EU Takes Belgium, Italy to Task for State Support of Steelmakers
01/21/2016 - The European Commission has ordered Belgium to recover EUR211 million in aid it granted to steel companies in the Duferco group, saying the assistance distorted competition and violated EU state aid rules.
The EU also has launched an investigation into financial support that Italy has granted the Ilva group, the commission announced.
“EU countries and the commission have put in place strict safeguards against state aid to rescue and restructure steel companies in difficulty. This avoids harmful subsidy races between EU countries and that uncontrolled state aid in one EU country can unfairly put at risk thousands of jobs across the EU,” said Margrethe Vestager, European Commissioner for Competition, in a statement explaining the actions.
According to the commission, Belgium injected funding into Duferco between 2006 and 2011, artificially boosting the companies' revenues and postponing capacity adjustments in the steel industry in the country’s Wallonia region.
“Despite the illegal state aid to Duferco, the company has now withdrawn almost all business activities from Belgium. The case shows that state aid to artificially keep steel manufacturers afloat that are not viable seriously distorts competition and only delays their exit from the market at the cost of taxpayers," Vestager said.
In Italy, the commission said it will investigate whether assistance granted to Ilva violates state aid rules.
The support, which could add up to EUR2 billion, includes state guarantees on loans and adoption of a law putting loans granted to Ilva at the head of the line of creditors, including public entities, in the event it went bankrupt.
The Ilva works is the EU's largest steelmaking facility, and, running at full capacity, it alone could produce more than all of the steelmakers in Bulgaria, Greece, Hungary, Croatia, Slovenia, Romania and Luxembourg did in 2015, the commission said.
The commission said it has received numerous complaints over measures designed to keep Ilva afloat, potentially leading to a significant distortion of competition. Italy, however, denies the charge.
“Italy will continue to cooperate with the European Commission to demonstrate that it acted correctly on Ilva,” said Italy’s Industry Minister Federica Guidi in a statement, reported The Wall Street Journal.
Italy has put Ilva’s facilities up for sale, and offers from potential buyers are due in February.
“EU countries and the commission have put in place strict safeguards against state aid to rescue and restructure steel companies in difficulty. This avoids harmful subsidy races between EU countries and that uncontrolled state aid in one EU country can unfairly put at risk thousands of jobs across the EU,” said Margrethe Vestager, European Commissioner for Competition, in a statement explaining the actions.
According to the commission, Belgium injected funding into Duferco between 2006 and 2011, artificially boosting the companies' revenues and postponing capacity adjustments in the steel industry in the country’s Wallonia region.
“Despite the illegal state aid to Duferco, the company has now withdrawn almost all business activities from Belgium. The case shows that state aid to artificially keep steel manufacturers afloat that are not viable seriously distorts competition and only delays their exit from the market at the cost of taxpayers," Vestager said.
In Italy, the commission said it will investigate whether assistance granted to Ilva violates state aid rules.
The support, which could add up to EUR2 billion, includes state guarantees on loans and adoption of a law putting loans granted to Ilva at the head of the line of creditors, including public entities, in the event it went bankrupt.
The Ilva works is the EU's largest steelmaking facility, and, running at full capacity, it alone could produce more than all of the steelmakers in Bulgaria, Greece, Hungary, Croatia, Slovenia, Romania and Luxembourg did in 2015, the commission said.
The commission said it has received numerous complaints over measures designed to keep Ilva afloat, potentially leading to a significant distortion of competition. Italy, however, denies the charge.
“Italy will continue to cooperate with the European Commission to demonstrate that it acted correctly on Ilva,” said Italy’s Industry Minister Federica Guidi in a statement, reported The Wall Street Journal.
Italy has put Ilva’s facilities up for sale, and offers from potential buyers are due in February.
