2008/281/EC: Commission Decision of 25 September 2007 on measure C 45/06 (ex NN 62/A/06) implemented by France in connection with the construction by AREVA NP (formerly Framatome ANP) of a nuclear power station for Teollisuuden Voima Oy (notified under document number C(2007) 4323) (Text with EEA relevance)
Date: 2007-09-25
Institutions: European Commission
Subjects: Finland, France, State aid, control of State aid, exchange of information, financing, invitation to tender, nuclear power station

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(Acts adopted under the EC Treaty/Euratom Treaty whose publication is not obligatory)

II

DECISIONS

COMMISSION

COMMISSION DECISION

of 25 September 2007

on measure C 45/06 (ex NN 62/A/06) implemented by France in connection with the construction
by AREVA NP (formerly Framatome ANP) of a nuclear power station for Teollisuuden Voima Oy

(notified under document number C(2007) 4323)

(Only the French version is authentic)

(Text with EEA relevance)

(2008/281/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(2)

The Commission registered the complaint under registry
No CP 201/2004 on 29 October 2004.

Having regard to the Treaty
Community,
and in particular
Article 88(2) thereof,

establishing the European
subparagraph of
the

first

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

Having called on interested parties to submit their comments (1)
pursuant to the provisions cited above and having regard to
their comments,

Whereas:

1. PROCEDURE

(1)

By letter of 11 October 2004, registered as received by
the Commission on 15 October 2004, Greenpeace
submitted to the Commission a complaint concerning
the granting by Compagnie française d'assurance pour
le
a
guarantee in respect of the exportable French portion
the services provided by Framatome ANP to the
of
Finnish company Teollisuuden Voima Oy
(TVO).
Framatome ANP has since been renamed AREVA NP (2).

(hereinafter Coface)

commerce

extérieur

of

(3)

(4)

(5)

(1) OJ C 23, 1.2.2007, p. 11.
(2) To facilitate understanding of

‘AREVA NP’ will be used, even for
change of name.

the decision,

the current name
the period preceding the

By letter of 4 November 2004 (ref. D/57822),
the
Commission asked the French authorities for information
on the guarantee. The French authorities provided the
information by letter of 10 December 2004, registered
as received by the Commission on 13 December 2004.

By letter of 14 December 2004, registered as received by
the Commission on 16 December 2004, the European
Renewable Energies Federation asbl (EREF) submitted to
the Commission a complaint challenging the conformity
with Community
for
and operating TVO's new
constructing,
nuclear power station. It claims that, in addition to the
Coface guarantee,
the financing offered by Bayerische
Landesbank (BLB) and by AB Svensk Exportkredit (SEK)
also constitutes aid.

arrangements

financing

law of

the

The Commission registered the State aid aspects of this
on
complaint
under
21 December 2004. To a
then
examined the two complaints jointly since complaint
CP 238/2004 covers the same ground as complaint CP
201/2004.

registry No CP 238/2004
large

extent,

it

(6)

(7)

(8)

(9)

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the
By letter of 15 February 2005 (ref. D/51174),
Commission asked the German authorities for infor-
mation on the measures referred to in the complaints.
The German authorities provided the information by
letter of 16 March 2005, registered as received by the
Commission on 17 March 2005.

complaints. The French authorities provided the infor-
mation by e-mail of 20 February 2006, registered as
received by the Commission on 21 February 2006 and
supplemented by an e-mail of 10 March 2006, registered
as received by the Commission on 13 March 2006.

By
the
letter of 26 May 2005 (ref. D/54101),
Commission asked the French authorities for information
on the measures referred to in the complaints. The
French authorities provided the information by letter of
26 July 2005, reigstered as received by the Commission
on 27 July 2005.

(14)

(15)

The French authorities provided the Commission with
additional
information on the measures referred to in
the complaints by an e-mail of 5 April 2006, registered
as received by the Commission the same day.

By letter of 4 May 2006, registered as received by the
Commission on 12 May 2006, Greenpeace provided the
Commission with additional
information on complaint
CP 201/2004.

By letter of 7 June 2005 (ref. D/54366), the Commission
asked the Finnish authorities for information on the
measures referred to in the complaints. The Finnish auth-
orities provided the information by letter of 8 July 2005,
registered as received by the Commission on 11 July
2005.

(16) On 4 July 2006 a meeting took place between the
Commission, the French authorities and representatives
of a bank, AREVA NP and TVO at which the French
authorities
on the measures
documents
referred to in the complaints.

provided

By letter of 8 June 2005 (ref. D/54377), the Commission
asked the Swedish authorities for information on the
measures referred to in the complaints. The Swedish
authorities provided the information by letter of 7 July
2005, registered as received by the Commission on
18 July 2005.

(10) On 2 September 2005 a meeting took place between the

Commission and EREF.

(11)

(12)

By letter of 18 November 2005, registered as received by
the Commission on 22 November 2005, EREF provided
the Commission with additional details regarding its
complaint of 14 December 2004, including in particular
details regarding the State aid referred to in complaint CP
238/2004.

By letter of 9 December 2005 (ref. D/59668),
the
Commission asked the Swedish authorities for additional
referred to in the
information on the measures
complaints. The Swedish authorities provided the infor-
mation by letter of 6 April 2006, registered as received
by the Commission on 10 April 2006.

(13)

By letter of 13 January 2006 (ref. D/50295),
the
Commission asked the French authorities for additional
referred to in the
information on the measures

(17)

By letter of 18 July 2006, registered as received by the
Commission on 25 July 2006, EREF provided further
details regarding complaint CP 238/2004 and called on
the Commission to take a decision in the matter.

(18) On 7 September 2006 the Commission grouped together
the two complaints under registry No NN 62/06. On
20 September 2006 it split the case into two (3) sub-
cases, NN 62/A/06 and NN 62/B/06. Case NN 62/A/06
covers the aspects of the complaints that relate to the
Coface guarantee, while Case NN 62/B/06 covers the
aspects of complaint CP 238/2004 that relate to the
loan
facility involving BLB and the bilateral
credit
provided by SEK (complaint CP 201/2004 does not
cover these aspects).

(19) On 24 October 2006 the Commission took a decision in
each of the two cases. In the first decision (4) it took the
view that the measures covered by Case NN 62/B/06 did
not constitute aid. It then informed France of its decision
to initiate the procedure provided for in Article 88(2) of
the EC Treaty in respect of the Coface guarantee, with
Case NN 62/A/06 being renumbered C 45/2006. This
measure is the subject matter of the present decision,
procedure
which
C 45/2006.

investigation

terminates

formal

(3) This was necessary as some of the measures concerned France while
others concerned Germany and Sweden. Some confidential
infor-
mation was provided, especially on the French part of the file, and
could not be communicated to the other Member States. Moreover,
the Commission was ready to take a definitive decision on the
German and Swedish part of the file on completion of the pre-
liminary investigation, whereas a formal
investigation procedure
had to be launched for the French part.

(4) C(2006) 4963 final (OJ C 23, 1.2.2007, p. 5).

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(20)

(21)

By letter of 14 November 2006, registered as received by
the Commission on 16 November 2006,
the French
authorities
asked the Commission to extend the
deadline for submitting their comments. By letter of
the Commission granted an
30 November 2006,
extension. The
their
French authorities
comments by letter of 22 December 2006, registered
as received on 4 January 2007.

submitted

The Commission decision to initiate the procedure was
published in the Official Journal of the European Union (5)
on 1 February 2007. The Commission called on
their comments on the
interested parties to submit
measures in question.
It received comments from 10
interested parties. It forwarded them to France by letter
of 23 March 2007 (ref. D/51341), giving the latter the
opportunity to comment. After requesting an extension
of the deadline set, the French authorities submitted their
comments by letter of 11 May 2007,
registered as
received on 14 May 2007.

TVO informed the AREVA NP/Siemens consortium that
it was the preferred bidder. The construction contract
was signed on 18 December 2003. According to the
information received by the Commission, alongside the
consortium selected, […] (*) had participated in the invi-
tation to tender.

(27) Olkiluoto 3 will be the first of a new generation of
European pressurised-water
(EPRs), with a
planned capacity of 1 600 MW. According to the
initial planning, the reactor was to come on stream in
construction work is behind
2009 but,
schedule,
it is planned to come on stream at the end
of 2010/beginning of 2011.

reactors

since

the

2.2. Financing

(28)

TVO is using several sources of financing for Olkiluoto 3,
which will cost more than EUR 3 billion.

2. DESCRIPTION

2.1. The Olkiluoto 3 project

(22) At present, Finland has four nuclear reactors. Two of
them, owned by the company Fortum, are situated in
Loviisa, while the other two, owned by TVO, are in
Olkiluoto.

(29)

(23)

TVO is a non-profit company which supplies electricity
to its shareholders at cost price. Its capital is divided into
several tranches, each corresponding to a power station
or group of power stations. Possession of part of a
to buy an
tranche of TVO capital confers the right
equivalent
the corre-
the production of
sponding power station or stations at cost price.

fraction of

Firstly, TVO's shareholders have agreed to increase TVO's
capital (own funds) by an amount equivalent to some
[15-30] % of
the project cost by creating a specific
tranche of shares for the new reactor. Secondly, a subor-
dinated loan equivalent to [0-15] % of the total cost will
In addition to this
be provided by the shareholders.
financing provided by the
shareholders when the
investment contract was
signed in December 2003,
TVO arranged a credit facility with a syndicate of inter-
national banks and a series of bilateral loans. Most of this
debt financing was then refinanced by means of a loan
guaranteed by Coface in March 2004, a new credit
facility concluded in June 2005 and a number of new
bilateral loans.

(24)

VTO's shareholders are essentially energy and industrial
enterprises that are large consumers of electricity.

2.2.1. The credit facility

(30)

The facility (credit facility) is for EUR 1,35 billion.

(25)

(26)

TVO, which already owns two nuclear reactors, has a
shareholding in a coal-fired power station and operates
a wind farm, is currently having a third nuclear reactor
built at the Olkiluoto site, to be known as ‘Olkiluoto 3’.

(31)

The entity responsible for constructing Olkiluoto 3 is a
consortium comprising Siemens and AREVA NP, itself a
subsidiary of AREVA and Siemens, which hold 66 % and
34 % respectively of
the capital. The consortium was
selected by TVO following an invitation to tender
launched in September 2002. On 15 October 2003

in which BLB, BNP Paribas,

The credit facility was granted to TVO by a banking
syndicate
JP Morgan,
Nordea and Svenska Handelsbanken were the mandated
lead arrangers. By letter of 11 November 2003, these five
banks each undertook to provide,
if necessary, up to
EUR 500 million, representing EUR 2,5 billion in total.
In the course of the syndication process, other banks par-
ticipated in the credit facility. On 17 December 2003 the
credit facility was signed by 12 banks participating on
equal terms.

(5) See footnote 1.

(*) Information covered by professional secrecy.

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(32)

(33)

(34)

facility comprises

two tranches, with a
The credit
respective maturity of five and seven years. It carries a
EURIBOR-indexed variable interest rate. The five-year
tranche offers a spread of […] basis points (bps) above
EURIBOR for the first three years, with a step-up of […]
bps for the years […]. The seven-year tranche offers a
spread of […] bps for the first three years and then a
step-up of […] bps for the years […] and […] bps for
the years […]. The loan is not backed by any public
guarantee.

The contract between VTO and the banks that was
signed on 17 December 2003 was
for
EUR 1,95 billion.
In March 2004 this amount was
reduced to EUR 1,35 billion after TVO had been
granted the Coface-guaranteed loan described in Section
2.2.2.

initially

In June 2005, alongside other financing, TVO concluded
a new EUR 1,6 billion credit facility on the back of more
favourable market conditions, paying an average spread
of only […] bps above EURIBOR for this seven-year
facility. Since it had met its initial Olkiluoto 3-related
disbursements out of
financing
described in this section, and in particular the share-
holder funds, TVO in the end never had to call on the
credit
facility concluded in December 2003 and thus
terminated it.

the other sources of

(35) On 11 June 2004 the Commission gave a positive
opinion in accordance with Article 43 of the Euratom
Treaty in which it concluded that the industrial project in
question contributed to improving the security and
diversity of supply at both regional and European level
and that all aspects of the investment were consistent
with the objectives of the Euratom Treaty.

2.2.2. The loan guaranteed by Coface

(36)

This is a EUR 570 million credit facility (‘the guaranteed
loan’, the word ‘loan’ having been selected to avoid any
confusion with the credit facility referred to in Section
2.2.1) and granted by the same mandated lead arrangers
as those referred to in paragraph 31, excluding the bank
[…].

(37)

The loan principal will be gradually drawn down by TVO
over a five-tear period, with the sums borrowed over

time matching the payments to be made by TVO to
AREVA NP. Repayment of the loan will be in the form
of constant six-monthly repayments of the principal. It
will begin six months after the last disbursement and will
be spread over 12 years. The average duration of the loan
as calculated by the French authorities is 8,92 years.

(38)

The interest rate payable to the banks is variable and
indexed to EURIBOR. The loan offers the banks a
spread of […] bps above EURIBOR.

(39)

(40)

(41)

The loan is backed by a guarantee granted by Coface as
part of its export credit insurance activities on behalf of
the French State. The insurance has been taken out by
the banks and the insured parties are the banks, with
the loan amount. For this
Coface insuring 95 % of
insurance Coface charges a flat-rate premium of [2,5-
3,5] % for each payment, the total premiums payable
to Coface
amounting to EUR [14,25-19,95]
million. The premium is charged to the banks, which
in addition to the interest
in turn charge it to TVO,
rate referred to in paragraph 38.

thus

The French Export Credit and Guarantee Commission
(CGCCE), which was responsible for deciding whether
or not the guarantee should be provided, delivered a
positive decision on 17 November 2003. Coface
promised to provide a guarantee on 1 December 2003.
The guaranteed loan was concluded on 25 March 2004.

France gave notification of the guarantee to the par-
ticipants in the Arrangement on Officially Supported
Export Credits concluded within the OECD (the OECD
Arrangement) on 20 November 2003.
It should be
pointed out that the transaction in question was not
the participants to the OECD
challenged by any of
Arrangement.

2.2.3. The bilateral loans

(42)

In addition to the credit facility, when the investment
taken, TVO contracted a number of
decision was
financial bodies
bilateral
loans with various other
totalling EUR […] million. One of
the loans was
contracted with SEK for an amount of EUR 100
million (see the decision in Case NN 62/B/06).

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2.2.4. Synopsis of the financial package and the chronology of events

(43)

The following table gives the breakdown of the financing for the Olkiluoto 3 project as at 25 march
2004:

Breakdown of the financing for the Olkiluoto 3 project (as at 25 March 2004)

Table 1

Source of financing

amount (EUR)

Proportion of project cost

Increase in capital of TVO

Subordinated shareholder loan

[…] million

[…] million

[15-30] %

[0-15] %

Credit facility

1,35 billion

approx. 42 %

Loan guaranteed by Coface

570 million

approx. 18 %

Bilateral loans

[…] million

Total

> 3 billion

[15-30] %

100 %

(44)

The following table gives the chronology of events:

Table 2

Project schedule (main stages 2002-04)

Date

Event

Before September 2002

Selection by TVO of the nuclear reactor for the power station
(procedure for obtaining the corresponding permits)

September 2002

Launch of the tender invitation (the criteria for assessing the bids set
out
include the provision of
financing by the bidders)

in the tender documents do not

March 2003

Receipt of the bids by TVO and start of the assessment procedure

May-June 2003

Alongside and independently of the assessment procedure, TVO
asks the bidders to comment on the possibility of obtaining an
export credit as an alternative source of financing

August-September 2003

TVO launches an invitation to tender for banks interested in
providing a EUR 2.5 billion syndicated loan

15 October 2003

The AREVA NP/Siemens consortium is notified by TVO of
‘preferred bidder’ status

its

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Date

Event

11 November 2003

Commitment by five banks to provide up to EUR 2,5 billion

1 December 2003

17 December 2003

18 December 2003

Following the positive decision by the CGCCE of 17 November
2003, Coface issues the promise of a guarantee to AREVA NP in
respect of a EUR 570 million export credit

Signing of the EUR 1,95 billion syndicated credit facility (with no
Coface guarantee) to cover total financing needs with the support of
shareholders and the other bilateral loans

Signing of the commercial contract between TVO and the AREVA
NP/Siemens consortium for the construction of the nuclear power
station

End December 2003-January 2004

TVO begins discussions with the banks on the terms and conditions
of an export credit

4 February 2004

25 March 2004

The terms and conditions of an export credit are agreed on by TVO
and the banks (in particular, fixing of the bank spread)

Signing of the EUR 570 million loan guaranteed by Coface and
subsequent reduction of the syndicated credit facility to EUR 1,35
billion

(45)

3. GROUNDS FOR INITIATING THE PROCEDURE

the

the

first

time whether

insurance premium of

In its decision of 24 October 2006, the Commission
examined for
the measure
constituted aid within the meaning of Article 87(1) of
the EC Treaty. The decision ascertained in detail whether
or not an advantage was conferred. The Commission
noted that
[2,5-3,5]%
charged by Coface could not be compared directly to a
market rate since no insurer seemed to offer this type of
financial product. However, as the public guarantee was
for a loan, it seemed that the total cost of the guaranteed
loan — defined as the sum of the interest paid and the
guarantee premium — could be compared with that
which would have had to be borne by the borrower if
there had been no public guarantee. On the basis of a
comparison of the total cost of the guaranteed loan with
the cost of the credit facility described in Section 2.2.1,
the
the
Commission came to the preliminary conclusion that
the guaranteed loan did not
seem to reduce the
the borrower would normally
financial charges
have had to bear.
that no
It would seem,
advantage was conferred on TVO. The Commission
would though point out that this preliminary conclusion
is based on a certain number of assumptions. And so it
was unable to rule out at that stage any possibility that
the measure constituted aid and it decided to allow
France and the interested parties to comment on the

latter being regarded as

a market

therefore,

rate,

that

methodology used and on the assumptions on which the
Commission based its analysis of the existence of an
advantage.

(46) As for the compatibility of any aid, the Commission
would comment that,
if some particulars suggest com-
patibility on the basis of Article 87(3)(c) of the EC Treaty,
others seem to point in the opposite direction. The com-
patibility of any aid cannot, therefore, be presumed a
priori.

(47)

(48)

Since there can be no ruling out the possibility that the
measure constituted aid and since, if this were the case, it
was not certain that the measure would be compatible,
the Commission decided to initiate the formal
investi-
gation procedure.

4. COMMENTS BY INTERESTED PARTIES

By letter of 2 January 2007, TVO sent its comments to
the Commission. It stated that the decision to initiate the
procedure contained a number of
factual errors and
suggested some corrections. It also took the view that
some of the assessments made by the Commission were
based solely on a certain number of hypothetical suppo-
sitions and were speculative in nature. As to the existence

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of any advantage, TVO, referring back to the Com-
mission's preliminary assessment, pointed out that the
loan guaranteed by Coface was more expensive than
the credit
financing
facility and the other sources of
available at the time. It opted nevertheless for the guar-
anteed loan because of its longer period to maturity and
because it reduced the amounts lent by the banks, thus
making the amounts not
future
financing needs (6). TVO therefore considered that the
the
Commission should come to the conclusion that
guarantee did not constitute aid within the meaning of
Article 87(1) of the EC Treaty.

lent available

for

By letter of 1 March 2007, Greenpeace, which was the
first to submit a complaint when the present procedure
was initiated (see Section 1), set out
its comments,
recalling that export aids within the Community had
always been prohibited so that,
the
Commission should take a negative decision on the
measure in question, with the aid being recovered. The
letter did not comment on the preliminary analysis in the
decision initiating the procedure as to the existence or
otherwise of an advantage.

in its opinion,

an export

By letter also dated 1 March 2007, EREF, which was the
second complainant at the time (see Section 1), set out
its comments. In its view, it was clear that the granting
of
exports
constituted unlawful State aid. EREF referred back to
the arguments contained in its letter of 18 November
2005 and asked that that letter be included in the file
relating to the present procedure.

intra-Community

credit

for

in its view,

For EREF, Coface's involvement in the financing of the
project gives a strong signal to private banks that they
should participate too since,
the Coface
guarantee mitigates the risk for the banks involved in
the financing and reduces the amount of own funds
mobilised by the banks for the loans in question. By
lowering the risks borne by the banks,
the Coface
guarantee would be an incentive for them to grant
reduced-rate loans to TVO. The advantage conferred by
greater. EREF
the
financing
considers that
might
to withdraw its
if Coface were
guarantee. It asked the Commission to take a look at
all the contractual relationships between the parties and
at the negotiating process that led to these contracts
being concluded.

guarantee would,

the structure of

therefore, be

the project

collapse

(49)

(50)

(51)

(52) Apart from the general points summarised in paragraph
51, EREF's letter does not comment on the preliminary
analysis in the decision to initiate the procedure as to the
existence or otherwise of an advantage.

(53)

In addition to the three letters mentioned in paragraphs
48, 49 and 50, the Commission received comments from
six Member States — the Netherlands, Sweden, Finland,
the Czech Republic, Austria and Germany — and from
the Chairman of the Council Export Credits Group (7).
The Member States concerned do not comment on the
specific features of the case but criticise the Commission
for initiating the Article 88(2) procedure in respect of an
export credit and for taking the view that such a measure
may constitute incompatible State aid. They consider that
export credits are governed by the OECD Arrangement,
which has been incorporated into Community law. By
subjecting an export credit to the state aid procedures
laid down in Article 88 of
the
Commission is creating considerable legal uncertainty
and may be weakening the position of European
exporters vis-à-vis their foreign competitors.

the EC Treaty,

5. COMMENTS BY FRANCE

(54)

The French authorities begin by recalling the character-
istics and main stages of the project, especially as regards
financing and the invitation to tender.

by

on

applied

it shows that

the methodology

(55) As for the assessment of the measure in question, the
French authorities argue mainly that the measure cannot
be classified as aid. They maintain in particular that it
does not confer any advantage. According to them, the
Coface guarantee was granted on market terms. They
comment
the
Commission in its decision to initiate the procedure.
They regard it as one commonly used by banks and
note that
the guarantee premium was
granted at market rates. They go on to say that the
methodology can be usefully supplemented and verified
by applying a more complex method for valuing
financial assets which they describe as a ‘method for
comparing credit values’. On the basis of this second
method, the French authorities come to the conclusion
that a bank would have attributed a higher value to the
guaranteed loan than to the credit facility, that is to say,
they would have regarded the former as being more
remunerative. This amounts to saying that
the credit
guaranteed by Coface confers no advantage on any of
the partners in the project in the form of lower financing
costs. The French authorities also argue that the measure
cannot be classified as Sstate aid since it affects neither
competition nor trade between Member States.

(6) The original text reads as follows: ‘TVO selected the facility on the
basis that it had slightly longer maturity profile and it saved some
room from banks for future financing needs.’

(7) Germany, which is chairing the Group, has pointed out that the
United Kingdom does not agree with all of the views expressed.

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(56)

(57)

(58)

In the alternative, France argues that, if the measure were
it would be compatible with the
to constitute aid,
common market. On the one hand,
it would be
compatible on the basis of Article 87(3)(c) of the EC
Treaty since it pursues a legitimate objective and does
not affect trade to an extent contrary to the common
interest. On the other hand, it would be compatible on
the basis of Article 87(3)(b) of the EC Treaty.

to recovery,

referring in particular

expectations. According

legitimate
the Commission has

In the latter respect, France furthermore points to various
to the
obstacles
principle of
to
traditionally taken no
France,
action with regard to medium- or long-term export
credits. The measure is also compatible with the rules
of the OECD Arrangement. On these points, France's
analysis reflects the comments presented by the other
Member States mentioned in paragraph 53.

(61)

6. ASSESSMENT OF THE MEASURE

In order to assess the measure implemented by France in
March 2004,
to establish
the Commission has first
whether it constitutes State aid within the meaning of
it
Article 87(1) of the EC Treaty.
points out that an export credit or a guarantee linked
to such a credit may, especially where it relates to a
transaction between Member States, constitute State aid
within the meaning of Article 87(1) of the EC Treaty.
The OECD Arrangement does not automatically rule out
the possibility that such a measure may constitute State
aid within the meaning of Article 87(1) (8).

In this connection,

(59)

In its decision initiating the procedure, the Commission
states that, on the basis of an initial analysis, the measure
does not seem to constitute aid, in particular because it
does not seem to confer an advantage on the beneficiary.
Accordingly, it should be ascertained whether there are
any new elements that call the preliminary analysis into
question.

(62)

6.1. Classification as State aid: existence of an
advantage

6.1.1. Introduction

(60)

In its decision initiating the procedure, the Commission
notes that the measure is a guarantee in respect of a loan
provided by some banks to TVO and rules out the possi-
bility that it confers an advantage on the banks. This
assessment has not been challenged by the parties that
presented their comments to the Commission under the
present procedure. The Commission, in this decision, will
therefore simply verify the existence or otherwise of an
advantage for the borrower TVO and its supplier AREVA

(8) However,

in some cases,

the OECD Arrangement may be a
significant element to be taken into account in the anlysis of the
compatibility of such a measure on the basis of Article 87(3) of the
EC Treaty.

If

it cannot be ruled out at

the decision initiating the
NP. As regard the latter,
procedure states that
this
stage that France made the provision of the guarantee
to TVO conditional on the contract being concluded with
this were the case, France would be
AREVA NP.
conferring an advantage on TVO provided that AREVA
NP were selected as the supplier. AREVA NP would,
therefore, also benefit from the measure. It follows that
the existence of an advantage for TVO is a necessary
prior condition for the existence of an advantage for
In the present decision, the Commission
AREVA NP.
will
existence or
ascertain initially
otherwise of an advantage for TVO.

therefore

the

if

confers

guarantee

The advantage that a borrower like TVO might obtain
from a public guarantee in respect of a loan is a
In order to establish
reduction in its financing costs.
whether or not
an
a public
advantage on the borrower,
there is a case therefore
for determining which financial charges the borrower
would have had to bear
it had resorted to the
market in bank loans without any public intervention
and for comparing this cost with the cost
incurred
after public intervention.
It should also be ascertained
whether some companies simply have no access to the
capital market and can take this step only with the help
the advantage
of public intervention.
accruing from public intervention may be even greater.
that EREF
In such circumstances and given the fact
doubts that VTO had access to the market
in bank
the Commission, before analysing
loans at
whether there was any reduction in financial charges,
will ascertain whether TVO had access to the capital
market and whether
to
finance the entire Olkiluoto 3 project.

such access was

In such a case,

the time,

sufficient

6.1.2. Analysis of access to the market in bank loans

It

guarantor

transpires that

In Section 2 of this decision the Commission analysed
the different stages of the Olkiluoto 3 project and its
financing.
the guaranteed loan was
formally provided in March 2004. However, Coface
as
had undertaken to stand
1 December 2003, a move that had been approved by
the CGCCE on 17 November 2003. On 11 November
2003 five banks had formally undertaken to provide
TVO with up to EUR 2,5 billion,
loan being
sufficient to complete the financing of the project. The
information provided by the French authorities demon-
strates that, even before the intervention of the French
Government, TVO had sufficient access
to financial
markets to be able to finance the entire project.

early

this

as

(63)

The Commission would also point out that TVO was
investment grade by a leading rating
classified as
agency when setting up the different financing packages
for the Olkiluoto 3 project.
In the normal course of
events, such a rating guarantees easy access to the
market in bank loans and so TVO cannot be regarded
as a firm in difficulty.

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Official Journal of the European Union

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(64)

the

amount of

the guaranteed loan,

Lastly, the Commission notes that the guaranteed loan
(EUR 570 million) is small compared with the aggregate
amount of capital raised (over EUR 3 billion). Conse-
quently, even after the intervention of Coface, the bulk
of the project is still being financed by the market. As
regards
the
Commission would comment
that on 11 November
2003 five banks had agreed to provide up to EUR 2,5
billion, i.e. up to EUR 500 million each. The risk borne
by the French State is thus comparable to that which
private banks were prepared to bear. Accordingly, par-
ticipation by the French State in the financing of the
project did not diversify the sources of the finance or
reduce the risks borne by the other banks any more than
if another bank had participated in the financing of the
project.

(65) On the basis of

its disposal,

the
the information at
Commission has come to the conclusion that TVO had
sufficient access to financial markets prior to any public
intervention. Contrary to what EREF states, the French
Government did not play the role of lead investor and
provided its guarantee at a time when the financing for
the entire project had already been secured. What
is
the French Government had acted as lead
if
more,
investor,
its intervention was in respect of an amount
that was small compared with all the funds needed to
finance the project and therefore insufficient to have a
knock-on effect on private investors. The Commission
also comes to the conclusion here that the possibility
— referred to by EREF — of
the financing for the
project
guarantee were
withdrawn can reasonably be ruled out.

the Coface

collapsing

if

(66)

(67)

6.1.3. Analysis of the existence of a reduction in financial

charges for TVO

Since it has been established that, contrary to EREF's
to the capital
assertion, TVO had sufficient access
market,
the
it should be ascertained whether or not
the guarantee premium asked by the French
level of
Government led to a reduction in the financial charges
that TVO would have had to bear in the absence of
public intervention.

i.e.

In the decision initiating the procedure, the Commission
institution currently
stated that no insurer or financial
offered the precise type of insurance as that offered by
Coface in the present case,
insurance against a
payment default by TVO in the long term. The fact
that the market does not at present offer this type of
insurance is confirmed by the French authorities and has
not been challenged by the complainants. This is not
contradicted by the Commission communication to the
Member States pursuant to Article 93(1) of the EC Treaty
applying Articles 92 and 93 of the Treaty to short-term

(68)

(69)

(70)

insurance (9), according to which, while
export-credit
there is a market for short-term export-credit insurance,
this is not always the case for medium- and long-term
insurance. Consequently, the price charged by the French
authorities cannot be directly compared to a market
price.

for

The fact that there is no market for this type of insurance
does not have any automatic consequences
the
existence or otherwise of an advantage. Since the
measure in question is a loan guarantee, TVO would,
in the absence of public intervention, have had to
obtain financing in the form of an unguaranteed loan.
To establish the existence of an advantage,
it should
therefore be ascertained whether TVO benefited from a
reduction in its financing costs by comparing the total
cost of the guaranteed loan (the interest rate charged by
the banks plus the amount of the guarantee premium)
with the interest rate that would have been charged by
private banks for a similar loan in the absence of a public
guarantee.

that,

in addition to the
The Commission notes
guaranteed loan, TVO had recourse to bank financing
It
in the form of a credit
should,
rate
charged by the banks for the credit facility is a reliable
indicator of the rate that would be charged by private
banks for a loan similar to the guaranteed loan if no
public guarantee had been provided.

facility for
examined whether

therefore, be

the project.

the

EREF disputes the assertion that the interest rate for the
credit facility is a sound estimate of the market rate that
would have been charged by the banks in the absence of
it takes the view that BLB's
a public guarantee. Firstly,
role regarding the credit
facility constitutes aid and
favourably influenced the conditions on which it was
granted to TVO. The Commission notes that,
in its
decision in Case NN 62/B/06 (10), it ruled out the possi-
bility that BLB's role might constitute aid. It therefore
rejects the complainant's first assertion. Secondly, EREF
considers that
the Coface guarantee reduced the risk
attaching to the credit facility and thus encouraged the
banks to grant the latter on more favourable conditions
than a loan not backed by a public guarantee. On this
point, la Commission notes that EREF does not indicate
the precise mechanism by which the Coface guarantee
would reduce the risk attaching to the credit facility. It
has analysed in detail the financing of the Olkiluoto 3
project. Although the Coface guarantee clearly reduces

(9) OJ C 281, 17.9.1997, p. 4. Communication as last amended by the
communication of the Commission to Member States amending the
communication pursuant to Article 93(1) of the EC Treaty applying
Article 92 and 93 of
the Treaty to short-term export-credit
insurance (OJ C 325, 22.12.2005, p. 22).

(10) EREF brought before the Court of First Instance an appeal against
Commission final decision C(2006) 4963 concerning Case NN
62/B/06. The Court registered the appeal under No T-94/07.

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1.4.2008

the risk attaching to the loan as regards the banks that
provided it and therefore lowers the interest rate charged
by them for the guaranteed loan, the Commission has
not identified any mechanism or contract whereby the
Coface guarantee would lower the risk attaching to the
credit facility. It should be pointed out that the Coface
guarantee
facility.
Accordingly, the Commission rejects the complainant's
assertion that
the Coface guarantee reduces the risk
attaching to the credit facility.

in no way

covers

credit

the

(71)

(72)

(73)

The Commission has not identified any other factors that
might suggest that the interest rate for the credit facility
is not a valid indicator of the interest rate that private
banks would charge for a loan similar to the guaranteed
loan in the absence of a public guarantee. It notes that
the guaranteed loan is not a subordinated loan, i.e. a loan
the repayment of which would be conditional on the
prior repayment of the credit facility. The guaranteed
loan has the same ranking as the credit facility. The
Commission also points out that the credit facility does
not enjoy any preference or have any collateral
that
would distinguish it from the guaranteed loan (11).

In view of the foregoing, the Commission concludes that
the interest rate for the credit facility is a valid indicator
of the interest rate that private banks would charge for a
loan similar to the guaranteed loan in the absence of any
guarantee.

The Commission has already compared the total cost of
the guaranteed loan with the cost of the credit facility in
paragraphs 59 and 63 of
the decision initiating the
procedure. The comparison is based on the average
period to maturity of the guaranteed loan. The interest
rate (12)
that would be charged for such a period is
the rate for the
calculated by linear extrapolation of
credit
(the
interest rate charged by the banks plus the guarantee
premium charged by Coface) of the guaranteed loan is
not lower than the interest rate charged by the banks for
the credit facility.

the total cost

facility. This

shows

that

(74)

The Commission notes
the French authorities
that
consider the method of comparison described in para-
graphs 59 and 63 of the decision initiating the procedure
to be valid even though the complaints have not
commented on this and have not proposed any alter-
comparison. Agreeing with the
native method of

(11) The two loans are not backed by any particular security. Both

provide for a negative pledge by TVO.

(12) Since both the guaranteed loan and the credit facility are variable-
rate loans, the comparison is based on the spread over EURIBOR
and not on absolute interest rates, which are in any event unknown
since they are determined in the future.

Commission's analysis in this respect, TVO points out
that the loan guaranteed by Coface was more expensive
than the credit facility and the other sources of financing
available at the time.

(75)

(76)

The Commission concludes that the guarantee has not
led to any reduction in TVO's financial charges compared
with those that it would have had to bear if it had turned
to the banking market without the backing of a public
guarantee.

The Commission would emphasise that neither in their
comments on the initiation of the procedure nor in their
previous comments had the complainants proposed a
calculation method that would have made it possible to
ascertain whether or not
the guarantee
premium charged by France led to a reduction in
TVO's financing costs.

the level of

6.2. Classification as State aid: conclusion

(77) As the analysis described in Section 6.1 shows,

the
Commission has been unable to establish the existence
of an advantage for TVO.

(78)

(79)

It noted that,

the decision initiating the
In points 69 and 70 of
procedure,
suppliers of
the Commission stated that
nuclear power stations might have competed not only
on the price asked for the construction of the power
station itself but also on the financing conditions
this were so and
offered to TVO.
suppliers competed on the ‘overall price’
including the
the guarantee might have allowed AREVA
financing,
NP to propose to its customer TVO financing at a
more advantageous rate and thus to propose a more
attractive ‘overall price’
than the other
suppliers of
nuclear power stations.
In such a case, the guarantee
would have conferred an advantage on AREVA NP and
would have constituted export aid.

if

Firstly,

including the

The chronology of events described by the French auth-
orities and summarised in Table 2 rules out the possi-
bility that suppliers might have competed on an ‘overall
price’
the AREVA
financing.
NP/Siemens consortium was selected as the preferred
bidder by TVO before the guarantee had been formally
agreed and well before the precise level of the premium
had been fixed. Secondly, the contract for the supply of
the power station had been formally signed with the
AREVA NP/Siemens consortium before the precise level
of the guarantee premium has been formally fixed. These
facts demonstrate that TVO chose AREVA NP/Siemens
before knowing the precise cost of the guarantee and
hence the cost of financing the project.

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Official Journal of the European Union

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(80)

For the rest, even if this latter conclusion were to prove
incorrect and if suppliers did indeed compete on an
‘overall price’, the Commission has already come to the
conclusion in paragraph 75 of the present decision that
the guaranteed loan was not a less expensive source of
financing than the other sources available to TVO. Since
the guarantee did not have the effect of reducing TVO's
financing costs relative to the cost of other financing not
covered by the guarantee that was available, it did not
reduce the ‘overall price’ of the bid submitted by the
AREVA NP/Siemens consortium and did not therefore
make this bid more attractive.

(81)

In conclusion, the possibility that the measure may have
conferred an advantage on AREVA NP should be ruled
out.

(82)

Since the existence of an advantage, this being a key
factor in classification as aid, could not be established
either for TVO or for AREVA NP,
the Commission
concludes that the Coface guarantee for the EUR 570
million loan granted to TVO does not constitute State
aid.

7. CONCLUSION

(83)

The Commission finds that the guarantee provided by
France
on
the
25 March 2004 does not constitute aid,

intermediary

of Coface

through

HAS ADOPTED THIS DECISION:

Article 1

The guarantee provided by France on 25 March 2004 in
connection with the construction by AREVA NP of a nuclear
power station for Teollisuuden Voima Oy does not constitute
aid within the meaning of Article 87(1) of the Treaty.

Article 2

This Decision is addressed to the French Republic.

Done at Brussels, 25 September 2007.

For the Commission

Neelie KROES
Member of the Commission