WRITTEN QUESTION E-0847/03 by Jan Andersson (PSE) to the Commission. Closure of the Asarum plant as a result of government aid.
Date: 2003-03-18
Institutions: European Parliament, Provisional data
Subjects: State aid, Sweden, aid system, aid to undertakings, cessation of trading, control of State aid, industrial restructuring, restriction on competition, single market, tube

C 58 E/30

Official Journal of the European Union

EN

6.3.2004

(2004/C 58 E/033)

WRITTEN QUESTION E-0847/03

by Jan Andersson (PSE) to the Commission

(18 March 2003)

Subject: Closure of the Asarum plant as a result of government aid

A common internal market is based on open and fair competition between the companies operating in
that market. It is for this reason that government aid to companies is allowed only in exceptional cases, the
main rule being that it must not have the effect of distorting competition. Nevertheless, several cases have
come to light over the years in which government aid appears clearly to have distorted competition.
Judging by the circumstances, such a case has just emerged in southern Sweden several years after the
actual event. In 1996, a company belonging to Outokumpu Copper Tubes in the Basque country received
the equivalent of SEK 57 million in aid from the Spanish Government. The aid was approved by the
Commission. As a result of the aid, the factory at Asarum in Sweden, having the same owner and same
production, was closed down, despite the fact that the Swedish plant was considerably more profitable
than the one in the Basque country.

Does the Commission actually take the view that this type of government aid, with the risk it entails

1.
of distorting competition, is consistent with the legislation applicable on the common internal market?

2. What criteria did the Commission apply in making its assessment in the abovementioned case and
would the same assessment be made today in the light of the strategy for a general reduction and
re-orientation of government aid by the Member States, which the Commission itself is working intensively
to promote?

Answer given by Mr Monti on behalf of the Commission

(28 April 2003)

The need for a comprehensive and firm control of State aid in the Union is widely acknowledged in
1.
order to ensure a more efficient operation of the internal market. Indeed, the distortive effect of aid is
magnified as other governmental distortions are eliminated and markets have become more open and
integrated.

The basic principle underlying the rules on State aid is that it is incompatible with the common market.
However, exceptions may be made for legitimate reasons provided that the impact on trade and the
distortion of competition which result from the granting of State aid are offset by an adequate contribution
to the Community’s objectives or otherwise mitigated as far as possible.

In this sense and in order to ensure a level playing field for all firms within the internal market, the
Commission has adopted rules which explain the criteria by which it assesses the State aid cases.

As to the specific State aid case to which the Honourable Member refers, it concerns aid that had been
granted by the Basque Government in support of the restructuring plan of Outokumpu Copper SA,
a subsidiary of the Finnish based company Outokumpu Copper OY. The Commission considered it
compatible with the common market by Decision adopted on 20 December 1995.

The Commission notes that it was only in 1998 that, in order to improve the profitability of its tube mills
operations, Outokumpu decided to move the tube production of the Granefors Plant in Sweden to Pori
(Finland) and Zaratamo (Spain) (1). Therefore, the link between the closure of the Swedish plant in 1998
and the aid granted by the Basque Government prior to 1995 does not appear to be straightforward.
Moreover, the restructuring plan of the company resulted in the closure of another plant in Spain.

In assessing the above mentioned aid,

2.
the Commission applied the criteria contained in the
Community guidelines on State aid for rescuing and restructuring firms in difficulty (2) in force at the time.

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Official Journal of the European Union

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The Commission took namely into account that the restructuring plan served to restore the long term
viability and health of the firm which had been making losses. Furthermore,
the Commission also
considered that the aided restructuring programme included measures which offset undue distortions of
competition: it entailed the definitive closure of the copper wire and tube facilities of the company’s plant
located in Cordoba. This resulted in a significant net reduction of 8 000 tonnes per annum in the overall
production capacity of the company and, therefore, made a significant contribution to the restructuring of
the copper industry in the Community, which was affected by a structural excess of production capacity.
Finally, the Commission took also into account that the aid would help to overcome the structural
problems of the region where the plant is located by creating sixty new jobs and assuring an economically
viable business.

On 9 October 1999 the Commission published new guidelines on State aid for rescuing and restructuring
firms in difficulty (3) which in principle are in force until October 2004. These new guidelines have
tightened the rules namely as far as the eligibility of the firms for aid is concerned. The Commission does
not have all the relevant information that would be needed to assess today whether the company could be
considered a firm in difficulty for the purposes of the application of the guidelines.

(1) Source: Company’s annual report.
(2) OJ C 368, 23.12.1994.
(3) OJ C 288, 9.10.1999.

(2004/C 58 E/034)

WRITTEN QUESTION E-0859/03

by Roberta Angelilli (UEN) to the Commission

(20 March 2003)

Subject: Request for clarification about funding obtained by the City of Frosinone

In connection with the allocation of European funding a number of Italian daily newspapers recently
reported that the City of Frosinone has received EU funding amounting to EUR 30 billion to carry out
projects of various kinds.

These reports contradict other data according to which a number of Italian cities, including Frosinone, find
it difficult to make the effort to obtain the funding available to them, which the Commission has often
pointed out remains unused, even though it is much needed.

Such data include the Commission’s answers to questions E-3433/02 (1), E-3427/02 (2), E-3429/02 (3) and
E-3431/02 (4) on the use, by the municipality of Frosinone, of the following funds: URBAN II, Daphne,
EQUAL, the ESF and the Fourth Action Programme on Equal Opportunities for Women and Men, SAVE II
and Altener II.

All the Commissioners’ answers indicate that the municipality of Frosinone has not submitted projects for
any of the programmes mentioned.

In view of all this, can the Commission clarify the situation with regard to the actual use of European
funding by the municipality of Frosinone?

(1) OJ C 137 E, 12.6.2003, p. 207.
(2) OJ C 222 E, 18.9.2003, p. 70.
(3) OJ C 137 E, 12.6.2003, p. 206.
(4) OJ C 155 E, 3.7.2003, p. 153.