Brussels, 14/12/2007 (Agence Europe) - On 12 December, the European Commission decided that Slovak regional investment aid worth SKK 42 million (some €1.15 million) in the form of tax exemption for Glunz&Jensen was incompatible with the EU state aid rules and could not be granted. After a formal investigation, the Commission found that the proposed aid did not contribute to regional development and would have created significant distortions of competition in a specific market in which Glunz&Jensen has an important share (graphic arts pre-press processing equipment). As the aid has not yet been granted, there is not need to have it recovered.
On 24 April 2007 the Commission opened the formal state aid investigation procedure as it had doubts as to the compatibility of the proposed aid with the single market. State aid that threatens to distort competition and trade between member states can only be approved if the negative effects are outweighed by a positive contribution to a Community objective such as regional development. Where, as in the Glunz&Jensen case, it is envisaged to grant individual ad hoc aid to a single firm, it is the responsibility of the member state to demonstrate that the project contributes towards a coherent regional development strategy and that, having regard to the nature and size of the project; it will not result in unacceptable distortions of competition.
The Commission considered that the aid given to the project lacked the incentive effect required by the Regional Aid Guidelines, since the project had already started before the application of the aid. That indicated to the Commission too that the project could be carried out without the aid. Moreover, the beneficiary has very high market share of in the graphic arts pre-press processing equipment market.
The project concerns the relocation of the beneficiary's activities from Denmark and the United Kingdom to Slovakia, which includes closing down Glunz&Jensen's facilities in these countries and transferring machinery and equipment to its Slovakian site. The Commission concluded that the notified aid would have a major impact on competition and trade in the extremely specific relevant market in which the beneficiary is active.
As neither the Slovak authorities nor any third parties have submitted comments during the in-depth investigation, the Commission's initial doubts, as expressed in its decision to open the formal investigation procedure, could only be confirmed. (O.L.)