Commission Decision (EU) 2020/1012 of 24 February 2020 on State aid SA.48394 2018/C (ex 2017/N) which Romania has partly implemented in favour of National Uranium Company (CNU) (notified under document C(2020) 1069)Text with EEA relevance.

(72) The Romanian authorities submitted the following elements with regards to the request of the Commission in its Opening Decision for the investment study of the Tulgheș-Grințieș mine underlying Romania’s assumption in the initial restructuring plan: Romania submits that the decision to open the new mine is based on previous studies from 1986, 2004 and in particular 2011; even if the Romanian authorities considered the 2011 study as classified information and as such did not share it with the Commission, Romania considers that the assumptions taken in the plan are even conservative as the plan is to begin, at least during the first 10 years to exploit surface reserves and not underground, making the extraction cheaper. A feasibility study which has been commissioned by the Romanian authorities to Cepromin SA should only be available in November 2019.

(73) As regards the technological adaptations of the Feldioara plant in view of processing, refining and exploitation of mining waste, the Romanian authorities mention that the purpose is to reduce the cost of processing uranium ore by upgrading the technological flow, which will lead to higher processing yields.

(74) Romania also explains that from table 4 that it is apparent that the proposed plan will ensure sufficient cash-flows to cover CNU’s own contribution as the own contribution required would be around RON 178 million while the sum of the expected operational cash flows over the period 2017-2023 is over RON 250 million (EUR 52,7 million).

(75) Romania also provided with a detailed table of planned cost reductions by site of activity as presented below in table 5. This table shows that the main cost reductions will stem, according to Romania, from Suceava, where the current Crucea-Botușana mine is located.

Table 5

Costs per site

Source: Annex 14 to the third restructuring plan (Copenhagen Economics).

Costs (million RON)2017201820192020202120222023Cost per siteCentral[…][…][…][…][…][…][…]Feldioara[…][…][…][…][…][…][…]Suceava[…][…][…][…][…][…][…]Stei[…][…][…][…][…][…][…]Oravita[…][…][…][…][…][…][…]Total costs[…][…][…][…][…][…][…]total amortisation[…][…][…][…][…][…][…]Total operational costs[…][…][…][…][…][…][…]

(76) Romania also explains that the estimates in the third restructuring plan are based on the current uranium prices but that their own research shows positive prospects on the uranium market in the near future. According to Romania, different sources (like S&P Global Market Intelligence) report similar forecasts. The average among forecasts shows that uranium price is expected to grow between 2018 and 2020 by 40 %. Romania also refers to a previous Commission decision that notes market consensus on views that prices of nuclear materials will recover in the medium-term

See Commission Decision of 10 January 2017, SA 44727 (2016/C) Restructuring aid to Areva (OJ L 155, 17.6.2017, p. 23), recital 231.

.

(77) Romania then submits that the overall profitability results are robust to significant changes in assumptions or market conditions. According to Romania, CNU should be able to achieve an own contribution sufficient to cover the investments needs for restructuring even if the foreseen investments had to be increased by 25 % or if the cash-flows would decrease by a similar percentage.

3.3.3.

The restructuring aid in the third restructuring plan will not distort competition

(78) Romania first underlines that the amount of restructuring aid has been reduced by 60 % compared to the initial restructuring plan and that this decrease will considerably limit the impact on competition and trade.

(79) Romania then puts forward that the uranium markets seem global (both the upstream – extraction than the downstream – refining/processing businesses) and as such the impact of an aid of less than EUR 40 million can only be minimal. To support this, the Romanian authorities explain that Romania accounts for less than 0,1 % of the world’s uranium production.

(80) Furthermore, CNU is the only producer of UO2 using the CANDU technology in Europe and one of the only two companies in the world producing non-enriched natural UO2. Romania also explains that the small demand for non-enriched UO2 is not sufficient to trigger sufficient sales that would make a shift in technology profitable and as such which could be an incentive for a current producer of enriched UO2 to enter this new market.

(81) According to Romania, CNU’s exit from the uranium market may increase SNN’s dependence on external suppliers of UO2/U3O8. Romania expects that, if the control over the full nuclear fuel cycle were lost, external suppliers of UO2/U3O8 and in particular Cameco, which would become the only available supplier of processed uranium in the form of UO2 with CANDU certification in Romania, will take advantage of this situation. They would significantly increase the price of products to delivered SNN and maximise their profit. This situation will affect the long-term viability of the national nuclear operator, with negative implications for Romania’s energy security.

(82) Finally, Romania underlines that there would be no feasible structural compensatory measure that could be taken without endangering not only the viability of the company but also its core activity. Romania puts forward that the Commission already accepted in previous decisions that any further reductions in activity may risk jeopardising the possibilities of a company to recover, without providing meaningful market opportunities for competitors, as in decision C10/2006 Restructuring to Cyprus Airways.

1. ASSESSMENT OF THE AID

4.1.

Existence of aid within the meaning of Article 107(1) TFEU

(83) By virtue of Article 107(1) TFEU, save as otherwise provided in the Treaties, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects the trade between Member States, be incompatible with the internal market.

(84) It follows that, for a measure to be qualified as State aid within the meaning of Article 107(1) TFEU, the following cumulative criteria must be met: (i) it must be granted by the State and through State resources; (ii) it must confer an advantage upon an undertaking; (iii) it must be selective, i.e. favour certain undertakings or the production of certain goods; and (iv) it must distort or threaten to distort competition and it must affect trade between Member States.

(85) Under section 4, the Commission will assess the aid measures as presented in the third restructuring plan by the Romanian authorities (see table 3 for full details) which are:

(a) the conversion (through debt write-off) of the prolonged rescue loan into restructuring aid for RON 60,4 million (EUR 12,7 million) and;

(b) three State grants totalling RON 117,9 million (EUR 24,9 million) to support CNU investments in the modernisation of the Feldioara plant, the opening of the exploitation at the Tulgheș-Grințieș mine and the closure of the Crucea-Botușana mine.

(86) Prior to examining whether these measures involve State aid pursuant to Article 107(1) TFEU, the Commission notes that Romania considers that the conversion of the prolonged rescue loan into restructuring aid (hereinafter the write-off of rescue loan), as well as the three above-mentioned State grants (hereinafter the State grants) do involve State aid.

4.1.1.

State resources and imputability to the State

(87) For measures to be qualified as State aid within the meaning of Article 107(1) TFEU, (a) they have to derive from the State’s resources, either directly or indirectly by any intermediary body acting by virtue of powers conferred on it and (b) they have to be imputable to the State.

(88) The write-off of the rescue loan deprives the State from being reimbursed the rescue loan that it granted from its budget and which should be repaid to the State by CNU. Therefore this measure involves State resources. As this decision has to be taken by the Romanian State, the measure is imputable to the State. The State grants are also to be financed from the State budget and directly result from a decision from the Romanian State. These measures are therefore also clearly imputable to the State and granted through State resources.

4.1.2.

Selectivity

(89) To be considered State aid, a measure must be selective in that it favours only certain undertakings or the production of certain goods.

(90) The write-off of the rescue loan and the State grants shall be made available only to CNU and are thus not part of a general measure available to all undertakings active in the mining and processing of minerals or in other sectors in Romania. Furthermore, the Government Emergency Order No 65/2016 establishing the legal framework for granting the rescue aid only concerned CNU and is not available to other companies competing, or envisaging to compete with CNU on the uranium processing supply. As the Court has stated, where individual aid is at issue, the identification of the economic advantage is, in principle, sufficient to support the presumption that a measure is selective

See judgment of 4 June 2015 Commission v MOL, C-15/14 P EU:C:2015:362, paragraph 60.

. Therefore, the write-off of the rescue loan and the State grants are of a selective nature.

4.1.3.

Economic advantage

(91) An advantage, within the meaning of Article 107(1) of the TFEU, is any economic benefit that an undertaking could not have obtained under normal market conditions, that is to say in the absence of State intervention

Judgment of the Court of Justice of 11 July 1996, SFEI and Others, C-39/94, ECLI:EU:C:1996:285, paragraph 60; Judgment of the Court of Justice of 29 April 1999, Spain v Commission, C-342/96, ECLI:EU:C:1999:210, paragraph 41.

.

(92) The write-off of the rescue loan amounting to RON 62 million (EUR 13,1 million) would favour CNU freeing for other purposes the resources that would be needed to reimburse the loan. No market creditor would have agreed on a debt write-off concerning its whole claim against a given company without any compensation or recovery perspective compared to the possibility of a – at least partial – recovery as part of the liquidation mass of the company in case of bankruptcy. As a conclusion, CNU could not have obtained funding at this condition from the market and therefore the write-off of the rescue loan provides an advantage to CNU.

(93) The State grants planned in favour of CNU are non-repayable financial instruments, which are not available on financial markets, as they offer no remuneration, expectation or entitlement to future financial profits to an investor. CNU could not have obtained funding from the market at these conditions. The State grants therefore provide an advantage to CNU.

4.1.4.

Distortion of competition and impact on trade between Member States

(94) If aid granted by a Member State strengthens the position of an undertaking compared to other undertakings competing in intra-Union trade, the latter must be regarded as affected by that aid

See, in particular, Judgment of the Court of 17 September 1980, Philip Morris Holland BV v Commission of the European Communities, Case 730/79, EU:C:1980:209, para. 11; Judgment of the Court (Sixth Chamber) of 22 November 2001, Ferring SA v Agence centrale des organismes de sécurité sociale (ACOSS), Case C-53/00, EU:C:2001:627, para. 21; Judgment of the Court (Sixth Chamber) of 29 April 2004, Italian Republic v Commission of the European Communities, Case C-372/97, EU:C:2004:234, para. 44.

. It is sufficient that the recipient of the aid competes with other undertakings on markets open to competition

Case T-214/95 Het Vlaamse Gewest v Commission, ECLI:EU:T:1998:77.

.

(95) As explained in recitals 9 and 10, CNU is mainly active in two stages of the production cycle of uranium: from mining until the production of yellow cake and then from the yellow cake until the production of UO2.

(96) As explained in recitals 20 to 22, yellow cake is a tradable product offered by a number of companies and the market in which CNU operates is global and open for competition. CNU is in particular actually facing real and direct competition from the European company Orano that proposed to serve SNN’s needs in yellow cake and faces the potential competition from EU players via their planned mines in Finland, Hungary and Spain within the EU.

(97) As regards UO2, it is explained in recital 23 that UO2 is not a specific product only produced by CNU, but that UO2 is as well an intermediary product in the production chain of the enriched UO2. Beyond the competition of Cameco and potential competition of other UO2 producers in countries with CANDU reactors (see recital 23), it is as well noticeable that the information report of Orano’s Malvési plant mentions that Orano got the necessary authorisations to install an equipment that will enable the production of 300 tons/year of UO2 to be sold to French clients or on the international market

Information retrieved from https://www.orano.group/docs/default-source/orano-doc/groupe/publications-reference/rapport_tsn_malvesi_2018.pdf, p. 13, consulted on 23 September 2019.

. Therefore, this new capacity could fully serve SNN yearly demand in UO2.

(98) CNU is in no way precluded by law from supplying goods or providing services in other Member States.

(99) Likewise, CNU monitors and manages closed uranium mines in Romania. The activity can also be carried out by other mining companies active in the closure and management of mines elsewhere in the Union.

(100) The Commission therefore concludes that there is intra-Union trade for the products traded or produced and services provided by CNU. The planned aid, which allows CNU to remain on the market, is liable to improve its competitive position in the internal market, preventing its competitors to take over CNU’s activity in part or in full. Therefore, it distorts or threatens to distort competition and affects trade between Member States.

4.1.5.

Conclusion on the presence of aid

(101) In light of the above, the Commission concludes that the write-off of the rescue loan and the State grants by which Romania plans to fund RON 178,3 million (EUR 37,6 million) costs of CNU’s third restructuring plan constitute State aid under Article 107(1) TFEU and will therefore assess its lawfulness and compatibility with the internal market.

4.2.

Lawfulness of the aid

(102) The Commission notes that Romania withdrew its plans as regards the State aid notified in the initial restructuring plan in the form of a RON 75,5 million grant, a RON 213 million operating subsidy and a conversion of CNU’s debt as of 30 March 2017 of RON 13,3 million into shares held by the Romanian State. Romania confirmed that these measures have not been put into effect. Therefore the assessment by the Commission of these three measures have become devoid of purpose.

(103) As regards the remaining notified aid measures as described in recital 57 and in view of the fact that Romania committed not to put the write-off of the rescue loan and the State grants into effect until the Commission has adopted its final decision, the standstill obligation laid down in Article 108(3) TFEU is met and these measures are considered lawful, without prejudice to their compatibility assessment.

(104) The rescue aid loan was not put into effect before the Commission rescue aid decision and was therefore not unlawful State aid when approved. However, its excessive prolongation and non-repayment well beyond the six-month period for which it was granted render the aid unlawful.

4.3.

Compatibility of the aid and the legal basis for the assessment

(105) The TFEU sets out the conditions under which aid can be declared compatible with the internal market. Under Article 107(3)(c) TFEU, the Commission can authorise State aid if it is granted to promote the development of certain economic sectors and does not adversely affect trading conditions to an extent contrary to the common interest. Given the nature of the State aid in question, the Commission will examine whether the State aid is compatible with the internal market in light of the provisions set out in the R&R Guidelines, with due regard to the Euratom Treaty.

(106) The assessment of the compatibility of the restructuring aid to support the third restructuring plan has to establish whether the information gathered in the proceedings dispels the doubts expressed in the Opening Decision. To that effect, the assessment follows the three main doubts expressed therein regarding the compatibility of the restructuring measures described in the third restructuring plan with the internal market, namely (i) the presence of real and actual own contribution free of aid from the beneficiary, (ii) the restoration of long-term viability and (iii) the absence of meaningful compensatory measures.

4.3.1.

Eligibility of CNU for restructuring aid under the R&R Guidelines

(107) Only undertakings in difficulty as defined in point 20 of the R&R Guidelines and not active in the steel or coal sectors as defined in points 15 and 16 thereof, can benefit from compatible rescue or restructuring aid.

(108) As noted in the rescue aid and in the Opening decisions, CNU fulfilled the criteria for being qualified as a firm in difficulty according to point 20 of the R&R Guidelines (see recital 33 of the rescue aid decision)

CNU, according to its financial statements as of 31 December 2015, had negative equity and fulfilled the criteria under Romanian law for being placed in collective insolvency proceedings at the request of its creditors.

and is not active in the coal, steel or banking sectors, so that it can benefit from restructuring aid.

4.3.2.

Presence of real and actual own contribution free of aid from CNU

(109) According to point 62 of the R&R Guidelines, a significant contribution to the restructuring costs is required from the own resources of the aid beneficiary, its shareholders or creditors or the business group to which it belongs, or from new investors. Point 64 requires that the own contribution which would be considered as adequate for a large company -like CNU- would amount to at least 50 % of the restructuring costs.

(110) Furthermore, according to point 63 of the R&R Guidelines, it is also important that this contribution must be real, as high as possible, aid-free and exclude future expected profit.

(111) This key compatibility criterion of the R&R Guidelines is underpinned by the fact that rescue and restructuring aid are among the most distortive types of State aid. Supporting ailing companies interferes with the normal market dynamic that would push less efficient undertakings out of business. As such, a significant own contribution is assessed as a sign that the markets believe in the feasibility of the return to viability and are actively supporting the restructuring plan.

(112) In the third restructuring plan, Romania presented an own contribution amounting to RON 178,1 (EUR 37,6 million) and purportedly representing 50 % of the total restructuring costs (see section 3.3.1). The sources of revenue are contracts with: (i) SNN for the provision of UO2, (ii) SNN for the treatment of scrap, (iii) the ANRSPS, (iv) CONVERSMIN, and (v) other minor revenues (see table 4).

(113) While analysing the free of aid character of the own contribution, the Commission prominently notes the absence of participation of any contribution from market investors or commercial banks that would take the risk of pre-financing sales to SNN or provide a market-based loan or fresh capital to finance part of the restructuring costs. On the contrary, the Commission notes that all of the proposed sources of own contribution consist of revenues from contracts with public administrations and State-owned enterprises.

(114) Romania did not present any supporting document or evidence of market-conformity of the planned contracts and prices of ANRSPS, a public administration, with CNU, that could lift the doubt raised in the Opening Decision (recital 51). The same is true regarding contracts with CONVERSMIN: Romania presented data about past and present contracts but does not show these contracts and revenues therefrom are aid free, by demonstrating that the price is a market price.

(115) More prominently, the main source of revenues of CNU (about 80 %) to the restructuring costs, will come, according to Romania, from UO2 contracts to be concluded between CNU and SNN in implementation of the new adopted law 193/2018 and its accompanying Government’s decision (as described in recital 53). Therefore, the Commission will first assess if these revenues – notably from the sales to SNN – can be considered aid free. To this purpose, the Commission will follow the same reasoning and criteria as the one analysed in section 4.1.

4.3.2.1.

Assessment of the revenues from SNN for UO2 provision by CNU

(116) The analysis of CNU’s revenues generated from the UO2 sales to SNN provided under this section is only meant at verifying the compliance with point 63 of the R&R Guidelines, which requires that the contribution of the beneficiary to the restructuring costs be free of aid.

(117) As explained in recital 12, the Romanian State owns through the Ministry of Energy 82,5 % of the share capital in SNN. It follows that the resources transferred from SNN to CNU as payment for the contracts to be executed within the framework of the new monopoly law are in fact stemming from State resources to an overwhelming proportion and that the resources of SNN are under control of the Romanian State.

(118) According to settled case law, the ability of the State to control a public undertaking involved in granting a measure does not justify automatically the presumption that its actions and commercial decisions are imputable to the State. The Court of Justice of the European Union (the Court) has explained that the resources of a public undertaking are to be considered State resources and actions concerning them are considered to be imputable to the State if the State is capable, by exercising its dominant influence over such an undertaking, to direct the use of its resources

Case C-482/99 French Republic/Commission (Stardust Marine) [2002] ECR I-4397

. The Court provided indicators for establishing imputability which include, among others, the intensity of the supervision exercised by the public authorities over the management of the undertaking or any other indicator showing an involvement by the public authorities in the adoption of a measure.

(119) First and foremost, the Commission notes that law 193/2018 forcing SNN to buy from CNU has been adopted in Parliament, (see recital 53). As a consequence of this law, SNN will have the obligation to purchase UO2 from CNU based on CNU’s actual refining costs, irrespective of the profitability for SNN of the transaction, notably compared to alternative supplies of UO2 for instance from Canada-based Cameco. This clearly indicates that supply contracts between SNN and CNU pursuant to this law are not market-based independent commercial decisions of SNN but will be the result from the exercise of the legislative power of the Romanian State. This means that it is the Romanian State which is ultimately exercising the decisive influence over the decision by SNN to contract the purchase of UO2 from CNU and over the related conditions of that contract (in particular, its price).

(120) In similar circumstances, the Commission concluded that long-term contracts relating to the purchase of electricity by Hidroelectrica, a public undertaking controlled by the Romanian State (80 % of shares) from other public undertakings S.C. Termoelectrica S.A and S.C Electrocentrale Deva S.A, that were prompted by the State authorities, involved State resources and were imputable to the State

See Commission Decision of 20 April 2015 on Incompatible aid through preferential tariffs in contracts between Hidroelectrica S.A. and thermoelectricity sellers (SA.33 475 (2012/C)), recitals 12 and 92 to 100 (OJ L 275, 20.10.2015, p. 46). In that case, the selling prices were based on costs determined by the Energy Regulator and the contracts allowed the sellers, which could not find buyers at market prices to sell part of their production to Hidroelectrica well above market prices.

. In the case at hand, imputability to the State is even more obvious and directly established, considering that any alternative supply of UO2 –except for the case where CNU would be unable to supply- would breach law 193/2018 of the State-imposed nature of the contractual relationship between SNN and CNU that directly stems from the Romanian law.

(121) The Commission also notes that this conclusion is strengthened by the importance of the role of the State within the governance of SNN (see recital 12) that ensures that the obligation imposed by law to SNN is put in practice by SNN’s decision bodies: indeed, the seven members of the executive board of SNN

See: SNN’s latest report in the annual reports section of its official website: 2016 Annual report retrieved on 30.7.2019, pages 88 to 96 – http://www.nuclearelectrica.ro/wp-content/uploads/2018/01/Raport-Anual-CA-2016-Final-ENGLEZA1.pdf

are appointed by the General meeting of shareholders, where the State, owing to its stake in SNN, holds a majority. The Board of directors is in particular responsible for appointing and revoking the managers of SNN and oversees their activity.

(122) Therefore, the Commission concludes that there is direct evidence showing that the conclusion of the contracts and their implementation are imputable to the Romanian State. Furthermore, considering that the conclusion and the implementation of the contracts involve a transfer of resources of SNN (as payment to CNU), which is a State-controlled buyer, the Commission concludes that this planned new measure entails State resources (see recitals 116 and 118).

(123) Law 193/2018 only concerns CNU and is not available to other companies competing, or envisaging to compete with CNU on the uranium processing supply. As the Court has stated, where individual aid is at issue, the identification of the economic advantage is, in principle, sufficient to support the presumption that a measure is selective

See judgment of 4 June 2015 Commission v MOL, C-15/14 P EU:C:2015:362, paragraph 60.

. Law 193/2018 and the revenues accruing to CNU in implementation thereof are thus clearly selective.

(124) On the advantage, the Commission notes that the regulatory framework formed by law 193/2018 and the accompanying Government’s decision, ensures CNU with the certainty to sell to SNN its UO2 production at a price covering part of its costs and ensuring it a profit. This certainty is not available on the market for any other company. In the absence of State intervention, CNU would not have the certainty to sell its production, as in the previous setting of SNN tendering out its UO2 supply contracts. This is confirmed by table 1, showing that since the introduction of the tender procedure, the prices offered by CNU have always been significantly higher than the one offered by Cameco. The Commission therefore concludes that Law 193/2018 and the revenues accruing to CNU in implementation thereof, provides an advantage to CNU.

(125) In light of the above, the Commission concludes that the revenues from SNN for the purchase of UO2 are not free of aid, and therefore do not constitute a valid own contribution to the restructuring costs under point 63 of the R&R Guidelines.

(126) The Commission then assessed, other things being equal, what would be the level of CNU’s own contribution if those revenues from SNN for processing were not accounted anymore. The resulting operational cash flows are presented in table 6

In order to recalculate the operational cash flows, several assumptions on the revenues and the costs as presented by Romania (Table 4) have been made. First, regarding the revenues, the assumption is taken that CNU would not receive the revenues linked to the UO2 contract with SNN as from 2019; revenues from 2017 and 2018 pre-dated law 193/2018. Second, the calculations conservatively assume that CNU would bear only a percentage of the costs related to the Feldioara plant corresponding to the percentage of revenues generated by the scrap contract compared to the total revenues generated by the scrap and the UO2 contract to SNN as of 2019. The operating costs of the existing Crucea-Botușana mine as of 2019 are also set aside, considering that CNU would not bear most of them if it needs not to produce U3O8 for supplying UO2 to SNN. As a result, these operating cash flows constitute a maximum in the absence of UO2 contract with SNN given conservative assumptions on the extent of the decrease in revenues and of the decrease in costs: the decrease in costs could be lower, for instance if CNU were still to produce U3O8 for instance for constituting an internal stock, in spite of the absence of UO2 contract with SNN.

.

Table 6

Actual and projected financial results of CNU

Source: Commission calculations based on data in Third restructuring plan.

In RON million201720182019 (f)2020 (f)2021 (f)2022 (f)2023 (f)Turnover84,137,812,915,416,516,917,4(total expenditures)66,044,02,73,23,12,83,0Total operational cash-flows18,1-6,210,112,213,414,114,4(amortisations)14,611,311,311,311,311,3(taxes – 16 % tax rate assumed based on submissions by Romania)0,00,00,20,30,50,5Net profitn.a.-1,20,81,72,42,6Adjusted equity115,2

Based on submission by the Romania authorities (RON 41,3 million of share capital and RON 73,9 million of other reserves).

114,1114,8116,6119,0121,6ROE

ROE, ROCE and ROA were computed, in accordance with the methodology followed for the financial year 2018 by the Romanian authorities in their submission dated 19 April 2019 (annex 14), by dividing the net profit by the share capital increased by other reserves. Cumulative profits were taken into account to compute an adjusted equity for each year of the restructuring period.

n.a.-1,0 %0,7 %1,5 %2,0 %2,2 %

ROCEn.a.-0,8 %0,4 %1,3 %0,7 %0,9 %ROAn.a.-0,3 %0,2 %0,4 %0,4 %0,6 %

(127) Based on those calculations and using the sum of operating cash flows over 2017-2023 as Romania did, the maximum aid-free amount that CNU could contribute to the plan is RON 76,2 million (EUR 16,1 million). This amount only represents 21,4 % of the RON 365 million (EUR 77,0 million) planned restructuring costs. This is well below the required level of minimum 50 % own contribution. In that respect, even if one assumed, for the sake of the argument, that CNU would still be capable of selling to SNN if it aligned with market prices, the operating revenues accruing to CNU would necessarily be hypothetical and not sufficiently stable and predictable to amount to a real and actual source of own contribution to the restructuring costs. The doubts the Commission raised in that respect in the Opening Decision therefore remain.

(128) Under the Commission’s decision making practice in application of the R&R Guidelines, the different beneficiaries concerned contributed with aid free funding to as much as 73 %

Commission Decision of 25 June 2018, SA.49214 (2017/N) – Restructuring aid to Semenarna Ljubljana d.o.o. (OJ C 339, 21.9.2018, p. 1).

of such costs and no less than 44 %

Commission Decision of 12 May 2016, SA.40419 (2015/NN) – Restructuring aid for Polzela d.d. (OJ C 258, 15.7.2016, p. 1).

of the restructuring costs (less than 50 % can be accepted in an assisted area pursuant to Article 107(3) a) as provided for in point 98 of the R&R Guidelines). The Commission also wants to underline that the strategic nature of the nuclear industry was not a reason for alleviating own contribution requirements for Areva, a potential competitor of CNU where the own contribution was higher than 50 %

See Commission Decision of 10 January 2017, SA 44727 (2016/C) Restructuring aid to Areva (OJ L 155, 17.6.2017, p. 23).

. In the present case, the Commission does therefore not identify any valid reason to depart from the rules and its decision-making practice as regards the minimum amount of own contribution to the restructuring costs.

(129) Furthermore, Romania also did not provide any justification to the point raised by the Commission in its Opening Decision (see recital 50) that Romania failed to explain why future profits are actual sources of own contribution in light of the point 63 of the R&R Guidelines, which excludes future expected profits such as cash flow.

(130) As regards other revenues than the ones from SNN relating to CNU’s UO2 supply contract, would these revenue be real, actual and aid-free, which has not been demonstrated by Romania, these revenues would in any case only represent 21,4 % maximum of own contribution (see recital 127) and be largely insufficient for it to meet the requirement relating to own contribution of the R&R Guidelines. The Commission therefore does not need to conclude on whether the other sources of own contribution as presented by Romania are actual, real and aid-free.

4.3.3.

Restructuring plan and return to long-term viability

(131) According to point 45 of the R&R Guidelines, in the case of restructuring aid, the Commission will require that the Member State concerned submit a feasible, coherent and far-reaching restructuring plan to restore the beneficiary’s long-term viability. The restructuring plan must restore the long-term viability of the beneficiary within a reasonable timescale and on the basis of realistic assumptions as to future operating conditions that should exclude any further State aid not covered by the restructuring plan. According to point 48 of the R&R guidelines, the restructuring plan must identify the causes of the beneficiary’s difficulties and the beneficiary’s own weaknesses, and outline how the proposed restructuring measures will remedy the beneficiary’s underlying problems. According to point 50, the expected results of the planned restructuring should be demonstrated in a baseline scenario as well as in a pessimistic (or worst-case) scenario. According to point 52 of the R&R guidelines, long-term viability is achieved when an undertaking is able to provide an appropriate projected return on capital after having covered all its costs including depreciation and financial charges.

(132) This key condition of the R&R Guidelines notably aims at avoiding distortion of competition over a long period by unprofitable, repeated injection of public money into ailing companies that would not be able to return to a self-sustained and viable financial situation in a reasonable timeframe in the future. In that respect, the Commission notes that the strategic nature of the nuclear industry was not in other case involving that industry

See footnote 42.

a reason for alleviating requirements in terms of thoroughness and robustness of the restructuring plan and in terms of likelihood of return to long-term viability after implementation of the plan.

4.3.3.1.

Shortcomings of the restructuring plan

(133) Recitals 54 to 61 of the Opening Decision raised doubts that CNU could become viable without continuous aid (the operating subsidy) and that the planned new mine would be profitable under realistic assumptions. In response, Romania alleges that CNU would become viable on long-term basis given financial projections showing on average between 2018 and 2023, a return on equity (ROE) of 14 % (11,4 % in 2023) and a return on capital employed (ROCE) of 12,9 % (13,6 % in 2023). However, for the reasons provided in the following recitals, the Commission’s view is that CNU’s long-term viability is not proven.

(134) The Commission notes that in its submission, Romania did not explain why its cash-flow forecasts did not seem to encompass either operating costs or investment costs relating to the new mine planned at Tulgheș-Grințieș.

(135) The Commission also notes that based on information provided by Romania (see table 1), the prices submitted by CNU for supplying SNN with batches of 120 tonU of UO2 over 6-month period between December 2015 and August 2018 were higher by 39 % to 99 % compared to Cameco’s bid. In its third restructuring plan, Romania did not submit a detailed, quantified explanation of how CNU’s production processes (both on the mining and processing/refining segments) could become competitive with Cameco and thus return to long-term viability on the market without further State aid at the end of the restructuring period.

(136) The Commission also notes that the amount of operating costs assumed by CNU in the third restructuring plan is in the range of RON [50-70] million (EUR [10,5 – 14,8 million) per year from 2020. This amount is roughly equal to one third of the annual expenditures foreseen in 2023 (RON 196,8 million) (EUR 41,5 million) in the first restructuring plan submitted by Romania (see table 1). The Romanian authorities did not provide any clear nor convincing justification for this significant reduction in operating costs between those two plans: in particular, in both plans, Crucea would have been fully depleted by 2023; as a consequence, the closure of this mine does not appear to be the explanation for that difference in operating costs between the two above-mentioned restructuring plans. The credibility of assumptions relating to operating cost is thus not established.

(137) Moreover, Romania did not explain at all the underlying assumptions for the revenues assumed in its restructuring plan as of 2021, such as the assumptions in terms of mix for the input of the Feldioara plant between U3O8 produced internally and imported. Additionally, the Romanian authorities did not submit a worst-case scenario as foreseen by point 50 of the R&R guidelines with a detailed assessment of the return to viability of the company even under pessimistic assumptions. The Romanian authorities indeed merely computed the amount of cumulative operating cash-flows deemed to constitute own contribution in case operating costs (or alternatively investment costs) were higher by 25 % without substantiating the rationale for such an assumption nor assessing in detail the impact it would have on the financial statements of CNU.

(138) In addition, Romania did not provide evidence that the new mine would be profitable, as expressly requested in the Opening Decision. A feasibility study commissioned from a Romanian consultancy (Cepromin Deva) is expected by November 2019. Therefore, the Commission notes that the 2011 study on the uranium mine, (see recital 72), which the Commission regrets that Romania was unable to produce, even expurgated of possible concerns on national security is, in any event, obsolete and insufficient to establish the profitability of the new mine. In particular, Romania did not dismiss the observation made by the Commission in the Opening Decision that the planned production cost of the mine would be exceeding by far U3O8 international market price (see recital 39). Based on

the same specialised source, the Commission observes that uranium prices remain at a low level of circa UDS 25 (EUR 22,6) per lb of U3O8

Data as of 20 July 2019 retrieved from https://www.uxc.com

, which is by far lower than the production cost of USD […] (EUR […]) per lb of U3O8 foreseen by Romania in its initial restructuring plan. Romania explained that the production costs of its new mine may be lower than the ones initially envisaged in its 2011 plan as only open pit reserves would be exploited in a first stage but failed to explain how that would compare with current and forecasted market prices. Furthermore, the new subsidy introduced in the third restructuring plan (see recital 57) in order to cover the costs of closure of the Crucea-Botușana mine shows that CNU did not set aside reserves for the environmental restoration of that mine. In the absence of any study for the new mine, there is no possibility to verify that these costs have been correctly factored in for the new mine. The same is true for all the other future costs of exploitation of the new mine. Therefore, the Commission concludes that the doubts about the new mine raised in the Opening decision have not been lifted.

4.3.3.2.

Doubts on the return to long-term viability

(139) Foremost, the Commission considers that the calculations provided by the Romanian authorities do not demonstrate the return to viability of CNU as they are based on the wrong premise that CNU satisfactorily contributes to the restructuring of its operations. As explained above, the Commission indeed considers that the revenues from the supply monopoly for the provision of UO2 to SNN are not free of aid (see recital 125). It follows that there is no return to long-term viability without further State aid since the supplies to SNN under the monopoly are not limited in time and are expected to constitute the bulk of the revenue of CNU during the restructuring period. In practice, as shown in Table 5, notwithstanding the shortcomings in Romania’s third restructuring plan, absent this source of revenue, CNU would generate at most a ROE of 2,2 % and ROCE of 0,9 % in 2023. This 2,2 % return is far below the current 5,0 % market rate for a Romanian sovereign bond with a 10-year maturity; this 2,2 % return is also far below the 7,5-8,5 % ROCE which Romania deems to be an adequate remuneration for capital in this industry, by reference to the Paks II decision (see recital 65). The ROCE benchmark that Romania puts forward relates to the construction and operation of a nuclear power plant, which entails risks, costs and remunerations that are different from those of nuclear fuel supply. CNU’s business involves a mining component exposed to the evolution of yellow cake prices and a conversion activity into uranium dioxide. A minimum target ROCE for CNU around 7 % to 8,4 %, which coincidentally happens to be in the same order of magnitude as the range in Romania’s submission, might therefore be appropriate for reference

In 2018, Orano’s post-tax weighted cost of capital on uranium mining was 7,65 % to 11,6 % and 6,7 % in subsequent refining and processing activities. The relative weights of mining and refining and processing cost for CNU in 2019 are 34 % and 66 %, respectively (see table 5), which results in an all in post-tax weighted cost of capital of 7 % to 8,4 %, if the capital cost of Orano was set as target ROCE for CNU. This would be conservative. The minimum target ROCE should be higher than a post-tax weighted cost of capital since an acceptable remuneration must always cover the borrowing costs and appropriate shareholder remuneration. Consolidated accounts of Orano 31.12.2018, p. 46 available at: https://www.orano.group/docs/default-source/orano-doc/finance/publications-financieres-et-reglementees/2018/resultats-annuels-2018/orano_comptes

. In any event, CNU’s projected ROE and ROCE at the end of the restructuring period in 2023 remain largely below the 5 % borrowing costs of Romania if the non-aid free revenues are not taken into consideration. CNU cannot thus be held to return to long-term viability without further aid.

(140) On a subsidiary basis, the Commission assessed whether its conclusion with regard to long-term viability would be changed in case expected revenues in the absence of monopoly would be based on sales at market price. However, if CNU were to effectively sell and record revenues for UO2 production at market prices, the resulting income would not allow it to reach long-term viability.

(141) According to Romania’s submissions, the current sale price of UO2 is indeed equal to 380 RON/kg (EUR 80/kg) (Cameco’s offer dated July 2018), and the market price for U3O8 is equal to 31,7 USD/lb (RON 350,4 per kgU of U3O8) based on a 6-month historical average. As a consequence, a market buyer would accept to pay CNU for the provision of UO2 based on imported U3O8 a market price for UO2 (380,4 RON per kg U) less the market price for U3O8 (350,4 RON per kgU) that is roughly 30 RON per kgU. The revenues at market price would prove largely insufficient to cover for CNU’s processing cost of U3O8 into UO2 ([…] RON/kg, including a 5 % profit margin). Indeed, a higher price for UO2 based on imported U3O8 would prove uncompetitive.

(142) Similarly, based on the information submitted by Romania, CNU would not come back to long-term viability if it were to be paid the market price for UO2 (380,4 RON per kgU) by SNN for an integrated offer of UO2 based on internally mined yellow cake: indeed, Romania submitted that CNU’s integrated production cost is roughly of […] RON/kgU based on the Crucea-Botușana mine

Second restructuring plan Annex 11.

which is far higher than the price for UO2 submitted by Cameco. Therefore, most of expected sales (ca. 80 %) for the provision of UO2 based on internally mined U3O8 from its planned new mine would be loss making. On that basis, the plan submitted by Romania does not allow concluding that CNU would be viable on the market when selling at market prices.

(143) The Commission further assessed what would happen if CNU were to sell UO2 from yellow cake stemming from its new planned mine to SNN at market price (380,4 RON per kgU). In such a case, based on the information provided by the Romanian authorities (table 4), the cost of Feldioara would represent at least around RON […] million per year, which would amount to RON […] per kgU, assuming very conservatively, that production at full plant capacity of […] tonU of UO2 per year would not increase costs. After covering Feldioara’s costs and the cost of central functions (conservatively assumed unchanged at RON […] million per year), this would leave a maximum margin of RON […] per kgU of UO2 for CNU to cover the cost of the (new) mine and processing uranium into yellow cake. This margin is far lower than the current market price of RON 350 per kgU of U3O8. This is also lower than the production cost of RON […] per kgU which Romania submitted for the new mine in Tulgheș-Grințieș

See Opening Decision recital 25. Romania has not submitted any new reasoned cost estimates.

.

(144) Table 7 shows that CNU would fail to reach long-term viability if selling UO2 at market price under the notified restructuring plan, even under the (optimistic) assumption that the production cost of the new mine (including proper coverage of future environmental liabilities) would be equal to current market price for yellow cake (i.e. RON 350 per kgU of U3O8). In effect, the revenues from sales of UO2 at market price would be lower than CNU’s production costs. Accordingly, its ROE, ROA and ROCE would all be negative at the end of the restructuring period. On that basis, even with supplies from the new mine, the third restructuring plan submitted by Romania does not allow concluding that CNU would be viable on the market when selling at market prices.

Table 7

Actual and projected financial results of CNU (sale of UO2 at market price)

Source: Commission calculations based on data in Third restructuring plan.

In RON million201720182019 (f)2020 (f)2021 (f)2022 (f)2023 (f)historical revenues84,137,8non-UO2 related revenues12,915,416,516,917,4UO2 related revenues93,1293,1293,1293,1293,12Total Turnover84,137,8106,0108,5109,6110,1110,5Feldioara costs42,9828,3842,5341,7340,6139,2737,84Central costs7,774,297,777,777,777,777,77Suceavamining costs (assuming a production cost equal to market price)nana8484848484Net profitnana-28,4-25,1-22,8-21,1-19,2adjusted equity115,23ROE

Computed on the basis of an adjusted equity of RON 115 million (assumption provided for 2018 by the Romanian authorities in the notified third restructuring plan); ROCE and ROA computed by dividing net profit by the same relevant aggregate than in Table 6.

-25 %-22 %-20 %-18 %

ROCE-20 %-12 %-17 %-7 %ROA-7 %-6 %-5 %-4 %

4.3.4.

Avoidance of undue negative effects on competition and trade

(145) According to point 76 and following of the R&R Guidelines, when restructuring aid is granted, measures must be taken to limit distortions of competition, so that adverse effects on trading conditions are minimised as much as possible and positive effects outweigh any adverse ones. In particular, measures limiting the distortion of competition should usually take the form of structural measures, i.e. clear-cut divestitures of viable activities, and not the form of divestitures of loss-making activities which would need to be abandoned anyway to preserve viability.

(146) The logic behind this condition is that under normal market circumstances, if the company would not get the aid, it would go bankrupt or be taken over. This would give rise to market and/or external growth opportunities for its competitors. Therefore, the beneficiary, while getting the aid, should somehow compensate partly for the negative impact on competition that it creates. In addition to the requirement of a contribution by the aid to an objective of common interest, the requirement for compensatory measures also acts as a deterrent for undertakings and helps preventing moral hazard with shareholders of companies turning to the State when experiencing difficulties while recording the upsides when they are profitable.

(147) In this regard, as summarised in recitals 78 to 82, Romania first submits that as compared to the initial restructuring plan, the third restructuring plan decreases the State aid to be granted to CNU by more than 60 %. The Commission notes that as concluded in recital 125, in the third restructuring plan, the revenues coming from the UO2 contract between CNU and SNN (concluded based on law 193/2018), and amounting to more than RON 250 million (EUR 52,7 million) (over the restructuring period according to Romania’s estimations), cannot be considered as free of aid. Therefore, this amount must be added to the RON 178,3 million (EUR 37,6 million) aid, which gives a total aid amount of RON 428,3 million (EUR 90,3 million). This amount represents 97,2 % of the total aid amount presented by Romania in its initial restructuring plan (RON 440,8 million or EUR 93,0 million). Therefore, the Commission concludes that the aid intensity is almost unchanged and has not decreased by 60 % as presented by Romania.

(148) Romania also merely repeats the arguments already presented and on which the Commission expressed doubts in the Opening Decision (see recitals 62 to 68). Romania submits that structural compensatory measures are neither needed, nor possible because CNU’s size is negligible and the lack of EU-based alternative CANDU-based supplier makes the impact of aid on competition inexistent. Allegedly, any divesture would jeopardise the viability of the restructuring plan.

(149) However, based on the information presented in recitals 21 to 23 and assessed in section 4.1.4, the Commission concluded that there is actual and potential competition from European companies in providing the yellow cake and that there is also potential competition on the conversion activity as well.

(150) As regards the argument put forward by Romania that any divestment would jeopardise the viability of the restructuring plan, the Commission notes that in the Areva case

See footnote 42.

, Areva divested its reactor business (New Areva NP) to the French energy incumbent EDF. This activity represented a third of Areva’s assets and generated more than 50 % of its turnover pre-restructuring

See recital 333 of the final decision as referenced in footnote 42.

. The Commission notes that Romania did not present any alternative plan including a divestment of any of CNU’s activities such as focussing CNU on the mining segment, while divesting its processing/refining activity on a going concern basis as a stand-alone business.

(151) In view of the information portrayed in recitals 147 to 150 above, it appears that: (i) there is actual competition regarding the uranium extraction activity, (ii) further competition could potentially arise regarding the uranium processing-refining activity and (iii) Romania does not propose any structural compensatory measure for CNU. Consequently, the Commission concludes that the absence of structural compensatory measures does not satisfy the criteria of measures to limit the distortion of competition set out in points 76 and following of the R&R Guidelines.

4.4.

Final conclusion on compatibility of the restructuring aid with the internal market

(152) As regards the rescue aid loan, in line with point 55(d) of the R&R Guidelines, Romania committed to submitting, within maximum six months from the date of the rescue aid decision or the disbursement of the first instalment (recital 42 of the rescue aid decision), either proof that the loan was reimbursed, or a valid restructuring plan, or a substantiated liquidation plan setting out the steps leading to the liquidation of CNU within a reasonable time frame, without further aid. Romania did not meet this commitment, since (i) the rescue loan has not been reimbursed and (ii) Romania was informed that the restructuring plan (submitted by Romania in June 2017 and amended with a latest version in April 2019) does not ensure a proper own contribution of CNU to the restructuring plan, nor a return for CNU to long term viability without further aid at the end of the restructuring period, nor appropriate compensatory measure.

(153) From the above the Commission concludes that (i) the conversion (through debt write-off) of the prolonged rescue loan into restructuring aid for RON 60,4 million (EUR 12,7 million) and (ii) the three State grants totalling RON 117,9 million (EUR 24,9 million) to CNU are incompatible with the internal market.

1. AREAS OF APPLICATION OF THE EURATOM TREATY

(154) The Commission also takes in due account that CNU is active in the areas covered by the Euratom Treaty. The Euratom Treaty established the European Atomic Energy Community, specifying the necessary instruments and allocating responsibilities with a view to achieving objectives that include nuclear safety, energy independence and the diversity and security of energy supplies

See in particular Articles 1, 2 and 52 of the Euratom Treaty.

.

(155) Article 52 of the Euratom Treaty established the Euratom Supply Agency (ESA) to ensure a regular and equitable supply of nuclear fuels to European users in line with the objectives of Art. 2(d). To perform this task, ESA applies a supply policy based on the principle of equal access of all users to ores and nuclear fuel and ESA has a right of option on materials produced in the Community and an exclusive right to conclude supply contracts for the supply of ores and nuclear fuels

(156) Pursuant to Article 67 of the Euratom Treaty, save where exceptions are provided for in this Treaty, prices shall be determined as a result of balancing supply against demand as provided for in Article 60; the national regulations of the Member States shall not contravene such provisions. Under the simplified procedure, established by Article 5bis of the Regulation of the Supply Agency of the European Atomic Energy Community

See Regulation of the Supply Agency of the European Atomic Energy Community amending the rules of the Supply Agency of 5 May 1960 determining the manner in which demand is to be balanced against the supply of ores, source materials and special fissile materials (OJ L 193, 25.7.1975, p. 37).

, ESA is exercising its right of option and its right to conclude contracts through a single trilateral contract between the producer, ESA and the user.

(157) In the case at hand, ESA is party to every contract between CNU and SNN and as specified in recital 156, is not bound by any Romanian legal acts while assessing purchase orders.

(158) The system for regulating supplies only lays down the principle of preference for Community users, in accordance with Article 2(d) of the Euratom Treaty, and does not guarantee the disposal of Community production of nuclear materials. Moreover, the Euratom Treaty provides for a system that requires prices to be determined by balancing supply and demand unless there are exceptional circumstances

See, ENU v Commission, judgment of 11 March 1997, C-357/95 P EU:C:1997:144, where the Court indicated that there could be exceptional circumstances that could justify departing from the pricing mechanism laid down in the Treaty. The example provided is the existence of a threat or a possible threat to the fundamental objective of a regular and equitable supply of ores and nuclear fuels (para. 47).

.

(159) The Commission has acknowledged in previous decisions on State aid that the promotion of a successful nuclear energy sector is a fundamental objective of the Euratom Treaty, and therefore also of the European Union

See the Commission Decision 2005/407/EC of 22 September 2004 on the State aid which the United Kingdom is planning to implement for British Energy plc (OJ L 142, 6.6.2005, p. 26), and the Commission Decision (EU) 2015/658 of 8 October 2014 on the aid measure SA.34947 (2013/C) (ex 2013/N) which the United Kingdom is planning to implement for support to the Hinkley Point C nuclear power station (OJ L 109, 28.4.2015, p. 44).

. Without prejudice to the compliance of supplies by CNU to SNN governed by law 193/2018 and Government Decision 126/2019 with the provisions of the Euratom Treaty, the Commission acknowledges that the present decision may impact some of Romania’s obligations under the Euratom Treaty as regards safety of uranium mining and processing and security of supply, especially if CNU had to cease operations.

(160) In the context of or as a follow-up to the present proceedings under the TFEU, Romania may plan to adopt measures ensuring the fulfilment of the Euratom Treaty objectives as regards safety of uranium mining and processing and security of supply for instance preserving the ability to guarantee that the Feldioara plant, whether under CNU ownership and operation or not, remains able to produce UO2 for SNN’s CANDU reactors. However, such measures in that context cannot put into question, unduly reduce the scope or delay the implementation of any recovery obligation ensuing from the present proceedings and shall have to be necessary, proportionate, reasonable and limited in time and scope to what is indispensable to preserve safety and security of supply. In enforcement of the present Decision, the Commission must be informed in advance and be in a position to verify that these conditions are met. Consequently, this decision is generally without prejudice to such measures.

1. RECOVERY

(161) According to the TFEU and the Union Court’s established case-law, the Commission is competent to decide that the Member State concerned must abolish or alter aid when it has found that it is incompatible with the internal market

See Case C-70/72 Commission v Germany, ECLI:EU:C:1973:87, paragraph 13.

. The Court has also consistently held that the obligation on a Member State to abolish aid regarded by the Commission as being incompatible with the internal market is designed to re-establish the previously existing situation

See Joined Cases C-278/92, C-279/92 and C-280/92 Spain v Commission ECLI:EU:C:1994:325, paragraph 75.

.

(162) In this context, the Court has established that this objective is attained once the recipient has repaid the amounts granted by way of unlawful aid, thus forfeiting the advantage which it had enjoyed over its competitors on the market, and the situation prior to the payment of the aid is restored

See Case C-75/97 Belgium v Commission ECLI:EU:C:1999:311, paragraphs 64 and 65.

.

(163) In this regard, Article 16(1) of Council Regulation (EU) 2015/1589

Council Regulation (EU) 2015/1589 of 13 July 2015 laying down detailed rules for the application of Article 108 of the Treaty on the Functioning of the European Union (OJ L 248, 24.9.2015, p. 9).

states that where negative decisions are taken in cases of unlawful aid, the Commission shall decide that the Member State concerned shall take all necessary measures to recover the aid from the beneficiary […].

(164) Thus, the prolonged rescue aid loan – which became unlawful as from the moment when the rescue aid was not repaid within six months after its granting and/or disbursement – was implemented in violation of Article 108(3) TFEU, and is to be considered as unlawful and incompatible aid. The loan must be recovered in order to re-establish the situation that existed on the market prior to its granting. According to Article 16(2) of Regulation (EU) 2015/1589, recovery should cover the time from when the advantage was granted to the beneficiary, that is to say when the aid in the form of principal amount of loan was unlawfully put at the disposal of the beneficiary, until its effective recovery. Furthermore, the sum to be recovered should bear interest until effective recovery. The recovery interest is distinct from the contractual interest or other related sums related to the rescue loan owed by CNU to the State based on contractual agreements, which must be accordingly added to the principal aid amount. By paying the recovery interest, the beneficiary forfeits the financial advantage arising from the availability of the aid in question, free of charge, from the date it was put at the disposal of the beneficiary until it is paid back

See Case T-459/93 Siemens v Commission ECLI:EU:T:1995:100, paragraphs 97-101

. The recovery interest shall be calculated pursuant to Regulation (EC) No 794/2004

Commission Regulation (EC) No 794/2004, OJ L 140, 30.4.2004, p. 1, as amended.

.

(165) The Commission takes note of the recent discussions with Romania in which it was not excluded that a winding up of CNU may follow a recovery order relating to the rescue loan and its assets being sold in order to meet its liabilities, including those arising from the implementation of recovery imposed on Romania as a result of this Decision.

(166) The fact that CNU may be put under insolvency procedure and unable to repay the aid does not constitute a valid reason for exempting it from its obligation to reimburse the aid

Judgment of the Court of Justice of 29 April 2004, Germany v Commission, C-277/00, ECLI:EU:C:2004:238, paragraph 85; Judgment of the Court of Justice of 15 January 1986, Commission v Belgium, C-52/84, ECLI:EU:C:1986:3, paragraph 14; Judgment of the Court of Justice of 21 March 1990, Belgium v Commission, C-142/87, ECLI:EU:C:1990:125, paragraphs 60 to 62.

. In this case, restoring the situation prior to the payment of the aid and removing the distortion of competition can be achieved by registering the liability relating to the rescue aid loan in the schedule of liabilities as part of a court-supervised insolvency procedure. If Romania was unable to recover the full amount, the proceedings should result in the definitive cessation of CNU’s activities

Judgment of the Court of Justice of 11 December 2012, Commission v Spain, C-610/10, ECLI:EU:C:2012:781, paragraph 104.

.

1. CONCLUSION

(167) The Commission concludes that Romania has granted to CNU unlawful State aid through the prolonged rescue aid loan, which is incompatible with the internal market and which should be recovered and not written-off, as Romania plans. The Commission also concludes that the additional planned restructuring aid in the form of three grants related to the closing of the Crucea-Botușana mine, the opening of the new Tulgheș-Grințieș mine and to the modernisation of the Feldioara plant, amounting to RON 117,9 million is also incompatible with the internal market and should not be put at the disposal of CNU. Furthermore, the Commission takes note that Romania no longer plans to implement some restructuring aid measures initially notified on which it raised doubts.

(168) The Commission may examine in future separate proceedings whether revenues accruing to CNU in implementation of Law 193/2018 as further specified by Government Decision 126/2019 involve unlawful State aid,

HAS ADOPTED THIS DECISION:

Article 1

The State aid which Romania is planning to implement for Compania Națională a Uraniului SA, in the form of a write-off of the loan granted in accordance with Government Emergency Order No 65/2016 and three State grants related to the closing of the Crucea-Botușana mine, the opening of the new Tulgheș-Grințieș mine and to the modernisation of the Feldioara plant, amounting to RON 178,3 million, is incompatible with the internal market.

The aid measures shall therefore not be implemented.

Article 2

After Romania withdrew its plans, the proceedings with respect of the State aid notified by Romania in the form of a RON 75,5 million grant, a RON 213 million operating subsidy and a conversion of Compania Națională a Uraniului SA ‘s debt as of 30 March 2017 of RON 13,3 million, into shares held by the Romanian State have become devoid of purpose.

Article 3

The loan amounting to RON 62 million, granted in favour of Compania Națională a Uraniului, in accordance with Government Emergency Order No 65/2016 and interest (the rescue loan) not reimbursed after six months, constitutes unlawful State aid granted by Romania, in breach of Article 108(3) of the Treaty on the Functioning of the European Union and is incompatible with the internal market.

Article 4

1. Romania shall recover the incompatible aid, referred to in Article 3 from the beneficiary.

1. The actual sum to be recovered shall equal the amount of the rescue loan effectively disbursed, namely RON 60367550,53, to the beneficiary and not reimbursed by the latter to the Romanian State, as well as the corresponding contractual interest that should have been charged from the disbursement of the rescue loan. The sum to be recovered shall also bear recovery interest from the date the aid became unlawful until its actual recovery.

1. The interest shall be calculated on a compound basis in accordance with Chapter V of Commission Regulation (EC) No 794/2004

Commission Regulation (EC) No 794/2004 of 21 April 2004 implementing Council Regulation (EU) 2015/1589 laying down detailed rules for the application of Article 108 of the Treaty on the Functioning of the European Union (OJ L 140, 30.4.2004, p. 1).

.

1. Romania shall cancel all payment of all outstanding amount of the aid referred to in Article 3 with effect from the date of adoption of this decision.

Article 5

1. Recovery of the aid referred to in Article 3 shall be immediate and effective, without prejudice of appropriate measures which Romania may adopt with a view to achieve Romania’s obligations under the Euratom Treaty, provided such measures are proportionate, reasonable, and limited in time.

1. Romania shall ensure that this Decision is implemented within four months following the date of notification of this Decision.

Article 6

1. Within two months following notification of this Decision, Romania shall submit the following information to the Commission:

(a) the total amount (principal and recovery interests) to be recovered from the beneficiary;

(b) a detailed description of the measures already taken and planned to comply with this Decision;

(c) documents demonstrating that the beneficiary has been ordered to repay the aid.

1. Romania shall keep the Commission informed of the progress of the national measures taken to implement this Decision until recovery of the aid referred to in Article 3 has been completed. It shall immediately submit, on simple request by the Commission, information on the measures already taken and planned to comply with this Decision. It shall also provide detailed information concerning the amounts of aid and recovery interest already recovered from the beneficiary.

Article 7

This Decision is addressed to Romania.

Done at Brussels, 24 February 2020.

For the Commission

Margrethe Vestager

Executive Vice-President