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16.1.2013 Official
Journal
of
the
European
Union
L
12/1
II
(Non-legislative acts)
DECISIONS
COMMISSION DECISION
of 12 June 2012
on the measures SA. 27420 (C 12/2009) (ex N 19/2009) implemented by Finland for Osuuskunta
Karjaportti
(notified under document C(2012) 3249)
(Only the Finnish and the Swedish versions are authentic)
(Text with EEA relevance)
(2013/8/EU)
THE EUROPEAN COMMISSION,
notified measures and several measures granted in the
past. Following that opening Decision, Finland
Having regard to the Treaty on the Functioning of the European
submitted further information to the Commission by
Union, and in particular the first subparagraph of Article 108(2)
letter dated 13 May 2009.
thereof,
Having regard to the Agreement on the European Economic
Area, and in particular Article 62(1)(a) thereof,
(3) The
Commission
decision
to
initiate
the
procedure
was
published in the Official Journal of the European Union ( 3 ).
Having called on interested parties to submit their comments
The Commission invited interested parties to submit their
pursuant to the provisions cited above and having regard to
comments on the aid measures.
their comments ( 1 ),
Whereas:
(4) The
Commission
received
comments
from
one
interested
1. PROCEDURE
party. It forwarded them to Finland, which was given the
(1) By
letter
dated
15
January
2009,
Finland
notified
the
opportunity to comment. Those comments were received
Commission of a rescue aid consisting of a guarantee
by letter dated 28 August 2009. Finland provided further
and debt rescheduling to Osuuskunta Karjaportti (here
information by e-mail dated 3 November 2009.
inafter referred to as 'Karjaportti'; at the time of notifi
cation it was known as Jrvi-Suomen Portti Osuuskunta).
By letters dated 5 February 2009, 11 February 2009,
16 February 2009 and 20 February 2009, Finland
(5) By
letter
dated
15
December
2009,
the
Commission
provided the Commission with further information.
informed Finland that it had decided to extend the
procedure laid down in Article 108(2) of the TFEU in
(2) By
letter
dated
8
April
2009,
the
Commission
informed
respect of additional aid measures granted in the past.
Finland that it had decided to initiate the procedure laid
Finland submitted further information by letter dated
down in Article 108(2) of the Treaty on the Functioning
12 February 2010.
of the European Union (TFEU) ( 2 ) in respect of the
( 1 ) OJ C 134, 13.6.2009, p. 16; OJ C 58, 10.3.2010, p. 4.
( 2 ) With effect from 1 December 2009, Articles 87 and 88 of the EC
(6) The
Commission
decision
to
extend
the
procedure
was
Treaty have become Articles 107 and 108, respectively, of the Treaty
on the Functioning of the European Union (TFEU). The two sets of
published in the Official Journal of the European Union ( 4 ).
Articles are, in substance, identical. For the purposes of this
The Commission invited interested parties to submit their
Decision, references to Articles 107 and 108 of the TFEU should
comments on the aid measures. The Commission
be understood as references to Articles 87 and 88, respectively, of
received no further comments from interested parties.
the EC Treaty where appropriate. The TFEU also introduced certain
changes in terminology, such as the replacement of "Community" by
"Union" and "common market" by "internal market". The
( 3 ) OJ C 134, 13.6.2009, p. 16.
terminology of the TFEU will be used throughout this Decision.
( 4 ) OJ C 58, 10.3.2010, p. 4.

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L 12/2
EN
Official Journal of the European Union
16.1.2013
(7) On
1
March
2010,
Finland
informed
the
Commission
Osuusteurastamo Karjaportti; from 31 December 2002 it
that it had withdrawn the notification concerning the
was known as Jrvi-Suomen Portti Osuuskunta and since
guarantee in favour of Karjaportti. By letter dated
14 December 2010, it has been known as Karjaportti. To
26 March 2010 the Commission informed Finland that
date, Karjaportti employs 300 people permanently and
it would deal with the withdrawal of the notification of
an additional 100 to 120 seasonal workers during spring
the guarantee in the final decision, together with the
and summer.
other measures under assessment. In addition, the
Commission addressed questions to Finland, to which
Finland replied by letter dated 22 April 2010. The
(9) Karjaportti
is
active
in
the
manufacturing
of
food,
namely
Commission sent an information request to Finland on
in the field of processing meat into products such as
15 July 2010, to which Finland replied on 20 August
meatballs and sausages. In addition, the co-operative
2010. Another information request was sent by the
sells packed meat, pieces of meat and carcases. Karja
Commission on 28 September 2010, to which Finland
portti exports little to other Member States.
replied on 29 November 2010. Lastly, the Commission
asked for additional information by letter dated
16 November 2011. Finland submitted that information
2.2. Financial situation of Karjaportti
on 16 December 2011.
(10) Since
1
December
2004,
Karjaportti
is
subject
to
court-
supervised restructuring proceedings under the Restruc
2. BENEFICIARY
turing of Enterprises Act 47/1993 ( 5 ) (hereinafter referred
to as 'court-supervised restructuring proceedings'; for
2.1. The co-operative Karjaportti
more detailed information on the court-supervised
restructuring see recitals 31-43).
(8) Karjaportti
is
a
co-operative
company
located
in
Mikkeli,
with production facilities in Mikkeli and Kouvola, both in
Eastern Finland (It-Suomi), a region eligible for regional
(11) Details
on
the
financial
situation
of
Karjaportti
before
aid under Article 107(3)(c) of the TFEU. The co-operative
and during the court-supervised restructuring proceedings
was originally established in 1914. In 1950 it was named
are provided in the following Table:
Table I
Karjaportti's key financial data in EURO
Deficit for
Share capital /
Year Turnover Operating
result
Net result (profit/
losses)
previous
Reserves and
Equity balance
accounting periods
contingency
2000
139 620 882 8
682 –
1
169
091 7
681
411/
8 893 097
10 247 107
2001
139 748 861 2
082
662 549
865 7
812
809/
9 442 963
9 078 473
2002
135 781 234 2
259
488 14
382 7
783
428/
17 357 751
9 559 942
2003
128 354 480 –
3
299
914 –
6
009
055 7
585
778/
11 083 248
9 506 525
2004
125 849 631 –
3
972
464 –
10
686
420 7
234
608/
46 141
3 497 953
2005
101 507 619 –
6
629
915 –
9
235
908 –
7
404
955 7
772
913/ – 8 651 289
216 662
2006 99
802
293 –
3
485
054 4
277
565 –
16
640
864 8
141
610/ – 4 005 028
216 662
2007 86
962
069 –
8
916
539 –
7
943
878 –
12
363
299 6
244
277/ – 13 846 239
216 662
2008 80
901
753 –
3
791
985 –
2
770
037 –
20
307
178 5
768
185/ – 17 092 368
216 662
2009 64
793
763 305
936 –
2
124
435 –
23
077
214 5
077
160/ – 19 907 828
216 662
( 5 ) Laki yrityksen saneerauksesta 25.1.1993/47, Lag om fretagss
anering 25.1.1993/47.

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EN
16.1.2013 Official
Journal
of
the
European
Union
L
12/3
(12) In the year 2008, the Finnish Tax authorities filed twice
was granted, approximately FIM 3 million of the real
for bankruptcy proceedings against Karjaportti. At the
property mortgages was available as collateral. In
first filing, on 7 October 2008, they presented an
addition, the guarantee was collateralised by business
injunction to pay EUR 461 579. The filing was then
mortgages ( 10 ) with a registered value of FIM 25 million
withdrawn by the tax authorities. A re-filing took place
and FIM 30,5 million respectively on movable assets of
on 1 December 2008 with an injunction to pay
Karjaportti.
EUR 981 658. The bankruptcy proceedings against Karja
portti have been closed since June 2009 as the co-
operative has paid outstanding debt to the tax authorities.
(16) When the court-supervised restructuring proceedings
commenced in December 2004, Tapiola demanded
payment of the outstanding debts of Karjaportti from
3. DESCRIPTION OF THE MEASURES
the City of Mikkeli under the guarantee. After having
made such payments to Tapiola, the City of Mikkeli
(13) The
measures
under
consideration
consist
of
measures
stepped in as a creditor of Karjaportti in place of
granted by the City of Mikkeli, where Karjaportti is
Tapiola (see recital 34).
located, and measures granted by Finnvera Oyj (here
inafter referred to as 'Finnvera'). Finnvera is a specialised
financing company owned by the state of Finland and it
is the official Export Credit Agency of Finland ( 6 ). In the
following, the measures granted by the City of Mikkeli
(17) Measure
2:
Also
in
2000,
Karjaportti
was
assigned
a
plot
are first described (Section 3.1.), and thereafter the
for the construction of the Tikkala production facility by
measures granted by Finnvera (Section 3.2.).
Mikkeli rural district ( 11 ). The size of the plot was
152 366 m 2 and the City of Mikkeli provided it
without consideration to Karjaportti, that is to say, no
purchase price was paid. In addition, the City of Mikkeli
made a commitment to transfer the land ready for
3.1. Measures granted by the City of Mikkeli
construction. To that end, the City of Mikkeli reimbursed
3.1.1. Guarantee granted on 12 June 2000 (measure 1) and
Karjaportti the costs of levelling the land, amounting to
Assignment of land (measure 2)
FIM 2 000 000 (approximately EUR 336 376) (


12 ).
(14) Measure
1: By decision
of 12 June
2000, the
City
Council of Mikkeli granted an absolute guarantee ("ta
kaus") to Karjaportti, covering 100 % of a future loan
amounting to FIM 25 million (approximately EUR 4,2
(18) Other
measures were granted to Karjaportti for the
million (
construction of the production facility in Tikkala.

7 ). The loan was provided to Karjaportti in
September 2000 at a fixed interest rate of 5,35 % and
Finnvera granted loans and guarantees of FIM
for a duration of 10 years by the bank Tapiola Pankki Oy
20 000 000 (approximately EUR 3 363 759) and the
('Tapiola'). At the same time, the guarantee was imple
Ministry of Employment and the Economy (then:
mented by the City Board of Mikkeli, signing the
Ministry of Trade and Industry) awarded direct grants
guarantee agreement. The guarantee was provided
amounting to FIM 15
000
000 (approximately
without a guarantee fee and as an absolute guarantee
EUR 2 552 819).
where the guarantor is liable for the principal debt as
if it were the guarantor's own debt, meaning that the
creditor could ask for the repayment of principal debt
from the guarantor when the principal debt has become
(19) Overall,
the
measures
described
in
recitals
14-18
to
be
due. The guaranteed loan was provided in order to
provided for the construction of the production facility
finance the construction of a production facility in the
in Tikkala had a nominal value of FIM 63 783 719
district of Tikkala in Mikkeli ( 8 ).
(approximately EUR
10
757
652). The gross grant
equivalent of the measures granted amounted to
EUR 3 617 143, according to the overview provided in
the following Table:
(15) The guarantee
was collateralised by way of already
existing real property mortgages with a registered value
( 10 ) A business mortgage is created by the issuing of a business
of FIM 7,5 million (EUR 1 261 409) (
mortgage note, registered in the business mortgage register; those

9 ). When measure 1
notes are pledged and delivered as security to the creditor of the
respective business. The registered capital of the notes, together
( 6 ) See description of Finnvera in recital 56.
with accrued interest at the rate set out in the notes as well as
( 7 ) Exchange rate used EUR 1 = FIM 5,95.
the amount expressed therein to be reserved for enforcement costs,
( 8 ) The guarantee was referred to as measure 1 in the first opening
constitutes the maximum amount that can be received by their
decision.
holder. A business mortgage will cover, in principle, all business
( 9 ) The City of Mikkeli originally received a real property mortgage on
assets (such as machinery, equipment, trademark rights, raw
the Rokkala property of Karjaportti (property 491-8-8-2) with a
materials, products, cash, receivables) of the debtor company,
registered amount of FIM 7,5 million (EUR 1 261 409); in 2002,
with the exception of immovable property.
the mortgage was transferred to the production site of Tikkala
( 11 ) Mikkeli rural district became part of the City of Mikkeli in 2001.
(property 491-35-1-1), as the City of Mikkeli had bought the
( 12 ) See section 155 of the minutes of a meeting of the City Board of
Rokkala property (see description of measure 3, recital 25).
Mikkeli dated 25 February 2002.

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L 12/4
EN
Official Journal of the European Union
16.1.2013
Table II
Table III
Gross grant equivalent of the measures granted in EURO
Breakdown of the project costs relating to acquisition
prices in EURO
Measure Amount
Gross grant
equivalent
Land and Buildings 14
208
192
Guarantee City of Mikkeli 4
204
698 345
786
Machinery and equipment 11
155
379
Assignment of land by City of
300 000 300
000
Office equipment / software 572
356
Mikkeli
TOTAL 25
935
928
Levelling of the site paid by
336 376 336
376
City of Mikkeli
Finnvera loan 1
681
879 82
162
(23) The
aid
element
of
EUR
3
617
143
corresponds
to
an
aid
intensity of 13,95 % of the total eligible costs of
EUR 25 935 928.
Direct grants Ministry of Trade
2 552 819 2
552
819
and Industry
TOTAL 10
757
652 3
617
143
(24) Karjaportti
had
applied
for
the
measures
granted
by
the
City of Mikkeli before work on the investment project
was started ( 14 ). The measures were taken by Finland to
promote regional development. The new production site
(20) The gross grant equivalent of the guarantee granted by
should raise the number of jobs in the region from
the City of Mikkeli was calculated by Finland in the
around 400 to 550 or 600.
following way: it compared the market rate for a
comparable guarantee (1,75
%) to the guarantee
premium actually charged by the City of Mikkeli (0 %).
The aid element in the guarantee equals the difference
3.1.2. Purchase of Land (measure 3)
between the two premiums, that is 1,75 %. If the City of
Mikkeli had charged a premium at that rate, it would
(25) On
28
February
2002,
the
City
of
Mikkeli
bought
six
have collected FIM 2 406 250 FIM as premiums during
properties and one building with related leases from
the validity of the guarantee of 10 years, which
Karjaportti. The purchase price paid was
discounted at a rate of 5,7 % on the date the guarantee
EUR 6 646 787 ( 15 ). At the closing date of the purchase
was granted would make FIM 1 055 949 FIM (approxi
of the properties by the City of Mikkeli, and in case of
mately EUR 345 786).
one property, at the date when its possession was trans
ferred to the City of Mikkeli, the properties were free of
mortgages.
(21) The
gross
grant
equivalent
for
the
Finnvera
loan
was
calculated by Finland in the following way: It compared
3.1.3. Guarantee granted on 8 March 2004 (measure 4)
the interest that Finnvera charged for the loan (6 months
(26) By decision of 8 March 2004, the City Council of Mikkeli
EURIBOR plus 1,75 %) with the reference rate in
granted a guarantee covering 100 % of a loan of
accordance with Commission Notice on the method for
EUR 607 054 to be granted by Tapiola. On 14 April
setting the reference and discount rates ( 13 ) that was valid
2004, the loan was granted at a fixed interest rate of
at the time the loan was granted. The aid element equals
4 % with a duration of 10 years. The guarantee was
the difference between the two rates for the duration of
granted without guarantee fee and as an absolute guar
the loan (10 years). The commission that Karjaportti had
antee. The loan and the guarantee respectively were given
to pay for the loan (0,5 %) was deducted from the result
to replace a loan granted by Tapiola for which the City
of the calculation. Discounted at a rate of 5,7 %, on the
of Mikkeli had originally granted a guarantee by a
date the guarantee was granted, the aid element was
decision of 2 November 1992. The original loan
EUR 82 162.
amounted to FIM 7,5 million (EUR 1 261 409) and was
granted at an interest rate of 4,5 % for a duration of 10
years.
( 14 ) According to the minutes of the City Council of Mikkeli, dated
(22) The
eligible
investment
costs
were
calculated
on
the
basis
12 June 2000, the measures were taken concerning the future
of the costs relating to acquisition prices, according to
construction of a new manufacturing plant.
the breakdown provided in the following Table:
( 15 ) To this price, EUR 336 376 were added for levelling costs that were
reimbursed to Karjaportti by the City of Mikkeli. Accordingly, the
deed for the purchase of the properties includes a purchase price of
( 13 ) OJ C 273, 9.9.1997, p. 3.
EUR 6 983 163.

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EN
16.1.2013 Official
Journal
of
the
European
Union
L
12/5
(27) The guarantee was collateralised by way of the property
Pankki Oyj; hereinafter 'OKO/Pohjola Bank') filed for
mortgages on the production site of Tikkala that were
court-supervised restructuring proceedings with the
already used as collateral for measure 1. In addition, the
District Court of Mikkeli. According to Finnish law,
City of Mikkeli held a business mortgage with a value
such restructuring proceedings may be undertaken in
registered in the business mortgage register of FIM 25
order to rehabilitate a distressed debtor's viable
million. Also this business mortgage was already used as
business, to ensure its continued viability and to
collateral for measure 1.
achieve debt arrangements ( 17 ). The court-supervised
proceedings concerning Karjaportti were commenced by
decision of the District Court of Mikkeli on 1 December
2004. Legally, from the commencement, the debtor is
not allowed to repay restructuring debts or provide
(28) When the court-supervised restructuring proceedings
security for such debts ( 18 ). Restructuring debts are all
commenced in December 2004, Tapiola demanded
debts accrued before the commencement date.
payment of the outstanding debts towards Karjaportti
from the City of Mikkeli under the guarantee. After
having made such payments, the City of Mikkeli
stepped in as a creditor of Karjaportti in place of
Tapiola (see recital 34).
(32) Subsequently,
a
restructuring
programme
was
submitted
to the District Court on 23 June 2005 and a revised
restructuring programme on 30 November 2005. The
duration of the restructuring programme, which was
approved by the District Court on 30 January 2006,
was ten years (until 1 July 2015). Between 2004 and
3.1.4. Guarantee granted on 10 May 2004 (measure 5)
2008 Karjaportti has terminated 372 employment
contracts and outsourced some of its activities such as
(29) By
decision
of
10
May
2004,
the
City
Council
of
Mikkeli
granted an absolute guarantee that covered 100 % of a
acquisitions, butchery and cutting activities.
EUR 1,7 million loan to be granted by Tapiola.
Subsequently, on 8 June 2004, Tapiola decided to
grant the 3 year investment loan amounting to
EUR 1,7 million at a variable interest rate of 12
months EURIBOR plus a fixed margin of 0,3 %. The
(33) Overall,
approximately
[30-70]
(*)
%
of
the
restructuring
guarantee was granted without a guarantee fee and as
debts subject to the court-supervised restructuring
an absolute guarantee. The guarantee was collateralised
proceedings were owed to private creditors. The private
by way of the same property mortgage on the
creditors having the biggest shares in those debts were
production site of Tikkala as measure 1 and measure 4
the above mentioned banks Nordea Bank and OKO/
and the very same business mortgage (
Pohjola Bank as well as Nordea Financing.

16 ), held by the
City of Mikkeli. In addition, the City of Mikkeli
received a new collateral mortgage instrument with a
registered value of EUR 1 135 268 on the production
site of Tikkala as a special pledge.
(34) On
16 December 2004 in relation to these court-
supervised restructuring proceedings Tapiola demanded
the City of Mikkeli to pay the outstanding amounts of
the three loans guaranteed by the City of Mikkeli
described under 3.1.1, 3.1.3 and 3.1.4. After having
(30) When the court-supervised restructuring proceedings
paid Tapiola, the City of Mikkeli became creditor of
commenced in December 2004, Tapiola demanded
Karjaportti as regards the overall amount of the three
payment of the outstanding debts towards Karjaportti
outstanding loans, which was EUR 5 356 895. The
from the City of Mikkeli under the guarantee. After
loans were secured by the collateral described in
having made such payments, the City of Mikkeli
recitals 15, 27 and 29.
stepped in as a creditor of Karjaportti in place of
Tapiola (see recital 34).
(35) In addition, the City of Mikkeli entered a claim
amounting to EUR 682 087 in the court-supervised
3.1.5. Measures taken within the court supervised restructuring
restructuring proceedings, consisting of unpaid charges
proceedings (measure 6)
to the City property administration, the water
management department of Mikkeli and the waste
(31) On
17
November
2004,
Karjaportti,
together
with
the
management department of Mikkeli. This claim was
creditors Nordea Bank Finland Abp (hereinafter 'Nordea
also secured by the collateral described in recitals15,
Bank'), Nordea Rahoitus Suomi Oy (hereinafter 'Nordea
27 and 29.
Financing') and OKO Osuuspankkien Keskuspankki Oyj
(since 1 March 2008, this company is named Pohjola
( 17 ) See Restructuring of Enterprises Act 47/1993, Section 1.
( 18 ) See Restructuring of Enterprises Act 47/1993, Section 17.
( 16 ) See footnote 9.
(*) Business secret

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L 12/6
EN
Official Journal of the European Union
16.1.2013
(36) The
loans
and
other
debts
(unpaid
charges)
towards
the
unpaid charges of EUR 682 087 were treated as "secured
City of Mikkeli were considered as large secured debts ( 19 )
debt" and the interest rate was reduced to a rate of […]
in the court-supervised restructuring proceedings. The
EURIBOR ( 22 ).
other large secured claims were held by private parties
(Nordea Bank, Nordea Financing, OKO/Pohjola Bank) as
well as by Finnvera ( 20 ).
(39) Also for the secured debts of the private creditors, an
interest rate equivalent to […] EURIBOR is foreseen in
the restructuring programme. For a certain amount for
Table IV
each creditor except […], until 31 December 2010, a
reduced interest rate was foreseen, equivalent to […]
Large secured debts in EUR
EURIBOR minus […]%; minimum interest […]% and
maximum interest […]%. After 31 December 2010, the
Creditor of secured large debts Amount Share
in
%
interest rate for all secured debts has been […] EURIBOR.
Nordea Bank […](*) [10-40]
%
Nordea Financing […] [0-20]
%
Table V
Interest amounts for large secured debts in EUR
OKO/Pohjola Bank […] [10-40]
%
Interest rate of
Finnvera […] [10-40]
%
[…] EURIBOR
minus […]% until
31 December
Interest rate of
[…] EURIBOR
City of Mikkeli – loans due to
[…] [10-40]
%
Creditor of secured large debts
2010; after that for an amount
triggered guarantees
date, interest rate
[…] EURIBOR
of
will be charged
City of Mikkeli – other debts
[…] [0-20]
%
for an amount of
(unpaid charges)
Nordea Bank and Nordea
[…] […]
Financing
TOTAL 24
579
150 100
%
OKO/Pohjola Bank […] […]
Finnvera […] […]
(37) In relation to the loans and to other debts (unpaid
charges) towards the City of Mikkeli, the following
City of Mikkeli – loans due to
[…] […]
measures were foreseen in the restructuring programme:
triggered guarantees
City of Mikkeli – other debts
[…]
(unpaid charges)
R e d u c t i o n o f i n t e r e s t r a t e s f o r t h e
s e c u r e d d e b t s
(38) The EUR 5 356 895 loan of the City of Mikkeli was
treated as "secured debt" and was divided in two parts.
R e s c h e d u l i n g o f d e b t s
For both parts the interest rates were reduced according
to the restructuring programme: On a portion of
(40) The City of Mikkeli agreed to a deferral of payments on
the debts mentioned above. According to the restruc
EUR 4,0 million, the interest rate amounted to […]
turing programme, the reimbursement of the secured
EURIBOR minus […]% (however, the rate was
debts of the City of Mikkeli is foreseen for 2015. The
supposed not be more than […]% or less than […]%)
first instalment should have been paid on 1 July 2009,
until 31 December 2010. After that date, an interest rate
from 2010 onwards two instalments per year were
of […] EURIBOR has been charged. To the remaining
foreseen, and in 2015 the remaining major part of the
portion of EUR 1 356 895 million an interest rate of […]
secured debts has to be paid, that is EUR […] for the
EURIBOR has been charged ( 21 ). Like the loans, the
loans due to triggered guarantees and EUR […] for other
debts (unpaid charges) respectively.
( 19 ) According to Section 3 point 7 of the Restructuring of Enterprises
Act 47/1993, secured debts means restructuring debt where the
creditor holds, as against third parties, an effective real security
right to property that belongs to or is in the possession of the
debtor, in so far as the value of the proceedings would have been
(41) Also
the private creditors agreed to the deferral of
enough to cover the amount of the creditor’s claim after the
payments on their secured debts.
deduction of liquidation costs and claims with a higher priority.
( 20 ) See description of Finnvera in recital 56.
( 21 ) The reduction of interest rates was referred to as measure 2 in the
( 22 ) The reduction of interest rates for unpaid charges was referred to as
first opening decision.
measure 4 in the first opening decision.

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16.1.2013 Off
Table VI
Deferral of payment in EUR
Instalment due on
Instalment due on
Instalment due every
Creditor of secured large debts Debt
1.7.2009 and
% of total amount
% of total amount six months starting % of total amount Instalment due on % of total amount
2.1.2010 and
of debts
2.1.2011 and
of debts
2.1.2012 until
of debts
1.7.2015
of debts
1.7.2010
1.7.2011
2.1.2015
EN

Nordea Bank […] […] […] […] […] […] […] […] […]
Nordea Financing […] […] […] […] […] […] […] […] […]
OKO/Pohjola Bank […] […] […] […] […] […] […] […] […]
Finnvera […] […] […] […] […] […] […] […] […]
City of Mikkeli […] […] […] […] […] […] […] […] […]
icial
City of Mikkeli […] […] […] […] […] […] […] […] […]
Jour
Total 24
579
150 500
000 2
% 1
000
000 4
% 1
500
000 6
% 10
579
150
nal
43
%
of
the
European
Union
L
12/7

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L 12/8
EN
Official Journal of the European Union
16.1.2013
C o n d i t i o n a l d e b t w a i v e r
(46) The
conversion
of
unpaid
interest
rates
into
loans
in
the
year 2005 was in principle laid down in the restructuring
(42) According to the restructuring programme, the
programme. According to the programme, not only the
reimbursement of the loans and unpaid charges to the
City of Mikkeli, but all secured creditors in this context
City of Mikkeli should be accomplished by 2015, with
were to be treated similarly. Accordingly, on
the major part of the outstanding amount due in 2015.
28 December 2005, [one private creditor] converted
If in 2015 Karjaportti does not meet certain economic
interest rates into a loan amounting to approximately
requirements at the end of the court-supervised restruc
EUR 1 623 000 with a loan period until the end of
turing proceedings (ratio between liabilities and operating
2010. The interest rate was EURIBOR 3 months plus
margin bigger than 4), the City of Mikkeli will waive a
1,5 %. The repayment was supposed to start in 2009.
maximum of EUR [0-3] million of the outstanding debts.
On 29 December 2005, [another private creditor]
converted interest rates into a loan amounting to
approx. EUR 1 532 500 with a loan period until the
(43) Also the claims of the other creditors will be reduced at
end of 2010. The interest rate was 3 months
the end of the court-supervised restructuring proceedings.
EURIBOR plus 2 %. The repayment was supposed to
Nordea Bank will waive a maximum of EUR [0-3
start in 2009.
million] and Nordea Financing will waive a maximum
of EUR [0-2 million]. Finnvera's claim will be reduced
by a maximum of EUR [0-2 million]. The claim of […]
will not be reduced. According to the restructuring
programme, the sums by which the secured debts are
reduced are based on the value of the collaterals for
3.1.8. Write-off of debts in the financial statements of 2006
the secured loans in two different scenarios: first
(measure 9)
scenario was that Karjaportti continues its operation;
second scenario was that Karjaportti changes or
(47) By
a
decision
of
5
February
2007,
the
Mikkeli
City
Board
terminates its operation, that is to say that the collaterals
agreed on the write-off from the 2006 accounts of a
have to be realised. The two values were determined by
receivable from Karjaportti amounting to EUR 274 023.
two independent evaluations (
The writing-off of the debt in the accounts had no effect

23 ). The concrete amount
by which the secured debt was reduced was then
on the legal relationship between the creditor and the
determined for each creditor separately, taking into
debtor, and consequently, the City of Mikkeli continued
account the ranking of the creditor and comparing the
to pursue the collection of the debts.
values in the two difference scenarios.
3.1.6. Purchase of shares from Karjaportti (measure 7)
3.1.9. Write-off of debts in the financial statements of 2008
(44) On
2
September
2005
Karjaportti
sold
50
%
of
the
shares in the real estate company Kiinteist Oy
(measure 10)
Suksimki to a company owned by the City of Mikkeli,
(48) The
City
of
Mikkeli
made
a
write-off
for
an
uncertain
for a purchase price of EUR 860 000.
receivable from Karjaportti amounting to EUR
5,7
million in its financial statements of 2008. The
writing-off of the debt in the accounts had no effect
3.1.7. Conversion of unpaid interest rates into loans
on the legal relationship between the creditor and the
(measure 8)
debtor, and consequently, the City of Mikkeli continued
to pursue the collection of the debts.
(45) Karjaportti
did
not
pay
interest
due
for
the
secured
debts
of the City of Mikkeli accrued between 16 December
2004 and 19 December 2005 ( 24 ). Those interests
amounted to EUR 281 982 and were converted into a
loan for a loan period until the end of 2010 by decision
of the City Council of Mikkeli dated 19 December 2005.
3.1.10. Non-implemented guarantee that had been planned
The interest rate of the loan is EURIBOR 3 months plus
for 2009 (measure 11)
0,3 %. The repayment was supposed to start in March
2009 and consisted of four equal instalments to be paid
(49) The
City
Council
of
Mikkeli
decided
on
8
December
twice a year, that is to say EUR 144 991 should be paid
2008 to provide an absolute guarantee amounting to
in 2009 and EUR 144 991 in 2010 ( 25 ). The repayment
EUR 2,75 million to cover a future loan by Tapiola to
of the due amounts was at least partially postponed (see
Karjaportti. The City Council entitled the City Board to
measure 12).
decide on the detailed conditions relating to the absolute
guarantee, that is to implement the guarantee. According
to the notification the loan should have amounted to
( 23 ) The two evaluations determined the market value of the pledged
premises, based on comparable prices and rental information; they
EUR 5 819 807 at an interest rate of 3,65 %. As remun
were undertaken by Kaakon Notariaatti Oy, www.kaakonnotariaatti.
eration for the guarantee the notified measure foresees a
fi and Catella Property Oy, www.catella.fi. The studies have been
one time fee of 4 % and the guarantee will be granted for
ordered by Karjaportti’s bankruptcy administrator.
10 years ( 26 ).
( 24 ) Since then, Karjaportti has paid the due interest for the secured
debts.
( 25 ) The conversion of unpaid interest rates was referred to as measure
( 26 ) The guarantee was referred to as measure 5 in the first opening
3 in the first opening decision.
decision.

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16.1.2013 Official
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European
Union
L
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(50) The decision of the City Council of Mikkeli did not
(56) Finnvera
is
a
specialised
financing
company
owned
by
become final, as a complaint was made at the adminis
Finland and it is the official Export Credit Agency of
trative court of Kuopio (Kuopion Hallinto-Oikeus).
Finland. Finnvera's operations are steered by the
Following this complaint, the court ordered the City of
industrial and ownership policy goals laid down by the
Mikkeli to halt the implementation of the guarantee and
state. These goals include: increasing the number of
to seek approval of the aid by the Commission.
starting enterprises; enabling financing for changes
encountered by SMEs; and promotion of enterprise
growth, internationalisation and exports. In its oper
ations, Finnvera is expected to adhere to the principle
(51) As the decision of the City Council of Mikkeli to provide
of economic self-sustainability. Finland, however, covers
the guarantee did not become final, Tapiola refrained
part of Finnvera’s credit and guarantee losses; the State is
from granting the loan to Karjaportti. Lastly, Finland
directly responsible for the domestic guarantees and
withdrew the notification of the guarantee in March
export credit guarantees granted by Finnvera and the
2010, as Karjaportti withdrew its application for the
State grants guarantees for Finnvera’s own acquisition
guarantee and the City Board decided on 22 February
of funds. These state measures in relation to Finnvera
2010 not to implement the decision of the City Council.
do not fall within the scope of this decision; the
Commission reserves the right to assess them at a later
stage. Finnvera is subject to the Administrative Procedure
Act 434/2003.
3.1.11. Rescheduling of debts since 2009 (measure 12)
(52) Deferral of the repayment of secured debts: According to
the restructuring programme approved by the court,
Karjaportti was supposed to reimburse EUR […] in
(57) Concerning
Finnvera's
corporate
governance,
the
Super
2009 and EUR […] in 2010 of the outstanding
visory Board, which supervises the company’s adminis
amount of the secured debts (see Table VI). According
tration by the Board of Directors and the Managing
to the notification, the reimbursement of these amounts
Director, represents the owner of the company, which
should have been postponed, the latest until 1 July 2015.
is in Finnvera's case the State. The Supervisory Board
members are selected from the parliamentary groups of
political parties on the basis of their representation in the
Finnish Parliament. In addition, Finnvera’s Supervisory
(53) Deferral of the repayment of the loan granted in 2005
Board includes representatives of organisations in line
(conversion of unpaid interest rates): Karjaportti was
with the company’s industrial policy goals. The Board
supposed to reimburse EUR 140 991 in 2009 and the
of Directors, which has 6-9 members and 2 deputy
same amount in 2010 of the outstanding amount of the
members, confirms the company’s strategy, approves
interests converted into a loan (see recital 40). According
the financial statements and the interim report,
to the notification the reimbursement of these amounts
advances the company’s development and ensures that
should have been postponed to the years 2011 to
the operations are conform to law and meet the goals
2013 ( 27 ).
set by the owner. Four of the Board members and the
two deputy members are elected among candidates
named by various ministries. The Managing Director is
responsible for the company's administration.
(54) The administrative court of Kuopio (Kuopion Hallinto-
Oikeus) prohibited the implementation of the City
Council's decision concerning the debt rescheduling on
4 February 2009. It seems, however, that a rescheduling
of debts nevertheless took place. Starting from May
(58) Finnvera
is
exempted
from
paying
income
tax
since
2009, Karjaportti on a regular basis made proposals to
25 September 2007. The Commission has approved
the City of Mikkeli and its other creditors to postpone
this exemption. The approval decision is based on the
payments of due debts in order to safeguard the
fact that Finnish authorities have given a commitment
continued operation of the cooperative
(
that Finnvera will limit its activities to the administration

28 ). These
proposals were approved by the City Board of Mikkeli.
of state aid schemes ( 29 ).
3.2. Measures granted by Finnvera
3.2.1. Guarantee granted on 17 March 2004 (measure 13)
(55) According
to the information submitted by Finland,
(59) On
17
March
2004,
Finnvera
granted
a
100
%
guarantee
Finnvera granted several loans and guarantees to Karja
for a loan amounting to EUR 91 000 with a guarantee
portti in the years 2004 to 2008.
fee of 3 % per year. The loan, which had a duration of 3
years, was granted by Tapiola at a fixed interest rate of
( 27 ) These measures were referred to as measure 6 in the first opening
[2-5] % per year. The loan and the guarantee respectively
decision.
were given to replace a loan granted by Tapiola in 1992.
( 28 ) The proposals are dated 26 May 2009, 28 September 2009,
18 November 2009, 22 January 2010, 17 February 2010,
12 April 2010, 2 June 2010, 23 August 2010, 3 November
( 29 ) Commission decision N 715/06, Finland. Tax Exemption to
2010, 10 February 2011 and 31 May 2011.
Finnvera Oyj, OJ C 307, 18.12.2007, p. 6.

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Official Journal of the European Union
16.1.2013
3.2.2. Loan granted on 12 January 2006 (measure 14)
(65) At
the
same
time,
private
creditors,
[…]
and
[…],
granted
loans amounting to EUR 800 000 and EUR 650 000
(60) On
12
January
2006,
Finnvera
granted
a
loan
amounting
respectively, also for a duration of six months. The
to EUR 180 000 at an interest rate of EURIBOR 6
interest rate for those loans was 1 month EURIBOR
months + 2 % per year. The loan relates to interest
plus 2 %. The reimbursement of their loans has also
accrued during the restructuring process between
been delayed (outstanding amounts on 23 November
2 December 2004 and 28 February 2008, which was
2011: EUR […] and EUR […]).
converted into a new credit facility. The loan was collat
eralised by mortgages in properties located in Tikkala,
Lappeenranta and Kouvola, and shares in […]. The
duration of the loan was until the end of 2010 and
repayment should have started in 2009. On 23 November
(66) For
those
two
loans
and
the
loan
granted
by
Finnvera,
2011, EUR […] of the capital was still outstanding.
Karjaportti provided the following collateral: a business
Private creditors […] and […] converted the interest
mortgage with a registered value of EUR 1 850 067;
rates at the same time into loans.
shares in the company […]; and a bank account. These

collaterals were divided between Finnvera, […] and […]
according to their risk in relation to the loans. In fact, the
three creditors had the same ranking and divided the
collateral by way of a share of percentages (Finnvera:
(61) On
28
December
2005,
[a
private
creditor]
converted
[0-30] %; [the first private creditor]: [10-50] %; [the
interest rates into a loan amounting to approximately
second private creditor]: [10-50] %).
EUR 1 623 000 with a loan period until the end of
2010. The interest rate is EURIBOR 3 months plus
1,5 %. The repayment was supposed to start in 2009.
3.2.5. Guarantee granted on 9 January 2008 (measure 17)
(67) On 9 January 2008, Finnvera granted a counter-
(62) On 29 December 2005, [another private creditor]
guarantee to […] amounting to EUR 280 000 with a
converted interest rates into a loan amounting to
guarantee fee of 2,5 % per year paid by Karjaportti.
approx. EUR 1 532 500 with a loan period until the
The counter-guarantee covered 80 % of a guarantee
end of 2010. The interest rate was 3 months
provided by […] to Karjaportti on 11 January 2008
EURIBOR plus 2 %. The repayment was supposed to
amounting to EUR 350 000 relating to a subcontracting
start in 2009.
agreement between […] and […]. […]charged a
guarantee fee of [0-3] %. Finnvera had access to a
collateral in the form of a shareholding of Karjaportti
in […]. According to an estimate undertaken by
3.2.3. Guarantee granted on 14 September 2006
Finnvera, dated 8 January 2008, at the time of the
(measure 15)
grant of the counter-guarantee these shares had a
security value for Finnvera of EUR […]. The counter-
(63) On
14
September
2006,
Finnvera
granted
a
counter-
guarantee expired on 28 February 2011, and no
guarantee to […] amounting to EUR 300 000 with a
payments were made under it.
guarantee fee of 1,65 % per year paid by Karjaportti.
[…] in turn granted a guarantee to Karjaportti for the
same amount at an interest rate of 1,25 %. This
guarantee and the counter-guarantee covered 16,7 % of
4. GROUNDS FOR OPENING THE PROCEDURE
EUR 1,8 million relating to a subcontracting agreement
between […] and Karjaportti. The duration of Finnvera's
(68) As described in recitals 2, 3 and 6 the Commission
guarantee was 8 months. The remainder of the subcon
decided on 8 April 2009 to open a formal investigation
tracting agreement was covered by guarantees from […]
procedure (hereinafter 'the first opening decision'). This
and […] (EUR 825 000 and EUR 675 000 respectively)
formal investigation procedure was extended to several
who charged a guarantee fee of 1,75 %. Finnvera was not
additional measures on 15 December 2009 (hereinafter
involved in the grant of these guarantees, that is to say
'the second opening decision').
they were not counter-guaranteed. Finnvera's counter-
guarantee expired on 30 June 2007 without having
been invoked. Accordingly, no payment obligations
were incurred by Finnvera on the basis of this guarantee.
4.1. Measures granted by the City of Mikkeli
4.1.1. Guarantee granted on 12 June 2000 (measure 1)
3.2.4. Loan granted on 6 July 2007 (measure 16)
(69) In
its
first
opening
decision,
the
Commission
doubted
that the measure in question would be in conformity
(64) On
6
July
2007,
Finnvera
granted
a
loan
amounting
to
with the private market economy investor principle.
EUR 250 000 at an interest rate of EURIBOR 6 months
First, in accordance with Commission Notice on the
+ 2,5 % per year. The loan had a duration of six months
application of Articles 87 and 88 of the EC Treaty to
and should have been reimbursed by 15 January 2008.
State aid in the form of guarantees ( 30 ) ('the Guarantee
So far, only part of the loan was reimbursed (outstanding
amount on 23 November 2011: […]).
( 30 ) OJ C 71, 11.3.2000, p. 14, point 4.2.

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16.1.2013 Official
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Union L
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Notice 2000') that was in force at the time when the
described as the behaviour of a market operator, in
measure was granted, the measure may constitute state
particular in a situation where the company already
aid since the guarantee covered 100 % of the loan in
was in difficulties.
question. This conclusion would not be changed by the
Guarantee Notice 2008 currently in force ( 31 ). Moreover,
granting the guarantee without a commission fee, that is
in effect taking on a financial risk without any quid-pro-
(74) As regards the compatibility of the measure, the
quo, cannot be described as the behaviour of a market
Commission was not provided sufficient information
operator.
that would allow it to determine whether the

requirements set out in the R&R Guidelines 1999 were
met.
(70) As
regards
compatibility,
the
Commission
had
doubts
that the guarantee could qualify for an exception under
4.1.5. Guarantee granted on 10 May 2004 (measure 5)
Article 107(3) of the TFEU; according to a preliminary
assessment the conditions of Community guidelines on
(75) The
Commission
had
similar
doubts
as
for
the
guarantee
State aid for rescuing and restructuring firms in
granted on 8 March 2004.
difficulty ( 32 ) ('the R&R Guidelines 1999') seemed not
to have been met.
4.1.6. Agreement to the court supervised restructuring
proceedings (measure 6)
4.1.2. Assignment of land (measure 2)
(76) In the first opening decision, the Commission doubted
that the measures taken during restructuring would be in
(71) In the second opening decision, the Commission
conformity with the private market economy investor
expressed doubts that the sale was undertaken in
principle.
accordance with the market economy investor principle,
as the requirements of the Commission Communication
on State aid elements in sales of land and buildings by
(77) First, the City of Mikkeli agreed to reducing the interest
public authorities ( 33 ) were not met. It was considered
rates for the secured debts with the effect that the interest
that no market price was paid, as the land was
rates charged were far below the reference rate for
assigned to Karjaportti without consideration. In
Finland at that time. Since the reference rate is considered
addition, Karjaportti did not have to bear the costs of
to be the market rate for healthy companies, and since
levelling the site.
Karjaportti was in difficulties at the time, the
Commission found it unlikely that a private creditor
would have granted the loans at such a low interest rate.
4.1.3. Purchase of land (measure 3)
(72) In the second opening decision, the Commission
(78) As regards the compatibility of the measures, the
expressed doubts that the terms and conditions of the
Commission at the time of the opening only had
purchase complied with the market economy investor
limited knowledge of the restructuring measures taken
principle, as Finland did not provide evidence that the
by Karjaportti since 2004. It was considered that the
purchase of the properties was done under market
continuous restructuring had not been successful as the
conditions, such as an evaluation of the properties by
tax authorities filed for bankruptcy proceedings
an independent expert.
concerning Karjaportti in December 2008. Thus, the
Commission had doubts that the long-term viability of
the company could be achieved through the restructuring
measures undertaken. As regards the other criteria for
restructuring aid according to the R&R Guidelines
4.1.4. Guarantee granted on 8 March 2004 (measure 4)
2004 ( 34 ), the Commission could not, in the absence of
a notification and a restructuring plan, evaluate whether
(73) In
the
second
opening
decision,
the
Commission
doubted
that the measure in question would be in conformity
the other requirements of the R&R Guidelines 2004 were
with the private market economy investor principle.
met.
First, in accordance with the Guarantee Notice 2000
that was in force at the time of the granting, the
measure may constitute state aid since the guarantee
4.1.7. Purchase of shares from Karjaportti (measure 7)
covered 100 % of the loan in question. This conclusion
would not be changed by the Guarantee Notice 2008
(79) In the second opening decision, the Commission doubted
currently in force. Moreover, granting the guarantee
that the measure in question was in conformity with the
without a commission fee, that is in effect taking on a
private market economy investor principle, as Finland did
financial risk without any quid-pro-quo, cannot be
not provide the evidence that the purchase of the shares
was done under market conditions.
( 31 ) OJ C 155, 20.6.2008, p. 10.
( 32 ) OJ C 288, 9.10.1999, p. 2.
( 34 ) OJ C 244, 1.10.2004, p. 2; prolonged in 2009, OJ C 156,
( 33 ) OJ C 209, 10.7.1997, p. 3.
9.7.2009, p. 3.

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Official Journal of the European Union
16.1.2013
4.1.8. Conversion of unpaid interest rates into loans
Finland owns 100 % of Finnvera. Concerning the loans,
(measure 8)
the Commission had doubts that the interest rate charged
exceeded the relevant reference rates. In addition, it did
(80) As regards the conversion of the unpaid interest rates
not have sufficient information to assess whether the
into a loan, the City of Mikkeli agreed to charge a very
measures were granted together and at equal conditions
low interest rate for the loan. In fact, private creditors
with private investors. Concerning the guarantees, the
converting their unpaid interest rates negotiated higher
Commission had doubts that they were granted under
interest rates, which led the Commission to question
existing schemes, as guarantees granted to a large
whether such an approach could have been in line
company in difficulty would not fall under such
with the market economy investor principle.
schemes. If the measures were granted outside an
existing aid scheme, the Commission doubted that they
would comply with the market economy investor prin
ciple.
4.1.9. Write-off of debts in the financial statements in 2006
and 2008 (measure 9 and measure 10)
(81) In the second opening decision, the Commission
5. COMMENTS FROM FINLAND
considered that if the write-off of debts in the financial
statements in 2006 and 2008 also included the legal
5.1. Measures granted by the City of Mikkeli
obligation ceasing to exist, the write-off would confer
an advantage to Karjaportti. In the Commission's view
5.1.1. Guarantee granted on 12 June 2000 (measure 1)
it was questionable whether a private market investor
would have acted in the same way.
(85) Finland argues that the guarantee should not be
considered state aid, as Karjaportti would probably have
been able to acquire such a guarantee from private
capital markets. Finland refers to the fact that Tapiola
granted the loan that was secured by the guarantee in
4.1.10. Non-implemented guarantee that had been planned
question as part of a financing package of EUR 25
for 2009 (measure 11)
million for the investments in the Tikkala production
site. Other parties contributed to the financing. State
(82) In
the
first
opening
decision,
the
Commission
doubted
that the City of Mikkeli would act like a private market
support for the investment consisted of the assignment
investor when granting the guarantee and considered
of land and bearing the costs for the levelling of the site
preliminarily that the guarantee entailed state aid. As
by the City of Mikkeli (see recitals 89 and 90), loans and
regards compatibility, the Commission had doubts
guarantees granted by Finnvera as well as direct grants
whether the guarantee would comply with the R&R
granted by the Ministry of Trade and Industry.
Guidelines 2004, as the "one time, last time principle"
seemed not to have been met. In addition, the guarantee
fee and the interest rate for the loan were too low in
order to satisfy point 25(a) of the Guidelines and the
(86) In
addition,
Finland
claims
that
the
City
of
Mikkeli
was
guarantee was not in line with point 25(c) of the Guide
treating all companies applying for guarantees on an
lines, as it was not limited to six months.
equal basis.
4.1.11. Rescheduling of debts since 2009 (measure 12)
(87) If
the
measure
was
to
be
considered
as
state
aid,
Finland
is of the opinion that such aid would have been
(83) In
the
first
opening
decision,
the
Commission
doubted
compatible with the internal market as it was granted
that the City of Mikkeli acted like a private market
in accordance with Guidelines on national regional
creditor when agreeing to the rescheduling of debts
aid ( 35 ) ('the RAG 1998'). Large companies were eligible
and considered preliminarily that the measure entailed
for regional aid measures under Article 107(3)(a) of the
state aid. As regards compatibility, the Commission had
TFEU if they did not exceed the amount of 24 % of the
doubts whether the debt rescheduling would comply
eligible net costs. These conditions were met. In
with the R&R Guidelines 2004, as the "one time, last
particular, Finland provided a calculation according to
time principle" seemed not to have been met. In
which the gross grant equivalent would still remain
addition, the debt rescheduling did not meet the
under 24 % when taking into account all the state
requirements for rescue aid. It was not limited to six
support for the investment.
months and was hence not in line with point 25(c) of
the Guidelines.
5.1.2. Assignment of land (measure 2)
4.2. Measures granted by Finnvera (measures 13-17)
(88) Finland
claims
that
the
current
book
value
of
the
plot
is
not a comparable indicator for the determination of the
(84) In the second opening decision, the Commission
value of the plot at the time of the transfer. The City of
considered that the measures were granted through
state resources and were imputable to the State, as
( 35 ) OJ C 74, 10.3.1998, p. 9.

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Union L
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Mikkeli estimates the market value of the land at the time
spring and summer 2004. Finally, in December 2004,
of the assignment at EUR 300 000. According to Finland
Karjaportti was considered a viable undertaking when
the costs of levelling the site amounted to FIM 2 million
its creditors approved the restructuring despite its
(EUR 336 376).
prolonged financial difficulties. Otherwise, Karjaportti
would have been declared bankrupt.
(89) Finland considers that the transfer of the plot of land and
bearing the costs for levelling of the site has been in line
5.1.5. Guarantee granted on 10 May 2004 (measure 5)
with the RAG 1998 (see recital 87).
(94) Finland considers
the guarantee as a continuum of
funding provided for the investment in the Tikkala
production facility in the year 2000 by the City of
5.1.3. Purchase of land (measure 3)
Mikkeli. The guarantee was granted to complete the
original investment plan initiated in 2000. At the time
(90) According to Finland, the purchase of the properties in
the guarantee was granted, Karjaportti was not in
the year 2002 related to the construction project of the
difficulty within the meaning of the R&R Guidelines
Tikkala production facility for which Karjaportti needed
1999, as already brought forward for the guarantee
funding. Finland claims that the properties were bought
granted in March 2004 (see recital 93).
at a market price. The evaluation took into account that
the properties were purchased in order to turn them into
predominantly residential use through an alteration of
plans, while part of the area was still in business use.
In addition, the properties were subject to mortgages
(95) According
to
Finland,
if
the
guarantee
involved
state
aid,
given to private creditors and alone one of the six prop
it was compatible as it was in line with the RAG 1998.
erties had a total mortgage of approximately EUR 9,6
Large companies were eligible for regional aid measures
million, which confirms that the value of the properties
under Article 107(3)(a) of the TFEU if they did not
was higher than the purchase price. Hence, the City of
exceed the amount of 24 % of the eligible net costs.
Mikkeli respected the market economy investor principle
These conditions were met, as the aid element of the
and the purchase did not include state aid.
guarantee was only EUR 57 835 whereas the overall
investments of Karjaportti in Tikkala amounted to EUR
[…].
5.1.4. Guarantee granted on 8 March 2004 (measure 4)
(91) Finland
states
that
the
guaranteed
loan
was
granted
to
5.1.6. Court supervised restructuring proceedings (measure 6)
offset an old pension loan that was granted in 1992. At
that time, the City of Mikkeli, together with Finnvera and
(96) Finland
argues
that
the
measures
taken
were
all
related
to
[…], guaranteed for the pension loan. As a counter-
the commencement of the court-supervised restructuring
security, the City of Mikkeli received a mortgage with
proceeding. In accordance with the Court of Justice case-
the value of FIM 7,5 million (EUR 1 261 409) on a
law, legislation on court-supervised recovery schemes and
property of Karjaportti. When issuing the guarantee on
insolvency does not in itself justify treating that legis
8 March 2004, the City of Mikkeli retained this security.
lation as aid ( 36 ).
(92) Finland
argues
that
the
original
guarantee
was
granted
before Finland's accession to the EU. When the City of
(97) Second, no new loans were granted during the
Mikkeli granted the new guarantee on 8 March 2004, no
proceedings, but payment of debts granted prior to the
new aid was granted, as the existing original guarantee
restructuring was rescheduled in conformity with the
was converted into a new guarantee while retaining
national legislation on restructuring of enterprises,
sufficient counter-securities. In addition, at the same
treating the creditors on an equal basis. In addition to
time, also other guarantors of the original pension loan
the City of Mikkeli's receivables, receivables of private
of 1992 granted loans to Karjaportti.
players were also rearranged during the proceedings.

The creditors of Karjaportti were divided into several
groups. The receivables of each group of creditors were
subject to mutually equal and similar terms. Finland
points out that this is in particular true as regards the
(93) Finally,
Finland
disputes
that
Karjaportti
was
in
difficulty
secured debts of the City of Mikkeli. Hence, it seems that
within the meaning of the R&R Guidelines 1999 in
the City of Mikkeli has acted like a private market
spring 2004. According to Finland, the market
economy investor when agreeing to the court-supervised
projections were satisfactory in the first half of 2004
restructuring proceedings.
and Karjaportti had budgeted a profit of EUR 3 million
for 2004. In addition, Karjaportti was able to get loans
( 36 ) See Case C 480/98 Kingdom of Spain v Commission [2000]
from private lenders at relatively low interest rates during
ECR I-08717, paragraph 18.

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L 12/14
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Official Journal of the European Union
16.1.2013
(98) In
addition,
Finland
points
out
that
the
City
of
Mikkeli
5.1.8. Conversion of unpaid interest rates into loans
had deemed it more profitable to reschedule the debts
(measure 8)
than to allow Karjaportti to go bankrupt and to close
down permanently, which is also showed in a liquidation
(103) Concerning the conversion of the unpaid interest into a
balance sheet attached to the restructuring programme.
loan, Finland firstly argues that the non-payment of
interest rates is a typical measure to court-supervised
restructuring proceedings. The conversion of such
unpaid interest into loans, which will be better ranked
than other loans, is foreseen by Finnish legislation. In
addition, Finland considers that the conversion of the
(99) As regards the compatibility of the measures under the
unpaid interest into a loan was taken in accordance
R&R Guidelines 1999, Finland argues that a company
with the private market investor principle, as private
subject to restructuring proceedings should generally be
creditors converted unpaid interest receivables into
deemed as firm in difficulty within the meaning of the
loans together with the City of Mikkeli.
Guidelines. It then repeats that the restructuring
proceeding did not involve state aid and that the City
of Mikkeli did not carry out support measures during the
restructuring proceedings.
5.1.9. Write-off of debts in the financial statements of 2006
and 2008 (measure 9 and measure 10)
(104) Finland confirms that recording the debts as a loss is
(100) Then Finland brings forward arguments relating to each
simply a bookkeeping operation on the creditor's part,
of the measures granted: As regards the triggering of City
done in accordance with the principle of prudence and
of Mikkeli's guarantee for the loan granted in 2000,
the respective provisions in the Accounting Act
Finland argues that Mikkeli did not grant any new
1336/1997. Finland argues that the debt write-off does
loans to Karjaportti, but simply stepped in as a creditor
not affect the legal relationship between the creditor and
on the demand of Tapiola at the beginning of the court-
the debtor, i.e. the debts were not waived. The City of
supervised restructuring proceedings, which was an
Mikkeli has confirmed that it has not waived the debts
ordinary measure under such restructuring proceedings.
recorded as losses and that it continues to pursue
As regards the terms and conditions of the repayment of
collection. The debt is part of the secured debt under
the loan, Finland points out that they had been specified
the court-supervised restructuring proceedings.
in the restructuring programme and were equal for all
creditors within the same group of creditors.
5.1.10. Non-implemented guarantee that had been planned
for 2009 (measure 11)
(101) As regards the unpaid charges, Finland clarifies that the
(105) Before the notification of the guarantee was withdrawn
receivables are owed to the City property administration,
in March 2010, Finland argued that the guarantee was
the water management department and the waste
compatible according to the R&R Guidelines 2004. In
management department of the City. The receivables
light of the withdrawal of the notification, Finland's
consist of unpaid charges that had arisen prior to the
arguments are not presented in more detail.
commencement of the court-supervised restructuring
proceeding. No guarantee was granted for those
outstanding amounts by the City of Mikkeli, as they
were receivables due to the City. Hence, when the
court-supervised restructuring proceedings started, they
5.1.11. Rescheduling of debts since 2009 (measure 12)
were entered into the restructuring programme as one
sum.
(106) Finland argues that rescheduling of debts is a measure
inherent to court-supervised restructuring proceedings
and does not involve state aid. According to Finland,
the creditors of Karjaportti had a mutual understanding
that the rescheduling of debts was a reasonable alter
5.1.7. Purchase of shares from Karjaportti (measure 7)
native in order to safeguard their receivables. It informs
the Commission that the notified rescheduling was never
(102) Finland claims that the shares of the real estate company
implemented, as the administrative court of Kuopio
Kiinteist Oy Suksimki were purchased at a market
(Kuopion Hallinto-Oikeus) halted the implementation of
price from Karjaportti. Finland submitted an independent
the debt rescheduling. Finland explains that Karjaportti's
valuer’s statement according to which the value of the
debts were nevertheless rescheduled, following several
shares amounted to approximately EUR 1 million based
proposals by Karjaportti in the period 2009–2011,
on the prevailing rent level. This value was adjusted as
which were accepted by the City of Mikkeli. Finland
regards the actual prevailing rent level and the shares
claims that this subsequent rescheduling was in line
were accordingly bought at a price of EUR 860 000.
with the market economy investor principle, as the
Hence, the property transaction did not include any aid
City of Mikkeli and all other creditors implemented the
element.
rescheduling at equal terms.

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EN
16.1.2013 Official
Journal
of
the
European
Union L
12/15
5.2. Measures granted by Finnvera
6. COMMENTS FROM INTERESTED PARTIES
5.2.1. Guarantee granted on 17 March 2004 (measure 13)
(112) The interested party only commented on measures 1, 2,
3, 5, 7, 9 and 10.
(107) Finland considers that the guarantee was granted in line
with the Guarantee Notice 2000. In any event, the
guarantee did not involve state aid. First, Finnvera's risk
was not increased, as the guarantee replaced a guarantee
6.1.1. Guarantee granted on 12 June 2000 (measure 1)
that Finnvera granted earlier (in 1992) for a pension
loan. This loan was replaced by a new pension loan in
(113) The interested party states that the guarantee was granted
2004, for which Finnvera granted the guarantee in
in order to secure a loan of FIM 25 million for the
question. In addition, two private creditors granted
investment in a new production site.
credit facilities to Karjaportti at the same time in order
to allow for funding the postponement of the 2004
payments. Furthermore, the guarantee was subject to a
6.1.2. Assignment of land (measure 2)
high fee and the aid element of the guarantee was below
the de-minimis threshold. Finally, the forecasts for Karja
(114) The interested party claims that a plot of land was
portti were good at the time the guarantee was granted.
allocated to Karjaportti and the City of Mikkeli
undertook to provide municipal engineering and other
requisite technical work, with costs totalling FIM 2,5
million. Karjaportti paid FIM 1,2 million for the plot.
In the books of Karjaportti, the plot is valued
5.2.2. Loan granted on 12 January 2006 (measure 14)
EUR 403 000 and the interested party wonders whether
the allocation of the land could have been state aid.
(108) Finland considers that the loan granted in 2006 did not
involve state aid as Finnvera acted like a private market
creditor when converting the unpaid interest into a new
loan in line with the restructuring programme. In
6.1.3. Purchase of land (measure 3)
addition, private creditors converted their unpaid
interest into new loans shortly before Finnvera did so
(115) The interested party alleges that the City of Mikkeli
and at similar conditions.
bought six abandoned factory buildings in Mikkeli and
paid a total of EUR 6,7 million for them. An investor
acting in accordance with the market economy investor
principle would not have bought properties of a
company in deep financial troubles at such a price.
5.2.3. Guarantee granted on 14 September 2006
(measure 15)
(109) Finland considers that the guarantee was granted in line
6.1.4. Guarantee granted on 10 May 2004 (measure 5)
with the Guarantee Notice 2000. In any event, the
guarantee does not involve state aid as it only covers
(116) The interested party alleges that Karjaportti was in grave
16,7 % of EUR 1,8 million and private creditors were
difficulties at the time the guarantee was granted. The
covering the remainder of this amount by way of guar
company had substantial debts already towards the City
antees.
of Mikkeli and the group companies owned by the City
of Mikkeli.
6.1.5. Purchase of shares from Karjaportti (measure 7)
5.2.4. Loan granted on 6 July 2007 (measure 16)
(117) The interested party alleges that the price paid for the
(110) Finland considers that the loan granted in 2007 did not
shares in the real estate company was above the book
involve state aid as Finnvera acted together with two
value of the shares.
private creditors who granted new loans at the same
time and at similar conditions. In addition, the loan
was collateralised by way of valuable mortgages and
business mortgages.
6.1.6. Write-off of debts in the financial statements of 2006
and 2008 (measure 9 and measure 10)
(118) The interested party submitted a copy of minutes of the
meeting of the Mikkeli City Board dated 5 February
5.2.5. Guarantee granted on 9 January 2008 (measure 17)
2007, in which the debt-write off in the financial
statements of 2006 was decided. In addition, the
(111) Finland considers that the counter-guarantee was granted
interested party points out that it was at least unusual
in accordance with the Guarantee Notice 2000. In any
that the City of Mikkeli wrote off millions of euros of
event, it does not involve state aid as the other party
Karjaportti's debts in its 2008 financial statements, and
involved was a private lender and the guarantee fee
questions in particular why the City of Mikkeli was at the
imposed by Finnvera was considerably higher than the
same time prepared to grant further guarantees to Karja
guarantee fee imposed by the private lender.
portti.

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L 12/16
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Official Journal of the European Union
16.1.2013
7. ASSESSMENT
called hard criteria laid down in Point 5 of those Guide
lines, that is when it lost more than half of its registered
(119) Article 107(1) of the TFEU lays down that any aid
capital or could be subject to collective insolvency
granted by a Member State or through state resources
proceedings under national law. If the hard criteria are
in any form whatsoever, which distorts or threatens to
not met, a company can still show the "usual signs of a
distort competition by favouring certain undertakings or
firm being in difficulty" according to point 6 of the R&R
the production of certain goods and affects trade between
Guidelines 1999, such as increasing losses, diminishing
Member States is incompatible with the internal market.
turnover, growing stock inventories, excess capacity,
declining cash flow, mounting debt, rising interest
charges and falling or nil net asset value (so-called soft
criteria). The R&R Guidelines 2004 include similar hard
and soft criteria in Points 10 and 11.
(120) The conditions laid down in Article 107(1) TFEU are
cumulative and thus for a measure to be qualified as
state aid all the conditions must be fulfilled simulta
neously.
(125) Against this background, the Commission notes that in
the year 2000, Karjaportti has not lost capital nor has it
shown the "usual signs" of a firm being in difficulty in
(121) Whereas Article 107(1) of the TFEU provides for the
the year 2000. In fact it seems that Karjaportti was a
general prohibition of state aid within the Union,
healthy company which recorded a high turnover, a
Articles 107(2) and 107(3) of the TFEU provide for
positive operating result, stable share capital and
exemptions to the general rule that such aid is incom
reserves at relatively high levels for the period between
patible with the internal market as stated in Article 107(1)
2000 and 2002 (see also Table I).
of the TFEU.
(126) The situation looked gloomier in the following years.
(122) In the following sections, the Commission assesses the
Turnover was decreasing and losses had significantly
existence of state aid separately for each of the measures
increased from 2003 to 2004. Debt was mounting and
described. If a measure entails state aid, the Commission
already at the beginning of 2004, the beneficiary started
goes on to assess the compatibility of the aid measure.
rescheduling of debts and had to ask the creditors for
The Commission distinguishes between measures with
deferral of due payments ( 39 ). It also seems that Karja
drawn, measures that were granted by the City of
portti had some excess capacities. In addition, it has to be
Mikkeli and measures that were granted by Finnvera.
taken into account that already in 2004, Karjaportti's
As a preliminary point, it is assessed at what point in
losses were not covered by the contingency fund
time Karjaportti could be considered a company in
anymore (see Table I).
difficulty.
(127) According to Karjaportti's financial statements, the share
7.1. Company in difficulty
capital of Karjaportti almost disappeared in 2004, as it
(123) For both, the existence of state aid and the compatibility
dramatically fell to less than a tenth of its value
of the measures in question it is relevant whether the
compared to the year 2003. Since then the company
beneficiary was in difficulty at the time when the
recorded negative equity that tended to increase over
measures were granted. The question whether Karjaportti
the last years. With the exception of the year 2006,
can be considered a company in difficulty has to be
Karjaportti has since 2003 been loss making. The
assessed under the R&R Guidelines 1999 until
profit made in 2006 cannot be perceived as a sign of
9 October 2004, the date of expiry of the R&R
recovery of the company as it did not stem from the core
Guidelines 1999 (
activity of the company. Karjaportti's operational profit

37 ). As from 10 October 2004, the
R&R Guidelines 2004 are applicable (
remained negative, similarly to the preceding and the

38 ).
following years. The profit in 2006 was not sufficient
to offset the amount of deficit accumulated over past
accounting periods nor to compensate for the negative
equity. Overall the financial situation of Karjaportti
(124) According to the R&R Guidelines 1999, a company can
remained considerably unfavourable. In 2008, Karjaportti
be considered as being in difficulty when it meets the so
was twice put into bankruptcy proceedings by the tax
authorities.
( 37 ) See Point 79 of the R&R Guidelines 1999: "Subject to the
provisions set out below, these Guidelines shall enter into force
( 39 ) According to minutes of a City Council meeting from 8 March
on the date of their publication in the Official Journal of the
2004, Karjaportti had started restructuring its debts earlier that
European Communities. They shall remain in force, unless otherwise
year and asked the City of Mikkeli to agree on a deferral of the
stipulated in any new decision, for five years." The R&R Guidelines
instalments due in 2004 to the year 2005 for the loan granted in
1999 were published on 9 October 1999.
2000, guaranteed by the City of Mikkeli (which was accepted by
( 38 ) See Point 102 of the R&R Guidelines 2004.
the City Council).

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16.1.2013 Official
Journal
of
the
European
Union L
12/17
(128) In light of the facts presented in recitals 125-127, it can
guarantee given in June 2000 constitutes state aid. The
be concluded that Karjaportti qualifies as a firm in
question whether the changes in the conditions of the
difficulty under Point 5 of the R&R Guidelines 1999
loan could entail state aid is assessed as part of measure
and under Point 11 of the R&R Guidelines 2004
6 (see recitals 188-195).
respectively since the beginning of 2004. In 2008,
when Karjaportti was subject to bankruptcy proceedings,
it also qualified as a firm in difficulty under Point 10(c)
of the R&R Guidelines 2004.
(133) The guarantee was given by the City of Mikkeli and
accordingly consists of state resources and is imputable
to the state.
7.2. Measures withdrawn
7.2.1. Non-implemented guarantee that had been planned for
(134) To involve state aid, within the meaning of Article 107(1)
2009 (measure 11)
of the TFEU, a measure must confer an advantage that an
undertaking would not have obtained under normal
(129) In accordance with Article 8 of Council Regulation (EC)
market conditions. In order to carry out that assessment,
No 659/1999 of 22 March 1999 laying down detailed
the Commission will rely on the Guarantee Notice 2000.
rules for the application of Article 93 of the Treaty ( 40 )
At the time when the measure was granted, the
('the Procedural Regulation'), a Member State can
Guarantee Notice 2000 was in force. However, as the
withdraw the notification after the opening of the
case-law of the Court clearly indicates, "the question
formal investigation procedure in due time before the
whether aid is State aid within the meaning of the
Commission has taken a decision on the aid character
Treaty must be determined on the basis of objective
of the notified measure. In such case, the Commission
elements, which must be appraised on the date on
will decide to close that procedure on the ground that it
which the Commission takes its decision" ( 42 ). Accord
is without object.
ingly, for the assessment in hand, the Commission will
rely on the Guarantee Notice 2008.
(130) As the decision of the City Council of Mikkeli to provide
a guarantee to Karjaportti did not become final and the
(135) According to point 3.2 of the Guarantee Notice 2008,
City Board decided in February 2010 not to implement
the existence of state aid within an individual state
the guarantee, Finland withdrew the notification of the
guarantee can be ruled out if four cumulative
guarantee in March 2010. Thus, as regards the guarantee,
requirements are fulfilled: "(a) The borrower is not in
the investigation became without object.
financial difficulty […], (b) The extent of the guarantee
can be properly measured when it is granted, […] (c) The
guarantee does not cover more than 80 % of the
outstanding loan or other financial obligation […], (d)
A market-oriented price is paid for the guarantee […]."
7.3. Measures granted by the City of Mikkeli
7.3.1. Guarantee granted on 12 June 2000 (measure 1) and
assignment of land (measure 2)
(136) In the case at hand, the borrower has not been in
E x i s t e n c e o f s t a t e a i d
financial difficulties at the time of granting (see recitals
123–128). However, the guarantee under assessment
(131) Guarantee (measure 1): As described in recitals (14)-(16),
covers 100 % of the loan.
the City of Mikkeli gave the guarantee in June 2000 and
made payments under the guarantee in December 2004.
After the City of Mikkeli had become creditor of Karja
portti, the conditions for the loan were changed within
(137) In addition, the guarantee was granted without any
the court-supervised restructuring proceedings (for details
guarantee fee, even though the granting authority itself
see recitals 34-39).
considered that a great risk was entailed ( 43 ). Whereas
Finland argues that Karjaportti could have obtained a
similar guarantee on the market, the Commission is of
the opinion that a guarantee premium of zero cannot be
(132) Accordingly, several steps have to be distinguished.
considered as close to the market premium applicable at
Whereas the aid is granted at the moment when a
the time of granting. The guarantee covered 100 % of the
state guarantee is given, any payments by the state
loan in question, that is to say that the granting authority
according to the terms of the guarantee are not to be
bore the risk of default of the beneficiary alone and the
considered as granting of state aid (
guarantee was granted as an absolute guarantee, i.e. the

41 ). On the other
hand, the change of the conditions of the loan after
the state guarantor has become creditor could entail
( 42 ) See Joined Cases C-341/06 P and C-342/06 P Chronopost SA and
state aid. In the following, it is examined whether the
La Poste v Union franaise de l’express (UFEX) and Others [2008]
ECR I-04777, paragraph 95.
( 43 ) According to the Minutes of the City Council of Mikkeli of 12 June
( 40 ) OJ L 83, 27.3.1999, p. 1.
2000, "… it must be observed that the risk to the City is great
( 41 ) Point 2.1 of the Guarantee Notice 2008.
during the first years …".

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Official Journal of the European Union
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guarantor was liable for the principal debt as if it were
133, 140 and 141, also the assignment of land consists
the guarantor's own and the creditor could ask for the
of state resources and is imputable to the state, is
repayment of principal debt from the guarantor when the
selective, and it distorts competition and affects trade
principal debt had become due.
among the Member States.
(138) Accordingly, in the case at hand, contrary to the view of
(145) On the basis of the foregoing, the Commission concludes
Finland, the Commission is of the opinion that the
that the measure constitutes state aid.
measure cannot be considered free of aid.
C o m p a t i b i l i t y
(139) Finland's argument that the measure was granted
together with other parties can be rejected, as
(146) Finland argues that the guarantee, together with the
according to the information provided by Finland the
assignment of land for building the production site in
other parties taking part in the investment were also
Tikkala, is compatible as regional aid. At the time when
state owned. Accordingly, it is considered that the
measures 1 and 2 were granted, that is in the year 2000,
measure confers an advantage to Karjaportti.
the RAG 1998 were in force ( 44 ). The measures under
consideration were not granted under a scheme, but as
an individual ad hoc payment. As they were granted in a
sector to which the RAG 1998 are applicable, the
(140) To be considered state aid, a measure must be specific or
measures fall in principle within the scope of the RAG
selective in that it favours only certain undertakings or
1998. At the time of granting, the beneficiary was not in
the production of certain goods. The measure under
difficulty, as described in recitals 123–128 above, and it
assessment was granted to Karjaportti, one specific
was located in It-Suomen, a region eligible for regional
company. Therefore, the Commission considers that the
aid under Article 107(3)(a) of the TFEU. Therefore, the
measure taken constitutes a selective advantage to the
Commission has assessed the project under the RAG
beneficiary.
1998. This assessment has led to the following observa
tions:
(141) Finally, the Commission has to consider whether the
measure taken by the City of Mikkeli in favour of Karja
(147) According to Section 2 of the RAG 1998, regional aid
portti is likely to distort competition and affect trade
can only be compatible if there is a balance between its
between Member States, by providing this company
distortive effect and its advantage as regards the devel
with an advantage over (potential) competitors not
opment of a less favoured region. In this context, the
receiving public support. There is trade in meat
Commission notes that the investment project in
products between Member States, the area in which the
question was supposed to have positive impact on the
beneficiary operates. According to Finland, Karjaportti
regional development. It contributed to the further devel
exports its products mainly to Russia, but also to
opment of the economic activity and to the creation of
Member States. Therefore, the Commission considers
new and indirect jobs. In fact, as described in recital 24,
that the measure taken is likely to distort competition
the new production site should raise the number of jobs
and affect trade between Member States.
in the region from 400 to 550-600.
(142) On the basis of the foregoing, the Commission concludes
(148) Section 4 of the RAG 1998 lays down the conditions for
that the measure constitutes state aid.
granting compatible regional aid.
(143) Assignment of land (measure 2): Finland does not deny
(149) First, according to Point 4.1 of the RAG 1998, the object
that the measure could constitute state aid. The bene
of regional aid is to secure either productive investment
ficiary was clearly granted an advantage, as it did not
(initial investment) or job creation linked to investment.
have to pay anything for the assignment of the land.
Initial investment means according to Point 4.4 of the
In addition, the City of Mikkeli reimbursed the bene
RAG 1998 an investment in fixed capital relating to the
ficiary the costs for the levelling of the site. Accordingly,
setting-up of a new establishment, the extension of an
the Commission considers that the measure confers an
existing establishment, or the starting-up of an activity
advantage to Karjaportti that it would not have received
involving a fundamental change in the product or
on the market.
production process of an existing establishment. The
measures under consideration were used to build a new
production site, which is an initial investment within the
meaning of point 4.4 of the RAG 1998.
(144) In addition, the measure meets all other requirements for
the existence of state aid. As described in detail in recitals
( 44 ) See Section 6 of the RAG 1998.

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European
Union L
12/19
(150) Secondly, the aid intensity must be below the regional
five years. Finland confirmed that the investment in
aid ceiling of 24 % ( 45 ). In order to calculate the aid
question was to be maintained for a minimum period
intensity, the value of the investment and the aid
of five years.
element involved in the measures considered have to
be determined.
(153) Fourth, according to Point 4.2 of the RAG 1998, the
beneficiary's contribution to the investment's financing
must be at least 25 %. Finland confirmed that this was
(a) Concerning the investment's value, according to Point
the case.
4.5 of the RAG 1998, the eligible costs in this
context may include costs for land, building plants
and machinery. In the event of a purchase, only the
costs of buying these assets should be taken into
(154) Fifth, the Commission notes that, in line with Point 4.2
account. In fact, Finland calculated the eligible costs
of the RAG 1998, the aid application has been submitted
according to these provisions, resulting in an amount
before work on the project was started and that the rules
of EUR 25 935 928 (see recital 22 and Table III).
on cumulation of aid are respected, as foreseen in Point
4.18 of the RAG 1998, and that the regional aid ceiling
was not exceeded.
(b) Concerning the aid element involved, Finland
provided a calculation, the credibility of which has
(155) On the basis of the foregoing arguments, the
been cross-checked by the Commission. For measure
Commission concludes that measures 1 and 2 met the
1, the guarantee granted by the City of Mikkeli, the
conditions of the RAG 1998 and are therefore
Guarantee Notice 2000 can be used to quantify the
compatible.
aid element. Three methods are foreseen to quantify
the aid element, out of which one is to calculate it
"by any other objectively justifiable and generally
accepted method" (Section 3.2 of the Guarantee
7.3.2. Purchase of land (measure 3)
Notice 2000). Finland has compared the market
rate for a comparable guarantee to the guarantee
(156) In principle, the market economy investor principle is
premium actually charged by the City of Mikkeli,
also applicable to the purchase of land or other assets
which seems in fact to be an objectively justifiable
by a State. Such purchase could include state aid if it
and generally accepted method. For measure 2, the
cannot be considered a normal commercial transaction.
aid element consists of the value of the land plus the
Even if a public authority purchases goods and services at
costs for levelling the site, which is also acceptable.
a market price, state aid may nevertheless still be present
As regards the funding from Finnvera and the
if it turns out that the State did not have an actual need
Ministry of Trade and Industry, which is not
for the land or assets in question ( 46 ).
subject to this Decision, if the funding were to be
considered to involve state aid, the aid element would
also have to be taken into account. Finland provided
(157) Accordingly, the Commission has to assess whether the
a calculation for the aid element involved in the
purchase of land can be considered a normal commercial
Finnvera loan, which is considered credible. For the
transaction. To this end, it has to be considered whether
direct grants of the Ministry of Trade and Industry,
the price paid by the City of Mikkeli reflected the value
the whole amount was taken into account. Overall,
of the properties and the building bought.
taking into account the aid element involved in the
measures granted by the City of Mikkeli, Finnvera
and the Ministry of Trade and Industry, the aid
element (calculated as gross grant equivalent), is
(158) According to the interested party, a private market
EUR 3 617 143 (see Table II).
investor would not have been willing to pay EUR 6,7
million for the factory buildings which the City of
Mikkeli bought at this price.
(151) The aid element of EUR 3 617 143 corresponds to an aid
intensity of 13,95 % of the total eligible costs of
(159) Finland, on the other hand, provided the Commission
EUR 25 935 928 The aid intensity is hence below the
with an indication of the value of the properties.
threshold of 24 %.
According to Finland, private bank […] held a
mortgage amounting to EUR 7,5 million on one of the
properties sold at the time of the purchase ( 47 ).
(152) Third, according to Point 4.10 of the RAG 1998, aid for
( 46 ) See Case T-14/96 Bretagne Angleterre Irlande (BAI) v Commission
initial investment must be conditional on maintaining
[1999] ECR II-139 paragraph 71; Joined Cases T-116/01 and
the investment in question for a minimum period of
T-118/01, P & O European Ferries (Vizcaya), SA and Diputación
Foral de Vizcaya v. Commission [2003] ECR II-02957, paragraphs
114 et seq.
( 45 ) Commission Decision in case N238/1999, letter to Finland dated
( 47 ) See recital (25); when the possession on the property was trans
13 December 1999 concerning the regional aid map 2000-2006,
ferred to the City of Mikkeli, it was free of mortgages.

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(160) Finland informed the Commission that no evaluation of
the Procedural Regulation). According to Commission
the land exists. The Commission considers that the value
Regulation (EC) No 794/2004 of 21 April 2004 imple
of the mortgage held by a private bank might give an
menting Council Regulation (EC) No 659/1999 ( 48 ), an
indication of the value of the property. Indeed, before
alteration is "any change, other than modifications of a
accepting collaterals, a bank will value the property in
purely formal or administrative nature which cannot
question so that if the debtor is not able to pay back its
affect the evaluation of the compatibility of the aid
debt, the bank may be satisfied by realising the mortgage.
measure with the common market".
(161) For the properties in question, the City of Mikkeli paid a
(165) In fact, the City of Mikkeli granted a new guarantee on
purchase price of EUR 6 646 787, which is below the
8 March 2004 that was securing a new loan granted by
registered amount of the mortgage held by a private
Tapiola on 14 April 2004. The new guarantee cannot be
party on one of the properties prior to closing the sale
seen as a continuation of the old guarantee as it was
procedure. In addition to this property, five other prop
granted for a new loan with new conditions. The fact
erties and a building were sold to the City of Mikkeli. In
that this loan replaced a loan granted in 1992 by Tapiola
addition, the Commission notes that the City of Mikkeli
that had already been guaranteed by the City of Mikkeli
bought the properties with a view to converting the land
does not alter the view of the Commission. Whereas it is
into residential area by implementing changes to local
true that the new loan amounted to the outstanding
plans; the properties were located near city centre and
capital of the old loan, and the interest rate was more
in an attractive residential area.
favourable for Karjaportti (4,5 % p.a. for the old loan;
4 % p.a. for the new loan), there was a change in the
duration of the loan (the old loan should have been
repaid ten years after granting, that is to say in
November 2002; the new loan allowed repayment until
(162) On the basis of the foregoing, the doubts raised by the
2014). Overall, the amount of the new loan (capital plus
Commission in the opening decision concerning the
interest for the years 2004 to 2014) is higher than the
price paid for the properties and the buildings are
amount of the old loan. Accordingly, by granting the
dispelled. It is considered that the City of Mikkeli
new guarantee, the risk of the City of Mikkeli and
bought the properties and the building at a price that
hence the amount of the measure increased compared
reflected their value and that the market investor test is
to the old guarantee. Granting the new guarantee has
met. The Commission therefore concludes that the
to be seen as an alteration of the old guarantee that
measure does not involve state aid.
allows classifying the new guarantee as new aid. Accord
ingly, Finland's argument that the old guarantee was
granted before Finland's accession and can thus be
considered as existing aid and that the new guarantee
cannot be considered as involving granting new aid can
7.3.3. Guarantee granted on 8 March 2004 (measure 4) and
be dismissed.
guarantee granted on 10 May 2004 (measure 5)
(163) As for the guarantee granted in June 2000, several steps
have to be distinguished (granting of the guarantee;
payment under the guarantee; change of conditions in
the loan; compare recital 132). Accordingly, in the
(166) The question whether the guarantee conferred an
following, it is examined whether the guarantees given
advantage to the beneficiary can be assessed on the
in March 2004 and in May 2004 constitute state aid. The
basis of the Guarantee Notice 2008. At the time when
question whether the changes in the conditions of the
the measure was granted, the Guarantee Notice 2000 was
loan could entail state aid is assessed as part of measure
in force. However, as explained in recital (134), the
6 (see recitalsto 188-195).
Commission will rely on the Guarantee Notice 2008
when assessing the measure. According to point 3.2 of
the Guarantee Notice 2008, the existence of state aid
within an individual state guarantee can be ruled out if
four cumulative requirements are fulfilled (see recital
E x i s t e n c e o f s t a t e a i d
135). The guarantee under assessment covers 100 % of
the loan. This suffices to say that the existence of state
(164) Measure 4: Contrary to Finland's arguments, presented
aid cannot be ruled out on the basis of point 3.2 of the
under recital (92), the Commission considers that
Guarantee Notice 2008. In addition, and contrary to
converting existing liabilities in a new guarantee can
Finland's arguments, the Commission considers that
constitute state aid. In this context, a distinction has to
Karjaportti was in difficulty, within the meaning of the
be made between existing aid and new aid. The definition
R&R Guidelines 1999, already in March 2004 (see
of existing aid entails individual aid measures that had
recitals123-128), which is another reason that the
been put into effect prior to the entry into force of the
guarantee cannot fall under point 3.2. of the Guarantee
Treaty (Article 1(b) of the Procedural Regulation). New
Notice 2008.
aid, on the contrary, is "all aid […] which is not existing
aid, including alterations to existing aid" (Article 1(c) of
( 48 ) OJ L 140, 30.4.2004, p. 1.

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Union L
12/21
(167) In addition, the guarantee was granted without any
was granted as an absolute guarantee. Accordingly, in the
guarantee fee, even though the company was facing
case at hand, contrary to the view of Finland, the
difficulty and the risk for the City of Mikkeli could be
Commission is of the opinion that the measure confers
considered as considerable. The guarantee covered 100 %
an advantage to Karjaportti.
of the loan in question, i.e. that the granting authority
bore the risk of default of the beneficiary alone and the
guarantee was granted as an absolute guarantee, that is to
say the guarantor is liable for the principal debt as if it
(173) In addition, measure 5 meets all other requirements for
were the guarantor's own and the creditor can ask for the
the existence of state aid. As described in detail in recitals
repayment of principal debt from the guarantor when the
133, 140 and 141 also this guarantee consists of state
principal debt has become due.
resources and is imputable to the state, is selective and
distorts competition and affects trade among the Member
States.
(168) In addition, Finland believes that the measure is in line
with the market economy investor principle, in particular
as private parties were involved. This argument can be
(174) On the basis of the foregoing, the Commission concludes
rejected. According to the information submitted by
that measure 4 and measure 5 constitute state aid.
Finland, firstly, the private parties did not grant guar
antees but loans to the beneficiary. Second, the loans
by the private parties were not granted at the same
time as the guaranteed pension loans. Third, the
C o m p a t i b i l i t y
interest rate asked for by at least one of the private
parties for a loan was already higher than the interest
(175) Finland did not bring forward any arguments as regards
rate for the pension loan. More importantly, private
the compatibility of measure 4. For measure 5, Finland
parties only agreed on short term loans, with a
invoked Article 107(3)(a) of the TFEU and the RAG
duration of several months, whereas the guarantee
1998 (see recital 95). The RAG 1998 can however not
granted by the City of Mikkeli covered a loan with a
serve as compatibility basis, as, Karjaportti was in
duration of ten years.
difficulty at the time of granting of the two guarantees
(see recitals 123-128). According to the RAG 1998, aid
to companies in difficulty has to be assessed under the
Rescue and Restructuring Guidelines ( 49 ). Therefore, the
(169) In view of the foregoing, it is considered that the
Commission first assesses whether measures 4 and 5
measure confers an advantage to Karjaportti. In
are compatible as rescue and restructuring aid
addition, measure 4 meets all other requirements for
according to the R&R Guidelines. At the time of
the existence of state aid. As described in detail in
granting, the R&R Guidelines 1999 were applicable ( 50 ).
recitals 133, 140 and 141, also this guarantee consists
of state resources and is imputable to the state, is
selective and distorts competition and affects trade
among the Member States.
(176) According to the R&R Guidelines 1999, a rescue aid has
to meet certain requirements, which are not all fulfilled
by the measure under consideration.
(170) Measure 5: Finland's argument that the measure was
granted to continue the investment started in 2000 can
be rejected, as the guarantee was clearly a new measure.
(a) First, whereas the measures consist of liquidity
support in the form of a guarantee (point 23(a) of
the R&R Guidelines 1999), the loans covered by the
respective guarantees were not granted at an interest
(171) According to point 3.2 of the Guarantee Notice 2008,
rate at least comparable to those observed for loans
the existence of state aid within an individual state
to healthy firms (reference rate for Finland in March
guarantee can be ruled out if four cumulative
2004: 4,43 % plus 100 basis points; reference rate
requirements are fulfilled (see recital 135). Like measure
for Finland in May 2004: 4,43 % plus 100 basis
4, the guarantee under assessment covers 100 % of the
points).
loan and Karjaportti was already in difficulty within the
meaning of the R&R Guidelines 1999 in May 2004 (see
recitals 123-128). Accordingly, the guarantee cannot fall
under point 3.2 of the Guarantee Notice 2008.
(b) Second, the guarantees were not linked to a loan that
was to be reimbursed over a period of not more than
twelve months after disbursement of the last
instalment to the firm (point 23(b) of the R&R
(172) In addition, and similar to measure 4, the guarantee was
Guidelines 1999).
granted without any guarantee fee, even though the
company was facing difficulty and the risk for the City
( 49 ) See Point 4.4, fn. 10 and fn. 21 of the RAG 1998.
of Mikkeli could be considered as considerable. The
( 50 ) According to Section 6 of the R&R Guidelines 1999, they applied
guarantee covered 100 % of the loan in question and
until 9 October 2004; see fn. 37 above.

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(c) Third, Finland did not provide any information that
make good damage caused by natural disasters or excep
the aid was warranted on the grounds of serious
tional occurrences and have not been awarded to the
social difficulties and had no unduly adverse
economy of certain areas of the Federal Republic of
spillover effects on other Member States (point
Germany affected by the division of that country.
23(c) of the R&R Guidelines 1999).
(181) Further exemptions are laid out in Article 107(3) of the
(d) Fourth, the guarantees were neither reimbursed
TFEU.
within 6 months nor had a restructuring plan
within the meaning of the R&R Guidelines 1999
been set up (point 23(d) of the R&R Guidelines
1999).
(182) Article 107(3)(a) of the TFEU states that “aid to promote
the economic development of areas where the standard
of living is abnormally low or where there is serious
underemployment” may be declared compatible with
(e) Lastly, there are no indications that the guarantees
the internal market. Karjaportti, at the time of granting,
were restricted to the amount needed to keep the
was located in such an area.
firm in business for the period during which the
aid was authorised (point 23(e) of the R&R
Guidelines 1999).
(183) At the time when measures 4 and measures 5 were
granted, the compatibility of state aid to assisted areas
was regulated by the RAG 1998. Under those Guidelines,
(177) Measure 4 and 5 do not meet all the requirements for
companies in difficulties are not eligible for regional aid.
restructuring aid set out in the R&R Guidelines 1999
Accordingly, in view of the foregoing, the Commission
either.
concludes that the aid is not eligible for the derogation
provided for in Article 107(3)(a) of the TFEU.
(a) First, the measures were not conditional on the
implementation of a restructuring plan (point 31 of
(184) Article 107(3)(b) of the TFEU states that "aid to promote
the R&R Guidelines 1999). It is noted that no
the execution of an important project of common
restructuring plan within the meaning of point 32
European interest or to remedy a serious disturbance in
et seq. of the R&R Guidelines 1999 has been set up.
the economy of a Member State" may be declared
compatible with the internal market. The Commission
notes that the aid in question is not designed to
(b) Second, aid beneficiaries are expected to make a
promote the execution of an important project of
significant contribution to the restructuring plan
common European interest nor has the Commission
from their own resources (point 40 of the R&R
found any evidence that it is designed to remedy a
Guidelines 1999) and for the measures under
serious disturbance in the Finnish economy. In view of
consideration, there is no indication of an own
the foregoing, the Commission concludes that the aid
contribution of the beneficiary.
does not qualify for the derogation enshrined in
Article 107(3)(b) of the TFEU.
(c) Third, in order to avoid undue distortions of
competition, compensatory measures must be taken
(185) Article 107(3)(d) of the TFEU states that aid to promote
(point 37 of the R&R Guidelines 1999). Such
culture and heritage conservation may be declared
measures have not been provided for.
compatible with the TFEU where such aid does not
affect trading conditions and competition in the
Community to an extent that is contrary to the
common interest. This Article obviously does not apply
(178) Accordingly, the Commission considers that the
to the current case.
measures were not granted in accordance with the R&R
Guidelines 1999.
(186) Article 107(3)(c) of the TFEU provides for the authori
sation of state aid to facilitate the development of certain
(179) Further, it has to be considered whether measure 4 and 5
could be compatible on the basis of any other of the
economic activities or of certain economic areas, where
exemptions laid down in Article 107(2) and (3) of the
such aid does not adversely affect trading conditions to
TFEU.
an extent contrary to the common interest. The

Commission has developed several guidelines and
communications that explain how it will apply the dero
gation contained in this Article. However, the
(180) The exemptions in Article 107(2) of the TFEU do not
Commission considers that because of the nature and
apply in the present case because the measures in
characteristics of the aid, it is self-evident that the
question do not have a social character, have not been
exceptions under these guidelines and communications
awarded to individual consumers, are not designed to
are not applicable to the present case.

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Union L
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(187) On the basis of the foregoing arguments, the
proceedings with the District Court of Mikkeli according
Commission considers that measures 4 and 5 involve
to the Restructuring of Enterprises Act 47/1993. A
state aid that is not compatible with the internal market.
restructuring programme was submitted to the Court,
including details of the measures currently under
assessment. The Court, after having checked the details,
approved the restructuring programme. The Commission
7.3.4. Court-supervised restructuring proceedings (measure 6)
notes that Karjaportti has been subject to court-
supervised restructuring proceedings under Finnish law.
(188) Finland's main argument, as described in recitals 96-98,
In fact, the purpose of such a court-supervised restruc
is that the City of Mikkeli was not more generous than
turing proceeding is to rehabilitate a distressed debtor's
other creditors of the company, but that the City of
viable business, to ensure its continued viability and to
Mikkeli acted together with private creditors of the bene
achieve debt arrangements. Therefore, the Commission
ficiary and at the same conditions. Accordingly, it acted
considers that the measures taken by the City of
like a private market economy investor when agreeing to
Mikkeli during the court-supervised restructuring
the restructuring programme.
proceeding can be assessed according to the market
economy investor principle.
(189) The first question to be verified in this context is if the
market economy operator test applies to situations where
one or several public entities, the behaviour of which is
(192) According to the Magefesa case law ( 53 ), if the state is
imputable to the State, carry out multiple measures in
more generous than other creditors of the company,
respect of one undertaking. The General Court has
measures under a court-supervised restructuring
addressed this question in BP Chemicals v Commis
procedure can constitute state aid. Accordingly, the
sion (
Commission verifies whether indeed the private and the

51 ). According to the Court, the mere fact that a
public undertaking has already made capital injections
public creditors were equally treated in the restructuring
into a subsidiary which are classed as 'aid' does not auto
proceedings
matically mean that a further capital injection cannot be
classed as an investment which satisfies the private
market economy investor test. The Commission has,
however, to determine whether multiple measures in
(193) First, it is noted that overall, the […] of restructuring
respect of one undertaking can be reasonably severed
debts (approximately [30-70] %) is owed to private
and can be seen as independent measures. In this
creditors. The main private creditors are Nordea Bank,
context, according to the Court, the chronology of the
Pohjola Bank and Nordea Financing. Second, it has to
measures in question, their purpose, and the subsidiary's
be considered that the creditors of Karjaportti were
situation at the time when each decision to make an
divided into different groups, according to their
injection was made have to be considered ( 52 ).
ranking. Together with the private creditors Nordea
Bank, OKO/Pohjola Bank and Nordea Financing as well
as the state owned specialised financing company
Finnvera, the City of Mikkeli belonged to the group of
(190) In the case at hand, the Commission has to determine
creditors of large secured debts. As can be seen in Table
whether the guarantees granted in March and May 2004
IV, within these large secured debts, the City of Mikkeli
(measure 4 and measure 5) can be severed from the
has a share of [10-40]%, whereas the private creditors
court-supervised restructuring proceedings (measure 6).
together have a share of [30-70] %. Finnvera has a share
Whereas it is true that all three measures have been
of [10-40] %.
decided within one year, the Commission observes that
they intervened in a different context. In the meantime, a
court-supervised restructuring proceeding had been
initiated, in which all creditors of the company partici
pated. The purpose of measure 6 therefore was no longer
(194) In the following, each of the measures taken by the City
of Mikkeli is assessed in more detail:
to enable the company to return to viability without

insolvency by obtaining fresh money from private
banks. Rather, the City of Mikkeli, as all other creditors,
aimed, in their role as creditors, to maximize the
recovery of their outstanding claims under the
(195) Reduction of interest rates for secured debts: As can be
constraints of the national bankruptcy law. Therefore,
seen in Table V, the interest rates for the loans and other
the Commission considers that measure 6 can be
debts (unpaid charges) which were considered "large
severed from measures 4 and 5.
secured debts" were the same for private and public
creditors, with the exception of […]. This creditor
received an interest rate of […] EURIBOR for all
outstanding amounts from the commencement of the
(191) .As described in recital 31, Karjaportti, together with its
restructuring proceedings, whereas the other creditors
private creditors, filed for court-supervised restructuring
received for a part of the outstanding amounts only
[…] EURIBOR minus […]% until 2010.
( 51 ) Case T-95/11 BP Chemicals v Commission [1998] ECR II-3235.
( 52 ) Case T-95/11 BP Chemicals v Commission [1998] ECR II-3235,
( 53 ) See Case C 480/98 Kingdom of Spain v Commission [2000] ECR
paragraphs 171 and 172.
I-08717, paragraph 19.

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This difference was due to the fact that […] had the
collaterals the respective creditors held. Therefore, in light
highest ranking as regards the collaterals provided by
of the above, it has to be concluded that the beneficiary
Karjaportti as security. It is considered that […] higher
did not gain an advantage within the meaning of
ranking justifies the difference in the interest rates
Article 107(1) of the TFEU from the court-supervised
applied.
restructuring proceedings. The doubts that the
Commission raised in the opening decision are
dispelled and the measures described in recitals 31-43
do not constitute state aid.
(196) Rescheduling of loans: The claims of the City of Mikkeli
were deferred to the same extent as the claims of other
secured debtors. As can be seen in Table VI, Karjaportti
has to pay instalments to all secured creditors from July
7.3.5. Purchase of shares (measure 7)
2009 on until 2015, when the biggest part of
(199) First, the Commission notes that the purchase of shares
instalments becomes due (43 % of the capital of each
was not part of the court-supervised restructuring
of the secured debts). The instalments to be paid to
proceedings.
each creditor all have the same proportion in relation
to the overall amount of the claim of the respective
creditor (2 % of the outstanding amount for the first
three instalments; 4 % for the next two instalments;
6 % for the remaining instalment). The last instalment
(200) Finland claims that the City of Mikkeli acted in line with
amounts to 43 % of the capital for each of the secured
the market economy investor principle when purchasing
creditors. Accordingly, the City of Mikkeli has not been
the shares. First, following the logic of the BP Chemicals
treated less favourable than the private creditors in a
case (see recitals 189-191), it has to be determined
similar situation.
whether the market economy investor principle can be
applied to measure 7, as the City of Mikkeli had already
granted aid measures to Karjaportti in the past. In this
context, the Commission notes that measures 4 and 5
were taken before the beginning of the court-supervised
(197) Conditional debt waiver: According to the restructuring
restructuring proceedings, whereas the purchase of shares
programme, as described in recitals 42 and 43, the
only took place afterwards. In addition, whereas the
amounts to be waived at the end of the court-supervised
purpose of measures 4 and 5 was to allow the bene
restructuring proceedings, if certain economic
ficiary to continue to have access to liquidity, after the
requirements are not met, are based on a comparison
beginning of the court-supervised restructuring
between the value of the collateral if Karjaportti
proceedings it was clear that those needs would be
continues its operations, and the value of the collateral
addressed within such proceedings. Therefore, it is
in case of its realisation, determined for each of the
considered that measure 7 can be severed from
respective creditors, taking into account their respective
measures 4 and 5 and that the market economy
rankings. The value of the collateral in the two scenarios
investor principle is in principle applicable to measure 7.
was determined by two independent valuators at the time
when the restructuring programme was set up, based on
comparable prices and rental information. Against this
background, […] does not have to waive debts at the
(201) As described at recital 156, the market economy investor
end of the court-supervised restructuring proceedings, as
principle is applicable to the purchase of land or other
it is the highest ranking creditor. The amounts for the
assets by a state. Finland provided a valuation of the
other creditors were also determined according to the
value of the shares, undertaken by […] ( 54 ), a real
said methodology, resulting in the amounts presented
estate management agency based in Helsinki. The valu
in recital 43. The methodology used in determining the
ation, dated 29 March 2005, valued the shares in the real
respective amounts can be considered credible, in
estate company between EUR 1 million and EUR 1,1
particular as it relates the respective ranking to the
million. The valuation was based on the value of the
value of the respective collateral in the two scenarios.
property owned by the company. Two methods were
In practice, the calculation was based on independent
applied to determine the value: the capital value at
expert evaluations, and the same principles were used
market rent (after housing statistics compiled by Statistics
to all creditors when determining the amounts by
Finland) and the resale value (after asking prices).
which the restructuring debts can be at maximum
reduced at the end of the court-supervised restructuring
proceedings. In light of this, it can be considered that all
creditors were treated on an equal basis.
(202) At the time the shares were sold, the property was rented
out below the market rent level. According to the valu
ation, the market rent level could be reached in two
years, with the maximum yearly rent increase. Accord
(198) Overall, the Commission considers that the City of
ingly, the value of the property was adjusted at the time
Mikkeli was not treated less favourably than the private
of the purchase and in the end, the City of Mikkeli
creditors during the court-supervised restructuring
bought the shares at a price of EUR 860 000.
proceedings. Where differences to the other creditors
occur, they were justified by the different quality of
( 54 ) See […].

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Union L
12/25
(203) The valuation was undertaken by an independent expert.
the argument that the City of Mikkeli acted on equal
The methodology used, as described above, was to first
terms with private creditors can be rejected. In light of
check the capital value at market rent, then the resale
the difference in interest rates it can also be excluded that
value. Both values were based on market data and the
the City of Mikkeli charged a market fee for the loan.
two values were used to determine the value of the
Therefore, the loan into which the unpaid interest rates
shares, which was also adjusted to the rent level
were converted by the City of Mikkeli provides an
prevailing at the time of the purchase. This methodology
advantage to Karjaportti.
is considered as plausible. The Commission concludes
that the shares in Kiinteist Oy Suksimki were bought
at a market price and that the measure did not confer an
advantage to Karjaportti.
(207) In addition, measure 8 meets all other requirements for
the existence of state aid. As described in detail in recitals
133, 140 and 141 the loan consists of state resources
and is imputable to the state, is selective and distorts
competition and affects trade among the Member States.
(204) On the basis of the foregoing, the doubts raised by the
Commission in the opening decision have been dispelled
and it is concluded that the measure does not include
state aid.
(208) On the basis of the foregoing, the Commission concludes
that measure 8 constitutes state aid.
7.3.6. Conversion of unpaid interest rates into loans
C o m p a t i b i l i t y
(measure 8)
(209) Finland did not bring forward any arguments as regards
E x i s t e n c e o f s t a t e a i d
the compatibility of measure 8. As Karjaportti was in
difficulty at the time of the conversion of the unpaid
(205) Finland argues that the conversion of unpaid interest
interest rates (see recitals 123-129), the Commission
rates into loans is a typical measure to court-supervised
first assesses whether measure 8 is compatible as rescue
restructuring proceedings. It is true that such a measure
and restructuring aid according to the R&R Guidelines.
can be seen as inherent to court-supervised restructuring
At the time of granting, the R&R Guidelines 2004 were
proceedings. In the case at hand, the conversion of
applicable ( 55 ).
unpaid interest rates into loans in the year 2005 was
in principle already laid down in the restructuring
programme for all creditors of large secured debts
([two private creditors] and Finnvera). In light of this,
(210) According to the R&R Guidelines 2004, a rescue aid has
the Commission does not consider the fact that unpaid
to meet certain requirements, which are not all fulfilled
interest rates were converted into a loan as such as state
by the measure in question.
aid. It has, however, to be verified whether the interest
rate that the City of Mikkeli charged from Karjaportti
involved an advantage to the latter.
(a) First, whereas the measure consists of liquidity
support in the form a loan (point 25(a) of the
R&R Guidelines 2004), the interest rate charged is
not at least comparable to those observed for loans
(206) In this context, Finland considers that the City of Mikkeli
to healthy firms (reference rate for Finland in
acted in accordance with the private market investor
December 2005: 4,08 % plus 100 basis points; the
principle, as private creditors converted unpaid interest
interest rate charged for the loan was EURIBOR 3
rates into loans together with the City of Mikkeli. First of
months + 0,3 %, which amounted on 19 December
all, by the same token as for the court-supervised restruc
2005 to 2,486 % plus 30 basis points).
turing proceedings, it is considered that in principle the
private market investor principle can be applied to
measure 8, as this measure is severable from measures
4 and 5 (see recitals 189-191). Applying the private
(b) Second, Finland did not undertake to communicate a
market investor principle to the case at hand, the
restructuring plan within six months of the authori
Commission notes the following: Whereas it is true
sation of the aid and the duration of the measure was
that not only the City of Mikkeli, but also [the private
not limited to six months (point 25(a) and (c) of the
creditors] were subject to the conversion, the interest
R&R Guidelines 2004).
margin charged for the loans was not the same. In
fact, [one private creditor] asked for EURIBOR 3
months plus 1,5 % and [the other private creditor] for
EURIBOR 3 months plus 2 %, whereas the City of
(c) Third, the one time, last time principle (point 25(e) of
Mikkeli only asked for EURIBOR 3 months plus 0,3 %.
the R&R Guidelines 2004) is not met, as the
Hence, the interest rate which the City of Mikkeli agreed
company has received incompatible and illegal state
to charge for the loan is 1,2 % below the interest that
aid at times when it was in difficulty before.
[one private creditor] charged and 1,7 % below the
interest that [another private creditor] charged. Therefore,
( 55 ) See Point 102 of the R&R Guidelines 2004.

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(211) The measure does not meet all the requirements for
(216) According to the principle of prudence under the good
restructuring aid set out in the R&R Guidelines 2004
accounting practice and in accordance with Accounting
either.
Act 1336/1997, the value of receivables entered in the
balance sheet may not exceed their probable value.
Accordingly, receivables that probably cannot be
collected are recorded in the profit and loss statement
(a) First, the measure is not conditional on the imple
as an expense.
mentation of a restructuring plan (point 34 of the
R&R Guidelines 2004). Whereas it is true that a
restructuring programme for Karjaportti was set up
during the court-supervised restructuring proceedings,
it does not comply with the requirements of point 35
(217) On the basis of the foregoing, the Commission considers
that the debt write-off was only done in the financial
of the R&R Guidelines 2004 (duration of 10 years,
accounts of the City of Mikkeli in line with accounting
no sensitivity analysis, no return to long term
standards and the respective claims are still pursued
viability within a reasonable time frame).
within the court-supervised restructuring proceedings.
(b) Second, aid beneficiaries are expected to make a
significant contribution to the restructuring plan
(218) The doubts raised by the Commission in the opening
from their own resources (point 43 of the R&R
decision have been dispelled and it can be concluded
Guidelines 2004) and for the measures under
that the measures did not provide an advantage to Karja
consideration, there is no indication of an own
portti. Therefore, measure 9 and 10 do not involve state
contribution of the beneficiary.
aid.
(c) Third, the measure does not meet the one time, last
7.3.8. Rescheduling of debts since 2009 (measure 12)
time principle, as the company had received incom
patible and illegal state aid at times when it was in
E x i s t e n c e o f s t a t e a i d
difficulty before.
(219) Finland's argument that the measure is inherent to court-
supervised restructuring proceedings and does not
involve state aid can be rejected. First, the rescheduling
(212) Accordingly, the Commission considers that the measure
of debts in 2009 was not foreseen in the initial restruc
was not granted in accordance with the R&R Guidelines
turing programme and second, the fact that such a
2004.
restructuring would be undertaken in line with the
national legislation is not sufficient to exclude state
aid ( 56 ).
(213) Further, it has to be considered whether measure 8 could
be compatible on the basis of any other of the
exemptions laid down in Article 107(2) and (3) of the
TFEU. For the same reasons as set out above for measure
(220) In principle, also measures mitigating the charges which
4 and measures 5 (see recitals 179-186), the Commission
are normally included in the budget of an undertaking,
considers that none of the exemptions is met. Therefore,
can be considered as state aid. Concerning rescheduling
the Commission concludes that measure 8 involves state
of debts, the Commission is assessing such behaviour
aid that is not compatible with the internal market.
with the private creditor test ( 57 ). There, the state is
rather viewed as a public creditor which, like a private
creditor, seeks to recover sums due to it and which, to
that end, concludes agreements with the debtor, under
7.3.7. Write-off of debts in the financial statements in 2006
which the accumulated debts are to be rescheduled or
and in 2008 (measure 9 and measure 10)
paid by instalments in order to facilitate their repay
ment ( 58 ). There is favourable treatment in the meaning
(214) First, it has to be verified whether these debt write-offs
of Article 107(1) of the TFEU if the amount owed can be
could confer an advantage to Karjaportti. This would be
paid back to the public creditor at more favourable terms
the case if the City of Mikkeli abandoned to pursue the
than would be permitted by a private creditor. The
collection of the debts, that is if it waived the debts in
Commission takes note of the argument of Finland
question.
that the rescheduling was never implemented as
the administrative court of Kuopio (Kuopion Hallinto-
Oikeus) prohibited its implementation. However, as
(215) As described at recital 105, Finland confirmed that the
Finland states, the repayment schedule of the debt has
write-off of debts was only an accounting measure that
does not affect the legal relationship between the creditor
( 56 ) See Case T-152/99 Hamsa v Commission [2002] ECR II-3049,
and the debtor, that is to say that the debts were not
paragraph 158.
waived. According to the documents submitted by
( 57 ) See Case T-36/99 Lenzing AG v Commission [2004] ECR II-3597,
paragraph 152.
Finland, the City of Mikkeli is still pursuing collection
( 58 ) See Case C-342/96 Spain v Commission [1999] ECR I-2459,
of the debts.
paragraph 46.

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nonetheless been extended, resulting in a deferral of due
(225) As regards the other requirements for the existence of
payments. In this context, the Commission notes that the
state aid within the meaning of Article 107(1) of the
actually implemented rescheduling differs from the
TFEU, the Commission notes that the rescheduling was
notified rescheduling as regards the amounts and the
agreed to by the City of Mikkeli and accordingly consists
timeframe. The amount actually rescheduled by the City
of state resources and is imputable to the state. In
of Mikkeli is lower than the originally notified amount
addition, the measure can be considered selective.
and the rescheduling was only granted for shorter
Finally, it distorts competition and affects trade among
periods than originally notified. In light of this, it is
the Member States, as described in more detail in recitals
considered that the notified measure has been imple
133, 140 and 141.
mented with modifications. Irrespective of these modifi
cations, the Commission notes that no private creditor
would ever have accepted a debt rescheduling in
whatever form for reasons set out in this recital.
(226) On the basis of the foregoing, the Commission concludes
that the measure constitutes state aid.
(221) A private creditor will normally enforce its claims if it
C o m p a t i b i l i t y
has previously entered into agreements on the resche
duling of debts which have not been honoured by the
(227) Finland's main argument was that this measure did not
debtor ( 59 ). The City of Mikkeli, on the contrary, agreed
involve state aid; it had, however, also notified measure
to a subsequent debt rescheduling after Karjaportti had
12 as rescue aid (see recital 1). In fact, when the City of
failed to respect the conditions of the debt rescheduling
Mikkeli agreed to the debt rescheduling, Karjaportti was
agreed to during the court-supervised restructuring
in difficulty within the meaning of point 10(c) of the
proceedings. In addition, there are no particular reasons
R&R Guidelines 2004 (see recitals 123-129). Accord
for non-enforcement, such as higher securities provided
ingly, the compatibility of the measure in question has
to the City of Mikkeli. Lastly, as regards the prospects of
to be considered on the basis of the R&R Guidelines
future profitability and viability of the company, the
2004.
Commission considers that the financial situation of
the company was such that it did not give cause to
believe that investments would reach an acceptable
level of profitability within a reasonable period. At the
(228) According to the R&R Guidelines 2004, a rescue aid has
to meet certain requirements, which are not all fulfilled
time of granting, Karjaportti was in bankruptcy
by the measure in question.
proceedings and in addition, since 2004, the company
had been in court-supervised restructuring proceedings.
In light of this, the Commission notes that a hypothetical
private creditor, in the same situation as the City of
(a) First, the measure does not consist of liquidity
Mikkeli, would not have accepted continued rescheduling
support in the form of loan guarantees or loans
of the debts.
(point 25 (a) of the R&R Guidelines 2004, but of
deferral of payments.
(222) In this context, Finland states that the City of Mikkeli has
acted on equal terms with the other creditors of Karja
(b) Second, Finland did not undertake to communicate a
portti.
restructuring plan within six months of the authori

sation of the aid and the duration of the measure was
not limited to six months (point 25(a) and (c) of the
R&R Guidelines 2004).
(223) In fact, concerning the notified debt rescheduling, the
agreement of the private creditors was, according to
Finland, conditional on the agreement by the City of
(c) Third, the one time, last time principle (point 25(e) of
Mikkeli. Second, it seems that the intended debt resche
the R&R Guidelines 2004) is not met, as the
duling did not foresee the same conditions for all of the
company has received incompatible and illegal state
secured creditors. Whereas the City of Mikkeli would
aid at times when it was in difficulty before.
have deferred the payment of the outstanding debts to
2011, the private creditors would still have received an
instalment in 2009. In the light of this, the argument
brought forward by Finland can be rejected.
(229) The measure does not meet all the requirements for
restructuring aid set out in the R&R Guidelines 2004
either.
(224) On the basis of the foregoing, the Commission concludes
that the measure does not meet the private creditor test
(a) First, the measure is not conditional on the imple
and that it provides an advantage to Karjaportti.
mentation of a restructuring plan (point 34 of the
R&R Guidelines 2004). It is noted that no restruc
( 59 ) See Case T-36/99 Lenzing AG v Commission [2004] ECR II-3597,
turing plan within the meaning of point 35 of the
paragraph 140 et seq.
R&R Guidelines 2004 was set up.

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(b) Second, aid beneficiaries are expected to make a
(236) Article 107(3)(b) of the TFEU states that “aid to promote
significant contribution to the restructuring plan
the execution of an important project of common
from their own resources (point 43 of the R&R
European interest or to remedy a serious disturbance in
Guidelines 2004) and for the measures under
the economy of a Member State” may be declared
consideration, there is no indication of an own
compatible with the internal market. The Commission
contribution of the beneficiary.
notes that the aid in question is not designed to
promote the execution of an important project of
common European interest nor has the Commission
found any evidence that it is designed to remedy a
(c) Third, in order to avoid undue distortions of
serious disturbance in the Finnish economy. In view of
competition, compensatory measures must be taken
the foregoing considerations, the Commission concludes
(point 38 of the R&R Guidelines 2004). Such
that the aid does not qualify for the derogation enshrined
measures were not provided for.
in Article 107(3)(b) of the TFEU.
(d) Fourth, the measure does not meet the one time, last
time principle, as the company had received incom
(237) Article 107(3)(d) of the TFEU states that aid to promote
patible and illegal state aid at times when it was in
culture and heritage conservation may be declared
difficulty before.
compatible with the TFEU where such aid does not
affect trading conditions and competition in the
Community to an extent that is contrary to the
common interest. This Article obviously does not apply
(230) Accordingly, the Commission considers that the measure
to the current case.
was not granted in accordance with the R&R Guidelines
2004.
(238) Article 107(3)(c) of the TFEU provides for the authori
(231) Further, it has to be considered whether measure 12
sation of state aid to facilitate the development of certain
could be compatible on the basis of any other of the
economic activities or of certain economic areas, where
exemptions laid down in Article 107(2) and (3) of the
such aid does not adversely affect trading conditions to
TFEU.
an extent contrary to the common interest. The
Commission has developed several guidelines and
communications that explain how it will apply the dero
gation contained in this Article. However, the
(232) The exemptions in Article 107(2) of the TFEU do not
Commission considers that because of the nature and
apply in the present case because this measure does not
characteristics of the aid, it is self-evident that the
have a social character, has not been awarded to indi
exceptions under these guidelines and communications
vidual consumers, is not designed to make good damage
are not applicable to the present case.
caused by natural disasters or exceptional occurrences
and has not been awarded to the economy of certain
areas of the Federal Republic of Germany affected by
the division of that country.
(239) On the basis of the foregoing arguments, the
Commission considers that measure 12 involves state
aid that is not compatible with the internal market.
(233) Further exemptions are set out in Article 107(3) of the
TFEU.
7.4. Measures granted by Finnvera
(234) Article 107(3)(a) of the TFEU states that “aid to promote
the economic development of areas where the standard
(240) As a preliminary remark, the Commission recalls that
of living is abnormally low or where there is serious
Finland has, in the context of state aid decision N
underemployment” may be declared compatible with
715/2006, given a commitment that the activities of
the internal market. Karjaportti, at the time of granting,
Finnvera will be limited to administering state aid
was located in such an area.
schemes. On this basis, the Commission has decided
on 25 September 2007 (the date of the Commission
decision) that the exemption from income tax for
Finnvera does not constitute state aid. Measures 13 to
(235) Compatibility of State aid to assisted areas is regulated by
17 have been granted before the Commission decision in
the RAG 1998. Under those Guidelines, companies in
case N 715/2006. Measure 18 has been granted after the
difficulties are not eligible for regional aid. Accordingly,
adoption of the Commission decision in case N
the Commission concludes that the aid is not eligible for
715/2006. The Commission therefore has to take into
the derogation provided for in Article 107(3)(a) of the
account the commitment given by the Finnish authorities
TFEU.
in this case in its assessment of measure 18.

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7.4.1. Guarantee granted on 17 March 2004 (measure 13)
be considered that Finnvera acted "together" with them.
Finland's argument that the guarantee was granted in
E x i s t e n c e o f s t a t e a i d
accordance with the Guarantee Notice 2000, can also
be rejected. First, as explained above, the Commission
(241) In order to be considered state aid in the sense of
relies on the Guarantee Notice 2008 when assessing
Article 107(1) of the TFEU, a measure must be granted
the measure (see recital 134). According to point 3.2
directly or indirectly from state resources and it must be
of the Guarantee Notice 2008, the existence of state
imputable to the State. Finland has not disputed that
aid within an individual state guarantee can be ruled
measures taken by Finnvera consist of state resources
out if the borrower is not in financial difficulty. As the
and are imputable to the State. According to case law,
Commission considers that Karjaportti was already in
resources of an undertaking are to be considered state
difficulty, within the meaning of the R&R Guidelines
resources if the State is capable, by exercising its
1999, in March 2004 (see recitals 123-128), the appli
dominant influence over such undertakings, to direct
cation of the Guarantee Notice can be excluded. Finland
the use of their resources ( 60 ). Measures granted by a
also brings forward that the guarantee was subject to a
special financing institution, which can be considered a
high fee. In light of Karjaportti's financial difficulties at
public sector body according to its statute, are generally
the time of granting of the guarantee, it is, however
imputable to the State ( 61 ). The Court has further
considered that the guarantee fee charged by Finnvera
explained the notion of imputability in Stardust
is not a market fee. In fact, the beneficiary had total
Marine ( 62 ). It provided the following indicators for estab
financing costs of [5-8]% for the loan together with
lishing imputability: integration of the public undertaking
the guarantee, whereas the Reference Rate applicable at
into the structures of the public administration; the
that time was 4.43 %, to which at least 400 basis points
nature of its activities and the exercise of the latter on
would have to be added, considering the beneficiary's
the market in normal conditions of competition with
financial difficulties. In view of the foregoing, it is
private operators; the legal status of the undertaking (in
considered that the measure confers an advantage to
the sense of its being subject to public law or ordinary
Karjaportti.
company law); the intensity of the supervision exercised
by the public authorities over the management of the
undertaking. In this context, the Commission notes that
Finnvera's actions are subject to administrative law, indi
cating that it is closely linked to the administration.
Finnvera is a 100 % state owned special financing
company, which enjoys a State guarantee and is mainly
(243) Furthermore, to be considered state aid, a measure must
providing state aid and financing which is not readily
be specific or selective in that it favours only certain
available on the market, such as export credits. Therefore,
undertakings or the production of certain goods.
although its activities may overlap on the margins with
Measure 13 was granted to Karjaportti, one specific
commercial banks, it does not exercise its activities in
company. Therefore, the Commission considers that it
normal conditions of competition with private operators.
constitutes a selective advantage to the beneficiary.
It is incorporated under ordinary company law; at the
same time, the State exercises strong supervision: the
State appoints the Supervisory Board members from
the parliamentary groups of political parties on the
basis of their representation in the Finnish Parliament.
Most of the Managing Board members have to be
(244) In addition, the Commission has to consider whether
chosen among candidates elected by several Ministries.
measure 13 is likely to distort competition and affect
(see recitals 56-57). In light of this, the Commission
trade between the Member States. In this context,
considers that measures taken by Finnvera consist of
Finland argues that the aid element of the guarantee
state resources and are imputable to Finland.
was below the de minimis threshold. When measure
13 was granted, 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 (
(242) Concerning the question whether measure 13 provides

63 ) ('the de minimis Regulation 2001') was appli
an advantage to the beneficiary, contrary to Finland's
cable ( 64 ). One of the requirements for applying the de
view, the measure was not granted together with
minimis Regulation 2001 is that the total de minimis aid
private creditors at the same conditions. Whereas it is
granted to an enterprise must not exceed EUR 100 000
true that […] and […] both granted loans to Karjaportti
over any period of three years. The guarantee under
in 2004, the Commission has no indication that those
assessment only amounted to EUR 91 000, that is to
banks also granted guarantees. In addition, the loans
say it would even respect the ceiling of EUR 100 000
granted by the two private creditors were only granted
if the whole amount had to be taken into account as
in summer 2004, that is to say a couple of months after
aid element. It has, however, to be determined whether
Finnvera had granted measure 13, and it can hence not
measure 13 has to be assessed together with measure 4,
a guarantee which the City of Mikkeli granted in March
2004, only 9 days prior to measure 13, the guarantee
( 60 ) Case C-482/99 French Republic/Commission (Stardust Marine)
granted by Finnvera. Whereas the two guarantees were
[2002] ECR I-4397.
( 61 ) Case T-358/94 Air France vs. Commission [1996] ECR II-2109,
paragraphs 55-61.
( 63 ) OJ L 10, 13.1.2001, p. 30.
( 62 ) Case C-482/99 French Republic/Commission (Stardust Marine)
( 64 ) See Article 5(2) of Commission Regulation (EC) No 1998/2006,
[2002] ECR I-4397, paragraph 50-59.
OJ L 379, 28.12.2006, p. 5.

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granted by two different entities and covered two
(c) Third, the guarantee was neither reimbursed within 6
separate loans with a different duration, these two
months nor had a restructuring plan within the
loans replaced one single loan granted by Tapiola in
meaning of the R&R Guidelines 1999 been set up
1992. It can hence be considered that measure 4 and
(point 23(d) of the R&R Guidelines 1999).
measure 13 were granted for the same purpose, which
was to allow converting the Tapiola loan granted in
1992 into new loans. In light of this close link
between the two measures, the Commission considers
(d) Lastly, there are no indications that the guarantee was
that measure 4 and measure 13 have to be seen as
restricted to the amount needed to keep the firm in
one measure for the purpose of applying the ceiling of
business for the period during which the aid was
EUR 100 000 ceiling of the de minimis Regulation 2001.
authorised (point 23(e) of the R&R Guidelines 1999).
Taken together, the aid element involved in those two
measures exceeds EUR
100
000. The Commission
therefore concludes that measure 13 does not fall
under the de minimis Regulation 2001.
(249) For the same reasons as set out above for measure 4 and
measure 5 (see recitals 177–178), the Commission
considers measure 13 does not meet all the requirements
for restructuring aid set out in the R&R Guidelines 1999
(245) Finally, Finland argues that measure 13 is the
either. Accordingly, the Commission considers that the
continuation of already existing liabilities and that
measure was not granted in accordance with the R&R
hence Finnvera's exposure is not increased. Finland
Guidelines 1999.
presented a similar argument in relation to measure 4.
By the same token as for measure 4, the Commission
does not consider measure 13 as mere continuation of a
previously granted measure (see recitals 164-165).
(250) Further, it has to be considered whether measure 13
could be compatible on the basis of any other of the
exemptions laid down in Article 107(2) and (3) of the
TFEU. For the same reasons as set out above for measure
(246) On the basis of the foregoing, the Commission concludes
4 and measure 5 (see recitals 179–186), the Commission
that measure 13 constitutes state aid.
considers that none of the exemptions is met. Therefore,
the Commission concludes that measure 13 involves
state aid that is not compatible with the internal market.
C o m p a t i b i l i t y
(247) Finland did not bring forward any arguments as regards
7.4.2. Loan granted on 12 January 2006 (measure 14)
the compatibility of measure 13. As Karjaportti was in
difficulty when Finnvera granted the guarantee (see
(251) Finland argues that the measure was foreseen in the
recitals 123-128), the Commission first assesses
restructuring programme for the court-supervised restruc
whether it is compatible as rescue and restructuring aid
turing proceedings and that Finnvera took the measure
according to the R&R Guidelines. At the time of time of
together with private creditors.
granting, the R&R Guidelines 1999 were applicable ( 65 ).
(252) It is true that the measure was already foreseen in the
(248) According to the R&R Guidelines 1999, a rescue aid has
restructuring programme for both private and public
to meet certain requirements, which are not all fulfilled
creditors of Karjaportti. According to the documents
by the measure in question.
submitted by Finland, the conversion of interest
actually took place in the end of 2005 and the
beginning of 2006. Also private creditors converted
their interest rates into loans.
(a) First, the guarantee was not linked to a loan that was
to be reimbursed over a period of not more than
twelve months after disbursement of the last
instalment to the firm (point 23(b) of the R&R
(253) First, following the logic of the BP Chemicals case (see
Guidelines 1999).
recitals 189-191), it has to be determined whether the
market economy investor principle can be applied to
measure 14. In this context, the Commission notes that
measures 4, 5 and 13 were taken before the beginning of
(b) Second, Finland did not provide any information that
the court-supervised restructuring proceedings, whereas
the aid was warranted on the grounds of serious
measure 14 was taken in the course of such proceedings.
social difficulties and had no unduly adverse
For the reasons set out above in recitals 189–191, the
spillover effects on other Member States (point
Commission considers that measure 14 can be severed
23(c) of the R&R Guidelines 1999).
from measures 4, 5, and 13. In addition, measure 14 was
even foreseen in the restructuring programme itself,
( 65 ) According to Section 6 of the R&R Guidelines 1999, they applied
which had the purpose of bringing the company back
until 9 October 2004; see fn. 37 above.
on track.

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(254) Second, as regards the application of the market
1,25 % for the counter-guarantee). It follows that the
economy investor principle to the measure at hand, the
measure taken by Finnvera did not confer an advantage
Commission considers that the loans granted by the
to Karjaportti.
private creditors […] and by […] are comparable to
the loan granted by Finnvera. As secured creditors in
the court supervised restructuring proceedings the
(260) On the basis of the foregoing, it is concluded that the
companies are all in a similar situation. Given that
measure does not include state aid.
these loans were granted at similar conditions to the
loan granted by Finnvera (same loan period, comparable
reimbursement period) and that the interest rate that
Finnvera asked was even more favourable for Finnvera
7.4.4. Loan granted on 6 July 2007 (measure 16)
(EURIBOR 6 months + 2 % was 4,643 % on 1 January
2006) than the interest rate the private creditors received
(261) As described at recital 110, Finland argues that the loan
(on 1 January 2006, EURIBOR 3 months + 1,5 % was
did not involve state aid as it was part of a larger funding
3,988 %; EURIBOR 3 months + 2 % was 4,488 %), the
measure in which also private creditors took part.
Commission concludes that the measure did not confer
an advantage to Karjaportti.
(262) By the same token as for measure 14, following the logic
of the BP Chemicals case (see recitals 189–191) it is
considered that the market economy investor principle
(255) On the basis of the foregoing, it is concluded that the
measure does not include state aid.
can be applied to measure 16 (see recital 253).
7.4.3. Counter-guarantee granted on 14 September 2006
(263) As outlined in recital 254, the Commission considers
(measure 15)
that […] and […] are in a comparable situation to

Finnvera. Concerning the specific measure under
(256) First, the Commission considers that the beneficiary of
consideration, it is true that Finnvera granted the loan
the measure is Karjaportti, although the counter-
at the same time at similar conditions as […] and […].
guarantee was granted to […]. The low fee charged by
The duration of the loans was for all creditors six
[…] from Karjaportti indicates that […] only granted the
months; for all loans, payment was delayed in the
guarantee in the light of the guarantee granted by
same proportion (outstanding amount for all creditors
Finnvera. Indeed, in fact, Karjaportti and not […] pays
is approximately […]% of the original amount). All
the guarantee premium for the counter-guarantee to
three loans were secured with the same collateral, as
Finnvera.
described in recital 66, and the collateral is divided
among the creditors according to the risk of the
respective creditor in relation to the loan it granted.
Concerning the interest rate, it seems that the interest
(257) In any event, Finland considers that Finnvera acted on
rate that Finnvera asked was even more favourable for
the same terms as private creditors […] and […] did. It is
Finnvera (EURIBOR 6 months + 2,5 % was 6,847 % on
true that […] and […] were in a similar situation as
6 July 2007) than the interest rate the private creditors
Finnvera. All three companies are secured creditors in
received (on 9 July 2007, EURIBOR 1 month + 2 % was
the court-supervised restructuring proceedings. They all
6,105 %). Accordingly, the loan can be considered to be
have granted loans and guarantees to Karjaportti before
in line with the market economy investor principle and
([…]).
not to entail state aid.
(258) By the same token as for measure 14, following the logic
(264) On the basis of the foregoing, it is concluded that the
of the BP Chemicals case (see recitals 189–191) it is
measure does not include state aid.
considered that the market economy investor principle
can be applied to measure 15, as this measure is
severable from measures 4, 5 and 13 (see recital 253).
7.4.5. Guarantee granted on 9 January 2008 (measure 17)
E x i s t e n c e o f s t a t e a i d
(259) Concerning the measure in question, overall the guar
anteed loan amounted to EUR 1,8 million. Finnvera
(265) First, it has to be determined which entity benefits from
counter-guaranteed […] for only 16,7 % of this sum
the measure in question, […] or Karjaportti Finnvera
(EUR 300 000). The remainder of the loan was covered
granted the counter-guarantee to […], the main bank
by guarantees from […] and […] (EUR 825 000 and
of Karjaportti. […] granted in turn a guarantee to Karja
EUR 675 000 respectively), which were not counter-guar
portti. […] charged a very low fee from Karjaportti for
anteed by Finnvera. From the perspective of the bene
this guarantee, which indicates, that […] only granted the
ficiary Karjaportti, the overall costs for the counter-guar
guarantee to Karjaportti as it was covered by the counter-
anteed guarantee were higher than for the guarantees
guarantee of Finnvera. The Commission also notes that
granted by […] and […]. Whereas the latter two
not […], but Karjaportti pays the guarantee premium for
charged a guarantee fee of 1,75 % from Karjaportti, the
the counter-guarantee to Finnvera. In light of this, the
total financing costs for the counter-guarantee for Karja
Commission considers that the beneficiary of the
portti were 2,9 % (1,65 % for the […] guarantee plus
measure is Karjaportti.

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(266) Secondly, it has to be assessed whether the measure gives
(272) According to the R&R Guidelines 2004, a rescue aid has
an advantage to Karjaportti. In this context, Finland
to meet certain requirements, which are not all fulfilled
claims that the counter-guarantee does not involve state
by the measure under consideration.
aid, as another private party was involved in the
arrangement. This argument can be rejected, as
Finnvera granted a counter-guarantee for the guarantee
of the private party involved, meaning that Finnvera and
(a) First, the guarantee did not come to an end within a
the private party were not at all in a similar situation.
period of not more than six months after the
disbursement of the first instalment (point 25(a) of
the R&R Guidelines 2004).
(267) In light of this, the Commission assesses the measure on
the basis of the Guarantee Notice 2008. Whereas it is
(b) Second, Finland did not communicate within six
true that Finnvera's counter-guarantee does not cover
months after the first implementation of the
more than 80 % of […] guarantee, the beneficiary, Karja
measure a restructuring plan or liquidation plan or
portti, was in difficulty at the time of granting, as
proof that the guarantee had been terminated (point
described in more detail in recitals 123–128. Accord
25(c) of the R&R Guidelines 2004).
ingly, the existence of state aid cannot be ruled out on
the basis of point 3.2 of the Guarantee Notice 2008.
(c) Third, the one time, last time principle (point 25(e) of
the R&R Guidelines 2004) is not met, as the
(268) Even if a guarantee does not fulfil all the requirements of
company had received incompatible and illegal state
point 3.2 of the Guarantee Notice 2008, the fee paid for
aid at times when it was in difficulty before.
a guarantee can still justify the conclusion that the
guarantee does not entail state aid. In any event, in the
case at hand, contrary to the view of Finland, the
Commission is of the opinion that the measure cannot
(273) The measure does not meet all the requirements for
be considered aid free. The guarantee was granted at a
restructuring aid set out in the R&R Guidelines 2004
low guarantee fee, even though the company was facing
either.
difficulties (see recitals 123–128) and the risk for
Finnvera could be considered as considerable. Accord
ingly, it is considered that the measure confers an
advantage to Karjaportti. The Commission observes in
(a) First, the measure is not conditional on the imple
this context also that Finnvera, according to the
mentation of a restructuring plan (point 34 of the
commitment given by the Finnish authorities in the
R&R Guidelines 2004). It is noted that no restruc
context of case N 715/2006, was not allowed to grant
turing plan within the meaning of point 35 of the
market-based financing.
R&R Guidelines was set up.

(b) Second, aid beneficiaries are expected to make a
(269) In addition, the measure meets all other requirements for
significant contribution to the restructuring plan
the existence of state aid. As described in recital 241,
from their own resources (point 43 of the R&R
measures granted by Finnvera consist of state resources
Guidelines 2004) and for the measures under
and are imputable to the state. Measure 17 is also
consideration, there is no indication of an own
selective, as the only company benefitting from it is
contribution of the beneficiary.
Karjaportti. Lastly, it distorts competition and affects
trade among the Member States..
(c) Third, in order to avoid undue distortions of
competition, compensatory measures must be taken
(point 38 of the R&R Guidelines 2004). Such
(270) On the basis of the foregoing, the Commission concludes
that the measure constitutes state aid.
measures were not provided for.
(d) Fourth, the measure does not meet the one time, last
C o m p a t i b i l i t y
time principle, as the company had received incom
patible and illegal state aid at times when it was in
(271) Finland did not argue that measure 17 was compatible
difficulty before.
with the internal market. In fact, when Finnvera granted
the measure, Karjaportti was in difficulty within the
meaning of the R&R Guidelines 2004 (see recitals
123-128). Accordingly, the measure could only be
(274) Accordingly, the Commission considers that the measure
compatible as rescue and restructuring aid according to
was not granted in accordance with the R&R Guidelines
the R&R Guidelines 2004.
2004.

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Union L
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(275) Further, it has to be considered whether measure 17
— Guarantee granted on 9 January 2008 by Finnvera
could be compatible on the basis of any other of the
(measure 17).
exemptions laid down in Article 107(2) and (3) of the
TFEU. For the same reasons as set out above for measure
4 and measures 5 (see recitals 179–186), the
Commission considers that none of the exemptions is
(279) They must therefore be recovered in order to re-establish
met. Therefore, the Commission concludes that
the situation that existed on the market prior to the
measure 17 involves state aid that is not compatible
granting of the aid. Recovery shall hence take place
with the internal market.
from the time when the advantage occurred to the bene
ficiary, that is to say when the aid was put at the disposal
of the beneficiary and shall bear recovery interest until
8. RECOVERY
effective recovery.
(276) According to the TFEU and the Court of Justice's estab
lished case-law, the Commission is competent to decide
that the state concerned must abolish or alter aid (
8.1. Recovery of the aid measures granted in the

66 )
when it has found that it is incompatible with the
form of guarantees
internal market. The Court has also consistently held
that the obligation on a state to abolish aid regarded
(280) The incompatible aid element of two guarantees granted
by the Commission as being incompatible with the
by the City of Mikkeli in 2004 (measure 4 and measure
internal market is designed to re-establish the previously
5) and of the guarantees granted by Finnvera in the years
existing situation (
2005 (measure 13) and 2008 (measure 17) shall be

67 ). In this context, the Court has estab
lished that that objective is attained once the recipient
determined based on the following principles.
has repaid the amounts granted by way of unlawful aid,
thus forfeiting the advantage which it had enjoyed over
its competitors on the market, and the situation prior to
(281) In principle, a state guarantee could be aid up to the total
the payment of the aid is restored ( 68 ).
amount of the underlying loan, if the beneficiary is not
capable of accessing financial markets on its own
powers ( 69 ). In the case at hand, Finland has, however,
(277) Following that case-law, Article 14 of the Procedural
demonstrated that Karjaportti was still able to access
Regulation laid down that “where negative decisions are
financial markets at the time of granting the guarantees
taken in respect of unlawful aid, the Commission shall
in 2004, by providing information on loans granted by
decide that the Member State concerned shall take all
private lenders to the beneficiary (see recital 93). There
necessary measures to recover the aid from the bene
are little indications on whether Karjaportti had still
ficiary.”
access to the markets in 2008, when measure 17 was
granted. In this context, the Commission notes that the
counter-guarantee granted by Finnvera only covered
(278) Thus, six measures at hand are to be considered as illegal
80 % of the guarantee provided by a private creditor,
and incompatible aid:
which means that for 20 % the private creditor still
carried the risk. In light of this, it can be considered
that the company was still capable of assessing
— Guarantee granted on 8 March 2004 by the City of
financial markets without the guarantee of 2008.
Mikkeli (measure 4);
(282) However, given Karjaportti's financial difficulties at the
— Guarantee granted on 10 May 2004 by the City of
time of the granting of the measures, commercial
Mikkeli (measure 5);
banks would have charged a correspondingly higher
interest rate than the one achieved with the state guar
antees, because the latter are an additional security for
— Conversion of unpaid interest rates into loans
the banks. Thus, the Commission considers that Karja
(measure 8);
portti benefitted from lower interest rates, which it
received thanks to the guarantees.
— Rescheduling of debt since 2009 (measure 12);
(283) According to Point 4.2 of the Guarantee Notice 2008, in
the absence of a comparable market guarantee premium,
— Guarantee granted on 17 March 2004 by Finnvera
the total financing costs of the guaranteed loan (interest
(measure 13);
rate plus guarantee premium) should be compared to the
interest rate on the market for a similar loan without a
( 66 ) See Case C-70/72 Commission v Germany [1973] ECR 00813,
state guarantee. In many cases, such a market interest
paragraph 13.
rate is not available. Therefore, the Commission has
( 67 ) See Joined Cases C-278/92, C-279/92 and C-280/92 Spain v
developed in its Communication on the revision of the
Commission [1994] ECR I-4103, paragraph 75.
( 68 ) See Case C-75/97 Belgium v Commission [1999] ECR I-030671
paragraphs 64-65.
( 69 ) Point 2.2 and Point 4.1.(a) of the Guarantee Notice 2008

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L 12/34
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method for setting the reference and discount rates ( 70 )
normal collateral. The aid amount should therefore be
('the Reference Rate Communication 2008') a financial
calculated as the difference between this theoretical
methodology which, for the reasons set out in point 4.2
market rate and the interest rate at which the guaranteed
of the Guarantee Notice 2008, can be used as proxy for
loan was actually provided (4 %), after the deduction of
the market interest rate.
the price actually paid for the guarantee, that is to say 0
basis points. The difference between these rates shall be
calculated for the period the rate actually provided was
applied.
(284) In the case at hand, there is no indication of what Karja
portti would have paid for a comparable non-guaranteed
loan. Furthermore, the granting of the three guarantees
predates the economic and financial crisis. In addition,
(288) The aid shall bear recovery interests calculated from the
the Commission is of the view that due to the time
moment the difference between the theoretical interests
elapsed since the granting of the measures, the calcu
and the interest rate at which the guaranteed loan was
lation of a "real" market rate for a Finnish meat
actually provided would have been due until effective
producer would be a difficult exercise. Therefore, the
recovery.
Commission will use the relevant reference rate as
proxy for the market rate.
8.1.2. Guarantee granted on 10 May 2004 (measure 5)
8.1.1. Guarantee granted on 8 March 2004 (measure 4)
(289) As regards measure 5, the securisation could be
considered as normal for the purpose of the Reference
(285) As regards measure 4, the securisation of Karjaportti's
Rate Communication 2008. Karjaportti provided the
loans could be considered as normal for the purpose
same collateral as for measure 4, that is to say a
of the Reference Rate Communication 2008. Karjaportti
property mortgage on the production site of Tikkala
provided a property mortgage and a business mortgage
and a business mortgage. In addition, a "special pledge"
for measure 4. The registered values of these two
on the production site of Tikkala was granted, with a
instruments are quite high (see recital 27). It has,
registered value of EUR 1 135 268 (see recital 29). To
however, to be taken into account that the very same
all these collaterals the same reasoning applies as
collateral was already used to collateralise other claims of
provided above for measure 4, and it seems plausible
the City of Mikkeli (such as measure 1), so that not the
to consider the collateral provided as normal collateral.
full amount would be available for the measure at stake.
Also, it has to be considered that the actual value of the
property mortgage as well as of the business mortgage
depends on the value of the encumbered goods and the
(290) The interest rate Karjaportti should have paid for a loan
City of Mikkeli's ranking.
under market conditions, without the guarantee, is again
the reference interest rate of 4,43 % plus a risk premium
of 650 basis points. The aid amount should therefore be
calculated as the difference between this theoretical
(286) In this context, it is noted that Finland could not provide
market rate and the interest rate at which the guaranteed
an evaluation of the value of the collaterals at the time of
loan was actually provided (12 months EURIBOR
granting the guarantee. It provided, however, two inde
+ 0,3 %), after the deduction of the price actually paid
pendent valuations of the collateral in general, used for
for the guarantee, i.e. 0 basis points. The difference
drawing up the restructuring programme, dated
between these rates shall be calculated for the period
15 February 2005 (see recital 43), which is quite close
the rate actually provided was applied.
to the date of granting the guarantee. In this context, it is
mentioned that in light of the rank of the City of Mikkeli
the property mortgage might suffice to cover its claims if
the property is kept in use; if Karjaportti has to be liqui
(291) The aid shall bear recovery interests calculated from the
dated, the value of the property might be too low to
moment the difference between the theoretical interests
cover any of the City of Mikkeli's claims. The business
and the interest rate at which the guaranteed loan was
mortgage might cover only part of the City of Mikkeli's
actually provided would have been due until effective
claims. In light of this, it seems plausible to consider the
recovery.
collateral provided as normal quality collateral.
8.1.3. Guarantee granted on 17 March 2004 (measure 13)
(287) Therefore, the interest rate Karjaportti should have paid
for a loan under market conditions, without a guarantee,
(292) The Commission is not aware of details of the securi
is the reference interest rate of 4,43 % plus a risk
sation of measure 13, and it can thus only provide the
premium of 650 basis points, which reflects the risk
method how the recovery has to be effected. In a first
premium applicable to a firm in difficulty providing
step, if measure 13 was indeed collateralised, the value of
such collateral according to the Reference Rate
( 70 ) OJ C 14, 19.1.2008, p. 6.
Communication has to be determined.

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Union L
12/35
(293) The interest rate that Karjaportti should have paid for a
element is calculated as the difference between the
loan under market conditions, without the guarantee, is
interest rate at which the loan was actually provided
again the reference interest rate of 4,43 % plus a risk
and the market rate. In the case at hand, private
premium reflecting the value of the securisation. The
creditors granted loans together with the City of
aid element should be calculated as the difference
Mikkeli. The interest rates the private creditors charged
between this theoretical market rate and the interest
can be seen as indication for a market rate.
rate at which the guaranteed loan was actually
provided ([2-5] %), after the deduction of the price
actually paid for the guarantee, which was 3 %. The
difference between these rates shall be calculated for
(298) The aid amount should therefore be calculated as the
the period the rate actually provided was applied.
difference between the average interest rate charged for

the loans granted by the private creditors (EURIBOR 3
months + 2 % and EURIBOR 3 months + 1,5 %) and the
interest rate at which the loan was actually provided
(EURIBOR 3 months + 0,3 %).
(294) The aid shall bear recovery interests calculated from the
moment the difference between the theoretical interests
and the interest rate at which the guaranteed loan was
(299) The difference between these rates shall be calculated for
actually provided would have been due until effective
the period the rate actually provided was applied.
recovery.
(300) The aid shall bear recovery interests calculated from the
moment the difference between the theoretical interests
8.1.4. Guarantee granted on 9 January 2008 (measure 17)
and the interest rate at which the loan was actually
provided would have been due until effective recovery.
(295) As regards measure 17, the securisation could be
considered as normal for the purpose of the Reference
Rate Communication 2008. Karjaportti provided
collateral in the form of a shareholding in a company,
8.3. Recovery of the aid granted in the form of a
which Finnvera estimated to have a security value of EUR
rescheduling of debts since 2009 (Measure 12)
[…], as described in more detail in recital (67). The
(301) The incompatible aid element in measure 12, the resche
interest rate Karjaportti should have paid for a loan
duling of debts by the City of Mikkeli since 2009, has to
under market conditions, without the guarantee, is
be established. As described in recitals 219-226, the
again the reference interest rate of 5,19 % plus a risk
notified debt rescheduling has been implemented with
premium of 650 basis points. The aid amount should
modifications. As the Commission is not aware of the
therefore be calculated as the difference between this
details of the actually implemented rescheduling, it can
theoretical market rate and the interest rate at which
only provide the method how the recovery has to be
the guaranteed loan was actually provided ([0-3] % plus
effected.
the interest rate for outstanding amounts under the
subcontracting agreement) after the deduction of the
price actually paid for the guarantee, that is to say 250
basis points. The difference between these rates shall be
(302) The aid was put at the disposal of the company from the
calculated for the period the rate actually provided was
moment Osuuskunta Karjaportti deviated from the
applied.
payment schedule as agreed to during the court-
supervised restructuring proceedings in 2006. The
Commission considers that at the time of granting the
aid, Karjaportti was no longer capable of accessing
financial markets. Therefore, the aid equals the amount
(296) The aid shall bear recovery interests calculated from the
of rescheduled debt. The amounts to be recovered
moment the difference between the theoretical interests
therefore equate to the amount of rescheduled debts
and the interest rate at which the guaranteed loan was
towards the City of Mikkeli. Payments already made
actually provided would have been due until effective
may however be deducted from the amounts to be
recovery.
recovered.
(303) The aid shall bear interests from the date the aid was put
at the disposal of the company until effective recovery.
8.2. Recovery of the aid granted in the form
of the conversion of unpaid interests into loans
(Measure 8)
9. CONCLUSION
(297) The incompatible aid element in measure 8, a loan
granted by the City of Mikkeli, has to be determined.
(304) The Commission notes that the formal investigation as
As described in recitals 45-46, the City of Mikkeli
regards the guarantee of EUR 2,75 million notified but
granted the loan at lower interest rates than the private
subsequently withdrawn by Finland became without
creditors of Karjaportti. In principle, for a loan, the aid
object pursuant to Article 8 of the Procedural Regulation.

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(305) Concerning the guarantee granted in the year 2000 and
(312) The guarantee granted by Finnvera on 17 March 2004
the assignment of the land in the same year by the City
also entails state aid, which is not compatible under the
of Mikkeli, the Commission considers those measures to
R&R Guidelines 1999. The loan granted by Finnvera on
be state aid that is compatible as investment aid under
12 January 2006 does not constitute state aid, as it was
the RAG 1998.
granted together with comparable private creditors and at
similar conditions. The same is true for the guarantee
granted by Finnvera in September 2006 and the loan
granted in July 2007.
(306) The purchase of land undertaken in 2002 by the City of
Mikkeli is considered not to entail aid as it was done
(313) Finally, the guarantee granted on 9 January 2008 by
under market conditions.
Finnvera can be considered as state aid, taking into
account that Karjaportti was in difficulties within the
meaning of the R&R Guidelines 2004 at the time of
granting. The measure is not compatible with the
internal Market, as none of the provisions of
(307) The guarantees granted by the City of Mikkeli in March
2004 and May 2004 can be considered as state aid,
Article 107(2) and (3) of the TFEU is met.
taking into account that Karjaportti was a company in
difficulty within the meaning of the R&R Guidelines
1999 at the time of granting. These measures are not
HAS ADOPTED THIS DECISION:
compatible with the internal market, as none of the
provisions of Article 107(2) and (3) of the TFEU are met.
Article 1
The formal investigation procedure under Article 108(2) of the
Treaty on the Functioning of the European Union in respect of
(308) The measures taken within the court-supervised restruc
the guarantee of EUR 2,75 million (measure 11), notified but
turing proceedings by the City of Mikkeli were granted
subsequently withdrawn by Finland, is terminated.
together with comparable private creditors and under
similar conditions. Accordingly, the Commission
concludes that the market economy investor principle
Article 2
was met and that the measures do not entail state aid.
The measures which Finland has implemented for Osuuskunta
Karjaportti, consisting of:
(309) The purchase of shares by the City of Mikkeli and the
write-off of debts in the financial statements in 2007 and
— purchase of land in 2002 (measure 3),
2008 can be both considered as aid free.
— the measures taken within the court-supervised restructuring
proceedings (measure 6),
(310) The conversion of unpaid interest rates into a loan by the
City of Mikkeli in December 2005 can be considered as
— the purchase of shares from Osuuskunta Karjaportti
state aid, taking into account that Karjaportti was a
(measure 7),
company in difficulty within the meaning of the R&R
Guidelines 2004 at the time of granting. These
measures are not compatible with the internal market,
as none of the provisions of Article 107(2) and (3) of the
— the write-off of debts in the financial statements of 2006
TFEU are met.
and 2008 (measure 9 and measure 10),
— the Finnvera loan granted in June 2006 (measure 14),
(311) As regards the rescheduling of debts agreed to by the
City of Mikkeli in 2009, it is noted that it was a
— the Finnvera counter-guarantee granted in September 2006
subsequent rescheduling of debts. In the light of this,
(measure 15) and
the Commission considers that a private creditor would
not have agreed to such a debt rescheduling and that the
measure constitutes state aid. As Karjaportti was in
difficulty within the meaning of the R&R Guidelines
— the Finnvera loan granted in July 2007 (measure 16)
2004 at the time of granting, the measure could only
have been compatible under those Guidelines. As not all
requirements are fulfilled, it is concluded that the
do not constitute aid within the meaning of Article 107(1) of
measure constitutes incompatible state aid.
the Treaty on the Functioning of the European Union.

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EN
16.1.2013 Official
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Union L
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Article 3
3. The
interest
shall
be
calculated
on
a
compound
basis
in
accordance with Chapter V of Commission Regulation (EC)
The state aid measures which Finland has implemented for
No 794/2004.
Osuuskunta Karjaportti, consisting of:
4. Finland
shall
cancel
all
outstanding
payments
of
the
aid
— a guarantee granted in June 2000 (measure 1) and
referred to in Article 4 with effect from the date of notification
of this decision.
— the assignment of land in the same year (measure 2)
Article 6
are compatible with the internal market within the meaning of
1. Recovery
of
the
aid
referred
to
in
Article
4
shall
be
Article 107(3)(a) of the Treaty on the Functioning of the
immediate and effective.
European Union.
2. Finland
shall
ensure
that
this
Decision
is
implemented
within four months following the date of notification of this
Article 4
Decision.
The state aid measures which Finland has implemented for
Osuuskunta Karjaportti, consisting of:
Article 7
1. Within two months following notification of this
— Guarantee granted on 8 March 2004 by the City of Mikkeli
Decision, Finland shall submit the following information to
(measure 4);
the Commission:
— Guarantee granted on 10 May 2004 by the city of Mikkeli
(a) the total amount (principal and recovery interests) to be
(measure 5);
recovered from the beneficiary;
— Conversion of unpaid interest rates into loans (measure 8);
(b) a detailed description of the measures already taken and
planned to comply with this Decision;
— Guarantee granted by Finnvera on 17 March 2004 (measure
(c) documents demonstrating that the beneficiary has been
13);
ordered to repay the aid.
— Guarantee granted on 9 January 2008 by Finnvera (measure
2. Finland
shall
keep
the
Commission
informed
of
the
17);
progress of the national measures taken to implement this
Decision until recovery of the aid referred to in Article 4 has
been completed. It shall immediately submit, on simple request
— Rescheduling of debt since 2009 (measure 12).
by the Commission, information on the measures already taken
and planned to comply with this Decision. It shall also provide
detailed information concerning the amounts of aid and
were unlawfully put into effect by Finland in breach of
recovery interest already recovered from the beneficiary.
Article 108(3) of the Treaty on the Functioning of the
European Union and are incompatible with the internal market.
Article 8
Article 5
This Decision is addressed to the Republic of Finland.
1. Finland
shall
recover
the
aid
referred
to
in
Article
4
from
the beneficiary.
Done at Brussels, 12 June 2012.
For the Commission
2. The sums to be recovered shall bear interest from the date
on which they were put at the disposal of the beneficiary until
Joaquín ALMUNIA
their actual recovery.
Vice-President

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