L 46/56 Official Journal of the European Communities 20. 2. 1999 COMMISSION DECISION of 14 July 1998 on State aid in favour of Fabricantes Vascos de Herramientas SA (Favahe SA) and its successors (notified under document number C(1998) 2362) (Only the Spanish text is authentic) (Text with EEA relevance) (1999/143/EC) THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Community, and in particular the first subparagraph of Atrticle 93(2) thereof, Having given the parties concerned the opportunity to submit their comments, in accordance with Article 93, Whereas: By letter dated 19 November 1996 (SG(96) D/9851), the Commission informed the Spanish Government of its decision to initiate Article 93(2) proceedings against aid in favour of the group Fabricantes Vascos de Herramientas SA (Favahe), a Basque manufacturer of hand tools. Favahe’s headquarters and production plants were located in the Basque Country (Vitoria and Iran), which is an area eligible for regional aid within the meaning of Article 92(3)(c). The group was created in 1982 with a view to rational- ising the supply of various hand tool producers in the Basque Country and adapting it to demand. However, the expected positive results did not materialise. The group undertook various restructuring measures up to 1991, but failed to improve the financial situation. In 1990 the enterprise made losses of ESP 457 million and in 1991 the losses rose to ESP 686 million. In 1992 a new strategic plan was drafted, envisaging posi- tive results for the group by 1994. The plan included, among other measures, the optimisation of the supply of the various companies in the group, coordination of the companies’ administrative structures, the reorganisation and rationalisation of production activities (with each company concentrating on only one sector of the market), and a reduction of the workforce, from 1 153 in 1992 to 714 in 1994. In order to finance the restructuring measures, Favahe applied for a guarantee from the Basque Autonomous Government under Decree No 628/91, to cover bank loans totalling ESP 825 million, which would be used to implement the restructuring plan. Decree No 628/91 established an aid scheme under which restructuring aid could be granted to firms located in the region. The aid was to be given in the form of guarantees covering an amount proportionate to the firm’s difficulties. By letter dated 28 April 1992, the Commission informed the Spanish authorities that it had decided to raise no objections to the aid scheme, but that the Commission would have to be notified of guarantees given to firms with more than 250 employees. The guarantee in favour of Favahe was granted in December 1992 for a period of seven years with a two- year grace period. The Spanish Government, however, had failed to notify the granting of the aid, despite the fact that the Favahe companies had more than 250 employees. Since the restructuring plan did not have the expected results, and the company went on making losses of some ESP 580 million in 1994, Favahe filed for voluntary bank- ruptcy on 7 April 1995. The Commission received several complaints regarding possible aid in the context of the bankruptcy procedure. According to the complainants, Favahe’s assets had been transferred to a newly created company, Herramientas Eurotools SA, which had several Favahe executives on its Board of Directors. The new firm, Herramientas Euro- tools SA, was later acquired by the American multina- tional Snap-on, which paid ESP 1200 million to the Basque Regional Government and to the Guiptzcoa and Alava provincial councils. This company marketed hand tools under the brand names originally used by Favahe, namely ‘Acesa’, ‘Irimo’ and ‘Palmera’.