The European Commission has concluded that Slovakia's EUR125m investment aid to Jaguar Land Rover is in line with EU state aid rules.
The aid would contribute to the development of the region of Nitra, without unduly distorting competition in the single market.
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Margrethe Vestager, commissioner in charge of competition policy, said: "Our investigation confirmed that Slovakia's EUR125m public support to Jaguar Land Rover for its project to build a new car plant in the region of Nitra is in line with our state aid rules.
"Our investigation revealed that the aid was necessary for Jaguar Land Rover to invest in Europe rather than in Mexico. We also found that the measure will contribute to job creation and to the economic development of a disadvantaged region without unduly distorting competition."
Jaguar Land Rover, owned by Tata Motors India, has spent EUR1.4bn to build a car manufacturing facility in the region of Nitra (Slovakia), an area eligible for regional aid under EU state aid rules. The production capacity is 150,000 cars per year and the project is expected to create about 3,000 direct jobs.
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Slovakia notified the commission of its plans to grant EUR125m of public support for the project. This represents the maximum aid that can be granted for such a project under the commission's guidelines on regional state aid for 2014-2020, which enable member states to support economic development and employment in EU's less developed regions and to foster regional cohesion in the single market.
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By GlobalDataThe commission's in-depth investigation opened in May 2017 confirmed that, when analysing in 2015 where to build the new car plant, Jaguar Land Rover considered several locations both in the European Economic Area (EEA) and in North America. Nitra was eventually selected as the preferred European location, while a city in Mexico was identified as the preferred alternative location in North America. The commission's investigation established that without the investment aid, the project would not have been carried out in Europe but in Mexico.
The commission's investigation also showed that the aid was limited to the minimum necessary to trigger the decision by Jaguar Land Rover to carry out the investment in Slovakia, as it compensated the company for the financial disadvantages incurred for carrying out the project in Nitra rather than Mexico.
The commission also found the investment aid will contribute to job creation as well as to the economic development and to the competitiveness of a disadvantaged region.
The commission concluded the positive effects of the project on regional development clearly outweigh any distortion of competition brought about by the state aid.
In its in-depth investigation, the commission also assessed certain other measures carried out by the Slovak state and concluded they do not constitute aid within the meaning of EU state aid rules.
The commission found certain infrastructure measures financed by the Slovak state and carried out to develop the industrial estate where the new Jaguar Land Rover plant is located will not only benefit the automaker but also all other companies located in the industrial estate and more generally in the Nitra region. Hence, they do not give a selective advantage to Jaguar Land Rover.
The commission also found the transfer by the Slovak state to Jaguar Land Rover of a 185 hectare land plot, where the car plant was built, was carried out at market price.
