The European Union ordered the Belgian government to recover US$ 230 million in state aid granted Duferco steel group. This is due to the state aid to the group that distorted competition in the industry.
The New York Times reported that this is the second time within a short period the EU competition office ruled against Belgium. Last week, it ordered the Belgian government to recover US$ 760 million in illegal tax breaks granted to 35 multinational companies to entice them to stay in Belgium. The Commission concluded that the US$ 230 million (€211 million) funding given from 2006 to 2011 to the Duferco group violated EU state aid rules. Despite this aid, the company eventually withdrew almost all business activities from Belgium. EU Commissioner Margrethe Vestager said that there was no point in providing state aid just to keep a company within a country.
New Europe quoted Vesteger as saying that steel companies across Europe have been struggling because of overcapacity and imports and that the response to this problem is to improve the EU steel sector's long-term global competitiveness. She said that Duferco's withdrawal from Belgium despite the aid shows that even if government provides funding to artificially keep failing steel manufacturers afloat "distorts competition and only delays their exit from the market at the expense of taxpayers". The Commission noted that public funding for companies only provides selective advantage to beneficiaries that their competitors lack.
In a press release explaining the decision of the EU, Commissioner Vestager said that the EU's response to the challenges facing the steel sector should be to ensure fair competition globally and to protect a level playing field within the EU. She said that the European stell manufacturers need to be globally competitive and must not rely on public funds to survive. She clarified that EU state aid rules allow for support research, development and innovation to make steelmakers competitive in the long-term but do not allow public support for rescue and restructuring of failing steel companies.
Duferco received the state aid sometime between 2006 and 2011 but nevertheless withdrew most of its business from Belgium later on. The EU also opened a formal probe into the Ilva steel producer due to possible state aid as well.
