Brussels, 05/11/2013 (Agence Europe) - On Tuesday 5 November, the European Commission opened a consultation of interested parties that will run until 31 December 2013 on the Commission's new guidelines on state aid for struggling companies (not including banks) before the guidelines are issued in the first quarter of 2014.
The new guidelines will replace those that came into force in 2004 and have twice been extended (in 2009 and 2012). The Commission says the new guidelines aim to strike a better balance between the desire, on the one hand, to keep companies alive artificially with public funding that creates an uneven playing field and, on the other, to safeguard skills and jobs in companies that can become viable if they receive public funding and are restructured. The Commission is keeping the two main criteria from the current guidelines (aid limited to a six-month period, after which time it must be repaid or a restructuring plan must be drawn up that demonstrates the company's viability and makes a fair contribution to the company's and its lenders' costs; measures to limit the distortions of competition), but introducing new aspects to facilitate restructuring aid and ensure better targeting of it.
The new aspects include: - a new concept of temporary restructuring support, designed to simplify the granting of state funding for restructuring while reducing distortions of competition, by making it easier for member states to employ measures that are less distortive of competition, such as loans and guarantees for up to 12 or 18 months (yet to be decided) ; such temporary support will only be available to SMEs; and - better filters to ensure that state aid is targeted at cases where it is really needed ; this includes the need to show that the aid is needed to prevent hardship, for example in areas of high unemployment, and that the granting of restructuring aid will improve the outcome; and - suggestions on how burden sharing can be implemented for non-financial firms ; this concept requires that a company's investors make a fair contribution to the costs of its restructuring and that there is clarity on the identity of contributors (shareholders and historic lenders, along possibly with junior bond-holders if the first two categories do not suffice). The Commission is also inviting stakeholders' views on the definition of “undertakings in difficulty” to make it more objective and precise because only firms that qualify as undertakings in difficulty can receive aid under the rescue and restructuring guidelines. (FG/transl.fl)