EU probes new unit of Italy's SEA on issue of state aid

BRUSSELS, July 9 Wed Jul 9, 2014 7:55am EDT

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BRUSSELS, July 9 (Reuters) - The European Commision said it had opened an in-depth probe into whether a 25 million euro ($34 million) capital injection by Milan airport operator SEA into its new ground-handling unit was in line with EU state aid rules.

The investigation will examine whether the funding provided by SEA to subsidiary Airport Handling had circumvented a 2012 decision by the Commission that required SEA to repay incompatible state aid granted to its previous ground-handling unit, SEA Handling.

SEA, which is nearly 55 percent-owned by the city of Milan, could not immediately be reached for comment.

According to the Italian authorities, there was no economic continuity between SEA Handling, which was wound up in June this year, and Airport Handling, which started operations in July, the Commission said.

"However, the Commission has concerns that the aim and result of creating the new company was to avoid repaying the incompatible state aid," it said in a statement on Wednesday.

It said the scope of the transferred activities, the price of the assets, the identity of shareholders and the timing and economic logic of the operation all "seemed to indicate that Airport Handling is in fact the successor of SEA Handling".

The European Commission will also examine whether the capital injection was carried out on market terms.

In a separate case, the Commission is investigating whether an investment by Italy's state-owned postal service in loss-making flagship carrier Alitalia last year complied with EU state aid rules.

($1 = 0.7331 Euros) (Reporting by Francesco Guarascio; writing by Agnieszka Flak; editing by Jane Baird)

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