2003/284/EC: Commission Decision of 11 December 2002 on the State aid implemented by Spain for Sniace SA (notified under document number C(2002) 4824) (Text with EEA relevance)
Date: 2002-12-11
Institutions: European Commission
Subjects: Spain, State aid, control of State aid, loan, silviculture, wood industry

30.4.2003

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Official Journal of the European Union

L 108/35

COMMISSION DECISION

of 11 December 2002

on the State aid implemented by Spain for Sniace SA

(notified under document number C(2002) 4824)

(Only the Spanish text is authentic)

(Text with EEA relevance)

(2003/284/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

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

context,
it received comments from Sniace. On 10
August 2000 it forwarded them to Spain, which was
given the opportunity to react thereon but chose not to.

Having regard to Council Regulation (EC) No 659/1999 of 22
March 1999 laying down detailed rules for the application of
Article 93 of the EC Treaty, (1) and in particular Article 14
thereof,

(4)

Having called on interested parties to submit their comments
pursuant to the provisions cited above, (2) and having regard
to their comments,

By letter dated 2 October 2001 the Commission
addressed an information injunction to Spain, which
replied by letter dated 17 December 2001. By letter
dated 19 December 2001 Sniace sent further comments
and proposed that a meeting be held in order to clarify
the situation. The meeting took place in April 2002. By
letter dated 31 May 2002 Spain submitted additional
information to the Commission.

Whereas:

I. PROCEDURE

II. DETAILED DESCRIPTION OF THE MEASURE

(1)

(2)

(3)

By letter dated 2 March 1998 the Commission received
a complaint alleging that Sniace SA (hereinafter referred
to as (cid:145)Sniace(cid:146)) had received illegal aid in the form of a
subordinated loan of EUR 12 020 242 (PTA 2 000
million) granted on non-market terms. The Commission
requested Spain to submit
information thereon and,
since insufficient particulars were received in reply, on
11 December 1998 it registered the case as non-notified
aid.

(5)

By letter dated 11 April 2000 the Commission informed
Spain that it had decided to initiate the procedure laid
down in Article 88(2) of the EC Treaty in respect of the
aid. Spain submitted its comments by letter dated 5 June
2000.

The Commission decision to initiate the procedure was
published in the Official
the European
Communities (3). The Commission invited interested
parties to submit their comments on the aid. In this

Journal

of

Sniace is a company based in Torrelavega, Cantabria.
Sniace is highly vertically integrated and is active in the
areas of forestry management and production of paper,
synthetic fibres and derived chemical products. In 2000
it employed around 600 people. From 1992 to 1996 it
was under the suspension of payments procedure, from
which it emerged after an agreement with its main
private creditors was signed on 26 September 1996.
The Cantabrian Regional Government commissioned
during 1996 a
viability plan from the private
consultancy Coypsa. The plan was agreed on by the
interested parties on 29 September 1996. As part of
this plan, in 1997 the company renegotiated its debts
with the remaining creditors, including Social Security.
In October 1998 the Commission adopted an initial
negative decision on the terms of
that rescheduling
agreement, on the grounds of the level of the interest
rates negotiated. However,
in the
light of a judgment delivered by the Court of Justice in
a
Spanish company
Tubacex (4), the Commission decided to revoke its initial

in September 2000,

concerning

similar

case

the

(1) OJ L 83, 27.3.1999, p. 1.
(2) OJ C 162, 1.6.2000, p. 15.
(3) See footnote 2.

(4) Case C 342/96, 9.4.1999, Rec. 1999, p. I-02459.

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decision and adopted a positive decision declaring that
no aid was involved (5).

the clients’ representation increases the influence of the
publicly appointed members.

(6)

(7)

In this same context,
in January 1998 Caja Cantabria
decided to grant a loan of EUR 12 020 242 (PTA 2 000
million) to Sniace. The loan is to run for eight years,
from the date of signature of the contract (4 February
1998) until 2 January 2006. It is a subordinated equity
loan. As a subordinated loan it will be reimbursed only
the
at maturity and in the event of bankruptcy of
company it will be reimbursed after all the common
creditors’ claims but before the shareholders’. As an
equity loan, the interest incurred depends on the profits
made by the company. The interest rate is made up of
two components: a fixed component of 2 % and a
variable component
that depends on the company’s
profits. The variable component is to be paid only when
the company generates profits and was set at 5 % for
profits up to EUR 3 million (PTA 500 million), 8 % for
profits between EUR 3 and 6 million (PTA 500 to
1 000 million) and 10 % for profits over EUR 6 million
(PTA 1 000 million). This variable component cannot
however exceed the outcome of applying MIBOR + 2 %
to the remaining principal. For 1998, the interest was
fixed at 6,75 %. The loan may be converted into shares
or bonds, if the parties so decide.

(8)

As indicated when the procedure was initiated, because
of this situation, the Commission considers that Caja
Cantabria’s decisions to finance certain companies may
be based on reasons of public interest rather than the
private investor principle. The Commission decided that
it had to assess whether the above loan to Sniace was
granted under normal market conditions.

III. COMMENTS FROM INTERESTED PARTIES

(9)

Sniace was the only intervening party.
may be summarised as follows:

Its comments

(a)

the preliminary investigation stage lasted too long,
and during that period both the company and the
Spanish authorities cooperated with the Commission
departments. The company therefore had legitimate
expectations that the loan would be regarded as not
involving aid;

Caja Cantabria is a credit institution with the legal status
It is a non-profit institution,
of a private foundation.
with the results of
its activity being used to finance
social and cultural activities. A majority of the voting
rights (63 %) of its different decision-making bodies are
held by political representatives in the region. Article 7
of Cantabrian Regional Law 1/1990 of 12 March 1990
on the decision-making bodies of
the savings banks
provides for the following representation in the general
bodies:
and
meeting
municipalities:
25 %;
depositors: 22 %; social and cultural institutions: 10 %;
employees: 5 %. Under Article 10(2) of the same Law,
the representation of the provinces is assigned directly
the public authorities are
to the region.
involved in the appointment of the representatives of
social and cultural institutions. Where it is not possible
to have representatives of
the founding members or
bodies among them, the representation of public bodies
is increased further (6). Lastly, the fragmented nature of

decision-making
councils:

the
38 %;

In addition,

provincial

other

(b) Caja Cantabria was a private institution; the public
that were
its
representatives
full
bodies
decision-making
independence. Its funds were of private origin and
its loans therefore could not constitute State aid;

appointed
acted

with

to

(c)

in any event, the loan was granted in accordance
with national laws and at normal market conditions.
Sniace had been through difficult times in the recent
it generated
past but was now performing well:
profits in 2000 and was likely to do so again in
2001. Moreover, the company had assets valued at
some EUR 150 million (PTA 25 000 million). There
was therefore no risk of the loan not being repaid;

(5) OJ L 11, 16.1.2001, p. 46.
(6) This is the case for Caja Cantabria. For example, the composition
of the general meeting was, on 31 December 2001: municipalities:
40 %; provincial councils: 27 %; depositors: 23 %;
social and
cultural institutions: 5 %; employees: 5 %. At the same date, 10 out
of 15 members of the board of directors (including the chair, the
two vice-chairs and the secretary) were appointed by public
authorities.

(d) other private banks stated that they would have lent
to Sniace on similar terms. The differences with Caja
Cantabria’s
they
and
constituted State
it would be below the
threshold for de minimis aid. The Commission
should therefore approve the loan on the current
terms;

loan were minimal

aid,

if

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(e)

if the Commission were however to decide that the
loan involved aid, Sniace invited the Commission to
approve it under the derogations provided for in
Article 87(3)(a) or (c).

(14)

IV. COMMENTS FROM SPAIN

(10)

(11)

(12)

In their letter of 5 June 2000 the Spanish authorities
stated that they understood the surprise expressed by
the company at the Commission’s decision to initiate
the formal investigation procedure after such a lengthy
preliminary examination.

independence

They also reiterated that Caja Cantabria was a private
credit institution and that the public representatives on
its decision-making bodies were required by law to act
and were personally
with complete
accountable for their actions in the same way as any
other member of any decision-making body in any
other private financial
institution. Accordingly, Spain
concluded, the loan in question constituted a contract
between a private credit
institution and a private
company and did not involve State aid.

By its letters of 17 December 2001 and 31 May 2002,
which followed the information injunction issued by the
Commission on 2 October 2001, Spain reaffirmed that
the subordinated loan did not contain State aid. By its
letter of 31 May 2002, Spain submitted the viability
plan implemented by Sniace in 1996. Spain stressed,
however, that the viability plan was not relevant for the
purpose of assessing the subordinated loan, given that
the loan was not mentioned therein and was granted by
Caja Cantabria only in February 1998.

V. ASSESSMENT

1. Legal basis

The Commission has made public the criteria it applies
when examining the compatibility of national regional
aid with the common market under the provisions of
Article 87 in its guidelines on national regional aid (7).
Where aid is granted to undertakings in the synthetic
fibres sector, the Commission has also published specific
assessment criteria in the code on aid to the synthetic
fibres industry (8). Where aid is granted for restructuring
companies in difficulty, the criteria applied are set out
in the Community guidelines on State aid for rescuing
and restructuring firms in difficulty (9).

(15)

The Commission has also made public the criteria it
applies when assessing the existence of aid in loans by
the State to undertakings in its communication to the
Member States on the application of Articles 87 and 88
to public undertakings (10).

in order

(16) As indicated in the above communication, and in line
to determine
with long-standing practice,
whether a loan involves aid and, if so, how much, the
Commission applies the principle of the private investor
operating under normal market conditions. Any loan
granted by a lender to a client under normal market
economy conditions involves a degree of risk. The risk
attached to any loan arrangement is usually reflected in
two distinct parameters: the interest rate charged and
the security required to cover the loan.

(17)

rate

and the

The possible aid involved in a given loan by a public
lender will correspond to the difference between the
interest rate that the firm would have to pay, if it had to
cover the risk attached to the loan as a private lender
actually paid. The
would require,
Commission has
to the Member
also indicated
States (11) that its published reference rates are set in
such a way that they reflect the average level of interest
in the different Member States, on
rates charged,
medium- and long-term loans (five to 10 years) backed
by normal security. The current reference rates are thus
equivalent to the five-year interbank swap rates plus a
premium, which is 75 basis points in the case of Spain.

(13) Article 87(1) of the EC Treaty provides that any aid
granted by a Member State or through State resources
in any form whatsoever which distorts or threatens to
distort competition by favouring certain undertakings
shall, in so far as it affects trade between Member States,
be incompatible with the common market. Article 87(3)
provides for the possibility of considering aid to be
compatible with the common market, under certain
circumstances.

(7) OJ C 74, 10.3.1998, p. 9.
(8) OJ C 94, 30.3.1996, p. 11.
(9) OJ C 368, 23.12.1994, p. 12. These guidelines were revised in
1999 (OJ C 288, 9.10.1999, p. 2). The 1999 version of
the
guidelines does not apply because the alleged aid measures were
granted prior to their publication (see Section 7 of
the 1999
version).

(10) OJ C 307, 13.11.1993, p. 3.
(11) Commission notice on the method for setting the reference and

discount rates (OJ C 273, 9.9.1997, p. 3).

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(18)

In the same notice, the Commission also states that the
reference rate thus determined is a floor rate which may
be increased in situations involving a particular risk, for
example in the case of an undertaking in difficulty or
where the security normally required by banks is not
provided. In such cases, the premium may amount to
400 basis points or more if no private bank would have
agreed to grant the relevant loan under normal market
conditions.

2. The aid is granted by the State or through state
resources

(19)

(20)

at

rights

voting

regional

can be

economic

objectives

(63 %) of

regarded as

Caja Cantabria is a credit institution with the legal status
of a private foundation, which besides carrying on the
normal activities of a credit institution pursues social
and
level.
Representatives of public authorities in the region hold
a majority
in its
the
decision-making bodies. Because of the rules that govern
it, Caja Cantabria
a public
undertaking according to the definition given in Article
2(c) of Commission Directive 80/723/EEC of 25 June
1980 (the Transparency Directive) (12) as last amended
by Directive 2000/52/EC (13). According
to that
provision a public undertaking is an undertaking over
which the public authorities may exercise directly or
indirectly a dominant
influence, and such dominant
influence shall be presumed when the public authorities
can, directly or indirectly, appoint more than half of the
members of the undertaking’s administrative, managerial
or supervisory body.

The Commission cannot agree with the argument put
forward by Spain and by Sniace that the loan is an
arrangement between a private institution and a private
company and that automatically no aid is involved. Nor
granting
does
subordinated equity loans is provided for by a national
law (14) automatically mean that no aid is involved. The
loan has to be examined according to the criteria used
to assess measures of this type.

possibility

that

fact

the

the

of

a

case

cannot

in
particular
automatically
presumed (15). To that end,
the Commission has to
examine whether the public authorities were involved,
in one way or another, in the adoption of the particular
measures.

be

(22)

(23)

In the present case, the Commission has examined the
evidence arising from the circumstances of the case and
the context in which the subordinated loan was granted
and has concluded that the measure can be regarded as
imputable to the State, for the reasons set out below.

Firstly, the public authorities played a very active role in
the relaunch of Sniace and its return to normal activity
after the suspension of payments period. The economic
situation of
discussed on numerous
occasions in the Regional Assembly of Cantabria. At its
session of 4 June 1996, the Regional Assembly voted
unanimously a motion point 4 of which called on the
Regional Government to:

Sniace was

the means

available
applying

(cid:145)Use
all
to the Regional
and
Government
administrative pressure to ensure that Banesto and
Banco de Santander uphold its vision of Sniace’s
future, as well as its commitment to its future(cid:146) (16).

political

for

(24) At

the

time,

same

the Cantabrian Government
commissioned from the consultancy Coypsa the viability
plan that formed the basis of Sniace’s return to normal
activity (17) and was
subsequently accepted by the
company and the unions.

implementation. A working group was

(25) After the signature of the viability plan in September
1996, the local authorities also played an active part in
its
set up
including representatives of the Cantabrian Government,
the
Torrelavega City Council, Sniace’s management,
trade unions,
for a
the private bank Banesto. The
number of meetings,
to discuss
regularly in order
working group met
implementation of
including the
aspects linked to its financing.

the consultancy Coypsa, and,

the viability plan,

(21)

The fact
that
the public authorities may exercise a
influence over Caja Cantabria does not
dominant
automatically imply that the State actually exercised its
control in a particular case. Indeed, even if the State is
in a position to exercise a dominant influence over an
undertaking’s operations, actual exercise of that control

(12) OJ L 195, 29.7.1980, p. 35.
(13) OJ L 193, 29.7.2000, p. 75.
(14) Law 27/1984 of 26 July 1984 on industrial conversion and

reindustrialisation.

(15) Judgment of the Court of Justice in Case C-482/99 [2002] ECR

I-4397.

(16) Diario de Sesiones de la Asamblea Regional de Cantabria, No 34,

4 June 1996, p. 1230.

(17) This is confirmed, inter alia, by the statement made by Mr Alvarez
Redondo, representative of the Cantabrian Government, to the
Regional Assembly of Cantabria on 17 July 1996: (cid:145)We should not
forget that the viability plan was an initiative of the Regional
Government(cid:146), Diario de Sesiones de la Asamblea Regional de
Cantabria, No 98, 17 July 1996, p. 1885 ((cid:145)No podemos olvidar que
la realizaci(cid:243)n del Plano de Viabilidad ha sido una iniciativa del Consejo
de Gobierno(cid:146)).

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(26)

(27)

in the implementation of

The Regional Assembly of Cantabria also took an
the viability plan.
interest
Representatives of
the private bank Banesto, one of
Sniace’s main creditors, appeared before the Regional
Assembly of Cantabria on 5 July 1996 and 22 January
1997.

Secondly, the involvement of the local authorities in the
implementation of the plan included active involvement
in the aspects related to its financing. On 22 January
1997 Dr Robles, a representative of Banesto, took part
in a hearing at the Regional Assembly of Cantabria.
During the hearing, Dr Robles declared that the bank
was ready to provide Sniace with a loan of up to EUR
10,2 million (PTA 1 700 million) and a credit line of
around EUR 18 million (PTA 3 000 million), on
condition that Sniace needed them and that proper
collateral was provided (18). Replying
to specific
questions on Banesto’s position, Dr Robles pointed out
that the need for collateral was the main problem in the
ongoing negotiations with Sniace (19).

(28)

The Commission also takes into account the following
indications from press reports (20):
in the summer of
1997 Caja Cantabria confirmed that it was prepared to
provide half of the EUR 12 million loan, on condition
that Banesto would provide the other half. Unlike
Banesto, Caja Cantabria was at the time involved only to
a limited extent in Sniace’s financing.

Sniace’s working

(29) Negotiations on the loan were held under the auspices
group. The daily El Diario
of
Montaæes (21) reports a statement made by Sniace’s CEO
Blas Mezquita at the end of the working group meeting
that took place on 24 November 1997 at the premises
of the Industry Ministry of the Regional Government of
Cantabria. According to that report, Mr Blas Mezquita
declared that the main decision taken by the working
group was
the Cantabrian Government would
intervene directly as an intermediary to secure the EUR
12 million loan to Sniace.

that

to provide

(30) A the end of January 1998, following Banesto’s refusal
to grant the subordinated loan to Sniace, Caja Cantabria
agreed
EUR 12 million
subordinated loan. According to press reports, at the
the loan, a
board meeting that decided to grant
the
representative
the Cantabrian industry association
representative of

clients

bank’s

entire

and

the

the

of

(18) Diario de Sesiones de la Asamblea Regional de Cantabria, No 150, 22

January 1997, p. 2812.

(19) Diario de Sesiones de la Asamblea Regional de Cantabria, No 150, 22

January 1997, p. 2817.

(20) El Diario Montaæes, 17 August 1997, pp. 1 and 16; 20 August
1997, p. 17; 23 August 1997, p. 18; 3 September 1997, p. 16;
28 October 1997, p. 16.

(21) Issue of 25 November 1997, p. 16.

industry

voted against the granting the loan (22). According to
the
the
subordinated loan did not afford Caja Cantabria all the
necessary guarantees (23).

CEOE-Cepyme,

association

(31)

that

other

indicate

financial

for credit

choice of

instrument,

circumstances

Thirdly,
the
subordinated loan can be regarded as imputable to the
the
State. The
a
institutions
is unusual
subordinated loan,
acting on a purely commercial basis. Subordinated loans
are reimbursed only at maturity and in the event of
bankruptcy of the company will be reimbursed after all
the
the
shareholders’. A bank with no exposure towards the
prospective debtor, as was the case for Caja Cantabria,
would normally have required better collateral and a
higher level of security for any new loan it decided to
grant.

creditors’

common

claims

before

but

(32) Moreover, the subordinated loan was very important in
securing Sniace’s financial viability. The company had a
negative net worth of EUR 10,4 million at the end of
1997, which became positive to the tune of EUR 6,4
million at the end of 1998 thanks to the subordinated
and the
loan under
renegotiation of old debts with creditors. Additionally,
the loan formed a very large proportion of Sniace’s
debt, amounting in 1998 to 73 % of its long-term debt
towards credit institutions and 26 % of its total debt
towards credit institutions. Lastly, it represented roughly
one fifth of 1998 turnover.

scrutiny,

increase,

capital

a

(33)

(34)

Sniace was at the time the loan was granted a major
player in the local economy. With a workforce of 600,
it was a sizeable employer in the region of Cantabria,
where unemployment stood at 20,9 % of
the active
population in 1997 (24). Sniace’s importance for the
Cantabrian economy is confirmed by the fact that the
company’s return to viability was presented in the
debate on Cantabrian Government policy held on 15
June 1998 as
the
a
Government’s industrial policy (25).

achievement of

remarkable

the

above,

reasons

set out

the Commission
For
concludes that in the case under scrutiny it is highly
unlikely that the public authorities were not involved in
the adoption of Caja Cantabria’s decision to grant the
subordinated loan to Sniace. The facts surrounding the
grant of the loan indicate that the public authorities
were involved in the process of granting the loan. The
subordinated loan can therefore, in the present case, be
considered to imputable to the State.

(22) Alerta, 30 January 1998, p. 29.
(23) Alerta, 29 January 1998, p. 33.
(24) Source: Eurostat Newcronos Database, regional statistics.
(25) Diario de Sesiones de la Asamblea Regional de Cantabria, No 119.1,

15 June 1998, p. 3849.

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(35)

The next section assesses whether or not the terms of
the loan are in line with those that a private lender
acting under normal market conditions would have
granted in the same circumstances.

the company had also already began to return to its
normal production activity and was ready to carry out
the major investments considered necessary, such as
building its own power generation plant.

(36)

(37)

(38)

3. The aid favours a particular undertaking

The loan granted by Caja Cantabria is an eight-year loan
without any security and carrying a variable annual
interest rate that can range from 2 % if the company
does not make any profits to MIBOR + 4 where it
generates very high profit levels. In order to determine
whether any aid is involved and, if so, how much, it is
necessary to compare the conditions of the loan with
those that would have been acceptable to a credit
institution acting under normal market conditions. To
this end, the particular situation of Sniace has to be
considered.

For several years Sniace experienced severe difficulties
that culminated with the company being under the
suspension of payments procedure from 1992 to 1996.
The procedure was lifted thanks to a viability plan and
an agreement which Sniace concluded with its private
creditors whereby the latter accepted a rescheduling and
reduction of their claims, thereby allowing the company
to reduce its debts. The company then negotiated
separately with its public creditors and secured a
rescheduling of
security debts. The plan
established a business strategy for the company, with
in particular in a power generation
new investments,
plant
company
Abengoa, which should enable Sniace to reduce its
production costs. Other investments were also carried
out in order to modernise the production plant and to
allow full and optimum use of all its installations.

co-financed by the private

to be

social

its

Sniace is a major company in the paper industry, where
variable production costs are very high. The viability
plan is centred on this aspect, identifying the company’s
advantages and its handicaps and establishing cost
reduction measures. The viability plan provided for the
company’s return to viability and profits. The company
in 2000, which are
in fact achieved large profits
expected to continue in 2001. All
the company’s
creditors had agreed to contribute to its implementation
either by signing the
creditors’ agreement or by
renegotiating in 1997 the terms of reimbursement. Also
in 1997,
the company’s share capital was increased
through an issue of new shares in order to reduce its
debt burden. From the industrial point of view, in 1997

(39)

(40)

(41)

(42)

In these circumstances the Commission considers that a
credit institution acting under normal market conditions
might have decided to provide the loan that Caja
Cantabria granted Sniace. The question is, however,
whether it would have done so on the same terms as
Caja Cantabria did.

The Commission cannot accept Sniace’s suggestion that
if aid is deemed to exist it should be calculated with
reference to the terms included in letters sent by private
banks concerning identical loans that they might have
considered granting to Sniace. The letters are not an
offer of credit made in January 1998 but a statement in
1999 of what the banks might have done in the past.
They do not therefore constitute evidence that the banks
were prepared, at that precise point in time and in the
specific circumstances in which the subordinated loan
to those
was granted,
provided by Caja Cantabria. The Commission also
points out that no information regarding negotiations
with Banesto have been provided by the Spanish
authorities, although it is clear that that bank negotiated
the terms of a subordinated loan with Sniace before
withdrawing from the deal. For
the
amount of aid involved in the subordinated loan has to
be calculated according to the criteria that have been
developed and made public by the Commission in
various communications as indicated above.

to offer conditions

these reasons,

similar

Sniace did not provide any security for the loan. The
fact that the Sniace had assets valued at approximately
EUR 150 million cannot be considered as a satisfactory
substitute for security, because Caja Cantabria had no
specific claims on those assets. On the contrary, in the
event of bankruptcy the bank’s claim could be met only
after all common creditors’ claims had been satisfied.
Neither can the loan’s convertibility into equity or
bonds (cid:150) allowing redemption before its maturity (cid:151)
provide a real alternative for
the security normally
required.
In granting such a loan, any private lender
acting under normal market conditions either would
have required first-quality assets to secure the loan or
would have increased the interest rate charged in order
to cover the increased risk.

In view of the characteristics of the loan and taking into
account the history of Sniace, and the fact that in 1998
the company was beginning gradually to emerge from
the
serious difficulties

threatened its

survival,

that

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to the

interbank rate used by

Commission considers that the normal interest rate to
cover the risk involved would have been 12,2 %. This
corresponds
the
Commission for calculating its market reference rate
plus the normal 75 basis points it adds for loans in
Spain and a further 600 basis points for the absence of
security. This is in line with the indications contained in
the Commission notice on the method for
setting
reference rates, which mentions that the reference rate
may be increased by 400 basis points or more in
situations involving particular risk. The normal market
rate would yield annual interest of EUR 1 466 701 on a
the
typical year
eight-year loan period, total interest paid would amount
to EUR 9 454 365 at 1998 prices.

(from 1999 to 2005) (26). Over

Calculation of the interest rate paid by Sniace during the
life of the loan must take into account the fact that
actual interest paid depends on two factors (cid:151) Sniace’s
profitability and the MIBOR rate for the period 1998 to
2006 (cid:151) that could not be known to the parties when
the loan was granted.
In the worst-case scenario, of
Sniace not making a profit for any year up to 2006,
interest paid would amount
to EUR 240 000 on a
typical year (from 1999 to 2005) (27) Over the loan
period,
to EUR
2 066 108 at 1998 prices.

interest paid would amount

total

It is not possible to calculate a best-case scenario on the
basis of the information available to the parties at the
time the loan was granted. However, the Commission
considers that a useful approximation can be made by
calculating the interest that would be paid by Sniace if it
achieved the profit
in the viability
plan (28).
the Commission has
In this
calculated that the total interest paid would amount to
EUR 4 340 602 at 1998 prices.

targets
scenario,

set out

The Commission therefore concludes that the advantage
conferred on Sniace would be EUR 7 388 258 in the
and EUR 5 113 763 in the
worst-case
approximated
advantage
conferred on Sniace is in any event well above the EUR
100 000 de minimis threshold.

best-case

scenario,

scenario.

The

(43)

(44)

(45)

(26) In 1998, interest charges would have been slightly lower, at EUR
1 325 849, because the loan was granted on 4 February and thus
interest accrued for less than one calendar year.

(27) For 1998,

interest charges were fixed by the parties at EUR

733 564.

(28) And making two further assumptions: firstly that profit would
remain constant for the years 2002 to 2005 at the same level
forecast in the plan for the years 1999 to 2001, and secondly that
the resulting interest paid would always be lower
than the
MIBOR + 2 ceiling.

4. The aid affects trade between Member States

synthetic

(46) As there is extensive trade between Member States in
and derived chemical
fibres
the paper,
products sectors, the advantage conferred on Sniace is
liable to distort competition in the Community by
giving Sniace an advantage over
competitors not
receiving aid. The measure therefore constitutes State
aid within the meaning of Article 87(1) of the Treaty.

VI. ASSESSMENT OF THE COMPATIBILITY OF THE AID
ELEMENT

(47)

(48)

(49)

The Commission does not agree with the comments
made by Spain and Sniace that
the company had
legitimate expectations that a positive decision would be
taken on the grounds of the length of the preliminary
examination period. On the contrary,
the Court of
Justice has on several occasions ruled that companies
cannot rely on legitimate expectations where aid has not
been granted in full compliance with the rules. In the
present case the measure was not notified, and a
preliminary examination cannot prejudge
final
decision on a case.

the

The Commission has to assess whether the aid may be
considered compatible with the common market under
one of the derogations laid down in the Treaty. In its
reply to the decision initiating the procedure, Sniace
stated that, on account of its nature as quasi-capital, the
loan had been used to finance the normal current needs
of the company. No specific allocation was made.

that

The Commission considers
the aid cannot be
regarded as investment aid and must be classed as
operating aid. Although the company is located in an
area eligible for regional aid under the derogation in
Article 87(3)(a), such ad hoc aid is not regarded as
regional aid proper. The aid does not
satisfy the
requirements to qualify as aid for initial investment or
the requirements to be deemed aid for job creation as
indicated in the guidelines on national regional aid. Nor
does it satisfy the conditions set out therein for the
approval of operating aid in Article 87(3)(a) regions (29).
Accordingly, the aid cannot be considered compatible
under that legal framework.

(50)

Since Sniace produces synthetic fibres, aid granted to it
could be covered by the code on aid to the synthetic

(29) OJ C 74, 10.3.1998, p. 9. See in particular point 2, footnote 10

and point 4.17.

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Official Journal of the European Union

30.4.2003

fibres industry. The code however only imposes special
conditions on investment aid for production equipment
specified in the code, so that any other type of aid has
to be assessed according to the horizontal rules. As the
aid is not in direct support of the industrial processes of
extrusion, texturisation or polymerisation or in direct
support of
linked to the
ancillary process
contemporaneous installation of extrusion/texturisation
capacity, as described in the code, the aid in question
cannot be deemed to fall within the scope of the code
(see recitals 55 and 56 below).

any

(51)

This leaves the possibility of assessing the aid according
to the rescue and restructuring guidelines, under which
operating aid may under certain circumstances be
considered compatible. Firstly, it must be demonstrated
that Sniace was a firm in difficulty, unable to recover

through its own resources. Secondly, the assessment of
the aid must be carried out on the basis of a
restructuring plan aimed
firm’s
long-term viability.

restoring

the

at

(52) As regards the difficulties experienced by Sniace, high
production costs,
falling market shares and declining
markets led the company to seek a suspension of
payments in 1992. The suspension of payments was
ordered in March 1993 and lifted in October 1996,
when the private creditors agreed to convert 40 % of
the company’s debt into equity, while the public-sector
creditors decided not to subscribe to the agreement. It is
therefore clear that, in 1996, at the time the viability
plan was drawn up, Sniace was a company in difficulty.
Table 1 summarises the company’s financial situation in
the years 1991 to 1996.

TABLE 1

(in EUR)

Year

1991

1992

1993

1994

1995

1996

Turnover

69 342 781

43 015 266

4 797 844

38 790 217

65 944 130

34 558 196

Operating income ﬂ 13 700 984 ﬂ 25 322 689 ﬂ 23 221 491

ﬂ 6 843 112

ﬂ 5 536 157

ﬂ 8 695 810

(53)

(54)

the

June

1996

Cantabrian

consultant Coypsa. The plan analyses

In
Government
commissioned a viability plan for Sniace from the
private
the
situation of
suspension of
the actions to be taken in
payments and sets out
subsequent years, at
to
ensure the company’s long-term viability.

industrial and financial

following

Sniace

level,

the

it

Sniace endorsed the viability plan in September 1996
in 1997 and 1998, as
and started to implement
reported in point 3.2 of the company’s 1998 annual
report. The same point of the annual report mentions
explicitly the subordinated loan (described in point 11.1
of
the
viability plan. For this reason, Spain’s claim that the
viability plan is not relevant for the purpose of assessing
the subordinated loan cannot be accepted.

the implementation of

the report) as part of

(55)

The main element of the viability plan consisted in a set
of measures aimed at reducing production costs, and in
particular energy costs. Of particular importance in this
respect was the plan to build a cogeneration plant in
partnership with the Spanish company Abengoa SA.
The cogeneration plant was to reduce significantly the
impact of energy purchases on production costs, and

thus make the company’s products more competitive,
particularly for the most energy-intensive products such
as paper and synthetic fibres.

(56) Other measures provided for in the plan were aimed at
reducing costs arising from the production of
liquid
wastes (new waste treatment and water management
installations), as well as operating costs (reduction of
overheads, rationalisation of the administrative and sales
departments,
in
Barcelona and Madrid).

closure of non-essential premises

(57)

(58)

envisage permanent

The plan did not
capacity
reductions on the existing production lines. Nor did it
provide for
that would have increased
installed capacity, with the exception of the increase in
energy production capacity following construction of
the new cogeneration plant.

investments

The financial requirements for implementing the plan
were estimated at: a credit line of EUR 3 million to
restart production on the lines that had been stopped
following the suspension of payments; a credit line of
EUR 18 million to finance working capital; and EUR 9,2
million to finance the investments envisaged in the plan.
the necessary conditions for
The plan also set out

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L 108/43

maintaining pre-existing debt at a serviceable level,
mainly through converting it into long-term debt.

(60)

(59)

It is therefore necessary to establish whether, on the
basis of the viability plan, Sniace fulfilled the criteria to
be eligible for restructuring aid. To this end, it has to be
the
demonstrated that
following conditions, set out
the
rescue and restructuring guidelines:

viability plan satisfies
in point 3.2.2 of

the

(61)

(a)

the plan must restore the long-term viability of the
company on the basis of realistic assumptions;

(b) the

aid must

avoid

undue

distortions

of

competition;

(c)

the aid must be proportional to the restructuring
costs and benefits;

(d) the company must implement the plan in full and

respect its conditions.

realistic assumptions as

The restoration of Sniace’s long-term viability should be
achieved within a reasonable timescale and on the basis
to its
of
future operating
conditions. The improvement
in viability must result
mainly from internal measures, so as to allow the
company to operate successfully once the restructuring
has been completed.

In the case under scrutiny, the viability plan covers the
period 1997 to 2001. On the basis of the information
contained in the plan, it can be concluded that the plan
laid the foundations for ensuring Sniace’s long-term
viability. The thrust of the viability plan is to reduce
production costs, especially in those areas,
like energy
in the past
purchases and environmental costs,
made Sniace’s products uncompetitive in the market.
Another
the
element of
optimisation of capacity utilisation in order to respond
to demand conditions and avoid costly energy purchases
the
in the medium term. According to the plan,
company was to achieve limited profitability already in
1997, and satisfactory profitability from 1999 onwards
(see Table 2 below).

the plan is

important

that

TABLE 2

(in EUR)

Year

1997

1998

1999

2000

2001

Turnover

70 100 049

70 100 049

69 056 657

69 056 657

69 056 657

Operating income

835 142

1 069 128

5 129 284

5 129 284

5 129 284

(62)

The fact that the assumptions on which the viability plan was based were realistic is confirmed by
the evolution of Sniace’s actual performance as set out in Table 3 below. Although Sniace’s
turnover recovery and return to profitability took longer than expected in the plan, turnover and
operating income levels in 2000 and 2001 were largely in line with what had been anticipated in
the plan.

TABLE 3

(in EUR)

Year

1997

1998

1999

2000

2001

Turnover

33 648 943

56 110 490

51 043 676

72 333 369

65 703 334

Operating income

ﬂ 9 603 554

ﬂ 7 050 166

ﬂ 7 164 563

4 991 273

4 376 660

(63) On these bases,

the Commission concludes that

the

viability criterion is satisfied.

repercussions on the

should contribute, in proportion to the aid received and
to the
its
restructuring of the industry by irreversibly reducing or
closing capacity.

relevant market,

(64) As

the

regards

impact of

aid on Sniace’s
competitors, the guidelines on restructuring aid require
measures to be taken to avoid undue distortion of
competition. This means that, where there is a structural
excess of capacity in the sector, the restructuring plan

the

(65) According to the guidelines, the fact that a company is
located in an assisted area does not in itself justify a
permissive approach to the granting of restructuring aid.
However, the obligation to avoid undue distortions of

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Official Journal of the European Union

30.4.2003

and particularly

competition can be applied more flexibly in assisted
regarded as
areas,
disadvantaged under Article 87(3)(a), as has been the
case since 1995 for Torrelavega in Cantabria.

in the

areas

(66) While it is certainly true that competition exists within
the European Union in the sectors in which Sniace
operates, it is important to note that the viability plan
did not envisage any increase in installed capacity in
those sectors. The construction of
the cogeneration
plant,
intended to remove an
in particular, was not
existing productive bottleneck thereby leading to more
installed capacity. The plant would
intensive use of
instead allow the impact of energy costs on total
production costs to be reduced by replacing power
previously purchased from the grid with energy
produced in-house. The improved utilisation of existing
capacity after completion of the restructuring process
and the implementation of the rationalisation measures
were necessary in order to allow Sniace to return to
profit in 2000. The aid in question, while necessary to
return to viability a company located in an assisted area,
the
does not
implementation of the plan, its capacity at the expense
of
its competitors. The increase in power generation
capacity is indeed indispensable in order to reduce the
company’s operating costs and achieve profitability in
the medium term.

allow Sniace

to increase,

during

(67) As

regards

the proportionality of

the aid to the
restructuring costs, Sniace’s return to viability can be
regarded as not depending solely on the aid received.
This is true even taking the worst-case scenario of
Sniace not making a profit in any year between 1999
and 2005 (this scenario did not materialise) and thus
setting the aid element at EUR 7 388 258. In this case,
the aid intensity would amount to only 24,5 % of the
EUR 30,2 million total costs included in the viability
plan. The above percentage would be further reduced
where Sniace paid Caja Cantabria higher
levels of
interest (as was the case in 2000 and 2001).

activities that could create distortions of competition
and would be unrelated to the restructuring process.
The aid in question is furthermore linked to measures
that are necessary for implementing the viability plan
and
company’s
does not
financing costs.

excessively

reduce

the

(69)

For the reasons stated above, the Commission concludes
that the restructuring aid under scrutiny is compatible
with the common market.

VII. CONCLUSION

(70)

The Commission finds that the loan granted by Caja
Cantabria to Sniace involves State aid within the
meaning of Article 87(1). Consequently, Spain has
unlawfully implemented the aid in question in breach of
Article 88(3). However, as established by the above
assessment,
the
derogation laid down in Article 87(3)(c) and is therefore
compatible with the Treaty,

the aid fulfils

conditions

the

for

HAS ADOPTED THIS DECISION:

Article 1

The State aid which Spain has implemented for Sniace SA,
amounting to a maximum of EUR 7 388 258, is compatible
with the common market pursuant to Article 87(3)(c) of the
Treaty.

Article 2

This Decision is addressed to the Kingdom of Spain.

Done at Brussels, 11 December 2002.

(68)

The Commission concludes that
the aid obtained by
Sniace is limited to the minimum necessary and does
not create excessive liquidity liable to be used for

For the Commission

Mario MONTI

Member of the Commission