A purchaser of assets from a company which has received illegal aid from an EU member state may be liable to repay that aid with interest. This could clearly be a significant issue for the purchaser due to the impact on the valuation of the assets.

A recent case decided by the EC provides an example of how properly to structure an acquisition of assets so as to avoid such a concern. On 31 July 2014, the EC decided that Belgian crystal manufacturer Val Saint-Lambert (VSL) had received aid from the Walloon Region (part of the Belgian state). This aid included a loan guarantee, the assignment and exclusive use of the VSL brand, a loan, an increase in capital and funding of works to clean up pollution. None of this aid could be exempted under EU competition law, and therefore it was declared illegal, with the result that VSL must repay it.

Some of VSL’s assets are, however, being sold and, in a separate decision of the same day, the EC concluded that the repayment obligation would not be transferred to the buyer of those assets owing to the absence of “economic continuity” with VSL. This issue was analysed using the standard indicators used by the EC in these cases: the extent of the assets sold, the sale price, the identity of the buyer, the timing of the sale and the economic logic of the transaction.

The buyer of the assets, having obtained this “no continuity” decision from the EC, is free of the risk of repayment. However, similar buyers have got this wrong, and it pays to be careful in these situations. This is particularly the case since aid can arise in any form, the basic test being whether an advantage has been obtained which would not have been obtained under normal market conditions.