The European Commission has opened a formal investigation into state aid given to Greece’s cereal sector amid concerns the assistance broke EU law.

Following a complaint last year, the Commission conducted a preliminary investigation into alleged state aid to cereal farmers and co-operatives.

The initial investigation showed that the Greek government decided during 2008 to grant to unions of agricultural co-operatives and indirectly to farmers a state-guaranteed loan of EUR150m and a subsidisation of the interest.

“The Commission has doubts concerning the compatibility of this scheme with EU law. The opening of a formal investigation allows the Commission to examine the measure more closely and gives interested third parties the possibility to submit comments. It does not prejudge the outcome of the procedure,” the Commission said yesterday (14 December).