HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN"L 228/22
EN
Official Journal of the European Union
3.9.2011
COMMISSION DECISION
of 23 March 2011
on the State aid C 28/05 (ex NN 18/05, ex N 517/2000) implemented by Germany for Glunz AG
and OSB Deutschland GmbH
(notified under document C(2011) 1764)
(Only the German text is authentic)
(Text with EEA relevance)
(2011/524/EU)
THE EUROPEAN COMMISSION,
(4) Therefore,
the
Commission
has
to
take
a
new
decision
on
the basis of the notification of the German authorities of
7 August 2000.
Having regard to the Treaty on the Functioning of the European
Union, and in particular the first subparagraph of
Article 108(2) (
(5) By
letter
dated
17
December
2004,
the
Commission

1 ) thereof,
asked the German authorities whether they wanted to
submit further information to the notification of
7 August 2000 due to the annulment the Commission’s
Having regard to the Agreement on the European Economic
decision and sent a reminder on 3 March 2005. The
Area, and in particular Article 62(1)(a) thereof,
German authorities replied by letter of 23 March 2005,
but did not submit additional information at that stage.
Having called on interested parties to submit their comments
pursuant to the provision(s) cited above (
(6)
Moreover, it has to be noted that the German authorities

2 ) and having regard to
their comments,
granted in February 2000 the present aid on the
condition that it would be approved by the Commission.
The German authorities started to pay out the aid after
the no objection decision of the Commission of 25 July
Whereas:
2001.
I. PROCEDURE
(7) However,
following
its
annulment
by
the
General
Court,
the decision of 25 July 2001 must be considered as
(1)
By letter dated 4 August 2000, registered on 7 August
never to have existed and the German authorities thus
2000, the German authorities notified their intention to
did not receive an approval from the Commission on the
provide an aid intensity of 35 % for an investment aid in
aid intensity proposed
( 5 ). The Commission has
favour of the establishment of an integrated centre for
accordingly transferred the case to the register of
wood processing in Nettgau (Saxony-Anhalt) by Glunz
illegally granted aid under aid NN 18/05.
AG and OSB Deutschland GmbH. The proposed aid was
registered with the number N 517/2000.
(8) By
letter
dated
20
July
2005,
the
Commission
informed
Germany that it had decided to initiate the procedure laid
(2) After the submission of additional information, the
down in Article 108(2) of the Treaty on the Functioning
Commission adopted, on 25 July 2001, a decision not
of the European Union (TFEU) in respect of the aid.
to raise objections to an aid intensity of 35 % based on
the Multisectoral Framework on regional aid for large
investment projects ( 3 ) (hereinafter referred to as ‘MSF
(9) The
Commission
decision
to
initiate
the
procedure
was
1998’).
published in the Official Journal of the European Union ( 6 ).
The Commission invited interested parties to submit their
comments on the aid.
(3) By
judgement
of
1
December
2004,
the
General
Court
decided in case T-27/02 ( 4 ), Kronofrance/Commission, to
(10) The
Commission received comments from interested
annul the above mentioned Commission decision.
parties. It forwarded them to Germany, which was
given the opportunity to react; its comments were
( 1 ) On 1 December 2009, Articles 87 and 88 of the EC Treaty became
received by letters dated 24 October 2005 and
Articles 107 and 108, respectively, of the Treaty on the Functioning
24 January 2006.
of the European Union (TFEU), which entered into force that day.
The two sets of provisions are, in substance, identical.
( 2 ) OJ C 263, 22.10.2005, p. 7.
( 5 ) In line with Court case C-199/06 (CELF), ECR 2008, I-469,
( 3 ) OJ C 107, 7.4.1998, p. 7.
paragraphs 60-64.
( 4 ) ECR 2004, II-4177.
( 6 ) Cf. footnote 2.

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EN
3.9.2011 Official
Journal
of
the
European
Union L
228/23
(11) By
letter
dated
28
February
2006,
Germany
requested,
in
basis of the 28. Rahmenplan der Gemeinschaftsaufgabe
the meaning of Article 7(6) of Council Regulation (EC)
‘Verbesserung der regionalen Wirtschaftsstruktur’ , while an
No 659/1999 ( 7 ) the suspension of the formal investi
amount of EUR […] was already paid out as Investitions
gation procedure in view of the pending appeals
zulage. Thus, an aid amount of totally EUR […] was
brought by Germany and Glunz AG before the Court
already paid out by the German authorities to the bene
of Justice of the European Union (joined cases C-75/05
ficiaries (out of the agreed total amount of
P and C-80/05 P) against the judgement of the General
EUR 69 797 988).
Court in case T-27/02, Kronofrance/Commission.
2.2. THE BENEFICIARY
(12) By
letter
of
9
March
2006,
the
Commission
accepted
the
suspension of the procedure until after the judgement of
(19) There
are
two
aid
beneficiaries.
the Court of Justice in joined cases C-75/05 P and
C-80/05 P Federal Republic of Germany and Others v
Kronofrance SA.
(20) One of the aid beneficiaries is Glunz AG, Hamm (North-
Rhine-Westphalia) which was founded in 1932 and was
(13) The Court of Justice in its ruling of 11 September
then operating in the field of timber-based materials.
2008 (
Since the 1960s, the company manufactures and

8 ) decided to uphold the decision made by the
General Court. Following this, the formal investigation
markets exclusively Particle boards, MDF (Mittel-dichte
procedure in case C 28/05 resumed.
Faserplatte – medium density fibre board), OSB
(Oriented Strand Board) and plywood. At the time of
the notification, TAFISA, which belongs to the
Portuguese SONAE-group, held 96,03 % of the shares
(14) Germany submitted additional information by letter
of Glunz AG.
dated 4 August 2009 and, following a request for
information of the Commission, by letter dated 19 July
2010.
(21) The
other
aid
beneficiary
is
OSB
Deutschland
GmbH
(hereinafter ‘OSBD’) which belongs at 100 % to TAFISA
II. DETAILED DESCRIPTION OF THE AID
and thus is an affiliated sister company to Glunz AG as
they both have the same mother company TAFIS. OSBD
2.1. THE AID MEASURE
was created on 16 July 1999 and upon full completion
of the investment in Nettgau, started with the manufac
(15) The Landesfrderinstitut Sachsen-Anhalt decided on
turing and marketing of OSB products.
29 February 2000 to grant investment aid for the estab
lishment of a centre for wood processing in Nettgau
(Saxony-Anhalt) to Glunz AG and OSB Deutschland
GmbH. The total aid amounts to EUR 69 797 988.
2.3. THE PROJECT
(22) The
investment
project
is
located
in
Nettgau,
Saxony-
Anhalt (Germany) an assisted area in virtue of
(16) According to the notification of 4 August 2000, the aid
article 107(3)(a) of TFEU. In this region the maximum
is given in the form of a grant for an amount of
permitted aid intensity for the support of new
EUR 46 201 868 under the 28th Framework of
investments was 35 % gross with regard to large under
common interest ‘Improvement of the regional
takings at the time of notification.
economic structures’ (28. Rahmenplan der Gemeinschaft

saufgabe ‘Verbesserung der regionalen Wirtschaftsstruktur’ ( 9 )),
approved by the Commission. This grant corresponds to
23,17 % gross of the eligible cost.
(23) Glunz
AG
and
OSBD
set
up,
on
a
land
not
yet
used
for
industrial purposes, a centre for wood processing which
will comprise two combined plants. The first plant,
(17) Furthermore,
an
investment
premium
is
given
on
the
owned by OSB Deutschland GmbH, manufactures OSB.
basis of the Investment Premium Law 1999 ( 10 ) (Investi
The second plant, owned by Glunz AG, manufactures
tionszulage), approved by the Commission for an amount
particle board. The German authorities stated that both
of EUR 23 596 120. This investment premium amounts
plants have their production lines linked to each other by
to 11,83 % gross of the eligible investment cost.
a common technical infrastructure. Moreover, they
advanced that both OSB panels and particle board
panels are further processed and refined through the
(18) According
to
information
submitted
by
Germany,
an
same grinding line, the same lamination equipment and
amount of EUR […] (*) was already paid out on the
the same tongue and groove equipment. In addition, they
put forward that particles deriving from the treatment of
OSB are used in the neighbouring particle board instal
( 7 ) OJ L 83, 27.3.1999, p. 1.
lation. Furthermore, the German authorities submitted
( 8 ) ECR 2008, I-6619.
that a central administration will manage both plants
( 9 ) State aid N 209/99, Commission decision D/105751, 2.8.2000.
( 10 ) State aid N 702/97, Commission decision D/12438, 30.12.1999.
including their marketing, supply and distribution
(*) Covered by the obligation of professional secrecy.
activities.

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L 228/24
EN
Official Journal of the European Union
3.9.2011
(24) Additionally, the German authorities argue that the
and/or if the relevant market (defined as the product
concept of the integrated centre for wood processing
envisaged and its substitutes) is not in relative decline
of Glunz and OSBD offers several advantages thanks to
(declining market test).
an optimised conception of the installation through a
single technical infrastructure in particular as concerned
the treatment of the wood panels produced. They
advance that it enables an optimal use of the wood
(30) The
Commission,
in
its
decision
to
initiate
the
procedure
assortment including the better utilisation of raw
laid down in Article 108(2) of the TFEU, had doubts as
material and internal recycling.
to definition of the relevant market to which OSB
belongs and consequently could not establish whether
the market is in decline or not for defining the
competition factor ‘T’.
(25) The
notification
of
7
August
2000
mentions
that
part
of
the aid will be granted in favour and the OSB plant and
part of it in favour of the particle board plant. The aid
IV.
foreseen in favour of the OSB plant amounts to
COMMENTS FROM INTERESTED PARTIES
EUR 28,61 million for eligible investment cost of
(31) The
Commission
received
on
22
November
2005
a
joint
EUR 81,8 million, corresponding to an intensity of
submission ( 11 ) by competitors belonging to the
35 % gross. The aid granted in favour of the particle
KronoGroup Switzerland (Kronotex GmbH & Co. KG,
board plant amounts to EUR 41,18 million for eligible
Kronoply GmbH & Co. KG and Kronofrance S.A.).
investment cost of EUR 117,6 million, corresponding to
an intensity of 35 % gross.
(32) In
their
submission,
the
KronoGroup
companies
argued
in favour of a market definition comprising OSB and
(26) At the time of the notification, the German authorities
softwood plywood. Hardwood plywood is significantly
estimated that the integrated centre for wood processing
more expensive and is used predominantly in areas
in Nettgau would create 355 permanent jobs. The jobs
(furniture and decorative applications) where OSB and
were distributed to the respective plant as follows: 234
softwood plywood are not or hardly used. They
jobs would be created in relation to the particle board
referred to a study made by Jaakko Pyry ( 12 ) and to a
plant production and 121 in relation to the OSB plant
publication of the Finnish Forest Research Institute
production. The German authorities indicated that 520
substantiating this claim.
indirect jobs created in relevant assisted areas. Amongst
them 33 are indirect safeguarded jobs. The new
investment in Nettgau was to be realised between
January 2000 and end of 2002. The production was
(33) KronoGroup
raised
some
further
issues
which
can
be
intended to start in the course of 2001 and full
summarized as follows.
operation was to be reached after 2 years.
(34) KronoGroup
claims
that
the
Commission,
when
calcu
lating whether the market was in decline, should use
(27) The
production capacity
of the new OSB-plant was
data for the period until 1999 as such data were
estimated to amount to […] m 3 in 2002. In 1999, the
already available at the time of the initial approval
capacity for OSB-products of the TAFISA-group was […]
decision (July 2001) which was later annulled by the
m 3 .
General Court. It also alleges that in the period 1995-
99, particle board had a negative average growth rate of
– 4,626 %. The submission however acknowledges that
in the period 1994-99, particle board had a positive
(28) In 1999, the capacity for particle board within the Glunz
group amounted to […] m
average growth rate of 0,456 % (even if below the

3 . According to the German
authorities, the total production capacities will reach […]
growth of the EEA manufacturing industry as a whole).
m 3 , thus the new plant in Nettgau will create new
capacities of […] m 3 .
(35) KronoGroup
also
claims
that
the
Commission,
rather
than calculating a common aid intensity for the whole
project, should assess separately the aid to the OSB plant
III. REASONS FOR INITIATING THE FORMAL INVESTI
and the aid to the particle board plant as the two
GATION PROCEDURE
investments, the two production lines and the two
product markets can clearly be separated. This would
(29) The
maximum
allowable
aid
intensity
under
MSF
1998
is
entail a separate calculation of all the assessment
determined on the basis of a calculation which involves
factors for the two plants.
the application of a number of assessment factors, and,
in particular, the factor indicating the state of
competition in the sector concerned (‘factor T’), for
( 11 ) The information was formally submitted by the law firm ‘Luther
which there are four levels: 0,25, 0,5, 0,75 and 1. It
Willma Buchholz Baierlein und Nierer’ in the name of the
KronoGroup companies.
can only be set at 1 if the sector (defined at the lowest
( 12 ) Structural Panel Supply and Demand in Europe, 10 December
NACE level) is not facing overcapacity (overcapacity test)
2003.

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EN
3.9.2011 Official
Journal
of
the
European
Union L
228/25
(36) KronoGroup further alleges that in parallel to its
cation: packaging 40-60 %; hoarding 70-80 %; roofing
investment in Nettgau, Glunz closed down its particle
70-90 %; flooring 50-80 %; sheathing/walls 70-90 %.
board plant in Sassenburg (located at a distance of
30 km, although in a different Land, i.e. Lower
Saxony ( 13 )). It cites newspaper articles according to
which the entire workforce of the plant in Sassenburg
was taken over in the new plant in Nettgau. This,
according to KronoGroup, is contrary to the aim of the
(42) In the furniture industry, OSB is not suitable for visible
MSF 1998 to create jobs in the region concerned for
applications owing to its surface characteristics. The
those living in the region, and these jobs should not
surface of OSB is not visually attractive since it is manu
be taken into account when determining the capital/
factured using oriented strands of wood which makes it
labour factor and the regional impact factor defined in
rough and uneven. OSB cannot therefore be decoratively
the MSF 1998 (both of which build on the number of
coated. OSB is only suitable for non-visible furniture
jobs created by the investment).
parts (e.g. support structure for upholstered furniture).

In the area of non-visible furniture parts, however, OSB
cannot compete in terms of price with the far cheaper
types of particle board, which are generally used in this
context.
(37) Finally,
KronoGroup
also
claims
that
the
Commission
should have ordered an injunction to provisionally
recover the aid pursuant to Article 11(2) of Regulation
(EC) No 659/1999 (recovery injunction for unlawful aid)
since Glunz and OSBD obtained substantial competition
(43) In the construction industry (formwork), it is crucial that
advantages through the partly disbursed aid.
the sheathing/shuttering/framework materials used with
regard to poured-in place concrete have a smooth
surface. Owing to the unevenness caused by the manu
facturing process, OSB has to be specially coated for fair-
faced concrete in order to ensure that the fair-faced
V. COMMENTS FROM GERMANY
concrete has an even surface. This further processing is
expensive and raises the price of the end product. In
(38) The
observations
of
Germany
can
be
summarised
as
comparison with plywood, OSB is only competitive if
follows.
it can be re-used on several occasions as a framework.
However, for practical reasons, this will not necessarily
be the case. Since the boards are heavily used at
construction sites, their surface may become damaged.
If cracks appear, there is a danger that the OSB will
5.1. COMMENTS WITH REGARD TO THE DEFINITION OF
become warped by water or moisture or deformed in
THE RELEVANT MARKET FOR OSB
some other way. Therefore, repeated use of expensive
processed OSB is not necessarily possible. In addition,
(39) Germany
considers
that
the
relevant
market
regarding
OSB consists of OSB and plywood in the end-use appli
the edges of OSB may be unstable and susceptible to
cations of packaging, hoarding, roofing, flooring and
moisture. Furthermore, materials used as a framework
sheathing/walls. This market is not declining.
for cement need to be very difficult to split and bend.

In this respect, OSB does not satisfy the demands which
the construction industry makes of framework materials.
Softwood plywood on the other hand is in view of its
relatively low cost and even surface very suitable for this
use, as can be seen by the volume actually used for
(40) The end-use applications in which OSB substitutes
plywood broadly correspond to the main areas of appli
formwork.
cation for softwood plywood. In key areas of application
of hardwood plywood (furniture industry, construction
industry and fitting out of transport vehicles), however,
OSB cannot be used because of its technical char
acteristics. Including OSB in the overall market for
(44) In the area of transport vehicles, it is also important that
hardwood and softwood plywood would not therefore
the surface should be even as the boards used here often
be in line with the actual conditions on the markets
have to be coated. Coating OSB is for various reasons
concerned. This is confirmed in an expert opinion
often not easily practicable. Even if OSB is coated, for
dated 21 October 2005 drawn up by Jaakko Pyry.
example with melamine paper, there is a risk that the
coating will crack owing to the uneven surface of the
OSB. When a lift truck is being loaded, pressure is put on
the surface at certain points. There is a danger that in
such cases in a damp or wet environment, water may
(41) Jaakko
Pyry
estimates
the
following
percentages
for
the
seep into the board causing it to become deformed or
substitution potential of OSB in the above areas of appli
warped. Stable surface coating can only be guaranteed by
expensive further processing. The surface of OSB is,
( 13 ) This area was not an assisted region under the German regional aid
unlike hardwood plywood, which is relatively resistant
map applicable in the period 2000-06.
to scratches, pressure points etc. given the particular

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L 228/26
EN
Official Journal of the European Union
3.9.2011
hardness of its surface, also otherwise not sufficiently
common aid intensity must be determined for overall
resistant to withstand the effects of pressure in the field
project in Nettgau on the basis of the contribution
of transport.
margins of the two production lines, i.e. for OSB and
particle board production.
(45) Assessment
of the scope for substituting OSB with
softwood plywood on the one hand and hardwood
(50) The contribution margin is the amount which a product
plywood on the other rests largely on the technical
contributes to covering fixed costs and to achieving the
properties and possible uses of OSB and on the price
company’s net profit. It is calculated as the difference
difference compared with hardwood plywood. Whereas
between earnings and the variable costs incurred
hardwood plywood is superior to softwood plywood and
directly for that product.
OSB in all technical respects, the price difference between
hardwood plywood on the one hand and OSB and
softwood plywood on the other means that hardwood
plywood lacks competitiveness in the areas of application
(51) By
using
contribution
margins
as
a
reference,
the
aid
dominated by OSB and softwood plywood. It would
intensity would be assigned to the individual parts of
therefore be wrong to assume that OSB can be
the investment project in Nettgau in accordance with
substituted by all types of plywood, including
the actual contribution of OSB and particle board, as
hardwood plywoods.
products, to the operating result.
(46) There
exists
a
large
overlap
between
the
market
for
OSB
5.4. COMMENTS ON OTHER POINTS RAISED BY
and plywood in the end-use applications of packaging,
KRONOGROUP
hoarding, roofing, flooring and sheathing/walls on the
one hand and the market for OSB and softwood
(52) Germany considers the assessment of the aid should be
plywood on the other. There is only a difference
based on facts that were known on 7 August 2000, i.e.
between the two market definitions in relation to the
at the time of the notification.
construction industry (formwork). OSB is unsuitable for
this area, whereas softwood plywood is eminently usable
and is indeed employed. The core common message is
that hardwood plywood must not be included in the
(53) According
to
Germany,
this
results
from
the
interpre
market for OSB.
tation of the MSF 1998. Germany refers in this respect
to point 3.1 of the MSF 1998, which provides that the
maximum allowable aid intensity is identified on the
basis of the regional aid ceiling valid at the moment of
5.2. COMMENTS ON THE EVOLUTION OF THE MARKET
notification. Moreover, point 3.6 of the MSF 1998
FOR PARTICLE BOARD
foresees the calculation of market share prior to the aid
application. Also, the Annex to the MSF 1998 indicates
(47) Germany
considers
that
the
competition
factor
should
in the section ‘ex-post control’ the possibility for the
also be set at 1 for the particle board market, which
Commission to verify the accuracy of the information
should not be regarded as declining, as there is a
provided in the context of the notification.
strong upward trend within the meaning of paragraph
7.8 of the MSF 1998.
(54) Germany
claims
furthermore
that
apparent
consumption
(48) To
substantiate
this,
Germany
submitted
a
study
by
data for 1999 were not known at the time of the notifi
Professor Stefan Collignon (Harvard University, the
cation. In any event, in order to obtain the average
Minda de Gunzburg Center for European Studies) (
annual growth rate of apparent consumption over 5

14 )
according to which long-term growth in the market for
years, as required in point 7.8 of the MSF 1998,
particle board between 1972 and 2003 was 36 % faster
apparent consumption data covering 6 years instead of
than in manufacturing industry as a whole. Germany is
five as proposed by KronoGroup are necessary. This is
of the opinion that under paragraph 7.8 of the 1998
due to the fact that the growth rate for a given year is
MSF, this strong, long-term upward trend means that
calculated by comparing apparent consumption in 2
the particle board market cannot be regarded as in
distinct years.
decline.
(55) As
regards the alleged relocation of jobs, Germany
5.3. COMMENTS ON ASSIGNING AID INTENSITY TO
confirms the closing of the plant in Sassenburg.
DIFFERENT PARTS OF THE PROJECT
Germany explained in this respect that the Sassenburg
plant was the oldest particle board plant of Glunz and
(49) In
Germany’s
view,
should
the
Commission
nevertheless
was making significant losses. Therefore, it had no
take the view that the competition factor ‘T’ is 0,75 for
chance to survive and had to be closed, independently
the particle board market while it is 1 for OSB, the
of the new investment of Nettgau. […] employees that
had previously been employed in Sassenburg were trans
( 14 ) Professor Collignon is a member of the Supervisory Board of Glunz
ferred to Nettgau (making up […]% of the workforce
AG.
there).

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EN
3.9.2011 Official
Journal
of
the
European
Union L
228/27
(56) In their comments on the observations of the
The proposed aid is to be granted in the context of two
KronoGroup, the German authorities add that in any
regional schemes which were already approved by the
event, the MSF 1998 only requires that the new jobs
Commission.
be created in the region concerned, but not that they
have to be filled with employees from this region. The
main aim is to foster the development of the assisted
(61) However,
under
the
rules
laid
down
in
the
MSF
1998,
region in question.
the aid intensity to be granted for large investment
projects is excluded from the scope of application of
approved schemes if aid to the relevant investment
project exceeds certain thresholds.
(57) Germany
indicated
that
some
of
the
machinery
were
also
transferred from Sassenburg to Nettgau; these however
were excluded from the eligible costs of the project and
(62) The
planned
aid
amounts
totally
to
EUR
69
797
988.
If
thus did not receive aid. In any event, with a book value
the aid is considered as concerning a single investment
of some EUR […], these machines represent a very small
project, the notification requirement laid down in point
part of the overall investment project.
2.1(ii) of the MSF 1998 is fulfilled as the total aid is at
least EUR 50 000 000.
VI. ASSESSMENT OF THE AID
(63) As
mentioned
under
point
2.3
of
the
present
decision,
the German authorities argued extensively in their notifi
(58) The following assessment is based on the facts, figures
cation that the present aid measure concerns a single
and situations as they were known at the time of the
investment project.
notification on 7 August 2000. Since some time has
elapsed between the original notification and the
current decision, situations might have changed,
(64) Point
7.2,
second
paragraph
of
the
MSF
1998
stipulates
markets might have developed and facts concerning the
that an investment project should not be artificially
project might have turned differently than was originally
subdivided into sub-projects in order to escape the notifi
planned. However, this cannot be taken into account by
cation obligation. In the present case this would however
the Commission in this assessment. In general, the
not occur. Indeed, even if it was considered that the
Commission has to take a decision before the investment
investment concerns two distinctive investment projects,
is actually carried out, on the basis of estimates of future
the notification requirements would still be fulfilled for
perspectives and market figures. The aid intensities are
the investments in the Glunz plant and in OSBD plant.
nevertheless not adapted afterwards if some years later
figures show that the market has, for example, turned out
differently. Although in the present case the Commission
(65) The Commission thus concludes that the aid is to be
has to take a decision more than 10 years after the
notified and assessed according to the MSF 1998.
original notification took place, it must nevertheless
base its assessment on the facts and situations known
at the time of notification and not on information
6.3. THE THREE ASSESSMENT CRITERIA OF THE MSF 1998
arising thereafter.
(66) Under the MSF 1998, the Commission has to identify, in
order to determine the maximum allowable aid intensity
for a proposal to award aid, the maximum aid intensity
6.1. EXISTENCE OF AID UNDER ARTICLE 107(1) TFEU
(regional aid ceiling) which a company could obtain in
the assisted area concerned within the context of the
(59) The
present
aid
measure
was
granted
by
a
Member
State
authorised regional aid system valid at the moment of
and through State resources in the sense of
notification.
Article 107(1) TFEU (see point 2.1 of the present
decision). The aid confers an advantage to Glunz and
OSBD as they otherwise would have had to bear the
(67) As
the
notification
took
place
on
7
August
2000,
the
whole costs of the investment on their own. As a
regional aid map 2000-06 is applicable ( 15 ). Nettgau in
significant volume of the concerned wood boards is
Saxony-Anhalt is a region falling under Article 107(3)(a)
transported across international borders, there exists an
TFEU, with a regional aid ceiling of 35 % GGE at the
international trade in the wood-industry concerned.
time of notification. The Commission notes that the
Therefore, financial advantages favouring the two
proposed aid intensity of 35 % gross corresponds with
concerned companies may distort competition in a way
the applicable regional aid ceiling.
that can affect trade between Member States.
Consequently, the Commission considers that the
(68) According to the rules laid down in the MSF 1998, the
notified measure constitutes State aid to Glunz AG and
Commission has then to assess three specific adjustment
OSBD within the meaning of Article 107(1) TFEU.
factors that have to be applied to the percentage figure of
35 % in order to calculate a maximum allowable aid
intensity for the project in question, namely, the
6.2. NOTIFICATION REQUIREMENT
competition factor (T), the capital/labour factor (I), the
regional impact factor (M).
(60) According
to
Article
108(3)
TFEU,
Member
States
have
to notify all aid measures before putting them into effect.
( 15 ) OJ C 340, 27.11.1999, p. 8.

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L 228/28
EN
Official Journal of the European Union
3.9.2011
(69) It is recalled here that according to the KronoGroup,
to the existence or not of structural/serious overcapacity
rather than calculating a common aid intensity for the
in the sector or sub-sector concerned.
whole project, the Commission should assess separately
the aid to the OSB plant and the aid to the particle board
plant as the two investments and the two product
markets can clearly be separated.
(75) According to point 3.4 of the MSF 1998, it is only in the
absence of sufficient data on capacity utilisation that the
Commission will consider whether the investment takes
place in a declining market. However, following the
(70) The
Commission
notes
in
this
respect
that
point
7.2
of
the MSF 1998 defines an ‘investment project’ as an initial
Judgement of 1 December 2004 (T-27/02, Kronofrance
investment in fixed assets in the creation of a new estab
SA/Commission), the General Court ruled that point 3.4
lishment, the extension of an existing establishment or
and 3.10 of the MSF 1998 must be understood as
engaging in an activity involving a fundamental change
meaning that, where the data on capacity utilisation in
in the product or production process of an existing
the sector concerned does not allow the Commission to
establishment.
reach the positive conclusion that there is structural over

capacity, the Commission must consider whether the
market in question is a declining market. The Court of
Justice in joined cases C-75/05 P and C-80/05 P Federal
(71) The
German authorities provided detailed arguments
Republic of Germany and Others v Kronofrance SA
concerning the links that exist between the two plants,
upheld the judgement of the General Court.
set up on the same site by two sister companies of the
same group. Both plants have their production lines
linked to each other by a common technical infra
structure. Both OSB panels and particle board panels
(76) Therefore,
the
Commission
will
first
analyse
if
there
is
are further processed and refined through the same
sufficient data on capacity utilisation and then it will, if
grinding line, the same lamination equipment and the
the data on capacity utilisation is not sufficient or if this
same tongue and groove equipment. In addition,
data shows there is no structural overcapacity, analyse if
particles deriving from the treatment of OSB are used
the market is in decline on the basis of data on apparent
in the neighbouring particle board installation.
consumption. Moreover, following point 3.6 of the MSF
Furthermore, a central administration will manage both
1998, the Commission has still then to analyse if the
plants including their marketing, supply and distribution
beneficiary(ies) of the aid, prior to making an application
activities.
for aid, does already have a market share of 40 %.
(72) In
light
of
the
strong
technical,
functional
and
adminis
trative links that exist between the two plants set up on
(77) The
market
data
on
capacity
utilisation
has
to
be
estab
the same site, the Commission considers that the
lished at the lowest available segmentation of the NACE
investments in the OSB and particle board plant form
classification. Moreover, in order to establish whether the
a single investment project, i.e. an initial investment in
market is in decline and whether the market share ceiling
the creation of a new establishment. Consequently, the
is exceeded, the Commission also has to define the
maximum allowable aid intensity will be calculated for
relevant market of the product(s) concerned by the
this overall investment project.
investment project.
6.3.1. COMPETITION FACTOR (T)
6.3.1.2. The product(s) concerned
6.3.1.1. Applicable rules
(78) The
investment
project
concerns
the
production
of
OSB
(Oriented Strand Board) and particle board.
(73) According to point 3.2 of the MSF 1998, the authori
sation of aid to companies operating in sectors which are
in structural overcapacity poses particular risks for the
distortion of competition. Indeed, any capacity
expansion, which is not compensated by capacity
(79) Particle board is a wood panel made of the crushing of
roundwood-shaving and/or recycled wood-shavings
reductions elsewhere, will exacerbate the problem of
which are agglomerated by an organic binder. It is
structural overcapacity. The Commission notes that the
mainly used in the furniture industry and for internal
notified project will create new capacities on the
house finishing.
European market. The competition factor has thus to

involve an analysis of whether the proposed project
would take place in a sector or sub-sector suffering
from structural overcapacity.
(80) OSB
is
a
wood
panel
made
of
wood
strands
composed
in
three layers. The raw material used to make OSB is pine
wood. OSB is mainly used in the prefabricated building
(74) Pursuant
to
point
3.3
of
the
MSF
1998,
when
sufficient
industry, the packaging industry and for the restoration
data on capacity utilisation is available, the Commission
of old buildings. OSB was invented in the 1950s in
has to limit the determination of the competition factor
North America. During the 1980s and 1990s it has

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EN
3.9.2011 Official
Journal
of
the
European
Union L
228/29
gained wide acceptance in the wood panel market and
(85) As regards OSB, the decision to initiate the procedure
was used as a substitute for the more expensive
laid down in Article 108(2) of the TFEU indicated that
(softwood) plywood.
substitution to a certain extent seems to exists in the EEA
between OSB and (certain types/segments of) plywood.
6.3.1.3. Relevant market
(86) Plywood
is
a
versatile
polymer
wood
composite.
It
is
basically made up of an uneven number of thin layers
(81) According to point 7.6 of the MSF 1998, the relevant
of wood called veneer joined together by a synthetic or
product market(s) compromises the products envisaged
natural adhesive. There exist softwood plywood and
by the investment project and, where appropriate, its
hardwood plywood. As the name suggests, one sort of
substitutes considered by the consumer (by reason of
plywood is made of softwood (which means made of
the products’ characteristics, their prices and their
trees [fir, pine, spruce, hemlock] characterized by its
intended use) or by the producer (through flexibility of
needles and being for the most part evergreen; the
the product installations). The relevant geographical
term does not refer to the hardness of the wood) and
market compromises usually the EEA or, alternatively,
the other sort of hardwood (which means made of the
any significant part of it if the conditions of competition
botanical group of trees that have broad leaves, produce
in that area can be sufficiently distinguished from other
a fruit or nut, and generally go dormant in the winter).
areas of the EEA.
(87) Because of the doubts as to the extent of substitutability
of OSB and different types/segments of plywood, the
Relevant product market
Commission invited interested parties to comment on
the relevant market to which OSB belongs.
(82) As mentioned above, the project concerns the production

of OSB and particle board. According to the German
authorities, the production facilities do not allow to
produce distinct products but only variations of the
same products, i.e. with a different surface quality. The
(88) The
comments
received
from
Germany
and
one
of
the
German authorities thus argue that, from the manufac
aid beneficiary’s main competitors, i.e. the KronoGroup
turing point of view, substitution at the production side
point to the same relevant market which comprises OSB
through flexibility of the production installations should
and plywood in the end-use applications of packaging,
be excluded.
hoarding, roofing, flooring and sheathing/walls. It is only
in these end use applications that a substitution potential
of more than 50 % exists between OSB and plywood.
Due to different performance criteria in the transport
(strength/weight) and also the appearance markets
(83) At
the
demand
side,
particle
board
and
OSB
are
to
a
(furniture), the substitution potential is very limited
certain extent substitutable, namely in the field of prefab
(less than 20 %). These arguments and the degree of
ricated building industry. However, the substitution
substitutability in the different end uses were supported
between particle board and OSB seems to be very
by several studies prepared by Jaakko Pyry ( 17 ).
limited as it would be less than 10 % of the market
size ( 16 ). This limited substitution seems to be due to
the differentiation in end-uses and the significant price
difference (EUR 285/m 3 for OSB to EUR 117/m 3 for
(89) The
above
end-use
applications
almost
the
same
as
those
particle board). The Commission considers that this is
of softwood plywood (the only difference being that
too marginal to justify that OSB and particle board
softwood plywood is also widely used in a further appli
would be assigned to the same product market.
cation, i.e. formwork where OSB is not suitable). On the
other hand, OSB and hardwood plywood do not
substitute each other to the extent that they could be
considered as belonging to the same relevant market.
(84) In
its
decision
to
initiate
the
procedure
laid
down
in
Article 108(2) of the TFEU, the Commission considered
that particle board constituted a separate product market.
(90) Therefore,
the
Commission
defines
the
relevant
market
to
Since this finding has not been contested, the
which OSB belongs as OSB and plywood in the end-use
Commission concludes that for the purposes of this
applications of packaging, hoarding, roofing, flooring and
assessment particle board constitutes a relevant product
sheathing/walls, which to a very large extent corresponds
market on its own.
to the market of OSB and softwood plywood.
( 16 ) Jaako Pyry Consulting, The Development of Wood-Based Panel
( 17 ) Expert Opinion on OSB Substitution Potential of Plywood and Mill
Industry – Capacity Utilisation Rate and Substitution between
Capacity Calculations. Jaakko Pyry, 15 September, 2000. Substi
OSB and Particle board in the European Economic Area 1993-
tution between OSB and Plywood in the European Economic Area.
1998, 20.6.2000.
Jaakko Pyry, 13 February 2001.

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L 228/30
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Official Journal of the European Union
3.9.2011
The relevant geographical market
the total production of wood-panels in Europe ( 19 ).
Therefore, the Commission esteems that it can base its
(91) Although
a
significant
volume
of
wood
boards
is
trans
assessment on capacity utilisation data for the NACE
ported across international borders, boards are a bulky,
20.20 segment.
heavy product. As a result it is generally too expensive to
transport it over great distances, the transport radius
being restricted to some 800 km. The various supply
areas can be seen as a series of overlapping circles with
(94) The
German
authorities
provided
figures
on
the
average
their centres at the production plant. Given the
annual capacity rate from 1994 to 1998 (which are the
dispersion of the individual production plants and the
5 years for which data was available at the moment of
various degrees of overlap for the natural supply areas,
the notification) in the EEA for the NACE code 20.20
so that effects can be transmitted from one circle to
corresponding to the manufacturing of wood panels.
another, it is appropriate to define the EEA as the
These data, obtained from a study of an independent
relevant geographical market for both products
expert ( 20 ), comply with the requirements of point 7.7
concerned (
of the Multisectoral Framework since they correspond

18 ).
to the sector at the lowest segmentation of the NACE
classification.
6.3.1.4. Data on capacity utilisation
(92) Pursuant
to
point
7.7
of
the
MSF
1998,
structural
over
capacity is deemed to exist when, on average over the
(95) The
expert
has
defined
the
basis
of
annual
capacity
calcu
last 5 years, the capacity utilisation rate of the relevant
lation as the daily (23 hours) capacity of the line for 300
sector or subsector is more than two percentage points
days in a year. This basis of annual capacity calculation
below that of manufacturing as a whole. Serious
has been calculated on the basis on information obtained
structural overcapacity is deemed to exist when the
from industry and the expert’s Wood-Based Panel Mill
difference with respect to the average for manufacturing
Databank which includes capacity information by indi
is more than five percentage points.
vidual mills and press lines. The figure of 23 hours/300

days takes into account the variation in machinery
type/age and mill configurations when determining the
capacity of a line.
(93) According to footnote 13 of the MSF 1998, the market
data on capacity utilisation has to be established at the
lowest available segmentation of the NACE classification.
The Commission considers that the production of
(96) The
study
concluded
that
the
average
annual
capacity
particle board and OSB by, respectively, Glunz and
utilisation rate from 1994 to 1998 (which are the
OSBD corresponds well to that of the total NACE
years for which data was available at the moment of
20.20 products (manufacture of veneer sheets; manu
the notification) in the EEA amounts to 88,8 % for
facture of plywood, lamin board, particle board, fibre
particle board, to 80,4 % for OSB, to 88,8 % for the
board and other panels and boards) since the production
combined particle board and OSB rate and to 85 % for
of particle board, plywood and OSB accounts for 81 % of
wood-based panels in total (NACE 20.20).
(97) The capacity utilisation rate of the wood-panels industry (NACE 20.20) in the EEA is detailed in the
following table:
1994 1995 1996 1997 1998
Total production, 1 000 m 3
30,673 32,412 32,566 35,178 36,481
Total capacity, 1 000 m 3
36,776 37,148 40,034 40,545 41,787
Utilisation Rate 83
% 87
% 81
% 87
% 87
%
(98) The
Commission
took
also
into
consideration
a
second
study
( 21 ) carried out on its behalf. This
second study took as a basis a daily capacity (22 hours) of 345 days a year and came to an average
of 81,8 % for the years 1995 to 1997. This study did not however provide any data for the
remaining years of the period 1994-98 and seems to be based on the average annual capacity of
modern plants only.
( 19 ) Michel Vernois, Centre Technique du Bois et de l’Ameublement,
Paris, Expertise Report, Market Structure and Competition in the
European Wood Industry, 2001.
( 20 ) Jaako Pyry Consulting, The Development of Particle board and
OSB Consumption and Capacity Utilisation Rate in the EEA
( 18 ) See also case No IV/M.599, Noranda Forest/Glunz, OJ C 298,
1993-1998, 14.4.2000.
11.11.1995.
( 21 ) Cf. footnote 19.

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EN
3.9.2011 Official
Journal
of
the
European
Union L
228/31
(99) According to point 3.1 of the MSF 1998, the
whether the relevant market is in decline, compare the
Commission will, where appropriate, utilise external inde
evolution of apparent consumption of the product(s) in
pendent data to assess the likely impact on competition
question (that is, production plus imports minus exports)
in the relevant market; where this is not easily obtainable,
with the growth rate of EEA manufacturing industry as a
however, the Commission will give full weight to repre
whole.
sentations made by Member States. In the present case,
the Commission considers the study provided by the
German authorities to be sufficiently reliable. In any
event, the other study, although not providing
complete information, would lead to the same result.
(103) Following point 7.8 of the MSF 1998, the market for the
product(s) in question will be deemed to be in decline if,
over the last 5 years, the average annual growth rate of
apparent consumption of the product(s) in question is
significantly (more than 10
%) below the annual
(100) Over the period 1994-98, the average annual utilisation
average of EEA manufacturing industry as a whole,
capacity rate for the EU manufacturing industry as a
unless there is a strong upward trend in the relative
whole amounts to 81,72 %.
growth rate of demand for the product(s). An absolutely
declining market is one in which the average annual
growth rate of apparent consumption over the last 5
years is negative.
(101) Taking into account the above, the Commission
concludes that the investment project will result in a
capacity expansion in a sector where no overcapacity
exists. However, following the Judgement of the
General Court, when the Commission reaches the
Market to which particle board belongs
positive conclusion that there is no structural over
(104) The annual average growth rate of the whole EEA manu
capacity, which is the case at present, the Commission
facturing industry for the years 1993-98 ( 22 ) is 5,78 %.
has to analyse if the market is in decline or not.
6.3.1.5. Data on apparent consumption
(105) A study from an independent consultant ( 23 ) gives data
on value of the apparent consumption of particle board
Applicable rules
in billion EUR shows the following results for the years
1993-98 (which are the 6 years on which data existed on
(102) According to point 3.4 of the MSF 1998, the
the moment of the notification). This data can be
Commission should for the purpose of defining
presented as follows:
Billion EUR 1993 1994 1995 1996 1997 1998 Growth/a
Particle board 4,61 4,78 5,91 4,98 5,71 5,65 4,15
%
(106) The Commission notes that the difference between
(108) The Commission considers that this argument is not
5,78 % and 4,15 % is more than 10 %. The outcome
sufficient to prove that there exists a strong upward
would be the same if data until 1999 (i.e. over the
trend in the relative growth rate of demand for particle
period 1994-99), as argued for by KronoGroup, would
board. This condition of the MSF 1998 aims at a
be taken into account.
situation where, although the average annual growth
rate of the relevant market over the last 5 years is low,
the latest couple of years show a clearly increasing
growth trend which might continue in the years to
come, i.e. in the short term, when the aided investment
(107) In its observations, Germany refers to point 7.8 of the
comes on stream. This would ensure that the distortive
MSF 1998 according to which the market is not
effects of the aid remain limited.
considered to be in relative decline (despite the fact
that its annual growth rate is below that of the EEA
manufacturing industry as a whole) if there is a strong
upward trend in the relative growth rate of demand for
the product. Germany substantiates this by a study which
shows that in the period 1973 to 2003 apparent
( 22 ) Data on apparent consumption for 6 years are necessary in order to
calculate average annual growth over a period of 5 years.
consumption of particle board grew 36 % faster than
( 23 ) Jaakko Pyry ‘The development of wood-based panels consumption
value added in the manufacturing industry.
in the EEA 1993-1999’.

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L 228/32
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Official Journal of the European Union
3.9.2011
(109) The study, however, works with very long term data that do not allow predictions for the immediate
future which is more relevant for the assessment of the investment’s impact. Moreover, it presents
data until 2003 that were not available at the time of the initial notification in 2000.
(110) Therefore, the Commission considers that the market for particle board is in relative decline
according to point 7.8 of the MSF 1998 and the competition factor ‘T’ for this product should
be set at 0,75.
Market to which OSB belongs
(111) As mentioned already above, the annual average growth rate of the whole EEA manufacturing
industry for the years 1993-98 is 5,78 %.
(112) The notification by Germany contains a study from an independent consultant ( 24 ) which gives data
on value of the apparent consumption in billion EUR in the EEA for the years 1993-98 for OSB and
plywood in the end-use applications of packaging, hoarding, roofing, flooring and sheathing. These
data are as follows:
1993 1994 1995 1996 1997 1998 Growth/a
OSB 0,05 0,06 0,08 0,10 0,13 0,18 31,321
%
Plywood segments 0,46 0,55 0,55 0,48 0,50 0,49 1,175
%
OSB and plywood
0,51 0,61 0,63 0,58 0,63 0,67 5,765
%
segments ( 1 )
( 1 ) In the end-use applications of packaging, hoarding, roofing, flooring and sheathing.
(113) Thus for the relevant market consisting of OSB and
SONAE group, the parent company of TAFISA to which
segments of plywood in the end-use applications of
Glunz and OSBD belong. These data are as follows:
packaging, hoarding, roofing, flooring and sheathing,
the difference in growth between 5,78 % and 5,765 %
is not more than 10 %. Consequently, according to
2002 (after
point 7.8 of the MSF 1998, this relevant market is not
Product markets
1999 (before
investment)
investment)
in decline and a competition factor ‘T’ of 1 applies for
the market to which OSB belongs.
Particle boards […]
% […]
%
OSB and plywood segments ( 1 ) […]
% […]
%
( 1 ) In the end-use applications of packaging, hoarding, roofing, flooring
and sheathing.
6.3.1.6. Market shares on relevant market
(114) In assessing the competition factor, the Commission has
(116) The provided data show that the market share of the
also, following point 3.6 of the MSF 1998, to check
SONAE group did not exceed 40 % in the relevant
whether the market shares of the group to which
markets. Therefore, the established competition factors
Glunz and OSBD belong in the relevant market is at
do not have to be reduced.
least 40 %, which would imply that the risk exists that
the award of maximum levels of aid normally permitted
in the region concerned may unduly distort competition.
6.3.2. CAPITAL/LABOUR FACTOR (I)
(117) It is recalled here that in its comments, KronoGroup
considered that the jobs relocated following the closure
of Glunz’ particle board plant in Sassenburg should not
(115) The German authorities submitted market share data at
be taken into account when determining the capital/
the level of the EEA ( 25 ) for the years 1999 (before the
labour factor and the regional impact factor (both of
investment) and 2002 (after the investment) of the
which build on the number of jobs created by the
investment). According to KronoGroup, taking into
account these jobs would be contrary to the alleged
( 24 ) Report by Jaakko Pyry ‘The development of OSB and Plywood
Consumption in the European Economic Area 1993-1998’.
aim of the MSF 1998 to create jobs in the region
( 25 ) As it existed at the time of the initial notification in 2000.
concerned for those living in the region.

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EN
3.9.2011 Official
Journal
of
the
European
Union L
228/33
(118) The Commission considers that the notion of ‘job
(121) The different capital-labour factors are listed under point
creation’ within the meaning of the MSF 1998 has to
3.10.2 of the MSF 1998. The total investment amounts
be interpreted in the context of the assisted region, as it
to EUR 199 400 000 for the creation of 355 jobs. This
is through the creation of jobs in this region that the
corresponds to the ratio EUR 561 700/job. In such a
project contributes to regional development. Therefore, it
case, the competition factor ‘I’ for the adjustment of
seems justified to accept that ‘jobs created’ means jobs
the maximum aid intensity is to be set at 0,8.
that are new to the region concerned. Moreover, the
creation of jobs in the assisted region, even if the posts
are filled with employees commuting from a neigh
6.3.3. REGIONAL IMPACT FACTOR (M)
bouring area (which in the present case is a non-
assisted region of the same Member State), undoubtedly
(122) The regional impact factor takes into account the
benefits the region concerned through its spill-over
beneficial effects of a new aided investment on the
effects and thus fulfils the main aim of regional aid.
economy of the assisted region. The Commission
considers that job creation can be used as an indicator
of a project’s contribution to the development of a
region. A capital-intensive investment may create a
significant number of indirect jobs in the assisted
(119) Therefore, the Commission will take these jobs into
region concerned and any adjacent assisted region. Job
account when determining the capital/labour factor and
creation in this context refers to jobs created directly by
the regional impact factor applicable for the investment
the project together with jobs created by first-tier
project.
suppliers and customers in response to the aided
investment.
(120) The MSF 1998 lays down a capital-labour factor which
(123) The German authorities estimated at the time of the
aims at adjusting the maximum aid intensity with a view
notification of 7 August 2000, the indirect jobs to be
to favour those projects which effectively and better
created as a result of the investment upon full
contribute to the reduction of unemployment through
completion of the centre for wood processing to be a
the creation of a relatively more important number of
total amount of 520 and broken down as follows
new direct jobs.
according to the needs of each production:
OSB
OSB
Particle board Particle board
production
production
production
production
Total
Indirect jobs Contingencies Indirect jobs Contingencies
Forestry activities 61 11 70 12 154
Wood transport to the plants 42
8 77 14 141
Paste transport to the plants
5
8 13
Fuel transport to the plants
2
3
5
Melanin paper transport
1
1
Transport from plants to customers 50
9 76 14 149
Supply of services (maintenance, repair of
17
3 17
3 40
facilities)
Cleaning services
5
5 10
Housing, consumer goods for staff
2
5
7
Total 184 31 262 43 520
(124) The calculation of the estimated job creation is based on the following calculation.
(125) According to the German authorities, the most important source of indirect job creation (309)
generated by both productions is the transport sector for supply of materials and for delivery of
final products to customers.

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L 228/34
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(126) As far as the OSB-production is concerned, the forecasted
(131) The forecasted sales of […] m 3 per year would result,
manufacturing of approx. […] m 3 OSB-products should
over 251 working days, in a volume of […] particle
result in sales of about […] m 3 . The production of one
board per day, which will be transported in trucks of a
m 3 final product will need about […] m 3 wood resulting
[…] m 3 capacity. The estimates of 71 drivers, 14
in approx. […] m 3 wood/year. Estimates for paste and
contingencies and 5 mechanics are reduced by 14
chemicals amount to […] tons and for fuel to […]
contingencies and the Commission accepts 76 indirect
tons/year.
jobs created for the transport of the final product to
the customers.
(127) Raw material for the OSB products is 100 % forest wood
(132) The German authorities did not provide explanations
originating within a radius of approx. 100 km around
with regard to the 19 indirect jobs created for the
the plant. The volume needed per day is estimated at
transport of paste, fuel and melamine paper for both
[…] m 3 transported in trucks with a capacity of […]
plants. However, the Commission considers this figure
m 3 . On the basis of two trips per day and a capacity
as realistic.
of […] m 3 , this will result in 39 trucks and 39 drivers,
further 8 contingencies and 3 mechanics, and to a total
of 50 indirect jobs. However, the Commission considers
that contingencies do not comply with the definition of
(133) In total, the Commission considers that the indirect job
jobs set out in points 3.7 and 7.5 of the MSF 1998 ( 26 ).
creation in the transport sector can be set at 264.
Therefore 42 indirect jobs can be accepted for the
transport of materials to the plant.
(134) The forestry activities, providing the second important
source of indirect job creation, are carried out on 251
days/year.
(128) The forecasted sales of […] m 3 would result, over 251
working days, in a volume of […] m 3 OSB-products per
day transported in trucks with a capacity of […] m 3 . 46
trips per day will need 46 drivers, further 9 contingencies
(135) The production of OSB requires a daily volume of […]
and 4 mechanics and will result in a total of 59 new
m 3 wood of which 95 % are produced mechanically and
indirect jobs. Taking out the contingencies, the indirect
5 % manually. The mechanical production of […] m 3
job creation for the transport of final products to the
involves 25 gangs comprising 2 machineries and 2
customers is 50.
forestry workers, plus one supplementary job attached
to six gangs, performing each […] m 3 /day. This results
in 54 jobs. The manual production of […] m 3 involves
13 forestry workers performing each […] m 3 /day. The
German authorities estimate that in addition to the 67
(129) The production capacity in the particle board plant is
indirectly created jobs, 13 jobs will be created for
estimated per year at approx. […] m 3 raw particle
contingencies leading to a figure of 80 indirect jobs.
board and […] m 3 coated board. The sales are forecasted
However out of the 67 indirectly created jobs, only 61
to reach […] m 3 for the first product and […] m 3 for the
are created in the assisted region and adjacent assisted
latter. The difference between capacity and sales forecast
regions and will therefore be taken into account.
results from the fact that a significant part of particle
board will enter in the coating process. The total
demand for wood is set at […] m 3 /year. Estimates for
paste and chemicals amount to […] tons and for fuel to
(136) The production of particle board requires a daily volume
[…] tons/year.
of […] m 3 wood of which 95 % are produced mech
anically and 5 % manually. On the basis of the same
calculations as carried out in the case of the pre-
forestry activities for the OSB-production, the German
authorities estimate the creation of indirect jobs at 41,
(130) The forest wood also originates from a periphery of
including 5 jobs for contingencies. However out of the
approx. 100 km around the plant. The volume needed
41 indirectly created jobs, only 32 are created in the
per day is estimated at […] m 3 forest wood, further […]
assisted region and adjacent assisted regions and will
m 3 packing wood and […] m 3 wood shavings. The
therefore be taken into account.
transport capacity is indicated at […] m 3 forest wood
or […] m 3 packing wood respectively wood shavings.
This, results in 72 daily trips conducted by 72 drivers
and, together with 14 contingencies and 5 mechanics,
(137) With regard to the volume of […] m 3 /day of packing
would lead to 91 indirect jobs. Taking out the
wood, the German authorities estimate at 36 the number
contingencies, the indirect job creation for the
of indirect jobs for collecting, transporting and sizing,
transport of material to the particle board plant is
further 7 jobs for contingencies and 7 jobs for the
thus 77.
purchase of material, for logistic purposes, etc... Out of
the 43 indirectly created jobs, only 38 are created in the
( 26 ) Permanent full-time jobs in direct relation with the project.
assisted region and adjacent assisted regions.

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EN
3.9.2011 Official
Journal
of
the
European
Union L
228/35
(138) In total, the Commission considers that the indirect job
factor with reference to the relative share of the two
creation in forestry activities can be set at 131.
products in the eligible investment costs.
(139) The German authorities did not provide explanations for
(145) In their comments on the opening decision, Germany
the creation of 51 indirect jobs plus 6 contingencies in
proposed a third way of weighing the different
the service sector as well as for housing and consumer
competition factors related to the two products, namely
goods. The Commission, considering that some of these
on the basis of the contribution margin ( 29 ) (Deckungs
jobs should be shared by both plants, estimates that the
beitrag) of the two production lines. According to
figure of only 45 indirect jobs is realistic.
Germany, this would ensure that account is taken of
the contribution of each of the products concerned to
the operating income.
(140) Taking into account the above, the total number of
indirect jobs created in the assisted region and adjacent
assisted regions amounts to 440. If the indirect safe
(146) Depending on the approach followed, the combined
guarded jobs were not included, the overall number of
competition factor for the investment project as a
indirect jobs would be 407. The amount of 440 or even
whole would be 0.86 (calculation based on relative
407 compared to the total direct job creation of 355
capacities ( 30 )), 0,85 (calculation based on relative
would in any event lead to a ratio that is, in both
investment costs ( 31 )) or 0,92 (calculation based on the
cases, more than 100 % which leads to the regional
relative contribution margins ( 32 )).
impact factor ‘M’ of 1,5.
(147) Since the other two assessment factors necessary to
6.3.4. MAXIMUM ALLOWABLE AID INTENSITY FOR THE
calculate the maximum allowable aid intensity for the
INVESTMENT PROJECT
project are 0,8 (capital/labour factor, ‘I’) and 1,5
(regional impact factor, ‘M’), the final maximum aid
(141) The maximum allowable aid intensity according to the
formula R × T × I × M (
intensity according to the formula R × T × I × M as

27 ) as mentioned under point
3.10 of the MSF 1998.
mentioned under point 3.10 of the MSF 1998 would be

respectively 36,12 %, 35,70 % and 38,64 %. In all cases
the aid intensity of 35 % as notified by the German
authorities complies with the MSF 1998.
(142) Since the competition factor ‘T’ is different for the two
products concerned (i.e. 1 for OSB and 0,75 for particle
board), it has to be established how to arrive at a single
competition factor applicable for the whole project. The
(148) Therefore, it is not necessary to decide which method to
MSF 1998 does not provide guidance in this respect.
use for the calculation of the combined competition
factor. In any event, the method proposed by Germany
(which leads to the most favourable result) should be
rejected on the grounds that it uses data from 2004,
(143) In a similar case under the MSF 1998 which concerned
not available at the time of the notification.
two distinct products which were assigned different
competition factors (C 15/06 Pilkington
( 28 )), the
Commission noted that since the project in question
concerns a completely integrated production site, it
6.3.5. NO RECOVERY INJUNCTION
would be artificial to weigh the two competition
factors by the relative value of the investments
(149) It is recalled here that an aid amount of totally EUR […]
was already paid out by the German authorities to the
concerning each of the two products. In that case, the
Commission used therefore the proportion of the
beneficiaries (out of the agreed total amount of
capacities created for the two products for the weighing.
EUR 69 797 988).

( 29 ) The contribution margin is the difference between revenues and
variable costs that are linked to a product. Contribution margin
(144) The present case, as explained in point 2.3 of this
can be thought of as the fraction of sales that contributes to
decision, concerns two combined plants (one for OSB
offset the fixed costs. Alternatively, unit contribution margin is
and one for particle board production), linked to each
the amount each unit sale adds to profit.
(
other by a common technical infrastructure and a

30 ) In the notification, the production capacity of the new OSB-plant
was estimated to amount to […] m 3 (42 %), whereas the particle
common administration. It is possible to identify the
board plant creates new capacities of […] m 3 (58 %). The combined
eligible costs associated with each of these plants.
competition factor would therefore be equal to 0,42 × 1 +
Therefore, in contrast to the Pilkington decision, it is
0,58 × 0,75 = 0,86.
also be possible to calculate to common competition
( 31 ) The OSB plant has eligible investment costs of EUR 81,8 million
(41 %), while the particle board plant’s eligible costs amount to
EUR 117,6 million (59 %). This would result in a combined
( 27 ) Where ‘R’ is the authorised maximum aid intensity for large
competition factor of 0,41 × 1 + 0,59 × 0,75 = 0,85.
companies in the assisted area concerned, ‘T’ is the competition
( 32 ) According to the German authorities, the relative contribution
factor, ‘I’ is the capital-labour factor and ‘M’ is the regional
margin of the OSB plant was 68,5 % and that of the particle
impact factor.
board plant was 31,5 % in 2004. Therefore, the combined
( 28 ) OJ L 49, 20.2.2009, p. 18.
competition factor is calculated as 0,685 × 1 + 0,315 × 0,75 = 0,92.

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L 228/36
EN
Official Journal of the European Union
3.9.2011
(150) KronoGroup in its comments argued that the
HAS ADOPTED THIS DECISION:
Commission should have ordered an injunction to provi
sionally recover the aid pursuant to Article 11(2) of
Regulation (EC) No 659/1999 (recovery injunction for
unlawful aid).
Article 1
The State aid Germany has implemented for Glunz AG and
OSB Deutschland GmbH, amounting to EUR 69 797 988, is
(151) In this respect it should be noted that such an injunction
decision has never been taken. A recovery injunction is
compatible with the internal market within the meaning of
an unusual step which the Commission may adopt only
Article 107(3)(a) of the Treaty on the Functioning of the
in very specific conditions laid down in Article 11 of the
European Union.
Procedural Regulation (EC) No 659/1999. KronoGroup
has not put forward convincing arguments showing that
these conditions are fulfilled; in any event, the
Article 2
Commission takes the view that a recovery injunction
would not have been appropriate in the present case.
This Decision is addressed to the Federal Republic of Germany.
VII. CONCLUSION
Done at Brussels, 23 March 2011.
(152) The Commission finds that Germany has unlawfully
implemented the aid in question in breach of
Article 108(3) of the Treaty on the Functioning of the
For the Commission
European Union. However, the aid intensity of 35 %,
employed by Germany, is compatible with the provisions
Joaquín ALMUNIA
of the MSF 1998,
Vice-President

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