CELEX: 31974D0613
Language: en
Date: 1974-10-16 00:00:00
Title: 74/613/ECSC: Commission Decision of 16 October 1974 approving additional aids to be granted by the Federal Republic of Germany for the benefit of undertakings in the coal industry in respect of the calendar years 1971, 1972 and 1973

No L 335/30                               Official Journal of the European Communities                            14. 12. 74
                                                      COMMISSION DECISION
                                                         of 16 October 1974
               approving additional aids to be granted by the Federal Republic of Germany for the
               benefit of undertakings in the coal industry in respect of the calendar years 1971 , 1972
                                                               and 1973
                                                  (Only the German text is authentic)
                                                            (74/613/ECSC)
  THE COMMISSION OF THE EUROPEAN                                       Whereas the purpose of that measure was to improve
  COMMUNITIES ,                                                        the undertaking's liquidity position, RAG being
                                                                        able to use its claim as security in order to obtain
                                                                        additional credit from the banks ;
 Having regard to the Treaty establishing the
 European Coal and Steel Community, and in                             Whereas, according to the annual reports for 1971
  particular Articles 2, 3 , 4 and 5 thereof;                           and 1972 published by RAG :
 Having regard to Commission Decision No 3 /71 /                       — in 1971 operating losses of DM 178 million were
 ECSC (') of 22 December 1970 on Community rules                            not covered by financial assistance from public
 for intervention by Member States for the benefit of                      funds but carried forward to the 1972 financial
 the coal industry ;
                                                                            year ;
 Having regard to Decision No 73 / 287/ECSC (2) of                     — in 1972 operating losses rose by DM 567
 25 July 1973 on coking coal and coke, and in                               million ;
 particular Article 9(1 ) thereof;
                                                                       Whereas RAG 's total losses therefore amounted to
 Having consulted the Council ;                                        DM 745 million at the end of 1972 ;
 Whereas on 14 November 1973 the Commission of                         Whereas, in order to ease RAG's critical position
 the European Communities adopted Decision                            the Federal Government has authorized the release
 No 73/397/ECSC (3 ); whereas this Decision approved                   of DM 650 million from Che specially created
the aid proposed by tihe Government of the Federal                     stabilization reserve ( which was to be funded out of
Republic of Germany for the benefit of the coal                        the company's registered claim), in order to cover
industry in respect of 1972 to the extent that it had                 part of the operating losses sustained in 1971 and
been included and examined by the Commission in                        1972 ; whereas, following the implementation of this
the 'supplementary report on financial intervention                    measure RAG still had at the end of 1972 uncovered
by Member States in 1972 for the benefit of the                       losses of DM 95 million, which were carried forward
 coal industry' (4);                                                   to the 1973 financial year;
Whereas, as stated in that report (5), the Federal                    Whereas RAG's registered claim was thus used not
Government had adopted a number of measures to                        only to improve its liquidity position but also to
aid the largest German coal undertaking, the                          cover losses ;
Ruhrkohle AG (RAG); included the entry in
November 1971 in the Official Debt Register
(Schuldbuck) of a claim (Schuldbuckforderung) in                      Whereas RAG 's total losses of DM 745 million at the
favour of RAG in an amount of DM 1 000 million ;                      end of 1972 exceeded its share capital of DM 500
                                                                      million by almost 150% , so that it would no longer
                                                                      have been possible for Che undertaking to stay in
                                                                      business ;
W   OJ No L 3 , 5 . 1 . 1971 , pp . 7 et seq .
(2) OJ No L 259 , 15 . 9 . 1973 , p. 41 .
(3) OJ No L 346 , 17. 12 . 1973 , pp . 15 et seq .
(4) Doc. SEC(73 ) 2272 fin ., pp . 3 et sea .                         Whereas the economic and social situation in the
(5) Doc . SEC(73 ) 2272 fin ., pp . 4 et seq .                        Land North Rhine-Westphalia, where RAG carries on
 ---pagebreak---  14. 12 . 74                            Official Journal of the European Communities                             No L 335 /31
 the greater part of its activities, is at present relatively      Whereas 87% of the operating losses sustained by
 favourable, although there are still problems in                  RAG are to be covered ' by the aid; whereas if this
 certain fields, mostly in connection with coal­                   percentage is applied to each of the financial years
 mining (*); whereas, however, this situation would                the aid (DM 650 million) can be 'broken down into
 change if RAG had to cease its activities and                     DM 155 million for 1971 and DM 495 million for
 dismiss, within a relatively short period of time,                1972 (42-3 million u.a.       and   135-2 million u.a .
 the 170 000 employees whose jobs at present it                    respectively);
 provides ; whereas in the circumstances it follows
 that the covering of losses is compatible with the
 provisions of the first subparagraph of Article 9 ( 1 ),          Whereas the following amounts of aid are to be
 since the effect of this is to prevent a drop in                  granted to the entire coal industry in the Federal
 production due to market forces which would result                Republic of Germany in 1971 and 1972 ;
 in serious economic and social upheavals in an area
 where, in the short term, there is insufficient
 employment for such a large numiber of workers ;
                                                                                                          million units of account
                                                                                                           1971           1972
 Whereas, as regards the appropriateness of the aid
 having regard to the difference between production                 Original amounts                     210-1          261-1
 costs and revenue, it can be seen that the aid will
 cover only approximately 87% of the total operating               Additional amounts                     42-3          135-2
 losses for 1971 and 1972 ; whereas the operating
 losses stem almost exclusively from the collieries ;                                        Total       252-4          396-3
 whereas the aids therefore comply with the
provisions of Article 9                (2) of Decision
 No 3 /71 / ECSC ;                                                 Aid per metric ton                       2-16           3-65
Whereas the aid is to be paid for two previous
financial years ( 1971 and 1972); whereas other aids
granted by the public authorities to the undertaking               Whereas the total amount of German aid for 1972
during those two financial years, and included and                 is 143-9 million units of account (— + 57% higher
examined in the Commission memorandum, were                        than for 1971 ); whereas the increase in the amount
counted as exceptional income When determining                     of aid per metric ton amounts to 69% ;
the amount of the losses ; whereas the payment of
the aid in respect of the previous years is therefore
compatible with the provisions of Article 9 (5 ) of                Whereas, as far as can be seen from the overall
Decision No 3/71/ECSC;
                                                                   foreign trade figures, this has had no unfavourable
                                                                   effects on the trade in coal within the Community ;
Whereas it can be concluded from the explanation
given above that the covering by the public
authorities of part of the operating losses sustained              Whereas, although aid towards the covering of the
by RAG in the financial years 1971 and 1972 is                     losses sustained by RAG has reduced the difference
compatible with the provisions of Article 9 of                     between the amount of subsidies granted in Germany
Decision No 3/71 /ECSC ;                                           and in the other Member States, it has, however, at
                                                                   the same time, created a difference between the
                                                                   subsidies granted to RAG and those granted to the
Whereas, for      the purposes of   an examination of the          other German undertakings in 1972, since the aid
compatibility      of the aid to   cover operating losses          was for the benefit of one undertaking only;
sustained by      RAG with the      proper functioning of          whereas, on account of this and in view of the
the common        market (Article   3 ( 1 ) of Decision No         increase in the number of price alignment agreements
3 /71 /ECSC), the total amount of DM 650 million                   concluded in 1972, the Commission has examined
must be divided proportionally between the financial               the competitive situation ; whereas it was found that
years 1971 and 1972 and added to the amounts of                    the various German undertakings in the coal
aid already approved 'by the Commission for                        industry were in competition with RAG in respect
1971 /72 ;                                                         of certain parts of their production, but that there
                                                                   were no substantial indications that the aid granted
                                                                   to RAG to cover its losses had led to a distortion
                                                                   of competition on the common market in coal ;
( x ) See the Commission Decision of 17 February 1971              whereas the quantities of coal sold at the aligned
      concerning investment premiums in the German coal­           prices in 1972 were in fact greater than those sold
      mining regions ( OJ No L 57, 10. 3 . 1971 , p. 19).          in 1971 ; whereas sudh alignment agreements were
 ---pagebreak--- No L 335/32                         Official Journal of the European Communities                                14. 12. 74
concluded exclusively between undertakings which                                                         in DM 1 000 000
did not belong to RAG ; whereas such price                     — aid in respect of equalization of burdens
agreements did not arise as a result of the special                 (Lastenausgleich) payments                     21-0
aid granted to RAG but are an indirect result of
competition between the German coal industry as
a whole and coal and other energy substitutes                  — closure premiums                                  75-0
imported from non-member countries ; whereas the                                                            Total  96-0
prices applied by RAG do not enable it to undercut
the prices of the imported energy substitutes ;
                                                               Aid to water supply undertakings in re­
Whereas, in view of the situation prevailing in 1972,          spect of expenditure incurred in removing
the Commission has no reason to doubt that the                 underground water from closed pits                  30-0
common market in coal is functioning properly; that
it could become necessary, in order that the common
market in coal may continue to function properly,              Premiums to staff in respect of shifts
to impose limits ; whereas it would, however, like             worked           underground      ( coal-winning
to remind the Federal Government on any further                premium)                                           110-0
increase in the differences between aids granted to
individual undertakings ;                                      Investment aids to individual projects
                                                               under an overall investment programme              160-0
Whereas it has also been found that :                          Payment of the instalments owed by RAG
                                                               in respect of state-guaranteed compen­
                                                               sation to the former mine-owning
— the prices charged by RAG for coking coal and                companies                                           56*9
     boiler coal do not amount to indirect aid to
     industrial consumers of coal ;
     the closure of five unprofitable pits belonging to        Whereas the aids listed above satisfy the require­
     RAG ( annual output — approximately five                  ments set out        in  Articles 6   to   9  of   Decision
     million metric tons) in 1972 has led to                   No 3 /71 /ECSC in respect of the admissibility of
     rationalization and concentration of production           such support measures taken by a State ;
     on pits where productivity is highest;
                                                               Whereas the aid to be paid through the 'Aktions­
 Whereas it can therefore be said in conclusion that
                                                               gemeinschaft Deutsche Steinkohlenreviere' may be
 the release of DM 650 million 'from the specially             granted only on condition that it is used in
 created stabilization reserve — that is funds to be
                                                               connection with 'a total or partial ' closure of pits'
 provided under RAG's registered claim — in order               (Article 6 ( 1 ) of Decision No 3/71 /ECSC);
to cover operating losses sustained in 1971 and
 1972 is compatible with the proper functioning of
 the common market ;'
                                                               Whereas the amounts of such aids do not exceed
                                                                the permissible level ;
 Whereas, furthermore, the Government of the
 Federal Republic of Germany notified the Com­
 mission, pursuant to Article 2 of Decision No                 Whereas as regards the aid in respect of
 3 /71 /ECSC, of the financial interventions, direct or         'equalization' payments the government has taken
 indirect, proposed for the benefit of the coal                into account the fact that the closure of a pit, leads
 industry during 1973 ; whereas the aids listed below          to the destruction to a considerable degree of the
 are subject to authorization pursuant to the Decision          original fixed assets ; whereas the aid which consists
 referred to above:                                             in the remission of two-thirds of the levy payable
                                                                on assets and 'credit gains' (Vermogens- und Kredit­
                                                               gewinnabgabe) to the Equalization Fund ( Lasten­
                                                                ausgleichsfonds ) is in any case considerably lower
 Aids as follows to be paid through the 'Aktionsge­             than the amount of capital lost as a result of the
 meinschaft Deutsche Steinkohlenreviere GmbH ' in               closure of the pits and is therefore within the limits
 respect of pit closure :                                       laid down in Article 6 of Decision No 3 /71 /ECSC ;
 ---pagebreak---  14. 12 . 74                             Official Journal of the European Communities                         No L 335/33
Whereas the closure premium paid to the under­                      undertakings of an optimal size within the meaning
takings in the coal industry by the Aktiqnsgemein­                  of Section 18 of the Law of 15 May 1968 concerning
schaft Deutsche Steinkohlenreviere in respect of the                the redeployment and recovery of the German coal
closures amounts to a lump sum of DM 15 per                         industry and the German coal mining regions;
metric ton produced ; whereas this amount was                       whereas the undertakings may use the aid only for
calculated on the basis of the balance sheet of the                 investments in pits, auxiliary installations and
Ruhrkohle AG for 1971 ; whereas this gives the                      processing plant; Whereas a maximum of 30% of
following picture of the future obligations of the                  purchase costs and/or manufacturing costs in respect
undertakings in the coal industry in respect of                     of the investment projects may be covered 'by the
mining damage, pensions and miners' concessionary                   aid ;
 coal allowances ;
 Continuing obligations in respect of mining damage and             Whereas it is not yet possible to indicate how the
                        social charges                              aid for 1973 will be apportioned among the
                                                                    individual projects ; whereas this will not be possible
                                     in DM per metric ton produced
                                                                    before the end df 1973 ;
                                1969         1970         1971
 Mining damage                 10-58        12-16         13-29
                                                                    Whereas the purpose and amount of the aid applied
Pensions                         5-62         5-54         6-47     for show that this measure is compatible with the
                                                                    provisions of Article 7 (2) of Decision No 3 /71/
 Miners' concessionary                                              ECSC; whereas the Federal Government is bound
coal                             6-11         6-05         6-29
                                                                    to notify the Commission at least once a year in
                                                                    the case of each project of the objectives pursued,
                  Total        22-31        23-75        26-05
                                                                    the amounts invested and the amount of aid granted;
Whereas it is only the charges listed above which                   Whereas provision has been made for 1973 for the
exceed the closure premium of DM 15 per metric                      public authorities in lieu of RAG to pay an
ton granted by the Federal Government;                              instalment of DM 56-9 million to the former pit
                                                                    owners, who have a state-guaranteed claim to
                                                                    compensation vis-a-vis RAG ;
Whereas the lump sum aid granted does not
therefore exceed the expenditure on the closure of
pits and is therefore compatible with the provisions
 of Article 6 (2) of Decision No 3/71 /ECSC ;                       Whereas in 1972 RAG suffered losses and will once
                                                                    again suffer high losses in 1973 ; Whereas the
Whereas the payment of aid amounting to DM 30                       payment of the instalments by the public authorities
million for the removal of underground water from                   is to be regarded as a measure aimed at preventing
closed pits is likewise compatible with Article 6 ( 1 )             RAG from becoming bankrupt and thereby
of Decision No 3 /71 / ECSC :                                       jeopardizing the jobs of approximately 160 000
                                                                    persons ;
Whereas the aid towards the payment of the coal­
winning premium helps the coal industry to achieve
 a stable situation as regards qualified workers, which
is absolutely imperative if its productivity is to                  Whereas payment by the Federal Government of the
increase ; whereas the undertakings are moreover                    instalments in respect of state-guaranteed compen­
                                                                    sation is therefore compatible with the provisions
 involved in expenditure on the recruitment, training,
                                                                    of the first subparagraph of Article 9 ( 1 ) of
retraining and retention of staff which greatly                     Decision No 3 /71 /ECSC ;
exceeds the amount of the contribution to this
premium ;
Whereas the purpose and amount of the coal­                         Whereas as regards the appropriations of the aid
winning premium show that this measure is                           having regard to the difference between production
compatible with Article 7 (3 ) of Decision                          costs and revenue it is found that the aid will cover
No 3 /71 /ECSC ;                                                    only a fraction of the operating losses which RAG
                                                                    can be expected to have sustained during 1973 ;
Whereas the purpose of the investment aids is to                    whereas such aid is therefore compatible with the
increase the economic viability of the German coal                  provisions of Article 9 (2) of Decision No
industry ; whereas such aid is to be granted to those               3 /71 /ECSC ;
 ---pagebreak--- No L 335 /34                        Official Journal of the European Communities                             14. 12. 74
Whereas the examination of the compatibility of                 Whereas, pursuant to Article 11 ( 1 ) of Decision
the German aid with the proper functioning of the               No 3 /71 /ECSC, the Commission must ensure that
common market must include all direct and indirect             'the aids authorized are employed for the purposes
measures to be taken for the benefit of the coal                set out in Articles 6 to 9 of that Decision ; whereas
industry in      1973  (Article 3    (2)   of Decision          the Commission must be informed in particular of
No 3 /71/ECSC);                                                 the amount of the aid and of the manner in which
                                                                it is appointed,
Whereas on that basis of calculation the total cost
of the proposed direct and indirect measures
amounts to 410*2 million units of account, i.e.                 HAS ADOPTED THIS DECISION :
4-04 units of account per metric ton produced ;
whereas this means a 3-5% increase in the total
amount of aid compared to 1972 ; whereas the
                                                                                       Article 1
amount of aid per metric ton will rise from
3-65 units of account to 4-04 units of account i.e. by
 10-7% ;                                                        The Government of the Federal Republic of
                                                                Germany is hereby authorized to grant to RAG in
                                                                respect of the calendar years 1971 and 1972 aid in
Whereas the German coal industry receives less aid              an amount of DM 650 million to cover operating
(per metric ton) than the Belgian, French and Dutch             losses . The following aids may be granted in respect
industries ; whereas the German aids are, however,              of the calendar year 1973 for the benefit of the
twice as high as those granted in the United                    German coal industry as a whole :
Kingdom ;
                                                                1 . remission of two-thirds of the obligations of pits
Whereas the following remarks can be made on the                     due to be closed in respect of the levy on assets
compatibility of the total amount of the German aids                 and 'credit gains' (Vermogens- und Kreditge­
with the proper functioning of the common market ;                   winnabgabe);
— such amount is consistent with the tonnage                    2. payment of a closure premium, in an amount of
    forecasts for 1973 , having regard to the Com­                   DM 15 per metric ton produced, through the
    munity's overall supply position in respect of                   'Aktionsgemeinschaft     Deutsche    Steinkohlen­
    coke and coal, so that the requirements of the                   reviere';
    first subparagraph of Article 3 ( 1 ) of Decision
     No 3 /71 /ECSC are satisfied ;
                                                                3 . reimbursement of the cost of pumping out
— there has been no noticeable decline in trade in                   underground water from closed pits, up to a
    coal between the Federal Republic of Germany                     maximum of DM 30 million;
    and the other Community countries in 1973 ;
                                                                4. partial remission of the wages tax due from
— as regards the prices of German coal, more price                   undertakings in the coal industry; up to a
    alignment agreements were concluded in 1972                      maximum of DM 110 million ;
    than in 1971 ;
— the prices of German coking coal and boiler                   5 . grant of investment aid in an amount not
    coal in 1973 did not amount to indirect aid to                   exceeding DM 160 million to undertakings in
    industrial consumers of coal ;                                   the coal industry in order to encourage
                                                                     investment ;
— the closure of unprofitable pits will lead to
    rationalization   and      the  concentration     of
    production in pits where productivity is highest;           6 . payment of instalments owed by RAG in respect
                                                                     of the state-guaranteed compensation of the
                                                                     former mine-owning companies, up to a
Whereas it can therefore be concluded that the                       maximum of DM 56-9 million .
German aids for the benefit of the coal industry
are compatible with the proper functioning of the
common market;
                                                                                       Article 2
Whereas this applies even when account is taken                 The Federal Government shall notify the Commission
of those aids paid to the coal mines under Decision             by 30 November 1974 of details of the aids granted
No 73 /287/ ECSC ;                                              pursuant to this Decision , in particular as regards
 ---pagebreak--- 14. 12 . 74                     Official Journal of the European Communities                        No L 335 /35
the amounts paid and the manner in which such              Done at Brussels, 16 October 1974.
amounts are apportioned.
                                                                                         For the Commission
                     Article 3
                                                                                             The President
This Decision is addressed to the Federal Republic
of Germany .                                                                           Fran^ois-Xaviei ORTOLI