EU investigates Hungarian subsidies for Samsung SDI
The European Commission has opened an investigation against Hungary to assess whether Hungary’s plans to grant €108 million in subsidies to Samsung SDI for the expansion of its battery cell production plant in Göd follow EU rules on regional state aid.
The European Commission has indicated that it has doubts at this stage that all relevant criteria for the state subsidy are met. Samsung SDI had completed the factory, located some 30 kilometres north of Budapest, in May 2017, but started expansion work in December of the same year. In 2018, Hungary informed the EU Commission that it intended to support the project with 108 million euros from public funds.
“Public investment is important to foster economic growth in disadvantaged regions in Europe. But public support should only be given if it’s necessary to trigger private investment in the disadvantaged region concerned,” says Competition Commissioner Margrethe Vestager. “Otherwise, it only gives the beneficiary an unfair advantage over its competitors, at the expense of taxpayers. The Commission will carefully investigate whether Hungary’s planned support is vital for Samsung SDI to invest in Göd”.
According to EU Communication, to be authorised, aid must “fulfil certain conditions to make sure that they have the intended positive effect”. This includes that support must provide incentives for private investment and be limited to the minimum necessary.
In the case of Samsung SDI, however, the EU doubts that the support has an “incentive effect”. Since Samsung SDI had already started construction before the Hungarian government’s commitment, the EU Commission suspects that the investment in Göd would have been made even without public support. The Commission also doubts “the public support’s contribution to regional development and on its appropriateness and proportionality”. Another point: at this stage, the Commission cannot exclude that the public support could lead to the relocation of jobs from other EU Member States to Hungary – another condition for state aid.
The EU Commission does not specify a time frame for the investigation in the communication.