EU investigates Poland’s €53m aid package incentive

THE EU is investigating a €53 million aid package the Polish government has promised Dell for the plant that is resulting in the loss of 1,900 jobs in its Limerick operation.

A spokesperson for the European Commission said it suspected the aid, in the form of tax breaks and direct grants, could be more than the permitted threshold.

If it is, Poland would not be allowed to go ahead with the package but the investigation will take about six months to complete.

Competition experts in the European Commission began their in-depth investigation of the Polish state aid to the new manufacturing plant in Lodz in early December.

Commission spokesman on competition Jonathan Todd said: “The commission has doubts over whether the aid is compatible with the rules on regional aid for large investment projects”

They want to verify the market for the products to be manufactured at the plant, and ascertain the increase in production capacity as a result of the investment and the extent to which demand for these products is in decline.

EU member states and interested parties have been invited to provide information and comment, in particular on the incentive effect and positive and negative effects of the aid.

Competition Commissioner Neelie Kroes said: “We need to investigate all the effects of this aid to verify that it contributes to regional development and to ensure that it will not reinforce Dell’s position or create significant capacity in a market on the decline in the European economic area.”

Dell Products Poland is wholly owned by the US-based company and intends to create 3,000 jobs producing desktops, notebooks and servers in the new plant. The plant cost €189.6 million and the investigation will centre on whether the proposed aid of €52.73m is too high.

The Lodz region is a disadvantaged one and aid is entitled to be given to make up for regional handicaps. EU rules limit the amount of aid that can be given to companies with a market share of over 25% or for projects that increase capacity by more than 5% in a sector that is in relative decline.

During the investigation, the commission will verify whether the thresholds of the regional aid guidelines are respected, if the aid provides an incentive for investment and whether the benefits of the measure outweigh the resulting distortion of competition.