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30.4.2013 Official
Journal
of
the
European
Union L
119/9
COMMISSION DECISION
of 27 June 2012
on the State aid SA.28356 (C 37/09, ex N 226/09) — Habidite Alonsotegi
(notified under document C(2012) 4194)
(Only the Spanish text is authentic)
(Text with EEA relevance)
(2013/198/EU)
THE EUROPEAN COMMISSION,
(2) On
2
December
2009
the
Commission
opened
a
formal
investigation procedure pursuant to Article 108(2) of the
Treaty with regard to the notified contracts (hereinafter:
"the opening Decision") ( 3 ). The opening Decision was
published in the Official Journal of the European Union
Having regard to Treaty on the Functioning of the European
on 12 March 2010 ( 4 ).
Union, and in particular the first subparagraph of Article 108(2)
thereof ( 1 ),
(3) The
Spanish
authorities
did
not
submit
comments
on
the
opening Decision. Habidite commented on the opening
Having regard to the Agreement on the European Economic
Decision by letter of 9 April 2010. These comments
Area, and in particular Article 62(1)(a) thereof,
were transmitted to the Spanish authorities by letter of
15 April 2010, who replied by letter of 12 May 2010.
No other third parties commented on the opening
Decision.
Having regard to the Decision by which the Commission
decided to initiate the procedure laid down in Article 108(2)
of the Treaty, in respect of the aid C 37/09 (ex N 226/09) ( 2 ),
(4) On
6
September
2010
Habidite
requested
access
to
the
file documents originating from the Spanish authorities
under Regulation (EC) 1049/2001 ( 5 ). The Commission
consulted the Spanish authorities on this request on
Having called on interested parties to submit their comments
10 September 2010. The Spanish authorities replied on
pursuant to the provisions cited above, and having regard to
13 September that they did not object to granting access
their comments,
to the requested documents to Habidite. The requested
documents were transmitted to Habidite on 7 October
2010.
Whereas:
(5) The
Commission
requested
additional
information
from
the Spanish authorities by letters of 28 June 2010 – to
which the Spanish authorities replied on 26 July 2010,
and 8 December 2010 – to which the Spanish authorities
I. PROCEDURE
replied on 14 January 2011.
(1) On
15
April
2009
the
Spanish
authorities
notified
for
legal certainty purposes two contracts, concluded on
15 December 2006, between BIZKAILUR S.A. (here
inafter "BIZKAILUR") and the Diputación Foral de
(6) Habidite
submitted
additional
comments
and
information
Bizkaia (hereinafter "the Diputación"), on the one hand,
on: 27 July 2010 – to which the Spanish authorities
and on the other hand, by the private undertakings
replied on 3 November 2011; 6 April 2011 (registered
Habidite Technologies País Vasco S.A. (hereinafter "Habi
on 13 April 2011) – to which the Spanish authorities
dite"), Grupo Empresarial AFER S.L. (hereinafter "the
replied on 30 May 2011 (registered on 6 June 2011);
AFER group") and the Habidite group.
and 7 July 2011. The Commission services met on
3 February 2011 in Brussels with representatives of
Habidite, at the latter’s request.
( 1 ) With effect from 1 December 2009, Articles 87 and 88 of the EC
Treaty have become Articles 107 and 108, respectively, of the TFEU.
The two sets of provisions are, in substance, identical. For the
( 3 ) See footnote 2.
purposes of this Decision, references to Articles 107 and 108 of
( 4 ) See footnote 2.
the TFEU should be understood as references to Articles 87 and 88,
( 5 ) Regulation No. 1049/2001 of the European Parliament and of the
respectively, of the EC Treaty where appropriate.
Council of 30 May 2001 concerning public access to documents of
( 2 ) Commission Decision C(2009)9310 final of 2 December 2009 (OJ
the European Parliament, the Council and the Commission (OJ
C 61, 12.3.2010, p. 6).
L 145, 31.5.2001, p. 43).

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L 119/10
EN
Official Journal of the European Union
30.4.2013
II. BACKGROUND OF THE CASE
under Article 107(3)(c) of the Treaty ( 10 ). The Habidite
factory should have created 1 100 new jobs in this
T h e c o n t r a c t i n g p a r t i e s
assisted area.
(7) The
two
contracts
which
are
the
subject
of
this
Decision
were concluded on 15 December 2006 between
BIZKAILUR and the Diputación, on the one side, and
(11) The
new
factory
would
have
produced
the
so-called
on the other side, Habidite, the AFER group and the
"Habidite modules", i.e. prefabricated construction
Habidite group.
modules to be used for the direct assembly of homes/
buildings. The Habidite modules were to be produced
with a line assembly technology similar to the one
used in the car manufacturing industry, and thereafter
be transported and directly assembled at their future
location. The product was considered to be innovative,
not only because of the singular production technology
(8) BIZKAILUR
was
a
company
100
%
owned
by
the
Dipu
involved, but also due to savings in time and resources in
tación whose social object was the purchase and adap
the assembly of the final product (buildings and homes),
tation of land for promoting industrial and social
and to the use of materials allowing energy savings. The
housing projects in the province of Bizkaia. As of June
company had applied for several patents in relation to
2010 BIZKAILUR was merged, together with other
this product ( 11 ).
public companies with similar scope of activity, into
the current AZPIEGITURAK S.A.U., also 100 % owned
by the Diputación, and which continues the same line
of activities ( 6 ).
(12) According
to
information
provided
by
the
Diputación,
the costs of this investment project in Alonsotegi were
estimated at the time of signature of the two notified
contracts at EUR 55 million, as follows:
(9) Habidite,
together
with
other
linked
companies
in
the
Land EUR
4,8
million
Habidite group, is part of the private AFER group, head
quartered in Ortuella, Bizkaia ( 7 ). At the date of the
Industrial building EUR
22,5
million
notification, the AFER group comprised a total of 13
companies (
Land adaptation (urbanización) EUR
4,04
million

8 ) active in the construction and adjacent
sectors. All companies in the AFER group were at the
time majority-owned and controlled by […]
(*).
Installations EUR
24,0
million
According to the Diputación and Habidite, neither
Total EUR
55,34
million
Habidite nor the AFER group constituted firms in
difficulty within the meaning of Points 9, 10 and 11
of the Community Guidelines on state aid for rescuing and
restructuring firms in difficulty ( 9 ) (hereinafter "the R&R
Guidelines") at the time when the two notified
(13) The
annual
production
of
the
projected
Habidite
factory
contracts were concluded.
was estimated to be of 3 500 houses during the initial
years of the functioning of the factory, and 4 500 houses
once full production capacity would have been reached.
L e g a l f r a m e w o r k o f s o c i a l h o u s i n g i n t h e
P a í s V a s c o
T h e H a b i d i t e p r o j e c t


(14) In
order
to
understand
the
context
in
which
the
notified
(10) The
notified
contracts
were
concluded
to
support
a
new
contracts were concluded on 15 December 2006, it is
investment project to be carried out by Habidite: the
necessary to shortly describe the legal framework in
establishment of a factory of construction modules (here
which social housing is provided in the País Vasco (here
inafter "the Habidite factory") in Alonsotegi, a village in
inafter "the Basque Country").
the Gran Bilbao administrative area (comarca). On the date
when the notified contracts were concluded, the Gran
Bilbao comarca was deemed to be a region assisted
( 10 ) See Commission Decision of 17.5.2000 concerning State Aid
N 773/99 Spain, approving the regional aid map for Spain for
the period 2000-2006. This Decision is available at http://ec.
( 6 ) http://www.azpiegiturak.bizkaia.net/index.php?option=com_
europa.eu/eu_law/state_aids/comp-1999/n773-99.pdf.
content&task=view&id=140&Itemid=185.
( 11 ) According to Habidite's Business Plan available at the time of
( 7 ) See http://www.grupoafer.com.
conclusion of the notified contracts (not dated), a total of 56
( 8 ) Not including the newly-founded Habidite Technologies Alonsotegi
patents were requested in relation to this product. The parties did
S.A., in relation to whose set-up the notified contracts were
not inform whether the requested patents were granted. Further
concluded.
information about the characteristics of the Habidite construction
(*) Confidential information.
modules are available on the website of Habidite, at http://www.
( 9 ) OJ C 244, 1.10.2004, p. 2.
habidite.com/descripcion.html.

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EN
30.4.2013 Official
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of
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European
Union L
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(15) Average real estate prices were higher in this
— EUR 1 307,94/sqm for municipalities listed in Annex
autonomous community (comunidad autónoma) than in
II to the Order of 1.8.2004;
the rest of Spain before the beginning of the crisis in
2008, and continue to remain higher up to the date of
this Decision. The Basque authorities seek to ensure
access to housing to the more disadvantaged categories
of citizens by providing social housing under the
— EUR 1 181,54/sqm for other municipalities;
protected regime (viviendas protegidas) and under the
semi-protected regime (viviendas tasadas). The nature of
each of these two categories of social housing is
explained below.
— EUR 472,40/sqm for the annexes (garage/box etc.).
(16) The Ley 2/2006 del suelo y de urbanismo ( 12 ) (hereinafter
"Regional Law 2/2006") established that:
The prices for the viviendas tasadas were topped to a
maximum 1,7 of the above-indicated prices.
(a) 40 % of the urban land qualified for construction
shall be destined to protected (viviendas protegídas)
(19) The Diputación informs that, when BIZKAILUR
and semi-protected regime houses (viviendas tasadas),
concluded with Habidite the notified contracts, the
in proportion of 20 % for each (Article 80.2. of the
former was acting within the framework of Ley 7/1985
Regional Law 2/2006);
de 2 de abril del 1985 reguladora de las Bases del Régimen
Local (Law 7/1985) ( 14 ), which gives to the municipalities
the autonomy to administrate matters of local interest,
including the provision of social housing (Art. 25). Based
(b) from the extra-urban land qualified for construction,
on Article 109.2 of the Real Decreto 1372/1986 (Royal
55 % shall be reserved for protected regime housing
Decree 1372/1986) and on Article 79 of Law 7/1985 (in
(viviendas protegídas) and 20 % for semi-protected
its consolidated version), the municipalities transfer to
regime housing (viviendas tasadas) (Article 80.3. of
BIZKAILUR, be it free of charge or against a price,
the Regional Law 2/2006).
assets which are necessary for carrying out social
housing objectives. At the time when the notified
contracts were concluded, on 15 December 2006), the
social housing objectives were defined in a Plan adopted
(17) Houses under the semi-protected regime housing
by the Diputación in 2004 on the provision of social
(viviendas tasadas) belong to an intermediary category
housing in this province during the period 2004-2007 –
between social protection housing and houses sold
the Plan Foral de actuación en materia de vivienda
freely in the market. The prices for semi-protected
2004-2007 (hereinafter “the Plan Foral”). According to
houses (viviendas tasadas) are limited by Regional Law
the Diputación, the Plan Foral foresaw that BIZKAILUR
2/2006 to maximum 1,7 of the maximum prices for
would have provided over the period 2004-2007 a total
equivalent houses sold in fully-protected regime (viviendas
of 3 000 homes in protected regime.
protegídas). The maximum prices for the latter category in
the province of Bizkaia are established on the basis of the
Orden (Order) of 1.8.2004 of the Housing and Social
Affairs Department ( 13 ), which established an initial
regulated price that was to be thereafter indexed
T h e n o t i f i e d c o n t r a c t s
annually on the basis of the ndice de Precios al Consumo
(Consumption Price Index) (IPC) determined by the
(20) Under the first contract - identified in the opening
Instituto Nacional de Estadística (Spanish National
Decision as "Measure 1", hereinafter referred to as "the
Institute of Statistics).
Land Contract" - the Diputación and BIZKAILUR
undertake that the latter would have purchased and
adapted for industrial use a surface totalling
101 430 sqm (81 600 sqm for the industrial plant,
(18) According to the Diputacíon, in 2006, when the notified
5 300 sqm for offices and 14 300 sqm for industrial
contracts were concluded, the resulting maximum prices
annexes) in the industrial area of Montealegre in Alon
for protected housing (viviendas protegídas) were the
sotegi, within 24 months from the date of signature of
following:
the contract (Part Two, Article 1(ii) of the contract).
BIZKAILUR would have transferred ownership of the
adapted land surface to Habidite within 12 months
from the date of signature of the contract (Part Two,
— EUR 1 351,86/sqm for municipalities listed in Annex
Article 1(iii) of the contract), "free of any charge,
I of the Order of 1.8.2004;
expense or contribution", for a price equal to "the
effective costs incurred by BIZKAILUR for its purchase"
(Part Two, Article 1(vi) of the contract). This price would
( 12 ) BOPV (Official Journal of the Basque Country) No. 2006/138,
p. 15396.
( 13 ) BOPV No. 2004/160, p. 15872.
( 14 ) BOE (Boletín Oficial del Estado) No. 80, 3.4.1985, p. 8945.

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L 119/12
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Official Journal of the European Union
30.4.2013
have been paid by Habidite within 7 years from the date
(b) homes under 75 sqm: 83,30 % of the price obtained
of the transfer of ownership, in 4 equal instalments (of
by BIZKAILUR for the living surface, plus 100 % of
25 % each), to be paid at the end the 4th, 5th, 6th and
the price obtained for the annexes (garage, storage
7th year (Part Two, Article 1(vii) of the contract).
box, etc.)
(25) BIZKAILUR would thus have retained the rest of 17 %,
(21) Under
the
second
contract
–
identified
in
the
opening
or 16,70 % respectively, of the price obtained for the
Decision as "Measure 2", hereinafter referred to as "the
houses (except for the annexes – garage, storage box,
Houses Contract" - the Diputación, be it directly or
etc. - where the entire sale price would have been for
through BIZKAILUR, would have purchased from
Habidite).
Habidite a total of 1 500 homes, of which 750 with a
surface of less than 75
sqm. The Diputación or
BIZKAILUR would have ordered the 1 500 homes
between May 2007 and end of June 2010, so as to
(26) In
an
example
provided
by
the
Diputación,
for
a
house
allow the delivery of the total number of 1 500 homes
of 75 sqm to be sold under the semi-protected regime in
by May 2011.
2006, Habidite would have obtained: EUR 143 060,58
(83 % of 75 sqm × EUR 1,351 × 1,7), plus EUR 28 107,6
for the annexes (100 % of 35 sqm × EUR 472,4), from
the total price of EUR 200 459,5 at which BIZKAILUR
would have sold the home under the semi-protected
(22) The
contracted
homes
would
have
been
built
on
land
regime (as viviendas tasadas).
placed at the disposal of Habidite by BIZKAILUR, and
then sold under the semi-protected regime (as viviendas
tasadas), be it directly by the Diputación or BIZKAILUR,
be it by Habidite itself, in respecting the maximum
(27) According
to
Article
A(g)
of
the
Houses
Contract,
on
an
pricing provisions applicable (see recitals (14) to (19)).
exceptional basis, part of the 1 500 homes contracted
When the contracted homes were to be sold by the
from Habidite could have been sold by the Diputación
Diputación or BIZKAILUR, Habidite would not have
or BIZKAILUR at market price, in which case Habidite
acquired property of the land on which the houses
would have obtained the same percentages of the sale
were to be built. In such cases, it task would have
price as stipulated at Article A(e) – as indicated in
been exclusively to build the homes.
recital (24).
(28) The
Diputación
and
BIZKAILUR
did
not
carry
out
a
(23) The
Contract
also
allowed,
on
an
exceptional
basis,
that
public tender before concluding the Houses Contract
for some of the contracted homes, Habidite or the AFER
with Habidite.
group could also have acted as promoters (Article A(f) of
the Houses Contract). In such exceptional cases, Habidite
or AFER would have first received ownership of the land
necessary for the construction of the homes, then would
S u s p e n s i o n o f t h e H a b i d i t e p r o j e c t
have carried out the construction works, and finally,
would have sold themselves the houses under the semi-
(29) The
Habidite
project
was
eventually de facto abandoned.
protected regime (as viviendas tasadas). In such cases,
According to the Diputación, the main reason was that
Habidite or AFER would have only retained the stipulated
BIZKAILUR would have incurred higher-than-initially-
price for the homes, as indicated below, while the part of
estimated costs for the purchase and adaptation to
the price corresponding to the land would have been
industrial use of the land plot where the Habidite
transferred to the Diputación and/or BIZKAILUR.
factory would have been set.
(30) The
Diputación
had
informed
( 15 ) that from May 2007
until April 2008 BIZKAILUR had bought
(24) According
to
Article
A(e)
of
the
Houses
Contract,
the
205 487,73 sqm of land for this project, for which it
price to be obtained by Habidite for the 1 500 homes
had paid a total of EUR 4,7 million. According to the
was as follows:
Diputación, the purchase of an additional 95 000 sqm
was necessary, for which an additional cost of
EUR 2,6 million was estimated. As to the costs for
adapting the land for industrial use, in March 2009
they were estimated to be EUR 28,5 million.
(a) homes over 75 sqm: 83 % of the price applied by
BIZKAILUR for the living surface, plus 100 % of
( 15 ) Based on information submitted by the Diputación on
the price obtained for the annexes (garage, storage
23 September 2009, prior to the opening of the formal investi
box);
gation.

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30.4.2013 Official
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Union L
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(31) The ownership of the land already acquired by
intra-Union trade, it was underlined that Habidite
BIZKAILUR in view of this project has not been trans
operates in the construction sector, where competition
ferred to Habidite.
is very intense, and where aid to one company might
harm companies from other Member States.
III. THE OPENING DECISION
C o m p a t i b i l i t y
(32) In
the
opening
Decision
of
2
December
2009
( 16 ), the
Commission considered that both the Land Contract and
(36) In
the
opening
Decision
expressed
doubts
as
regards
the
the Houses Contract seemed to involve state aid within
compatibility of the aid potentially involved in the
the meaning of Article 107(1) of the Treaty. Also, the aid
notified contracts with the Treaty under the compatibility
did not appear to be compatible with the Treaty under
criteria laid down in the Commission Guidelines on National
any of the relevant state aid rules.
Regional Aid for 2007-2013 ( 18 ), the Commission Regu
lation (EC) No 800/2008 of 6 August 2008 declaring
certain categories of aid compatible with the common market
in application of Articles 87 and 88 of the Treaty ( 19 ), and
E x i s t e n c e o f a i d
the Temporary Framework for State aid measures to support

access to finance in the current financial and economic
(33) In relation to the Land Contract, the Commission
crisis ( 20 ).
preliminarily concluded that the terms for the
repayment of by the beneficiary of the land purchase
and adaptation were similar to an interest-free loan,
thus conferring to Habidite an advantage that it would
IV. COMMENTS RECEIVED FROM THE SPANISH AUTH
not have been able to obtain on the market.
ORITIES
(37) The
Spanish
authorities
did
not
comment
on
the
opening
Decision (see recital 6 above), but provided additional
(34) In relation to the Houses Contract, the opening Decision
information in answer to requests addressed by the
noted that the price to be paid by BIZKAILUR for the
Commission following the opening Decision, and also
1 500 houses did not seem to be market-conform, as the
replied to some of the arguments put forward by
beneficiary had estimated in its own business plan that
Habidite. These replies and additional information are
the average price to be obtained from BIZKAILUR would
summarised in recitals (48) to (54).
have been of EUR 2 012,19/sqm, whereas the average
price estimated to be obtained on the market would
have been EUR 1 762,6/sqm.
V. COMMENTS RECEIVED FROM THIRD PARTIES
(38) As
indicated
in
recitals
(3)
and
(6),
Habidite
commented
on the opening Decision on 9 April 2010, and provided
(35) The
Commission
also
noted
a
series
of
indications
of
an
additional information and comments on 27 July 2010,
advantage to Habidite in the light of the judgment of the
6 April 2011 and 7 July 2011. With these submissions,
Court in P&O Ferries ( 17 ): a) the Houses Contract had not
Habidite on the one hand informed of relevant factual
been concluded through public tender; b) the need for
elements which were not known to the Commission at
providing social housing was neither claimed nor demon
the time of the opening Decision, and on the other hand,
strated by the Diputación Foral de Bizkaia and
brought forward arguments to contest the existence of
BIZKAILUR; and c) the Houses Contract allowed for
aid in the notified contracts. These arguments and the
the possibility that part of the 1 500 homes purchased
additional factual information presented by Habidite are
from Habidite be sold on the market. It also noted that
summarised recitals (39) to (47).
that the purchase of a large part of the new factory's
production in the first years of its functioning reduced
the risks that are normally associated with a new
investment project. Concerning the criterion of use of
state resources and imputability to the State, the
F a c t u a l e l e m e n t s
Decision pointed out in relation to potential aid
involved in both contracts that BIZKAILUR is a
(39) First, Habidite informed that a third contract was
company fully owned and controlled by the public auth
concluded on the same date with the Land and Houses
orities which performs tasks attributed by the State. With
Contracts (15 December 2006). With this third contract
respect to selectivity, it was noted that the contracts
(hereinafter “the Training Aid Contract”) the Diputación
clearly benefitted exclusively to Habidite and the AFER
engaged to provide to Habidite training aid for the 1 100
group. On distortion of competition and affectation of
new hires at the Habidite factory. In particular, the Dipu
tación committed to cover training expenses for the
( 16 ) See footnote 2.
( 17 ) See Joined Cases T-116/01 and T-118/01 P&O European Ferries
( 18 ) OJ C 54, 4.3.2006, p. 13.
(Bizkaia) and Diputación Foral de Bizkaia v. Commission [2003] ECR
( 19 ) OJ L 214, 9.8.2008, p. 3.
II-2957.
( 20 ) OJ C 83 of 7.4.2009, p. 1.

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L 119/14
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Official Journal of the European Union
30.4.2013
1 100 employees, while Habidite committed on its side
(c) The unique nature of the Habidite prefabricated
to preserve the 1 100 new jobs for at least 5 years. This
modules, in terms of the product characteristics and
contract was also de facto suspended due to the failure of
assembly technology, exclude the possibility of
the Habidite project (see recitals (29) to (31)).
distortion of competition or affectation of trade
between the Member States. In cases N-09084
Ristretto Group/Williams Scottsman and N-04059
TDR Capital/Agelco the Spanish competition
(40) Second,
Habidite
provided
documentation
showing
that
authority defined the relevant market as “production,
the Habidite project was granted, by Decision of the
sale and rental of modular houses”. According to this
Gobierno Vasco (the Basque government) of 30 December
definition, the uniqueness of the Habidite modules
2008, a regional aid totalling EUR
6 million, in
implies that it does not have any direct competitors
application of the block-exempted regional aid scheme
who might be harmed by the two contracts.
XR 175/2007 ( 21 ).
Moreover, in the Commission’s Decision in case
M2473 Finnforest/Moelven Industrier ( 25 ) it was estab
lished that the market for modular buildings is local
or regional, because transport costs exclude the feasi
(41) Third,
Habidite
informed
that,
following
the
suspension
bility of competition from larger distances. The
of the Habidite project, it filed, by letters of 6 February
Habidite prices were at any rate very competitive,
2009 and 17 September 2009, administrative complaints
given the technological characteristics of the product.
for non-compliance by the Diputación and BIZKAILUR
with the obligations assumed under the three contracts.
Habidite also informed that it intended to pursue its
claims before the competent Spanish court.
(44) Habidite
also
put
forward
specific
detailed
arguments
to
contest that any of the two notified contracts would have
conferred on it an advantage.
E x i s t e n c e o f a i d a n d c o m p a t i b i l i t y
(42) Habidite
argues
that
the
Land
and
Houses
Contracts
do
not fulfil the cumulative criteria for being qualified as
involving state aid within the meaning of Article 107(1)
(45) In
respect
of
the
Houses
Contract,
Habidite
argues
in
of the Treaty.
essence that it could not have derived any advantage

because the stipulated sales prices were not above, but
actually below market levels. In particular:
(43) In respect of the elements of the notion of state aid other
than the advantage element Habidite has presented the
following arguments, common to both notified contracts:
(a) The prices to be obtained by Habidite under the
Houses Contract were by definition under market
levels, considering that the houses would have been
sold by BIZKAILUR at the regulated, below-market,
(a) The two contracts do not involve a transfer of state
levels of price established by law for houses to be
resources because, to the extent that they involve
sold under the semi-protected regime (viviendas
market-conform operations, they do not involve a
tasadas) – see recitals (14) to (19).
loss of public resources (according to the judgment
of the Court in PreussenElektra ( 22 )).
(b) The average price to be obtained by BIZKAILUR
(b) The selectivity criterion should not be assumed to be
for the homes constructed by Habidite, of
met by the Houses Contract only because the
EUR 2 010,19/sqm, was comparable to the average
contract was not concluded following public tender.
prices that BIZKAILUR was paying at the time
Under the Real Decreto Legislativo No. 781/1986 de
under similar contracts for the construction of
18 de abril, por el que se aprueba el texto refundido de las
homes to be sold under the protected and
disposiciones legales vigentes en materia de Régimen
semi-protected regime. For example, according to
Local ( 23 ) and Article 31 of Directive 2004/18/EC of
Habidite, in 2007 BIZKAILUR paid for the
the European Parliament and the Council of 31 March
construction of social houses in Lemoiz
2004 on public procurement ( 24 ), such contracts can
EUR 2 277/sqm, in Ziérbana EUR 1 964/sqm, and
also be concluded directly, i.e. without public
in Areatza EUR
2
021/sqm. In 2007, the
tender, when justified by the technical nature of the
average price of houses sold as viviendas
project or for protecting exclusivity rights.
tasadas in four municipalities of Bizkaia was of
EUR 1 808,69 EUR/sqm for houses of 84 sqm ( 26 ).
( 21 ) Published in the Official Bulletin of the Basque Country No. 194 of
8.10.2007.
( 25 ) OJ C 239, 25.3.2001, p. 9.
( 22 ) Case C 379/1998 PreussenElektra [2001] ECR I-2099.
( 26 ) See www.behargintza.net/home2/Bizkaiamedia/Contenido_Noticia.
( 23 ) B.O.E. 96 of 22.04.1986.
asp?TNo_Codigo=0&Not-Codigo=1196&Tem_Codigo=7&Texto=
( 24 ) OJ L 134, 30.4.2004, p. 114.
plan%foral%20vivienda.

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30.4.2013 Official
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European
Union L
119/15
(c) At any rate, Habidite would have obtained only 83 %,
the contractual obligations assumed vis-à-vis Habidite
and respectively 83,30 % of this average price of
under the Land and Houses Contracts had not been
EUR 2 010,19/sqm (for houses of less than 75 sqm)
performed.
on the basis of the Houses Contract – see recitals
(24) to (25). In this respect, the opening Decision
had erroneously noted that EUR 2 010,19/sqm was
the price to be obtained by Habidite itself under this
contract.
(49) With
respect
to
the
Training
Aid
Contract
(see
recital
(39) above), the Diputación draws attention to the fact
that its commitment to provide training aid for the
1 100 employees of the Habidite factory was, according
to Art.10 of the contract, conditional upon compliance
(d) The average price to be obtained by BIZKAILUR for
with the relevant legislation, including therefore implicitly
the homes constructed by Habidite was well below
an eventual notification to the Commission or clearance
price levels for equivalent housing sold freely on the
under the applicable state aid rules. The Diputación
market in the province. In 2007 the average price on
confirms that the training aid in question was not
the market in the province of Bizkaia was of
disbursed.
EUR 2 921,9/sqm ( 27 ).
(50) When inquired about the relationship between the
(46) In
relation
to
the
Land
Contract,
Habidite
argues
that
it
notified contracts and the regional aid granted in 2008
would not have derived any advantage because,
by the Basque government, and whether both sets of
according to its understanding, it would have had to
measures concern the same investment project, the Dipu
repay to BIZKAILUR not only the actual costs incurred
tación does not exclude that the investment project
for the purchase and adaptation of the land, as stipulated
might be the same one, but draws attention to the fact
in the contract, but also the financing costs incurred in
that this does not necessarily mean that the eligible
relation to this operation.
investment costs taken into account in 2008 by the
regional government for the EUR 6 million aid are the
same eligible costs of the project as it stood in 2006,
when the notified contracts were signed. On this subject,
the Diputación refers to the information provided by the
Basque government and by Habidite.
(47) Furthermore,
Habidite
contests
the
costs
estimated
by
the
Diputación for the purchase and adaptation of the land.
According to the Land Contract, BIZKAILUR had to
purchase only 101 403 sqm for this project, and not
205 000 sqm, as the Diputación indicated. Furthermore,
(51) On
the
issue
of
the
repayment
due
by
Habidite
under
the
the costs for adapting 254 785 sqm of land to industrial
Land Contract, and in particular, on Habidite’s argument
use, which the Diputación claims to be of EUR 28,5
that it interpreted its repayment obligations to include
million, were erroneous. These costs seemed to
the financing costs related to the land purchase and
correspond rather to costs that were incurred by the
adaptation, the Diputación points to the actual wording
Diputación for a different project, namely the
in the Land Contract. Article 1(vi) of the Land contract
construction of the Kadagua highway, segment
reads as follows: “The price to be paid by [Habidite] is
Kastrexana Arbuio-Sodupe. Habidite also argues that
equivalent to the effective cost assumed by BIZKAILUR
the land purchased for the Habidite project has been
S.A. […] for the purchase of the land described at […]”
used illegally for depositing waste, as established also
(emphasis added).
by a national court ruling (judgment no 148/2010 of
1 September 2010 of the first instance court of
Barakaldo.
(52) Finally, according to the information available to the
Diputación, Habidite and the AFER group as such did
not qualify as firms in difficulty within the meaning of
VI. ADDITIONAL INFORMATION AND REPLIES TO
Points 9, 10 and 11 of the R&R Guidelines at the time
HABIDITE’S COMMENTS RECEIVED FROM THE
when the two notified contracts were concluded.
SPANISH AUTHORITIES
(48) In reply to the Commission's questions, the Diputación
confirmed that the Habidite project was suspended and
(53) In
its
turn,
the
Basque
government
provided
information
( 27 ) Information obtained by Habidite from the data published by the
Ministerio de Fomento (Spanish Ministry of Development), available
on the regional aid of EUR 6 million granted to Habidite
at www.fomento.gob.es/BE2/sedal/35101000.XLS.
on 30 December 2008, including the eligible expenditure

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L 119/16
EN
Official Journal of the European Union
30.4.2013
that was taken into account for the granting of this aid.
practice ( 30 ), state aid is considered to be granted at the
The categories of eligible expenditures are detailed in the
moment when there is a legally-binding, non-conditional
Table below:
commitment for its disbursement. Article 10 in the
Training Aid Contract (see recital (49)) makes the
commitment to disburse the training aid conditional
upon compliance with the relevant legislation, including
Union's state aid rules. It follows that the commitment to
Total investment (EUR million) 90,42
disburse training aid stipulated by this contract cannot be
qualified as being non-conditional at the moment of
R&D expenses 13,71
conclusion of the contract. Furthermore, the Spanish
authorities confirmed that the training aid foreseen by
Eligible expenses, of which: 76,71
this contract has not been disbursed. At any rate, as
the Habidite project in Alonsotegi did not materialise,
IT 2,85
this aid is unlikely to be disbursed in the future.
Land 5,5
Buildings 34,76
(57) This
Decision
does
not
address
either
the
regional
aid
of
Technical equipment 19,14
EUR 6 million granted by the Basque government to
Habidite on 30 December 2008 (see recitals (40) and
Machinery 11,94
(50)). However, it should be pointed out that the two
notified contracts covered by this Decision as well as the
Other installations 0,737
regional aid granted in 2008 all refer to the same
investment project, i.e. the setup of a Habidite modules
IT equipment 0,965
factory in Alonsotegi. This assertion was not specifically
contested by the Basque government or the Diputación
Excess land and buildings 3,9
(see in this sense recital (50)).
Total eligible expenses 72,8
Aid granted
6
(58) Pursuant
to
Point
66
of
the Community Guidelines on
National Regional Aid 2007-2013 ( 31 ), the Spanish auth
orities must ensure compliance with the provisions on
cumulation of aid applicable to the 2008 regional aid
(54) This
aid
has
not
been
disbursed.
Pursuant
to
Point
65
grant.
of the Community Guidelines on National Regional Aid
2007-2013 ( 28 ), the Spanish authorities submitted to
the Commission on 19 February 2009 the information
sheet for aid granted to non-notifiable large investment
(59) In addition, it must be recalled that, according to
projects under an authorised regional aid scheme ( 29 ).
information provided by the Diputación (see recital
(30)), the purchase of the land necessary for this
investment project has started in May 2007, and
several plots of land were successively purchased to
VII. ASSESSMENT
this end until April 2008. Therefore the project has
already started to be implemented in May 2007.
M e a s u r e s n o t c o v e r e d b y t h i s D e c i s i o n
Pursuant to Point 38 of the Community Guidelines on
National Regional Aid 2007-2013 ( 32 ), in order to
(55) This
Decision
does
not
address
(a)
the
Training
Aid
ensure that regional aid produces an incentive effect on
Contract concluded by the Diputación and Habidite on
the investment, aid may only be granted under aid
15 December 2006 and (b) the regional aid of EUR 6
schemes if the beneficiary has submitted an application
million granted to the Habidite group by the Basque
for aid and the competent authorities have subsequently
government on 30 December 2008, for the reasons
confirmed in writing, before the start of the work on the
explained below.
project, that it meets in principle the conditions of eligi
bility laid down in the scheme.
(56) With
respect
to
the
Training
Aid
Contract
concluded
A p p l i c a b l e l a w
by the Diputación and Habidite on the same date
as the notified contracts (see recitals (39) and (49)),
(60) Prior
to
assessing
existence
of
aid
and
its
compatibility
the Commission notes that this measure has not been
with the Treaty the Commission must determine the
notified by the Spanish authorities, and was not covered
applicable state aid rules rationae temporis.
by the opening Decision. According to an established
( 30 ) See for example Commission Decision on State aid C 19/2006 Javor
( 28 ) OJ C 54, 4.3.2006, p. 13.
Pivka Lesna Industrija d.d., OJ L 29, 2.2.2008, p. 16.
( 29 ) Case MF 12/2009 Habidite - Spain, pending at the date of the
( 31 ) See footnote 18.
current Decision.
( 32 ) See footnote 18.

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30.4.2013 Official
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European
Union L
119/17
(61) The Land and Houses Contracts were signed on
Article 107(1) of the Treaty is that State resources should
15 December 2006, but they were notified to the
be put at use, be it through disbursement of state
Commission for review only in April 2009. As already
resources or as revenue forgone by the State.
indicated in recital (56) above, according to an estab
Furthermore, according to an established jurispru
lished practice ( 33 ), state aid is considered to be granted
dence ( 37 ), the resources of public or private undertakings
at the moment when there is a legally-binding, non-
on which the public authorities can exercise, be it directly
conditional commitment for its disbursement. In the
or indirectly, a controlling influence, also qualify as State
case of the two notified contracts, such a legally-
resources, to the extent that these resources remain under
binding, non-conditional commitment was taken on
public control and therefore available to the competent
15 December 2006, when the Diputación and
public authorities. On this aspect, the Commission notes
BIZKAILUR signed the two notified contracts. Therefore
the following in recitals (65) and (66).
any aid involved in the two contracts is unlawful, since it
was granted in breach of the notification obligation
stipulated at Article 108(3) of the Treaty.
(65) First, the Land Contract was concluded by the Diputación
and BIZKAILUR together. The contract contains several
clear indications that, within the framework of this
(62) According to the CELF/SIDE jurisprudence
( 34 ), any
contract, BIZKAILUR was acting as 'the arm' of the Dipu
posterior notification or declaration of compatibility
tación. The Land Contract was signed, on behalf of the
does not remove the unlawful character of aid granted
Diputación and BIZKAILUR, by the Diputado General
in breach of the notification or stand-still obligation. As
(Chairman) of the Diputación. Point 2 of the Preamble
indicated in the Commission notice on the determination of
to the Land Contract stipulates that the Diputación, as
the applicable rules for the assessment of unlawful State
100 % owner of BIZKAILUR, pursues, among its public
aid ( 35 ), the rules applicable to unlawful aid are those
policy objectives, the promotion of new and innovative
that were in force at the moment when the aid was
investment projects, job creation, and the facilitation of
granted – in the present case, on 15 December 2006.
access to social housing for the citizens of the province
These principles are also confirmed by Points 63 and
of Bizkaia. Point 5 of the Preamble to the Land Contract
105 of the Community Guidelines on National Regional
stipulates that the contract is concluded in order to
Aid 2007-2013 ( 36 ). The Commission shall therefore
pursue, either directly or through public companies
rely on the state aid rules in force on 15 December
such as BIZKAILUR, the achievement of the economic
2006, when the two notified contracts were signed, for
and social policy objectives mentioned at Point 2 of the
assessing both existence of aid and compatibility.
Preamble.
VII.1. Existence of aid
(66) Second, the resources to be deployed by BIZKAILUR for
(63) In order to ascertain whether the measures under
performing its obligations to purchase and adapt to
scrutiny involve State aid, the Commission has to
industrial use the land for the setup of the Habidite
assess whether they fulfil the cumulative conditions of
factory in Alonsotegi were under the control of the Dipu
Article 107(1) of the Treaty. That provision states that
tación. As of 1999 onwards BIZKAILUR had been 100 %
"[s]ave as otherwise provided in the Treaties, any aid
owned and controlled by the Diputación
( 38 ). The
granted by Member State or through State resources in
following “organic” and “structural” indicators established
any form whatsoever which distorts or threatens to
by the Stardust Marine jurisprudence ( 39 ) for determining
distort competition by favouring certain undertakings
whether BIZKAILUR's actions within the ambit of the
or the production of certain goods shall, in so far as it
Land Contract were imputable to the State are met:
affects trade between Member States, be incompatible
with the internal market". These cumulative criteria
shall be examined in turn for each of the two notified
contracts below.
(a) the scope of BIZKAILUR's actions within the
framework of the Land Contract were defined by
the Diputación;
VII.1.1 Measure 1: Land Contract
U s e o f s t a t e r e s o u r c e s a n d S t a t e i m p u t
a b i l i t y
(b) for the purposes of this contract, BIZKAILUR was
explicitly acting on behalf of the Diputación;
(64) One of the criteria for determining whether a
given measure involves state aid within the meaning of
( 37 ) See e.g. Case C-278/00 Greece v. Commission [2004] ECR I-3997
para. 50, C-482/99 France v Commission [2002] ECR I-4397 and
( 33 ) See for example Commission Decision on State aid C 19/2006 Javor
Joined Cases C-328/99 and C-399/00 Italy v Commission (SIM 2
Pivka Lesna Industrija d.d., OJ L 29, 2.2.2008, p. 16.
Multimedia) [2003] ECR I-4035, para. 33.
( 34 ) Case C-199/06 CELF/SIDE [2008] ECR I-469.
( 38 ) See
http://www.azpiegiturak.bizkaia.net/index.php?option=com_
( 35 ) OJ C 119, 22.5.2002, p. 22.
content&task=view&id=397&Itemid=492
( 36 ) See footnote 18.
( 39 ) Case C-482/99 France v. Commission [2002] ECR I-4397.

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(c) the specific nature of BIZKAILUR’s activities, which
a full repayment within 7 years from the date of transfer
were targeted exclusively at attaining public policy
of ownership over the land to Habidite, without charging
objectives, show that this undertaking was not a
any interest for this financing.
regular market operator competing on market terms.
(72) In the light of the findings in recitals (69) to (71) it must
be concluded that Habidite would have derived from the
(67) In the light of the indicators in recitals (65) and (66), the
Land Contract an advantage that could not have been
criterion of use of State resources and imputability to the
obtained in normal market conditions. The advantage
State is found to be met in the case of the Land Contract.
consists of the following two components:
S e l e c t i v e a d v a n t a g e
(a) the interests forgone for a loan amounting to the
total costs incurred by BIZKAILUR for the purchase
(68) The
Commission
examined
the
terms
and
conditions
for
of the land according to this contract - a loan with a
the repayment of the land to be facilitated by the Dipu
duration of 7 years, a grace period of 4 years and 4
tación and BIZKAILUR for the Habidite project in Alon
equal annual repayment instalments (of 25 % of the
sotegi, as established in Part Two, Article 1, recitals (vi)
reimbursed sum each); and
and (vii) of the Land Contract (see also recital (20)
above), and on this basis observes the following in
recitals (69) to (83).
(b) the costs that BIZKAILUR would have incurred for
the adaptation to industrial use of the parcel of land
totalling at least 101 403 sqm necessary for this
project, as stipulated in Article 1(ii) of the Land
(69) Under
Part
Two,
Article
1(vi)
of
the
Land
Contract,
the
Contract (i.e. at least 81
600
sqm for the
price to be paid by Habidite for the land purchased and
factory, 5 300 sqm for offices and annexes, and
adapted for industrial use by BIZKAILUR was the
14 300 sqm for industrial use).
"effective cost assumed by BIZKAILUR […] for the
purchase of the land […]". Habidite argued (see recital
(46)) that, in its interpretation, this would have also
included financing costs. Yet such an interpretation
cannot be accepted. The reference to the “effective costs
(73) With respect to the first component, i.e. the interests
forgone in respect of the repayment of the price for
incurred for the purchase of the land” is sufficiently clear
the land purchase, the Commission estimates that those
so as not to require further interpretation: it covers only
would have amounted to a net grant equivalent (NGE) of
the price effectively paid by BIZKAILUR for purchasing
13,21 % of the price paid for the land purchase by
the land.
BIZKAILUR. This NGE was calculated as indicated in
recitals (74) to (77).
(70) It
must
therefore
be
concluded
that,
first,
this
wording
clearly excludes the effective costs incurred by
(74) In
a
first
step,
the
interest
rate
applicable
to
a
similar
BIZKAILUR for adapting the land to industrial use.
loan was identified on the basis of the reference rate
applicable in Spain in December 2006, of 4,36 %, as
reported in the Commission’s Reference Rate Communi
cation ( 40 ).
(71) Second,
the
repayment
facilities
stipulated
in
Part
Two,
Article 1(vii) of the Land Contract, i.e. four years of
"grace period", fractioning of the successive four yearly
(75) In
a
second
step,
based
on
the Commission notice on the
repayment instalments as 25 % of the price effectively
method for setting the reference and discount rates of
paid by BIZKAILUR for the land purchase, are in
1997 ( 41 ) (hereinafter "the 1997 Commission Notice" -
practice equivalent to an interest-free loan. The wording
which was in force at the time when the Land Contract
of Article 1(vii) of the Land Contract cannot be inter
was concluded) no top-up needs to be added to this
preted to also include the financing costs for an
reference rate so as to reflect the credit risk profile of
equivalent loan, i.e. the interests that would have been
Habidite. Under the 1997 Commission Notice, reference
charged to Habidite for a similar loan by a market
rates were considered to reflect the average level of
creditor. Indeed, it is doubtful that a private operator
interest rates charged in the various Member States on
in a situation similar to BIZKAILUR would have
medium- and long-term loans (five to ten years) backed
accepted not to charge to Habidite the costs for the
adaptation of the land, and furthermore, that it would
( 40 ) http://ec.europa.eu/competition/state_aid/legislation/reference_rates.
have agreed to a “grace period” of 4 years for the
html.
repayment of the price paid for the land purchase, and
( 41 ) OJ C 273, 9.9.1997, p. 3.

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Union L
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by normal security. This general principle was not
on which NGE should be applied in order to determine
specifically modified by the Commission Regulation (EC)
the aid amount, is disputed between the parties. As
No 794/2004 ( 42 ). In the absence of direct information
indicated at recital (30) above, the Diputación claims
on the credit risk rating of Habidite or the AFER group at
that until September 2009 BIZKAILUR had paid
the time, the Commission considers that it can be
EUR 4,7 million to purchase 205 000 sqm of land, and
assumed that Habidite qualified at the time as a normal
it estimated that another EUR 2,6 million would have
company with normal collateralisation. Indeed, both the
been needed to purchase the remaining 95 000 sqm
Diputación and Habidite agreed in considering that
necessary for this project. Habidite, on the other hand,
Habidite and the AFER group did not qualify as firms
claims that BIZKAILUR did not have to purchase such a
in difficulty within the meaning of Points 9, 10 and 11
large surface for this project, as the Land Contract
of the R&R Guidelines at the time (see recital (52) above).
stipulated a total of only 101 403 sqm (see recital (47)
above).
(76) In
a
third
step,
the
gross
grant
equivalent
of
the
aid
involved in this repayment arrangement was adjusted
(79) In
relation
to
this
dispute,
the
Commission
notes
first
to take into account the corporate tax that should have
that, according to the specific wording of Article 1(ii)
been paid by the recipient, which at the time in Spain
of the Land Contract, the surface for the project should
was of 35 %.
have been of “at least” 101 403 sqm in total. Second, the
Commission cannot take an informed view on this
subject based on the information provided by the
parties in the course of the formal investigation
procedure. However, as the aid in the Land Contract
has not been disbursed, and there is no need to order
(77) Based
on the elements in recitals
(74) to (76), the
resulting NGE for this subsidised loan is indicated in
recovery, the issue of the exact price that should have
the Table below:
been reimbursed by Habidite for the land purchase can

be left open. For the purposes of this Decision it is
sufficient to define the aid element arising from the
repayment terms established in the Land Contract.
Loan amount 100
%
(80) This
aid
component
is
thereby
defined
as
13,21
%
of
the
Duration of loan 7
years
costs to be reimbursed to BIZKAILUR for the purchase of
the land necessary for the Habidite project, under the
Grace period for repayment 4
years
terms of Part Two, Article 1(ii) of the Land Contract.
The amount thus determined corresponds to the
Reference rate 4,36
%
interests forgone by BIZKAILUR, and which would
have been charged by a market operator, for a loan
Margin/top-up
0
with a duration of 7 years, a grace period of 4 years,
and for 4 equal annual repayment instalments (of 25 %
of the reimbursed sum each). The basis for calculating
Total interest rate applicable 4,36
%
this aid component is the effective cost that should have
been incurred by BIZKAILUR for the purchase of the
Gross grant equivalent of the aid 20,33
%
land stipulated in Part Two, Article 1(ii) of the Land
Contract.
Corporate tax 35
%
Net grant equivalent (after tax) 13,21
%
(81) Similar
considerations
must
be
made
in
respect
to
the
other aid component in the Land Contract, i.e. the costs
for adapting the land for industrial use – which,
(78) The
Commission
also
notes
that
the
effective
cost
for
the
according to the Land Contract did not have to be
acquisition of the land for this project, which is the basis
repaid to BIZKAILUR (see in this sense recitals (69)
and (70)). Here again, the parties disagree on the
amounts. According to the Diputación, in March 2009
( 42 ) Commission Regulation (EC) No 794/2004 of 21 April 2004 imple
menting Council Regulation (EC) No 659/1999 laying down detailed
these costs were estimated at EUR 28,5 million (see
rules for the application of Article 93 of the EC Treaty (OJ L 140,
recital (30)). Habidite, however, considers that this
30.4.2004, p. 1). Indeed, the methodology for calculating
estimate is inflated (see recital (47)), partly because
reference and recovery rates was modified only in 2008, by intro
BIZKAILUR purchased more land than what was
ducing the top-ups/margins to be added to the reference rate so as
required under the Land Contract for this project, and
to reflect the beneficiary’s risk profile and level of collateralisation –
partly because it has used the part of the land already
see Communication from the Commission on the revision of the
method for setting the reference and discount rates (OJ C 14 of
purchased for the project for other purposes, e.g. waste
19.1.2008, p. 6).
deposits.

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(82) Once again, considering that the aid has not been
competition with constructors of traditional houses on
disbursed, and there is no need for recovery, it is
several Spanish regional markets on which it intended to
sufficient for the purposes of this Decision to define
sell its products (including in particular the Basque
this aid component in the Land Contract: it consists of
Country, Navarra, Cantabria, La Rioja, Madrid and Cata
the total costs that would have been incurred by
lonia, but also other Spanish comunidades autónomas to a
BIZKAILUR for adapting to industrial use the parcel for
lesser extent). It estimated its overall resulting market
the project – under the terms of Part Two, Article 1(iii)
share on the Spanish market (free market plus social
of the Land Contract-, costs which, according to the
housing projects) to increase from 0,4 % in 2011 to
wording of Part Two, Article 1(vi) of the Land
1 % for the period 2012-2016. For the year 2011, for
Contract, did not have to be reimbursed by Habidite to
example, Habidite estimated that the total number of
BIZKAILUR.
houses to be sold on the entire Spanish market would
have been of approximately 320 000 houses, of which,
with a production of 1 403 houses in 2011, it would
have covered a market share of 0,4 %. Regarding the
(83) The Commission also concludes that the advantage
market in the Basque Country in particular, Habidite
identified at recitals (68) to (77), consisting of two
estimated a market share of 0,5 % in 2011 and up to
components, as identified at recitals (80) and (82),
2,8 % as of 2014 onwards, assuming that the total yearly
must be considered selective, insofar as it would have
demand for housing in this region would have been of
been conferred, on the basis of the Land Contract, to
8 000 houses for the period 2011-2016.
one specific beneficiary, namely Habidite and the AFER
group to which it belongs.
(88) According
to
an
established
jurisprudence,
aid
is
to
be
considered as distorting competition insofar as it
D i s t o r t i o n o f c o m p e t i t i o n
strengthens the financial position and opportunities of
the recipient company with respect to those of
(84) As
indicated
in
recital
(43),
Habidite
argues
that
the
competitors not receiving aid (
notified contracts do not distort competition, because:

43 ). In the light of this
principle and the above considerations, it must be
(a) the relevant market is restricted to “production, sale
concluded that the aid given to Habidite and the AFER
and rental of prefabricated modules”, and (b) the unique
group through the Land Contract would have had
characteristics of the Habidite prefabricated modules
distortive effects on competition, because it would have
imply that the company has no competitors.
allowed Habidite to reduce investment costs that
normally are borne by the company itself, and thereby
to derive a competitive edge vis-à-vis actual and potential
competitors.
(85) The Commission cannot accept the arguments put
forward by Habidite. Even if the Habidite prefabricated
modules could be considered a singular product because
of their characteristics, in the present case, the relevant
product market must be defined in a broader sense, as
A f f e c t a t i o n o f i n t r a - E U t r a d e
being the market for the construction and sale of houses
in general – including both houses sold on the free
(89) Similar to the discussion in recitals (84) to (87), the
market, and houses sold on the regulated segment of
argument made by Habidite that the relevant geographic
the market (social housing).
market is only local or regional when it comes to prefab
ricated houses in particular, because of the costs
associated with the transportation of the prefabricates,
cannot be accepted. Due to the geographic vicinity of
the Basque Country to other Member States and its
(86) As Habidite itself argues, the prices of the houses to be
sold to BIZKAILUR can be benchmarked against the
closeness to the sea, the additional transportation costs
prices of houses sold on the free market, or of those
would probably not be decisive for eliminating potential
eventually sold in protected or semi-protected regime.
competitors of Habidite in this comunidad autónoma.
The fact that BIZKAILUR also contracted with
Conversely, transportation costs might not represent an
constructors other than Habidite other houses to be
obstacle for Habidite to compete for the construction of
sold under the semi-protected regime, demonstrates
homes in close Member States.
that other constructors were at the time indeed in
competition with Habidite for providing to BIZKAILUR
houses to be sold in protected and semi-protected
regime.
(90) According
to
the
same
line
of
jurisprudence
as
cited
in
recital (88), when state aid strengthens the financial
position of a company compared with others
competing in intra-Union trade, the latter must be
(87) Furthermore,
in the Business Plan submitted to the
Basque government in support of its application for the
( 43 ) See e.g. Case 730/79 Phillip Morris Holland v. Commission [1980]
2008 regional aid (dated November 2008, at pp. 10-12),
ECR 2671, para. 11 and Case C-259/85 France v. Commission
Habidite indicated itself that it would have been in
[1987] ECR 4393, para. 24.

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EN
30.4.2013 Official
Journal
of
the
European
Union L
119/21
regarded as impaired by the aid. Aid may be of such kind
(95) Second, Habidite argues that the price that it would have
as to affect intra-Union trade even if the recipient under
obtained from BIZKAILUR under the Houses Contract
taking does not participate itself in cross-border activ
for the 1 500 houses was comparable to the prices
ities ( 44 ).
obtained by other construction companies which had
concluded similar contracts with BIZKAILUR in that
period (examples are indicated in recital (45)).
(91) On the basis of the considerations at recitals (89) and
(90), the Commission concludes that the aid involved in
the Land Contract would have been likely to affect trade
(96) Finally, Habidite also argued that, under Legislative
between the Member States.
Decree 78/1986 and Article 31 of Directive 2004/18/EC
of the European Parliament and the Council of 31 March
2004 on public procurement ( 45 ), such contracts can also be
concluded directly, i.e. without public tender, when
justified by the technical nature of the project or for
protecting exclusivity rights.
VII.1.2 Measure 2: Houses Contract
(92) The considerations made at recitals (64) to (67), (84) to
(88) and (89) to (90) on the criteria of use of State
resources and imputability of the State, distortion of
competition and affectation of intra-Union trade in the
(97) Having
assessed
the
information
and
arguments
provided
definition of state aid are also applicable, mutatis
by Habidite, the Commission has the following obser
mutandis, to the Houses Contract. Consequently, in
vations to make in recitals (98) to (107).
recitals (93) to (96), only the criterion of selective
advantage shall be examined.
(98) First,
it
should
be
noted
that
the
information
concerning
average prices obtained by other construction companies
S e l e c t i v e a d v a n t a g e
which had concluded similar contracts with BIZKAILUR
relies exclusively on press publications. The Commission
(93) As
explained
in
recital
(45),
Habidite
argues
that
the
did not receive direct information on this aspect from the
Houses Contract did not convey to it any advantage,
Diputación – for example, in the form of copies of
because, in essence, the prices to be paid by
similar contracts concluded by BIZKAILUR with other
BIZKAILUR for the 1 500 homes to be constructed by
construction companies. At any rate, the price
Habidite under this contract were actually below market
estimates provided by both Habidite and the Diputación
levels.
refer to the years 2006 and 2007, whereas, according to
Article A(c) in the Houses Contract and to the Business
Plan of Habidite as made publicly-available in 2009, the
1 500 houses would have been delivered to BIZKAILUR
over the period 2009-2011.
(94) In
particular,
Habidite
first
argues
that
the
1
500
houses
which were to be delivered by Habidite under this
contract would have been sold by BIZKAILUR under
the semi-protected regime (as viviendas tasadas), at a
maximum price limited by the applicable regional law
(99) Even if it were to be accepted that the prices to be
to 1,7 of the price established by the Basque govern
obtained by Habidite from BIZKAILUR for the 1 500
ment's Order of 1.8.2004, as successively indexed on
houses on the basis of this contract were comparable
the basis of the Consumption Price Index (IPC)
with those obtained by other construction companies
determined by the Spanish National Institute of Statistics
from BIZKAILUR on the basis of similar contracts, and
(see in this sense recitals (17) and (18)). The average price
were at any rate under the prices observable on the free
to be thus obtained by BIZKAILUR for the 1 500 houses
market for such houses, this argument is not sufficient to
was of EUR 2 010,19/sqm, which is below the average
enable the Commission to conclude that Habidite did not
price for houses sold freely on the market in the province
derive an advantage from this contract. As also noted in
of Bizkaia in 2007, of EUR 2 921,9/sqm. Furthermore,
the opening Decision ( 46 ), the advantage derived by
Habidite would have obtained only 83
%, and
Habidite from this contract consists mainly in the fact
respectively 83,30 % (in the case of the 750 houses
that the contract secured the sale of an important part of
under 75 sqm) of the EUR 2 010,19/sqm which were
its initial production, thus considerably reducing the risks
obtained by BIZKAILUR itself from the sale of these
inherently associated with a new investment project,
houses under the semi-protected regime.
which are by definition even higher at the launch of a
new product, such as the Habidite modules were.
( 44 ) See, e.g., Case C 102/87 France v Commission (SEB) [1988] ECR-
4067, and Case C-310/99 Italian Republic v. Commission [2002] ECR
( 45 ) OJ L 134, 30.4.2004, p. 114.
I-289, at para. 85.
( 46 ) See recital 32 of the opening Decision.

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L 119/22
EN
Official Journal of the European Union
30.4.2013
(100) It is commonly known that competition on the Spanish
per year. The same Business Plan mentions that Habidite
construction market was at the time, and continues to
intended to sell with priority on the regulated segment of
be, very intense. The fact that BIZKAILUR contracted
the market (social housing), both in the Basque Country
1 500 homes from Habidite should confer from this
and in other regions of Spain. In particular, in 2011
perspective a not-so-negligible advantage to Habidite
Habidite foresaw that it would have sold on the
vis-à-vis its competitors, even if only demand for the
regulated market in Spain a total of 289 houses, from
construction of houses to be sold under the protected
a total production of 1 403 houses in the same year. This
and semi-protected regime were to be considered.
shows that, after the end of the Houses Contract (as the
1 500 houses ordered by the Diputación and BIZKAILUR
were to be delivered by May 2011 at the latest), the share
of houses Habidite was hoping to sell on the regulated
market from its total annual production, i.e. 289 houses
from a total production of 1 403 houses, compared
(101) The fact that, as the Diputación informs, according to the
Plan Foral (see recital (19)) BIZKAILUR was supposed to
much lower than the same ratio in the first three years
provide a total of 3 000 houses to be sold under the
of functioning of the Habidite plant in Alonsotegi, which
protected regime over the period 2004-2007, is a good
were covered by the Houses Contract.
indication that the number of houses contracted from
Habidite was not negligible at all. It is true that the
Plan Foral covers the period 2004 to 2007, whereas
the 1
500 homes contracted with BIZKAILUR by
Habidite were foreseen to be delivered over the period
(104) Another relevant aspect is the actual demand for social
2009 to 2011 (according to the company's Business Plan
housing in the province of Bizkaia that was covered by
in the version made public in 2009). It is nevertheless an
BIZKAILUR through the Houses Contract. Neither the
indication of the total number of houses that BIZKAILUR
Diputación nor Habidite produced specific evidence
was intending to sell under the protected regime at the
regarding the actual demand for social housing that
time when the Houses Contract was concluded.
was to be covered by BIZKAILUR by means of the
Houses Contract concluded with Habidite on the given
terms. As already mentioned in recital (98), the 1 500
houses stipulated by this contract were estimated to be
delivered during the period 2009-2011. Moreover, the
(102) This element needs to be assessed in light of the ratio of
Diputación did not argue that the contract was
houses contracted by the Diputación and BIZKAILUR
concluded with a view to providing a service of general
from the estimated total output of Habidite for the
economic interest such as social housing. Also to be
relevant period. According to the Business Plan made
noted that the Houses Contract was not concluded
public in 2009, Habidite estimated that in 2009 its
following a public tender - whereas, according to the
entire production of 433 houses would have been
information provided by Habidite itself when referring
purchased exclusively by BIZKAILUR. In 2010,
to similar contracts concluded by BIZKAILUR with
BIZKAILUR would have purchased 670 houses,
other construction companies, it seems that BIZKAILUR
whereas the total production of Habidite would have
should have normally tendered such a contract.
been of 1 113 houses. In 2011, BIZKAILUR would
have purchased 342 houses, whereas the total production
of Habidite would have been of 3 151 houses. This is an
indication that, at the time when the Houses Contract
was concluded, Habidite itself estimated that the Dipu
tación and BIZKAILUR would have purchased a notable
(105) From this perspective, the argument made by Habidite
(see recital (96)) that the special technical nature of this
part of the production during the first 2 productive years
project allowed for direct contracting, without a public
of the Habdite factory in Alonsotegi (2009 and 2010).
tender, cannot be accepted. First, the provisions invoked
This supports the conclusion that, indeed, the Houses
by Habidite do not address situations such as the present
Contract considerably reduced the risks inherently
one, where the special nature of the project consisted in
associated with a new investment project, and particular
introducing a new product on the market. The object of
with the launch of a new product on the market (the
the Houses Contract was the purchase of houses to be
Habidite modules).
then sold under the semi-protected regime for the
disadvantaged citizens. The technology used for
building such houses is irrelevant, and homes constructed
with prefabricated modules were in direct competition
with homes constructed through traditional methods.
(103) A further indication that Habidite would have been
Second, in a report of January 2009 ( 47 ), the Tribunal
alleviated through this contract of a considerable part
Vasco de Cuentas Públicas (the Basque Court of Auditors)
of the risk associated with selling its product on the
expressed doubts on the legality of the Land and Houses
market stems from Habidite's own Business Plan (dated
Contracts in a context where it drew attention to public
November 2008) as submitted in view of obtaining the
contracts concluded in breach of the principles of trans
2008 regional aid. In this Business Plan, Habidite
parency and competitive tendering.
estimated the total demand for houses to be sold on
the regulated market in the entire Basque Country for
( 47 ) See http://legislacion.derecho.com/acuerdo-11-junio-2009-tribunal-
the years 2011-2016 at approximately 8 000 houses
vasco-de-cuentas-publicas-2231134.

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EN
30.4.2013 Official
Journal
of
the
European
Union L
119/23
(106) According to the P&O Ferries jurisprudence ( 48 ), the mere
(b) The total costs that BIZKAILUR would have incurred
fact that a public authority purchases good on market
for the adaptation to industrial use of the mentioned
pricing terms is not sufficient in itself in order to
parcel of land, totalling at least 101 430 sqm, as
conclude that the transaction is market-conform, if the
stipulated in Part Two, Article 1(iii) of the Land
State did not have an actual need for those good,
Contract.
particularly where such goods were contracted without
a public tender. In the present case, the absence of
information concerning the actual demand for
BIZKAILUR to sell the 1 500 contracted houses under
the semi-protected regime over the period 2009-2011,
(110) In the case of the Houses Contract, the aid element
coupled with the absence of a public tender, are indi
consists of the profit that would have been obtained
cations that the transaction was not concluded on market
by Habidite from the sale of the 1 500 houses under
terms.
this contract, namely, the difference between the price
stipulated by Article A(e) of the Houses Contract for
the 1 500 houses and the production costs incurred by
Habidite in the production of the 1 500 houses.
(107) In the light of the considerations made at recitals (97) to
(106), the Commission concludes that the Houses
Contract cannot be considered to be a normal market
operation. Instead, the contract does confer an advantage
VII.2. Compatibility
to Habidite and the AFER group, by alleviating it of the
risk of having to sell its output on market terms, in
(111) In the opening Decision of 2 December 2009, the
direct competition with other constructors. The aid
Commission doubted that the aid involved in the Land
element is hereby defined as the profit that would have
and Houses Contracts could have been considered
been obtained by Habidite from the sale of the 1 500
compatible with the Treaty under the relevant rules
homes to the Diputación and BIZKAILUR under the
applicable at the time of the assessment – referring in
terms of the Houses Contract, namely, the difference
particular to the original Temporary Framework ( 49 ), the
between the price to be obtained from BIZKAILUR
2004 R&R Guidelines, the Community Guidelines on
from the sale of the 1 500 houses under the pricing
National Regional Aid 2007-2013 ( 50 ) and the 2008
terms stipulated by Article A(e) of the Houses Contract
General Block Exemption Regulation ( 51 ).
the Houses Contract and Habidite's production costs for
the 1 500 houses. The advantage is selective, being
conferred under the Houses Contract specifically to
Habidite and the AFER group.
(112) However, as indicated at recitals (60) to (62), the aid
granted through the Land and Houses Contracts was
unlawfully granted (i.e. prior to notification to the
VII.1.3 Preliminary conclusions
Commission) on 15 December 2006. Its compatibility
must therefore be assessed on the basis of the state aid
(108) On the basis of the considerations made at recitals (64)
rules in force at the time when it was granted.
to (90) and (92) to (106) – and without prejudice to any
further findings with regard to the compatibility with EU
public procurement law - it must be concluded that both
the Land Contract and the Houses Contract involve state
aid within the meaning of Article 107(1) of the Treaty.
(113) Under this temporal perspective, the compatibility of the
aid granted under the Land and Houses Contracts cannot
be examined under the special rules applying in relation
to the crisis, which were adopted and came into force
(109) In the case of the Land Contract, the state aid involved
later on.
has two components:
(114) Also, according to the Diputación, Habidite and the
(a) The interests forgone for a loan totalling the costs
AFER group did not qualify on 15 December 2006 as
incurred by BIZKAILUR for the purchase of the land
firms in difficulty within the meaning of Points 9, 10 and
for the Habidite project, which would have been
11 of the 2004 R&R Guidelines. Therefore the latter
granted interest-free for a period of 7 years, with a
were not eligible for rescue or restructuring aid at the
grace period of 4 years. These forgone interests
time when the Land and Houses Contracts were
amount to an NGE of 13,41
% of the land
concluded.
purchase costs undertaken by BIZKAILUR on the
basis of Part Two, Article 1(ii) of the Land Contract.
( 49 ) Temporary Community Framework for state aid measures to support access
to finance in the context of the current economic and financial crisis
( 48 ) See Joined Cases T-116/01 and T-118/01 P&O European Ferries
(OJ C 83, 7.4.2009, p. 1).
(Vizkaya) S.A. and Diputación Foral de Vizkaya v. Commission [2003]
( 50 ) OJ C 54, 4.3.2006, p. 13.
ECR II-2957, recitals 109-139 in particular. The judgment was
( 51 ) Commission Regulation No. 800/2008 of 6 August 2008 declaring
upheld regarding this part of the assessment by the ruling of the
certain categories of aid compatible with the common market in application
ECJ of 1 June 2006 on the appeal.
of Articles 87 and 88 of the Treaty (OJ L 214 of 9.8.2008, p. 3).

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L 119/24
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Official Journal of the European Union
30.4.2013
(115) The Land and Houses Contracts were concluded on
(119) However, under the same Point 2 of the 1998 Guide
15 December 2006 to support a new investment
lines, such ad hoc aid benefiting one single sector and
project in Alonsotegi, a village situated within the Gran
firm may exceptionally be declared compatible with the
Bilbao comarca, which was at the time an assisted region
Treaty, if it can be demonstrated that it has a significant
under Article 107(3(c) of the Treaty ( 52 ). It therefore
contribution to regional development, exceeding its
needs to be examined whether the aid granted under
distorting effects on intra-Union trade and competition.
the Land and Houses Contract may have been compatible
Although the Spanish authorities have not put forward
with the Treaty under the rules applicable to regional aid
arguments on this aspect, the Commission shall never
on 15 December 2006, namely: the 1998 Guidelines on
theless examine of its own motion if the conditions for
National Regional Aid ( 53 ) (hereinafter "the 1998 Guide
such derogation are met in the case of the aid granted
lines") and the 2002 Multisectoral Framework on regional
through the Land Contract on the basis of information in
aid to large investment projects ( 54 ) (hereinafter "the 2002
its possession.
Framework"), and against the background of
Article 107(3)(c) of the Treaty.
(120) The Land Contract was clearly intended to support a new
C o m p a t i b i l i t y o f t h e L a n d C o n t r a c t a i d
investment project, i.e. the new Habidite factory in Alon
u n d e r t h e 1 9 9 8 G u i d e l i n e s a n d 2 0 0 2
sotegi. The project was estimated at the time to create
F r a m e w o r k
1 100 direct new jobs in an assisted area, and very likely
also a non-negligible number of indirect jobs in the same
(116) In order to be found compatible with the internal
region. This element should also be corroborated with
market, regional investment aid must respect a series of
the fact that, under the parallel Houses Contract, the new
standard compatibility criteria, which at the time when
investment project would have also contributed to the
the Land Contract was concluded, on 15 December
achievement of regional policy objectives, namely the
2006, were laid down in the 1998 Guidelines. In
provision of social housing for disadvantaged citizens
particular, the aid had to be able to contribute to
in the province of Bizkaia. Furthermore, neither
regional development and to support an initial
Habidite nor the AFER group qualified as firms in
investment project on which works have started only
difficulty within the meaning of Points 9, 10 and 11
after the aid beneficiary introduced an application for
of the R&R Guidelines at the time when the Land and
aid (incentive effect), the investment project should
Houses Contracts were signed (see recital (9)). The
have been financed by the beneficiary at least up to
Commission therefore concludes that the conditions for
25 %, and the investment project should have been
the exception foreseen in the last paragraph of Point 2 in
maintained within the assisted region where it was
the 1998 Guidelines are met in the case of the Land
located for at least five years. In addition, the eligible
Contract.
expenditure to be taken into account for the granting
of the aid had to be limited to certain eligible costs,
and the aid should not be combined with other aid so
as to exceed the applicable regional aid ceiling.
(121) Under Point 4.4. of the 1998 Guidelines, the notion of
regional aid covers only aid for initial investment, which
is defined as investment in fixed capital relating to the
(117) Under Point 2 of the 1998 Guidelines, ad hoc regional aid
setting up of a new establishment, the extension of an
granted to a single firm or benefitting one single sector
existing establishment, or the starting up of an activity
of activity was, as a general rule, not to be found
involving a fundamental change in the production
compatible with the Treaty, as its distortive effects
process of an existing establishment. The aid granted
would in principle exceed its positive effects on
under the Land Contract complies with this definition,
regional development. Furthermore, ad hoc aid to firms
because the aid was granted in support of the estab
in difficulty was prohibited.
lishment of a new investment project in Alonsotegi.
(118) The aid granted to Habidite under the Land Contract was
not notified by the Spanish authorities as being granted
(122) Under Point 4.5. of the 1998 Guidelines, aid for initial
under an authorised regional aid scheme. This aid
investment should be destined to cover exclusively
qualifies rather as an ad hoc measure benefitting only
eligible investment costs, and consequently, the
Habidite and the AFER group, and implicitly, only of
maximum amount of regional aid is defined as a
benefit to the construction sector.
percentage of the eligible investment costs. According
to Points 4.5. and 4.6. of the 1998 Guidelines, the
category of 'eligible costs' of a new investment project
( 52 ) See Commission Decision of 17.5.2000 in state aid case N 773/99
comprises land, buildings and plant/machinery, and also
Spain – regional map for 2000-2006, text available at http://ec.
some categories of intangible investments (patents,
europa.eu/eu_law/state_aids/comp-1999/n773-99.pdf.
( 53 ) OJ C 74, 10.3.1998, p. 9.
licenses, know-how) up to a limit of 25 % of the
( 54 ) OJ C 70, 19.3.2002, p. 8.
standard base in the case of large firms.

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30.4.2013 Official
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of
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European
Union L
119/25
(123) Therefore the eligible costs of the Habidite project in
which is an eligible expenditure, an assessment under
Alonsotegi, as of 15 December 2006, should be first
Points 4.11. to 4.17. of the 1998 Guidelines is not
determined.
necessary.
(128) Before the Land Contract was signed, the Habidite
(124) As the aid involved in the Land Contract was not granted
on the basis of a prior application for aid, the beneficiary
investment project had not previously received any
did not submit at the time the information that is
other investment aid that should be taken into account
pertinent for the identification of the eligible expenditure
for the purposes of assessing cumulative effects under
in a new investment project in regional aid cases. The
Point 4.18. of the 1998 Guidelines.
information available to the Diputación on the subject of
the eligible expenditure was indicated at recital (12)
above, as follows:
(129) Point 4.2. of the 1998 Guidelines establishes that aid
schemes must lay down that an application for aid
must be submitted before work has started on the
investment project. The purpose of this provision is to
guarantee that regional aid is granted only where it has a
Land EUR
4,8
million
verifiable incentive effect: should the works on a given
Industrial building EUR
22,5
million
project have started before the application for aid, the
regional aid subsequently granted would evidently not
Land adaptation (urbanización) EUR
4,04
million
have incentive effect, meaning, the project would have
been likely carried out even in the absence of the aid.
Installations EUR
24,0
million
Total EUR
55,34
million
(130) In relation to this point, it should be noted first that the
Land Contract was an ad hoc measure, and not an aid
granted under an approved scheme. Nonetheless,
(125) The categories of expenditure thereby indicated can
incentive effect is a general compatibility criterion
indeed be considered as 'eligible expenditure' within the
under Article 107(3)(c) of the Treaty, which must at
meaning of Point 4.5. of the 1998 Guidelines.
any rate be verified for the Land Contract. Although
Furthermore, as the aid involved in the Land Contract
the Diputación did not claim incentive effect in relation
was linked directly to the purchase and adaptation to
to this measure, the Commission should nevertheless
industrial use of the land for the new investment
examine of its own motion compliance with this
project, it also satisfies this requirement stemming from
essential compatibility condition.
Point 4.5 of the 1998 Guidelines.
(131) The Commission considers that the incentive effect
condition is met in the case of the aid involved in the
(126) Under Point 4.10. of the 1998 Guidelines, aid for initial
investment should be made conditional on the main
Land Contract, for the following reasons. First, although
tenance of the investment in question for a minimum
the aid was not notified before the date of its granting
period of 5 years. While this condition is not specifically
(15 December 2006), the works related to the project
imposed on Habidite in the context of the Land Contract,
had not started prior to the granting of the aid. Indeed,
it must nevertheless be noted that, in the context of the
according to information provided by the Diputación, the
parallel Training Aid Contract (described at recital (39)
purchase of the land necessary for the project, which can
above), also concluded on 15 December 2006 and in
be considered the start of the work on this investment
relation to the same investment project, Habidite had
project, started only in May 2007, therefore at a date
committed to maintain 1 100 jobs for a period of at
posterior to the signature of the Land Contract on
least 5 years. The Commission therefore concludes that
15 December 2006. Second, the fact that the Habidite
Point 4.10. of the 1998 Guidelines is also satisfied.
project was not carried out after the suspension of the

Land and Houses Contracts can be seen as a demon
stration of the fact that the aid had incentive effect: the
project was not carried out in the absence of the aid.
(127) In the absence of information regarding the estimated
wage costs for the 1.100 employees of the Habidite
factory in Alonsotegi, the Commission cannot perform
(132) Point 4.2. of the 1998 Guidelines also required that the
a meaningful assessment of the eventual compatibility of
beneficiary of the aid should have provided itself an aid-
the aid granted under the Land contract with Points 4.11.
free own financial contribution to the project of at least
to 4.17. of the 1998 Guidelines on job creation.
25 % of the eligible costs. This condition is also evidently
However, as long as the aid in the Land Contract
complied with in the case of the aid involved in the Land
would have been linked to the purchase of the land,
Contract. The eligible costs declared by the Diputación

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L 119/26
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Official Journal of the European Union
30.4.2013
for this project totalled EUR 55 million, and therefore
(136) It follows that the aid involved in the Land Contract
Habidite should have financed from own resources at
would have been compatible only up to the total
least 25 % of this amount, meaning at least EUR 13,75
amount of EUR 10,5 million, and incompatible for the
million. The Commission considers that the aid element
part eventually exceeding EUR 10,5 million. Indeed, as
in the Land Contract, as identified in recital (109) above,
indicated in recitals (78) to (82) and (109), the amount
could not have exceeded 75 % of the eligible costs, i.e.
of aid involved in the Land Contract cannot be precisely
EUR 41,25 million, not even in a scenario where the
quantified, given the dispute on the effective costs that
total aid amount would have been considerably
should have been incurred by BIZKAILUR for performing
increased by accepting that the aid consisted of
its contractual obligations of purchasing and adapting to
EUR 28,2 million of effective costs for the adaptation
industrial use the land plot for the setup of the Habidite
of the land to industrial use, plus EUR 0,98 million (i.e.
plant in Alonsotegi – a dispute on which the
13,41 % of a total of EUR 7,3 million of costs for the
Commission is not in the position to take an informed
land purchase, as estimated by the Diputación).
final position.
(133) Based on the considerations at recitals (116) to (132), the
(137) The first aid component would have represented 13,21 %
Commission concludes that the aid involved in the Land
of the effective costs incurred by BIZKAILUR for the
Contract satisfied the compatibility conditions of the
purchase of the land. The Diputación claims that these
1998 Guidelines.
effective costs would have amounted to a total of
EUR 7,3 million, but Habidite considers this estimate to
be excessive. It is also noted that, according to the
information provided by the Diputación itself (see
recital (12)), the costs for purchasing the land were, at
a given moment, estimated at EUR 4,8 million. Finally,
(134) The information on eligible investment costs indicated in
the costs estimated in November 2008 for the purchase
recitals (12) and (124) also shows that the Habidite
of the land, as reported in Habidite's Business Plan
investment project qualified in December 2006 as a
submitted in its application for the 2008 regional aid,
large investment project within the meaning of the
were of EUR 5,5 million.
2002 Framework – the total eligible costs for this
project exceeded EUR 50 million. Therefore the compati
bility of the aid involved in the Land Contract must also
be examined from the perspective of its compliance with
the conditions of the 2002 Framework.
(138) As to the second aid element, namely the totality of the
effective costs incurred by BIZKAILUR for the adaptation
to industrial use of the land plot in question, the Dipu
tación estimated them at EUR 28,5 million in March
2009, but also informed that at a given moment these
costs were estimated at only EUR 4,04 million (see recital
(135) The maximum aid intensity applicable in the Grand
Bilbao comarca in December 2006, expressed as NGE,
(12)).
was of 20 %. Based on Point 21 of the 2002 Framework,
and taking into account the eligible expenditure for the
Habidite project as of 2006 as indicated in recital (12),
the maximum aid intensity permissible for this project
should have been scaled down as follows:
(139) To conclude, on the basis of the existent information, it
cannot be excluded in full certainty that the aid involved
in the Land Contract would not have exceeded the
permissible amount for this project of EUR 10,5 million.
Eligible expenditure Adjusted
aid
ceiling
Up to EUR 50 million EUR
10
million
(20
%
-
the
regional ceiling - of EUR 50
(140) Point 24 of the 2002 Framework establishes additional
million)
compatibility conditions for measures where the aid
amount exceeds the maximum aid allowable for an
Between EUR 50 million and EUR 0,5 million (10 % - half
investment of EUR 100 million in the same assisted
EUR 100 million
of the regional ceiling - of
region. In our case, based on Point 21 of the 2002
EUR 5 million)
Framework, the maximum aid allowable for an
investment of EUR 100 million in the Gran Bilbao
Part exceeding EUR
100
—
comarca in December 2006 was of EUR 15 million
million
(composed of EUR 10 million, representing 20 % of the
Total EUR
10,5
million
first EUR 50 million, plus EUR 5 million, representing
10 % of the next EUR 50 million).

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(141) As already explained at recitals (78) to (82), the total aid
aid involved in the Land Contract are sufficient for the
amount involved in the Land Contract cannot be
purposes of this Decision.
precisely quantified on the basis of the information
available. However, the Commission cannot exclude
that the aid amount might have exceeded the ceiling of
EUR 15 million. Under these circumstances, the
Commission verified if the two additional conditions
(147) The Commission draws the competent Spanish auth
for the approval of such aid were complied with in the
orities' attention to the fact that the aid involved in the
case of the Land Contract.
Land Contract must be taken into account, for examining
compliance with the rules on aid cumulation, for the
2008 regional aid granted by the Basque government
for the same project. This is furthermore necessary
considering that both the aid in the Land Contract and
(142) The first condition is that the beneficiary of aid should
the 2008 regional aid covered eligible expenses related to
not have exceeded 25 % of the sales of the product
the purchase and adaptation of the same land plot. It is
concerned before or after the investment. The second
again noted that works on this investment project started
condition is that the capacity created by the investment
in May 2007, whereas the application for the 2008
project should not exceed 5 % of the market concerned.
regional aid was submitted in 2008.
According to Point 24 of the 2002 Framework, the
burden of proving that these conditions are met lies
with the Member State concerned. In the case at hand,
the Spanish authorities did not provide information
allowing the Commission to verify if any of these two
C o m p a t i b i l i t y o f t h e H o u s e s C o n t r a c t
additional conditions were met.
a i d u n d e r t h e 1 9 9 8 G u i d e l i n e s a n d
2 0 0 2 F r a m e w o r k
(148) As indicated in recitals (93) to (107), the aid involved in
the Houses Contract reduces the risks associated with the
(143) However, based on the market rate estimates provided by
initial investment by securing sale of an important part
Habidite in November 2008 for obtaining the 2008
of the initial production of the new plant, and also
regional aid (see recital (87)), the company estimated its
confers an advantage to Habidite by reference to other
own share on the overall Spanish house construction
competitors from the fact of securing without a public
market (free market and the social housing segment
tender a contract for the supply to public authorities of
included) to be of [0,1-1,0]% in 2011, i.e. after the
1 500 homes to be sold under the semi-protected
addition of the new production capacity by this
regime. The aid involved in the Houses contract was
investment project, and rising to [0,5-1,5]% from 2012
defined as the profit that Habidite would have derived
onwards. If only the Basque market were to be
from the purchase of the 1 500 houses by the Dipu
considered, the share of Habidite in 2011 on the free
tación and BIZKAILUR, namely the difference between
segment of the construction market would have been of
the price at which the latter would have sold the
[0,1-1,0]%, rising up to [2,0-3,0]% as of 2014 onwards.
houses and Habidite's own costs for producing those
houses.
(144) Given these estimates, which are not called into question
by any other information available to the Commission, it
can be assumed that Habidite would not have exceeded
(149) Under the 1998 Guidelines, regional aid is linked to
the market share and capacity ceilings laid down in Point
eligible costs. While it is true that Point 4.2. of the
24 of the 2002 Framework in December 2006 in respect
1998 Guidelines does not limit the forms in which
of the investment supported by the Land Contract.
investment aid can be granted, it is also clear from

Point 4.5. of the 1998 Guidelines and from the entire
content of these Guidelines that investment aid must
support eligible investment costs. Under Point 4.5. of
the 1998 Guidelines, only costs for buying assets such
(145) To conclude, the compatibility conditions of the 2002
as land, buildings and plant/machinery can be taken into
Framework would have also been satisfied by the part of
account for the purpose of granting regional aid. Under
the aid involved in the Land Contract not exceeding the
Point 4.6. of the 1998 Guidelines, other costs, such as
permissible amount of maximum EUR 10,5 million. The
those for the acquisition of patents, licenses and know-
amount of aid eventually exceeding this ceiling would
how, can also be supported through regional aid.
not have been compatible with the Treaty as not
satisfying the compatibility conditions of the 1998
Guidelines and the 2002 Framework.
(150) However, given its nature, the aid granted through the
Houses Contract does not support such eligible expenses.
Rather, the nature of this aid is to reduce the beneficiary's
(146) As the aid has not been disbursed and recovery is not
current operating expenses. Under Point 4.15. of the
necessary, these conclusions on the compatibility of the
1998 Guidelines, operating aid was as a general rule

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Official Journal of the European Union
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prohibited, and only exceptionally allowed in regions
(156) It is also underlined that the Land and Houses Contract
assisted under Article 107(a) of the Treaty. Yet the
involve unlawful aid. The aid involved in both contracts
Habidite project was to be carried out in a region
was granted on 15 December 2006, in breach of the
assisted under Article 107(3)(c) of the Treaty, and not
Treaty obligation of prior notification. In the light of
under Article 107(3)(a) of the Treaty.
the CELF/SIDE jurisprudence ( 55 ), the posterior notifi
cation of the two contracts and the finding of partial
compatibility of the aid involved in the Land Contract
up to the permissible amount of EUR 10.5 million do
(151) The Commission therefore concludes that the aid
not remove the unlawful character of the aid. The
involved in the Houses Contract qualified as operating
Commission requires the competent Spanish authorities
aid, which pursuant to Point 4.15. of the 1998
to draw all the necessary legal consequences form the
Guidelines would not have been compatible with the
unlawful character of the aid involved in the Land and
Treaty.
Houses Contract.
VIII. CONCLUSION
(157) The aid granted through the Land Contracts is
(152) In the light of the above assessment at recitals (63) to
compatible with the Treaty under the 1998 Guidelines
(151) – and without prejudice to any further findings
and the 2002 Framework up to the permissible amount
with regard to the compatibility with EU public
of EUR 10,5 million. The part of the aid granted under
procurement legislation - the Commission concludes
the Land Contracts eventually exceeding this permissible
that the Land Contract and the Houses Contract
amount is incompatible with the Treaty.
involve state aid within the meaning of Article 107(1)
of the Treaty.
(158) The aid granted through the Houses Contract constitutes
operating aid, which is incompatible with the Treaty in
(153) In the case of the Land Contract, the aid has two
its entirety under Point 4.15. of the 1998 Guidelines.
components:
(a) The interests forgone for a loan totalling the costs
(159) The findings in the present Decision on existence of aid
incurred by BIZKAILUR for the purchase of the land
in the Land Contract are of relevance for the 2008
for the Habidite project, which would have been
regional aid granted to the same investment project by
granted interest-free for a period of 7 years, with a
the Basque government. It is noted that works for this
grace period of 4 years. These forgone interests
investment project have started in May 2007, therefore
amount to an NGE of 13,41
% of the land
prior to the application for the 2008 regional aid.
purchase costs undertaken by BIZKAILUR on the
basis of Part Two, Article 1(ii) of the Land Contract.
(160) The beneficiaries of the aid granted through the Land and
Houses Contracts are Habidite Technologies País Vasco
(b) The total costs that BIZKAILUR would have incurred
S.A. and the AFER group, which are both contracting
for the adaptation to industrial use of the mentioned
parties in the Land and Houses Contracts, and are
parcel of land, totalling at least 101 430 sqm, as
linked within the meaning of Article 3(2) and 3(3) of
stipulated in Part Two, Article 1(iii) of the Land
the Annex to the Commission Recommendation of 6 May
Contract.
2003 concerning the definition of micro, small and medium-
sized enterprises ( 56 ),
(154) In the case of the Houses Contract, the aid element
consists of the profit that would have been derived by
Habidite and the AFER group from the sale of the 1 500
HAS ADOPTED THIS DECISION:
houses contracted by the Diputación and BIZKAILUR,
meaning the difference between the price at which the
latter would have sold the houses based on the
provisions of the Houses Contract and the costs
Article 1
incurred by Habidite for constructing them.
The two contracts notified by the Kingdom of Spain on
15 April 2009, concluded on 15 December 2006 between
the Diputación Foral de Bizkaia and BIZKAILUR S.A., on the
(155) The information available does not enable the exact
one hand, and Habidite Technologies País Vasco S.A. and the
quantification of the aid amounts involved in the Land
AFER group on the other hand, involve state aid within the
and Houses Contracts. However, the quantification of the
meaning of Article 107(1) of the Treaty.
aid is not necessary for the purposes of this Decision: the
aid has not been disbursed, and it needs not be
( 55 ) See footnote 33.
recovered.
( 56 ) OJ L 124, 20.5.2003, p. 36.

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Article 2
profit is defined as the difference between the price obtained by
Habidite from BIZKAILUR on the basis of Article A(e) of this
The aid involved in the notified contracts is unlawful, as it was
contract and Habidite's own costs for the construction of the
granted in breach of the prior notification obligation stemming
1 500 houses.
from Article 108(3) of the Treaty.
Article 5
Article 3
The aid involved in the Land contract is compatible with the
The aid involved in the Land Contract comprises:
Treaty under the 1998 Guidelines on National Regional Aid and
the 2002 Multisectoral Framework on regional aid to large
(a) The interests forgone by the Diputación and BIZKAILUR for
investment projects up to the permissible amount of
a loan totalling the effective costs for the purchase of the
EUR 10,5 million. Aid exceeding this ceiling is incompatible
land, to be reimbursed after a grace period of four years in
with the Treaty.
four equal annual instalments of 25 % each, interest-free.
The NGE of such an interest-free loan would have been
Article 6
of 13,41 % of the effective costs incurred by BIZKAILUR
for the purchase of the land for this project on the basis of
The aid involved in the Houses Contract is incompatible with
Part Two, Article 1(ii) of the Land Contract.
the Treaty under Point 4.15. of the 1998 Guidelines on
National Regional Aid, since it constitutes operating aid.
(b) The total effective costs that BIZKAILUR would have
incurred for the adaptation to industrial use of the land
Article 7
to be purchased for this project, totalling at least
101 430 sqm, as stipulated in Part Two, Article 1(iii) of
This Decision is addressed to the Kingdom of Spain.
the Land Contract.
Done at Brussels, 27 June 2012.
Article 4
The aid involved in the Houses Contract consists of the profit
For the Commission
that would have been derived by Habidite and the AFER group
from the sale of the 1 500 houses ordered by the Diputación
Joaquín ALMUNIA
Foral de Bizkaia and BIZKAILUR S.A. under this contract. This
Vice-President

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