ANNOUNCEMENT 01 Dec 2009In December 2009, the government of Latvia announced a change in private-sector financial support.
NUMBER OF INTERVENTIONS
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=3_N670_2009
On 1 December 2009 Latvia notified an individual guarantee measure in favor of JSC Liepajas Metalurgsin 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.