Brussels, 09/11/2011 (Agence Europe) - On Wednesday 9 November, the European Commission opened a formal investigation to assess whether German plans to grant regional investment aid to the Canadian group Linamar for the construction of a new factory in Crimmitschau, Saxony, are in line with EU state aid rules.
The project to produce engine and power transmission parts for motor vehicles would be carried out in an area eligible for regional aid. The aid would consist of a direct grant and tax allowances for a total amount of €26.65 million.
As the capacity created by the project exceeds certain thresholds set in the Regional Aid Guidelines for 2007-2013, the Commission is required to open the investigation in order to carry out an in-depth assessment of the aid. The Commission considers that for projects where the aid beneficiary has a market share of more than 25% or the production capacity created by the project exceeds 5% of the market (while the growth rate of the product market concerned is below the European Economic Area GDP growth rate), regional aid to large investments entails a higher risk of distorting competition.
The Commission will have to assess, in particular, whether and to what extent the aid is needed to incentivise Linamar to carry out the investment in Crimmitschau and whether the benefit of the aid for the region offsets the distortion of competition which it creates. The assessment will be carried out on the basis of the Commission's communication on the in-depth assessment of regional aid to large investment projects. (OL/transl.rt)