Brussels, Belgium – The European Commission has initiated a formal in-depth investigation under EC Treaty state aid rules (Article 87) into aid granted to Chemobudowa Kraków, a state-owned building company. Poland has notified two measures supporting the restructuring of Chemobudowa, both amounting to €2.67 million and have informed the Commission about other measures in favour of the company granted during the restructuring period. Poland claims that the latter do not constitute state aid. The Commission has doubts as to the compatibility of the notified measures and as to the absence of aid as regards the other measures. While the Commission has no competence to assess aid granted before accession, it needs to verify the aid character of all measures that are part of the same restructuring plan in order to assess the compatibility of the measures granted after accession, in particular to determine whether the aid is limited to the minimum necessary. The opening of the formal investigation will allow interested parties to comment, but does not prejudge the Commission’s final decision.

“The Commission needs to assess the whole restructuring plan in order to find out whether the overall aid granted goes beyond what is necessary to restore the viability of Chemobudowa”, Competition Commissioner Neelie Kroes commented.

Chemobudowa Kraków is a large company employing 919 workers with a turnover of about €34 million in 2004. The notified measures consist of a loan and the deferral of a liability. Other measures such as deferrals and arrangements of payments in instalments have been granted during the restructuring period 2003-2005. According to the Polish authorities, they do not constitute state aid as part of them is below the ‘de minimis’ threshold (maximum €100,000 in three consecutive years). As for the remaining measures, the Polish authorities claim that a private creditor would have accepted such arrangements. Subsequently, these measures would not confer any advantage to the company and therefore would not constitute state aid.

On the basis of the information submitted by the Polish authorities, the Commission doubts that the measures comply with all of the requirements laid down in the Community guidelines on state aid for rescuing and restructuring firms in difficulty and in particular that the restructuring plan will restore the long-term viability of Chemobudowa, since it is largely focused on debt write offs and deferrals of liabilities. Furthermore, the Commission has doubts that the private contribution to the financing of the restructuring is sufficient.