EC to investigate public financing for German paper mill Propapier after EU General Court judgment

Brussels, 15-5-2013 — /europawire.eu/ — State aid: Commission opens investigation into public financing for German paper mill Propapier after Court judgment

After the annulment of its 2008 decision to authorise a regional investment aid granted by Germany to Propapier for the construction of a paper mill in Eisenhüttenstadt (Brandenburg, Germany), the European Commission has opened an investigation to reassess the measure in light of the guidance provided by the judgment of the EU General Court (case T-304/08). The Commission will assess whether the positive effects of the aid on regional development outweigh the potential distortion of competition and negative effect on trade between Member States created by the selective advantage granted to Propapier. The opening of a formal investigation gives interested third parties a possibility to comment on the measure. It does not prejudge the outcome of the investigation.

In 2008, Germany granted €43.4 million of public financing to Propapier for a €350 million investment project started in 2007 and completed in 2010. The Commission had approved the aid in 2008 (see IP/08/532). Propapier’s competitor Smurfit Kappa appealed this decision to the EU General Court (GC), who annulled the decision in July 2012 (case T-304/08) because the Commission had not balanced the negative and positive effects of the aid, but had only noted that the market share and sectoral overcapacity and growth thresholds foreseen in the regional aid guidelines for triggering an in-depth investigation were not exceeded. Therefore, the Commission now needs to reassess the measure and take a new decision.

Propapier is a large enterprise belonging to Progroup AG, active in the production and sale of corrugated case material and corrugated board. The paper plant in Eisenhüttenstadt produces two types of corrugated case material, namely testliner and fluting made from recycled fibre.

On the basis of the information that was submitted to it before the adoption of the annulled decision, the Commission cannot establish at this stage whether a situation of structural overcapacity existed in the relevant paper sectors in 2008, and if so, whether it was maintained or reinforced by the aid. Therefore, without a formal investigation the Commission cannot affirm without doubt, as requested by the General Court, that the positive effects of the aid on regional development outweigh its negative effects on trade and competition. In line with the jurisprudence of the European Courts, the Commission will base its assessment on the market information available at the time of the adoption of the annulled decision.

Background

In parallel, the Commission is currently investigating whether German infrastructure projects in Eisenhüttenstadt may involve incompatible state aid in favour of Propapier (see IP/10/1397). The non-confidential version of today’s decision will be made available under the case number SA.23827 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.