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EU says aluminum producers received illegal state aid

European Union regulators said portions of French, Italian and Irish fuel subsidies for aluminum manufacturers violated rules on state aid.

The European Commission, which reviews whether government grants in the 27-nation EU harm competition, said in a statement that the three countries must recover the illegal aid provided to companies including Alcan Inc., the world's second largest aluminum producer. The commission said the three nations gave aluminum producers tax exemptions from heavy fuel duties that benefited only one company in each country. Only 20% of the subsidies violated EU rules because the companies failed to engage in „binding agreements to improve their environmental record,” the commission said in a statement. Montreal-based Alcan received the state aid in France, Aughinish Alumina in Ireland and Eurallumina SpA in Italy, the commission said. The three countries must seek the return of the tax breaks offered since January 2004. Margaret McCarthy, a spokeswoman for Aughinish Alumina, had no immediate comment. Officials at Alcan and OAO Russian Aluminum, the parent company of Eurallumina, couldn't be immediately reached to comment. (Bloomberg)