SPEECH/08/588
Neelie Kroes
European Commissioner for Competition Policy
State aid decisions on Gdynia and
Szczecin shipyards
Opening remarks at press conference
Brussels, 6th November 2008
Ladies and gentlemen
The Commission has agreed today on a solution for the shipyards in Gdynia and
Szczecin that will maximise opportunities for viable economic activity to continue at
these historic sites, with good prospects for sustainable jobs there, while putting an
end to the disproportionate distortion of competition caused by the huge subsidies
received by these shipyards in recent years.
We have struck a fair balance between the interests of companies and workers in
Poland and the interests of companies and workers in the rest of the EU.
This solution has been made possible by the positive cooperation we have enjoyed
with the Polish Government in recent weeks.
More specifically, the Commission has concluded, following more than four years of
investigation, that state aid granted to the shipyards in Gdynia and Szczecin gives
rise to disproportionate distortions of competition within the Single Market, in breach
of EC Treaty state aid rules, and must be repaid.
As many of you know, the European Commission gave successive Polish
governments chance after chance over many years to restructure these shipyards
and so ensure a viable future and sustainable jobs for the workers.
Most recently, in July the Commission gave the Polish authorities an additional two
months to submit revised restructuring plans complying with EC rules.
It is to my great regret that this did not happen, despite our repeated efforts. While
the plans presented some improvement compared to previous ones, they were
clearly not good enough.
In particular, despite further large amounts of state aid and substantial job losses,
the plans would not ensure the yards' commercial viability.
Clearly, today's decision is not the one which the shipyard workers would have
liked. This is without a doubt one of the hardest proposals to the Commission that I
have had to make as Competition Commissioner.
I met representatives of the shipyard workers three times this year, and each time I
was struck by their tremendous integrity, their desire for fair treatment, and their
determination to earn a fair wage and make the shipyards a success.
But the sad reality is that the very large subsidies received were consistently used
for day to day operations, to keep the yards going in the short term rather than
invested to make the yards viable in the long term.
Largely because of this lack of investment we are in the paradoxical situation that
even though shipbuilding has been booming worldwide and prices for new ships
rising, the yards in Gdynia and Szczecin were still making a loss on every ship they
produced.
Even handed approach
I would like to underline that the Commission applied the same rules to the Gdynia
and Szczecin restructuring plans as we have done for every other shipyard and
every other restructuring case.
Poland was held to the same standards as everyone else before it, and everyone
who will come after it. In the past, the Commission has imposed strict but necessary
restructuring on shipyards in other Member States, such as Germany, Greece and
Spain.
2
In eastern Germany, for example, the Commission required substantial closures of
capacity but as a result the remaining shipyards are now profitable. We applied the
same rules to Germany as we are now applying to Poland. And in the long run,
German workers benefited.
The principle of equal treatment is fundamental to much of the work done by the
Commission. This does not just apply to shipyard cases - the Commission applies
the same rules for all restructuring cases and has treated Poland in the same way
as any other Member State.
Shipyards are not banks
Some have drawn comparisons between the treatment of Polish shipyards, and the
approvals that the Commission has given to rescue aid in the banking sector.
There are two important differences between the shipyards and the banks to bear in
mind. First, we have been authorising rescue aid for banks whose failure could have
had catastrophic knock-on effects on Member States' financial sectors, and in turn
Member States' economies as a whole, potentially harming seriously every citizen
and every business in Europe. Second, the rescue aid for banks has been
authorised for relatively short periods. If the banks concerned receive aid going
beyond pure rescue, they too will have to undergo restructuring to restore their
viability, just as the shipyards were supposed to do.
Good news
And now for the good news. The Commission has also agreed today to accept
commitments from Poland for the implementation of the state aid decisions in a way
that will quickly create opportunities for viable and sustainable economic activities at
the Gdynia and Szczecin sites and so maximise the number of sustainable jobs
there.
In particular, the Polish authorities have committed to sell the yards' assets by the
end of May 2009 through a series of open, transparent, non-discriminatory and
unconditional tenders.
The assets have to be sold at market price to the highest bidder. The tenders must
be non-discriminatory, ensuring access to all types of potential buyers, irrespective
of the purpose of their investment.
No conditions can be attached to the tenders (for example, a requirement that a
bidder purchases all the assets of a given yard).
The sole award criterion for the selection of the winning bid will be revenue
maximisation for the benefit of the yard's creditors. An automatic transfer of
employees to the new economic activity cannot be imposed.
There can be no write-off or repayment of public or private liabilities, financed by the
State, as that would amount to additional state aid and could not be accepted. All
creditors and clients must be treated in the same way as they would be in the
framework of normal insolvency procedures.
The proceeds from the asset sales will be used to repay the yards' creditors, and to
repay the unlawful aid to the State. The existing shipyard companies, with any
remaining assets and liabilities, will then be liquidated.
The advantage for companies acquiring some of the yards' assets will be that they
will not be liable to repay the illegal subsidies from the past and would not be
subject to any limitation concerning their future activity.
3
I can well imagine that the buyers of certain assets may want to engage in
shipbuilding at the sites, and that would not be a problem for the Commission
because there would be no new subsidies and they would buy the assets at a
market price.
But if those acquiring the assets want to pursue other economic activities than
shipbuilding, they must be allowed to. In other words, shipbuilding activity could
continue at the yards, but this is for the market to decide and will depend on
whether this is what the highest bidder wishes to do.
The most important thing is that the sale of assets creates sustainable jobs for the
workers, taking advantage of their skills, in whatever industry needs them.
Only in this way can we create long-term, stable employment conditions and end
this uncertainty that has hung over the shipyard workers' heads like a sword of
Damocles for years. I am sure the skills of the yards' workers can be used efficiently
in many sectors - shipbuilding is just one of the possibilities.
Companies buying some of the yards' assets cannot be obliged to take over the
yards' workers. It is, however, possible or even likely that the buyers of assets will
be willing to re-employ workers needed for the new economic activities developed
there.
Given the fact that companies buying the assets will be free of the burden of having
to repay past illegal state aid, the final outcome might be even more jobs secured
than would have been the case if the September plans, which assumed significant
job cuts, were implemented.
The Commission can help workers at these yards to find alternative employment.
My colleagues Commissioners Vladimir Spidla and Danuta Huebner have offered
assistance in devising flanking measures under existing EU programmes to find
solutions for the shipyards' workers and these regions that will help them through
the potentially difficult times ahead.
I should in particular mention the possible assistance from the European
Globalisation Adjustment Fund and structural funds.
Gdansk
Finally, as regards the Gdansk shipyard, we have not yet taken a decision. Gdansk
is in a slightly different situation than the two other yards because it is smaller, it is
already privatised and the level of subsidies received is considerably lower than in
the case of Gdynia and Szczecin. Moreover, the new owner has already invested
considerable sums in the Gdansk yard.
The Polish authorities now have an opportunity to submit a restructuring plan for
Gdansk alone for the Commission to examine.
We sincerely hope that the plan for Gdansk will meet the Commission's
requirements and will ensure a viable and sustainable future for the Gdansk
shipyard.
4