The European Commission has opened an in depth investigation to establish whether measures granted by the Greek government in favour of United Textiles breached EU State aid rules.

It is alleged that between 2007 and 2010 United Textiles repeatedly received aid in direct contravention of EU rescue and restructuring guidelines. The Commission is also concerned that these measures could also have transferred an undue advantage to the company's lending banks.

Joaquín Almunia, vice-president in charge of competition policy, said: “Governments are entitled to help firms in difficulties provided that they respect the EU's state aid rules. These rules ensure that competition is not unduly distorted.”

United Textiles, one of the largest textile companies in Greece, has been in financial difficulty since 2004. The majority of its operations were suspended in 2008, alongside funding from its main shareholder and lending banks.

Information obtained from the Greek authorities suggests that Untied Textiles has been the subject of repeated state interventions since 2007. Furthermore, United Textiles' lending banks appear to have benefited from state guarantees granted to the company, which covered United’s Textiles existing loans.

EU guidelines on rescue and restructuring aid, from 2004, state that a company can only be ‘rescued’ by the state once in 10 years. Known as the ‘one time, last time’ principle, the Commission intends to investigate whether measures taken to support United Textiles complied with this rule.