EC Clears Hungarian State Aid for Hankook Expansion

The European Commission has approved EUR 71.6 million (HUF 28 billion) in aid from the state of Hungary for the expansion of South Korean tire maker Hankook Tire & Technology Co. Ltd.'s plant in Rácalmás (C Hungary), the European Union's executive body said on Monday.

The EC statement highlights that this measure will support Hankook in setting up a truck and bus radial tire factory in the Central Transdanubia region, Hungary. This project has a total budget of EUR 538 million. With the investment, the company will diversify its existing plant in Fejér County, which so far only produces tires for passenger cars and light trucks. The measure will take the form of a direct grant and is expected to contribute to the economic development of the region by creating 469 jobs, mainly in manufacturing.

The Commission assessed the Hungarian measure under EU State aid rules, in particular Article 107(3)(a) of the Treaty on the Functioning of the EU, which enables Member States to grant aid to promote the economic development of the most disadvantaged areas in Europe, and the Regional Aid Guidelines. The Commission found that the measure is necessary and appropriate to contribute towards the economic development, competitiveness and increase of employment rate of the region.

Furthermore, the aid has an incentive effect, as the beneficiary would not have carried out the project in the European Economic Area without the public support. Finally, the Commission found that the measure is proportionate as it is limited to the minimum necessary to trigger the investment in Hungary. In particular, the support will not exceed the maximum amount of aid calculated on the basis of the aid intensity set out in the Hungarian regional aid map, and has a limited impact on competition and trade within the EU. On this basis, the Commission approved the Hungarian measure under EU State aid rules.