EC: Spanish Shipyards Owe €308.3M

Thursday, May 13, 2004
Yesterday the European Commission decided that aid provided to the public Spanish shipyards is not in line with EC rules on State aid to shipbuilding. The Commission has established that State holding company Sociedad Estatal de Participaciones Industriales (SEPI), in 1999 and 2000, granted aid worth €500 million to the civil public shipyards that are today all owned by IZAR. The aid took the form of a capital injection, loans and a purchase price above market value. As the loans amounting to € 192.1 million to SEPI were paid back, the sum to be reimbursed will amount to € 308.3 million, plus interest.

The object the decision are a number of transactions that took place between 1999 and 2000 involving SEPI and its subsidiaries Astilleros Españoles (AESA), the former holding company of the public shipyards, and Bazán, the military shipbuilding group. Since the Commission suspected that these transactions might have contained state aid, it opened a formal investigation in July 2000, was extended in November 2001 and extended again in May 2003.

Based on the facts that have been established during the formal investigation the Commission concludes that the state holding company SEPI undertook the following transactions, which entailed further state aid to the public Spanish shipyards:

An excess purchase price paid by SEPI when AESA sold three shipyards to SEPI in 1999. According to the Commission's calculation the purchase price paid by SEPI contained an aid element of € 55.9 million. The aid benefited the remainder of civil shipyards still owned by ASEA;

A 1999 SEPI loan amounting to € 192.1 million to three shipyards;

A capital injection by SEPI of € 252.4 million to AESA in 2000, benefiting the remaining AESA's civil shipyards.

Since Spanish shipyards after the final restructuring package of 1997 are not eligible for restructuring aid and since none of aid measures described above could be approved on any other base available under the State aid provisions, the aid identified above should be recovered.

However, in 2000 the loan of € 192.1 million was paid back to SEPI, the sum to be reimbursed will amount to €308.3 million, plus interest.

The Commission is aware that the consequences of this decision may be serious for the Spanish public shipyards, and its employees. However, the Commission has received numerous complaints from shipyards in other EU Member States, and even from Spanish competitors. Several of the complainants argue that job losses have already occurred in their companies as a result of suspected illegal state aid provided to the public Spanish shipyards over the last years.

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