Brussels, 4 April 2008
Competition Commissioner Neelie Kroes said: “The Commission cannot tolerate aid that gives one company an unfair advantage over its competitors, even if the subsidies come from local authorities. Otherwise companies can be driven out of business purely because they do not benefit from similar subsidies”.
Arbel Fauvet Rail is a manufacturer of railway wagons for industrial use established in Douai in Northern France. In 2005, the company was granted two loans totalling €2 million from the Région Nord-Pas-de-Calais and the Communauté d'agglomération du Douaisis.
Under EU state aid rules, interventions by public authorities in companies carrying out economic activities can be considered compatible with the Single Market, if they are undertaken on terms that a private entity operating under market conditions would have accepted.
However, the Commission's investigation found that the two loans in question were granted at the interest rate then in force for financially sound undertakings. Arbel Fauvet Rail was in economic difficulties at the time and so would have been charged a higher rate of interest on the private credit market.
The reduced interest applied by the local authorities gives rise to a subsidy which conferred an unfair advantage on Arbel Fauvet Rail over its competitors. The advantage equals the difference between the interest due at the reduced rate and the interest that the company would have been required to pay at market rates. The exact amount will have to be determined by the French authorities which are required to recover the aid from Arbel Fauvet Rail.
The non-confidential version of the decision will be made available under the case number C 38/2007 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.