Brussels, 25/01/2007 (Agence Europe) - The European Commission has decided that a so-called “silent participation” and two guarantees, granted by a public investment company and the German Land of Saxony to companies of the Biria group, a producer of bicycles, are illegal under EC Treaty state aid rules (Article 87) because they distort competition within the EU Single Market.
A “silent participation” is comparable to a loan. The investor does not obtain any shares in the company but receives remuneration. Granting aid can be authorised under Community law but only when a sound restructuring plan exists, and when measures are contained for limiting any distortion to competition. Germany argues that at the time the guarantees were granted, the financial situation of the companies was sound. However, the Commission found that the subsidiaries in question were in fact in financial difficulties at the time, and private banks were partly withdrawing from the financing of the companies. Obligatory measures for restricting distortion to competition were also absent.
The €5.2 million in total aid now has to be recovered from beneficiaries by the German government. The Commission decided not to extend the recovery to the Lone Star group that took over the majority of the assets from the Biria group in November 2005. The money must therefore be recovered from the Biria group. (cd)