Aluminium SA, a member of the Mytilineos Group, won an appeal today over electricity tariffs and state aid with the European Court ruling as invalid a preceding decision by the Competition Committee, which had ruled that lower electricity rates enjoyed by the company were illegal. The verdict is particularly significant not only for Aluminium SA but Greek industry as a whole, burdened by elevated energy costs.

The European Court verdict vindicated the Greek industrial company by annulling a decision reached in 2011 by the Competition Committee, which it noted “contains a manifest error of assessment” which the Commission relied on to classify Aluminium SA invoices as illegal state aid. As a result, Aluminium SA is not obliged to return 17.5 million euros to the State.

The legal case’s history

In 1960, Aluminium of Greece – succeeded in 2007 by Aluminium SA in Greece’s aluminium producing sector – signed an agreement with PPC, the Public Power Corporation, which offered the company a preferential rate for electricity supply. The agreement was due to expire on March 31, 2006, unless it was extended. In 1992, the Commission reached a decision to not regard the favorable electricity rate offered to the company as a form of state aid.

In February, 2004, PPC notified Aluminium SA of the contract’s approaching termination and, at the end of March, 2006, ceased implementing the preferential electricity rate agreement.

At the request of Aluminium SA, a Single-Member Athens Court of First Instance temporarily suspended, on January 5, 2007, the consequences of the termination of the preferential tariff. Then, following a request by PPC, a Multi-Member Athens Court of First Instance canceled the suspension in March, 2008.

Subsequently, between the period covering March, 2004 and January 5, 2007, and as of March, 2008, PPC did not implement the preferential tariff rate. Between January 5, 2007 and March, 2008, Aluminium SA was charged based on the preferential tariff rate.

In July, 2008, the Commission received allegations concerning state aid offered to Aluminum SA, through preferential tariff rates.

In 2010, the Commission initiated inspection procedures and, on July 13, 2011, delivered its decision. It ruled that, during the relevant period, Aluminium SA benefited from the difference in preferential tariff rates and regular rates offered to major industrial consumers, and valued the benefit at 17.4 million euros. The electricity rate price difference offered Aluminium SA an unjustified advantaged over competitors, who were obliged to pay regular rates, which distorted fair trade. The Commission ordered the Greek state to recover the aforementioned amount.

Aluminium SA requested that the EU General Court annul the Commission’s decision. PPC then intervened in support of the Commission.

According to the Commission, the Single-Member Athens Court of First Instance ruling established a renewal of the preferential tariff rate for Aluminium SA between January, 2007 and March, 2008.

Aluminium SA supported that the Single-Member Athens Court of First Instance verdict did not modify the initial preferential agreement. Based on this assumption, the company argued that it did not receive new state aid.