On Monday 20 November, the European Commission approved some of the Greek support measures for Hellenic Defence Systems (HDS) in light of EU state aid rules, concluding that these measures aim to protect vital security interests in Greece.
HDS is a Greek company that is 99.8% owned by the Greek State and produces both defence and civil products.
Between 2004 and 2011, Greece adopted several support measures in favour of HDS, such as a direct subsidy of €10 million, a capital increase of €158 million and state guarantees for loans at a level of €942 million.
On 6 March 2013, the Commission opened an in-depth investigation (see EUROPE 10800) to assess these measures with regard to EU law. In particular, the institution worked on the basis of article 346 of the Treaty on the Functioning of the European Union (TFEU), which stipulates that the measures necessary for the protection of the vital security interests of a member state are excluded from the scope of application of the rules on state aid. However, this is not the case for the measures in support of the civil activities of companies active in the defence sector.
The Commission found that the majority of the measures aimed to support HDS's military production and concerned only products required to protect Greece's vital security interests. It therefore concluded that these measures were exempt from the assessment under interview state aid rules.
On the other hand, the institution considers that some of the measures, worth up to around €55 million, supported HDS's civil activities and should therefore be evaluated in light of the European guidelines of 2004 on state aid for the bailout and restructuring of companies in difficulty. The Commission noted that Greece was required to present a credible restructuring plan on returning HDS to long-term viability, and to propose measures to limit competition distortions. In the absence of such a plan, the institution concluded that the support measures constituted unlawful State aid and ordered the Greek public authorities to recover these amounts. (Original version in French by Lucas Tripoteau)