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PR(94)09: EFTA Surveillance Authority authorises state aid to BMW’s engine plant in Steyr, Austria

14.10.2002

The EFTA Surveillance Authority has authorised a plan of the Austrian authorities to award State aid to BMW Motoren Gesellschaft mbH in support of an R&D and investment project at its engine plant in Steyr, Austria.

The project involves research, process and product development in the area of diesel and petrol engine technology, with the aim of reducing fuel consumption and carbon emission levels, together with measures to enhance environmental protection at the plant and for the training of employees. Moreover, the project foresees related investments in plant and logistic tools, buildings and other production facilities.

The overall cost of the project, which will be realized over a period of three years, is estimated at 3.396,7 million Austrian Shillings (ATS), of which 2.855,6 million ATS is considered eligible for State aid. The aid amount, totalling 454,8 million ATS, will be awarded in the form of a grant under the Guarantee Act of 1977 and grants according to regional and local aid schemes.

An aid award of 209,7 million ATS is foreseen to finance the research and development expenditures of the project (basic industrial research, applied research and process development), 48 million ATS towards environmental protection measures and 23,8 million ATS for training of employees.

173,3 million ATS will be allocated towards financing the regional investment part of the project totalling 1.781 million ATS. In discounted terms this corresponds to a gross aid intensity of 8,9%. The EFTA Surveillance Authority has in its decision on the map of assisted areas in Austria accepted that the region of Steyr‑Kirchdorf (Oberösterreich) is eligible for regional aid, up to a maximum aid intensity of 15 per cent (NGE). The level of the regional aid element in the project is well below this ceiling. Nevertheless, due to the sensitive nature of the motor vehicle industry and high risk of distortion of competition, special attention has been paid to possible adverse sectoral effects. The Surveillance Authority noted, however, that the modest capacity expansion resulting from the investment will be used exclusively to supply BMWs new assembly plant in the USA, and it is deemed not to lead to the creation of overcapacity at European level. Furthermore, a cost‑benefit analysis of the net regional handicaps facing the investor has revealed that the aid will be in reasonable proportion to the problems it seeks to resolve.

The aid proposal was found by the Surveillance Authority to be compatible with Article 61(3)(c) of the EEA Agreement and the rules on State aid to die motor vehicle industry as set out in the Surveillance Authority's Procedural and Substantive Rules in the Field of State Aid adopted in January of this year. These rules correspond to the European Commission's Community framework on State aid to the motor vehicle industry.

For further information please contact Klaus Pendl (Press & Information Officer), tel. 22 66 882, Gudlaugur StefAnsson (State Aid & Monopolies Dir.) tel. 22 66 854.




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