22nd January 2016

EU anti-trust chief acts against state aid in steel sector

The EU steel sector, under immense economic pressure due to global excess of production capacity, came under scrutiny of Margrethe Vestager´s anti-trust department of the EC. Two decisions were taken last week. First, the Belgian Southern francophone region of Wallonia will have to recover the €211 million it gave Duferco and its subsidiaries in 2006-2011 as subsidies. The EC found that these subsidies amounted to illegal state aid, gaving Duferco an unfair advantage and distorting the market. At the same time, the EC decided to open an in-depth investigation into subsidies, loans and state guarantees awarded by Italy to Ilva, another steel giant.

The cases are sensitive. The steel industry, under immense global economic pressure, employs around 350 000 people in 500 European plants. Ms Vestager stated, however, that state subsidies are not the way to help the industry. Steel producers must be globally competitive, not rely on taxpayer money to make fake profit. Moreover, cases such as those investigated at the moment could lead to an EU subsidy race, which would only make the matter worse.

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Members of the American Chamber of Commerce in the Czech Republic