State aid: France - Commission takes final negative decision on €2 million aid for restructuring of Euromoteurs - Main contents

Following an in-depth examination launched in January 2005, the European Commission has decided that the restructuring aid of around €2 million, which France intended to grant to Euromoteurs, is incompatible with the Single Market.

Competition Commissioner Neelie Kroes i commented: "Using State subsidies to keep alive an ailing firm can harm more efficient market players and thus be detrimental to the competitiveness of the European industry as a whole. In line with the State Aid Action Plan's call for "less and better targeted state aid", the Commission can approve restructuring aid only when it is ensured that the aid will succeed in restoring the long term viability of the beneficiary."

Restructuring aid is one of the most distortive types of aid and can therefore be granted only subject to very strict conditions. In particular, the aid must be limited to the minimum necessary to attain its aim, avoid the creation of undue distortions of competition and allow the company to restore its long term viability.

Comments by France following the opening of the formal investigation procedure failed to allay the Commission's doubts in particular about this last point.

Moreover, the investigation revealed that Euromoteurs had been granted public subsidies under a scheme which the Commission had declared incompatible with EC Treaty state aid rules. So far, the company has not repaid the illegal and incompatible aid received. In line with Court jurisprudence, when assessing the present case, the Commission took into account the cumulative effect of the new aid and of the incompatible aid which had not yet been reimbursed. The Commission found that, to prevent an undue distortion of competition, the illegal aid would have to be recovered from the company before any restructuring aid could be granted. However, such repayment was not foreseen in the business plan linked to the restructuring aid. This further reinforced the Commission's position that the viability of Euromoteurs would not be restored by the implementation of the notified aid measure.

The Commission thus concluded that the criteria of the Community Guidelines on rescuing and restructuring firms in difficulty were not fulfilled and that the notified aid is therefore incompatible with the Single Market.