Spain in the dock over shipyard subsidies

European regulators have demanded that Madrid reimburse ?308.3 million ($366 million) in illegal aid subsidies given to IZAR, the state-backed shipbuilder. IZAR, owner of all public shipyards in Spain, was granted the bail-out sums by state holding company Sociedad Estatal de Participationes Industriales (SEPI) to the tune of ?500 million between 1999 and 2000. The monies arrived in the form of a capital injection, loans and a purchase price above the market value. IZAR has already paid back part of the loans.

“The Commission is aware that the consequences of this decision may be serious for IZAR, its shipyards and its employees,” said the EU executive on Tuesday. “However, the Commission has received numerous complaints from shipyards in other EU Member States, and even from Spanish competitors,” added the body. The move from Brussels comes despite continuing long-running competitiveness problems in the EU shipbuilding sector due to alleged ?unfair practice of Korean shipyards?. The market share for European shipbuilding has dropped 15% since 1999 while the Korean share reached 38% in 2003.