Brussels, 13/03/2008 (Agence Europe) - On Thursday 13 March, the European Commission opened a formal investigation into public funding of over €47 million for an investment project by BDN Sp. z o.o. Sp.k., a company belonging to the German-based BVG Medien Beteiligungs GmbH (“BVG”). The investment is intended to fund a new rotogravure printing plant in the Polish region of Lower Silesia. This area, with its low standard of living and high unemployment, is eligible for regional aid under Article 87(3)(a) of the EC Treaty. However, in this particular case, the Commission has doubts about whether the aid is compatible with the relevant Community rules. BVG's investment in the region amounts to €160 million.
Warsaw intends to support the project through corporate tax exemptions of up to €47 million. The Commission points out in a press release that Community rules on regional aid to large investment projects provide for reduced aid intensities for this kind of investment with regard to the general regional aid ceiling and limit the amounts of aid that can be given to companies with a market share of over 25% or for projects which increase capacity in a non-growing sector by more than 5%. While acknowledging that the market share of the beneficiary at group level clearly remains below 25% in the European Economic Area (EEA), the Commission has doubts as to whether the EEA can be considered the relevant geographic market for the rotogravure printing of magazines. Moreover, it points out that available evidence suggests that the EEA market for rotogravure printing of magazines is not growing and the capacity created by the project seems to exceed 5 % of the size of the market. (O.L.)