State aid: Commission opens in-depth investigation into public support for the expansion of LG Chem’s electric vehicles battery plant in Poland

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European Commission
European Commission

State aid: Commission opens in-depth investigation into public support for expansion of LG Chem’s electric vehicles battery plant in Poland

The European Commission has opened an in-depth investigation to assess whether €95 million of public support granted by Poland to chemical company LG Chem Group (“LG Chem”) for investing in the expansion of its battery cell production facility for electric vehicles (EV) in Biskupice Podgórne in the Dolnośląskie region (Poland) is in line with EU rules on regional State aid. 

In 2017, LG Chem decided to invest more than €1 billion in the expansion of its production capacity of lithium-ion cells and battery modules and packs for electric vehicles in its existing plant in the Dolnośląskie region of Poland. In 2019, Poland notified the Commission of its plans to grant €95 million of public support for the expansion. At this stage, the Commission has doubts that the planned public support complies with all relevant criteria of the Regional Aid Guidelines. In particular: (i) it has doubts about whether the measure has an “incentive effect”; (iii) it has doubts about the public support’s contribution to regional development and its appropriateness and proportionality; and (iii) it cannot exclude at this stage that the public support exceeds the maximum permissible aid intensity for the project. The Commission will now investigate further to determine whether the initial concerns are confirmed.

The opening of an in-depth investigation provides Poland and interested third parties with an opportunity to comment on the measure. It does not prejudge in any way the outcome of the investigation. Commissioner Margrethe Vestager, in charge of competition policy, said: “EU State aid rules enable Member States to foster economic growth in disadvantaged regions in Europe. At the same time, we need to ensure that the aid is really needed to attract private investments to the region concerned, and avoid that the recipient of the aid gains an unfair advantage over its competitors at the expense of taxpayers. We will carefully investigate whether Poland’s support was necessary to trigger LG Chem’s decision to expand its existing cell production facility in Poland, is kept to the minimum necessary and does not distort competition or harm cohesion in the EU.” The full press release is available online