Brussels, 29/11/2001 (Agence Europe) - The European Commission has decided to extend the formal investigation procedure into non-notified aid granted by the German Land of Thüringen to Kahla Porzellan GmbH (Kahla I) and Kahla/Thüringen Porzellan GmbH (Kahla II). The extension concerns financial aid of EUR 14.9 million which appears to constitute unlawful state aid.
Kahla II was created in 1993 when Kahla I went bankrupt. The Commission doubted that there were really two separate companies and launched an investigation into the aid in November 2000 since it did not appear to be compatible with EU state aid rules (see EUROPE of 17 November, p.16). The Commission has now extended the investigation to aid not complying with or not covered by approved aid schemes amounting to EU 7.9 million which the Commission was only informed about after the formal investigation procedure had been launched. The measures will be assessed as new aid under Article 87 of the EC Treaty and the EU Guidelines on state aid for rescuing and restructuring firms in difficulty. No restructuring plan has yet been presented and the contribution of the private investor does not appear to be significant, which leads the Commission to doubt the compatibility of the aid with the Common Market. The Commission also noted that the porcelain market is saturated, suffering from overcapacity, which increases its concern that the aid in question may seriously distort competition in the Common Market.