Brussels, 27/09/2007 (Agence Europe) - On 25 September, the European Commission opened a formal investigation into possible aid awarded in the privatisation of tractor producer Tractorul and its sale to Flavus Investments SRL in July 2007. The Commission also required Romania to suspend the granting of any unlawful aid until a decision on the compatibility of the aid is taken.
Flavus Investments SRL won the tender for the purchase of the producer of tractors and other agricultural devices, Tractorul. Because of its large losses and high debts, the company, based in Braºov, Romania, went into voluntary liquidation under the authority of the Romanian privatisation agency AVAS. The Head of AVAS, Teodor Atanasiu, explained that only voluntary liquidation allowed the sale of shares to go ahead without the purchaser having to take on the debts of the company, which were four times greater than the value of the shares. The Commission is concerned that specific conditions were attached to the tender, in particular, the successful bidder had to maintain the current activity for 10 years and re-hire former Tractorul employees. The low selling price of the company could constitute a financial contribution from the state (since it did not receive the full market value), which infringes European state aid rules. State aid cannot be used to ensure the viability of a company or to affect its value. Some shareholders have also expressed concern that neither the value of the brand nor that of the company's intellectual property were properly evaluated.
The Commission investigation will determine whether or not the actions of the Romanian state were in line with Community law. The Romanian authorities have said they will read the Commission communication carefully before deciding on how to proceed. The opening of an investigation gives interested parties the possibility to comment on the measures under examination. It does not prejudge the outcome of the procedure. (cd)