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Brussels, 17th July 2008

State aid: Commission endorses €47 million aid to Wacker Schott and opens in-depth investigation into €48 million aid to Deutsche Solar, two German firms in the solar sector

The European Commission has authorised, under EC Treaty state aid rules, €47 million of aid, which the German authorities intend to grant to Wacker Schott for the production of solar wafers in Thüringen, Germany. The project involves investments of €322 million and is expected to significantly increase direct and indirect employment. The Commission found the measure to be compatible with the requirements of the Regional Aid Guidelines 2007-2013 (see IP/05/1653) and in particular with the rules on large investment projects. At the same time, the Commission opened a formal investigation under EC Treaty state aid rules into €48 million aid for a similar project of solar wafer production by Deutsche Solar in Saxony, Germany. In this case, the Commission has concerns that the aid is in fact part of a single investment project. According to the Regional Aid Guidelines 2007-2013, if this proves to be the case, the current proposed aid would need to be reduced. The opening of an in-depth investigation gives interested parties the possibility to comment on the proposed measure. It does not prejudge the outcome of the procedure.

Competition Commissioner Neelie Kroes said: “I am pleased to approve aid for the large investment project by Wacker Schott which is expected to create more than 500 direct and indirect jobs and will contribute to the development of the region. In the case of Deutsche Solar, however, we need to ensure that the aid does not merely reinforce the competitive position of this company without added value for regional cohesion. This is why we are opening an investigation on the proposed aid for Deutsche Solar."

Both projects concern the manufacturing of solar wafers which are used to produce solar cells out of which solar modules are made. Solar modules convert sunlight into electricity.

Wacker Schott is a newly created company which will set up two new plants in Jena, Thüringen. The investment costs taken into consideration for the calculation of the aid are €322 million, while the actual aid amount is €47 million.

Deutsche Solar already has two plants in Freiburg: Freiberg South and FreibergSaxonia. It now intends to create a third plant in FreibergEast. The investment costs taken into consideration for the notified measure are €350 million, while the notified aid amounts to €48 million. An extension of the FreibergSouth plant will also receive aid. The German authorities considered that this aid did not need to be notified to the Commission because the total investment costs were below €50 million.

Both projects are to be carried out in areas eligible for regional aid under Article 87(3)(a) of the EC Treaty as a region with an abnormally low standard of living and high unemployment.

In both cases, the aid (paid out in the form of an investment premium and a grant) is granted under existing aid schemes but due to the high amounts of aid and investment costs involved, the measure had to be notified to the Commission for individual assessment and clearance.

The Commission verified in both cases whether the market share of the beneficiary and the production capacity created by the investment remain below the thresholds set in the Regional Aid Guidelines. The relevant product markets in the two cases are the markets for solar wafers, for solar cells and for solar modules.

The Commission found that both companies' shares on the relevant worldwide markets would remain below the 25% threshold, both before and after the planned investment. The Commission also concluded that the relevant markets were growing rapidly compared to the EEA growth rate and that therefore the additional production capacity created by the projects would not raise concerns.

Therefore, in the case of Wacker Schott, the effect of the aid on competition is deemed to be outweighed by its positive contribution to regional development.

However, in the case of Deutsche Solar, the Commission is concerned that the aid is not fully in line with Regional Aid Guidelines 2007-2013 and its conditions for granting aid for large regional investment projects. These guidelines include a progressive reduction of the regional aid ceiling for very large projects, because these suffer less from typical regional handicaps than smaller projects. If, the measure for the construction of the FreibergEast plant forms a single investment project with the extension of the FreibergSouth plant, the scaling down would apply to the combined investment and therefore the notified amount of aid for the FreibergEast plant would need to be reduced. Deutsche Solar and the German authorities maintain that they should be considered as separate investments. The Commission therefore needs to investigate the potential technical, functional, strategic and geographic links between the two investment projects of FreibergEast and FreibergSouth, which started almost simultaneously.

In the Wacker Schott case, the company agreed that the two separate plants in Jena should be considered as a single investment, so it is not necessary to investigate this issue further.

The non-confidential version of the decisions will be made available under the case number N 773/2007 (Wacker Schott) and N170/2008 (Deutsche solar) 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.

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