EU challenges steel aid for Duferco, Ilva

OREANDA-NEWS. January 22, 2016.  The EU is challenging the legality of financial aid given to Switzerland-based trading and raw materials distribution firm Duferco and Italian steelmaker Ilva in recent years.

Duferco will have to repay €211mn (\\$230mn) granted to it by Belgium's Wallonia region in 2006-11, EU competition commissioner Margrethe Vestager said today. Financial aid from Walloon "artificially" boosted Duferco's revenues, she said. "When aid is illegal it must be recovered." And the financial support did not prevent Duferco from closing its steelmaking facilities in Wallonia in 2013, Vestager said.

The European Commission is launching an investigation into an estimated €2bn of Italian state support for troubled Ilva, Vestager said. The financial aid "might bring a very serious distortion to competition in a very competitive sector", she said. The investigation follows a complaint filed by European steel association Eurofer in May, alleging that the Italian government has given Ilva unlawful financial aid.

EU rules forbid state aid for the rescue and restructuring of companies in the steel sector. Italy can give Ilva financial support to aid the extensive environmental clean-up that is under way at the firm's Taranto site, as long as Ilva then refunds the money, the commission said.

Separately, Vestager said that the EU can speed up its anti-dumping procedures to help Europe's steel sector. But anti-dumping procedures must be robust, so that they are not used to protect individual entities, but to ensure a level-playing field in the steel sector, she said.

The commission is still "very determined" to use anti-dumping measures even if China is granted market economy status in December, Vestager said, although Eurofer previously insisted that such a move would make EU anti-dumping measures ineffective.