No L 25/92 Official Journal of the European Communities COMMISSION DECISION _ of 13 July 1988 concerning aid provided by the United Kingdom Government to the Rover Group, an undertaking producing motor vehicles (Only the English text is authentic) (89/58/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 in accordance with the above Article to interested parties to submit their comments, Whereas : By letter of 14 March 1988 from its Permanent Represen- tative the United Kingdom Government notified the Commission of its intention to provide new capital to the Rover Group in the context of the sale of the remaining car and jeep businesses of the group to British Aerospace. This notification followed a statement to the United Kingdom Parliament on 1 March 1988 that British Aerospace had declared its interest in acquiring the Government’s shareholding in the company and it expected that negotiations on an exclusive basis would be concluded by 30 April. On 29 March 1988 the Commission decided to initiate the procedure laid down in Article 93 (2) of the EEC Treaty in respect of the notified aid plan of the United Kingdom Government. Given that the new capital injection would be used to reduce the financial burden and the debt repayment obligations of Rover Group, the Commission considered that it conferred a competitive advantage on Rover Group #is-d-vis other Community car manufacturers. Thus, the proposed measure contained aid elements falling under Article 52 (1) of the EEC Treaty. Moreover, the aid element.of the assistance measure was not contested by the United Kingdom Government. The main reasons for opening the procedure were the danger of distortion of competition given the sensitivity of the motor vehicle industry, the absence of any figure for the proposed debt write-off and the lack of information concerning additional restructuring efforts. - By letter dated 30 March 1988 the Commission gave the United Kingdom Government notice to submit its comments. In accordance with Article 93 (2) of the EEC Treaty, the other Member States and third parties were also given notice to submit their comments. 11 The United Kingdom authorities presented their comments under the procedure by letters dated 29 April, 18 May, 26 May, 6 June, 14 June, 7 July and 12 July 1988 providing detailed information on the precise terms of the agreement, on the restructuring efforts to be undertaken by Rover Group in the future, on the group’s activities, its financial and fiscal situation and its future prospects. 1 In particular, the United Kingdom " authorities communicated the following principal terms of the sales agreement which was reached on 29 March 1988 : — the United Kingdom Government intends to make a capital injection of £ 800 million into Rover Group to eliminate the company’s indebtedness, — British Aerospace would immediately thereafter pay £ 150 million to the United Kingdom authorities for their 99,8 % shareholding in Rover Group, — British Aerospace would meet all costs of future restructuring in Rover Group, — Rover Group would not use more than £ 500 million of its current level of £ 1600 million trading tax losses and these trading tax losses will remain within Rover Group, — the parliamentary assurances given by successive United Kingdom Governments in relation to Rover Group’s obligations have been substantially modified, and would not cover new obligations incurred by Rover Group after completion of the sale, — the United Kingdom authorities indicated that they would not give any of the warranties that might be expected in such a sale, save for formal warranties to the title to the Government shareholding, — British Aerospace would undertake not to on-sell the Austin Rover and/or Land Rover businesses, nor theis trademarks, for the next five years. Should one of these events occur, British Aerospace would have to pay a penalty of up to £ 650 million to the United Kingdom Government. 28. 1. 89