The European Commission has returned a mixed verdict to Chupa Chups following an investigation into financial aid granted to the Spanish lollipop producer in 2003.
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The investigation was launched in January 2006, following a complaint a year earlier, from a competitor about alleged aid measures in favour of Chupa Chups. At the time, the Commission had doubts about the compatibility of the measures with EU state aid rules.
However, in a statement today (10 May), the Commission said its investigation found that a majority of the measures were in fact compatible with EU rules on state aid. In particular, the Commission concluded that a EUR35m (US$47.2m) credit from the ‘Instituto Catalán de Finanzas’ (ICF) did not constitute state aid because it was granted on conditions that a market economy investor would have accepted.
However, the Commission found that an EUR800,000 subsidy to Chupa Chups agreed by Spain in 2003 would have constituted illegal investment aid (under the guidelines on rescue and restructuring aid), because at the time the company was in difficulties.
But as the Spanish authorities have confirmed that this aid has not yet been paid out, there is no need for the money to be recovered.
On the other hand, the Commission concluded that a further EUR100,000 that Chupa Chups received from the ‘Instituto de Comercio Exterior’ “ICEX” constituted an illegal state aid given that the Spanish authorities failed to provide any justification for the financial help. This EUR100,000 will have to be paid back by Chupa Chups.
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By GlobalDataOfficials at Chupa Chups and its Italian owner, Perfetti van Melle, which bought the company last year, could not be reached for comment as just-food went to press.
