No L 276/40 Official Journal of the European Communities 19. 10. 84 COMMISSION DECISION of 18 July 1984 on an aid proposal by the Irish Government in favour of a producer of polyester yarn situated in Letterkenny (Only the English text is authentic) (84/498/EEC) THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Economic Community, and in particular the first subparagraph of Article 93 (2) thereof, Having given notice to the parties concerned to submit their comments as provided for in the said Article 93, and having regard to those comments, Whereas : By letter dated 22 December 1983, the Irish Govern- ment notified the Commission of its intention to grant aid to a company which has taken over the polyester yarn production plant situated in Letterkenny from its former owner. The aid would take the form of grant assistance amounting to £ Irl 2 900 000 and would be granted by the Industrial Development Authority (IDA). By telex dated 12 January 1984, the Commission requested additional information from the Irish Government. This information was received on 19 and 30 January 1984. Having examined the aid proposal, the Commission considered that the aid would affect trade between Member States to an extent contrary to the common interest and that it would, therefore, be incompatible with the common market, particularly in a situation where other EC producers of synthetic fibres by consi- derably reducing capacities undertake great efforts to adapt to the present market situation, which is marked by serious difficulties of overcapacities. The Commis- sion also considered that the aid would not help to restructure the polyester plant in the sense of the Commission’s synthetic fibre discipline of 1977 and prolonged in 1979, 1981 and 1983 as the assistance would neither lead at any decrease in capacities nor help to convert the production facility away from synthetic fibres. Consequently, the Commission initiated the procedure provided for in the first . subparagraph of Article 93 (2) of the EEC Treaty and, by letter of 8 March 1984, gave the Irish Government notice to submit its comments. 11 The Irish Government, in submitting its comments under the procedure provided for in Article 93 (2) of the EEC Treaty by letter of 6 April and telex of 27 June 1984, pointed out that the aid of £ Irl 2 900 000 would be provided for investment of £ Irl § million in order to upgrade product quality and plant control. No grant or other State assistance would be provided for the balance of the total investment of £ Irl 16 700 000, which covers also the acquisition cost of the Letter- kenny plant. The Irish Government argued that the proposed aid- conforms with Article 92 (3) (a) of the EEC Treaty in promoting County Donegal and that it would not lead to an increase in production capacity and would, therefore, be in line with the synthetic fibre discipline. The Irish Government, in addition, has informed the Commission that the company in question was unable to give any formal written commitment not to increase existing polyester yarn production capacity at its Letterkenny plant, even for a limited period of time. The comments of two other Member States, one federation of firms in the sector and three individual companies, submitted to the Commission under the Article 93 (2) procedure, supported the Commission’s view and highlighted the difficult situation of produ- cers of polyester yarn because of overcapacity problems. They also underlined the need to fully respect the synthetic fibre discipline, particularly in a situation where market prospects are dim. It also was claimed that the aid in question gave an unfair advan- tage to the yarn producer concerned in competition with other Community manufacturers. I11 In polyester yarn there is a high volume of trade and a large degree of competition between Member States. Consequently, the Irish Government's proposed aid is likely to affect trade and distort competition between Member States by favouring the undertaking in ques- tion within the meaning of Article 92 (1) of the EEC Treaty.