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Hungary state aid for Daimler plant approved

The European Commission on Thursday said it approved €111.5 million in aid from the Hungarian state to support the construction of a plant by German car maker Daimler in the Hungarian city of Kecskemét.

The plant will create 2,500 jobs, the Commission said.

“The Commission is satisfied that Daimler's market share and the production capacity created by the project are not excessive and that there will be no disproportionate distortions of competition,” EU Competition Commissioner Neelie Kroes said.

Though Mercedes-Benz Hungary will finance the project using equity and bank loans, it will receive aid totalling €111.5 million in the form of a cash grant and a corporate tax allowance as part of the project, the Commission said. Additionally, Mercedes-Benz Hungary will receive financial support for access to the public railway network amounting to some €800,000, it added.

The aid would be granted under existing regional investment aid schemes, but its size required that Hungary seek European Commission approval.

The Commission found that Daimler's market share would remain significantly below the 25% threshold in each of the car segments concerned - small family cars, compact multi-purpose vehicles and the total passenger car market - both before and after the planned investment. The Commission also verified that the capacity increase generated by the project remains below 5% of the apparent consumption of the product concerned in the European Economic Area (EEA). (MTI-ECONEWS)