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Financing of Spanish Agro-food Companies Examined

by 5m Editor
21 May 2008, at 3:40pm

SPAIN - The European Commission has launched two formal investigations into two Spanish agro-food companies El Pozo Alimentacion and J. Garcia Carrion La Mancha.

The investigation comes under the EC Treaty state aid rules into the investment aids.

The Commission has expressed its doubts as to the compatibility of the aids for not containing an incentive element required under the applicable legislation.

"El Pozo Alimentacion" a leading pig meat processing company and drinks company "J. Garcia Carrion La Mancha" are two big companies active in Spain in the agro-food sector.

The Spanish authorities separately notified some investment aid measures in favour of the companies for the enlargement and improvement of some of their plants located in Spain in April and May 2007.

The level of the aid measures for "El Pozo Alimentacion" is €15.1 million and for "J. Garcia Carrion La Mancha" €14.5 million.

The Commission assumes that both investment aids might constitute incompatible state aid as the "incentive effect," provided by the State aid rules applicable in the present case, seems not to be respected. In fact, the investments have already been initiated before the date of the Commission approval.

Moreover, the beneficiaries seem to have not submitted to the Spanish authorities the relevant applications for the aid in order to carry out those investments.

The Commission has, therefore, decided to investigate whether these measures constitute incompatible State aid by opening two investigation procedures under art. 88 paragraph 2 (state aid rules) of the EC Treaty.

The full text of the Commission decisions will be published in the Official Journal of the European Union. Spain and other interested parties will be given one month from the date of publication to submit their comments. After this period, the Commission will rule as soon as possible on the question whether these measures are compatible with the common market.

5m Editor