I. introduction

Дата канвертавання25.04.2016
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A. General Principles of European State Aid Law

State aid law is an important part of European competition law. The objectives of state aid regulation are (i) to ensure that government interventions do not distort competition and trade inside the EU; (ii) to maintain a level playing field for all undertakings in the single European Market; and (iii) to avoid member states from becoming locked into a contest where they try to outbid each other to attract investment.125

To achieve these goals, Article 107(1) of the Treaty on the Functioning of the European Union (“TFEU”), otherwise known as the “Lisbon Treaty,” provides that any state aid granted by a member state in any form whatsoever is prohibited if it distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods. However, this general prohibition of state aid is “neither absolute nor unconditional.”126 According to the European legislation, in some circumstances government interventions are necessary for a well-functioning and equitable economy. Therefore, Article 107(2) TFEU declares that certain types of aid, e.g., aid having a social character and aid to repair damage or losses caused by natural disasters or exceptional occurrences, are compatible with the internal market. Furthermore, Article 107 (3) TFEU authorizes the European Commission to declare under certain conditions that state aid is compatible with the internal market. The most pertinent of these exceptions are (i) Article 107(3)(a) TFEU covering “aid to promote the economic development of areas where the standard of living is abnormally low or where there is serious underemployment;” and (ii) Article 107(3)(c) TFEU referring to “aid to facilitate the development of certain economic activities or certain economic areas, where such aid does not adversely affect trading conditions contrary to the common interest.” As a result of the financial crisis, another exception has come into focus concerning state aid practice, i.e., Article 107(3)(b) TFEU covering state aid “to remedy a serious disturbance in the economy of a member state.”127

The application of these exemptions rests exclusively with the European Commission, which possesses strong investigative and decision-making powers.128 Within the framework of Article 107(3) TFEU, the European Commission has discretion to determine whether state aid is regarded as compatible with the internal market.129

To insure that the European Commission effectively monitors and controls the award of state aid, the member states must inform the European Commission in advance of any plans to grant or alter aid (Art. 108(3) TFEU) and may – in principle – only implement a state aid measure after approval by the European Commission.

On this basis, the European Commission has established a comprehensive system of rules for the monitoring and assessment of state aid. It has published numerous “communications,” “notices,” “frameworks,” “guidelines,” and “letters to Member States” in which the Commission has established the criteria it employs when assessing state aid.130 In addition, the Commission has adopted several “block exemption regulations,” the most important of which is the “General Block Exemption Regulation” (the "GBER"). State aid covered by these “block exemption regulations” is exempted from the obligation to notify the European Commission in advance (Article 3 of the GBER). However, the European Commission reserves the right to investigate if aid granted under a block exemption regulation comports with relevant requirements fixed by the applicable regulations (Article 10 of the GBER).

Finally, the European Commission may order member states to recover unlawful state aid. Article 14 (1) of the “Council Regulation (EC) No 659/1999 laying down detailed rules for the application of Article 93 of the EC Treaty” (the “Procedural Regulation”)131 authorizes the European Commission to order recovery of unlawful and incompatible state aid, unless this would be incompatible to general principles of law. These general principles of law preventing a recovery (such as “legitimate expectations” and “legal certainty”) are interpreted in a very restrictive way by the European Commission and the European Court of Justice.132 The recovery of unlawful state aid shall be effected without delay and in accordance with the procedures under the national law of the member state concerned, provided that they allow the “immediate and effective execution of the European Commission's recovery decision” (Art. 14(3) of the Procedural Regulation). The recovery includes interest at an appropriate rate fixed by the European Commission (Art. 14(2) of the Procedural Regulation). The power of the European Commission to order recovery is subject to a limitation period of 10 years (Article 15 of the Procedural Regulation).

B. State Aid and the Financial Crisis (Weltfinanzkrise)

Leading up to the year 2007, the total volume of state aid granted by member states declined significantly and stood at about €65 billion (or less than 0.5% of GDP) in 2007. This situation changed dramatically when the financial crisis first affected the European financial sector and later expanded into the European real economy. While state aid (excluding the crisis measures) remained more or less at the same level of approximately €67.4 billion in 2008, aid granted by member states as the crisis intensified in 2008 added up to the incredible amount of €212.2 billion representing 1.7% of GDP of the European Union.133

The turmoil caused by the crises in the financial markets also influenced the state aid policy of the European Commission. In a first phase, the European Commission tackled individual cases of state aid for European banks under the “Community Guidelines on State aid for restructuring firms in difficulty (“R&R Guidelines”).”134 When the crisis intensified and spread, the European Commission issued several communications prescribing temporary rules for state aid granted to financial institutions.135 In these communications, the European Commission recognized that

“in the light of the level of seriousness that the current crisis in the financial markets has reached and of its possible impact on the overall economy of Member States, … Article 87(3)(b) [now Article 107(3)(b) TFEU] is, in the present circumstances, available as a legal basis for aid measures undertaken to address this systemic crisis.”

In brief, state aid to financial institutions may be justified on the basis that the aid is necessary “to remedy a serious disturbance in the economy of a Member State.”

When the financial crises spilled over into the real economy, the European Community adopted a “Recovery Plan” to facilitate Europe’s emergence from the financial crisis.136 The Recovery Plan consists of two elements: (i) short-term measures to boost demand, save jobs and restore confidence; and (2) “smart investments” to yield higher growth and sustainable prosperity in the longer term. In this context, the European Commission accepted that there existed a strong need for new, temporary state aid. To meet this need, the Commission adopted a “Temporary Community framework for state aid measures to support access to finance in the current financial and economic crises” (the “Temporary Framework”).137 The objectives of the Temporary Framework are (i) to unblock lending to companies and thereby guarantee continuity in their access to finance; and (ii) to encourage companies to continue investing in the future.138 It applies to all sectors, including the automotive industry.

Like the new state aid rules for the financial sector, the Temporary Framework is based on Article 107(3)(b) TFEU. In addition to existing aid instruments, the Temporary Framework enables member states to establish new and broader state aid schemes for different aid instruments. The most important of these aid instruments under the Temporary Framework may be summarized as follows:

1. Cash Grants. Under the pre-crisis aid schemes, the maximum amount of so-called “de minimis” aid that a member state could grant to companies without further restrictions and without prior notification to the European Commission was limited to €200,000 within three fiscal years. Now, the Temporary Framework affords member states the authority to establish aid schemes, increasing this amount to €500.000 for the period from January 1, 2008 to December 31, 2010.

2. State Guarantees. Under the Temporary Framework, member states may also grant state guarantees at reduced annual premiums to businesses for up to 90% of new bank loans, provided that the maximum loan does not exceed the total annual wages paid to its employees by the aid recipient during 2008.

3. Subsidised Interest Rates. Under pre-crisis aid rules, public loans were not considered to be state aid if they were granted under normal market conditions. The European Commission has established a method to calculate the reference and discount rate for state credits to determine whether the proposed state aid is permissible. The Temporary Framework modified this calculation of interest rates and enables member states to grant loans at subsidised interest rates. Additional interest rate reductions are allowed for investment loans relating to the production of “green products”.

4. Risk Capital Measure. The Temporary Framework relaxed the restrictions for state aid to promote risk capital investments.

Cash grants, states guarantees and loans based on the Temporary Framework may only be granted to companies that were not “in difficulty” on July 1, 2008. The Temporary Framework expires on December 31, 2010.

Although it is not expressly stated in the Temporary Framework, the European Commission has repeatedly stressed that, based on general principles of state aid law, state funding under the Temporary Framework must be based strictly on objective and economic criteria and may not be granted subject to protectionist, non-commercial conditions. Most importantly, state aid under the Temporary Framework cannot be used to impose political constraints concerning the location of production activities within the internal market. The aid recipient must retain unfettered freedom to perform its economic activities in the internal market.139 Furthermore, although member states were provided with additional means to grant state aid to companies in order to alleviate the effects of the financial crisis, the European Commission stressed that

“during a financial and/or economic crisis, state aid control is all the more necessary because there can be greater temptation for Member States to grant aid that would risk putting out of business companies in other Member States, thereby making the crisis worse. State aid control also avoids subsidy races, which would tend to penalise smaller Member States which lack the deep pockets of larger Member States.”140

As a part of its second economic stimulus package (Konjunkturpaket II), the German government made use of the expanded measures described above to grant state aid under the Temporary Framework and established the German Business Funds (Wirtschaftsfonds Deutschland). The German Business Funds consists of several state credit and guarantee schemes. The total volume of assistance available under these devices amounts to €115 billion. These schemes have been notified to the European Commission and approved by it.141 Aid awarded in accordance with these schemes may therefore be granted without (further) prior notice to the European Commission.

C. State aid and the Opel case

As mentioned above, in November 2008 Opel executives conducted an emergency meeting with the German Chancellor Angela Merkel to obtain €1 billion in government loan guarantees to protect Opel from the fallout caused by a possible GM bankruptcy. Merkel promised that the German government would conduct a constructive review of the possibility of extending a state liquidity guarantee to the company.142 After intensive further discussions, in mid-May, 2009, zu Guttenberg, the German Economy Minister, proposed a plan for a trusteeship for Opel and the extension of bridge financing of €1.5 billion (the “Bridge Loan”).143

The Bridge Loan was granted by the German government on May 29, 2009. It was funded from the German Business Funds under a state credit scheme allowing Germany to grant subsidized loans to companies on the basis of the Temporary Framework.144 As the Bridge Loan was based on an existing aid scheme pre-approved by the European Commission, the granting of the individual loan did not require prior notice to and approval of the European Commission.

Nevertheless, the entire Opel case was monitored closely by the European Commission right from the beginning. The European Commission’s intervention began as soon as the first signs of substantial difficulties for Opel emerged. During several meetings, European commissioners and ministers of all member states in which European GM plants were located exchanged information and arrived at a common understanding that any solution must fully comply with EU state aid rules and be based on purely economic considerations.145 The member states and the European Commission also agreed in an informal meeting on March 13, 2009 (MEMO/09/108) that no national measures should be taken without prior notice to and coordination with the European Commission and other involved countries.146

With regard to the Bridge Loan, the European Commission did not raise any objection when it was informally notified by the German government of its intention to grant the loan. Ms. Kroes confirmed in an answer to a question raised by members of the European Parliament that this measure appeared to conform with the German aid scheme permitted under the Temporary Framework. General Motors repaid the Bridge Loan in November 2009.147

The European Commission also closely monitored the plans of Germany to grant state aid to Opel and Magna in connection with the planned acquisition of a majority stake in Opel by Magna. The respective correspondence between the European Commission and the German government has been described in Part III above. Right from the beginning and throughout this process, the European Commission repeatedly stressed that state aid granted under the Temporary Framework could not

“be subject to additional non-commercial conditions concerning the location of investments and/or the geographic distribution of restructuring measures. While the EU should aim at keeping as many people as possible in jobs, national aid measures within this framework must not affect the freedom of manufacturers to develop their activities in the internal market, and in particular should not prevent manufacturers from adapting their production capacities to market developments, in conformity with the applicable labour law.“148
Concerning this requirement, Ms. Kroes in the final stages of the negotiation expressed concerns that the envisaged state aid to Opel/Magna was not in line with European state aid law. According to Ms. Kroes, there were significant indications that the aid promised by the German government was “de facto” conditioned to a specific business plan discussed and agreed with the German government with regard to the geographic distribution of the restructuring measures.149

On the one hand, these restrictions of the EU state aid law are economically sound and, in the long run, in the interest of all European economies. The regulations safeguard a level playing field for European companies and prevent a subsidy race. On the other hand, there is a fundamental conflict between these restrictions and the messages election-oriented politicians desire to send to their electorate. It is much easier to transmit the simple message that “German taxpayers money is being used to save German jobs” than to explain the complex mechanisms of state aid.

Opel is by no means the only case were this conflict has arisen. Opel, however, is a very prominent illustration given the political awareness of the case and the sheer magnitude of the potential amount of state aid that was planned. Nor is Germany the only member state who has been tempted to use state aid to further its own national interest. To posit just one other example, the European Commission intervened when the French government announced its intention to grant state aid to its national car producers. As a reaction to this intervention, the French government undertook not to implement aid measures containing conditions regarding the location of the activities of the automobile producers or a preferring France-based suppliers.150

When GM finally decided not to sell a majority equity state in Opel but to restructure Opel itself, the European Commission and the member states in which GM plants were located attempted to avoid another subsidy race. For this purpose, representatives of the member states and EU commissioners Verheugen and Kroes agreed in December 2009 not to make any commitments regarding state aid before GM has presented a restructuring plan for GM Europe and to make certain that this restructuring plan is evaluated ex ante by the European Commission.151 In the meantime, however, the new European Competition Commissioner, Joaquin Almunia Mira, has taken a more formalistic approach and has stressed that such a prior examination of a private company's decisions extends beyond the Commission’s formal competences.152 It remains to be seen whether conflict between national interests and European state aid law will be handled more successfully in the second chapter of the Opel saga.

On February 19, 2010, when Opel published its annual financial statements for the year 2008 showing a loss of €1.1 million, another criteria for the granting of state aid under the Temporary Framework reemerged. As mentioned above, a business is eligible for state aid under the Temporary Framework only if it was not “in difficulty” on July 1, 2008.

The European Commission regards a firm as being “in difficulty”

“where it is unable, whether through its own resources or with the funds it is able to obtain from its owner/shareholders or creditors, to stem losses which, without outside intervention by the public authorities, will almost certainly condemn it to going out of business in the short or medium term.”153
In particular, a company is, in principle and irrespective of its size, regarded as being “in difficulty” in the following circumstances:

  • in the case of a limited liability company, where more than half of its registered capital has been lost and more than one quarter of that capital has dissipated over the preceding 12 months;

  • in the case of a company where at least some members have unlimited liability for the debt of the company, where more than half of its capital as shown in the company accounts has been lost and more than one quarter of that capital has been lost over the preceding 12 months;

  • whatever the type of company concerned, where it fulfils the criteria under its domestic law for being the subject of insolvency proceedings.

If Opel/GM Europe had been “in difficulty” on July 1, 2008, the company could not qualify for state aid under the “Wirtschaftsfonds Deutschland” because a grant of these funds is based upon the Temporary Framework. That this question now arises again is somewhat surprising, given the fact that Opel previously received state aid under the Temporary Framework. As mentioned above, the Bridge Loan granted to Opel by the German government was financed by the Wirtschaftsfonds Deutschland and was therefore based on a subsidy scheme regulated by the Temporary Framework.

Even if Opel cannot qualify for state aid under the Temporary Framework, the granting of state aid would not be impossible. In this situation, aid could be granted on the basis of another legal provision, the “Community guidelines on state aid for rescuing and restructuring firms in difficulty” (the “R&R Guidelines”).154 As the name of these guidelines indicates, the R&R Guidelines cover state aid for rescuing and restructuring of business entities in financial difficulty. However, the R&R Guidelines are in several respects stricter than the Temporary Framework. For example, for large companies, each award of state aid under these guidelines requires prior notice to the European Commission. In addition, the European Commission will normally demand compensatory measures in return for this aid to avoid undue distortion of competition. These compensatory measures may include divestments of assets, reductions in production capacity or decrease of market presence. The degree of reduction will be established by the European Commission on a case-by-case basis. If the company is active in a market with long-term structural overcapacity (such as the European auto industry), the reduction in the company’s capacity or market presence may be as high as 100%.155 Therefore, it would be more difficult and less attractive for GM to apply for and obtain state aid under the R&R Guidelines instead of under the Temporary Framework.


From the very beginning of the Opel saga, the issue of whether insolvency would be the better option for Opel has been extensively discussed in Germany. As outlined below, this may hold some advantages for Opel but nevertheless gives rise to substantial risks.

German insolvency law was fundamentally changed by new Insolvency Act (Insolvenzordnung, InsO) that came into force in 1999. The objective of the new Insolvency Act is to satisfy creditors’ claims on an equal basis and to restructure the insolvent entity so that it may continue to operate. Insolvency need not necessarily result in the liquidation of an insolvent company.

A. Reasons for Commencing of Insolvency Proceedings
Under German law, insolvency proceedings may be initiated in three situations, viz., (i) where the debtor is illiquid (Zahlungsunfähigkeit) [Sec. 17 InsO]; (ii) where the debtor’s illiquidity is imminent (drohende Zahlungsunfähigkeit) [Sec. 18 InsO]; and (iii) where the debtor is overindebted to creditors (Überschuldung) [Sec. 19 InsO]. In case of the company’s illiquidity or overindebtedness [Sec. 17, 19 InsO], German law requires that the company’s management must file for insolvency relief.

German law also provides that a debtor will be deemed illiquid if it is unable to pay its debts as they become due [Sec. 17 Para 2 InsO]. The second reason for commencing proceedings, i.e., that of imminent illiquidity, allows the debtor to file for insolvency relief at an earlier stage if the debtor will presumably be unable to meet his payment obligations once they become due [Sec. 18 Para 2 InsO]. However, management is not required to file for insolvency if there is imminent illiquidity. The third insolvency situation - overindebtedness - has been revised just recently with a view to the world financial crisis. Until October 2008, Sec. 19 InsO required management to file for insolvency if the company’s assets did not cover its debts, applying a balance sheet test. If, in an individual case, continuation of the business is deemed to be predominantly likely (positive Fortführungsprognose), the assets will be valued on a going concern basis; otherwise liquidation values are relevant. In light of the depreciation in asset values caused by the credit crunch, German legislators feared that enterprises (namely credit institutions) heavily affected by these losses would become overindebted under the previous legal standards of Sec. 19 InsO, thereby making it compulsory for the company’s management to file for insolvency even though their business appeared viable.156 As a result, the Bundestag enacted the Financial Markets Stabilization Act (Finanzmarktstabilisierungsgesetz, FMStG)157 which became effective on October 18, 2008, and which altered the prior definition of “over-indebtedness” in Sec. 19 InsO. The amended Sec. 19 InsO now defines overindebtedness as a situation in which the value of a company’s assets does not cover its debts unless continuation of the business is overall deemed to be a likely event. Under revised Sec. 19 InsO, management will therefore not be obliged to file for insolvency if continuation of the business is deemed likely, even though the company is overindebted. This relief was designed as a temporary measure only and should have expired on December 31, 2010 [Art. 6 Para 3, 7 Para 2 FMStG]. In an amending law, this provision was further extended until December 31, 2013.158 The application of the revised standard for overindebtedness, although mainly focused on the financial market, is not limited to banks but applies to all companies and may have permitted Opel to avoid insolvency proceedings so far.

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