Brussels, 24th October 2007
State aid: Commission orders recovery of restructuring aid from Polish seamless tube producer Technologie Buczek
The European Commission has decided under EC Treaty state aid rules that Polish tube producer Technologie Buczek has misused restructuring aid it received in 2003 under special national rules for steel restructuring in Poland. Moreover, Poland has failed to recover public debts from the company, which constitute additional illegal aid. The Commission has ordered Poland to recover a total of €5,35 million of unlawful aid from Technologie Buczek and two of its subsidiaries.
Competition Commissioner Neelie Kroes commented: “The Commission has to ensure that aid in the Polish steel sector is used in accordance with the conditions to which Poland agreed in the Accession Treaty, and that no aid is granted beyond what is authorised.“
Under the national restructuring programme for the Polish steel industry and the special steel rules for Poland, Polish steel producer Technologie Buczek S.A (TB) was authorised to receive about €4 million of state aid. However, the company failed to implement its restructuring plan properly and in 2006 had to file for bankruptcy. Therefore the Commission concluded that the restructuring aid of €0,35 million has been misused and must be recovered.
Moreover, the Commission found that TB had received additional operating aid through the non-enforcement of public debt. Under EU state aid rules, such aid can be considered compatible with the Single Market if it is offered on terms that a private creditor, operating under market conditions, would have accepted. . Despite TB's precarious situation, the Polish authorities continued to defer outstanding debt and thereby allowed a significant rise of the debt up to €5 million. In view of the good securities held by the Polish authorities to enforce the debts and the poor prospects of the company’s performance, a private creditor in this situation would have insisted on the enforcement of the debt.
Two of TBs subsidiaries, Huta Buczek Sp. z o.o. and Buczek Automotive Sp. z o.o., into which the company spun off its main activities before its bankruptcy, benefited from the aid and will have to repay their part). TB made significant capital and asset injections into these subsidiaries which were possible only because the public debt was not enforced.
Restructuring aid in the steel sector is generally prohibited. However, Protocol 8 of the Accession Treaty, on the restructuring of the Polish steel industry, granted Poland a derogation from this rule. On the basis of a national restructuring plan, the Protocol accepts the granting of state aid to eight companies from 1997 to 2003 up to a maximum of about PLN 3.4 billion upon the condition that they would implement a genuine restructuring and would become viable by the end of 2006. In exchange, Poland committed to cut more than 1 million tonnes of production capacity. Protocol 8 constitutes the legal basis for the assessment by the Commission of state aid in the steel sector between 1997 and 2006, including aid granted before Poland's EU accession on 1 May 2004.
The non-confidential version of the decision will be made available under the case number NN 60 / 2007 in the State aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State aid Weekly e-News.