2007/656/EC: Commission Decision of 20 December 2006 on State aid C 12/05 (ex N 611/03) which Germany is planning to implement for e-glass AG (notified under document number C(2006) 6587) (Text with EEA relevance)
Date: 2006-12-20
Institutions: European Commission
Subjects: Germany, Saxony-Anhalt, State aid, control of State aid, glass industry, investment aid, regional aid

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Official Journal of the European Union

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COMMISSION DECISION

of 20 December 2006

on State aid C 12/05 (ex N 611/03) which Germany is planning to implement for e–glass AG

(notified under document number C(2006) 6587)

(Only the German version is authentic)

(Text with EEA relevance)

(2007/656/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

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 regard to Council Regulation (EC) No 659/1999 of
22 March 1999 laying down detailed rules for the application of
Article 93 of the EC Treaty (1), and in particular Article 9 thereof,

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

(4)

(5)

(6)

Whereas:

1.

PROCEDURE

(1)

By letter dated 15 December 2003, registered as received
on 18 December 2003, Germany notified the Commission
of planned investment aid for e-glass AG, Osterweddingen,
(N 611/03) in accordance with the notification requirement
laid down in the 1998 multisectoral framework on regional
aid for large investment projects (hereinafter referred to as
the ‘MSF 1998’) (3). On 23 January and 27 February 2004,
information. Ger-
the Commission requested additional
many provided the requested information by letters dated
13 February 2004, registered as received on the same day,
and 4 March 2004, registered as received on the same day.

(2) On 20 April 2004 the Commission approved, under
the aid intensity for e-

reference C(2004) 1350 final,
glass AG notified under the MSF 1998.

(3)

By letter dated 25 October 2004, registered as received on
26 October 2004, Germany informed the Commission that
part of the information on the owners of e-glass AG in the
initial notification was incorrect and asked the Commission
for an amendment of the decision of 20 April 2004.

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

of Accession.

(2) OJ C 220, 8.9.2005, p. 3.
(3) OJ C 107, 7.4.1998, p. 7.

By letter dated 8 February 2005, registered as received on
9 February 2005, Germany submitted additional informa-
tion.

By letter dated 24 February 2005, reference D/51447, the
Commission gave Germany the opportunity to comment
on the Commission's intention of revoking its decision of
20 April 2004 by initiating the formal
investigation
procedure. Germany submitted its comments by letter
dated 4 March 2005, registered as received on 8 March
2005.

By letter dated 20 April 2005, reference C(2005) 1114
final,
it had
the Commission informed Germany that
decided to initiate the procedure laid down in Article 88(2)
of the EC Treaty in respect of the aid for e-glass AG. The
Commission decision to initiate
the procedure was
published in the Official Journal of the European Union (4).
The Commission called on interested parties to submit their
comments.

(7) Germany submitted its comments by letter dated 7 June

2005, registered as received on 9 June 2005.

(8)

The Commission received comments
from interested
parties by letters dated 3 October 2005, registered as
received on 4 October 2005, 7 October 2005, registered as
received on 10 October 2005, and 10 October 2005,
registered as received on the same day. The Commission
forwarded the comments to Germany, which was given the
opportunity to react. The comments from Germany were
received by letter dated 22 November 2005, registered as
received on 25 November 2005.

2.

DESCRIPTION OF THE AID MEASURE

(9) Germany intends to provide regional investment aid to the
limited company e-glass AG (e-glass) for the setting-up of a
new plant for the production of raw float glass in Saxony-
Anhalt, Germany.

(4) See footnote 1.

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2.1.

The recipients and the change in ownership

structure

(10) The object of e-glass, according to its articles of association,
is ‘the manufacture, processing and distribution of flat glass
of all types’.

(15) The lawyer Mr Heckmann who was acting as a trustee for a
German firm transferred his shares to AD Augento GmbH,
Stuttgart
from
21 December 2004. [...] (6).

(AD-GmbH) with effect

(Germany)

(16) Following the transaction on 21 December 2004,
ownership structure of e-glass is now as follows:

the

(11) The following shareholder

structure was notified on

15 December 2003:

— Trösch

— [...]

— Luxfinpart S.A., Luxemburg, with a [...] (*) % stake,

— Third owner (shares held in a trustee-

ship by AD-GmbH)

— Semco Glaskooperation GmbH (Semco), Germany,

with a [...] % stake,

2.2.

The project

[...] %

[...] %

[...] %

— Mr Heckmann, lawyer, acting as trustee for a German

firm (trustor), with a [...] % stake.

Luxfinpart S.A., founded in 1997, is a holding company for
which the notified project seemed to represent a purely
financial investment at the time of notification.

founded in 1997, processes

Semco,
float glass. The
shareholders are Sawatzki GmbH & Co. Vermögensanlage
KG and Hermann Schüler GmbH & Co. KG, each with a
[...] % holding.

The trustor is a [...] which processes and refines glass and
float glass. The trustor's shares are [...] or held by [...].

(12) By letter dated 25 October 2004 Germany informed the
Commission of incorrect information in the notification as
regards one of the owners of e-glass and its activities in the
float glass market (5).

(13) By letter dated 8 February Germany informed the
Commission of a change in the ownership structure of e-
glass, which took effect on 21 December 2004. The
Commission was informed that Luxfinpart S.A. had sold its
share in e-glass to Glas Trösch Holding GmbH, Bad
Krozingen, Germany (Trösch). Trösch additionally bought
[...] resulting in a [...] % share in e-glass.

(14) Trösch is the German holding company of the Trösch
group, which has its headquarters in Bern (Switzerland).
Trösch is the majority owner of Euroglas S.A., Hombourg
(France), and Euroglas GmbH, Haldensleben (Germany).
The Trösch group produces float glass and is also active in
the processing of float glass.

(*) Business secret
(5) For details see chapter 3.1.

(17) The project is being carried out in Sülzetal-Osterweddin-
gen, an assisted area under Article 87(3)(a) of the EC Treaty.
The regional aid ceiling is 28 % gross or, in exceptional
cases, 35 % gross for large firms (7). The start of
the
investment project was 15 April 2003. The project was
scheduled to end on 31 December 2005. The application
for the granting of aid was submitted before the start of the
project.

(18) The purpose of the project was the construction of a new
plant for the production of raw float glass. Float glass is by
far the most common type of flat glass. Other flat glass
categories include patterned glass, mirror glass and sheet
glass. Float glass has a share of over 80 % of total flat glass
production worldwide (8). Within the EEA, the share of
float glass is probably well over 80 %. The market for float
glass is generally divided into two levels, namely the
production of unprocessed float glass (level 1) and the
processing of float glass (level 2).

(19) To produce unprocessed float glass, a continuous ribbon of
glass is first produced, with molten glass being floated on
molten tin. This produces absolutely flat glass surfaces.
After cooling, the glass is cut and is then ready for sale.
Float glass is usually further processed and is then used
wherever flat glass is required, essentially in the building
industry and the motor vehicle industry.

(20) The new plant will be e-glass's first production site.
Production was planned to start in [...], and the plant was
to become fully operational in [...]. Once the start-up period
has been completed in [...], annual capacity is expected to
be approximately [...] tonnes (gross) of raw float glass.

[...]

(6)
(7) Commission decision of 2.4.2003 in state aid case N 641/2002
concerning the German regional aid map (OJ C 186, 6.8.2003,
p. 18).

(8) According to the study Pilkington and the flat glass industry 2003,
published by one of the leading float glass producers, Pilkington plc,
some 35 million tonnes of flat glass were produced worldwide in
2002, with float glass accounting for some 29 million tonnes of this
total.

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(21) Eligible costs are EUR 121 million, broken down as follows:

Item

Eligible costs in EUR

Land

Buildings

External facilities

Installations, machines

Intangibles (software)

[...]

[...]

[...]

[...]

[...]

Total

121 000 000

(22) According to the notification, the project will help to create
186 direct
is also
expected to help create 358 indirect jobs in the assisted
region itself and in adjacent assisted areas (at NUTS level II).

including ten traineeships.

jobs,

It

2.3.

Aid intensity

(23) Germany is asking for approval of aid having a gross
the total eligible costs of

intensity of up to 35 % of
EUR 121 million.

2.4.

Aid measures

(24) The aid to e-glass consists of the following:

— An investment grant on the basis of the joint Federal
Government/Länder scheme for improving regional
economic structures (Gemeinschaftsaufgabe ‘Verbesser-
ung der regionalen Wirtschaftsstruktur’) in conjunction
with the 32nd outline plan of
the joint Federal
(32. Rahmenplan der
Government/Länder
Gemeinschaftsaufgabe). The 32nd outline plan,
in its
relevant provisions, is identical to its predecessor, the
31st outline plan, which was approved by the
Commission until the end of 2006 (9),

scheme

— An investment premium on the basis of

the
Investment Premium Law 1999 (Investitionszulagenge-
setz 1999), approved by the Commission for the
production or purchase of economic goods, both
completed before 2005 and linked to an initial
investment project (10). Germany had reserved for
itself the use of a potential successor scheme to the
Investment Premium Law 1999,

(25) Germany has confirmed that

the
approved regional aid map and of the abovementioned
approved aid schemes (12) will be complied with.

the conditions of

3.

INITIATION OF THE PROCEDURE

3.1.

The incorrect information

(26) By letter dated 25 October 2004, Germany reported to the
Commission that part of the information in the original
notification on the owners of e-glass was
incorrect.
Germany and the management of e-glass claim not to have
been aware of
this situation before the Commission
adopted its decision.

(27) The new information concerns one of the owners of e-glass
(Luxfinpart S.A.) and its activities in the processing market
(level 2). The initial notification specified three owners, two
of them already active in the processing market (level 2),
whereas the third owner was considered only a financial
investor (Luxfinpart S.A.), active neither in the raw float
glass production market (level 1) nor in the processing
market (level 2). The correct information submitted by
Germany by letter dated 25 October 2004 was that at the
time of the notification the three owners of e-glass were all
active in the processing market (level 2).

(28) Since March 2003 Luxfinpart S.A. had had a commercial
relationship with [...].[...] is active in the processing of float
glass (level 2). [...] bore the economic risk of Luxfinpart's
the same time [...] undertook the
share in e-glass. At
contractual obligation to buy [...] % of the output of e-glass.

3.2.

Consequences of the incorrect information

for the assessment

(29)

In the initial decision of 20 April 2004, the relevant market
was defined as being the market for raw float glass (level 1).
Although two out of the three owners of e-glass were active
in the processing market
(level 2), Germany provided
evidence that allowed the Commission to conclude that the
analysis could be limited to the level 1 market.

— A guarantee for a bank loan, based on an aid scheme

approved in 1991 (11).

(9) Commission decision of 1.10.2003 in state aid case N 642/2002

(SG(2000) D/232040 of 2.10.2003).

(10) Commission decision of 9.12.1998 in state aid case N 702/1997
(SG(98) D/12428 of 31.12.1998), of 28.2.2001 in state aid case
C 72/1998 (SG(2001) D/286551 of 2.3.2001) and of 10.12.2003
in state aid case N 336/2003 (SG(2003) D/233359 of 11.12.2003).
(11) Programm für unmittelbare Bürgschaften des Bundes und der Länder in den
neuen Bundesländern und Berlin Ost, N 297/1991, SG(91) D/1344 of
15.7.1991, E 24/1995, SG(96) D/5500 of 18.6.1996, and SG(98)
D/54570 of 11.11.1998.

(30) The Commission had copies of draft contracts between e-
glass and an independent customer. The contract with the
independent customer demonstrated that this customer had
the same terms and conditions as the owner-customers.
Therefore, it was concluded that there was equal treatment
between owner-customers and other customers active in
the downstream market, with the result that the aid would
have no impact on the processing markets and that there
was no need for the Commission to include the processing

(12) All the German aid schemes approved by the Commission contain a
stipulation that at least 25 % of total eligible costs must not contain
any aid element.

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market (level 2) in the definition of the relevant market. In
addition, it was argued that the production (level 1) and
processing (level 2) markets would follow the same
development since raw float glass is the main input factor
used in the processing market.

information provided in the notification, the Commission
should, from today's perspective, consider the time period
1999-2004 as the decisive period for the assessment of the
intensity of the state aid.

(31) The information provided by Germany on 25 October
2004 showed, however, that the abovementioned sample
contract was not from an independent customer as stated
in the notification, but was actually a contract with one of
the (indirect) owners of e-glass at
the
notification, namely [...], which is active in the float glass
processing market (level 2).

the time of

(37) According to Saint-Gobain, the average annual growth rate
of apparent consumption of raw float glass over the last
five years was negative (1999-2004: - 0,62 %), and the
market should therefore be defined as an ‘absolutely
declining market’ within the meaning of point 7.8 of the
MSF 1998.

Therefore, the conclusion that the aid would not have any
distorting impact on the processing market (level 2) and
that the Commission therefore did not have to assess the
development of the processing market could no longer be
upheld. The new information means that the processing
market (level 2) needs to be included in the Commission's
assessment of the compatibility of the aid measure.

(32) As the incorrect information had an influence on the
reasons for defining the relevant market(s) and therefore
influenced the competition factor and thus the maximum
allowable aid intensity under the MSF 1998, the incorrect
information is to be seen as a determining factor for the
decision within the meaning of Article 9 of Regulation (EC)
No 659/1999.

(33) Article 9 of Regulation (EC) No 659/1999 stipulates that
‘the Commission may revoke a decision … after having
given the Member State concerned the opportunity to
submit its comments, where the decision was based on
incorrect information provided during the procedure which
was a determining factor for the decision. Before revoking a
decision and taking a new decision, the Commission shall
open the formal
to
Article 4(4). …’.

investigation procedure pursuant

(34) Before revoking the original decision, which was based on
incorrect information that was a determining factor for the
decision, and taking a new decision,
the Commission
opened the formal investigation procedure — in accord-
ance with Article 9 of Regulation (EC) No 659/1999 — on
20 April 2005.

4.

COMMENTS FROM INTERESTED PART IES

(35) Following the invitation to submit comments pursuant to
the Commission received

the Treaty,

Article 88(2) of
comments from three competitors.

(36) The first interested party, Saint-Gobain, was of the opinion
that the Commission could not ignore market develop-
ments that were known by it at the time of the adoption of
a decision on the compatibility of state aid under Article 87
of the EC Treaty and the MSF 1998. Consequently, in the
current formal investigation proceedings, the Commission
could not simply base its assessment on the average annual
growth of apparent consumption in the period 1997 to
2002. Saint-Gobain stated that, in view of the incorrect

(38) Saint-Gobain was also of the opinion that, even at the time
of the decision of 20 April 2004, the Commission should
have taken into account forward-looking growth estimates
of apparent consumption, especially if they indicated a
significant change in the average annual growth of apparent
consumption. It pointed out that the Commission itself
requests the notifying Member State to provide estimates
and forecasts on the development of
the apparent
the product(s) concerned in the three
consumption of
financial years following the notification (see point 5.4.2 in
Section 5 of the Annex to the MSF 1998).

(39) Saint-Gobain argued that

the relevant market should
include the market for processed glass (level 2). However,
according to Saint-Gobain, only a sub-market of the overall
processed glass market was relevant in this case. Saint-
Gobain made an initial distinction between the markets for
automotive glass and general trade glass (building glass),
the production technology for
because it claimed that
automotive glass,
and the way
customer base
the
automotive glass was put on the market were totally
different
then
further divided the building glass sector into four separate
markets: (i) sealed units (double or multiple glazing); (ii)
toughened glass (safety glass); (iii) laminated glass (safety
glass); and (iv) silvered glass (mirrors). As glass consump-
tion for sealed units (double glazing), in terms of volume,
amounted to approximately 80 % of float glass used in
general trade (non-automotive applications), Saint-Gobain
claimed that the main relevant product market in this case
was the market for sealed units.

in the construction sector.

from that

It

(40) As to the geographic scope of

for

the above-mentioned
markets, Saint-Gobain argued that the markets for silvered
glass (mirrors) and laminated glass should be considered to
be Community-wide. However,
the other product
in particular toughened glass and sealed units,
markets,
no clear indications for a Community-wide market seemed
to exist. Such markets rather appeared to involve national
or even regional markets, essentially due to higher
transport costs. At current prices for double glazing, the
high cost would no longer allow long-distance transport,
and — as far as Saint-Gobain was aware — all glass
producers supplied sealed units to customers at a distance
of approximately 250 to 300 km from the processing
plant. Saint-Gobain therefore argued that the market for
sealed units in particular should be considered to be
national or even regional in scope.

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(41) Saint-Gobain also commented on the assessment of the
forecasts of
the number of new jobs created by the
investment. It pointed out that the planned float glass plant
in Osterweddingen would be situated 40 km from an
already-existing float glass plant in Haldensleben operated
by Euroglas. One of the three shareholders in Euroglas was
Trösch. Because of the possible synergies between these two
plants and due to the fact that the new e-glass plant was
equipped with the most modern technology, Saint-Gobain
argued that e-glass was likely to be able to operate its plant
with fewer than 120 employees (including trainees).

(42) The second interested party, […] (13), submitted updated
figures for the information on the market for raw float glass
and value) used by the
(Community-wide, volume
Commission in its decision of 20 April 2004.
It also
argued that the market situation in Germany should be
taken into consideration by the Commission. It therefore
provided figures on the volume and value of
total
consumption of raw float glass in Germany (2001-2004).

(43) The second interested party was also of the opinion that,
although it was extremely difficult to obtain recent figures
on the volume or value of the consumption of processed
glass in the Community, such figures reflected the trend in
the raw float glass sector. It emphasised that, since all raw
float glass was processed, the trend reflected by the data
provided for the raw float glass sector should be similar to
that of the processed glass market, and that the fluctuation
in imports and exports of processed glass into and from the
Community could be ignored.

(44) The second interested party also commented on the
Commission's assessment of the capital-labour factor. It
pointed out firstly that the construction of a similar float
plant by Trösch in Hombourg, France, had created 168 new
jobs. Secondly,
it argued that Trösch would be able to
provide administrative, technical, commercial and other
services, management support and training to e-glass.
Therefore, the number of new jobs created by the e-glass
project would be even lower than 168.

(45) The third interested party, Pilkington, commented on the
reference period to be taken into account for the calculation
of the competition factor. It argued that the Commission
was not continuing the original investigation, but was now
carrying out a new investigation. At the same time, the
Commission was obliged to take account of the latest
available data. Therefore the five-year period to be taken
into account was the period 1999 to 2004.

applications. Of this latter market, insulating glass units
constituted by far
the largest element. According to
Pilkington, the relevant geographic market for processed
glass (level 2) in this case was not Community-wide, but
was confined to Germany (or at most to Germany and its
immediately adjacent territories).

5.

COMMENTS FROM GERMANY

(47) Germany commented by letter dated 7 June 2005,
registered as received on 9 June 2005, on the decision to
initiate the procedure.

(48) As regards the relevant

time period for

the analysis,
Germany supported the Commission's opinion as stated in
the decision of 20 April 2005 that the data from 1997 to
2002 needed to be taken into account as these data
represented the most recent data available at the time of the
notification.

(49) Germany suggested separating the level 2 market in safety
glass (ESG and VSG), multiple-walled glass and technical
glass. Safety glass
(ESG and VSG) was used in the
automotive industry and the construction sector, mul-
tiple-walled glass mainly in the construction sector. As all
three shareholders in e-glass produced safety glass (ESG and
VSG) and multiple-walled glass for the construction sector,
only these sub-markets should be regarded as relevant. In
addition, they provided information on the supply-side
substitutability of these products.

(50) Germany was of the opinion that the level 2 market in
safety glass (ESG and VSG) and multiple-walled glass was
EEA-wide.
it provided information on the
positive development of this market during the years 1997
to 2002.

In addition,

(51) By letter dated 22 November 2005, registered as received
on 25 November 2005, Germany submitted comments on
the reactions of the competitors of e-glass. It stressed that
the reference period 1997 to 2002 had to remain
unchanged as only information available at the time of
the notification could be taken into account. In opening the
formal
the Commission was
continuing an assessment that had been started following
the notification in December 2003.

investigation procedure,

(46) Pilkington also argued that the relevant product market was
processed glass for general trade and not for automotive

(13) In its comments, this competitor requested anonymity.

(52) Germany provided some information on the development
of the raw float glass market in the years 2003 and 2004
which underlined the positive development of this market.
It also showed that the main producers of float glass were
planning to increase their production capacity, which
supported the positive view on the market.

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(53) As regards the market

for processed glass (level 2),
Germany remained of the opinion that this market did
not need to be included in the analysis. It argued that a very
high share of the raw float glass would be directly sold into
the market and the shareholders of e-glass would procure
the raw float glass at market rates. As a consequence, the
aid would not have any impact on the level 2 market.

(54) Concerning the definition of the relevant market, Germany
argued against the view that only multiple-walled glass
would form the relevant market and stressed that the
relevant market was EEA-wide and should include safety
glass (ESG and VSG) as well as multiple-walled glass.

(55) Germany also provided information on the transport costs
of raw float glass and processed float glass. The percentage
share of transport costs was higher for raw float glass than
for processed glass due to the higher price of processed
glass. This meant an EEA-wide market definition.
In
addition, Germany suggested that the distribution areas of
the production facilities for processed glass in the EEA
overlapped, which pointed to the conclusion that
the
market was EEA-wide.

(56) Germany commented on the competitors’ view that the
capital-labour factor needed to be adjusted since Trösch
could exploit synergies between the e-glass production site
and other factories of the group in the area. In particular,
Germany argued that since Trösch was only one of three
shareholders that were all competitors in the market for
it was not possible to generate these
processed glass,
synergies.
it provided information on the
correct estimation of the number of staff and argued that
comparisons between factories as carried out by competi-
tors were not correct and led to wrong conclusions.

In addition,

6.

ASSESSMENT OF THE AID

6.1.

Preliminary remarks

(57) On 20 April 2004 the Commission approved the aid
intensity for e-glass as notified by Germany on 15 Decem-
ber 2003. Since, after the decision was taken, Germany
informed the Commission of incorrect information in the
original notification and since this information was a
the Commission
determining factor
for
decided on 20 April 2005 to initiate
formal
investigation procedure with a view to revoking the original
decision of 20 April 2004 and issuing a new decision.

the decision,

the

framework on regional aid for large investment projects (14)
(MSF 2002) stipulates that a project has to be assessed in
the light of the criteria applicable at the time of notification:
‘…, the provisions of this framework will be applied as
from 1 January 2004. The previous multisectoral frame-
work will remain applicable until 31 December 2003.
However, notifications registered by the Commission before
1 January 2004 will be examined in the light of the criteria
in force at the time of notification.’ In the light of the above,
for the assessment of the aid to e-glass the criteria laid
down in the MSF 1998 apply.

Relevant facts

(60) This assessment will take into account the facts, figures and
situations as they existed at the time of the notification on
15 December 2003.

(61) The Commission has to take an ex-ante decision on the
basis of estimates of future perspectives and market figures.
The Member State also has no other information available
to decide on the aid than the facts, figures and situations as
they exist at the time of the notification. The aid intensities
are not adapted afterwards if some years later — ex-post —
figures show that the market has, for example, turned out
differently. Although in the present case the Commission
has to take a decision two and a half years after the original
notification took place,
it must nevertheless base its
assessment on the facts and situations which existed at
the time of notification.

some

(62) The reference period in the decision of 20 April 2004 was
the years 1997 to 2002. Competitors of e-glass suggested
that the reference period for the analysis should be adjusted
to take more recent data into account that is now available.
Since
elapsed between the original
notification and the current Decision, situations might
have changed, markets might have developed and facts
concerning the project might have turned differently than
was originally planned. For the reasons stated above, this
cannot be taken into account by the Commission in its
assessment.

time has

6.2.

Existence of aid under Article 87(1) of the EC

Treaty

(58) The decision of 20 April 2004 contains a complete
assessment of the notification. This assessment is taken
over in the present Decision except for those parts which
need to be corrected because of the information sent by
Germany on 25 October 2004 and formed part of the
decision of 20 April 2005.

Applicable guidelines

(59) Germany notified the aid to e-glass on 15 December 2003,
received on
and this notification was
18 December 2003. Point 40 of the 2002 Multisectoral

registered as

the EC Treaty (see point 2.4 of

(63) The present aid measure was granted by a Member State
and through state resources within the meaning of
this
Article 87(1) of
Decision). The aid will confer an advantage on e-glass as it
would otherwise have had to bear the entire costs of the
investment on its own. As a significant volume of the float
glass is transported across international borders, there exists
international trade in the float glass market. Therefore,
financial advantages conferred on the company may distort
competition in a way that may affect
trade between
Member States. Consequently, within this assessment, the

(14) OJ C 70, 19.3.2002, p. 8.

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Commission considers that the notified measure constitutes
state aid to e-glass within the meaning of Article 87(1) of
the EC Treaty.

situation in the relevant product market, the capital-labour
factor (I) and the regional impact factor (M).

6.3.

Notification requirement

Defining the relevant product market — preliminary remarks

6.4.1. The competition factor

(64) Since the criteria set out in point 2.1(i) of the MSF 1998
apply, the aid project must be notified and the maximum
allowable aid intensity must be determined in accordance
with the MSF 1998. The Commission notes that the aid is
based on three regional aid schemes already approved by
the Commission. It is therefore not ad hoc aid within the
meaning of the third paragraph of point 2 of the guidelines
on national regional aid (15) whose basic compatibility with
the common market must be examined individually. The
Commission's examination requirement here is confined to
the compatibility of the notified aid intensity of 35 % gross
under the criteria set out in the MSF 1998.

6.4.

Assessment under the MSF 1998

(65) The maximum aid intensity allowed for projects under the
MSF 1998 has to be determined in accordance with the
maximum aid ceiling applicable to regional aid in the
assisted area concerned at the time when the aid is notified.

(66)

In the case of Sülzetal-Osterweddingen, where e-glass is
located, the regional aid ceiling is 28 % gross for large
if certain conditions are met, the
companies. However,
regional aid ceiling may be increased to 35 % gross. Upon
application by a Land, and with approval of the Joint Task
der Gemeinschaftsaufgabe
Sub-Committee
‘Verbesserung der
in
justified exceptional cases measures which are structurally
particularly effective in relation to the location of under-
takings may receive the higher aid intensity. According to
the information provided by Germany, these conditions are
met, since the Sub-Committee approved the application of
Saxony-Anhalt on 23 July 2003 (16).

(Unterausschuss
regionalen Wirtschaftsstruktur’

(GA)),

(68) The approval of aid to firms in industries with structural
overcapacity poses particular risks of distorting competi-
tion. Any increase in capacity that is not offset by a capacity
reduction elsewhere makes the problem of structural
overcapacity more acute. Consequently,
in determining
the competition factor,
the Commission must examine
whether the planned project is being carried out in an
industry or branch of industry in which there is structural
overcapacity.

(69) According to point 7.6 of the MSF 1998, the relevant
product market(s) compromises the products envisaged by
the investment project and, where appropriate,
its sub-
stitutes considered by the consumer (by reason of the
products’ characteristics, their prices and their intended use)
the product
or by the producer (through flexibility of
installations).

(70) Float glass is by far the most common form of flat glass.
Since, because of its specific manufacturing process and its
product qualities, float glass cannot be replaced either on
the supply or on the demand side by other types of flat
glass (e.g. sheet glass, patterned glass or mirror glass), the
market for float glass must be regarded as a separate
product market (17). This product market is in turn divided
into two levels that must be assessed separately from one
another, namely the production of unprocessed float glass
(level 1) and the processing of float glass (level 2) (18).

(71) The Commission's analysis in the decision of 20 April
2004 led to the conclusion that in this particular case solely
for raw float glass (level 1) needs to be
the market
assessed (19). Due to the incorrect
information on the
ownership structure, this conclusion cannot be upheld and
the processing market (level 2) needs to be included in the
definition of the relevant markets since the aid could distort
competition at this level also.

(67) Consequently, a regional aid ceiling of 35 % gross applies in
this instance. In calculating the maximum aid intensity
allowed for the relevant project, this regional aid ceiling
must be adjusted in accordance with the provisions of the
MSF 1998 to take account of various coefficients that result
from the application of three assessment factors, namely
the competition factor (T), which takes account of the

(15) OJ C 74, 10.3.1998, p. 9.
(16) See minutes of the 255th meeting of the Joint Task Sub-Committee.

(72)

In the following section the market for raw float glass (level
1) is first assessed, followed by an assessment of the market
for processed float glass (level 2).

(17) See Decision 94/359/EC in merger case Pilkington-Techint/SIV,
paragraph 11 (OJ L 158, 25.6.1994, p. 24), and the decision of
7.8.1998 in merger case Glaverbel/PPG, paragraphs 7 to 12 (OJ
C 282, 11.9.1998, p. 2).

(18) See footnote 17: Decision 94/359/EC, paragraph 13, and the

decision in merger case Glaverbel/PPG, paragraphs 7 to 12.

(19) The reasons behind this conclusion are outlined above under 3.2.

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A n a l y s i s o f
( l e v e l 1 )

t h e m a r k e t

f o r r a w f l o a t g l a s s

(77) Conclusion: The Commission concludes that

the geo-
graphic market for raw float glass is the EEA as a whole (21).

Preliminary remark

(73) The assessment of the market for raw float glass (level 1) as
described in the original decision of 20 April 2004 was not
called into question and not part of the decision of 20 April
2005 initiating the procedure. The following part
is
therefore a reproduction of the assessment that was carried
out and described in the decision of 20 April 2004.

The relevant geographic market definition for raw float glass
(level 1)

(74) Point 7.6 of

the relevant
the MSF 1998 states that
geographic market comprises usually the EEA or, alter-
natively, any significant part of
it if the conditions of
competition in that area can be sufficiently distinguished
from other areas of
the EEA. Where appropriate the
relevant market may be considered to be global.

the

the

sales markets of

(75) Because of the relatively high costs of transporting raw
float glass (20),
individual
production plants do not cover the whole of the EEA.
Rather, they take the form of concentric circles round the
relevant production site whose radius is determined by the
economically viable transport distance, which as a rule is
not more than 500 to 1 000 km for transport by road, this
being the form of transport most frequently used. However,
since there are now more than 50 production sites operated
by European float glass manufacturers throughout the EEA,
and since consequently their sales markets overlap, they
jointly cover the whole of the EEA.

(76)

individual markets,

the Eurostat statistics available,

to determine whether, on the basis of

this
In order
similar
geographic overlapping of
conditions of competition also exist in the various areas
of the EEA, the Commission examined whether separate
markets exist on which separate prices have been able to
develop independently from the other sales markets, or
whether pricing in the EEA follows a uniform basic pattern.
On the basis of
the
Commission compared prices per
tonne in the main
float-glass-producing Member States, namely in France,
Germany,
Italy, the United Kingdom and Spain in the
period 1997 to 2002 and in Belgium (due to missing data)
in the period 1999 to 2002. The figures show that prices
for raw float glass in the individual Member States show a
high degree of correlation in the period 1997 to 2002. This
parallel trend in prices indicates that purchasers of raw float
glass have sufficient scope to switch to producers in other
Member States — a clear indication of a single geographic
market.

(20) According to the study Pilkington and the flat glass industry 2003,

transport costs generally account for 10 % of total costs.

Determining the competition factor for the raw float glass market
(level 1)

(78) The lowest level of the NACE classification corresponding
to the production of raw float glass is NACE class 26.11
‘manufacture of flat glass’. Raw float glass accounts for well
over 80 % of total flat glass production in the EEA and can
therefore be regarded as representative of NACE class 26.11.
However, capacity in the flat glass sector is measured by
reference to exploitable (saleable) capacities (22). This
measurement method is not comparable with the measure-
ment of capacity in manufacturing industry as a whole.

(79) Consequently, the Commission takes the view that the
situation regarding capacity for the raw float glass market
cannot be taken into consideration in assessing the
competition factor (23).

(80) Point 3.4 of the MSF 1998 provides that, in the absence of
sufficient data on capacity utilisation, the Commission will
use the figures on apparent consumption in order to
determine whether the investment is taking place in a
declining market. The market for the product in question is
deemed to be declining if, over the last five years, the
average annual growth rate of apparent consumption of the
product in question is more than 10 % below the annual
average of EEA manufacturing industry as a whole, unless
there is a strong upward trend in the relative growth rate of
demand for the product. An absolutely declining market is
one in which the average annual growth rate of apparent
consumption over the last five years is negative.

(21) The Commission came to the same conclusion in the following
decisions: merger case Pilkington-Techint/SIV (see footnote 18 above),
paragraph 16; State aid case Sangalli Manefredonia Vetro (Commission
decision of 26.7.1999, OJ L 137, 8.6.2000, p. 1), paragraphs 32 et
seq.; State aid case Pilkington/Interpane (Decision of 26.7.2000 in
N 291/2000, SG(2000) D/106264 of 17.8.2000), section 4.4.2;
State aid case Glaverbel Kavala (No N 553/1999 of 26.7.2000,
SG(2000) D/106281 of 17.8.2000), paragraph 58.

(22) The European Association of Flat Glass Manufacturers, the GEP-VP
(Groupement Européen des Producteurs de Verre Plat), assumes an
effective maximum capacity of 90 % of maximum melt capacity.
(23) The Commission came to a similar conclusion in section 4.4.3. of its
decision in state aid case Pilkington/Interpane, and in paragraph 51 of
its decision in state aid case Glaverbel Kavala; see footnote 21 above.

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(81) The Commission has the following data on apparent consumption of raw float glass for the period

1997–2002:

Market for raw float glass in the Community

1997

1998

1999

2000

2001

2002

Average
annual growth
rate

Total consumption in volume terms
(million tonnes) (1)

6,937

7,334

7,716

7,677

7,509

7,599

1,84 %

Average price per tonne (in EUR) (2)

293,87

285,20

291,79

333,26

349,15

346,92

Total consumption in value terms
(EUR million)

2 038,6 2 091,7 2 251,5 2 558,4 2 621,8 2 636,2

5,28 %

(1)
(2)

Source: CPIV (Comité Permanent des Industries du Verre de l'Union Européenne).
Source: Eurostat/Comext intra-EU trade statistics.

(82)

In the period 1997-2002, the average annual growth rate
of EEA manufacturing industry as a whole was 4,8 %. The
threshold below which, pursuant to point 7.8 of the MSF
1998, a declining market must be assumed to exist is
accordingly 4,4 %. The European raw float glass market had
an average annual growth rate in value terms of 5,28 %
over that period and is therefore well above the EEA
average (24). The Commission also examined, on the basis
of the available Eurostat/Comext intra-Community trade
data, whether the trend of apparent consumption of raw
float glass in value terms in the individual Member States
confirmed this result and found that it did so.

A n a l y s i s o f
( l e v e l 2 )

t h e m a r k e t

f o r p r o c e s s e d g l a s s

Products concerned

(85) According to point 7.6 of the MSF 1998, the relevant
product market(s) comprises the products envisaged by the
investment project and, where appropriate, its substitutes
considered by the consumer (by reason of the products’
characteristics, their prices and their intended use) or by the
producer (through flexibility of the product installations).

(83) The positive trend of the raw float glass market is reflected
in the conduct of the producers, since, on the European
market, which is concentrated on a few large float glass
producers (25),
investment has been carried out in new
in recent years in France (2001 —
production plant
in Belgium (2001 — Glaverbel/
Pilkington/Interpane),
Scheuten) and in Italy (2002 — Sangalli) (26).

(86) The market for processed glass (level 2) needs to be further
subdivided in order to identify the products concerned and
to define the relevant market in this case. Two broad
categories can be clearly distinguished which are not
substitutable from the consumer or producer point of view:
automotive glass and building glass (27). These two products
form two separate product markets since production
technology, customer base as well as marketing strongly
differ. The market for building glass can then be subdivided
into the following sub-markets:
(i) multiple-walled glass
(sealed units); (ii) toughened glass (ESG — safety glass);
(iii) laminated glass (VSG — safety glass); and (iv) silvered
glass (mirrors).

(84) Conclusion: The Commission therefore concludes that the
market for raw float glass is not a declining market and that
the competition factor pursuant to point 3.10.1(iv) of the
MSF 1998 must be put at 1,0.

(24) The Commission uses for the comparison the growth rate of the raw
float glass market in value terms as the comparator (the development
of manufacturing industry as a whole) is measured in volume terms
evaluated with the relevant prices for the individual products —
meaning that the growth rate is conceptually based on value figures.
(25) According to estimates in the 2002 and 2003 studies entitled
Pilkington and the flat glass industry, 90 % and 91 % of total European
capacity in 2002 and 2003 respectively was accounted for by five
companies (Saint-Gobain, Pilkington, Asahi
(Glaverbel), Guardian
and Sisecam).

(26) Pilkington and the flat glass industry studies 2002 and 2003. Figures

are not available for earlier years.

(87) Safety glass (ESG and VSG) and multiple-walled glass are
substitutes from the supply side as the manufacturers can
adjust the production to the different products within a
short time frame and without significant cost. According to
Germany, around 70 to 80 % of the processed glass for the
building industry is produced by manufacturers that offer
the two products, safety glass and multiple-walled glass, at
the same time. It is also important to note that safety glass
can serve as a final product but also as an input product for
the production of multiple-walled glass. In addition, sales
and distribution of safety and multiple-walled glass for the
building industry are often done simultaneously.

(27) This differentiation is in line with the definition of the relevant
market in the state aid decision of 17.8.2000 in the Pilkington/
Interpane case (N 291/2000).

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(88) On this basis, it would be erroneous to conclude that the
relevant product market should be limited to sealed units
only as competitors suggested in their comments.

(98)

(89) The Commission notes that all three shareholders in e-glass
produce safety glass (VSG and ESG) and multiple-walled
glass for the building industry but do not manufacture
technical glass or glass for the automotive industry.

(90) Conclusion: The Commission concludes that the relevant
product market is a sub-group of
the level 2 market,
namely safety glass (VSG and ESG) and multiple-walled
glass for the construction industry, with the following
PRODCOM codes: 26121230 (toughened safety glass,
n.e.c.), 26121270 (laminated safety glass, n.e.c.) and
26121330 (multiple-walled insulating units of glass).

The relevant geographic market definition for the processed glass
market (level 2)

(91) Point 7.6 of

the relevant
the MSF 1998 states that
geographic market comprises usually the EEA or, alter-
it if the conditions of
natively, any significant part of
competition in that area can be sufficiently distinguished
from other areas of
the EEA. Where appropriate the
relevant market may be considered to be global.

(92) Germany suggests that, like the market for raw float glass
(level 1), the market for processed float glass (level 2) has to
be considered to be EEA-wide.

(93) Competitors of e-glass suggest in their comments that the
market for processed glass (level 2) is national or even
regional in scope as high transport costs would not allow
for wider distribution.

(94) According to evidence provided by Germany, the customer
base of e-glass's shareholders for the relevant market as
defined in paragraphs 85 to 90 is larger than national or
regional and covers various areas of the EEA (28).

(95) Sales markets form concentric circles around the different
production sites and, despite relatively high transport costs,
processed glass is transported over a long distance (29).
These concentric circles overlap each other and cover
jointly the whole EEA. Furthermore, there are no different
technical standards or regulatory barriers to trade for
processed glass (level 2) within the EEA territory and about
20 % of the German production is imported.

transported over

long distances by the

In the merger case IV/M/1230 Glaverbel/PPG, paragraph 16
states: ‘In respect of general trade in the Pilkington-Techint/
SIV case the Commission left the precise definition of the
geographic market open.
In particular, on silvered and
laminated glass the Commission noted that these products
large
were
producers. Therefore, the parties hold that there is a strong
argument for defining these markets EU-wide as well. The
parties submit
the same conclusion is valid for
toughened glass and sealed units as all major producers
are operating at least on an EU-wide basis and market
conditions in the different Member States are sufficiently
homogeneous. The Commission's
investigation in the
present case has confirmed that the markets for silvered
glass (mirrors) and laminated glass are EU-wide. For the
other product markets in the general trade segment the
results are not so clear’.

that

(99) Therefore, defining the geographic market for level 2 as
national, as suggested by Pilkington in its comments, would
be contradictory to its own statement in response to the
investigation of the merger case.

(100) Conclusion: The Commission concludes that the geographic
market for processed glass (level 2) in the form of safety
and multiple-walled glass for the building sector is the EEA
as a whole. The Commission has no reason to conclude
that the market for processed glass should be differently
defined in geographic terms than the market for raw float
glass.

Determining the competition factor for the processed glass market
(level 2)

(101) The Commission notes that data on capacity utilisation for
the level 2 market are not available or do not exist. The
necessary information on the (yearly) production volume
and the (yearly) maximum production capacity in the EEA
of the factories processing raw float glass in the form of
safety glass and multiple-walled glass for the construction
industry is not available — either from Eurostat or research
institutes or from sector associations.

(96)

(97)

In line with previous merger and state aid decisions, the
Commission considers that, like the market for raw float
glass (level 1), the market for processed float glass (level 2)
has to be seen as EEA-wide.

(102) Consequently, the Commission takes the view that the
situation regarding capacity for processed glass in the form
of safety glass and multiple-walled glass for the construc-
tion industry cannot be taken into consideration in
assessing the competition factor.

aid case Pilkington/Interpane

In state
(N 291/2000),
SG(2000) D/106264 of 17 August 2000, the Commission
for VSG and coated class
concluded that
including insulating glass is EEA-wide.

the market

(28) The Commission received copies of invoices indicating to which

location in the EEA processed glass was delivered.

(29) Competitors of e-glass referred in their comments to transport

distances of around 250 to 300 km.

(103) As stated in paragraph 80, point 3.4 of the MSF 1998
provides that, in the absence of sufficient data on capacity
utilisation, the Commission will use the figures on apparent
consumption in order to determine whether the invest-
ment is taking place in a declining market. According to
point 7.8 of the MSF 1998, the market for the product in
question is deemed to be declining if, over the last five
the average annual growth rate of apparent
years,

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19.10.2007

consumption of the product in question is more than 10 %
below the annual average of EEA manufacturing industry
as a whole, unless there is a strong upward trend in the
the product. An
relative growth rate of demand for

absolutely declining market is one in which the average
annual growth rate of apparent consumption over the last
five years is negative.

(104) The Commission has the following data on apparent consumption in value for the reference period

1997 to 2002 (source: COMEXT/Eurostat):

Market for processed float glass (level 2) in EUR
PRODCOM

1997

2002

26121230 (toughened safety glass, n.e.c.)

807 949 414

1 272 280 870

26121270 (laminated safety glass, n.e.c.)

717 692 284

1 085 038 665

Compound average
annual growth rate
(1997-2002)

9,51 %

8,62 %

26121330 (multiple-walled insulating
units of glass)

2 171 614 199

3 090 852 791

7,31 % (1)

(1) No data available for Ireland, Greece, Austria, Luxembourg, Iceland and Norway.

(105) Germany has submitted volume data from the industry
association CPIV (30), which show that the market for safety
glass (ESG and VSG) and multiple-walled glass grew by
5,54 % during the reference period 1997 to 2002. These
volume data have been converted into turnover figures by
using price information from the beneficiary as far as
available as well as price estimates. The compound average
annual growth rate in value terms calculated is 7,6 % for
the reference period 1997 to 2002. This figure is in line
with the COMEXT/Eurostat data shown above.

(106) The annual average growth rate of the apparent consump-
tion in value terms for all relevant products (safety glass in
the form of VSG and ESG as well multiple-walled glass)
individually but also together as reflected in the table above
lies above (31) the average annual growth rate of EEA
manufacturing industry for the same time period, which
was 4,8 %.

(107) Conclusion: The Commission therefore concludes that the
market for processed glass as defined above is not a
declining market and that the competition factor pursuant
to point 3.10.1(iv) of the MSF 1998 must be put at 1,0.

(108) The assessment of the processing market (level 2) together
with the analysis of the market for raw float glass (level 1)
shows that these markets have developed in the same
direction during the reference period 1997 to 2002,
namely with a growth rate above the average growth rate of
manufacturing industry. The Commission notes that for
both markets (level 1 and level 2) the competition factor is
set at 1,0, which also means that the competition factor for
the project as a whole is set at 1,0 (32).

(30) Comité Permanent des Industries Du Verre de L'Union Européenne.
(31) The positive development of the market for safety glass (ESG and
VSG) and for multiple-walled glass for the construction sector can be
explained by several factors. In particular, new forms of architecture
(e.g. facades made of glass) but also energy-saving programmes are
key factors.

(32) Germany has confirmed that the market share of e-glass together
with its shareholders is in none of the relevant markets above 40 %.
Therefore, point 3.6. of the MSF 1998 does not apply.

6.4.2. The capital-labour factor

Preliminary remark

(109) The assessment of the capital-labour factor as described in
the original decision of 20 April 2004 was not called into
question and not part of the decision of 20 April 2005
initiating the procedure. The following part is therefore a
reproduction of the assessment that was carried out and
described in the decision of 20 April 2004.

Assessment

(110) The capital-labour factor of the MSF 1998 aims to adjust
the admissible maximum aid intensity in favour of projects
which contribute effectively and more positively to
reducing unemployment
creation of a
relatively higher number of new jobs or the safeguarding
of existing jobs.

through the

(111) According to the information provided by Germany, the
project will create 186 long-term jobs, broken down as
follows:

Activity field

Direct jobs

Administrative

Commercial

Production — management

Production –mixture/cullet

3

4

8

11

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Activity field

Direct jobs

Production — hot end

Production — bath/annealing lehr/cold end

Production — cutting

Production — storage/distribution

Production — quality/laboratory

Technical services

Apprenticeships

27

31

1

44

9

38

10

(113) Eligible investment costs of EUR 121 million for the
creation of 186 jobs give a figure of EUR 650 538 per job.
In accordance with point 3.10.2 of the MSF 1998, the
capital-labour factor must therefore be put at 0,8.

6.4.3. The regional impact factor

Preliminary remark

(114) The regional impact factor as described and assessed in the
original decision of 20 April 2004 was not called into
question and not part of the decision of 20 April 2005
initiating the procedure. The following part is therefore a
reproduction of the assessment that was carried out and
described in the decision of 20 April 2004.

Total

186

Assessment

(112) These estimates are based on a comparison with another
plant in Saxony-Anhalt which has already been operating
for at least six years and whose float glass division, with a
production of [...] tonnes gross a day, employs 187 persons
(excluding trainees) at the moment of notification. E-glass,
with a production of [...] tonnes gross a day, will have a
somewhat smaller number of jobs than the comparison
plant, since in the case of e-glass certain areas (security) will
be outsourced and since the most modern technologies will
be used. The Commission considers these figures plausible.

(115) The regional impact factor takes account of the beneficial
effects of new investment on the economy of the assisted
region. The Commission considers that job creation can be
used as an indicator of a project's contribution to the
development of a region. Investment,
including capital-
jobs in the
intensive investment, may create indirect
assisted region concerned and in any adjacent assisted
region, with job creation in this context referring to jobs
created directly by the project or by first-tier suppliers and
customers.

(116) The project will contribute to the creation of indirect jobs in the following areas:

Field of activity

Claimed indirect
jobs

LOI (1)

To be recognised

Raw material production — soda

Raw material production — sand

Raw material production — dolomite

Raw material production — limestone

Raw material production — cullet

Raw material transport — sand, limestone and soda

Raw material transport — remainder

Float glass transport

Further processing (small firms)

Operation and maintenance of the supply facilities
— nitrogen, hydrogen

Operation and maintenance of the supply facilities
— electricity, natural gas (municipal plants)

24

10

2

2

20

29

8

81

30

5

3

24

8

2

2

15

29

8

81

6

—

—

24

8

2

2

15

29

8

81

6

5

3

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Field of activity

Claimed indirect
jobs

LOI (1)

To be recognised

Waste disposal

Packaging producers

Servicing, spare parts, maintenance, repair
(machinery, production plant, cranes, pumps, heat-
ing, ventilation and sanitary equipment, electronics,
air conditioning, transport, vehicles)

Permanent painting work

Maintenance/servicing of computers, communica-
tions equipment and industrial TV technology

Cleaning services

Cleaning/upkeep of external facilities, winter service

Guards/security

Canteen

Suppliers of replacement and expendable parts

12

28

60

1

8

5

6

12

2

10

Total

358

12

28

60

—

8

—

5

7

2

—

297

12

28

60

1

8

5

5

7

2

0

311

(1)

Letters of intent from the firms contacted are available, specifying the long-term jobs expected to be created.

(117) As regards the areas for which the contacted firms provided
letters of intent, the Commission recognises the figures
specified in such letters of intent (a total of 297 jobs).

6.4.4. Maximum authorised aid intensity

(118) In the case of 24 other jobs, no letters of intent have been
provided. However, the explanations and figures given by
Germany for these jobs appear convincing. Only as regards
the area ‘Suppliers of replacement and expendable parts’
are there doubts: the ten jobs claimed here seem to the
Commission to be too high, since the supply of spare parts
seems already largely covered by the 60 jobs specified
under the heading ‘Servicing, spare parts, maintenance,
repair …’. The Commission therefore includes only 14 of
the total of 24 jobs not covered by letters of intent, giving a
total of 311 indirect jobs which can be recognised.

(120) In the light of the above and on the basis of the figures
provided by Germany,
the MSF 1998 formula for
calculating the maximum aid intensity for this project is:
35 % gross x 1,0 x 0,8 x 1,5 = 42 % gross, limited by the
regional aid ceiling of 35 % gross.

(121) The aid intensity of up to 35 % gross of eligible investment
costs which Germany proposes to grant
to e-glass is
consequently compatible with the maximum aid intensity
calculated on the basis of the MSF 1998.

7.

CONCLUSION

(119) The Commission therefore concludes that, compared to the
186 directly created jobs, there will be a high degree of
indirect
to
point 3.10.3(i) of MSF 1998, the regional impact indicator
is therefore 1,5.

job creation (more than 100 %). Pursuant

(122) The notified aid intensity of up to 35 % gross which
Germany proposes to grant
to e-glass AG meets the
conditions that allow it to be regarded as compatible with
framework on regional aid for large
the multisectoral
investment projects (1998),

19.10.2007

EN

Official Journal of the European Union

L 276/35

HAS ADOPTED THIS DECISION:

Article 3

Article 1

The Decision adopted on 20 April 2004 in case N 611/2003 is
hereby revoked.

This Decision is addressed to the Federal Republic of Germany.

Article 2

Done at Brussels, 20 December 2006.

The state aid of up to 35 % gross of eligible expenditure for e-
glass, notified to the Commission by Germany on 15 December
2003,
is compatible with the common market pursuant to
Article 87(3)(a) of the EC Treaty.

For the Commission

Neelie KROES

Member of the Commission