C 252/4 EN Official Journal of the European Communities 11.8.98

STATE AID C 9/98 (ex NN 176/97)

(98/C 252/03) (Text with EEA relevance)

(Articles 92 to 94 of the Treaty establishing the European Community)

Commission notice pursuant to Article 93(2) of the EC Treaty to other Member States and interested parties concerning financial measures in connection with the takeover of Bremer Vulkan Marine Schiffbau GmbH by Lürssen Maritime Beteiligungen GmbHØ@ØCo. KG

In the letter reproduced below, the Commission Lürssen Werft GmbH, a shipyard located close to the informed the German Government of its decision to former premises of Bremer Vulkan Werft GmbH i.ØK. in initiate proceedings under Article 93(2) of the EC the north of (Vegesack) and the neighbouring Treaty. Lower Saxony across the river Weser specialissed in seagoing luxury motoryachts, police and navy crafts and research vessels.

‘The Bremer Vulkan Verbund AG, the maritime industrial holding with subsidiaries mainly in the ship- building but also the construction and electronic equipment sectors based in the Federal State of Bremen The administrator in the bancruptcy of BVV, acting on (hereinafter referred to as the BVV) suffered accute behalf of BVM Beteiligungs GmbH sold the shares in financial difficulties at the end of 1995 and subsequently BVM to LMB at a nominal purchase price of DEM 1. applied for composition procedures in February 1996. According to information provided by authorities this On 1 May 1996 the responsible Court declared the price was the result of negotiations between the adminis- attempted composition failed and initiated bankruptcy trator and several interested parties. proceedings under the German Konkursordnung. The administrator appointed by the Court started selling shareholdings in subsidiary companies, most of which had also entered into bankruptcy proceedings, and tried to restructure parts of the group, namely the Bremer In addition, the administrator, acting on behalf of Vulkan Werft GmbH, the main shipyard of the BVV Bremer Vulkan Werft GmbH i.ØK., sold a certain portion located in Bremen. This having failed, the last of the site in Bremen-Vegesack, including pier, dock and commercial vessel of the yard was completed in August certain equipment, to LMB at a purchase price of DEM 1997 and the administrator started liquidation. 547Ø501. The German authorities stressed that the cleansing of the contaminated soil, to be carried out by LMB, would cost around DEM 3 million and that LMB did not intend to use this site for the construction of BVV held a 100Ø% share in BVM Beteiligungs GmbH, commercial vessels, but only for the construction and which itself was the sole shareholder of Bremer Vulkan repair of naval vessels and yachts. Marine Schiffbau GmbH, a small company with some 60 staff active in acquiring orders for the construction of naval vessels. It was founded mainly to participate in the procurement proceedings regarding a programme of Germany of a volume up to DEM 3 billion (FØ124) in During negotiations with the participation of the Bremen cooperation with Preussag and Thyssen. This company authorities, LMB accepted to employ, in addition to 40 did not enter into bankruptcy in the framework of the people who were previously granted limited contracts, breakdown of the group. 100 former workers and 10 trainees of Bremer Vulkan Werft GmbH. LMB claimed that these workers would, in principle, only be needed to work in the framework of the FØ124 project, which was postponed until the year With a view to the prospects of Bremer Vulkan Marine 2000. The State of Bremen consequently agreed to Schiffbau GmbH (hereinafter referred to as the BVM) to contribute DEM 4,6 million towards the costs of participate in the construction of the new the employing these workers. Were LMB to make workers Lürssen Maritime Beteiligungen GmbHØ@ØCo. KG (here- covered by this agreement redundant over a certain inafter referred to as LMB) decided to acquire the shares period, that was not specified by the German authorities, of this company. LMB is the holding of Friedrich it would have to recover DEM 100Ø000 per employee. 11.8.98 EN Official Journal of the European Communities C 252/5

Furthermore, the public Hanseatische Industrie Beteili- measures. The intended investment aid of up to DEM gungen GmbH (hereinafter referred to as HIBEG), a 900Ø000 was, according to the information available, not company solely controlled by the Federal State of disbursed and may therefore be considered notified. Bremen, waived claims of DEM 5 million plus interest of an unknown amount arising from a loan granted to BVM. The amount would be used to increase the equity of BVM to contribute towards the reduction of its over- The contribution of the State of Bremen towards the indebteness. The authorities are of the opinion that this costs of employment of former workers of BVV by LMB loan was initially granted under market conditions but constitutes operating aid. The waiving of claims of that HIBEG would have had no prospect of receiving HIBEG in favour of BVM may also be considered redemption since BVM would in any case have entered operating aid in favour of LMB since it reduces the costs bankruptcy without having been taken over by LMB. of acquiring the advantages inherent in the order book of BVM. The intended contribution towards the costs of planned investments constitutes investment aid.

The Federal State of Bremen is prepared to grant an aid towards intended investments of up to DEM 900Ø000 It is doubtful whether these aid measures may be (15Ø% of intended DEM 6 million total investment). considered compatible with the common market under the provisions of the EC Treaty and the seventh Directive. BVM was initially only a separate entity of BVV for handling its limited activities in the naval ship- building sector. Through the takeover of the shares in The authorities are of the opinion that the abovemen- BVM and the acquisition of the installations of Bremer tioned State financial measures should be considered Vulkan Werft GmbH in Vegesack, the Lürssen group acceptable under Articles 5 to 7 of the seventh Directive extended its shipbuilding capacity and ensured a certain in view of the fact that they ensure the employment of prospect of participating in future profitable naval vessel 150 workers and trainees made redundant in the construction for the . The aid should framework of the collapse of BVV. The north of Bremen therefore be considered to be in favour of the Lürssen is facing an exceptionally high unemployment rate after shipbuilding undertaking. the loss of some 1Ø000 jobs in the shipbuilding sector. In addition, the German Government expressed its interest in preserving a smaller competitor in the field of naval shipbuilding. It stresses that the shipyard of Bremer It is doubtful whether Lürssen would use the newly Vulkan Werft GmbH in Bremen, Vegesack was acquired capacities and the workforce financed by the effectively closed and that the sale of a major part of the State exclusively for activities not covered by the seventh site to LMB does not represent a re-opening of Directive. The company is competing in the shipbuilding commercial shipbuilding activities because it is only sector in general and its recognised performance intended to carry out construction and repair of naval together with the production capacities acquired may vessels and luxury yachts at these installations. attract potential customers of new commercial passenger ships, special carriers, etc.

The contribution of DEM 4,6 million of the Federal The seventh Directive stipulates that contract-related aid State of Bremen towards the costs of employing 110 to shipyards may, under certain conditions, be held workers and employees and the waiving of debts of compatible with the common market (Article 4). The DEM 5 million plus interest by the public HIBEG measures described above are not related to individual constitute State aid in the meaning of Article 92(1) of the contracts. EC Treaty and Article 1(d) of Council Directive 90/684/ECCØ(Î) (the seventh Directive).

Other operating aid may, pursuant to Article 5, be deemed compatible only if it does not exceed the These aid measures are illegal because they were put into maximum contract-related aid calculated in proportion effect without prior notification pursuant to Article 93(2) to the turnover of the yard and if the Member State of the EC Treaty and Article 11(2) of the seventh concerned furnishes evidence to the extent that the aid is Directive and consequently without awaiting the necessary to maintain a shipyard in operation that suffers Commission’s decision regarding the compatibility of the from the general international market situation which the Directive is intended to address. In the present case no information to that extent was forwarded and the auth- (Î)ÙOJ L 380, 31.12.1990, p. 27, Directive as amended by Council Directive 92/68/EEC (OJ L 219, 4.8.1992, p. 54) orities did not claim that the operating aid was intended and Council Directive 93/115/EC (OJ L 326, 28.12.1993, to help Lürssen, reportedly profitable, maintain its p.Ù62). operations. C 252/6 EN Official Journal of the European Communities 11.8.98

Pursuant to Article 6 of the Directive investment aid may The Commission enphasises that any aid granted without only be granted as part of a restructuring plan that does prior notification or without awaiting a final decision is not involve any increase in capacity or if it is directly unlawful and, in principle, will have to be recovered linked to a corresponding irreversible reduction in the from the recipient firm. Repayment should be made in capacity of other yards in the same Member State. In the accordance with the procedures and provisions of present case, the closure of the shipbuilding capacity of German law with interest, based on the interest rate used Bremer Vulkan Werft GmbH in Bremen already served as reference rate in the assessment of regional aid to justify closure aid under Article 7 of the Directive and schemes, starting to run on the date of which the aid was the Commission in its decision of 1997Ø(Ï) stressed that granted. the closed installations shall not be used for further commercial shipbuilding activities. It stated, however, in principle that a takeover exclusively for naval vessel and The Commission requests the German Government to yacht construction could be acceptable. According to the inform the recipient firm and the Government of Bremen information available, the intended investments are not of the initiation of the procedure and the fact that the part of a restructuring of Lürssen and there is no company in question might have to repay the aid intended capacity reduction but an increase of capacity received. of Lürssen which may potentially be used for commercial shipbuilding falling within the scope of the seventh Directive. The Commission further informs the German Government that it will publish a notice in the Official It is therefore concluded that the public contribution Journal of the European Communities giving the other towards the cost of employing former workers of Bremer Member States and other parties concerned notice to Vulkan Werft GmbH, the waiving of debts by HIBEG submit their comments. The ESA will be informed in and the intended contribution towards the costs of accordance with Protocol 27 of the EEA Agreement.’ planned investment constitute aid and that it is doubtful whether these measures may be held compatible with the common market under the provisions of the seventh The Commission invites the Member States and other Directive and the EC Treaty. interested parties to submit their comments on the aid measures in question within a period of one month of the date of publication of this notice: The Commission consequently decided to initiate the procedure under Article 93(2) of the EC Treaty with regard to the above aid measures. As part of the European Commission, procedure, the Commission requests the German Directorate-General for Competition (DG IV), Government to provide any information or comment it State Aid Directorate, might consider relevant in this case within one month of Rue de la Loi/Wetstraat 200, being notified of this letter. B-1049 Brussels. Fax: (32-2) 296Ø98Ø17.

(Ï)ÙState aid C 38/96, letter SG(97) D 4211 of 4 June 1997 (OJ These comments will be communicated to the German L 250, 13.9.1997). Government.