2009/145/EC: Commission Decision of 10 December 2008 concerning State aid C 15/06 (ex N 291/2000) which France plans to implement in favour of Pilkington/Interpane (notified under document number C(2008) 7799) (Text with EEA relevance)
Date: 2008-12-10
Institutions: European Commission
Subjects: EU investment, France, State aid, control of State aid, exchange of information, glass industry

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COMMISSION

COMMISSION DECISION

of 10 December 2008

concerning State aid C 15/06 (ex N 291/2000) which France plans to implement in favour of
Pilkington/Interpane

(notified under document number C(2008) 7799)

(Only the French text is authentic)

(Text with EEA relevance)

(2009/145/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

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

establishing the European
subparagraph of
the

first

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

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

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

Whereas:

1. PROCEDURE

(1)

By letter dated 22 May 2000, registered as received on
25 May 2000 (A/34298), France notified, in accordance
with the provisions of the Multisectoral Framework on
regional aid for large investment projects (3) (hereinafter
called ‘the 1998 MSF’), aid to two public limited
companies incorporated under French law, Pilkington
France SAS and Interpane Glass Coating France SAS,
jointly owned by the two international glassmaking
groups Interpane and Pilkington. On 7 June 2000, the
information. France
Commission requested additional

(1) OJ L 83, 27.3.1999, p. 1.
(2) OJ C 196, 19.8.2006, p. 3.
(3) OJ C 107, 7.4.1998, p. 7.

submitted additional information by letters dated 13 June
2000, registered as received on 14 June 2000 (A/34798),
30 June 2000, registered as received on 3 July 2000
(A/35410), and 30 June 2000, registered as received
on 3 July 2000 (A/35411).

By Decision of 17 August 2000 (4), reference SG(2000)
D/106264 (hereinafter called ‘the 2000 Decision’), the
Commission approved the intensity of the aid for Pilk­
ington/Interpane notified under the 1998 MSF.

Annual reports were provided by France, in cooperation
with the aid recipients, on 17 October 2002, 18 August
2003 and 31 August 2004 as part of the ex-post moni­
toring of the proper implementation of the decisions
taken under the 1998 MSF (point 6.4) and in accordance
with the 2000 Decision.

By letter dated 13 January 2005, registered as received
on the same day (A/30447), and by letter dated 13 June
2005, registered as received on 14 June 2005 (A/34734),
the French authorities informed the Commission that the
information furnished in the notification which had
resulted in the 2000 Decision was incorrect, notably as
regards the calculation of the amount of the business tax
exemption, and asked the Commission to amend the
2000 Decision.

dated 6 March 2006 (D/57979),
in accordance with Article 9 of

the
By
letter
the
Commission,
Procedural Regulation,
invited the French authorities to
submit their comments on its intention to revoke the
2000 Decision. The French authorities submitted their
comments by e-mail dated 16 March 2006, registered
as received on 17 March 2006 (A/32057).

(2)

(3)

(4)

(5)

(4) OJ C 293, 14.10.2000, p. 7.

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(6)

(7)

(8)

(9)

By letter dated 26 April 2006, the Commission informed
France of its decision to open the procedure laid down in
Article 88(2) of the EC Treaty in respect of the aid at
issue with a view to revoking its Decision of 17 August
2000 and adopting a new Decision. The Commission’s
Decision to open the procedure was published in the
Official Journal of the European Union (1). The Commission
called on interested parties to submit their comments on
the aid.

2. DESCRIPTION OF THE AID

2.1. The aid recipients

(11)

The following description of the recipients reflects the
situation as it existed in 2000.

2.1.1. The companies concerned

France submitted its comments by e-mail dated 2 June
2006.

(12)

its

2000

France

informed

notification,

In
the
Commission of its intention to grant regional investment
aid to two French public limited companies (incorporated
in the form of sociétés par actions simplifiées) jointly owned
by two glassmaking groups,
Interpane and Pilkington,
and named Pilkington Glass France SAS and Interpane
Glass Coating France SAS (PGF/IGCF).

The Commission received no comments on the matter
from interested parties.

By letter dated 12 September 2007 (D/53668),
the
information. France
Commission requested additional
submitted a partial answer by letter dated 21 December
2007 (A/40607) and supplemented that answer by e-
mail dated 30 May 2008 (A/10204).

(13) Ownership of

the joint ventures is shared unequally
(see also

follows

between the parent companies as
figure 1):

— PGF is owned 51 % by Pilkington and 49 % by

Interpane,

(10)

By e-mails dated 16 September and 19 September 2008
(A/19328 and A/19263), France submitted new infor­
supplemented by e-mail dated
mation, which was
24 October 2008 (A/22746).

— IGCF is owned 51 % by Interpane and 49 % by

Pilkington.

Figure 1

Legal structure of the companies

(14)

The two new State-aided companies are production joint
ventures. They will not operate autonomously in the
market. Their sole object will be to supply the parent
companies with first-stage-processed raw flat float glass
either for their own use or for on-selling.

(1) OJ C 196, 19.8.2006, p. 3.

2.1.2. The formation of the joint ventures

(15)

The formation of the joint ventures was notified, by letter
dated 7 April 2000, under Article 81 of the EC Treaty (2)
with a view to obtaining individual exemption under
Article 81(3) of the Treaty.

(2) On the basis of Article 4 of Council Regulation No 17 (OJ 13,

21.2.1962, p. 204/62).

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(16)

The notifying parties agreed to the notification being
dealt with by comfort letter.

(17) On 29 June 2000, two comfort letters were sent by the
Commission to each of the notifying parties, informing
them that:

— the agreements contained restrictions of competition
caught by the prohibition in Article 81(1) of the EC
Treaty,

— the Directorate-General

for Competition considered
the notifying parties had furnished sufficient
the criteria of

that
justification for its concluding that
Article 81(3) of the EC Treaty were met,

— consequently,

the Directorate-General

for Compe­
it was unnecessary to close
tition considered that
the procedure by proposing that
the Commission
adopt an exemption decision under Article 81(3) of
the EC Treaty in accordance with the procedure laid
down by the old Regulation No 17 (1).

— there was a strong presumption that

ventures were caught by Article 81(1) of
Treaty inasmuch as:

the joint
the EC

(a)

there was a likelihood of sensitive information
being exchanged between them;

(b) the cooperation between two major competitors
could lead to coordination of the parties’ conduct
in the highly concentrated market
for coated
glass;

— the Directorate-General for Competition analysed the
agreements in the light of Article 81(3) of the EC
Treaty and,
following confirmation by the parties
that clause 2 of the exclusive supply agreement had
been
of
Article 81(3) were satisfied. Clause 2, the ancillary
nature of which was open to question, provided
that Pilkington and Interpane could at any time
obtain supplies
requirements
from different plants of the two joint ventures.

according to their

concluded

deleted,

criteria

that

the

(18)

The comfort letters were sent following an economic
analysis of the situation, which can be summed up as
follows:

2.1.3. The partners

(19)

The recipient companies are co-owned by the two inter­
national glassmaking groups Interpane and Pilkington.

— the notified operation consisted in the formation of

two cooperative joint ventures,

— the notified agreements concerned:

(a)

intermediate products

the production by the joint ventures of unpro­
intended for
cessed or
further processing into finished products by the
founders or for sale by their own distribution
networks;

(20)

(21)

(b) the exclusive supplying of the founders by the
joint ventures;
this agreement was ancillary to
the formation of the joint ventures in so far as
it could not be dissociated from the joint ventures
without calling their existence into question;

(1) First Regulation implementing Articles 81 and 82 (formerly Articles

85 and 86) of the Treaty.

and chairman of

current majority owner

Interpane was set up in 1971 by Mr Georg Hesselbach,
the
the
management board of the Interpane group. The group
is presently active worldwide in the sector of glass for the
building industry and in related fields (manufacture of
windows in Germany and the United States, manufacture
of equipment for the glass industry in Germany).

for

the building industry.

In Europe, the activities of the group (15 companies in
1999) are centred on the treatment and processing of
glass
Interpane has been
present in France since 1998 following its acquisition
of two glass processors (at Hoerdt in Alsace and Mitry-
Mory in the Paris area). The European subsidiaries are
Interpane Glas
headed by
Industrie AG,
in
Lauenförde, Germany. This holding company is owned
88 % by the Hesselbach family and 12 % by the German
publicly owned bank Nord/LB.

company
the registered office of which is

the holding

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(22)

(23)

Interpane Glass Manufacturing BV,

in partnership with the
The holding company holds,
Dutch holding company Interpane NV, via the holding
company
the
Interpane group’s shares in the joint ventures receiving
the aid. Interpane NV and Interpane Glass Manufacturing
BV were specially created for the purposes of this trans­
action. They are owned by the Hesselbach family either
alone or jointly with Nord/LB.

The Pilkington group is a world leader in the glass sector.
Its activities cover all industrial areas of the sector: the
manufacture, treatment and processing of glass for the
building industry (49 % of activities) and the automotive
industry (44 %), and the production of special glasses.
The group’s headquarters are in the United Kingdom.
The
subsidiaries
worldwide (Europe, North and South America, Asia/
Pacific).

24 manufacturing

group

has

(24)

The group’s shareholdings in the joint ventures situated
in Freyming-Merlebach are held by the Dutch holding
company Pilkington BV.

Table 2

The groups’ workforces

Interpane group

(EUR million)

World

Europe (1)

France (2)

na

na

1 748

703

721

732

Pilkington group

0

0

65

World

Europe

France

1996

1997

1998

1996/1997

39 100

24 200

1997/1998

37 800

23 500

1998/1999

32 300

20 500

537

524

497

(1) Holding company Interpane Glas Industrie AG.
(2) Two subsidiaries of the Interpane group have been active since 1998
in the insulating glass sector in France: Interpane Hoerdt SA (67) and
Interpane
subsidiaries
at Mitry-Mory
employed 97 people in 1999.

Ile-de-France

(77). These

Table 1

Turnover

Interpane group

(EUR million)

2.2. The investment project

1996

1997

1998

World/Europe (1)

France (2)

107

114

118

Pilkington group

0

0

0

World

Europe

France

1996/1997

4 380

1997/1998

4 830

1998/1999

5 000

2 730

2 500

2 410

69,5

75,0

73,0

NB: The figures for Interpane are based on an exchange rate of FF 3,35 to
one DM (1999 rate). The figures for Pilkington are based on an exchange
rate of FF 10,60 to one GBP (January 2000 rate).
(1) Holding company Interpane Glas Industrie AG.
(2) Two subsidiaries of the Interpane group have been active since 1998
in the insulating glass sector in France: Interpane Hoerdt SA (67) and
Interpane
subsidiaries
at Mitry-Mory
employed 97 people in 1999.

Ile-de-France

(77). These

(25)

The joint ventures are situated in the Freyming-Merlebach
employment area, which was an assisted area within the
meaning of Article 87(3)(c) of the EC Treaty for the
period 2000-2006 (1)
in which the intensity of public
investment aid may be as high as 15 % NGE.

(26) According to the information furnished by France, the
investment project is being carried out by two separate
the
joint ventures owing to the dual ownership of
is never­
production facilities. The investment project
theless
the float
fully integrated and self-contained:
glass production unit was designed from the outset to
part supply a joint glass-treatment unit, and the latter
unit is present on the site only because its float glass
supplier is adjacent to it. According to the same infor­
mation, the integrated nature of the project is attested by
the siting of the float, laminating and coating lines in the
same building. France accordingly considers the joint
investment project on the site in Lorraine to be an
‘initial
investment in fixed assets in the creation of a
new establishment’ within the meaning of point 7.2 of
the 1998 MSF. There are two aid recipients, but a single
investment project is being aided.

(1) Commission Decision of 15 March 2000 defining the regional aid

map for France 2000-2006 (N 45/2000).

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(27)

Production was set to start at the end of the first half of
2001 and reach its maximum after five years in 2006-
07. Float glass production was to amount to 147 000
tonnes during the first full year of operation in 2001-02,
increasing gradually to 260 000 tonnes of usable product
per year when operating at full capacity as from 2006.

(28)

The purpose of the project is to construct an integrated
float glass production unit for the building, comprising
the activities of raw float glass manufacture, cutting,
treatment (coating) and processing by laminating. The
planned glass manufacturing cycle is as follows:

Figure 2

(29)

By letter dated 13 January 2005, the French authorities
informed the Commission that
the project had been
amended. Eligible expenditure now came to EUR 158,5
million in nominal terms. The number of direct jobs
jobs
created was 176 and the number of
created was 150 (see also point 5.2).

indirect

2.3. The aid measures

(30)

The planned State aid consists of several measures which
either come under various authorised aid schemes or are
individual ad hoc aid measures:

— regional planning grant

(prime à l’aménagement du

territoire — PAT) for industrial projects,

— European Regional Development Fund (ERDF),

— ad hoc aid for purchasing the land (discount on the

selling price),

— ad hoc aid for real estate development,

— exemption from business tax,

(31)

(32)

(33)

(34)

The PAT scheme was approved by Commission Decision
of 28 June 2000 (N 782/1999). The Sofirem loans
scheme was approved by Commission Decision of
15 June 1989 (NN 2/89), as amended following the
taking of appropriate measures to bring the scheme
into line with the 1998 Guidelines on national regional
aid (1).

The five-year exemption from business tax is based on
Articles 1464 B and 1465 of the General Tax Code (Code
Général des Impôts — CGI), the Order of 16 December
1993, the Order of 24 November 1980 and Decrees
86/225, 80/921 and 80/922.

The current aid total
terms (see also point 5.2).

is EUR 17 106 280 in nominal

3. OPENING OF THE PROCEDURE

3.1. The new information communicated by the
French authorities

By letter dated 13 January 2005, the French authorities
informed the Commission firstly that the project had
been amended and secondly that
the amount of aid
linked to the business tax exemption had been under­
estimated by France.

— soft loan from the Société Financière pour favoriser
l’industrialisation des Régions Minières (Sofirem).

(1) OJ C 74, 10.3.1998, p. 9.

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(35)

(36)

(37)

Total eligible expenditure now came to EUR 158,5
million in nominal
terms (EUR 164,7 million in the
2000 Decision). The net present value of the eligible
expenditure came to EUR 149,97 million. The project
ended in March 2005 and the investment was carried
out in full. In March 2005, the number of direct jobs
created was 176 and the number of indirect jobs created
was 150 (245 and 260 respectively in the 2000
Decision).

In their letter of 13 January 2005, the French authorities
explained that the business tax exemption had originally
been underestimated. It now came to EUR 6,28 million,
of which EUR 2,14 million had already been paid by the
French State (being part of the EUR 17,89 million in
State aid already disbursed). This sum corresponded to
the amount of aid before tax and was therefore expressed
as gross grant equivalent (GGE).

(41)

(42)

instalment

this being the last

EUR 4,14 million business

tax
The outstanding
exemption forms part of
the EUR 5,19 million still
remaining to be paid to the project by the French
State,
for which prior
Commission authorisation is needed in accordance with
point 6.2 of the 1998 MSF and the 2000 Decision,
which provide that the final significant payment of the
aid (e.g. 25 %) may be made only when the French auth­
orities are satisfied that execution of
the investment
project by the companies is in compliance with the
Commission Decision.

corrigendum as in the case of typographical errors. In
reality, the 2000 Decision was based on incorrect infor­
mation provided by the French authorities.

concerned

Consequently, the Commission must revoke the 2000
Decision in accordance with Article 9 of the Procedural
‘the Commission may
that
Regulation, which states
revoke a decision …, after having given the Member
State
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

opportunity

submit

the

to

In their e-mail of 16 March 2006, the French authorities
argued that the elements to be taken into account from
both an industrial and an aid standpoint did not entail
any substantial overturning of the broad logic of the
2000 Decision and that a new decision on the matter
would have a limited impact on how it turned out. In the
same e-mail, they stated that they accepted the procedure
in Article 9 of the Procedural Regulation,
as set out
the Commission, after opening the
which requires
formal
in
Article 88(2) of the EC Treaty, to first revoke the 2000
Decision and then take a new decision replacing it in the
light of the corrected information provided.

investigation

procedure

provided

for

(38)

France has explained that the difference compared with
the aid amount notified in 2000 is due to an upward
adjustment to the original estimate of the business tax
exemption.

4. COMMENTS FROM INTERESTED PARTIES

(43)

The Commission did not receive any comments from
interested parties.

(39)

The aid total is now said to come to EUR 23,09 million
terms (EUR 14,65 million at net present
in nominal
value). The intensity of
the aid to the Pilkington/In­
terpane project is therefore said to be 14,65/149,97 =
9,77 % net grant equivalent (NGE). According to France,
this aid intensity is lower than the maximum allowable
intensity recalculated to take account of the changes in
the project’s parameters (9,82 % on the basis of the 1998
MSF).

3.2. Grounds for opening the procedure

(40)

The new information furnished by the French authorities
gives rise to a new maximum allowable aid intensity (1).
The Commission is of the opinion, therefore, that it is
not sufficient to amend the 2000 Decision by way of a

(1) Calculated on the basis of point 3.10 of the 1998 MSF.

5. COMMENTS FROM FRANCE

5.1. E-mail of 2 June 2006

(44)

France submitted comments on the decision to open the
procedure by e-mail dated 2 June 2006.

(45)

It explained that the Commission had been informed of
changes to the industrial project in the light of altered
market conditions, and also of changes in the original aid
estimate. The data relating to the industrial project itself,
on the one hand, and those relating to the aid, on the
other, had been set out in a letter from France dated
13 January 2005. France argued, however, that none of
these changes altered the general
thrust of the 2000
Decision, and the aid granted to the two companies
complied with the maximum intensity authorised by
the 1998 MSF.

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(46) When the 2000 Decision monitoring reports were being
drawn up, the French authorities had taken the oppor­
tunity to review all
the information on which the
decision was based. During that review, the French auth­
orities had discovered that two elements in relation to
the aid affected the information originally transmitted to
the Commission, namely:

5.2. Subsequent information

(50)

By letter dated 12 September 2007, the Commission
requested additional information in order to clarify the
details of the project and of the calculation of the aid
granted. After several requests for extension of the time
limit for submitting the information requested, France
submitted a partial reply by letter dated 21 December
2007. In this letter, France confirmed that the project
indeed the project
completed in March 2005 was
originally planned at the time of the notification.

— the estimate of the business tax exemption needed to

be revised,

— the method of calculating the net grant equivalent
also needed revising to take account of the actual
investment
and
equipment) and of the impact of taxation on all the
aid — something which had not been done when the
aid was notified.

allocation

buildings

(land,

(51)

The missing information was submitted, after further
extensions of the time limit, by e-mail dated 30 May
2008. Other additional
information was submitted by
e-mails dated 16 and 19 September and 24 October
2008. This information was derived from calculations
based on final project data on investments and jobs
created. The aid linked to job creation had been recal­
culated from 2006 to allow for fewer jobs being created
than planned.

(47)

There was no particular connection between the two
changes. Taken together, though, they altered both the
nominal amount of the aid and its net grant equivalent.

(48)

(49)

support

In 2000, when the project
file was being
compiled, the business tax exemption scheme applied
to a basis consisting of the rental value of any tangible
fixed assets (land, buildings, fixtures and fittings, physical
equipment, furniture, etc.) and a portion of the amount
of any wages and fees paid. As from 2003, a reform of
the business tax arrangements meant that wages were no
longer included in the tax basis. Since then, the business
tax has been based solely on fixed assets.

(52)

(53)

France explained that the business tax exemption had
originally been the subject of a clerical error following
the calculation of
the various hypotheses as to the
timetable for implementing the industrial project. The
original estimate had not been corrected until 2005
owing, firstly, to the fact that various departments were
involved in compiling and administering the file and,
secondly,
the
exemption. The checks carried out had induced the
French authorities to inform the Commission of the re-
evaluation of the original estimate in 2005.

time delay in the

effect of

to the

In the light of all these new elements, the level of aid
granted is lower than what was planned in 2000 and in
2005. The eligible costs of the project come to EUR
158,5 million (EUR 150,165 million at net present
aid granted is EUR
value). The
17 106 280 (EUR 12 985 610 at net present value),
corresponding to an aid intensity of 8,65 % NGE.

amount of

total

The (nominal) amount of the final aid instalment, which
ought not to be paid until after the Commission has
given its authorisation (1), comes to EUR 4 276 570.
that
France has informed the Commission, however,
4/5 of this amount has already been disbursed and that
the balance comes to EUR 727 389 (in nominal terms).
France thus acknowledges having anticipated payment of
the final instalment of 25 % of the aid, but this was due
to errors in calculating the business tax exemption. The
French authorities assert that at no time have they sought
to usurp the Commission’s prerogatives.

(1) In accordance with point 6 of the 1998 MSF.

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(54)

(55)

(56)

In view of the changes (fewer jobs created than planned),
some of
revised
the planned aid has had to be
downwards. Pilkington even had to repay in September
2007 an overpayment under the PAT of EUR 146 430.
The revised aid granted under the three measures at issue
now comes to: EUR 993 968 under the PAT (of which
EUR 34 561 still has to be paid), EUR 1 532 765 under
the FIL (1) (aid linked to the PAT, of which EUR 399 851
still has to be paid) and EUR 694 426 under the FIBM (2)
(part of the aid for real estate development, of which
EUR 64 304 still has to be paid). To the total of EUR
498 716 still
there must be added EUR
228 673 of aid from the Conseil Général, which brings
to EUR 727 389 the amount to be taken into account
pending the Commission’s Decision authorising payment
of the final instalment.

to be paid,

France explains that only PGF enjoyed business tax
exemption in respect of
its Seingbouse establishment
during the period 2001-05 (IGCF did not enjoy such
exemption during that period).

The aid which PGF received by way of the exemption
provided for in Article 1465 of the General Tax Code is
equal to the difference between the tax actually paid by
the company and the tax it would have paid had there
been no exemption,
the amounts taken into account
being the net amounts after application, where appro­
priate, of
in

the value-added ceiling (3). The amount

(57)

(58)

comes

tax
question
exemption granted to PGF’s Seingbouse establishment
for the years 2001 to 2005).

EUR 986 170 (business

to

The French authorities state that they cannot explain the
error made in 2005 in respect of the amount then over­
estimated otherwise than by the existence of a misunder­
standing between two government departments over the
nature of the information to be produced within the
framework of the annual report and,
it would appear,
of confusion between the relief stemming from the
ceiling
exemption (aid
measure).

(general measure)

and the

France has recalculated the net grant equivalent for the
aid elements taken both together and separately, using
the current discount rate of 5,70 %. Each of
the aid
elements (apart from the aid for the land, which is not
subject to tax) has been apportioned between buildings
(19,24 %) and equipment (78,82 %). This apportionment
is based once more on the reality of the investment on
the ground, whereas at the time of the notification the
calculation was made using a standard distribution of the
aid basis (5 % land, 50 % buildings, 45 % equipment).
Next, the annual integrated share of the aid is calculated,
for each of the aid elements, on the basis of the depre­
ciation period (20 years for the building and seven years
for the equipment). The results of these calculations are
set out in the table below:

Aid measure

Aid amount
(in EUR, nominal value)

Aid amount
(in EUR, NGE)

Table 3

PAT (and FIL)

ERDF

Aid for land purchase

Real estate development
— of which Conseil régional
— of which Conseil général
— of which District
— of which State (FIBM)

Business tax exemption

SOFIREM

Aid intensity

Total

2 526 740

2 667 570

2 816 000

7 974 690

986 170

135 110

2 988 100

1 753 160

2 539 000

694 430

17 106 280

10,79 %

1 623 160

1 761 250

2 816 000

6 100 300

593 730

91 170

1 983 190

1 126 820

2 539 000

451 290

12 985 610

8,65 %

(1) Fonds d’Industrialisation de la Lorraine.
(2) Fonds d’Industrialisation des Bassins Miniers.
(3) The General Tax Code provides for a ceiling on business tax on the
basis of value added. The provision is a general one and cannot be
considered State aid (Article 1 647 B sexies of the General Tax Code).

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6. ASSESSMENT

6.1. Preliminary remarks

(59) On 17 August 2000,

to the Commission that

the Commission approved the
intensity of the aid for Pilkington/Interpane as notified
by France on 22 May 2000. Subsequently, France
pointed out
infor­
mation had been furnished in the original notification
insofar as that information constituted a decisive
and,
factor
the Commission decided on
26 April 2006 to open the procedure laid down in
Article 88(2) of the EC Treaty in respect of the aid at
issue with a view to revoking the 2000 Decision and
adopting a new decision.

the decision,

incorrect

for

(60)

The 2000 Decision contains a full assessment of the
notification. The assessment
in the 2000 Decision is
reproduced in the present Decision with the exception
of the elements that must be corrected in the light of the
information submitted by France on 13 January 2005,
which formed the subject matter of the opening decision
of 26 April 2006, and of the information subsequently
submitted to the Commission.

6.1.1. Applicable guidelines

(61)

France notified the aid for PGF/IGCF by letter dated
22 May 2000, registered as received on 25 May 2000.
Footnote 58 of the Guidelines on national regional aid
‘Individually notifiable
for 2007-2013 (1)
investment projects will be assessed in accordance with
the rules in force at the time of notification’. Conse­
the present
quently,
project
the 1998 MSF and
must be examined in the light of that framework.

the Commission considers

falls within the scope of

states

that

that

6.1.2. Relevant facts

(62)

The present assessment reflects the facts and situations as
they existed at the time of notification, i.e. 22 May 2000.

(63)

The Commission must adopt a decision on the basis of
ex-ante estimates of future prospects and market shares.
Aid intensities are not adjusted subsequently if several
years later — ex post — the figures show that
the

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

market, for example, has evolved differently from what
was originally expected. Although in the present case the
Commission is having to take a decision eight years after
the original notification,
it must nevertheless base its
assessment on the facts and situations as they existed
at the time of notification.

(64)

(65)

intensity,

calculating

the maximum aid
take account, however, of

the
In
Commission will
the new
information submitted by France. France has reduced
the aid granted to take account of the actual number
of jobs created by the investment (revised downwards
compared with the data contained in the notification)
and to rectify an error
the
amount of the business tax exemption as notified in
2000.

in the calculation of

6.2. The formation of joint ventures considered in
the light of Article 81(3) of the EC Treaty

it

to the Council

should be observed that, whilst

First of all
the
procedure laid down in Articles 87 and 88 leaves a
wide discretion to the Commission and,
in certain
to come to a decision
conditions,
regarding the compatibility of a system of aids granted
by States with the requirements of the common market,
it is clear from the general plan of the Treaty that that
procedure must never produce a result which is contrary
to the specific provisions of the Treaty (2).

(66)

The Court of Justice has also held that those aspects of
aid which contravene specific provisions of the Treaty
other than Articles 87 and 88 may be so indissolubly
linked to the object of the aid that it is impossible to
evaluate them separately (3).

(67)

This obligation on the part of the Commission to ensure
that Articles 87 and 88 are applied consistently with
other provisions of the Treaty is all the more necessary
where those other provisions also pursue, as in the
present case, the objective of undistorted competition
in the common market. When adopting a decision on
the compatibility of aid with the common market, the
Commission must be aware of
individual
traders undermining competition in the common market.

the risk of

(2) Case 73/79 Commission v Italy [1980] ECR 1533, paragraph 11.
(3) Case 74/76 Iannelli & Volpi v Meroni [1977] ECR 557, paragraph 14.

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(68) Nevertheless, the procedure under Articles 81 et seq. and
that under Articles 87 et seq. of the Treaty are inde­
pendent procedures governed by specific rules.

(73)

6.5. Legal basis of certain aid measures

Part of the aid is being granted on the basis of regional
investment aid schemes approved by the Commission
and in force at the time the aid was notified (see point
2.3 of this Decision), while another part is being granted
as ad hoc aid.

(69)

Consequently, when taking a decision on the compati­
bility of State aid with the common market,
the
Commission is not obliged to await the outcome of a
parallel procedure initiated under Regulation No 17,
it has reached
once,
the conclusion, based on an economic analysis of the
situation, that the recipient of the aid is not in breach
of Articles 81 and 82 of the Treaty.

in the exercise of

its discretion,

(70)

In the light of the facts described in point 3.1.2 above,
and having regard to the abovementioned case law of the
Court of Justice, the Commission considers that there is
no obstacle to authorising the aid planned for PGF/IGCF.

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

(71)

State

the meaning

resources within

the investment costs on their own.

The aid at issue has been granted by a Member State
through
of
Article 87(1) of the EC Treaty (see point 2.3 of this
Decision). The aid confers an advantage on PGF/IGCF
without which the companies would have had to bear
all
Insofar as a
substantial volume of raw glass is transported across
national borders,
international trade takes place in the
raw glass market. Consequently, the financial advantages
conferred on the companies may distort competition and
affect trade between Member States. In its assessment, the
Commission therefore
the notified
measure constitutes State aid within the meaning of
Article 87(1) of the EC Treaty.

considers

that

(74) As regards aid granted under the ERDF, Article 25 of
Council Regulation (EC) No 1260/1999 of 21 June
1999 laying down general provisions on the Structural
Funds (1) provides that those Funds may finance expen­
diture in respect of major economic projects the cost of
which exceeds EUR 50 million. The ERDF can thus
supplement national measures such as the PAT and
assistance towards business premises where the single
programming
region
concerned so provide. The Freyming-Merlebach area is
included in the French map for Objective 2 ‘Economic
and social conversion of areas facing structural diffi­
culties’ approved by the Commission on 16 January
2000.

(DOCUP) of

documents

the

(75)

The possibility of ad hoc aid for purchasing land and
buildings is open by law to regional and local authorities
in regionally aided areas.

(76)

the French
By letter dated 30 June 2000 (A/35411),
authorities provided a breakdown of the calculation of
the amount of business tax exemption showing that, in
the present case, the cost of the investments and the cost
of the permanent jobs created had been taken as a basis
in 2003, a
for calculating the exemption. However,
reform of business tax law led to wages being removed
from the tax basis. Since then, business tax has been
based solely on fixed assets. Consequently, the aid can
be considered investment aid within the meaning of the
1998 Guidelines on national regional aid.

(77)

The award of ad hoc aid to businesses is conditional on
their committing themselves to maintaining the aided
jobs and investment in the area for at least five years.

6.4. Notification requirement

(72)

Since the three cumulative conditions laid down in point
2.1(i) of the 1998 MSF are met, the aid proposal must be
notified and the maximum allowable aid intensity must
be determined in accordance with the 1998 MSF. Ad hoc
aid must, moreover, be notified to the Commission
under Article 88(3) of the EC Treaty.

(78)

The Commission’s examination in the present proceeding
is limited to assessing the compatibility of the notified
aid intensity of 8,65 % according to the criteria of the
1998 MSF.

(1) OJ L 161, 26.6.1999, p. 1.

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6.6. Assessment under the 1998 MSF

(79)

The maximum allowable aid intensity for projects under
the 1998 MSF must be determined on the basis of the
maximum intensity rate applicable to regional aid in the
assisted area in question at the time the aid was notified.

for Interpane). It is planned to produce 90 % of low-
emission glass and 10 % of sunlight-reflective glass of a
thickness of either 4,6 mm or 8 mm.

(80)

The Commission considers that the new elements do not
call
into question its overall assessment of the market
and its evolution as set out in its 2000 Decision.

(81)

the
The Commission would recall
companies taking part in the project at issue held, at
the time the project was notified, a high market share
within the meaning of point 3.6 of the 1998 MSF.

that none of

6.6.1. The relevant product and market

(82)

Float glass can be used to make windows for buildings
and for motor vehicles. The plant forming the subject-
matter of the notification is configured to produce glass
for the building industry. The product and market defi­
nitions contained in the 2000 Decision have been neither
called into question nor modified and did not form part
of the decision of 26 April 2006 to open the procedure.
The assessment that follows is therefore reproduced from
the 2000 Decision.

T h e p r o d u c t

(83)

Raw float glass is produced by floating a continuous
stream of molten glass onto a bath of molten tin in an
atmosphere of nitrogen (so-called float glass process
developed by Pilkington in the 1960s).

(84)

an electromagnetic

Coated glass is a basic glass which has undergone a
surface treatment or coating (applied under vacuum
designed
to
using
eliminate reflections or ensure thermal
insulation. It is
thus possible to obtain a thermo-regulating glass (low-
emission, or ‘low-E’, glass: Iplus brand for Interpane) or a
solar control glass (sunlight-reflective glass: Ipasol brand

process (1))

(1) The process used is the ‘magnetron’ process whereby the raw glass is
treated on a separate production line. There exists another process,
the pyrolitic treatment process
it
possible to treat the glass directly on the float line.

(pulverisation), which makes

(85)

Laminated glass is a type of safety glass composed of two
or more panes of glass with PVB (polyvinyl butyral) or
resin film in between (2).

(86)

First-stage-processed raw float glass and coated glass are
listed together
in the statistical nomenclature under
codes:

— CN 7005: Float glass and surface ground or polished
glass, in sheets, whether or not having an absorbent,
reflecting or non-reflecting layer, but not otherwise
worked,

— NACE 26.1.A: Manufacture of flat glass.

(87) Unworked float glass is used in the building and auto­
motive industries. According to the GEPVP, 80 % of
European float glass production is intended for
the
building industry. The investors will manufacture only
glass for buildings at
the Freyming-Merlebach site. A
special
feature of this type of production is that the
manufacturing plant works to order (for batch sizes
and the thickness and other specifications of the glass)
on small production runs.

(88)

The products resulting from the first-stage processing of
raw float glass are intermediate goods used in the manu­
facture of safety glass (statistical code CN 7007 —
consisting of toughened (tempered) or laminated glass)
and of multiple-walled insulating units of glass for the
building industry (statistical code CN 7008 — consisting
of at least two panes of glass separated by one or more
hermetically sealed spaces
enclosing dehydrated air
and/or other gases). Glass insulating units are made
mostly from coated glass.

(2) All definitions have been taken from the work L’industrie du verre by
the Secrétariat d’Etat à l’industrie, Service des Etudes et des Statis­
tiques Industrielles (SESSI), 1999.

(89)

(90)

(91)

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for

The companies will also produce laminated glass for the
building industry at the Lorraine plant. This product is
listed
statistical purposes under CN heading
7007 29 00 — Laminated safety glass — Other. The
this
other
heading are used in the automotive industry, which is
the leading consumer of laminated glass manufactured
in Europe (windscreens).

laminated glass

included under

types of

totality of

investors’ wishes

the building industry. This
the

Float glass can be used to make windows for buildings
and for motor vehicles. The Commission notes that, in
keeping with the
to satisfy the
increasing demand for glass for building construction,
the Freyming-Merlebach plant is configured to produce
glass
speciality now
for
Interpane’s business. The
represents
group has no capacity for processing primary glass into
car widows, nor has it any commercial relations with
motor manufacturers. The coated glass produced at the
new plant will have properties
for
buildings only (1). The laminated glass will
likewise be
used to make safety glass for buildings. Consequently,
the investors’ decision to manufacture only glass for
the building industry at Freyming-Merlebach would
appear to be irreversible.

that are useful

(93)

(94)

(95)

In the present case, no evidence to show that the relevant
geographic market is different from the EEA emerged
during
geographic
investigation. The
market must therefore be defined as the EEA.

relevant

the

M a r k e t

t r e n d s

The Commission is not disposed to accept
the data
enclosed with the notification showing a high rate of
utilisation of production capacity. The data were
supplied by the glass industry (GEPVP) (2) and correspond
to what the industry calls ‘saleable capacities’ (3). This
calculation method may be useful to the industry, but
it makes it hard to compare the capacity utilisation data
with those available for other industrial sectors.

Consequently, the Commission based its analysis in its
2000 Decision
apparent
consumption.

evolution

the

on

of

that

trends,

treatment

the Commission considers

In the light of the above, and with a view to comparing
a
market
distinction must be drawn between the trend in raw
float glass and the trend in intermediate products such
laminated glass or coated glass which undergo
as
for final use as architectural or
subsequent
building glass. This distinction is consistent with the
Commission’s analysis of
in the
context of
the abovementioned agreements on the
formation of two joint ventures, where a distinction is
made between the raw float glass market as such and the
(including
final use of
laminated and coated glasses)
architectural or
building glass.

types of glass
as

the relevant market

the various

G e o g r a p h i c s c o p e

(92)

The geographic market comprises in principle the EEA
or, where appropriate, any substantial part of
the
territory of the EEA if the conditions of competition
are appreciably different there from those prevailing in
the rest of the EEA.

(1) Standards and requirements in terms of solar and thermal reflectivity

are different in the automotive industry.

(96)

The notification included volume data on the evolution
of apparent consumption of float glass (CN 7005) during
the period 1993-98.

(97)

in price levels (4). Such a fall,
The results show a fall
together with a volume growth rate of 4,89 %, points
to average growth being below the annual average of
5,78 % for EEA manufacturing industry as a whole,
which suggests that the market is in decline within the
meaning of the 1998 MSF.

(98)

The Commission considers however — as indicated
above — that a distinction must be drawn between the
trend in raw float glass and the trend in intermediate
products such as laminated glass or coated glass which
undergo subsequent
for final use as archi­
tectural or building glass.

treatment

(2) European Flat-Glass Producers Association.
(3) Saleable capacities are calculated from the nominal melt capacity
float glass
corrected for
produced is
lost during the manufacturing process) and for
furnace stoppages to change the glass colour and thickness and to
carry out major periodic repairs.

(approximately 15 % of

losses

the

(4) EUR 366,9/t in 1993 and EUR 338,19/t in 1995, peaking in 1995.

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(99)

The Commission notes in particular that prices of sealed
units (CN 7008) (1)
increased substantially during the
period 1993-98. The increases were due to the intro­
duction of new European standards concerning the use
of insulating materials in building and to the long-term
trend in the industry towards using insulating products
and materials.

aid normally allowed in the region concerned will unduly
distort competition.
the 1998 MSF
provides for the application of an adjustment factor of
0,50.

In such cases,

(100) The Commission notes also that the average growth in
consumption of insulating products (including insulating
glass for building) will experience a strong upward trend
owing to the stricter carbon emission controls following
the adoption of the Kyoto Protocol to the 1997 United
Nations Framework Convention on Climate Change. In
the residential and building sector, thermal insulation is
an effective technology in terms of energy saving and
hence in terms of carbon emissions
Im­
plementation of the new standards for insulation types
(ISO 10456) and for heat
loss (ISO 832) will entail
higher heat loss values which will lead to an increased
need for energy savings.

reduction.

(101) Consequently,

the

analysis

in line with

in the
the
Commission Decision in the Rockwool
strong upward trend shown by intermediate glass
products which undergo subsequent treatment for final
use as architectural or building glass points to the
conclusion that the market is not in decline (3).

case (2),

(i) raw float glass and (ii)

(102) To conclude, a different trend is found to exist in the
intermediate glass
case of
products which undergo subsequent treatment for final
use as architectural or building glass (such as laminated
glass or coated glass): as regards (i), the Commission
considers
in decline within the
meaning of the multisectoral framework; as regards (ii),
the market is not in decline.

the market

that

is

(104)

In the present case, the Commission has identified the
raw float glass market as being a market in decline. None
of the founders of the two joint ventures has a share of
40 % or more of this market.

6.6.2. Determination of the maximum allowable aid intensity

(105)

determines

In accordance with the provisions of the 1998 MSF, the
Commission
the maximum allowable
intensity for a notified aid measure according to a
formula which takes into account various factors. The
calculation begins by identifying the maximum aid
intensity (regional ceiling) which a large company may
obtain in the assisted area concerned within the context
the
the authorised regional aid system valid at
of
moment of notification.
the
to calculate
in
maximum allowable aid intensity for
question, a range of adjustment factors are then applied
to the percentage obtained in accordance with three
specific assessment criteria, namely: competition,
the
capital-labour ratio and regional impact.

the project

In order

M a x i m u m a i d i n t e n s i t y i n t h e
a r e a c o n c e r n e d ( R )

a s s i s t e d

(106) According to the applicable French regional aid map for
Freyming-Merlebach
period
the
employment
an assisted area within the
meaning of Article 87(3)(c) of the EC Treaty in which
the intensity of public investment aid can be as high as
15 % NGE.

2000-06,
is

area

the

M a r k e t s h a r e s

(103) Where a project results in a capacity expansion in a
sector facing structural overcapacity and/or a declining
market and is likely to reinforce high market share (4),
there is a risk that the award of the maximum levels of

(1) Multiple-walled insulating units of glass, consisting of one or more
hermetically sealed spaces enclosing dehydrated air and/or other
gases.

(2) Commission Decision of 21 April 1999 in Case N 94/99 Rockwool

Peninsular SA.

(3) See point 7.8 of the 1998 MSF.
(4) Put, for the purposes of the 1998 MSF, at least 40 %.

T h e c o m p e t i t i o n f a c t o r ( T )

(107) The competition factor (points 3.2 to 3.6 of the 1998
MSF), as determined in the 2000 Decision, has been
neither challenged nor amended and did not form part
of the decision of 26 April 2006 to open the procedure.
The assessment that follows is therefore reproduced from
the 2000 Decision.

(108) The competition factor involves an analysis of whether
the notified project will be implemented in a sector or
subsector suffering from structural overcapacity.

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(109)

the 1998 MSF
In accordance with the provisions of
(point 3.3), the potential existence of structural overca­
pacity is evaluated by considering the difference between
the average capacity utilisation rate for manufacturing
industry as a whole and the capacity utilisation rate of
the relevant sector or subsector.
In the absence of
sufficient data on capacity utilisation, the Commission
considers whether the investment is taking place in a
declining market. For
it compares the
evolution of apparent consumption of the product(s) in
question with the growth rate of EEA manufacturing
industry as a whole.

this purpose,

(110) As indicated above, the Commission is faced with an
absence of reliable data on the sector concerned. It is
therefore impossible to calculate capacity utilisation, or
even apparent consumption, for this sector.

(111) On the basis of the market trend analysis, a factor of
0,75 must be applied to the part of the investment that
is devoted to the production of raw float glass (CN
7005). For the part of the investment that relates to
laminated or coated building glass falling under CN
headings 7007 and 7008, a competition factor of 1
should be applied.

(112) The 1998 MSF does not envisage a situation in which
two or more competition factors might be applied to a
single investment for which a different market trend has
been assessed for each relevant product. Insofar as, in the
present case, the application of only one of the two
factors to the whole investment would be not only
the Commission
disproportionate but also inaccurate,
should be
considers
the
that
weighted so as to reflect
trend for each
relevant product.

competition factor
the market

(114) This results in a factor T of 0,85 (1), which represents the

competition factor (1 and 0,75) in the two markets.

T h e c a p i t a l - l a b o u r f a c t o r ( I )

(115) The new information furnished by the French authorities
gives rise to a new capital-labour coefficient. The amount
of eligible investment is EUR 158,5 million. France has
indicated that
jobs created will
ultimately be 176. The capital-labour ratio is therefore
900. As this ratio is between 701 and 1 000, a factor I
of 0,7 should be applied instead of 0,8 as originally
provided (point 3.10(2) of the 1998 MSF).

the number of direct

T h e r e g i o n a l

i m p a c t

f a c t o r ( M )

(116) The new information furnished by the French authorities
gives rise to a new indirect jobs-direct jobs coefficient.
France has indicated that the number of indirect jobs
created is 150, equivalent to 85 % of the number of
direct
jobs. As this percentage is between 50 % and
100 %, a factor M of 1,1 should be applied instead of
1,2 as originally provided (point 3.10(3) of the 1998
MSF).

C a l c u l a t i o n o f
a i d i n t e n s i t y

t h e m a x i m u m a l l o w a b l e

(117)

In the light of the above, the revised maximum allowable
intensity of the aid in the present case is therefore: R × T
× I × M = 15 % × 0,85 × 0,7 × 1,1 = 9,82 % (whereas it
was 12,24 % in the 2000 Decision).

6.7. Conclusion on the compatibility of

the aid

granted

(118)

In the light of all these new elements, the level of aid
granted is lower than what was planned in 2000. The
eligible costs of the project come to EUR 158,5 million
(EUR 150,165 million at net present value).

(113)

Inasmuch as the project consists in a fully integrated
plant,
it would be artificial to establish an adjustment
factor calculated on the basis of the relative value of
the relevant
the investment
products. The Commission has
therefore used an
adjustment
(40/60) which is based on the
respective capacities placed on the market by the aid
recipient.

in relation to each of

factor

(119) Basing themselves on the method described in Annex I
to the 1998 Guidelines on national regional aid, the
is an NGE of
French authorities state that
EUR 12 985 610 for
aid amount of
EUR 17 106 280.

a nominal

the result

(1) (0,4 × 1) + (0,6 × 0,75).

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(120) According to the French authorities, the intensity of the
aid to the PGF/IGCF project therefore comes to 8,65 %
NGE (12 985 610/150 165 000), which is lower than
the maximum allowable intensity recalculated to take
in the project’s parameters
account of
(9,82 % NGE).

the changes

Article 2

The State aid which France plans to implement in favour of
PGF/IGCF of an intensity of 8,65 % NGE is compatible with the
common market within the meaning of Article 87(3)(c) of the
EC Treaty.

(121) The notified aid intensity of 8,65 % NGE which France
proposes to grant to PGF/IGCF fulfils the conditions for
its being considered compatible with the 1998 MSF.

Implementation of the aid is accordingly authorised.

(122) Given that the investment project has been completed,
there can be no application of the ex-post monitoring
conditions provided for in point 6 of the 1998 MSF.
France can therefore be authorised to pay the balance
of the final aid instalment, namely EUR 727 389 (in
nominal terms), to PGF/IGCF,

France is authorised to pay the balance of the aid, namely
EUR 727 389 (in nominal terms), to PGF/IGCF.

This Decision is addressed to the French Republic.

Article 3

HAS ADOPTED THIS DECISION:

Done at Brussels, 10 December 2008.

Article 1

The Decision adopted on 17 August 2000 in Case N 291/2000
is hereby revoked.

For the Commission

Neelie KROES
Member of the Commission