Computer chip maker Intel did not want a European Commission investigation into the proposed €100 million Government grant for a new plant in Leixlip, Co Kildare, because the company feared the commission would give some of its business secrets to its rivals, official records reveal.

In letters that give a flavour of the prolonged tension over the issue between the Government and the European Commission, the Minister for Enterprise, Trade and Employment Mícheál Martin says the EU's questioning of the grant aid was likely to leave him with "real political difficulty".

He made the statement in the first of three letters on the matter to the Competition Commissioner Neelie Kroes, which was sent last December.

In a follow up letter in January he said at the EU's approach to the grant issue was at odds with the "Lisbon Agenda" plan to boost the European economy.

He said the EU stance would serve to heighten concern among international investors that the EU "is an anti-business environment obsessed by regulation, bureaucratic procedure and litigation. History would not judge the commission kindly" if it did not approve the grant, warned Mr Martin.

Following firm indications from Brussels that Ms Kroes was unlikely to sanction the package even after an investigation, the Government cancelled its application to give the grant to Intel.

The decision raises serious questions about the Government's ability grant any further aid packages.

According to files released under the Freedom of Information Act, Intel did not want to take part in an investigation because it believed the commission was set against the project and did not want to "risk exposure" of its business secrets.

"The releasing [ sic.] by a Commission spokesman of confidential information ... regarding the size of the investment and the level of aid proposed has confirmed the company's worst fears regarding confidentiality," said Mr Martin in a third letter to Ms Kroes.

The Minister has not yet received a response to this letter, which was dated March 8th, less than a week after the Government withdrew its application.

In the letter Mr Martin said: "I fear that the business community worldwide will find it hard to understand why the Commission was unwilling to accept than an investment of the scale proposed by one of the most innovative companies in the the world would involve innovation and the creation of new product markets".

He took issue with comments from the commission and said they did "not accurately reflect the very negative signals received directly from the Commission" at a meeting in December.

"Prohibiting even low levels of investment aid for large projects will not improve the competitive position of Europe," he said.

Intel declined to comment.