Investigation launched into whether Slovakia violated EU state aid rules with €150 million grant to support new car factory

The European Commission has launched an investigation into plans by Slovakia to grant €125 million (£108m) to Jaguar Land Rover (JLR) to support the construction of a new plant in the country.

The money from the Slovakian government had been promised to support JLR’s construction of a £1 billion factory in the city of Nitra. The plant, due to be completed in 2019, would have a production capacity of 150,000 cars per year. The €125m subsidy, announced in May 2016, is the maximum aid that can be granted.

EU state aid rules allow countries to support economic development and employment programmes in less developed regions, but hey must meet certain criteria to be approved. These include that state aid must promote private investment, be kept to the minimum necessary and not lure investment away from another EU member state.

Margrethe Vestager, the EU Commissioner in charge of competition policy, said: “It is a good thing if public investment fosters economic growth in Member States. However, we need to avoid harmful subsidy races between 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.”

The Commission is also investigating whether other elements of the agreement are free from state aid. These include Slovakia’s transferral of land for the car plant to JLR, and exemption from a fee payable for converting agricultural land into industrial land.

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Comments
7

24 May 2017
Isn't the new Defender going to be built here,or are JLR just hedging their bets post 2019? An initial capacity of a 150,000 unit's maybe rising to 300,000 is an awful lot of vehicles to shift will their be a smaller SUV than the Discovery Sport built their as well.

24 May 2017
One big EU happy family.

25 May 2017
Well, I come from what I would call a happy family, and my brother and I are acting as executors for my late mother. From that experience, I can say that scrupulous fairness is necessary, even in happy families, so the desire to have subsidy rules that everyone plays by is a good thing.

This plant was planned before the Brexit vote, by the way.

Happy motoring

24 May 2017
As I understand it the plan is to move the Discovery to Slovakia so that the Brumies can teach the Slovakians how to build it. The Defender will then go into production in the U.K. replacing the lost production.

The volumes sound right to me. We know JLR will soon launch the baby Jag SUV, it will develop the Defender range into 3 or 4 distinct models and I think the Disco range may also get at least 1 more model. After that the rumours are that Range Rover will start making crossovers and potentially other cars to take the fight to the likes of the 3 series BMW, but with a distinctly Land Rover take on it. Quattro style 3 series with off-road ability anyone?

25 May 2017
Ford's £80m EU loan to boost Turkey factory - and close Southampton's Swaythling plant.
WM

25 May 2017
I suspect that the French think JLR should be building a factory in northern France instead. Aren't EU rules set up exclusively to aid French industrial policy ....? :-)

BertoniBertone

25 May 2017
Slovakia hosts VW, PSA and Kia and local authorities have given them subsidies. JLR are small fry in comparison to them.

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