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VEHICLE INDUSTRY : STATE AID TO ROMANIAN TRACTOR COMPANY UNDER INVESTIGATION.

Aid from the Romanian authorities in the context of the privatisation of the tractor company Tractorul and its sale to Flavus Investments SRL in July 2007 could breach EU rules on state aid. The European Commission therefore opened a formal investigation on 25 September and asked Romania to suspend the granting of any unlawful aid until the Commission takes a decision on the compatibility of the aid.

Tractorul, situated in Brasov, went into voluntary liquidation under the authority of the Romanian privatisation agency AVAS. Currently, no production takes place. During the voluntary liquidation, a viable activity was identified and sold by public tender in July 2007. The tender was won by Flavus Investments SRL. AVAS attached specific conditions to the privatisation contract. In particular, the successful bidder had to maintain the current activity for ten years and had to give priority to the (re)hiring of former employees of Tractorul.

The Commission believes that the privatisation of Tractorul through a tender subject to these and other conditions might have resulted in a lower sales price than in the case of an unconditional tender and could therefore involve state aid. The conditions attached to the tender would ensure that a certain level of economic activity would be maintained. The aid would therefore support that economic activity. Furthermore, if the sales price was below the market value because the specific conditions attached to the privatisation limited the number of potential buyers, the successful bidder would also have obtained an advantage. In both cases, the advantages would have been paid for by the revenue that the state had foregone from the sale.

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Title Annotation:Tractorul UTB S.A.
Publication:European Report
Article Type:Brief article
Geographic Code:4EXRO
Date:Sep 26, 2007
Words:269
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