The EU’s European Commission (EC) has concluded that Hungary’s plan to support the construction of a new automotive components plant in Észak Magyarország is not in line with EU state aid rules. Therefore, the aid cannot be granted by Hungary, the European Commission said in a statement.
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In October 2022, the EC opened an in-depth investigation to assess whether Hungary’s plans to grant €43.76 million to GKN Automotive Hungary Kft (previously Rubin NewCo Kft) for the construction of a new automotive components plant in the northern Hungary region of Észak Magyarország was in line with EU State aid rules.
Based on its preliminary assessment, the EU had found that the investment project facilitates the economic development and employment in a less advantaged region of the EU. Nevertheless, the EU had doubts on whether the envisaged aid was in line with the Commission’s Guidelines on Regional State Aid (‘RAG’). The EC decided to further investigate whether the decision to set up the new plant in Hungary was directly triggered by the Hungarian public support or whether it would have been carried out in that area even without public support.
Based on its in-depth investigation, the EC concluded that Hungary failed to prove that the aid was decisive for the beneficiary to locate its investment in Hungary. The available evidence showed that the beneficiary had decided to invest in Hungary without considering the public support and there was no sufficient evidence that the investment would take place in another location.
The EC concluded that since the public support did therefore not have a real “incentive effect” and it did not effectively encourage GKN Automotive Hungary to invest in the specific region of Észak Magyarország, the aid is incompatible with EU state Aid rules. Therefore, the aid cannot be granted by Hungary, it said.
Margrethe Vestager, Executive Vice-President in charge of competition policy, said: “Regional aid must incentivise a company to carry out an additional activity in a disadvantaged area. Our in-depth investigation has revealed that Hungary’s plan to support GKN Automotive Hungary is not in line with EU State aid rules, because it would subsidise the costs of an activity that the company would have carried out in Hungary in any event.”
