EU: Investors to return illegal subsidies to Spain

EU says Spanish shipbuilding benefited from illegal subsidies and must pay them back to govt

Associated Press

The European Union's competition watchdog ruled Wednesday that tax breaks given to investors in Spanish shipbuilding constituted illegal subsidies and must be repaid to the government.

European Competition Commissioner Joaquin Almunia wouldn't say how much money was involved, saying it was up to the Spanish government to calculate the sum. Spanish media have estimated it could reach 2.8 billion euros ($3.7 billion).

Almunia said in Brussels only subsidies since 2007 would have to be paid back, acknowledging that there was uncertainty about European rules before then. The commission approved a new Spanish tax scheme last year, so the government should be in compliance with EU rules going forward.

Spanish unions have warned that the decision would kill off the shipbuilding sector and could destroy some 87,000 jobs. But Almunia stressed that only investors would be affected and hoped that the impact on the industry would be minimal.

The European Union bans some kinds of state support for industries to prevent unfair competition. Governments are supposed to submit subsidy plans to the EU for review before implementing them; a statement from Almunia's office said it wasn't notified of the shipbuilding tax breaks.

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