92/266/EEC: Commission Decision of 27 November 1991 on the conversion activities of French public industrial groups outside the steel and coal industries and excluding the Compagnie Générale Maritime, pursuant to Articles 92 to 94 of the EEC Treaty (Only the French text is authentic)

• Published date: 21 May 1992
• Subject Matter: concorrenza,aiuti degli Stati,competencia,ayudas concedidas por los Estados,concurrence,aides accordées par les États
• Official Gazette Publication: Gazzetta ufficiale delle Comunità europee, L 138, 21 maggio 1992,Diario Oficial de las Comunidades Europeas, L 138, 21 de mayo de 1992,Journal officiel des Communautés européennes, L 138, 21 mai 1992

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92/266/EEC: Commission Decision of 27 November 1991 on the conversion activities of French public industrial groups outside the steel and coal industries and excluding the Compagnie Générale Maritime, pursuant to Articles 92 to 94 of the EEC Treaty (Only the French text is authentic)

Official Journal L 138 , 21/05/1992 P. 0024 - 0031

COMMISSION DECISION of 27 November 1991 on the conversion activities of French public industrial groups outside the steel and coal industries and excluding the Compagnie Générale Maritime, pursuant to Articles 92 to 94 of the EEC Treaty (Only the French text is authentic) (92/266/EEC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Economic Community, and in particular the first subparagraph of Article 93 (2) thereof,

Having given the interested parties notice to submit their comments in accordance with Article 93, and having regard to those comments,

Whereas:

I

By letter dated 28 March 1989, the Commission requested from the French authorities various details of the conversion activities of public industrial groups outside the steel and coal industries and excluding the Compagnie Générale Maritime. This information was to reach it by the end of June 1989. By letter dated 27 June 1989, the French authorities asked for the deadline to be extended by three months. Their request was granted.

By letter dated 14 November 1989, the French authorities answered as to substance the Commission's letter of 28 March 1989 but gave no details of the conversion activities in question. The Commission therefore asked for further information in a letter dated 20 December 1989.

The French authorities replied by letter dated 15 February 1990 but again gave no details of the conversion activities in question. It was only in a letter dated 18 April 1990 that some of the information was provided. That information was to be supplemented by 'a forthcoming letter' which the Commission did not receive before the initiation of the procedure provided for in Article 93 (2) of the Treaty.

II

The conversion companies are subsidiaries (or divisions) of major industrial groups. They provide various forms of assistance (grants, subsidized loans, acquisitions of holdings, other equity or near-equity funding, free advisory services, etc.) in specific geographic areas, to mitigate the effects of restructuring undertaken by the industrial groups controlling them. Although their assistance is intended primarily for small and medium-sized enterprises (SMEs), it is not in principle restricted to any particular type of firm.

In the period 1988 to 1990, the amounts allocated to conversion by various groups were as follows (in millions of French francs and, in brackets, in millions of ecus as an indication of the order of magnitude):

[ . . . ].

III.

A.

The Commission had already examined the conversion activities of French public groups in the steel and coal industries and the Compagnie Générale Maritime, applying Articles 92 to 94 of the Treaty. In a Decision of 17 February 1988 (1), communicated to the French authorities by letter dated 25 February 1988, the Commission considered that the loans, sometimes accompanied by debt write-offs, granted by the conversion companies Sodinor, Solodev, Sodilor, Socadev, Somidev, Sodicentre, Sodicar and Sorid, subsidiaries of the Usinor and Sacilor groups, contained aid elements within the meaning of Article 92 (1) of the Treaty. By Decision of 31 May 1989 (1), communicated to the French authorities by letter of 15 June 1989, the Commission considered that the loans and the provision of services and advice by Sofirem and Finorpa, conversion subsidiaries of the Charbonnages de France group, contained elements of aid within the meaning of Article 92 (1) of the Treaty. It also considered that injections of equity or near-equity funding by these companies could in certain specific cases conceal an aid element and required the submission of six-monthly reports on their application. Lastly, a similar position to that adopted concerning Sofirem and Finorpa was applied to Atlantique Developpement, a conversion subsidiary of Compagnie Générale Maritime. The Commission sent its Decision of 14 June 1989 (1) on this matter to the French authorities by letter dated 16 June 1989.

B.

The Commission based its view that the activities of the abovementioned conversion companies contained aid elements on the following considerations:

- the activities of these companies do not conform to the practices of traditional financial institutions. Loans are granted at lower rates than those the recipients would have obtained from commercial banks, they are frequently granted without guarantees, contrary to custom, and sometimes accompanied by write-off clauses. Similarly, the services and advice are provided free of charge or below cost, which is not normal market practice. The activity of these companies therefore consists in subsidizing enterprises,

- the companies are essentially financed by State resources for which provision is made in the finance laws. The resources are sometimes channelled to the parent companies but, in that event, the latter pass them on to the conversion companies,

- the conversion companies are controlled by the State. Their Boards, which lay down policy, are made up of representatives of the public parent companies, the State and sometimes local authorities. In the case of Sofirem, the State appoints a government commissioner and a state controller who have the right, in particular, to veto decisions taken by the Board.

These three factors are sufficient for the activities of the conversion companies to be considered as aid or as containing an element of aid within the meaning of Article 92 (1) of the Treaty. The activities of these companies in their relationships with assisted enterprises do not correspond to the behaviour of a private entrepreneur; using State resources, the companies subsidize enterprises according to rules established by Statecontrolled bodies.

This assessment is confirmed by the gradual development of the companies. Initially restricted to conversion operations connected with job cuts in their parent companies, their scope was extended at the request of the public authorities to other conversion projects. Sofirem, the conversion arm of Charbonnages de...