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EC Authorises Restructuring Aid for French Firm

by 5m Editor
28 January 2009, at 11:34am

FRANCE - Under the state aid rules contained in the EC Treaty, the European Commission has authorised restructuring aid of €3.6 million for the poultry export firm SA Tilly-Sabco.

After examining the restructuring plan, the Commission considered that the restructuring measures were an appropriate means of restoring the firm's viability, that the aid was limited to the minimum necessary and that it did not entail excessive distortion of competition. The Commission therefore concluded that the aid was in accordance with the EU provisions on restructuring firms in difficulty.

The company Tilly-Sabco, based in Le Finistère in Brittany, is the UNICOPA group's major exporting subsidiary. It employs 325 people and is active mainly on the Middle Eastern market. Owing to media coverage of the bird flu epidemic, since October 2005 the company has faced difficulties linked to falling consumption, exports and prices. When the H5N1 virus was found to be present on a turkey farm in the Department of Ain in February 2006, more than 50 countries (including those of the Middle East) placed an embargo on poultry from France, bringing sales to a standstill and considerably slowing production.

In June 2006 the Commission authorised rescue aid of €3.6 million for the company in the form of a repayable advance. In December 2006 France informed the Commission that it intended to grant Tilly-Sabco restructuring aid in the form of direct grants by transforming the repayable advance of €3.6 million paid as rescue aid.

The restructuring plan consists of optimising the firm's competitiveness on its current markets. The strategic choices of rationalising the company's activity on its historical core market of the Middle East and the Overseas Departments by focusing on whole chickens and sausages, and consolidating sausage trading with third countries, entail withdrawing from Tilly-Sabco's "tactical" markets (chicken cuts, processed products and turkey) and thereby reducing overall activity on those markets by 41 per cent (35 700 tonnes).

The Commission has made sure that the planned aid complies with the 2004 guidelines on state aid for rescuing and restructuring firms in difficulty. Examination of the restructuring plan showed that the measures envisaged were sufficient to restore Tilly-Sabco's long-term viability. The Commission also considered that the aid was limited to the minimum necessary and would not provide the company with additional funding. The French authorities have undertaken to impose compensatory measures on the recipient in order to ensure that the aid will not unduly distort competition, given that the firm is reducing its presence on its markets. The Commission also took into account the fact that the company is located in an assisted region.

The non-confidential version of the decision will be published under number NN 72/2007 in the state aid register on the Competition DG's website once any confidentiality problems have been resolved.