Alas no state aid …

The European Commission has decided under state aid rules not to authorise regional investment aid amounting to almost €3m. This would have been granted in the form of tax exemptions in favour of Alas Slovakia (a company).

In this case the Slovak authorities planned to grant individual ad hoc aid to a single firm, Alas Slovakia, involved in the extraction and processing of gravel and stone.

The Commission concluded that the proposed aid would not sufficiently contribute to regional development as to justify the distortions of competition that the granting of a selective advantage to a large company would have brought about.

The key issue in the decision was that the Commission had to take a strict line on aid which distorts competition without significantly contributing to regional development. The onus is on the Member State to demonstrate that the aid contributes to regional development.

In this case, the Slovak Authorities did not submit any comments.

Repayment of illegal aid

The European Commission has referred Slovakia to the Court of Justice for failure to recover illegal and incompatible aid. The key point is that where the Commission finds a breach of state aid rules, the persons in receipt of that state aid must repay the benefit received.

In June 2006, the Commission declared a tax debt write-off worth approx €13m that the Tax Office granted to Frucona, formerly one of the major producers of spirits in Slovakia, incompatible with EC Treaty state aid rules and ordered Slovakia to recover the money from Frucona.

According to the Commission press release, to carry out the Commission's decision, the Slovak authorities launched a court procedure to force the beneficiary to pay. However, the application for payment was dismissed by the competent court. The Tax Office appealed against this judgment, but the appeal procedure is still pending and may last some time.