Poland: Rescue Aid to Tarchominskie Zakłady Farmaceutyczne "POLFA" S.A.
Description
On 14 October 2008, Poland notified a rescue aid to Tarchominskie Zakłady Farmaceutyczne "POLFA" S.A. ("POLFA"), a large undertaking active in the manufacture of basic pharmaceutical products.
POLFA, the beneficiary of the rescue aid, is a large undertaking located in a region of Mazowieckie, Warsaw, a Polish region eligible for regional aid under Article 87(3)(a) of the EC Treaty. The company was originally established in 1823. Nowadays it has around 1800 employees.
POLFA is a part of a business group as of 2004. Its major shareholder is the Polish government which holds 69% of its shares through Polish Pharmaceutical Holding (Polski Holding Farmaceutyczny S.A., "PHF"). In addition, 16% of shares are held directly by the Ministry of Treasury. PHF holds shares also in two other companies: Polfa Pabianice S.A. and Polfa Tarchomin S.A.
The Polish authorities notified to the Commission a rescue aid in a form of the PLN 20,500,000.00 (c. EUR 3.6 million) loan.
The Commission considered that the present loan in favour of POLFA constitutes State aid pursuant to Article 87(1) of the EC Treaty. Thus, "the loan in favour of POLFA is provided by ARP, which is a public entity over which the state excises control, and, therefore, the loan is granted from state resources and is imputable to State. The loan constitutes a selective advantage since it will provide POLFA with access to credit that, being in a difficult situation, the company would not have been able to obtain otherwise. Furthermore, as there is trade between the Member States in pharmaceutical products which POLFA manufactures, the measure is apt to improve the competitive position of the beneficiary in relation to its competitors in Poland and the EU, and it, consequently, distorts or threatens to distort the competition and affects trade between the Member States." (par. 8 from the letter from the EC to Poland - Brussels, 23.12.2008 K (2008) 8991).
The Commission considers a rescue aid compatible with the common market pursuant to Article 87(3)(c) of the EC Treaty if it complies with the criteria under the Rescue and Restructuring Guidelines (the Guidelines), which spell out the rules as to the eligibility of the firm for the aid (only firms in difficulty are eligible) and its form, interest rate and other conditions.
The Commission decided to consider that the state aid consisting in a loan of PLN 20,500,000.00 loan (c. EUR 3.6 million) for Tarchominskie Zakłady Farmaceutyczne "POLFA" S.A. is compatible with the common market.
Restructuring aid to POLFA "Tarchominskie Zakłady Farmaceutyczne" S.A. - State aid N 488/2009
On 11 August 2009, Poland notified restructuring aid to POLFA S.A. The company has based the restructuring plan on the assumption that it will transform the company into a standard model generics drug producer. In order to attain this goal the company has envisaged various measures. First, the company intends to change the profile of activity reducing vertical integration. Second, the company intends to eliminate research and implementation activities related to the methodical discovery and innovative drug research and development in the field of exploration and production deployment of new generic formulations.
On the basis of this assumption the Plan stretching from the period of 2009 until 2013 was devised. The Plan is based on the following restructuring measures: (i) financial restructuring, (ii) assets restructuring, (iii) employment restructuring and (iv) an implementation of an investment programme. The restructuring costs amount to PLN 163,5 million. Under the Plan the restructuring costs are covered by state aid in a form of a soft loan of PLN 42,5 million and own contribution of PLN 121 million.
Concerning the restructuring plan, the EC gave the following assessment:
"The notified measures involve State resources granted by IDA which is a public entity over which the state excises control, and, therefore, the loan is granted from state resources and is imputable to State. The loan constitutes a selective advantage since it will provide POLFA with access to credit that, being in a difficult situation, the company would not have been able to obtain otherwise. Furthermore, as there is trade between the Member States in pharmaceutical products which POLFA manufactures, the measure is apt to improve the competitive position of the beneficiary in relation to its competitors in Poland and the EU, and it, consequently, distorts or threatens to distort the competition and affects trade between the Member States." (par. 25 of the letter from the EC to Poland -Brussels, 15.12.2009 C (2009) 9351 final version)
The Commission took also into consideration the relative importance of the company on the market, and assessed that the compensatory measures are proportional to the distortion of competition caused by State aid and is therefore compatible with the internal market. (par. 54-59 of the letter)
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? | Yes |
| 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: 1 Jan 2009
Duration: 60 months
GTA Evaluation: Red
Source:
The official letter from the European Commission to Poland - Brussels, 23.12.2008 K (2008) 8991. Avaliable from < http://ec.europa.eu/competition/state_aid/cases/227876/227876_924996_29_... >
the letter from the EC to Poland -Brussels, 15.12.2009 C (2009) 9351 final version. Available from : < http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=... >
Government Response:
- 614 reads
