Brussels, 27 October 2010
State aid: Commission opens in-depth investigation into Portuguese short-term trade insurance scheme
The European Commission has opened a formal investigation under EU state aid rules into an export-credit and domestic trade insurance scheme put in place by Portugal in the context of the current financial crisis. The Commission has doubts whether the scheme is in line with its Temporary Framework for State aid to the economy during the crisis (see IP/08/1993 and MEMO/08/795). In particular, the Commission needs to verify whether the pricing of the scheme which offers cover for export-credit and domestic transactions at below market prices is justified. The opening of the in-depth inquiry gives interested third parties an opportunity to comment on the measure. It does not prejudge the outcome of the investigation.
Joaquín Almunia, Commission Vice-president in charge of competition policy said: "The Temporary Framework allows Member States to provide companies with export credit insurance when this is not available on the private market. The Commission however needs to verify whether the prices charged by the State are adequate."
In January 2009 Portugal put in place an insurance scheme covering export-credit and domestic trade transactions, offering top-up cover to companies already partially insured by a private insurer. The additional credit limit offered by the State represents up to 100% of the amount already covered by a private insurer. The price charged by the State for the additional cover is fixed at 60% of the rate charged by the private insurer. The measure was notified to the Commission as an export-credit insurance scheme under the Temporary Framework.
Portugal claimed that the export-credit and domestic trade insurance measures do not constitute state aid, insofar as no selective economic advantage has resulted from its application. However, only companies that dispose of a credit limit with a private insurer are eligible for the advantageous public cover. At this stage, the Commission considers that the measure may confer a selective advantage to some exporters and trading companies and therefore constitutes state aid. Such aid can be compatible with the internal market, if it complies with the requirements of the Temporary Framework and is necessary to help remedying a serious disturbance in Portugal's economy.
Under the scheme, state cover is provided at below market prices. The Commission has doubts whether such pricing is necessary to address a possible unavailability on the private market, or whether a less distortive pricing would be sufficient to overcome the market failure.
In the case of domestic trade insurance, it should be noted that this is not covered by the Temporary Framework. The Commission will therefore examine whether the domestic trade insurance provided by the State is necessary to help remedying a serious disturbance in Portugal's economy.
The non-confidential version of the decision will be made available under the case number C28/2010 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 .