The European Commission has opened formal investigation of Poland’s proposal to grant €40.9 million in investment aid to Fiat Powertrain Technologies Poland.

The aid, which was notified by the Polish authorities early last year, is designed to support a production of next-generation petrol engines in the Silesia region of Poland.

The aid is in the form of a tax allowance, a grant under the Innovative Economy Operational Programme, a direct investment grant and a direct grant for employment costs. Silesia qualifies for regional aid of up to 40% under Article 107 (3) (a) of the EU Treaty because of its abnormally low standard of life and high unemployment rate.

The Commission decided to investigate the case further because the initial assessment has shown that Fiat’s market share in one of the passenger car markets exceeds 25%.

The Commission will check whether the planned aid is required to encourage Fiat to carry out the investment in Silesia and whether the benefits associated with the aid exceed the potential distortion of competition. It will also assess the Polish government’s argument that passenger cars and light commercial vehicles form part of the same product market.