Saksen-Anhalt moet 6,7 mln euro staatssteun aan chemiebedrijf Chemische Werke Piesteritz terugvorderen (en)

The European Commission has decided that a number of measures worth €6.7 million benefiting Chemische Werke Piesteritz, a producer of phosphoric acid and phosphates situated in the Land of Sachsen-Anhalt, constitute subsidies liable to distort competition within the EU's Single Market in violation of the EC Treaty's state aid rules (Article 87). The money must now be recovered by the German Government. The measures were provided to the company in the years 1997 and 1998 to help the company with its restructuring.

Competition Commissioner Neelie Kroes commented: "Keeping an ailing firm which is unable to restore its viability alive through state subsidies harms its more efficient competitors and is thus detrimental to the competitiveness of the European industry as a whole."

The decision follows a judgement of the Court of First Instance of 2001 by which the Court annulled the initial 1997 Commission decision to approve the aid. The Court procedure was launched by a competitor of Chemische Werke Piesteritz (CWP), Prayon-Rupel. The Court annulled the decision mainly because Prayon-Rupel could prove that the restructuring plan of CWP was not feasible.

Aid for restructuring purposes raises particular competition concerns as it can unfairly shift the burden of structural adjustment on to other, more efficient, producers who are managing without aid. Restructuring aid is therefore allowed only in circumstances in which it can be demonstrated that the approval of restructuring aid is in the Community interest, and in particular, that a sound restructuring plan exists which should allow the company to restore its viability and competitiveness after the restructuring period.

The Commission has concluded that the 1996 restructuring plan for CWP was not sound. The plan was not carefully planned, steps were missing and costs were understated. It could thus not lead to the restoration of the company's long-term viability. The fact that the plan, which originally was to run until 2000, is still not fully implemented, further supports this view.