EC clears investment aid for Apollo tire plant in Hungary

ERJ staff report (TP)

Gyöngyöshalász, Hungary – The European Commission (EC) has cleared regional investment aid totalling €95.7 million to Apollo Tyres (Hungary) for the construction of a tire plant in Gyöngyöshalász, in northern Hungary.

The investment is in line with EU state aid rules and the EC said the aid granted by Hungary favours regional development. Any competition distortions, it ruled, would remain limited.

“Apollo Hungary's investment project is expected to create 975 new jobs in Gyöngyöshalász. It will contribute significantly to the development of the region without unduly distorting competition in the Single Market," said commission vice president in charge of competition policy Joaquín Almunia.

As ERJ reported in June, Apollo Tyres picked Hungary instead of Slovakia for its new manufacturing plant.

At that time, Hungary notified plans to support the construction of a new tire plant with a direct grant of €48.2 million, an employment grant of €2.8 million and tax allowances of around €44.7 million.

The project involves investments of €442.2 million and is expected to create over 975 now jobs. It is to be carried out in Gyöngyöshalász in the Észak-Magyaroszág region, an area with high unemployment and a GDP well below EU average, eligible for regional aid under Article 107(3)(a) of the Treaty on the functioning of the European Union (TFEU).

The EC’s investigation found that the market shares of Apollo Tyres Ltd., Apollo Hungary's parent company, for passenger car tires, light truck tires and tires for trucks and buses in the European Economic Area (EEA) will stay below 25% after the investment.

Moreover, the production capacity created by the investment remains below 5% of the market. The EC therefore concluded that the measure's positive contribution to regional development would outweigh the distortion of competition created by the state aid.