Competition and trade law: Guidelines on rescuing and restructuring aid

United Kingdom

Guidelines on rescuing and restructuring aid

The Commission has issued revised guidelines for State aid for rescuing and restructuring firms in difficulty. The Commission comments that controlling State aid is important because it strains national budgets and distorts competition to the detriment of more efficient firms.

The Commission distinguishes rescue aid from restructuring aid. To be valid, rescue aid must be:

  • a loan guarantee or a loan with normal commercial interest rates;
  • no more than what is necessary to keep the business afloat;
  • paid only for the time needed (generally not more than six months);
  • warranted by serious social difficulties without affecting the industry or agriculture of other Member States; and
  • a one-off operation.

The general conditions for restructuring aid are more stringent. There must be a Community interest and a restructuring plan must be submitted to the Commission for consideration. The Commission will assess whether:

  • the plan will restore the long-term viability and health of the firm within a reasonable time;
  • the plan will avoid undue distortion of competition through the aid;
  • the plan is in proportion to restructuring costs and benefits; and
  • the company will implement fully the restructuring plan and submit detailed annual reports on progress and success of its restructuring plans.

The guidelines then give conditions for restructuring aid to assisted areas and to small and medium-sized enterprises (SMEs). It also considers restructuring aid to agriculture and aid to cover the social cost of restructuring.