C 120/12EN Official Journal of the European Communities 1.5.1999

STATE AID

Invitation to submit comments pursuant to Article 93(2) of the EC Treaty concerning the aid/measure C 5/99 (ex N 728/97) — — Mirafiori Carrozzeria (1999/C 120/05)

(Text with EEA relevance) By the letter reproduced below, dated 9 March 1999, the The investment Fiat Auto plans to make is in its Mirafiori plant Commission notified Italy that it had decided to initiate the (), which is in an assisted region under Article 92(3)(c) procedure under Article 93(2) of the EC Treaty. and has a regional maximum intensity of 10 % nge for large firms.

‘On 28 October 1997 the Italian Government notified a plan to According to the information supplied by the Italian auth- grant State aid to Fiat Auto SpA for investment in its Mirafiori orities, Mirafiori Carrozzeria manufactures several types of plant (Turin, Piedmont) where it manufactures motor vehicles. vehicle (in 1994, when the project started, it was producing The aid was registered as notified aid No N 728/97 on the Uno, Thema, Croma, Panda and Punto) in 1999/2000, 29 October 1997. when the project ends, it will be producing the Punto/Model 188 (2), Marea and Multipla). The plan originally notified was essentially aimed at improving plant management and organi- sation with a view to the production of the new vehicles (Marea, Model 188 and Multipla). The urban location of the By letter of 24 November 1997 the Commission asked the plant imposes major constraints on production and logistics. Italian authorities to send further information. Three The investment is also designed to improve working reminders, which also referred to the possibility of Article conditions, energy savings and environmental protection. It 93(2) proceedings being initiated, were sent to the Italian auth- will also safeguard a number of jobs in an area experiencing orities on 16 February 1998, 8 June 1998 and 10 July 1998, industrial decline. urging them to send the necessary information. A meeting was also held on 23 April 1998 with the representatives of the Italian authorities to discuss the methods by which the case would be examined. Having requested extensions of the deadline for a reply, your Government provided fresh The notification of 28 October 1997 contains the following information, which unfortunately was still inadequate, by investment details for 1994 to 2000: letter of 20 November 1998. To allow the Commission to carry out a more detailed investigation, your authorities in turn agreed to an extension of the usual period for assessment to 15 February 1999. (in ITL million)

Description Amount

Planning and supervision of work 860 The recipient of the aid would be Fiat Auto SpA, a subsidiary of Fiat SpA. The Fiat group operators in the motor vehicle Finishing and related work 14 900 industry, in particular through Fiat Auto for motor vehicles, Iveco for commercial vehicles and Magneti Marelli for Equipment and machinery 627 319 components. Total 643 079 (1)

(1) Equal to ECU 334 million (ECU 1 = ITL 1 924 in October 1997).

Fiat Auto has plants in Italy, Poland, Turkey and South America and produced 2,8 million vehicles in 1997, of which 1,8 million in Italy under the brand names , Ferrari, Fiat, and . It has some 10 plants in Italy which manufacture motor vehicles, as well as engines and Following the letter of 24 November 1997 from the components. In 1997 it employed about 62 000 persons in Commission and the meeting between the Italian authorities Italy in those activities of whom 17 000 at Mirafiori (1). The and the Directorate-General for Competition on 23 April 1998, domestic market accounted for 53 % of sales, other Union the Italian authorities decided to modifiy the terms of the countries 32 % and third countries 15 % (1995 basis). In notification. In their letter of 20 November 1998 they stated 1997, the Fiat group held some 11 % of the European market that the regional aid intensity originally proposed (2,01 % gge) (17 countries) for motor vehicles. would make a cost-benefit analysis unnecessary, as the aid could be authorised as aid for innovative investments.

(1) In the body and engineering shops (production of vehicles, engines and gear boxes). (2) Replacing the Punto. 1.5.1999EN Official Journal of the European Communities C 120/13

The objectives of the innovative investments are summarised in The total investments described as innovative thus amount to the letter, as follows: ITL 51,1 billion (± EUR 26,6 million) in nominal terms. This would be equivalent at current values to ITL 33,68 billion.

— to introduce comprehensive innovations in order to bring the plant into line with its internal and external socio- The Italian authorities consider that, as a result of the economic context; investments, the Marea production line at Mirafiori is the most ergonomic line in the Fiat group and has no rivals among Fiat's European competitors. Other innovations, — to apply specific technical innovations for the development defined as “additional and marginal”, are referred to in the of the “space frame” chassis, intended specifically for niche letter from the Italian authorities of 20 November 1998: vehicles;

— innovations relating to the data processing systems, — to introduce supplier integration into production and logistics. — maintenance dollies — dashboard (Marea sedan and estate models (3)), The innovative investments, broken down into seven sub-projects, are as follows (nominal cost in ITL billion):

— maintenance dollies — doors (Marea sedan and estate MULTIPLA models),

Stamping Equipment and machinery for the manufacture of variable-section — swivel hooks (on the Marea sedan and estate models). underframes for chassis subcom- ponents (Ermac) 16,5 New chassis welding plant using However, no figures are given for the proposed additional the “lift-shift” process and TTS investments; it would seem that Fiat Auto is to receive transport system (twin trolley system) to overcome differences discounted aid totalling ITL 8,13 billion under an approved in level without recourses to scheme provided for by Law No 488 of 19 December 1992. descenders for chassis and body The aid intensity would be 24,1 % gge, a rate which the Italian assembly 11,8 authorities state is below the ceiling stipulated by the Dedicated new welding line for Commission for aid to innovation. No other aid is planned bodyshells ready for transport, for the project in question. loading of chassis and unloading of bodyshell 7,8 Equipment and production The Commission can only examine the proposal to grant aid testing in the test rooms with a view to developing new shell for innovative investments on the basis of the information production cycles 6,8 contained in the recent letter from the Italian authorities.

(a) The aid to Fiat Auto is caught by the ban in Article 92(1) MAREA of the EC Treaty as it is financed by the State or through State resources. Furthermore, as it constitutes a significant proportion of the total financing of the operation, it is Stamping New integral robogate with shell liable to distort competition in the Union by giving Fiat stapling by robots which grasp Auto an edge over competitors not receiving aid. Lastly, the body panels, place them in the correct position in relation there is extensive trade between Member States in the to the chassis and bend the ribs market for motor vehicles. in order to form the sub-assembly which is sent on for temporary assembly 16,5 The aid is intended for a firm which manufactures and Assembly Adoption of the “friction assembles motor vehicles. conveyor”, an ergonomic system for working on shells which, because of the larger size of the pallets, enables workers to stand The aid must therefore be assessed under the Community on the platform and assemble framework on state aid to the motor vehicle industry. It components on an unmoving vehicle 3,1 (3) Estate car. C 120/14EN Official Journal of the European Communities 1.5.1999

was notified by the Italian Government on 28 October 25 November 1996. The plan to grant aid, however, was 1997 and entered in the Commission State aid register on notified only on 28 October 1997. Furthermore, mass 29 October 1997. The framework in question was production of the Marea, Multipla and the new Punto published in Official Journal C 123 of 18 May 1989 (4). started in March 1996, July 1998 and April 1999 The Commission notes that the proposed aid would be respectively. However, in extending the decisions taken in granted under an approved scheme and that the cost of cases N 784/97, N 786/97, N 157/98, N 158/98, N 159/98, the operation exceeds EUR 17 million. The Italian auth- N 161/98 (5), N 163/98 (6) and 726/97 (7), the Commission orities have thus satisfied the requirement to notify the acknowledged that particular circumstances surrounding proposal. the adoption of Law No 488/92 could explain the delays between the start of the operation, the application for aid and the notification. It accepts, in the light of the expla- nations furnished by the Italian authorities, that the investor The Commission also notes that, according to the had strong reason to believe that aid would be granted framework which entered into force on 1 January 1998, under Law No 488/92, even as regards the part of the cases notified before 1 November 1997 but not yet assessed investment made between 1994 and 1996. The for compatibility by the Commission or cases which are the Commission also notes that the studies relating to the subject of Article 93(2) proceedings initiated prior to that project were started by Fiat in 1994. It therefore date will be examined under the preceding framework, concludes that the aid is needed in order to carry out the which entered into force for two years on 1 January 1996. investment in question.

The Commission regrets the long delay between the date on which the Ministerial Decree establishing the aid in (d) The Community framework on State aid to the motor question was signed, i.e. 20 November 1996 and the date vehicle industry requires the Commission to take a strict on which it was officially notified, i.e. the end of October attitude towards aid for modernisation and innovation. 1997. Proposed aid for innovation must be examined to determine whether it really relates to the introduction of genuinely innovative products or processes at Community level. (b) Article 92(2) of the Treaty specifies certain types of aid that are compatible with the Treaty. In view of the character and purpose of the aid, and the geographic location of the investment, Article 92(2)(a), (b) and (c) are not applicable. Article 92(3) specifies other forms of aid which may be regarded as compatible with the common market. Compati- The Commission examined the technical information bility must be assessed from the standpoint of the supplied by the Italian Government for each of the six Community as a whole and not in a purely domestic projects regarded as innovative. In the course of its exam- context. In order to maintain the proper functioning of ination, a specific difficulty emerged. As the Commission is the common market and having regard to the principle required to carry out a comparative analysis of the in Article 3g of the Treaty, the exceptions in Article investment of the basis of the state-of-the-art European 92(3) must be construed narrowly. With regard to the motor vehicle industry, the time taken by the Italian auth- exception in Article 92(3)(b) and (d), it is clear that the orities to process the case raises the problem of the aid in question is not intended for a project of common reference date. The Commission considers that the European interest or to remedy a serious disturbance in the relevant date for determining the innovative content of Italian economy or to promote culture and heritage conser- the sub-projects is the date on which the project was vation. As regards the exceptions in Article 92(3)(a) and (c), launched; however, at this stage of proceedings, other only the provisions of (c) are relevant as Mirafiori is an dates cannot be ruled out, for instance the notification assisted region under Article 92(3)(c). date or the date of the decision, which would pose the practical question of how to determine the innovative nature of an investment that is no longer new.

Once it has ascertained that the conditions laid down in the Community framework on State aid for the motor vehicle industry have been satisfied, the Commission decides whether the proposed aid is compatible with the In any event, a preliminary examination has revealed that common market under Article 92(3)(c). the information sent by the Italian authorities is not sufficient to prove that the sub-projects in question relate to the introduction of genuinely innovative processes at Community level. (c) The Italian authorities informed Fiat that the aid had been authorised, subject to the approval of the Commission, on (5) Decisions of 30 September 1998 (OJ C 409, 30.12.1998). (6) Decision of 30 September 1998 (OJ C 384, 12.12.1998). (4) As amended (OJ L 231, 3.9.1994 and OJ C 284, 28.10.1995). (7) Decision of 7 April 1998 (OJ C 240, 31.7.1998). 1.5.1999EN Official Journal of the European Communities C 120/15

As a result, the Commission has no choice but to express The Commission accordingly concludes that the notification doubts as to the innovative nature of the notified sent by the Italian authorities is incomplete and that the investment. additional details contained in their letter of 20 November 1998 give rise to a number of doubts.

(e) The Commission does not have the necessary information at this stage to calculate the discounted value of the investments by sub-project. It is therefore impossible to Firstly, the Commission does not have sufficient data to calculate exact aid intensities for any sub-projects that are determine the innovative nature of each process notified or genuinely innovative. to fix the reference date for assessing the innovations claimed; it also has doubts as the practical consequences of fixing such a date. (f) The table of aid intensities supplied by the Italian auth- orities on 20 November 1998 shows that a first instalment of ITL 5 455 million was granted in 1998. If this is correct, Secondly, it is not possible to calculate the intensity of the aid the aid would be illegal as it was granted without awaiting to sub-projects which may be genuinely innovative. the Commission's final decision.

(g) The Italian authorities wrongly state that an intensity of Thirdly, the aid intensity proposed by the Italian authorities is 24,1 % (discounted) would be below the ceiling allowed significantly higher than the maximum authorised by the by the Commission for innovative investment aid. Cases Commission for aid to innovative investment. Furthermore, in which the Commission has authorised innovation aid the risk borne by Fiat Auto does not at this stage appear to include BMZ Steyr (8) and MCC-Swatch (9). The aid auth- be sufficiently high for an aid intensity of 10 % to be granted. orised for innovative projects does not exceed 10 % and takes account of various factors such as the extent of the investment risk. The Commission has not at this stage Fourthly, it cannot be ruled out that the Italian authorities have identified any reason why it should derogate from its estab- granted illegal aid to the investor. lished policy in this area. It also doubts whether the risk incurred by Fiat in connection with genuinely innovative projects would qualify for an intensity of even 10 %. On the basis of the information in its possession, the Commission is unable to identify any grounds for concluding (h) In order to complete its analysis and for reasons of trans- that the aid in question qualifies for exemption under Article parency, the Commission would comment as follows on 92(3) of the Treaty. other aspects of the project referred to by the Italian auth- orities. The Commission accordingly gives the Italian Government notice under the Article 93(2) procedure to submit its obser- First, it is doubtful that all the investments notified in vations within one month of receipt of this letter. Italy is also October 1997 could qualify for regional aid under the requested to supply all the documents, information and data Community framework for the motor vehicle industry as required for an assessment of the compatibility of the aid. In the project appears inherently to comprise some elements particular, in connection with the initiation of proceedings in of modernisation, which is completely excluded from all cases N 727/97, N 729/97, N 730/97, N 834/97 and N 838/97 aid. The vagueness of the industrial logic of the original concerning aid to Fiat Auto, the Commission requires sufficient project strengthens that doubt. information to show that the projects in question are inde- pendent of each other. If it does not receive that information, it will adopt a decision on the basis of the facts in its Second, the framework for motor vehicles does not allow a possession. cost-benefit analysis to be carried out on the basis of a comparison site located outside a non-assisted area of the European Union. The Commission also requests the Italian authorities to forward a copy of this letter to the potential aid recipient immediately. Lastly, the Commission notes that, notwithstanding the claim by the Italian authorities that the investments in question have an ecological purpose, no specific information has as yet shown how compliance with the The Commission would remind the Italian Government that motor vehicle framework and the Community guidelines aid granted without prior notification or without awaiting on State aid for environmental protection (10)istobe the Commission's final decision is illegal and may have to be achieved. recovered. It would draw the attention of the Italian authorities to the letter it sent to all Member States on 22 February 1995, in which it reminded them that any aid granted unlawfully (8) Decision published in OJ C 12, 16.1.1998, p. 5. might have to be recovered from the recipient in accordance (9) Decision published in OJ C 391, 28.12.1996, p. 11. with the provisions of national law; the amounts thus (10) OJ C 72, 10.3.1994, p. 3. recovered will include interest calculated on the basis of the C 120/16EN Official Journal of the European Communities 1.5.1999 reference rate used to assess regional aid, running from the The Commission hereby gives notice to interested parties to date on which the aid was granted to the recipient until the submit their comments on the aid/measure in question, within date of actual recovery. one month of the date of this notice, to:

The Commission will inform other interested parties by European Commission publishing this letter in the Official Journal of the European Directorate-General for Competition Communities. It will also be informing interested third parties Directorate H 1 in the EFTA Member States which signed the EEA Agreement Rue de la Loi/Wetstraat 200 by publishing a notice in the EEA Supplement to the Official B-1049 Brussels Journal and will send a copy of this letter to the EFTA Fax (32-2) 296 95 79. Surveillance Authority. All the interested parties will be invited to submit their observations within one month of such publication.’ Those comments will be communicated to Italy.

STATE AID Communication from the Commission concerning State aid C 32/98 (ex NN 22/98) inloving aid for debt settlement and consolidation of agricultural cooperatives and other enterprises through the Agricultural Bank of Greece

(1999/C 120/06)

By the following letter of 30 March 1999 the Commission Treaty, the procedure before the Commission has become void informed the Greek auhorities of the following: with respect to the above provisions.

‘On 15 December 1998, the Council of the European Union The Commission therefore informs the Greek Government that approved, under the third subparagraph of Article 93(2) of the it will not be taking a decision on the compatibility of the aids Treaty, the aid measures referred to in Articles 14 to 18 and provided for in Articles 14 to 18 and Article 21 of Law No Article 21 of Greek Law No 2538/97 up to a maximum of 2538/97 with the common market. GRD 158,672 billion. The aid measures examined under procedure No C 32/98 On 7 April 1998, the Commission had decided to open the which were not referred to in the above Council decision, in procedure provided for in the first subparagraph of Article other words those provided for in Article 19, 20, 22, 23, 33 93(2) against the above aids. This decision was communicated and 57 of Greek Law No 2538/97, will be the subject of a to the Greek Government by letter SG(98) D/4020 of 20 May future Commission decision. 1998 and to interested third parties by publication in the Official Journal of the European Communities (1). The Commission reminds the Greek authorities that they have not formally submitted their observations with respect to the Before the Commission had adopted a final decision on the procedure opened by the Commission on 7 April 1998. These compatibility of these aids with the common market, Greece observations should have been submitted within one month of decided to apply to the Council under the third subparagraph the communication to the Member State of the openning of of Article 93(2) regarding the aid measures for the settlement the procedure.’ of the debts of cooperatives and other economic enterprises through the Agricultural Bank of Greece provided for in The Commission hereby reminds the other interested parties Articles 14 to 18 and Article 21 of the above Law. that, pursuant to the Commission communication opening the procedure provided for in Article 93(2) of the Treaty (OJ Since the Council decided unanimously that the State aid in C 376, 4.12.1998, p. 2), their comments on the measures in question should be considered compatible with the common question should have been submitted within one month of the market in derogation from the provisions of Article 92 of the date of publication of that notice.

(1) OJ C 376, 4.12.1998, p. 2.