State aid - Germany: State aid in favour of Schneider Technologies AG - comment within one month (link)

February 23, 2005

Brussels, 22 Feb 2005

Full text of this notice

State aid in favour of Schneider Technologies AG State aid No C 26/2004 (ex NN 38/2004)

Invitation to submit comments pursuant to Article 88(2) of the EC Treaty

By means of the letter dated 14 July 2004 reproduced in the authentic language on the pages following this summary, the Commission notified Germany of its decision to initiate the procedure laid down in Article 88(2) of the EC Treaty concerning the abovementioned aid.

Interested parties may submit their comments on the measures in respect of which the Commission is initiating the procedure within one month of the date of publication of this summary and the following letter, to:
European Commission
Directorate-General for Competition State Aid Greffe
B-1049 Brussels
Fax (32-2) 296 12 42

These comments will be communicated to Germany. Confidential treatment of the identity of the interested party submitting the comments may be requested in writing, stating the reasons for the request.

SUMMARY OF THE LETTER TO THE GERMAN GOVERNMENT

Description

On 19 March 2003 a complaint was sent to the Commission listing a series of alleged aid measures in favour of Schneider Technologies AG (called Schneider Rundfunkwerke AG until 2000, hereinafter `Schneider AG').

The relevant undertaking, Schneider AG

Schneider AG is a German consumer electronics producer. Its diverse range of products such as radios, PCs and record players was reduced in a 1993 restructuring to colour TVs only. From the early 1990s the company also embarked on an ambitious laser technology development, which required huge investment but produced only potential profit. From 2000 to 2002, the two main business areas were regrouped in two fully owned Schneider AG subsidiaries: Schneider Electronics AG and Schneider Laser Technologies AG. In March 2002 separate insolvency proceedings were opened for Schneider AG and its two subsidiaries.

In the course of these proceedings, assets and various trademarks of Schneider AG and Schneider Electronics AG were sold in an `asset deal' to the Chinese electronics company TCL. The assets, patents and employees of Schneider Laser Technologies AG were transferred into a new company (Auffanggesellschaft) owned to 60 % by Jenoptik, Laser, Optik, Systeme GmbH (LOS) and to 40 % by the insolvency mass of Schneider Laser Technologies AG. The bodies allegedly granting State aid

The first alleged aid provider is the State-controlled Förderbank Bayern (LfA) bank. The second State-controlled organisation allegedly providing subsidies to Schneider AG is the Bayerische Forschungsstiftung (Bavarian Research Fund).

The financial measures in chronological order

The Complainant claimed unlawful aid to Schneider AG in the following measures:

1. A EUR 5,1 million (DM 10 million) loan granted in 1993 by LfA to Schneider AG;

2. A subsidy of EUR 9 050 121,88 provided to Schneider AG by the Bavarian Research Fund in the period of 1995-1999;

3. LfA's purchase of 250 000 shares in Schneider AG and its participation in the capital increase of EUR 23 million (DM 45 million) in September and October 1998;

4. LfA's consideration of EUR [...] (*) paid in November 1999 to the Complainant in exchange for cancellation of the Complainant's compensation right (Nachbesserungsrecht). The Complainant was allegedly obliged to provide the compensation amount to Schneider AG as a loan, therefore the claim related to an aid indirectly provided by LfA to Schneider AG; 22.2.2005C 46/12 Official Journal of the European Union EN

(*) Confidential information. - 5. Three loans provided in 1999 and 2000 by LfA to Schneider AG, amounting altogether to EUR 12,8 million.

Assessment

Existence of aid

The Commission has concluded that measures No 1, 3 and 4 do not involve State aid or are compatible with the common market.

As regards the other measures from LfA

During the period September 1999-February 2000, three loans were provided by LfA to Schneider AG: EUR 2,1 million and EUR 5,1 million in September 1999 and EUR 5,6 million in February 2000. Germany submitted that the purpose of the three loans was to ensure the maintenance of the EUR 31 million credit line from the private pool banks. The interest rates of the LfA loans were higher or equal to those from the pool banks and were higher than the Commission's reference rate. Subsequently, the outstanding amounts of these loans were claimed by LfA in the insolvency proceedings of Schneider AG. As mentioned above, when the three loans were granted the price of shares was high and Lehman Brothers bought [...] Schneider AG shares from LfA. This shows the continuing interest of the market in Schneider AG at that time. Two further capital increases with Lehman Brothers as sole or lead investor in late 1999 and early 2000 also support Germany's view that the three loans meet the market economy investor test. Nevertheless, further information is necessary from Germany in order to complete the assessment.

According the Germany, in late 1999 and early 2000 two capital increases were carried out in Schneider AG amounting to EUR 25 million and EUR 46 million. The first was carried out solely by Lehman Brothers and this company was the lead investor in the second capital increase as well, which involved private investors and LfA. The Complainant disputes these amounts and claims that capital increases by Lehman Brothers between September 1999 and February 2000 amounted to altogether only EUR 2,3 million. Therefore, further information is necessary from Germany concerning the exact amount and circumstances of these capital increases.

As regards the subsidy from the Bavarian Research Fund

The subsidy for R&D in laser technology was provided to Schneider AG in two separate measures: EUR 6 498 468,68 in the period 1995-1997 and EUR 2 551 653,20 in the years 1997-1999. These measures have not been notified to the Commission and can be considered as unlawful aid. Nevertheless, in 2001 the Commission approved the High Technologies scheme (1) for the period 2001-2005. In order to assess the possible compatibility of this aid with Article 87(3)(c) of the EC Treaty by analogy to the scheme, further information is necessary. In accordance with Article 14 of Council Regulation (EC) No 659/1999 , all unlawful aid can be subject to recovery from the recipient.

TEXT OF LETTER

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