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State Aid & Privatizations

State Aid & Privatizations

Against a background of competitive challenges resulting from the liberalization of major industrial sectors leading to the privatization of State-owned companies, as well as a difficult economic climate, the EU rules governing the legality of aid granted by member states to private or public corporations have become an increasingly important part of EU competition policy.

Shearman & Sterling draws on the considerable EU State aid experience of its lawyers to provide clients with a unique and tailored service. Members of the team have worked at the EC and national authorities and have acted in many significant state aid investigation procedures, with particular emphasis on cases concerning the restructuring and privatization of State-owned companies.

The EU rules that control State aid are perhaps of greater importance to corporations and governments today than ever before. Notwithstanding the economic crisis, the EC is generally unwilling to consider a relaxation of competition rules to accommodate short-term issues encountered by businesses, and considers it vital that competition rules are fully enforced regardless of the current economic environment. The EC has thus expressed on numerous occasions its determination to continue challenging State aid that provides unfair competitive advantages and has emphasized its intention to enforce vigorously the State aid rules.

To that effect, the EC has made steady progress in its efforts to devise clear State aid policy and a rigorous body of law intended to curb the unlawful transfer of public resources to selected corporations. Furthermore, the European courts have substantially developed case law on State aid that has provided additional and welcome clarity to this complex body of rules.

Featured Matters

  • Bond investors holding subordinated bank debt on the State aid implications of European bank restructuring.
  • German government in various privatizations, including but not limited to, Buna-Werke, Chemiekombinats Bitterfeld, Stickstoffwerke Piesteritz, VEAG Vereinigte Energiewerke AG, Laubag AG and Mibrag.
  • Hellenic Republic Asset Development Fund on corporate and EU state aid issues arising from the privatization of Greece's Public Power Corporation (PPC).
  • London and Continental Railways on State issues arising on the Channel Tunnel Rail Link debt restructuring, and on the sale by London and Continental Railways (LCR) and refinancing of High Speed 1 (HS1), officially known as the Channel Tunnel Rail Link (CTRL) in a Public Private Partnership.
  • Medgaz Pipeline Company on State aid issues arising from the Medgaz pipeline project that revolves around the direct gas pipeline between Algeria and Europe which was officially inaugurated in March 2011.
  • Société Générale on state aid aspects of its divestment of its Greek subsidiary, Geniki Bank to Piraeus Bank.
  • UK government in obtaining State aid approval and achieving compliance with the requirements of EU structural funds for regional development projects including privatizations, risk capital, and environmental schemes.
  • UK government on the privatizations of the IBA transmission network, British Telecom, British Gas, government financing and refinancing of Channel Tunnel Rail Link in relation to a Public Private Partnership, the privatization of the UK rail network and rolling stock leasing companies, Equity Red Star, as well as the award of rail franchise concessions.
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