16.10.1999 Official Journal of the European Communities L 268/25 COMMISSION DECISION of 20 July 1999 which Germany is planning to implement for Saxonylon Textil GmbH (notified under document number C(1999) 2535) (Only the German version is authentic) (Text with EEA relevance) (1999/673[EC) THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Community, and in particular Article 88(2) thereof, Having regard to the Agreement on the European Economic Area, and in particular Article 62(1)(a) thereof, Having regard to Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article 93 of the EC Treaty, and in particular Article 7 thereof (), Having called on interested parties to submit their comments pursuant to the provision cited above (3 and having regard to their comments, Whereas: I. PROCEDURE (1) By letter dated 19 June 1998, Germany notified the Commission of a proposal to grant aid to Saxonylon Textil GmbH in connection with an investment in a plant to produce polyamide yarn in Meerane, Saxony. By letter dated 10 September 1998, it provided further information. (2) By letter dated 17 November 1998, the Commission informed Germany that it had decided to initiate the procedure laid down in Article 88(2) of the EC Treaty in respect of this aid. Germany responded to the opening of the procedure in its letter dated 7 January 1999. (3)  The Commission decision to initiate the procedure was published in the Official Journal of the European Commu- nities (%). The Commission invited interested parties to submit their comments on the aid. (4  The Commission received comments from six interested parties. It forwarded them to Germany, which was given the opportunity to react; its comments were received by letter dated 15 June 1999. II. DETAILED DESCRIPTION OF THE AID (5)  The proposed aid relates to an investment project by Saxonylon Textil GmbH, a subsidiary of the Tolaram Group, Singapore. The Tolaram group operates in more than twenty countries and manufactures and sells textiles, fibres, yarn, floor coverings, paper, chemicals, telecommunications equipment, food, electronic goods () O] L 83, 27.3.1999, p. 1. () O] C 39, 13.2.1999, p. 2. and household commodities. The plan is to build a state-of-the-art production plant at Meerane for polya- mide 6.6 industrial and textile filament yarn, including fully drawn yarn (FDY), partly drawn yarn (PDY), textured yarn, and plied and dyed yarn. The plant is to manufacture micro, fine and medium-weight multifila- ment yarns with filaments of 0,5 to 1 denier. (6)  The planned capacity of the plant is 12 140 tonnes per year and production is scheduled to begin in the third quarter of 1999. Output from this plant would replace between 3 000 and 4 000 tonnes a year of nylon prod- ucts which are currently imported by the Tolaram Group from outside the Community. The project would create at least 150 jobs. (7)  The eligible project costs total DEM 120,990 million. The proposed financial support comprises DEM 35,208 million under the Commission-approved 26th frame- work for the joint Federal/Linder programme for improving regional economic structures (}) and an investment allowance of DEM 7,138 million, with an overall aid intensity of 35 %. (8)  When opening the procedure, the Commission expressed doubts as to the compatibility of the aid with the common market since the project clearly did not comply with the relevant provisions of the Code on aid to the synthetic fibres industry (¥ (hereinafter referred to as the ‘Code). III. COMMENTS FROM INTERESTED PARTIES (9 The International Rayon and Synthetic Fibres Committee (CIRFS) stated that it was clear that a situation of struc- tural overcapacity existed for both polyamide textile fila- ment yarn and polyamide industrial filament yarn and that, consequently, the provisions of the Code relating to structural shortage of supply were not applicable in this case. Since the project involved an increase in the company's capacity in circumstances where no structural shortage of supply could be established, the aid was incompatible with the Code. CIRFS added that many companies active in this sector had modernised and in some cases had added new capacity without infringing the provisions of the Code. There were currently further projects in the pipeline, not involving the use of State aid, which could be put at risk if subsidies were to be permitted for a competing project. CIRFS anticipated (®) Commission letter (SG) D/7104, of 18 September 1997. (*) O] C 94, 30.3.1996, p. 11.