An investigation by the European Commission has revealed that the Greek Larco General Mining and Metallurgical Company S.A. (Larco) was receiving 136 million euros in state aid, violating the European state aid rules. The Commission has announced that Larco must return the amount with interest in order to mitigate the distortions of competition resulting from the incompatible aid.
Currently, assets of the state-owned Larco are being privatized. However, according to the Commission’s decision the company’s repayment obligation will not be transferred to the future buyers.
In March 2013, the European Commission launched an investigation into the Larco state aid, including a capital increase in 2009 of 45 million euros, and several State guarantees during 2008-2010. However, the support measures were not sent to the commission for approval as required by the EU rules.
Larco has been facing financial difficulties since 2008. Under EU legislation such companies can receive state support either within the framework of a restructuring plan or within a resolution plan. This way it is ensured that state funding isn’t wasted on keeping a failing enterprise “alive.” However, since the Greek state did not provide a restructuring plan, the aid therefore cannot be justified under EU law.
Larco is one of the largest ferronickel producers worldwide. The Greek State owns 55.2% of its shares, 33.4% is owned by the National Bank of Greece S.A. and 11.4% by the Public Power Corporation S.A.
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