BRUSSELS, Belgium (AP) — European Union regulators on Tuesday ordered Italy to recover euro80 million (US$117 million) in aid granted to steel company ThyssenKrupp, cement maker Cementir and the chemical company Terni Nuova Industrie Chimiche.
The European Commission said the subsidy, granted in the form of preferential electricity tariffs, violated EU rules on state aid.
The cheap electricity was initially granted in 1962 to factories operating in the central region of Umbria to compensate for the expropriation of a hydroelectric power plant, but the EU said a decision to extend the aid to the three companies from 2005 to 2010 ''can no longer be considered compensatory in nature.''
It said aid granted since 2005 distorted fair competition between businesses within European markets by giving the three companies an unfair advantage over their rivals.
''Neverending compensation becomes incompatible state aid when, as here, it distorts competition,'' said EU Competition Commissioner Neelie Kroes. ''The aid must be fully recovered, including interest.''
The Italian government nationalized the power plant owned by Societa Terni in 1962 and agreed to provide cheap electricity in compensation to the company for 30 years. The three companies involved in the current case are the legal successors of Societa Terni.
EU regulators agreed to an extension to the aid in 1993, but opened an investigation after Italian authorities further prolonged the aid in 2005.
