Brussels launches probe into Spanish aid for Peugeot

Peugeot is investing around €500m in new production lines and process improvements at its existing plant in Vigo, northwest Spain. Work started in November 2015, and in 2017 Spain agreed to grant Peugeot €20.7m in support of the project.

But on Monday, the EC said it was launching an investigation as it had “doubts” that the grant complies with state aid guidelines.

In particular, Brussels said it was concerned the money might have attracted the project away from an economically more disadvantaged region in another country; that Peugeot would have carried out the work anyway without the grant; and that the new production processes being installed are not sufficiently innovative to qualify for public funds.

Margrethe Vestager, commissioner in charge of competition policy, said: “Public investment is important to foster economic growth in disadvantaged regions in Europe.

“However, we need to avoid harmful subsidy races between member states. The commission will carefully investigate if Spain’s planned support is really necessary for Peugeot to invest in genuinely innovative production processes in Vigo and if it will further develop the region without unduly distorting competition or harming cohesion in the EU.”

Peugeot did not immediately respond to a request to comment.