Global Trade Alert

On 16 March 2010 Poland notified a rescue aid to Fabryka Lozysk Tocznych Krasnik SA. It is a company manufacturing bearings and gear boxes. FLT Krasnik is a large enterprise as it employs 2300 workers. The company is part of a larger business group.
 
The Polish authorities have notified to the Commission a rescue aid in a form of a PLN 12.5 million loan (c. EUR 3.2 million). This loan is to be granted to the company by a public entity, The Industrial Development Agency (Agencja Rozwoju Przemyslu S.A., hereinafter: "ARP"), in one installment upon being approved by the Commission.
 
The Commission concluded that the measure contains state aid and gave the following assessment:
 
"The loan in favor of FLT Krasnik is provided by ARP, which is a public entity over which the State exercises control and, therefore, the loan is granted from State resources and is imputable to the State. The loan constitutes an advantage since it will provide the company with access to credit that, being in a difficult situation, it would not have been able to obtain otherwise. The loan is granted to FLT Krasnik alone; the advantage is therefore also selective. Furthermore, as there is trade between the Member States in bearing and gear boxes which the company 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 tradebetween the Member States." (par. 7 of the official letter from the EU to Poland - Brussels, 2.6.2010 C (2010) 3573).
 
The Commission has decided, on the basis of Article 107 (3)(c) TFEU, to consider that the State aid consisting of a loan of PLN 12.5 million to FLT Krasnik is compatible with the internal market.
 
Restructuring aid to FLT Krasnik SA- State aid SA.32024
 
On 6 December 2010, Poland notified restructuring aid to Fabryka Lozysk Tocznych Krasnik SA. The notified restructuring plan was preceded by a notification of a rescue loan of PLN 12.5 million (circa EUR 3 million) of 16 March 2010 which was approved by the Commission on 2 June 2010 (see above).
 
The restructuring plan covers the period 2010-2012. The restructuring is to cover marketing, assets, organisation and finances. (details par. 20-32 of the official letter from the EU to Poland - Brussels, 8 July 2011 C(2011)4934)

 
On the restructuring measures, the EC gave the following assessment:
"The proposed recapitalization constitutes a selective advantage since it will provide FLT Krasnik with funds which it would not otherwise be able to obtain for a null cost on the market. Nothing in the information examined suggests that the capital injection is envisaged by the body granting the aid (which is separate from the Treasury) in the light of considerations and prospects and at conditions that would have prompted a private investor to carry it out.
The Commission notes that FLT Krasnik's production is predominantly destined for exports, among which to other EU markets. Several other companies operate on those markets in competition with FLT Krasnik and there is trade between Member States in bearings. Consequently the aid can at least potentially distort competition and affect trade between Member States.
Therefore, the Commission considers that the present direct grant to FLT Krasnik constitutes State aid pursuant to Article 107(1) of the TFEU." (par. 49-51 of the letter)
 
However, the Commission considers that the notified restructuring aid in favour of FLT Krasnik is compatible with the internal market under Article 107(3)(c) of the TFEU on the basis of the Guidelines on State aid for rescuing and restructuring firms in difficulty.
 
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.