Brussels, 7th December 2005
The European Commission has decided under the EU state aid rules that for the period up to 30.12.2003, part of the total exemptions from excise duty on mineral oils used as fuel for alumina production granted by France, Ireland and Italy constitutes illegal operating aid liable to distort competition within the EU’s Single Market. The aid has been given without prior Commission approval and would normally therefore be fully repayable. However, given the specificities of the case and in particular the fact that these exemptions had been authorised under EU rules on excise duties by Decisions of the EU’s Council of Ministers based on Commission proposals, the Commission considers that until publication of its decision to launch a formal investigation procedure (see IP/01/1520) the beneficiaries might had grounds to believe that the measures in question did not involve incompatible state aid. Consequently, the Commission has ordered the beneficiaries to repay only that part of the incompatible aid received from 03.02.2002 onwards. The investigation of the exemptions as from 1st January 2004 remains open.
“The Commission’s action will remedy serious distortions of competition by ordering repayment of large tax breaks benefiting selected companies” commented Competition Commissioner Neelie Kroes.
Alumina is a white powder, produced from bauxite ore, used in smelters to produce aluminium.
Article 6 of Council Directive 92/82/EEC of 19.10.1992 on the approximation of the rates of excise duties on mineral oils established a minimum rate of excise duty on heavy oil.Successive Council Decisions authorised France, Ireland and Italy to totally exempt from excise duty mineral oils used as fuel for alumina production in derogation from Directive 92/82. The most recent such Council Decision (2001/224/EC), which prolonged the exemptions until 31 December 2006, made it clear that the authorisation given by the Council in the context of the excise duty Directives was without prejudice to any procedure under EC Treaty state aid rules (Articles 87 and 88). There is only one producer of alumina in each of the Member States concerned.
Given the significant changes to the Community framework for the taxation of energy products and electricity introduced by Council Directive 2003/96/EC of 27.10.2003, which repealed Council Directive 92/82/EEC as from 31.12.2003, the Commission has limited its present decision to the period up to this date. In particular, Directive 2003/96 specifies that there is no longer a minimum level of excise duty on energy products used for electrolytic and metallurgical processes, including alumina production. The Commission will seek further information from the respective Member States before reaching a decision on possible aid for the period since 2004.
The Commission found that for the period under examination, the measures conferred an advantage to the beneficiary companies (Aughinish in Ireland, Eurallumina in Italy and Alcan in France), were financed through state resources and were selective since they only applied to a given production and in given regions without being justified by the nature and the logic of the tax systems. They also distorted competition and trade within the Single Market was affected (there is also alumina production in Greece, Spain, Hungary and Germany). The measures were not justified on regional development grounds because they were not aimed at tackling handicaps of a regional character. The Commission concluded that, for the period under examination, the measures constituted state aid and that the exemptions, up to the level of €13 per 1000 kg which was the Community minimum rate set by Directive 92/82/EC, constituted incompatible aid.