10.2.4 Failure to submit a restructuring plan

The Commission approach before the adoption of the 2013 Banking Communication can be summarised as follows: rescue aid is declared compatible for a period of six months, under the condition that the Member State submits a restructuring plan (or liquidation plan) within those six months. The commitment to present a restructuring plan is therefore essential. In almost every case, Member States have complied with their commitment to submit a restructuring plan. There is one notable exception; that is the case of Banco Privado Português (BPP).

On 5 December 2008, Portugal notified to the Commission a State aid measure in favour of BPP. Although Portugal had committed to submit a restructuring plan for BPP within six months (so before 5 June 2009)1, it failed to do so. As a result, the aid became unlawful since 6 June 2009. Moreover, since the restructuring plan was essential to the compatibility of the State aid measure2, the failure to submit such a restructuring plan resulted in the aid measure being incompatible. As was explained in section 5.8, BPP started legal proceedings at the Court of Justice.

According to BPP, the Commission had concluded that the guarantee was incompatible with the internal market on the basis of non-compliance on purely procedural grounds, namely the fact that the Portuguese Republic did not submit a restructuring plan for BPP within the six-month period laid down in the Decision of 13 March 2009. BPP therefore argued that the Commission had failed to assess whether the aid in question was intended to remedy a serious disturbance in the economy of the Member State concerned, within the meaning of Article 107(3)(b) TFEU.3

However, the Court held that, contrary to what was claimed by BPP, the temporal limitation of aid granted in the form of a State guarantee and the obligation to notify any subsequent extension of that guarantee, as well as the obligation resting on the beneficiary of that guarantee to submit a restructuring plan are not mere formal requirements, but rather necessary conditions for that aid to be declared compatible with the internal market and means of ensuring that the emergency aid granted to an undertaking in difficulty does not go beyond what is necessary to achieve the common-interest objective concerned, which consists, in the present case, in preventing a serious disturbance in the national economy.4

As indicated before, chapter 5 provides some further backgrounds to this case. In the context of the current chapter, the key feature of the case of BPP is that it underlines the importance of submitting a restructuring plan.