European competition commissioner Neelie Kroes has signed off on a €48.25 million Government grant for a €530 million investment by US drug group Centocor in Ringaskiddy, Co Cork.

The decision after an examination of the project by the EU Commission's competition body indicates that the way is not closed for IDA Ireland to offer big grant packages to multinationals in return for Irish investment.

However, the Commission made a point of saying the project was going ahead in a region designated as disadvantaged under State aid rules.

While the Commission said the grant to Centocor "would not give rise to undue distortion of competition" in the single market, it was unclear last night whether the money would have been approved for a project in an area not designated as disadvantaged.

The Commission's refusal on state aid grounds to sanction a €100 million grant package for Intel in Leixlip, Co Kildare, prompted terse exchanges last year between the Government and the competition directorate general, leading to concern that grant aid would no longer be possible.

That refusal to sanction support for what was seen as a very prestigious project also appears to have changed the manner in which IDA Ireland makes grant packages available.

An IDA Ireland spokesman said yesterday that EU approval was not required for its grant for an €820 million investment in Co Cork by US biopharmaceutical Amgen, which was confirmed only on Tuesday.

The plant in Carrigtwohill will employ 1,100 by 2010, 750 of them graduates.

"Because of the nature and way we're supporting Amgen, it does not require EU approval," the IDA spokesman said. He declined to reveal the nature of the grant aid or its scale.

Ms Kroes's decision clears the way for Centocor, a biopharmaceutical subsidiary of Johnson & Johnson, to push ahead with a project that will create 750 new jobs in Ringaskiddy.

When the grant was in jeopardy late last year, the company warned that it would not expand the plant until a final decision from the EU.

Ms Kroes said: "I am happy to be able to authorise the aid for this very important project, which will benefit not only Ireland, but the European Union as a whole."

Her office cited the article in the EU Treaty which says that state aid for the promotion of development for "certain disadvantaged areas" may be deemed compatible with the common market by the Commission.

"The Commission considered the aid to be compatible with the Commission's rules on regional aid to large investment projects," the office said.

The Ringaskiddy plant will make make biopharmaceutical active ingredients for medicines to treat disease. Fermentation and purification work will be carried out there and the company aims to develop new products in a process development centre.