ANNOUNCEMENT 15 Apr 2009In April 2009, the government of Hungary announced a change in private-sector financial support.
NUMBER OF INTERVENTIONS
the letter from the EC to Hungary - Brussels, 24.04.2009 C(2009)3285 corr. Available from < http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_N203_2009 >
On5 April 2009, Hungary notified a guarantee scheme under the "Temporary Community framework for State aid measures to support access to finance in the current financial and economic crisis" ("Temporary framework").
Hungary considers that the financial crisis is affecting the real economy. The notified measure forms part of an overall package of measures and aims at improving the access of firms to investment and working capital loans in order to compensate for the insufficient loan activity by private banks resulting from the financial crisis.
The aid is provided in the form of subsidized guarantees for investment and working capital loans. The budget of the scheme - the guaranteed amount of loans will not exceed HUF 500 billion (EUR 1.6 billion).
The potential beneficiaries of the scheme are SMEs and large enterprises.
The Commission stated that the notified measure constitutes State aid within the meaning of Article 87 (1) of the EC Treaty and gave the following assessment:
"State resources are involved in the notified scheme since the loan guarantees are made available by national, regional and municipal organisations. The measure is selective since guarantees are awarded only to certain undertakings. The measure confers an advantage by relieving the beneficiaries of costs which they would have to bear under normal market conditions since, without the intervention by the State, the beneficiaries would obtain loans only at higher costs, if at all. The favouring of certain undertakings means that competition is distorted or threatened to be distorted. The measure affects trade between Member States since the scheme is not limited to beneficiaries which are active in sectors where no intra-community trade exists." (par. 29-32 of the letter from the EC to Hungary - Brussels, 24.04.2009 C(2009)3285 corr.).
Article 87(3)(b) of the EC Treaty enables the Commission to declare aid compatible with the Common Market if it is "to remedy a serious disturbance in the economy of a Member State." This aid has to be applied restrictively and must tackle a disturbance in the entire economy of the Member State according to the interpretation of the Article 87(3)(b) by the Court of First Instance.
The Commission referred to its Communication on the financial crisis and concludes that the Measure complies with the conditions laid therein. Therefore, despite the measure constituting State aid pursuant to the Article 87(1) EC, it is compatible with the Common Market according to the Article 87(3)(b) EC Treaty. The Commission raises no objections against the measure at issue and authorizes it as emergency intervention in the face of the current financial crisis. (par. 34 - 41 of the letter).
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.