EU Commission Approves Amendment to Brodotrogir Restructuring Plan (Croatia)

The European Commission has authorised an amendment to the restructuring plan for Brodotrogir, one of the Croat shipyards in difficulty. Indeed, the distortion of competition that may arise from the modest increase in the total amount of restructuring aid is offset by the additional compensatory measures proposed by Croatia, in line with EU Guidelines on state aid for restructuring companies in difficulty.

Moreover, Croatia committed to sign the privatisation contract for the yard within two weeks from the receipt of the Commission decision. This will allow the completion of the privatisation process by 1 July 2013, i.e. the date of accession of Croatia to the EU, as foreseen in the Act of Accession.

Commission Vice-President in charge of competition policy Joaquín Almunia said: “We are making good progress with the Croatian shipyards. After the successful privatisation of Brodosplit, we have now found a satisfactory solution for the restructuring of Brodotrogir. The privatisation of the yard can now go ahead in line with Croatia’s commitments. This will enable the new owners of Brodotrogir and its workforce to build a new future”.

In 2011, the Commission and the Croatian competition authority approved a restructuring plan for Brodotrogir, involving HRK 2.8 billion (around €370 million) of restructuring aid. In February 2013, Croatia notified a modest increase in the restructuring costs and a proportional increase in the amount of restructuring aid.

To offset the impact on competition, Croatia proposed to withdraw the possibility for Brodotrogir to trade production quotas with other yards, a mechanism which was allowed by the accession act. In addition, Brodotrogir committed to an individual capacity reduction in line with the accession act. The Commission found that this will ensure a strict limitation of production and a permanent removal of part of the production facilities. The Commission concluded that these additional compensatory measures adequately address the potential distortion of competition triggered by the aid, especially in view of the relatively modest increase of the aid amount.

Moreover, the own contribution of Brodotrogir’s buyer to the restructuring is real, free of state aid and after the increase still represents 40% of the total restructuring costs.

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Europa, June 20, 2013; Image: Brodotrogir