17.6.2017   

EN

Official Journal of the European Union

L 155/1

(1)

It is important to specify the information that investment firms, market operators and, where required by Directive 2014/65/EU, credit institutions should notify to the competent authorities of their home Member State when they wish to provide investment services or perform investment activities as well as ancillary services in another Member State, in order to establish uniform information requirements and to benefit from the possibility to provide services throughout the Union.

(2)

The scope and the content of information to be communicated to the home competent authority by investment firms, credit institutions or market operators wishing to provide investment services or activates as well as ancillary activities or arrangements to facilitate access and trading vary according to the purpose and the form of the passport rights. For reasons of clarity it is therefore appropriate to define different types of passport notification for the purposes of this Regulation.

(3)

For the same reasons, it is also important to clarify the information that investment firms or market operators, operating a multilateral trading facility (‘MTF’), or organised trading facility (‘OTF’), should submit when they wish to facilitate, within the territory of another Member State, access to and trading on those systems by remote users, members or participants established in that other Member State.

(4)

Competent authorities of home and host Member States should receive updated information in case of any change in the particulars of a passport notification, including any withdrawal or cancellation of the authorisation to provide investment services and activities. That information should ensure those competent authorities are able to make an informed decision that is consistent with their powers and responsibilities.

(5)

Changes to the name, address and contact details of investment firms in the home Member State are to be considered relevant and should therefore be notified as a change of branch particulars notification or as a change of tied agent particulars notification.

(6)

It is important for competent authorities of the home and host Member State to cooperate in addressing the threat of money laundering. This Regulation, and in particular the communication of the investment firm's programme of operations, should facilitate the assessment and supervision by the competent authority of the host Member State of the adequacy of the systems and controls to prevent money laundering and terrorist financing of a branch established in its territory, including the skill, knowledge and good character of its money laundering reporting officer.

(7)

The provisions in this Regulation are closely linked, since they deal with notifications related to the exercise of the freedom to provide investment services and activities and the exercise of the right of establishment that apply to investment firms, market operators and, where foreseen, credit institutions. To ensure coherence between those provisions, which should enter into force at the same time, and to facilitate a comprehensive view and compact access to them by persons subject to those obligations, it is desirable to include all regulatory technical standards for notification of information required by Title II, Chapter III of Directive 2014/65/EU in a single Regulation.

(8)

For reasons of consistency and in order to ensure the smooth functioning of the financial markets, it is necessary that the provisions laid down in this Regulation and the related national provisions transposing Directive 2014/65/EU apply from the same date.

(9)

This Regulation is based on the draft regulatory technical standards submitted by ESMA to the Commission.

(10)

In accordance with Article 10 of Regulation (EU) No 1095/2010 of the European Parliament and of the Council (2), the European Securities and Markets Authority (ESMA) has conducted open public consultations on such draft regulatory technical standards, analysed the potential related costs and benefits and requested the opinion of the Securities and Markets Stakeholder Group established in accordance with Article 37 of that Regulation,

(a)

the right of freedom to provide investment services and activities in accordance with Article 34(5) of Directive 2014/65/EU;

(b)

the right of establishment in accordance with Article 35(7) of Directive 2014/65/EU.

(a)

‘investment services and activities passport notification’ means a notification made in accordance with Article 34(2) of Directive 2014/65/EU, or in accordance with Article 34(5) of Directive 2014/65/EU;

(b)

‘branch passport notification’ or ‘tied agent passport notification’ means a notification made in accordance with Article 35(2) of Directive 2014/65/EU, or in accordance with Article 35(7) of Directive 2014/65/EU;

(c)

‘notification for the provision of arrangements to facilitate access to an MTF or an OTF’ means a notification made in accordance with Article 34(7) of Directive 2014/65/EU.

(d)

‘passport notification’ means an investment services and activities passport notification, a branch passport notification, tied agent passport notification, or a notification for the provision of arrangements to facilitate access to an MTF or an OTF.

(a)

the name, address and contact details of the investment firm along with the name of a specified contact person at the investment firm;

(b)

a programme of operations which includes the following items:

(a)

the name, address and contact details of the investment firm or the market operator, along with the name of a specified contact person at the investment firm or the market operator;

(b)

a short description of the appropriate arrangements to be in place and the date from which these arrangements will be provided in the host Member State;

(c)

a short description of the business model of the MTF or the OTF, including the type of the financial instruments traded, the type of participants, and the marketing approach of the MTF or OTF to target remote users, members or participants.

(a)

the name, address and contact details of the investment firm or credit institution in the home Member State, and the name of a specified contact person at the investment firm or credit institution;

(b)

the name, address and contact details in the host Member State of the branch or of the tied agent from which documents may be obtained;

(c)

the name of those persons responsible for the management of the branch or of the tied agent;

(d)

reference to the location, electronic or otherwise, of the public register where the tied agent is registered; and

(e)

a programme of operations.

(a)

a list of investment services, activities, ancillary services and financial instruments to be provided;

(b)

an overview explaining how the branch or the tied agent will contribute to the investment firm's, credit institution's or group's strategy, and setting out whether the investment firm is a member of a group, and what the main functions of the branch or tied agent will be;

(c)

a description of the type of client or counterparty with which the branch or tied agent will be dealing and of how the investment firm or credit institution will obtain and deal with those clients and counterparties;

(d)

the following information on the organisational structure of the branch or tied agent:

(e)

details of individuals performing key functions with the branch or the tied agent, including the individuals responsible for day-to-day branch or tied agent operations, compliance and dealing with complaints;

(f)

details of any outsourcing arrangements critical to the operations of the branch or the tied agent;

(g)

summary details of the systems and controls that will be put in place, including:

(h)

forecast statements for both profit and loss and cash flow, over an initial 36-month period.

(a)

the name of the person or persons who will be responsible for the process of terminating the operation of the branch or the tied agent;

(b)

the schedule of the planned termination;

(c)

the details and processes proposed to wind down the business operations, including details of how client interests are to be protected, complaints resolved and any outstanding liabilities discharged.

17.6.2017   

EN

Official Journal of the European Union

L 155/6

(1)

The European Commission (‘the Commission’) initiated on 31 March 2016 (2) an investigation following a complaint lodged on 15 February 2016 by the European Steel Association (‘EUROFER’ or ‘the complainant’) on behalf of producers representing more than 25 % of the total Union production of rebars.

(2)

The Commission imposed on 20 December 2016 a provisional anti-dumping duty on imports of certain concrete reinforcement bars and rods originating in the Republic of Belarus (‘Belarus’ or ‘the country concerned’) by Implementing Regulation (EU) 2016/2303 (3) (‘the provisional Regulation’).

(3)

Subsequent to the disclosure of the essential facts and considerations on the basis of which a provisional anti-dumping duty was imposed (‘the provisional disclosure’), the complainant and the sole Belarusian exporting producer made written submissions making known their views on the provisional findings. The parties who so requested were granted an opportunity to be heard.

(4)

Hearings took place with the Belarusian exporting producer and with Union producers.

(5)

The Commission considered the oral and written comments submitted by the interested parties and, where appropriate, modified the provisional findings.

(6)

In order to verify the questionnaires replies mentioned in recitals (124) and (133) of the provisional Regulation, which were not verified at the provisional stage of the procedure, verification visits were carried out at the premises of the following parties:

(7)

The Commission informed all parties of the essential facts and considerations on the basis of which it intends to impose a definitive anti-dumping duty on imports of rebars (‘the definitive disclosure’). All parties were granted a period within which they could make comments on the definitive disclosure. After definitive disclosure, in the light of the findings as established in recitals (18) to (24) of the General Disclosure Document the Commission analysed injury indicators excluding data pertaining to the Italian market for which all parties were informed (the additional final disclosure). Subsequently, all parties were granted a period within which they could make comments on the additional disclosure. The comments submitted by the interested parties were considered and taken into account where appropriate.

(8)

In the absence of comments concerning the method of sampling, the provisional findings set out in recitals (7) to (10) of the provisional Regulation are confirmed.

(9)

In the absence of comments concerning the investigation period (‘IP’) and the period considered, the periods established in recital (14) of the provisional Regulation are confirmed.

(10)

As set out in recitals (15) to (16) of the provisional Regulation, the product subject to investigation was defined as ‘certain concrete reinforcement bars and rods, made of iron or non-alloy steel, not further worked than forged, hot-rolled, hot-drawn or hot-extruded, but including those twisted after rolling and also those containing indentations, ribs, grooves or other deformations produced during the rolling process, originating in Belarus and currently falling within CN codes ex 7214 10 00, ex 7214 20 00, ex 7214 30 00, ex 7214 91 10, ex 7214 91 90, ex 7214 99 10, ex 7214 99 71, ex 7214 99 79 and ex 7214 99 95 (‘rebars’ or ‘the product concerned’). High fatigue performance iron or steel concrete reinforcing bars and rods are excluded’.

(11)

Already at provisional stage of the investigation, the exporting producer from Belarus pointed to an alleged inconsistency between the complaint (referring to two CN codes) and the notice of initiation (NoI) (referring to nine CN codes). After explanations given in this regard in the provisional regulation, the Belarussian exporter changed the nature of its claim and requested the inclusion of an additional sentence in the descriptive part of the product concerned in order to make it clear that round bars and other types of bars without indents, ribs or other deformations, which are also covered by the additional seven CN codes, are not included in the product concerned.

(12)

On the other hand, contrary to the claim of the Belarusian company, the complainant claimed that round bars and other bars without deformation should be included in the product scope.

(13)

After careful examination, the Commission concludes that the descriptive part of definition of the product concerned in the complaint and in the NoI clearly does not encompass round bars and bars without deformation and, therefore, these bars fall outside the product scope. Furthermore, all the data concerning product concerned collected for the dumping calculations and injury analysis did not include data referring to the round bars or bars without deformation. Therefore, the definition of the product scope should make it clear that round bars and bars without deformation are not part of the product concerned. Hence, the Commission accepts the changes in the description of the product concerned suggested by the Belarusian exporting producer. During this assessment, the Commission verified that the CN codes ex 7214 99 71 and ex 7214 99 79 referred exclusively to round bars and bars without deformation and, therefore, excluded the reference made to them in the definition of the product scope. The Commission also noticed that these bars had been incorrectly included in the information set out in recitals (62), (63), (65) and (103) of the provisional Regulation (Union consumption, volume and market share of the imports concerned, prices of imports, and imports from third countries) and therefore this data was revised accordingly.

(14)

Taking into account the above, the Commission clarifies the definition of the product concerned as followed:

‘The product concerned is certain concrete reinforcement bars and rods, made of iron or non-alloy steel, not further worked than forged, hot-rolled, hot-drawn or hot-extruded, whether or not twisted after rolling, containing indentations, ribs, grooves or other deformations produced during the rolling process, originating in Belarus and currently falling within CN codes ex 7214 10 00, ex 7214 20 00, ex 7214 30 00, ex 7214 91 10, ex 7214 91 90, ex 7214 99 10 and ex 7214 99 95 (‘the product concerned’). High fatigue performance iron or steel concrete reinforcing bars and rods and other long products, such as round bars are excluded’.

(15)

In the absence of comments concerning details of dumping calculation, the provisional findings and conclusions set out in recitals (19) to (55) of the provisional Regulation are confirmed.

(16)

In the absence of any comments concerning the Union industry, the provisional findings and conclusions set out in recitals (56) to (59) of the provisional Regulation are confirmed.

(17)

As mentioned in the recitals (13) and (14), the round bars and bars without deformation are not part of the product concerned. These products are currently falling within CN codes ex 7214 99 71 and 7214 99 79. The revised information presented in the tables, as set out in recitals (62), (63) and (65) of the provisional Regulation, is as follows:

(18)

The correction of the figures above did not have any impact on the injury assessment. Indeed, the trends observed were the same and therefore the Commission's findings in recitals (62) to (66) of the provisional Regulation are confirmed.

(19)

As described in recital (132) of the provisional Regulation, the Belarusian exporting producer and one of the non-sampled Union importers raised the issue of alleged price-fixing among the Union producers, which would have rendered the injury data unreliable. This claim was further developed by the Belarusian company in its submission after provisional disclosure. The Belarusian exporting producer indicated that a cartel investigation was currently being conducted by Italian Competition Authority (Autorità Garante della Concorrenza e del Mercato (‘AGCM’)) with regard to certain companies located in Northern Italy. One of the companies concerned is part of the sample of the Union producers in the current antidumping investigation.

(20)

Following this claim, the Commission requested relevant information from AGCM to evaluate whether and to what extent those facts influence the reliability of the injury data of the Union industry in the present anti-dumping proceedings.

(21)

According to the case-law, in a situation where an investigation into anti-competitive behaviour is pending at a national competition authority, the Commission has to consider whether the Union industry, through this behaviour, has contributed to the injury suffered and establish that the injury on which it bases its conclusions did not derive from the anticompetitive behaviour. The Commission may in such a situation not wait until the competent national authority concludes its investigation, but has to request the relevant information from the parties and the national authorities, as appropriate, under the procedural rules for anti-dumping investigations and carry out an assessment of that information (4).

(22)

Following a request based on Article 6(3) of the basic Regulation, AGCM has informed the Commission that on 21 October 2015 it opened a formal investigation with respect to six Italian producers of concrete reinforcement bars and welded wire for an alleged infringement of Article 101 TFEU (5). One of these companies is the Italian sampled producer in the current anti-dumping investigation. AGCM extended the proceedings in September 2016 to also cover under the investigation two additional Italian producers. Following the in-depth assessment of all available information, AGCM issued a Statement of Objections that was communicated to the relevant companies on 18 January 2017. The anti-competitive conduct being investigated concerns an alleged exchange of information and price collusion between the eight Italian companies that would cover several phases of the value added chain of their activities from the purchase of inputs, through the levels of production capacity and effective production, up to the sale of the output, which would have taken place over the period 2010 to 2016. On account of its supply and demand side characteristics, the relevant geographic market was defined as national in the formal decision to launch the investigation.

(23)

The information submitted by AGCM shows that the product concerned in this investigation, rebars, overlaps with the products subject to the antitrust investigation, and also that the alleged cartel was in force during the whole investigation period. In these circumstances, the Commission considers that the data of the sampled Italian producer is not reliable for the purpose of the injury analysis.

(24)

As a result, the Commission has analysed Union consumption, volume and market share of the imports concerned and also the macroeconomic and microeconomic injury indicators excluding data pertaining to the Italian market. For the sake of transparency, the relevant figures excluding the Italian companies are presented below.

(25)

Macroeconomic indicators (tables):

(26)

Microeconomic indicators (tables — indexed for confidentiality reasons):

(27)

On that basis, the Commission notes that the development of the injury indicators without the data pertaining to Italy is practically the same to the one reflecting the whole Union market including Italy. It can therefore be concluded that following the exclusion of data relating to the Italian market from the injury analysis, the situation of the Union industry is still one of material injury within the meaning of Article 3(5) of the basic Regulation

(28)

As far as undercutting is concerned, the Commission first notes that the undercutting margin found at provisional stage was 4,5 %. The Commission has re-examined the existence of undercutting in the light of the findings above in recitals (19) to (23). Undercutting is established by using data from the sampled companies. Hence, the Commission has excluded from the undercutting calculations the data relating to the Italian producer that is part of the sample. The undercutting margin based on all sampled companies minus the Italian one remains significant at a level of 4,4 %.

(29)

The Belarussian exporting producer also claimed that the undercutting (and underselling) calculations should not be done by comparison to the prices of all transactions of the sampled Union producers but only in comparison to those happening where the competition with Belarusian import takes place. Undercutting calculations are normally performed on the basis of dumped imports of the product concerned into the Union with all comparable sales of the Union industry. However, given the specific circumstances of this case and the particular characteristics of the product concerned, the Commission has also calculated an undercutting margin by limiting the analysis to those Member States where the Belarusian products were first sold, mainly in the Netherlands, Germany, Poland, and Lithuania. This approach is based on the conservative assumption that the immediate and direct pressure exercised by the dumped imports on Union sales prices first took place in those Member States. Any subsequent trickling through of the effect to other Member States has thus deliberately been ignored. Under this scenario, the duly adjusted weighted average sales prices of the Belarusian dumped imports were compared to the corresponding sales prices of the sampled Union producers, excluding the one located in Italy, charged to unrelated customers in those regions where direct competition with Belarusian products occurred. This resulted in an undercutting margin of 2,8 %, instead of the 4,5 % margin as established in recital (68) of the provisional Regulation.

(30)

The product concerned by this investigation can be considered a commodity product, which is very price sensitive. It is therefore concluded that even an undercutting margin of 2,8 % is significant and sufficient to cause price depression as explained in recitals (83), (84) and (98) of the provisional Regulation.

(31)

Following final disclosure, the Belarussian exporting producer also claimed that the findings above in recitals (19) to (23) would most likely have spill-over effects on other Member States, especially in France, where the parent company of one of the Italian producers has a subsidiary holding a strong market position. However, with respect to the alleged anti-competitive conduct in Italy, AGCM has defined the relevant geographic market as national. Moreover, the evidence of the file summarized in recitals (19) to (23) on its own does not support such a claim. This claim is therefore rejected.

(32)

In the absence of any additional comments with regard to injury to the Union industry, the provisional findings and conclusions set out in recitals (70) to (95) of the provisional Regulation are confirmed.

(33)

In the absence of any comments with regard to the effect of dumped imports on the economic situation of the Union industry, the findings and conclusions set out in recitals (97) to (100) of the provisional Regulation are confirmed.

(34)

In the absence of any comments with regard to export performance of the Union industry, the conclusion set out in recital (101) of the provisional Regulation is confirmed.

(35)

In the absence any comments with regard to the sales to related parties, the conclusions set out in recitals (102) to (103) of the provisional Regulation are confirmed.

(36)

As mentioned in the recitals (13) and (14), the round bars and bars without deformation are not part of the product concerned. The revised information presented in the tables, as set out in recital (103) of the provisional Regulation, is as follows:

(37)

The correction of the figures above did not have any impact on the findings in recital (104) of the provisional Regulation. Indeed, throughout the period considered the prices of imports from the third countries were on average always higher than the prices of the Union industry. The only exporting country with lower average prices than the Union industry was Belarus in the IP which was the same year when volumes of imports from Belarus increased most rapidly. Therefore the Commission's findings in recital (104) of the provisional Regulation are confirmed.

(38)

With regard to the imports from third countries, the Belarusian exporting producer did not agree with the Commission's conclusion that individual market shares of third countries, with exception of Ukraine's, had increased only marginally. The Belarusian exporting producer supported its opinion with imports statistics for the year 2016, which is a period subsequent to the IP. Furthermore, it pointed out to an alleged discrepancy between the import figures reported in table 6.3.3 of the provisional Regulation and available Eurostat statistics.

(39)

In response to this claim, it should first be noted that post IP trends and data are normally not taken into account in the injury and causation analysis. While the Commission agreed in the recital (111) of the provisional Regulation to collect and review certain post IP data, it was undertaken in the context of the claims concerning the impact of so called ‘VAT fraud scheme’, the alleged subsequent gap between demand and supply of the product concerned on the markets of Poland and the Baltic States, and the abnormally high level of IP export volumes from Belarus allegedly resulting from that scheme.

(40)

Secondly, the Commission cannot base its finding concerning the effects of imports from third countries on post IP import figures presented by the interested party, since it should only analyse trends observed during the period considered (2012-2015), and on which it collected information during the investigation. As explained in recital (39), in this investigation, the Commission assessed limited post IP data to address an exceptional situation, that is, the VAT fraud scheme. Thus, the findings of recital (104) of the provisional Regulation which relate to changes of market shares of third countries during the period under consideration, which ends in 2015, were confirmed.

(41)

Even if the development of imports from third countries after IP were taken into account, it would not change the Commission's conclusion on the potential impact of these imports on the situation of the Union industry, as those prices remained higher than prices of imports from Belarus.

(42)

Finally, with regard to the alleged discrepancy between the import figures reported in the provisional Regulation and Eurostat statistics, it should be noted that the latter statistics include also import volumes of so-called high fatigue performance bars which are not part of the product scope of this procedure and were not reported in table 6.3.3 of the provisional Regulation (6). Taking into account the above, the claims of the Belarussian exporting producer concerning the impact of third countries' imports are rejected.

(43)

In the absence of other comments with regard to the imports from third countries, the conclusions set out in recital (104) of the provisional Regulation are confirmed.

(44)

In the absence of any comments with regard to the costs evolution, the conclusion set out in recital (105) of the provisional Regulation is confirmed.

(45)

The Belarusian exporting producer reiterated in its submission the comments made at the provisional stage of the investigation with regard to the impact of the so-called VAT fraud scheme on the Union market, and claimed the Commission had failed to discharge its duty of investigating the matter. According to the exporting producer, this scheme was the main reason for the financial difficulties of some Union producers. As a result of this fraud scheme two producers located in Latvia (in early 2013) and Slovakia (in late 2014) went bankrupt and stopped production of the like product. Furthermore, one Union producer in Poland stopped the production of the like product for 3 months in 2014 due to upgrading its machinery. All these events together allegedly led to a shortage of supply mainly on the Polish and on the Baltic markets from 2013 onwards. This alleged gap would have been filled by the Belarusian exports.

(46)

The Belarusian exporting producer further claimed that, because of the VAT scheme, the year 2015 (IP) was an ‘unusual year’ in terms of high volumes of the product concerned exported to the Union and that export volumes started to decrease already at the end of the IP and continued decreasing after the IP.

(47)

In response to these claims, the Commission first looked into the exports data provided by the Belarusian statistics office and noted the following. The increase in the volume of exports by the exporting producer to the Union correlated with the decrease in the volume exports of the exporting producer to the Russian market. As described in the table below, between 2013 and 2015, the Belarusian exporting producer decreased its sales to Russia significantly by around 370 000 tonnes and increased its sales to the Union market by approximately the same amount, i.e. 380 000 tonnes.

(48)

Secondly, the Commission evaluated the situation on the Polish and the Baltic States' markets. Concerning 2013, Polish and Baltic states' markets were faced with the decrease of production of one Polish producer and the stop of production of one Latvian producer. Moreover, from 1 October 2013 the Polish government applied reverse charge VAT mechanisms to some 40 steel products, from fencing and pipes to finished flat-steel products as well as rebars, and thus tackling the VAT fraud scheme. The analysis of the export sales from Belarus to the Union market showed that the Belarusian exporting producer sales to Poland and the Baltic States remained stable, at around 110 000 tonnes compared with 2012. Therefore it is concluded that the Belarusian exporting producer did not take advantage of the alleged shortage of supply by the Union production in 2013 and that the other Union producers present in the market were able to supply the market either from stocks or by re-directing export sales to these markets (7).

(49)

Concerning 2014, one Polish producer stopped production for one quarter in order to upgrade its machinery and one Slovak producer stopped its production in August 2014 (the company was declared in bankruptcy in February 2015). The quantity not available as a result of those events is estimated at around 133 000 tonnes.

(50)

The analysis of the export sales from Belarus to the Union market showed that the Belarusian exporting producer sales to Poland and the Baltic States indeed increased by around 75 000 tonnes. However the exporting producer also increased its sales to other Union markets such as Germany from basically minimal quantities to around 120 000 tonnes. Therefore the argument that the Belarusian exporting producer increased its sales to the Union market only because of the exceptional market situation in Poland and the Baltic states is rejected, as it also increased (at even higher pace) its sales to other parts of the Union market where no exceptional circumstances existed.

(51)

Concerning the investigation period, the Latvian producer re-opened in March 2015. The Polish production was back to normal. Therefore, there was no longer an exceptional market situation in these parts of the Union market.

(52)

Despite this, the Belarusian exporting producer increased its sales to Poland even further and it maintained its sales to the Baltic States compared to 2014. Moreover the sharpest increase took place on other parts of the Union market (mainly in Bulgaria, the Netherlands, and Germany).

(53)

Therefore, it is concluded that the increase of the Belarusian exports to the European Union was not due to the gap between demand and supply in the Union market but to the redirection of the volume lost on the Russian market. Thus, the claim of inadequate assessment of the impact of the VAT fraud scheme in the provisional determination is unfounded and is, therefore, rejected.

(54)

In accordance with recital (111) of the provisional Regulation the Commission assessed the volume imports after the investigation period. The data showed that the imports from Belarus decreased somewhat, but they were still well above the 2013 levels and more or less at 2014 levels. Therefore the argument that the increase of imports from Belarus was temporary in nature and was explained by the particular market situation on certain Union market segments is rejected.

(55)

In the absence of other comments with regard to the VAT fraud scheme and post IP developments, the findings and conclusions set out in recitals (106) to (111) of the provisional Regulation are confirmed.

(56)

In summary, the Commission considers that none of the arguments put forward by the interested parties after the provisional disclosure were able to alter the provisional findings which established a causal link between the dumped imports and the material injury suffered by the Union industry during the IP. Thus, the conclusions set out in recitals (112) to (115) of the provisional Regulation are confirmed.

(57)

The Commission has found that the only other factor that may have had an impact on the situation of the Union industry was imports from third countries, as stated in the recital (104) of the provisional Regulation. However, the Commission concluded that those imports could not break the causal link between Belarusian dumped imports and the material injury found to the Union industry and that the dumped imports from Belarus remained the main cause of injury.

(58)

Based on the above analysis, which distinguished and separated the effects of all known factors on the situation of the Union industry from the injurious effects of the dumped imports, it is concluded that the dumped imports from Belarus caused material injury to the Union industry within the meaning of Article 3(6) of the basic Regulation.

(59)

In the absence of any comments with regard to the interest of the Union industry, the conclusions set out in recitals (117) to (122) of the provisional Regulation are confirmed.

(60)

The Belarusian exporting producer claimed in its submissions that the Commission's assessment of Union interest did not take into account particular problems of importers and users located in the Baltic States. It claimed that, due to logistic reasons (such as, railway connections or certificate requirements), Belarus is the only source of supply of rebars for those companies.

(61)

In this regard, the Commission confirmed that the only cooperating user located in the Baltic States experienced certain technical problems with deliveries from the Union producers (none of them being located in the Baltic States). On the other hand, this company stated that purchases from Belarus could be, and in the post IP period effectively were, replaced by purchases from Russia and to some extent also from Ukraine.

(62)

Furthermore, the Commission received very low cooperation from the companies located in the Baltic States, which seems to indicate that they do not perceive that they would be negatively affected by potential antidumping measures concerning Belarusian imports of the product concerned.

(63)

In the absence of other comments with regard to the interest of the users and importers, the conclusions set out in recitals (123) to (131) and recital (134) of the provisional Regulation are confirmed.

(64)

In its submission after the provisional disclosure, the complainant claimed that the level of antidumping duty proposed at provisional stage (12,5 %) would not be sufficient, as the measure could easily be absorbed by the Belarusian exporting producer, which is a state-owned company, located in a non-market economy country with alleged favourable access to the subsidized raw material metal scrap.

(65)

With regard to this claim, it should be stressed that the potential absorption can only be a matter of a separate anti-absorption investigation on the basis of Article 12 of the basic Regulation and cannot affect in advance the level of antidumping measures imposed in the original investigation. Furthermore, the evidence available in this investigation does not support the allegation of the easy access to a subsidized raw material by the Belarusian producer; in fact, the Commission found that the company purchases most of its raw material from Russia and Ukraine, countries considered as market economies.

(66)

In its submission after the provisional disclosure, the Belarussian exporting producer and the Belarussian authorities referred to the strategic importance of the cooperation with the EU in the steel sector, and the fact that measures may negatively affect Belarusian purchases of capital equipment in the Union, the establishment of network of related trading companies in the Union, and any cooperation with European financial institutions.

(67)

In response to this point, the Commission underlines that the measures have as sole purpose to restore a level playing field on the Union market. It is not of a punitive nature. If the exporting producer increases its prices durably, so that dumping ceases to exist, it can ask for a refund and an interim review. Therefore, the Commission does not consider those considerations to be relevant for the assessment of Union interest.

(68)

In summary, none of the arguments put forward by the interested parties demonstrates that there are compelling reasons against the imposition of measures on imports of the product concerned from Belarus. Any negative effects on unrelated users and importers can be mitigated by the availability of alternative sources of supply. Moreover, when considering the overall impact of the anti-dumping measures on the Union market, the positive effects, in particular on the Union industry, appear to outweigh the potential negative impacts on the other interested parties. Thus, the conclusions set out in recitals (135) to (137) of the provisional Regulation are confirmed.

(69)

Following provisional disclosure, the Union industry contested the target profit used in order to determine the injury elimination level as set out in recital (143) of the provisional Regulation. The same claims were reiterated after final disclosure.

(70)

The target profit used in the provisional injury margin calculations amounted to 4,8 %. This figure was based on the 2012 profit margin found for a very similar product, HFP rebars, and used in the recent anti-dumping procedure concerning imports of HFP rebars originating in China (8).

(71)

The complainant in its submission contested the use of the same target profit used in the HFP rebars investigation and claimed that these two products and their respective markets are different. The complainant suggested using a target profit even higher than originally proposed in the complaint, 16 % or 17 %, which was the profit achieved by the Union producers in 2006 or considered ‘desirable in the long term for the sound steel industry’ (9).

(72)

In this regard, the target profit used in these proceedings, which the Commission found to be the most appropriate, is based on the figure actually achieved in 2012 (which is within the period considered) by the Union producers of a very similar product manufactured to a large extent using the same facilities for production of the product concerned in this investigation. It is also recalled that in the complaint EUROFER requested a target profit of 9,9 %, which was used in an investigation on wire rod, a product definitely more distant from the product concerned than HFP rebars. Finally, the purpose of the establishment of the injury margin is to remove the part of injury caused by dumped imports, but not by other factors such as the economic crisis. While the profit of 1,3 %, which was the only profit achieved by the Union industry in the period considered (10), was found to be inappropriate due to the impact of the VAT fraud scheme, it appears more congruous to use a profit margin that was achieved by the industry in the same period, verified and found appropriate for a very similar product in an antidumping procedure with mostly overlapping periods. The claim of the Union industry is therefore rejected.

(73)

In the provisional calculation of the injury margin, an adjustment of 2 % was used for post-importation costs (11). In its submission after provisional disclosure, the Belarusian exporting producer claimed that in this particular case a higher figure of 4-6 % should be used, since this level of adjustment would better reflect the actual post-importation costs the importers/users have to cover.

(74)

Following this claim, the Commission looked in more detail into the level and structure of the importation and post-importation costs declared by the cooperating importer and users referred to in recital (6).

(75)

Based on the findings of the verification visits of these companies, the Commission does not find grounds to change the level of adjustment. The actual post importation costs for the importer and one of the users were (on average for the whole IP) below 2 %. Only for one company (the German user), post importation costs were higher than 2 %, within the claimed range of 4-6 %. However, this company had non-standard post importation operations for the transport of the product concerned from its warehouses to inland production sites. These are not standard post-importation costs, common to importers, but costs very specific to this company's operation. It should be stressed that, for the purpose of the injury margin calculations, export prices are established at an EU border level (adjusted for post-importation costs) and compared with ex works prices of the Union producers. Costs of transportation of the product to the users' production sites are not relevant in this context and thus are not taken into account. Based on the above, the Commission confirms the post-importation cost established at provisional stage at 2 % as reasonable. The claim is therefore rejected.

(76)

After provisional disclosure, both the complainant and the Belarussian exporting producer raised several additional minor points with regard to the injury margin calculations.

(77)

The complainant indicated that the establishment of the CIF price for the undercutting and underselling calculations should not be based on transfer price to related importers but recalculated from the independent re-sales. The Commission hereby confirms that in fact the CIF price used for the calculation of undercutting and underselling at the provisional stage is based on independent re-sales.

(78)

The complainant proposed an ‘alternative’ method of cost allocation between different types of product for the calculation of undercutting and underselling. However, this proposal was made after provisional measures when all the questionnaire replies were already verified on spot and calculations completed. In any event, cost allocation is irrelevant for the injury margin calculation in this case, as the injury margin was based on per product type ex-work prices and not on per product type costs. The claim is therefore rejected.

(79)

The complainant also proposed to base the injury margin not on the data of the whole IP but on a chosen quarter of IP where the margin would be ‘more representative’. However, the complainant failed to provide any evidence that there are any special circumstances in this case which would justify departing from the standard practice of the Commission to base the injury margin on the whole IP. The claim is therefore rejected.

(80)

The Commission has decided to apply caution as far as the calculation of the injury margin is concerned. Indeed, given the unreliability of certain data for the reasons set out above at recitals (19) to (23) and the specificities of this case, the Commission has revised the calculation of the the injury elimination level by excluding data from the sampled Italian producer and limiting the calculation to sales in the Netherlands, Germany, Poland, and Lithuania. This calculation is a mirror of the undercutting calculation mentioned above in recital (29) that resulted in an undercutting margin of 2,8 %. On this basis, the revised injury margin is established at a level 10,6 %.

(81)

After final disclosure, the complainant contested the methodology followed by the Commission in this case, on the grounds that the Commission had de facto narrowed down the scope of the investigation to reduce it to a regional investigation. It also claimed that the above injury elimination level would not remove injury to the overall Union industry. The complainant further noted that the Belarussian dumped imports took place in 16 different Member States, i.e. many more than those used by the Commission for its establishment of the injury margin.

(82)

In this respect, it should be noted that the Commission has actually based his injury analysis on the situation of the overall Union industry, and has concluded that removing Italy from the assessment does not change the injury picture. As far as the injury elimination level is concerned, even though imports from Belarus indeed took place in a number of Member States (in fact 13), the Commission based the injury elimination calculations on the data pertaining only to the companies in the sample, which sold the like product in a more limited number of countries, for the reasons explained in recital (29). This is without prejudice to the possibility, for all interested parties, to request an interim review once the findings of the cartel investigation are finalized, and depending on the situation prevailing at that time.

(83)

In the absence of any other comments regarding the injury elimination level, the level of the definitive injury elimination level is established at 10,6 %.

(84)

In view of the conclusions reached with regard to dumping, injury, causation and Union interest, and in accordance with Article 9(4) of the basic Regulation, definitive anti-dumping measures should be imposed on the imports of the product concerned at the level of the injury margin, in accordance with the lesser duty rule.

(85)

After final disclosure the Belarussian exporting producer claimed that the circumstances of the case justified the imposition of measures under the form of a partial duty free amount, i.e. that the first 200 000 tons imported would be free of duty, and that the duration of the measures should be limited to two years.

(86)

It is recalled that dumping results from price discrimination and therefore the remedy should consist of anti-dumping duties or a price undertaking. A duty free quota as requested by the Belarussian exporter does not contain any price element which would remedy injurious dumping and can therefore not be accepted. In this case there is also no justification for reducing the period of application of the measures. Should the circumstances change, the Belarussian has the possibility to request a review of the measures pursuant to Article 11(3) of the basic Regulation. The claims are therefore rejected. It is also recalled that the Commission may revisit the findings should the cartel investigation put in question the definitive findings set out in this regulation.

(87)

On the basis of the above, the rate at which such duties will be imposed are set as follows:

(88)

In view of the dumping margins found and given the level of the injury caused to the Union industry, the amounts secured by way of the provisional anti-dumping duty, imposed by the provisional Regulation, should be definitively collected.

(89)

The Committee established by Article 15(1) of Regulation (EU) 2016/1036 did not deliver an opinion,

17.6.2017   

EN

Official Journal of the European Union

L 155/21

(1)

In accordance with Article 25(2) of Decision 2008/615/JHA, the supply of personal data provided for under that Decision may not take place until the general provisions on data protection set out in Chapter 6 of that Decision have been implemented in the national law of the territories of the Member States involved in such supply.

(2)

Article 20 of Council Decision 2008/616/JHA (3) provides that the verification that the condition referred to in recital 1 has been met with respect to automated data exchange in accordance with Chapter 2 of Decision 2008/615/JHA is to be done on the basis of an evaluation report based on a questionnaire, an evaluation visit and a pilot run.

(3)

In accordance with point 1.1 of Chapter 4 of the Annex to Decision 2008/616/JHA, the questionnaire drawn up by the relevant Council Working Group concerns each of the automated data exchanges and is to be answered by a Member State as soon as it believes it fulfils the prerequisites for sharing data in the relevant data category.

(4)

Croatia has completed the questionnaire on data protection and the questionnaire on vehicle registration data (VRD) exchange.

(5)

A successful pilot run has been carried out by Croatia with the Netherlands.

(6)

An evaluation visit has taken place in Croatia and a report on the evaluation visit has been produced by the Dutch and Romanian evaluation team and forwarded to the relevant Council Working Group.

(7)

An overall evaluation report, summarising the results of the questionnaire, the evaluation visit and the pilot run concerning VRD exchange, has been presented to the Council.

(8)

On 19 December 2016, the Council, having noted the agreement of all Member States bound by Decision 2008/615/JHA, concluded that Croatia had fully implemented the general provisions on data protection set out in Chapter 6 of Decision 2008/615/JHA.

(9)

Therefore, for the purposes of automated searching of VRD, Croatia should be entitled to receive and supply personal data pursuant to Article 12 of Decision 2008/615/JHA.

(10)

In its judgment of 22 September 2016 in Joined Cases C-14/15 and C-116/15 (4), the Court of Justice of the European Union held that Article 25(2) of Decision 2008/615/JHA unlawfully lays down the requirement of unanimity for the adoption of measures necessary to implement that Decision.

(11)

However, Article 33 of Decision 2008/615/JHA confers upon the Council implementing powers with a view to adopting measures necessary to implement that Decision, in particular as regards the receiving and supply of personal data provided for under that Decision.

(12)

As the conditions for triggering the exercise of such implementing powers have been met and the procedure in this regard has been followed, an Implementing Decision on the launch of automated data exchange with regard to VRD in Croatia should be adopted in order to allow that Member State to receive and supply personal data pursuant to Article 12 of Decision 2008/615/JHA.

(13)

Denmark is bound by Decision 2008/615/JHA and is therefore taking part in the adoption and application of this Decision which implements Decision 2008/615/JHA.

(14)

The United Kingdom and Ireland are bound by Decision 2008/615/JHA and are therefore taking part in the adoption and application of this Decision which implements Decision 2008/615/JHA,

17.6.2017   

EN

Official Journal of the European Union

L 155/23

(1)

On 29 April 2016, after pre-notification contacts, the French authorities notified to the Commission restructuring aid in favour of the Areva group (‘the Areva Group’) in the form of two capital injections by the French State. The French authorities sent additional information to the Commission by letters dated 27 May and 6 July 2016.

(2)

By letter dated 19 July 2016, the Commission informed the French authorities that it had decided to initiate the procedure laid down in Article 108(2) of the Treaty on the Functioning of the European Union (‘TFEU’) in respect of the aid. The French authorities sent their comments on that decision to the Commission by letter dated 12 September 2016.

(3)

The Commission decision to initiate the procedure (‘the opening decision’) was published in the Official Journal of the European Union  (2) on 19 August 2016. The Commission called on interested parties to submit their comments.

(4)

The Commission received comments within the deadline from the following interested parties: Urenco, Teollisuuden Voima Oyj (‘TVO’), Siemens, the Areva Group, and a third party who wished to remain anonymous. It forwarded them to France, giving it the opportunity to comment on them, and received its comments by letter of 18 October 2016.

(5)

The French authorities sent a number of additional comments on 30 November and again on 7, 12, 21 and 22 December 2016.

(6)

In parallel to the proceedings in respect of the restructuring aid, on 27 July 2016 the French authorities notified to the Commission rescue aid of EUR 3.3 billion in the form of two loans to the Areva Group, one of EUR 2 billion granted to the parent company Areva SA (‘Areva SA’), and the other of EUR 1.3 billion to its wholly owned subsidiary New Areva (‘New Areva’) (3). These loans are to be converted into capital in these two entities when the capital injections at issue in this Decision are made. The notified rescue aid, registered under number SA.46077, is the subject of a separate decision.

(7)

The Areva Group is listed on the stock exchange. The French State directly or indirectly controls 86,52 % of it. The State directly owns 28,83 % of the parent company, Areva SA, and indirectly owns 54,37 % and 3,32 %, via the Atomic Energy Commission (Commissariat à l'Énergie Atomique, ‘CEA’) and Bpifrance Participations respectively. Areva SA controls the various Areva Group subsidiaries in the proportions shown in Figure 2 below.

(8)

The Areva Group is active in the whole range of nuclear-cycle activities, through four business lines:

(9)

The group's operations also include renewable energies, though this activity is on a smaller scale and is currently being rationalised. It accounted for less than 1 % of the Areva Group's turnover in 2015.

(10)

These four business lines can be grouped into two main historically distinct and complementary activities: (i) nuclear fuel cycle management, comprising mining, and front-end and back-end operations, and (ii) reactors. The first was carried on by Cogema and the second by Framatome, before these two entities merged in 2001 to form the Areva Group.

Figure 1

Overview of the Areva Group's activities

(11)

The distinction between the two main business categories was carried over into the organisation chart for the merged Areva Group, as shown in Figure 2. The reactors business was housed in the subsidiary Areva Nuclear Power (‘Areva NP’) (and, where naval propulsion was concerned, in Société Technique pour l'Énergie Atomique (‘Areva TA’)), while the fuel cycle business was divided between Areva Nuclear Cycle (‘Areva NC’) for the front end and back end of the cycle, and the subsidiary ‘Areva Mines’ for mining activities. Nuclear fuel assembly, despite being linked to the fuel cycle, was housed in Areva NP because of the close synergies between assembly and reactor design (5).

Figure 2

Simplified organisation chart for the Areva Group as at 31 December 2014

(12)

As at 31 December 2015 the Areva Group employed 39 537 people. In 2015 its total turnover came to EUR 8,2 billion, compared with EUR 8,3 billion in 2014. However, applying IFRS Standard 5 on Non-current Assets Held for Sale and Discontinued Operations (6) resulted in a published turnover for the Areva Group of EUR 4,2 billion.

(13)

The difficulties encountered by the Areva Group arise first from the consequences of the sharp downturn in the nuclear market and from the adverse economic and financial conditions since 2008. Second, the Areva Group made significant losses on a small number of industrial projects. Lastly, its profitability fell as a result of certain acquisitions and the development of certain activities.

(14)

Regarding the first difficulty, the accident at Fukushima in 2011 contributed to a rapid downturn in nuclear markets. Since that date, a number of reactors have been shut down and countries such as Germany and Switzerland have decided to pull out of nuclear energy. Plans for new power stations in countries such as China have also been put on hold. Both the fuel and the reactor markets have been affected, and the Areva Group's results have suffered as a consequence.

(15)

With sources of long-term financing drying up as a result of the financial crisis in 2008 and the entry into force of new prudential rules, it has become more difficult to finance capital-intensive projects such as nuclear power stations.

(16)

Moreover, the contraction of the market and the resulting overcapacity hit at a time when the Areva Group had decided to invest in modernisation and was facing an increase in its operating costs. This had a direct impact on its cash flows and forced it to resort to debt to finance its short-term operations. At the same time, in view of the deteriorating market outlook, the Areva Group had to write down assets.

(17)

Regarding the second difficulty, the Areva Group accumulated major losses on a number of industrial projects, the most important of which is the construction of a new-generation nuclear plant at Olkiluoto in Finland (‘OL3 project’) for TVO.

(18)

The project is being led by a consortium (‘the Consortium’) formed in 2003 by the Areva Group, through Areva NP and its subsidiary Areva GmbH (‘Areva GmbH’), and Siemens. The project is some nine years behind schedule and has overrun its costs, resulting in a loss on completion for the Areva Group estimated at EUR 5,5 billion (7). The Areva Group has issued a liability guarantee, via its parent company Areva SA, in favour of its customer TVO, although according to the French authorities questions remain regarding its validity and scope.

(19)

The OL3 project is the subject of a major arbitration case between the Consortium and TVO, with each party claiming that the other is responsible for the significant delays and cost overruns at the site. The parties are seeking several billion euros in compensation from each other. […] (*1).

(20)

The Consortium and TVO had started negotiating an overall settlement, contractually setting a new provisional date for delivery (8) […], in order to resolve the arbitration dispute […] (9).[…].

(21)

The French authorities also gave details of the losses associated with the JHR projects (Jules Horowitz Reactor — a planned materials testing reactor under construction at CEA's Cadarache site) and […] (upgrade of the […] reactor at the […] plant), which have generated losses of several hundred million euros to date.

(22)

Lastly, regarding the third difficulty, the financial health of the Areva Group also deteriorated as a result of unprofitable acquisitions and development projects, in particular in mining (the acquisition of Uramin, for example, gave rise to losses of close on EUR […]) and in renewable energy.

(23)

For all these reasons, the Areva Group has recorded substantial accumulated losses in excess of EUR 9 billion over the financial years 2011 to 2015. The Areva Group financed these losses and the investments needed to modernise its industrial plant (10) with debt, via both banks (‘banking debt’) and the capital markets (‘bond debt’). After it drew down new banking lines in early 2016, its debt on 5 January 2016 stood at EUR 9,4 billion (11), EUR 6 billion of which was bond debt.

(24)

In view of the outlook for the Areva Group, its capital structure does not allow it to cover its debts, which is why the French authorities have launched a wide-ranging restructuring exercise in cooperation with the Areva Group.

(25)

In their notification of 29 April 2016 the French authorities outlined a restructuring plan covering the period from November 2014 to December 2019 (‘the restructuring period’) with a view to restoring the Areva Group's competitiveness and improving its financial structure. Under the plan, the Areva Group will refocus its activities on the nuclear fuel cycle. The restructuring plan will be accompanied by industrial restructuring under a Performance and Competitiveness Plan designed to generate cost savings of some EUR 500 million by 2018 within the continuing business operations, and major financial restructuring, primarily recapitalisation of the Areva Group.

(26)

Refocusing on the fuel cycle business will be achieved by (i) divesting the Areva Group's other activities, (ii) creating the new legal entity New Areva to carry on the fuel cycle operations, and (iii) ring-fencing certain liabilities in the current parent company Areva SA.

(27)

The divestments concern the following subsidiaries and operations:

(28)

The Areva Group also plans to withdraw in the short and medium term from practically all its activities in renewable energy and energy storage. Adwen, a company specialising in offshore wind energy, is in the process of being sold to the Spanish group Gamesa. In floating offshore wind, […]. In biomass, […]. In 2014 the Areva Group decided to gradually wind down its concentrated solar power activities, once current projects have been completed. Lastly, the Areva Group retains a minority stake in an undertaking that is developing electrolysis technologies for energy storage and a small research and development operation in flow batteries and hydrogen fuel cells.

(29)

The divestment of the activities carried on to date by Areva NP is subject to specific arrangements and a number of conditions set out in the share purchase agreement (‘the SPA’) signed by EDF and the Areva Group on 15 November 2016.

(30)

First, the parties have agreed that EDF should be insulated from a certain number of risks linked today to Areva NP. These risks are associated primarily with the continuation of the OL3 project, but also with the anomalies detected during quality audits of equipment manufactured by Areva NP at the Le Creusot, Jeumont and Saint-Marcel plants (‘the components contracts’). To insulate EDF, the parties chose a hive-down mechanism whereby Areva NP's principal activities will be transferred to a new entity (‘New Areva NP’) for sale to EDF. The activities related to performance of the OL3 contract […] (12) will remain with the old Areva NP, and through it the parent company Areva SA.

(31)

Lastly, the sale will take place only once certain conditions have been met. These include the condition that […] Flamanville 3 project does not throw up any anomalies that would significantly push up the costs or delay the project. […] vessel is […] subject to a specific testing programme following the discovery in 2014 of non-compliant values in analyses conducted on a part similar to that at Flamanville 3, resulting in a higher than expected carbon concentration (‘carbon segregation’). The Areva Group and EDF proposed further tests (‘demonstration programme’) to provide additional guarantees to demonstrate the reliability and safety of the vessel despite the carbon segregation issue. These adaptations to the testing programme were approved by the French Nuclear Safety Authority (Autorité de Sûreté Nucléaire, ‘ASN’) (13). The tests comprising the demonstration programme ran until the end of 2016. On 16 December 2016 the Areva Group and EDF submitted the final report on the tests to ASN, which expects to take five months to analyse the results and publish its final conclusions.

(32)

The initial restructuring plan saw New Areva keep a strategic 15 % stake in New Areva NP. However, in response to the doubts raised by the Commission during its in-depth investigation, the French authorities have committed to a full divestment by the Areva Group of its reactors business, which means that Areva SA and New Areva will have no capital links with New Areva NP following implementation of the restructuring plan notified to the Commission.

(33)

The Areva Group set up the company New Areva, which today is wholly owned by Areva SA, to take over:

(34)

On 30 August 2016 the agreement on partial transfer of assets from Areva SA to New Areva was signed and on 27 September 2016 the agreement of all the holders of bonds transferred to New Areva was obtained. The creation of New Areva was approved by the extraordinary general meeting of Areva SA shareholders on 3 November 2016.

(35)

The capital of the new entity is to be increased in the amount of EUR 3 billion by the French State and a number of third-party investors. The French State will inject EUR 2,5 billion, and the third-party investors, EUR 500 million. With the shares in New Areva valued, before the transaction, at EUR 2 billion, after the transaction its capital will be held in the following proportions: 40 % by Areva SA, 50 % directly by the French State, and 10 % by third-party investors.

(36)

As part of the restructuring, the risks associated with the OL3 project and […] will be borne by the current parent company, Areva SA, either directly or via Areva NP. Areva SA will also retain the Areva Group's banking debt, but will lose its principal business activities with the divestment of New Areva NP and the hive-down of the fuel cycle operations.

(37)

In order to improve its competitiveness and operational performance after refocusing on the fuel cycle, the Areva Group has started to implement a Performance and Competitiveness Plan.

(38)

The aim is to make cost savings of EUR 500 million per year, thanks to substantial efforts.

(39)

The Performance and Competitiveness Plan has four strands: (i) selectivity in purchasing, (ii) better use of sales forces, (iii) improved productivity (in particular through a voluntary redundancy plan) and (iv) wage moderation. The first measures were taken in 2015 and the Plan is expected to run until 2018.

(40)

The barely sustainable financial structure of the Areva Group calls for restructuring.

(41)

The proceeds from the divestment of the various subsidiaries listed in recitals 27 and 28 will constitute a first source of financing for the liquidity requirements of the Areva Group.

(42)

The Areva Group is also mobilising own financing of around EUR [0-2 billion], split between a structural reduction of EUR [0-1 billion] in the minimum cash balance and various transfers of claims worth EUR [0-1 billion]. These transactions are described in more detail in recital 321.

(43)

However, these resources are not sufficient to tackle the Areva Group's debt position. The French authorities estimate the Areva Group's capital shortfall at EUR 5 billion. The restructuring plan therefore includes a capital contribution of EUR 5 billion, broken down as follows:

(44)

On 29 April 2016 the French authorities notified as a single restructuring aid measure the planned subscription by the French State to two capital injections in Areva SA and New Areva respectively for a total amount of EUR 4,5 billion. This aid is to be financed from the French State's own funds.

(45)

The compatibility of restructuring aid has to be assessed under the Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty (16) (‘the Guidelines’). Following a preliminary investigation, the Commission expressed doubts about the compatibility of the aid with the Guidelines.

(46)

The Commission questioned whether the assumptions underpinning the plan for returning the Areva Group to long-term viability were realistic.

(47)

It found that the baseline scenario for New Areva did not clearly identify what impact, including in terms of lost synergies, the various divestments under the restructuring plan (especially of New Areva NP) might have on the nuclear fuel cycle operations. There was a contradiction here with the assertion by the French authorities that the divestments reduced the competitiveness of the restructured Areva Group and thus constituted genuine compensatory measures.

(48)

The Commission also found that the adverse scenario had not been based on a proper sensitivity analysis clearly identifying and ranking the main risk factors for the Areva Group.

(49)

In addition, the Commission had doubts about whether New Areva could return to long-term viability in an adverse scenario, as this scenario threw up a financing gap […].

(50)

In respect of Areva SA, the forecasts notified by the French authorities still involved too many uncertainties, including around the quantification of the hive-down scenario.

(51)

In the light of the information notified by the French authorities, the Commission concluded that the principle of adequate burden-sharing appeared to have been complied with, though it required clarifications on the treatment of the existing minority shareholders.

(52)

However, the Commission had doubts about the Areva Group's own contribution to the costs of its restructuring. The forecasts provided by the French authorities implied that the Areva Group would in principle be able to finance more than 50 % of its restructuring costs. However, the total of the own contributions came to EUR [9-11 billion], which was higher than the financing shortfall estimated at EUR [8-9 billion], and no justification for the difference was provided. Moreover, several of the elements of the own contribution, such as the planned divestments or the contribution from third-party investors to New Areva's capital injection, were still too uncertain to be classified as ‘real and actual’.

(53)

The Commission recognised that the various total or partial divestments undertaken by the Areva Group resulted in a significant reduction in the scope of its business — some 50 % based on consolidated turnover or on the number of staff. However, the impact of these divestments on the competitive situation was not obvious.

(54)

In the Commission's view, not all the divestments could be placed on the same footing. The sale of relatively small subsidiaries such as Areva TA or Canberra was not in proportion to the scale of the planned aid.

(55)

There remained the partial divestment of New Areva NP, which did seem in line with the amount of the aid, but did not appear to have a direct impact on the markets in which the Areva Group would have a significant position after the restructuring. The Commission had questions therefore about the two assumptions underpinning the assertion by the French authorities that this was a pro-competitive measure: first, that there were strong synergies between the reactors business and the fuel cycle business, such that there was an advantage to operating as an integrated group in nuclear markets; and second, that the Areva Group would lose the benefit of these synergies by divesting its subsidiary New Areva NP.

(56)

Regarding the second assumption in particular, the Commission noted that, by virtue of a Memorandum of Understanding signed by EDF and the Areva Group on 20 July 2015, the two groups appeared to be rebuilding contractually the synergies that had previously existed structurally.

(57)

For these different reasons, the Commission had doubts about the effects that the divestment of New Areva NP would have on the Areva Group's competitive position in its markets after the restructuring, and thus about whether this compensatory measure was sufficient.

(58)

Lastly, the Commission was surprised that the French authorities refused to give an undertaking as required in the Guidelines that the restructuring aid would not be used to acquire shares. The Commission therefore invited the French authorities to include any such transactions in the restructuring plan, if they were found to be indispensable to the return to long-term viability of the Areva Group.

(59)

The Areva Group gave its full support to the comments submitted by the French authorities on 12 September 2016, which it had helped to formulate.

(60)

With respect to the doubts expressed by the Commission, the Areva Group stressed the following key points:

(61)

The Areva Group also stressed the strategic importance of the restructuring aid for the nuclear industry and the economy in Europe: it was a direct job provider, a key player in maintaining the nuclear sector, involved in numerous segments of the nuclear value chain, and a crucial contributor to the smooth functioning of Europe's nuclear power fleet.

(62)

The Areva Group also stressed that the restructuring plan was progressing well, with (i) the divestments of Canberra (finalised) and the Areva Group's share in Adwen (option exercised), and (ii) the approval by the bondholders of the partial transfer of assets from Areva SA to New Areva, and the simultaneous transfer of the bond debt to New Areva. Moreover, the approval of the Hinkley Point C project meant a favourable outlook for the plan.

(63)

Urenco was born out of political cooperation between Germany, the Netherlands and the United Kingdom. Established in 1970, its main business is uranium enrichment, and it has plants in the three countries that set it up, as well as in the United States.

(64)

Urenco began by painting a broad picture of the nuclear fuel cycle value chain, and then went on to develop a three-pronged argument: first, the aid under scrutiny would significantly strengthen the Areva Group; second, the distortive effect would be felt particularly on the enrichment market to the detriment of Urenco and the other competitors in this segment; and consequently, the competitive measures proposed by the French authorities were insufficient and needed to go further.

(65)

On the first point, Urenco stated that the restructuring plan failed to include any capacity reduction measures in any of the Areva Group's business lines, despite its financial difficulties and the overcapacity in its markets. New Areva would retain the same assets in the nuclear fuel cycle as in the past, and would thus be ideally placed to maintain a strong position in these markets.

(66)

This was all the more evident in that the State intervention helped to repair the balance sheets of the newly established entities and wipe the slate clean of historic poor management. New Areva NP and New Areva were thus restored to a position where they had the freedom to make new investments, access financing and leverage bargaining power. New Areva's competitors, by contrast, had to bear the full costs of their past investments and could count on their profits alone for future development.

(67)

On the second point, Urenco took the view that the distortions of competition would be felt over the long term in the enrichment segment, which was characterised by overcapacity and a limited number of highly capital-intensive projects.

(68)

According to Urenco, worldwide enrichment capacity was significantly higher than demand […]. This overcapacity was all the more detrimental because part of the growth in demand came from countries such as China and Russia, which were largely closed to Western companies. As for the demand that could be accessed by Western companies, EDF's electro-nuclear fleet represented a major share, and it was therefore vital that the closer ties between EDF and the Areva Group did not restrict Urenco's access to EDF.

(69)

The aid under scrutiny also helped the Areva Group to remain active in MOX fuel, even though this fuel was less competitive than enriched natural uranium. Without the State aid, this business would have been closed or scaled down, freeing up the markets for the Areva Group's competitors (in particular for supplying EDF, [0-25] % of whose demand could be met with MOX fuel).

(70)

New Areva's repaired balance sheet would also free it up to develop trading in enrichment services (‘separative work units — SWUs’), an activity that required significant financial room for manoeuvre. This market […] could help to place New Areva in a stronger position than its non-subsidised competitors, whose financial structure, reflecting the highly capital-intensive projects in the sector, did not allow them to take this kind of risk.

(71)

Lastly, Urenco argued that New Areva would continue to benefit from the advantages of vertical integration in the fuel cycle markets.

(72)

On the third point, Urenco stressed that the competitive measures should be offered in the markets in which the Areva Group would operate after the restructuring, all the more so since most of these markets (mining, conversion and enrichment) currently faced overcapacity.

(73)

Urenco did not share the view of the French authorities that withdrawing from the reactors business would give rise to lost synergies on such a scale that the fuel operations would be affected. The fact that there were numerous non-integrated but successful players (such as Urenco, Cameco and KAP) demonstrated that the importance of these synergies was relative. Moreover, they concerned only the supply of fuel to new reactors; […].

(74)

In any event, the strategic partnership between EDF and New Areva would recreate any synergies lost. New Areva would keep a strategic stake in the joint subsidiary with EDF, which would involve a certain degree of coordination between the two groups and could be an incentive for EDF to favour New Areva. In addition, they would have the same shareholder: the French State. And closer cooperation was on the cards, as the Commission noted in its opening decision. Lastly, the disadvantages of the split would be felt primarily by New Areva NP, which would have to form new sales teams for the sale of fuel assemblies, while New Areva would keep the benefits of integration on the fuel cycle side.

(75)

Accordingly, Urenco proposed the following pro-competition measures:

(76)

Urenco also wanted the French authorities to explore other pro-competition measures to be spread across all the segments, such as the sale of an activity to a new entrant, in order to reduce the synergies derived from New Areva's integration on the fuel cycle side. Lastly, Urenco stressed the importance of compliance with the ban on acquiring any undertaking during the restructuring period, unless it could be shown that such an acquisition was indispensable to the Areva Group's return to viability.

(77)

TVO is a Finnish electricity generator established in 1969 and owned by other Finnish electricity undertakings and by industrial companies. TVO is the future owner of OL3, a nuclear power plant using European Pressurised Reactor (‘EPR’) technology, that is still under construction. The construction contract for this plant […] was concluded on 18 December 2003 with the Consortium. The initial date of delivery was 30 April 2009. Following numerous delays, the Consortium has now announced that delivery will take place in December 2018.

(78)

TVO stressed the importance of the OL3 reactor for the energy sector in Finland and in Europe. Once it had been commissioned, OL3 would contribute 9 % of total electricity generation in Finland by 2020, and meet 14 % of total electricity demand, thereby helping Finland to increase its energy independence. In addition, OL3 was a pioneering project, which should pave the way for a ‘resurgence’ of the nuclear industry.

(79)

The OL3 project was in its final stage of completion. External construction was almost complete, but some construction and fitting work was still ongoing inside the plant, particularly with respect to the nuclear island (reactor). Some 2 400 people were working on the site. TVO stressed that the OL3 project was now entering the crucial commissioning phase, which would ultimately take it to the provisional delivery date. This phase required the ongoing support of the Consortium, which had the EPR knowledge and expertise.

(80)

TVO also referred to the arbitration dispute between itself and the Consortium. The total amount claimed by the Consortium was currently some EUR [0-5 billion], while the amount claimed by TVO to cover its own costs and losses came to EUR [0-5 billion] according to its latest estimates. The total combined amount claimed by the two parties to the dispute therefore came to around EUR [0-10 billion].

(81)

TVO went on to explain its understanding of the Areva Group's restructuring plan, now based on ‘plan B’, i.e. transferring New Areva NP to EDF after ring-fencing the OL3 project and the resources needed to complete it, as well as leaving in this ‘legacy structure’ the components contracts and part of the Areva Group's debt.

(82)

Overall, TVO supported the planned recapitalisation of the Areva Group by the French State. However, it had concerns about the potential negative impact of the group's restructuring on the OL3 project. In particular, TVO wondered about the ability of the legacy structure, in which the ring-fenced OL3 project would be placed, to maintain the resources necessary for the proper completion of the project. The legacy structure would have limited financial resources to meet what could be significant debts that were difficult to quantify at this stage.

(83)

The financial resources of the legacy structure were composed of: EUR 2 billion in capital injections, EUR 2,5 billion in proceeds from the sale of New Areva NP to EDF, residual proceeds from the sales of Areva's non-strategic activities and the balance still owed by TVO to the Areva Group for the completion of the OL3 project. Mirroring these resources, the costs borne by the legacy structure were estimated to be: the costs of completing the OL3 project and the associated guarantees, the repayment of the banking debt of EUR 3,4 billion, potential guarantees to EDF for the contracts for nuclear plants whose components were to be audited, other guarantees linked to the sale of non-strategic assets and, if TVO were to win the ongoing arbitration dispute, an amount that could be as high as EUR [0-5 billion].

(84)

TVO therefore questioned the ability of the restructured Areva Group to cope with the risks associated with the OL3 project, in particular the costs of completing it, and set out the implications of its doubts for the restructuring aid assessment under the Guidelines, and more specifically the degree to which the aid contributed to an objective of common interest, the long-term return to viability of the Areva Group, and the one-time-last-time principle.

(85)

First, as regards the objective of common interest, TVO endorsed the argument made by France highlighting the contribution made by the aid to achieving the objectives of the Euratom Treaty, set out in Article 2(d) thereof. However, TVO stressed the need also to consider Article 2(b) and (c) of the Treaty. With respect to Article 2(c), the aid contributed to the completion of OL3, which was an important project for the development of the European energy sector and for security of supply in the Nordic countries. With respect to Article 2(b), the nuclear safety objective implied, as laid down in Article 11 of the Convention on Nuclear Safety that ‘each Contracting Party shall take the appropriate steps to ensure that sufficient numbers of qualified staff with appropriate education, training and retraining are available for all safety-related activities in or for each nuclear installation, throughout its life’. Given that TVO's expertise was mainly restricted to the operation of power plants, it was relying on the Consortium's expertise to ensure the safety of the OL3 project. However, a restructuring plan involving the ring-fencing of the OL3 project in a legacy structure risked giving rise to under-allocation of qualified staff from the Areva Group to the project, loss of back-office support from the Areva Group in France and Germany, loss of the Areva Group's technical infrastructure and potential problems with project sub-contractors.

(86)

Second, as regards the return to long-term viability of the Areva Group, TVO questioned whether the capital injection into Areva SA was sufficient, whether the assumptions underlying the restructuring plan were realistic, and therefore whether the aid could ensure the long-term viability of Areva SA.

(87)

Third, as regards the one-time-last-time principle, if the restructuring plan did not ensure that the Areva Group was able to meet its obligations in respect of the completion of the OL3 project, additional obligations in the form of damages associated with new delays could arise. It would then be impossible to approve new State aid because of the one-time-last-time principle.

(88)

In order to address these doubts and questions, TVO stressed that any restructuring plan had to comprise:

(89)

Together with two companies belonging to the Areva Group (Areva GmbH and Areva NP), Siemens is part of the Consortium sponsoring the OL3 project. Although the Areva Group is carrying the biggest share of the project, the members of the Consortium are jointly and severally liable to their client, TVO, for the completion of the project.

(90)

While the Siemens group expressed full support for the intervention by the French State on behalf of the Areva Group, it nevertheless had a number of reservations.

(91)

First, Siemens questioned whether the aid was sufficient to cover the commitments and risks borne by Areva SA:

(92)

Siemens then wondered how the structure that was to house the OL3 project would have sufficient legal, human, financial and operational resources to carry the project to completion, if the activities and operational resources in construction were to be transferred to New Areva NP for sale to EDF. The almost inevitable outsourcing of part of the project to New Areva NP could […].

(93)

Siemens also expressed concern that the Areva Group's restructuring plan designed to ring-fence OL3 in a specific structure might be blocked […] by TVO.

(94)

According to Siemens, these risks could be covered by additional mechanisms such as (i) additional financial resources from the French State, (ii) a State guarantee covering any additional liabilities arising from the OL3 project, or (iii) an undertaking from the French State to finance any additional capital shortfall linked to the project.

(95)

Lastly, given that Siemens and the Areva Group bore joint liability within the Consortium, Siemens was worried that it would have to cover the financial costs that the Areva Group was unable to meet, which in its view, would be incompatible with the burden-sharing principle laid down in the Guidelines.

(96)

A final third party, who wished to remain anonymous, alerted the Commission to the distortions of competition generated by the aid under scrutiny. According to this third party, both New Areva and New Areva NP would end up stronger as a result of the restructuring, thanks to the State intervention.

(97)

Undertakings in receipt of State support had a distinct competitive advantage in the nuclear industry, which was characterised by very intense competition and a demand for increasingly broad guarantees.

(98)

Lastly, the anonymous third party took the view that the future cooperation between New Areva and New Areva NP would recreate important synergies that would distort competition.

(99)

The comments by France are divided into four parts, corresponding to the main doubts raised by the Commission in the opening decision. First, the French authorities seek to demonstrate that the only measure which could constitute State aid is the capital injection into Areva SA and New Areva. They then respond to the Commission's doubts concerning the robustness of the assumptions underlying the business plan, the proportionality of the aid and the proposed competition measures.

(100)

The French authorities pointed out first that the possibility of the Areva Group granting State aid to third parties by selling its subsidiaries at too low a price (i) was not relevant in this procedure, and (ii) was entirely theoretical because it had an incentive to maximise the return on its divestments. They also pointed out that the Areva Group was receiving no aid from the divestments of New Areva NP and Areva TA, which involved State resources but were being carried out at market price.

(101)

As regards New Areva NP, the French authorities explained that a specific type of governance had been introduced within EDF to ensure that EDF's interests were protected. In that context, a working group composed of independent managers had been specifically created for the acquisition of New Areva NP, in order to check whether the transaction was in the interests of EDF's shareholders and to give an independent opinion to EDF's Board of Directors. No State representative sat on the working group. On the basis of the work done by the group, which had also commissioned a valuation study from the bank Société Générale, EDF had finally taken the acquisition decision.

(102)

The French authorities also explained that they had ultimately opted for a hive-down for EDF's acquisition of the Areva Group's reactors business. According to the French authorities, these new divestment arrangements had no impact on the valuation carried out by the parties and their advisers under the previous divestment plan: EUR 2,5 billion for 100 % of the capital. Irrespective of the legal arrangements for the divestment, the economic reality remained the same for EDF, which would take over Areva NP's historical activities without bearing the risks linked to the OL3 project. EDF would also be insulated against the risks linked to the components contracts. These risks had not been taken into account in the valuation of January 2016, but the insulation mechanism agreed by the parties meant the substance of the valuation need not be altered.

(103)

As regards Areva TA, the valuation process had been organised in two stages, in accordance with the most common market practices: (i) between January and May 2016, the Areva Group had provided the consortium of buyers with financial, operational, legal and tax information, and organised several working sessions with the Areva TA management team; (ii) the consortium had then had access to a data room and had been able to hold question and answer discussions with Areva TA management. In this context, the Areva Group and the buyer had been assisted by 12 legal, banking and due diligence advisers.

(104)

On 18 August 2016, the buying consortium described in recital 27 had submitted an offer valuing Areva TA shares at EUR [0-2 billion]. This valuation was based on the discounted cash flows method (‘DCF’) method, applied to a business plan based on assumptions agreed with the buyer. The price had been set out in the contract of sale signed on 15 December 2016.

(105)

The French authorities considered therefore that the final valuation was based on commonly recognised methods, after the usual due diligence.

(106)

The French authorities first presented updated financial projections for New Areva. They were based on assumptions deemed to be extremely conservative: (i) the price of uranium had been revised downwards, […], (ii) the projections for mining activities had been revised downwards, (iii) an additional risk had been taken into account as regards […], (iv) a strengthened cost reduction plan had been incorporated for enrichment and conversion, (v) the cost of implementing the hive-down had been stabilised at EUR [200-900 million] over the period 2016-2025. The adverse scenario assumptions had also been revised downwards, following similar reasoning.

(107)

The French authorities then addressed the various doubts raised by the Commission concerning the plan for restoring viability.

(108)

The French authorities argued that, given the length of nuclear industry cycles, the time horizon for the main losses of synergy extended beyond the Areva Group's financial projections (2016-2025). New Areva had a full order book for the next five to 10 years, which meant a degree of inertia in the development of its market shares. This characteristic was nevertheless common to all nuclear material suppliers; supply contracts typically extended over a period of many years, usually five to 10 years depending on the type of material (unprocessed, converted or enriched uranium) and the nature of the customer. However, the various divestments planned, especially that of New Areva NP, would undermine New Areva's competitive position in the longer term.

(109)

Furthermore, the Areva Group was implementing a Performance and Competitiveness Plan, which would cushion the shorter-term impact of the divestment of New Areva NP on its structural costs. For example, the Plan aimed precisely at achieving gains in the diversification of purchases to compensate for the loss of purchase volume resulting from the divestment of New Areva NP. However, the adverse financial projections assumed that the Plan's objectives would only be [50-100] % achieved, and that therefore a negative impact would be felt.

(110)

The French authorities and the Areva Group had identified the key risk factors affecting the future of New Areva. They pointed out that the baseline scenario was already very conservative, and it was therefore unlikely that all the adverse assumptions would occur at the same time.

(111)

The first of these factors was the euro/dollar exchange rate. […]. An analysis of exposures was carried out monthly and coverage was contracted as necessary to cover a minimum percentage of future payments. Furthermore, some activities, such as mining, benefited in part from natural protection against this risk: 50 % of New Areva's mining output would originate in Canada, whose currency was correlated to the dollar.

(112)

The second risk concerned […]. The consequences in the adverse scenario were around EUR – [0-100 million] on accumulated operational cash flows for the period 2016-2025. The French authorities pointed out that the Areva Group was already taking a series of cost optimisation and reduction measures to limit the impact of this risk, in the form of operational improvements aimed at […]. These improvements were included in the Performance and Competitiveness Plan, which ran until 2018, […] could be sought beyond 2018 if the risk materialised.

(113)

The third risk identified related to the consequences of a possible failure of […]. This was unlikely in the view of the French authorities, as […]. Nevertheless, a failure […] would affect New Areva's income.

(114)

The financial projections for New Areva lastly took into account a number of contingencies […], the extent of which differed according to whether the baseline or adverse scenario was considered. These amounted to EUR [1-2 billion] in the adverse scenario over the period 2016-2025, i.e. EUR [0-1 billion] more than in the baseline scenario. The French authorities indicated the corrective action that could be taken: additional commercial or productivity measures (e.g. optimising purchases and reducing the wage bill), or adjusting the investment plan […].

(115)

In response to the doubt raised by the Commission in recital 151 of the opening decision, the French authorities stated that, in the baseline scenario, New Areva's financing needs would materialise […]. It was expected that New Areva would have re-established sufficiently good financial ratios by that time that recourse to the bond markets would be possible without calling into question the investment grade rating of the undertaking.

(116)

In contrast, in the adverse scenario, New Areva would need […] of financing. However, the French authorities explained that New Areva would be able to bridge the gap […], without jeopardising the company's return to viability […].

(117)

The French authorities had undertaken to ensure that Areva SA carried out no activities other than those specifically provided for in the restructuring plan notified to the Commission. On that basis, they considered that Areva SA would have sufficient resources to cover its financial needs.

(118)

The French authorities confirmed their assumptions for the costs of completing the OL3 project over the period 2017-2025. These projections resulted in negative cash flow of EUR [0-2 billion] over the period in question. […].

(119)

On the basis of these assumptions, Areva SA's business plan showed surplus liquidity of EUR [0-500 million] at the end of the period in the baseline scenario and EUR [0-100 million] in the adverse scenario. […].

(120)

First, the French authorities pointed out that substantial provisions for losses and asset write-downs had already been set aside, and that the share price was historically low. The responsibility for past management was therefore largely borne by the minority shareholders, in proportion to their stake.

(121)

Second, they anticipated that the State would be obliged by the Financial Markets Authority (‘AMF’) to make a public buy-back offer. The price offered to shareholders would be closely monitored by the AMF, which would ensure that a multi-criteria valuation method was followed.

(122)

As regards the possible excess liquidity referred to in recital 172 of the opening decision, the French authorities considered that the fact that the liquidity used to implement the restructuring plan exceeded the restructuring costs did not in itself imply that the aid was not kept to the minimum. The Guidelines set a floor for the own contribution but did not establish either a ceiling or a mathematical relationship between the amount of State aid and the restructuring costs.

(123)

In other words, the French authorities considered that a clear distinction should be drawn between the two distinct legal criteria. These were, on the one hand, the financing required in view of the financial projections to return to viability and, on the other, limiting the State aid to the minimum by requiring a significant own contribution to the restructuring costs. This interpretation was reflected in the Commission's practice in previous decisions (18) of accepting that the own contribution exceeded the restructuring costs without this excess liquidity meaning that the aid was not limited to the minimum.

(124)

Lastly, the French authorities stressed that the Areva Group needed a liquidity cushion if the adverse scenario occurred.

(125)

As regards the doubts raised by the Commission concerning the real and actual nature of the Areva Group's own contribution, the French authorities provided a number of clarifications and reiterated that the Commission had, in its previous decisions, accepted that future sales of assets were accounted for as an own contribution provided they were subject to an independent assessment of the market value of the asset (19).

(126)

As regards the divestment of New Areva NP, the French authorities pointed out that independent valuations had been carried out and sent to the Commission with the notification. France also stressed the aspects which made it possible to establish the real and actual nature of the divestment of New Areva NP: first, the contract for EDF's purchase of New Areva NP shares signed on 15 November 2016; second, the fact that the conditions precedent attached to the sale did not call the sale into question. The French authorities were thus confident about the ASN's findings concerning the demonstration programme for the Flamanville 3 vessel, since all the related tests had been conducted without revealing any non-compliance in the view of EDF and the Areva Group. In addition, […] the negotiations with TVO did not call into question the divestment of New Areva NP but affected only the timetable.

(127)

As regards the divestment of Canberra, the French authorities noted that it had actually been implemented since 1 July 2016.

(128)

The divestment of Areva TA was being finalised, as was apparent from the information already summarised in recitals 103 to 105 of this Decision.

(129)

As regards the subsidiary Elta, a unilateral purchase promise had been received from the ECA Group on 4 August 2016, and the sale had been notarised on 1 December 2016 at a price of EUR [0-10 million].

(130)

It was intended that the Areva Group's stake in its subsidiary Adwen would be fully divested; a EUR 60 million floor price having been secured by the Gamesa group. The divestment was scheduled to be carried out at the beginning of January 2017.

(131)

However, the divestments […] would not occur before […].

(132)

Lastly, as regards the involvement of third-party investors in New Areva's capital injection, the French authorities pointed out that they had received expressions of interest from […] Japanese groups JNFL and MHI […]. The state of play in the negotiations was as follows. The MHI and JNFL groups had each submitted a firm offer […] for 5 % of New Areva's capital, valued at EUR 250 million. […].

(133)

According to the French authorities, the divestment of New Areva NP was a particularly significant compensatory measure because it would mean that the Areva Group simply withdrew from a large number of markets in which the EDF Group would then be the leading competitor. By divesting New Areva NP, the Areva Group was giving up one third of its assets and around half of its turnover. It was also giving up all of the advantages stemming from the integrated model it had developed over the last 15 years and was thus making a major strategic shift. In addition, the Areva Group was giving up the positive cash flows that New Areva NP would generate over the period.

(134)

In support of this reasoning, the French authorities referred in detail to the various points raised by the Commission in the opening decision.

(135)

The French authorities pointed out that ‘measures to limit distortions of competition should address both moral hazard concerns and possible distortions in the markets where the beneficiary operates’, taking into account ‘the characteristics of the market concerned’ (20).

(136)

In the case in question, any risk of moral hazard could be excluded in their view since the past losses had been borne by the existing shareholders of the Areva Group, in particular the State, through provisions and asset write-downs. Furthermore, in the light of the characteristics of the relevant markets, the State aid preserved, more than it restricted, effective competition as most of the markets in which New Areva would operate had an oligopolistic structure, which would be exacerbated by the disappearance of an operator.

(137)

According to the French authorities, a comparison of the markets in the counterfactual scenario without aid clearly showed that only the continued presence of the Areva Group allowed effective competition in the market to be maintained.

(138)

Thus, the divestment of New Areva NP was more than sufficient as a compensatory measure, particularly as it imposed short-term losses of synergy on the Areva Group, and in the medium-term deprived it of the particularly profitable development prospects described below in Section 4.4.2.

(139)

The integrated Areva Group had an integrated marketing and sales force for natural uranium, conversion services, enrichment, and design and manufacture of fuel assemblies, and any possible combination of these products and services. Integrating the sale of fuel assemblies with front-end services gave the Areva Group a significant information and trading advantage. Electricity generators usually had a single buyer for the supply of fuel assemblies. Because of the low substitutability of fuel assemblies, a supplier of assemblies was a key partner for an electricity generator, which was not the case of a front-end supplier, whose products and services were fungible.

(140)

The French authorities gave the example of an electricity generator […] to which the Areva Group had been able to expand its sales to include front-end products and services as part of an invitation to tender for fuel assemblies. Today, [5-10] out of every 10 customers were customers of both Areva NC and Areva NP.

(141)

Furthermore, the unbundling of New Areva NP's activities would make logistical optimisation more difficult. In future New Areva would have to work with New Areva NP's fuel assembly manufacturers in the same way as with all the other American and European manufacturers and would therefore miss out on logistical improvements, e.g. delivery costs would increase and its ability to fine-tune its production of enriched uranium would be reduced.

(142)

The French authorities also explained that any supplier of front-end products and services supported by a supplier of fuel assemblies and reactors had an undeniable competitive advantage for tenders at the beginning of the cycle. A buyer of a new plant would generally require the contractor to supply the first reactor core as well as possible reloads. By being integrated with Areva NP, the Areva Group had automatic access to this for its front-end operations. The Areva Group was also able to negotiate better terms and conditions for its uranium, since such negotiations were generally conducted privately, without an open procedure. Finally, this type of contract allowed a commercial relationship to be established, including in markets which are difficult to access, such as China.

(143)

This competitive advantage was reflected in the contracts negotiated by the Areva Group for the reactors in OL3 and Taishan 1 and 2 […]. In the case of Taishan 1 and 2, for example, […]. Such terms and conditions could not have been negotiated without the benefits of integration: by comparison, the Areva Group could only enter into contracts […].

(144)

All future sales of reactors by New Areva NP thus represented missed opportunities for New Areva to sell front-end material under the best possible terms and conditions. According to the French authorities, New Areva NP would be well placed to win the projects […]. New Areva NP could also aspire to the projects […]. On account of the length of nuclear cycles, however, these lost synergies would not be felt until after the end of the period for which the Areva Group had provided financial projections.

(145)

The lost synergies were particularly evident in the early life of a reactor, but they were also felt throughout its lifetime. Some electricity generators preferred to use a single tender combining purchase of uranium and conversion, enrichment and assembly services, including for reactors whose closure was already planned (end of life).

(146)

Lastly, the end of integration would make it more difficult to develop an integrated chain for the recycling of reprocessed uranium, as this required a high level of logistical coordination between the supplier of fuel assemblies (New Areva NP) and the supplier of reprocessing services (New Areva).

(147)

All these lost synergies would penalise New Areva and benefit its competitors. By remaining integrated, the Areva Group would have been ideally placed to take advantage of the expected market recovery, in particular because of its upgraded equipment. A sizeable market was opening up, for example, in managing end-of-life reactors for electricity generators. However, owing to the expected loss of synergies, the French authorities and the Areva Group were focusing on […].

(148)

In contrast, New Areva's competitors would be able to take advantage of the opportunities created by the break-up of the Areva Group, including in the supply of fuel to new reactors. New Areva would have to take on competitors which were integrated, like Rosatom, or in the process of vertical integration, like KHNP, Toshiba/Westinghouse and CNNC.

(149)

The divestment of New Areva NP would be […] for New Areva's operations in recycling and processing spent fuel. MOX sales depended on a fleet of light water reactors on the market that could be operated with MOX fuel assemblies. The size of this fleet depended on the efforts New Areva NP was willing to make to propose and roll out the technology in the future.

(150)

The decision by an electricity generator to ‘mox’ a reactor depended on its ability to maintain the performance of its reactor and associated costs. These two factors, in turn, depended on good cooperation between the designer of the reactor, the designer of the assemblies and the supplier of the moxed material. To date, this cooperation had been possible because of the Areva Group's ability to act as a central arbitrator between the differing interests of these entities.

(151)

New Areva NP thus […] to promote an increase in the number of MOX reactors in so far as […]. Until now, being part of the same group had enabled intra-group agreements […] capable of aligning the differing interests of the two operations. This would no longer be the case in the future, and significant losses of synergy were therefore likely in the long term.

(152)

The lost synergies would also be felt in the decommissioning and logistics segments. Decommissioning was highly integrated with reactor design and the supply of services to the installed base. The logistics operations were currently customers of Areva NP in two respects: for the shipment of contaminated maintenance tools and for the shipment of fuel assemblies. These intra-group services were likely to be either brought in house by New Areva NP or put out to competition in the future.

(153)

Decommissioning and logistics were both dynamic markets, in which the Areva Group […].

(154)

The French authorities had provided the Commission with the Memorandum of Understanding of 28 July 2016 between EDF and the Areva Group. Annex 7 thereof concerned the creation of an overall strategic and industrial partnership.

(155)

According to the French authorities, the partnership was not likely to recreate lost synergies […].

(156)

[…] the French authorities emphasised that New Areva NP and New Areva were about to enter into a customer/supplier relationship. […].

(157)

Consequently, no strategic partnership could reproduce the strength of the intra-group trade-offs and synergies of the past.

(158)

Nevertheless, in response to the Commission's objections on this point, the French authorities had undertaken to ensure that, during the restructuring period, New Areva NP — under the supervision of EDF and New Areva — would not enter into any strategic partnership or other framework agreement for commercial cooperation which was designed to benefit New Areva in cases where New Areva NP would wish to make a customer an integrated offer with a nuclear material supplier, in the markets identified in recitals 344 and 347 — supply of fuel assemblies and construction of new reactors. This undertaking did not prevent New Areva and New Areva NP from making joint offers, provided that New Areva had been chosen on the basis of commercial and technical criteria.

(159)

While reiterating the importance of partnerships in the nuclear field, the French authorities had undertaken that, during the restructuring period, the Areva Group (Areva SA and New Areva) and the companies under its control would refrain from acquiring, directly or indirectly, shares in any company which was not already under its control, with the exception of projects indispensable for restoring the Areva Group's viability. This undertaking did not apply to shares acquired by New Areva and the companies directly or indirectly controlled by it for the purposes of the financial management of (i) decommissioning funds which the Areva Group was obliged to manage under a legal or regulatory obligation, (ii) pension funds for Areva Group staff, (iii) liquidity investments. They had also undertaken to ensure that the Areva Group (Areva SA and New Areva) would refrain from publicising the support it received as a competitive advantage when marketing its products and services.

(160)

The French authorities considered that Areva SA would be able to finance all its forecast requirements.

(161)

On the one hand, it was incorrect to suggest that the Areva Group was jeopardising the smooth finalisation of OL3 through the restructuring plan. The success of the project was essential for all parties to the restructuring: Areva SA, of course, but also New Areva (for the supply of fuel) and New Areva NP (for the demonstration value of this first EPR). Areva SA would therefore have all the necessary operational resources — which would not be carved out and diverted immediately to New Areva NP — to successfully complete the project. This should dispel all TVO's doubts on this matter.

(162)

In particular, the French authorities stressed the existence of […] specific cooperation between Areva NP and New Areva NP, allowing Areva NP to call on New Areva NP as soon as necessary […].

(163)

On the other hand, the needs of Areva SA had been properly estimated by the French authorities, in a conservative manner.

(164)

As regards the costs of finalising OL3, the Areva Group's estimate was comparable, or even more conservative, than that of TVO, except for […], but the French authorities rejected […], which in their view completely lacked credibility. The French authorities did not comment on the estimate of Siemens, which could not be analysed in detail at that level of aggregation.

(165)

As regards the damages which might result from an unfavourable outcome of the arbitration proceedings, […].

(166)

According to the French authorities, it would be entirely inappropriate and contrary to the objectives and spirit of the rules on restructuring aid to increase the amount of aid in order to guarantee to third parties the payment of damages which they might be awarded in an action brought against the beneficiary of the aid. First, this type of contingency did not fall within the definition of the risks to be taken into account in establishing the adverse scenario. The Guidelines referred only to macroeconomic and trade factors. Second, such an increase in aid would be contrary to the principles of proportionality and limitation of aid to the strict minimum. Third, in practice the arguments of TVO and Siemens would result in the State guaranteeing the solvency of their jointly liable debtor/co-debtor, which would constitute State aid to Siemens and TVO. The Commission had explicitly acknowledged that State guarantees for hypothetical disputes constituted State aid (21) and had already excluded the principle of their compatibility (22). Fourth, the arguments of Siemens and TVO were inconsistent because they did not take into account the possibility of a positive outcome for the Consortium. Fifth, in the event of an unfavourable arbitration outcome, […].

(167)

In the case of […]. The French authorities had put forward several arguments.

(168)

As regards […].

(169)

Furthermore, the regulatory problems associated with carbon segregation were in the process of being settled in EDF's existing fleet. The ASN had authorised the restart of all the reactors operating in France with steam generators manufactured in Le Creusot (in which carbon segregation issues had been identified), and eight of the 12 reactors with steam generators manufactured by the Japanese partner of Areva NP.

(170)

Nor had any anomaly been found to date in Taishan's primary loop. In any event, the contract stipulated that the contractual liability of the Areva Group would be capped at EUR [0-1 billion] for the Taishan project.

(171)

[…], any request would require evidence of definite damage, i.e. a genuine safety flaw in a component leading to a high risk of failure.

(172)

As regards all matters involving the civil liability of the Areva Group, the French authorities had informed the Commission that […].

(173)

As regards the argument by Siemens that the estimated resources of Areva SA should enable it to cover a maximum theoretical amount covering all the theoretically possible risks, the French authorities emphasised that the examples of the Commission's decision-making practice on which Siemens based its reasoning all came from procedures opened under the temporary framework for aid to restructure financial institutions in the context of the economic and financial crisis. This reasoning by analogy advocated by Siemens was therefore invalid in this case, in the view of the French authorities. They also argued that the worst-case scenario under the Guidelines could not cover all the theoretically possible risks but had to remain within the sphere of possible events.

(174)

Lastly, in reply to the argument by Siemens that an under-capitalisation of Areva SA would contravene the principle of adequate burden-sharing set out in the Guidelines, the French authorities noted that the principle applied only to shareholders and subordinated creditors, who should not be unduly protected by the effects of the aid.

(175)

First, the French authorities pointed out that Urenco had played a large part in the overcapacity which had characterised the uranium enrichment market since Fukushima. Urenco's share in global enrichment capacity had doubled between 2007 and 2015, as the Areva Group's share had decreased.

(176)

The French authorities then showed that the State aid would not create any distortion of competition but, on the contrary, would help to stimulate competition in the long term.

(177)

The relatively modest presence of the Areva Group in the decommissioning and logistics markets explained why the aid would not distort competition. Similarly, the Areva Group was the only global player operating a reprocessing plant on an industrial scale, and its continued presence in this segment could not, therefore, harm competition that did not exist.

(178)

In the mining, conversion and enrichment segments, the market structures were highly concentrated; the Areva Group was also the only sizeable European group in the mining and conversion segments. The disappearance of the Areva Group from these segments would therefore undermine competition by helping to increase concentration even further.

(179)

Furthermore, the Areva Group would not be unduly strengthened by the State aid in the specific enrichment segment. First, the French authorities pointed out that the capacity of the Areva Group to sign contracts for enrichment services was not linked to its credit rating, but to other characteristics such as supply price, contractual flexibility, quality of logistics, etc. Second, the enrichment subsidiary of the Areva Group (Société d'Enrichissement du Tricastin — ‘SET’) was already profitable and financially independent, […]. […], this activity would contribute more to the return to viability of the restructured Areva Group than the amount of aid it received itself. Third, Areva had not been active in the trading of SWUs for at least 10 years, […].

(180)

The French authorities referred to the arguments set out in their comments of 12 September 2016 to point out that the disappearance of synergies linked to the integrated model would penalise not only operations at the beginning and end of the cycle but also, more generally, all operations throughout the life cycle of the reactor. The divestment of New Areva NP was therefore a sufficient measure. For the reasons set out in those same comments, the strategic partnership with EDF would not recreate the synergies, and the fact that the French State was a shareholder in both groups changed nothing, since they were independent economic units with their own decision-making power.

(181)

As regards, in particular, the different measures advocated by Urenco, the French authorities argued that:

(182)

The Commission has to assess whether the measures covered by this procedure constitute State aid within the meaning of Article 107(1) TFEU.

(183)

Under Article 107(1) TFEU, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market.

(184)

The Commission considers that a public measure can thereby be classified as State aid if all of the following conditions are met: (i) the measure must be granted by the State or through State resources, (ii) it must confer an economic advantage on its recipient; (iii) that advantage must be selective, and (iv) the measure must distort or threaten to distort competition and be liable to affect trade between Member States.

(185)

Although these two interventions are seemingly separate, the Commission considers that the State's subscription to the capital injections into Areva SA and New Areva respectively must be regarded as a single aid measure made available to Areva. It is apparent from the analysis of the difficulties and indebtedness of the Areva Group that as a whole it needs capital. The fact that this overall need for recapitalisation is subsequently broken down between Areva SA and New Areva is nothing more than an implementing arrangement for recapitalising Areva.

(186)

This subscription is attributable to the State and is granted through State resources. The two capital injections will be subscribed to by the State directly through its own resources.

(187)

This confers an economic advantage on the Areva Group. On the one hand, this investment improves the position of the Areva Group by enabling it to meet a significant part of its debts. On the other hand, the Areva Group would not have been able to obtain such capital under normal market conditions, since no private investor would have subscribed in those circumstances to any capital injection into the Areva Group in view of its serious financial situation. The two third-party investors MHI and JNFL will not subscribe to the capital of the Areva Group in the same way as the French State, since their investment will concern only one of the two entities of the restructured Areva Group (New Areva), and for a minority stake of […] %.

(188)

The advantage thus granted to the Areva Group is selective. The State's subscription to these capital injections is an ad hoc measure which exclusively benefits the Areva Group for the purposes of its restructuring.

(189)

Lastly, the advantage granted to the Areva Group through the State subscription to the capital injections is liable to affect trade between Member States. The different markets on which the Areva Group operates are characterised by a high level of trade between these States. In this regard, the Commission has already had cause to regard the nuclear markets as at least pan-European (23). In addition, the advantage granted to the Areva Group provides it with additional financial resources enabling it to remain active on the market. The measure is therefore liable to distort competition

(190)

In the light of the above, the Commission concludes that the French State's subscription to the capital injections in Areva SA and New Areva constitutes State aid within the meaning of Article 107(1) TFEU, in favour of the Areva Group, amounting to EUR 4,5 billion.

(191)

In the opening decision, the Commission noted that the various divestments envisaged by the Areva Group could constitute aid if they were not carried out at market price. They would constitute aid either to the buyer, if the sale price were considered excessively low, or to the seller (the Areva Group) if the sale price were considered excessively high — aid to the seller being relevant only in the event of divestment to another public entity, provided that the criteria of imputability and State resources are met. The Commission notes that, according to point 63 of the Guidelines, divestments comprising an aid element to the seller (the Areva Group) cannot be taken into account in calculating the own contribution.

(192)

As regards divestments to non-public third parties (Canberra, Elta, Adwen), the Commission acknowledges that aid from the Areva Group to these buyers, by means of an unduly low price, is unlikely since the Areva Group has every incentive to maximise the proceeds from these divestments. Moreover, the divestments took place through competitive processes likely to maximise the price obtainable by Areva.

(193)

In contrast, in the case of the divestments of New Areva NP and Areva TA, it could not be ruled out a priori that EDF or the public consortium buying Areva TA might make an offer at an unduly high price so as to benefit the Areva Group. Nevertheless, the Commission can conclude, on the basis of the reasoning set out below in parts 5.1.2.1 and 5.1.2.2, that the divestments are being carried out at market price, which rules out an economic advantage within the meaning of Article 107(1) TFEU.

(194)

The sale to EDF of a majority stake in New Areva NP was not the subject of an open, transparent and unconditional call for tender. However, the private sale of controlling stakes is common practice in the market. As regards New Areva NP, account should also be taken of its area of business and links with the operation of nuclear power plants, where the sale of controlling stakes by tendering procedure is not common market practice. In addition, before agreeing to the sale of the stake, the parties to the transaction had recourse to independent studies, so as to determine the sale price for themselves. While it is true that ultimately the actual selling price is the result of a negotiation between a willing seller and buyer, the fact remains that the use of such studies for negotiation prior to agreement on price is also common market practice, which a prudent investor would follow (24).

(195)

As regards the content of the studies, following an evaluation of the value of the shareholding based on a multi-criteria approach, EDF's financial adviser, the bank BNP Paribas, delivered the following opinion on 24 July 2015: ‘On the basis of the information on and characteristics of the operation referred to above, at present the price of EUR 2,7 billion for 100 % of the capital of Areva NP proposed by EDF in the context of the operation is, in our view, reasonable for EDF from a strictly financial point of view.’ EDF then contracted the bank Société Générale to carry out the due diligence. The French authorities have provided the Commission with a detailed presentation of the results of this due diligence, dated January 2016, in which Société Générale confirms the valuation renegotiated between the parties of EUR 2,5 billion for 100 % of the capital.

(196)

The valuation carried out by Société Générale is very detailed (127 pages of analyses) and is based on the DCF method, which is generally accepted in financial matters.

(197)

First, Société Générale reworked with EDF the business plans produced by the Areva Group for each of the five business lines within the scope of New Areva NP: installed base, fuel assemblies, manufacture, major projects, and other (auxiliary functions, contingencies, etc.). These business plans run until 2023. The adjustments relate to many assumptions affecting a large number of New Areva NP projects. […] (25).

(198)

On the basis of the business plans, the enterprise value of each business line is calculated using a DCF method. Société Générale applies a different weighted average cost of capital (‘WACC’) for each business line, based on the risk specific to each of these activities. This WACC is estimated on the basis of a fairly detailed Capital Asset Pricing Model (CAPM) methodology: for each business line, a WACC is estimated for each country of operation, then a weighted WACC is calculated from these various geographical WACCs. The risk-free interest rates are derived from multiple sources (SG Research, Bloomberg, Associés en Finance), the country risk premiums are based on the work of Professor Damodaran of NYU Stern School of Business, and the cost of debt is based on the risk premium of the bonds of comparable undertakings. These comparable undertakings, selected by Société Générale on the basis of different criteria specific to each business line, are also used to determine the beta of each activity. The sample of comparable undertakings consists of seven listed companies for the fuel business line, five for the installed base, six for manufacturing and six for major projects. The beta values obtained are corroborated by comparison with the beta predictions provided by the Barra multi-factor model.

(199)

The analysis of the value of each business line based on the DCF method also includes a terminal value after 2023. This was calculated on the basis of Gordon Shapiro's method by retaining a normalised cash flow considered representative of the cash flow generation capacity of the activity. An assumed perpetuity growth rate of zero was chosen for all business lines.

(200)

Sensitivity analyses were carried out on these enterprise values by varying parameters such as the WACC or EBITDA margin. The net debt of each business line was then subtracted from these enterprise values in order to arrive at the value of the capital. The sum of these various amounts per business line gives the total value of the capital of New Areva NP. Société Générale considered that an EBITDA multiple of […] could be inferred from this valuation. This EBITDA multiple seems reasonable since it is below the average and median EBITDA multiples observed for comparable transactions — Société Générale having selected a sample of 19 transactions representing the various activities of New Areva NP.

(201)

The value of the various parameters used for the DCF method, as well as the implicit EBITDA multiple, are further corroborated by comparison with the averages and medians taken from the study of comparable undertakings referred to in recital 198.

(202)

In the light of the above, the Commission confirms the finding in the opening decision that the valuation carried out by EDF and its advisers is based on the available objective, verifiable and reliable data, which reflect the economic situation at the time the transaction was decided. This finding was not challenged by any third party during the investigation. The new developments since then, such as recourse to a hive-down or the discovery of risks relating to components contracts, are not likely to affect the result since EDF was careful to fully insulate itself against such risks, in the manner described in recital 30.

(203)

On the basis of this valuation of EUR 2,5 billion for 100 % of the capital, Société Générale showed that EDF could expect an internal rate of return (‘IRR’) from the investment of [0-20] % in the central scenario. This scenario postulates an exit (for the calculation of the terminal value) in […], and an exit multiple equivalent to the entry multiple, i.e. […] x the EBITDA.

(204)

This IRR must be compared with the cost of capital weighted according to the different sectors of New Areva NP. In the case in question, Société Générale's calculations, which are based on the objective criteria listed in recital 198, provide the following indications for each business line: [0-10] % for fuel, [0-10] % for the installed base, [0-20] % for major projects, [0-10] % for production. These estimates seem reliable in that they are based on a commonly agreed methodology and sources, similar to those which the Commission itself has used in other cases, supported by the General Court where appropriate (26). Weighting these estimates with the relative share of each business line in the turnover of New Areva NP produces a weighted average cost of capital of [0-10] %. The IRR that EDF can expect from the investment in New Areva NP is therefore above the cost of capital in the sector in question, including under a number of negative scenarios taken into account in the sensitivity analysis (concerning the year and the exit multiple) carried out by Société Générale.

(205)

In the light of these objective aspects, the Commission concludes that the divestment of New Areva NP is being carried out under normal market conditions without conferring any economic advantage on the buyer (EDF) or the seller (the Areva Group), and therefore rules out the presence of State aid.

(206)

The French authorities have clarified the arrangements for divesting Areva TA and provided evidence to justify the price of EUR [0-2 billion] for 100 % of the capital. This evidence was summarised in a study by the financial consultancy firm […] dated 6 December 2016.

(207)

In the context of its due diligence, the buying consortium has developed its own business plan for Areva TA based on the seller's perspective, adapting the underlying assumptions of the plan to the best of its knowledge.

(208)

The Commission has reviewed the projections and assumptions used for this valuation and considers that it fulfils the quality requirements of a prudent investor. It is based on available objective, verifiable and reliable data which reflect the economic situation at the time the transaction was decided.

(209)

In the light of this, the Commission considers that the divestment of Areva TA is being carried out under normal market conditions without any economic advantage being conferred on the buyer or the seller (the Areva Group), and therefore rules out the presence of State aid.

(210)

The French State's subscription to the injections of capital into Areva SA and New Areva constitutes State aid within the meaning of Article 107(1) TFEU that France is planning to grant to an undertaking, the Areva Group, which is active in the areas covered by the Euratom Treaty.

(211)

The Euratom Treaty established the European Atomic Energy Community, specifying the necessary instruments and allocating responsibilities with a view to achieving objectives that include nuclear safety, energy independence and the diversity and security of energy supplies (27).

(212)

As the Commission has acknowledged in previous decisions (28), the promotion of a successful nuclear energy sector is a fundamental objective of the Euratom Treaty, and therefore also of the European Union. As set out in the preamble to the Euratom Treaty, the Commission, as an institution of the European Atomic Energy Community, is required to create the ‘conditions necessary for the development of a powerful nuclear industry which will provide extensive energy resources’. This obligation must be borne in mind when the Commission exercises its discretionary powers to authorise State aid under Article 107(3)(c) and Article 108(2) TFEU.

(213)

The TFEU sets out the conditions under which aid can be declared compatible with the internal market. Under Article 107(3)(c) TFEU, the Commission can authorise State aid if it is granted to promote the development of certain economic sectors and does not adversely affect trading conditions to an extent contrary to the common interest. Given the nature of the measure in question, the Commission will establish whether it is compatible with the provisions on restructuring aid set out in the Guidelines, mindful of the doubts expressed in the opening decision as well as the comments from France and interested third parties.

(214)

At the end of 2014, which was when the restructuring of the Areva Group began, the Group had negative equity totalling EUR – 244 million. New losses have been recorded since then, meaning that the Areva Group's equity situation deteriorated further in 2015. Areva Group's total equity stood at EUR – 2,3 billion on 31 December 2015.

(215)

Given the presence of negative equity, the criterion set out in point 20(a) of the Guidelines is fulfilled. The Areva Group must therefore be considered an undertaking in difficulty, making it eligible for restructuring aid.

(216)

The Euratom Treaty sets out the following objectives of common interest: nuclear safety, energy independence and the diversity and security of energy supplies. Under Article 2(d) of the Euratom Treaty, the Euratom Community must ensure that all users in the Community receive a regular and equitable supply of ores and nuclear fuels. By preventing the Areva Group's demise, the aid under consideration contributes to the achievement of these different objectives.

(217)

The aid enables the Areva Group, a key player in Europe's nuclear industry, to survive. The Areva Group is the leading European operator in the uranium mining market and the only European operator active in the uranium conversion, fuel recycling and MOX production markets. It has the expertise required to operate, in optimal safety and security conditions, a number of ‘basic installations necessary for the development of nuclear energy’ within the meaning of Article 2; this includes sites and facilities such as Comurhex II, La Hague and Melox. Lastly, the Areva Group is a key European operator in terms of the production of nuclear fuel for materials testing reactors and of target materials to be irradiated to produce radioisotopes for medical use.

(218)

Its demise would therefore have immediate consequences in terms of nuclear safety, energy independence, and the diversity and security of Europe's energy supplies.

(219)

The Guidelines also set out the conditions under which restructuring aid contributes to an objective of common interest. This is the case if the aid aims to prevent social hardship or address market failures that would be created if the undertaking left the market and its activities no longer existed.

(220)

Of the market failures listed in point 44 of the Guidelines, those that apply to the case in question are, depending on the specific markets, (i) the risk of disruption to an important service which is hard to replicate and where it would be difficult for any competitor simply to step in, (ii) the negative consequences of an undertaking with an important systemic role in a particular sector leaving the market, and (iii) the irremediable loss of important technical knowledge or expertise. The way in which the aid makes it possible to prevent these risks or negative consequences is examined below, in recitals 223 to 226.

(221)

Furthermore, the Commission must also consider other scenarios not involving a complete market exit, such as the continuation of certain activities after liquidation without State aid. The Commission must be satisfied that the objectives of common interest would not be achieved in the same way in these counterfactual scenarios that do not involve aid. This assessment is covered in part 5.2.4 of this Decision.

(222)

As regards the consequences of the Areva Group exiting its markets, the Commission notes the following.

(223)

As regards the mining business, given that the Areva Group is the main European operator in the sector, its exit from the market would result in Europe's uranium being principally supplied by non-European operators, including the Russian (Rosatom) and Kazakh (KAP) operators, which account for around [30-50] % of the market (29). It appears unlikely that any European or even Western operator (such as the Canadian operator Cameco) will strengthen its mining capacity to the extent required to achieve the objective of ensuring the diversity and security of the European Union's supply. The Areva Group's exit from the market could also lead to an increase in the price of uranium in the long term, given the concentration in that market. In this regard, the Areva Group has an essential systemic role in terms of Europe's uranium supply.

(224)

As regards the conversion business, the Areva Group is the last European operator active in this market. Its exit from the market would have serious negative consequences. Firstly, it would jeopardise the European Union's energy independence, given that the conversion of uranium is an indispensable link in the nuclear energy production chain. Secondly, it would reduce competition in that market, which is already highly concentrated, and this could give rise to additional costs for European electricity generators, and consequently for European consumers. In this regard, the Areva Group has an important systemic role in terms of the European fuel-cycle business and, if it exited the market, there would be a risk of disruption to an important service.

(225)

As regards the enrichment business, the Areva Group is one of only two European operators, alongside the consortium Urenco. The only other operator actually present on the European market is the Russian operator Tenex (Rosatom group). The loss of the Areva Group's activities would affect the structure of the market, which would then become an oligopoly at European level, and this would probably lead to higher prices. Thus, in terms of its enrichment business, the Areva Group once again has an important systemic role.

(226)

As regards the reprocessing and recycling of spent fuel, the Areva Group is now the world's only industrial-scale operator of the technology for the recycling of spent fuel and its conversion into MOX for light-water reactors. As a result of these processes, the Areva Group provides recycled fuel that accounts for [0-25] % of the electricity produced in France. Furthermore, France has decided to entrust the industrial responsibility for recycling to the Areva Group. This responsibility is therefore an essential element of spent-fuel management policy in France and the wider European Union. In these circumstances, Areva Group's exit from the market could seriously undermine the smooth functioning of the market in the European Union by bringing about the irremediable loss of important technical knowledge and essential expertise and causing disruption to an essential service that no competitor would currently be able to provide in its place.

(227)

The Commission concludes that the restructuring aid notified by the French authorities, by preventing the demise of the Areva Group and its fuel-cycle business, addresses market failures that would be created by such an eventuality.

(228)

In order for the restructuring aid to contribute effectively to the achievement of the objectives of common interest described above, it must be demonstrated that the planned restructuring will restore the undertaking's long-term viability. However, in the opening decision, the Commission questioned whether certain assumptions underpinning the plan for restoring the long-term viability of the Areva Group were realistic.

(229)

The analysis of the Areva Group's return to viability must be applied to the restructured Areva Group, which in the future will comprise two entities: (i) New Areva and (ii) Areva SA. These two entities will have separate activities and separate accounts. To assess Areva Group's return to viability, each entity's business plan can therefore be analysed separately and in turn.

(230)

The French authorities sent New Areva's business plan, comprising a baseline scenario and an adverse scenario, to the Commission. The financial projections associated with these scenarios are reproduced in Tables 1 and 2 below.

Table 1

Financial projections for New Areva (baseline scenario)

Table 2

Financial projections for New Areva (adverse scenario)