ANNOUNCEMENT 20 Dec 2010In December 2010, the government of Sweden announced a change in private-sector financial support.
NUMBER OF INTERVENTIONS
European Commission Report -
This measure is reported in the WTO/OECD/UNCTAD "REPORT ON G20 TRADE MEASURES (MID-OCTOBER 2010 TO APRIL 2011)" . Available from < http://www.oecd.org/dataoecd/20/46/47955250.pdf >
The government of Sweden has introduced a state guarantee for Volvo Personvagnar AB through the Swedish National Debt Office (Riksgäldskontoret) to co-finance the development of environment-friendly cars. The budget of the support is EUR500 million (approx. US$714 million). EU State Aid N 520/10.
The guarantee will be divided into two separate guarantees.
The first guarantee will cover 90% of the loan, i.e. EUR 450 million out of EUR 500 million. In return for the guarantee, VCC will pay the Swedish State a premium amounting to 'between 68-170' basis points ("bps") per annum ("p.a.") for the first two years that the guarantee applies, i.e. '0.68-1.70' of the instalments received by VCC. After this period of two years, VCC will pay a premium amounting to 'between 80-200 bps (0.8-2.00)' p.a. for the remainder of the validity of the guarantee. This guarantee is referred to as 'guarantee A' in this decision.
The second guarantee will cover the remaining 10% of the loan, i.e. EUR 50 million out of EUR 500 million. This guarantee is referred to hereinafter as 'guarantee B'.
The European Commission gave the following assessment:
"As regards the application of the State aid criteria of Article 107(1) TFEU to guarantees A and B, the Commission considers the following. As the guarantees are based on powers given by Parliament and can be issued only upon express decision by the Government, the decision to grant the guarantees is clearly imputable to the State. The guarantees are granted from State resources since, in the event that the Swedish state would actually have to pay out money under the guarantees, the necessary funds would be drawn from the central State budget, which is consequently burdened by the financial risk linked to the guarantees. The guarantees are also selective since the Government has discretion to choose the undertakings that will benefit from such guarantees. Finally, as there is extensive trade in cars and car parts between several operators within the European Union, the advantage granted to VCC by means of the guarantees would be liable to affect competition and trade between the Member States." (par. 23 of the letter from the EC to Sweden - Brussels, 16.12.2010 C(2010) 9304 final)
the Commission finds that Guarantee B does not contain state aid within the meaning of Article 107(1) TFEU and that Guarantee A 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 theextent to which its implementation affects the extent of discriminationagainst foreign commercial interests. On this metric, the state aidproposed here is discriminatory.