European Commission Orders Bulgaria to Recover Illegal Aid for 'Ruse Industry'

In a July 13 ruling, the first of its kind for Bulgaria, the European Commission ordered Bulgaria to recover illegal and incompatible aid from a beneficiary.

After an in-depth investigation, the European Commission has concluded that the Bulgarian metal manufacturer Ruse Industry, now in bankruptcy proceedings, has received subsidies in the form of unpaid debts to the State of around EUR 3.7 million.

The company has been in difficulties for several years. In June 2009, the Bulgarian authorities notified the Commission of plans to restructure Ruse Industry AD and its debt. In April 2010, the Commission opened an in-depth investigation. The notified restructuring was withdrawn by Bulgaria in November 2010, but the Commission has continued its investigation into the aid involved in view of the State's failure to enforce its debt in previous years. On 11 November 2010, the Bulgarian authorities filed for bankruptcy proceedings against Ruse Industry.

The Commission believes that Ruse Industry benefited from state aid as any other creditor would have sought the repayment of the debt sooner and more effectively. This creates distortions of competition vis ? vis other companies, who had to operate their businesses without such support and were subject to the discipline of credit markets. In order to remedy this distortion, the aid to Ruse Industry should be recovered.

This is the first time the Commission orders Bulgaria to recover illegal and incompatible aid from a beneficiary. The purpose of recovery is to re-establish the situation that existed on the market prior to the granting of the aid, thereby canceling or at least alleviating the distortion of competition brought about by the aid. This is necessary to ensure a level-playing field in the internal market. The Commission's recovery policy is set out in its 2007 Recovery Notice. The Commission can only order the recovery of the aid as from the time when Bulgaria became a member of the EU, on 1 January 2007.