94/343/EC: Commission Decision of 7 December 1993 concerning aid granted by the Spanish Government to Merco, a company (Only the Spanish text is authentic)

Article 1

The aid amounting to Pta 18 billion paid by Spain to Merco, a company, in the form of contributions of capital in 1992 is illegal, having been granted in breach of the rules of procedure laid down in Article 93 (3) of the EC Treaty. This aid, and the aid of Pta 5,8 billion Spain has decided to grant to Merco, are also incompatible with the common market within the meaning of Article 92 of the Treaty.

Article 2

Spain shall withdraw the aid of Pta 18 billion granted in 1992 and order Merco to repay the money within two months of the date of notification of this Decision.

The aid shall be recovered in accordance with the procedures and provisions of national law, and in particular those relating to interest on overdue payments owed to the State, with interest starting to run from the date on which the unlawful aid was granted.

Article 3

Spain shall inform the Commission within two months of the date of notification of this Decision of the measures taken to comply herewith.

Article 4

This Decision is addressed to the Kingdom of Spain.
Done at Brussels, 7 December 1993.
For the Commission
René STEICHEN
Member of the Commission
(1) OJ No 172, 30. 9. 1966, p. 3025/66.
(2) OJ No L 285, 20. 11. 1993, p. 9.
(3) OJ No C 291, 7. 11. 1992, p. 7.
(4) OJ No L 55, 6. 3. 1993, p. 54.
(5) Communication to the Member States concerning public authorities' holdings in company capital (Bulletin of the European Communities 9-1984).
(6) [1986] ECR 2263.
(7) [1991] ECR I-1603.
(8) [1973] ECR 611.
(9) [1973] ECR 1471.
(10) [1977] ECR 595.
(11) [1991] ECR I-5505.
(12) [1973] ECR 813.
(13) [1987] ECR 901.
(14) [1990] ECR I-3437.
(15) [1986] ECR 2321.
(16) [1990] ECR I-959.
(17) See Commission communication, OJ No C 318, 24. 11. 1983, p. 3.
(18) See Case C-142/87, cited above, paragraphs 49, 50 and 51.

Article 92

(3) (a) provides for a derogation for aid to promote the economic development of areas where the standard of living is abnormally low or where there is serious underemployment. Article 92 (3) (c) also provides for a derogation for aid for the development of certain areas. It should be noted, however, that, although Merco carried out certain of its activities in areas eligible for regional aid pursuant to Article 92 (3) (a) and (c), the aid measures in question were not applied as part of regional aid programmes but on the basis of ad hoc decisions taken by the Spanish Government and in the form of contributions of capital made on a discretionary basis.
Even were the aid in question to be considered as regional aid it could not be eligible for any of the derogations provided for in Article 92 (3) (a) and (c) since aid granted pursuant to the said Article must contribute to the long-term development of the area (which, in this case, would at least have involved the use of the aid to restore the profitability of the undertaking, which was impossible for Merco since the decision to inject capital was taken at the same time as that to liquidate the company) without having any unacceptable negative consequences for conditions of competition within the Community.
With regard to the derogations provided for in Article 92 (3) (b), the aid in question is obviously not intended to promote a project of common European interest nor to remedy a serious disturbance of the Spanish economy. Furthermore, the Spanish Government has not invoked such reasons to justify the aid.
Finally, with regard to the derogations provided for in Article 92 (3) (c) for aid to facilitate the development of certain economic activities, the Commission may judge certain sectoral aid to be compatible with the common market where two conditions, set out in Article 92 (3) (c), are fulfilled, i.e. the aid must be to facilitate the development of a sector from the point of view of the Community and must not adversely affect trading conditions in a manner contrary to the common interest.
In view of the fact that the contributions of capital were decided upon at the same time as the liquidation of the undertaking, they cannot be considered as being for the implementation of a restructuring programme intended to put the undertaking on a sound footing and develop the sector.
It is clear from the judgments handed down by the Court of Justice in abovementioned Case 234/84 and in Case 40/85, Belgium v. Commission, (15), that aid of this type does not fulfil the conditions laid down for the granting of one of the derogations provided for in Article 92 where it does not contribute to putting an undertaking on a sound footing, i.e. where the undertaking cannot be expected to be moved into profit without other assistance within a reasonable time.
Given that the financial assistance was granted before the Commission could reach a decision on its compatibility, that part of the aid was or would be used to compensate, at least in part, for losses, to reduce the undertaking's debts and probably to pay its creditors, principally financial institutions, that the measures in question were not linked to a restructuring programme intended to put the undertaking on a sound footing and that the measures may have had an adverse effect on its competitors in the Community, the Commission cannot consider the aid in question as compatible with the common market.
From the above it must be concluded that the aid granted to Merco, on the one hand, enabled the undertaking to be kept artificially afloat when, under normal market conditions, it would have disappeared or would have had to have undergone restructuring and, on the other hand, prevented other operators from increasing their market share.
Consequently, the aid paid to Merco and that planned, in the form of injections of capital, is not compatible with the common market since it fulfils none of the conditions required for the granting of the derogations provided for in Article 92 of the Treaty.
X As stated in Section VIII, the Commission may require Member States in such cases to recover from the recipients aid paid unlawfully.
It should be recalled that the recovery of aid which has been paid unlawfully is the logical consequence of the fact that its illegality had been established (see the judgment of the Court of 21 March 1990 in Case C-142/87, Belgium v. Commission) (16).
The aid of Pta 18 billion paid to Merco in the form of contributions of capital in 1992 must be revoked and the sums paid recovered.
It should be stressed that the information submitted by the Spanish authorities does not give the Commission reason to believe that Merco has already used the money from the injections of capital to pay its creditors.
The Commission takes the view that the decision taken by the Spanish Government to liquidate the company does not remove the obligations to repay aid of Pta 18 billion paid in 1992.
To lift the obligation to repay aid where a decision to liquidate an undertaking is taken would be to render the rules on State aid and the provisions laid down on the recovery of illegal and incompatible aid (17) meaningless. A decision to liquidate a company which had received financial support from the State would suffice to prevent the application of Articles 92 and 93 of the Treaty.
Furthermore, it must be stressed that it has already been unsuccessfully argued before the Court of Justice that the provisions on the recovery of aid should not apply where a decision to liquidate an undertaking has been taken (18).
Repayment must be made in accordance with the procedures and provisions of Spanish law, in particular those concerning interest on overdue payments owed to the State, the interest being calculated from the date the aid in question was paid. This appears necessary in order to restore the previous situation by revoking all the financial advantages enjoyed by the company receiving the illegal aid since the date on which it was paid.
The aid of Pta 5,8 billion planned by the Spanish authorities for the same purpose as the Pta 18 billion paid to Merco in 1992 may not be paid.
This Decision shall not prejudice any consequences the Commission might draw for the financing of the Common Agricultural Policy by the European Agricultural Guidance and Guarantee Fund (EAGGF),
HAS ADOPTED THIS DECISION:

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