The European Commission has launched an investigation to determine whether French plans to grant EUR 96 million in aid to Peugeot-Citroën for the development of a hybrid diesel car are compatible with EU State aid rules. Although the Commission fully supports the development of less polluting cars, it considers that Peugeot-Citroën, the second largest European car manufacturer, could have undertaken such development without being subsidised. Only where the market is unable to trigger R&D activities in a specific field is State aid acceptable and even then it must be well-targeted. However, given that other car manufacturers have already announced similar projects, the Commission is concerned that the State aid would simply finance Peugeot-Citroën’s R&D activities.