IP/02/1665
Brussels, 13 November 2002
Commission reduces proposed aid
caprolactam plant in Schwedt, Germany
for
new
The European Commission decided that part of the aid proposed by
Germany in favour of the Capro Schwedt GmbH for the construction of a new
caprolactam complex exceeds the maximum amount allowable under the
specific rules for regional state aid to large investment projects. Germany
may subsidise the project with up to 21.00% of the investment costs, i.e. to
the amount of roughly € 69.5 million, instead of the initially notified 28% aid
intensity corresponding to € 92.7 million.
Germany notified in August 2001 an aid of € 92.7 million in favour of
Capro Schwedt GmbH for a large investment in a newly created chemical industrial
park in Schwedt (Brandenburg). Capro Schwedt GmbH is a new company owned by
Aquafil, an Italian synthetic fibres producer. The production complex, which also
includes three supplying companies, will produce caprolactam, the main input
material for the production of synthetic fibres. According to Germany the eligible
investment cost is € 331 million and the project will create of 528 direct jobs. The
total proposed aid intensity was 28%, which is the regional ceiling for large
undertakings in the assisted area.
The Commission opened the investigation procedure in January 2002, mainly as
there were doubts whether the intended aid level was in conformity with the
maximum allowable aid calculated on the basis of the state aid rules for large
regional investments. During the investigation procedure, two competitors and an
agricultural industry association expressed its reservations about the project,
supporting the Commission’s doubts.
The Commission now concluded the investigation procedure. As the caprolactam
market is in relative decline (compared to the average of the manufacturing industry)
the Commission reduced the level of allowable aid. Only 21.00% of the investment
cost (that is three quarters of the level notified) may be granted to the project. In
addition, the last aid instalment may only be paid out after the Commission has
verified that all 528 announced jobs have in fact been created.
Background: “Multisectoral Framework for large investment projects”
On 16 December 1997, the Commission adopted the Multisectoral framework on
regional aid for large investment projects. The main purpose of the framework is to
limit aid for large-scale projects to a level, which avoids as much as possible adverse
effects on competition.
According to the framework, the Commission has to determine a maximum allowable
aid intensity. It begins its assessment by identifying the regional aid ceiling for large
companies in the assisted area. Three specific adjustment factors are then applied to
that percentage figure in order to calculate the maximum allowable aid intensity for
the project: a competition factor (reflecting the capacity/market situation in the
industry), a capital-labour factor (taking into account the number of direct jobs
created by the project in relation to the capital invested) and a regional impact factor
(taking into account the indirect jobs created by the project in the assisted regions).
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