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Brussels, 10th December 2008

State aid: Commission opens in-depth inquiry into €11 million sale of Greek Cassandra Mines to Ellinikos Xrysos

The European Commission has opened an in-depth investigation under EC Treaty state aid rules to establish whether the terms of the sale of the Greek state-owned Cassandra Mines to Ellinikos Xrysos for €11 million constitute illegal state aid. In particular, the Commission will examine the sale of the mine and without any open, transparent and unconditional tendering procedure at a price which appears to be below the market value. The opening of an in-depth investigation allows interested parties to comment on the proposed measures. It does not prejudge the outcome of the procedure.

Competition Commissioner Neelie Kroes said: “We have to make sure that no hidden advantage was granted to Ellinikos Xrysos at the expense of Greek taxpayers and that Greece acted like any private vendor would have when selling these public assets.”

In July 2007 the Commission received a complaint alleging that as early as 2003 Greece had granted illegal aid to the mining company Ellinikos Xrysos through the sale of the state-owned Cassandra Mines for €11 million. The Cassandra mines quarry gold and copper.

The Commission has come to the preliminary conclusion that Greece sold the Cassandra mines without an open, transparent and unconditional tender for a price far below its market value. In June 2004, only six months after the transaction, an international minerals industry consultant estimated the market value of the Cassandra Mines assets at €408 million, more than thirty five times the price at which it was sold. In addition, the sale contract involved a tax waiver and a reduction of the applicable legal fees in favour of Ellinikos Xrysos.

Under EU state aid rules, interventions by public authorities in companies carrying out economic activities can be considered free of aid if they are made on terms that a private player operating under market conditions would have accepted (the market economy investor principle). During the formal investigation procedure, the Commission will therefore check whether the state acted as a market economy vendor when selling the Cassandra Mines.

The non-confidential version of the decision will be made available under the case number NN 61/2008 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.

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