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Neelie Kroes

European Commissioner for Competition Policy

State aid for financing the real economy, merger approvals and Slovak Post

Introductory remarks at press conference
Brussels, 17th December 2008

Ladies and gentlemen,

I have a range of announcements today. The first is about state aid measures to tackle the effects of the credit squeeze on the real economy.

State Aid

The EU’s state aid policy is the right framework for ensuring a consistent and coordinated approach between Member States' policies to counter the financial crisis and to tackle the recession.

Maintaining the integrity of Europe’s Single Market through, amongst other things, the application of the EU’s state aid policy by the Commission and the Member States working in partnership is essential to combat the worst effects of the recession. By working as partners and protecting the Single Market our response to this downturn will be coherent – as it must be if we are to protect:

  • - jobs
  • - stable business conditions and
  • - value for money for consumers

A free for all, with every Member State doing whatever they want, would make the recession worse.

The EU's state aid policy, based on the fundamental principle that any distortion of competition must be in proportion to the objective of the aid, has shown its adaptability and strength in recent months.

The Commission has demonstrated consistently that, when it enjoys full cooperation from Member States, it can act very quickly indeed to authorise aid that will not give rise to undue distortions of competition. Where we do not enjoy such full cooperation from Member States in ensuring that there are no disproportionate distortions of competition, then the Commission has no choice but to pause until such time as we receive the necessary information and commitments. It's a bit annoying when the Commission is accused of being bureaucratic when it’s the Member States that don't deliver!

As regards to helping the real economy to cope with the recession, I would like to underline that Member States are now in a position to give no less than 26 different types of state aid without having to notify individual subsidies to the Commission. This is thanks to the Commission's foresight in introducing substantial changes to the state aid rules over the last couple of years to make it easier for Member States to give horizontal aid to meet objectives linked to improving the competitiveness of Europe's economy such as stimulating research, development and innovation, making risk capital available to SMEs and start-ups, training, regional development and environmental protection.

I therefore very strongly urge Member States to use to the full these opportunities for aid.

Nevertheless, in view of the unprecedented current economic situation, and in particular the difficulties companies in the real economy can experience when trying to overcome financial problems arising from the current credit squeeze, the Commission has today adopted a temporary Framework – applicable until the end of 2010– granting Member States additional ways to deliver finance to both sound and vulnerable enterprises.

We want to ensure that Member States can help business in a coherent and consistent manner with the problem of obtaining finance while making sure that these measures allow Member States to fight the crisis, not each other.

This measure fits into the wider context of the European Economic Recovery Plan announced in October and endorsed by the latest European Council. It was finalised in record time after consultation with Member States, to equip them with adequate additional possibilities to support their national economies during the crisis.

The Framework makes sure that every Member State has the freedom to create made-to-measure solutions for their economy in this crisis, but we are making sure these solutions unfold on a level playing field.

The new Framework pursues three objectives:

  • First, to immediately unblock bank lending and thereby help providing for continuity in companies' access to finance
  • Second, to ensure that aid reaches the recipients in the most rapid and effective way, and
  • Third, to encourage companies to continue investing into a sustainable future, including development of green products.

The specific changes that will assist Member States to meet those objectives include:

  • the possibility to give up to five hundred thousand euros per company to cover for instance investments and/or working capital
  • allowing state guarantees for loans at a reduced premium
  • allowing subsidised loans, notably for the production of green products
  • lifting the amount of risk capital that can be offered to each SME to €2.5 million per year (instead of €1.5 million), and reducing the percentage of this capital that must come from private sources from fifty percent to thirty percent.

These changes are justified given the exceptional economic conditions. But given that these are temporary circumstances, today's measures must also be temporary – and are foreseen only until the end of 2010. Following detailed discussions with a number of national governments I have every confidence that the economic situation will have improved sufficiently by then to allow a return to the previous rules.

The framework adopted today takes effect immediately. I therefore urge Member States to immediately use these new opportunities, in addition to the possibilities for the 26 types of aid I already mentioned earlier. The Commission has delivered promptly. The ball is now in the court of the Member States. If Member State and companies now want to realise the full benefits of this framework, they will also have to work faster than ever.

Turning to mergers, it's a Dutch day today. We have two cases involving Dutch commercial operations: in the dairy and aviation sectors.

Friesland / Campina

Today the Commission has put in place important safeguards for consumers of Dutch dairy products. In clearing the proposed merger between the Dutch dairy cooperatives Campina and Friesland Foods, we have imposed conditions to ensure that customers continue to enjoy choice and value for money on fresh dairy products, cheese and long life dairy drink markets. The merging parties will divest Friesland Foods' fresh dairy product business and a part of Campina's cheese business and two Campina brands for long life dairy drinks. The parties have also offered remedies to ensure access to raw milk for the fresh dairy and cheese businesses to be divested by the parties as well as for their competitors in the fresh dairy and cheese markets in The Netherlands. This includes the setting up of a Dutch Milk Fund ensuring access to raw milk for a maximum yearly volume of 1.2 billion kg of raw milk and the removal of exit barriers to farmers who might wish to leave the new merged cooperative, thus enabling the establishment of a source of Dutch raw milk independent from FrieslandCampina. Through this system we are creating the necessary conditions for ongoing competition to the new FrieslandCampina entity.

KLM's takeover of Martinair

The Commission has also approved the proposed acquisition of Martinair by KLM – two airlines active in both the transport of passengers and cargo. The in-depth investigation showed that the transaction would have only a limited market impact. The Commission is satisfied that consumers will continue to have good competitive choices for travel to long-haul destinations after this merger. KLM already owns a 50 percent stake in Martinair.

The main routes affected by the takeover will be connections between Amsterdam and North American and Caribbean locations such as Vancouver, Toronto, Miami, Havana, Punta Cana, Cancun, Curacao and Aruba.

Slovak Post

And finally I wish to update you on the Slovak postal case - where the Commission acted against the Slovak Government for closing down competition in the market for so-called hybrid mail, and re-monopolising this market for the incumbent Slovenska Post.

There has been no positive measure by Slovakia to comply with the Commission's October 2008 decision, so I have no choice but to now initiate infringement proceedings. That gives me no pleasure but we cannot tolerate the Government's current inaction. Regardless of any appeal they may launch, the Government's current approach remains illegal and cannot be enforced in the meantime against any company trying to operate in this market.

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