2005/122/EC: Commission Decision of 30 June 2004 on the State aid which the Netherlands is planning to implement in favour of four shipyards to support six shipbuilding contracts (notified under document number C(2004) 2213) (Text with EEA relevance)
Date: 2004-06-30
Institutions: European Commission
Subjects: Netherlands, State aid, control of State aid, shipbuilding

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COMMISSION

COMMISSION DECISION

of 30 June 2004

on the State aid which the Netherlands is planning to implement in favour of four shipyards to
support six shipbuilding contracts

(notified under document number C(2004) 2213)

(Only the Dutch text is authentic)

(Text with EEA relevance)

(2005/122/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

16 September 2003,
further information.

it provided the Commission with

Having regard to the Treaty
establishing the European
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 regard to the Commission Framework on State aid to
shipbuilding (1),

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

Whereas:

I. PROCEDURE

(1)

By letters dated 9 September 2002, The Netherlands
notified the Commission of
the aid. By letters dated
30 January 2003, 16 May 2003, 16 July 2003 and

(1) OJ C 317, 30.12.2003, p. 11.
(2) OJ C 11, 15.1.2004, p. 5.

(2)

(3)

(4)

(5)

By letter dated 11 November 2003, the Commission
informed The Netherlands
it had decided to
initiate the procedure laid down in Article 88(2) of the
EC Treaty in respect of the aid. The Netherlands replied
by letters dated 28 November 2003 and 12 December
2003.

that

The Commission decision to initiate the procedure was
published in the Official Journal of the European Union. The
their
Commission invited interested parties to submit
comments on the aid.

The Commission received comments from interested
parties.
It forwarded them to The Netherlands, which
was given the opportunity to react; its comments were
received by letter dated 23 March 2004.

II. DETAILED DESCRIPTION OF THE AID

in the form of grants,
contracts

The notifications propose to give aid for a total of EUR
in support of six
21,6 million,
shipbuilding
shipyards:
to
Bodewes Scheepswerven BV; Bodewes Scheepswerven
Volharding Foxhol; Scheepswerf Visser; and Scheepswerf
de Merwede. The aid has been offered to the yards,
subject to the Commission’s approval.

four Dutch

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(6)

The purpose of the notified aid is to match aid allegedly
offered by Spain to certain private Spanish shipyards
which competed for the contracts referred to above.
According to The Netherlands, the alleged Spanish aid
implied a price discount of between 9 and 13 %. The
Dutch shipyards received all the concerned orders and
the ships are under construction or have already been
delivered. Details of the notified Dutch aid are presented
in table 1 below.

(a)

the Commission considered that granting aid to
match alleged illegal aid from another EC Member
State is contrary to the EC Treaty and therefore
had doubts that the notified aid could be compatible.
In this context it had doubts that the approval of the
Dutch scheme included the right
to match aid
provided from another EU Member State;

TABLE 1

Notified aid, ships and benefiting shipyards

Notification
No

N 601/02

N 602/02

Beneficiary
Shipyard

Bodewes
Scheepswerven
BV

Bodewes
Scheepswerven
BV

Ships

4 container
ships

3 ro-ro vessels

N 603/02

Visser

Arctic Trawler

N 604/02

N 605/02

Bodewes
Scheepswerven
BV

Bodewes
Volharding
Foxhol

N 606/02

De Merwede

(*) Confidential information.

4 multi-purpose
freight vessels

6 container
ships

2 hopper
dredgers

(EUR million)

Aid
amount
[…] (*)

[…]

[…]

[…]

[…]

[…]

(7)

Legal basis — the aid scheme

(Besluit

According to the Netherlands, the proposed aid may be
granted under the so-called heavy matching provisions
(Matchingfonds zwaar) of the Decision on export credit
subsidies exportfinancieringsarrange-
subsidies
menten, hereinafter called BSE), as first approved by
the Commission,
letter of 24 June 1992 (SG(92)
D/8272 — aid number N 134/92) (1). The BSE was
subject to various amendments, among which the most
important was approved by the Commission in a letter
dated 12 December 1997, reference SG(97) D/10395
(aid number N 337/97) (2). In this decision the scheme
was approved for the period of 1997 to the end of
2002.

Grounds for initiating the procedure

(8)

The opening of the procedure addressed doubts in the
following areas:

(9)

(10)

(11)

(b) even if the scheme would allow for such intra-EU
the Commission had doubts as to the
in establishing the

matching,
fulfilment of
existence of illegal aid to match;

the procedures

(c)

the Commission further had doubts that
the aid
could be approved on the basis of Article 3(4) of
the shipbuilding Regulation (3),
since that Article
concerns export credits to shipowners while the
Netherlands notified grants to the shipyards.

III. COMMENTS FROM INTERESTED PARTIES

Comments were received from the representative of the
beneficiaries and from a party requesting his identity not
to be disclosed. All these parties argue that the aid should
be approved, stressing among other
the
Commission had approved the matching scheme, that
the alleged Spanish aid was
the presented proof of
the aid
that
sufficient, and that
would be available was not sufficiently explicit.

the Spanish denial

things that

The representative of the beneficiaries further argued that
there is nothing in the Commission’s decisions approving
the scheme, or in the text of the scheme, that suggests
that
the
the matching would only be allowed if
competitor originates from a third (non-EU) country. It
also argues that the planned aid is based on an approved
scheme and therefore is existing aid, which therefore
should not be assessed on the basis of the shipbuilding
Regulation.

IV. COMMENTS FROM THE NETHERLANDS

The Netherlands claims to have acted within the rules
(the BSE scheme) governing heavy matching, which
were authorised by the Commission and which are in
accordance with the relevant OECD procedures. The
Netherlands maintains that
the BSE scheme does not
alleged aid provided by
exclude matching against
another EU Member State and that the procedures have
shown with sufficient certainty that there was indeed
Spanish aid. The Netherlands therefore considers that it
is entitled to proceed with the matching and that the
beneficiaries have legitimate expectations to receive the
aid.

(1) OJ C 203, 11.8.1992.
(2) OJ C 253, 12.8.1998, p. 13.

(3) Council Regulation (EC) No 1540/98 of 29 June 1998 establishing
new rules on aid to shipbuilding (OJ L 202, 18.7.1998, p. 1).

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(12)

The Netherlands also considers that the aid is existing
aid, since it is based on an approved scheme, and the
fact that the Dutch authorities nevertheless decided to
notify these cases was due to an Exchange of Letters
between the Dutch Minister of Economic Affairs and
the Commissioner in charge of Competition. The Dutch
authorities consider that the Commission,
in this case,
should have presented to the Netherlands a recommen-
dation containing appropriate measures before launching
a formal investigation procedure. Finally, the Netherlands
considers that the Commission’s doubts, based on Article
3(4) of Regulation (EC) No 1540/98 (the shipbuilding
Regulation), concerning the right to provide grants to
shipyards instead of credit facilities to shipowners, are
unfounded since the legal basis should be the Council
decisions based on the OECD export credit rules.

V. ASSESSMENT OF THE AID

Legal basis for the assessment

(13) 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 established case-
law of the European courts, the criterion of trade being
affected is met
firm carries out an
the recipient
economic activity involving trade between Member
States.

if

(14)

that

The Commission notes that the Netherlands intends to
grant subsidies to four shipyards for the construction of
as detailed above. The Commission notes,
vessels,
therefore,
the beneficiaries are involved in an
economic activity involving trade between Member
States. The alleged ‘raison d'être’ of
the measures is
indeed (unfair) competition from shipyards of another
Member State. The Commission considers
the
notified aid falls within the scope of Article 87(1) of
the EC Treaty.

that

in its Framework on State aid to shipbuilding, which is
applicable from 1 January 2004 to 31 December 2006.
Previously, State aid to shipbuilding was regulated by the
shipbuilding Regulation.

Assessment of whether the aid is contrary to general
principles of EC law

The principle that a Member State should not act on its
own to counter the effects of unlawful aid from another
Member State has been clearly established by the Court.
Specifically, the Court has held that it is not possible to
justify an aid on the ground that other Member States
have granted illegal aid (1). The Commission observes that
the notified aid aims at matching alleged illegal aid from
another EC Member State. This is therefore contrary to
the general principles of the EC Treaty. The notified aid is
incompatible with the EC Treaty and should therefore
not be authorised.

Assessment whether the aid could be approved
based on the BSE scheme

the aid would be
Since the Netherlands argues that
compatible with the BSE
therefore
compatible with the EC treaty, this issue has also been
assessed by the Commission. The Commission can
conclude that
the notified aid cannot be authorised
under this scheme for two reasons.

scheme,

and

Firstly, the Commission’s approval of the BSE scheme
expired by the end of 2002. Since the Commission
must base its decisions for notified State aid on the
legislation in force at the time of its decision, it is not
possible to authorise any aid based on an aid scheme for
which the approval has expired.

(17)

(18)

(19)

(15) According to Article 87(3)(c) of the EC Treaty, aid to
facilitate the development of certain economic activities
or of certain economic areas, where such aid does not
adversely affect trading conditions to an extent contrary
to the common interest, may be considered to be
compatible with the common market. Based on this
the BSE scheme was approved in 1992 and
Article,
was modified in 1997. However,
it was stated in the
general provision that
requests for subsidies will be
turned down if they are in contravention of the EEC
Treaty.

(20)

Secondly, even if the aid scheme had not expired, the
Commission considers that the aid scheme in question
did not authorise aid to match alleged aid from another
Member State.

(21)

Some elements in the Commission decisions indicate,
indeed,
intra-EU matching was not authorised
that
under these decisions:

(16)

Furthermore, the Commission has clarified its interpre-
tation of the rules on state aid applicable to shipbuilding

(1) See Case 78/79, Steinike 1 Weinlig v Federal Republic of Germany

[1977] ECR 595, paragraph 24.

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(a)

firstly, the statement expressed in the Commission’s
‘requests for
decision approving the scheme that
subsidies will be turned down if they are in contra-
vention of the EEC Treaty’ meant not only that the
scheme had to be approved by the Commission, but
also that the application of the scheme had to be in
conformity with the general provisions of the EEC
Treaty;

(b) secondly, in its decision on the modified scheme in
1997 (N 337/97),
the Commission stated, as a
general observation before assessing the scheme,
that ‘Although trade effects between Member State
are probably felt less intensively in cases of aid to
trade transactions outside the EU (1), such effects
cannot a priori be excluded.’. This is a clear indication
that the notified scheme was assumed to involve aid
to trade transactions outside the EU.

(25)

(26)

(22)

The Dutch authorities have claimed that the Commission
should not have opened the
investigation
procedure against an aid granted on the basis of an
approved scheme. Instead the Commission should have
presented the Netherlands with a recommendation for
appropriate measures.

formal

(23) On this issue the Commission notes that

aid. Therefore,

that notified the

it was the
Netherlands
even
though an aid scheme existed at the time of the notifi-
cation, to which the Netherlands refers, it was the noti-
fication by the Netherlands that led the Commission to
procedurally handle this case as an ad hoc case and not as
an individual application of a scheme. In addition, since
the aid does not fall within a scheme as approved by the
Commission,
it had to be individually notified and the
Commission had the duty to open the procedure under
Article 88(2) of
the Treaty in case of doubts on its
compatibility with the common market.

Assessment as ad hoc aid

In the opening of the procedure the Commission also
explored the possibility of approving the aid directly
based on Article 3(4) of
the shipbuilding Regulation,
now replaced by section 3.3.4. of the Framework on
State aid to shipbuilding, which states that ‘aid in the
form of State supported credit
facilities granted to
national and non-national shipowners or third parties
the building (…) of vessels may (2) be deemed
for
compatible with the common market and shall not be
counted within the ceiling (on operating aid)
it
complies with the terms of (…) OECD Understanding
on export credits for ships…’, since the OECD Under-
standing for ships contains a matching clause.

if

In this respect, the Commission first notes that it does
not accept the matching of alleged aid from another
Member State; therefore, this provision is not applicable
in the present case. The Commission considers that the
use of ‘may’ gives it discretion not to apply this provision
for matching alleged aid from another Member State.
Secondly,
the Commission recalls that no new infor-
mation has been presented which would make it
there were sufficient proof of
modify its doubts that
the alleged Spanish aid (see recital 24). Thirdly,
the
Commission confirms, as mentioned in its decision to
open the procedure, that the provision concerns credits
to shipowners (or third parties) while the aid at stake
relates to grants to shipyards. Finally, the Commission
disagrees with the Netherlands that the aid should only
be assessed on the basis of Council decisions based on
rules. State aid within the
the OECD export credit
meaning of Article 87(1) of
the Treaty to the ship-
building industry has necessarily to be assessed on the
basis of
the Commission
that
imposed itself
(the framework on State aid to ship-
building) in order to apply the derogations to the incom-
patibility of State aid as foreseen by the Treaty.

the applicable rules

(24)

Proof of illegal aid to match

the conditions of

Furthermore, the Commission is of the opinion that all
the BSE scheme have not been
of
fulfilled in the present case and that,
in particular,
sufficient proof of the existence of illegal Spanish aid
was not provided. In this respect the comments from
the Netherlands and the potential beneficiaries do not
alleviate the doubts expressed in the opening decision.
The Commission considers that the Spanish authorities
have clearly denied that the aid would ever be available.
In State aid proceedings the Commission has to, in the
last analysis, rely on the statements of the Member State
supposed to (have) grant(ed) the aid.

(27)

The Commission also considers that no other legal basis
exists under which the notified State aid could be
approved. Besides,
the Dutch authorities have not
invoked any other derogation of the Treaty.

Legitimate expectations of the beneficiaries

(28) As

already mentioned,

the BSE scheme was not
applicable
expectations
and therefore no legitimate
from the beneficiaries can be accepted. In any case, the
beneficiaries could not claim legitimate expectations since
the aid was granted by the Netherlands subject to the
outcome of the Commission assessment.

(1) Not underlined in the 1997 decision.

(2) Not underlined in the Framework.

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VI. CONCLUSION

The aid may accordingly not be implemented.

The Commission concludes that the notified aid is contrary to
the general principles of the EC Treaty. Furthermore, the aid
scheme, to which the Netherlands authorities have referred, has
expired, and even if it were still in force the aid would not be
compatible with this scheme. There are no legitimate expec-
tations to approve the aid, and there is no other possibility to
approve the aid under any other legal basis. Therefore the
notified aid is incompatible with the Treaty,

Article 2

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

Article 3

HAS ADOPTED THIS DECISION:

This Decision is addressed to the Kingdom of the Netherlands.

Article 1

The State aid which the Netherlands is planning to implement
for Bodewes Scheepswerven BV, amounting to EUR […], for
Scheepswerf Visser, amounting to EUR […],
for Bodewes
Scheepswerf Volharding Foxhol, amounting to EUR […] and
for Scheepswerf De Merwede, amounting to EUR […] is incom-
patible with the common market.

Done at Brussels, 30 June 2004.

For the Commission

Mario MONTI
Member of the Commission