2006/949/EC: Commission Decision of 19 July 2006 concerning a measure taken by the Netherlands with regard to VAOP (notified under document number C(2006) 3224) 0 Text with EEA relevance
Date: 2006-07-19
Institutions: European Commission
Subjects: Netherlands, State aid, control of State aid, cooperative, pulp and paper industry, waste management

28.12.2006

EN

Official Journal of the European Union

L 383/61

COMMISSION DECISION

of 19 July 2006

concerning a measure taken by the Netherlands with regard to VAOP

(notified under document number C(2006) 3224)

(Only the Dutch text is authentic)

(Text with EEA relevance)

(2006/949/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

by BNG and the loan granted by the participating
municipalities.

Having regard to the Treaty establishing the European Commu-
nity, 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:

(1)

(2)

1.

PROCEDURE

By letter dated 12 June 2002, recorded as incoming mail on
17 June 2002,
the Commission received a complaint
against four allegedly irregular aid measures benefiting the
Association of Suppliers of Waste Paper (Vereniging van
Aanbieders van Oud Papier — ‘VAOP’), namely partial
exemption from corporation tax and from value added
tax,
the provision of a loan by Bank Nederlandse
Gemeenten (‘BNG’), and the provision of a subordinated
loan by a number of municipalities (gemeenten). By letters
dated 30 July 2002 and 6 December 2002, the Commis-
sion requested information from the Dutch authorities,
which replied respectively by letters of 10 October 2002
and 10 February 2003. A meeting between the complai-
nant and Commission staff took place on 29 April 2003.
By letter dated 5 May 2003, the complainant informed the
Commission that it intended to collect more information
on the case from the Dutch authorities and that, on that
its complaint on certain
basis,
measures.

it would then focus

By letter dated 13 September 2004,
the complainant
information and announced its
submitted additional
intention to limit its complaint to the loan provided by
BNG to VAOP. On the basis of this new submission, the
Commission requested additional
information from the
Dutch authorities, by letter of 21 October 2004; they
replied by letter dated 17 December 2004. By letter dated
3 May 2005, the Commission informed the Netherlands
that it had decided to initiate the procedure laid down in
Article 88(2) of the EC Treaty in respect of the loan granted

(3)

(4)

(5)

The Dutch authorities requested two extensions of the time
allowed for a reply to the decision initiating the procedure,
and ultimately replied by letter dated 29 August 2005. By
letter dated 9 November 2005, the Commission requested
additional information, which was submitted by letter of
8 December 2005. By email message of 4 May 2006, the
Commission made an additional request for information,
which was answered by letter of 2 June 2006 and by letter
of 19 June 2006

The Commission’s decision to initiate the formal investiga-
tion procedure was published in the Official
Journal on
30 September 2005 (2). The complainant sent observations
on this decision by letter dated 28 October 2005, and
requested the Commission to attach the complainant’s
letters of 12 June 2002 and 13 September 2004 and the
record of
the discussions of 29 April 2003 to that
submission and to consider them an integral part of the
submission. A non-confidential version of the two letters
was sent to the Netherlands by letter of 24 November
2005, and the Netherlands replied by letter of 16 December
2005.

By letter of 28 October 2005, the Commission received
comments on the decision initiating the procedure from the
alleged recipient, VAOP, which also requested a meeting. A
meeting was held on 31 January 2006. By letter dated
27 March 2006, VAOP submitted further information to
supplement the observations it had put forward at the
meeting.

2.

DESCRIPTION

2.1.

The recipient

It

(6) VAOP was set up in the beginning of the 1990s by a
number of Dutch municipalities.
is a not-for-profit
cooperative association with limited liability, which seeks to
offer certain services to its members on terms as favourable
as possible. More specifically, its object is to organise the
optimal collection, initial treatment (sorting/pressing) and
sale of waste paper from the municipalities which are its
members. Its activities have subsequently been expanded to
include waste glass and other recyclable waste.

(1) OJ C 240, 30.9.2005, p. 36.

(2) See footnote 1.

L 383/62

EN

Official Journal of the European Union

28.12.2006

(7) VAOP is not a fully vertically integrated undertaking. It
merely organises the tasks concerned for its members: most
of the operational work, such as the transport of the waste,
it subcontracts to other enterprises. This explains why it
had only 20 employees in 2002 for a turnover of
EUR 27,5 million. VAOP charges the local authorities for
the cost of collection and initial treatment of the recyclable
waste from their
territory, and transfers to them the
revenues generated by the sale of recyclable waste to
producers of recycled material (e.g. recycled paper).

(8)

The Dutch tax authorities do not consider VAOP to be a
branch of public administration.

(9)

The first entity that was set up was the cooperative
association with limited liability Coöperative Vereniging
VAOP BV. Over the course of the years, this parent body
set up several subsidiaries to harbour the operational part
of its activities. These subsidiaries are in the form of private
limited companies. The Commission will consider all these
companies as a group constituting one single economic
entity (‘VAOP’), because the parent holds majority stakes in
all the subsidiaries. The subsidiaries are included in the
In addition, BNG,
consolidated accounts of the parent.
which is VAOP’s principal creditor, has concluded only a
single loan contract with the group, and not one with each
separate company, even though that contract lays down
credit limits for some individual subsidiaries. Finally, the
contract provides for cross-guarantees between the different
companies of the group: each company is liable vis-à-vis
BNG for the debts of any of the others.

join. Here too VAOP can be considered to be in competition
with private sector companies (4) seeking to attract the
same customers.

2.3.

The two measures

(12) Firstly, in March 1998, BNG granted VAOP a credit facility
of NLG 16,3 million (EUR 7,4 million, ‘the first measure’).
On 31 December 1997, VAOP’s consolidated balance sheet
indicated that its equity amounted to NLG 0,8 million
(EUR 0,4 million) and its balance sheet total amounted to
NLG 17,3 million (EUR 7,9 million). One year later, after
the provision of the loan, the equity was NLG 0,09 million
(EUR
total was
NLG 29,1 million (EUR 13,2 million).

0,04 million) and the balance sheet

(13) Secondly, in the course of 2001, the local authorities agreed
to convert debts that VAOP owed them for the supply of
waste paper into a loan of NLG 3 million (EUR 1,3 million,
‘the second measure’). VAOP had undergone heavy losses at
the end of 2000, following the insolvency of one of its
the consolidated
subsidiaries. On 31 December 2000,
accounts of VAOP showed negative equity of NLG 3,4 mil-
lion (EUR 1,5 million). At the same date, the balance sheet
total was NLG 32,1 million (EUR 14,5 million). VAOP’s
main creditor, BNG, had obtained liens (pandrechten) on
nearly all the assets, so that this unsecured loan could be
considered subordinate to BNG’s claims. It was therefore
referred to as ‘the subordinated loan’ (achtergestelde lening).

2.2.

The market

3.

GROUNDS FOR INITIATING THE FORMAL

INVESTIGATION PROCEDURE

(10)

In the 1990s VAOP’s activities grew strongly. Its share of the
Dutch market for waste paper collection reached between
25 and 30 % by the beginning of the present decade. It is
also an important player on the market for waste paper
initial treatment (sorting/pressing). It entered the Dutch
market for waste glass collection, where it became one of
the market leaders. Some of the companies active on these
markets are subsidiaries of foreign companies.

(14) As regards the first measure, the Commission initiated the
formal investigation procedure because it doubted whether
a normal market economy investor would have acted in the
same way. At the material time VAOP had nearly no equity.
In addition, the size of the new loan seemed very high in
comparison with the borrower’s balance sheet total. In
short, the risk involved seemed too big for a normal market
economy investor.

(11) Dutch law requires local authorities to collect waste paper
separately and to offer it on the market for recycling, but
the way in which these operations have to be performed is
not defined. Most Dutch municipalities put the work out to
tender. VAOP has tendered for such work, thus competing
directly with private-sector companies offering the same
services (3). VAOP also tries to attract new members by
approaching municipalities and suggesting that they should

(3) VAOP has tendered successfully only once. In recent years, VAOP has

decided not to participate in such tenders any more.

(15) Regarding the second measure, the Commission doubted
whether a normal market economy creditor would have
agreed to convert its claim into a subordinated loan of this
kind. The loan seemed to present a high degree of risk, as
the borrower’s financial situation was bad and all its assets
appeared to be subject to a lien in favour of BNG. Finally,
the Commission wondered whether a market economy
creditor would not have requested a higher interest rate.

(4) Private sector companies may be vertically integrated to a greater
in

that does not mean they are not

degree than VAOP, but
competition with it.

28.12.2006

EN

Official Journal of the European Union

L 383/63

(16)

In conclusion, the Commission suspected that the two
measures might constitute state aid to VAOP falling under
the prohibition laid down in Article 87(1) of the EC Treaty.

the municipalities a claim against it, and that was what the
management of VAOP had decided to do.

4.

COMMENTS FROM INTERESTED PARTIES

5.

COMMENTS FROM THE NETHERLANDS

(17) The Commission has received the following comments
from the complainant. Regarding the first measure, the
complainant asserts that the general policy and practice of
BNG is to offer financial products to public bodies and
associated institutions on terms that are not in line with the
market. The complainant analyses the size of VAOP’s equity,
and concludes that at the time its balance sheet structure
was far from healthy. There was a significant lack of equity.
The complainant also points to the scale of debt. In these
circumstances, the BNG financing allowed VAOP to expand
its business despite its lack of equity and at low cost. The
complainant reckons that a high-risk loan of that kind
would not have been provided by a private bank, and
constitutes state aid within the meaning of Article 87(1) of
the EC Treaty.

(18) The complainant also argues that given that VAOP’s
financial situation did not improve over the years, BNG
should have not continued to finance it.

(19) Turning to the second measure, the complainant argues
that this subordinated loan carried a very high degree of
risk, given the scale of the debts owed by VAOP that would
have to be reimbursed first in the event of insolvency. The
margin on the loan was not sufficient to compensate for
that risk. This loan therefore constitutes state aid too.

(20) The Commission has received the following comments
from the alleged recipient, VAOP. VAOP claims that the first
measure was a purely commercial transaction, in accord-
ance with the market investor principle. VAOP says that at
the time it was also in contact with several private banks,
which were proposing to provide financing on terms close
to those offered by BNG. VAOP has provided a copy of a
signed offer of financing made by [a private bank] (*) on
7 January 1998.

(21) Regarding the second measure, VAOP asserts that it was not
into the loan arrangement with the
obliged to enter
municipalities. On the basis of its constitution (statuten) and
its supply contracts with the municipalities, VAOP cannot
be required to pay its paper suppliers more than its liquidity
position allows. In addition, VAOP is entitled to impose
obligations on its members in the form of a ‘yearly
contribution’, which may be used to cover operating
charges or may be regarded as risk-bearing capital. VAOP’s
contract with the municipalities also allowed VAOP to give

(22) Regarding the first measure, the Netherlands argues that the
granting of the credit facility by BNG was not a matter for
the State. BNG is a public limited company. The Dutch
authorities acknowledge that BNG’s shares are owned
entirely by the State, the provinces and the municipalities.
They also acknowledge that some members of the super-
visory board are appointed by these authorities, but they
argue that the supervisory board is not involved in the
bank’s day to day business, which is the responsibility of the
management. There is no provision in the constitution of
the bank requiring the management to comply with the
directions of the supervisory board when offering financial
the
products. There was no provision requiring that
supervisory board be consulted or
it give its
authorisation for
the loan concerned, which was the
responsibility exclusively of the management. Finally, the
Dutch authorities assert that there is nothing else to suggest
that this transaction was attributable to the State.

that

(23) Even if the loan was imputable to the State, the Netherlands
submits that its terms would be acceptable to a market
economy investor. A higher level of equity would indeed
have been desirable, but the risk of loss to BNG was limited,
thanks to several forms of security, notably a first-rank lien
on VAOP’s receivables, which had to amount to 100 % of
the loan. The loan was granted at a time when the firm was
not in difficulty and its prospects were good. The very
serious deterioration in its financial situation could not
have been foreseen.

(24) With regard to the second measure, the Netherlands recalls
that VAOP is a not for profit body that transfers to its
members the net revenues generated from the sale of the
In the
recyclable waste collected on their
territory.
beginning of 2001, VAOP was in a difficult
financial
the insolvency of a subsidiary
situation as a result of
engaged in the recycling of glass; it decided not to pay to
the participating municipalities a small part of the revenues
generated by the sale of the waste in 2000 (5) , and to
convert it instead into a five-year subordinated loan. BNG
was threatening that without additional resources such as
this subordinated loan it would not continue to finance
VAOP, which would then have been insolvent itself. The
Netherlands
its
constitution and its contracts with the participating
municipalities VAOP was not obliged to pay this NLG 3 mil-
lion (EUR 1,3 million) to the municipalities, because the
amount exceeded the resources it had available. VAOP

that on the basis of

asserts,

first,

(*) covered by the obligation of professional secrecy.

(5)

In the year 2000, VAOP paid the local authorities a total of
NLG 40,7 million (EUR 18,5 million).

L 383/64

EN

Official Journal of the European Union

28.12.2006

nevertheless decided to give the municipalities a corre-
sponding claim against it in the form of an interest-bearing
loan. Second, from the point of view of the local authorities
this conversion of part of
their claims into a loan
represented a more favourable option than insolvency. At
that time they had claims against VAOP amounting to
NLG 5,7 million (EUR 2,59 million) which were not
secured. The Dutch authorities have calculated that, in the
event of
the municipalities would have
recovered around NLG 1,2 million (EUR 0,5 million),
loss of NLG 4,5 million (EUR
resulting in a net
2,05 million). The municipalities acted as market economy
creditors would have done by accepting the conversion of
NLG 3 million (EUR 1,3 million) of their claims against
VAOP into a loan, which enabled VAOP to continue in
business in the knowledge that BNG would continue to
finance it.

insolvency,

6.

ASSESSMENT

6.1.

Existence of aid

The first measure

authorities have provided a copy of the internal documents
of BNG relating to each step of the decision-making process
that led to the provision of this financing to VAOP: the
proposal by the account managers, dated 21 January 1998,
the opinion of the credit analyst, dated 22 January 1998,
and the positive decision by the credit committee, dated
26 January 1998. These papers show that BNG identified
and analysed the risks associated with the loan, including
the very limited equity. On the basis of this analysis, BNG
gave VAOP a low rating (‘C-’). To offset the risks identified,
BNG decided to impose strict conditions and to require
substantial security. Among other things, BNG insisted that
all the parties (VAOP and its subsidiaries) should be jointly
and severally liable for all
the other
members of the group. It also demanded a first rank lien on
various commercial claims held by VAOP. VAOP was to
provide BNG with a monthly list of liens on commercial
claims, the value of which had to amount to at least 100 %
of the sum lent by the bank. The credit committee decided
that the loan could be granted provided that the loan
agreement comprised these various conditions and forms
of security for BNG. The new loan agreement also included
an existing NLG 5 million (EUR 2,2 million) financing. It
increased BNG’s potential claim on VAOP from the existing
maximum of NLG 5 million (EUR 2,2 million) to NLG 16,3
(EUR 7,4 million). The net
therefore
NLG 11,3 million (EUR 5,1 million).

the liabilities of

increase was

(25) Article 87(1) of the EC Treaty indicates that ‘any aid granted
by a Member State or through State resources in any form
whatsoever which distorts or threatens to distort competi-
tion by favouring certain undertakings or the production of
certain goods shall,
insofar as it affects trade between
Member States, be incompatible with the common market.’

(29) These documents show that BNG conducted the lending
operation in accordance with its normal procedures, and
asked for substantial security for the loan.

(26) The Court of Justice has held that ‘It should also be noted
that, pursuant to the principle that the public and private
sectors are to be treated equally, capital placed directly or
indirectly at the disposal of an undertaking by the State in
circumstances which correspond to normal market condi-
tions cannot be regarded as State aid … Therefore,
in
accordance with equally settled case-law, it is necessary to
determine whether,
in similar circumstances, a private
investor of a dimension comparable to that of the bodies
managing the public sector could have been prevailed upon
to make capital contributions of the same size … having
regard in particular
to the information available and
foreseeable developments at the date of those contribu-
tions’ (6).

(30) The Commission also notes that in January 1998 […] (*)
proposed to grant VAOP a loan. This would have come on
top of the existing NLG 5 million facility provided by BNG.
The size of the loan offered by […], at NLG 7,3 million
(EUR 3,3 million), was not as large as the additional
financing ultimately offered by BNG, which amounted to
NLG 11,3 million (EUR 5,1 million), but did correspond to
a large part of it. The interest rate margins which […]
planned to charge in this firm proposal, at 125bps and
150bps, are below those that applied for lending to a
company in difficulty or for equity provision. This shows
that contrary to the doubts expressed by the Commission
when it decided to launch the formal
investigation
procedure a private bank might have agreed to grant a
large loan to VAOP despite its very limited equity (7).

(27)

In order to determine whether the grant of the credit facility
by BNG constituted aid, the Commission has therefore to
verify whether the transaction respects the market economy
investor principle as expounded by the Court
in the
judgment referred to.

(28) At the request of the Commission, in addition to a copy of
the Dutch

the loan agreement of March 1998 itself,

(6)

Joined Cases C-328/99 and C-399/00 Italy and SIM 2 Multimedia v
Commission [2003] ECR I-4035, paragraphs 37 and 38.

(31) The Commission has compared the interest rate on BNG’s
loan with the rate proposed by […] (8). BNG’s interest rate
is slightly smaller. However, the Commission notes, first of

(*) Business secret
(7) As already indicated, this can be explained among other things by
the securities available to the potential lender and by the fact that at
that time the firm was considered to be an expanding enterprise with
a stable and cost covering core business.

(8) Both credit

facilities comprise loans of different kinds. The
Commission has compared those with similar maturities and
conditions.

28.12.2006

EN

Official Journal of the European Union

L 383/65

all, that BNG had (and still has) very low operating costs,
much lower than […]’s (9). Second, the loan agreement
between BNG and VAOP included various commissions to
be charged in the event that VAOP actually called upon
certain loan facilities. The offer made by […] explicitly
excluded the payment of such charges. Finally, it is likely
that the existence of […]’s offer encouraged BNG to make
the very best offer it could (within the limits of its lending
guidelines and subject to substantial security), in order not
to lose the business of an existing client with what appeared
at the time to be real prospects of expansion. On the basis
of the foregoing, the Commission concludes that even
though BNG provided financing at an interest rate lower
than the one proposed by a private bank, BNG, when it
granted the loan in 1998, was acting as a market economy
investor. The loan consequently does not constitute state
aid within the meaning of Article 87(1) of the EC Treaty.

(32) The complainant also asserts that a market economy
creditor would not have continued to finance VAOP given
the poor
the enterprise in the
succeeding years. The Commission has therefore analysed
how BNG has dealt with the deterioration of VAOP’s
financial situation.

financial situation of

(33)

(34)

In 1999, when the financial situation of VAOP Glas BV and
REVA deteriorated, BNG negotiated a new agreement,
which was signed on 9 July 1999. First, the security was
expanded to include liens on inventories, plant and other
assets. Second, it was agreed that there would be a strict
screening of the monthly list of claims subject to a lien.
Third, no long-term loans would any longer be granted for
investments in fixed assets. Any such loans would have to
take the form of short-term financing instruments known
as ‘cash drawings’ (kasgeldtrekkingen). Fourth, the price of the
credit facility was increased.

In October 2000 REVA became insolvent, and a new
agreement was negotiated and signed on 19 January 2001.
facility was reduced to NLG 13,2 million
The credit
(EUR 6 million) (the effective lending to VAOP at that point
was NLG 15,2 million (EUR 6,9 million)); the credit facility
was to be reduced further in accordance with a timetable
laid down. A penalty premium of 3 % would be applied to
the amount exceeding that credit limit. At the same time,
the security was expanded further. On the basis of the
liquidation value of VAOP’s assets BNG calculated that it
stood to lose almost NLG 5,8 million (EUR 2,6 million) out
of its total claim of NLG 15,2 million (EUR 6,9 million). In
September 2002, a new contract was signed, modifying the
previous timetable for the reduction of the size of the credit
facility.

(9)

In the banking sector, the level of operating costs is often measured
by the efficiency ratio, which is defined as operating expenses divided
by total revenue.
[…]'s Netherlands division had an
efficiency ratio of 64,8 %. In 1998 and 1999, it was respectively
65,2 % and 62,9 % (source: […]). BNG's efficiency ratio is one third
of that level, indicating a very low cost base. This is explained in part
by the fact that it does not have a large network of offices.

In 1997,

the amount

(35) From this account it will be clear that BNG could not
simply stop financing VAOP or ask for the immediate
reimbursement of
lent. This would have
rendered VAOP insolvent, causing considerable loss to
BNG. BNG sought to measure the potential loss against
VAOP’s chances of recovery. Given the stability of VAOP’s
core business (waste paper) and its ability to generate cash
flow, BNG decided not to push VAOP into insolvency, and
to go on financing it. The Commission has not found any
manifest error in this assessment or the decision it led to.
Nor has the complainant brought forward any convincing
argument showing why this decision would have not been
acceptable to a private bank.

(36)

In conclusion,
the Commission considers that BNG’s
conduct in this case is in accordance with the market
economy creditor principle, and consequently does not
constitute state aid to VAOP.

(37) On the question whether BNG’s lending can be attributed to
the State the Commission will not take a position, because
in the light of the foregoing even if the lending could be
attributed to the State it would not constitute state aid.
Moreover, the Commission cannot and will not take a
position on the question whether all lending by BNG in
other cases conforms to the market economy investor
principle.

The second measure

(38) At the beginning of 2001, VAOP was unable to pay the
participating municipalities the NLG 3 million (EUR 1,3 mil-
lion) it owed them for the supply of waste paper. It did not
have sufficient liquidity available. As a condition for further
financing of VAOP, BNG was demanding that there be
positive resources available for guarantee purposes, defined
as capital and reserves, provisions plus long-term sub-
ordinated loans. Paying the money to the municipalities
would have pushed VAOP into insolvency. The Commission
observes that the difficult financial situation was caused
mainly by a one-off event, namely the insolvency of REVA
in 2000. VAOP had invested in that company because it
was active in the treatment of waste glass.

(39) The Commission would point out that the municipalities'
net claims on VAOP amounted to NLG 5,7 million
(EUR 2,6 million) (10). These claims were unsecured,
because another major creditor, BNG, had a fist-rank lien
on important assets. If VAOP had become insolvent and its
assets had been liquidated, the local authorities would have
been unable to recover a large part of their claims. The

(10) Financial situation at the end of 2000.

L 383/66

EN

Official Journal of the European Union

28.12.2006

that

in the

event of

Commission has reviewed the calculation submitted by the
Dutch authorities: from the creditors' point of view, it was
on the optimistic side (11). The Commission takes the view,
therefore,
an insolvency the
municipalities could have expected to recover no more
than NLG 1,2 million (EUR 0,5 million) out of their claims
of NLG 5,7 million (EUR 2,6 million). In addition, the
money would have been recovered only after
the
substantial delay inherent in a liquidation. Instead of taking
this loss of NLG 4,5 million (EUR 2 million), the members
preferred to convert NLG 3 million (EUR 1,3 million) into
an interest-bearing loan and to recover the balance. This
second option was a more favourable solution. When it
initiated the procedure,
the Commission also doubted
whether a market economy investor who did accept such a
conversion would not have demanded a higher interest rate.
These doubts have been allayed:
the municipalities’
bargaining position vis-à-vis BNG was not in fact such
that they could have demanded a higher interest rate. In the
longer term higher interest rate charges would have reduced
VAOP’s ability to repay its loan to BNG. BNG was in a
position to resist such a demand on the part of
the
municipalities, by threatening to trigger the insolvency of
VAOP, which, as
indicated, would have been a less
favourable outcome for the municipalities. Indeed even if
the municipalities had had the bargaining power necessary,
it would not have been in their interest to increase the
interest rate, because that would simply have increased the
VAOP’s financial burdens over the next five years. As the
members pay VAOP for the costs of the services the receive,
the higher interest rates they would have obtained would
have been offset by higher payments to VAOP during that
period.

(40)

In can be concluded that for purposes of Article 87(1) of
the EC Treaty the conversion of
into a
subordinated loan does not constitute state aid granted by
the local authorities to VAOP.

the debt

7.

CONCLUSION

(41) On the basis of the foregoing, the Commission concludes

that neither of the measures constitutes aid,

HAS ADOPTED THIS DECISION:

Article 1

The measures taken by the Netherlands and Bank Nederlandse
Gemeenten with regard to the Association of Suppliers of Waste
Paper (Vereniging van Aanbieders van Oud Papier), for amounts
respectively of NLG 3 million (EUR 1,3 million)
and
NLG 16,3 million (EUR 7,4 million), do not constitute aid
within the meaning of Article 87(1) of the Treaty.

Article 2

This Decision is addressed to the Kingdom of the Netherlands.

Done at Brussels, 19 July 2006.

For the Commission

Neelie KROES

Member of the Commission

(11) The calculation submitted by the Dutch authorities is optimistic fro
the municipalities' point of view among other things because it does
not deduct the costs of settling the insolvency. It has already been
seen that BNG, which as a financial institution has greater expertise
in such calculations, is more prudent regarding the capacity of the
liquidated assets to cover the creditors' claims.