WRITTEN QUESTION E-0221/00

by Ilda Figueiredo (GUE/NGL) to the Commission

(4 February 2000)

Subject: State aid to the EPAC Empresa para a Agro-Alimentação e Cereais, SA (Agro-foods and Cereals Company, Ltd)

The EPAC, SA agro-foods and cereals company was recently dissolved by the Portuguese Government, leaving only the EPAC-Comercial, which according to reports in the press is also under threat unless the Commission authorises state aid.

The EPAC, SA employed over 1 000 workers and played a major role in cereal marketing in Portugal. Still at stake are over 160 jobs.

What is the Commission's position with regard to retaining the EPAC-Comercial at least, and hence safeguarding the jobs of the more than 160 people it employs?

What, in the light of the decisions taken, are the Commission's responsibilities regarding the dissolution of the EPAC, SA and the hundreds of people now out of work as a result?

Answer given by Mr Fischler on behalf of the Commission

(15 March 2000)

The Commission is responsible for monitoring State aids under the EC treaty, Articles 87-89 (former Articles 92-94) of which make aid granted by the Member States that distorts or threatens to distort competition by favouring certain undertakings, or the production of certain goods, incompatible with the common market.

At the end of 1996 the Commission received a complaint from private operators engaged in the cereals trade concerning a guarantee granted by Portugal to the Empresa para a Agri-Alimentação e Cereais, SA (EPAC) in relation to a loan to consolidate its bank debt. On 9 July 1997, the Commission adopted a negative final decision with regard to this guarantee. Portugal did not apply this decision, which it referred to the Court of Justice. Legal proceedings are still continuing.

Portugal also notified the Commission of a restructuring programme for this firm and an aid measure for the harbour company Silopor. In view of the relationship existing between these two public-sector companies, the Commission considered these cases together. The restructuring plans were discussed at length by Portugal and the Commission and proceedings were opened under Article 88(2) (former Article 93) of the EC Treaty.(1) The final version was sent at the end of 1999. The Commission will adopt its final position on this matter as soon as possible.

As regards the employment aspect, the Commission would stress that the financial difficulties of EPAC resulted from its failure to adapt to the European single market in cereals, not to any obligations arising from compliance with the Community competition rules.

The Community guidelines on State aid for firms in difficulty(2) are based on the restoration of the economic viability of the firms which would benefit. These firms have to take internal measures under a restructuring plan to restore their long-term viability within a reasonable timescale based on realistic assumptions. The aid may not have a harmful impact on the other firms active on the market which do not have access to similar aid.

Lastly, the Community guidelines leave the Member States considerable freedom to grant aid to cover the social costs arising from these restructuring processes.

(1) OJ C 363, 25.11.1998.

(2) OJ C 288, 9.10.1999.