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Brussels, 29 October 2009

State aid: Commission opens in-depth investigation into Hungarian aid for Audi

The European Commission has opened a formal investigation under EC Treaty state aid rules into Hungarian aid for an investment project of Audi Hungaria Motor Kft. in its existing plant in Győr. Hungary intends to subsidise the installation of new high-tech engine production lines for new generation engines and engine components for a wide range of passenger car models of the Volkswagen-Porsche Group. At this stage, the Commission's preliminary view is that the market shares of the Volkswagen-Porsche Group exceed the limits established by the Commission's regional aid guidelines (see IP/05/1653 ), and in particular the thresholds of the rules for large investment projects. The opening of an in-depth investigation gives interested third parties the possibility to comment on the proposed measure. It does not prejudge the outcome of the procedure.

Competition Commissioner Neelie Kroes said: "When the beneficiary of aid for a large regional investment project has a large market shares in some sectors, we have to verify that the beneficiary genuinely needs the aid to carry out the investment and that the benefits of the aid outweigh the resulting distortion of competition".

The project is to be carried out in the West Transdanubia region, eligible for regional aid under Article 87(3)(a) of the EC Treaty as a region with an abnormally low standard of living and high unemployment. It has to be assessed under the Regional Aid Guidelines 2007-2013 (see IP/05/1653 ), and in particular the rules on large investment projects.

The investment concerns the production of new generation engines and engine components, running from 4 to 12 cylinder petrol and diesel engines. The investment costs to be taken into account for the calculation of the aid amount to HUF 153.4 billion (€511.3 million). Hungary intends to grant aid of HUF 14.9 billion (€49.5 million) in the form of a direct grant and a tax allowance.

The Commission's preliminary investigation revealed doubts that in some markets for passenger cars the 25 % market share threshold of the regional aid guidelines would be exceeded. Should the information provided in the course of the formal investigation procedure not alleviate the Commission's doubts, the Commission would have to carry out an in-depth-assessment on the basis of its recently adopted Communication on the In-Depth Assessment of Regional Aid to Large Investment Projects (see IP/09/993 ).

This in-depth–assessment covers in particular the question whether the aid is needed to encourage the beneficiary to carry out the investment in the assisted region (as in the absence of the aid the investment would not be realised) and whether the benefit of the aid in the assisted region outbalance the distortion of competition which it creates.

The non-confidential version of the decision will be made available under the case number C31/2009 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News .

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