The European Commission has launched an investigation into public support for LG Chem. As indicated in the press release, this is €95 million provided by the Polish authorities to a Korean chemical company for investments in the expansion of a battery factory in Biskupice Podgórne in Lower Silesia.
"EU State aid rules enable Member States to stimulate economic growth in European disadvantaged regions. However, we need to make sure that public support is actually needed to attract private investment to the region and prevent the aid beneficiary from gaining an unfair advantage over the competitors at the expense of taxpayers,” Margrethe Vestager, the EU commissioner responsible for competition policy, said.
"We will thoroughly investigate whether the support from the Polish authorities was necessary to persuade LG Chem to decide to expand the battery manufacturing plant in Poland and whether this support is limited to the minimum necessary and does not distort competition or adversely affect the cohesion in the EU," she added .
In 2017, LG Chem decided to invest more than €1 billion in the development of lithium-ion battery production capacity as well as modules and battery packs for electric vehicles at its plant in the Lower Silesian Voivodeship.
“The battery of every ninth electric car traveling around Europe may come from Poland,” said Mateusz Morawiecki, then Deputy Prime Minister and Minister of Finance, on the occasion of the awarding of the Korean company LG Chem with a permit to operate in October 2017. Morawiecki then indicated that in terms of value, it would be the largest investment in Poland since at least 2001.
In 2019, Poland notified the Commission of plans to provide public support for this purpose in the amount of EUR 95 million. However, the Commission has doubts that the transfer of this amount to LG Chem complies with all the criteria set out in the Regional Aid Guidelines.
Therefore, the EC will check whether the decision of LG Chem to increase the production capacity in Poland was directly influenced by public support from the Polish authorities, or whether the investment would have been implemented in Biskupice Podgórne even in the absence of public support. There are also doubts about the contribution of public support to regional development and the proportionality of this support.