European Business Law, the fourth volume in our series, shows how the European authorities simultaneously abolish all restrictions on access to and exercise of economic activities and support the growth of domestic markets, through the harmonization the internal legislation or the enactment of genuinely unified regulations.

European Business Law

The existence of subsidy implies that the financial contribution by the public authorities in the country of origin or export confers a benefit , either directly or indirectly, for the manufacture, production, export or transport of any product whose release for free circulation in the Union causes injury . The recipient of the subsidy is the exporter, whether a producer or trader, and not the pur …

Market economy private investor test

The existence of subsidy implies that the financial contribution by the public authorities in the country of origin or export confers a benefit , either directly or indirectly, for the manufacture, production, export or transport of any product whose release for free circulation in the Union causes injury . The recipient of the subsidy is the exporter, whether a producer or trader, and not the purchaser of the goods .

The Commission uses a criterion which is close to that of the market economy private investor applied as regards State aid , in order to determine whether the exporter has effectively received a benefit that it would not have obtained under normal business conditions.

Thus, a loan granted to a company having a heavy debt burden is not such as to confer on it a benefit where the bank's decision remains commercially rational in view of the market position, and given, particularly, the borrower's credit rating at the time of the granting of the loan. It is obviously important to verify that the loan has been granted with an interest rate and maturity periods which are in conformity with market conditions. Likewise, a short-term export credit insurance is not a subsidy where the premiums required are related to the transaction and the risk is taken in full knowledge of the situation of the recipient at the time of the granting of the insurance. On the other hand, funds granted through a debenture program of a government-owned bank to an undertaking in difficulty constitute subsidies where these funds are deemed to be reserved only for companies having very strong credit ratings to issue bonds. The benefit results from abnormal conduct of the bank which did not behave like a private investor in the same market conditions, since the recipient, having a weak rating, could not make such a financial operation . This is also the case for the restructuring of an undertaking which is in a dire financial situation where no evidence suggests that a market-oriented investor would have assessed the investment as one worth making .

The private investor test is used both to identify the benefit and assess its significance when calculating the amount of the countervailable subsidy. This amount must reflect the benefit conferred on the recipient in the course of the investigation period as compared to what it could normally have obtained. Article 6 of the anti-subsidy regulation compares the public authorities' behavior with that of a private operator, whether acting as investor , lender , guarantor  or supplier of goods or services or purchaser of goods . If there are no comparable market conditions in the country concerned, the Commission may adjust these conditions on the basis of the costs, prices and other effective factors that are available and, if necessary, refer to the terms and conditions prevailing on the market of another country or on the world market, to which the recipient may have access .

Lastly, only the effective benefit is taken into account, not the potential benefit. The benefit resulting from a subsidy scheme established in the form of a credit granted when exporting a finished product, and intended to offset customs duties payable at the time of subsequent imports of inputs used in the production of that product, only exists when the credit is effectively used .

Regulation No 2016/1037, Article 6(i)(ii); see, for example, Commission Regulation No 618/1999 of 23 March 1999, imports of stainless steel wire importations (India, Korea), LawLex200900002886JBJ, where, without comparable loan granted to the recipient, the Commission refers to the commercial loans granted to other cooperating exporters.

Council Regulation (EU) No 2450/98 of 13 November 1998, imports of stainless steel bars (India), LawLex200900002490JBJ.

See Council Regulation (EU) No 2597/1999 of 6 December 1999, imports of polyethylene terephthalate (PET) film (India), LawLex200900002518JBJ, as regards an exemption scheme with respect to a tax levied on sales of goods, and added to the sales prices on the invoice, which cannot be regarded as a subsidy since the exporting producer does not get any benefit from that scheme, but the purchaser of the goods does.

See L. VOGEL: European Competition Law, LawLex/Bruylant, 2015.

See, for these various examples: Commission Regulation No 708/2003 of 23 April 2003, imports of certain electronic microcircuits known as DRAMs (Korea), LawLex200900002754JBJ.

See Council Regulation (EU) No 320/2008 of 7 April 2008, imports of certain electronic microcircuits known as DRAMs (Korea), LawLex200900002485JBJ, which also considers that a debt-to-equity swap that an undertaking in difficulty receives after a capital write-down, is a subsidy where it is certain to obtain a minimum amount for its shares, whilst it does not seem to be in a position to distribute any sort of return to its shareholders with a view to its return-on-equity ratio; see, also, Council Regulation (EU) No 1480/2003 of 11 August 2003, imports of certain electronic microcircuits known as DRAMs (Korea), LawLex200900002542JBJ, which considers that a bank purchasing program of maturing bonds is such as conferring a benefit to an undertaking where it is offered no other comparable source of financing on the market due to its already high exposure in its creditor banks and its weak financial situation which does not allow it to finance its maturing bonds through bank loans.

European Business Law

492. Market economy private investor test

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Les décisions de justice citées dans ce paragraphe :

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492. Market economy private investor test

Demandez un accès gratuit au contenu exclusif Livv – juristes d’entreprise

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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au contenu exclusif Livv – juristes d’entreprise