Jaguar Land Rover plant in Slovakia raises questions, EU opens investigation
An in-depth investigation regarding Slovakia’s plans to grant €125 million to Jaguar Land Rover for a car plant was opened by the European Commission. The company is investing €1.4 billion in a car manufacturing facility in the region of Nitra, an area eligible for regional aid under EU state aid rules.
In May 2016, Slovakia notified the European Commission of its plans to grant €125 million of public support for Jaguar Land Rover’s project to build a plant that would have a production capacity of 150,000 cars per year. The amount represents the maximum aid that can be granted for such a project and Slovakia claims that without the aid the investment would have taken place outside the European Union, in Mexico.
But the European Commission now has doubts that the planned aid support of €125 million in Nitra measure complies with all criteria of the Regional Aid Guidelines. More specifically, whether the measure incentivizes private investment, as the Commission needs to make sure that the conditional public subsidy wasn’t the detail which triggered Jaguar Land Rover’s investment decision.
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The Commission also want to investigate further indications that the €125 million subsidies 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.
“It is a good thing if public investment fosters economic growth in the Member States. However, we need to avoid harmful subsidy races between the 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,” Commissioner Margrethe Vestager, in charge of competition policy, said.
Also, the European Commission will be looking at additional measures planned by Slovakia are free from state aid. In particular, the fact that Slovakia will transfer land for the new car plant from a large industrial estate under development and has granted an exemption from a fee payable under the country’s law when converting agricultural land into industrial land. If these additional measures are in fact 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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