No L 78/44 Official Journal of the European Communities 23. 3. 88, COMMISSION DECISION of 20 January 1988 on the Belgian Government’s aid proposal in favour of Roger Vanden Berghe NV, a polypropylene yarn and carpet producer located in Desselgem, Belgium " (Only the French and Dutch texts are authentic) (88/173/BEC) 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 g‘ivenv notice to the parties concerned to submit their comments as provided for in the said Article 93, and having. regard to those comments, Whereas : I By letter dated 23 March 1987 and with reference to the synthetic fibres and yarn aid code, the Belgian Government notified the Commission of a proposal to grant financial assistance to Roger Vanden Berghe NV, a producer of polypropylene yarn and carpets located in Desseigem. Additional information was provided by telex of 13- May 1987. The aid which would be granted under the Economic Reform Act of 4 August 1978 is intended to facilitate investments of Bfrs 47,98 million for the purpose of increasing polypropylene yarn production capacxty and would take the form of a grant amountmg to Bfrs 6812 450. Following an initial acrutiny, the Commission considered that the proposed aid would not meet the conditions which must be fulfilled in order to benefit from any of the exceptions set out in Article 92 (3) of the EEC Treaty and, in particular, that it would not be in line with the synthetic fibres and yarn aid discipline introduced by the Commission in 1977, notified to the Member States by letter of 19 July 1977 and published in the Bulletin of the European Communities of July/August 1977 under point 1.5.3 and of November under point 2.1.47 and prolonged in 1979, 1981, 1983, 1985 and 1987. Under this discipline aid has to be avoided if it has the effect of increasing production capacity in the sector - concerned. In the present case the aid is intended for an extension of polypropylene yarn production capacity by 100 %. The Commission also considered that this investment had been undertaken as early as 1985 without the use of State aid which was proposed retrospectively in 1987. Thus, the aid was and is not necessary for the development of the economic activities at issue and, consequently, would give an unfair advantage to the undertaking concerned, the financial position of which would merely be bolstered.. The aid would allow trading conditions between Member States to be affected and competition to be distorted without any justification on grounds of Community interest as set out in Article 92 (3). Therefore, the Commission initiated the >procedure provided for in the first subparagraph of Article 93 (2) of the EEC Treaty. By letter of 26 June 1987, it gave the Belgian Government notice to submit its comments. The other Member States were informed on 4 August and -third parties on 8 October 1987. 1I By letter dated 21 September 1987, the Belgian Government informed the Commission that it had no comments to make under the procedure thus initiated. In commenting under tlljs_p:ocedurc, four other Member States and two federations of firms in the sector supported the Commission’s view as stated at the opening of the procedure. III There is a high volume of trade in synethetic yarn and particularly in polypropylene yarn with approximately 60 % of total EC-production of this product being traded within the Community. The company in question, the production capacity of which has risen from 2,95 % to 59 % of total EC capacity by way of the investment at’ issue here, participates actively in this intra-Community trade by exporting 30 % of its production to other Member States. The relevant market in this case is the market for polypropylene yarn for the purpose of carpet production, which takes approximately two-thirds of total polypro- pylene yarn production in the EC. Despite growing consumption, considerable over-capacity persists in this market as new capacities are being installed at a very fast rate. From 1985 to 1986, for example, production and