EC Starts First State Aid Investigation of Bulgarian Company

EU Commissioner for Competition Joaquin Almunia has announced the start of an investigation of a Bulgarian company over state aid. Photo by EPA/BGNES

The European Commission has opened an investigation of the Bulgarian company Ruse Industry AD over suspicions that it is receiving state aid.

The EC is inspecting plans by Bulgaria to reschedule a debt of EUR 9.8 M owed to the State by Ruse Industry AD, a manufacturer of metal structures and elements, the Commission press service announced.

This is the first time the Commission opens an in-depth investigation on a Bulgarian state aid case. The Ruse Industry AD is owned by the Rousse Shipyard Jsc.

The Commission has announced that it has doubts whether the proposed measure is in line with EU rules on rescue and restructuring aid.

“We have to make sure that the measure planned in favour of Ruse Industry complies with the rules on restructuring aid, in particular that the company is viable in the long-term and that the aid does not adversely affect competition,” Competition Commissioner Joaquín Almunia said.

On June 30, 2009, the Bulgarian authorities notified the Commission of plans to restructure the debt of Ruse Industry AD, a company that produces metal structures and elements. The proposed measure consists of the deferral and rescheduling of public debt amounting to EUR 9.8 M.

''The debt owed to the Bulgarian State dates back from before Bulgaria's accession to the EU in 2007. The origin of the debt, therefore, is not subject to the investigation. But subsequent subsidies involved in the rescheduling of the debt must comply with the rules,“ says the announcement of the European Commission.

It further explains that at this stage, the Commission has doubts whether the proposed measure fulfils the conditions set out in the EU guidelines on State aid for rescuing and restructuring firms in difficulty.

It also has concerns whether Ruse Industry is eligible for restructuring aid at all, especially in light of the rule that rescue and restructuring aid can be paid out to a company only once every ten years (the "one-time-last-time" principle) – this is aimed to avoid ailing companies being kept artificially alive through continued state support. It appears that Ruse Industry already benefitted from an earlier rescheduling of its public debt that could constitute state aid, the EC press office said.

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