2004/286/EC: Commission Decision of 23 July 2003 on research and development aid in the aviation field which Spain is planning to implement for Gamesa (Text with EEA relevance) (notified under document number C(2003) 2518)
Date: 2003-07-23
Institutions: European Commission
Subjects: Spain, State aid, aeronautical industry, control of State aid

30.3.2004

EN

Official Journal of the European Union

L 91/49

COMMISSION DECISION

of 23 July 2003

on research and development aid in the aviation field which Spain is planning to implement for
Gamesa

(notified under document number C(2003) 2518)

(Only the Spanish text is authentic)

(Text with EEA relevance)

(2004/286/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(6)

the Commission
By letter dated 24 February 2003,
asked the Spanish authorities for additional information.
The Spanish authorities provided the information by
letter dated 25 March 2003, registered as received on 26
March 2003.

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

Having regard to Council Regulation (EC) No 659/1999 laying
down detailed rules for the application of Article 93 of the EC
Treaty (1), and in particular Article 7 thereof,

Having called on interested parties to submit their comments
pursuant to the abovementioned Article,

Whereas:

(1)

(2)

(3)

(4)

(5)

1. PROCEDURE

By letter dated 28 June 2001, registered as received on 2
July 2001, the Spanish Permanent Representation noti-
fied the proposed R&D aid measure in the aviation field
for Gamesa in accordance with Article 88(3) of the EC
information was provided by letters
Treaty. Further
dated 3 October 2001, registered as received on 5
October 2001, and 11 January 2002, registered as
received on 15 January 2002.

The Commission had the file analysed by an indepen-
dent scientific expert. The analysis gave rise to a contract
signed on 14 December 2001.

the Commission
By letter dated 12 March 2002,
informed Spain that it had decided to initiate the proce-
dure provided for in Article 88(2) of the EC Treaty in
respect of the proposed aid.

By letter dated 26 April 2002 (2), registered as received
on 29 April 2002,
the
Commission their comments.

the Spanish authorities sent

The Commission's decision to initiate the procedure
(referred to below as the decision of 12 March 2002 or
decision to initiate the formal examination procedure)
was published in the Official
the European
Communities on 27 April 2002. The Commission called
on interested parties to submit their comments on the
aid. No interested parties submitted comments within
the period set by the Commission.

Journal of

(1) OJ L 83, 27.3.1999, p. 1.
(2) OJ C 153, 27.6.2002, p. 14.

2. DESCRIPTION

(7)

(8)

(9)

The recipient
is Gamesa, which manufactures and
supplies high-tech goods, equipment and services in the
fields of aviation and renewable energy. The number of
Gamesa's employees and its turnover exceed the thresh-
olds provided for in Annex I to Commission Regulation
(EC) No 70/2001 of 12 January 2001 on the application
of Articles 87 and 88 of the EC Treaty to State aid to
small and medium-sized enterprises (3) below which an
enterprise is deemed to be an SME.

Gamesa is currently taking part in a development project
for two new regional aeroplanes: the ERJ-170 and the
ERJ-190. The project was launched by the Brazilian
company Embraer. Gamesa was tasked with supplying
the rear fuselage, stabilisers and the tail fin of the two
aircraft.

in the
Accordingly, Gamesa set up an R&D project
Basque Country with a view to acquiring the technolo-
gies necessary for developing rear sections for commer-
cial aircraft, which will apply to the ERJ-170/190 project
and to other future programmes as well. The project is
scheduled to last four years, from 2000 to 2003.

(10)

The total cost of the project is […] (*), or […].

(11)

The Basque Government (regional administration) plans
to support the project by granting aid consisting of an
interest-free loan amounting to ESP 4 621 000 000, or
EUR 27 772 769,34.

(3) OJ L 10, 13.1.2001, p. 33.
(*) Parts of the text of this decision have been edited to ensure that
confidential information is not enclosed; those parts are enclosed in
square brackets and marked with an asterisk.

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(12) According to the Spanish authorities, the project's work

(c) Precompetitive development activities

programme comprises the following activities:

(a) Feasibility studies

These include the technical study on the project and
an analysis of its technical and economic viability.

(b) Industrial research

The aim is to acquire the technologies necessary to
develop the project:

— overall mechanical technologies

— leading edges: optimal design, metal/compo-
site, bird impact, icing, simulations, tests,

— pressure bulkheads: stability, compression of
semi-mounted thin rings, composite bulk-
heads,

— interchangeability of stabilisers: special equip-

ment, local milling,

— lightning impact,

— installation of systems (antennae) on stabili-

sers,

— zonal analysis: installation of actuators,

— drainage systems;

— materials, processes and production technologies

— composite and plastic materials: qualification
of new materials, plastic injection technology,
qualification of components, production of
leading edges,

— mechanical materials: use of precipitation-
hardenable steels, influence of heat treatment,

— large forged rings, production techniques,

— peen-forming,

— qualification of special cutting technologies;

— inspection, maintenance and repair technologies

— structural reliability techniques,

— corrosion prevention:

new
anodising,

compound

galvanic
inhibitors,

corrosion,
portable

— composite repair,

— repair of bearing housings,

— advanced inspection methods;

— project technologies

— information technologies

— simulation and modelling,

— diagonal voltage,

— electronic control system (fly-by-wire),

design,

delivery

This concerns the technical activities necessary for
the
integration,
testing, certification and operational support for the
vertical and horizontal stabilisers and rear fuselage of
the ERJ-170/190 aircraft.

development,

In particular, this includes work on:

— basic geometry: basic structural outline,

— definition of

standards: production processes

must be approved,

— costs: calculation of internal and external costs in

order to avoid gaps,

— design: definition, determination of product
structure, detailed structural design,
system
installation design, digital models, test documents
for structural
interfaces and systems, definition
and design of ground support equipment, etc.,

— structures engineering: calculations and structural
analysis (static, fatigue, damage tolerance), etc.,

— systems engineering: systems integration support,
analysis of distribution of ice masses, analysis of
lightning protection,
(engine
turbine failure, bird impact), etc.,

analysis

zonal

— certification tests: development of tests with a
view to obtaining certification from the relevant
authorities,

— maintenance studies: development of mainte-
nance programmes (general accessibility, use of
standard components,
interchangeability, design
techniques for preventing and isolating cracks,
etc.),

— development and design of equipment: develop-
ment of specific assembly tools, design of calibra-
tion tools,

— definition of production methods.

3. GROUNDS FOR INITIATING THE PROCEDURE

(13)

In its decision of 12 March 2002,
the Commission
expressed a series of doubts on the following aspects of
the proposed aid:

— the classification of work in accordance with the
stages of research defined in Annex I to the Com-
munity framework for State aid for research and
development (1) (the R&D framework) and,
in par-
ticular, the R&D nature of the certification work and
maintenance studies,

— calculation methodologies;

(1) OJ C 45, 17.2.1996, p. 5.

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— the incentive effect of the aid within the meaning of
point 6 of
the R&D framework, since the data
submitted by the Spanish authorities, pointing to an
increase in the company's R&D staff and budget,
were difficult
to interpret as having an incentive
effect. In addition, the Spanish authorities did not
mention the costs associated with cross-border coop-
eration or submit any data which pointed clearly to
a market failure. Lastly, the aircraft mainly concerned
by the project's results, the ERJ-170/190, had already
achieved a very significant degree of maturity, since
they were rolled out on 29 October 2001, their
maiden flight being scheduled to take place early in
2002 and their first delivery by the end of 2002,
which seemed to rule out the existence of significant
risks making funding by a non-governmental source
impossible.

(17)

4. COMMENTS FROM SPAIN

(14)

(15)

The Spanish authorities consider,
firstly, that the aid
intensity is well within the limits allowed under the R&D
framework, even assuming that all the activities involved
in the project had to be classified as precompetitive
development activities. The initial calculations, carried
out in April 2001, were based on the initial timetable,
which provided for payments to be made to Gamesa in
2000, 2001, 2002 and 2003 and for repayments to be
made by it between 2007 and 2013.

regards

the selective nature and the
Secondly, as
comparative advantage conferred by the aid, the Spanish
authorities point out that the aid falls within the frame-
work of a general industrial policy set out in the Interin-
the
stitutional Plan for the Economic Promotion of
Basque Country. In particular, the aid for Gamesa was
granted as part of a programme of strategic projects.
Furthermore, the Spanish authorities argue, there is no
selectivity in so far as the two aerospace groups oper-
ating in the Basque Country (Gamesa and ITP), although
operating in different subsectors, have received equiva-
lent aid proposals under the programme of strategic
projects. In addition,
it is generally accepted that the
average level of government support for R&D activities
in the aerospace sector in Europe is below 50 %. The
proposed aid for Gamesa, it was argued, is thus in line
with, and indeed below, the instruments which other
European companies have at their disposal for the devel-
opment of R&D activities, and not granting the aid
would put the company in an unequal position.

(16) As far as the incentive effect of the aid is concerned, the
in its framework
Spanish authorities point out
technological
programme 2002-2006 for
development and demonstration activities
(the sixth
framework programme) aimed at contributing to the
creation of the European Research Area, the Commis-
sion sets out to promote support for research at interna-

that,
research,

tional level in key priority areas of exceptional usefulness
and added value for Europe, one such area being aero-
space. More specifically, the sixth framework programme
includes amongst its research priorities that of reinfor-
cing the competitiveness of the fuselage manufacturing
industry, by reducing aircraft development costs and
aircraft operating costs, and by concentrating on inte-
grated design systems and processes, smarter production
technologies, aircraft configuration, aerodynamics, mate-
rials and structures, mechanical, electrical and hydraulic
systems, etc. According to the Spanish authorities, the
Gamesa project
is an example of adjusting to these
guidelines.

risks

involved,

the size of

The Spanish authorities take the view that support for
this type of activity is necessary and that the incentive
effect is clear in the case of Gamesa, given the technolo-
gical and financial
the
company and the circumstances surrounding the project.
In this respect, they argue, account should be taken of
the fact that the aerospace industry is closely tied to
research and development, which, in this type of enter-
prise, is markedly cyclical in character due to product
life, being especially intensive during the preliminary
development stages. Consequently, maintaining a stable
large firms,
research structure is
whereas, in the case of medium-sized enterprises such as
Gamesa, the objective can only be a medium-term one.

feasible only for

(18)

The Spanish authorities point
to the considerable
increase in research activity anticipated as a result of the
project, both in terms of expenditure and staff. As a
direct result of the project, thanks to the know-how,
technologies and capacities acquired by the firm, it is at
present able to present itself as a candidate for equivalent
projects carried out by other American manufacturers,
under more realistic risk conditions.

(19) With regard to the Commission's doubts as to the
unduly large fluctuation in the research budget,
the
Spanish authorities explain that,
in 1999, before the
the project, research staff consisted of 109
start of
expenditure was ESP 2 490
and average
persons,
million. Following the start of the project, it is hoped
that expenditure will amount to some ESP 4 000 or
4 500 million, with research staff stabilising at around
300 persons. As pointed out by the Spanish authorities,
R&D expenditure in aerospace is cyclical, being very
substantial during the preliminary product development
stages and falling rapidly thereafter. In the case in point,
Gamesa anticipates investing […] in four years, with
more than half of this being spent in the first year. The
firm's objective is to try to maintain a stable R&D struc-
ture at the levels attained at the end of the project by
incorporating other projects in future that would be
pursued at the same time as it, thus allowing the firm to
maintain the human capital and technological develop-
ment capacity achieved.

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(20)

Furthermore, the ERJ 170/190 project, it is argued, also
involves a very substantial need for cross-border coop-
eration during the development stage. The percentage
which cross-border cooperation represents in relation to
the total costs for staff directly involved in the research
could be put at between 30 % and 50 % as regards coop-
eration within the European Union, and between 10 %
and 20 % outside the European Union, depending on
results and how the project develops.

leading world manufacturers

(21) As far as market failure is concerned, the Spanish autho-
rities also point to the cyclical nature of the aerospace
market, as may be seen from the figures published by
the
(Airbus, Boeing,
Bombardier and Embraer) on deliveries and orders year
on year. This trend is normally in line with the trend of
world GDP. However, airlines usually react immediately
to changes in the trend, by increasing or reducing their
orders, thus creating market failures in the aerospace
industry throughout
the subcontracting chain. This
context, which means that the possible profitability of
the investments may be compromised, reinforces the
role of aid as an incentive instrument in the face of
market failures.

(22)

Furthermore, according to the Spanish authorities, it is
an established fact that development cycles in aerospace
programmes have become much shorter,
requiring
greater investment intensity and resulting in an increase
in risks, particularly in the case of research projects
whose development allows subsequent participation in
other aerospace programmes. Thus,
the development
cycle has fallen in recent years from 10 to five years: 12
months for the conceptual design of the aircraft, eight
months for the preliminary design, 17 months for the
detailed design, 11 months to the maiden flight and 12
months to certification of the aircraft. In view of the
competitiveness of
the conceptual, preli-
minary and detailed design stages have speeded up
considerably, thus increasing the inherent risks and the
investment required.

the sector,

(23)

The Spanish authorities thus consider that aid designed
to offset this situation has a very significant incentive
effect.

(24) As regards the question of

the apparent degree of
maturity of the project, the Spanish authorities point out
that the fact that the aircraft had been rolled out and the
maiden flight had taken place was due more to a ques-
tion of product marketing than to the finalisation of the
product's development. Furthermore, the project was not
aimed solely at developing a product, but also at devel-
oping the technologies that would provide the capacity
for developing an aircraft
to
different models. According to the Spanish authorities,
the timing of a maiden flight was important in the
process of developing an aircraft, particularly in order to
determine the real aerodynamic characteristics of the
aircraft and identify certification tasks. But it was also

applicable

structure

very important in commercial terms, since it influenced
the sales campaign, which gets under way well before
the product is ready to be manufactured. At this stage, a
large number of technical problems remain to be solved,
such as weight optimisation, emergency handling of the
aircraft, etc. The Spanish authorities also point out that,
when the decision was taken to initiate proceedings, the
ERJ 190 model had not yet carried out its maiden flight
and that it carries 108 passengers as opposed to the 70
carried by the ERJ 170, which means a 50 % increase in
the aircraft's maximum take-off weight and requires a
major redesign of the aircraft's internal structure.

is

that

that

stress

reiterate

that all

the product and that

(25) With regard to the Commission's doubts as to the R&D
nature of the certification work and maintenance studies,
the Spanish authorities
the tests
included in the project are directly linked to the develop-
the project does not
ment of
include any certification test
linked to the
marketing or indeed the manufacture of products. The
Spanish authorities
the costs and time
involved in developing aerospace projects mean that any
stage that may affect the viability of the project should
be tackled early. This is the case with development tests,
since they anticipate and preclude any risk in future
certification tests and underpin the development of the
product itself. Such development tests serve to validate
the technologies developed by Gamesa. Such studies
may therefore be considered to form part of the same
R&D stage as the development of this technology itself
the tests must be
(industrial
performed on similar models in terms of materials and
structural characteristics as those whose technology is to
be validated, but not necessarily on versions of
the
product that are sufficiently close to the version that is
to be marketed.

research). Of course,

(26)

state that

they share the
The Spanish authorities
Commission's view that it is not possible to classify as
R&D activities within the meaning of the R&D guide-
lines certification activities carried out on an already
approved prototype with a view to providing legal
backing for the marketing of the prototype. However,
according to the Spanish authorities, the development of
any product involves a large number of tests, trials and
certifications which affect materials, specifications and
designs and which, depending on the results, affect the
project or require modifications to the product. The
Spanish authorities consider that these types of tests
form part of the development of a new product and are
customary in R&D projects in any sector.

(27) According to the Spanish authorities, the same applies
to maintenance studies, which must begin during the
initial design stages, since they affect the direct opera-
tional cost (DOC) resulting from the project and hence
its very viability. The DOC is the total of the various
costs involved in flight and maintenance, which include
and
essentially

(amortisation

ownership

costs

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interest on capital invested), insurance, flight costs (crew,
fuel and oil, takeoff and landing charges) and mainte-
nance costs. The total cost of maintenance is the sum of
the engine, the structure and the maintenance margins,
and the design of structures has a major influence on
questions such as the selection of materials and standar-
dised processes for the aircraft, tools, accessibility, relia-
bility,
the
various components, scope for replacement components,
etc. All of this means that, during the initial stages of
design, work must be carried out specifically on these
tasks so as to keep maintenance costs as low as possible,
such costs being an essential parameter in the develop-
ment of aerospace products.

intervals between inspections,

the life of

(28)

in the sixth framework programme,

The Spanish authorities also state that the Commission
included
itself,
amongst research priorities in the aerospace sector those
linked to reducing aircraft development costs. The
Spanish authorities believe it would be difficult
to
explain how the same type of activity could be consid-
ered a priority for research guidelines in Europe at
general level and at the same time called into question in
this specific case.

(29) As regards the Commission's doubts as to the classifica-
tion of work in accordance with the stages of research
defined in Annex I to the R&D framework, the Spanish
authorities consider that the definitions of these stages
are sufficiently general for their application to a specific
and complex project to be able to give rise to different
points of view. The Spanish authorities believe that they
have already explained their reasons for including the
various costs in each of the stages.
it
would be difficult at all events to take the view that a
project on such a scale could take place without an
industrial research stage, particularly for a firm dealing
for the first time with the technologies required for
complex structures such as those being developed in this
project.

In their view,

(30)

to the

following

In the case in point, it was considered that […] (*) out of
a total of […] could correspond to this category of costs,
taking into account the costs incurred in acquiring new
know-how to enable Gamesa to develop structures that
it had never developed before. Specifically,
the new
know-how relates
technologies:
mechanical technologies (leading edges, pressure hulls,
action and control systems, electrical cabling, rudders,
fins/stabilisers, rear
fuselage interface), manufacturing
technologies (composite material, cutting technologies,
joining
and
repair technologies (non-destructive inspections, servi-
cing plans, corrosion, repair technologies) and drafting
and certification technologies (informational, analytical
and simulation technologies, test technology).

inspection, maintenance

technologies),

(*) 24 % of the eligible costs notified by the Spanish authorities

(31) All the other research activities more directly linked to
development of the product were included in the cate-
gory precompetitive research. At all events, this was,
according to the Spanish authorities, a purely indicative
classification, since, in the aid proposal notified to the
Commission, the whole of the project was treated as
precompetitive development activities.

5. ASSESSMENT

(32)

It could also affect

The measures planned by the Spanish authorities confer
an advantage on the recipient firm by relieving it of
some of the costs incurred through the research activ-
ities which it should in principle bear itself. This advan-
tage is also selective with respect to other Community
firms which might wish to carry out such research
projects.
intra-Community trade,
since Gamesa competes with European firms such as
GKN (United Kingdom), Hurel-Dubois (France and the
United Kingdom) and Latecoère (France). Lastly,
the
interest-free loans are granted direct by the Basque
Government, and consequently the advantages must be
deemed to have been conferred by means of State
resources. The measures in question therefore constitute
State aid within the meaning of Article 87(1) of the EC
Treaty.

(33) As

stated in paragraph (13) of

the
Commission has expressed doubts on this project. The
questions arising will be examined below.

this Decision,

With regard to the classification of certain activities
under the stage of research within the meaning of
Annex I to the R&D framework

(34)

The Commission notes firstly that the Spanish authori-
ties have not provided any new information to justify
why certain activities in the research programme are
classified as industrial research within the meaning of
Annex I to the R&D framework. The Commission there-
fore considers that its doubts on this matter stand and
that it must accordingly regard all of the work as being
at most as close to the market as precompetitive devel-
opment activities.

(35) As far as the classification of the certification work is
concerned,
the Spanish
the Commission notes that
authorities seem to draw a distinction between some
certification work that is more directly involved in the
commercial version of the product and other certifica-
tion work that is reported to be merely preliminary
testing. The Spanish authorities share the Commission's
analysis that the certification activities do not involve
R&D within the meaning of the R&D framework as
regards the first of these categories, but not as regards
that,
the

Commission

recognises

second.

The

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during the aircraft development process, some tests are
technological (but preliminary) in nature, whereas others
relate to product certification. The Commission notes,
however, that the Spanish authorities have not provided
any additional details on the specifics of the work to
which the Commission's doubts relate and on the
proportion of such work that might not be strictly certi-
fication work, but rather preliminary testing work.

(36)

In the absence of further details, the Commission there-
fore considers that the certification activities covered by
the programme do not constitute research and develop-
ment activities within the meaning of the R&D frame-
work and that the costs associated with these activities
cannot therefore be included in the costs eligible for aid
under the R&D framework. Their total amount, i.e. […],
must therefore be withdrawn from the total amount of
eligible costs notified by the Spanish authorities.

(37) With regard to the classification of maintenance studies,
the Spanish authorities stated that such activities were
carried out concurrently with the conceptual design of
the aircraft. They also noted that they contributed to
reducing the development costs of the aircraft and that
research into the reduction of such costs was one of the
points in the sixth framework programme, which meant
that such activities did indeed come under the heading
of R&D. The Commission considers that the fact that
some activities are carried out partly in parallel to devel-
opment of the aircraft and use the results of such devel-
opment as input data only allows the conclusion to be
drawn that they relate to that aircraft in particular and
does not allow the conclusion to be drawn that they
form part of the research process. At all events, the
Commission notes that
the activities in question are
ones which by definition relate to the final marketed
state of the product. Lastly, the Commission notes that
the fact that the sixth framework programme includes
the reduction of aircraft development costs as one of its
objectives does not in any way allow the conclusion to
be drawn that any activity aimed at reducing such costs
constitutes research. Reducing costs is one of the objec-
tives naturally pursued by any company in a competitive
situation. There can be no question of research being
involved in this area unless the reduction in costs draws
on new processes or new technological concepts, and
the Spanish authorities have not provided any precise
demonstration of this in the case in point. The Commis-
sion therefore considers that its doubts as to the R&D
nature of the certification work under the R&D frame-
work still stand.

(38)

The Commission therefore considers that the mainte-
nance studies do not constitute research and develop-
ment activities within the meaning of the R&D frame-
work and that the costs associated with such activities
cannot therefore be included in the costs eligible for aid
under the R&D framework. The relevant amount, […],
must therefore be withdrawn from the total amount of
eligible costs notified by the Spanish authorities.

(39)

(40)

(41)

(42)

(43)

(44)

(45)

In view of the above considerations, the total amount of
eligible
to
ESP 8 206 000 000, i.e. EUR 49 319 053,29.

costs must

therefore

reduced

be

With regard to the incentive effect of the aid

by

the

the additional
The Commission takes note firstly of
information provided
Spanish authorities
regarding the scope of the quantitative data in respect of
the incentive effect of the aid. The Commission considers
that this information allows it to withdraw its doubts as
to the possibility of taking these data into account in
assessing the incentive effect of the aid.

from the qualitative point of view,

the
Furthermore,
Commission also takes note of the fact that some of the
aspects which it had considered in expressing its doubts
as to the degree of maturity of the project did not reflect
its real degree of maturity. This is the case in particular
with the roll out of the aircraft, which the Commission
notes was more in the nature of a statement to custo-
mers than a technical stage of the project.

Lastly, the Commission notes that the request for aid
was made by the company to the local authorities before
the programme was launched.

In view of the above considerations, the Commission
takes the view that, in this case, it can regard the aid as
having an incentive effect within the meaning of section
6 of the R&D framework.

Conclusion

In view of the above considerations, the Commission
takes the view that most of the activities notified by the
Spanish authorities can receive aid that is compatible
with the conditions set out in the R&D framework. This
covers eligible costs amounting to ESP 8 206 000 000,
i.e. EUR 49 319 053,29,
relating to precompetitive
development activities within the meaning of Annex I to
the R&D framework.

The maximum admissible intensity of the aid is 25 %,
pursuant to point 5.5 of the R&D framework, to which
an extra five percentage points may be added pursuant
to the second paragraph of point 5.10.2 of the R&D
framework, the work being carried out in an area eligible
for regional aid under Article 87(3)(c) of the EC Treaty.

(46)

The Commission therefore considers that the aid may be
authorised under the R&D framework, provided that its
exceed 30 % of
gross grant
EUR 49 319 053,29, i.e. EUR 14 795 715,99.

equivalent does not

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L 91/55

(47)

The Commission notes in this respect that the gross
grant equivalent of the aid must be calculated using the
reference and discount rate published by it, plus a
premium of 400 basis points, since the loan granted by
the State does not have any security (1). For the calcula-
tion of the gross grant equivalent of the aid, the Spanish
authorities may refer to section 3 of Annex I to the
guidelines on national regional aid (2),

The gross grant equivalent of the aid shall be calculated using
the reference and discount rate published by the Commission,
plus a premium of 400 basis points.

Article 2

Spain shall inform the Commission, within two months of noti-
fication of this Decision, of the measures taken to comply with
Article 1 above.

HAS ADOPTED THIS DECISION:

Article 1

The State aid which Spain is planning to implement
for
Gamesa, consisting of an interest-free loan amounting to a total
of EUR 27 772 769,34,
is compatible with the common
market within the meaning of Article 87(3)(c) of the EC Treaty,
provided that the gross grant equivalent of the aid does not
exceed EUR 14 795 715,99.

This Decision is addressed to the Kingdom of Spain.

Article 3

Done at Brussels, 23 July 2003.

For the Commission

Mario MONTI

Member of the Commission

(1) OJ C 273, 9.9.1997, p. 3.
(2) OJ C 74, 10.3.1998, p. 7.