State aid: Commission approves Slovakia's investment aid to paper manufacturer Mondi SCP

 The European Commission has found Slovakia's €49 million investment aid to Mondi SCP, a paper and pulp manufacturer, to be in line with EU state aid rules. The support will contribute to the development of the region, whilst preserving competition in the Single Market.

The investment aid granted by Slovakia will support Mondi SCP's plans to invest €310 million to introduce in its existing plant in Ružomberok the production of corrugated case material. Corrugated case material is used for the production of corrugated board, which is then processed into boxes. In particular, Mondi SCP will extend its pulp production capacity in the plant and install a new paper machine. The project is expected to create 105 direct jobs. Ružomberok is located in the Žilina region, in Stredné Slovensko, an area eligible for regional aid (Art. 107(3)(a) of the Treaty on the functioning of the European Union).

The Commission assessed the measure under its Guidelines on Regional State Aid, which enable Member States to support economic development and employment in the EU's less developed regions and to foster regional cohesion in the Single Market.

The Commission's assessment showed that without the public funding, the project would not have been carried out in Ružomberok, but in another location outside the European Economic Area. The Commission also found that the aid was limited to the minimum, as it merely compensated the company for the financial disadvantage incurred by carrying out the project in Ružomberok and not in an alternative location. The Commission therefore concluded that the positive effects of the project on regional development clearly outweigh any distortion of competition brought about by the state aid.

Background

Slovakia granted the aid subject to Commission approval in March 2016. The aid was granted in the framework of pre-existing aid schemes, but had to be notified to the Commission for individual assessment and clearance because of the high aid amount that carries a higher risk of distorting competition.

Mondi SCP is a joint venture between Mondi SCP Holdings, B.V. (51%) and Eco-Investment a.s. (49%).

When approving an aid measure under the Commission Guidelines on Regional State Aid for 2014-2020, the Commission has to be convinced that among others the following conditions are respected:

  • 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 be kept to the minimum necessary to attract the investment to the disadvantaged region.
  • The aid must not have undue negative effects. Examples of such undue negative effects would be the creation of excess capacity by the aided investment in a market which is in absolute decline; or the granting of an aid amount that would exceed the regional aid ceiling applicable to the region in question; or that the aid would have causal effect for the relocation of existing/closed down activities to the aided establishment; or that the aid would lure away investment from a region, which has the same or a lower level of economic development than the region where the aided investment takes place.

The non-confidential version of the decision will be made available under the case number SA.45584 in the state aid register on the Commission's 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.

 

 

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