EU General Court: a divestment of subsidiary does not automatically justify State aid, T-115/09, Electrolux v Commission

The EU General Court annulled the Decision 2009/484/EC of the European Commission authorizing France to provide State aid of € 31 million to Fagor France SA operating at the electrical household appliance market. Competitors Electrolux AB and Whirlpool Europe BV sued the Commission.

Both France and the Commission agreed that it is a restructuring aid, which is necessary to avoid undue distortions of competition in the sense of points 38-40 of the Guidelines on State aid for rescuing and restructuring firms in difficulty (§ 44). Fagor France SA divested its subsidiary Brandt Components to the Austrian group ATB for € 2-5 million, lost a part of the washing machine components market, and needed an aid. Brandt Components represented turnover of € 25-45 million or 2-5 % of Fagor France turnover in 2003, and employed 250-500 employees of 5-10 % of mother company’s workforce (§ 47).

The EU General Court held that the divestment does not justify the State aid, since:

1. It took place 2,5 years before the restructuring (§ 51).
2. The Commission herself mentioned once that the sale of Brandt Components did not have a “real effect” on the washing machine market (§ 53).
3. The fact that the sale was neither a write-off nor a closure does not mean that this divestment could be considered as a compensatory measure for the restructuring aid (§ 54).

The Commission’s Decision was annulled as a manifest error of assessment (§ 5).