HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN"L 279/30
EN
Official Journal of the European Union
12.10.2012
COMMISSION DECISION
of 22 February 2012
on the State aid SA.26534 (C 27/10 ex NN 6/09) implemented by Greece in favour of United
Textiles S.A.
(notified under document C(2011) 9385)
(Only the Greek text is authentic)
(Text with EEA relevance)
(2012/541/EU)
THE EUROPEAN COMMISSION,
also several additional ones, in favour of United Textiles
and its lending banks, by letters of 20 March 2009 and
8 February, 17 March, 19 July and 23 August 2010. The
Having regard to the Treaty on the Functioning of the European
Greek authorities answered by letters of 7 April 2009
Union, and in particular the first subparagraph of Article 108(2)
and 25 February, 26 March, 13 August and 30 August
thereof,
2010.
Having regard to the Agreement on the European Economic
(4)
At the request of the Greek authorities, a meeting was
Area, and in particular Article 62(1)(a) thereof,
held on 7 July 2010. At that occasion, a draft new
restructuring concept of United Textiles was submitted.
The company acknowledged that the latter was not
Having called on interested parties to submit their comments
linked with previous restructuring actions taken in
pursuant to Article 108, paragraph 2, first quotation of the
2007, which had failed.
Treaty ( 1 ), and having regard to these comments,
(5) By
letter
dated
27
October
2010
the
Commission
Whereas:
informed Greece that it had decided to initiate the
procedure laid down in Article 108(2) of the Treaty on
the Functioning of the European Union (‘TFEU’) in
I. PROCEDURE
respect of the following measures:
(1) Following
information
that
Greece
planned
to
grant
a
State guarantee for new loans of EUR 35 million to
finance United Textiles, the Commission asked the
(a) state guarantee of May 2007;
Greek authorities to comment on the specific measure
by letters dated 11 September, 14 October, 20 October,
18 November and 4 December 2008. The Greek auth
(b) rescheduling of debts of 2009 for social insurance
orities provided incomplete answers by letters of
contributions;
15 October and 10 November 2008.
(c) state guarantee of June 2010.
(2) For
that
reason,
on
3
March
2009
the
Commission
issued an information injunction under Article 10(3) of
Council Regulation (EC) No 659/1999 of 22 March
1999 laying down detailed rules for the application of
(6) Greece
submitted
its
comments
to
the
Commission’s
Article 93 (*) of the EC Treaty (
opening decision on 31 December 2010.

2 ), requesting Greece to
submit all information necessary to assess whether
United Textiles had received State aid and to assess if
that aid would be compatible with the internal market.
(7) The
Commission
decision
to
initiate
the
procedure
was
Greece submitted the requested information by letter of
published in the Official Journal of the European Union ( 3 ).
11 March 2009.
The Commission invited interested parties to submit their
comments on the measures.
(3) The Commission requested further information,
regarding the State measure mentioned in recital 1 and
(8) The
Commission
received
comments
from
United
Textiles on 7 and 9 February 2011. The comments
( 1 ) OJ C 357, 30.12.2010, p. 18.
were transmitted to Greece which was given the oppor
(*) Subsequently Article 88 of the EC Treaty and from 1 December
tunity to comment on them. Its comments were received
2009 Articles 87 and 88 of the EC Treaty were replaced with the
on 4 May 2011.
corresponding Articles 107 and 108 of the Treaty on the Func
tioning of the European Union.
( 2 ) OJ L 83, 27.3.1999, p. 1.
( 3 ) See footnote 1.

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EN
12.10.2012 Official
Journal
of
the
European
Union L
279/31
(9) The
Commission
requested
additional
information
from
March 2009, production has almost completely stopped.
the Greek authorities on 28 July 2011, to which Greece
In July 2008, the company’s main shareholder decided
replied by letter of 30 August 2011.
not to participate in a scheduled capital increase. Since
2008, almost all its bank loans have been overdue. Since
February 2010, trading of its shares in the Athens Stock
Exchange has been suspended. According to the
(10) At the request of the Greek authorities, a meeting was
company’s announcements, as published in its
held on 4 April 2011. In that meeting, the Greek auth
webpage ( 5 ) as well the webpage of the Athens Stock
orities presented arguments as regards the alleged aid
Exchange ( 6 ), its financial statements for 2010 were not
measures.
published because of a work retention which was
ongoing until 29 August 2011 (the last available
announcement).
II. DETAILED DESCRIPTION OF THE ALLEGED AID
II(a) The potential beneficiaries
Lending banks
United Textiles
(16) The
lending
Greek
banks
of
United
Textiles,
which
are
involved in the State aid measures under scrutiny, are the
(11) United
Textiles
is
a
large
Greek
textile
company
listed
on
the Athens Stock Exchange. It realised 45 % of its 2008
National Bank of Greece, Emporiki Bank, Agricultural
sales in Greece (38 % in 2007), 54 % in other EU
Bank of Greece, Alpha Bank and Eurobank. They are
countries (60 % in 2007) and 1 % to non-EU countries
all commercial banks, active in providing a full range
(2 % in 2007).
of financial products and services. They all have

presence, through subsidiaries, in other EU countries, in
particular Bulgaria, Germany, France, Cyprus,
Luxembourg, Netherlands, Poland, Romania and the
United Kingdom ( 7 ).
(12) In
2009
it
had
total
assets
of
EUR
201,7
million
and
a
turnover of EUR 4,5 million (limited sales of stock).
Previous years’ sales were EUR 30,6 million in 2008
and EUR 74,7 million in 2007. At the end of 2009 it
had 839 employees. The company has four subsidiaries
II(b) The measures under examination
in three countries: Albania, Bulgaria and the former
Yugoslav Republic of Macedonia. Its main shareholder
(17) In
the
period
2007-10,
three
State
measures
were
taken
is an off-shore company named European Textiles
in favour of the company United Textiles that could
Investments Ltd (Mauritius).
involve State aid elements, as follows in recitals 18 to 23.
(13) United
Textiles’
business
is
production
of
clothing,
fibre
Measure 1: The State guarantee of May 2007
and fabric. Its sales are realised in both wholesale and
retail markets. It has 12 plants in several districts of
(18) On
30
May
2007,
the
National
Bank
of
Greece,
lending
Greece. The plants in question, as well as those of the
bank of United Textiles, was granted a State guarantee
subsidiaries mentioned in recital 12, have not been
for a new loan to include: (a) a rescheduling of an
operating since 2008, because of lack of working capital.
existing loan of EUR 7,5 million; and (b) a new loan of
EUR 12,5 million. The State guarantee covered 80 % the
loan. This new loan had an interest rate of six-month
EURIBOR, plus spread of 1,85 % ( 8 ), equal to a total
(14) The
company’s
situation
has
constantly
deteriorated
at
interest rate of 6,10 % on 30 May 2007. There was no
least since 2004, with gradually decreasing sales,
premium for the State guarantee. According to the
negative Earnings Before Taxes and negative own equity
submitted rescheduling contract, the original existing
since 2008. Because of the latter, the company could be
loan was covered with a mortgage on a fixed asset.
dissolved, according to Greek Legislation (
Also, according to the annual reports of United Textiles

4 ).
for 2007, 2008 and 2009, the above new loan was
covered with the guarantee of the main shareholder
and also envisaged to be covered with pledges on
assets, however there is no reference to any realisation
(15) According to the company’s annual report’s, since 2001
of the latter pledge.
lending banks’ support to the company has been limited,
with reduced credit lines and loans. Since June 2008, a
large part of its operations has been stopped. Since
( 5 ) http://www.unitedtextiles.com/Alist.asp?catid=312&section=0.08.00.
( 6 ) http://www.ase.gr/content/gr/companies/ListedCo/Profiles/pr_press.
asp?Cid=111&coname=%C5%CD%D9%CC%C5%CD%C7+%CA%
( 4 ) According to Article 47 of Greek Law No 2190/1920, in case that a
CB%D9%D3%D4%CF%DB%D6%C1%CD%D4%CF%D5%D1%C3%
company’s own equity falls below 50 % of its share capital, the
C9%C1+%C1%2E%C5%2E
company’s shareholders must decide (within six months from the
( 7 ) As stated in the banks’ financial reports and internet sites.
expiry of the relevant fiscal year) either to dissolve the company or
( 8 ) Including a tax of 0,6 %, applicable in all loans in Greece (except for
to adopt other measures.
mortgage and agricultural loans, where tax is 0,12 %).

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L 279/32
EN
Official Journal of the European Union
12.10.2012
(19) The guarantee was based on a Ministerial decision of
(23) The
underlying
planned
syndicated
loan
had
duration
of
26 January 2007 (Decision 2/75172/0025/26.01.2007).
nine years. The ministerial decision 2/35129/0025
The decision foresaw that State guarantees could be
granting the guarantee did not specify any interest rate
issued to existing loans of industrial, mining, livestock
for the loans to be covered. It merely specified that the
farming and hotel companies, located in the district of
loans have to be at ‘market’ rate. The State guarantee
Imathia, Northern Greece (where part of United Textiles’
covers 80 % of the loan. A yearly premium of 2 % on
operations is located). The scheme did not exclude firms
the loan’s yearly average outstanding amount is foreseen
in difficulty and did not foresee a premium for the State
for the State. Lending banks receive, in addition to the
guarantee. The scheme did not foresee any kind of
State guarantee, securities for the new loan in the form
objective criteria for the selection of beneficiary
of pledged shares of the company for at least 25,9 % of
companies. The Commission notes that the scheme has
its total shareholding and first rank mortgages on real
not been notified, in line with Article 108 TFEU,
estate assets of the company. The State does not receive
therefore the Commission reserves the right to investigate
any security for its guarantee; however, in case the
other State measures possibly granted on the basis of the
guarantee is called, the securities will be transferred to
scheme.
the State.
(20) On the basis of the guarantee, the loan agreements were
signed on 11 October 2007.
(24) The guarantee granted in June 2010 under ministerial
decision 2/35129/0025 replaced (by revoking it) a
previously granted one of 2 October 2009 (ministerial
Measure 2: Rescheduling of social insurance debts
decision 2/71055/0025). The latter was granted for a
new loan of EUR 40 million, also aiming at financing
(21) On
25
May
2009
the
Greek
authorities
rescheduled
the
the rescheduling of the loans granted to the company
company’s overdue social insurance debts of the period
in the period August 2008-February 2009 (see recital
2004-09, amounting to EUR 14,57 million, to 96
22(a)). The loan of EUR 40 million, however, was
monthly payments of EUR 0,19 million each. The resche
never issued and therefore the October 2009 guarantee
duling took place in the context of Law No
was not activated. Instead, the latter was replaced with
3762/2009 ( 9 ). The rescheduled amount partly included
the new guarantee of June 2010, which covered the
debts already arranged in previous reschedulings, which
syndicated loan of EUR 63,6 million. According to the
had not been respected. In addition, on the basis of the
Greek authorities, the reason for that replacement was
information submitted, it does not seem that United
that the extent of the loan of EUR 40 million was not
Textiles has paid any contributions so far.
sufficient anymore to cover the company’s liquidity
needs.
Measure 3: The State guarantee of October 2009 and
June 2010
(25) Despite the guarantee, the underlying loan has never
(22) On 30 June 2010, with ministerial decision
been granted. In view of the company’s acute difficulties,
2/35129/0025, the Greek State granted a guarantee to
the banks refrained from signing the loan agreement and
the lending banks of United Textiles. Those banks are the
never paid out the loan.
National Bank of Greece, Emporiki Bank, Agricultural
Bank of Greece, Alpha Bank and Eurobank. The
guarantee covered a new planned syndicated loan of
III. GROUNDS FOR INITIATING THE FORMAL INVESTI
EUR 63,6 million, separated in three sub-amounts for
GATION PROCEDURE
the purpose of the following:
(26) In the opening decision of 27 October 2010, the
Commission questioned whether the terms of the State
(a) EUR 36,6 million to reschedule loans granted to the
guarantees of 2007 (Measure 1) and 2010 (Measure 3)
company by its lending banks in the period August
were market conform and in line with the Commission
2008-September 2009. According to the information
Notice on the application of Articles 87 and 88 of the
available, the loans in question had interest rates
EC Treaty to State aid in the form of guarantees ( 10 ) (‘the
between three-months and six-months EURIBOR,
Guarantee Notice’).
plus 1,25
% to 3
%. Also according to the
information available, those loans were initially not
covered by a State guarantee.
(27) As regards the measure of the rescheduling of overdue
social insurance obligations (Measure 2), in the opening
(b) EUR 15 million to finance the payment of overdue
decision of 27 October 2010, the Commission ques
debts of the company to the State, to suppliers and
tioned whether a private creditor in the given circum
to its employees.
stances would have accepted any type of rescheduling of
debts. Indeed, the possibility of obtaining a late
repayment of the debt appeared restricted, since United
(c) EUR 12 million to finance investments and operating
Textiles was already in serious financial difficulties and
expenses.
had stopped most of its production.
( 9 ) FEK A’ 75, 15.5.2009.
( 10 ) OJ C 155, 20.6.2008, p. 10.

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EN
12.10.2012 Official
Journal
of
the
European
Union L
279/33
(28) The
Commission
thus
questioned
whether
the
measures
decline the State guarantee and in its place to inscribe a
under investigation constituted illegal State aid in the
mortgage on real estate assets of United Textiles, which
meaning of Article 107(1) TFEU and whether the
will inactivate the guarantee.
measures were compatible with the TFEU.
(38) Finally, Greece and the beneficiary argue that the
IV. COMMENTS FROM GREECE AND THE BENEFICIARY
guarantee was incorporated in the guarantee of 2010,
therefore there is a continuum in the settlement of the
(29) The
information
submitted
by
the
Greek
authorities
and
company’s lending.
United Textiles (the beneficiary) on the measures in
question can be summarised as follows:
IV(b) Measure 2: Rescheduling of overdue public
insurance debts
IV(a) Measure 1: The State guarantee of May 2007
(39) Greece and the beneficiary argue that the measure is
(30) With
regard
to
Measure
1,
the
comments
of
Greece
and
based on Law No 3762/2009, which is a general law,
the beneficiary overlap to a large extent, therefore the
applicable to all companies with overdue or unpaid
Commission will expose them together, as follows:
public insurance obligations, therefore the measure in
question is not selective.
(31) Greece and the beneficiary acknowledge that at the time
of the 2007 guarantee the company was in difficulty,
IV(c) Measure 3: The State guarantee of June 2010
allegedly due to international competition of lower cost
countries. Greece also acknowledges having granted the
(40) Greece
acknowledges
having
granted
the
2010
guarantee
above guarantees.
and argues that the latter was granted because the extent
of the previous guarantee of 2009 (which has never been
implemented) was not sufficient anymore to cover the
(32) Greece and the beneficiary also support that the 2007
company’s liquidity needs, therefore the 2009 guarantee
guarantee does not constitute aid, as it was not selective
was incorporated into the 2010 guarantee.
to United Textiles: it was granted on the basis of a
ministerial decision not only for United Textiles but
also for other companies.
(41) Greece
argues
that
the
2010
guarantee
is
in
line
with
the
communication from the Commission — community
guidelines on State aid for rescuing and restructuring
(33) Apart from the above, Greece and the beneficiary argue
firms in difficulty (
that the 2007 guarantee was granted pursuant to Greek

11 ) (‘Rescue and restructuring guide
lines’) and that it does not confer an advantage to
Law No 2322/1995, which allowed the Minister of
United Textiles. Moreover, it claims that there is no
Finance to grant State guarantees to banking institutions
infringement of the ‘one time last time’ principle as
for loans that reschedule debts or grant new working
enshrined in the Rescue and restructuring guidelines,
capital.
since the 2010 guarantee replaces the 2009 guarantee
and changes several provisions of the 2007 guarantee
(see Measure 1 in recital 18). Therefore, the 2010
(34) Furthermore,
Greece
and
the
beneficiary
claim
that
before
having been granted the guarantee, the company had
guarantee embodies the totality of the clauses of the
submitted to the Greek authorities a restructuring plan
company’s loans in a single text with unified provisions.
with financing from banks and without any State guar
Greece also states that the guarantee is not valid yet,
antee. Such a restructuring plan was never formally
because the Ministry’s competent service has not
submitted to the Commission.
approved it yet.


(35) Greece also argues that the 2007 guarantee was granted
(42) Finally, Greece informed the Commission that the
in line with the State aid rules in force in the EU.
2010 guarantee has not yet been activated, as the
According to Greece’s allegations, the guarantee had a
company has not signed any loan contract with any
maximum coverage of 80 % and was granted for loans
bank and no loan payment has taken place. Also, the
with market interest rates. Also, Greece supports that the
Greek authorities have drawn the Commission’s attention
loan was properly securitised with pledged commodities
to the fact that the granting ministerial decision
and personal guarantees of shareholders and that it was
2/35129/0025/28.06.2010 foresees that the loan’s first
granted for a specific transaction and duration.
two sub-loans (EUR 36,6 million + EUR 15 million) had
to be paid until 28 July 2010 and this date has expired,
therefore the guarantee actually cannot be activated.
(36) Moreover,
Greece
and
the
beneficiary
support
that
the
latter is one of the most significant textile companies
in Greece, employing a significant number of staff and
(43) United
Textiles
argues
that
the
underlying
loan
contract
operating mainly in regions close to the border.
has not been signed yet, therefore there is no interest rate
defined yet. When this is done, the interest rate will be
market conform.
(37) Greece
and
the
beneficiary
also
claim
that
the
National
Bank of Greece (the lending bank) has accepted to
( 11 ) OJ C 244, 1.10.2004, p. 2.

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L 279/34
EN
Official Journal of the European Union
12.10.2012
(44) Regarding
the
restructuring
plan
of
2010
(see
recital
4),
(Section V(a)). Secondly, the Commission will assess the
United Textiles supports that it foresees a drastic
presence of aid in the measures under scrutiny, in order
reduction of production, therefore the forecasted return
to conclude if there is aid or not (Section V(b)). Thirdly,
to viability does not distort competition.
where a measure indeed involves aid, the Commission
will assess its compatibility with the internal market
(Section V(c)).
V. ASSESSMENT OF THE AID
(45) On the basis of the above facts and also of the arguments
V(a) Status of the company
of Greece and United Textiles, the Commission will
assess the measures in question in this section. First,
(46) As shown in recitals 14 and 15 and set out in more
the Commission will assess the status of United
detail in Table 1 below, the company’s operating and
Textiles at the time of the measures under scrutiny, in
financial performance deteriorated significantly in the
order to conclude if the company was in difficulty or not
period 2004-09.
Table 1
United Textiles’ key financial data (million EUR)
2004 2005 2006 2007 2008 2009
Turnover 154,3 97,5 64,6 74,7
(*) 30,6 4,5
EBT –89,6 –61,3 –49,3 –38,5 –62,4 –60,6
Accumulated
264,1 316 378,3 418,7 481 520,3
(**)
losses
Registered capital 276,3 283,3 280,8 288,9 290,4 290,4
(**)
Own equity 95,2 35,7 32,9 4,6 –49,1 –111,5
Debt/equity 281
% 692
% 829
% 6
243
% –561
% –280
%
Data from 2004-09 financial statements.
(*) Increase because of increased funds that allowed more factories to operate.
(**) September 2009.
(47) On the basis of these financial figures, the Commission
of capital or the capitalisation of losses, which would
concludes that the company has been in difficulty in the
wipe out the registered capital. It appears that only the
meaning of point 10 of the Rescue and restructuring
latter case would be feasible for United Textiles, due to
guidelines at the time of the granting of the measures
its critical financial situation (see Table 1) and its difficult
under scrutiny (the period 2007-10). The Commission
access to finance (see recital 15). On the basis of the
equally considers that the company is in difficulties at
above, the Commission considers that the company
present.
lost more than half of its registered capital.
(48) More
specifically,
with
regard
to
point
10(a) of
the
(49) Furthermore,
concerning
point
10(c)
of
the
Rescue
and
Rescue and restructuring guidelines, the company’s
restructuring guidelines, since 2008 the company fulfilled
registered capital, as appearing in its financial statements
the criteria under Greek law for being the subject of
of years 2004-09, was not lost but increased in the
collective insolvency proceedings ( 13 ).
period 2004-09. However, the Commission notices that
in the same period the company’s own equity was
reduced to minimal (2007) or negative level (2008 and
(50) Finally, as regards point 11 of the of the Rescue and
2009). At the same time, the company did not adopt
restructuring guidelines, the usual signs of a firm being
appropriate measures in order to tackle the decrease of
in difficulty, such as increasing losses, diminishing
its own equity, as foreseen by Greek legislation ( 12 ). If
turnover and mounting debt, have been present since
adopted, those measures would be either the increase
at least 2004.
( 12 ) See footnote 4 above.
( 13 ) See footnote 4 above.

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EN
12.10.2012 Official
Journal
of
the
European
Union L
279/35
V(b) Presence of aid in the meaning of Article 107(1)
According to the Guarantee Notice, points 2.2 and 3.2,
TFEU
when the borrower does not pay a market-oriented price
for the guarantee, it obtains an advantage. In some cases,
(51) Article 107(1) TFEU states that ‘Save as otherwise
the borrower, as a firm in financial difficulty, would not
provided in the Treaties, any aid granted by Member
find a financial institution prepared to lend on any terms,
State or through State resources in any form whatsoever
without a State guarantee.
which distorts or threatens to distort competition by
favouring certain undertakings or the production of
certain goods shall, in so far as it affects trade between
Member States, be incompatible with the internal
(58) In the case at hand, the 2007 guarantee was granted for
market’.
loans of a firm in difficulty and did not foresee a
premium for the guarantor (State). In the light of
points 3.2 and 4.2 of the Guarantee notice, the
Commission notes the significant deterioration of the
(52) The Commission will assess whether the measures under
company’s financial situation in the period 2004-07,
scrutiny in favour of United Textiles constitute State aid
the overdue situation of its loans and the fact that
in the sense of Article 107(1) TFEU.
already since 2001 its lending banks’ support had been
limited, with reduced credit lines and loans. The
Commission considers that, since at the time that the
V(b)(1) Measure 1: State guarantee of May 2007
measure was taken United Textiles was in serious
difficulty, it must be classified in the credit category ‘bad’.
A i d t o U n i t e d T e x t i l e s
(a) State resources
(59) In addition to the above, the Commission notes that,
(53) The Commission notes that the State guarantee in
according to the company’s annual reports of 2007,
question indeed involves State resources, as it has been
2008 and 2009, the guaranteed loan was still
granted directly by the State. The decision has been made
envisaged to be securitised with assets of the company,
by the responsible minister; therefore, the measure is also
therefore that securitisation was apparently not realised
imputable to the State. Thus, the criterion of State
yet (see recital 18). In addition, the Commission notes
resources is fulfilled.
that the National Bank of Greece (the lending bank) was
proposed in December 2010 to decline the State
guarantee and in its place to inscribe a mortgage on
(b) Advantage
real estate assets of United Textiles (see recital 37). The
Commission considers this proposal to be a clear indi
(54) Greece and the beneficiary claim that the National Bank
cation that indeed the securitisation in question was not
of Greece (the lending bank) has accepted to decline the
realised. On this issue, the Greek authorities submit that
State guarantee and in its place to inscribe a mortgage on
the 2007 guarantee was securitised with commodities of
real estate assets of United Textiles, which will deactivate
the company and personal guarantees of its shareholders
the guarantee. To demonstrate their claim, Greece and
(see recital 35), however the facts of the case only verify
the beneficiary submit a letter of the National Bank of
the shareholders’ personal guarantees. Thus, the
Greece, dated 24 December 2010 (replying to a letter of
Commission considers that the underlying loan was not
United Textiles dated 23 December 2010).
securitised.
(55) The
Commission
cannot
accept
the
above.
Indeed,
in
the
(60) On the basis of the above, the Commission doubts that
submitted letter of the National Bank of Greece, it is only
any private guarantor would have offered such a
stated that the bank would be willing to examine the
guarantee and that any private bank would have
proposed exchange of securities, mainly under the
accepted to finance the company without a State
conditions that the bank would choose the assets to be
guarantee at all, as in a similar situation it would
pledged and that the exchange would be accepted by all
appear extremely difficult for such company to be able
concerned parties. Thus, the Commission considers that
to repay the loan and for the guarantor to avoid to
the National Bank of Greece has not actually accepted the
honour the guarantee. Thus, the Commission considers
proposed exchange of securities.
that the aid amount stemming from the 2007 guarantee
amounts up to the whole amount of the guaranteed loan,
i.e. EUR 16 million (80 % of EUR 20 million).
(56) Greece also argues that the 2007 guarantee was granted
in line with the State aid rules that are in force in the EU.
According to Greece’s allegations, the guarantee had a
maximum coverage of 80 % and that it was granted
(c) Selectivity
for loans with market interest rates.
(61) Greece and the beneficiary also support that the 2007
guarantee does not constitute aid, as it was not selective
to United Textiles: it was granted on the basis of minis
(57) The
Commission
cannot
accept
the
above
argumentation
terial decision 2/75172/0025/26.01.2007 which
and considers that the 2007 guarantee has indeed
concerned not only United Textiles but also other
procured an undue advantage to United Textiles.
companies.

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L 279/36
EN
Official Journal of the European Union
12.10.2012
(62) The
Commission
notes
that
the
ministerial
decision
on
However, the bank would be able to recover the existing
which the guarantee was based targeted certain sectors of
loan through liquidation procedures. In this regard, the
a specific geographical area, i.e. the Imathia district. In
Commission notes that the 2007 loan was already
addition, in the case at hand, the Greek authorities had a
covered with a mortgage on a fixed asset ( 17 ).
wide range of manoeuvre in granting a guarantee in
favour of United Textiles, as there were no objective
criteria set for deciding whether to grant the guarantee
Conclusion on the existence of aid in Measure 1
or not. In the absence of such objective criteria, the

measure was indeed selective, because the authorities
(66) On the basis of the above, it is concluded that the State
applied it individually on a discretionary basis ( 14 ).
guarantee of May 2007 (Measure 1) constitutes unlawful
According to established case-law ( 15 ), where the public
State aid in favour of United Textiles in the meaning of
body granting financial assistance enjoys a degree of
Article 107(1) TFEU.
latitude which enables it to choose the beneficiaries or
the conditions under which the financial assistance is
provided, that assistance cannot be considered to be
general in nature. Thus, the criterion of selectivity is
(67) The
Commission
considers
that
the
State
guarantee
of
indeed fulfilled.
May 2007 did not constitute State aid in favour of the
lending bank the National Bank of Greece in the
meaning of Article 107(1) TFEU.
(d) Distortion of competition and affectation of trade
between Member States
(63) United Textiles is active in a sector whose products are
V(b)(2) Measure 2: Rescheduling of overdue social insurance
widely traded among Member States and who is subject
obligations
to intense competition. At the time of the granting of the
(a) State resources
aid measures, United Textiles was an undertaking which

realised most of its sales to other Member States (see
(68) The
Commission
notes
that
the
aim
of
social
insurance
recital 11). Also, the aid measure in question granted
contributions is to finance the budget of Social Security
United Textiles an advantage over its competitors (see
Organisations, which constitute public legal entities
recitals 45, 46 and 47). According to established case-
under the State’s supervision. Therefore the non-
law ( 16 ), when State aid strengthens the position of an
collection of such contributions deprives the State of
undertaking compared with other undertakings
resources. Thus, this criterion is fulfilled.
competing in trade between Member States, those other
undertakings must be regarded as affected by that aid.
Thus, the criterion of distortion of competition and affec
tation of trade between Member States is indeed fulfilled.
(b) Advantage
(69) The
Commission
notes
that
United
Textiles
was
effec
A i d t o t h e l e n d i n g b a n k
tively granted a delay of eight years to the payment of
a financial obligation, at the time of severe financial
(64) Regarding the bank lending the underlying loan of the
difficulty and high probability of default. According to
2007 guarantee (the National Bank of Greece), the inves
well-established case-law
( 18 ), in order to establish
tigation has shown that it did not benefit from the
whether a selective advantage is conferred by non-
guarantee in question. Indeed, the guarantee was
enforcement of debts and whether the advantage could
granted in the context of a new loan contract, with a
be classified as State aid for the purposes of Article 107(1)
new duration of 10 years. According to point 2.3.1 of
TFEU, it must still be established that United Textiles
the Guarantee Notice, if a State guarantee is given ex post
could not have obtained such an advantage under
in respect of a loan, without the terms of this loan being
normal market conditions. In this regard the essential
adjusted, then there may also be aid to the lender; in the
question to be asked is whether the behaviour of the
case at hand, however, the terms of the existing loan
State as creditor in the given circumstances could be
were changed, through the change of the loan’s
compared to the behaviour of a diligent private creditor.
duration. Therefore the Commission considers that the
2007 guarantee did not constitute aid to the lender.
(70) According
to
the
Greek
authorities,
previous
rescheduling
(65) At the same time, the 2007 guarantee merely resulted in
agreements had not been respected by United Textiles. At
the bank not seeking immediately to collect its loan.
the same time, the company was effectively granted an
extension of eight years for the payment of a financial
obligation of EUR 14,57 million (see recital 16), at the
( 14 ) See Commission Notice on the application of the State aid rules to
measures relating to direct business taxation, OJ C 384,
10.12.1998, p. 3. See also decision of the Court of 26 September
( 17 ) It is also noted that, in principle, banks in Greece usually accept as
1996 in case C-241/94 France v Commission (Kimberly Clark
securities only assets whose ‘fire sale’ value (around 75 % of the
Sopalin) [1996] ECR I-4551.
market value) is at least equal to the loan.
( 15 ) Judgement of the Court of First Instance (now General Court) of
( 18 ) See e.g. Judgement of the Court of 29 April 1999 in C-342/96
11 July 2002 in case T-152/99, Hamsa v Commission, 2002 ECR
Spain v Commission, Rec.1999, p. I-2459; Judgement of the Court of
3049, paragraphs 156-157.
First Instance (now General Court) of 11 July 2002 in T-152/99
( 16 ) Judgement of the Court of 17 September 1980 in case 730/79,
HAMSA v Commission, Rec.2002, p. II-3049; Judgement of the
Philip Morris v Commission, paragraph 11, 1980 ECR 2671, Greek
Court of 29 June 1999 in C-256/97 DM Transport, Rec.1999, p.
special version 1980/ΙΙΙ, p. 13.
I-3913.

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EN
12.10.2012 Official
Journal
of
the
European
Union L
279/37
time of severe financial difficulty and high probability of
obligations constitutes State aid in favour of United
default. Such an extension would not have been granted
Textiles in the meaning of Article 107(1) TFEU.
by a market economy creditor, especially since previous
reschedulings had already failed.
(77) The
amount
of
aid
equals
to
EUR
14,57
million,
granted
to the company at the moment of the overdue debts’
(71) For the above-stated reasons, the Commission considers
rescheduling on 25 May 2009, as the total amount of
that the behaviour of the Greek authorities could not be
the rescheduled debts.
compared to that of a diligent private creditor, since the
rescheduling of 2009 was applied in spite of previous
failed rescheduling agreements and the company was
already in serious financial difficulties and had stopped
V(b)(3) Measure 3: State guarantee of June 2010
most of its production, thus the perspective of obtaining
a repayment of the debt appeared unlikely.
(78) The
Commission
notes
that
the
company
stopped
oper
ations already in 2009 and did not even publish financial
statements since then (see recital 15). The guarantee was
not sufficient to obtain any fresh funding and the under
(72) Thus, the Commission considers that the 2009 resche
taking did not resume its activities while it was valid.
duling of the company’s public insurance debts has
Under these circumstances, the Commission considers
conferred an advantage within the meaning of
that the guarantee did not distort or threaten to distort
Article 107(1) TFEU on the company.
competition. Therefore, it does not constitute State aid.
(c) Selectivity
V(c) Compatibility of the aid measures with the
Internal Market
(73) The
Greek
authorities
and
the
beneficiary
claim
that
the
rescheduling was based on a general national law ( 19 ),
V(c)(1) General
applicable to all companies in Greece, therefore the
measure was not selective.
(79) Inasmuch as Measures 1 and 2 constitute State aid within
the meaning of Article 107(1) TFEU, their compatibility
must be assessed in the light of the exceptions laid down
in paragraphs 2 and 3 of that Article.
(74) The
Commission
cannot
accept
the
above
argument.
Indeed, in the case at hand, the Greek authorities had a
wide range of manoeuvre in the treatment of United
Textiles’ social insurance debts, as there were no
V(c)(2) Company in difficulty
objective criteria set for deciding whether to grant the
rescheduling or not. In the absence of such objective
(80) As
shown
in
recitals
46
to
50,
the
company’s
operating
criteria, the measure was indeed selective, because the
and financial performance deteriorated significantly in the
authorities applied it individually on a discretionary
period 2004-09. On this basis, the Commission
basis (
concludes that the company has been in difficulty in

20 ). Also, according to established case-law, where
the public body granting financial assistance enjoys a
the meaning of points 10 and 11 of the Rescue and
degree of latitude which enables it to choose the bene
restructuring guidelines at the time of the granting of
ficiaries or the conditions under which the financial
the measures under scrutiny (the period 2007-10), as
assistance is provided, that assistance cannot be
also acknowledged by Greece and the beneficiary. The
considered to be general in nature (
Commission equally considers that the company is in

21 ). Thus, the
criterion of selectivity is indeed fulfilled.
difficulties at present because the situation has not
improved since.
(d) Distortion of competition and affectation of trade
between Member States
V(c)(3) Exemptions under Article 107(2) and (3) TFEU
(75) Finally, the criterion of distortion of competition and
(81) The derogations laid down in Article 107(2) and
effect on trade between Member States is fulfilled in
Article 107(3), points (d) and (e), are clearly not
the same way as in recital 63.
applicable and have not been invoked by the Greek auth
orities.
(e) Conclusion on the existence of aid in Measure 2
(82) Article
107(3)(a)
states
that
‘aid
to
promote
the
economic
(76) On the basis of the above, the Commission concludes
development of areas where the standard of living is
that the 2009 rescheduling of overdue social insurance
abnormally low or where there is serious under
employment’ may be declared compatible with the
internal market. United Textiles is located in an assisted
( 19 ) Law No 3762/2009, FEK A’75 15.5.2009.
( 20 ) See footnote 14 above.
area under Article 107(3)(a), therefore it could potentially
( 21 ) See footnote 15 above.
be eligible for regional aid.

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L 279/38
EN
Official Journal of the European Union
12.10.2012
(83) The
Guidelines
on
regional
aid
2007-2013
( 22 ) (‘Regional
measures are not restricted to the minimum necessary
aid guidelines’), which were applicable at the time of
amount, as foreseen in point 25(d) of the Rescue and
application of the 2007 guarantee and the 2009 debt
restructuring guidelines and stemming from the formula
rescheduling (Measures 1 and 2), set out the conditions
set out in the Annex to those guidelines.
for the approval of regional investment aid.
(89) Second,
none
of
the
measures
could
be
found
compatible
(84) The
Regional aid guidelines clearly
exclude firms in
as restructuring aid either. Greece and the beneficiary
difficulty from their scope. United Textiles was already
claim that before having been granted the 2007 guar
in difficulty at the time when Measures 1 and 2 were
antee, the company had submitted to the Greek auth
granted, therefore it was not eligible for regional aid. On
orities a restructuring plan with financing from banks
this basis, the Commission concludes that the aid cannot
and without any State guarantee. However, such a
be declared compatible on the basis of the Regional aid
restructuring plan was never officially submitted to the
guidelines.
Commission, therefore, the grant of these measures was
made in the absence of a restructuring plan; however,
such a restructuring plan is the condition for ensuring
the restoration of a firm’s long-term viability. In fact,
(85) The
Commission
will
also
assess
the
compatibility
of
the
measures in question under the Commission Regulation
based on the evidence of the investigation, no such
(EC) No 800/2008 of 6 August 2008 declaring certain
plan existed, and all restructuring efforts in this period
categories of aid compatible with the common market in
have failed, to the point that the company practically
application of Articles 87 and 88 of the EC Treaty
ceased to operate and was taken off the stock
(General block exemption Regulation)
(
exchange. Despite this failure to restructure, the State

23 ). The
Commission notes that aid to firms in difficulty is
continued to provide working capital to United
excluded from the scope of the general block
Textiles, through the 2007 State guarantee. Thus, the
exemption Regulation. United Textiles was already in
Commission considers that Measures 1 and 2 constituted
difficulty at the time when Measures 1 and 2 were
mere operating aid without any underlying credible
granted, therefore the aid granted to United Textiles is
restructuring.
not compatible under the general block exemption Regu
lation.
(90) Finally,
no
compensatory
measures
in
the
sense
of
points
38 to 42 of the Rescue and restructuring guidelines have
(86) The Commission has also to assess whether any of the
been officially submitted.
measures concerned could be compatible under the crisis
rules enshrined in the Communication from the
Commission — Temporary Community framework for
(91) As
regards
United
Textiles’
eligibility
to
receive
restruc
State aid measures to support access to finance in the
turing aid, the Commission notes that the company has
current financial and economic crisis ( 24 ) (hereinafter
been granted operating aid since at least 2007, at a time
‘Temporary Framework’). However, the Commission
when it was already in difficulty. The Commission
notes that United Textiles was clearly a company in
considers that the above fact is an infringement of the
difficulties before 1 July 2008 and therefore not
‘one time last time’ principle, as it demonstrates that the
eligible for aid under the Temporary Framework.
company’s difficulties are of a recurrent nature and that
the aid measures in the company’s favour have distorted
competition contrary to the common interest. In
(87) Since
United
Textiles
was
a
firm
in
difficulty
at
the
time
addition, the beneficiary argues that the 2007
of the granting of the measures, the compatibility of the
guarantee was incorporated in the guarantee of 2010,
aid measures can only be assessed in the light of the
therefore there is a continuum in the settlement of the
Rescue and restructuring guidelines, i.e. under
company’s lending. However, the Commission considers
Article 107(3)(c) TFEU.
that there are no elements suggesting that the restruc
turing should be considered to form a continuum, as the
aid measures of 2007, 2009 and 2010 were granted over
several years and were not granted on the basis of a
(88) First, the Commission considers that the measures in
single restructuring project or concept capable of
question cannot be found compatible as rescue aid.
restoring the company’s viability.
Indeed, the guarantee does not have a limited duration
of six months, as foreseen in point 25(c) of the Rescue
and restructuring guidelines, and the debt rescheduling,
which could be comparable to a loan, also goes beyond a
(92) On the basis of the above, the Commission considers
six-month period admissible as rescue aid. Also, the
that the ‘one time last time’ principle is not respected.
( 22 ) OJ C 54, 4.3.2006, p. 13.
( 23 ) OJ L 214, 9.8.2008, p. 3.
(93) Finally,
as
United
Textiles
was
in
difficulty
at
the
time
of
( 24 ) OJ C 16, 22.1.2009, p. 1, as modified by the Communication from
the granting of the measures, the Commission cannot
the Commission amending the Temporary Community Framework
for State aid measures to support access to finance in the current
conceive of another set of State aid rules that could
financial and economic crisis, OJ C 303, 15.12.2009, p. 6.
make the alleged aid measures compatible with TFEU.

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EN
12.10.2012 Official
Journal
of
the
European
Union L
279/39
V(c)(4) Conclusion on compatibility
Article 2
(94) In the view of the above, the Commission concludes that
1. Greece
shall
recover
the
aid
stipulated
in
Article
1,
Measures 1 and 2 are incompatible with TFEU.
paragraph 1, from the beneficiary.
VI. RECOVERY
2. The
sums
to
be
recovered
shall
bear
interest
generated
from the date on which they were put at the disposal of the
(95) On the basis of the foregoing, the Commission concludes
beneficiary until their actual recovery.
that the 2007 State guarantee and the 2009 rescheduling
of overdue social insurance obligations constitute State
3. The
interest
shall
be
calculated
on
a
compound
basis
in
aid which is incompatible with the internal market. The
accordance with Chapter V of Commission Regulation (EC) No
Commission has also come to the conclusion that the
794/2004 ( 25 ).
2010 State guarantee does not constitute State aid.
4. Greece
shall
cancel
all
outstanding
payments
under
the
aid
stipulated in Article 1, paragraph 1, with effect from the date of
(96) Article
14
of
Regulation
(EC)
No
659/1999
lays
down
notification of this decision.
that ‘where negative decisions are taken in respect of
unlawful aid, the Commission shall decide that the
Article 3
Member State concerned shall take all necessary
measures to recover the aid from the beneficiary’.
1. Recovery
of
the
aid
referred
to
in
Article
1,
paragraph
1,
shall be immediate and effective.
(97) Thus, given that the measures at hand are to be
considered as unlawful and incompatible aid, the
2. Greece
shall
ensure
that
this
decision
is
implemented
amount of aid must be recovered in order to re-
within four months following the date of notification of this
establish the situation that existed on the market prior
Decision.
to the granting of the aid. Recovery shall be hence
Article 4
affected from the time when the advantage occurred to
the beneficiary, i.e. when the aid was put at the disposal
1. Within two months following notification of this
of the beneficiary and shall bear recovery interest until
Decision, Greece shall submit the following information to
effective recovery.
the Commission:
(98) The incompatible aid element of the 2007 State
(a) the total amount (principal and recovery interests) to be
guarantee (Measure 1) is calculated as amounting up to
recovered from the beneficiary;
the total of the guaranteed loan. The Commission
(b) a detailed description of the measures already taken and
estimates that the aid thus granted to United Textiles
planned to comply with this Decision;
amounts up to EUR 16 million.
(c) documents demonstrating that the beneficiary has been
(99) The
incompatible
aid
element
of
Measure
2
is
calculated
ordered to repay the aid.
as the total amount of the rescheduled debts, thus the
amount of aid granted to United Textiles is EUR
2. Greece
shall
keep
the
Commission
informed
of
the
14,57 million. Payments made other than the amounts
progress of the national measures taken to implement this
paid under the agreement may be deducted from the sum
Decision until recovery of the aid stipulated in Article 1,
to be recovered as unlawful and incompatible aid.
paragraph 1, has been completed. It shall immediately submit,
on simple request by the Commission, information on the
(100) The exact recovery amount and the recovery interest to
measures already taken and planned to comply with this
be applied on these amounts have to be calculated by
Decision. It shall also provide detailed information concerning
Greece,
the amounts of aid and recovery interest already recovered from
the beneficiary
HAS ADOPTED THIS DECISION:
Article 5
Article 1
This Decision is addressed to the Hellenic Republic.
1.
The State aid granted by Greece in breach of Article 108(3)
of the Treaty on the Functioning of the European Union, in
favour of United Textiles S.A., in the form of a 2007 State
Done at Brussels, 22 February 2012.
guarantee and a rescheduling of overdue social insurance
obligations in 2009, is incompatible with the internal market.
For the Commission
2. The
2010
State
guarantee
does
not
constitute
aid
within
the meaning of Article 107(1) of the Treaty on the Functioning
Joaquín ALMUNIA
of the European Union.
Vice-President
( 25 ) OJ L 140, 30.4.2004, p. 1.

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