2006/950/EC: Commission Decision of 26 September 2006 on aid measure No C 49/2005 (ex N 233/2005) for Chemobudowa Kraków S.A. (notified under document number C(2006) 4214) Text with EEA relevance
Date: 2006-09-26
Institutions: European Commission
Subjects: Poland, State aid, aid for restructuring, control of State aid, industrial restructuring

28.12.2006

EN

Official Journal of the European Union

L 383/67

COMMISSION DECISION

of 26 September 2006

on aid measure No C 49/2005 (ex N 233/2005) for Chemobudowa Kraków S.A.

(notified under document number C(2006) 4214)

(Only the Polish version is authentic)

(Text with EEA relevance)

(2006/950/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Commu-
nity, and in particular 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 (1)
pursuant
to those provisions and having regard to their
comments,

Whereas:

I.

PROCEDURE

(1)

The planned aid to Chemobudowa Kraków S.A. (‘Chemo-
budowa Kraków’ or ‘the recipient’), a State-owned building
company, was notified to the Commission by letter dated
29 April 2005, registered on 2 May 2005. On 20 June
2005, the Commission asked Poland to submit certain
missing documents. These were provided by letter dated
9 August 2005 registered on 11 August 2005. The
Commission requested further information by letter dated
15 September 2005, to which Poland replied by letter dated
26 October and registered on 27 October 2005.

(2) On 21 December 2005, the Commission decided to initiate
the Article 88(2) procedure in respect of two notified
measures and two non-notified measures granted after
Poland's accession to the EU because of doubts as to their
compatibility with the common market. The Commission
decision to initiate the procedure was published in the
Official Journal of the European Communities on 28 June
2006 (2). The Commission called on interested parties to
submit their comments on the aid measures. No comments
were submitted.

(3)

By letter dated 25 January 2006, registered on the following
day, Poland informed the Commission that it had with-
drawn the notification. By letter dated 7 February 2005 the
Commission called on Poland to comment on the two state
accession without prior
aid measures granted after

(1) OJ C 150, 28.6.2006, p. 51.
(2) See footnote 1.

notification to the Commission. By letter of 7 March
2006, registered on 9 March 2006, Poland submitted its
comments on these two measures and asked for the
rectification of some incorrect data in the decision to
initiate the Article 88(2) procedure. By letter dated
12 September 2006, registered on the following day, the
Polish authorities provided further clarifications on the two
aforementioned aid measures.

II.

DETAILED DESCRIPTION

1.

The aid recipient

(4) ChK is a large company created in 1949, which in 2004
employed 919 workers, 343 of whom in branches of the
company located abroad (in the Czech Republic and
Germany).

(5) ChK is the parent company of Towarzystwo Budownictwa
Społecznego Krak-System S.A. (‘TBS’),
in which it owns
78 % of shares. Its activity consists in building apartment
blocks and renting them out. According to the Polish
authorities its turnover is insignificant.

(6)

The recipient has a market share of 0,13 % of the Polish
building market. It has branches in Germany and the Czech
Republic and 42 % of its turnover comes from those two
branches.

2.

The aid measures

(7)

The Polish authorities have given notice that they intend to
grant two measures for the restructuring of Chemobudowa
Kraków. First, the recipient was supposed to receive a loan
of about PLN 10 million (EUR 2,57 million). The loan was
to be secured by a mortgage on real estate evaluated at PLN
17,35 million (about EUR 4,46 million). Second, Chemo-
budowa Kraków was to benefit from deferral of payments
to the ‘State Fund for Rehabilitation of Disabled Persons’
(‘PFRON’) and these payments were to be made in
instalments. The deferred amount was to be equal to PLN
693 000 (about EUR 178 000).

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Official Journal of the European Union

28.12.2006

(8)

(9)

In addition to the above notified measures, the Polish
authorities have informed the Commission of 18 measures
in favour of Chemobudowa Kraków granted between
December 2001 and May 2004. According to the Polish
authorities, the nominal value of these measures is PLN
8,511 million (EUR 2,19 million). Poland has requested
that these measures not be treated as state aid, claiming that
some of them are de minimis aid and that the others pass the
private creditor test. The Commission concluded that two
of these eighteen measures had been granted after accession
without the Commission's approval and therefore had to be
treated as potential new unlawful aid.

‘ZUS’)

The first measure granted after Poland's accession, i.e. on
12 May 2004, is an agreement for payment of debts of PLN
3,164 million (EUR 0,81 million) to the Social Insurance
Fund (hereinafter
to be made in instalments.
According to the Polish authorities, the amount of the aid
is PLN 147 322 (EUR 37 874). Even before the decision to
initiate the Article 88(2) procedure, the Polish authorities
informed the Commission that the arrangement had been
annulled because Chemobudowa Kraków did not meet the
relevant conditions. The Commission had doubts as to
whether the above-mentioned debts had been honoured by
the recipient and whether failure to enforce the debts might
not constitute additional state aid.

(10) The second measure granted after accession on 20 May
2004 was granted by the Head of Małopolska Treasury
Office and consisted of an agreement for debts of PLN
280 000 (EUR 71 979) to be paid in instalments.

3.

Grounds for initiating the procedure

(11) The Commission wished to clarify whether the eighteen
measures referred to above constituted state aid as, in order
to assess the compatibility of measures granted after
accession,
it had to take into account all aid measures
granted in the context of restructuring, especially with a
view to determining whether aid was limited to the
the eighteen
necessary minimum. Moreover,
measures were granted after accession. The Commission
has analysed this aid in the light of the 2004 Guidelines on
rescue and restructuring aid for firms in difficulty.

two of

(12) The Commission decided to initiate the Article 88(2)
procedure because it doubted whether all the conditions for
approving restructuring aid had been met, and in particular
whether:

— the restructuring plan would restore the recipient's
long-term viability, given that its main focus was
financial restructuring;

— the recipient's contribution to restructuring costs was
the Commission lacked sufficient

significant, as
information on its source;

— the company was eligible for restructuring aid as the
recipient had managed to generate operating profits of
PLN 5,4 million (EUR 1,388 million) in 2004.

III.

COMMENTS FROM THE POLISH AUTHORITIES

(13)

In their letter of 25 January 2006 the Polish authorities
informed the Commission that they had withdrawn the
notification of the measures referred to in paragraph 7
above.

(14) With regard to the two measures granted after accession
without prior notification to the Commission, Poland
stated the following:

(15) With regard to the first measure granted after accession, i.e.
on 12 May 2004, described in paragraph 9 above, Poland
indicated that the agreement had been annulled because
Chemobudowa Kraków did not meet the relevant condi-
tions. In addition, the company had paid off all its debts
with interest.

(16) With regard to the second measure granted after accession,
i.e. on 20 May 2004, described in paragraph 10 above,
Poland stated that the measure passed the private creditor
test and added that if the Commission did not agree with
that assessment, the measure constituted de minimis aid. The
Polish authorities indicated that most of the aid received by
the recipient during the corresponding three-year period,
including the aid measure referred to in paragraph 10, was
below the EUR 100 000 threshold and as such constituted
de minimis aid.

IV.

ASSESSMENT OF THE MEASURES

(17) Poland withdrew notification of the two state aid measures
in order to
referred to in paragraph 7 above. However,
terminate the Article 88(2) procedure, the Commission
needs to assess the two non-notified measures described in
paragraphs 9 and 10.

(18) With regard to the measure described in paragraph 9,
Poland has confirmed that no state aid has been granted by
ZUS since accession. The Commission takes the view that
as this measure was annulled and never came into force and
as all debts vis-à-vis ZUS were reimbursed with interest, the
measure does not constitute state aid.

(19) Regarding the measure described in paragraph 10 above, on
the basis of the information available, the Commission
concludes that the measure does not constitute state aid
within the meaning of Article 87(1) of the EC Treaty, since
the Polish authorities have confirmed that the de minimis aid
threshold was not exceeded.

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Official Journal of the European Union

L 383/69

V.

CONCLUSION

(20) The Commission notes that according to Article 8 of
Council Regulation (EC) No 659/1999 (3), the Member
State concerned may withdraw the notification in due time
before the Commission has taken a decision on the aid. In
cases where the Commission has initiated the formal
investigation procedure, the Commission shall close that
procedure.

(21) Consequently, the Commission has decided to close the
formal investigation procedure under Article 88(2) of the
EC Treaty in respect of the notified aid measures, recording
that Poland has withdrawn the notification.

(22) With regard to the two non-notified measures,

the

Commission finds that they do not constitute state aid,

HAS ADOPTED THIS DECISION:

Article 1

The measures which Poland was planning to implement
for Chemobudowa Kraków, amounting to PLN 10 693 000,

were withdrawn after
investigation procedure. The formal
therefore no longer applies to these measures.

the Commission opened the formal
investigation procedure

Article 2

The measure granted on 12 May 2004 was later annulled by the
granting authority. The formal investigation procedure therefore
no longer applies to this measure. Regarding the measure granted
on 20 May 2004, the Commission concludes that it does not
constitute state aid within the meaning of Article 87(1) of the EC
Treaty.

This Decision is addressed to Poland.

Article 3

Done at Brussels, 26 September 2006.

For the Commission
Neelie KROES
Member of the Commission

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

Accession.