European Commission, 27/3/14
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The European Commission has
concluded that Greek public support measures granted to Larco General
Mining and Metallurgical Company S.A. (Larco) gave the company an undue
advantage over its competitors, in breach of EU state aid rules. In
total, the capital injections and public guarantees were worth €136
million. The Commission has decided that Larco must pay back the amount
with interest to mitigate the distortions of competition resulting from
the incompatible aid.
Certain assets of Larco, a
State-owned company, are currently being privatised. The Commission has
in a separate decision concluded that the repayment obligation will not
be passed on to the buyers of these assets.
In March 2013, the Commission
opened an in-depth investigation into a number of support measures by
the Greek State to Larco, including a capital increase in 2009 of €45
million, and several State guarantees in the period 2008-2010 (see IP/13/195).
The measures were not notified to the Commission for prior approval as
required under EU rules. The investigation has shown that no private
player would have invested in Larco under similar terms and that the
measures therefore constitute state aid within the meaning of the EU
rules.
Larco has been in difficulties
at least since 2008. Under EU rules such companies can receive state aid
either within the framework of a restructuring plan that ensures the
company's long-term viability or a resolution plan for its orderly
winding-down. This is to ensure that the amount of public money spent
is kept to the necessary minimum and not wasted to artificially keep
failing companies in the market. However, Greece did not provide a
restructuring or resolution plan for Larco. The aid measures therefore
cannot be justified under EU rules.
In December 2013, as part of its
privatisation programme, Greece notified the Commission of its
intention to sell through open tenders certain assets operated by or
belonging to Larco: the Larymna smelter, part of the Agios Ioannis
mines, part of the Evia mines and the Kastoria mines. The Commission
examined, in a separate investigation, if the sale would lead to the
company continuing its activity under a new name. However, because the
sale is conducted through open tenders and concerns only part of Larco's
business, the Commission has concluded that there is no economic
continuity, and the sale is not an attempt to avoid repayment of
incompatible state aid. This obligation will therefore not be passed on
to the buyers of the assets but remain with Larco.
Background
Larco specialises in the
extraction and processing of laterite ore, the extraction of lignite and
the production of ferronickel and by-products. Its activities include
the exploration, development, mining, smelting and trading of its
products worldwide. Larco is one of the largest ferronickel producers in
the world. 55.2% of Larco's shares are owned by the Greek State through
the Hellenic Republic Asset Development Fund, 33.4% by the National
Bank of Greece S.A. and 11.4% by Public Power Corporation S.A.
Public interventions in
companies that carry out economic activities can be considered free of
state aid within the meaning of the EU rules when they are made on terms
that a private player operating under market conditions would have
accepted (the so-called "market economy investor principle" – MEIP). If
the MEIP is not respected, the public intervention constitutes state aid
within the meaning of the EU rules (Article 107 of the Treaty on the
Functioning of the European Union – TFEU), because it gives an economic
advantage to the beneficiary that its competitors do not have. The
Commission then assesses, whether such aid can be found compatible with
the common EU rules that allow certain categories of aid, such as the
2004 Guidelines on state aid for the rescue and restructuring of
companies in difficulty (see MEMO/04/172).
The Commission assesses
potential economic continuity of companies through the sale of their
assets using a set of indicators, such as the scope of the assets sold
(assets and liabilities, maintenance of workforce, bundle of assets),
the sale price, the identity of the buyer(s), the moment of the sale and
the economic logic of the operation........[europa.eu]
27/3/14
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