Brussels Wants Billions Back From Spanish Tuna Shipyardsff
22 July 2013
Spain
Spanish tuna fishing companies could feel the rippling financial effects of Brussels ordering the Spanish shipyard industry to pay back up to USD 2.8 billion to the Spanish government, deeming state subsidiaries in the form of tax breaks illegal.
The European Union made the decision to rule the repayment of the money which could result in the bankruptcy of an already struggling Spanish shipbuilding industry and potentially have huge negative implications on Spanish and Mexican tuna fishing companies who have invested or already made large down payments for the construction of new tuna purse seine vessels through these shipyards.
Spanish largest tuna fishing company Albacora could see detrimental consequences as important shareholder of one of Spain’s major shipyards that has been the constructer of its large superseiner vessels. Barreras shipyard is one of the Spanish companies that is ruled to make substantial repayments to the government, which could destroy its finances that have already been seen as struggling in the recent past, with the sale of 51 percent of its shares to Mexican oil company, Pemex.
The decision from Brussels could also cause risk to as many as 87,000 jobs in the shipbuilding industry, adding to the dramatic unemployment problems already faced by Spain.
Mariano Rajoy, the Spanish prime minister, on Monday called the president of the European Commission in a last-minute attempt to change the regulator’s stance. But the complex ruling decided by the commission found that Spain had failed to inform the EU of the subsidiary scheme and by doing so broke state aid rules by favoring particular groups and investors over their competitors, thus meaning the repayments must be made under law.
However, due to the struggling state of the industry, the EU allowed reduced repayments to be made, but still totaling nearly USD 3 billion, which could see the closure of companies and further aggravate unemployment in the country.
The investors must repay the tax subsidies to the Spanish government. An unspecified portion of the grants, however, was deemed compatible with the EU guidelines on support to shipbuilders.
Mr. Joaquin Almunia, the EU’s competition enforcer overseeing the probe, said: “Economic interest groupings and their investors have benefited unlawfully from tax advantages which they must now repay to the Spanish state. As regards the future, there is a non-selective tax scheme which was approved by the commission in November 2012 and which can be used, among other things, to finance the shipbuilding industry.â€
The impending decision has sparked an intense lobbying effort by the Spanish government as it fears this could lead to huge negative implications for the tuna industry in a country that ranked sixth globally for tuna catch volume in 2011, accounting for over 280,000 tons of the total catch.
