The European Commission has launched an in-depth investigation to assess if Hungary’s plans to grant €108 million (£93m) of public support to Samsung SDI’s battery production facility complies with state aid rules.
The Commission said it doubts whether the planned state aid has an incentive effect and whether it will boost regional development.
It also expressed concerns the public support may lead to the relocation of jobs from other EU member states to Hungary.
Samsung SDI is investing around €1.2 billion (£1bn) to expand the production capacity of lithium-ion cells and battery packs for electric vehicles (EVs) in its existing plant located in Göd in Hungary.
The work on the capacity expansion started in December 2017 and the implementation of the project is now well advanced.
Hungary notified the Commission of its plans to grant the public support for the project in 2018.
Commissioner Margrethe Vestager, in charge of competition policy, said: “Public investment is important to foster economic growth in disadvantaged regions in Europe. But public support should only be given if it’s necessary to trigger private investment in the disadvantaged region concerned. Otherwise, it only gives the beneficiary an unfair advantage over its competitors, at the expense of taxpayers.
“The Commission will carefully investigate whether Hungary’s planned support is really necessary for Samsung SDI to invest in Göd, is kept to the minimum necessary and does not distort competition or harm cohesion in the EU.”