The European Commission (EC) opened an in-depth investigation on Monday to assess whether Spain's plan to grant 20.7 million euros in public aid to the PSA group, Peugeot manufacturer, to invest in its Vigo plant comply with European standards from State aid to regions.
"The Commission will thoroughly investigate whether the planned aid from Spain is really necessary for Peugeot to invest in truly innovative production processes in Vigo and whether they will develop the region without unduly distorting competition or undermining cohesion in the EU," he said. In a statement, the European Competition Commissioner, Margrethe Vestager.
The opening of the investigation gives Spain and third parties the opportunity to rule on the case and does not prejudge in any way the final result, which should determine whether the rules are met.
The PSA group, manufacturer of Peugeot and Citröen, is investing 500 million euros in new production lines and improvements in the production process at the Peugeot factory in Vigo.
Work on the new lines began in 2015 and in 2017 Spain notified the Commission that it wanted to grant public aid to this project for a total of 20.7 million euros, recalled the Community Executive.
Brussels "doubts" that the aid provided by Spain "meets all the criteria" required by the European Union to allow states to give public aid to the most disadvantaged regions to boost their economy, the Commission said.
In particular, the community executive fears that PSA would have made the investment in Vigo even without state aid or that this public contribution may have attracted this investment project to Galicia from another more disadvantaged region of another EU country.
In addition, the rules on regional aid do not allow large companies that invest in existing facilities to benefit from this support unless the investments allow fundamental and innovative changes in the production process that are applied for the first time in this sector – in this case automotive case- in the European Economic Area.
In this regard, the Commission "doubts that the planned production process is sufficiently innovative to be able to benefit from this exception," he said in a statement.
Brussels also has doubts about the contribution that the regional development aid will have and about its "suitability and proportionality".
Likewise, it can not rule out for the time being that they will have negative effects on competition in the passenger car market to which PSA investments are directed.
(tagsToTranslate) Brussels (t) investigates (t) Peugeot (t) invest (t) Vigo