Brussels, 11/04/2002 (Agence Europe) - On Tuesday the European Commission decided that part of the aid proposed by Germany in favour of the Austrian company Hamburger AG for the construction of a new plant in Brandenburg exceeds the maximum amount allowable under the specific rules for regional state aid to large investment projects.
In May 2001, under the Multisectoral Framework on regional aid for large investment projects, Germany notified aid of around EUR 54 million for Hamburger AG for investment in Schwarze Pumpe (Brandenburg). The project concerns the construction of a new plant for the production of corrugated base paper, with total proposed aid intensity of 35% based on eligible investment costs of EUR153 million. The ceiling for regional aid in the assisted area concerned is 35% for large undertakings. The Commission opened a formal state investigation procedure in October 2001 because it doubted that the intended aid level was in conformity with the maximum allowable aid calculated in each case on the basis of the Multisectoral Framework. The Commission in particular questioned whether it could be ruled out that the sector concerned was in relative decline and whether the whole number of indirect jobs claimed by Germany could be taken into account for the assessment of the compatibility of the aid (277 direct and 356 indirect jobs). The investigation came to the conclusion that the market was indeed in relative decline, since the average annual growth rate was significantly (more than 10%) below that of manufacturing industry as a whole. Moreover, not all the indirect jobs that allegedly would be created could be taken into account as some of them didn't meet the conditions laid down in the Multisectoral Framework. The Commission therefore considered that the aid cannot exceed 26.25% of the investment costs (that is three quarters of the level notified) and that any amount beyond this is incompatible with the Common Market and may not be implemented.