Commission decision shows role of trademarks in state aid cases
Commission Decision of January 9 2012 SA.30584 (C 38/10, ex NN 69/10, published in the Official Journal of the European Union on April 3 2013, L 92/1) concerned the state aid granted by the Hungarian government to Hungarian airline Malev. The purpose of this article is not to comment the state aid decision, but only to show its significance in relation with trademarks.
Several measures were examined by the commission.
The first one concerned a transfer of €76 million, which originated in a loan agreement between Malev and the Hungarian Development Bank (Magyar Fejlesztési Bank or MFB). The loan was then transferred to Malév Asset Management Company (MAVA), a new entity whose activity was to be a conduit for certain payments between Malev and MFB.
This loan agreement was included in the list of existing aid measures in the Hungarian accession treaty. However, when the maturity of this loan was extended until 2017, it could no longer be considered as an exiting aid. The result of this transaction was that the debt was taken off Malev’s balance sheet.
The commission found that the collateral offered was not sufficient to enable MAVA to repay the debt at the end of the maturity of the loan (ie, in 2017). No private investor would have accepted such risk.
The assets used as collateral were a B767 and a kerosene pipeline valued at €20 million, and the Malev brand, which was evaluated at €56 million. To reach this evaluation, the following reasoning was carried out:
+ €76 million (amount of the loan)
- €20 million (value of the plane and kerosene)
= €56 million (value of the trademark)
However, Malev was not able to pay the royalties and MAVA never tried to enforce payment. In addition, a €32 million guarantee intended to cover the principal and the interest of the payment that MAVA had towards MFB was given.
In the light of those facts, and given the lack of adequate equivalent transferred to MAVA, the removal of the debt from Malev’s balance sheet must be regarded as an advantage in favour of Malev.
The commission then acknowledged that the Malev brand does have a certain value. However, an objective value should have been obtained using an independent evaluation which was not provided for by the Hungarian government.
As a consequence, the aid was evaluated at €56 million (76 - 20). Since the evaluation of the value of the trademark was not substantiated by the Hungarian government, the commission considered that its value could be as low as zero.
This shows that trademarks, and more precisely their value, may be taken in consideration both as guarantees and as part of the examination process in state aid cases. It also shows that an independent appraisal of the marks must be carried out and that the commission will not accept an evaluation made by a national government at face value.
Richard Milchior, Granrut, Paris
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