State aid: Commission opens inquiry into aid measures to Chupa Chups in Spain
European Commission - IP/06/85 26/01/2006
Brussels, 26th January 2006
The European Commission has launched an in-depth investigation to establish whether aid measures including a €35 million loan granted by the Catalonian Region in 2003 to Chupa Chups S.A., the Spanish producer of lollipops and other sweets, are compatible with EC Treaty state aid rules. The Commission has doubts as to whether the Catalonian Government has behaved in the same way as a market economy investor - the loan might therefore constitute aid that distorts competition between Member States. The opening of the formal investigation will be published in the EU’s Official Journal, allowing interested parties to comment. The launch of this in-depth inquiry does not prejudge the Commission’s final decision.
Competition Commissioner Neelie Kroes said: “There are rules allowing governments to help firms in difficulties. These rules ensure that the help does in fact benefit the company concerned, and that taxpayers money is put to good use. I am opening an inquiry to establish the facts because I have some doubts that the rules have been complied with in this case.”
Chupa Chups S.A. is the holding company of a family-owned industrial group established in Spain in 1940, with a significant international presence. The main activity of the group is the production and commercialisation of sweets, and notably lollypops (70% of sales), for which Chupa Chups is the main world supplier. Presently the group operates four production centres, located in Russia, Mexico, Sant Esteve de Sesrovires (Barcelona) and Villamayor (Asturias).
In recent years, the group has suffered financial difficulties. A restructuring plan launched in 2002 led to the closure of production plants in Brazil, France and China, and the sale of some secondary brands. In addition, an in-depth financial overhaul took place.
In the context of this restructuring, on 05/09/2003 the ‘Instituto Catalán de Finanzas’ (“ICF” - financial agency of the Catalonian Regional Government) granted the company a loan of €35 million. This loan gave rise to a complaint for alleged state aid submitted to the Commission. Further to the Commission’s enquiries, the Spanish authorities provided information disclosing additional measures in favour of Chupa Chups.