Brussels, 23 January 2013
State aid: Commission opens in-depth inquiry into public support in favour of Portuguese shipyard ENVC
The European Commission has opened an in-depth investigation to verify whether numerous public support measures granted by Portugal in favour of the shipyard "Estaleiros Navais de Viana do Castelo S.A." (ENVC) are in line with EU state aid rules. At this stage, the Commission has doubts that these measures were carried out on terms that a private operator would have accepted under market conditions. The opening of an in-depth investigation gives interested third parties an opportunity to comment on the measures under assessment. It does not prejudge the outcome of the investigation.
On the basis of the Commission's preliminary assessment, it appears that ENVC may have benefited from several aid measures in the past worth more than €180 million. These measures include interest-bearing loans to cover operating costs provided in 2012, a capital increase carried out in 2006 and several loans granted between 2006 and 2011 to cover operating costs. In addition, it appears that EMPORDEF, the state-owned holding which fully owns ENVC, has issued numerous comfort letters and guarantees in support of financing agreements between ENVC and commercial banks.
The Commission will now investigate whether these measures constitute state aid in the meaning of EU rules. Public support measures constitute state aid if they were not made on terms that a private operator would have accepted under market conditions. If the measures involved state aid, the Commission would then examine whether they could be found compatible with EU state aid rules, in particular with the rules applying to the shipbuilding industry and to companies in difficulty.
In addition, the Commission has learnt that Portugal plans to grant new measures to ENVC in the context of its privatisation. The exact nature and amount of these measures is not clear, since they will depend on the actual content of the binding offers and the price conditions. Although these measures are not subject to the present decision, the Commission considers it likely that they could contain state aid if implemented. Portugal should therefore notify these measures to the Commission before implementing them.
ENVC is the largest Portuguese shipyard. It is fully owned by the State through EMPORDEF, a 100% State-owned holding. ENVC has been heavily loss-making since at least 2000, and has had negative equity since at least 2009. ENVC is currently in the process of being privatised through the direct sale of up to 95% of its share capital. It appears that Portugal has received two binding offers for the shipyard. Although the initial intention of the Portuguese authorities was to decide on the privatisation before the end of 2012, it appears that no final decision has been yet taken yet.
Public interventions in companies that carry out economic activities can be considered free of state aid within the meaning of EU rules when they are made on terms that a private operator would have accepted under market conditions (the market economy investor principle – MEIP). If the MEIP is not respected, the public intervention constitutes state aid in the meaning of the EU rules (Article 107 of the Treaty on the Functioning of the European Union – TFEU), because it procures an economic advantage to the beneficiary that its competitors do not have. The Commission then proceeds to assess, whether such aid can be found compatible with the common EU rules that allow certain categories of aid.
The non-confidential version of the decision will be made available under the case number SA.35546 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.