Belgium, (Brussels Morning Newspaper) The European Commission has approved Hungary’s subsidies worth 89.6 million euros for Samsung SDI battery manufacturer.
In a statement released on Tuesday, the EC pointed out that the subsidy will help Samsung SDI to expand its production capacities in Göd, which will create jobs and help to develop the region.
Samsung SDI is one of the largest producers of lithium-ion batteries, with the EC reminding that the company decided to invest some 1.2 billion euros in the expansion of its battery cell production facility in Göd in Pest County in 2017.
The facility started operating at full capacity at the start of last year, making more than 6 million battery cells per month. The EC pointed out that the area in question is eligible for regional aid under EU rules and reminded that Hungary announced plans to subsidize further expansion in 2018.
At the end of 2019, the EC launched an investigation into Hungary’s plan and expanded the probe in 2021.
The body pointed out that it wanted to make sure the subsidy would have an incentive effect and contribute to regional development. It also wanted to clarify whether the subsidy would lead to the relocation of jobs from other bloc members to Hungary.
Investigation results
The EC stressed that the investigation showed Hungary’s subsidy has an incentive effect as Samsung SDI would not expand production in Göd without state aid.
It added that the subsidy does not go beyond what is necessary to incentivize Samsung SDI to invest in Hungary and noted that the move will create jobs as well as help the region to become more competitive.
The Commission stressed that positive effects of the subsidy “clearly outweigh any distortion of competition brought about by state aid,” which is why it approve Hungary’s aid scheme.
The EC pointed out that the scheme keeps the aid to a minimum necessary to attract investment to the EU and does not exceed the regional aid ceiling.
It will not cause Samsung SDI to relocate activities from other parts of the bloc and will not have undue negative effects “such as the creation of excess capacity in a declining market.”