Brussels, 2 October 2013
State aid: Commission finds expropriation compensation for Dutch alcohol producer Nedalco involves no state aid
The European Commission has concluded that an expropriation compensation granted by the Netherlands to the alcohol producer Nedalco for relocating its site in Bergen op Zoom, in the Dutch region of Noord-Brabant, was in line with EU state aid rules. The Commission found that the compensation did not give any selective advantage to the company and thus did not involve state aid in the meaning of the EU rules.
In 2004, the municipality of Bergen op Zoom and Nedalco concluded an agreement regarding compensation for the relocation of Nedalco's production site that the municipality wanted to use for a real estate project. The amount of compensation had been estimated by independent experts on the basis of the Dutch Expropriation Act. Due to the Municipality's inability to pay, Nedalco agreed on a substantially lower amount. When final payment was due in 2011, the Netherlands took the view that Nedalco was not entitled to full compensation but only to the market value of the site and notified the agreement to the Commission claiming it involved illegal state aid.
As confirmed by established case-law, the Commission considers that in principle there is no undue economic advantage where compensation is paid as a result of state intervention, e.g. in cases of expropriation. In this case the Commission found that Nedalco had not sold its site voluntarily but agreed with the municipality on a purchase price which included compensation for damages, in accordance with the Dutch Expropriation Act which invites parties concerned to find an amicable agreement prior to launching the formal expropriation.
The Commission further considers that compensation going beyond the actual market value of the site may be granted in certain circumstances, without giving the beneficiary an undue economic advantage. In this case the Commission found that Nedalco was entitled to compensation not only for the mere market value of the land and buildings, but also for the further damages it had suffered, in particular the cost of a possible relocation, which at the time of the 2004 agreement was a viable option. The fact that in 2010 Nedalco moved its production to other factories, which had started production in 2005-2007, does not change this conclusion, since the existence of an advantage must be established on the basis of the facts and circumstances prevalent at the time of granting.
The Dutch municipality of Bergen op Zoom and Nedalco agreed in 2004 on compensation for relocating its production site that the municipality wished to obtain for a large scale real-estate project. To find an amicable agreement prior to a possible expropriation, to which the Dutch expropriation law invites parties, independent experts estimated the compensation due to Nedalco on the basis of the Dutch Expropriation Act. The latter is based on the principle of full compensation for all damages directly or necessarily suffered as a result of the loss of property, such as land, buildings and installations as well as financial damages including relocation of the business, unless the business is not viable (e.g. if the company is on the path of insolvency).
When the municipality was not able to pay the amount calculated by the independent experts in the final agreement, the parties concluded on a final substantial lower amount of compensation and furthermore agreed that Nedalco could use the compensation at its discretion i.e. without an obligation to relocate in or outside Bergen op Zoom.
Nedalco ended production in 2010 without relocation while increasing its production elsewhere in the Netherlands and in the UK. When the final payment was due in 2011, the municipality took the view that Nedalco would not be entitled to receive full compensation arguing that illegal State aid would be involved. In that regard the Dutch authorities argued for a lower compensation solely based on the market value of the site, which was estimated ex post.
A national court proceeding, started by Nedalco, was suspended to await the outcome of the Commission's decision on the notification.
The non-confidential version of the decision will be published in the Official Journal of the EU and made available under the case number SA.32225 in the State Aid Register on the Commission's competition website once any confidential issues have been resolved. New publications of State aid decisions in the internet and in the Official Journal are listed in the State Aid Weekly e-News.