Commission opens in-depth State aid investigation into Slovak support to NAJPI for setting up a glass sand extraction site

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The European Commission has opened an in-depth investigation to assess whether public support granted to the Slovak company NAJPI a.s. (‘NAJPI’) for setting up a glass sand extraction site is in line with EU State aid rules.

The Commission’s investigation

The Commission’s assessment started on the basis of a complaint alleging that NAJPI benefited from State aid incompatible with the internal market. In 2013, Slovakia had granted NAJPI €4.99 million in regional aid to support its investment in a glass sand extraction site in the Slovak region of Trnavský kraj, Západné Slovensko.

On 20 July 2017, the Commission adopted a decision in which it concluded that the Slovak aid measure fulfilled the criteria laid down in the General Block Exemption Regulation (‘GBER’), and was therefore compatible with the Treaty on the Functioning of the European Union (‘TFEU’) and exempted from the requirement of prior notification and Commission approval.

In its judgment of 9 September 2020, the General Court annulled the Commission decision. In particular, the General Court considered that the evidence provided by the complainant relating to the links between NAJPI and another company was capable of giving rise to doubts on the part of the Commission, as to NAJPI’s characterisation as a small and medium-sized enterprise (‘SME’). The General Court held that the Commission was required to assess if the relevant thresholds for classifying NAJPI as an SME were exceeded in two consecutive accounting periods. The correct classification of NAJPI as an SME or large enterprise is necessary for the Commission to be able to correctly assess compliance with the criteria laid down in the GBER. 

Following the General Court’s judgment, the Commission will now carry out a more in-depth investigation in order to further assess the aid to NAJPI. The Commission will assess in particular whether, at the time of granting of aid, NAJPI could be qualified as an SME. The Commission will also assess whether, at the time of granting of aid, the conditions laid down in the GBER, in particular, concerning economic difficulties were fulfilled, as in such circumstances NAJPI would not qualify for regional aid.

Should the Commission conclude that the Slovak support could not benefit from an exemption based on the GBER, it would assess whether the conditions of the 2007-2013 RAG were met.

The opening of an in-depth investigation provides Slovakia and all interested parties, including the beneficiary, with an opportunity to submit comments. It does not prejudge in any way the outcome of the investigation.

Background

EU State aid rules, in particular the GBER and the 2007-2013 RAG, enable Member States to support the economic development and employment in disadvantaged areas of Europe and to foster regional cohesion in the Single Market, while ensuring a level playing field between Member States.

The GBER declares specific categories of State aid (such as regional aid) compatible with the TFEU, provided that they fulfil certain conditions. It therefore exempts these categories from the requirement of prior notification to and approval by the Commission, enabling Member States to grant the aid directly and informing the Commission only ex-post.

The 2007-2013 RAG set out the rules under which Member States can grant State aid to companies to support investments in new production facilities in the less advantaged regions of Europe. In order to comply with the 2007-2013 RAG, an aid measure must respect a number of conditions, in particular:

• The aid must have a real “incentive effect”, in other words, it must effectively encourage the beneficiary to invest in a specific region.
• The aid must not exceed the regional aid ceiling applicable to the region in question and must be kept to the minimum necessary to attract the investment to the disadvantaged region.
• The aid cannot be granted to an undertaking in difficulty.
• The aid must bring positive effects that outweigh any potential distortion of competition and trade in the EU.

The non-confidential version of the decision will be made available under the case number SA.38121 in the State Aid Register on the competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.