Commission action against Spain

In the light of Spain’s refusal to recover aid granted by the state to the Magefesa group, the European Commission has referred the matter to the ECJ. In 1989, the Commission declared incompatible with the common market aid granted to the Magefesa Group of companies in the form of soft loans, bank guarantees and subsidies. The Commission requested Spain to adopt all measures necessary to recover the aid. Only the soft loans were converted to market rate loans, while neither the guarantees nor the direct subsidies were ever reimbursed. In a new decision in October 1998, the Commission declared incompatible with the common market aid granted to the companies of the Megafesa Group. In this case, the Spanish authorities had allowed the group to default on over €78 million due taxes and social security contributions throughout the period between the adoption of the 1989 decision and the group’s bankruptcy filing. In the 1998 decision, the Commission ordered Spain to adopt the necessary measures to recover this aid, but so far only a marginal figure, namely less than 1% of the amounts paid has been recovered. Spain has justified the absence of recovery of the aid on the grounds that the companies concerned were either insolvent or bankrupt. However, the Commission considered that Spain has not adopted all the measures a diligent creditor would have adopted in order to recover the credit under Spanish law. Therefore, the Commission has decided to refer the matter to the ECJ on the basis of Article 242 EC for non-implementation of the Commission decisions of 1989 and of 1998. (IP/99/747)