ANNOUNCED AS TEMPORARYNo
On 16 November 2011, the European Commission approved the Portuguese modified aid scheme for the modernisation of enterprises.
The scheme was initially set out in 1999 with the aim of "funding of financial consolidation and industrial restructuring operations of small and medium sized enterprises which are in financial difficulty. (...) The aid will be granted by a contract concluded between the beneficiary and an investment fund called "Fund for the Revitalization and Modernisation of Business" (FRME)" (par. 5-7, letter from the EC to Portugal, 16.11.2011).
All sectors are eligible to apply for the aid apart from "agricultural sector, sports clubs, public limited liability companies in the sports industry, enterprises that are part of a business group, enterprises that are active in a market suffering from long-term overcapacity, enterprises whose initial financial situation was insecure, and newly created enterprises defined as enterprises which have been operating for less than three years at the time they submit their application for aid under the scheme" (par. 9). Previously, the exclusion restriction was not in place for enterprises that are active in a market suffering from long-term overcapacity.
Large undertakings - i.e. entities not classified as SMEs under EU law - may also apply but will need a separate approval from the Commission.
The planned budget of the scheme is 137.3 million EUR. This represents a stark increase in the state aid available from the previous budget of 117.2 million EUR which was distributed over 12 years.
Also, unlike the old scheme, the restructuring aid will no longer apply for purchase of assets by another firm (par. 10) but will allow much lower minimum levels of own contribution (with 25% for small firms and 45% for medium-sized enterprises). Previously, the scheme was allowed to cover between 25% and 50% of the total aid (letter from the EC to Portugal, 20.12.2001, p.3).
According to the Commission, "since the scheme is open to all sectors of the economy (...) and most, if not all sectors are open to competition and intra-EU trade, competition and trade are likely to be affected" (art. 24, letter from the EC Portugal, 16.11.2011). However, the EC deemed the state aid to be compatible with the single market.
The programme will be in force until 31 October 2012.
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