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Brussels, 17 June 2008

State aid: Commission refers Slovakia to Court of Justice for failure to recover illegal and incompatible aid

The European Commission has decided to refer Slovakia to the European Court of Justice concerning failure to implement the Commission's decision of 7 June 2006 ordering Slovakia to recover SKK 416.5 million (approximately €13 million) of illegal and incompatible state aid granted by the Tax Office Košice to Frucona Košice a.s. (see IP/06/754).

Competition Commissioner Neelie Kroes said: "The Commission will continue to be strict with Member States that fail to implement its state aid decisions. This is crucial to avoid unfair distortions of competition."

In June 2006, the Commission declared a tax debt write-off worth SKK 416.5 million that the Tax Office Košice granted to Frucona, formerly one of the major producers of spirits in Slovakia, incompatible with EC Treaty state aid rules and ordered Slovakia to recover the money from Frucona.

To carry out to the Commission's decision, the Slovak authorities launched a court procedure to force the beneficiary to pay. However, the application for payment has been dismissed by the competent court. The Tax Office appealed against this judgment, but the appeal procedure is still pending and may last some time.

A Commission decision addressed to a Member State is binding on all the institutions of that state, including its courts. This implies that all the Member State's institutions involved in enforcing a decision must take all necessary measures to secure its immediate and effective application. Two years after the Commission's decision, Slovakia has not recovered the illegal and incompatible aid, and the measures so far undertaken have not led to any effective result. Therefore, the Commission has concluded that Slovakia has failed to comply with its decision of 7 June 2006.

This strict approach is in line with the State Aid Action Plan, which is designed to ensure the effectiveness and credibility of state aid control through better enforcement of Commission decisions (see IP/05/680 and MEMO/05/195).

More information on this case will be available under the case number CR 25/2005 in the State Aid Register on the DG Competition website. 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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