State aid: Commission approves €2.03 million investment aid for German shipyard Rolandwerft
European Commission - IP/06/1850 20/12/2006
Brussels, 20th December 2006
The European Commission has approved under EC Treaty state aid rules regional investment aid totalling €2.03 million for the German shipyard Rolandwerft. After an in-depth investigation initiated in February 2006 concerning a first set of investments worth € 1.56 million (see IP/06/203), the Commission has concluded that the investment is limited to a modernisation of the yard which will improve its productivity. It will not result in a disproportionate capacity increase. Simultaneously, the Commission has approved further investment aid to Rolandwerft worth € 0.47 million notified in August 2006.
Competition Commissioner Neelie Kroes commented: "The aid encourages greater efficiency and competitiveness of an EU yard. This is in line with the objective of the State Aid Action Plan of less and better targeted state aid. I am satisfied that the aid will only be used to modernise the yard and not to create additional capacity."
In October 2005 Germany notified its intention to grant regional investment aid to Rolandwerft. Rolandwerft is a shipyard located in Berne (Lower Saxony) a region where economic development is below the German average. In such regions, state aid may be authorised to promote regional development under Article 87(3)(c) of the EC Treaty. The proposed investment aid would enable the yard to increase its productivity and to build smaller feeder ships and specialised vessels at competitive costs. Total investment costs amount to some €13 million. Germany intends to support the project with €1.56 million, which corresponds to an aid intensity of 12%. This is slightly below the maximum aid intensity of 12.5% allowed under the Framework on State aid to Shipbuilding.
The Commission decided in February 2006 to open an in-depth investigation to establish whether the planned aid was compatible with EC Treaty state aid rules. The shipbuilding sector is a very cyclical market which in the past regularly faced periods of over-capacity and depressed prices.
Because of the sector’s high sensitivity, state aid for shipbuilding in the EU is governed by a special set of rules, the Framework on State aid to Shipbuilding (see IP/03/1607 and IP/06/1452). This framework is more restrictive than the general rules on regional investment aid, as it allows aid only for investment into upgrading and modernisation of existing yards to improve the productivity of existing installations. The framework’s objective is to ensure that investment for the creation of new capacities is not financed by state aid.
The Commission initially had doubts that the notified investment respected the provisions of the framework and that it was limited to the modernisation of an existing yard to improve the productivity of existing installations. Moreover, the Commission was concerned that the investment might lead to a significant capacity increase of the yard, in particular resulting from investments in a new fitting quay.
However, following an in-depth analysis, the Commission has concluded that the aided investment does aim at improving the productivity of the existing installations. At the same time the Commission's doubts that the investment would lead to a disproportionate capacity increase were dispelled by Germany’s demonstration that while steel processing capacities will increase slightly the output of the yard as a whole will remain unchanged following the implementation of the investment project.
In August 2006, Germany notified the Commission of its intention to grant additional regional investment aid to Rolandwerft for an expansion of the ship lift. This investment will enable the yard to lift bigger and heavier ships at the lowest possible cost. The cost amounts to € 3.97 million, of which Germany plans to finance € 0.47 million, representing an aid intensity of 11.84%. The Commission considered also this investment to qualify as modernisation of the yard which aims at improving the productivity of existing installations but does not lead to a disproportionate capacity increase.