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EU orders Belgium to recover €211 million from Duferco group

Staff writer ▼ | January 22, 2016
The European Commission said that €211 million funding by the Walloon authorities in Belgium to steel companies within the Duferco group between 2006 and 2011 distorted competition in breach of EU state aid rules.
Duferco group
Europe   Several steel companies hit by EU rules
Following an in-depth investigation, the Commission concluded that no private investor would have accepted to invest at the same terms as the Belgian Foreign Strategic Investments Holding (FSIH), a public authority controlled by the Walloon Government in Belgium.

The public funding therefore provides a selective advantage to its recipients that their competitors who have to operate without such subsidised funding did not have.

In view of overcapacity problems in the EU's steel industry, EU State aid rules only allow fostering the long-term competitiveness and efficiency of steel manufacturing but not the support of manufacturers in financial difficulties. These rules have been consistently applied in a number of EU countries.

In October 2013, the Commission opened an in-depth investigation into the financing of several companies of the Duferco group by the Belgian Foreign Strategic Investments Holding (FSIH).

The FSIH was created in 2003 by the Société wallonne de gestion et de participations (SOGEPA), belonging to the Belgian region of Wallonia, in order to invest in steel companies.

The FSIH repeatedly granted support measures amounting to €211 million in state aid to companies of the Duferco group between 2006 and 2011. This artificially boosted the companies' revenues and postponed the difficult yet necessary capacity adjustments in the Walloon steel industry.

The Commission's investigation found that no market-based fund manager would have exclusively invested in one single group (Duferco) and in one sector (steel) with the aim of supporting steel production in Wallonia, as the FSIH did.

The investments therefore constitute state aid within the meaning of the EU rules. However, EU state aid rules only allow competitiveness enhancing support to viable steel companies and do not allow public aid to steel manufacturers in financial difficulties.

The repeated support measures granted to Duferco's companies are therefore illegal under EU state aid rules. Belgium must now recover the aid from the beneficiaries or from their legal successors.

Despite the significant illegal state aid granted by the Walloon Government, Duferco's plants in Charleroi, La Louvière and Clabecq subsequently ceased steel production.

The Commission is using the European Globalisation Adjustment Fund (EGF) to support the Walloon Region's efforts to re-train the workers who were made redundant.