ANNOUNCEMENT 07 Aug 2009

In August 2009, the government of Romania announced a change in private-sector financial support.

NUMBER OF INTERVENTIONS

1

  • 1 harmful
  • 0 neutral
  • 0 liberalising

SOURCE



letter from the EC to Romania- Brussels, 13.11.2009 C(2009)8956 final - http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_N478_2009


Inception date: 15 Sep 2009 | Removal date: open ended
Still in force

Loan guarantee

On 7 August 2009 Romania notified a guarantee measure in favor of Ford Romania SA (hereinafter: "Ford Romania" or "the company") in order to secure a loan that will be granted to the company by the European Investment Bank.
 
The State guarantee has the purpose to ensure the financing of Ford Motor Company's (hereinafter: 'Ford') investment project in Craiova, located in Dolj County, South-West of Romania. The beneficiary of the planned measure is the legal entity Ford Romania.
 
The loan to be covered by the notified guarantee measure is granted by the EIB, which lends a total of EUR 600 million to Ford of Europe for the realization of the joint project, whereby EUR 400 million are granted to Ford Romania and EUR 200 million to Ford Germany.
 
The Romanian guarantee will be granted by the Ministry of Public Finances.
 
Romania tookthe view that the guarantee is compatible with the Treaty in view of the provisions of the Commission's communication 'Temporary framework for State aid measures to support access to finance in the current economic and financial crisis.'
 
The Commission found that the measure constitute state aid within the meaning o f and gave the following assessment:
 
" The State guarantee is granted by the Ministry of Public Finances and it involves State resources since, in the event Romania 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, Ford Romania, at the discretion of the Romanian Government. Moreover, in order to establish whether the guarantee contains State aid, the Commission must also assess whether it provides an advantage to Ford Romania. A State measure is not State aid unless it provides the beneficiary with an economic good he would not otherwise have been able to obtain on similar market terms. Account should be taken of the possibilities for a beneficiary to obtain equivalent financial resources by having recourse to the capital market. State aid is not involved where a new funding source is made available on conditions which would be acceptable for a private operator under the normal conditions of a market economy. In view of the present market benchmark premiums for guarantees in the automotive sector for a similar rating and similar collaterals, it appears excluded that Ford Romania would have been able to obtain a similar guarantee at the same price (i.e. 380 basis points) on the market. Finally, as there is extensive trade in cars and car engines within the Community, the advantage granted to Ford of Romania by means of the guarantees would be liable to affect trade between the Member States." (par. 27-31 of the letter from the EC to Romania- Brussels, 13.11.2009 C(2009)8956 final).
 
The Commission found, however,that the notified measure is compatible with the common market on the basis of Article 87(3)(b) of the 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