92/328/EEC: Commission Decision of 20 December 1989 concerning aid granted by the French Government for the disposal of the assets of the MFL Group (Machines françaises lourdes), producer of heavy-duty machine tools (Only the French text is authentic)
Data as of 2026-07-04 · Compiled from an official source version. Later amendments or repeals may not be reflected; the official text prevails. · Read the official text ↗
The public assistance to the companies arising from the disposal of the assets of MFL, namely Brisard Machine-Outil and Berthiez Productics, in the form of advances amounting to FF 25 million and FF 17 million respectively, on terms other than normal market terms, was granted illegally in breach of Article 93 (3), and is incompatible with the common market pursuant to Article 92 of the EEC Treaty.
Accordingly, the aid elements of the public assistance referred to in Article 1 must be abolished with effect from the date on which it was granted. Consequently, as regards the FF 25 million advance to Brisard Machine-Outil, the French Government is hereby requested to either convert it into a normal credit on market terms as regards both interest and repayment with effect from the date on which it was granted, or withdraw the advance completely, or take any other appropriate measure to ensure that the aid elements are wholly abolished. On the contrary, the aid element in the FF 17 million advance to Berthiez Productics does not need to be abolished because the initial beneficiary went bankrupt, and the final beneficiary Berthiez SA did not take over the liabilities of Berthiez Productics.
The French authorities shall inform the Commission, within two months from the notification of this Decision, of the measures taken to comply therewith. Should this Decision be implemented later than the said period, the national provisions regarding interest on arrears payable to the State will be applicable from the date of the Decision's notification.
This Decision is addressed to the French Republic. Done at Brussels, 20 December 1989. For the Commission Leon BRITTAN Vice-President (1) OJ No C 212, 12. 8. 1988, p. 2. (2) OJ No C 31, 3. 2. 1979, p. 9.
(1) of the EEC Treaty provides that aid meeting the criteria laid down therein is in principle incompatible with the common market. Notwithstanding, the Treaty provides for certain exceptions to that general rule. The exceptions provided for in Article 92 (2) are not applicable in this case because of the nature of the assistance, which is not directed towards the attainment of the objectives listed therein. For its part, Article 92 (3) lists aid which may be compatible with the common market. Compatibility with the Treaty must be determined in the context of the Community as a whole and not in that of a single Member State. In order to ensure the proper functioning of the common market, and having regard to the principle embodied in Article 3 (f), the exceptions provided for in Article 92 (3) must be construed narrowly when any aid scheme or individual aid award is scrutinized. In particular, they may be invoked only when the Commission is satisfied that without the aid, market forces alone would be insufficient to guide the aid recipients towards patterns of behaviour that would serve one of the objectives of the said exceptions. With regard to the exceptions provided for in Article 92 (3) (a) and (c) for aid that promotes or facilitates the development of certain areas, none of the areas where the MFL plants are situated - Capdenac, Albert, Saint-Étienne - is a region characterized by an abnormally low standard of living or serious underemployment within the meaning of Article 92 (3) (a) as established by the Commission (1). Moreover, the advances were not granted under the corresponding regional aid schemes but on the basis of ad hoc decisions of the government. The aid involved does not have the requisite features of aid to facilitate the development of certain economic areas within the meaning of Article 92 (3) (c), inasmuch as the assistance granted was not conditional on investment or job creation as explained in the 1979 Commission communication on the principles of coordination of regional aid schemes (2). As regards the exemptions provided for in Article 92 (3) (b), the aid in question was not intended to give effect to a project of common interest, or to remedy a serious disturbance in the economy of the Member State concerned nor did it have the characteristics of such projects. Moreover, the French authorities have not invoked this derogation.
(3) (c) also lays down an exemption for aid to facilitate the development of certain activities, where such aid does not adversely affect trading conditions to an extent contrary to the common interest. In this regard, as mentioned above, the necessity of the aid should also be clearly demonstrated, that is to say, that without the aid the objective stated in the said exemption would not be reached. In the case at issue, the aid involved in the granting of advances at other than market conditions does not appear essential even as regards the basic aims pursued by the French authorities: to ensure both the continued operation of the undertakings disposed of, and the preservation of existing jobs. According to the financial forecasts provided by the French authorities, over the first three years of operation the new companies will record profits before tax amounting to about FF 42 million and FF 2 million, for BMO and BSA, respectively. In the last year of this three-year period, the profits before tax will account for 4,3 and 6,8 % of their respective global income. In the light of these financial forecasts, the companies concerned appear capable of supporting by themselves the cost of advances granted at normal market credit conditions. In other words, even when regarded from the point of view of the objectives pursued by the French authorities, the aid in question constitutes a completely artificial benefit for which there is no justification. Furthermore, the aid cannot be justified from the Community point of view given the substantial distortion of competition caused by this artificial benefit in the context of the intense competition between producers in the machine-tool sector. It should be remarked that, as a result of the significant aid received by MFL for modernization of industrial equipment and restructuring under the Machine-Tool Programme, no major future investments will be required by the new companies resulting from the disposals, in order to consolidate their competitive position, but rather rationalization and improvement in their management policies, as stated in the recovery plan submitted to the Commission. It should also be recalled in this regard that the same companies have benefited from a variety of other circumstantial advantages. On the one hand the substantial capital gains arising from the take-over of assets for a largely symbolic price under the winding up proceedings of MFL. The capital gains resulting from the formation of Brisard Machine-Outil have been estimated by the company itself at FF 90 million; no estimates for Berthiez SA have been provided. On the other hand, these new companies have commenced operations with a better sized labour force. Such reduction was produced without expense to the companies, since the decisions of the Commercial Courts regarding the disposal of the assets under receivership proceedings broke the juridical links between these continuing companies and the workers made redundant as a result. In view of all the above considerations, the Commission has come to the conclusion that the aid granted by the French Government to the continuing businesses of MFL carried on by the new companies arising from the disposal of its assets, does not qualify for the exemption provided for in Article 92 (3) (c) of the EEC Treaty. Therefore, in summary, the aid in question has proved to be illegal under Community law because the French Government did not fulfil its obligations under Article 93 (3). As pointed out above, the Commission can in such cases require Member States to recover aid granted illegally from recipients. After examination it appears that the aid is incompatible with the common market in view of the fact that, having altered intra-Community trade within the meaning of Article 92 (1), it does not fall within any of the exemptions provided for in Article 92 (2) and (3). In consequence, the aid in question must be withdrawn, HAS ADOPTED THIS DECISION:
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