ANNOUNCEMENT 21 Apr 2009In April 2009, the government of the Czech Republic announced a change in private-sector financial support.
NUMBER OF INTERVENTIONS
Official letter from the EC to Czech Republic - Brussels, 06.05.2009 C(2009)3709. Available from < http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_N237_2009 >
On 21 April 2009, the Czech authorities notified the Temporary aid scheme for granting aid in the form of loans with subsidized interest rate ("Ceský prechodný rámec").
The Czech Republic considers that the financial crisis starts affecting its real economy as a whole at national, regional and local level.
The aid will be provided in the form of subsidized public loans. The budget of the scheme has not yet been finalised, but the Czech authorities expect the aid volume resulting from interest rate subsidization under this scheme to amount to CZK 2.6 billion (EUR 97 million).
The potential beneficiaries of the scheme are SMEs and large enterprises. The Czech authorities estimate that the total number of beneficiaries will exceed 1000.
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 subsidized loans are made available from national, regional, and local resources, via the respective aid granting authorities at national, regional, and local level. The measure is selective since it will be granted only to a limited number of firms located in the Czech Republic. 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 borrowers would obtain loans only at higher costs, if at all. The favoring 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. 25-29 of the official letter from the EC to Czech Republic - Brussels, 06.05.2009 C(2009)3709).
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 (Temporary Framework) and concluded 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. 30-36 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.