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Spain remains in EU State aid spotlight Print
Mar/Apr 2010

The imminent arrival of Joaquín Almunia as the new EC Competition Commissioner, replacing Nellie Kroes, may well prompt a change in approach on the issues of antitrust damages, provision of due process for companies under investigation by regulators and relaxation of State aid rules, say competition lawyers.

The latter will be of particular interest to his native Spain. Since 2000, the country has been investigated for well over 300 cases of possible illegal State aid. The latest is a formal investigation into the way the public television and radio provider, RTVE, is now financed following the government's decision to withdraw its on-air advertising. To pay for the service, a levy has now been imposed on all commercial television and telecommunications companies. The arrangement, which was not previously notified to the EC, has been challenged by various operators who do not provide services with audiovisual content.

 The Government is also being investigated for the scale and purpose of its bank support fund FROB. While the maximum amount that may be offered to Spanish banks in distress is expected to be scaled down, antitrust lawyers say FROB may nonetheless attract sympathy since DG Competition should see compatibility with the Commission's own European Economic Recovery Plan.

 Garrigues has been brought in to advise the Bank of Spain on European law issues and prepare an overarching framework so that mergers of cajas, Spain's savings banks, can take place without the need for a referral to Brussels each time consolidation is achieved.

 In addition, the Government has also now had to formally notify the EC of its plans to force electricity generators to burn coal mined in Spain and bought at a regulated price. However, this time there was prior consultation between the Government and Brussels.

 Sources say that this change in approach has much to do with Almunia taking over as Competition Commissioner, as the Government does not want him to start his mandate by instituting proceedings against his own country.

 Nonetheless, some lawyers still believe that Spanish officials will struggle to persuade Brussels that the coal measure, enshrined in a Royal Decree, is not State aid.

 An existing EU directive only permits priority being given to using up to 15% of national resources in order to guarantee continuity of supply. The real Spanish need, believe some, is to clear 8 million tons of unsold, stockpiled coal.

 Almunia's Commission will also now have the task of enforcingsanctions previously handed out to Spanish companies judged to have received illegal state aid – with the Spanish Government seeming to have been very slow in insisting on repayments, fearing possible insolvencies if they do.

 Many antitrust lawyers, starved of merger referral work, admit however that client enquiries concerning State aid issues are though providing useful replacement work.

 
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