31994D0259

94/259/ECSC: Commission Decision of 12 April 1994 concerning aid to be granted by Italy to the public steel sector (Ilva group) (Only the Italian text is authentic)

Official Journal L 112 , 03/05/1994 P. 0064 - 0070

COMMISSION DECISION of 12 April 1994 concerning aid to be granted by Italy to the public steel sector (Ilva group) (Only the Italian text is authentic) (94/259/ECSC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Coal and Steel Community, and in particular the first and second paragraphs of Article 95 thereof,

After consulting the Consulative Committee and with the unanimous assent of the Council,

Whereas:

I The Community steel industry is currently experiencing its most difficult period since the first half of the 1980s. This is due to the general slowdown in the economy, which has had a significant effect on industrial activities in general, and on the steel industry in particular, leading to a serious imbalance between supply and demand, accompanied by a collapse in prices. In addition, the international market generally has been weak: there is pressure from imports and there has been a trade dispute with the United States of America affecting substantial Community exports to that market. All of these factors have combined to aggravate the financial situation of almost all steel companies in the Community.

II Under Commission Decisions 89/218/ECSC (1), 90/89/ECSC (2) and 92/17/ECSC (3) concerning aid that the Italian Government proposed to grant to the public steel sector, the Commission authorized considerable State aid for Ilva, the Italian public steel sector undertaking, during the period 1998 to 1991, so as to help it carry out a restructuring programme providing, in particular, for the closure of 2 700 000 tonnes per year of liquid steel production capacity, 1 180 tonnes per year of hot-rolling capacity and 780 000 tonnes per year of coldot-rolling capacity and 385 000 tonnes per year of liquid steel production capacity and 510 000 tonnes per year of hot-rolling capacity, plus the shedding of 27 196 jobs, equivalent to 38,7 % of the workforce in 1988, all of which was supposed, under normal market conditions and on the basis of strict implementation and rgirorous management control, to ensure the viability of the undertaking.

Despite the major restructuring effort, the objective of restoring viability was not achieved over subsequent years by Ilva, which, since 1991, has continued to build op deficits and has experiences difficulties in maintaining its position on the market.

By the end of 1992 the total debts of the Ilva group, including both its ECSC and EEC activities, had reached Lit 7 600 billion, i.e. a debt/equity ratio of 8,24. It may be estimated that, for the financial year 1993, indebtedness will amount to some Lit 10 067 billion, thus exceeding turnover.

The injection by the Instituto nazionale per la ricostruzione industriale (IRI) of Lit 650 billion into the capital of Ilva prompted the Commission, on 8 July 1992, to initiate proceedings pursuant to Article 6 (4) of Commission Decision No 3855/91/ECSC (4) in respect of the aid contained in that financial transfer, since it could not be deemed to be a genuine provision of risk capital according to usual investment practice in a market economy.