State aid in the paper industry

Yesterday in the news:

After the annulment of its 2008 decision to authorise a regional investment aid granted by
Germany to Propapier for the construction of a paper mill in Eisenhüttenstadt
(Brandenburg, Germany), the European Commission has opened an investigation to
reassess the measure in light of the guidance provided by the judgment of the EU General
Court (case T-304/08). The Commission will assess whether the positive effects of the aid
on regional development outweigh the potential distortion of competition and negative
effect on trade between Member States created by the selective advantage granted to
Propapier. The opening of a formal investigation gives interested third parties a possibility
to comment on the measure. It does not prejudge the outcome of the investigation.

This brings back memories of my internship at Metsäteollisuus Ry in 2002. I wrote a report about state aid regulation and how it applied to the case of Zellstoff Stendal in former Eastern Germany, an investment by Mercer. Mercer apparently recently increased the capacity of this pulp mill.

It would be interesting to compare these two cases, on the basis of the publicly available evidence/documentation. Both rely on the frameworks for regional investment aid for jobs, but time has changed, in terms of the market situation.


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