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Brussels, 29th April 2009

State aid: Commission opens in-depth inquiry into rescue measures for Hungarian fertiliser producer Péti Nitrogénművek

The European Commission has opened an in-depth investigation to establish whether measures in favour of Hungarian fertiliser producer Péti Nitrogénművek infringe EC Treaty state aid rules. The measures include loans granted by the Hungarian Development Bank amounting to approximately €85 million, covered by state guarantees. Hungary did not notify these measures and the Commission has concerns as regards their compatibility with EU state aid rules. The in-depth investigation will allow interested parties to comment on the measure under scrutiny. It does not prejudge the Commission’s final decision.

Competition Commissioner Neelie Kroes said: “Governments are entitled to help firms in difficulties but on condition that they respect the EU's state aid rules. These rules ensure that the help does in fact benefit the company concerned and does not without unduly distorting competition. Such measures have to be notified to the Commission and approved before they are implemented."

In December 2008 the Commission became aware of potential aid to the artificial manure producer Péti Nitrogénművek Zrt., after several press articles about the Hungarian Government's commitment to grant state guarantees to the company. According to media reports, Péti Nitrogénművek stopped production in October 2008 and the measures were intended to support the relaunch of the company's operations.

The guarantees covered an investment loan of €52 million and debt amounting to HUF 10 billion, both provided by the 100% state-owned Hungarian Development Bank. Hungary failed to notify these measures to the Commission.

The 2004 EU guidelines on rescue and restructuring aid (see IP/04/856) allow for rescue aid to firms in difficulties under strict conditions. During the current crisis, aid may also be granted to companies affected by the credit crunch under the Commission's Temporary Framework to tackle the real economy effects of the crisis (see IP/08/1993). However, any measure put in place under these rules is subject to notification and the Commission's formal approval.

In its preliminary assessment of the measures in favour of Péti Nitrogénművek, the Commission found that they may constitute state aid. Moreover, the Commission has serious doubts as to whether they are compatible with the Common Market. The opening of the formal investigation procedure will enable the Commission to assess the measure in depth.

The non-confidential version of the decision will be made available under the case number 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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