* Italy took control of Ilva in January
* Main plant accused of failing to control toxic emissions
* Italy guaranteeing 400 mln euro loan to finance clean-up
* Eurofer says 2 bln euros given by Italian state (Adds detail, background, Eurofer comment)
By Philip Blenkinsop
BRUSSELS, May 28 (Reuters) - European steel association Eurofer filed a formal complaint on Thursday at the European Commission against what it said was illegal state aid for Italian steelmaker Ilva.
Eurofer said that about 2 billion euros ($2.2 billion) allocated to Ilva by the Italian authorities is not compatible with European Union regulations.
“We cannot allow this sort of distorted government intervention, just as we cannot allow distortion from trade,” Eurofer’s director general, Axel Eggert, told a news conference, adding that the German steel federation had already filed a complaint.
Eggert said that the Italian authorities needed to inform the European Commission about the aid they had provided.
“We don’t know if they have done so. They hadn’t done by March,” he said.
Italy’s government took full control of the Ilva plant, Europe’s biggest by output capacity, in January and placed it under extraordinary administration to save 16,000 jobs after a court had sequestered much of the factory on accusations that it failed to contain toxic emissions.
In April Italy’s Economy Minister Pier Carlo Padoan signed a decree to guarantee a bridge loan of 400 million euros to finance the environmental clean-up.
Ilva declined to comment on Thursday.
The plant is losing tens of millions of euros a month and is a headache for an Italian government battling to pull the country clear of recession. The Italian steel sector is Europe’s second-largest behind Germany‘s.
Ilva’s Taranto site has been producing at well below its annual capacity of more than 11 million tonnes since 2013.
Last year ArcelorMittal, the world’s biggest steelmaker, submitted a non-binding joint offer for Ilva with Italian steel processor Marcegaglia. Italian steel producer Arvedi also submitted an offer. ($1 = 0.9142 euros) (Additional reporting by Massimiliano Di Giorgio in Rome; Editing by Robert-Jan Bartunek and David Goodman)