2006/938/EC: Commission Decision of 4 July 2006 on State aid C 40/2005 (ex N 331/2005) which Belgium is planning to give to Ford Genk (notified under document number C(2006) 2931)   (Text with EEA relevance)
Date: 2006-07-04
Institutions: European Commission
Subjects: Belgium, State aid, control of State aid, motor vehicle industry, vocational training

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COMMISSION DECISION

of 4 July 2006

on State aid C 40/2005 (ex N 331/2005) which Belgium is planning to give to Ford Genk

(notified under document number C(2006) 2931)

(Only the French and Dutch texts are authentic)

(Text with EEA relevance)

(2006/938/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

DESCRIPTION OF THE AID

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

(5)

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

Having invited the parties concerned to submit their comments
in accordance with the articles referred to above (1),

Whereas:

The recipient

The recipient of the aid is Ford-Werke GmbH, Fabrieken te
Genk, Belgium (hereinafter referred to as ‘Ford Genk’),
which is part of the Ford Motor Company. The plant
opened in 1964. At the end of 2003, as part of a general
there was a significant
restructuring of Ford Europe,
reduction in staff involving about 3 000 employees. At
the same time, the company announced an investment
programme of some EUR 700 million., primarily devoted
to a new flexible manufacturing system. Under
this
programme production of the next generation Galaxy and
a third model would be added to the current Mondeo
production line. The plant currently employs about 5 000
people. In 2004 it produced 207 163 vehicles. In Belgium
the Ford group also has a Volvo plant in Ghent.

PROCEDURE

The training project

(1)

(2)

Belgium notified the Commission of the planned aid to
Ford in Genk by letter dated 22 June 2005, registered on
27 June 2005. The Commission requested further
information by letter of 27 July 2005, to which the Belgian
replied by letter dated and registered on
authorities
15 September 2005.

By letter of 9 November 2005, the Commission informed
Belgium that it had decided to initiate the procedure laid
down in Article 88(2) of the EC Treaty in respect of the aid.
A meeting with the Belgian authorities
followed on
25 November 2005.

(3)

The Belgian authorities submitted their observations by
letter dated and registered on 13 January 2006.

(4)

The Commission decision to initiate the procedure was
published in the Official Journal of the European Union on
25 February 2006 (2). The Commission invited interested
parties to submit their comments on the measure. However,
no comments were received.

(1) OJ C 47 of 25.2.2006, p. 14.
(2) See footnote 1.

(6) According to the information provided by Belgium, the
training programme's eligible costs total EUR 33,84 million.
This figure includes EUR 25,34 million for specific training
and EUR 8,5 million for general training.

(7)

The eligible costs considered in the programme, and their
respective amounts, are:

— Consultancy costs: they cover the provision of training

services by external suppliers.

— On-the job-training: cost of

the operators when
trained on the production line (versatility). The
workers have to be able to operate at three different
positions in the team. According to Ford's training
objectives, this accounts for 1,35 training days per
year on average.

— Lean organisation: cost of the personnel in the team
flexible, and efficient
in line with the new Ford

providing training in lean,
production methods,
Production System (FPS).

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— Off-line personnel costs: cost of the workforce during
classroom training. According to Ford's
training
objectives, this accounts for 1,95 training days per
year on average.

— Training enablers:

large, glass-enclosed rooms with
areas for reading and socialising, containing notice
boards
for posting up production and quality
information. Belgium proposes that the depreciation
of these areas be an eligible cost for the period in
question as
training
purposes.

they are used for

long as

Type of activity

Specific
training (EUR
million)

General training
(EUR million)

‘Training enablers’

1,48

Personnel costs of the
training department

‘Cascading’

Six Sigma

Restructuring

Launch costs

1,6

4,47

7,44

0,92

0,026

— Personnel costs of the training department: salaries of
the employees in the company's training department
who are working for this training programme.

(8)

Total eligible costs broken down by type of expenditure are:

— ‘Cascading’: the director of the plant calls a meeting of
all the workforce three times a year in order to brief
them on the implementation of Ford's ‘lean organisa-
tion’ system (‘FPS’). Cost of the workforce during this
meeting.

— Six Sigma: expenditure arising from the personnel
costs of
the team providing training using the
‘DMAIC’ method (define-measure-analyse-improve-
control).

— Restructuring: In recent years Ford Europe has tried to
adapt its production capacity to a stagnating level of
demand. To this end, over the period December 2003
to April 2004, Ford Genk reorganised its production
and 2 770 employees were laid off or (for those
having worked enough years) offered early retirement.
In order to guarantee continuity in production and
quality, 279 experienced employees were asked to stay
for some additional weeks or months to train their
successors.

— Launch costs: personnel cost of the ‘product coaches’,
the first workers involved in launching new
i.e.,
models. They learn about the new products (con-
struction, use of the new plant, process), and then
transfer this knowledge to other workers.

Type of expenditure

Trainers' personnel costs

Depreciation of tools and equipment

Cost of guidance and counselling services

Trainers' personnel costs

(EUR m)

16,54

1,48

0,92

14,9

Total eligible costs

33,84

The aid

(9)

The proposed aid consists in a direct grant to Ford Genk of
EUR 12 279 423 for the period 2004-2006. Of this sum,
EUR 4 677 408 (38 %) is aid for general training, and EUR
7 602 015 (61 %) is for specific training. The aid is to be
granted as ad hoc aid by the Flemish Community (Vlaamse
Gemeenschap). Belgium has given assurances
this
training aid will not be supplemented by other aid for the
same costs.

that

(10) The amount of this aid gives an aid intensity of 55 % for

general training and 30 % for specific training.

Type of activity

Consultancy costs

On-the job-training

Lean organisation

Off-line personnel costs

Specific
training (EUR
million)

General training
(EUR million)

0,88

5,44

1,65

2,35

2,05

5,5

DECISION TO INITIATE PROCEEDINGS UNDER
ARTICLE 88(2) OF THE TREATY

(11)

In its decision to initiate a formal
the
Commission expressed doubts concerning (1) the way the
Belgian authorities interpret the scope of eligible costs and
(2) the proposed classification of some cost items under the
headings of general or specific training.

investigation,

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(12) On the issue of eligible costs, the Commission queried
whether some of the expenditure proposed by Belgium was
compatible with Article 4(7) of Regulation (EC) No 68/
2001 of 12 January 2001 on the application of Articles 87
and 88 of the EC Treaty to training aid (3), notably:

— Training enablers: the Commission queried whether
buildings or other types of infrastructure fell within
the scope of Article 4(7)(d) of Regulation (EC) No 68/
2001.

— Personnel costs of

the training department:

the
Commission doubted whether these costs could be
assimilated to ‘cost of guidance and counselling
services with regard to the training project’ (Article 4
(7)(e) of Regulation (EC) No 68/2001).

— ‘Cascading’:

the Commission wondered whether
cascading included any training content and whether
it was anything more than a mere management
practice. It also expressed doubts about the company's
needing any state aid to undertake these activities, as
they seemed to be part of Ford Genks' routine
management operations.

— Restructuring costs and launch costs: the Commission
queried whether aid linked to restructuring and launch
costs provided any real incentive for the companys'
training operations. Furthermore,
the Commission
also had reservations as to whether the restructuring
costs were eligible under Article 4(7) of Regulation
(EC) No 68/2001 as
they appeared to result
exclusively from the recent restructuring of the plant.

— Expenditure in 2004: part of the eligible costs was
expenditure that had already been made in 2004.
this aid is intended to subsidise past
Given that
expenditure,
it
the Commission queried whether
could have any incentive effect on the firms' training
activities for that period.

(13) On the question of the breakdown between ‘general’ and
‘specific’ training, the Commission feared that the Belgian
authorities had applied an excessively wide definition of
general training to some project expenditure. The Com-
mission's misgivings focused on the training headings
‘Consultancy costs’ and ‘Off-line personnel costs’. Accord-
ing to the Belgian authorities, the training department of
Ford Genk estimated that about 70 % of this expenditure
concerned training of a general nature. However, no
evidence has been provided in support of this claim.

(3) OJ L 10 of 13.01.2001, p. 20. Regulation modified by the regulation

(EC) no 363/2004 (OJ L 63 of 28.2.2004, p. 20).

COMMENTS FROM BELGIUM

(14)

In their reply to the opening of the formal investigation, the
Belgian authorities made the following comments:

— Training enablers: the Belgian authorities argue that
these equipped spaces enclosed by glass walls are used
for training activities for most of the time and must
therefore be considered an eligible cost.

— Personnel costs of the training department: Belgium
claims that they are covered by Article 4(7)(e) of
Regulation (EC) No 68/2001 (‘cost of guidance and
counselling services with regard to the training
project’), that the employees in question have been
seconded to the programme for three years, that this
results in extra staffing costs over that period, and that
for the purpose of classification these costs have to be
accounted for as general training.

— ‘Cascading’: the Belgian authorities accept the Com-
mission's view that cascading should be considered a
management rather than a training instrument.

— Restructuring costs: according to the Belgian author-
ities, the lay-off of 2 770 Ford Genk employees in the
period 2003-2004 cannot be regarded as normal
restructuring in response to a change in market
circumstances. On the contrary, the workforce reduc-
tion, which was implemented in full compliance with
legislation and after consultation with staff
social
representatives, has resulted in a drastic change in the
organisation of
led to the
the plant. However,
sudden departure of the most experienced workers, i.
e. those able to train their younger colleagues. Under
these circumstances, and in order to avoid having to
use external coaches, the company decided to ask a
number of these workers to continue in service just to
provide training.

it

— Launch costs: the Belgian authorities claim that this
case is the not same as normal training that takes
place following a total or partial renewal of an existing
model. In particular, the entire Genk factory has been
converted to produce three models on a single
three completely new models are being
platform;
introduced over a period of 18 months.

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— Expenditure in 2004: the Belgian authorities have
provided assurances that the training programme for
2004-2006 was developed after
the promise of
support from the Flemish government in November
2003, and that the first course in the programme took
place after Ford Genk formally requested the aid from
the Flemish administration.

— As regards the distinction between ‘general’ and
‘specific’ training, Belgium has submitted a detailed
classification of the courses, including the name of
external consultants providing the training. In addi-
tion, the Belgian authorities have also undertaken to
correct, ex post, any deviation from the proportion of
general
training retained for budgetary purposes
(70 %) on the basis of the company's past experience.

ASSESSMENT OF THE AID

Existence of state aid

(15) The measure notified by Belgium in favour of Ford Genk
constitutes state aid within the meaning of Article 87(1) of
the Treaty. It takes the form of a grant that will be financed
by the state or through state resources. The measure is
selective as it is limited to Ford Genk. Furthermore, it is
liable to distort competition in the Community by
providing Ford Genk with an advantage over competitors
not receiving the aid. Finally, the automobile market is
characterised by extensive trade between Member States,
and the aid is therefore likely to affect trade between
Member States.

Legal basis for the assessment

(16) Belgium asks for approval of

the aid on the basis of
Regulation (EC) No 68/2001, the aid being linked to a
training programme.

(17) According to Article 5 of Regulation (EC) No 68/2001, if
the amount of aid granted to one enterprise for a single
training project exceeds EUR 1 million, the aid is not
exempted from the notification requirement of Article 88
(3) of the Treaty. The Commission notes that the proposed
aid in this case amounts to EUR 12 279 423, that it is to be
paid to one enterprise, and that the training scheme is a
single project. The Commission therefore considers that the
notification requirement applies to the proposed aid, and
that Belgium has complied with it.

appropriate that large amounts of aid remain subject to an
individual assessment by the Commission before they are
put into effect.’

its size, does not qualify for

(19) When the Commission assesses an individual training aid
which, because of
the
exemption laid down in Regulation (EC) No 68/2001 and
whose compatibility has therefore to be assessed on the
basis of Article 87(3)(c) of the Treaty, it employs the same
guiding principles as those of the Regulation. Having regard
to recital 4 of Regulation (EC) No 68/2001, which states
that notifications will be assessed by the Commission in
particular
in the
Regulation, the Commission goes on to assess whether or
not all eligible costs can be approved, once again exercising
its wide margin of discretion on the basis of Article 87(3)(c)
of the Treaty. Such measures must be assessed with a view
to ensuring coherent decision-making practice and equality
of treatment (4).

the criteria set out

in the light of

Compatibility with the common market

(20) The Commission's assessment of the measure's compat-
ibility with the common market must
therefore entail
verification that the points about which it had doubts at the
opening of the formal investigation are in conformity with
the common market under Regulation (EC) No 68/2001
and Article 87(3)(c) of the Treaty. In particular:

I)

Eligible costs

(21) The Commission notes that Article 4(7) of Regulation (EC)
No 68/2001 lays down that the following costs are eligible
for a training aid project:

a)

trainers' personnel costs,

b)

trainers' and trainees' travel expenses,

c)

d)

e)

f)

other recurrent expenditure such as materials and
supplies,

depreciation of tools and equipment as long as they
are used exclusively for the training project,

cost of guidance and counselling services for the
training project,

staff costs of trainees taking part in the project up to
the total of the other eligible costs referred to in (a) to
(e).

(18) Recital 16 of Regulation (EC) No 68/2001 explains why
is
such aid cannot be exempted from notification:

‘It

(4) See, for example, the judgment dated 24 March 1993 in Case C-313/
90 [1993] ECR p. I-1125, paragraph 44 and Article 4(2) of Council
Regulation (EC) No 994/98 (OJ L 142, 14.5.1998, p. 1).

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(22) Belgium has provided a training cost overview to enable the
Commission to identify the proposed eligible costs.
According to the information provided by Belgium, the
personnel costs of participation in the training do not
exceed the total of the other eligible costs.

i)

‘Training enablers’ (EUR 1,5 million)

(23) Article 4(7)(d) of Regulation (EC) No 68/2001 provides that
the depreciation of tools and equipment are potentially
eligible costs as long as they are used exclusively for the
training project. Buildings are not mentioned as potential
eligible costs. In this case, the ‘training enablers’ consist of
different facilities set up in rooms enclosed by glass panels.
These rooms are used for training activities. As they are
located within the plant, they do not constitute buildings
and can be considered as falling within the category of
‘tools and equipment’
laid down in Regulation (EC)
No 68/2001.

(24)

In view of
constitute eligible costs.

this,

the Commission considers that

they

ii)

Personnel costs of training department (EUR 1 mil-
lion)

(25) The Commission notes that large companies are more likely
to have their own training department and therefore less
prone to require the assistance of external counselling
services. Furthermore,
in order to be compatible with
Article 87(3)(c) of the Treaty, the aid measure must be
proportionate to the objective, and must not distort
competition to an extent contrary to the common interest.
In view of this, the Commission considers that excluding
the costs arising from internal training departments from
the scope of Article 4(7)(e) of Regulation (EC) No 68/2001
would discriminate against the category of large enterprises.
The Commission therefore accepts
eligible
expenditure.

them as

(26) The Commission will apply the same criteria used in this

decision to any similar case notified to it.

(27) However,

to reject

the Commission has

the Belgian
authorities' argument that all the costs in question can be
regarded as general training. The Commission considers
that guidance and counselling services are of the same
nature (general/specific) as the training activities they refer
to. Consequently, in order to avoid overcompensation of
such guidance and counselling costs, the expenditure of the
training department on training classified as ‘specific’ or
‘general’ must be subject
to the same maximum aid
intensity as the corresponding training activity. The costs of
the training department will
therefore be classified as
‘general’ or ‘specific’ in the same proportion as the ‘general’
training
and ‘specific’
project. In this case, taking the training activities for which

training elements of

the overall

the Commission authorises aid, this will result in 57,8 % for
general training and 42,2 % for specific training.

(28) Higher aid intensities would cause a disproportionate
distortion of competition. In particular, the Commission
takes the view that requiring an enterprise to finance a
reasonable proportion of
the cost contributes to the
efficiency and feasibility of the measure. It thus concludes
that a higher aid intensity would adversely affect trading
conditions to an extent contrary to the common interest.
This part of the measure may not, therefore, be regarded as
compatible with the common market under Article 87(3)(c)
of the Treaty.

iii) Restructuring costs (EUR 4,4 million)

(29) When deciding to undertake restructuring, a company
compares the present value of the expected reduction in
costs in future periods with the costs of the restructuring.
The expenditure for training employees who will occupy a
new function following the restructuring are a normal and
indispensable part of the restructuring costs. Indeed, once
the company has decided to lay off a significant part of its
staff, temporary training for the employees referred to
above is indispensable for ensuring the continuity of
production and quality. The company has no choice but to
incur such training expenditure for the remaining work-
force in order to replace the expertise that will be laid off.
Consequently, the aid in question would simply subsidise
the companys' normal and indispensable restructuring
costs, which would been incurred anyway, even without aid.
So this aid does not seem necessary and, in any event, it will
not result in additional training.

(30) Recital 10 of Regulation (EC) No 68/2001 describes the
rationale for state aid in support of training, considering
that training usually has positive external effects for society
as a whole, since it increases the pool of skilled workers
from which other firms may draw and improves the
In this case,
competitiveness of Community industry.
however,
lead to a
the restructuring in question will
reduction in the pool of skilled workers available and
therefore seems contrary to the explicit objective of
Regulation (EC) No 68/2001.

(31) Furthermore, in order to be compatible with Article 87(3)
(c) of the Treaty, the aid measure must be proportionate to
the objective and must not distort competition to an extent
contrary to the common interest. Since Ford Europe is one
of the major players in the Community market for car
manufacturing, it appears that market forces alone should
suffice to undertake the training entailed by the restructur-
ing in question. Any state aid in support of this training
would therefore, with reference to recital 11 of Regulation
(EC) No 68/2001, be in excess of the minimum necessary

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to obtain the Community objective which market forces
alone would not make possible, and would therefore result
in an undue distortion of competition. In this respect, the
Commission observes in particular that, despite the doubts
it voiced in the opening decision, Belgium has not
explained why the company would not have undertaken
the training activities in question without aid.

(34)

In earlier cases, the Commission did not analyse in detail
the need for specific training aid for launch costs (6). This,
however, does not stop it from doing so once it notices that
the economic conditions on the markets concerned have
evolved. In paragraph 52 of its judgment of 30 September
2003 in joined cases C-57/00 P and C-61/00 P (7), the
Court of Justice ruled ‘whatever the interpretation given by
the Commission to Article 92(2)(c) [now 87(2)(c)] of the
Treaty in the past, that cannot affect the correctness of the
Commission's
that provision in the
in
contested decision and hence its validity.’ Similarly,
paragraph 177 of its judgment of 15 June 2005 in case T-
171/02 (8), the Court of First Instance indicated that ‘the
legality of a Commission decision declaring that new aid
does not fulfil the conditions under which the exemption in
Article 87(3)(c) EC applies must be assessed solely in the
context of
the
Commissions' earlier decision-making practice, assuming
that is established.’

that article, and not

interpretation of

in the light of

(35) The Commission observes that in the car industry the
production of a new model
is necessary to maintain
competitiveness. The launch of a new model is therefore a
normal and regular feature of the car industry. In order to
produce new models, car manufacturers need to train their
workforce in the new techniques that will be adopted. The
related training costs necessary for launching the new
model are therefore normally incurred by car makers on the
sole basis of market incentive. Consequently, the training
activities in question would have been undertaken by the
company in any event, even without aid. Training aid is not
necessary in these circumstances. It does not motivate the
company to undertake ‘additional’ training activities beyond
those already carried out just on the basis of market forces.
The aid would cover an operational cost normally borne by
the company, and would therefore constitute distortive
operating aid.

(36)

In addition, the introduction of a single platform in the
Genk plant is likely to lead to more efficient production of
the new models. The company will
therefore benefit
directly from the single platform. Market forces alone are
thus sufficient to push the company to undertake this
restructuring of production and to bear the cost of the
correlated training activities. In view of this, the aid is not
necessary, as it would cover normal reorganisation costs of
the company.

(6) See, for example, cases C77/2002, Volvo Cars NV, Commission
decision 2003/665/CE of 13 May 2003 (OJ L 235 of 23.9.2003,
p. 24) and C78/2002, Commission decision 2003/592/CE of 13 May
2003, Opel Belgium NV (OJ L 201 of 8.8.2003, p. 21).

(7) Court judgment of 30 September 2003 in cases C-57/00P and C-61/
00P, Freistaat Sachsen, Volkswagen AG and Volkswagen Sachsen
GmbH, ECR p. I-9975.

(8) Court of First Instance judgment of 15 June 2005 in case T-171/02,
Regione autonoma della Sardegna, 15.6.2005, not yet published in
ECR.

(32) The Commission therefore considers that these restructur-

ing costs are not eligible for training aid.

iv)

Launch costs (EUR 7,5 m)

(33) Over the last year the Commission has amassed evidence
that some car manufacturers are putting their production
plants in different Member States in competition with each
other for the production of new models. Car makers
compare several plants with a view to production of a new
product, then decide where to locate the production on the
basis of total operating costs, which means all types of
costs, including government support of any kind, training
aid as well. In view of this economic reality, and in view of
the resulting risk that certain training aid measures do not
contribute to the objective of common interest laid down in
recital 10 of Regulation (EC) No 68/2001 but simply
constitute distortive operating aid, the Commission has to
scrutinise more carefully the need for aid ‘in order to ensure
that State aid is limited to the minimum necessary to obtain
the Community objective which market forces alone would
not make possible’ (recital 11 of the Regulation) (5). Such
assessment is even more justified in view of the current
market situation in the motor vehicle sector, characterised
by significant over-capacity.

(5) This is consistent with the approach taken in the cases General Motors
Antwerp (Case No. N 624/2005, formal
investigation opened on
26.4.2006, not yet published in the OJ), Auto Europa (Case No. N 3/
2006, formal investigation opened on 16.5.2006, not yet published
in the OJ) and WEBASTO Portugal (Case No. N 653/2005, approved
on 16.5.2006, not yet published in the OJ). In the latter case the
Commission found that the aid is necessary and that the positive
effects on the common interest outweigh possible distortions of
trading conditions, on the basis of
the combination of several
elements: Notably, the training programme exceeds the basic work
needs of the beneficiary, as reflected by the fact that the large
majority of training courses concern transferable skills (predomi-
nance of general training). The Commission also observed that the
training seeks preparation of employees that are newly recruited, in
an assisted region where the qualification of the workforce is weak,
for the beginning of activities in a brand new plant, using a
technology not yet available in the Member State concerned.

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(37) Furthermore, the arguments set out in recital 31 concerning
the proportionality of the aid and the avoidance of undue
distortion of competition as conditions for compatibility
under Article 87(3)(c) of
the Treaty also apply to the
training associated with the launching of new models. Any
state aid in support of this training would go beyond the
minimum necessary to obtain the Community objective
which market forces alone would not make possible, and
would therefore result in a distortion of competition to an
extent contrary to the common interest. In this respect, the
Commission observes in particular that, despite the doubts
it voiced in the opening decision, Belgium has not
explained why the company would not have undertaken
the training activities in question without aid.

(38) The launch costs may not therefore benefit from training

aid.

v)

2004 expenditure

II) Nature of the training

(42) Article 4 of Regulation (EC) No 68/2001 makes a
distinction between specific training and general training.

(43) Specific training is defined in Article 2(d) of Regulation (EC)
No 68/2001 as training involving tuition directly and
principally applicable to the employees' present or future
position in the assisted firm, and providing qualifications
which are not, or only to a limited extent, transferable to
other firms or fields of work.

(44) General training is defined in Article 2(e) of Regulation (EC)
No 68/2001 as training involving tuition which is not
applicable only or principally to the employees' present or
future position in the assisted firm, but which provides
qualifications that are largely transferable to other firms or
fields of work, and thereby substantially improve the
the employee. Training is regarded as
employability of
general if, for example, it is jointly organised by different
independent enterprises, or
if employees of different
enterprises may avail themselves of the training.

(39)

In their reply to the decision to open a formal investigation,
the Belgian authorities provided firm and detailed assur-
ances that the formal request for aid preceded the start of
the training programme. The Commission believes that
these assurances are sufficient to dispel the doubts it voiced
in its decision.

(45)

A d j u s t m e n t s i n t h e a m o u n t o f e l i g i b l e c o s t s

(40)

In view of the above arguments, the eligible costs of the
project have to be adjusted downwards to EUR 20,31 mil-
lion. Of this sum, the personnel costs of trainees account
for EUR 13,29 million, 65 % of the total.

In order to be compatible with the common market,
training aid must not exceed the maximum allowable aid
intensities in relation to eligible costs laid down in Article 4
(2) and (3) of the Regulation (EC) No 68/2001. These
maximum thresholds depend, inter alia, on the size of the
recipient company, the region in which it operates, and the
category of workers involved. The Commission notes that
Ford Genk is a large enterprise, that the project is located in
an area (the province of Limburg), which qualifies for
assistance under Article 87(3)(c) of the Treaty, and that the
participants in the training do not include any of the
categories of disadvantaged workers mentioned in Article 2
(g) of Regulation (EC) No 68/2001. The maximum aid
intensities authorised under these circumstances are 30 %
for specific training, and 55 % for general training.

(41) The Commission notes that Article 4(7)(f) of Regulation
(EC) No 68/2001 provides that such costs are eligible up to
the amount of the total of the other eligible costs. In view
of this, a further adjustment is required in this case to bring
trainees' personnel costs down to a level equivalent to the
sum of other costs (9). Such an adjustment results in total
eligible costs of EUR 14,04 million.

(9) When reducing the amount of eligible trainees' personnel costs, the
reduced the trainees' personnel costs which

Commission has
constituted specific training.

(46) The Commission considers that in its reply to the opening
of the formal investigation Belgium has submitted sufficient
information and assurances regarding the nature of the
training. In particular, it has communicated the names of
the external enterprises in charge of the general training. It
has also undertaken to correct, ex post, any deviation in the
proportion of general
training proposed. Any such
correction will follow the conclusions of the audit carried
out by the economic services of the Flemish region (on the
basis of which the exact percentage of general training will
finally be determined).

21.12.2006

EN

Official Journal of the European Union

L 366/39

Closing remarks

(47) The Commission notes that, in the case of the aid measure
under scrutiny, the exemptions provided for in Article 87(2)
of the Treaty do not apply since the aid measure does not
target any of the objectives listed there, nor has Belgium
argued that they do. The notified aid is not designed to
promote the execution of an important project in the
common European interest nor
to remedy a serious
disturbance in the economy of a Member State, nor is it
intended to promote culture or heritage conservation. The
Commission therefore considers that the aid for covering
costs stipulated in recital 7 cannot be exempted under
Article 87(3)(b) or (d) of the Treaty as regards the basic
incompatibility of state aid with the common market. The
exemption provided for in Article 87(3)(a) is not applicable
either, because the aim of the measures is the promotion of
training in an area which is not assisted under that article of
the Treaty. Finally Article 87(3)c of the Treaty is relevant to
the extent it concerns promotion of training and regional
development, which has already been taken into account in
the assessment above.

Conclusion

(48) The Commission finds that some of the measures notified
by Belgium, as set out
in recitals 21 to 41, concern
expenditure that is not eligible, or aid that is not necessary
for undertaking the training activities in question. This aid
is not compatible with the common market under any
exemption provided for
in the Treaty, and must be
prohibited. According to the Belgian authorities the aid
has not been granted, and therefore there is no need to
recover it.

(49) The other measures in the proposal, accounting for eligible
costs of EUR 14,04 million, which correspond to aid of
EUR 6 240 555, comply with the criteria for compatibility
with the common market under Article 87(3)(c) of the
Treaty,

HAS ADOPTED THIS DECISION:

Article 1

EUR 6 038 868 of the state aid which Belgium is planning to
accord a training project at Ford-Werke GmbH, Fabrieken te
Genk is incompatible with the common market.

Therefore that part of the aid may not be implemented.

The remaining EUR 6 240 555 million in notified aid is
compatible with the common market.

Article 2

Within six months of the date on which this Decision is notified,
Belgium shall inform the Commission of the measures taken to
comply with it.

This decision is addressed to the Kingdom of Belgium.

Article 3

Done at Brussels, 4 July 2006.

For the Commission
Neelie KROES
Member of the Commission