Four projects by Germany, Spain and Hungary are being examined by the European Commission concerning the compatibility with EU state aid rules for Volkswagen, BMW and Ford.

The Commission authorised a German aid measure worth EUR43.7m (US$60m) to Volkswagen/Porsche in Leipzig as it furthers regional development without unduly distorting competition in the Single Market, in line with EU guidelines.

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For BMW, also based in Leipzig, the Commission found only part of the planned aid was necessary to carry out the project and authorised EUR17m out of the EUR45m planned by Germany.

The Commission has opened an in-depth investigation to assess the compatibility of aid by Hungary to Volkswagen/AUDI in Gyor, because it has concerns, in view of the strong market position of the beneficiary and the difficult market situation, the aid could harm competition.

Equally, the Commission has closed a formal investigation into regional aid for Ford in Spain, after Madrid reduced the aid from EUR24.4m to EUR1.2m, a level which does not require Commission approval.

“The Commission’s objective is to ensure taxpayers’ money is only spent to encourage investments that would not be carried out otherwise and bring a genuine added value to the region,” said Commission competition vice president, Joaquin Almunia.

“We verify the aid amount offered does not exceed what is necessary to attract an investment project to a disadvantaged region.

“Avoiding such deadweight is extremely important to avoid distortions of competition in the Single Market and any waste of taxpayers’ money at a time of tight budgetary constraints.”

The applicable EU regional aid guidelines allow the granting of aid for investment projects if – on balance – their positive impact on regional development outweighs the distortion of competition brought about by the aid.

In recent years, the Commission has assessed a series of projects in the automotive sector in order to check this balance test is met and the aid is necessary and proportionate for implementing the investment.