Source: EURLEX
Language: en
Format: md

# No C 310 / 4 ran Official Journal of the European Communities 22 . 11 . 95

Approval of a State aid pursuant to Articles 92 and 93 of the EC Treaty

Cases where the Commission does not raise objections

State Aid N 135 / 95

( 95 / C 310 / 05 )

( Text with EEA relevance )

Summary of the Commission 's decision not to oppose the R&D, environmental and training aid
which the Austrian Government intends to provide to Opel Austria in support of its expenditure

on the Family-O-engine project

By letter dated 3 February the EFTA Surveillance The training expenditure covers costs of trainers material
Authority transferred a proposal of the Austrian auth ­ and travel for basic non-company specific training
orities to award State aid on the basis of the Financial related to quality control, basic hydraulics and pneu ­
Guarantee Act of 1977 to Opel Austria, a wholly owned matics as well as EDP-related knowledge . On-the-job
subsidiary of General Motors Corp. Detroit, of which it training concerns problem solving, maintenance and
had been notified on 4 November 1994, to the repair techniques required by new production processes .
Commission . The proposal concerns aid for R&D,
environmental protection and employee training linked
to the development and implementation of the new
Family-0 engine at Opel Austria 's plant in Aspern / The project takes place over the period of 1994 to 1998
Vienna . at a total cost of oS 4 913 million ( ECU 375,4 million ).
Of these, oS 3 421 million ( ECU 261,4 million ) concern
normal investment, which is not eligible for aid . The

The R&D, environmental and training expenditure Family-0 engine will be exclusively produced in Aspern

with an annual capacity of 500 000 units . At the same

originate from Opel 's decision to develop a new small time capacity of the Family - 1 engine will be reduced to

The training expenditure covers costs of trainers material
and travel for basic non-company specific training
related to quality control, basic hydraulics and pneu ­
matics as well as EDP-related knowledge . On-the-job
training concerns problem solving, maintenance and
repair techniques required by new production processes .

The R&D, environmental and training expenditure

with an annual capacity of 500 000 units . At the same

originate from Opel 's decision to develop a new small time capacity of the Family - 1 engine will be reduced to
size petrol engine Family ( Family-0 ), which forms part of

160 000 units from the present 452 000 p. a . Employment

an new overall approach to the powertrain design . The

in Aspern will rise from 2 700 to 3 000 people .

engine, which is developed in a three-cylinder and a
four-cylinder version, will have lower fuel consumption
and reduced emissions and would also be more easily
recyclable . It will incorporate a completely new
generation of an engine manangement system . The proposed aid for product related R&D will amount
to oS 93,8 million ( ECU 7,2 million ) at an intensity of

160 000 units from the present 452 000 p. a . Employment
in Aspern will rise from 2 700 to 3 000 people .

The process development expenditure concerns new
processes in crankshaft and con-rod machining and the
use of new materials for the con-rod . Furthermore, new
logistics, layout and production control systems will be
employed . The innovations result in new modular
production .

Although part of the development work will be
undertaken at Opel 's Technical Development Centre in
Russelsheim, Germany, it will be paid for by Opel
Austria and the intellectual property rights of all results
relating to the Family-0 engine will be transferred to
Opel Austria . The latter will be the sole owner of these
rights and will benefit from royalty payments, should
production of the engine in the future be undertaken in
other plants of the General Motors Group .

The environmental projects involve investments in the
cleaning and washing processes of the engine
components, which will reduce fluid emissions and noise
pollution significantly beyond legal standards .

1 5 %, while the proposed intensity on process related
R&D and innovative investment is 10 % resulting in an
amount of oS 72,8 million ( ECU 5,6 million ). For the
environmental expenditure a grant of 30 % will be given,
leading to an aid amount of oS 29,7 million ( ECU
2,3 million ). Finally, aid for basic training will be oS
8 million ( ECU 0,6 million ), i.e. 50 % intensity, while
aid for on-the-job training is set at oS 6 million ( ECU
0,5 million ) at an intensity of 25 % . In relation to the
total project cost of oS 4 913 million, the total proposed
aid reaches an intensity of 4,3 % .

The responsible administrations have employed inde ­
pendent auditors to monitor the correct execution of the
aided projects including the expenditure, which takes
place in Germany .

The proposed aid is granted by application of existing

aid schemes ( Financial Guarantee Act of 1977 and R&D
scheme of the City of Vienna ) and is notifiable under the
Community framework for State aid to the motor vehicle
industry . As there is a substantial intra-Community trade

22.11.95 | EN | Official Journal of the European Communities No C 310 / 5

balance and thus market acceptance . Apart from the
general design, the specific innovative aspects of the
engine concern the electronic engine management

system .

in passengers cars, the aid measures which relieve the balance and thus market acceptance . Apart from the
company concerned from part of the costs of its R&D, general design, the specific innovative aspects of the
environmental and training activities, clearly threaten to engine concern the electronic engine management
distort competition among vehicle manufacturers and to system .
affect trade within the Community within the meaning
of Article 92 ( 1 ) of the EC Treaty and Article 61 ( 1 ) of
the EEA Agreement . As concerns the process development, various elements
of the production process have to be considered inno ­
vative on a European level . They also involve
considerable risks for the company as to their efficiency

As outlined in the framework on State aids to the motor and practicability . This relates to the new sinuous layout
vehicle industry and the framework on R&D aid ('), the concept resulting from the parallel production of the
Commission recognizes the potential beneficial effects of Family-0 and 1 engines, specific grinding and drilling
R&D activity on economic development and takes a processes in the machining of various engine components
favourable view of aid to such activity, provided that it is and the con-rod cracking process using a completely new
not likely to adversely affect trading conditions to an material . Furthermore, the employment of the Andon
extent contrary to the EC Treaty . The assessment of system for production control and improvement is a first
such aid takes into consideration several factors such as

application on a European level . Finally, an innovative

the nature of the project, whether it really relates to system for the removal of coolant from the machine lines
genuinely innovative products or processes, the technical is employed .

As outlined in the framework on State aids to the motor
vehicle industry and the framework on R&D aid ('), the
Commission recognizes the potential beneficial effects of
R&D activity on economic development and takes a
favourable view of aid to such activity, provided that it is
not likely to adversely affect trading conditions to an
extent contrary to the EC Treaty . The assessment of
such aid takes into consideration several factors such as
the nature of the project, whether it really relates to
genuinely innovative products or processes, the technical
and financial risk involved and the risk of distortion of

competition .

For basic industrial research the level of aid should, as a
general rule, not exceed 50 % of the eligible costs . As
the activity being aided gets nearer to the market,
involving the areas of product and process development,
the Commission looks for progressively lower levels of
aid . The development expenditure follows applied
research, which was executed before the approval of the
aid and which was not aided . As the product devel ­
opment expenditure is closer to the market, the Austrian
authorities proposed to limit the aid intensity to 1 5 %,
which, in the Commission 's view, is an acceptable level .

The aid proposed by the Austrian authorities is limited to

an intensity of 15 % gross for the product development
expenditure and to 10 % for process development, and is
thus within the limits permitted by the motor vehicle and
R&D frameworks and in line with the intensities

approved in other cases in the motor vehicle industry .
The eligible costs upon which the calculation of these
intensities is based, conform to the categories set out in
Annex II to the R&D framework . As outlined above,
both the product and the new processes involve a
considerable degree of risk to the company . The aid
provides an incentive to the company to undertake an
additional effort in this field of engine development over
and above its normal operations .

As concerns the process development for this project, it The framework on State aid to the motor vehicle

is a mixture of development expenditure and innovative industry also accepts aid for general pollution control in
investment . In past cases ( 2 ), the Commission has never line with the Community guidelines on State aid for
approved more than an aid intensity of 8 to 10 % for environmental protection . The latter ( 3 ) specifies that
such expenditure . As the proposal of the Austrian auth ­ extra investment costs necessary ' to reduce or eliminate
orities acceptable is . limited to such an intensity, its level is pollution in order to and protect nuisances the or environment to adapt production ' may be subsidized methods

up to 15 % in gross terms if the investments lead to
compliance with new standards and up to 30 % if
standards are significantly exceeded or if there are no
The development expenditure has been examined by an standards .

independent expert and considered to be genuinely inno ­
vative on a European level . The innovative character of
the engine lies in the need to combine a great number of
different and often non-related technologies to
compensate for the inherent handicaps of a three ­
cylinder layout . Three-cylinder layouts have not been
used for a long time in Europe . Its introduction carries a
considerable risk with regard to its smoothness and

(») OJ No C 83, 11 . 4 . 1986 .
( 2 ) See aid to VW Bruxelles (C 12 / 90 ) and to Sevel Val di

The investment in new cleaning and washing processes
for the engine components lead to a significant reduction
in effluent emission and to the recycling of these
effluents . The investments either go beyond national
standards or are voluntary measures in the sense that no
standards exist . Furthermore, the new ' cold ' end function
and leak test leads to emission reductions . Finally, new
vapour extraction systems in the buildings lead to a

Sangro (N 396 / 94 ). ( 3 ) OJ No C 72, 10 . 3 . 1994 .

No C 310 / 6 EN Official Journal of the European Communities 22 . 11 . 95

reduction in oil mist far beyond legal standards, while
ventilation systems reduce noise pollution beyond legal
standards .

The eligible costs are limited specific investments
necessary to meet environmental objectives and do not
include general investment costs not attributable to
environmental protection or investment to create or to
replace capacity . Furthermore, the aid proposed by the
Austrian authorities is limited to an intensity of 30 %
gross, which is within the limits foreseen by paragraph
3.2.3.B and 3.2.3.C of the guidelines . Accordingly, the
aid is in proportion to the improvement of the
environment achieved .

In relation to the development of the new products and
production processes and the introduction of a new
assembly work structure, the project foresees measures
for training of the company 's workforce . The expen ­
diture excludes trainee 's wages and is split into basic and
on-the-job training, as explained above . In view of the
innovative nature of the project, it is considered that the
vocational training measures will correspond to
genuinely qualitative changes in the required skills of the

workforce . The basic training elements are not company
specific . On this basis and since the level of aid is within
reasonable limits, the proposed aid for training is
considered acceptable according to the rules on aid for
vocational training as specified in the framework on
State aid to the motor vehicle industry .

In conclusion, the R&D, environmental and training aid
proposed by the Austrian authorities for Opel Austria is
compatible with Article 92 ( 3 ) ( c ) of the EC Treaty and
Article 61 ( 3 ) ( c ) of the EEA Agreement, as it complies
with the criteria for R&D, environmental and training
aids set out in the Community framework for State aid
to the motor vehicle industry .

Accordingly, the Commission has decided, on the basis
of Article 92 ( 3 ) ( c ) of the EC Treaty not to raise any
objections to the proposal by the Austrian authorities to
award aid for product related R&D of oS 93,8 million,
for process related R&D and innovative investment of oS
72,8 million, for environmental expenditure of oS 29,7
million and for training expenditure of oS 14 million
under the assumption that the notified aid intensities are
respected .

Recapitulation of current tenders, published in the Supplement to the Official Journal of the
European Communities, financed by the European Community under the European Devel ­

opment Fund ( EDF ) or the European Communities budget

( week : 14 to 18 November 1995 )

( 95 / C 310 / 06 )

Invitation to

tender No

Number and date

of ' S ' Journal Country Subject

4075 S 219, 16 . 11 . 1995 Ethiopia ET-Addis Ababa : vehicles and
heavy equipment ( additional

information )

4029 S 220, 17 . 11 . 1995 Mauritius MU-Rose Hill : furniture,
miscellaneous equipment and
computer network

Final date

for submission

of bids

4 . 1 . 1996

16 . 2 . 1996