Brussels- The Polish government must sell off two shipyards which were the cradle of the anti-Communist Solidarity movement in order to claim back hundreds of millions of euros in illegal state aid, the European Union's executive ruled Thursday.

"State aid granted to the shipyards in Gdynia and Szczecin gives rise to disproportionate distortions of competition ... in breach of EC Treaty state aid rules, and must be repaid ," EU Competition Commissioner Neelie Kroes told journalists in Brussels.

"The Polish authorities have committed to sell the yards' assets by the end of May 2009 ... The proceeds from the asset sales will be used to repay the yards' creditors and to repay the unlawful aid to the State, (and) the existing shipyard companies, with any remaining assets and liabilities, will then be liquidated," she said.

The shipyards in Gdynia and Szczecin, together with a similar facility in Gdansk, were the birthplace of the Solidarity trade-union movement which in 1980 won fame around the world for the challenge it presented to Poland's then-Communist regime.

But since the collapse of Communism, the shipyards have run into severe financial difficulties. Since Poland joined the EU in 2004, they have been kept afloat by state aid well in excess of 3 billion euros (3.9 billion dollars), Kroes said.

"The sad reality is that the very large subsidies received were consistently used for day-to-day operations, to keep the yards going in the short term rather than invested to make the yards viable in the long term," she said.

The plan agreed between the commission and the Polish government is aimed at allowing future investors in the two yards to carry out economic activities without the fear of having to pay back state aid.

The Gdansk shipyard, which was recently privatized, is the subject of a parallel state-aid case which is still ongoing. (dpa)