EC investigates Greek shipyard

The European Commission (EC) has decided to extend its formal investigation under EC Treaty State aid rules into aid granted by Greece to Hellenic Shipyards S.A. (HSY), based at Skaramangas near Athens. In 2004, the Commission opened an investigation into amendments to an investment plan financed by investment aid to HSY as well as into several loans and guarantees granted to the shipyard by the state-owned bank ETVA. The Commission has now extended this inquiry into several potential aid measures that Greece did not notify: capital injections, guarantees and loans received by HSY from public sources, for example in relation with railway contracts and with the construction of ferries, cross-subsidisation between HSY?s military and civil activities, and an indemnifying clause granted by the Greek State to HDW/Ferrostaal against the liability to repay unlawful aid received by HSY. The extension of the formal investigation will allow interested parties to comment on the additional measures under examination. It does not prejudge the outcome of the procedure.

Competition Commissioner Neelie Kroes commented: “Member States have to respect EU state aid rules, whereby companies cannot be kept artificially alive by repeated state interventions. As regards naval shipbuilding, the EC Treaty ensures that Member States can protect their legitimate national security interests, but this safeguard cannot be used as a pretext for granting illegal state aid to civilian activities. We have to examine such cases with care in order to prevent distortions of competition on markets for civilian products”.

Today?s decision extends the investigation procedure opened in 2004 into Greece?s suspected failure to respect conditions attached by the Commission to its endorsement of a ?160 million restructuring aid in 1997 and of a ?29.5 million closure aid in 2002.

However, the Commission considers that some measures which were brought to its knowledge by a complainant do not constitute state aid or are exempted from EC Treaty rules by Article 296 of the EC Treaty, because they relate to the protection of national security interests.