In November 2014 the Commission received a complaint from a competitor alleging that Ducatt NV had been granted illegal financial support by two publicly-owned shareholders, Limburgse Reconversie Maatschappij(LRM) and Participatie Maatschappij Vlaanderen NV (PMV).
Between 2012 and 2014 LRM and PMV invested in Ducatt, which has been loss making since its creation in 2010, and provided numerous capital increases and shareholder loans, parts of which were later converted into equity. In 2015 a recapitalisation led to the exit of all existing shareholders except LRM and to the entry of new shareholders. This was accompanied with the restructuring of existing shareholder loans, which were partially written off. Together, these measures amount to over €40 million in financial support by LRM and PMV.
State interventions in companies can be considered free of state aid within the meaning of the EU rules when they are carried out at conditions that a private investor operating at market conditions would have accepted.
The Commission takes the preliminary view that no private investor would have accepted to act in the same way as LRM and PMV, who not only invested heavily in a company, which has been loss making over five years, but also accepted to convert some loans into equity and to write off others.
EU state aid rules only allow public support to companies in financial difficulty if the aid complies with the criteria set out in the Commission's 2014 Rescue and Restructuring Guidelines. This requires in particular that the company is subject to a sound restructuring plan, which would allow it to return to viability in the long-term without continued state support and without unduly distorting competition in the Single Market.
The Commission will now investigate further to find out whether its initial concerns are confirmed or not. The opening of an in-depth investigation gives interested parties an opportunity to comment on the measures under assessment. It does not prejudge the outcome of the investigation.
Ducatt NV is a Belgian manufacturer of glass for solar panels located in Limburg. It employs around 110 people.
Under EU state aid rules, public interventions in favour of companies can be considered free of state aid when they are made on terms that a private operator would have accepted under market conditions (the market economy investor principle - MEIP). If this principle is not respected, the public interventions involve state aid within the meaning of Article 107 of the Treaty on the Functioning of the European Union, because they confer an economic advantage on the beneficiary that its competitors do not have.
Under the 2014 EU Rescue and Restructuring Guidelines, companies in difficulty may receive state aid under certain strict conditions. Such aid has a high potential of distorting competition in the EU Single Market, as it artificially keeps companies alive that would have otherwise exited the market. The Guidelines require, in particular that beneficiaries work out a sound restructuring plan that enables them to become viable in the long-term on the basis of realistic assumptions. This is to avoid situations where an inefficient company keeps asking for public support instead of changing its business model and competing on its merits. Rescue and restructuring aid may be granted only once over a 10-year period ('one time, last time' principle).
The non-confidential version of the decision will be made available under the case number SA.39990 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.