Brussels, 20 July 2010
State aid: Commission opens in-depth investigation into aid to French aeronautic suppliers
The European Commission has opened a formal investigation procedure under EU State aid rules into the French 'Aero 2008' measure, which offers exchange rate risk insurance to companies supplying parts to aircraft manufacturers. The Commission doubts that the insurance is provided on market terms and, if it is not, that it is in line with EU State aid rules. The opening of an in-depth investigation gives interested parties the possibility to submit comments. It does not prejudge the outcome of the investigation. It will allow the Commission to evaluate if the measure distorts competition.
"A strong and competitive aeronautic industry is a key element for a strong and competitive European economy. We need to make sure that the French measure does not give some players an advantage over others to cover their exchange rate risk for long term deliveries" said Joaquín Almunia, Commission Vice President in charge of Competition Policy.
In autumn 2008, France launched a measure which enables aeronautic suppliers to get State supported exchange rate risk insurance. The insurance is given on the account of the State and is administered by Coface, the leading French export credit company. France considers that the insurance is provided on market terms, i.e. it does not contain state aid, and did not notify Aero 2008 to the Commission.
France argues that some aeronautic suppliers have difficulties to find a bank offering longer term exchange rate risk insurance. These suppliers face a currency risk, as their production costs are in euro while aircraft manufacturers normally pay deliveries in US dollar. France has therefore stepped in and offered insurance, administered by Coface, against the payment of an insurance premium.
The Commission doubts that the premiums for the insurance are in line with market prices. Also, there is no evidence that suppliers could not find similar insurances from banks. In any case, the Commission doubts that France limited the measure to suppliers which have shown their difficulties in finding such insurance. Furthermore, the Commission wants to verify that the measure has an incentive effect in order to avoid windfall profits.
Until now, four French aeronautic suppliers have benefited from the exchange rate risk insurance offered. The amount insured is the US dollar/euro exchange rate risk of deliveries totalling around €10 million.
The non-confidential version of the decision will be made available under the case number NN 20/2010 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.