ANNOUNCEMENT 25 May 2009

In May 2009, the British government announced a change in private-sector financial support.

NUMBER OF INTERVENTIONS

1

  • 1 harmful
  • 0 neutral
  • 0 liberalising

SOURCE



the letter from the EC to the United Kingdom - Brussels, 7.08.2009 C(2009)6379. Avaliable from < http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_NN41_2009 >


Inception date: 18 May 2009 | Removal date: open ended
Still in force

Bailout (capital injection or equity participation)

On 25 May 2009, the United Kingdom notified a rescue aid in favor of the firm LDV Group Limited (hereafter "LDV"), which had been granted on 18 May 2009.
 
The entity receiving the rescue aid is LDV, a company based in Washwood Heath, Birmingham. LDV is a manufacturer of commercial vans which it produces in a number of different versions: conventional vans, "combi", minibus and "chassis cab" variants. According to the notification, LDV total output in 2008 was 9,308 vehicles, representing a market share of about 0.5 of the European light commercial vehicle market. The later is estimated to amount to 1,992,648 units in 2008.
 
The notified rescue aid measure consists in a loan guarantee provided by the Department for Business Enterprise and Regulatory Reform (BERR) in respect of a loan in the maximum amount of up to Ł 5 million provided by Barclays Bank plc to LDV. The UK Government's liability is backed by a Standby Letter of Credit from USB bank (Singapore Branch) on behalf of Weststar (the "counter indemnity"). Both the loan and the guarantee are subject to an initial sub-limit of Ł 2.5 million which could be increased to a maximum of Ł 5 million, provided the counter indemnity by UBS to the UK Government would be increased by an equal amount.
 
The Commission considered that the present loan guarantee in favor of LDV constitutes State aid pursuant to Article 87(1) of the EC Treaty and gave the following assessment:
 
"The loan guarantee of Ł 5 million is provided by the Department for business enterprise and regulatory reform (BERR) in the UK and involves therefore state resources. Given the financial difficulties of LDV, it is unlikely that the company would be able to obtain a loan from the market without the State guarantee. Therefore, the firm benefits from an advantage compared to other companies that do not benefit from the aid. The measure, thus, improves the position of the beneficiary in relation to its competitors and it consequently distorts competition and affects trade between Member States." (par. 14 of the letter from the EC to the United Kingdom - Brussels, 7.08.2009 C(2009)6379).
 
The Commission considers a rescue aid compatible with the common market pursuant to Article 87 (3) (c) EC Treaty, if it complies with the criteria under the Rescue and Restructuring Guidelines (hereinafter: the Guidelines), i.e. the eligibility of the firm to the aid (only firms in difficulty are eligible); the aid must consist of liquidity support in form of loan guarantees or loans; the aid must be warranted on the grounds of serious social difficulties and have no unduly adverse spillover effects on other member states; in the case of a non-notified aid the member state must - not later than six months after the first implementation of a rescue aid measure - communicate a restructuring plan or a liquidation plan or a proof that the loan has been reimbursed in full and/or the guarantee has been terminated; the rescue aid has to be restricted to the amount needed to keep the firm in business for the period during which the aid is authorized and finally the rescue aid has to respect the "one time, last time" principle.
 
Based on the above mentioned criteria the Commission considered the rescue aid to LDV to be compatible with the common market in accordance with Article 87(3) (c) EC Treaty.
 
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.
 
 

AFFECTED SECTORS