In February 2012, the government of Germany announced a change in production support.



  • 1 harmful
  • 0 neutral
  • 0 liberalising
Inception date: 01 Jan 2012 | Removal date: 01 Jul 2014

Production subsidy

On 15 February 2012, Germany notified the EU commission about a new aid scheme for the shipbuilding sector. The measure started on 1 January 2012 and will be limited to the end of 2013.
The scheme can be seen as the successor of the initial innovation aid scheme, in place until 31.12.2011. (N452/2004)
The scheme aims to promote "innovative shipbuilding in conformity with the new provisions on innovation aid of the 2011 Framework" (Letter from the EC to Germany, Brussels 10.07.2012 C(2012) 4823 fin). The 2011 scheme has extended the scope to "inland waterway vessels" as well as "constructions of floating and moving offshore structures". Shipyards may benefit from the scheme if they build, repair or convert "self-propelled commercial vessels". 
The aid scheme does not apply to projects, for which the total aid amount exceeds EUR 150 per compensated gross tonnage for a ship or EUR 5 million for new processes. The overall contribution in the form of government aid is not clear at this stage.
The EC observes a potential trade distortion, elaborating on article 107(1) TFEU: "Article 107(1) TFEU declares that any aid granted by a member state or through state resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member states, be incompatible with the internal market." (par 26. ,Letter from the EC to Germany, Brussels 10.07.2012 C(2012) 4823 fin) 
Hence, applying this reasoning to the notified case: The notified measures "involve economic benefits for specific undertakings, and by their nature are likely to distort competition.(par. 27)

"Given the existence of interstate trade with the internal market in the sector in which the recipients are active, the measure falls within the scope of Article 107(1)"(par 28., Letter from the EC to Germany, Brussels 10.07.2012 C(2012) 4823 fin).
Taking the original German text into consideration: the existence of interstate trade in this sector and the market activity of the recipient, the distortion of competition can also be considered as trade distortion (reasoning based on the German version of par 28., Letter from the EC to Germany, Brussels 10.07.2012 C(2012) 4823 fin).

The 2011 Shipbuilding Framework defines the conditions that allow "innovation aid" to the shipbuilders compatible with the common market, hence article 107(1) TFEU.
Germany agrees to adhere to the condition of 2011 framework ("Framework on State aid to shipbuilding") so that an exception according to article 107(3) can be considered.
The EU commission follows this reasoning and concludes that: "the notified aid scheme is compatible with the internal market", pursuant to Article 107(3) (c) TFEU read in conjunction with the 2011 Framework. The Commission has accordingly decided not to raise objections to the aid scheme for shipbuilding, "Innovative shipbuilding safeguards competitive jobs".

Update: SA.37702 Prolongation
On 13 December 2013 the EC allowed the prolongation of the scheme until 30 June 2014. Besides the prolongation, the present decision does not introduce any changes with respect to the intial scheme. (para. 6, letter from the EC to Germany,Brussels 13.12.2013)

A state measure in the GTA database is assessed solely in terms of the extent to which its implementation affects the extent of discrimination against foreign commercial interests. On this metric, the state aid proposed here is discriminatory.