The European Commission has opened a formal investigation under EU state aid rules to examine a number of support measures, including several capital injections and shareholder loans, that the Hungarian authorities granted to Malév-Hungarian Airlines in the context of its privatisation and subsequent renationalisation. In particular, the Commission has doubts that Malév would have been able to obtain financing from the market on the terms conceded by the Hungarian authorities. The opening of an in-depth investigation gives interested parties the possibility to comment on the measures under examination. It does not prejudge the outcome of the investigation.

The measures which the Commission has identified as giving rise to issues of state aid concern are the following:

• In December 2007 the State took over a 2003 loan to Malév;

• A cash facility for one year in the context of the abortive sale of Malév's Ground Handling subsidiary;

• A tax deferral;

• A capital increase in February 2010;

• Shareholder loans grated between April to July 2010;

• The conversion of these shareholder loans (along with the interest owed thereon) into shares in Malév;

• Another capital increase in September 2010;

• A further shareholder loan in September 2010.

Under EU State aid rules, interventions by public authorities in companies carrying out economic activities can be considered free of aid provided they are made on terms a private player operating under market conditions would have accepted (the "market economy investor principle").

After a preliminary investigation and considering the facts currently at its disposal, the Commission has doubts as to whether, given the difficult financial situation of Malév, the airline would have secured such financing on the market on the same terms or at all. Moreover, the Commission also has doubts as to whether these measures meet the criteria of the Commission's guidelines for the rescue and restructuring of firms in difficulty.

The opening of a formal investigation procedure is common for state interventions in the aviation sector, in particular where the beneficiary seems to be in a difficult financial situation. It gives interested third parties, Member States and competitors the possibility to submit comments on a series of measures carried out in a highly competitive market.