Brussels, 12/03/2009 (Agence Europe) - On Tuesday 10 March, the European Commission found that the non-enforcement of several debt rescheduling agreements in favour of the Spanish synthetic fibres producer SNIACE between 1993 and 1996 involve state aid and is incompatible with Community law because it merely relieves SNIACE from ordinary business charges that its competitors had to pay, without furthering any public interest goal. The Commission emphasised that such aid “confers an unfair competitive advantage on the beneficiary” and has therefore ordered Spain to recover aid amounting to more than €22.6 million, plus interest, from SNIACE.
Following a complaint, the Commission started an investigation into a number of measures in favour of SNIACE including two debt rescheduling agreements with the Spanish Wage Fund Guarantee (FOGASA) in 1993 and 1995, and a debt rescheduling with the General Treasury of Social Security (TGSS). In 2000, the Commission found the measures in favour of SNIACE not to constitute state aid. By its judgement of 21 October 2004, the Court of First Instance (CFI) annulled the Commission's 2000 decision (case T-36/99); this judgement was confirmed by the European Court of Justice (ECJ) on 22 November 2007 (case C-525/04). Therefore, the Commission had to take a new decision.
Under EU state aid rules, debt deferrals by public authorities in companies carrying out economic activities can be considered free of aid, if they are made on terms that a private creditor operating under market conditions would have accepted. Otherwise they merely relieve a company from ordinary charges, that its competitors have to pay, thereby conferring on it an unfair competitive advantage.
The Commission initially considered that the 1993 agreement between FOGASA and SNIACE amounting to ESP 1,363 million (€7 million) did not constitute state aid because the agreement aimed at recovering a maximum of debt from SNIACE and would have been acceptable to a private creditor. However, the Commission subsequently found that the agreement had not been fully implemented as FOGASA did not enforce the payment of the debt. The parts of debt that SNIACE had not paid back therefore constitute incompatible state aid and have to be recovered, plus interest.
As regards the 1995 agreement between FOGASA and SNIACE amounting to ESP 301 million (€1.5 million) and the 1996 agreement between TGSS and SNIACE amounting to ESP 4,125 million (€21.1 million), the Commission found that FOGASA and TGSS did not behave as private creditors and that the agreements therefore constituted incompatible state aid.
Therefore, the Commission concluded that the full amounts covered by the 1995 and 1996 agreements (i.e. a total of €22.6 million) constitute incompatible state aid and have to be recovered by the Spanish authorities, plus interest, from SNIACE.