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WASTE MANAGEMENT/STATE AID : DUTCH VAOP LOANS DEEMED NOT TO BE STATE AID.

After concluding an in-depth investigation, the European Commission said that two loans to the Dutch recyclable waste collection company VAOPa(Association of Suppliers of Waste Paper) do not constitute state aid. The Commission opened formal investigation proceedings in May 2005 to verify whether a loan from the Dutch bank BNG and a loan from several municipalities had been granted on market terms and did not include state aid elements.

On the basis of the additional information received during the investigation, the Commission has concluded that the loan granted by BNG in 1998 conformed to market conditions and does not constitute state aid as BNG had requested adequate securities from VAOP. In addition, at that time a privately-owned bank was ready to provide similar financing to VAOP, which was considered to be a growing company offering good prospects. Finally, the interest rate charged by BNG is close to that proposed by the private bank.

The second loan was granted in 2001 by the municipalities which were members of VAOP. They had certain financial claims against VAOP and transformed a part of these claims into a subordinated loan. The Commission found that this partial transformation constituted the best alternative available to the municipalities. Indeed, in case of an eventual bankruptcy by VAOP, they could have expected to recover only a very limited part of their claims, as BNG had rights ( pandrecht') to nearly all of VAOP's assets to cover the company's debts towards BNG.

Accordingly, both BNG and the municipalities have acted as typical creditors in a market economy and their behaviour does not constitute state aid, the Commission has found.

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Publication:Europe Environment
Date:Sep 8, 2006
Words:269
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