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European Commission probes state aid for United Textiles
Oct '10
The European Commission has opened an in-depth investigation to establish whether measures granted by Greece between 2007 and 2010 in favour of United Textiles S.A., a company in financial difficulties, are in line with EU State aid rules.

In particular, the Commission has concerns that United Textiles received aid repeatedly since at least 2007, in breach of the EU rescue and restructuring guidelines. In addition, the Commission will investigate whether some of the measures could have transferred an undue advantage to the company's lending banks.

The opening of an in-depth investigation allows interested third parties to comment on the measures under assessment. It does not prejudge the outcome of the investigation.

Commission Vice-President in charge of competition policy Joaquín Almunia said: “Governments are entitled to help firms in difficulties provided that they respect the EU's State aid rules. These rules ensure that competition is not unduly distorted.”

United Textiles is one of the largest textile companies in Greece. It has been in difficulty at least since 2004. As from 2008, most of its operations, as well as funding from its main shareholder and lending banks were stopped.

Following press reports, the Commission sent several requests for information to the Greek authorities, to clarify whether the company had received state aid. The available information suggests that Untied Textiles has been indeed subject to repeated State interventions since 2007. Moreover, United Textiles' lending banks may have benefitted from state guarantees granted to the company, as the guarantees covered existing loans. This circumstance may have conferred an undue advantage to the banks.

A company in difficulty may receive state aid under strict conditions, which are set in the 2004 EU guidelines on rescue and restructuring aid (see IP/04/856). In particular, as rescue and restructuring aid is one of the most distortive types of state support , a company is allowed to be "rescued" by the State only once in 10 years. This is the so-called "one time, last time" principle.

The Commission has doubts that the measures under scrutiny are in line with EU state aid rules, especially with the EU guidelines on state aid for rescuing and restructuring aid. In particular, the Commission doubts that the "one time last time" principle has been complied with in the case of United Textiles.

The non-confidential version of the decision will be made available under the case numbers C27/2010) in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved.

European Commission

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