2007/402/EC: Commission Decision of 6 December 2006 on State aid No C 6/2006 (ex N 417/2005) which Germany is planning to implement for Volkswerft Stralsund (notified under document number C(2006) 5790) (Text with EEA relevance)
Date: 2006-12-06
Institutions: European Commission
Subjects: Germany, State aid, control of State aid, investment aid, shipbuilding

13.6.2007

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COMMISSION

COMMISSION DECISION

of 6 December 2006

on State aid No C 6/2006 (ex N 417/2005) which Germany is planning to implement for Volkswerft
Stralsund

(notified under document number C(2006) 5790)

(Only the German version is authentic)

(Text with EEA relevance)

(2007/402/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty
Community,
and in particular
Article 88(2) thereof,

establishing the European
subparagraph of
the

first

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

Having called on interested parties to submit their comments
pursuant to the provisions cited above (1) and having regard to
their comments,

Whereas:

I. PROCEDURE

(1)

By letter of 22 August 2005, registered as received on 26
August, Germany notified to the Commission its
intention to grant regional investment aid in favour of
Volkswerft Stralsund. The Commission requested infor-
to which Germany
mation by 13 September 2005,
replied by letter of 14 October, registered as received
on 17 October. By letter of 18 November 2005,
it
requested further information which Germany provided
by letter of 19 December 2005, registered as received on
20 December.

(2)

On 22 February 2006 the Commission initiated the
formal
to the
investigation procedure with respect
alleged State aid. The Commission decision to initiate
the procedure was published in the Official
Journal of

the European Union (2). The Commission invited interested
parties
to submit comments on the presumed aid.
Comments were submitted by letter of 10 May 2006,
registered as received on 11 May, by the beneficiary
Volkswerft Stralsund. By letters of 11 May, registered
as received on the same day, the Verband für Schiffbau
(German Shipbuilding and Ocean
und Meerestechnik
Industries Association) and Danske Maritime
(Danish
Maritime Industries Association) submitted comments.

(3)

(4)

(5)

The comments were transmitted to the German autho-
rities by letters of 12 May and 19 May. Germany replied
to these comments by letter of 2 June 2006, registered as
received on the same day.

Germany’s response to the initiation of the formal inves-
tigation procedure was submitted by letter of 7 April
2006, registered as received on the same day. On 26
July 2006 the Commission requested further information
which Germany provided by letter of 22 August 2006,
registered as received on 23 August.

II. DESCRIPTION

The beneficiary of the aid is Volkswerft Stralsund GmbH
(VWS), a shipyard located in Stralsund, Mecklenburg-
Western Pomerania (Germany), an assisted area under
the Treaty. VWS belongs to the
Article 87(3)(a) of
Danish A.P. Möller group and is part of its subgroup
of yards led by Odense Steel Shipyard Ltd. It is a large
enterprise and does not rank as a small or medium-sized
the Commission Recommendation
enterprise under
2003/361/EC of 6 May 2003 concerning the definition
of micro, small and medium-sized enterprises (3).

(1) OJ C 90, 13.4.2006, p. 36.

(2) See footnote 1.
(3) OJ L 124, 20.5.2003, p. 36.

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(6)

(7)

(8)

(9)

(10)

(11)

VWS is active in the design and production of sea-going
vessels as well as in ship repair and conversion.
It
produces predominantly medium-sized container vessels
but also passenger-cargo vessels,
ferries and special
vessels such as dredgers, cable-laying vessels, anchor
handling tug supply vessels
and marine pollution
control vessels. VWS can produce ships up to a length
of 260 m.

enlargement of two of the four existing conservation
facilities to accommodate larger sections. The ability to
build and handle larger steel constructions is necessary
for the construction of larger vessels from an economic
and technical point of view as the final assembly of
larger vessels from smaller sections would be inefficient.
By extending the ship lift,
its capacity will match the
capacity of the dock hall.

The pre-fabrication of the different components up to
sections takes place on specialised production lines. The
final assembly — after conservation work and painting
— is done in the dock hall, which can accommodate
ships of up to 300 m in length. The launching of the
ship is done with a 230 metre-long ship lift. This limits
the production programme of VWS to ships of up to
260 m.

VWS plans to modernise and rationalise its production as
well as to adapt to changes in international demand in
order to remain competitive on the world market. While
it assumes that
the favourable market conditions for
cargo vessels will continue for several years to come, it
considers that demand will increasingly shift to so-called
‘panamax vessels’, which VWS is currently not able to
produce at competitive costs. Panamax vessels are the
largest ships that can transit
i.e.
ships with a maximum length of 300 m and a
maximum width of 32,2 m.

the Panama Canal,

VWS is therefore implementing an investment project to
improve the productivity of the yard and to allow the
shipyard to produce larger panamax vessels efficiently.
The project will allow VWS to compete in the market
segment of panamax vessels and will therefore increase
the yard’s sales potential. VWS reckons that this will lead
the yard’s existing
to a more balanced utilisation of
installations
significantly the
thus
and will
production costs per ship, increasing the yard’s produc-
tivity.

reduce

The investments are in steel processing (panel production
and section construction; conservation) so as to be able
to build and handle larger steel constructions (sections)
and in extending the ship lift by 40 metres to allow the
lifting of longer ships.

In the field of panel production and section construction
a new production line for panels and for section parts for
larger types of vessel will be built in an existing hall.
Moreover, four additional sites for section construction
will be built on the slipway so as to build larger sections.
the investment concerns the
As regards conservation,

(12) On completion of the investment project, the produc-
according to the
information
tivity of VWS will,
increase from around […] (*) t
submitted by Germany,
steel/1 000 working hours in 2005 to […] t steel/1 000
working hours. The capacity of the yard measured in
compensated gross tonnes (CGT) will not increase as a
result of the investment project; only the product mix
will change,
from medium-sized container vessels to
large container vessels. The steel-processing capacity of
the yard will
increase from around 56 000 tonnes in
2005 to 64 000 tonnes following implementation of
the project.

(13)

The project was started at the beginning of 2005 and
completed by 28 February 2006. It will create 207 new
direct jobs.

(14)

integration at

The investment project involves a reduction in the degree
the shipyard. The share of
of vertical
outsourcing is
supposed to increase from 17 % of
productive hours in 2005 to around 28 % by the end
of 2007. It is estimated that increased outsourcing will
lead to the creation of 400 new jobs in the Stralsund
region.

(15)

Total project costs amount to EUR 18 669 000 and are
equal to eligible costs. Theses costs can be broken down
as follows:

Ship lift

Panel line and section construction

Conservation

(EUR)

10 512 000

3 910 000

4 247 000

Total

18 669 000

(16) Germany intends to grant State aid amounting to EUR
4 200 500, which is equal
the eligible
investment costs of EUR 18 669 000. The aid will be
granted on the basis of
two approved regional aid
schemes (4). The aid application was made before the
start of the investment project.

to 22,5 % of

(*) Confidential information, also marked by […] below.
(4) Joint Federal Government/Länder scheme for improving regional
economic structures, 34th general plan; Investment Allowance Law
2005.

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III. REASONS FOR INITIATING THE FORMAL INVES-
TIGATON PROCEDURE

(22)

(17)

formal

The Commission initiated the
investigation
procedure since it doubted that the grant was compatible
It had misgivings that the
with the common market.
investments in panel production and section construction
might go beyond mere investments to improve the
productivity of existing installations.
It also doubted
that the investments in conservation and in extension
of the ship lift constituted eligible investments as their
objective did not seem to be the improvement of the
productivity of existing installations.

(18)

the Commission had misgivings that

the
In addition,
investments by VWS might
lead to an increase in
capacity at the yard that might not be compatible with
the Framework on State
aid to shipbuilding (the
Framework) (5) or with the common market.

IV. COMMENTS FROM INTERESTED PARTIES

(19)

The Commission received comments from the bene-
ficiary,
from the German Shipbuilding and Ocean
Industries Association and from the Danish Maritime
Industries Association.

1. Comments from the beneficiary (VWS)

(20)

(21)

the purpose of

the yard is not

In its comments VWS points out that the aim of the
investment project was to increase productivity and to
improve capacity utilisation. Moreover, an increase in the
total capacity of
the
investment project, nor does the implementation of the
investment project have such an effect. The project is
instead a precondition for the product
innovation at
which VWS is aiming and for entering the market
segment of panamax vessels. VWS points out that the
market for vessels of between 2 500 TEU (6) and 4 999
TEU is the optimal market segment for the yard as the
segment has the highest sales potential worldwide and
competitive pressure within Europe is low.

VWS furthermore points out that, when the yard was
rebuilt
it was
in the period from 1993 to 1998,
already conceived as a panamax yard, as can be seen
from the fact that the size of the shipbuilding hall
is
adapted to the size of panamax vessels. However, at
that time, it could not be foreseen that market demand
would increasingly turn to panamax vessels. As Bremer
Vulkan, which was the owner of VWS at
the time,
already had yards capable of building panamax vessels,
its plans envisaged the production of smaller vessels at
VWS and a ship lift with a length of 230 m was thus
considered sufficient.

(5) OJ C 317, 30.12.2003, p. 11.
(6) Twenty-foot Equivalent Units.

several

VWS explains that the market situation for VWS has
changed in recent years because of
factors.
Bremer Vulkan does not exist anymore. The market
demand for the original product mix of VWS is not
sufficient and so the yard has specialised in container
vessels of up to 3 000 TEU and large specialised
offshore vessels. Since there is no longer any demand
ferries, passenger
for bulk carriers,
fishing vessels,
vessels or
the original
tankers, which were part of
product mix of VWS, these vessels are no longer being
built. VWS also points out that the market for smaller
container vessels is characterised by strong competition
in Germany and, to some extent, in Poland, whereas the
larger container vessels of the panamax class are built by
its
only a very few European yards.
technical equipment, in particular the shipbuilding hall,
already allows the construction of panamax vessels.

It argues that

(23) However,

in order to build panamax vessels efficiently,
changes in the technical equipment of
the yard are
necessary. Up to now, VW produced ships between
2 100 and 3 000 TEU and with a length of 197 to
237 m. These vessels were built out of between 95 and
111 steel sections of up to 16 m in length. The manu-
facture of such sections is limited by the available space
in the workshops and the conservation halls. Panamax
vessels have a length of 295 m. Without changes in the
technical equipment of
this would mean
building these vessels using 170 sections per vessel,
which would increase handling by between 60 % and
70 % if the size of the sections remained unchanged.
As the market price of these vessels is, however, only
between 20 % and 23 % higher, VWS has to increase
productivity if
is to build these vessels efficiently.
Investments in enlarging two of the existing conservation
facilities and expanding the production of panels and
sections are thus necessary if sections of up to 32 m
are to be built and treated.

the yard,

it

(24)

VWS points out that the launching of panamax vessels is
already possible with the existing 230 m ship lift. The
part of the vessel exceeding the length of the ship lift
would need to be supported, for example, by a floating
crane. However, such an operation would entail risks and
increase costs.

(25) As regard the capacity of the yard, VWS states that total
capacity measured in CGT will not increase.
In 2005
VWS built six container vessels of 2 500 TEU, equivalent
to 110 000 CGT. This required the processing of 56 000
taking up 1 725 000 working hours.
tonnes of steel
After completion of
the yard
will be able to deliver seven panamax vessels in 2006
and 2007 using 64 000 tonnes of steel and 1 900 000
working hours per year. Output will be 108 000 CGT in
2006 and in 2007. With CGT unchanged, the amount of
steel processed and the number of working hours taken
up will increase by 14 %.

the investment project,

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(26)

(27)

(28)

(29)

(30)

it

for

that

signed the contracts

the
VWS stresses
construction of panamax vessels in 2003, when the
trend away from smaller vessels to larger vessels of the
panamax class started to pose a serious threat to the
it continued building smaller
the yard if
viability of
the yard’s production flow
vessels. An analysis of
showed that the investments in question would allow
larger ships to be built with a degree of productivity
that would be competitive.

i.e.

The only yards active in the market segment for vessels
of between 2 500 and 4 000 TEU (22 000 to 50 000
CGT),
in future be
served by VWS, are the German yards of Aker TW
(HDW and Schichau Seebeck) and the Polish yards in
Gdynia and Szczecin.

the market segment

that will

The market share of European yards in this segment is
26,3 %, behind Korea (39,1 %) and ahead of China
(24,8 %). Korea and China are therefore the main compe-
titors in this segment and will determine the competitive
If VWS did not enter the
conditions in the future.
panamax market,
for
offshore vessels, which is characterised by strong intra-
European competition, and would rule itself out of parti-
for panamax
cipation in the fast-growing segment
the
that
vessels. VWS submitted figures
is increasingly turning towards larger vessels
market
and that
for vessels of 2 500 to 5 000
TEU is showing above-average growth.

it would remain in the market

the segment

showing

2. Comments from the German Shipbuilding and
Ocean Industries Association

The German Shipbuilding and Ocean Industries Asso-
ciation (the Association) observes that the Commission’s
concern about a potential
increase in capacity cannot
follow from the Framework on State aid to shipbuilding.
Its misgivings are not justified by the current market
situation and,
the planned aid will not
distort competition.

in particular,

The Association argues that the orientation of the EU
policy on State aid to shipbuilding has changed over
time. The Framework does not contain any provision
that would prohibit the granting of investment aid in
order to increase capacity. The Association presumes
therefore that such a provision was no longer considered
appropriate.
the Framework
dispenses as far as possible with any sector-specific
rules. The capacity issue is mentioned only in the
context of closure aid. Other types of aid, e.g. restruc-
turing aid, are covered by the general State aid rules.

It also points out

that

(31)

(32)

(33)

(34)

(35)

innovation,

the European industry

The Association also maintains that a restrictive interpre-
tation of the rules would run counter to the LeaderSHIP
2015 initiative, which is one of the measures for imple-
menting the Lisbon Strategy. The competitiveness and
should be
productivity of
increased through investment in research, development
and
in modern production
equipment. If State aid for investment cannot be linked
to capacity increases, this would go against the objective
of LeaderSHIP 2015, and in particular the objective of
safeguarding and expanding the industry’s position in
selected market segments. One such segment comprised
small and medium-sized container vessels, where Europe
is still in a very good market position vis-à-vis Korea and
China.

including

The Association argues that the planned investments will
not distort competition. There is currently no overca-
pacity as the world shipbuilding market is experiencing
a boom. Demand continues to be favourable, although
some weakening is to be expected in 2008/2009. With
world trade growing steadily, maritime transport is also
expanding, and in particular the transport of industrial
goods on container ships. Demand for such vessels can
thus be expected to grow further.

The planned investments will enable VWS to build
it
container vessels of up to 5 000 TEU. Until now,
was able to build only vessels of up to 3 000 TEU.
The market for container vessels of up to 3 000 TEU
is
these
vessels are built by several German yards, but also by
other European yards, and in particular the Polish yards
at Gdynia and Szczecin. Even so, the main competitors
are still Korea and China.

characterised by strong competition since

The structure of the market for vessels of more than
3 000 TEU is different. Although several German and
Polish yards are technically equipped to build these
vessels, they are built almost exclusively in Korea and
China.

the investments by VWS will not distort

The Association assesses the growth potential of
the
market segment for vessels of more than 3 000 TEU as
positive given that the segment of panamax container
It stresses
vessels has grown steadily in recent years.
that
intra-
European competition as
these vessels are currently
built almost exclusively in Korea and China. It should
also be noted that China will continue to increase its
shipbuilding capacities and market share, demonstrating
that it is a global and not a European market as regards
competition. Limiting the investment possibilities for
European yards would thus simply benefit competitors
in Korea and China.

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(36)

(37)

(38)

3. Comments from the Danish Maritime Industries
Association

The Danish Maritime Industries Association explains that,
in the present case, the aid will not have a distortive
effect as the ship types that are built and will be built
by VWS do not overlap with the production programme
of Danish shipyards. It also points out that the planned
State aid is aimed at increasing the competitiveness of
VWS in the market for larger container vessels. Compe-
tition in this new market will presumably come primarily
from third countries outside Europe. There is also a
general trend towards building larger vessels.

Furthermore, the Danish Maritime Industries Association
stresses that the shipbuilding industry in third countries
outside Europe is heavily subsidised. In order to be able
to withstand the increasing competition, the European
shipbuilding
extensive
investments.

to carry out

industry has

V. COMMENTS FROM GERMANY

a

increase

capacity
in productivity is
improving the productivity of

In its comments on the initiation of the formal investi-
gation procedure, Germany maintains that point 26 of
the Framework on State aid to shipbuilding does not
in particular,
contain any provisions on capacity and,
investment aid for projects
stipulate that
does not
an
resulting
in
improvement
It also
stresses that
the ship-
is one of main objectives of
industry
building
Community policy in this
the
LeaderSHIP 2015 initiative, which aims at
improving
the competitive situation of European yards and at
reducing the disadvantages faced by the European ship-
building industry following the subsidisation of ship-
building in Asia. According to Germany, this can be
achieved only through productivity increases.

inadmissible.

It mentions

following

sector.

(39)

In Germany’s opinion, it cannot be deduced from point 3
of the Framework on State aid to shipbuilding that the
impact of an investment project on capacities has to be
taken into account in assessing compatibility. Germany
goes on to argue that the shipbuilding market is no
longer characterised by the factors mentioned in point
3 but instead by a healthy order-book, high prices and
capacity shortages.

the
This subsidisation is mentioned in point 3(c) of
Framework as one of the sector-specific factors which
have to be taken into account. European shipyards
must, therefore, make every effort to increase produc-
tivity.

(41) According to Germany, every increase in productivity
automatically also increases the output of the installation.
An increase in productivity as required by the Framework
cannot therefore be taken to mean that the same amount
is produced but with less input, i.e. less labour. Germany
goes on to stress that the purpose of regional aid is to
contribute to regional development and job creation.
Productivity increases should therefore not result in job
cutbacks.

(42) As regards the market situation, Germany points out that
freight transport is increasing and that the trend towards
larger vessels is discernible in the container vessel market.
Vessels with 5 000 TEU already exist and recent forecasts
point to vessels with a capacity of 8 000 TEU. As such
large vessels can enter only a few ports, smaller vessels
such as the ones to be built by VWS will still be needed
to handle freight. The trend towards
larger vessels
therefore has no negative impact on the demand for
smaller vessels such as those built by VWS.

(43) Germany furthermore provides details on the investment
project of VWS, the steel-processing capacity and the
labour input and productivity of the yard before and
after completion of
the
the project.
investments are necessary to ensure the competitiveness
of the yard and to safeguard the 1 200 jobs.

It argues

that

(44) As regards a potential increase in the yard’s capacity as a
result of the investments, Germany points out that the
investments do not affect the areas which were identified
as technical bottlenecks at the yard. In its decision to
initiate
the
Commission explained that these technical bottlenecks
determine a yard’s capacity. Germany thus argues that,
according to the Commission’s own criteria, the capacity
of the yard remains unchanged.

investigation

procedure,

formal

the

(40) Germany also points out that the market share of the
European shipbuilding industry has contracted in the last
twenty years or so and that Japan, Korea and China have
increased their shares with the help of State subsidies.

(45) Germany also maintains that Article 87(1) of the EC
Treaty is not affected by the granting of the investment
aid and makes reference to the market economy investor
principle. As VWS is financing 77,5 % of the investments
costs from its own funds and is thus taking on a risk, it
can be assumed that
the investments satisfy market
economy criteria.

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(46)

In Germany’s view, the investment aid does not distort
competition and so Article 87(1) is not affected as ship-
building is a worldwide market and is already distorted
by the subsidisation of Asian shipyards. European yards
also currently operate at high capacity and a significant
growth potential
the coming years.
for
in assessing the competitive situation, only
Moreover,
are
competitors
same market
segment,
construction of panamax vessels,
should be taken into account. Their order books for
the coming years are full and their capacities are fully
taken up.

that
the

forecast

in the

active

i.e.

is

(47) As regards the future market developments and future
potential overcapacities described by the Commission in
its decision to initiate the formal investigation procedure,
Germany points out that forecasts are not very reliable
and that the Commission did not provide any proof for
the expected market developments. The fact that there
may be overcapacities in the future cannot be taken to
mean that planned aid will lead to a distortion of compe-
tition within the meaning of Article 87(1) of the Treaty.
For the same reasons, trade between Member States is
not affected either.

(48)

Lastly, as regards compatibility with Article 87(3) of the
EC Treaty, Germany argues that the aid is in line with
European industrial policy, which aims to improve the
the European ship-
position and competitiveness of
building industry as laid down in the LeaderSHIP 2015
initiative.

(49) As regards the comments from third parties, Germany
points out that they support Germany’s assessment that
the planned aid is compatible with the common market.

criterion of trade being affected is met if the recipient
firm carries out an economic activity involving trade
between Member States.

(51)

The aid is provided by the Land of Mecklenburg-Western
Pomerania and is thus imputable to the State. It confers
on VWS an advantage that the company would not have
obtained on the market.

(52)

VWS builds sea-going vessels. As these vessels are widely
traded, the measure threatens to distort competition and
affects trade between Member States. The arguments put
forward by Germany in this connection are uncon-
law, where aid
vincing. According to settled case
strengthens the position of an undertaking as compared
with other undertakings competing in intra-Community
trade,
the latter must normally be regarded as being
affected by that aid (7).

(53) As regards Germany’s argument concerning the absence
of proof for future potential overcapacities and thus for a
distortion of competition within the meaning of Article
87(1) of
that a
measure fulfils the conditions for the application of
Article 87(1) of the EC Treaty if it threatens to distort
competition and is capable of affecting trade between
Member States (8).

it must be pointed out

the Treaty,

(54) As regards the argument of the Association to the effect
that the measure at issue does not distort intra-European
competition as the vessels that will be built by VWS are
currently built almost exclusively in Korea and China, the
Commission points out that the container ships to be
built by VWS cannot be considered as a separate
market but are in competition with other container
ships built by other European yards.

(55)

Consequently, the grant constitutes State aid within the
meaning of Article 87(1) of the EC Treaty and has to be
assessed accordingly.

VI. ASSESSMENT

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

2. Derogations under Article 87(2) and (3) of the EC
Treaty

(50) According to Article 87 of the EC Treaty, 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,
in so far as it affects
trade between Member States,
incompatible with the
common market. Pursuant to the established case law
the
of

the European Community,

the Courts of

(56) Article 87(2) and (3) of

the EC Treaty provides for
exemptions to the general prohibition of State aid laid
down in Article 87(1).

(7) Case 730/79 Philip Morris

v Commission

[1980] 2671,

at

paragraph 11.

(8) Case T-23/98 Alzetta v Commission [2000] ECR II-2319, at

paragraph 80.

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(57)

according

Framework),

the building,

in the Community, of

For assessing aid to shipbuilding, the Commission has
adopted the Framework on State aid to shipbuilding
to which shipbuilding
(the
means
self-
propelled seagoing commercial vessels. The activities of
VWS fall under this definition and so the aid to VWS has
to be assessed in the light of
the Framework. The
Commission has no indication that VWS also builds
fishing vessels for the Community. According to the
Guidelines for the examination of State aid to fisheries
and aquaculture (9), no aid may be granted to shipyards
for the construction of Community fishing vessels.

are necessary for the production of these larger sections.
The enlargement of conservation facilities will enable the
yard to handle these larger sections. The investment
project will thus rationalise the production process of
VWS.

(62)

The investments in the extension of the ship lift will
adapt the length of the lift to the length of the ships
that will be lifted. The use of a floating crane would not
therefore be necessary. The extension thus improves the
lifting process for panamax vessels.

(58)

Point 26 of the Framework reads as follows: ‘Regional aid
to shipbuilding, ship repair or ship conversion may be deemed
compatible with the common market only if the aid is granted
for investment in upgrading or modernising existing yards, not
linked to a financial restructuring of the yard(s) concerned, with
the objective of improving the productivity of existing instal-
lations;’.

(63)

The Commission therefore considers that the adaptation
of the production facilities in order to build panamax
vessels efficiently can be regarded as a modernisation
or upgrading of an existing yard.

(59)

The aid intensity may not exceed 22,5 % in regions
referred to in Article 87(3)(a) of the EC Treaty or the
applicable regional aid ceiling, whichever is the lower.
Further, the aid must be limited to the eligible expen-
diture as defined in the applicable Community guidelines
on regional aid.

(64) After completion of the investment project, productivity
increase from around 32,6 t steel/1 000 working
will
hours in 2005 to around 38,2 t steel/1 000 working
hours. The project will thus improve the productivity
of the existing installations. The capacity of the yard
measured in CGT will not be affected (10). Capacity
measured in terms of
increase
from 56 000 tonnes in 2005 to 64 000 tonnes in
2006. The Commission considers that this increase in
steel-processing capacity is a side-effect of the produc-
tivity improvements and is not disproportionate to the
productivity increases achieved.

steel processing will

(60)

they would be

Implementation of the project will allow VWS to build
panamax vessels efficiently. According to information
submitted by the beneficiary, with the existing instal-
lations the yard could already build panamax vessels,
which are larger than the vessels it currently builds.
Nevertheless,
assembled from 170
sections of up to 16 m in length, and this would be
inefficient and not competitive.
In order to lift these
vessels with the existing ship lift, a floating crane
the vessel
would be needed to support
the ship lift. This
exceeding the current
would not be profitable and would entail an increased
risk of accident.

the part of

length of

(61) After completion of the investment project, the yard will
be able to build panamax vessels using 110 sections of
up to 32 m in length. The investments in a new
production line for panels and section parts and in the
building of four additional sites for section construction

(9) OJ C 229, 14.9.2004, p. 5.

(65)

(66)

The Commission therefore concludes that, overall, the
investment project
fulfils the condition of comprising
investments in upgrading or modernising existing yards
improving the productivity of
with the objective of
existing installations.
the aid is
that
limited to supporting eligible expenditure as defined in
the Community guidelines on regional aid and that the
applicable aid ceiling of 22,5 % is respected.

It also notes

VII. CONCLUSION

the
The Commission comes to the conclusion that
in line with the
planned regional aid for VWS is
conditions
laid down in the
Framework. The aid therefore fulfils the conditions for
it to be considered compatible with the common market,

regional

aid as

for

(10) Capacity amounted to 110 000 CGT in 2005 and will amount to
around 108 000 CGT annually in 2006 and 2007 (following the
switch from medium-sized to large container vessels).

L 151/40

EN

Official Journal of the European Union

13.6.2007

HAS ADOPTED THIS DECISION:

Article 2

Article 1

This Decision is addressed to the Federal Republic of Germany.

The State aid which Germany is planning to implement for
Volkswerft
to EUR 4 200 500 is
compatible with the common market within the meaning of
Article 87(3)(c) of the EC Treaty.

amounting

Stralsund

Done at Brussels, 6 December 2006.

Implementation of the aid amounting to EUR 4 200 500 is
accordingly authorised.

For the Commission

Neelie KROES
Member of the Commission