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© hannu viitanen dreamstime.com Business | May 26, 2017

EC looks into Slovakia's state aid for Jaguar Land Rover

The European Commission has opened an in-depth investigation to assess whether Slovakia's plans to grant EUR 125 million to Jaguar Land Rover for investing in a car plant in Nitra (Slovakia) are in line with EU rules on regional state aid.
EU Commissioner Margrethe Vestager, in charge of competition policy, said: "It is a good thing if public investment fosters economic growth in Member States. However, we need to avoid harmful subsidy races between Member States. The Commission will carefully investigate if Slovakia's planned support is really necessary for Jaguar Land Rover to locate its investment in Nitra and is kept to the minimum needed, if it distorts competition or harms cohesion in the EU".

Jaguar Land Rover is a large car manufacturing company owned by Tata Motors Limited India. Jaguar Land Rover is investing EUR 1.4 billion in a car manufacturing facility in the region of Nitra (Slovakia), an area eligible for regional aid under EU state aid rules. The plant would have a production capacity of 150'000 cars per year. In May 2016, Slovakia notified the Commission of its plans to grant EUR 125 million of public support for the project, representing the maximum aid that can be granted for such a project.

EU state aid rules, in particular the Commission's 2014 Regional State Aid Guidelines, enable Member States to support economic development and employment in the EU's less developed regions and to foster regional cohesion in the Single Market. In order to be approved, the measures need to fulfil certain conditions to make sure that they have the intended positive effect.

Slovakia claims that without the aid the investment would have taken place outside the European Union, in Mexico. However, the Commission will have to investigate further indications that the €125 million subsidy incentivised Jaguar Land Rover to invest in Slovakia rather than in another Member State. If proven, the measure may have an anti-cohesion effect in the EU, which would not be permitted under the Guidelines.

The Commission also has doubts whether additional measures planned by Slovakia are free from state aid. In particular, Slovakia will transfer to Jaguar Land Rover land for the new car plant from a large industrial estate under development and has granted an exemption from a fee payable under Slovakian law when converting agricultural land into industrial land. Should these additional measures turn out to qualify as state aid in favour of Jaguar Land Rover, the total aid amount would exceed the maximum that can be granted for this investment project in Nitra under the Regional Aid Guidelines.

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November 14 2017 8:30 PM V8.8.9-1