WRITTEN QUESTION E-1564/98

by Marie-Noëlle Lienemann (PSE) to the Commission

(20 May 1998)

Subject: Crédit Lyonnais

Is not the Commission exceeding its powers when it disputes the choices made by the French Government and Crédit Lyonnais on the way in which compensation for public subsidies, needed to uphold its rules of competition, is implemented.

The Commission must monitor the amount of compensation, and the fact that it is paid, but it has no say in the method by which this payment is implemented. It is particularly surprising that the Commission is calling for Crédit Lyonnais to give up its European network, which amounts to dismantling Crédit Lyonnais prior to its winding up, since the Commission ought to be seeking to preserve the permanence of this network. This is the rule which emerges from the case law in this area, but it is also essential in order to defend jobs.

Is not the Commission going against one of the main principles of the European Union when it calls for the privatization of a firm, - and indeed suggests the forms which this should take - even though the Treaty of Rome clearly states that the capital of undertakings may be public or private and that the European institutions have no say in the matter?

Joint answer to Written QuestionsP-1550/98 and E-1564/98 given by Mr Van Miert on behalf of the Commission

(8 June 1998)

Article 92 of the EC Treaty states that "aid to facilitate the development of certain economic activities" may be considered to be compatible with the common market "where such aid does not adversely affect trading conditions to an extent contrary to the common interest". The Community guidelines on restructuring aid(1) spell out the tests the Commission applies in order to determine whether aid to firms in difficulty, such as the aid now being granted by France to Crédit Lyonnais, is compatible with the common market. One of the conditions laid down there is that measures must be taken "to offset as far as possible adverse effects on competitors". The Commission may impose "any conditions and obligations as may be necessary", such as a reduction in the recipient's commercial presence. Under Article 155 of the Treaty, it is the Commission rather than the Member State granting the aid which is to ensure that Article 92 is being applied properly and to determine the nature and scale of the quid pro quo needed to protect the common interest.

Crédit Lyonnais is being given a volume of aid unparalleled in the history of the Community, far in excess of the aid given to it with the Commission's authorisation in 1995 and 1996, and the distortion caused in the banking sector is considerable. In the Commission's judgment, the common interest requires that measures to compensate Crédit Lyonnais's competitors should be centred mainly on Europe. The French authorities have accepted this approach and put forward in May 1998 a very far-reaching package of compensating measures in the form of asset sell-offs and branch closures. After examining the restructuring plan, the Commission came to the conclusion that Crédit Lyonnais would be viable, even after these compensating measures had been taken; that the aid was confined to what was strictly necessary; and that the compensating measures proposed by the French authorities would allow a very significant reduction in Crédit Lyonnais's commercial presence and hence in the distortion of competition caused by the aid. It should be pointed out that the Commission exercises supervision over the aid granted by Member States not with a view to safeguarding the continued existence of the recipient firms, but rather in order to ensure that the common market functions properly, without excessive distortion of competition.

The Commission has taken note of France's commitment to privatise Crédit Lyonnais rapidly, by October 1999 at the latest, in line with the objectives already announced by the French Government when the previous Decision was approved in 1995. The Commission shares the Honourable Member's view that the Treaty is neutral with respect to the ownership of business, a principle laid down in Article 222 of the EC Treaty. The Commission would point out, however, that regular state intervention in favour of the French publicly-owned banks has distorted competition considerably, to the detriment of the privately-owned banks, who did not have the benefit of similar near-automatic support from their private shareholders. In this particular context the transfer of Crédit Lyonnais to the private sector will help to ensure that in future it will turn to its private shareholders and to the market for any extra resources it needs, rather than to state aid whose distorting effect disturbs the proper operation of the common market.

(1) OJ C 368, 23.12.1994.