European Commission (EC) authorities have opened an in-depth investigation to assess whether Hungary’s plans to grant EUR108m (US$120m) of public support to Samsung SDI for investing in the expansion of its battery cell production facility in Göd (Hungary), is in line with EU rules on regional State aid.
“Public investment is important to foster economic growth in disadvantaged regions in Europe,” said Competition Policy Commissioner, Margrethe Vestager. “But public support should only be given if it’s necessary to trigger private investment in the disadvantaged region concerned.
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“Otherwise, it only gives the beneficiary an unfair advantage over its competitors, at the expense of taxpayers. The Commission will carefully investigate whether Hungary’s planned support is really necessary for Samsung SDI to invest in Göd, is kept to the minimum necessary and does not distort competition or harm cohesion in the EU.”
Samsung SDI is one of the main players in the fast growing market of lithium-ion batteries. Samsung SDI is investing around EUR1.2bn to expand the production capacity of lithium-ion cells and battery packs for electric vehicles in its existing plant located in Göd.
Work on the capacity expansion started in December, 2017 and the implementation of the project is now well advanced. In 2018, Hungary notified the Commission of its plans to grant EUR108m of public support for the project.
EU State aid rules, in particular the Commission’s 2014 Regional State Aid Guidelines, enable countries to support economic development and employment in the EU’s disadvantaged regions and to foster regional cohesion in the Single Market.
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By GlobalDataIn order to be approved, the measures need to fulfil certain conditions to make sure they have the intended positive effect.
This includes the support must incentivise private investment, be kept to the minimum necessary, must not lure away investment from a region in another Member State, which is as or more disadvantaged (anti-cohesion effect) and must not be directly causing the relocation of activities (such as jobs) to the Member State granting the support from elsewhere in the EU.
“The Commission has doubts at this stage the planned aid support of EUR108m to Samsung SDI in Göd complies with all relevant criteria of the Regional Aid Guidelines,” said an EC statement.
“The Commission has doubts whether the measure has an ‘incentive effect.’ In this respect, the Commission will investigate whether the decision by Samsung SDI to invest in Hungary was directly triggered by Hungarian public support, in line with conditions set out in the Guidelines or whether the investment would have been carried out in Göd, even absent the public support.
“It also has doubts in relation to the public support’s contribution to regional development and on its appropriateness and proportionality; and the Commission cannot exclude at this stage public support may lead to the relocation of jobs from other EU Member States to Hungary.”
The Commission will now investigate further to determine whether or not the initial concerns are confirmed. The opening of an in-depth investigation provides Hungary and interested third parties with an opportunity to comment on the measure.
It does not prejudge in any way the outcome of the investigation.
