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Brussels, 27th June 2007

State aid: Commission approves €2 million investment aid to modernise German shipyard Peene-Werft

The European Commission has approved under EC Treaty state aid rules regional investment aid of about €2 million to the German shipyard Peene-Werft. The Commission has concluded that the investment is limited to modernisation of the yard necessary to improve its productivity. It would not result in a disproportionate capacity increase.

Competition Commissioner Neelie Kroes commented: "I am satisfied that the aid will be used to encourage greater efficiency and improve the competitiveness of the Peene-Werft yard."

In January 2007, Germany notified its intention to grant regional investment aid to Peene-Werft. Peene-Werft is a shipyard located in Wolgast, Mecklenburg-Vorpommern, Germany in a region where the standard of living is below the EU average and with serious unemployment. In such regions, state aid may be authorised to promote regional development under Article 87(3)(a) of the EC Treaty.

State aid to 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 investments in upgrading and modernisation of existing yards to improve the productivity of existing installations. One of the framework’s objectives is to ensure that investment for the mere creation of new capacity is not supported by state aid.

Investment costs for the modernisation of the yard amount to €9 million. Germany intends to support the project with €2.025 million, which corresponds to an aid intensity of 22.5%, the maximum aid intensity allowed under the Framework on State Aid to Shipbuilding.

The proposed investment aid would allow improvements to the productivity of the yard, essentially by increasing the degree of automation, significantly reducing open-air work, improving the lay-out of the production process on the premises, building larger ships while maintaining the assembling duration in the dry dock and re-integrating works previously outsourced to sub-contractors. At the same time, the investments would not lead to a disproportionate increase of capacity.

This decision is the fourth in a recent series of regional investment aid decisions concerning the shipbuilding sector, for which the Commission has clarified the assessment line. The three previous cases were Volkswerft Stralsund (see IP/06/1696), Rolandwerft (see IP/06/1850) and Komarno (see IP/07/390).

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