A formal investigation has been launched by the European Commission into the sale of Bank Burgenland to Grazer Wechselseitige Versicherung, to ensure that the tender was conducted in a non-discriminatory manner and that the sale did not involve incompatible state aid.
Land Burgenland decided to sell to Austrian insurer Grazer Wechselseitige Versicherung (GRAWE) in March 2006 for a sum of E100.3 million, despite having been offered E155 million by an Austrian and Ukrainian consortium.
EU competition commissioner Neelie Kroes stated: The Commission must check whether Land Burgenland had objective, transparent and non-discriminatory reasons to favor the offer of Grazer Wechselseitige Versicherung AG. Otherwise, the sale might involve state aid that may be illegal under EU rules.
The privatization of Bank Burgenland was an essential move approved by the Commission in the context of a restructuring aid to Bank Burgenland.
In its 23rd report on competition policy (1993), the Commission outlined a number of criteria to assess state aid in the privatization of a state-owned company. However, two of the principles appear to have been breached during the sale.
Firstly, the company should be sold to the highest bidder and, secondly, the tender procedure should be open, transparent, unconditional and/or non-discriminatory.
Inter alia, the Commission’s investigation will seek to clarify why Land Burgenland did not request a provisional assessment of the two bidders by the Austrian Financial Market Authority before deciding.