EC to investigate PSA Peugeot Citroën group restructuring plan

Brussels,  3-5-2013 — /europawire.eu/ — State aid: Commission opens an in-depth investigation into the restructuring of the PSA Peugeot Citroën group

The European Commission has opened an in‑depth investigation to determine whether the PSA group’s restructuring plan is compatible with the European Union’s state aid rules. The opening of an investigation in no way prejudges its final outcome. It allows interested third parties to submit their comments and increases legal certainty for the aid beneficiary when the Commission adopts its decision.

The restructuring plan notified by France includes a guarantee of EUR 7 billion as well as grants and repayable advances of EUR 85.9 million.

The plan comprises a restructuring of the industrial organisation and the administrative structures, and a research and development project in the field of hybrid technologies. It forecasts a return to viability in 2015 and a number of compensatory measures to limit distortions of competition.

At this stage, the Commission intends to verify whether the assumptions underlying the restructuring plan to restore the company’s long‑term viability without continued state support are sufficiently realistic, in particular given the recent trend on the car market. The Commission wishes to check that the compensatory measures are proportionate to the distortions of competition created by the grants awarded.

Background

The PSA group produces and sells vehicles under the Peugeot and Citroën brands. In 2011 it sold more than 3.5 million vehicles and parts throughout the world.

In February the Commission granted temporary approval for a state guarantee covering the market issues of Banque PSA Finance for EUR 1.2 billion of the EUR 7 billion announced (IP/13/106). Banque PSA Finance is wholly owned by the PSA group and provides financing for sales by the group. Commission approval was subject to notification of a restructuring plan for the PSA group as a whole.

State aid to firms in difficulty is a type of aid that is most likely to distort competition because it may allow firms to remain on the market that would not have been able to do so by themselves.

This type of aid must therefore be subject to strict conditions that are laid down in the Guidelines on state aid for rescuing and restructuring firms in difficulty (see MEMO/04/172). In particular, such aid must be accompanied by a restructuring plan that is capable of restoring the long‑term viability of the firm without it needing to call on new state support. Furthermore, the aid must be accompanied by measures to compensate the resulting distortions of competition, for example reductions in the beneficiary firm’s capacity or market presence, or reductions in barriers to entry for new operators. Finally, the beneficiary must make a substantial contribution to the costs of its restructuring in order to reduce the burden on the taxpayer.

The non-confidential version of the current decision will be made available under the case numbers SA.35611 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.