Brussels, 31 July 2014
State aid: Commission concludes that Belgian crystal producer Val Saint-Lambert received incompatible State aid; authorises the sale of some of its assets
The European Commission has concluded that certain aid measures that the Walloon Region granted to Val Saint-Lambert SA (VSL) have conferred on the company an undue economic advantage over its competitors, in breach of EU State aid rules. VSL must now pay back the amount of the aid plus interest, to reduce the distortions of competition created by this granting of aid incompatible with the EU Single Market.
From contacts with the Belgian authorities, the Commission learned of a number of measures by SOGEPA (a public holding company wholly owned by the Walloon Region) in favour of VSL: a loan guarantee, the assignment and exclusive use of the "Val Saint‑Lambert" brand, a loan, an increase in capital, the sale of VSL real estate to a public body and funding of works to clean up pollution. Except for the rescue aid consisting of a loan of EUR 1 million, none of the other aid measures were notified to the Commission for prior scrutiny under the State aid rules.
The Commission opened an in-depth investigation in February 2013. The investigation revealed that the sale of VSL real estate did not involve State aid because it was sold on market terms. However, all the other measures were concluded on terms that no private investor would have accepted. They therefore conferred an undue economic advantage on VSL over competitors that had to operate without this public support. Consequently, the measures constitute State aid within the meaning of the EU rules. The Commission then examined whether the aid in question could be considered compatible with those rules. However, the examination showed that the aid distorted competition without serving an objective of common interest. Consequently, VSL must now pay back the incompatible aid it received in order to reduce the distortions of competition the aid created within the EU Single Market.
On 14 October 2013, the Tribunal de Commerce de Liège (Commercial Court of Liege) declared VSL bankrupt again (following the bankruptcies of 2002 and 2008). Following this bankruptcy, some of VSL's assets are currently being sold. In a separate decision also adopted today, the Commission has concluded that the repayment obligation would not be transferred to the buyer of those assets owing to the absence of economic continuity with VSL in view of the limited extent of the assets purchased.
VSL, which is based in Seraing in Wallonia, produced high-end crystal items. Its activities covered the two stages of crystal manufacturing: the hot phase and the cold phase (cutting and polishing).
Public interventions in companies engaged in an economic activity may be deemed not to constitute State aid within the meaning of the EU rules when they are made on terms that a private player operating under market conditions would have accepted (the so‑called 'market economy investor principle' – MEIP). If the MEIP is not respected, such public intervention constitutes State aid within the meaning of the EU rules (Article 107 of the Treaty on the Functioning of the European Union – TFEU) because it secures an economic advantage for the beneficiary that its competitors do not receive. The Commission then assesses whether such aid can be considered compatible with the common EU rules that authorise certain categories of aid, such as the 2004 Guidelines on State aid for rescuing and restructuring firms in difficulty (see MEMO/04/172).
The Commission assesses the possible economic continuity between the recipient of incompatible aid and its buyer through an asset sale. It does this using a set of indicators, such as the extent of the assets sold (assets and liabilities, retention of the workforce, portfolio of assets), the sale price, the identity of the buyer, the timing of the sale and the economic logic of the transaction.
The non-confidential version of the decisions will be made available under the case numbers SA.34791 (incompatible aid) and SA.38810 (purchase of certain assets following the bankruptcy of VSL) in the State Aid Register on the 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'.