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Brussels, 12 March 2009

State aid: Commission approves Luxembourg's temporary guarantee scheme

The European Commission has, under the state aid rules of the EC Treaty, authorised the second in a series of aid measures for businesses adopted by Luxembourg to deal with the current economic crisis. This measure enables the Government to grant aid to businesses until 31 December 2010 in the form of guarantees for investment and working capital credit likely to have a structural impact on the national or regional economy.

Competition Commissioner Neelie Kroes said: "The measure would give a shot in the arm to businesses affected by the current economic situation without leading to undue distortions of competition. The Commission was able to come to a decision very quickly because of the good cooperation shown by the Luxembourg authorities."

The scheme meets the conditions imposed by the temporary framework adopted by the Commission on 17 December 2008 giving Member States additional possibilities for providing businesses with improved access to financing during the economic and financial crisis (see IP/08/1993 and MEMO/08/795). It is therefore compatible with Article 87(3)(b) of the EC Treaty, which permits aid intended to remedy a serious disturbance in the economy of a Member State.

The scheme is based on the provisions of the temporary framework that deal with aid in the form of guarantees. The reduction in the guarantee premium will apply for a maximum of two years following the granting of the guarantees authorised before 31 December 2010. If the duration of the underlying loan exceeds two years, the safe-harbour premiums defined in Annex A to the temporary framework can be applied for an additional maximum period of eight years. No further reduction can be applied to these guarantee premiums. The guarantees granted under this aid scheme will last for ten years at most. Businesses which were in difficulty before 1 July 2008 are not eligible.

This scheme is the second measure authorised for Luxembourg under the new temporary framework for state aid (see IP/09/334).

The decision will be made available under case number N 128/2009 in the State Aid Register on the DG Competition website once all the 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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