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GFG Alliance's financial problems and the impact on the operations of steelworks

Question écrite de M. Evžen TOŠENOVSKÝ - Commission européenne


Subject: GFG Alliance's financial problems and the impact on the operations of steelworks

In April 2019, the Commission decided that Liberty House, a British company belonging to the global GFG Alliance group, was a suitable buyer for the Ostrava steelworks, which were originally owned by ArcelorMittal. At the time, there were concerns mainly because the acquisition was largely dependent on borrowed money and that the financing could affect the steelworks’ ability to function independently. However, the Commission gave the transaction a positive assessment and concluded that it raised no concerns.

Last month, however, it emerged that GFG Alliance's main creditor, the financial group Greensill, had become insolvent. Long before that, the group's debts had been held by a Credit Suisse fund. The latter then filed for insolvency in early April through Citigroup. There is even speculation that the debtor offered Greensill invoices of unrealised trades that were fabricated as a form of guarantee1.

As a consequence of GFG Alliance's financial problems, the steel mills under its subsidiary Liberty House (located in the Czech Republic, Romania and France) are experiencing an existential crisis and many thousands of employees are at risk of being made redundant2.

1. Is the Commission currently following this case, and what is its position on it?

2. Does the Commission plan to intervene if fraud is proven to have taken place in relation to unrealised trades?

1 https://www.e15.cz/byznys/prumysl-a-energetika/skupina-liberty-kryla-pujcky-smyslenymi-obchody-veritele-

mluvi-o-podvodu-1379519

2 https://byznys.ihned.cz/c1-66903790-situace-v-ostravskych-hutich-je-napjata-britska-vlada-zvazuje-znarodneni-casti-ocelarske-skupiny-liberty

Réponse - Commission européenne

Diffusée le 29 juin 2021

Answer given by Executive Vice-President Vestager on behalf of the European Commission (30 June 2021)

As is the case in all merger cases where divestments are offered by the parties, the buyer is proposed by the seller of the assets. In this case, it was ArcelorMittal’s commercial decision to sell the divestment assets to Liberty House. The Commission approved Liberty House as a purchaser after an extensive review. The Commission’s assessment of Liberty House’s financial resources during the buyer approval review needs to be seen separately from the financial situation of the financial institutions that may provide funding, which in principle is not part of the Commission’s merger control assessment.

The Commission is closely monitoring developments relating to the Gupta Family Group (GFG) Alliance. The Commission notes that most of the companies appear to be operating normally for now. Given the number of jobs involved in several EU Member States, the Commission stands ready to help and discuss with the Member States concerned regarding emergency support to the companies in line with Union rules, if necessary.

As a rule, the Commission cannot intervene in case of fraud or other criminal actions, unless these concern the EU budget. Apart from these cases, any criminal misconducts would have to be prosecuted by the competent national authorities in Member States.

⋅1∙ https://www.e15.cz/byznys/prumysl-a-energetika/skupina-liberty-kryla-pujcky-smyslenymi-obchody-veritele-mluvi-o-podvodu-1379519

⋅2∙ https://byznys.ihned.cz/c1-66903790-situace-v-ostravskych-hutich-je-napjata-britska-vlada-zvazuje-znarodneni-casti-ocelarske-skupiny-liberty



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