The European Commission on Tuesday said it has opened an in-depth investigation to assess whether some EUR 21 million granted by state-owned entities to Malév Ground Handling constitute state aid, and whether the grants comply with EU rules for aid to troubled companies.
The EC noted that Malév Ground Handling was granted a series of favorable financing measures by Hungarian National Asset Management Inc. (MNV), state-owned Tiszavíz and the Hungarian Development Bank (MFB) since its former parent company Malév, Hungaryʼs one-time national carrier, went bust in 2012.
Malév Ground Handling, which operates ground handling services at Budapestʼs Ferenc Liszt International Airport, is now owned by MNV.
The EC launched the probe after Malév Ground Holding competitor Budport lodged a complaint.
“The Commissionʼs preliminary view is that five measures in the form of loans, capital increases or debt-to-equity conversions granted to Malev GH may constitute state aid under EU rules,” said an EC press release. “At this stage, the Commission has concerns that these measures may have given the company an unfair competitive advantage over other ground handling operators at Budapest airport, in breach of EU state aid rules.”
Under EU state aid rules, public interventions in favor of companies can be considered free of state aid only when made on terms that a private operator would have accepted under market conditions, the EC explained. If this principle is not respected, such public interventions constitute state aid as they confer an economic advantage on the beneficiary that its competitors do not have.