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Brussels, 20 December 2006

Commission examines the financing of Hessische Staatsweingüter by the Land Hessen

The European Commission has today decided to open a formal investigation in respect of the financing of the Hessische Staatsweingüter by the Land Hessen. The Commission expresses its doubts as to the compatibility of different support measures with State aid rules. Hessische Staatweingüter is the biggest vineyard in Germany, with a cultivated area of some 190 hectares. It is 100% owned by the Land Hessen.

Hessische Staatsweingüter was loss making for a long time. Until the end of 2002 the losses were borne by the Land Hessen. The Commission presumes that this loss coverage might constitute operating aid, which would be incompatible with State aid rules. The amount involved seems to be some € 2.3 million.

As of 2003 the Hessische Staatsweingüter GmbH was created. The Land Hessen injected equity capital amounting to a total of € 2.225 million into this newly created company in 2003 and 2004. The Commission assumes that the capital was provided by the Land Hessen at overly favourable terms (not asking for a minimum rate of return) and therefore contains a State aid element.

A new wine cellar is being built with an equity contribution from the Land Hessen amounting to € 7.5 million to be provided in the form of an equity-like shareholder loan (Partiarisches Darlehen). The Commission has to investigate whether this measure constitutes State aid.

The full text of the Commission decision will be published in the Official Journal of the European Communities. Germany and other interested parties will be given one month from the date of publication to submit their comments. After this period, the Commission will rule as soon as possible on whether these measures constitute State aid and, as the case may be, on their compatibility with the common market.

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