7The contested judgment described the facts of the dispute as follows:16 The entry into force of the economic, monetary and social union between the Federal Republic of Germany and the German Democratic Republic on 1 July 1990 brought with it the collapse of demand for, and production of, Trabant vehicles in Saxony. In order to safeguard the motor vehicle industry in that region, Volkswagen AG... entered into negotiations with the Treuhandanstalt (“THA”), the public-law body entrusted with restructuring the businesses of the former German Democratic Republic, which led to an agreement in principle in October 1990. That agreement provided, inter alia:— for the joint creation of Sächsische Automobilbau GmbH (“SAB”), a company entrusted with the responsibility for maintaining jobs (“Beschäftigungsgesellschaft”), 87.5% of whose capital was initially held by the THA and 12.5% by Volkswagen;— for the [takeover] by SAB of the existing paint workshop (then under construction) and the final assembly workshop on the Mosel site (“Mosel I”);— for the [takeover] by Volkswagen Sachsen GmbH..., a wholly-owned subsidiary of Volkswagen, of an existing [engine] production plant on the Chemnitz site (“Chemnitz I”);— for the [takeover] by VW Sachsen of cylinder-head production at the Eisenach site; and— for the creation by VW Sachsen of a new motor vehicle construction plant in Mosel, comprising the four main activities of manufacture, namely metal pressing, skeleton bodywork, painting and final assembly (“Mosel II”) and a new [engine] production plant in Chemnitz (“Chemnitz II”).17 It was initially agreed that the reopening and restructuring of Mosel I and Chemnitz I constituted a temporary solution, designed to avoid unemployment of the existing workforce, pending the entry into service of Mosel II and Chemnitz II, scheduled for 1994.18 By letter of 19 September 1990, the Commission asked the German Government to notify it, in accordance with the Community framework, of State aid for those investment projects. By letters of 14 December 1990 and 14 March 1991, the Commission insisted that that aid could not be put into effect without having been notified to the Commission and received its approval. That question was also entered on the agenda of two bilateral meetings held in Bonn on 31 January and 7 February 1991.19 On 22 March 1991, on the basis of the Joint Task Law, the Saxon Ministry of the Economy and Employment adopted two [decisions] providing for the grant of certain investment grants to VW Sachsen in relation to Mosel II and Chemnitz II (“the 1991 [decisions]”). The amount envisaged for those grants totalled DEM 757 million for Mosel II, with payments spread out between 1991 and 1994, and DEM 147 million for Chemnitz II, with payments spread out between 1991 and 1996.20 On 18 March 1991, the Finanzamt (Tax Office) Zwickau-Land addressed a decision to VW Sachsen providing for the grant of certain investment allowances in accordance with the German law on investment allowances (Investitionszulagengesetz) of 1991.21 The Volkswagen group also sought the possibility of making special depreciation write-offs, in accordance with the German Assisted Areas Law (Fördergebietsgesetz) of 1991.22 By letter of 25 March 1991, the German authorities supplied the Commission with certain information concerning the aid referred to in paragraphs 19 to 21 above, whilst indicating that they did not yet have more precise information and that it was intended to grant it in the context of the aid schemes approved by the Commission for the new Länder. By letter of 17 April 1991, the Commission indicated that the letter from the German authorities of 25 March 1991 constituted a notification pursuant to Article 93(3) of the Treaty, but that further information was necessary.23 By letter of 29 May 1991, the German authorities argued, inter alia, that the Community framework was not applicable to the new Länder between 1 January and 31 March 1991. In the submission of those authorities, since the aid in question had been approved before 31 March 1991, the various files related thereto could henceforth be examined by the Commission only by reference to the regional aids scheme (see paragraphs above). The Commission rejected the arguments of the German authorities at a meeting on 10 July 1991 and requested further detailed information by letter of 16 July 1991. Following the reply of the German Government of 17 September 1991, the Commission raised a new series of questions by letter of 27 November 1991.24 In October and December 1991, the Volkswagen group received investment grants amounting to DEM 360.8 million and investment allowances amounting to DEM 10.6 million in relation to Mosel II and Chemnitz II.25 By decision of 18 December 1991 (OJ 1992 C 68, p. 14...), notified to the German Government on 14 January 1992, the Commission opened the procedure under Article 93(2) of the Treaty for reviewing the compatibility of the various aids for financing the investments in Mosel I and II, Chemnitz I and II and the Eisenach factory with the common market.26 In that decision, the Commission concluded, inter alia:“[...] the aids proposed by [the German] authorities give rise to major concern for the following reasons.— they have not been properly notified to the Commission according to the procedure of Article 93(3) of the EEC Treaty;— the apparent high aid intensity proposed to a plan involving significant expansion of capacity within the European car market could give rise to unfair distortion of competition;— not enough evidence has been presented to date which justifies the combination of the relatively high intensity of regional aid, the granting of indirect investment aid by the THA and the granting of a temporary operating aid also by THA by reference to the structural and economic problems which VW undoubtedly faces in the new Länder; on the contrary, the global aid intensity could be disproportionately high and incompatible with the criteria of the Community framework on State aid to the sector.”27 By letter of 29 January 1992, the German Government declared itself willing to suspend all aid payments until the review procedure was terminated.28 By letter of 24 April 1992, the Commission asked the German authorities, the THA and Volkswagen for further information. Further to a meeting of 28 April 1992 and the Commission's letters of 14 May, 5 June, 21 August and 17 November 1992, the German authorities provided additional information by letters of 20 May, 3 and 12 June, 20 and 29 July, 8 and 25 September, 16 and 21 October, and 4 and 25 November 1992; Volkswagen gave additional information by letters of 15 June and 30 October 1992, and 12 and 20 June 1993. The parties also met on 16 June, 9 September, 12 and 16 October and 3 December 1992, and on 8 and 11 June 1993.29 On 13 January 1993, Volkswagen decided to postpone a large part of the investments initially intended for the Mosel and Chemnitz factories. The paint workshop and final assembly line of Mosel II were henceforth to become operational only in 1997, and the [engine] production unit at Chemnitz II was not to enter into service until 1996. The Commission agreed to review its assessment on the basis of Volkswagen's new investment projects.30 On 30 March 1993, the Saxon Ministry of the Economy and Employment adopted two [decisions] amending the 1991 [decisions] (“the 1993 [decisions]”). The total amount of the investment grants thenceforth envisaged amounted to DEM 708 million for Mosel II, with payments spread between 1991 and 1997, and DEM 195 million for Chemnitz II, with payments spread between 1992 and 1997.31 Certain details of Volkswagen's new investment projects were submitted to the Commission during an interview which took place on 5 May 1993. By letter of 6 June 1993, Germany also communicated certain information on those projects, which Volkswagen supplemented by letters of 24 June and 6 July 1993 and a fax message of 10 November 1993. That new information was also examined during interviews which took place on 18 May, 10 June, 2 and 22 July 1993. Fresh information [on] the production capacities envisaged by Volkswagen was supplied in a letter from the German Government of 15 February and a fax message of 25 February 1994.32 The Commission also collected new information on those projects on a visit to the sites at the beginning of April 1994 and during interviews which took place on 11 May and 2, 7 and 24 June 1994. In addition, documents were submitted to it on the occasion of those interviews and others were sent to it by the German authorities and by Volkswagen on 10 May, 30 June and 4 and 12 July 1994.33 On 24 May 1994, the Saxon Ministry of the Economy and Employment adopted two [decisions] amending the 1991 and 1993 [decisions] (“the 1994 [decisions]”). The total amount of the investment grants thenceforth envisaged amounted to DEM 648 million for Mosel II, with payments spread between 1991 and 1997, and DEM 167 million for Chemnitz II, with payments spread between 1992 and 1997.34 By an agreement of 21 June 1994, supplemented by an annex of I November 1994, Volkswagen acquired from the THA the 87.5% of the shares in SAB which it did not already own.35 On 27 July 1994, the Commission adopted Decision 94/1068/EC of 27 July 1994 concerning aid granted to the Volkswagen Group for investments in the new German Lander (OJ 1994 L 385, p. 1; “the Mosel I decision”). In thaidecision, the Commission found, inter alia, as follows (Point IV, fourth paragraph, of the recitals):“On opening the procedure the Commission had regarded all Volkswagen's investment plans in Saxony as a single project and therefore intended to decide on all elements of State aid together. Even after its decision in 1993 to postpone investment in the new plants, Volkswagen initially argued that this did not affect the production technology, the labour input and other crucial variables. This year, however, on the basis of information collected during a site visit and through new expert advice, it became obvious that this view could no longer be maintained. Volkswagen also acknowledged to the Commission that their former plans had become obsolete and that they were being reworked. The new plans for the new car and engine plants Mosel II and Chemnitz II will now be closely linked to the development of the Golf A4 that will be put into production at the same time as Mosel II is now planned to come on stream, i.e. in 1997. A final version of the new plans will only be available at the end of 1994. On the basis of current information these new plans will include significant changes in technology and production structure. Under these circumstances it is obvious that the original link between the investment projects in the existing former THA plants and the new greenfield projects has been severed. The Commission has therefore decided to limit its current decision to the restructuring aid for the existing plants, on which it can form a clear opinion on the basis of the available information, and to postpone the decision on the aid to the greenfield projects until Volkswagen and Germany are able to present their definitive investment and aid plans.”36 The Mosel I decision shows that the paint and final assembly workshops of Mosel I were modernised and altered in accordance with the agreement concluded with the THA (see paragraph 16 above). In an initial period to 1992, Mosel I was used for the final assembly of the VW Polo and Golf A2 models, the parts for which were manufactured elsewhere by other plants of the Volkswagen group and delivered to Mosel in separate pieces. From July 1992, the combined use of the paint and final assembly workshops of Mosel I, the alteration of which had just been completed, and of the new body workshop of Mosel II, which had just come into service, allowed the production launch of the Golf A3 model at Mosel, pressing work being carried out elsewhere. As a result, logistics were transferred from the Wolfsburg site to Mosel I in January 1993, and new supplier undertakings, capable of supplying the necessary parts to Mosel I and Chemnitz I, were established in the proximity. The new press shop of Mosel II started to function in March 1994, close to Mosel I.37 It was in those circumstances that, in Article 1 of the Mosel I decision, the Commission declared various aids granted up to the end of 1993 (the date on which the restructuring was to be completed), and amounting to DEM 487.3 million for Mosel I and DEM 84.8 million for Chemnitz I, compatible with the common market. However, certain aid granted subsequently was declared incompatible with the common market, particularly that categorised as aid for replacement and modernisation investments, which according to the Mosel I decision could not be authorised under the Community framework (see the Mosel I decision, Points IX and X).38 Subsequently, the German Government verbally informed the Commission, a number of times, of delays occurring in the creation of Mosel II and Chemnitz II. In a letter of 12 April 1995, the Commission reminded the German authorities that they were required to notify it of Volkswagen's projects for those new plants, so that it could carry out a review of the aids concerned. That letter received no reply. By letter of 4 August 1995, the Commission requested that the necessary information be communicated to it as soon as possible, stating that, if Germany did not comply with that request, it would adopt a provisional decision, followed by a definitive one, on the basis of the information it already had. In reply to that letter, the German Government informed the Commission, by letter of 22 August 1995, that Volkswagen's investment projects were still not finalised.39 On 31 October 1995, the Commission adopted Decision 96/179/EC, enjoining the German Government to provide all documentation, information and data on the new investment projects of the Volkswagen Group in the new German Lander and on the aid to be granted to them (OJ 1996 L 53, p. 50).40 Following that decision, certain information concerning those projects and on the subject of production capacity was communicated to the Commission during an interview on 20 November 1995. That information was confirmed by letter of 13 December 1995 and clarified on a visit to the sites on 21 and 22 December 1995. On 15 January 1996, the Commission put other questions to the German authorities. After an interview on 23 January 1996, most of the missing information was communicated to the Commission by letters of 1 and 12 February 1996.41 On 21 February 1996, the Saxon Ministry of the Economy and Employment adopted two [decisions] amending the 1991, 1993 and 1994 [decisions] (“the 1996 [decisions]”). The total amount of the investment grants thenceforth envisaged amounted to DEM 499 million for Mosel II, with payments spread between 1991 and 1997, and DEM 109 million for Chemnitz II, with payments spread between 1992 and 1997.42 By letter of 23 February 1996, the Commission reminded the German authorities that it still lacked certain information. That information was communicated to it at an interview on 25 March 1996 and was subsequently discussed on 2 and 11 April 1996. A further interview took place on 29 May 1996.43 On 26 June 1996, the Commission adopted [the contested decision], the operative part of which reads as follows:“Article 1The following aid proposed by Germany for the various investment projects of Volkswagen... in Saxony is compatible with Article 92(3)(c) of the EC Treaty and Article 61(3)(c) of the [Agreement on the European Economic Area of 2 May 1992 (OJ 1994 L 1, p. 3, ‘the EEA Agreement’)]:— aid granted by Germany to [the Volkswagen group] for [its] investment projects in Mosel (Mosel II) and Chemnitz (Chemnitz II) in the form of investment grants (Investitionszuschüsse) of up to DEM 418.7 million,— aid granted by Germany to [the Volkswagen group] for [its] investment projects in Mosel (Mosel II) and Chemnitz (Chemnitz II) in the form of investment allowances (Investitionszulagen) of up to DEM 120.4 million.Article 2The following aid proposed by Germany for the various investment projects of Volkswagen... in Saxony is incompatible with Article 92(3)(c) of the EC Treaty and Article 61(3)(c) of the EEA Agreement and may not be granted:— the proposed investment aid for [the Volkswagen group] for [itsl investment projects in Mosel II and Chemnitz II in the form of special depreciation on investment under the Assisted Areas Law (Fordergebietsgesetz) with a nominal value of DEM 51.67 million,— the proposed investment aid to [the Volkswagen group] for [its] investment project in Mosel II in the form of investment grants (Investitionszuschüsse) in excess of the amount specified in the first indent of Article 1 and constituting an additional DEM 189.1 million.Article 3Germany shall ensure that the capacity of the Mosel plants in 1997 does not exceed a level of 432 units per day [...]Furthermore, Germany shall send to, and discuss with, the Commission an annual report on the realisation on the DEM 2654.1 million of eligible investments in Mosel II and Chemnitz II and the actual payments of aid so as to ensure that the combined effective aid intensity expressed in gross grant equivalent does not exceed 22.3% for Mosel II and 20.8% for Chemnitz II [...]Article 4Germany shall inform the Commission within one month of the notification of this Decision of the measures taken to comply herewith.Article 5This Decision is addressed to the Federal Republic of Germany.”44 Following a letter sent by the chairman of Volkswagen to the first minister of the Free State of Saxony on 8 July 1996, the Free State of Saxony paid Volkswagen, in July 1996, DEM 90.7 million in investment grants which the Commission had declared in [the contested decision] to be incompatible with the common market.’
Source: EUR-Lex, © European Union, 1998-2026. Reuse authorised under Decision 2011/833/EU.