EC Investigation of Proposed French Support of Shipyard
Tuesday, September 23, 2003
On September 17, The European Commission opened a detailed investigation with a view to examining an aid package which the French Government has put together in support of the Alstom group. At the same time, it found that the conditions are met for adopting an order suspending implementation of and/or payment for the acquisition by the French State of a stake in Alstom and the provision of a subordinated loan. The Commission wishes, however, to continue its dialogue with France and will thus give it one last chance before issuing the order. It has authorised Commissioner Monti, in agreement with the Commission's President, to adopt and implement the suspension order by 22 September unless the French authorities undertake publicly not to take any steps involving, automatically and irreversibly, the acquisition by the French State of a stake in the Alstom group without the Commission's prior approval under the state aid rules.
In parallel with its formal investigation, the Commission, in the hope of avoiding having to take a decision ordering France to suspend its acquisition of a stake in the Alstom group and its provision of a subordinated loan to the group, will examine any alternative measures which France might propose be they in the form of a capital subscription, convertible bonds or some other structural, unconditional measure. The College has authorized Monti, in agreement with the President, to adopt a suspension order unless the French authorities undertake publicly not to take any steps involving, automatically and irreversibly, the acquisition by the French State of a stake in the Alstom group without the Commission's prior approval under the state aid rules.
The decision taken by the College today shows that the Commission is still willing to continue its dialogue with the French authorities with a view to finding a solution which will enable it to conclude its formal investigation in a manner in keeping with the European rules on state aid. Commissioner Monti remains confident that a solution will be arrived at that will ensure the integrity of the single market while avoiding any distortions of competition essential preconditions for a healthy European industry and lasting employment.
The state aid measures
The Commission's investigation covers the following measures:
the French Government has granted Alstom a short-term loan worth 300 million euros;
the French Government has provided Alstom with a counter-guarantee for 65% of a syndicated guarantee worth 3.5 billion euros.
The investigation will also cover the French Government's commitment:
to subscribe irreversibly either to half of a capital increase totalling 600 million euros or to convertible bonds for the same amount;
to finance up to 300 million euros worth of subordinated, fixed-term loans.
If the scheduled timescale is adhered to, the Commission will not have time to comment on these planned measures. If necessary, it will therefore ensure compliance with Community law and guarantee the effectiveness of its investigation by suspending implementation of the last two measures referred to above.
At this stage, out of a package worth a total of 7.1 billion euros, the French Government's contribution may be put at 3.175 billion euros, the remainder being financed by private banks.