1999/398/EC: Commission Decision of 2 December 1998 concerning State aid granted by the region of Friuli- Venezia Giulia and the Italian Government to Seleco (notified under document number C(1998) 4035) (Text with EEA relevance) (Only the Italian text is authentic)
Date: 1998-12-02
Institutions: European Commission
Subjects: Friuli-Venezia Giulia, Italy, State aid, aid to undertakings, electronics industry, regional aid

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Official Journal of the European Communities

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II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 2 December 1998

concerning State aid granted by the region of Friuli-Venezia Giulia and the
Italian Government to Seleco

(notified under document number C(1998) 4035)

(Only the Italian text is authentic)

(Text with EEA relevance)

(1999/398/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Community, and in particular the first subparagraph of
Article 93(2) thereof,

Having regard to the Agreement on the European
Economic Area, and in particular Article 62(1)(a) thereof,

(2)

Having, in accordance with the abovementioned Article,
given
their
comments (1),

interested

submit

parties

notice

to

Whereas:

encrypted programmes (pay-TV sector) and profes-
sional television equipment (video projectors and
monitors). Like other firms in this industry in Italy,
Seleco has regularly received aid over the last 10
years (2) through the public financing institution
Ristrutturazione Elettronica (hereinafter referred to
as ‘REL' (3).

the losses,

In 1993 Selecto incurred losses of ITL 77,5 billion
(ECU 41 million), an amount exceeding its own
resources (ITL 60,6 billion in capital and reserves).
To cover
the different shareholders
concluded a cover and recapitalisation agreement at
the beginning of 1994 which provided for a partial
write-off (ITL 16 billion) of the amount owed to
REL (ITL 82 billion) by Seleco, a capital injection
of ITL 13 billion by the public financial institution
Friulia SpA and an undertaking given by the
public-sector banks to underwrite, together with
several private-sector banks, an ITL 9 billion recap-
italisation, in proportion to their respective claims.
The contribution from the public banks amounted
to ITL 3,5 billion.

I

(1)

Seleco, a company located in Pordenone, Friuli-
Venezia Giulia (Italy), employed 1 500 persons in
its consumer electronics business, more specifically
in three sectors: colour televisions, decoders for

(1) OJ C 373, 29.12.1994, p. 5; OJ C 155, 20.5.1998, p. 24.

(3)

The Italian authorities notified only the contribu-
tion from Friulia SpA, but the aid was granted

(2) In Decision C 20/91 (OJ C 166, 3.7.1992, p. 6), the Commis-
sion approved aid granted by REL to a dozen firms in the
consumer electronics industry, the largest of which was Seleco.
(3) Public body for the reconstruction of the consumer electronics
industry in Italy, whose activities were the subject of the deci-
sions of 17 January 1984 and 17 September 1985.

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(4)

(5)

(6)

before the Commission could take a decision. That
aid and the unnotified aid granted by REL and the
public-sector banks led the Commission to initiate
proceedings under Article 93(2) on 27 September
1994.

By letters dated 26 October 1994, 30 January 1995,
19 April 1995, 7 July 1995, 25 August 1995 and 19
November 1996, the Commission asked the Italian
authorities to provide more detailed information on
the abovementioned transactions.

The Italian authorities replied by letters received
on 14 October 1994, 10 November 1994, 31 March
1995, 27 June 1995, 19 December 1995, 22
January 1996, 5 December 1996 and 11 February
1997. Further details were provided at a meeting
held on 22 November 1995 between representa-
tives of the Commission and the Italian Govern-
ment.

II

At the beginning of 1996, whilst it was preparing to
close the proceedings initiated in 1994 with a
partly negative decision, the Commission learned
from press reports that other transactions may have
taken place involving public companies which may
the
have considerably altered the structure of
Seleco group. The transactions consisted in partic-
ular in: (a) the hiving-off from the parent company
of Seleco’s professional and pay-TV businesses and
their grouping together within Seleco Multimedia,
a firm which, apparently, had a capital of ITL 30
billion held equally by Seleco, Italtel (50 % private,
50 % public) and Friulia SpA (public sector); (b) a
debenture loan of ITL 12 billion launched by
Seleco and subscribed to by a pool of public and
(c) a convertible loan of ITL 12
private banks;
billion granted to Seleco by Friulia SpA;
(d) the
repurchase by Seleco of its ITL 66 billion debt
from REL for ITL 20 billion; (e) a commitment by
Italtel to repurchase the abovementioned convert-
ible loan granted by Friulia SpA.

was not committed to repurchasing the loan from
Friulia to Seleco.

(8)

By decision notified to the Italian Government by
letter dated 18 February 1998 (1), the Commission
extended the Article 93(2) proceedings so as to
allow it to examine all the aid measures taken until
then and to obtain further details concerning fresh
aid granted to Seleco in the meantime.

III

(9)

The Italian Government did not respond to the
Commission decision or
send the information
requested, despite a reminder dated 15 July 1998
stating that Italy might otherwise be ordered to
reply. It was only by a fax of 21 September 1998
that the Italian authorities officially stated that, on
17 April 1997, an Italian court had declared Seleco
bankrupt.

(7)

By letter of 19 November 1996, the Commission
asked the Italian authorities for further information
on the transactions. Replies were received on 5
December 1996 and 11 February 1997.

(10)

firm also

In their letters, the Italian authorities claim that the
Italtel and Friulia SpA investments in the capital of
Seleco Multimedia reflected normal business policy
acceptable to a private investor since, in acquiring
Seleco Multimedia,
acquired
the
know-how. As regards the debenture loan of ITL
12 billion granted to Seleco by a consortium of
banks and that granted by Friulia SpA, the Italian
authorities claim that the loan was in line with
market conditions. As regards the repurchase by
Seleco of its outstanding debt to REL of ITL 66
billion for the price of ITL 20 billion, the Italian
authorities claimed that the discount rate applied to
the debt was justified by the risks caused by major
difficulties on the consumer electronics market in
Italy. Lastly, the Italian authorities stated that Italtel

the status of

Following that communication, the Commission
requested the Italian Government by letter of 29
September 1998 to provide further information
concerning (a)
the liquidation of
Seleco, (b) a list of public-sector and private-sector
creditors as well as the amounts owed to them, (c)
the possible granting of other aid apart from that
covered by the proceedings initiated in 1994 and
extended in 1998, and (d) the possible use of the
commercial assets of Seleco, in particular to set up
other
industrial projects. The Commission also
asked whether it was possible to include new debts
in the bankruptcy proceedings, in particular with a
view to the possibility of recovering aid which had
in the meantime been declared incompatible with
the common market.

(1) Decision of 4 February 1998 (OJ C 155, 20.5.1998, p. 24).

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(11)

(12)

By letter dated 7 October 1998 and sent in reply to
the Commission letter of 29 September 1998, the
Italian authorities stated that
they had become
aware of the Commission decision of 18 February
1998 to extend the Article 93(2) proceedings only
when they received the reminder of 15 July 1998,
This is particularly surprising as the Commission
had sent a copy of the decision to the Office of the
Italian Permanent Representative on the same date,
i.e. 18 February. The Italian authorities also stated
that
it was impossible to answer the questions
asked by the Commission within the time limit of
15 working days.

By letter
received by the Commission on 17
November 1998, the Italian authorities replied to
the Commission letter of 29 September 1998.
However, the present decision remains necessary as
the information supplied does not contain a
complete list of Seleco’s public-sector and private-
sector creditors. Furthermore,
the information
required by the present decision is more extensive
and more detailed compared with the request made
in the letter of 29 September 1998.

HAS ADOPTED THIS DECISION:

Article 1

Italy shall provide the Commission, within 15 working
days of being notified of this decision, with all the infor-
mation necessary to allow it to assess the compatibility
with the common market of the aid granted to Seleco by
the region of Friuli-Venezia Giulia through Friulia SpA
and by the Italian State through the financial institution
Ristritturazione Elettronica and a number of public banks,
as well as by other means.

Article 2

Italy shall supply the information requested by

1.
letters of 18 February 1998 and 29 September 1998.

(13)

The Commission is unable, on the basis of the
information available, to decide whether the aid
granted to Seleco is compatible with the Treaty.

2.

Italy also hereby requested:

IV

(14)

In accordance with the case-law of the Court of
Justice (1), if the Commission finds that aid has
been granted or altered without having been noti-
it has the power, after having given the
fied,
Member State concerned the opportunity to express
its views,
to require it, by provisional decision,
pending the outcome of its assessment of the aid,
to provide the Commission within a specified
period, with all the documents, information and
data required for it to assess the compatibility of
the aid with the common market.

(15)

Should the Italian Government fail to provide the
information requested, the Commission will take a
decision on the basis of the information in its
possession,

(1) Case C-301/87 Boussac [1990] ECR I-307; Joined Cases C-324
and 342/90 Germany and Pleuger Werthington v. Commis-
sion [1994] ECR I-1173.

(a) to list any other aid granted to Seleco in addition to
that referred to in the decision initiating proceedings
under Article 93(2) and in the decision extending the
proceedings, notified to the Italian Government by
letter of 18 February 1998;

(b) to state the economic and commercial reasons, if any,
which prompted Seleco in 1996 to hive off some of its
assets and place them in another company, Seleco
Multimedia, and to give details of the parent compa-
ny’s balance-sheet position at the time of the hive-off
operation. A detailed report should also be submitted
on changes in the shareholding structure of Seleco
Multimedia from the time it was set up to the present;

it was subject

(c) to state whether, before the company was declared
bankrupt,
to supervision within the
meaning of Articles 187 et seq. of Decree No 267 of
16 March 1942 (Bankruptcy Law) or whether
it
pursued its business activities on the basis of a court-
approved creditors’ agreement within the meaning of
Article 160 et seq. of the Bankruptcy Law. In either
case, a report should be submitted on Seleco’s activi-
ties, as well as a list of the creditors sitting on the
committee set up under the supervision or creditors’
arrangements and a copy of the minutes of the meet-
ings of that committee relating to the discussion and
acceptance of supervision or participation in the cred-
itors’ agreement, with an indication of the amounts
owed to the State by Seleco in the form of taxes, social
security contributions or public funds for workers;

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(d) if the company was not placed under a supervision or
creditors’ arrangement, to give a description of the
circumstances in which bankruptcy was declared in
1997, together with details of any amounts owed to
the State by Seleco in the form of taxes, social security
contributions or public funds for workers; to specify
the applicant and provide a copy of the adjudication
of bankruptcy, a list of creditors, the amounts owed to
them and their respective ranking. In addition, the
current status of the bankruptcy proceedings should
be indicated and details concerning any applications
for review given;

(e) to submit a detailed report on all commercial and
financial activities undertaken by Seleco following the
declaration of bankruptcy. If appropriate, Italy should
provide, alongside a description of
the legal basis
invoked and the underlying economic reasons, (i) a list
of creditors participating in any committee of cred-
the opinions given by that
itors and a copy of
committee on the question of starting and continuing
such activities, and (ii) the amounts owed by Seleco to
the State in the form of taxes, social security contribu-
tions or public funds for workers;

(f) to provide a detailed description of the liquidation of
Seleco’s assets from the date of declaration of bank-

ruptcy until now, as well as the conditions and
arrangements for the transfer of its commercial assets;

(g) to describe the conditions and arrangements for the
distribution among the creditors of the bankruptcy of
revenue from the sale of the assets of Seleco. If the
distribution is based on a court-approved arrangement
with creditors,
the underlying economic reasons
should be given, together with a copy of the proposed
arrangement, the minutes of the meeting at which the
creditors’ committee accepted the arrangement, and
the decision of the court approving the said arrange-
ment.

Article 3

This decision is addressed to the Italian Government.

Done at Brussels, 2 December 1998.

For the Commission

Karel VAN MIERT

Member of the Commission