EU launches inquiry into Italian support for Ilva steel producer

Italian state support for the Ilva steelworks

The EU is the second-largest steel producer in the world, generating around 177 million tons every year at some 500 sites in 23 member states.

But the sector has been hit by worldwide overcapacity and stiff global competition, and EU rules as a result do not allow governments to support steel manufacturers in financial difficulties.

The commission has now received several complaints about state measures "aimed at keeping Ilva afloat artificially" - something that would be illegal under the EU competition rules.

It launched an investigation Wednesday into the allegations relating to the steel giant, located in the southern Italian region of Taranto.

"The best guarantee for a sustainable future of steel production in the Taranto region is the sale of Ilva's assets to a buyer thatupgrades them in line with environmental standards and runs them for productive use," said EU Competition Commissioner Margrethe Vestager.

The investigation relates to around 2 billion euros (2.2 billion dollars) of funding, the EU's executive said. This includes state guarantees on loans, access to funds seized during criminal proceedings against Ilva shareholders, among other things.

Italy is already in trouble for failing to curb pollution at Ilva, with commission proceedings underway since 2013.

At full capacity, the steel manufacturer could manufacture as much steel as the joint production of Bulgaria, Greece, Hungary, Croatia, Slovenia, Romania, and Luxembourg in 2015, according to the EU's executive.

Also Monday, the commission said that Belgium must recover 211 million euros in illegal state aid granted to several steel companies in the Duferco group between 2006 and 2011.

"Despite the illegal state aid to Duferco the company has now withdrawn almost all business activities from Belgium," Vestager noted.

"The case shows that state aid to artificially keep steel manufacturers afloat that are not viable seriously distorts competition and only delays their exit from the market at the cost oftaxpayers," she added.

Last update: Fri, 24/06/2016 - 08:49

More from Europe

Italy police arrest seven linked to online global paedophile network

Seven paedophiles linked to a global online network that counted tens of thousands of affiliates have been arrested...

Turkey now top 10 destination for German arms amid refugee crisis

Turkey has jumped into the top 10 in the rankings of destinations for German arms exports as Ankara responds to...

EU proposes corporate tax reforms to cut red tape, tackle abuse

The European Commission unveiled proposals Tuesday aimed at streamlining corporate tax rules across EU member states...

EU Parliament lifts Le Pen immunity over alleged racial slur

The European Parliament on Tuesday lifted the immunity of Jean-Marie Le Pen, the founder of France's far-right...

Sweden lowers projection for number of asylum seekers in 2016

Tighter border checks introduced by the European Union and individual European states were Tuesday cited as the main...