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Brussels, 18 February 2004

Commission starts state aid investigation of wine marketing company GfW (Germany)

The European Commission has today decided to initiate a formal investigation procedure into the support for the German wine marketing company GfW. The full name of the company is Gesellschaft für Weinabsatz Pfalz GmbH (Palatinate Wine Marketing Company). The Reconstruction Fund for the Rhineland-Palatinate winegrowing area (WAK) has decided to waive part of its outstanding claims on the GfW covering an amount of € 5 005 442 in the year 2001. In addition, the WAK did not claim any interest on the outstanding debts for the year 2001. Moreover, it has agreed to subordinate certain claims in favour of other creditors.

The purpose of the support measures was to prevent the impeding insolvency of the wine marketing company GfW and achieve a maximum repayment rate for loan claims of the WAK (Wiederaufbaukasse der rheinland-pfälzischen Weinbaugebiete). The WAK gave out a capital market loan of € 15 302 696 to the GfW in the year 1999, which was used by the GfW to purchase 44 million litres of table wine. The vineyards received a down payment of 80% of the purchase price from the GfW in the same year. In the course of the next two years, the wine market deteriorated so much as a result of the comparatively large harvest that the GfW's original pricing level was not feasible. The selling price fell sharply so that large quantities of the cask wine still in storage had to be sent to distillation. As a result of these negative market developments, the GfW was facing insolvency in November 2000.

In the opinion of the German authorities, the measure only consisted of the grant of a claims waiver. The German authorities have pointed out that this was not state aid within the meaning of Article 87 EC-Treaty but customary economic activity among commercial partners.

The Commission normally examines such measures on the basis of the "private creditor test", to assess whether, under the same market conditions, a private creditor would have acted or has acted in the same way as the public creditor. Following an initial assessment of the currently available information, the measures mentioned above do not appear to represent normal behaviour by traders.

According to Council Regulation (EC) No 659/1999(1), which lays down detailed rules for State aid procedures, the Commission shall initiate the formal investigation procedure where it finds that doubts are raised as to the compatibility with the common market of a state aid measure. The Commission is requesting Germany to submit all relevant information for a more detailed assessment of this measure. In addition, interested parties can submit their comments on the aid measure within one month of the date of publication of the decision.

(1) Published in the OJ L 83 of 27.03.1999

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