2005/940/EC: Commission Decision of  1 October 2003  on the State aid implemented by Germany for Jahnke Stahlbau GmbH, Halle  (notified under document number C(2003) 3375)   (Text with EEA relevance)
Date: 2003-10-01
Institutions: European Commission
Subjects: Germany, State aid, aid for restructuring, building industry, control of State aid

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II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 1 October 2003

on the State aid implemented by Germany for Jahnke Stahlbau GmbH, Halle

(notified under document number C(2003) 3375)

(Only the German text is authentic)

(Text with EEA relevance)

(2005/940/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Communities (2). The Commission called on interested
parties to submit their comments.

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

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

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

Whereas:

(1)

(2)

I. PROCEDURE

By letter dated 30 December 1999, Germany informed
the Commission of various aid measures for Jahnke
Stahlbau GmbH, Halle (hereinafter
Jahnke). The case
was registered under NN 9/2000.

By letter dated 2 March 2001, 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 and the notified asset sale. The Commission’s decision
was published in the Official
the European

Journal of

(3)

(4)

(5)

(6)

(7)

Pursuant to Article 10(3) of Council Regulation (EC) No
659/1999 of 22 March 1999 laying down detailed rules
for the application of Article 93 of the EC Treaty (3), the
Commission ordered Germany to submit all the infor-
mation necessary to enable it to verify whether a conso-
lidation loan from the Land of Saxony-Anhalt had been
granted in accordance with an approved aid scheme.

The Commission received no comments from interested
parties.

On 17 May 2001, 22 November 2002 and 17 January
2003 Germany submitted its comments on the opening
of the procedure.

17

2003, Germany

On
January
the
insolvency.
Commission that
On 31 July 2003, Germany informed the Commission
that Jahnke’s insolvency proceedings had been opened in
February 2003.

Jahnke had applied for

informed

II. DESCRIPTION

Jahnke is based in Halle, Saxony-Anhalt, Germany.
Jahnke is a steel construction company. Saxony-Anhalt
is an area eligible for regional aid pursuant to Article
87(3)(a) of the EC Treaty.

(1) OJ C 160, 2.6.2001, p. 2.

(2) See footnote 1.
(3) OJ L 83, 27.3.1999, p. 1.

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1. Background

(12)

In November 2002, Germany informed the Commission
that, in order to obtain the assets, Jahnke now envisaged
first taking over the liens held by two of HAMESTA’s
creditors in order to secure its position as buyer. To this
end Jahnke concluded an agreement with the two
creditors
in return for
EUR 1,54 million.

to take over

their

liens

(8)

(9)

Jahnke was set up on 12 November 1999 by Mr Bernd
Jahnke, managing director of
the steel construction
company Jahnke Stahlbau GmbH Lenzen (hereinafter
Jahnke Lenzen). Its object was to take over the assets
of HAMESTA Steel GmbH (hereinafter HAMESTA), a
company which had filed for bankruptcy in May 1999.
HAMESTA was the successor to Hallesche Metall- und
in bankruptcy since 1998.
Stahlbau GmbH i.Gv.,
Hallesche Metall- und Stahlbau GmbH was privatised in
1995 by the Treuhandanstalt by being sold to Thuringia
AG. The privatisation involved lawful aid of
some
EUR 37 million.

could not

that he
the agreement of

In November 1999, HAMESTA’s receiver informed Mr
assets
Jahnke
without
the meeting of creditors.
With a view to a later sale, he envisaged that Jahnke
might utilise the assets for a monthly fee of about
EUR 13 000, payable after 1 January 2000.

sell HAMESTA’s

(10) On 3 February 2001, a draft takeover agreement was
drawn up between HAMESTA’s receiver and Mr Jahnke,
under the terms of which assets were to be acquired by
the investor for an envisaged purchase price of about
EUR 2,5 million. However,
the
creditors’ meeting had decided not to proceed with the
execution of the takeover agreement, but instead to sell
the assets by public auction. The takeover agreement,
therefore, was not certified and remains ineffective.

in the meantime

(11)

In May 2000 HAMESTA’s receiver and Mr Jahnke signed
a new rental
about
EUR 11 300; duration unlimited; six months’ notice of
termination at year’s end).

agreement

(monthly

rent of

(13) According

the

public

auction

to Germany,

of
HAMESTA’s assets has not yet taken place.
Jahnke is
still the subject of insolvency proceedings. The public
auction of HAMESTA’s assets was originally scheduled
for 2002 but will now take place at the end of 2003.
The insolvency proceedings against Jahnke will not be
concluded before mid-2004.

(14)

Jahnke had about 80 employees.

It
In March 2001,
generated a turnover of about EUR 5 million (2000:
about EUR 2 million) and an operating profit of about
EUR 18 000 (2000: about EUR 100 000). Jahnke Lenzen
generated in 2001 a turnover of about EUR 3,3 million
(2000: about EUR 4,4 million) and an operating profit of
about EUR 21 000 (2000: about EUR 71 000). Jahnke
Lenzen employs about 40 people.

2. The aid measures

(15)

The proposed costs and funding of the restructuring have
changed significantly compared with the information
initially provided to the Commission in 1999 and
2000. By letter dated 4 September 2000, the following
financing requirement was set out:

Financing requirement
(EUR)

Origin of funds (EUR) (rounded figures)

Investor’s own funds

Sparkasse Halle

Land of Saxony-Anhalt

Bundesanstalt für
vereinigungsbedingte
Sonderaufgaben (BvS)

Purchase price
Up to 2,5 million

20 % of 2,5 million
500 000

Guarantee for 80 %
of loan
2 million

Assets/Current account
410 000

Share capital:
260 000

Financing of orders
and start-up costs:
670 000

Total:
3,58 million

150 000

Consolidation loan
260 000

410 000

260 000

500 000

2,26 million

560 000

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(16)

(17)

Purchase price of the assets of up to EUR 2,5 million

The purchase price for the assets was to be financed by a
bank loan of EUR 2,5 million, 80 % of which was to be
secured by a guarantee provided by the Land of Saxony-
Anhalt. The remaining 20 % was to be secured by liens
and property.

The guarantee of the Land of Saxony-Anhalt was to be
provided under an approved guarantee scheme (4). One
of the conditions of the scheme is that the criteria set out
in the Community guidelines on State aid for rescuing
the
and restructuring firms
guidelines) have to be fulfilled (5).

in difficulty (hereinafter

(18) According to Germany, neither the bank loan for the
the guarantee has been

the assets nor

purchase of
provided.

Financing of start-up measures

(19)

To cover its start-up costs Jahnke needed working capital
totalling EUR 1,08 million mainly for order financing
facility. To this end the
and for its current account
investor contributed EUR 260 000, the BvS two loans
totalling EUR 560 000 and the Land of Saxony-Anhalt
a loan of EUR 260 000 (6).

Lenzen. The
December 1999 to 30 November 2002.

restructuring period was given as 1

(23)

The restructuring plan foresaw a turnover/annual result
of about EUR 8 million/EUR 250 000 in 2000, EUR 9
million/EUR 600 000 in 2001 and EUR 10 million/EUR
600 000 in 2002. The actual turnover/annual result was
EUR 2 million/EUR 100 000 in 2000 and EUR 5
million/EUR 15 000 in 2001.

(24)

The restructuring plan consisted, according to Germany,
of the following measures.

Management and employees

(25) According to Germany, one of the reasons that ulti-
mately resulted in the insolvency of HAMESTA was
inadequate management. HAMESTA was overstaffed in
its operational and administrative departments, resulting
in high costs and inefficient management.

(26)

The total staff was reduced to 80, of which 45 were
production staff. Management staff levels were cut espe-
cially. In addition to the permanent staff, two external
consultants, a lawyer and a business adviser were to take
over some of the tasks previously performed in-house.

(20)

Subject to approval by the Commission, the loans from
the BvS were to be converted into grants.

Control

(21)

The working capital was needed for maintenance
measures,
interim financing of outstanding claims and
order financing. According to the German authorities it
is normal practice in the steel construction industry for
about 10 % of the order value to be guaranteed by a
bank at the outset. After the work has been completed
and the product delivered, the customer has a guarantee
claim of 5 % for two to five years.

3. The restructuring plan

(22) According to Germany, central to the restructuring plan
drawn up by the investor is the investor’s acquired know-
how; the introduction of effective control and tightening-
up of management;
the reduction of administrative
expenditure; the restructuring of operational areas; and
the increased use of the distribution network of Jahnke

(4) Guarantee guidelines of the Land of Saxony-Anhalt, circular of 4
April 2000 (Bürgschaftsrichtlinie des Landes Sachsen-Anhalt RdErl vom
4.4.2000), N 413/91; E 5/94; E 8/01.

(5) OJ C 288, 9.10.1999, p. 2.
(6) Granted under the guidelines for granting consolidation loans to
small and medium-sized businesses in the Land of Saxony-Anhalt
(Richtlinie über die Gewährung von Konsolidierungsdarlehen an mittelstän-
dische Unternehmen im Land Sachsen-Anhalt), an aid scheme approved
by the Commission under number N 452/97.

(27) According

orders was

to Germany,

in the past HAMESTA’s
of
The
unbusinesslike.
management
management
failed to keep track of any additional
work done under contracts and consequently customers
were not charged for it. This led in turn to contracts
being wrongly costed.

(28) As part of

the enterprise,

the restructuring of

in
December 1999 a start was made with the introduction
of a comprehensive business-management plan incor-
porating
target-based
targets attained,
management and an indication of
involving the use of modern software for accounting
and business planning.
In this way, real-time costing
became possible for contracts processed.

formulation

targets,

the

of

Production and more efficient manufacture

(29)

to reduce waste and offcuts,

Existing warehouse stocks were to be properly listed and
In
monitored using a warehouse management system.
order
to
Jahnke was
obtain its steel requirements directly from the steelworks.
The idea was that the steelworks would cut the raw
materials to the required size for each contract and
then deliver them to Jahnke by a private rail link.

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A new focus for business areas

5. Opening of the investigation procedure

(30)

to be diversified by
The range of customers was
branching out
into newer, more profitable activities.
While HAMESTA’s management aimed to process as
much steel as possible in the shortest possible time,
Jahnke’s objective is to produce high-quality, sophis-
ticated steel structures.

(37)

the Commission
By letter dated 28 February 2001,
informed Germany that
it had decided to open the
procedure laid down in Article 88(2) of the EC Treaty
in the absence of clarification of the following questions:

(31) While HAMESTA did not specialise in any particular
areas of steel structures manufacture, Jahnke Halle has
developed a range of higher quality products. In coop-
eration with an architect, the enterprise’s management
has developed a wide range of hangars that incorporate
glass and wood elements into the main steel structure. In
order to facilitate the in-house production of turnkey
hangars, Jahnke Bau GmbH was set up in conjunction
with Jahnke Lenzen in 1998 with a view to carrying out
work such as the production of concrete foundations for
steel hangars.

Marketing and distribution

(32)

Jahnke was to be linked to the existing distribution
network of Jahnke Lenzen and a systematic approach
to marketing was
to
Germany,
a well-established
customer base,
including well-known enterprises that
rate it as a skilled and reliable supplier and are interested
in placing further business with it.

adopted. According
has

to be
already

Jahnke

4. Market analysis

(33)

Jahnke is active in the steel construction industry (Nace
code 1 28.1).

(34) Geographically the most important market for Jahnke is
Germany where it has a market share of about 0,3 %. Its
market share in Europe is less than 0,01 %. According to
the German authorities, so far it has had only one supply
contract
to
the European market,
EUR 154 000.

amounting

for

(35) According to information provided by Germany, there is
no structural excess of production capacity either in the
German market
(about 80 % capacity utilisation in
western Germany and about 90 % in eastern Germany)
or in the EU market.

(a)

Is Jahnke, as a newly created firm, eligible for restruc-
turing aid in accordance with the guidelines?

(b) Does the restructuring plan, as presented, fulfil the

viability criteria of the guidelines?

(c)

Is competition unduly distorted by the aid?

(38)

(39)

(d) Would the guarantee of the Land of Saxony-Anhalt,
as envisaged, be provided in accordance with the
criteria laid down in the applicable aid scheme? The
Commission accordingly considered the guarantee to
be ad hoc aid.

The Commission also ordered Germany, pursuant
to
Article 10(3) of Regulation (EC) No 659/1999,
to
to
the information necessary to enable it
submit all
verify whether the consolidation loan from the Land of
Saxony-Anhalt had actually been granted in accordance
with the criteria laid down in the applicable aid scheme.

III. COMMENTS FROM GERMANY

the investigation
In its response to the opening of
procedure, Germany took the view that a letter dated
30 November 1999 from HAMESTA’s receiver to Mr
Jahnke was to be regarded as a takeover agreement and
that Jahnke therefore fell within the exception to the
general prohibition on restructuring aid to a newly
created firm, provided for
the
guidelines. The German authorities also pointed out
that Jahnke had already taken over HAMESTA’s stock
and between 2000 and 2002 had invested some
EUR 237 000 in repairs.

in footnote 10 of

(40) Germany maintained that

the restructuring plan was
suited to restoring Jahnke to long-term viability while
avoiding undue distortions of competition.

(36)

Starting in 1990 Jahnke has continuously reduced its
capacity and discontinued a number of activities to
improve cost structures.
It has also reduced its staff
from 650 in 1991 to 80 at present. The purpose of
the aid is not
to expand
production capacity but to finance mainly start-up costs.

to enable the recipient

(41)

The German authorities also submitted additional infor-
mation on the application of the scheme under which
the Land of Saxony-Anhalt had granted the consolidation
loan.
In their opinion, the loan had been granted in
accordance with all the conditions of the scheme.

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(42) Germany reminded the Commission that restructuring
aid to newly created firms had been approved in the
to the Commission’s
past and referred in particular
decision of 2 August 2000 on aid to Homatec Industrie-
technik GmbH (Homatec) and Ambau Stahl- und Anla-
genbau GmbH (Ambau) (7).

costs it would normally have to bear if it wanted to carry
out its restructuring project. Moreover, the recipient of
the aid, Jahnke, is active in steel construction and manu-
factures products that are traded between Member States.
As the aid threatens to distort competition, it falls within
the scope of Article 87(1) of the EC Treaty.

(43)

In January and July 2003 Germany informed the
Commission that
insolvency
and that the proceedings would last at least until mid-
2004.

Jahnke had applied for

(48) A derogation from the prohibition in Article 87(1) of the
EC Treaty may be granted under either Article 87(2) or
Article 87(3) of that Treaty.

IV. ASSESSMENT OF THE AID

1. State aid within the meaning of Article 87(1) of
the EC Treaty

(49) Germany has not claimed that

the aid should be
authorised under Article 87(2). Indeed, it is evident that
this provision does not apply.

(44) According to Article 87(1) of the EC Treaty, 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 or
the production of certain goods shall,
in so far as it
affects trade between Member States, be incompatible
with the common market. Pursuant to the established
case-law of the Courts of the European Communities,
if
the criterion of
the
recipient
activity
involving trade between Member States.

trade being affected is met
an

firm carries

economic

out

(45)

(46)

Jahnke has received from the BvS two loans totalling
EUR 560 000 and from the Land of Saxony-Anhalt a
consolidation loan amounting to EUR 260 000. The
Land was prepared to provide an additional guarantee
in order
to secure a bank loan, which was to be
granted in order to finance the sales price of the assets.
These measures confer on Jahnke advantages that a
company in such economic difficulties would not have
obtained on the financial market.

The Land of Saxony-Anhalt is part of the federal structure
of Germany, and as a constituent State of the Federation
shares in public authority. The BvS is likewise a public
body. It finances its activities with public money, and
acts as a public institution whose terms of reference
require it to privatise the enterprises in its keeping on
behalf of the authorities and in the public interest. For
these
taken by it are also
reasons,
imputable to the State.

the measures

(47)

The measures at issue are granted through State resources
to an individual company favouring it by reducing the

(50)

(51)

(52)

for

case

and are

indeed not

the EC Treaty,
This case falls under Article 87(3) of
which gives the Commission discretion to permit State
aid in certain specified circumstances. The derogations in
(d) and (e) were not invoked in the
Article 87(3)(b),
relevant. Article
present
87(3)(a) of the EC Treaty empowers the Commission to
approve State aid meant
the improvement and
economic development of regions with especially low
living standards or employment
levels. The Land of
Saxony-Anhalt is such a region. In this case, however,
the main purpose of the aid is to promote the devel-
opment of a certain economic sector rather than to
promote the economic development of a region. Hence
the aid for restructuring the company in accordance with
the restructuring plan presented falls to be assessed under
Article 87(3)(c) of the EC Treaty rather than under Article
87(3)(a).

Jahnke is an SME within the meaning of Commission
Recommendation
1996
concerning the definition of small and medium-sized
enterprises (8).

96/280/EC

3 April

of

2. Granting of aid under an approved scheme

In its decision to open the investigation procedure the
the Land of Saxony-Anhalt
Commission noted that
the
loan guarantee under
a
intended to provide
guarantee guidelines of the Land of Saxony-Anhalt (9),
which is a scheme approved by the Commission (N
413/91)
(hereinafter called the guarantee scheme). The
guarantee of EUR 2 million was to be provided in
order to secure 80 % of a loan totalling EUR 2,5 million.

(7) Homatec: decision of 12.7.2002 (OJ C 310, 13.12.2002, p. 22);
103,

2003/261/EC (OJ

L

Ambau: Commission Decision
24.4.2003, p. 51).

(8) OJ L 107, 30.4.1996, p. 4. See also Annex, Article 11 paragraphs 1

and 6.

(9) As adapted by circulars of the Ministry of Finance dated 4 April

2000 and 3 March 2001.

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(53)

(54)

to EUR 260 000. According

The Land of Saxony-Anhalt also granted a consolidation
loan amounting
to
Germany, the loan was granted in accordance with the
guidelines for granting consolidation loans to small and
medium-sized businesses in the Land of Saxony-Anhalt,
which is also a scheme approved by the Commission
(N 452/97) (hereinafter called the second scheme).

3. Restructuring aid to Jahnke

(61)

In the Community guidelines on State aid for rescuing
and restructuring firms in difficulty (10), the Commission
spelled out in detail the criteria for assessing aid for the
purpose of restructuring a company.

In the case of both schemes,
in order for aid to be
granted, certain conditions must be met. In the case of
a restructuring, the aid must be limited to restructuring
plans that will restore the long-term viability of
the
it must be combined with a
recipient;
substantial contribution from the recipient; and lastly, it
must be the minimum required to restore the recipient’s
competitiveness. Both schemes prohibit investment aid to
newly created firms.

in addition,

Eligibility for restructuring aid

(62) According to point 3.2.2 of

the guidelines, a newly
created firm is not eligible for rescue or restructuring
aid, even if its initial financial position is insecure. This
is the case, for instance, where a new firm emerges from
the liquidation of a previous firm or merely takes over
such firm’s assets. The only exceptions to this rule are
cases dealt with by the BvS in the context of its privati-
sation remit and other similar cases in the new Länder,
involving companies emerging from a liquidation or a
takeover of assets occurring up to 31 December 1999.

(55) As to the consolidation loan from the Land of Saxony-
Anhalt, the Commission issued an information injunction
to Article 10(3) of Regulation (EC) No
pursuant
659/1999 to enable it
this
measure fulfilled all the conditions of the second scheme.

to determine whether

(63)

(56) As to the envisaged guarantee, the Commission raised
doubts whether it would fulfil all the conditions of the
guarantee scheme (restoration of long-term viability; no
aid for initial investment to a newly created firm). The
Commission
envisaged
guarantee to be ad hoc aid.

considered

therefore

the

(57)

In its response to the information injunction and the
decision to open the formal
investigation procedure,
Germany took the view that both measures were gran-
ted/would be granted in accordance with the conditions
laid down in the respective scheme.

(64)

(58) As

for

the

the reasons given in point 3 below,

the
Commission considers
restructuring plan
that
presented does not fulfil the viability criterion of the
guidelines. It also considers Jahnke to be ineligible for
restructuring aid. It therefore considers that the loan and
the guarantee from the Land of Saxony-Anhalt was not
granted/would not be granted in accordance with all the
conditions of the respective scheme.

(59) As both measures do not fulfil the conditions of the
applicable aid scheme, they must be treated as ad hoc
aid.

(60) Accordingly, the total amount of ad hoc State aid within
the meaning of Article 87(1) of the EC Treaty to be
assessed in the present Decision is EUR 2,82 million.

In its decision to open the formal investigation procedure
the Commission noted that Jahnke, which was registered
in November 1999, was a newly created firm. It raised
doubts whether Jahnke fell within the exception to the
general prohibition on restructuring aid to a newly
created firm because there had been no liquidation of
HAMESTA’s assets, nor can Jahnke be considered to
have taken over the assets since the creditors’ meeting
had decided not to proceed with the sale of the assets to
Jahnke Halle but instead to dispose of them by public
auction.

In its comments Germany took the view that a letter
dated 30 November 1999 from the receiver
to Mr
Jahnke was to be regarded as a takeover agreement. In
this letter the receiver envisaged that Jahnke could utilise
the assets until such time as a sale took place. The
German
since
December 1999 Jahnke had operated the business of
Jahnke and his other
HAMESTA and that both Mr
company Jahnke Lenzen had made commitments.

authorities

pointed

also

that

out

(65) Germany also argued that the Commission had already
approved aid to newly created firms in a number of
instances. It referred in particular to the Homatec and
Ambau cases.

(66) According to the German authorities, the takeover of
HAMESTA’s assets by Jahnke occurred in the following
way:

(10) OJ C 288, 9.10.1999, p. 2. These guidelines are applicable
they were

the aid was granted after

inasmuch as part of
published (see point 101 of the guidelines).

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(67) On 30 November 1999, the receiver informed Mr Jahnke
that he envisaged selling the assets to Jahnke provided he
secured the agreement of the creditors’ meeting. In the
meantime, and in agreement with another tenant of the
assets, Mr Jahnke might utilise the assets for a price of
about EUR 13 000, payable after 1 January 2000.

(68)

In February 2000 a draft sales contract was drawn up.
After it appeared that HAMESTA’s creditors’ meeting
would not agree to the sales contract but preferred to
sell the assets by public auction, a new rental agreement
for an unlimited duration was signed (in May 2000).

(69) Germany first arranged for the auction to take place in
Jahnke
2002, then in 2003.
might acquire the assets at this auction, it was first to
acquire the liens from HAMESTA’s creditors and then the
assets.

In order to ensure that

(70)

Jahnke also took over HAMESTA’s stock for a purchase
price of EUR 76 694. Moreover, between 2000 and
2002 it invested some EUR 237 000 in repairs to the
assets.

(71) HAMESTA’s receiver informed Mr Jahnke by letter dated
30 November 1999 of his intention to sell
Jahnke
HAMESTA’s assets for a purchase price of EUR 2,5
million, provided he secured the agreement of
the
creditors’ meeting. The assets were at that time rented
out to someone else (until 31 March 2000 at the latest).
The receiver also proposed to Mr Jahnke that he might,
in agreement with the other tenant, utilise the assets for a
fee of about EUR 13 000, payable after 1 January 2000.

(72)

The sales contract concluded between the receiver and
Jahnke in February 2000 never became effective as
HAMESTA’s creditors’ meeting preferred to sell
the
assets by public auction.

(73) A new rental agreement between the receiver and Jahnke
was concluded in May 2000. This agreement could be
terminated at six months’ notice at year’s end. It would
expire when HAMESTA came out of receivership.

(75)

(76)

(77)

(78)

receiver
deadline.

terminated the agreement within the legal

The receiver was manifestly unable in November 1999 to
enter into a long-term commitment for a takeover of the
assets as he did not have the agreement of the creditors’
meeting. As became clear in February 2000, the creditors’
meeting was not in favour of a direct asset sale to Jahnke
but preferred to sell the assets via a public auction.

The public auction of HAMESTA’s assets has not yet
taken place. According to the German authorities, the
value of the assets has to be re-established before the
auction can take place (now scheduled for the end of
2003). The Commission cannot therefore assume that
Jahnke will be able to acquire the assets or operate
them on a permanent basis.

from the Homatec and
The present case is different
Ambau cases, both of which fell under
the 1994
guidelines on State aid for rescuing and restructuring
firms in difficulty (11). Owing to the exceptional circum-
stances prevailing in the new Länder, the Commission
authorised under the 1994 guidelines restructuring aid
to firms newly created in the form of so-called ‘Auffang-
lösung’ (12). As Homatec and Ambau were both Auffang-
lösungen and as all
the 1994
guidelines were satisfied, the Commission was able to
approve the restructuring aid for these two companies
at that time.

the relevant criteria of

The present case, however, concerns the application of
the 1999 guidelines, under which the Auffanglösung
limited to cases dealt with before
concept was
31 December 1999. Moreover,
the circumstances of
the present case are factually different inasmuch as the
economic operation of HAMESTA was not taken over by
Jahnke on a long-term basis but only on the basis of an
offer from the receiver to utilise the assets and only until
such time as the receivership was closed. The present
case is therefore different from the two aforementioned
cases. As the case falls to be assessed under the new,
stricter guidelines, the Commission must apply different
criteria from those used in the Homatec and Ambau
cases.

(74)

The Commission considers that it does not follow clearly
from the letter of 30 November 1999 that the receiver
was committing himself to a final takeover of the assets
by Jahnke. The receiver was merely proposing to Mr
Jahnke that he might,
in agreement with the other
tenant, utilise the assets for an indeterminate duration.
Mr Jahnke could utilise the assets until such time as the

(79)

For the reasons set out above, the Commission cannot
consider that Jahnke fulfils the criteria for exemption
from the general prohibition on restructuring aid to a
newly created firm.

(11) OJ C 386, 23.12.1994, p. 12.
(12) New firms evolving out of the bankruptcy proceedings and taking

over the economic operation of the bankrupt business.

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L 342/79

(80)

restructuring aid are

The Commission believes that its considerations about
the non-eligibility for
reason
enough to find that the aid does not meet the conditions
for a favourable exercise of its discretion under Article
in order to assess
87(3)(c) of the EC Treaty. However,
the
whether the measures fulfil
approved aid schemes,
also
examined the other relevant criteria of the guidelines.

the Commission has

the other criteria of

Restoration of viability

the viability criterion,

(81) According to the guidelines, the restructuring plan must
restore the long-term viability and health of the firm
within a reasonable timescale and on the basis of
realistic assumptions as to its future operating conditions.
the restructuring plan
To fulfil
must be considered capable of putting the firm into a
position of covering all its costs including depreciation
and financial charges and generating a minimum return
on capital such that, after completing its restructuring,
the firm will not require further injections of State aid
and will be able to compete in the market place on its
own merits.

(82)

In its decision to open the formal investigation procedure
the Commission noted that the cooperation with Jahnke
Lenzen was a main element of the restructuring plan.
The Commission pointed out in this connection that it
could not endorse a restructuring plan under which the
definitive beneficiary of the aid would not necessarily be
in a position to carry out the restructuring measures.
the Commission raised doubts whether
Furthermore,
the
financial
resources to acquire the assets. In the light of the fact
that the restructuring period was to end in November
2002 but the public auction was only to take place
between March and September 2002, the Commission
also raised doubts whether the restructuring plan could
restore the long-term viability of Jahnke in accordance
with the guidelines.

investor would have

the necessary

(83)

From the information set out above it appears that so far
Jahnke has been unable
acquire
HAMESTA’s assets, which in itself shows that the under-
taking is not viable. For the following reasons it seems
hardly possible that Jahnke will be able to acquire the
assets in the near future:

to permanently

(84)

The weakness of the restructuring plan lies in the fact
that at no time was the precondition for its implemen-
tation, i.e. the takeover of the assets, financially secured.
The information submitted after the opening of
the
procedure does not allow the conclusion to be drawn
that at any point has a clear commitment been given
by the financing bank. Nor does this information show
the investor could have obtained the lacking
that
financial support
from out of his own resources, as
they had already been allocated to financing the start-
up measures, or from the planned profits of the business
itself, as these would have been insufficient.

(85)

The Commission’s initial doubts have been confirmed by
the fact that the actual performance of Jahnke has been
below expectations. Whereas
restructuring plan
foresaw an annual result of EUR 250 000 in 2000 and
EUR 600 000 in 2001, the actual result has been about
EUR 100 000 in 2000 and EUR 15 000 in 2001.

the

(86)

The Commission cannot consider the restructuring plan
as being based on realistic assumptions or that Jahnke
will be restored to long-term viability within a reasonable
timescale.

(87)

(88)

Distortion of competition

The restructuring plan must contain measures to offset as
far as possible adverse effects on competitors, otherwise
the aid involved is contrary to the common interest and
not eligible for exemption pursuant to Article 87(3)(c) of
the EC Treaty.

This implies that, if the undertaking concerned is active
in a market in the EU where an objective assessment of
supply and demand shows that
there is a structural
the restructuring plan
excess of production capacity,
must make a significant contribution, proportionate to
the amount of aid received, to the restructuring of the
industry serving the relevant market by irreversibly
reducing or closing capacity. In cases where there is no
structural excess of production capacity, the Commission
will not normally require a reduction of capacity in
return for the aid.

(a)

the bank loan of EUR 2,5 million, necessary for
financing the sales price of the assets, has not been
granted;

(b) the

investor himself has only limited financial

resources; and

(c)

Jahnke applied for insolvency in 2002.

situation in the

(89) Germany has provided the Commission with detailed
information concerning
steel
the
construction market. The Commission is satisfied that
there is no structural excess of production capacity in
the market
in which Jahnke Halle is predominantly
active, namely the German market, in which its market
share is less than 1 %, and in the European market,
where its market share is less than 0,001 %.

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24.12.2005

(90)

Since Jahnke is an SME and the restructuring plan does
not provide for any increase in production capacity, the
Commission considers the corresponding criterion of the
guidelines to be fulfilled.

HAS ADOPTED THIS DECISION:

Article 1

Proportionality to the restructuring costs and benefits

(91)

The amount and intensity of the aid must be limited to
the strict minimum needed to enable the restructuring to
be undertaken and in the Commission’s opinion must be
proportionate to the expected benefits. The investor must
therefore make a significant contribution towards the
restructuring costs from out of his own resources.

(92) On the basis of the information provided by Germany,
the proposed own contribution of the investor is about
21 % of the total costs. Because Jahnke is a firm in the
small
the Commission is
justified in taking a less restrictive attitude towards the
aid.
the investor
contribution is reasonable.

to medium-sized category,

the opinion that

therefore, of

is,

It

V. CONCLUSION

In the light of the above considerations, the Commission
finds that, even though its initial doubts concerning the
undue distortion of competition and the proportionality
of the aid have been allayed, neither the conditions set
out in the guidelines concerning the eligibility of the
the
company nor
restructuring plan have been met. Consequently, the aid
has to be considered incompatible with the common
market.

those concerning the viability of

the Federal Republic of
The Commission finds that
Germany
about
granted
EUR 820 000 in breach of Article 88(3) of the EC Treaty.

unlawfully

has

aid

of

(93)

(94)

(95)

The aid which Germany has granted to Jahnke Stahlbau GmbH
in the form of two loans from the BvS totalling EUR 560 000
and a loan from the Land of Saxony-Anhalt amounting to
EUR 260 000 is incompatible with the common market.

Article 2

The aid which Germany has granted in the form of a
EUR 2 000 000 guarantee from the Land of Saxony-Anhalt in
favour of
Jahnke Stahlbau GmbH is incompatible with the
common market.

Article 3

Germany shall take all necessary measures to recover the
1.
aid referred to in Article 1 and unlawfully made available to the
recipient.

Recovery

shall be

effected without delay

2.
and in
accordance with the procedures of national law provided that
they allow the immediate and effective execution of
the
decision. The aid to be recovered shall
include interest from
the date on which it was at the disposal of the recipient 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.

Article 4

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

Article 5

This Decision is addressed to the Federal Republic of Germany.

Done at Brussels, 1 October 2003.

The unlawfully granted aid, consisting of two loans from
the BvS totalling EUR 560 000 and a loan from the Land
of Saxony-Anhalt amounting to EUR 260 000, must, in
so far as it has not been repaid, be recovered from the
recipient,

For the Commission

Mario MONTI
Member of the Commission