Latvia : Individual State Guarantee in favor of JSC Liepājas Metalurgs
Description
On 1 December 2009 Latvia notified an individual guarantee measure in favor of JSC Liepājas Metalurgs in order to secure a loan that will be granted to the company by Unicredit MedioCredito Centrale Spa.
LM1, the recipient of the State guarantee, is a manufacturer of rolled steel products based in Liepaja, Latvia - the only metallurgical company in the Baltic States.
In 2008, LM had 2,633 employees and sold 620,000 tones of rebar. The annual turnover amounted to EUR 365 m in 2008 (up from EUR 315 m in 2007) with a net profit of EUR 9 m in 2008 (down from EUR 23 m in 2007).
The Commission gave the following assessment:
" The guarantee is granted by the Minister of Finance and is clearly imputable to the State involving its resources since, in the event Latvia would actually have to pay out money under the guarantee, the necessary funds would be drawn from the State budget, which is consequently burdened by the financial risk linked to the guarantees. The guarantee is selective since it is granted to a single undertaking, LM, at the discretion of the Latvian Government. Moreover, as there is extensive trade in steel and steel products within the Union, the advantage granted to LM by means of the guarantees would be liable to affect trade between the Member States. This is all the more so because LM exports the bulk of its output to the rest of the EU." (par. 33-35 of the letter from the EC to Latvia - Brussels, 15.12.2009 C(2009)10225 final).
The Commission found that the measure is compatible with the internal market on the basis of
Article 107(3)(b) TFEU.
A state measure in the GTA database is assessed solely in terms of the extent to which its implementation affects the extent of discrimination against foreign commercial interests. On this metric, the state aid proposed here is discriminatory.
Any Evidence-Based Deliberation:
| Question | Result |
|---|---|
| Is there anything in the public record to suggest that evidence of the effectiveness of the proposed measure was considered during official deliberations? | |
| Is there any evidence that alternatives to the proposed measure were considered? | |
| Is there anything in the public record that suggests that empirical evidence informed the comparison across the alternatives available to government? | |
| Was such evidence identified? | |
| Is such evidence publicly available? | |
| Did the official decision-maker in question provide an explanation as to why a chosen measure was favoured over alternatives? | |
| Is there any evidence to suggest that potentially affected trading partners were consulted before the measures were taken? | |
| Is there any evidence that safeguards have been put in place to ensure that implementation of the initiative is transparent and non-discriminatory? | |
| Did the government state its intention to review the measure within one year of implementation? |
Date Discovered:
Implemented: Yes
Date of inception: 15 Dec 2009
Duration: 120 months
GTA Evaluation: Red
Source:
the letter from the EC to Latvia - Brussels, 15.12.2009 C(2009)10225 final - http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=...
Government Response:
- 704 reads
