PAPER: ITALIAN EURO 570M AID TO ISTITUTO POLIGRAFICO CLEARED.

The Commission has now closed its in-depth investigation which it started on 28 October 1998, concerning aid measures granted by Italy. The most important of which consists of a direct grant to be paid in instalments over a period of 20 years covering the interest and the principal of loans taken up by PZ with a view to financing the restructuring of the group. The present subsidy is about Euro 570 million (Italian lire 1,100 billion). PZ is required by law to supply normal and value paper ("carta valori") to the public administration, and to publish the Italian Official Journal; it also provides the coinage service for the State and supplies all those official stamps and documents that require particular security standards.In assessing the aid granted the Commission applied the market economy investor principle, i.e. it examined whether the behaviour of the state could be compared to that of a private investor acting under normal market conditions. It was concluded that when Italy decided on the measures PZ was in a very difficult economic and financial position, and the Italian state could not reasonably expect a normal market return on its investment. The measures in question therefore constitute State aid as they were granted on conditions that would not be acceptable for a market economy investor.However, the Commission considered that the measures could be approved under the EU rules on...