Brussels, 25/07/2003 (Agence Europe) - Following a 14 May 2002 ruling by the Court of First Instance, on Wednesday the European Commission changed its partial rejection in February 1999 of EUR 4.77 million in aid granted to Graphischer Maschinenbau GmbH in 1988.
The beneficiary of the aid, Graphischer Maschinenbau GmbH (GMB), is part of a group (KBA) which manufactures printing machines. Due to declining demand KBA decided to shut down GMB's factory in Berlin in June 1997. Faced with the impending loss of jobs, the Land Berlin gave a declaration of support in favour of GMB in February 1997. This was followed by the actual payment of subsidies as of 1998. In August 1998, the Commission opened a formal investigation procedure as it had serious doubts whether a part of the aid amount awarded for technical development work was in line with State aid rules. The Commission was of the opinion that the aid awarded for technical development was paid out before the notification of the aid in January 1998 and that this aid did not benefit GMB but rather the parent company KBA. In February 1999, the Commission took a partially negative decision, stating that the amount of the aid amounting to €2.5 million, which was earmarked for technical development work was not in line with State aid rules.
On 14 May 2002 the Court of First Instance, in Case T-126/99, held that the Commission had not correctly applied applicable State aid law. This obliged the Commission to reassess the measure. In the decision it took on 23 July, the Commission “finds that the aid amounting to EUR 2.5 million is in line with the Community Guidelines for the rescue and restructuring of firms in difficulty”. The Commission's assessment is based on the following reasons: The aid was based on a restructuring plan that promised to return GMB to long-term viability. The restructuring costs included the costs for the development of modernised products. The development work commenced after February 1997. At this point in time, GMB could reasonably assume that it would receive the aid pledged by the Land Berlin in its declaration of support in favour of GMB in February 1997. All investment, including the development works, which commenced after this date has to be considered as being induced by the aid. Since GMB did not have its own facilities for the development work, the parents company KBA carried out the development work. The payment of part of the aid for the development to KBA is remuneration for actual work done in KBA's development department. This development work was for the sole benefit of GMB. “KBA appears to have been the company best placed to provide the necessary development services. Thus, GMB is the sole beneficiary of the State aid used to pay for development undertaken in its interest”.