2007/529/EC: Commission Decision of 21 March 2007 on State aid C 21/2006 (ex N 635/2005), to be implemented by the Slovak Republic for Slovenské lodenice Komárno (notified under document number C(2007) 1182) (Text with EEA relevance)
Date: 2007-03-21
Institutions: European Commission
Subjects: Slovakia, State aid, control of State aid, regional aid, shipbuilding

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(Acts adopted under the EC Treaty/Euratom Treaty whose publication is not obligatory)

II

DECISIONS

COMMISSION

COMMISSION DECISION

of 21 March 2007

on State aid C 21/2006 (ex N 635/2005), to be implemented by the Slovak Republic for Slovenské
lodenice Komárno

(notified under document number C(2007) 1182)

(Only the Slovak version is authentic)

(Text with EEA relevance)

(2007/529/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(2)

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

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

Whereas:

(3)

(4)

1. PROCEDURE

(1)

By letter dated 9 December 2005, registered as received
on 14 December 2005, the Slovak Republic notified the
Commission of its intention to grant regional investment
aid to the shipyard Slovenské lodenice Komárno. The
Commission requested information by letters of 23
December 2005 and of 27 February 2006, to which
the Slovak Republic replied by letters of 26 January
2006, registered as received on 31 January 2006, and
of 23 March 2006, registered as received on 4 April
2006, respectively.

By letter of 7 June 2006, the Commission informed the
Slovak Republic that
it had decided to initiate the
procedure laid down in Article 88(2) of the EC Treaty
in respect of the aid.

The Commission decision to initiate proceedings under
Article 88(2) EC Treaty was published in the Official
the European Union (2). The Commission
Journal
invited interested parties to submit their comments on
the measure.

of

to the Commission,

By letter of 6 July 2006, registered as received on 12 July
2006, the Slovak Republic submitted the observations of
the beneficiary of the aid, Slovenské lodenice Komárno.
Since it was the Slovak Republic which forwarded these
the Commission
observations
considers that the Member State had had the opportunity
to react
to the beneficiary's observations. The Slovak
Republic did not submit any further observations. By
letter of 30 October 2006, the Commission requested
the Slovak Republic to confirm the Commission's under-
standing of the beneficiary's observations. The beneficiary
provided further clarifications at a meeting held on 14
December 2006. The Slovak Republic responded to the
Commission's request of 30 October 2006 by letter of
10 January 2007, registered as received that same day,
also confirming the clarifications provided by the bene-
ficiary at the above-mentioned meeting.

(1) OJ C 194, 18.8.2006, p. 30.

(2) See footnote 1.

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(5)

(6)

(7)

2. DETAILED DESCRIPTION OF THE AID

2.1. Relevant undertaking

joint

(SLK),

lodenice

The beneficiary is the Slovak shipbuilding company
stock
Komárno
Slovenské
company, Bratislava, situated on the river Danube in a
region eligible for regional aid under Article 87(3)a) EC
Treaty. The company was established in 2000. Its share-
holders are Euram Bank AG Vienna (70 %) and the State
(30 %). Euram Bank AG Vienna became the majority
shareholder
in 2003.
SLK is a large company with a turnover of SKK 1,424
billion (3) (2004) and 910 employees (2005). After being
the company tripled its
partially privatised in 2003,
output (in terms of annual CGT) and in 2004 it posted
a profit of SKK 26 million. The company is not
in
financial difficulties.

through two capital

injections

the Netherlands

SLK produces small sea-going container ships and bulk
carriers with a maximum loading capacity of 6 000 dwt.
According to the information provided by the Slovak
Republic, the market leaders are the Damen shipyards
in
in
Germany, producing ships between 4 000 and 20 000
dwt. The Stocznia Północna shipyard in Poland also
specialises in building container ships of a similar size.
SLK does not undertake repairs or conversions of sea-
going vessels. SLK’s entire production goes to European
Union Member States.

Flensburg

shipyards

and

2.2. The investment project

Between 2006 and 2008 SLK intends to implement an
investment project entitled ‘Modernisation of the technical
base of SLK’. The aim of the project is to modernise the
company's production. The investment project comprises
nine sub-projects (SP 01 to SP 09), which are described
below; the descriptions take account of the observations
investi-
submitted by the beneficiary after the formal
gation procedure was launched, as these were crucial
for clarifying the nature of the investment.

— SP 01 — Extension of

a new rail on the

the production areas:
construction of
shipyard's
premises, which will be fitted out to become a new
section assembly facility; the shipyard will be buying
a crane with a lifting capacity of 50 t. To date this
part of the yard has been used not for production,
but as a storage area. The costs of this investment
come to SKK 39 825 658.

lower

significantly

advantages over the current facility: higher processing
speed,
energy
consumption and environmental improvements. The
theoretical capacity of the automated steel pre-fabri-
to
cation system would increase from 12 450 t
15 700 t. The costs come to SKK 17 500 000.

abrasive

and

— SP 03 — Installing energy distribution on rails 4 and
5:
rails 4 and 5 are currently used for section
building and assembly work; the yard will build six
new energy connection points (for acetylene, oxygen
and compressed air), which will upgrade this facility.
The investment costs are SKK 6 500 000.

— SP 04 — Installing energy distribution on the quay,
where the final stage of the production process takes
place: new distribution channels and eight connection
points will be built along the quay (for acetylene,
oxygen, compressed air and electricity). The aim is
to replace the current slow and costly system where
acetylene, oxygen and compressed air are sourced out
of bottles. The costs come to SKK 3 500 000.

— SP 05 — Horizontal boring tool: purchase of a W
100 type horizontal boring tool. To date SLK has
been renting an older type of this tool (the W 75).
The W 100 type is a more advanced tool, which,
owing to its technical characteristics, can process a
larger variety of parts, in a more efficient way (more
revolutions per minute). The investment costs come
to SKK 6 000 000.

— SP 06 — Material-cutting workshop: purchase of
hydraulic table shears. To date, an alternative,
less
efficient technology has been used. The costs come
to SKK 2 000 000.

— SP 07 — Improvement of quality control: control
measurements of the hull during production; quality
control of work after the individual
interventions;
purchase of a portable X-ray machine, a machine to
measure paint and materials, an ultrasound machine
to measure the width of steel plates and a probe. The
costs come to SKK 2 000 000.

— SP 08 — Modernisation of moving equipment:
lead traction battery

platform truck,
charger. The costs come to SKK 2 000 000.

forklift

truck,

— SP 02 — Purchase and installation of a chamber jet
for the ‘automated steel pre-fabrication system’. The
investment is designed to speed up the cleaning of
several
steel plates. The new chamber

jet has

(3) The central

rate published by the National Bank of Slovakia

(November 2005) is EUR 1 = SKK 38,4550.

— SP 09 — Aluminium and stainless steel welding
tube-
locksmith workshop,
workshops:
electric
welding workshop.
are
The
currently subcontracted. The costs come to SKK
1 000 000.

two workshops

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(8)

comprise

The total costs come to SKK 80 325 658, corresponding
to the eligible costs for the regional investment aid. The
of
costs
the purchase
machinery and equipment. The present value of
the
eligible investment costs is SKK 76 100 000 (discount
rate 7,55 %). The costs are distributed over the different
years as follows:

expenditure

for

Table 1

The current value of the eligible costs

Year

2006

2007

2008

Eligible costs

Current value of eligible
costs

31 164 000

31 164 000

37 295 658

34 677 506

11 866 000

10 258 494

2.3. Measure in question

(13)

The notified measure involves a write-off by the Social
Security Agency of a penalty relating to SLK's late
payment of its social security contributions between 31
to be
October 2003 and 31 March 2004. The debt
written off totals SKK 17 117 957. The Social Security
Agency will not put
it
the write-off
receives the approval of the Commission. The current
value of the aid amounts to SKK 17 117 957, which is
equal to an aid intensity of 22,49 % of the eligible costs.

into effect until

(14)

financing are SLK’s own
The remaining sources of
resources (SKK 19 025 000) and a loan from a private
bank (SKK 39 957 043).

3. DECISION TO INITIATE PROCEEDINGS UNDER
ARTICLE 88 (2) EC TREATY

Total

80 325 658

76 100 000

(15)

(9)

According to the Slovak Republic, sub-projects SP 02 -
SP 09 are
self-standing projects which SLK will
implement even if sub-project SP 01 is not carried out.

(10)

The investment project will
increase the shipyard's
technical capacity from 24 000 CGT to 28 500 CGT in
2009, which corresponds to a production increase of up
to two ships a year. Other effects of implementing the
project will be a shortening of the production cycle, cost
savings and quality improvements. The productivity of
the yard will
increase from the current 67 man-
hours/CGT to 58 man-hours/CGT in 2009, taking into
account the work subcontracted.

(11) As a result of the investment, 140 jobs will be created in
the yard itself
(including 112 jobs directly linked to
production, 20 ancillary jobs and 8 white-collar jobs)
jobs will be created in the region,
and 50 indirect
which has an unemployment rate of 14 %. Following
the
sub-project SP 09, a large
portion of the jobs directly linked to production will
in
be created through in-sourcing. The annual
from
terms of
1 590 300 to 1 653 200 after the investment.

available man-hours will

implementation of

increase

input

on

the

formal
grounds.

investigation
The Commission initiated the
procedure
the
following
Commission had doubts as to whether sub-projects SP
01, SP 05 and SP 09 were investments in modernising
the existing yard aimed at increasing the productivity of
the existing installations and whether,
they
qualified as eligible for regional aid.

therefore,

First,

(16)

The Commission had specific doubts as to whether sub-
project SP 01, apparently intended to create new
production capacity, was also designed to improve the
productivity of installations already existing in the yard.

(17)

(18)

The Commission also suspected that sub-project SP 05
merely involved replacing the rented equipment with the
investment would not
the
company's own,
obviously
gains. The
any
bring
Commission had the same doubts with regard to sub-
project SP 09.

since
about

efficiency

Second, the Commission had doubts as to whether sub-
projects SP 01, SP 02 and SP 03 were eligible for
regional aid as they appeared to lead to an increase in
the technical capacity of the beneficiary. The Commission
concluded that it needed to analyse further the impact of
the aided investment on the capacity of the yard.

(12)

The beneficiary declared that it will maintain the results
of the investment for a period of at least five years. SLK
applied for aid by letter of 10 October 2005. The
investment commenced in 2006.

(19)

in connection with the doubts regarding the
Third,
regional aid eligibility of
the
investment project, the Commission also had doubts as
to whether the maximum permitted aid intensity was
respected.

the individual parts of

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(20)

the Commission's preliminary conclusion was
Finally,
that, on the basis of the information available to it at
that stage, the remaining sub-projects fulfilled the elig-
ibility criteria laid down in the Framework on State aid to
the
shipbuilding
Framework) (4).

(hereinafter

referred

to

as

4. COMMENTS FROM THE BENEFICIARY

(21)

In its submissions following the initiation of the formal
investigation procedure, the beneficiary provided further
explanations regarding the justification and impact of the
investment project.

(22)

(23)

(24)

explained that

the principal motivation of

the
It
investment project was the current unsuitable layout of
the yard, which made it dependent on natural conditions,
i.e. the water level of the Danube. Currently, hull sections
are assembled both in covered production halls and in
the open on rails 4 and 5. The problem with the current
layout is that the size of the sections is limited, on the
one hand, by the height of the production halls and, on
the other, by the lifting capacity of the crane on tracks 4
and 5 (27 t). The consequences are two-fold. First,
assembly of the larger sections has to be partially done
on water. Second, often the sections do not reach the
critical size to enable outfitting, in particular in the case
of the piping. The latter is therefore carried out on water
only after the hull is completed, which is inefficient.

The fact that the assembly and outfitting have to be at
least partially carried out on water renders the yard very
sensitive to the water levels and natural conditions on the
Danube. When the water level is low, production has to
be halted, because it is technically impossible to continue
assembly in the halls (limited height and space) or on the
existing outside facilities (limited cranage capacity).

This is the problem addressed by sub-projects SP 01 and
SP 03. The investment would create new assembly
capacity, enabling the yard to produce larger sections.
The outdoor assembly capacity will be extended by a
new facility on rail 8, equipped with a 50 t crane,
which corresponds
the
outfitting berth. In this way, the process is streamlined.
In addition, the existing assembly capacity on rails 4 and
5 will be modernised.

to the cranage capacity of

(25)

Consequently, part of the section building will be moved
the
outside from the production halls.

In the past,

(4) OJ C 317, 30.12.2003, p. 11. The duration of the Framework was
extended by the Commission communication concerning the
prolongation of the Framework on State aid to shipbuilding (OJ C
260, 28.10.2006, p. 7).

production halls have become congested when the
Danube water level was too low to enable work on
water, with the result that production had to be halted.
The space freed up will be used for streamlining the
production flow inside the assembly halls and will
enable the yard to carry out work other than assembly
work, such as painting, production of various smaller
ship parts, etc.

(26)

Implementation of sub-project SP 03 will shorten the
distribution network, which will reduce energy losses.

(27) As regards sub-project SP 02, the beneficiary highlighted
the efficiency gains resulting from the replacement of the
existing chamber jet by a new one.

(28)

In the case of sub-project SP 05, the beneficiary provided
a comparison of the technical characteristics of the old
boring tool with the new one, as described in paragraph
7 above.

(29)

(30)

of

that

subcontracting

Finally, as regards sub-project SP 09,
the beneficiary
aluminium and
explained
stainless steel welding becomes problematic when the
technical specifications of
the manufactured parts are
modified during the production process. Such modifi-
cations appear to be common and the beneficiary was
therefore often entirely dependent on the working
its subcontractors. Owning the necessary
schedule of
equipment
the
itself would
necessary flexibility to react promptly to such modifi-
considerable work-flow
a
cations
improvement (20 % cost reduction for the production
of non-steel parts). This was all the more important,
given that aluminium and stainless steel materials were
increasingly being used instead of steel.

beneficiary

give

lead

and

the

to

the yard,

the beneficiary argued that

In reply to the concern that sub-projects SP 01, SP 02
and SP 03 were intended to increase the technical
capacity of
the
increase in technical capacity was merely a consequence
of the productivity improvements achieved through these
investments. The beneficiary confirmed that the overall
capacity would increase from 24 000 CGT to 28 500
CGT in 2009, corresponding to an increase of, on
average, two ships a year, depending on the size and
type of vessel. The theoretical steel-processing capacity
would increase from 12 450 t to 15 700 t. However,
actual steel-processing capacity would remain at 12 450
t due to bottlenecks in the previous stages of production,
which could be eliminated only by very large-scale
investments, for which the yard had no plans in the
medium term.

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(31)

increase in productivity in terms of

In response to the concerns that that sub-projects SP 01,
SP 05 and SP 09 were not intended to improve the
productivity of existing installations,
the beneficiary
provided the Commission with figures to prove the
actual productivity increase. The beneficiary quantified
the overall
the
following factors: shortening of the production cycle by
20, 12 or 8 days, depending on the ship type; reduction
in the volume of work by about 12 000 man-hours per
vessel; increase in productivity of the steel pre-fabrication
installation in terms of processed steel (t) per production
worker by 14 % (from 13,65 to 15,60) and in terms of
man-hours per tonne of processed steel by 31 % (from
127 to 97).

(36) As already stated in its decision to initiate the formal
investigation procedure, the Commission decided not to
assess whether the non-recovery of the social security
contributions for the period between 31 October 2003
and 31 March 2004 constituted State aid within the
meaning of Article 87(1) of the EC Treaty. This event
occurred before Slovakia's accession to the European
Union and did not apply thereafter. Therefore,
the
Commission does not have the power to assess the
compatibility of the measure with the common market.
The data show that SLK paid all the social security contri-
butions accrued between 31 October 2003 and 31
March 2004, which is in fact a necessary condition for
the write-off of the penalty payments.

5. COMMENTS FROM THE SLOVAK REPUBLIC

(32)

The Slovak Republic sent the Commission the benefi-
ciary's comments without adding any of its own, which
meant that it endorsed what the beneficiary had stated.

6.2. Compatibility of aid: Derogation under Article
87(3) of the EC Treaty

(37) Article 87(2) and (3) of
exemptions to the general
as stated in paragraph (1) of the same Article.

the EC Treaty provide for
incompatibility of State aid,

6. ASSESSMENT

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

(38)

(33) Article 87(1) of the EC Treaty states that 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 shall, in so far as it affects
trade between Member States, be incompatible with the
common market. Pursuant to the established case law of
the European Courts, the criterion of trade being affected
firm carries out an economic
is met
activity involving trade between Member States.

the recipient

if

(34)

in part

In the present case, the debt write-off is provided by the
Social Security Agency, which is the central authority
managing the social insurance system. This means that
the financial measure involves state resources and is
imputable to the State. The Social Security Agency has
the discretionary power to waive penalty payments in
‘in justified cases’. The selectivity
whole or
criterion is therefore fulfilled. The measure confers a
financial advantage on SLK that
it would not have
obtained on the market, as it would normally have to
pay the penalty. SLK manufactures sea-going vessels. As
these products are traded,
the measure threatens to
distort competition and affects trade between Member
States. Although operating in a niche market of small
ships up to 6 000 dwt, SLK is in potential competition
at least with a small Polish shipyard, the Dutch Damen
shipyard and the German Flensburg shipyard. Conse-
quently,
the financial measure constitutes State aid
within the meaning of Article 87(1) of the EC Treaty
and has to be assessed accordingly.

shipbuilding means

The Commission issued the Framework for the purpose
of assessing aid to shipbuilding. According to the
in the
Framework,
Community, of
commercial
vessels. The activities of SLK fall under this definition
and the aid to SLK, therefore, has to be assessed in the
light of the Framework.

self-propelled seagoing

the building,

(39)

(40)

Point 26 of the Framework stipulates that regional aid
for shipbuilding, ship repairs or ship conversion may be
deemed compatible with the common market only if the
aid is granted for investment in upgrading or moder-
nising existing yards that is not linked to a financial
the
restructuring of
objective of improving the productivity of existing instal-
lations.

the yard(s) concerned and has

The aid intensity may not exceed 22,5 % in Article
87(3)(a) regions or the applicable regional aid ceiling,
whichever is the lower. In the present case, the ceiling
of 22,5 % is applicable. Furthermore, the aid must be
limited to support eligible expenditure as defined in the
applicable Community
aid
(Regional Aid Guidelines) (5).

guidelines on regional

The modernisation — Projects SP 01, SP 05 and SP 09

(41)

these sub-
The Commission's doubts as to whether
projects constitute investment in modernisation of the
existing yard with the aim of improving the productivity
of existing installations have been allayed.

(35)

The State aid totals SKK 17 117 957.

(5) OJ C 54, 4.3.2006, p. 13.

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(42)

it

liberate

The Commission considers that sub-project SP 01 does
constitute a modernisation project, as it contributes to
the streamlining of the production process and addresses
fundamental problems with the current layout of the
it will enable the yard to produce larger
yard. First,
sections on shore
from its
and thus
dependency on the natural conditions on the river
Danube. Second, the efficiency of the assembly process
will be improved, as the yard will be able to construct
larger sections. Third, the section outfitting will be done
at an earlier stage in the production process, which will
bring efficiency gains, compared to the current practice
of carrying out the outfitting on completed hulls, partic-
ularly in the case of the piping. Finally, the existence of
the
the new installation will enable better use of
production halls, which are currently congested with
section building and will
in the future be used for
other activities at an earlier stage in the production
process.

(43) On the basis of these considerations, the Commission
concludes that, despite the fact that it concerns a new
installation, sub-project SP 01 does represent a moder-
nisation of the yard as a whole (in particular of the
section assembly process) and does improve the produc-
the
tivity of
production halls.

the existing installations,

in particular

(44) As regards sub-project SP 05, the more modern and
faster boring tool can, thanks to its technical character-
istics, be used for handling a larger variety of parts,
the ‘production and
thereby increasing flexibility at
systems installation’ stage. The investment represents a
genuine modernisation and not a mere replacement of
the rented machinery used by the yard to date. The sub-
project improves the productivity of existing installations
the rented tools are not deemed to be
and, even if
existing installations,
the
sub-project
productivity of the ‘production and systems installation’
stage.

improves

the

(47)

(48)

for
modernisation of
improvements in productivity when compared with the
existing installations.

existing yard and make

the

The issue of capacity — Projects SP 01, SP 02 and SP 03

the formal

investigation
In its decision to initiate
procedure,
the Commission was concerned that sub-
projects SP 01, SP 02 and SP 03 would lead to an
increase in the capacity of
the yard and doubted
whether such an increase would be in line with the
Framework.

a qualitative

The Commission concluded that these three sub-projects
all fulfilled the requirement that the investment must be
in modernisation of the existing yard for the purpose of
improving the productivity of existing installations.
In
the case of sub-project SP 01, this was demonstrated
above in paragraph 42. As regards sub-project SP 02,
the Commission observes that
jet
represents
in terms of
increased speed, lower material and energy consumption
and impact on the environment. The benefits of sub-
project SP 03 are two-fold. First, the reduction of the
length of the distribution network leads to savings in
energy costs. Second, the improvement of the section
assembly installation on rails 4 and 5 brings the same
productivity improvements as sub-project SP 01 (ability
to build larger sections,
freeing-up of space in the
production halls, non-reliance on weather conditions).

the new chamber

improvement

(49) With regard to the issue of capacity, the Commission will
first examine the effects of these sub-projects on the
technical capacity of the yard (paragraphs 50 and 51
below) and then go on to determine whether,
if there
is any increase in capacity, it can be considered justified
(paragraphs 52 and 53).

(45)

Sub-project SP 09 makes for productivity improvements
in the aluminium and stainless steel welding workshop in
the form of clear cost savings and by enabling the yard
to react operationally to the frequent changes in client
thus eliminating the current work-flow
specifications,
interruptions. The investment
leading to in-sourcing
represents a genuine modernisation of the production
process. The project
the productivity of
improves
existing installations and even if the rented installation
is not deemed to be an existing installation, the project
improves the production process as a whole.

(46) On the basis of these considerations, the Commission
concludes that sub-projects SP 05 and SP 09 constitute

of

(50) On the basis of the information provided by the bene-
ficiary,
the Commission observes that, although sub-
project SP 02 does lead to an increase in the capacity
of an existing installation (the automated steel pre-fabri-
cation system), this increase is purely theoretical. The
new capacity of 15 700 t of processed steel is the new
maximum capacity
installation.
this
However, due to other bottlenecks in previous stages of
production, the quantity of steel actually processed will
beneficiary
remain
confirmed
be
necessary to de-bottleneck the steel pre-fabrication, and
that
for any such
investments. The Commission therefore concludes that
sub-project SP 02 does not lead to a capacity increase
of the yard as a whole and the possibility for expansion
up to the level of 15 700 t is purely theoretical.

The
investments would

unchanged
that

at
significant

currently no plans

there were

particular

12 450 t.

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(51)

(52)

(53)

that

it was
In the case of sub-projects SP 01 and SP 03,
confirmed that they would jointly result in an increase
in the capacity of the yard from 24 000 CGT to 28 500
CGT, which corresponds to an increase of up to two
ships a year, depending on the size and type of the
vessels produced. The Commission notes that since the
steel processing capacity does not increase (see paragraph
50 above), the increased technical capacity of the yard
could only be due to productivity improvements in the
follow the steel pre-fabrication. Sub-
processes
projects SP 01 and SP 03 do indeed lead to increased
productivity in the case of
the section assembling
process, with significant gains in terms of construction
time (the production cycle is shortened by on average
taking on average
30 %,
approximately 36 days and the average reduction being
13 days per vessel; see paragraph 31). The capacity
increase results from the fact that larger sections will
reduce the hull assembly
be assembled, which will
time. Consequently, the level of completion in terms of
CGT per calendar year increases.

the assembly of one vessel

The Commission now needs to determine whether this
capacity increase is proportionate to the productivity
increase. For this purpose, the Commission notes that
the investment project brings considerable production
gains. The production cycle is shortened by on average
30 %. All productivity indicators show improvement: an
increase in the overall productivity of the yard in terms
of man-hours per CGT by 15 % (from 67 to 58), as well
as an increase in the productivity of the steel pre-fabri-
cation installation in terms of processed steel
(t) per
production worker by 14 % (from 13,65 to 15,60) and
in terms of man-hours per tonne of processed steel by
31 % (from 127 to 97). The Commission also notes that
whereas 140 new direct jobs will be created at the yard,
which corresponds to a 15 % increase, the annual input
in terms of available man-hours will
increase by only
3,9 % (from 1 590 300 to 1 653 200). This means that
the new direct jobs are to a large extent the consequence
of the in-sourcing of the welding activity (SP 09). The
increased capacity is therefore due not to the creation of
additional jobs, but to the modernisation of the facilities
and streamlining of the production flow.

(1)

fulfil

the investments

the requirement of
Since:
modernisation of an existing yard, the aim and effect
of which is an improvement
in the productivity of
existing installations; (2) the increase in capacity is only
the result of
the yard and the
adjustments to the production process this involves and
(3)
the
increase of capacity is not disproportionate to the
productivity increase.

this productivity improvement

the modernisation of

significant,

is

The remaining sub-projects

(55)

The Commission confirms its preliminary conclusion
from its decision to open the formal
investigation
procedure that the remaining sub-projects (SP 04, SP
06, SP 07 and SP 08) are eligible for regional aid.

The remaining conditions for eligibility

(56)

The Commission likewise notes that all the notified sub-
projects fulfil
the eligibility criteria prescribed by the
Regional Aid Guidelines (investment in fixed assets: i.e.
equipment and machinery to be purchased on market
terms and not constituting mere replacement of depre-
ciated assets). The investment is not linked to financial
restructuring.

Aid intensity

(57)

Since its doubts concerning the eligibility of part of the
investment project for regional aid have been allayed, the
Commission concludes that the maximum aid intensity
the eligible costs as prescribed by the
of 22,5 % of
Framework is complied with.

The remaining conditions for compatibility of regional aid

(58) As the present case is an ad hoc grant of State aid for a
one-off project, the Commission also assessed its effects
on regional development in line with the Regional Aid
Guidelines. The Commission concludes that the project
contributes to regional development by undertaking a
crucial modernisation of the yard, thus improving its
competitive position on the market and maintaining
jobs in a region with an unemployment rate of 14 %.
The investment will be maintained in place for at least 5
years.

(59)

SLK applied for the State aid before work on the project
started and it is contributing more than 25 % to the
financing of the project,
in line with the Regional Aid
Guidelines.

7. CONCLUSION

(60)

(54)

The Commission therefore concludes that sub-projects SP
01, SP 02 and SP 03 are eligible for regional aid.

The Commission concludes that the planned regional aid
to SLK amounting to 22,5 % of SKK 76 100 000,
i.e.
is in line with the conditions on
SKK 17 117 957,
laid down in the Framework. The
regional aid as
planned aid therefore
to be
considered compatible with the common market,

conditions

fulfils

the

27.7.2007

EN

Official Journal of the European Union

L 195/43

HAS ADOPTED THIS DECISION:

Article 2

Article 1

This Decision is addressed to the Slovak Republic.

The State aid which the Slovak Republic plans to implement for
Slovenské lodenice Komárno in the form of debt write-off
amounting to SKK 17 117 957 is
compatible with the
common market within the meaning of Article 87(3)(c) of the
EC Treaty.

Implementation of the aid amounting to SKK 17 117 957 is
accordingly authorised.

Done at Brussels, 21 March 2007.

For the Commission

Neelie KROES
Member of the Commission