THE EUROPEAN Commission has launched an investigation into more than €52 million of state aid which computer-maker Dell was to receive from the Polish government.
The €52.7 million in grants relate to the establishment of Dell's manufacturing facility in the Polish city of Lodz, which opened in November 2007. The total cost of the development is €189.58 million, according to the commission.
It is Dell's second factory in Europe and there are widespread fears in the midwest that it may take over manufacturing from the company's other plant in Limerick, which employs 3,000 staff. Lodz employs 1,800 but this is slated to increase to 3,000.
The region of Poland where the factory is located qualifies for regional aid because of its low standard of living and high unemployment.
But the commission has doubts that the aid meets the rules on regional aid for large investment projects. In particular, it wants to look closely at the market definition for products to be made at the plant, the extent of the increased production capacity resulting from the investment, and the extent to which demand for these products is in decline.
Competition commissioner Neelie Kroes said: "We need to investigate all the effects of this aid to verify that it contributes to regional development and to ensure that it will not reinforce Dell's position or create significant capacity in a market on the decline in the EEA ."
In a statement last night, Dell said: "This matter is between the European Commission and the Polish government and so it would be inappropriate for us to comment.
"Dell will provide information as requested and appropriate to assist the commission's review."
State aid investigations such as this can take up to 18 months to complete depending on the complexity of the issues and the level of assistance provided by the member state in question. Once an investigation is launched, interested parties are entitled to submit comments to the commission.
Labour Party senator Alan Kelly said the investigation was significant for Ireland.
"It is important that when Ireland is seeking to attract and retain major employers, we are operating on an even playing field," said Mr Kelly.
"If other countries can flout the rules and regulations and get away with it, we will find it increasingly difficult to provide good quality jobs for our well-educated workforce."
In 2005, Ireland lost out on a major Intel investment as a result of a similar investigation by the commission which found that proposed grants of more than €100 million to the chip-maker would have breached European competition law.
In recent months it has been reported that Dell may consider selling its factories to an Asian contract-manufacturing firm.
Dell has plants in Ireland, the US, India, China, Brazil, Malaysia and Poland. If the plant in Lodz were included in any such deal, the Polish government would have to resubmit its aid proposals to the commission.
