The Commission has decided under EC Treaty state aid rules that the Polish steel producer Arcelor Huta Warszawa (AHW), before becoming part of the Arcelor group, has misused restructuring aid it received in 2003 under special provisions for steel restructuring in Poland laid down in the Polish Accession Treaty. AHW has voluntarily repaid the €2 million of unlawful aid. It was therefore not necessary to order Poland to recover the aid. Under the national restructuring programme for the Polish steel industry and the special steel rules for Poland, Polish steel producer Huta Lucchini Warszawa (HLW) received about €50 million of state aid. Most of the aid was in the form of a state guarantee for a loan to enable the company to pursue its investment plan in a timely fashion in 2003 and 2004.

However, HLW had used around €30 million of the loan in 2004 to pay off some old debts. The Commission found that this measure was neither indicated in the restructuring plan nor necessary for the restructuring, but, on the contrary, endangered the company's return to viability. The Commission therefore concluded that, that part of the aid had been misused and was incompatible with the Single Market.

However, the Commission acknowledges that after AHW had taken over the company in 2005 it repaid the guaranteed loan and updated the business plan of the company in order to ensure long term viability. The Commission considered that the advantage stemming from the guarantee during one year was an interest subsidy for the loan amounting to around €2 million. In order to settle the case AHW agreed to repay this amount.

Restructuring aid in the steel sector is generally prohibited. However, Protocol 8 of the Accession Treaty, on the restructuring of the Polish steel industry, granted Poland a derogation from this rule. On the basis of a national restructuring plan, the Protocol accepts the granting of state aid to eight companies from 1997 to 2003 up to a maximum of about PLN 3.4 billion upon the condition that they would implement a genuine restructuring and would become viable by the end of 2006. In exchange, Poland committed to cut more than 1 million tonnes of production capacity. Protocol 8 constitutes the legal basis for the assessment by the Commission of state aid in the steel sector between 1997 and 2006, including aid granted before Poland's EU accession on 1 May 2004.

The present decision is the last one of a series of decisions taken in the context of the monitoring of Polish steel restructuring. [12 December 2007]