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IP/10/104

Brussels, 29th January 2010

State aid: Commission orders recovery of aid granted to Sovello AG (formerly EverQ GmbH)

The European Commission has decided under EU state aid rules that Sovello AG (formerly EverQ GmbH), a German manufacturer of solar panels, was not entitled to receive public support in the form of a bonus for small and medium-sized enterprises (SMEs), (previously authorised by the Commission in June 2006), because the company did not meet the relevant criteria of the applicable EU framework for aid to SMEs (Commission Recommendation 2003/361/EC). The Commission opened a new investigation in 2008 on the basis of additional information suggesting that the earlier decision to qualify Sovello AG as an SME had been based on incorrect information (see IP/08/951 ). The Commission has now concluded that Sovello kept the participation of one of its joint venture partners artificially below 25%, while its influence in Sovello was considerably greater than such a shareholding would suggest, and so in practice did not meet the SME thresholds of EU state aid rules. The aid received in the form of an SME bonus is therefore incompatible with EU state aid rules. The Commission has therefore revoked its 2006 decision and ordered Germany to recover the SME bonus from Sovello.

Competition Commissioner Neelie Kroes said: "We need to ensure that the SME bonus is only granted to genuine SMEs for which size truly represents a handicap and not to enterprises which create artificial corporate structures to obtain more state aid by pretending they are SMEs."

Sovello was established as a joint venture end-2004 by Q-Cells SE - owning 24.9% of the shares - and the US firm Evergreen Solar Inc. - owning 75.1%. When in September 2005 Renewable Energy Corporation ASA (REC) joined, both initial shareholders lowered their participation in order to give REC 15% of the shares. Since September 2006, the three joint venture partners have an equal share (33.3%) in Sovello.

Sovello benefited from regional investment aid, including an SME bonus in 2006 (Sovello1, Commission decision N 426/2005 ) for the setting up of an integrated production site of photovoltaic modules on the basis of the so-called String-Ribbon technology. It requested a second regional aid for its second solar modules plant (Sovello2) which the Commission authorised in June 2009 (see IP/09/962 ).

During its investigation on Sovello2, the Commission uncovered indications that Sovello's corporate architecture had been artificially designed to meet the formal criteria of the SME definition. These formal criteria were only met by artificially keeping the participation of Q-Cells in Sovello below 25%, with the essential purpose to obtain an SME bonus, while the effective influence of Q-Cells in Sovello was considerably higher than what corresponds normally to a share of 25%.

Had the Commission been aware of additional information, which was only submitted to it during the notification for Sovello2 but not when it took its decision on 7 June 2006, this would have influenced its assessment.

An SME is defined on the basis of the number of employees and turnover and balance sheet data. Data from partner or linked companies are also taken into account. Based on the information which the Commission only received after its June 2006 decision, the Commission concludes that Q-Cells was to be considered a partner enterprise of Sovello (as if it had held 25%). The Commission therefore recalculated the SME ceilings for Sovello including 25% of the data for Q-Cells. Based on this calculation, Sovello exceeds all SME thresholds and therefore does not qualify for the SME status and cannot receive an SME bonus.

In addition, the Commission's investigation revealed that through its joint venture partners active in the same industrial sector Sovello potentially had access to funds and assistance not available to competitors of equal size which were not supported by linked or partner enterprises. The Commission therefore concluded that the SME bonus granted to Sovello was not necessary in order to ensure the financing of the investment.

The non-confidential version of the decision will be made available under the case number C 27/2008 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News .