
Vol. 1, N° 2, Summer 1994 EC COMPETITION POLICY NEWSLETTER PAGE 51
SMEs. The duration of these two scheme corresponds to the
duration of the current program under the Community
Structural Funds.
In order to determine whether a given region may benefit
from regional aid under Article 92(3)(c) EC the Commission
has until now applied two basic criteria, i.e. GDP per
inhabitant and the structural unemployment rate in the
region. However, these two criteria are not appropriate to
reflect the particular regional problems in certain of the
Nordic countries, i.e. Sweden, Norway and Finland, which
are signatories to the EEA Agreement and possible future
members of the Community. The rough climate and the low
population density in certain regions of these countries
represent additional disadvantages for the industry to take
into account when determining the eligibility for regional aid
under Article 92(3)(c). The Commission has thus decided to
introduce an alternative criterion for the application of
Article 92(3)(c) based on low population density, which
stipulates that a region with not more than 12,5 inhabitants
per kilometer on the basis of level III in the Nomenclature
NUTS will be eligible for regional aid under Article
92(3)(c).
Sectorial aid
Aid to the steel sector. The Commission has reiterated its
willingness to authorize state aid for the restructuring of the
European steel industry, which is vital to restore its long-
term viability. Following the Council's consent at the end of
last year, the Commission in April this year decided on the
basis of Article 95 of the ECSC Treaty to approve
restructuring aid in respect of public steel companies in
Germany, Spain, Italy and Portugal. In June a number of
competitors lodged an appeal with the European Court of
Justice against the Commission's decision on the above cases
alleging that Article 95 of the ECSC Treaty had been
misused and was not applicable to the state aid measures
concerned. Rather the Commission should have applied
Article 4(c) of the ECSC Treaty, which expressely prohibits
state aid to the sectors covered by the Treaty.
The authorization of the state aid to the public steel
companies, cf. above, was linked to a comprehensive
restructuring program, considerable reduction in the overall
capacity of the public steel sector and, in some cases,
privatization program for the companies concerned.
Therefore, as the Italian company "Riva" decided not to
acquire the German public steel company "EKO Stahl
GmbH" and carry out a restructuring of that company
involving a reduction of its production capacity, the
Commission considered that the conditions for granting the
approved aid to this steel company have not been met. As
the company continues to receive state aid from the
Treuhandanstalt to cover its investment costs and operating
losses the Commission in July decided to initiate the Article
6(4) in the Code with regard to this aid.
Under the Steel Aid Code state aid may be granted for
environmental protection purposes. However, this provision
does not cover investment aid to replace old installations
with new ones, even though the objective of this replacement
is to meet new environmental standards. The Commission
therefore decided in June to initiate the procedure provided
for in Article 6(4) of the Code with regard to an
environmental aid to the Luxembourg steel company
ProfilARBED S.A.
Aid
to shipbuilding. The Commission approved three
German development aid schemes for the sale of ships to
China, Indonesia and Cameroun, which is in line with the
favourable approach towards development aid in the form of
export credits to certain developing countries for the
purchase of ships constructed by Community shipyards,
insofar as the proposed aid is in line with the OECD rules
on export credits for ships, cf. Article 4(7) of the Seventh
Directive on aid to shipbuilding.
The Commission takes a favourable view on state aid for the
shipyards in the former GDR to carry out the comprehensive
restructuring of these yards, thereby restoring their viability.
The 7th Directive for aid to shipbuilding contains a specific
derogation for those shipyards, the application of which is
conditioned upon a reduction in the capacity. The
Commission decided on the basis of this derogation to
authorize the release of a second tranche of operating aid to
the German shipyard Mathias-Thesen-Werft.
The Commission also approved a scheme offering operating
aid and restructuring aid to Spanish shipyards in line with
the aid intensity laid down in the 7th Directive. The
Commission approved a similar Dutch scheme.
Aid to the synthetic fibres industry.
Under the Commission's
Synthetic Fibres Code Member States are obliged to notify
all aid measures to the production of synthetic fibres to the
Commission, even if the individual aid concerned is granted
under a state aid scheme already notified and approved by
the Commission. In view of the continuing structural
overcapacity in the synthetic fibres sector, the Code requires
investment aid to be linked to a significant reduction in
capacity. As investment aid to BVDA DS Profil seems to
lead to a slight increase in the company's production capacity
the Commission considered that the investment aid would
not comply with the Code and decided to open the Article
93(2) procedure.
On the other hand the Commission decided that proposed
aid to the British company Hoechst (UK) plc covering part
of the costs of a training program for its employees did not
involve investment aid and , consequently, that the aid was
not covered by the Code. Therefore, the requirement under
the Code that there must be a significant reduction in
capacity in order to authorize the aid did not apply to this
case and the training aid was approved on the basis of
Article 92(3)(a) EC.
In view of the continuing presence of structural overcapacity
in the synthetic fibres sector the Commission decided to
extend the period of validity of the Code by 6 months ending
30.6.1995, with the continuing proviso that it might revise or
abolish the Code before that date.
Aid
to the textile industry. Aid to firms in this sector, which
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