which, taking account of the loan, will allow
the firm’s difficulties to be resolved on a lasting basis.
Furthermore, the firm and the main bank must make an
appropriate contribution from their own funds.

Commission communication of 1988 on the method
for the application of Article 92(3)(a) and (c) to regional
aid and of the Commission’s subsequent practice, as
confirmed by the 1998 guidelines on national regional
aid.

(110) As regards the ceiling,

the
maximum amount of consolidation and working-capital
loans must not exceed what is directly necessary to
resolve the firm’s difficulties.

the rules stipulate that

(111) Although the rules require notification of individual
cases in sensitive sectors, this requirement was not met,
at least in part, in the sensitive sector of agriculture.

(112) A ban on repeated restructuring aid or a requirement to
notify repeated aid where previous restructuring aid
exceeded EUR 1 million is not contained in the wording
of the rules. Lastly, the rules do not provide for individual
notification of aid for large firms.

(113) The Commission has concluded that the rules themselves
are thus not in line with the requirements of the 1994
guidelines and are not compatible with the common
market. To the extent that restructuring aid was granted
under the rules to firms in difficulty, it is not compatible
with the common market.

4.3.2. Rescue aid

(114) In so far as the rescue of firms in difficulty is involved, it
must be noted that the 1994 guidelines make it a
precondition of compatibility 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 is not met in the case in point, since the
loans in question are soft loans.

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

4.3.3. Operating aid to viable firms

(117) Under the regional aid map in force from 1996 to 1999,
Thuringia was an assisted area under Article 87(3)(a) of
the EC Treaty. The Commission communication of 1988
allows the Commission exceptionally to approve certain
types of operating aid to areas in regions eligible under
Article 87(3)(a)
(formerly Article 92(3)(a) of the EC
Treaty) in view of the particular difficulties they face,
provided that the aid is limited in time, is designed to
overcome the structural handicaps of firms located in
such regions and is not granted in sensitive sectors.

(118) In addition, in the course of the 1990s, the Commission
developed a practice of requiring aid to be degressive.
This requirement is confirmed in the 1998 Community
guidelines on national regional aid.

(119) In the Commission’s view, the requirement for the rules
to be limited in time is not met, even though they ceased
to be valid on 31 May 1999 (28).

(120) In examining this requirement, the Commission cannot
confine its assessment to the rules, but must also take
account of the fact that they replaced two previous
schemes (29). Those schemes entered into force on
20 July 1993 and were replaced by the rules on
16 January 1996. The Commission takes the view that
the extension of the two schemes in the form of the
rules under consideration is not in line with the basic
requirement for aid to be limited in time, as set out in
the Commission communication of 1988 on the method
for the application of Article 92(3)(a) and (c) to regional
aid and in the guidelines on national regional aid.
Moreover, Germany has presented no argument which
rules out the possibility of operating aid having been
granted under the rules between 20 July 1993 and
31 May 1999. This does not contradict the argument
that each individual loan was limited in time.

(116) Where loans were granted to economically viable firms,
they provided them, according to the wording of the
rules, with liquidity that was not linked to any specific
investment. The Commission considers this aid to be
operating aid, which must be assessed in the light of the

(28) The Commission notes that the Thuringia loan programme
under consideration was replaced on 1 June 1999 by a new loan
programme which appears prima facie to comply with the de
minimis provisions applicable.

(29) Thuringia consolidation programme (C 85/98) and Thuringia

working-capital programme (C 28/99).

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(121) During the 1990s the Commission developed the prac-
tice of requiring operating aid to be degressive (30). In its
view, the rules themselves and their application should
have complied with the degressivity requirement as of
their entry into force on 16 January 1996. The rules
made no provision for this.

and was acknowledged by the Commission in its
decisions on the Treuhandanstalt cases and a number of
major projects (including EKO-Stahl and Leuna 2000);
however, it cannot be accepted for the period concerned
by these proceedings and was not even put forward by
Germany.

(122) Nor does the wording of the rules require a loan to be
granted only once. On the contrary, in at least one case
(Automatisierungs- und Elektronik GmbH), it has come
to light that a firm received aid both under the Thuringia
consolidation programme on 22 June 1995 and under
the rules at issue in these proceedings. In addition,
Germany has not explained the need for the further
granting of aid.

(123) It is necessary to stress here the exceptional nature of
the approval of operating aid by the Commission.
Neither the Commission communication of 1988 on
the method for the application of Article 92(3)(a) and (c)
to regional aid nor the 1998 guidelines on national
regional aid (point 4.15) provide for approval of op-
erating aid for safeguarding structures. The guidelines
provide general confirmation of the 1988 approach, in
that they require operating aid to be justified in terms of
its contribution to regional development and its nature,
and its level to be proportionate to the handicaps which
it seeks to alleviate and the existence of which must be
demonstrated by the Member State.

(124) In the years immediately following German unification,
the area of the former GDR, of which Thuringia is part,
had to cope with infrastructure disadvantages. However,
in the Commission’s view, by 1996, when the Thuringia
programme under consideration began, these disadvan-
tages had been significantly reduced as a result of major
infrastructure investment by Germany under the Aufbau-
Ost programme. During the proceedings, no argument
was presented to the Commission to show that the aid
granted was necessary to offset significant cost and
infrastructure disadvantages.

(125) In view of the major investment activity in Thuringia in
the period after 1996, there cannot be any question
either of the maintenance of existing investment forming
an essential precondition for the attraction of new
investment. This kind of argument for maintaining an
‘industrial core’ may well have applied in the early stages
of the new Länder’s integration into the united Germany

( 30) This practice was confirmed with the adoption of appropriate
measures to adapt existing aid schemes to the provisions of the
2000 amendments to the regional guidelines and by Commission
letter SG (98) D/1670 of 24 February 1998.

(126) The Commission also notes that Thuringia’s loan pro-
gramme is not clearly directed at small businesses in
traditional branches of the economy which could not
expand without outside help. As regards investment aid
in the new Länder at the time, there was no shortage of
Commission-approved mechanisms for financing initial
investment. In various decisions, the Commission recog-
nised that the new Länder were suffering from a long-
standing shortage of equity attributable to the lack of
opportunities for capital formation in the former GDR.
it approved a series of very limited
On this basis,
operating aid measures.

(127) While the object of the aid under the rules does not
exclude the possibility of financing growth, overall the
programme is not an offensive programme geared to
promoting growth and hence structural change but is
overwhelmingly defensive and thus impedes structural
change. However, the measures restricting structural
change are not likely in the long term to contribute to
successful regional development.

(128) The Commission accordingly considers that the contri-
the operating aid concerned to regional

bution of
development has not been demonstrated.

(129) Furthermore, it notes that, contrary to the wording of
the rules, sensitive sectors have not been excluded from
receiving operating aid. Application of the rules in the
sensitive agricultural sector shows that, contrary to their
wording, they were applied in at least one sensitive
sector.

(130) For all the above reasons, the Commission concludes
that, where operating aid was granted to viable firms
under the rules, it was not compatible with the common
market. The rules extend the time frame within which
operating aid can be granted; they do not require aid to
be degressive, and sensitive sectors were not excluded;
the rules are therefore incompatible with the common
market.

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(131) 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 (31).

the ceiling of EUR 1 million is exceeded. Where restruc-
turing aid was granted under the working capital section
of the rules, a restructuring plan was not required.
Moreover, the rules were applied in at least one sensitive
sector and allowed operating aid to viable firms which
was not degressive.

(132) The Commission concludes that, apart from the pro-
visions for assessing aid for rescuing and 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.

(137) Accordingly, application of the rules beyond the scope
of Regulation (EC) No 69/2001 or of the relevant
provisions that preceded it to firms in difficulty and in
respect of operating aid to viable firms was incompatible
with the common market.

(133) 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
culture or heritage conservation. The Commission there-
fore
that neither Article 87(3)(b) nor
Article 87(3)(d) of the EC Treaty applies to the rules.

concludes

(134) Some of the individual cases covered by the rules under
examination may have been the subject of other formal
investigation proceedings under Article 88(2) of the EC
Treaty. This decision does not apply to them.

(138) It

is the Commission’s 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
rules for the application of Article 92 of
the EC
Treaty (32). This Article requires Member States to take
all necessary measures to recover the aid from the
beneficiary. To clarify the number of cases where
recovery is required, the Commission considers that
Germany should draw up a list of all firms not covered
by the scope of Regulation (EC) No 69/2001,

5. CONCLUSION

HAS ADOPTED THIS DECISION:

Article 1

(135) The aid scheme was not notified and was thus unlawful
under Article 88(3) of the EC Treaty. 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 de minimis provisions in force at the time the
scheme was implemented and that was granted to
firms involved in intra-Community trade was granted
unlawfully.

(136) The application of the rules is incompatible with the
common market, in so far as intra-Community trade is
affected, in that it allows rescue aid to be granted at
subsidised interest rates beyond the de minimis ceiling,
allows restructuring aid to be granted more than once
and does not require repeated aid to be notified where

( 31) 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 (not yet published) concerning Section 52(8) of the
German Income Tax Law.

The rules governing the Thuringia loan programme for small
and medium-sized enterprises (hereinafter referred to as the
rules) establish State aid within the meaning of Article 87(1)
of the EC Treaty.

The rules do not establish State aid within the meaning of
Article 87(1) of the EC Treaty 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 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
producing goods or providing services that are not the subject
of intra-Community trade.

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

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

Article 6

Article 2

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

Article 3

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 4

This Decision does not apply to those cases covered by the
rules that were the subject of other Commission proceedings
or of a formal Commission decision.
Implementing this
Decision, Germany shall draw up a list of the firms concerned.

Article 5

Germany shall take all necessary measures to recover from the
beneficiaries the aid referred to in Articles 2 and 3 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.
Interest shall be calculated on the basis of the
reference rate used for calculating the grant equivalent of
regional aid.

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

This list shall indicate which firms are in difficulty and which
are viable and on which section of the programme the aid is
based. Germany shall also indicate the criteria used to classify
the firms in difficulty.

In this connection, Germany shall also devise a method to
identify the aid element in the guarantee on the basis of the
Commission notice on the application of Articles 87 and 88
of the EC Treaty to state aid in the form of guarantees.

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 and which produce goods or
provide services that are not the subject of intra-Community
trade and shall indicate the criteria applied.

Article 7

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

Article 8

This Decision is addressed to the Federal Republic of Germany.

Brussels, 27 November 2002.

For the Commission

Mario MONTI

Member of the Commission