Brussels, 28/12/2000 (Agence Europe) - The European Commission has decided that a non-notified state aid package of EUR 17.95 million and a notified aid package of EUR 1.74 million granted to Zeuro Möbelwerk GmbH, located in Thuringia, are incompatible with the common market. Germany will therefore have to take all necessary measures to recover the funds.
Zeuro, which is active in furniture manufacturing, was created from the former state-run enterprise (in former East Germany), Möbelkombinat Zeulenroda. In 1991, the Treuhandanstalt created the company from assets of the state-run enterprise and privatised it. After the company experienced financial difficulties, the Thüringer Industriebeteiligung GmbH & Co. (TIB) bought 100% of Zeuro's capital for one German mark. In 1996, the manager of the company drew up a restructuring plan and acquired 51% of the firm's shares. However, he did not implement the restructuring plan and misappropriated some of the firm's funds. He was removed as manager in July 1996, his shares were confiscated and the TIB once again became Zeuro's sole owner.
A new restructuring plan was drawn up. In July 1996, Germany informed the Commission of Zeuro's restructuring, which involved aid of EUR 26.3 million euros. Because of a lack of full information and in the absence of a private investor, the Commission then initiated the formal investigation procedure.
The investigation revealed that the subsidies allocated were not covered by state aid schemes authorised by the Commission and that they could not be exempted from the ban as ad hoc restructuring aid. The Commission observed that the restructuring plan was not founded on realistic assumptions and that no investor was prepared to take over the firm, whose long-term viability was therefore not assured. The company owes its survival to massive intervention by the State.