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Caspian Energy Journal Caspian European Club
Wednesday, 10 September 2014 17:00

Commission endorses investment aid to new production in Hungary

The European Commission has found that regional investment aid totalling €95.7 million (approximately HUF 29 billion) to Apollo Tyres (Hungary) Kft. for the construction of a tyre plant in Gyöngyöshalász (Northern Hungary) is in line with EU state aid rules. The Commission found that the aid granted by Hungary favours regional development while any distortions of competition will remain limited, Caspian Energy News (www.caspianenergy.net) reports with reference to the press-service of the European Commission.

 

“Apollo Hungary's investment project is expected to create 975 new jobs in Gyöngyöshalász. It will contribute significantly to the development of the region without unduly distorting competition in the Single Market" said Commission Vice President in charge of competition policy Joaquín Almunia.

 

In June 2014, Hungary notified plans to support the construction of a new tyre plant with a direct grant of €48.2 million, an employment grant of €2.8 million and tax allowances of around €44.7 million. The project involves investments of €442.2 million and is expected to create over 975 now jobs. It is to be carried out in Gyöngyöshalász in the Észak-Magyaroszág region, an area with high unemployment and a GDP well below EU average, eligible for regional aid under Article 107(3)(a) of the Treaty on the functioning of the European Union (TFEU). The state aid is granted in the framework of existing aid schemes but had to be notified to the Commission for individual assessment and clearance because of the high aid amount that carries a higher risk of distorting competition.

 

The Commission assessed the project under the applicable regional aid guidelines 2007-2013 (see IP/05/1653), and in particular the rules on large investment projects.

 

The Commission's investigation found that the market shares of Apollo Tyres Ltd., Apollo Hungary's parent company, for passenger car tyres, light truck tyres and tyres for trucks and buses in the European Economic Area (EEA) will stay below 25% after the investment. Moreover, the production capacity created by the investment remains below 5% of the market. The Commission therefore concluded that the measure's positive contribution to regional development would outweigh the distortion of competition created by the state aid.

 

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