19.6.2013

EN

Official Journal of the European Union

L 167/41

(1)

By letter of 13 August 2008, Poland informed the Commission of measures it planned to grant to support the restructuring of PZL D臋bica S.A. (‘PZL D臋bica‘�or ‘the company‘�. By letter of 3 October 2008 the Commission asked Poland to submit certain missing documents. These were provided on 20 October 2008.

(2)

By letter dated 19 December 2008, the Commission informed Poland that it had decided to initiate the procedure laid down in Article 108(2) of the Treaty on the Functioning of the European Union (‘the Treaty‘� in respect of the measures (‘the opening decision‘�.

(3)

The opening decision was published in the Official Journal of the European Union (2). The Commission called on interested parties to submit their comments. No interested third party commented on the opening decision.

(4)

The Polish authorities submitted additional information in reply to the opening decision on 12 February 2009, 9 July 2010, 16 May 2011, 7 June 2011, and 8 June 2011.

(5)

On 18 August 2011 Poland asked the Commission to refrain from assessing the notified aid until 31 October 2011. On 10 October 2011 Poland withdrew some of the notified measures i.e. a capital injection and a preferential loan which were both supposed to be awarded by the state-owned Industrial Development Agency.

(6)

On 2 November 2011 Poland submitted a report with a view to establishing that the remainder of the notification, i.e. deferral of social security debt, passed the private creditor test and therefore did not constitute state aid.

(7)

By letter of 26 July 2012 the Commission asked Poland to provide additional explanations on a number of points. Poland replied by letter dated 31 August 2012, in which it informed the Commission that an agreement on the deferral of the social security debt had been concluded on 1 March 2012 and that the outstanding debt to the local Office of the Marshall had been repaid on 14 August 2012.

(8)

Information was last provided by the Polish authorities on 6 December 2012.

(9)

PZL D臋bica has 212 employees. It is a medium-sized company active primarily in the production of refrigeration equipment such as compressors, units for ice water and chillers, air and liquid coolers, spray-and-evaporative condensers, vertical and horizontal shell-and-tube condensers, tank apparatus: liquid separators, horizontal tanks, inter-stage coolers, economisers, oil separators and refrigerating valves.

(10)

The company is located in Podkarpackie Province, a region covered by Article 107(3)(a) of the Treaty. It was founded in 1938 and has been a joint stock company since 1995. In 1999 the company‘檚 shares were held by the Treasury (25,08 %) and the employees (74,92 %). In 2006 the company was fully privatised: its shares were predominantly held by the current and former employees and their heirs. In 2010 a private investor, Eurotech, acquired a 16,7 % share in PZL D臋bica.

(11)

The company's market share on the Polish refrigerator equipment market is small (less than 1 % in 2006). Exports in 2006 accounted for 15,6 % of overall sales, of which 6,8 % went outside the European Union. On the Polish market the company faces strong competition from a number of companies, for instance York International, GEA GRASSO Refrigeration Division, Mycom International Refrigeration (Ltd), MOSTOSTAL Wroc艂aw S.A., Aerzen Maschinenfabrik GmbH and Zak艂ad Metalowy PILZNO.

(12)

According to the Polish authorities, the company's financial difficulties date back to 2002. At that time a restructuring plan was adopted for 2002-07. The plan was updated in October 2003 and included the following measures:

(13)

Due to budgetary constraints, the Enterprise Restructuring Fund was not able to grant PZL D臋bica the promised loan (recital (12)c)). Consequently, the Social Security Office decided not to defer the remainder of the debt owed to it (see recital (12)d)). As a result, the financial restructuring at the heart of the plan was not achieved by PZL D臋bica.

(14)

Despite this, the company succeeded in implementing the other elements of the restructuring plan, with the result that it recorded a modest profit as early as 2006. The financial results of the company between 2002 and 2011 are summarised in Table 1 below.

Table 1

Financial results of PZL D臋bica 2002-11 (PLN million)

(15)

Following the non-implementation of financial restructuring in the first restructuring plan, the Commission was notified of a second restructuring plan in August 2008. To a large extent, this second plan was designed to implement financial restructuring of the company. It provided for the following measures:

(16)

The opening decision expressed doubts as regards the compatibility with the internal market of the following aid measures forming part of the first restructuring plan:

The Commission also queried the classification of the measures listed in Table 2 below as de minimis aid.

(17)

In addition, the Commission expressed doubts as to whether the restructuring plan comprised all the elements necessary to restore PZL D臋bica‘檚 viability and whether a restructuring period of 12 years were not too long in view of point 35 of the Community Guidelines on state aid for rescuing and restructuring firms in difficulty (4) (‘the R&R Guidelines‘�.

(18)

In view of the aid already awarded under the first plan (recitals (12)a) and (12)b)), the Commission also questioned the company‘檚 eligibility for new restructuring aid (see recital (15)) in the light of the one-time-last-time principle (laid down in Section 3.3 of the R&R Guidelines).

(19)

In the opening decision the Commission stated that for the measures which Poland had classified as pre-accession measures (recitals (16)a) to (16)c)) no legally binding document had been presented to it by which the competent national authorities had undertaken to grant aid.

(20)

As regards the actual amount of the aid already awarded to the company, the Commission also expressed its doubts as to whether the de minimis aid awarded in 2006 could be considered as such, as it had awarded it to a company in difficulty, which, according to Article 1(1)(h) of Commission Regulation (EC) No 1998/2006 of 15 December 2006 on the application of Articles 87 and 88 of the Treaty to de minimis aid (5), did not qualify for such aid.

(21)

Lastly, the Commission doubted that the proposed compensatory measures could be accepted as they were associated with the restoration of the company‘檚 long-term viability and as such could not be considered as compensatory measures. The Commission also stated that Poland had not demonstrated that the abandoned activities were not loss-making.

(22)

This chapter contains only the comments of the Polish authorities relating to the measures which were not withdrawn in the course of the investigation.

(23)

As regards the length of the restructuring process, the Polish authorities stated that both restructuring plans should be treated as a single plan as the failure of the first plan was not the fault of the company and the second restructuring plan essentially continued the incomplete financial restructuring of the first plan.

(24)

Poland withdrew the aid measures listed under recitals (15)a) and (15)b) as, under the opening decision, granting these measures could potentially be incompatible with the one-time-last-time principle. The Polish authorities explained that the withdrawal was a consequence of the fact that PZL D臋bica had lost large company status. As a company with fewer than 250 employees, PZL D臋bica no longer qualified for financing from the Industrial Development Agency, which provides financing for large companies only. However, the deferral of the debt to the Social Security Office and write-off of debt to the Office of the Marshall were not withdrawn. Poland‘檚 arguments concerning these measures are set out below.

(25)

As regards the three measures classified in the opening decision as aid promised before accession to the EU (recitals (16)a) to (16)c) of this Decision), Poland provided documentary evidence to support its claim that the aid was awarded prior to accession and therefore did not constitute new aid.

(26)

With regard to the debt to D臋bica City Council, Poland submitted a notarial deed confirming that the debt had been settled on 31 May 2004 by way of a transfer of property to D臋bica City Council. The deed referred to the settlement of principal of PLN 1 116 788,60 and interest of PLN 592 669,80 (6).

(27)

Poland also explained that this measure had not been included in the first restructuring plan because the aid application submitted by PZL D臋bica to D臋bica City Council had been rejected.

(28)

With regard to the debt to the Tax Office of PLN 914 552,15, Poland submitted a decision dated 20 October 2003 on restructuring conditions signed by the Head of the local Tax Office. According to that decision PLN 636 729,85, plus interest of PLN 277 822,30, was to be written off.

(29)

Poland explained that the statement in the opening decision that this aid had been promised before accession but was not awarded was incorrect for a number of reasons.

(30)

First, Poland explained the aid award mechanism as provided for by the Restructuring of Businesses‘�Public-Law Liabilities Act of 30 August 2002 (7) (‘the 2002 Act‘�. Under that Act, further to an application from a company in difficulty, an awarding authority (e.g. the Tax Office) can issue a decision on the restructuring conditions (‘榬estructuring decision‘�. This decision confers on the beneficiary the right to receive aid. The actual payment or write-off (depending on the measure) takes place on the basis of an implementing decision in which the awarding authority acknowledges that restructuring has been completed (‘榠mplementing decision‘�. According to the Polish authorities, this implementing decision serves to confirm that the beneficiary (i) has submitted an updated restructuring programme together with information on the company‘檚 financial condition, (ii) has paid a restructuring fee and (iii) has not accumulated new debts vis-脿-vis the awarding authority. The implementing decision is merely an administrative document which confirms that the terms of the restructuring decision have been complied with. Under the 2002 Act, the awarding authority checks compliance with the restructuring conditions not earlier than 15 months after the restructuring decision is handed down.

(31)

Second, Poland informed the Commission that the Tax Office had not issued an implementing decision for PZL D臋bica. According to Poland, this was due to uncertainty on the part of some public authorities on how to interpret the state aid rules applicable as of 1 May 2004. As a result, some authorities had decided to wait until the Commission had adopted a position on these measures. Poland has submitted a declaration by the Head of the Tax Office in question confirming that was the case for PZL D臋bica.

(32)

Third, Poland indicated that the decision of the Tax Office of 20 October 2003 had conferred the right to the write-off on PZL D臋bica. Poland referred to the Commission decision of 6 November 2008 concerning the Gdynia shipyard (8) in support of its claim that the domestic legal order must be applied to determine whether the document in question conferred the right to aid. Poland also referred to the legitimate expectations of the aid recipients and indicated that failure by the awarding authority to issue an implementing decision could be challenged by PZL D臋bica in court. In that connection, Poland referred to rulings by the Supreme Court and the Supreme Administrative Court which confirmed that restructuring decisions placed an obligation on the state and that implementing decisions could not affect that obligation as they were mandatory i.e. not subject to administrative discretion (9).

(33)

In addition, Poland submitted a declaration by the Head of the local Tax Office confirming that PZL D臋bica fulfilled the necessary legal requirements for the implementing decision (mentioned in recital (30)) to be issued, but stating that the Tax Office was awaiting the outcome of the Commission‘檚 investigation.

(34)

The measure referred to in recital (16)c) is dealt with under Title 5 below - Deferral of debt to the Social Security Office.

(35)

The Polish authorities informed the Commission that all the de minims measures had been awarded to the company in 2006 when Commission Regulation (EC) No 69/2001 of 12 January 2001 on the application of Articles 87 and 88 of the EC Treaty to de minimis aid was in force (10) (Regulation (EC) No 1998/2006 did not enter into force until 1 January 2007); under Regulation (EC) No 69/2001 it was not prohibited to award de minimis aid to companies in financial difficulty.

(36)

Referring to the doubts raised by the Commission concerning the calculation mechanism, the Polish authorities explained the formula used to calculate the aid elements indicated in the Polish Regulation of 11 August 2004 (11). The formula takes into account the difference between the reference rate and the rate used to calculate the late payment charge An updated calculation of the de minimis aid element was provided (see Table 2).

Table 2

De minimis aid ‘�according to Poland

(37)

Poland informed the Commission that only the Tax Office had provided security for the purposes of the deferral. This covered 100 % of the nominal value of the deferral. Poland also pointed out that even if 600 base points were added to the rate, in line with the Commission notice on the method for setting the reference and discount rates of 1997 (12), the value of the de minimis aid would still be far below the threshold of EUR 100 000.

(38)

As regards the deferral of debt in the form of social security liabilities, which increased in both restructuring plans, the Polish authorities recalled first that this debt increased as a consequence of the failure of the financial restructuring envisaged in the first restructuring plan. Under that plan the debt to the Social Security Office was to be settled in the form of: (i) repayment of PLN 3 890 000 using the loan from the Enterprise Restructuring Fund and (ii) deferral of a further PLN 1 364 600. As stated above (see recital (13)) financial restructuring of this debt failed.

(39)

In addition, the Polish authorities noted that the Social Security Office had decided to participate in the second restructuring plan, which provided for (i) repayment of PLN 5,5 million from a loan to be granted by the Industrial Development Agency and (ii) deferral of an additional PLN 3 million. As indicated above (see recital (5)) PZL D臋bica did not obtain the promised loan and Poland withdrew the corresponding part of the notification.

(40)

Poland informed the Commission that PZL D臋bica‘檚 debt to the Social Security Office, like all funds owed to public authorities, had attracted interest calculated by the formula described in Article 56 of the Polish Tax Code of 29 August 1997 (13). The interest rate is equivalent to 200 % of the base rate published by the National Bank of Poland, plus 2 % (200 base points) (see Table 3 below). The rate may not be lower than 8 %; in the present case it was between 10 % and 46 %.

Table 3

Changes in interest rates from 2000 to 2012

(41)

Poland submitted detailed tables setting out changes in the debt to the Social Security Office. A summary of changes until 31 August 2012 is set out in Table 4. Poland indicated that in spite of the debt, which was mainly accumulated in 2000-05, the company made significant current payments to the Social Security Office, i.e. more than PLN 16 million between 2000 and August 2012.

Table 4

Changes in the debt to the Social Security Office

(42)

The Polish authorities also provided information on the other measures taken by the Social Security Office to secure and recover the debt.

Table 5

Sale of PZL D臋bica‘檚 assets

(43)

In October 2011, following the withdrawal of some of the notified measures i.e. the capital injection and preferential loan, Poland informed the Commission of its assessment that the deferral of social security debt (see recital (15)c) as part of the notified restructuring plan) passed the private creditor test and therefore did not constitute state aid.

(44)

For that purpose, a study was commissioned by PZL D臋bica in 2011 from ‘楥onsulting‘� an independent company based in Katowice. The report presented an analysis of the private creditor test based on a comparison between the following two scenarios:

(45)

In August 2012 Poland informed the Commission that a debt deferral agreement based on the private creditor test had been concluded between PZL D臋bica and the Social Security Office on 1 March 2012. Poland explained that the Social Security Office had considered the advantages of each option with a view to maximising debt recovery. The agreement covers the amount owed on that day of PLN [7-13 million], comprising debt of PLN [3,5-6,5 million] and interest of PLN [3,5-6,5 million]. A deferral fee of PLN [1-1,7 million] was added to that amount. The deferral provides for repayment in 96 monthly instalments, of which 9 have already been paid. Poland submitted the following comparison of the options available to the Social Security Office in 2012 (Table 6).

Table 6

Comparison of recovery options for PZL D臋bica‘檚 debt to the Social Security Office (in PLN)

(46)

Poland has pointed out that the Social Security Office still holds a mortgage on the company‘檚 assets worth a total of PLN 6 243 002,55. Under the agreement, any sale of assets automatically decreases the deferred amount, thereby enabling repayment to be made more quickly than in the 96 months provided for.

(47)

Poland confirmed to the Commission that the debt to the local Office of the Marshall referred to in the second restructuring plan had been settled on 14 August 2012. It comprised a debt of PLN 61 104,97 incurred between 1999 and 2001 and interest of PLN 103 566,29 which had accrued since then.

(48)

According to Article 107(1) of the Treaty, state aid is aid awarded by a Member State or through state resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods in so far as it affects trade between Member States.

(49)

The conditions laid down in Article 107(1) of the Treaty are cumulative and therefore for a measure to be qualified as state aid all the conditions must be fulfilled.

(50)

On the basis of the opening decision, the Commission will assess the following measures:

(51)

According to Article 8 of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article 93 of the Treaty (15), a Member State may withdraw the notification after the opening of the formal investigation procedure in due time before the Commission has taken a decision on the aid character of the notified measure and the procedure is closed accordingly.

(52)

The Polish authorities have withdrawn two of the measures to be implemented under the second restructuring plan, namely a capital injection and a preferential loan totalling PLN 10,5 million (see recitals (15)a) and (15)b)). Thus, pursuant to Article 8 of Council Regulation (EC) No 659/1999, the Commission‘檚 investigation into these measures must be closed.

(53)

The aid measures that were awarded before and are not applicable after the accession of Poland to the EU cannot be examined by the Commission, either under the procedures laid down in Article 108 of the Treaty or under the interim mechanism. That mechanism neither requires nor empowers the Commission to review aid measures which are not applicable after accession.

(54)

Aid awarded by Poland is deemed to have been awarded before accession if the competent authority adopted a legally binding deed before 1 May 2004 by which it undertook to award the aid. Individual aid is not applicable after accession if the precise economic exposure of the state was known when the aid was awarded.

(55)

If, on the other hand, the measures were awarded after accession, they would constitute new aid and their compatibility would be assessed by the Commission under the procedure laid down in Article 108 of the Treaty.

(56)

In addition to two measures referred to in the opening decision as pre-accession measures (see recitals (12)a) and (12)b)) Poland claims that a write-off decision issued by the local Tax Office in 2003 covering an amount of PLN 914 522,15 should also be treated as pre-accession aid.

(57)

Responding to the concerns raised by the Commission in the opening decision in connection with the fact that no aid award document had been provided, Poland supplied an aid award document dated 20 October 2003 and clarified the mechanism for awarding aid under the 2002 Act (see recital (30)).

(58)

The Polish authorities have provided the Commission with an analysis of Polish law indicating that the restructuring decision of 2003 constitutes a legally binding document on the basis of which the Tax Office is obliged to write off tax arrears. A number of objectively verifiable conditions were attached to the restructuring decision (see recital (28)). The Polish authorities have confirmed that PZL D臋bica complies with those conditions. In the absence of any indication to the contrary, the Commission therefore considers that the write-off was granted before Poland acceded to the EU.

(59)

In the course of the investigation Poland informed the Commission that PZL D臋bica had settled the following debts:

(60)

Poland provided confirmation that these debts had been settled.

(61)

Poland informed the Commission that as part of restructuring negotiations with public creditors which led to the first restructuring plan being updated in October 2003, PZL D臋bica had asked D臋bica City Council to include in the restructuring plan an amount of PLN 1 116 788,60 which it owed to the Council. D臋bica City Council refused and the company managed to settle the debt on 31 May 2004, one month after Poland acceded to the European Union.

(62)

The Commission notes that the debt had been subject to compound interest at a high rate ranging from 44 % to 13,5 % (see Table 3). The accumulated interest settled by PZL D臋bica on 31 May 2004 amounted to PLN 592 669,80.

(63)

The recovery rate that would have been applied by the Commission to aid made available unlawfully to a company in Poland between 1 and 31 May 2004 was 7,62 % (16). That is a much lower rate than the interest rate applied to the debt by Poland.

(64)

On the basis that the debt was repaid in full and the interest rate of 13,5 % applied to the debt between 1 and 31 May 2004 was much higher than the recovery rate of 7,62 % applied by the Commission, the Commission concluded that recovery was completed in accordance with the Notice from the Commission ‘楾owards an effective implementation of Commission decisions ordering Member States to recover unlawful and incompatible state aid‘�a href="#ntr17-L_2013167EN.01004101-E0017" id="ntc17-L_2013167EN.01004101-E0017" shape="rect"> (17)