The European Commission has concluded that two support measures totaling €23 million awarded by Poland to chemical company PCC MCAA Sp. z o.o (PCC) for an investment into a new plant align with EU State aid rules.
The Commissions Investigation
In 2012 and 2013, Poland provided public support to PCC for investing in a new plant to produce ultra-pure monochloroacetic acid in Brzeg Dolny, Poland. The support included: (i) a direct grant of €16 million, and (ii) a tax exemption of up to €7 million. Poland did not notify the support to the Commission, believing it was exempt under the 2008 General Block Exemption Regulation (2008 GBER).
In February 2014, a complaint was received from a PCC competitor, alleging the direct grant was not compliant with EU State aid rules and should have been notified. In 2016, Poland revoked the tax exemption after determining it did not align with the 2008 GBER.
Following a complaint, in October 2019, the Commission initiated an in-depth investigation into both the direct grant and tax exemption.
In September 2022, upon PCCs appeal, the Supreme Administrative Court of Poland ruled Poland should not have revoked PCCs tax exemption.
The Commissions Assessment
The Commission evaluated the two Polish measures under the EU Regional Aid Guidelines 2007-2013 (2007-2013 RAG). Its in-depth assessment concluded:
- The direct grant and tax exemption had an incentive effect, providing PCC a real incentive to invest in Brzeg Dolny, a disadvantaged region. PCC might not have invested in the region, or at a smaller scale, without public support.
- The overall aid amount granted by Poland to PCC did not exceed the regional aid ceiling for Brzeg Dolny.
- Despite claims of market overcapacity at the time of investment, the Commission found no absolute decline in demand, and future growth prospects were promising when the aid was granted.
- The positive effects of the measures outweighed any potential competition and trade distortion in the EU.
Background
EU State aid rules, particularly the GBER and RAG, allow Member States to support economic development and employment in disadvantaged areas and promote regional cohesion in the Single Market while ensuring a level playing field among Member States.
The GBER deems specific State aid categories (such as regional aid) compatible with the EU Treaty, exempting them from prior notification to the Commission, allowing direct aid grants with ex-post Commission information.
The RAG outlines conditions for State aid to support new production facilities in less advantaged regions. Compliance requires:
- Real incentive effect must encourage investment in a specific region.
- Aid must not exceed the regional ceiling and be minimal to attract investment to disadvantaged regions.
- Aid cannot be for undertakings in difficulty.
- Aid must yield positive effects that outweigh potential competition and trade distortion in the EU.
The Commissions 2007-2013 RAG applied until 30 June 2014, when the 2014-2021 RAG took effect.
The non-confidential version of the decision will be available under case number SA.38330 in the State Aid Register on the competition website once confidentiality issues are resolved. New state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.