The European Commission opened a probe on October 31 to assess if support worth €39mn for the Polish chemicals company PCC met EU rules for state aid.

In 2012 and 2013, Poland granted public support to PCC for investing in a new plant in Brzeg Dolny, southwest Poland. The support aimed at contributing to the development of the region, and consisted of a direct grant of €16mn and a tax exemption of maximum €23mn, the Commission said.

“The Commission's preliminary view is that both measures constitute State aid that should have been notified to the Commission for assessment before being implemented,” the EU executive said in a statement.

Poland, however, considered the support as falling under rules allowing it not to notify the Commission, known as the General Block Exemption Regulation (GBER).

“At this stage, the Commission has doubts that the Polish measures in favour of PCC are in line with the EU State aid rules,” the Commission said. It added that it had doubts whether the support for PCC had an incentive effect.

“The Commission will investigate whether the Polish public support gave PCC a real incentive to carry out the investment in Brzeg Dolny and whether, absent the support, the investment would not have been carried out in the region,” the Commission said.

The Commission also said that it had “concerns that the overall aid granted by Poland may have exceeded the maximum aid level allowed under the Guidelines [of EU public aid rules].”

“Based on the information available at this stage, the market for [ultra-pure monochloroacetic acid, the factory of which received support] appears to have been in absolute decline when the support measures were granted. The Commission cannot therefore exclude at this stage that the aid measures contributed to a substantial capacity increase by PCC in an underperforming market, leading to possible undue distortions of competition in that market,” the Commission also said.

The probe was opened after a complaint by PCA’s direct competitor. In 2016, Poland revoked the second measure - the tax exemption - after concluding that the aid was granted in breach of the provisions of the GBER. PCC appealed against the revocation and the case is ongoing.