Competition’s Consulting
economics of competition
Romania needs to recover €60 million of incompatible aid from energy producer CE Hunedoara
Following the non-repayment of the rescue aid by CE Hunedoara and in the absence of a credible restructuring plan or any real steps towards the liquidation of the company, in March 2018, the Commission opened an in-depth investigation.
During the investigation, the Commission assessed whether five publicly financed or supported loans granted to CE Hunedoara were in line with EU State aid rules. Together, the loans amounted to approximately €73 million (RON 337 million) as of 30 June 2016.
The Commission found that, in the present case, no private market economy operator would have granted, guaranteed or prolonged any of the five loans to CE Hunedoara, given the company's deteriorating financial situation since 2013. As a result, the Romanian public support measures gave CE Hunedoara an unfair economic advantage over its competitors, and therefore constitute State aid within the meaning of the EU rules.
The Commission found that the restructuring plan submitted by Romania in October 2015 and amended in January 2016 did not ensure the long term viability of CE Hunedoara without continued State aid and, in any event, has not been pursued by the company.
The Commission concluded that four of the five loans, totaling around €60 million plus interest, are incompatible with EU State aid rules and need to be recovered by Romania.
Commissioner Margrethe Vestager, in charge of competition policy, said: "A government can support a company in financial difficulty if the company has a sound restructuring plan, contributes to the cost of its restructuring and competition distortions are limited. In the case of CE Hunedoara these conditions were not met - we found that the public loans granted by Romania to CE Hunedoara gave the company an unfair economic advantage. This means that the state aid was illegal. Now Romania needs to recover the illegal aid that was granted to the company."