REGIONAL AID:THE EUROPEAN Commission has said computer maker Dell may not be able to receive €52 million in state aid for its new manufacturing plant in Poland, writes Jamie Smyth, European Correspondent.
Brussels ordered an in-depth investigation in December into a proposal by Warsaw to provide regional aid to Dell to support the creation of new jobs and the establishment of a new state-of-the-art manufacturing plant.
A spokesman for EU competition commissioner Neelie Kroes said last night that if the investigation found the aid was illegal, Warsaw could not pay over the cash.
"We were ahead of the game here and began the investigation last month," said commission spokesman Jonathan Todd. "If we find the proposed subsidies are not compatible with state rules, then Dell can't receive the money."
Mr Todd said the investigation would investigate whether the proposed subsidies could lead to a disproportionate distortion of competition. The duration of the inquiry could last up to 18 months and would depend on the complexity of the investigation and the level of co-operation received from the authorities, he said.
The €52.7 million in grants relate to the establishment of Dell's manufacturing facility in the Polish city of Lodz, which opened in November 2007. The total cost of the development is €89.58 million, according to the commission.
It is Dell's second factory in Europe and will now receive the bulk of the manufacturing work that computer maker Dell decided yesterday to shift from its Limerick operation. Lodz currently employs 1,800 people but this is slated to increase to 3,000.
The region of Poland where the factory is located qualifies for regional aid because of its low standard of living and high unemployment.
The commission, however, has doubts that the aid meets the rules on regional aid for large investment projects. In particular, it wants to look closely at the market definition for products to be made at the plant, the extent of the increased production capacity resulting from the investment, and the extent to which demand for these products is in decline.
In the original announcement of the investigation on December 12th, Ms Kroes said: "We need to investigate all the effects of this aid to verify that it contributes to regional development and to ensure that it will not reinforce Dell's position or create significant capacity in a market on the decline in the EEA."