The European Commission has opened an investigation to assess whether Hungary's plans to grant €108 million of public support to Samsung SDI for investing in the expansion of its battery cell production facility in Göd (Hungary) is in line with EU rules on regional State aid.

Commissioner Margrethe Vestager, in charge of competition policy, said: "Public investment is important to foster economic growth in disadvantaged regions in Europe. But public support should only be given if it's necessary to trigger private investment in the disadvantaged region concerned. Otherwise, it only gives the beneficiary an unfair advantage over its competitors, at the expense of taxpayers. The Commission will carefully investigate whether Hungary's planned support is really necessary for Samsung SDI to invest in Göd, is kept to the minimum necessary and does not distort competition or harm cohesion in the EU.”

Samsung SDI is one of the main players in the fast growing market of lithium-ion battery market. The company is investing around €1.2 billion to expand the production capacity of lithium-ion cells and battery packs for electric vehicles in its existing plant located in Göd (Hungary). The work on the capacity expansion started in December 2017, and the implementation of the project is now well advanced. In 2018, Hungary notified the European Commission of its plans to grant €108 million of public support for the project.

EU State aid rules, in particular the Commission's 2014 Regional State Aid Guidelines, enable Member States to support economic development and employment in the EU's disadvantaged regions and to foster regional cohesion in the Single Market. In order to be approved, the measures need to fulfil certain conditions to make sure that they have the intended positive effect. This includes that the support must incentivise private investment, be kept to the minimum necessary, must not lure away investment from a region in another Member State which is as or more disadvantaged ("anti-cohesion effect") and must not be directly causing the relocation of activities (such as jobs) to the Member State granting the support from elsewhere in the EU.

The Commission has doubts at this stage that the planned aid support of €108 million to Samsung SDI in Göd complies with all relevant criteria of the Regional Aid Guidelines.

The Commission will now investigate further to determine whether or not the initial concerns are confirmed.