2005/782/EC: Commission Decision of 3 May 2005 concerning a State aid which Germany is planning to implement for the development of municipal infrastructure directly serving industry in accordance with Part II, point 7 of the Outline Plan for the joint Federal Government/Länder scheme for ‘Improving regional economic structures’ — Construction or extension of business, technology and incubator centres that provide accommodation and services for small and medium-sized enterprises 2004 to 2006 (notified under document number C(2005) 1315)   (Text with EEA relevance)
Date: 2005-05-03
Institutions: European Commission
Subjects: Germany, State aid, aid to undertakings, control of State aid, location of industry, small and medium-sized enterprises

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COMMISSION

COMMISSION DECISION

of 3 May 2005

concerning a State aid which Germany is planning to implement for the development of municipal
infrastructure directly serving industry in accordance with Part II, point 7 of the Outline Plan for
the joint Federal Government/Länder scheme for ‘Improving regional economic structures’ —
that provide
Construction or

technology and incubator

extension of business,

centres

accommodation and services for small and medium-sized enterprises 2004 to 2006

(notified under document number C(2005) 1315)

(Only the German text is authentic)

(Text with EEA relevance)

(2005/782/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 regard to Council Regulation (EC) No 659/1999 of 22
March 1999 laying down detailed rules for the application of
the EC Treaty (1), and in particular Article 7
Article 93 of
thereof,

September 2002, Germany notified to the Commission
the aforementioned aid scheme pursuant to Article 88(3)
of the EC Treaty. Although Germany did not regard the
measure as State aid within the meaning of Article 87(1)
of the EC Treaty, the measure was notified for reasons
of legal certainty. The case was registered as State aid
No N 644/g/2002. By letters of 9 October 2002, 17
January 2003, 30 June 2003 and 25 September 2003,
information.
the Commission
Germany replied by letters of 18 November 2002, 11
and 12 February 2003, 24 July 2003 and 30 October
2003. By letter of 26 November 2003, Germany agreed
with a request for the extension until 5 February 2004 of
the two-month time-limit pursuant
to Article 4(5) of
Regulation (EC) No 659/1999 and submitted additional
information.

additional

requested

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

(2)

By letter dated 18 February 2004,
the Commission
informed Germany that it had decided to initiate the
procedure laid down in Article 88(2) of the EC Treaty.

Whereas:

I. PROCEDURE

(1)

By letter of 19 September 2002, registered as received by
the Commission on 20
the Secretariat-General of

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

of Accession.

(2) OJ C 84, 3.4.2004, p. 2.

(3)

The Commission decision to initiate the procedure was
published in the Official Journal of the European Union (3).
The Commission called on interested parties to submit
their comments.

(3) See footnote 2.

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L 295/45

(4)

(5)

(6)

(7)

By letter of 2 November 2004, registered as received on
3 November 2004, the Commission received comments
from ADT — Bundesverband deutscher Innovations-, Tech-
(hereinafter ‘ADT’), an
nologie- und Gründerzentren e.V.
technology and
association of German innovation,
incubator centres.
forwarded them to Germany by
letter of 15 November 2004, giving it the opportunity
to react. However, Germany did not react
to those
comments.

It

(9)

registered as

Comments by Germany were received on 19 March
2004. A meeting was held on 22 April 2004,
following which Germany, after two reminders from
the Commission dated 9 July and 9 September 2004,
information by letter of 16 September
sent additional
2004,
received on 22 September. A
further meeting was held on 16 December 2004,
following which the German authorities,
a
from the Commission dated 14 February
reminder
2005, presented additional
information and amended
the measure by letters of 3 and 23 March 2005,
registered as received the same day.

after

will be able to rent premises in a centre. Moreover, SMEs
in such centres will be able to avail themselves of services
such as consultancy, accommodation searches and coop-
eration with,
for example, universities and research
institutes or networking with other enterprises.

to the

available

However, SMEs will not be supported directly but within
a more complex structure. Germany will make financial
resources
to
encourage them to construct and/or extend a building,
i.e. an ‘industrial centre, a technology centre or an
incubator centre’, so that
facilities can be rented out
and services provided to the users (SMEs). The centres
must be operated for at least 15 years.

‘providers’

in order

(10)

The providers are normally municipalities or
local
authority associations but can also be public or private
non-profit bodies.

II. DESCRIPTION OF THE MEASURE

(11)

The centres are usually owner-operated or separate non-
profit legal entities.

is

financed jointly by

The measure
Federal
Government and the Länder. It is administered by the
Land governments, with the result that certain details
of
the measure are treated in a slightly different
manner by the individual Länder.

the

The public support is made available in the form of
grants for the providers of the centres. It is equivalent
to not more than 90 % of the construction or extension
costs of the centres. The financial support granted under
the scheme is intended to benefit the providers. This is
not to be understood as meaning that the providers or
the users would benefit from an aid intensity of up to
90 % of eligible costs. The measure applies both to
Article 87(3)(a) and (c) areas and to non-assisted areas
(accounting for about 5 % of the area covered by the
measure). The measure runs until 31 December 2006
and has an annual budget of some EUR 120 million.

(8)

The measure is designed to provide certain facilities for
small and medium-sized enterprises (SMEs). First, SMEs

(12)

There are different
types of centre. Whereas business
centres usually provide premises for all kinds of SMEs
in a particular sector or in all sectors, technology centres
are geared to small enterprises undertaking research; all
the necessary facilities are available, e.g.
laboratories,
consultancy services and contacts with universities and
research institutes.
Incubator centres are intended for
start-ups, mainly by micro enterprises. However, there
are also hybrid centres. Especially where not all
the
premises available can be rented out
to the target
group, centres tend to attract other target groups. Thus,
for instance, a technology centre could be used partly as
a business centre.

(13)

SMEs using the services of the centres (the users) have to
pay rental for the premises occupied by them and top-
ups for the use of other facilities (such as laboratories or
specialised equipment) and/or consultancy services,
if
available. The rental and/or the price for other facilities/
services can be below the market price. The tenants can
use the centres normally for five years (eight years in
exceptional cases).

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(14)

The following diagram illustrates how the measure works:

(15)

(16)

III. REASONS FOR INITIATING THE INVESTIGATION
PROCEDURE

(18)

the formal

the Commission expressed doubts as

investigation
In its decision to initiate
procedure,
to
whether the measure was compatible with the common
market as Germany had not provided sufficient infor-
mation on several aspects,
in particular whether State
aid was involved at all levels of the measure and espe-
cially whether the providers of the centres and the SMEs
using the services available at the centres benefited or
whether the aid was passed on in its entirety to the
SMEs.

V. COMMENTS FROM GERMANY

In its original comments, Germany argued that
the
measure was aimed at rectifying market failure in the
real estate sector, which was unable to provide start-
ups in particular with facilities at prices they could
In Germany’s experience, the private market is
afford.
reluctant to provide innovative start-ups with facilities
In
these firms are normally high-risk ventures.
as
addition,
apparently
facilities
available on the market.

are not

small

scale

IV. COMMENTS FROM INTERESTED PARTIES

the

services offered by

The ADT claimed that
the services provided by the
centres were not available on the market. According to
it,
included
consultancy services
(formulation of business plans,
support
in obtaining start-up capital, etc.), short-term
leases, cooperation and clustering with regional research
establishments, universities or other enterprises, and
research facilities within the
(laboratories,
specialised equipment, etc.).

centres

centres

the

(17)

In addition, the ADT pointed out that approximately
90 % of start-ups in the centres survive for three years,
a much better figure than that for start-ups elsewhere.

it

(19) Germany also claimed that all the aid would benefit the
users of the centres. As regards the aid element for the
it first stated that the aid intensity for the users
users,
would not exceed 10 % to 20 % of
the comparable
market prices. However,
in its letter of 22 September
2004,
commented that market prices normally
would be paid by the users (prices at the lower-end of
the market price scale) and that,
in any case, the aid
granted would be below EUR 100 000 over a period
of three years (up to EUR 23 000 per user each year
over a five-year period). Germany enclosed comments
from each Land some of which referred to studies
describing the positive effects for users and the positive
regional effects of the centres. Until then, Germany had
not undertaken to comply with all the conditions of
Commission Regulation (EC) No 69/2001 of 12
January 2001 on the application of Articles 87 and 88
of the EC Treaty to de minimis aid (4), and in particular
Article 3 on cumulation and monitoring.

(4) OJ L 10, 13.1.2001, p. 30.

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L 295/47

(20)

Finally, in their most recent comments and in particular
by letter of 3 March 2005, Germany amended the initial
notification presented and undertook to apply Article 5
of Commission Regulation (EC) No 70/2001 of 12
January 2001 on the application of Articles 87 and 88
of the EC Treaty to State aid to small and medium-sized
enterprises (5) in respect of aid for consultancy grants for
SMEs using the centres. It also undertook to apply Regu-
lation (EC) No 69/2001 to any other support measures
for SMEs using the centres, and in particular for the
renting of premises and laboratories and for the use of
research facilities or other items of equipment. Although
the aid was exempt under the Regulations, Germany
requested a definitive Commission decision for reasons
of legal certainty.

VI. ASSESSMENT OF THE MEASURE

(21)

The Commission has assessed the measure in the light of
Article 87 et seq. of the EC Treaty and Article 61 et seq. of
the EEA Agreement as well as in the light of Regulations
(EC) No 69/2001 and (EC) No 70/2001.

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

(22)

In order to assess the measure under the State aid rules
of the EC Treaty, it has to be ascertained first whether it
constitutes State aid within the meaning of Article 87(1)
of the EC Treaty.

(23) According to Article 87(1), 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 is,
insofar as it affects trade between
Member States, incompatible with the common market.
The concept of State aid applies to any direct or indirect
advantage financed out of State resources and granted by
the State itself or by entities acting by virtue of powers
conferred on it by the State. A measure is deemed
to constitute State aid if
the criteria of
Article 87(1).

it meets all

(24)

In the case of measures in the form of a grant or a loan,
it is normally obvious which enterprise is potentially the
beneficiary for the purpose of assessing whether State aid
is involved. However, the measure under consideration is
more
create
incentives for one group of market participants (the
providers)
to support another group (the
users). In addition, the measure creates a third group of

the German authorities

in order

complex

as

(5) OJ L 10, 13.1.2001, p. 33. Regulation as amended by Regulation

(EC) No 364/2004 (OJ L 63, 28.2.2004, p. 22).

potential market participants (the centres) which exist
separately from the providers
and users. Even if
Germany intends only to confer benefits on the users,
entities at all three levels may be beneficiaries of State
aid.

(25)

The existence of State aid within the meaning of Article
87(1) EC Treaty should therefore be assessed at the three
different levels: the providers, the centres and the users.

(26)

(27)

(1) First level: The providers

t is not contested that the measure will be funded out of
State resources. The percentage of State aid depends on
whether the provider is a municipality, an association of
local authorities or a public or private non-profit body.
In the first case, the centre is built with 100 % financing
from State resources (up to 90 % from Federal and Land
authorities and at least 10 % from local authorities or
local authority associations). However,
if a non-profit
body is involved, it has to provide at least 10 % of the
financing, with the State providing the remaining amount
(up to 90 %). However, the actual beneficiaries of the aid
are SMEs; the State resources are necessary to cover the
eligible costs of the construction of the building and in
no way reflect the level of the aid granted to the SMEs.

into two groups:

(1)
The providers of the centres fall
municipalities,
local authority associations and public
enterprises belonging to them, and (2) public or private
non-profit bodies such as universities or research estab-
lishments. Irrespective of the legal status of the operators
they are non-profit bodies,
and the fact
the
Commission, as
in its Decision 98/353/EC of 16
September 1997 on State aid for Gemeinnützige Abfall-
verwertung GmbH (6), considers that the providers can be
regarded as undertakings within the meaning of Article
87(1)
they carry out an economic activity on the
if
market.

that

(28) Admittedly, municipalities and local authority asso-
ciations are not normally regarded as undertakings. But,
even though they may carry out a range of public tasks
and exercise public powers, they can, according to the
ruling given by the Court of Justice of the European
in Case 118/85
Communities on 16 June 1987,
(Commission v Italy) (7), be regarded as undertakings if
they carry out an economic activity on the market. This
is to be assumed to be the case here especially if the
municipalities
owner-operated
municipal enterprise.

active

are

via

an

(6) OJ L 159, 3.6.1998, p. 58.
(7) Judgment of the Court of 16 June 1987 Case 118/85 Commission
of the European Communities v Italian Republic [1987] ECR 2599,
paragraphs 7 and 8.

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(29) Under

the measure in question,

the providers are
responsible for constructing and managing a centre.
They are thus creating the possibility that a centre can
rent out premises and/or offer other services to SMEs.
Even if they are non-profit bodies, they are performing
an economic activity which could be carried out by, for
example, private real estate firms or private consultancies.

(34)

receive any economic
Since the providers do not
advantage, they cannot be regarded as beneficiaries of
State aid within the meaning of Article 87(1). They can
be considered to be only the vehicles
for making
assistance available to the users via the centres.

(2) Second level: The centres and their managers

(30) However,

from the measure as

the providers are not supposed to benefit
themselves
the State aid is
intended to make premises and services available to
resources granted to the
SMEs.
providers
economic
an
to
advantage solely on the users. Several mechanisms
ensure that no advantage will remain at the level of
the providers.

the State
intended

Indeed,
are

confer

(35)

The State resources made available under the measure in
question are intended to be used for the construction or
extension of the centres. As only the construction costs
of centres are eligible under the measure, the centres’
operating costs are not covered. This can be ascertained
by a check on the use made of the funds (Verwendungs-
nachweisprüfung),
the aid by
Germany. Therefore, the centres, which are owned by
the providers, have no other use but to make available
premises and services to users.

the monitoring of

i.e.

(31) A public invitation to tender for the construction or
extension of a centre will be organised in compliance
with public procurement legislation.

(36)

Reference is also made to the absorption of profits that is
mentioned in recital 33 and that Germany has promised
to apply also at the level of the centres. This will ensure
that no unjustified benefit will remain for the centres
after 15 years.

(32)

The providers are obliged to transfer the possession or
use of the centre to the users for at least 15 years. To
that extent, they do not to receive an advantage over that
period of 15 years, during which the buildings have to be
used as centres.

in the course of

(33) However, as the centres will remain in the ownership of
the providers after 15 years and as long as no compen-
sation is payable for the residual value, their value could
constitute an advantage for the providers (the owners of
the building) as they could then be used for other
activities or sold. In order to ensure that no advantage
remains at the level of the providers after 15 years, the
German authorities undertook,
the
Commission’s investigation, to ensure that profits will
be absorbed after that period. This will be done either
by applying the discounted cash-flow method or, in any
case, on the basis of a method corresponding to the
method provided for in Article 29(4) of Council Regu-
lation (EC) No 1260/1999 of 21 June 1999 laying down
general provisions on the Structural Funds (8). All the
revenue earned and losses incurred by the providers
taken into account,
during the 15 years will be
including the
the building. This
suggests that the business activity of the centres should
be placed at the level of the providers as it is the latter
that will ultimately bear the economic risk attaching to a
centre.

residual value of

(8) OJ L 161, 26.6.1999, p. 1. Regulation as last amended by Regu-

lation (EC) No 173/2005 (OJ L 29, 2.2.2005, p. 3).

(37)

In addition, Germany has also promised to put out to
tender the management of a centre in accordance with
public procurement legislation if it is to be taken over by
third parties. The managers of a centre will receive a
normal market remuneration fixed in the invitation to
tender.

(38) As a result, neither the centres nor their managers receive
themselves be
an economic advantage and cannot
regarded as aid beneficiaries but only as vehicles for
making the assistance available to users. Hence,
the
measure does not grant aid at the level of the centres
and their managers.

(3) Third level: The users

(39)

Through the providers of the centres and through the
centres themselves, the SMEs who rent facilities in the
centres benefit indirectly from State resources. However,
it should be emphasized that
the scheme does not
provide for an aid intensity of 90 % to the targeted
SMEs. The costs financed up to 90 % or even 100 %
out of State resources are necessary in order to be able
to construct a centre.

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L 295/49

(40)

facilities

(such as

facilities
The centres offer SMEs a wide range of
(premises, equipment, scope for cooperation, laboratories,
consultancy and other services). The rental paid by the
SMEs for the premises and the prices paid by them for
laboratories and specialised
other
equipment) may be below the market price since it
would be exceptionally difficult for some SMEs to find
such premises and facilities on the market, at least at
prices they could afford. The advantage for the SMEs
therefore consists in the use — at low cost compared
with market prices — of the centre’s premises, including
access to other services. Accordingly, the Commission
assumes that the measure confers an advantage on user
SMEs in that the rental and/or the other facilities are
below the market price.

(41)

The measure distorts or may distort competition as it
targets certain undertakings, with the target group
being defined by the type of centre. As mentioned in
recitals 6 to 14, business centres are geared mostly to
all types of SME, while technology centres target inno-
vative SMEs, with incubator centres targeting start-ups
and micro firms. Of course,
there are also a large
number of hybrid centres since some start-ups may
also be innovative firms.

(42) Under the measure,

the possibility that aid may be
granted to firms engaged in economic sectors where
intra-Community trade takes place is not ruled out. It
must
the measure affects
trade between Member States.

therefore be assumed that

(43) Accordingly, at

the users,

the level of

the measure
constitutes State aid within the meaning of Article
87(1) of the EC Treaty insofar as the de minimis ceiling
of EUR 100 000 per beneficiary for a period of three
years pursuant to Regulation (EC) No 69/2001 is not
exceeded.

(44) As regards application of the de minimis ceiling to the
various facilities offered by the centres, the Commission
would note the following:

— As

far as

the rental of premises

is concerned,
Germany has undertaken to comply with the
provisions of Regulation (EC) No 69/2001 at
the
level of the users of the centres. The previous lack
rectified as
of
aid
the
Germany has undertaken to calculate

transparency of

the measure

is

for the premises
elements contained in the rental
rented by the SMEs on the basis of comparable
rentals for similar premises, and in particular the
official tables setting out commercial rentals (Gewer-
bemietspiegel). In this way, Germany will ensure that
the de minimis ceiling of EUR 100 000 over a three-
year period will be complied with.
It undertakes,
therefore, to explain to each user of a centre that
the centre’s services may contain aid
the use of
elements that rank as de minimis aid caught by Regu-
lation (EC) No 69/2001.

— As

regards

laboratories

(especially
commented

the use of
equipment

and other
in technology
specialised
centres), Germany
aid
any
that
elements are reflected in a premium charged on the
rental payable by the user. This can, therefore, be
separated from the normal rental. It is pointed out
that Germany has also promised to comply with
Regulation (EC) No 69/2001 also in respect of
laboratories and
for
these premiums
specialised equipment.

the use of

— As regards consultancy services, however,

the aid
element is not restricted to the de minimis ceiling
and must, therefore, be regarded as State aid caught
by Article 87(1) of the EC Treaty.

2. Legality of the measure

(45) Germany has complied with its obligation under Article

88(3) of the EC Treaty.

3. Compatibility of the measure with the EC Treaty

(46)

Since the measures available under the aid scheme to
assist SMEs (e.g. premises,
laboratories and specialised
equipment), with the exception of consultancy services,
are not regarded as State aid insofar as the de minimis
ceiling and the provisions of Regulation (EC) No
69/2001 are
consultancy
complied with, only the
services for SMEs remain to be assessed for their compat-
ibility with the common market.

(47)

The aid scheme is designed to promote the dissemination
and commercial use of new German and international
research and development
field of general
management and enterprise development. It thus fosters
technology transfer and cooperation between enterprises.

in the

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(48)

(49)

are

two of

the major objectives of

Pursuant to Article 157 of the EC Treaty, the promotion
of technology transfer and cooperation between enter-
prises
the
Community. To that extent, the aid scheme contributes
the
to the objectives of Article 157. However,
Commission has not yet drawn up any specific criteria
for assessing aid measures that are specifically tailored to
those objectives,
are
frequently promoted within the context of Community
regional policy through the European Regional Devel-
opment Fund.

even though such measures

(54)

Insofar as aid for the SME consultancy services available
in the centres is granted to SMEs under the aid scheme,
Germany undertook to make such grants in accordance
with Regulation (EC) No 70/2001, and in particular
Article 5,

HAS ADOPTED THIS DECISION:

Article 1

the

Spring

the Commission also refers

to its
In this context,
European Council
Communication to
‘Working together
for growth and jobs’ (9), which
stresses the importance of promoting innovation and
innovation clusters. The target group for the measure
under examination comprises innovative and technology
oriented SMEs in their start-up phase, these also being
the most important target group for fostering economic
growth and employment.

for

scheme

1.
The aid scheme which Germany intends to implement in
the period 2004 to 2006 for the development of municipal
infrastructure directly serving industry in accordance with Part
II, point 7 of the Outline Plan for the joint Federal Govern-
ment/Länder
economic
structures’ for the construction or extension of business, tech-
nology and incubator centres that provide accommodation and
small and medium-sized enterprises does not
services
constitute State aid caught by Article 87(1) of the EC Treaty
insofar as Germany abides by its undertaking to comply with
Regulation (EC) No 69/2001 for the rental of premises, labora-
tories, specialised equipment and/or other facilities.

‘Improving

regional

for

(50) With regard to consultancy services, it should be pointed
out that Germany has undertaken not to grant any aid
exceeding 50 of eligible costs. The aid for consultancy
services is, therefore,
in line with Regulation (EC) No
70/2001, and in particular Article 5.

(51) Accordingly, the measure should be assessed favourably

by the Commission.

VII. CONCLUSION

(52)

Following the amendments made by Germany during the
formal
investigation procedure, the Commission comes
to the following conclusion:

(53) As regards the aid granted under the scheme to certain
and using laboratories,
SMEs
for
the
and/or
specialised
Commission notes the commitment by Germany to
comply with Regulation (EC) No 69/2001 as regards
the scheme under examination.

renting premises
equipment

facilities,

other

is

compatible with the

to Article 87(3)(c) of

The aid scheme referred to in paragraph 1 constitutes
2.
common market
aid that
State
pursuant
the EC Treaty insofar as
Germany abides by its undertaking to grant any aid for
consultancy services to small and medium-sized enterprises
that avail themselves of the services available at business, tech-
nology and incubator centres in accordance with Regulation
(EC) No 70/2001.

Article 2

This Decision is addressed to the Federal Republic of Germany.

Done at Brussels, 3 May 2005.

For the Commission

Neelie KROES
Member of the Commission

(9) COM(2005) 24 final.