Brussels, 07/06/2001 (Agence Europe) - On Wednesday, the European Commission decided to declare non-notified State aid to Technische Glaswerke Ilmenau (TGI) incompatible with the common market. Established in Thuringen (Germany), TGI is active in the field of special glass. Following the decision, Germany must take all necessary steps to recover the aid illegally placed at the disposal of the recipient.
TGI was founded in 1994 with the aim of taking over four of the twelve production lines of former Ilmenauer Glaswerke GmbH, a company that its sole owner, the Treuhandanstalt, decided to liquidate. The purchase price amounted to 2.991 million (mio) euro. In December 1998, Germany informed the Commission of the waiver of 2,045 mio euro of the original purchase price in the context of a restructuring of the company. In fact, from the very outset, TGI had serious financial difficulties that worsened end-1997. It was for that reason that the Bundestalt fur vereigungsbedingte Sonderaufgaben (BvS) decided on a concerted action with the Land of Thuringen and the owner in order to restore the viability of the company. In the absence of complete information, the Commission decided in April 2000 to open the formal State aid investigation procedure as foreseen by Article 88 (2) of the EC Treaty. It had doubts concerning the restoration of the long-term viability of the company and the proportionality of the aid.
Germany considered that this waiver did not constitute State aid but was in line with the behaviour of a private creditor seeking to maximise the payment of the purchase price, as insistence on the payment of the full price would probably have driven the company to bankruptcy. After close examination, the Commission came to the conclusion that the waiver was not conform to the behaviour of a private investor but constituted State aid in the sense of Article 87 (1) of the EC Treaty. It found that the waiver could not be exempted as ad hoc aid for restructuring: the restructuring plan was not based on realistic assumptions and the restoration of TGI's long-term viability had to be doubted. In addition, no private investor was making any significant contribution to the restructuring, so that the condition of the proportionality of the aid was not met, the European Executive points out.