Samsung and Hungary have made new claims that may sway the EC’s decision in the case.
EU competition officials have extended a near two-year investigation into Hungarian state aid for Samsung SDI’s electric vehicle battery factory, according to Reuters. The announcement comes after Hungary submitted new data to back its case.
Samsung SDI, an affiliate of South Korean tech giant Samsung Electronics, began production at the Hungarian plant in 2018, making batteries for 50,000 EVs a year.
In October 2019, the Commission opened an in-depth 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.
“Hungary now argues that Samsung could have benefited from an investment grant and a tax exemption in an alternative location outside the EU, which would have increased the viability of the alternative location with respect to Hungary,” the Commission said.
New information sheds a mitigating light on the case
In particular, the Commission is further investigating, if the measure had an “incentive effect”, i.e. if the aid was necessary to attract the investment to Hungary. The Commission also had doubts in relation to the public support’s contribution to regional development and on its appropriateness and proportionality, as well as on the risk of relocation of jobs from other Member States to Hungary.
After the opening of investigation, Samsung SDI and Hungary submitted new claims and evidence, supporting a different narrative to justify the necessity of the aid. In particular, Hungary now argues that Samsung could have benefitted from an investment grant and a tax exemption in an alternative location outside the EU, which would have increased the viability of the alternative location with respect to Hungary.
In addition, new documentary evidence disclosed by Hungary shows that the location search for the investment project by Samsung had included also a number of greenfield investment sites (new production facilities) in Europe and, in particular, an alternative location in a less developed region in the EU.
Due to these new elements, the Commission has decided to extend the scope of the ongoing procedure to cover the new information brought forward by Hungary. The extension of the in-depth investigation provides all interested parties with an opportunity to comment on the measures. It does not prejudge in any way the outcome of the investigation. More information will be available on the Commission’s competition website in the public case register under the case number SA.48556 once any confidentiality issues have been resolved.
Earlier this year, Samsung said it would invest 942 billion won ($849 million) to expand the plant.