WRITTEN QUESTION P-0745/02

by Olle Schmidt (ELDR) to the Commission

(6 March 2002)

Subject: Unlawful public financial aid

It appears from the Commission's answer to Question H-0040/02(1) concerning aid granted to the tyre manufacturer Continental that the Commission has asked the Portuguese authorities for further information on this subject. The Commission stresses, however, that all public aid, whether from the Member States or from the European Union, must conform to EU rules on state aid.

According to recent reports in the Swedish media, the company in question has, in addition to what it received from the EU Structural Funds, also obtained state aid, possibly in the form of company-specific tax breaks.

Does the Commission consider such state aid really to be compatible with EU competition rules? If not, is it prepared to do what it can to ensure that the company in question pays back the monies it has received?

(1) Written answer of 5.2.2002.

Answer given by Mr Monti on behalf of the Commission

(2 May 2002)

As stated in its reply to the Honourable Member's question H-0040/02, in response to its request to the Portuguese authorities the Commission received the following information on the cofinancing granted to Mabor-Continental:

Total aid granted under the structural Funds:

- EUR 7 891 344 for the 1989-1993 programming period;

- EUR 14 515 707 for the 1994-1999 programming period.

This aid was paid as part of the first and second programmes for the modernisation of Portuguese industry (PEDIP) for the above periods. The European Regional Development Fund (ERDF) contributed EUR 21 224 134 and the European Social Fund (ESF) EUR 1 182 917.

As regards the Community Support Framework (CSF) for the 2000-2006 programming period, the Commission will consider any request from the Portuguese authorities in accordance with the terms of Council Regulation (EC) No 1260/1999 of 21 June 1999 laying down general provisions on the Structural Funds(1). In this connection, on 5 February 2002 the Commission reminded the Portuguese authorities of the information which must be sent to it in the case of projects whose total eligible cost exceeds EUR 50 million, pursuant to of Article 26 of the above Regulation.

Furthermore, the Commission has taken notice of recent reports in the European media of possible State aid measures awarded in the form of tax breaks by the Portuguese government to the tyre manufacturer Mabor-Continental.

The information at the disposal of the Commission prompted its services to request the Portuguese government to provide all the information necessary to assess the presumed aid measures under the EC Treaty rules on State aid. This information should enable the Commission to determine whether such measures exist and, if so, whether the Portuguese government was obliged to notify in advance any State aid measures, including fiscal ones, in favour of this company to the Commission, or whether such measures are covered by an aid scheme approved by the Commission where individual notification is not required.

If such a notification obligation was not observed in the case of Mabor-Continental, the measures are to be assessed in the light of Articles 87 and 88 of the EC Treaty in order to establish their compatibility with the common market. If the alleged measures are found to be illegal and incompatible aid, the Commission has to require the recovery of any sums of aid including interest already paid out to this company. The Commission should examine whether the measures should have been notified under the State aid rules on the basis of the response of the Portuguese authorities.

(1) OJ L 161, 26.6.1999.