The European Commission has launched a formal investigation under EC Treaty state aid rules into proposed regional investment aid of around $6.9 million to two German shipyards, Rolandwerft and Volkswerft Stralsund. The Commission needs to verify that the aid is limited to the modernization and upgrading of existing installations, as required by the rules governing state aid to shipbuilding, and that there will not be capacity increases in a sector cyclically suffering from over-capacity. The opening of a formal investigation will give interested parties an occasion to comment on the measures. It does not prejudge the outcome of the procedure. The proposed aid would be for investment to enable Volkswerft Stralsund to build larger ships. Investment costs amount to $22.3 million. Germany intends to support the project with $5 million, which corresponds to an aid intensity of 22.5%. For Rolandwerft , the proposed aid would be for the modernization and rationalization of certain parts of the yard and the construction of a quay. Project costs amount to $15.5 million, out of which Germany intends to finance $1.863 million, equal to an aid intensity of 12%.