Brussels, 8 March 2011
State aid: The Commission concludes that the Aero 2008 guarantee granted by France to aeronautic suppliers does not constitute state aid.
The European Commission has concluded that a state guarantee, put in place by France to cover the exchange rate risk for aeronautic suppliers (Aero 2008) and administered by Coface, is in line with market principles and does not, therefore, constitute state aid within the meaning of European Union law (Article 107(1) TFEU).
“On the basis of our in-depth analysis of the market and France’s subsequent detailed clarifications, we have concluded that the measure concerned does not give any advantages to aeronautic suppliers”, said Joaquín Almunia, Commission Vice-President in charge of Competition Policy.
The “Aero 2008” guarantee enables aeronautic suppliers at Tier 2 and below, which normally conclude supply contracts in US dollars, to benefit from a state-guaranteed US dollar forward rate for a specified amount of turnover and for a maximum period of five years. (The measure does not, therefore, relate to Tier 1 and Super Tier 1 suppliers, which are partners sharing the risks with the aircraft manufacturers.) The guarantee therefore enables the undertakings concerned to cover themselves against the risks of fluctuation in the dollar-euro exchange rate for supplies of up to EUR 500 million.
The measure is administered by Coface, which is one of the leading French credit insurance companies and operates on behalf of the French authorities. So far, the amounts covered represent approximately EUR 10 million, and only four undertakings have taken out the guarantee.
Article 107(1) of the Treaty on the Functioning of the European Union sets out four criteria for classifying a measure as state aid: it must be granted through state resources, confer a selective advantage on the recipients, distort or threaten to distort competition and be liable to affect trade between Member States.
In June 2009, the Commission began a thorough investigation in order to check that the premiums paid by the recipients to Coface did not give them an economic advantage. More specifically, the Commission had doubts as to whether the premiums paid really did cover Coface’s costs in administering the guarantee, the supplier’s default risk, the credit risk involved in the staggered payment of premiums, and a profit margin.
Under EU state aid rules, state interventions in undertakings conducting economic activities can be considered to be free of aid if they are made on terms that would be acceptable to a private agent operating under market conditions (the "market economy investor principle").
On the basis of the information communicated by France once the procedure had been initiated, the Commission verified that the premium charged by Coface covered not only the market value of the guarantee (including a profit margin), but also the insured's default risk and the administrative costs. With regard to the staggering of the premium, the French authorities confirmed that any possible difference between the rates of interest applicable and the reference rates specified by the Commission (http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2008:014:0006:0009:FR:PDF) will always be lower than the threshold below which a subsidy is presumed not to constitute aid because it has no impact on competition (de minimis threshold).
The Commission has therefore concluded that the Aero 2008 guarantee can be considered to operate in line with the market economy investor principle. The suppliers that took out the guarantee have not, therefore, benefited from any economic advantage, and the measure does not constitute state aid under Article 107(1) of the Treaty.
The non-confidential version of the decision will be made available under case number C 18/2010 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".