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EU: Illegal State Aid for Biria

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BRUSSELS, Belgium German bike maker Biria, that recently closed down its facility in Neukirch at the cost of 220 jobs, has to pay back 5.2 million worth of aid to the German Government. This was decided last week by the European Commission. As to which company or who has to pay back the millions,

EU: Illegal State Aid for Biria

BRUSSELS, Belgium – German bike maker Biria, that recently closed down its facility in Neukirch at the cost of 220 jobs, has to pay back € 5.2 million worth of aid to the German Government. This was decided last week by the European Commission. As to which company or who has to pay back the millions, the Commission decided not to extend the recovery to the Lone Star Group that took over the Biria Group in November 2005. The money must therefore be recovered from the Biria Group. However, this raises the question as to who the ‘Biria Group’ is because after the takeover by Lone Star, the number two bike maker in Germany changed its name Biria AG into Biria Bike GmbH.
A so-called ‘silent participation’ and two guarantees, granted by a public investment company and the German Land of Saxony to companies of the Biria Group, were found illegal by the European Commission. This verdict is based on EC Treaty state aid rules (Article 87). The reason is that they distort competition within the EU Single Market. According to the Commission, a ‘silent participation’ is comparable to a loan. The investor does not obtain any shares in the company but receives a remuneration. The European Commission says that: “The aid, worth €5.2 million, must now be recovered by the German Government from the beneficiaries.” These beneficiaries were the Biria Group when the management duo Mehdi Biria and Gerhard Urbannek led the company. Both retired after the sale of Biria to Lone Star.

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