Econostrum | Economic News in the Mediterranean

Greece fined €5.5m for undue aid to mining company Larco

Written by Eric Apim on Thursday, January 20th 2022 à 17:00 | Read 636 times

The Greek mining company Larco has been in difficulty for decades (photo GMMS Larco)
The Greek mining company Larco has been in difficulty for decades (photo GMMS Larco)
GREECE. The Court of Justice of the European Union (CJEU) on Thursday (20 January 2022) fined the Greek state €5.5m for failing to recover aid paid to Larco. The Luxembourg-based institution also decreed a penalty payment of €4.36 million for every six months of delay in implementing this decision, with the deadline starting today.

Larco General Mining & Metallurgical Company (ΛΑΡΚΟ) had received Greek state guarantees in 2008, 2010 and 2011 and a capital increase in 2009. In March 2013, the European Commission had opened a formal investigation into the financial support granted to this Greek mining company, which specialises in laterite ore mining and processing, lignite mining and ferronickel production. A year later, it declared them "illegal and incompatible with the European internal market" and ordered the government to recover them.

In 2016, the Commission lodged a first appeal with the CJEU. In 2017, the ECJ found that Greece had "failed to fulfil its obligations" by issuing a judgment. Without effect, it led, in November 2019, to a second appeal by the Commission for failure to implement this decision.

A dissuasive fine and penalty payment

The Court of Justice of the European Union has therefore just found that "Greece failed to fulfil its obligation to take all the measures necessary to comply with the 2017 judgment by 25 March 2019 (expiry of the time-limit set by the Commission in its letter of formal notice) and, secondly, that the failure to fulfil its obligation continued until the Court examined the facts of the case". Hence the justification for the heavy fine imposed and the associated half-yearly penalty payment. The CJEU refers to this as a "deterrent measure aimed at preventing the repetition of similar infringements of Union law in the future".

As of 14 May 2020, the amount of unrecovered aid was €160m.

Created in 1963 and loss-making since the 1980s, Larco was to be declared bankrupt after two tenders were organised to buy back some of its assets. The procedure for recovering the aid would not then have involved the new owners. But it was not until February 2020, a year after the deadline given by the European Commission, that Larco was placed under special administration.

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