The Commission decided to initiate a formal State aid investigation procedure against Greece concerning Olympic Airways. The Commission has doubts about the arrangements for setting up and privatising a new company to be known as Olympic Airlines and intends to ensure that no State aid is involved. It is high time to take action: this is the last chance for Olympic Airways. Unless the privatisation process is completed in full conformity with European legislation, the company will have to be placed into liquidation, as was the case with other companies in the competitive air transport market stated Loyola de Palacio, Vice-President with special responsibility for transport and energy. I am certain that the Greek Government will cooperate fully with the Commission to avoid the errors which led to this situation she explained.

The Commission decided to initiate a formal investigation under Article 88(2) of the Treaty against Greece since it has doubts as to whether several measures in recent years may be regarded as compatible with the common market. The Commission will assess whether the advantages granted to Olympic Airways constitute new State aid, and in particular the non-payment of tax debt in 2003; the provision of an advance by the Greek State to fund the restructuring and privatisation of the company and the non-payment of the airport modernisation tax (Spatosimo) charged to passengers.

In addition, the Commission intends to verify the conditions under which the Greek State set up at the end of 2003 a new company to be known as Olympic Airlines which took over the aviation activities of Olympic Airways. The Commission takes the view that all the companies which belong to the group are a single undertaking from the point of view of the Community State aid rules. All the assets of Olympic Airways (aeroplanes, staff), and in future the maintenance and groundhandling divisions have been or will be transferred to the new company. It has also taken over the slots, traffic rights and public service obligations of Olympic Airways.

Accordingly, the Commission has doubts about the lawfulness of the advantages that Olympic Airlines, as the successor to Olympic Airways, may enjoy, and about the procedure used which does not allow it to assess whether the potential purchaser will pay a fair price.

Lastly, the Commission is calling for the formal repeal before 31 December 2004 of several articles of Law 96/1975, establishing an exemption scheme for Olympic Airways which, in its opinion, distorts or threatens to distort competition within the common market.