Intervention by a public authority does not necessarily confer an advantage on the beneficiary, and as such does not constitute aid if it is carried out under normal market conditions, in other words, if the public authority acted as a prudent operator in a market economy would have done in similar circumstances. In this regard, the presence of significant investments of the same kind, carried out at the same time as the State intervention by other private operators taking similar risks (‘pari passu’), may provide an indication that the State behaved as a prudent operator. Lastly, it is necessary to examine whether the State intervention is based on economic evaluations comparable to those which, in the circumstances, a prudent private operator in a market economy, in a situation as close as possible to that of the State, would have commissioned before making the investment in order to determine its future profitability.

The legal nature of the measure. France considers that the measure in question has a dual nature since it is both a loan (payment of interest) and a capital contribution (potential payment of interest, depending on dividends). France explained that, if a choice had to be made, the measure should be classed as a capital contribution, which would allow it to be compared with Arcole's capital contribution, which also amounted to EUR 17,5 million. France therefore concluded that the two financing measures had been made pari passu and in the absence of State aid.

Accordingly, the Commission takes the view that the FDES support must be considered a loan and not a capital contribution and, in the absence of any prospects of similar remuneration, cannot be regarded as pari passu with Arcole's capital contribution. Moreover, and in any event, the difference in nature between the contributions by the FDES and Arcole is even more evident when the enhanced support facility and the degressive temporary allowance facility paid for by France are taken into account. Indeed, from a financial point of view, such a defrayal of costs can be likened to an unremunerated, non-repayable grant combined with the FDES loan, without Arcole making a similar financial effort from the point of view of the expected returns. At best, France could expect only the remuneration and repayment of the loan, whereas Arcole remained a shareholder in MoryGlobal and could expect a return on its share of the capital.

Conduct of France as a prudent economic operator. There is substantial evidence to suggest that France did not behave like a prudent economic operator.

First of all, as already described in section 6.1.3.2, representatives of France intervened publicly on numerous occasions to stress that France would intervene in order to support the takeover of MD in order to ‘preserve as many jobs as possible’. Such declarations of intent do not seem to reflect the behaviour of a prudent economic operator helping an undertaking in difficulty: in such a case, one of the first measures commonly adopted to reduce costs and keep the undertaking afloat is to reduce the wage bill. These considerations and objectives of a public authority which are reflected in an increased wage bill may run counter to the interest of a prudent private creditor because they can reduce the borrower's ability to repay the loan.

Moreover, the fact that the grounds of the judgment by Pontoise Commercial Court refer explicitly to the FDES loan as a guarantee enabling the undertaking's business to continue on a sustainable basis demonstrates that the loan conferred an advantage on MD under the court-supervised administration procedure and, as a result, on MoryGlobal as the successor to MD's activity following the latter's liquidation.

Lastly, the environmental commitments to replace MoryGlobal's vehicle fleet imposed by the FDES loan are a further demonstration that France acted as a public authority rather than a prudent economic operator. No prudent economic operator would have made the granting of a loan to an undertaking in difficulty conditional on the expensive renewal of the undertaking's vehicle fleet merely in response to environmental concerns. Without specific justification, that condition is totally foreign to the objective of achieving a return that a lender should pursue. The imposition of environmental requirements for the vehicle fleet is reflected in additional costs which may compromise the borrower's ability to repay the loan.

France did not behave as a prudent economic operator with regard to the terms of the loan. First, the loan was secured by a pledge on MoryGlobal's capital. In view of MoryGlobal's extremely precarious situation, such a solution seems less than reliable, to say the least. Since the repayment of the principal and interest must take place at term after 20 years, in the event of MoryGlobal going into liquidation, the FDES would not recover the amount originally lent. Furthermore, the value of the stakes held in a company is even lower if the shares are illiquid — as is the case with MoryGlobal. If MoryGlobal's results were to stagnate or even decline, the value of the stakes would also be seriously affected. The collateral granted and the expected remuneration therefore seem low and do not appear sufficient to reward the risk taken by France.

Moreover, the internal rate of return simulations presented by France are based on the assumption that Arcole would exit MD's capital and would pay breach of contract costs to the State, failing which the yield would be much lower. However, Arcole may decide to stay invested in the capital. In that case, the return on the loan for France would be limited to the receipt of interest. Furthermore, in such a situation, Arcole would obtain the benefit of the increase in value of its stake or of the unrealised gains thereon, which the State itself cannot expect. In that regard, it should be noted that the concern of France to prevent or penalise Arcole's exiting the undertaking's capital is not at all that of a prudent economic operator driven solely by considerations of achieving a return in the medium to long term. Rather, it is explained by the concern to ensure the continuity of an undertaking for which France intervened in support of Arcole (…).

In addition, the payment of variable interest seems extremely hypothetical, since MoryGlobal was set up after the liquidation of MD, which was itself created in part from the liquidation of Mory. Furthermore, the scenarios supplied by France provided for the payment of dividends, and thus variable interest, only from 2018, 2019 and 2020, without making the IRR positive. In this regard, it should be noted that the loan provision stipulating that the overall interest rate (fixed + variable) on the FDES loan could not be below the average rate of interest on the associated current accounts agreed by Arcole is not such as to provide further evidence that the granting of the loan was prudent, given the extremely hypothetical payment of variable interest.

Lastly, the internal rate of return calculation presented by France was performed only on the FDES loan and takes no account of the establishment of an enhanced support facility and a degressive temporary allowance facility paid for by France, which was none the less decided on at the same time as the FDES loan. It follows from the estimated amounts set out in recital 90 that the first facility, in particular, could represent a cost in excess of EUR 10 million in nominal terms for the French State. A prudent market economy operator would take into consideration all the funds that he is mobilising in an investment in order to estimate its real return. In the case of France, in order to assess whether the total public funding of the continued activity of MD offered sufficient prospects of profitability, a prudent economic operator would have taken into account not only the loan but also the cost of the enhanced support facility and the degressive temporary allowance facility borne by France.

As regards the discretionary component of the social measures, which included both the enhanced support facility and the degressive temporary allowance facility, France puts forward two arguments to rule out the existence of an economic advantage to the recipient undertaking. First, France points out that these benefits do not reduce the MD's contribution to the plan to safeguard jobs. Second, France argues that these benefits are intended solely for the workers made redundant and that, accordingly, they do not result in an advantage for the undertaking.

The Commission does not share that analysis.

First, the assurance of granting these measures by the State — even though they are intended to assist the employees — in fact benefited MD and its shareholder Arcole in the context of its takeover offer by simplifying considerably the social context of the takeover. The Commission notes in this regard that the decision by France to launch the enhanced support facility dates from 22 January 2014 and Arcole lodged the higher bid with Pontoise Commercial Court shortly thereafter, on 28 January 2014. The improved terms of the redundancy plan obtained before the higher bid was lodged were borne essentially by France through the introduction of the social measures described above. According to the press, the buyer had maintained its proposal of EUR 7 000 per employee by way of ex-gratia redundancy payments and had refused to increase them.

Consequently, the enhanced support facility and the degressive temporary allowance facility granted an advantage to MD since part of the redundancy plan, although it was not obligatory for the employer, was financed by France and not by MD, without the latter being required to repay the amounts borne by France.

Therefore, the examination of the FDES loan and the enhanced support facility and the degressive temporary allowance facility, taken individually or, a fortiori, taken together, shows that France did not behave like a prudent economic operator and that their granting conferred on MoryGlobal and on MD an economic advantage which they would not have been able to obtain under market conditions. MoryGlobal and MD have therefore been favoured within the meaning of Article 107(1) TFEU.

In the FDES loan. Regarding the interest rate on the loan, the Commission considers that, in itself, the rate of 1 % is not in line with market conditions. In the absence of any information calling into question the interest rates set out in the 2008 Communication, the Commission considers that it is possible to estimate the market interest rate on the basis of the latter.

In the present case, the Commission notes that, at the time the FDES loan was granted, MoryGlobal was officially a company without MD's liabilities and with its own funds. Thus, in theory, MoryGlobal should not have experienced any difficulties accessing financing from private operators. In practice, given the lack of private operators willing to lend, MoryGlobal had to turn to France and the FDES. Private operators were likely to view MoryGlobal as a company without the liabilities of MD, but none the less as the successor to MD, an unreliable company that had recently been liquidated, some years after the restructuring that led to its creation. On the basis of the information available to the Commission, MD's economic situation appears to be the best available benchmark in the absence of any credit rating for MoryGlobal. Thus, contrary to the argument put forward by France, a CCC rating must be assigned to MoryGlobal.

Furthermore, the collateral, the value of which depended solely on the success of the proposed takeover of MD, and not on intrinsic and objective characteristics, namely physical assets, stock, production assets or immovable property, must be regarded as weak.

Thus, if the 2008 Communication is applied, the rate should have been 10,53 % (i.e. 0,53 %, the base rate of France between January and March 2014, plus 1 000 basis points, given the low value of the collateral granted).

The Commission considers that the amount of the aid equates to the sum of the difference between (i) 10,53 % (reference rate for France + 1 000 basis points) applied to the principal and (ii) 1 % (rate on the FDES loan) applied to the principal, calculated for the period during which the amount was made available to MoryGlobal. This method of estimating the economic advantage conferred by the difference in rate must be applied to the amounts of interest. The fact that the loan agreement provides for variable interest payments does not affect this amount. In the simulations on which France claims to have based its decision to grant the loan, the payment of dividends was planned to begin in 2018 and the projections did not go beyond 2020. Moreover, the fact that MoryGlobal was created from the liquidation of MD, which itself was partly created from the liquidation of Mory, reflects the extremely hypothetical nature of the variable interest payments to be made to France.

In the enhanced support facility and the degressive temporary allowance facility. Under the enhanced support facility established by the Decree of 22 January 2014 implementing Article R.5123 of the Labour Code and under the enhanced collective support facility agreement concluded between France and MD's receivers, France will contribute EUR 4 000 per employee, with the maximum number of employees set at 2 732. The aid element therefore corresponds to the amounts actually paid by France under this facility.