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STATE AID — SLOVAKIA

State aid No C 25/2005 (ex NN 21/2005) — Measure in favour of Frucona Košice

Invitation to submit comments pursuant to Article 88(2) of the EC Treaty

(2005/C 233/11)

(Text with EEA relevance)

By means of the letter dated 5 July 2005 reproduced in the authentic language on the pages following this summary, the Commission notified Slovakia of its decision to initiate the procedure laid down in Article 88(2) of the EC Treaty concerning the abovementioned measure.

Interested parties may submit their comments to the measure in respect of which the Commission is initiating the procedure within one month of the date of publication of this summary and of the following letter, to:

These comments will be communicated to Slovakia. Confidential treatment of the identity of the interested party submitting the comments may be requested in writing, stating the reasons for the request.

TEXT OF SUMMARY

PROCEDURE

The Commission received by letter of 15 October 2004 a complaint concerning alleged unlawful State aid in favour of Frucona Košice, a.s., Slovakia. By letter of 4 January 2005 registered on 17 January 2005, the Slovak republic informed the Commission of possible unlawful State aid and asked for its approval as rescue aid to a company in financial difficulties.

DESCRIPTION OF THE BENEFICIARIES AND THE AID MEASURES

The recipient of the disputed measure is Frucona Košice, a.s., active in production of spirit and spirit-based beverages, non-alcoholic beverages, canned fruit and vegetable and vinegar. The company falls within the definition of a small and medium sized enterprise.

The disputed measure is a write-off of a tax debt by the competent tax office in the framework of the so-called arrangement with creditors governed by Act 328/91 Bankruptcy and Arrangement with Creditors. This procedure is a form of collective insolvency procedure under the supervision of a court. It consists in an agreement between the indebted company and its creditors, on the basis of which the creditors are partially satisfied by the debtor and they write-off the remainder of their receivables.

In the framework of such a procedure initiated by Frucona in March 2004, the tax office accepted to write-off 65 % of its receivables. The totality of the receivables amounting to SKK 640 793 831 (about EUR 16 million), the amount of debt written-off was SKK 416 515 990 (EUR 10,4 million). The private creditors participating in the arrangement procedure agreed to write-off their receivables on the same terms. The supervising court confirmed this agreement by a decision of 14 July 2004.

The complainant argues that the tax office had a possibility to achieve a satisfaction of its receivables to an extent higher than 35 %, on which the tax office agreed in the arrangement procedure. The complainant in particular stresses that a tax execution procedure and a bankruptcy procedure would lead to a better outcome for the tax office. In this line, the complainant argues that the tax office did not meet the private creditor test and the disputed write-off therefore represents unlawful State aid, which is moreover not compatible with EC Treaty.

Slovakia does not dispute the conclusion that the disputed measure constitutes State aid but requests that this aid is approved as rescue aid to a company in difficulty.

ASSESSMENT

State aid

The Commission notes that the tax office and the private creditors accepted the arrangement with Frucona on the same terms. The Commission, however, also observes that the tax office had other legal instruments by means of which it could have executed its right of a creditor. Namely, the tax office could have initiated a tax execution procedure, or a bankruptcy procedure. In the bankruptcy procedure, as its receivables had been secured, the tax office would have had a position of a separate creditor. The proceeds from sales of the secured assets in the bankruptcy procedure would be used exclusively to satisfy the receivables of the tax office. As a separate creditor voting in a separate group, the tax office had a possibility to veto the proposal of Frucona for arrangement and initiate either the tax execution or the bankruptcy procedure.

On the basis of the information available at this stage, the Commission has doubts that the tax office acted as a private creditor. The Commission therefore doubts that the disputed measure did not distort competition by conferring an advantage that Frucona would not be able to obtain on the private market. The Commission has doubts that the disputed measure does not constitute State aid.

Derogation under Article 87(2) and (3) EC Treaty

The Commission assessed the measure as aid to a company in difficulty in application of the 1999 Community Guidelines on State aid for rescuing and restructuring of firms in difficulty (OJ C 288 of 9.10.1999, p. 2). The Commission has doubts that the disputed measure is compatible as rescue aid, since it is not a temporary assistance, but a non-refundable grant. The Commission has furthermore doubts that the measure is compatible as restructuring aid. The Commission has in particular doubts that Frucona presented a restructuring plan capable of leading the company to a restoration of a long-term viability and that the aid is limited to a minimum necessary.

TEXT OF LETTER

‘Komisia oznamuje Slovensku, že po preskúmaní informácií poskytnutých vašimi orgánmi o vyššie uvedenom opatrení sa rozhodla začať konanie stanovené v článku 88 ods. 2 Zmluvy o ES.

I.   KONANIE

II.   OPIS

1.   Príslušný podnik

2.   Uplatňované vnútroštátne právne predpisy

3.   Sporné opatrenie

III.   ARGUMENTY STRÁN

1.   Sťažovateľ

2.   Slovenské orgány

IV.   HODNOTENIE

1.   Štátna pomoc v zmysle článku 87 ods. 1 Zmluvy o ES

2.   Výnimka podľa článku 87 ods. 2 a ods. 3 Zmluvy o ES

2.1.   Oprávnenosť podniku

2.2.   Pomoc na záchranu

2.3.   Pomoc na reštrukturalizáciu

Životaschopný plán reštrukturalizácie

Pomoc obmedzená na minimum

2.4.   Záver

V.   ROZHODNUTIE

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(1)  Dôverná informácia.

(2)  Suma, ktorú je Frucona Košice povinná splatiť svojim veriteľom.

(3)  Dôverná informácia.

(4)  Vzhľadom na stratu licencie na výrobu liehu a nápojov na báze liehu a podľa informácií poskytnutých sťažovateľom sa tento predaj zrejme týkal hlavne liehu.

(5)Ú. v. EÚ C 244, 1.10.2004, s. 2.

(6)Ú. v. ES C 288, 9.10.1999, s. 2.

(7)  Posledný dátum, kedy možno pomoc pokladať za poskytnutú. Možné sú aj iné skoršie dátumy (pozri odsek 19).

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