The European Commission on Monday cleared Hungary’s decision to grant a regional investment aid totalling 95.7 million euros to Apollo Tyres (Hungary) Kft for its proposed greenfield project in the east European country.
Apollo Tyres had earlier announced that it has decided to set up a 500-million-euros greenfield project in eastern Europe without disclosing the country’s name. The proposed plant will come up at Gyongyoshalasz in northern Hungary.
The commission in its communication said that it has found the aid granted by the Hungarian government to be favouring regional development. ?Apollo’s investment in Hungary is expected to create 975 jobs in Gyongyoshalasz. It will contribute significantly to the development of the region without distorting competition in a single Market,? said the commission’s vice-president-in-charge of competition policy Joaqu?n Almunia.
In June 2014, Hungary had notified plans to support the construction of a new tyre plant with a direct grant of 48.2 million euros, an employment grant of 2.8 million euros and tax allowances of around 44.7 million euros. The project involves investments of 442.2 million euros and is expected to create over 975 now jobs.
The commission’s investigation found that the market shares of Apollo Tyres, Apollo Hungary’s parent company, for passenger car tyres, light truck tyres and tyres 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 commission, therefore, concluded that the measure is a positive contribution to regional development and would outweigh the distortion of competition created by the state aid.
Apollo Hungary belongs to Apollo Tyres (Greenfield) Cooperatief UA, which in turn is a 100% subsidiary of Apollo Tyres, an Indian publicly listed company. The Hungary plant will produce tyres including those for passenger car, ranging from all season tyres, summer tyres to winter tyres, as well as light truck tyres and tyres for buses.
