2005/786/EC: Commission Decision of 2 March 2005 on the State aid implemented by Germany for Chemische Werke Piesteritz (notified under document number C(2005) 427)   (Text with EEA relevance)
Date: 2005-03-02
Institutions: European Commission
Subjects: Germany, State aid, aid for restructuring, chemical industry, control of State aid, credit guarantee, investment aid, privatisation

12.11.2005

EN

Official Journal of the European Union

L 296/19

COMMISSION

COMMISSION DECISION

of 2 March 2005

on the State aid implemented by Germany for Chemische Werke Piesteritz

(notified under document number C(2005) 427)

(Only the German text is authentic)

(Text with EEA relevance)

(2005/786/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

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

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) and having regard to
their comments,

Whereas:

I. PROCEDURE

(3)

(4)

(5)

(1)

By letter dated 7 March 1997, received on 15 April and
registered on 18 April, Germany notified State aid
measures
in favour of Chemische Werke Piesteritz
GmbH (hereinafter CWP). According to the notification,
part of
the aid had been granted beforehand. The
Commission asked for additional information by letters
dated 14 May 1997, 22 July 1997 and 4 November
1997. Germany replied by letters dated 10 July,
registered on the same day, and 2 September, registered
on the
the
Commission in its letter of 4 November 1997 were
discussed in a meeting with the German authorities on
24 November.

same day. The questions

raised by

(Prayon-Rupel), a direct competitor, expressed concern
about the situation from the point of view of compe-
tition.

On 16 December 1997 the Commission decided not to
raise any objections. Germany was informed accordingly
on 22 January 1998. A summary of the decision was
published in the Official Journal of the European Commu-
nities (2). In addition, the Commission informed Prayon-
Rupel on 19 December 1997 and transmitted the full
decision on 5 March 1998.

On 5 May 1998 Prayon-Rupel brought an action for
annulment to the Court of First Instance (CFI). On 15
March 2001 the decision in question was annulled (3).
The judgment was notified to the Commission on
19 March 2001.

Following this judgment, the Commission initiated the
formal
investigation procedure on 20 June 2001. The
Commission decision to initiate the procedure was
published in the Official Journal of the European Commu-
nities (4). The Commission invited interested parties to
submit comments on the aid. By letter dated 20
August 2001, registered on 21 August, comments were
submitted by a competitor, Chemische Fabrik Budenheim
Rudolf A. Oetker (CFB). By letter dated 10 September
2001, registered on 13 September, Prayon-Rupel added
to its comments of 15 June 2001, which had been
same day. By letter dated 26
registered on the
September
day,
registered
2001,
comments were submitted by BK Giulini GmbH (BK
Giulini). These comments were transmitted to Germany
by letters dated 29 October 2001 and 6 August 2002.
Germany replied to these comments by letter dated 8
October 2002, registered on the same day, by submitting
CWP’s response to the comments from third parties.

same

the

on

(2)

On 17 June 1997 the Commission received a request for
information from a direct competitor of the beneficiary.
On 28 July 1997 Société chimique Prayon-Rupel SA

(2) OJ C 51, 18.2.1998, p. 7.
(3) Judgment of the Court of First Instance of 15 March 2001, Case
the

chimique Prayon-Rupel SA v Commission of

T-73/98 Société
European Communities [2001] ECR II-867.

(1) OJ C 226, 11.8.2001, p. 2.

(4) See footnote 1.

L 296/20

EN

Official Journal of the European Union

12.11.2005

(6)

still missing,

that meeting,

relevant data were

Germany’s response to the initiation of the formal inves-
tigation procedure was
received by letter dated 21
registered on 27 September. The
September 2001,
annexes to this letter, consisting of
the management
reports for the period 1994 to 1999, were submitted
by letter dated 26 September 2001, registered on 4
October. As
the
Commission requested them by letter dated 25 October
2001. On 4 December 2001 a meeting was held in
Brussels with representatives of the German Government
and the beneficiary.
the
Following
Commission sent out questions on 14 December 2001.
By letter dated 20 December 2001, registered on 4
January 2002, Germany submitted the documents that
had been requested at the meeting. Germany replied by
letters dated 6 February 2002, registered on 8 February,
and 21 February 2002, registered on the same day, to
the letter of 14 December 2001. By letter of 6 February
beneficiary’s
2002, Germany
comments. By letter dated 7 February 2002, registered
on 14 February, Germany submitted the annexes to the
letter dated 6 February 2002. By letter dated 22 February
2002, registered on 26 February, Germany submitted the
information
management report
was submitted by letters dated 13 March 2002, registered
on 14 March, and 4 April 2002, registered on 5 April.
On 14 August 2002 the Commission requested clarifi-
cations on the aid involved. Germany provided the
requested information by letter dated 15 October
2002, registered on the same day.

for 2000. Additional

submitted

also

the

(7)

On 6 March 2003 the Commission informed Germany
of its decision to issue an information injunction in order
to clarify the facts of
the case and whether certain
measures ranked as aid.

(8)

By letters dated 17 April and 5 May 2003, registered on
22 April and 6 May respectively, Germany submitted the
information requested by the Commission. The relevant
annexes to those letters were submitted by letter dated
28 April 2003, registered on 6 May. Additional
infor-
mation was submitted by letter dated 13 June 2003,
registered on the same day, and by letters dated 4, 9
and 29 July 2003, registered on 7, 17 and 29 July, as
well as by letter dated 13 August 2003, registered on the
same day. On 22 August 2003 the Commission held a
meeting with representatives of
the Federal and Land
Governments as well as with representatives of CWP.
The questions raised at the meeting were answered in
letters dated 3 and 26 September 2003, registered on
4 and 26 September.

(9)

(10)

(11)

A further meeting with the German authorities was held
on 14 May 2004. By letter dated 18 June 2004,
registered on 24 June, Germany submitted additional
comments. On 6 July 2004 a final meeting was held
following which infor-
with the German authorities,
mation was submitted by Germany by letter dated 29
same day. Germany
July 2004,
submitted further
letter dated 26
August 2004, registered on the same day.

registered on the

information by

II. DESCRIPTION

A. The beneficiary

CWP is a limited liability company based in Piesteritz,
Saxony-Anhalt, an assisted area under Article 87(3)(a) of
the EC Treaty. It produces phosphoric acid and its deri-
vative products, notably phosphates.
It was set up in
1994 for the purpose of acquiring, as part of a privati-
sation, the phosphorus-based products division of Stick-
stoffwerke AG Wittenberg Piesteritz (Stickstoffwerke).
chemical
Stickstoffwerke was
of
products brought under the Treuhandanstalt
(THA), a
public-law body responsible for the privatisation and
restructuring of enterprises of the former German Demo-
cratic Republic.

a manufacturer

conditional on a

The privatisation took place on 29 June 1994 following
a tender organised by Goldmann Sachs. The owners of
CWP were Vopelius GmbH, URSEKO GmbH, Phosphor
AG (Kazakhstan) and eight private investors. The priva-
tisation was
increase by
Phosphor AG from DEM 30 000 to DEM 1,6 million.
This capital increase did not take place and the shares of
URSEKO GmbH and Phosphor AG were taken over by
Vopelius GmbH and six employees of CWP. Germany
states
the privatisation contract was declared
legally effective on 30 November 1994.

capital

that

(12)

The following data on CWP’s operation have been
submitted by Germany:

12.11.2005

EN

Official Journal of the European Union

L 296/21

Annual turnover

Operating result

Employees

Table 1 (5)

(in DEM million)

1996/97

1997/98

1998

1999

2000

18,8

– 4,8

80

26,3

– 4,1

99

6,2

– 7,2

100

33,0

– 5,0

100

31,2

– 4,1

97

(13) According to Germany, CWP has had a registered capital
of EUR 288 880 (DEM 0,565 million) since December
1998.
It is owned by Vopelius Chemie AG (29,2 %),
Vopelius GmbH (28,3 %), Mr Thilo Koth von Vopelius
(17,7 %) and BVT Industrie GmbH & Co. Chemische
Werke Piesteritz KG (24,8 %).

(14)

are

Chemie

subsidiaries

Leipzig GmbH and

Vopelius Chemie AG and Vopelius GmbH, together with
Vopelius-
Galvano
Bioprodukte GmbH (6), which
of
form an integrated group (the
Vopelius Chemie AG,
group). Mr Thilo von Vopelius is the chairman of the
board of directors of Vopelius Chemie AG. The group,
including Mr Vopelius, holds 75,2 % of CWP’s capital.
to information submitted by Germany
According
group
the
following
(excluding CWP)
in 2002,
generated a turnover of EUR 17 252 657 (DEM 33,755
million) and held assets totalling EUR 6 777 174 (DEM
13,255 million). It should be noted that, according to
Germany, the companies do not constitute a group under
commercial law.

employed 43 people

information

injunction,

the

(15)

BVT Industrie GmbH & Co. Chemische Werke Piesteritz
KG is part of the BVT Group, an international investment
and financial
enterprise with an aggregate
capacity of over EUR 3 billion (DEM
investment
6 billion) (7). It holds 24,8 % of CWP’s capital and is
regarded by Germany as an institutional partner.

services

(17)

(16)

In February 2001 CWP sold its assets linked to the
production of phosphates to […]* (*)
(TI), a producer

(5) CWP changed its accounting method in 1998. The data for 1998

correspond to October-December 1998.

(6) Following the

information injunction, Germany informed the
Commission that CWP had a wholly owned subsidiary, KEB Kali
Elektrolyse GmbH, Bitterfeld. The subsidiary had been set up in
1998 in order to operate a potassium electrolysis unit. Since this
did not function properly, the company was renamed Vopelius-
Bioprodukte GmbH and subsequently sold to Vopelius Chemie AG.

(7) http://www.bvt.de/
(*) Parts of this text have been edited to ensure that confidential infor-
mation is not disclosed; those parts are enclosed in square brackets
and marked with an asterisk.

the goodwill,

from which it

of phosphorus and phosphorus derivatives. Under the
sales contract,
intangible assets, stocks,
etc. were sold for EUR […]* (DEM […]* million) while
the land and installations were sold for EUR […]* (DEM
[…]* million). However, according to Germany,
the
acquisition of the land and installations is still condi-
tional on transmission of the assets free of liabilities as
well as on a Commission decision on the State aid
granted to CWP,
is
not liable for any recovery of State aid. In the case of
the successor to the
a positive Commission decision,
THA,
vereiningungsbedingte
the Bundesanstalt
Sonderaufgaben (BvS) and the Land of Saxony-Anhalt
will waive the securities linked to the assets which will
be taken over by TI so that the condition of the assets
being free of liabilities would be fulfilled and the sales
contract could become effective. As long as the sales
the payment of EUR […]*
contract
(DEM […]*) will still be outstanding. Until the contract
is effective, CWP will produce phosphates exclusively for
TI, which in turn provides the raw material.

transpires that TI

is not effective,

für

B. Financial measures by the public authorities

for

In connection with the privatisation of 29 June 1994,
CWP agreed to pay a price of EUR 3 181 769 (DEM
6,223 million)
the phosphorus-based products
operating division of Stickstoffwerke. The price was to
be paid in three instalments of EUR 511 292 (DEM
1 million) on 30 June 1995, 1 June 1996 and
30 June 1996, with a
instalment of
EUR 1 647 894 (DEM 3,223 million) payable on 1 July
1997. CWP also committed itself to guaranteeing 70
jobs until 1 October 1999 and to carrying out
investments of EUR 5 112 919 (DEM 10 million) by
31 December 2002.

remaining

(18)

In turn, the THA made available several measures. Some
of these measures were subsequently modified following
numerous amendments
to the privatisation contract
during the period 1994 to 2003. The following table
gives an overview:

L 296/22

EN

Official Journal of the European Union

12.11.2005

Table 2

(in EUR million)

Measures in the context of the privatisation (THA)

Guarantee

Prolongation of guarantee and transformation
into grant

Investment grant

Treatment of residues

1

1a

2

3

Total

1,02

(1,02)

3,06

0,31

4,39

EUR 306 775 (DEM 0,6 million). According to Germany,
however, since the project, which was to be subsidised by
the increase, turned out not to be technically feasible, this
additional amount was never paid out.

Financial measures notified by Germany in 1997

(23)

to the privatisation contract
The first amendments
provided, among other things, for the prolongation of
the guarantee under Measure 1 (Measure 1a) and the
deferred payment of the purchase price.

(19) Measure 1: Guarantee of EUR 1 022 583 (DEM 2
million) on an operating credit. The loan was originally
granted by Deutsche Bank before being transferred to
Commerzbank in 1996 and then to Hypovereinsbank
in 1998.

(24) A further

the

reached at

agreement was

end of
1996/beginning of 1997 between the company and the
BvS in order to avoid the insolvency of CWP. It provided
for a series of measures by the public authorities which
constituted the core of
the 1997 notification. The
following table gives an overview of the restructuring
measures notified in 1997.

(20) Measure 1a: Originally, the guarantee under Measure 1
was to run until December 1995. However, following the
initiation of the formal investigation procedure, Germany
reported that, as a result of various amendments to the
this guarantee was prolonged
privatisation contract,
several times, on the last occasion until 30 November
2000. Before expiry of the deadline, on 21 November
2000, BvS granted CWP a loan for the same amount in
order to repay the credit covered by the guarantee. The
loan then replaced the existing credit and the guarantee
was terminated. Germany stated that this new loan was
to run until 31 December 2005 and that the interest rate
corresponded
the
rate
by
Commission (8). The latest amendment
to the privati-
in July 2003,
sation contract, which took place
provided for the transformation of
this loan into a
grant,
i.e. the waiver of its repayment by CWP, in the
event of a positive Commission decision.

reference

the

set

to

(21) Measure 2: A non-repayable grant of EUR 3 067 751
to finance investments to safeguard

(DEM 6 million)
production.

(22) Measure 3: The THA took over the costs of treating
residues, which amounted to some EUR 623 776 (DEM
increased by
1,22 million). This grant was

later

(8) http://europa.eu.int/comm/competition/State_aid/others/reference_

rates.html

Table 3

Measures by the THA/BvS

Amount

(in EUR million)

4

5

6

7

8

Waiver of purchase price

Waiver of interest on deferral of purchase
price

Investment grant

20 % guarantee covering private
investment loan of DEM 6,3 million

20 % guarantee covering private
operating loan of DEM 8,5 million

3,18

0,23

1,79

0,64

0,87

7a/8a

Transformation of guarantees into loans/
grants

(1,51)

9

10

11

Measures by the Land of Saxony-Anhalt

80 % guarantee covering private
investment loan of DEM 6,3 million

80 % guarantee covering private
operating loan of DEM 8,5 million

Measures under approved aid schemes

Direct investment grants (joint Federal
Government/Länder scheme) of 8 July
1998

12

Investment allowances (1994-97)

2,58

3,47

1,94

0,15

Total

14,85

12.11.2005

EN

Official Journal of the European Union

L 296/23

(25) Measure 4: Under this agreement,
further

the BvS agreed in
December 1996 to a
until 31
deferral
December 1999 of the payment of the purchase price,
which had already been deferred on several occasions
under amendments to the privatisation contract. The
purchase price was finally waived on 5 July 1999. The
Commission was notified of this by way of the Vertrags-
management lists, which inform it of the contract-moni-
toring activities of the BvS (9).

(26) Measure 5: Following the initiation of the formal inves-
tigation procedure, Germany acknowledged that
the
that had accrued by the end of 1996 as a
interest
result of
to the tune of EUR
237 239 (DEM 0,464 million) had been waived by a
decision of December 1996. The BvS also agreed not
to charge any future interest on the deferred purchase
price.

the payment deferral

(27) Measure 6: The BvS increased the grant for the financing
of investment to safeguard production under Measure 2
by EUR 2 065 619 (DEM 4,04 million). Following the
initiation
procedure,
of
Germany stated that, of
the EUR 5 133 370 (DEM
10,04 million) granted in total to finance investment
(Measures 2 and 6), only EUR 4 867 499 (DEM 9,52
million) had been used. The increase in the grant thus
totalled EUR 1 799 747 (DEM 3,52 million).

investigation

formal

the

(28) Measure 7: In April 1998 CWP obtained an operating
loan of EUR 3 221 139 (DEM 6,3 million) from Hypo-
vereinsbank. This loan was covered by a 20 % guarantee
from the BvS for EUR 644 228 (DEM 1.26 million). The
remaining 80 % was covered by a guarantee from the
Land of Saxony-Anhalt (see Measure 9). The loan was
to run until December 1998 but was subsequently
times and, according to the latest
prolonged several
information, is still outstanding.

(29) Measure 8:

In April 1998 CWP also obtained an
investment loan of EUR 4 345 981 (DEM 8,5 million)
from Hypovereinsbank. This loan was covered by a 20 %
guarantee from the BvS for EUR 869 196 (DEM 1,7
million). The
covered by a
remaining 80 % was
guarantee from the Land of Saxony-Anhalt (see Measure
10). The loan was to run until May 2013. According to
the latest information, it is still outstanding.

(30) Measures 7a/8a: Following the initiation of the formal
investigation procedure, Germany stated that the 20 %
guarantees from the BvS were prolonged on several
occasions. On 21 November 2000 the BvS finally paid
direct to the banks the part of the loans covered by these
guarantees, i.e. EUR 1 513 424 (DEM 2,96 million). This
cash serves as security for the repayment of the credit by
CWP. Hence, for the banks it merely replaces existing
securities, but
for CWP it constitutes a new loan
replacing 20 % of the previous ones. CWP is supposed
to pay the amount of EUR 1 513 424 (DEM 2,96
million) by 31 December 2005, together with interest
corresponding to the Commission’s
rate.
However, in its response to the information injunction,
Germany reported that since January 2003 CWP had not
paid any interest and that
the payments had been
deferred.
Interest accumulated until December 2002
and amounting to EUR 301 000 (DEM 588 705) was
paid in July 2003. The latest amendment to the privati-
sation contract, which took place in July 2003, provided
including interest
for the transformation of this loan,
deferred since January 2003,
the
i.e.
waiver of
including the
the repayment of
outstanding interest, by CWP in the event of a positive
Commission decision. Since the measures in question
consist simply in the prolongation or the extension of
the measures covered by the decision to initiate the
formal
investigation procedure, they must be assessed
by the Commission in the present decision.

into a grant,
the loan,

reference

(31) Measure 9: The remaining amount of the operating loan
of EUR 3 221 138 (DEM 6,3 million) under Measure 7
was also covered by an 80 % guarantee from the Land of
Saxony-Anhalt amounting to EUR 2 576 911 (DEM 5,04
million). This guarantee was initially granted until 30
April 1998 but was prolonged for one year on several
occasions. CWP has requested a further prolongation.
According to the information submitted by Germany,
the guarantee is clearly still in force. In the event of a
positive Commission decision in this case, the Land of
Saxony-Anhalt would consider a further prolongation of
the guarantee.

(32) Measure 10: The remaining amount of the investment
loan of EUR 4 345 981 (DEM 8,5 million) under
Measure 8 was also covered by an 80 % guarantee
from the Land of Saxony-Anhalt amounting to EUR
3 476 785 (DEM 6,8 million). The guarantee runs until
April 2013.

(9) List No 33 concerning BvS’s’

follow-up negotiations reported as
being concluded in August 1999. The waiver was conditional on
a new associate of CWP contributing a liquidity-related capital
increase of EUR 2,05 million (DEM 4 million).

(33) Measure 11: Direct investment grants amounting to EUR
1 937 796 (DEM 3,79 million) were made on 8 July
1998. According to Germany, an amount of only EUR
1 845 764 (DEM 3,61 million) has been used up.

L 296/24

EN

Official Journal of the European Union

12.11.2005

(34) Measure 12:

Investment

allowances

totalling

EUR

357 904 (DEM 0,7 million).

C. The restructuring

(35) According to the information provided by Germany in
1997, a first restructuring effort had been undertaken in
the wake of privatisation with the THA measures
(Measures 1 to 3). However, this effort failed and in
1996 the difficulties facing CWP were caused by insuf-
ficient equity, an interruption in the supplies of raw
materials and a lack of liquidity.

obtained by the combustion of elemental phosphorus.
Since, according to the notification,
raw phosphoric
acid was easier to obtain and cheaper to process than
elemental phosphorus, CWP decided under the restruc-
turing plan to change the raw material base and, as a
consequence, the production method. This was intended
to resolve the supply difficulties for elemental phos-
phorus from Kazakhstan.

(39) Germany submitted two documents which it claimed
constituted the restructuring plan. These documents
contradicted the 1997 notification.

(40)

(36)

The insufficiency of equity was due to the failure of
Phosfor AG to increase its capital contribution of EUR
to EUR 818 067 (DEM 1,6
15 339 (DEM 30 000)
million) by 30 September 1994. As regards supplies,
CWP counted on using elemental phosphorus as the
raw material
for the production of phosphoric acid,
which, in turn, is the basis for the production of phos-
phates. Elemental phosphorus was to be supplied by
Phosfor AG from Kazakhstan. This, however, did not
take place and CWP faced supply bottlenecks for the
raw material between 1995 and 1996. The company
only partly succeeded in making up this shortfall by
buying elemental phosphorus at higher prices in other
markets. Production came to a standstill, leading to losses
in 1995 and 1996 that
reduced considerably the
company’s liquidity headroom.

The original restructuring plan

(37)

In order to restore the company’s long-term viability, a
sound restructuring plan was necessary. According to the
1997 notification, this was to be implemented during the
period 1997 to 2000. The plan envisaged mainly
investments
(the wet
process).

in a new production process

(41)

CWP

(38) Until 1996 CWP’s production was made up above all of
common phosphates (low level of purity) used primarily
in detergents. Phosphates are derived from phosphoric
acid, which
internal
produced
consumption (processing into phosphates) and for sale
to third parties. There are two processes for producing
phosphoric acid, each using a different raw material. In
the wet process, pure phosphoric acid is extracted from
basic or crude phosphoric acid (Merchant Grade Acid,
MGA) by means of a chemical reaction. In the thermal
process employed by CWP, pure phosphoric acid is

both

for

firstly,

The first document, dated 29 May 1996 and headed ‘A
new concept for continuing the business of CWP as the
company that
acquired the phosphorus derivatives
division of Stickstoffwerke AG Wittenberg’ sums up
CWP’s restructuring strategy. There are essentially two
goals:
to broaden the raw material base and,
to extend the company’s sphere of activity.
secondly,
However, there was no mention in that document of
the thermal production process being abandoned. On
to remain based on
the contrary, production was
process,
the
and
elemental
although some installations would be adapted for the
processing of raw phosphoric acid which CWP would
buy. It was also proposed that consideration be given
to building in the medium term an extraction installation
for the purification of MGA, i.e. for production using the
wet process.

phosphorus

thermal

In the second document, dated 16 October 1996 and
headed ‘Proposal
for the long-term survival of CWP,
including the investment and financing plan’, CWP
defined its investment priorities and the manner
in
which they would be financed, but it did not call into
question the strategy previously formulated of main-
taining the thermal process while, at
the same time,
introducing the wet process. Among the investment prio-
rities was the adaptation of
the existing plant and
to process wet phosphoric acid and the
equipment
construction of
the extraction installation mentioned
the aim being to ensure by September 1998
above,
that CWP would no longer be dependent on elemental
phosphorus. The feasibility of this extraction installation
was the subject of a report by a consultant, DLM, (10)
which also provided a cost study (11) putting the costs
of this installation at EUR 3,07 million (DEM 6 million).

(10) Reinigung von Nassphosphorsäure durch Flüssig-flüssig-Extraktion, DLM,

November 1997.

(11) Betriebskostenabschätzung für eine Extraktionsanlage zur Extraktion von

Nassphosphorsäure, DLM, September 1996.

12.11.2005

EN

Official Journal of the European Union

L 296/25

(42)

(43)

(44)

Amendment of the plan

In its response to the initiation of the formal
investi-
gation procedure, Germany explained that the technical
plan for the construction of the extraction installation
had been amended and expanded. A first amendment
took place in December 1997, when tests revealed that
post-treatment of
the aid (defluoridation and concen-
tration) was necessary in order to obtain the quality
level required by the food industry. In February 1999 a
CWP supplier who had so far provided MGA, which
needed no pre-treatment, cancelled its contract. As a
result, CWP had to buy standard MGA, pre-treat it and
bleach it. These two changes increased costs,
led to a
delay of eighteen months or so in the implementation
of the plan and moreover forced CWP to expand its
installations, which in turn further increased costs and
compounded the delay. The costs of the extraction instal-
lation rose from EUR 3,07 million (DEM 6 million) to
EUR 7,772 million (DEM 15,1 million).

Furthermore,
in 2000 CWP faced a problem with
raffinate, a highly toxic by-product. Germany’s response
to the initiation of the formal
investigation procedure
indicates that CWP had hoped that third parties would
further process this raffinate but it discovered in mid-
2000 that there were no offers for its raffinate. The
resulting crisis, together with the delays in carrying out
the restructuring measures brought the construction of
the extraction installation to a halt. In the summer of
increases by the share-
2000, despite several capital
holders, the company was on the verge of insolvency.
This danger was finally averted by an agreement with TI.

The agreement, which was
reached in early 2001,
provided for the sale of the phosphate production to
the contract becomes
TI, as described above. Until
effective, CWP will produce phosphates exclusively for
TI, which will provide the raw material. Once the
agreement
is in force, CWP will withdraw altogether
from the production of phosphates and will only
produce phosphoric acid using the wet process once its
extraction installation has been completed. This means
that new measures have to be undertaken for
the
closure of the installations producing thermal phosphoric
acid (CWP’s traditional production method), phosphorus
peroxide
the
products introduced as part of
the restructuring) and
for the closure of the phosphorus warehouse (since phos-
phorous will no longer be used as a raw material). CWP’s
workforce is to be reduced by some 33 people.

and sodium hypophosphite

(one of

(45) Germany considers that the restructuring of CWP was
accomplished in respect of phosphate
successfully
production, which is
to be taken over by TI. As
regards the production of phosphoric acid, the restruc-
turing will be successful once TI has paid the purchase
price for CWP’s assets. CWP will
then be able to
complete the extraction installation and ensure its long-
term viability without substantially departing from the
original plan. According to Germany, 90 % of
the
extraction installation has already been completed. The
production of thermal phosphoric acid was discontinued
in February 2001. The installations have been emptied
and cleaned and will not be used any more.

D. Costs of the restructuring

(46) According to the document ‘Proposal for the long-term
survival of CWP, including the investment and financing
plan’, dated 16 October 1996, CWP needed investments
totalling EUR 5,62 million (DEM 11 million) and
working capital amounting to EUR 2,56 million (DEM
5 million) during the period 1996 to 2000. However, the
same document contains an investment plan detailing
investments totalling EUR 9,29 million (DEM 18,17
million). According to the 1997 notification, restruc-
turing costs would total EUR 12,88 million (DEM 25,2
million). The restructuring measures notified in 1997 are
summarised in Table 4.

Table 4

(in EUR million)

Restructuring measures

Loss compensation (1995 to 1998)

Investments in safety

Restructuring investment

Clean-up of environmental damage dating from
before 1 July 1990

Costs

4,91

2,15

5,52

0,31

Total

12,88

(47)

the formal

investigation
Following the initiation of
procedure,
those same costs were estimated at EUR
18,87 million (DEM 36,9 million). It should be noted
‘grants’ and
that Table 5 contains two new items,
‘waiver of purchase price’, which constitute financial
resources rather than restructuring costs.

i.e.

L 296/26

EN

Official Journal of the European Union

12.11.2005

Table 5

Restructuring measures

Costs

(in EUR million)

Loss compensation (1995 to 1998)

Investments in safety

Restructuring investments

Cleaning-up of environmental damage dating
from before 1 July 1990

Grants

Waiver of purchase price

4,86

2,05

7,98

0,31

0,20

3,43

Total

18,87

(52)

on 29 June 1994 and did not require these investments
to be financed by private means.

investi-
In its response to the initiation of the formal
gation procedure, Germany stated that
investments
amounting to EUR 15,70 million (DEM 30,70 million)
had been made during the period 1994 to 2000 and
those investments, EUR 7,21 million (DEM
that, of
14,11 million) had been privately financed. However,
this
financed measures
totalling EUR 3,73 million (DEM 7,30 million). The
contribution by shareholders to these investments thus
amounts to EUR 3,48 million (DEM 6,81 million).

includes

publicly

amount

(48)

In its response to the information injunction, Germany
divided the restructuring into two parts: restructuring of
phosphate production and restructuring of
the other
areas (mainly phosphoric acid production). The costs of
restructuring phosphate production were put at EUR
7,99 million (DEM 15,63 million) in total and include
investments of EUR 4,71 million (DEM 9,21 million).
The costs of restructuring the other business areas were
estimated at EUR 27,14 million (DEM 53,08 million) in
total and include investments of EUR 13,22 million
(DEM 25,86 million). The overall restructuring costs
thus
to EUR 35,13 million (DEM 68,71
million). It is, however, to be noted that these restruc-
turing costs (12)
include costs for the period 1995 to
2001, i.e. including the failed restructuring after privati-
sation.

amount

(53) As regards the second component of the private contri-
bution, i.e. contributions from the shareholders, Vopelius
Chemie GmbH was, according to the 1997 notification,
to contribute a loan of EUR 0,15 million (DEM 0,3
million). In its response to the initiation of the formal
investigation procedure, Germany explained that
this
related to the hire purchase (Mietkauf) of
amount
investment goods
for which Vopelius provided a
guarantee.

(54)

In its response to the initiation of the formal
investi-
the
gation procedure, Germany also considered that
company’s subscribed capital of EUR 288 879 (DEM
0,565 million) must be regarded as a contribution
from the
the
investments.

financing of

shareholders

to the

(49)

In its letter of 26 August 2004 Germany finally stated
that the overall costs from 1997 until then totalled some
EUR 31,20 million (DEM 61 million). It does not provide
any explanation of
the difference with the figures
previously reported in its response to the information
injunction.

(55)

In its response to the information injunction, Germany
listed the measures which, in its view, constituted private
financing (Table 6).

E. Private contribution

(50) According to the 1997 notification, the private contri-
bution from CWP to the restructuring consisted in the
financing of certain investments and a contribution from
the shareholders.

(51)

CWP was to carry out investments totalling EUR 5,11
million (DEM 10 million) by 31 December 2002.
However, it is to be noted that this investment obligation
had already been agreed at the time of the privatisation

(12) Annex 42 to the letter of 4 July 2003.

Table 6

Private financing

(in EUR million)

Amount

Limited partner’s capital contribution (BVT)

Shareholder loan (BVT)

Shareholder grant (BVT)

Share capital

Sales price — salt

Sales price — saltworks (not yet paid)

Supplier credit (Vopelius)

4,84

0,15

0,11

0,29

1,64

1,66

2,75

Total

11,44

12.11.2005

EN

Official Journal of the European Union

L 296/27

(56)

silent partner

The increase in private financing, as notified by Germany,
is due mainly to the capital contribution from BVT,
which became a non-typical
in CWP
(atypische stille Beteiligung) in December 1998. BVT also
provided a loan in March 2001 and a grant in September
2001. In addition, Germany included as investor contri-
butions a supplier credit by Vopelius (which was made
available between January 1997 and January 1998 and
consisted in deferral of the payment for raw materials
supplied by Vopelius) and the revenues that CWP would
obtain from the sale of its phosphate division to TI.

which formerly required thermal phosphoric acid now
use purified wet phosphoric acid, with important cost
advantages.
It also states that raw phosphoric acid is
widely available and relatively inexpensive. According to
the handbook, there were still four producers of thermal
phosphoric acid in Western Europe in 2002: TI
(the
largest), CWP, FEBEX SA and Krems Chemie.

(57)

It is unclear how the measures in Table 6 relate to the
restructuring costs described in recitals 46 to 49.

(61) Germany states that the European market for phosphoric
acid and phosphates is one of oligopoly on which there
is no overcapacity. CWP, however, takes the view that
there is no oligopoly on the relevant European market.
Some of CWP’s competitors agree but maintain that
there is clear overcapacity.

F. Market analysis

(62)

(58)

(59)

It

in order

its phosphates

should be noted that

CWP was traditionally a manufacturer of industrial phos-
phates and produced phosphoric acid for
its own
it was to
consumption. Under the restructuring plan,
increase the quality of
to
produce for the food industry, with the wet process
the production of phosphoric
being introduced for
acid.
the phosphoric acid
produced with the wet process is equivalent in quality
to that produced with the thermal
and properties
the two processes actually use a
process. However,
different
the
the wet process.
thermal process
stages and
Moreover,
generates by-products
(notably raffinate) which need
further processing.

and MGA for
the wet process has different

raw material: elemental phosphorus for

products

Phosphoric acid is
the basis for
the production of
raw
requiring
phosphate
higher-purity
materials. It is used in the production of phosphate ferti-
lisers for agriculture and of phosphates for the food
industry. Polyphosphates, and in particular sodium tripo-
for
lyphosphate, are used in detergent
laundry, dishwasher and other cleaning products. They
are also used in various industrial and technical appli-
cations.

formulations

(60)

The 2002 Chemical Economics Handbook reports that
the demand for thermal phosphoric acid has been dras-
tically losing ground as wet phosphoric acid becomes
preferred for downstream chemicals, that there has also
been stiff competition because of imports from China
and that many phosphates and direct applications

is

insignificant.

Both Germany and CWP consider that CWP’s market
share on the Western European phosphate market as a
whole (industrial and food)
It was
estimated to be 5,1 % in 2000. Since 2001 CWP has
been producing only for TI and is thus not present on
the market any more. Its market share was taken over by
TI. Germany also states that TI has not been active on
the specific phosphate market
like CWP but on the
market for phosphorus, phosphoric acids and other deri-
vatives.

(63) As regards the production of phosphoric acid, CWP
states that its production of 40 000 tonnes of thermal
phosphoric acid is to be reduced to 20 000 tonnes using
the extraction process. Its originally foreseen share of the
phosphoric acid market (6 %) is to be reduced to 3 % in
Western Europe. As the thermal installations have been
shut down and the extraction installation is not yet
operational, CWP currently does not produce any phos-
phoric acid and its market share is zero.

III. REASONS FOR INITIATING THE FORMAL INVESTI-
GATION PROCEDURE

(64)

the CFI

Following an action for annulment brought by Prayon-
in its judgment of 15 March 2001
Rupel,
annulled the Commission decision of 16 December
1997 (13) on the grounds of
an
essential procedural
the
requirement.
Commission had been obliged to initiate the formal
investigation procedure because of serious difficulties in
assessing the compatibility of the aid with the common
market.

infringement of
ruled that

It

(13) See footnote 3.

L 296/28

EN

Official Journal of the European Union

12.11.2005

(65)

technical

the
the CFI ruled that

The CFI put the serious difficulties down to the fact that
the Commission had taken the decision without sufficient
restructuring measures.
knowledge of
the Commission had erro-
Firstly,
imple-
neously described the restructuring measures
mented by CWP. The Commission had based the
description of the technical restructuring measures on
the information provided by Germany in 1997, namely
that the wet process was to replace the thermal process
in the production of phosphoric acid. However, the CFI
emphasised that the two draft restructuring plans of May
and October 1996,
submitted by Germany to the
Commission, did not mention any abandonment of the
thermal process. Secondly, is stated that the Commission
feasibility and
had obviously misjudged the technical
profitability of the restructuring measures. According to
the CFI, an expert opinion presented by the plaintiff
provides clear evidence of this.

the basis of the information available, the Commission
could not verify whether
the measures described as
existing aid actually complied with the schemes under
which they had allegedly been granted. The Commission
issued an information injunction on 6 March 2003 in
order to clarify the situation.

V. COMMENTS FROM INTERESTED PARTIES

(68)

investigation
Following the initiation of
from
procedure the Commission received comments
three direct competitors of CWP and from CWP itself.
These comments are summarised below:

the formal

required to take

the Commission was

(66) According to the first paragraph of Article 233 of the
Treaty,
the
necessary measures to comply with the judgment of
the CFI. It undertook a preliminary assessment of the
measures in favour of CWP,
including the measures
that had not been examined in its previous decision,
and its view that
the measures constituted State aid
within the meaning of Article 87(1) of the EC Treaty
was confirmed. However,
it had serious doubts as to
the compatibility of the aid with the common market.
Firstly, the Commission could not determine the exact
amount of aid involved overall. Secondly, a preliminary
assessment under the 1994 Community guidelines on
State aid for rescuing and restructuring firms in difficulty
(Community guidelines) (14) raised serious doubts as to
the compatibility of the aid with the common market.
Consequently, the Commission initiated the formal inves-
tigation procedure.

(67)

IV. REASONS

FOR ISSUING THE
INJUNCTION

INFORMATION

The Commission initiated the investigation procedure
mainly on the basis of the information submitted in
1997. However, Germany’s response to the initiation of
the information injunction contained details of previous
measures that were presented as constituting existing aid
(Measures 1 to 3), amendments
to some measures
In addition, measures which
(Measures 1a and 7a/8a).
had been regarded until then as ad hoc measures were
regarded by Germany as existing aid following the
the procedure (Measures 9 and 10). On
initiation of

(14) OJ C 368, 23.12.1994, p. 12.

(69)

(70)

(71)

A. Comments from Prayon-Rupel

Prayon-Rupel submitted an exhaustive description of the
two production processes (thermal and wet) as well as of
the relevant products and markets. It doubted firstly that
the project accounts could be regarded as a restructuring
plan. According to it, a change in the production method
to a viable restructuring within the
did not amount
meaning of the Community guidelines. Furthermore,
if
the difficulties of the company were due to a supply
problem, the change of production process would not
resolve the matter. Prayon-Rupel also considered that
there was no supply problem, as the company could
obtain phosphorus
largest
from China,
producer, instead of from Kazakhstan.

the world’s

investments

the
Secondly, Prayon-Rupel doubted the viability of
the switch from the
restructuring plan.
In its view,
to the wet process envisaged in the first
thermal
feasible. Such a change would
document was not
require substantial
including an entirely
new installation and not simply the few investments
listed by Germany. In addition, it would not lead to an
improved product, a view also shared by Germany.
Prayon-Rupel doubted that CWP could restore
its
viability as
forecasts were based on
extremely optimistic assumptions and the operating
results continued to be negative. According to Prayon-
Rupel, a change in the production method not backed by
sufficient investment would only lead to lower-quality
products and hence to a further fall in profits.

turnover

the

considered

Prayon-Rupel

Thirdly,
that CWP was
expanding capacity. On the basis of the first restructuring
document, CWP was
to introduce the wet process
without abandoning the thermal process. According to
Prayon-Rupel, this amounted to a doubling of capacity.

12.11.2005

EN

Official Journal of the European Union

L 296/29

(72)

Fourthly, Prayon-Rupel considered that the aid was not
limited to the minimum and that the commitment of the
shareholders
to invest EUR 5,11 million (DEM 10
million)
following privatisation was not linked to the
restructuring but was hypothetical and insufficient.

(77)

(73)

Lastly, Prayon-Rupel doubted that
the plan would be
implemented in full. In its view, the acquisition by TI
of CWP’s phosphate production already confirmed that
the plan had not been implemented as planned.

B. Comments from Chemische Fabrik Budenheim
A. Oetker

C. Comments from BK Giulini

In its letter of 26 September 2001, BK Giulini considered
that CWP did not have any restructuring plan and that
the concept was inadequate and disproportionate. The
change in the production process was not necessary
and, from a technical and economic point of view, was
impracticable. Moreover, as CWP did not
intend to
abandon the thermal process, the measures constituted
incompatible operating aid. According to BK Giulini,
supply difficulties and a lack of
liquidity were not
sufficient reasons for changing the production process
and for carrying out a restructuring. The aid granted
was not used for investments but as a liquidity grant,
and this caused market distortions in the Community.
Another argument against the aid for CWP was over-
capacity on the phosphoric acid market in Europe.

(74)

(75)

view,

In its

In its letter of 20 August 2001, Chemische Fabrik
Budenheim A. Oetker (CFB) expressed doubts as to the
viability of the restructuring plan.
It claimed that the
the new extraction installation was
construction of
impracticable at such low cost and over
the short
period envisaged by CWP. It stated that this had been
confirmed subsequently since, according to market infor-
mation, CWP’s thermal installation had been shut down
and the construction of the new extraction installation
the
interrupted.
construction costs of the new installation was too low
and CWP did not have the required know-how for a new
process to produce phosphoric acid. Besides, CWP did
not indicate how the noxious by-products of this new
process were to be treated. CFB also noted that TI
successfully
the
thermal process, refuting the claim that a change in the
production process was necessary for CWP to restore its
profitability.
there were problems in
obtaining elemental phosphorus. The production of
phosphoric acid in the new installation would not,
therefore, reduce advance financing costs.

It doubted that

calculation of

phosphoric

produced

using

acid

the

the close cooperation
In addition, CFB noted that
to
between CWP and TI,
to TI and, after a
transfer
certain period, TI’s right
this area of
operation from CWP, raised the question whether TI
was not ultimately a beneficiary of the aid.

including the agreement

the phosphate business

to take over

(78)

BK Giulini also states that the aid granted by Germany
had demonstrably not contributed to restoring CWP’s
viability. Despite
company had been
making losses
since 1998. The agreement between
CWP and TI was evidence of the complete failure of
the restructuring measures.

aid,

the

the

(79)

Lastly, BK Giulini considered that TI was the actual bene-
ficiary of the aid.

D. Comments from CWP

(80)

By letters of 21 September 2001 and 6 February 2002,
Germany gave the reaction of CWP to the initiation of
the formal investigation procedure. By letter of 8 October
2002, in which Germany transmitted CWP’s reaction to
the comments
from the above-mentioned interested
parties, CWP addressed the doubts expressed by the
Commission when initiating the formal
investigation
procedure and by all the other interested parties.

(76)

Lastly, CFB pointed out that CWP was supported finan-
cially by its shareholders, notably BVT Industrie GmbH
and TI. Hence, the situation of CWP’s own capital should
be taken into account when granting the aid.

(81) As regards the existence of a restructuring plan, CWP
explained that the restructuring had two main objectives:
extension of the product range in the area of phosphates
and establishment of a broader raw material base by
procuring cheaper alternatives to phosphorus. It stated
that
unchanged
had
throughout the restructuring process although the plan
had indeed been amended on several occasions.

objectives

remained

these

L 296/30

EN

Official Journal of the European Union

12.11.2005

(82) As regards the doubts as to the viability of the restruc-
turing measures, CWP considered that extension of the
phosphate product
range could be achieved by the
construction of a new fluidised-bed dryer (Wirbelschicht-
for the production of water-free phosphates.
trockner)
the extraction
Regarding this extension,
installation would allow it
same
products with the same quality and at lower costs than
with the thermal process, without becoming dependent
on supplies of elemental phosphorus by third parties.

it stated that

to produce

the

(83)

that TI

Responding to CFB’s comment
successfully
produced phosphoric acid using the thermal process,
CWP pointed out
that TI was not dependent on
supplies of elemental phosphor as this is produced by
the company itself. In addition, TI can keep costs low,
particularly electricity costs (which accounted for the
bulk of
the costs of producing elemental phosphor)
because one of TI’s shareholders operated a nuclear
power station and TI could buy electricity at preferential
rates. Hence the situations of TI and CWP were quite
different.

that

considered

extraction installation was

(84) As regards the doubts as to the success of the restruc-
the measures
turing plan, CWP
undertaken represented a classical
restructuring of a
company. In its view, constructing the two installations
was a decision that would prove profitable. In particular,
expected to reduce
the
production costs by 7 % compared with the thermal
process and to achieve a net capital yield of 23 %. The
first tests with the extraction installation had confirmed
that the quality of the phosphoric acid produced was as
good as that using the thermal process. Moreover, CWP
noted that other competitors, notably Prayon-Rupel, had
announced the construction of an extraction installation
six times larger than CWP’s. The delays in constructing
the
supply
problems and not because the installation was imprac-
ticable. CWP stated that this installation was now 90 %
complete and that one institution was interested in
obtaining a licence for the know-how.

extraction installation were

caused by

(85)

the study ‘The Market

It pointed out that,
for

there were no
Furthermore, CWP considered that
in an
distortions of competition.
Industrial and
update of
Food Phosphates’
for the years 1998 to 2002, CRU
International Ltd. had forecast that, whilst the industry
was likely to have sufficient capacity overall
to meet
demand in 2003, there would be significant regional
imbalances which would have to be corrected. Overca-
pacity for industrial and food-grade phosphates existed
only ‘on paper’ since, according to the report, the instal-

lations were in very bad condition and had to be
renovated. Moreover, CWP’s market
share on the
relevant markets, as described in recitals 62 and 63,
was insignificant. CWP also stated that
it never sold
below market prices.

(86)

CWP went on to state that BK Giulini was not a direct
competitor. The company, which produced special phos-
phates, had bought more than two thirds of CWP’s
phosphate production in 2000 and was interested in
taking over CWP’s production of phosphoric acid and
In CWP’s view, the aid had not had any
phosphates.
impact on BK Giulini.

(87) As regards the private contribution to the restructuring,
CWP stated that it was not able to finance the restruc-
turing plan fully out of its own funds because of the high
raw material costs. However,
it did contribute substan-
tially. According to CWP, by the end of 2002 privately
financed investments amounted to EUR 5,11 million
(DEM 10 million). All
loans granted to the
the
including those guaranteed by the BvS and
company,
the Land, were to be regarded as a private contribution
to the restructuring since CWP paid interest and intended
to repay them by selling the assets linked to phosphate
production to TI.

(88) As regards the identification of the aid beneficiary, CWP
stated that it has not been incorporated into TI. After the
sale of the phosphate division to TI, there will be two
independent companies operating on CWP’s site, with TI
being active in the phosphate business and CWP in phos-
phoric acid production. Contrary to the opinion of CFB,
CWP had never supplied any thermal phosphoric acid to
TI. Moreover, CWP was the sole beneficiary of the aid.

(89)

VI. COMMENTS FROM GERMANY

In its response to the initiation of the formal
investi-
gation procedure, Germany submitted information on
the amendments to the restructuring plan, as described
in recitals 42 to 44. It also provided information on all
financial measures taken by the public authorities and
made available to the company during privatisation and
throughout
the restructuring period, as described in
recitals 17 to 34. The details on the private contribution
to the restructuring given in recitals 50 to 57 and the
company’s management reports for the period 1994 to
2000 and market data were also submitted. As regards
the comments from third parties, Germany refers to
CWP’s reaction, which was reported by letter of 8
October 2002.

12.11.2005

EN

Official Journal of the European Union

L 296/31

(90)

(91)

(92)

(93)

In its response to the information injunction, Germany
provided information on the compatibility of existing aid
measures with the schemes under which they had
purportedly been awarded.
the
should be divided between the phosphates
process
business, which it regards as having been successfully
restructured, and the remaining business areas of CWP,
mainly the production of phosphoric acid via the
extraction installation, which would be successful once
TI had paid the outstanding amount of the price.

It also indicated that

VII. ASSESSMENT

A. Introduction

Some of
the measures to be assessed were already
examined in the previous decision annulled by the
Court of First Instance; a number of them had been
notified at the initial stage of the project in accordance
with Article 93(3) of the EC Treaty (now Article 88(3)),
the
while
Commission decision. Yet others were not examined in
the annulled decision or were prolonged or extended
after that decision.

been implemented

before

others

had

In examining each measure, the Commission will look at
the situation prevailing at the time of the first decision as
far as the notified measures are concerned and at the
support measures were
situation when the financial
the non-notified measures
taken as
are
concerned. However,
it will have to give an overall
assessment of the restructuring, taking into account all
the relevant developments in the factual situation up to
the time when the last measures were taken.

far

as

B. The relevant undertaking

It

transpires that

in 2002 CWP,

Following the information injunction, Germany provided
extensive information on the shareholder structure of
CWP.
together with
the Vopelius Group, including Mr Vopelius, who holds
75,2 % of the capital, employed a workforce of 100,
totalling EUR 25,81 million (DEM
possessed assets
50,48 million) and had a turnover of EUR 22,36
million (DEM 43,73 million). Accordingly, the thresholds
specified in the Commission recommendation 96/280/EC
of 3 April 1996 concerning the definition of small and
medium-sized enterprises (15) are not exceeded.

exert

and does not

the
risk capital
operations of CWP. Consequently, CWP
can be
regarded as an SME. CWP also ranked as an SME in
the years preceding 1997 (first year for which full data
are available).

control over

(95)

The Commission notes that, on the basis of the infor-
mation available, no financial measures deriving from
State resources were made available to CWP after the
agreement with TI in February 2001. It has also taken
note of an expert report drafted by AnChem Consult and
submitted by Germany. According to that report, the
agreement was concluded following an open and trans-
parent procedure giving to all undertakings active on the
relevant market in Europe the possibility to submit bids;
the bid submitted by TI was selected as the economically
most viable and best bid and the price paid corresponded
to the market price. The Commission considers,
therefore, that TI has not been a direct or an indirect
beneficiary of the State aid for CWP.

C. Existing aid

(96) A number of measures allegedly constitute existing aid
and need not be reassessed by the Commission. The
compatibility of these measures with the schemes under
which they were allegedly granted should though be
examined.

at

the

(97) Measures 1, 2 and 3: As the company had some 70
time of privatisation, Germany
employees
regards any aid granted within this context as being
covered by THA scheme N 768/94 (16). The Commission
acknowledges that
the company had fewer than 250
employees at the time of privatisation. These measures
do not, therefore, need to be notified to the Commission
and are to be regarded as constituting existing aid.

(98) Measure 1a: As the granting of the guarantee is covered
by the THA scheme, the possibility of converting this
guarantee into a loan or grant had been envisaged
from the outset because the company was already in
difficulties. This is consistently acknowledged in the
three THA schemes that constitute the legal basis for
the granting of
the guarantee. The decision on THA
scheme E 15/92 explicitly states that loans and guar-
antees provided by the THA are increasingly likely to
the
be
guarantee into a loan and grant was already covered by
the THA scheme and cannot therefore be classified as
new aid.

into grants (17). Conversion of

converted

(94) As regards the BVT group, which holds the remaining
24,8 % of the shares, Germany states that it should be
regarded as an institutional investor since it provides only

(15) OJ L 107, 30.4.1996, p. 4.

(16) Point 3.1 of THA scheme N 768/94 states that privatisations of
companies must be notified to the Commission only if
the
company has more than 250 workers at the time of privatisation
(SG(95) D/1062 of 1.2.1995).

(17) SG(92) D/17613 of 8.12.1992.

L 296/32

EN

Official Journal of the European Union

12.11.2005

of

restructuring

It has to be emphasised that

(99) Measures 9 and 10: After the initiation of the formal
investigation procedure, Germany stated for the first
time that these guarantees had been granted under a
scheme approved by the Commission for the rescue
in difficulty (18). The
firms
and
Commission notes that all the conditions laid down for
the granting of guarantees have been met in the present
case.
the scheme was
adopted before the entry into force of the Community
guidelines and that these guidelines did not require the
Member States to bring their existing schemes into line
with the new rules (see point 2.5 of the Community
guidelines). In addition, the Commission did not review
the scheme at issue after the adoption of the Community
guidelines. This explains why Measures 9 and 10 comply
with the rescue and restructuring scheme but are not in
accordance with
guidelines. The
the Community
measures in question can thus be regarded as existing
aid which need not be reassessed.

(100) Measure 11: Investment grants amounting to EUR 1,94
million (DEM 3,8 million) were granted on the basis of
an aid scheme approved by the Commission as regional
investment aid (19).
In its response to the information
it would ensure that
injunction, Germany stated that
the rules on cumulation were complied with in respect
of regional aid granted to CWP and that the maximum
regional
respected. The
Commission thus regards the measure as existing aid.
In addition, the aid measure was not taken into consid-
eration when the formal
investigation procedure was
initiated.

aid ceiling for SMEs was

(101) Measure 12:

allowances

amounting

Investment

to
EUR 0,36 million (DEM 0,7 million) were granted on
the basis of aid schemes approved by the Commission
as regional investment aid. In its response to the infor-
mation injunction, Germany stated that it would ensure
that
the rules on cumulation were complied with in
respect of regional aid granted to CWP and that the
maximum regional aid ceiling for SMEs was respected.
The Commission thus regards the measure as existing
In addition, the aid measure was not taken into
aid.
consideration when the formal
investigation procedure
was initiated.

Commission. Their amount will nevertheless be taken
into account
the
overall aid.

in assessing the proportionality of

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

conferred advantages on CWP that

(103) According to Article 87(1) of the EC Treaty, any aid
which distorts or threatens to distort competition by
favouring certain undertakings is incompatible with the
common market in so far as it affects trade between
Member States. The financial measures in favour of
CWP have
a
company in difficulty would not have obtained on the
market. It should be recalled here that CWP was on the
verge of insolvency in 1997 and that no private investor
was willing at
time to provide CWP with the
financial means it needed. As CWP’s products are also
traded and as
in other
Member States, the measures threaten to distort compe-
tition and affect trade between Member States.

its competitors are present

that

(104) The measures are financed through State resources and
granted by the THA/BvS and the Land of Saxony-Anhalt.
The THA was set up as a public-law entity with the task
of privatising State-owned firms in the former German
Democratic Republic and was under the direct super-
vision of the German Ministry of Finance. The BvS is
the successor to the THA and likewise a public-law
entity. The measures are thus imputable to the State.
They constitute State aid within the meaning of Article
87(1) of
the EC Treaty and have to be assessed
accordingly.

(105) Measures 4, 5, 6, 7 and 8: These Measures, i.e. the waiver
of the purchase price and the accumulated interest, the
investment grant as well as the two 20 % BvS guarantees,
were granted outside the scope of any aid scheme and
thus constitute ad hoc aid and have to be assessed
accordingly. This is not contested by Germany.

(102) Accordingly, the Commission considers that on the basis
of the information provided, Measures 1 (including 1a), 2
and 3 as well as Measures 9, 10, 11 and 12 constitute
existing aid which need not be reassessed by the

(18) N 413/91, Guarantee rules of the Land of Saxony-Anhalt (SG(91)

D/15633 of 8.8.1991).

(19) 26th General Plan of the joint Federal Government/Länder scheme
for improving regional economic structures, N 123/97 (SG(97)
D/7104 of 18.8.1997 and SG(98) D/7191 of 18.8.1998).

(106) Measures 7a/8a: In Germany’s view, the prolongation of
the guarantees and their subsequent conversion into
loans and grants do not rank as new aid. However,
this would be relevant only if Measures 7 and 8
constituted existing aid, which is not
the case. Since
Measures 7 and 8 are to be regarded as ad hoc
measures, Measures 7a and 8a are, as part of Measures
7 and 8, included in the assessment of compatibility.

12.11.2005

EN

Official Journal of the European Union

L 296/33

(107) The guarantees under Measure 7 (including Measure 7a)
and under Measure 8 (including Measure 8a) enabled
CWP to obtain loans on better financial
terms than
those normally available on the financial markets. The
Commission considers that the aid element of the guar-
antees under Measures 7 and 8 is the difference between
the interest rate that CWP would have had to pay for a
loan on market terms, i.e. without a guarantee, and the
interest rate at which the guaranteed loan was actually
provided. As CWP was in severe financial difficulties at
the time the guarantees were granted and the loans made
available, the aid element could be as high as 100 % of
the guarantees as nobody would have granted the loans
without any guarantee. According to the Commission
notice on the method for setting the reference and
discount rates (20), the Commission establishes reference
rates which are supposed to reflect the average level of
interest rates charged on medium- and long-term loans
backed by normal security. The notice also points out
that this reference rate is a floor rate which may be
increased in situations involving a particular risk, e.g.
an undertaking in difficulty. In such cases, the premium
may amount to 400 basis points or more. And so, in the
present case, the Commission considers that, without the
guarantees, CWP would have had to pay an interest rate
at least equal to the reference interest rate plus 400 basis
points. The aid element of each guarantee thus consists
in the difference between the reference interest rate plus
400 basis points and the interest rate at which the guar-
anteed loan was provided.

(108) A similar reasoning applies to the conversion of

the
guarantees into loans by the BvS. The Commission
considers that the loans were granted at an interest rate
below the interest rate that CWP would have been able
to obtain on the market. The aid element of the BvS
loans under Measures 7 (including Measure 7a) and
Measure 8 (including Measure 8a) thus consists in the
difference between the interest rate that CWP would
have been able to obtain for such a loan on the
market and the interest rate at which the loans were
provided by the BvS. The Commission takes the view
that CWP would have had to pay an interest rate at
least equal to the reference interest rate plus 400 basis
points. The aid element of each loan is
the
difference between the reference rate plus 400 basis
points and the interest rate at which the loan was
actually granted.

thus

(110) The derogations in Article 87(2) of the EC Treaty do not
apply in the present case because the aid measures
neither have a social character and are granted to indi-
vidual consumers, nor do they make good the damage
caused by natural disasters or exceptional occurrences,
nor is the aid granted to the economy of certain areas
of
the Federal Republic of Germany affected by the
division of Germany. Germany has not invoked any of
these derogations.

(111) Further derogations are laid down in Article 87(3)(a) and
(c) of the EC Treaty. As the primary objective of the aid
is not regional development but the restoration of the
long-term viability of an undertaking in difficulty, only
restructuring aid could be authorized in the present case.
Restructuring aid is covered above all by the derogation
in Article 87(3)(c) of the Treaty.

(112) For its assessment of rescue and restructuring aid, the
guidelines (21),
Commission issued
which are applicable in this case (22). The conditions for
the
are
examined below.

the Community

the Community

application of

guidelines

(113) The Commission considers that no other grounds for
the other
compatibility, and in particular none of
Community guidelines or frameworks such as those for
research and development, environmental protection,
small
employment,
and medium-sized
training or risk capital, could apply.

enterprises,

Eligibility of the company

(114) According to point 2.1 of the Community guidelines, the
financial weakness of firms that receive help for restruc-
turing is due to poor past performance and dim future
prospects. The typical symptoms are deteriorating profit-
ability or increasing size of losses, diminishing turnover,
growing inventories, excess capacity, declining cash flow,
increasing debt, rising interest charges and low net asset
value.

E. Compatibility

(109) Measures 4, 5, 6, 7 (including 7a) and 8 (including 8a)
are to be assessed by the Commission as ad hoc aid.
Article 87(2) and (3) of
the EC Treaty provides for
derogations from the general prohibition on aid in
Article 87(1).

(20) OJ C 273, 9.9.1997, p. 3.

(115) At

the time the aid was granted, CWP registered
increasing losses and was faced with severe liquidity
problems as described in detail above. The Commission
thus considers
that CWP ranked as a company in
difficulty at the time.

(21) See footnote 14.
(22) Point 7.5 of the 1999 guidelines states that ‘the Commission will
examine the compatibility with the common market of any
rescuing and restructuring aid granted without its authorisation
(…) on the basis of the Guidelines in force at the time the aid is
granted (…)’ (OJ C 288, 9.10.1999, p. 2).

L 296/34

EN

Official Journal of the European Union

12.11.2005

Restoration of viability

(116) The sine qua non of all restructuring plans is that they
must restore the long-term viability of
the company
within a reasonable time scale and on the basis of
realistic assumptions as to its future operating conditions.
Consequently, restructuring aid must be linked to a viable
restructuring plan. The restructuring plan usually involves
the reorganisation and rationalisation of
the business
efficient basis. Among other
activities on a more
things,
it takes into account the circumstances giving
rise to the difficulties.

(117)

It is to be noted that, in the case of CWP, a first restruc-
turing had been undertaken following privatisation but it
failed. A second restructuring based on the
two
documents
referred to in recitals 40 and 41 was
undertaken in 1997. Although there are differences
between them, clearly the strategy was to introduce the
wet process and for this the extraction installation was
essential so that MGA could be used as the raw material
and the dependence on high-cost elemental phosphorus
reduced. In addition, the quality of the main end product,
i.e. phosphates, was to be enhanced. The two aims are
linked: CWP could produce phosphates economically
with a more readily available and cheaper raw material
only by using the wet process. In order to determine
whether the 1996 strategy was viable, the measures for
introducing the wet process need to be assessed.

to obtain high-purity products

dated July 1998, whereas the project was conceived in
1996. Hence, already in 1996 it should have been clear
that a post-treatment phase was necessary, particularly in
order
the food
industry, as CWP intended. Pre- and post-treatment of
the products also require larger installations, as CWP
realised in 1999. This again should have been anticipated
from the outset.

for

it

should be

established what
In other words,

(119) Moreover, the 1996 documents constituting the restruc-
turing plan did not contain an adequate solution for the
highly toxic raffinate. They do not mention it at all. Nor
does the 1997 notification. The 1997 DLM study states
that phosphates derived from raffinate (which contains
phosphoric acid) have too high a metallic content and
an acceptable
that
proportion would be.
identifies a
it
problem and a possible approach to resolving it but
solution. Subsequently, CWP
does not provide
probably hoped to be able to sell
the raffinate but
discovered that there was no demand for it, and this
contributed to the acute financial crisis in 2000.
It
should have been clear already at the conception phase
of the plan in 1996 that a solution had to be found for
the toxic raffinate. If the solution were to sell it, then an
appropriate market study should have been conducted in
order to establish whether this was feasible. However, the
1996 and 1997 documents did not even mention the
problem.

a

including defluorination,

(118) As the expert report submitted by Prayon-Rupel demon-
strates, the new production process cannot be introduced
by way of minor adjustments to the existing installations.
The wet process requires installations altogether different
from those used for the thermal process and necessitates,
among other things, pre- and post-treatment of
the
concentration and
product
the 1996 strategy did not
decolourisation. However,
provide for any of
these steps. Pre-treatment was
introduced in December 1997, when the project was
already operational, after tests in the laboratory had
shown it to be necessary. Such tests should have been
conducted before the project started and should have
served as a basis for calculating the overall costs. The
DLM study on the feasibility of the installation dated
November 1997 also mentions
the necessary pre-
treatment of wet phosphoric acid during the wet
should, however, have been drawn up
process.
before
established and
restructuring plan was
should have been used as a basis for determining the
costs and financing of the restructuring. Post-treatment
was introduced only in early 1999, although CWP claims
to be necessary only because its
that
it
supplier
appropriate
quality of acid. However, the Commission cannot share
this view: the contract between CWP and its supplier was

could no longer provide

turned out

It
the

the

(120) As a consequence of

the inadequate planning of

the
the costs of
necessary steps to achieve the objective,
in particular, of
the entire investment programme and,
clearly understated.
the
extraction installation were
share this view and
Germany, however, does not
presented a study by DLM on the costs of the extraction
installation. The four-page study, which is based on theo-
retical calculations that need be checked by conducting
practical tests, is simply a list of the costs of producing
the wet process. No
phosphoric acid by means of
estimate is given of the costs of building the installation
itself. This study does not then alter the view that the
costs of the investment programme and, in particular, of
the extraction installation were not carefully planned
when the restructuring strategy was decided on. This
view has been confirmed subsequently as the costs
were seriously understated. The extraction installation
was
supposed to cost EUR 3,07 million (DEM 6
million) in 1996 but the cost had risen to EUR 7,72
million (DEM 15,1 million) by 2000/2001, when the
work was interrupted owing to a lack of liquidity. The
overall investment, which had been put at for EUR 7,67
million in 1996, had risen to EUR 17,93 million by
2000/2001.

12.11.2005

EN

Official Journal of the European Union

L 296/35

(121) The inevitable consequence of
for

the

restructuring measures

long-term viability by 2000 as

the lack of any real
and the
planning
the extraction installation
investment costs was that
completed by 1998 and CWP had not
was not
initially
restored its
envisaged. By 2000 CWP had not managed to repay
any of the loans granted to it, was far from having
completed the extraction installation, continued to be
dependent on elemental phosphorus and was on the
It can thus be assumed that the
verge of insolvency.
1996 restructuring strategy failed in 2000.

(122) Germany, however, takes a different view, namely that,
when CWP avoided insolvency by selling its phosphate
division to TI,
it successfully accomplished the restruc-
turing of that division. In addition, it considers that the
restructuring of the phosphoric acid division will have
been successful once TI pays the outstanding amount
of the price because then CWP will complete the inno-
vative extraction installation and become viable once
assertion, Germany has
this
again.
from Dr Scheibitz dated 25 July
submitted a report
2000.
the initial strategy was
successful and, even if the Commission does not share
this view, the changes to the initial strategy have ensured
that CWP will be viable.

Its conclusion is that

In support of

the restructuring of

(123) The Commission does not agree. First, the restructuring
of CWP cannot be divided into two divisions (phosphates
and phosphoric acid). CWP was a firm which was in
difficulty and for which a restructuring strategy was
the two
drawn up. Moreover,
divisions is linked: CWP could produce phosphates effi-
ciently only if it could count on producing phosphoric
acid economically. Although CWP increased its product
range and potentially even the quality of its phosphates,
it never produced them efficiently because it remained
dependent on elemental phosphorus. The fact that CWP
withdrew from its traditional market by selling its phos-
phates division in a bid to avoid insolvency cannot be
regarded as a successful restructuring but is proof of the
failure of the original plan. It should also be noted that
the restructuring has not yet ended. The extraction instal-
lation, which should have been completed by 1998, i.e.
before the ‘sale’ of the phosphates division to TI, is still
not operational and the installations for the production
of thermal phosphoric acid have been closed down. The
Commission cannot regard these as changes to the initial
restructuring strategy: what
the initial
strategy failed completely in 2000 and that CWP is
now in a quite different position.

is clear is that

(124) The Commission cannot agree with Germany either that
the modified strategy would increase CWP’s chances of
survival. It notes that the report from Dr Scheibitz, which
Germany presented in order to demonstrate the technical
feasibility of the extraction installation, points to two
main problems. First,
if the problem with the raffinate
is not solved, the installation cannot become operational.
Second, CWP obviously did not
incorporate in its
planning a pilot phase that could show clearly whether
there were any problems with the installation. As could
have been envisaged, shortly after this report CWP was
once again on the verge of insolvency. On the basis of
the information available, the problem with the raffinate
has not been solved. Even if CWP were to complete the
installation, further problems could arise in the absence
of a pilot phase. Finally, the Commission notes that CWP
is not a major player on what is a difficult and highly
concentrated market dominated by large firms such as
Rhodia, Astaris, Prayon and TI. CWP clearly does not
have easy access
from a
chronic lack of equity. Even completion of the extraction
installation would not by itself ensure the company’s
survival.

to financing and suffers

(125)

In conclusion, the Commission considers that the 1996
strategy was not carefully planned and presented short-
comings and that costs were understated. Such a strategy
could not lead to the restoration of long-term viability.
The numerous changes to the plan support this view. It
is not surprising, therefore, that CWP found itself on the
verge of insolvency at the time when the restructuring
should have been successfully completed. In addition, the
Commission considers that the 1996 strategy, for which
the aid was granted, failed completely in 2000 and that
there is no guarantee of CWP’s continued survival.
laid down in point
Consequently,
3.2.2(i) of the Community guidelines are clearly not met.

conditions

the

Aid in proportion to the restructuring costs and benefits

(126) The amount and intensity of the aid must be limited to
the strict minimum needed to enable restructuring to be
related to the benefits
undertaken and must be
anticipated from the Community’s point of view.
Therefore, aid beneficiaries will normally be expected to
make a significant contribution to the restructuring plan
from their own resources or from external commercial
financing. Moreover, the form in which the aid is granted
must be such as to avoid providing the company with
surplus cash which would be used for aggressive, market-
distorting activities not
restructuring
process.

linked to the

L 296/36

EN

Official Journal of the European Union

12.11.2005

the

costs of

(127) According to the figures submitted by Germany in 1997,
the
to
EUR 12,88 million (see Table 4). In its response to the
investigation procedure, Germany
initiation of
the restructuring
indicated that
totalled EUR 18,87 million (see Table 5).

the
the overall costs of

restructuring should amount

financing of

(128) As regards the contribution of the beneficiary to the
restructuring,
the 1997 notification identified two
investments of EUR 5,11 million
items:
(DEM 10 million) and contribution from the share-
holders of originally EUR 0,15 million (DEM 0,3
million). As noted in the decision to initiate the formal
investigation procedure, the investment obligation was a
requirement of the privatisation in 1994, which had been
agreed two years before the restructuring started, and not
a contribution to the 1996 restructuring. Moreover,
under
investments
investment obligation only
amounting to EUR 5,11 million had to be carried out.
And so this obligation cannot be considered as a private
investor contribution to the 1996 restructuring.

this

(129) The State-guaranteed loans cannot be considered as a
private investor contribution as claimed by CWP.

(130)

In its response to the information injunction, Germany
lists a supplier credit from Vopelius as a private investor
contribution. It should be noted that this item does not
constitute a credit as such but consists in deferral for
several weeks of the payment by CWP for raw material
supplies from Vopelius. The amount of EUR 2,75 million
indicated by Germany as a private investor contribution
is an outstanding claim of Vopelius dated January 1998.
The outstanding claim fluctuates constantly. It amounted
to EUR 0,73 million in January 1997 and then fell to
EUR 0,4 million in April 1997 before increasing again
the
until
payment of
related to the
financing of the restructuring costs, cannot be considered
as a private contribution to the restructuring.

liabilities, which is not

short-term deferral of

January 1998. This

(131) The other measures listed by Germany as private investor
contribution in its response to the information injunction
date from the period after 1998 and so are not related to
the granting of the aid in late 1996/early 1997 or to the
original restructuring plan.

(132) Therefore, even if the Commission were to take into
account
the planned restructuring costs as originally
notified by Germany (EUR 12,88 million) and to
regard as private contributions the company’s subscribed
capital of EUR 0,29 million and the shareholders’ contri-
bution of EUR 0,15 million mentioned in the 1997
the ratio of private contributions to the
notification,
restructuring costs would amount
to 3,4 %, which is
manifestly insufficient, even when taking into account
the previous practice regarding aid to companies in the
Länder of eastern Germany.

(133) Consequently, the condition of the aid being propor-
tionate to the restructuring costs and benefits is not
fulfilled. The criteria laid down in point 3.2.2(iii) of the
Community guidelines are clearly not met.

Full implementation of the restructuring plan

(134) As already mentioned, the 1996 restructuring plan has
not been implemented. Consequently, the conditions laid
down in point 3.2.2(iv) of the Community guidelines are
not met.

F. Conclusion

(135) An ex ante assessment indicates that the aid, as initially
planned and granted, does not fulfil the criteria of the
Community guidelines and so cannot be regarded as
being compatible with the common market. Moreover,
it is to be noted that subsequent events both during the
period when further measures were granted and after the
granting of the last measures confirm this conclusion: it
is clear that the initial strategy for which the aid was
granted failed and that the future of the company is
highly uncertain.

(136) For this reason, the Commission considers that the aid
granted to CWP is incompatible with the common
market. In accordance with Article 14 of Council Regu-
lation (EC) No 659/1999 (23), where negative decisions
are taken in cases of unlawful aid, the Commission has
to decide that the Member State concerned must take all
necessary measures unless this would be contrary to a
general principle of Community law.

(23) OJ L 83, 27.3.1999, p. 1. Regulation as amended by the 2003 Act

of Accession.

12.11.2005

EN

Official Journal of the European Union

L 296/37

(137)

In the present case, all the aid measures, including those
that were notified initially, have been granted and not
authorised by a valid Commission decision. They must,
therefore, be considered as unlawful aid. Given that the
previous decision was challenged within the prescribed
time-limits and annulled by the Court of First Instance,
the general principles of Community law, and in
particular the principles of legal certainty and protection
of legitimate expectations, do not preclude recovery. This
the
is
Community Courts (24). To conclude otherwise would
render
the
Community legislator in accordance with Article 220,
the first paragraph of Article 230 and Article 233 of
the EC Treaty, of the legality of measures adopted by
the Community institutions (25). To this extent, no
distinction can be drawn between the aid measures
notified initially and those unlawfully granted since the
outset.

consistent with the

review conducted

ineffective

relevant

law of

case

the

by

is

calculated as

aid element of

4. Measure 7 (including Measure 7a): A guarantee/loan from
the
the BvS of EUR 644 228. The
the difference between the
guarantee
reference interest
rate plus 400 basis points and the
interest rate at which the guaranteed loan was provided.
The aid element of the loan is the difference between the
reference interest rate plus 400 basis points and the interest
rate at which the loan was provided by the BvS.

is

calculated as

aid element of

5. Measure 8 (including Measure 8a): A guarantee/loan from
the
the BvS of EUR 869 196. The
the difference between the
guarantee
reference interest
rate plus 400 basis points and the
interest rate at which the guaranteed loan was provided.
The aid element of the loan is the difference between the
reference interest rate plus 400 basis points and the interest
rate at which the loan was provided by the BvS.

(138) Accordingly,

the Commission takes

the view that
Germany should order the beneficiary to repay the aid,
including interest, within a period of two months as of
the date of this decision. It also deems it necessary that,
within a period of two months as of the date of this
decision, Germany submit the documents which prove
that recovery proceedings have been initiated against
the unlawful aid (such as circulars
the beneficiary of
and recovery orders),

Article 2

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

HAS ADOPTED THIS DECISION:

The loan under Measure 7 (including Measure 7a) and the loan
under Measure 8 (including Measure 8a) shall be discontinued
within two months following notification of this Decision.

Article 1

The State aid which Germany has implemented for Chemische
Werke Piesteritz is incompatible with the common market.

The aid consists of the following measures:

1. Measure 4: The waiver of a purchase price totalling

EUR 3 181 769.

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
include interest from
Decision. The aid to be recovered shall
the date on which it was at the disposal of the beneficiary until
the date of
shall be calculated in
accordance with the provisions of Chapter V of Commission
Regulation (EC) No 794/2004 (26).

recovery.

Interest

its

2. Measure 5: The waiver of

interest accumulated on the
purchase price up to the end of 1996 and amounting to
EUR 237 239.

Article 3

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

3. Measure 6: An investment grant of EUR 1 799 747.

(24) Judgment of the Court of

[1997] ECR I-135, and Judgment of

Justice of 14 January 1997 in Case
C-169/95 Kingdom of Spain v Commission of the European Commu-
the Court of First
nities
Instance of 5 August 2003 in Joined Cases T-116/01 and
T-118/01 P & O European Ferries (Vizcaya), SA v and Diputación
Foral de Vizcaya v Commission of the European Communities [2003]
ECR II-2957.

Germany shall provide this information using the questionnaire
it shall
attached in the Annex to this Decision. In particular,
submit to the Commission all documents proving that recovery
proceedings have been initiated against the beneficiary of the
unlawful aid.

(25) Joined Cases T-116/01 and T-118/01, (already cited, recital 209).

(26) OJ L 140, 30.4.2004, p. 1.

L 296/38

EN

Official Journal of the European Union

12.11.2005

This Decision is addressed to the Federal Republic of Germany.

Article 4

Done at Brussels, 2 March 2005.

For the Commission

Neelie KROES
Member of the Commission