State aid – Poland – State Aid SA.114436 (2025/C) (ex 2024/N) – Poland LIP – Aid to MAN Trucks – Invitation to submit comments pursuant to Article 108(2) of the Treaty on the Functioning of the European Union
Date: 2026-02-05
Institutions: Directorate-General for Competition, European Commission
Subjects: Little Poland province, Poland, State aid, aid to undertakings, control of State aid, infringement procedure (EU), investment aid, investment project, motor vehicle industry, regional aid




C_202600710EN.000101.fmx.xml












Official Journal of the European Union


EN
C series













C/2026/710


5.2.2026







            STATE AID – POLAND
         
State Aid SA.114436 (2025/C) (ex 2024/N) – Poland LIP – Aid to MAN Trucks
Invitation to submit comments pursuant to Article 108(2) of the Treaty on the Functioning of the European Union
(Text with EEA relevance)
(C/2026/710)

By means of the letter dated 28 July 2025 reproduced in the authentic language on the pages following this summary, the Commission notified Poland of its decision to initiate the procedure laid down in Article 108(2) of the Treaty on the Functioning of the European Union concerning the abovementioned aid.
Interested parties may submit their comments on the aid in respect of which the Commission is initiating the procedure within one month of the date of publication of this summary and the following letter, to:





European Commission,




Directorate-General Competition




State Aid Greffe




1049 Bruxelles/Brussel




BELGIQUE/BELGIË





Stateaidgreffe@ec.europa.eu





These comments will be communicated to Poland. Confidential treatment of the identity of the interested party submitting the comments and/or of parts of the comments submitted may be requested in writing, stating the reasons for the request.
TEXT OF SUMMARY

Procedure

On 6 June 2024, following pre-notification contacts, the Polish authorities notified, under the Regional Aid Guidelines 2014-2020 (‘RAG 2014’) (1), regional investment aid to MAN Trucks Spolka z ograniczoną odpowiedzialnością (‘MAN Trucks’), a subsidiary of the MAN Group and part of the Volkswagen Group (active in the manufacturing and sale of vehicles) in the form of a direct grant and a corporate income tax (CIT) exemption, in order to support the extension of the capacity of MAN Trucks’ existing establishment (‘Investment Project’) in Niepołomice, Poland (the ‘measure’).

Description of the aid in respect of which the Commission is initiating the procedure

The Polish authorities intend to promote regional development by providing regional investment aid for the Investment Project situated in the NUTS 2 region of PL21 Małopolskie, an area eligible for assistance under Article 107(3), point (a), TFEU (‘
               “a” area’) based on the regional aid map 2014-2020 for Poland.
The Minister of Economic Development and Technology of Poland awarded, with a suspension clause (subject to Commission’s approval), the notified aid in the form of a direct grant and in the form of a CIT exemption on 30 December 2021 and 7 June 2021, respectively. The aid amount for the direct grant will not exceed PLN 10 735 000 (ca. EUR 2,4 million) in nominal value, and PLN 10 310 136 in discounted value. The aid amount for the CIT exemption is PLN 105 550 968 (ca. EUR 23,7 million) in nominal value, and PLN 102 119 412 (ca. EUR 22.9 million) in discounted value. In total, the aid amount is PLN 116 285 968 (EUR 26 084 199) in nominal value, and PLN 112 429 548 (EUR 25 219 162) in discounted value. The total notified aid in discounted value for the eligible costs of PLN 419 549 563 (ca. EUR 94,1 million) (also discounted value) corresponds to an aid intensity of 26,8 %.

Assessment of the compatibility of the aid

The Commission considers that the measure constitutes State aid within the meaning of Article 107(1) TFEU since it meets the conditions laid down therein. This conclusion is not contested by the Polish authorities.
The legal basis for the assessment (2) of compatibility of the notified aid is Article 107(3), point (a), TFEU, as interpreted by the RAG 2014.
The RAG specify that regional aid can only be approved if the aided project contributes to regional development and the aid has incentive effect. Furthermore, there must be a need for State intervention, the aid must be appropriate and proportionate, and the aid should not lead to undue negative effects on competition and trade that would outweigh the positive effects of the aid.
According to section 3.5 of the RAG 2014, regional aid can only be found compatible with the internal market if it has an incentive effect. An incentive effect is present when the aid changes the behaviour of an undertaking in a way that it carries out additional activity, contributing to the development of an area, that it would not have carried out, or would only have done in a limited or different manner or in another location, if the aid was not granted. The aid must not subsidise the costs of an activity that an undertaking would carry out in any event and must not compensate for the normal business risk of an economic activity. Paragraph 61 of the RAG 2014 stipulates that the (substantive) incentive effect can be proven in either one of two scenarios: i.e. in the absence of aid, the investment would not be sufficiently profitable in any location (scenario 1) or, in the absence of aid, the investment would take place in another location (scenario 2). Poland invokes a scenario 2 situation in the present case and claims that the aid is justified by the need to compensate for a net financial disadvantage of the Polish location compared to an alternative investment location outside the EEA.
In this respect, the Commission takes note that the Polish authorities provided documentary evidence that is contemporaneous to the location decision adopted by the Executive Board of MAN Trucks & Bus of 29 March 2021. The final location decision reaffirmed an earlier decision of 8 February 2021, by concluding that Poland was the better option, and it confirmed that the Board was permitted to take the decision without requiring any change or amendment to it. According to that evidence, the authenticity of which the Commission does not contest, the Board compared the two sites in Niepołomice and in the alternative location outside the EEA, considered the respective financial data (NPV comparisons) as well as other criteria relevant for the location decision.
However, at this stage, based on the information available to it, the Commission expresses doubts that the alternative location outside the EEA was a realistic and credible counterfactual in which, in the absence of the aid from Poland, the Investment Project would have taken place. The Commission’s concerns about the alternative location outside the EEA constituting a genuine counterfactual relating to the decision-making factors prevalent at the time of the final location decision stem from various factors. Considering the lack of contemporaneous evidence on the pre-selection phase of the decision-making process and inconsistency in the information provided, it is unclear to the Commission which criteria or parameters were deemed decisive at this pre-selection stage of the decision-making, and precisely which criteria were fulfilled leading to the selection of Niepołomice and of the alternative location outside the EEA. The Commission therefore currently cannot confirm that the pre-selection, as described by the Polish authorities, took place, and even assuming it did, the Commission cannot confirm why the alternative location had been pre-selected. The Commission experiences similar concerns as to the lack of contemporaneous documentary evidence on the phase of comparison of the alternative location and Niepołomice until the decision of 8 February 2021. In particular, the Commission notes the absence of contacts with the authorities of the country of alternative location outside the EEA and the absence of contemporaneous documentation on the decision to take such a course of action. In the light of these factors, the Commission doubts that the alternative location outside the EEA was a realistic and credible alternative. Furthermore, the Commission considers that the explanation of the Polish authorities on the lack of contemporaneous evidence has not lifted its doubts.
Even if the counterfactual scenario proves to be genuine, the Commission doubts that the comparison of Poland and the country outside the EEA had a realistic basis, considering that the Polish authorities have not proven the availability or the specific amount of the incentives in the alternative location used in the Net Present Value (NPV) calculations comparing the two investments. To evidence the availability of such incentives for the counterfactual investment, the Polish authorities submitted guidelines on a general framework for incentives available in the alternative location and a prior incentives offer in the alternative location for a distinct investment project. The Polish authorities also argue that certain MAN employees had the necessary knowledge to calculate the amount of such incentives that could be granted for the counterfactual investment. The Commission, however, finds that the documents submitted are not sufficient to prove the availability and the amount of the incentives in the alternative location, and that Poland has not demonstrated that such incentives can be obtained automatically without the discretion of authorities. Absent the incentives in the alternative location (or even absent a very small share of these incentives), the Investment Project in Niepołomice would be more profitable than in the alternative location, thus calling into question the incentive effect of the State aid.
Furthermore, the assessment of the proportionality of the aid amount required under Section 3.6 of the RAG 2014 can only be carried out once the counterfactual scenario is established as credible. At this stage, it appears that no aid would be necessary to trigger the location of the investment in Poland, as this would happen in any event. Even on the assumption that the counterfactual location was credible, the Commission cannot conclude on the the proportionality in light of the counterfactual scenario submitted and of the additional cash flows related to increased production volumes forecasted in the counterfactual scenario.
Section 3.7.2 of the RAG 2014 lists a series of situations where the manifest negative effects on trade and/or competition manifestly outweigh any positive effects, meaning that the aid is unlikely to be declared compatible with the internal market. At this stage, the Commission considers that the aid as such does not trigger undue negative effects on competition and trade within the meaning of section 3.7.2 of the RAG 2014. However, as the Commission could not conclude at this point on the positive effects of the aid in view of the doubts expressed in connection with the incentive effect and the proportionality of the measure, the Commission is not in a position at this stage to perform a balancing of positive and negative effects of the aid.
For the above reasons the Commission raises doubts as to the compatibility of the aid.
Interested parties are invited to comment on the aid, and in particular on the issues identified more in detail in the attached letter to Poland.


(1)  
            OJ C 209, 23.7.2013, p. 1.

(2)  The Polish authorities explained that MAN Trucks could not make a declaration on the basis of Article 14(16) of the Commission Regulation (EU) No 651/2014 (‘GBER’). Therefore, the measure should be notified to the European Commission.






TEXT OF LETTER


1.   PROCEDURE









(1)


On 6 June 2024, following pre-notification contacts, the Polish authorities notified to the Commission, under the Guidelines on regional State aid for 2014-2020 (‘RAG 2014’) (1), regional investment aid to MAN Trucks Spolka z ograniczoną odpowiedzialnością (‘MAN Trucks’), in the form of a direct grant and a corporate income tax exemption (‘CIT exemption’), in order to support the extension of the capacity of MAN Trucks’ existing establishment (‘Investment Project’) in Niepołomice, Poland (the ‘measure’).












(2)


The Commission sent requests for information on 5 August and 29 November 2024 and on 16 April 2025, to which the Polish authorities replied on 30 September 2024, 18 February and 26 May 2025, respectively. On 10 September 2024, a meeting took place between the Commission services, the Polish authorities and representatives of MAN Trucks, and on 3 December 2024 and 26 March 2025, between the Commission services and the Polish authorities.












(3)


Poland agreed to waive its rights deriving from Article 342 TFEU, in conjunction with Article 3 of Regulation 1/1958 (2) and to have this Decision adopted and notified in English.




2.   DETAILED DESCRIPTION OF THE MEASURE

2.1.   Objective of the measure









(4)


The Polish authorities intend to promote regional development by providing regional investment aid for the Investment Project in Niepołomice, a city situated in the NUTS 2 region of PL21 Małopolskie, eligible for assistance under Article 107(3), point (a), TFEU (‘“a” area’) based on the regional aid map 2014-2020 for Poland (3) (‘regional aid map for Poland’).




2.2.   The beneficiary









(5)


Poland explained that the recipient of the aid is MAN Trucks, a company that is part of the Volkswagen capital group owned by Volkswagen AG (4) (‘VW Group’ or ‘VW’), whose activities include the development of vehicles, engines and vehicle software, and the production and sale of passenger cars, light commercial vehicles, trucks and buses. The sole shareholder of MAN Trucks is MAN Finance and Holding SA, a company incorporated under the laws of the Grand Duchy of Luxembourg, in which Volkswagen AG indirectly, through MAN SE (5), held 100 % of shares. As a consequence, companies under control of MAN SE could be regarded as part of the MAN Group (‘MAN Group’ or ‘MAN’). The beneficiary is a large enterprise (6).












(6)


The Polish authorities confirmed that neither MAN Trucks, nor the broader entity, MAN Group or the VW Group, to which it belongs to is an undertaking in difficulty within the meaning of the Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty (7).




2.3.   The Investment Project

2.3.1.   General description









(7)


The Investment Project consists in the extension of production capacity of MAN Truck’s existing establishment in Niepołomice (‘Niepołomice plant’). Pursuant to the Investment Project, the production capacity was planned to increase from [15 000 – 25 000] (*1) vehicles to [60 000 – 70 000] vehicles per year. The products manufactured in the Niepołomice plant fall under the NACE code 29.10 Manufacture of motor vehicles.












(8)


The Investment Project consists of an investment into tangible assets (buildings, plant and machinery), related to increasing the production capacity of the Niepołomice plant. In connection with the implementation of the Investment Project, MAN Trucks intends to create up to 1 400 new jobs (recital (28)).












(9)


The Investment Project is carried out on MAN Truck’s existing establishment in Niepołomice, which occupies a total area of 72 hectares. It is partly carried out on the premises of the existing hall, and it also includes the construction of a new production hall. To implement the Investment Project, the area of the site was expanded to 116 hectares. The site’s current size is ca. 114.4 hectares following the sale and expropriation of a small piece of land.












(10)


The Polish authorities submit that the Investment Project is part of MAN Group’s consolidation efforts in view of reducing its carbon footprint. The MAN Group planned to construct and ramp-up electric trucks (‘etrucks’) production at plants near its Munich headquarters and therefore looked to shift part of the production of conventional trucks to another location. Thus, the Niepołomice plant would become the centre of production of conventional trucks (recital (25)).












(11)


The Polish authorities presented the following timeline:

Table 1


Timeline of the Investment Project








 


CIT exemption


Direct grant




Date of application for the aid


31 May 2021


9 June 2021




Date of start of works on the investment project:


15 June 2021 (8)





Planned date of the start of production


by 31 December 2023




Planned date on which the full production capacity is reached


31 December 2025




Planned end date of the Investment Project


31 December 2025
















(12)


At the time of notification of the measure, the expansion of the Niepołomice plant has been completed and is in operation.




2.3.2.   Eligible investment costs









(13)


The total notified eligible investment costs for the Investment Project amount to PLN 423 519 500 (EUR 95 million (9)) in nominal value and to PLN 419 549 563 (ca. EUR 94.1 million) in discounted value (10). The Polish authorities note that the Investment Project qualifies as a large investment project within the meaning of paragraph 20, point (l), RAG 2014 (11). The eligible costs result from investments in tangible assets (buildings, plant, machinery and other equipment). Eligible investment costs do not include the estimated wage costs arising from job creation or intangible assets.

Table 2


Breakdown of eligible investment costs (nominal and discounted) in PLN













Eligible cost


Nominal/ discounted


2021


2022


2023


2024


2025


Total




Buildings


Nominal


[…]


[…]


[…]


0 


0 


[…]




Discounted


[…]


[…]


[…]


0 


0 


[…]




Plant/
machinery/
equipment


Nominal


[…]


[…]


[…]


0 


0 


[…]




Discounted


[…]


[…]


[…]


0 


0 


[…]




Total


Nominal


[…]


[…]


[…]


0 


0 


423 519 500 




Discounted


[…]


[…]


[…]


0 


0 


419 549 563 





Table 3


Breakdown of eligible investment costs (nominal and discounted) in EUR













Eligible cost


Nominal/ discounted


2021


2022


2023


2024


2025


Total




Buildings


Nominal


[…]


[…]


[…]


0 


0 


[…]




Discounted


[…]


[…]


[…]


0 


0 


[…]




Plant/
machinery/
equipment


Nominal


[…]


[…]


[…]


0 


0 


[…]




Discounted


[…]


[…]


[…]


0 


0 


[…]




Total


Nominal


[…]


[…]


[…]


0 


0 


95 000 000 




Discounted


[…]


[…]


[…]


0 


0 


94 109 500 
















(14)


The Polish authorities confirmed that the acquired assets are new (12).




2.4.   Form of aid, granting authority and national legal basis









(15)


The notified aid was granted in the form of both a direct grant and a CIT exemption.












(15)


The granting authority is the Minister of Economic Development and Technology of Poland.












(16)


The national legal bases for the direct grant are the following:






(a)


Grant agreement of 30 December 2021, which includes a suspension clause (§ 8, section 6.1) until the Commission’s approval of the aid and an obligation to notify (§ 8, section 5);










(b)


Act of 6 December 2006 on the principles of development policy – Article 19 section 2 (Journal of Laws 2006 No. 227 item 1658, as amended) (13);










(c)


Programme for the support of investments of considerable importance for Polish economy 2011-2030 – Resolution of the Council of Ministers No 116/2019 of 1 October 2019 (14);










(d)


Resolution No 40/2021 of the Council of Ministers of 25 March 2021 (15);










(e)


Annex to Resolution No 40/2021 of the Council of Ministers of 25 March 2021 (16).
















(17)


The national legal bases for the CIT exemption are the following:






(a)


Decision on support of 7 June 2021 (‘decision on support’) which includes a suspension clause (section I.3) until the Commission’s approval of the aid;










(b)


Act of 10 May 2018, on support for new investments (Journal of Laws 2018 item 1162, as amended) – Article 13 (17);










(c)


Act of 15 February 1992, on corporate income tax (Journal of Laws 1992 No 21 item 86 as amended) – Article 17 section 1 point 34a (18), laying down the standard CIT applicable to undertakings in Poland;










(d)


Ordinance of the Council of Ministers on public aid granted to some entrepreneurs for the implementation of new investments of 28 August 2018 (Journal of Laws 2018, item 1713) (‘the scheme) (19). The scheme provides for a regime under which aid can be block-exempted (20) under Commission Regulation (EU) No 651/2014 (“GBER 2014”) (21). Nevertheless, in § 6.7 it also establishes that in some situations, notably, when the applicant carried out or intends to carry out relocation within the meaning of Article 2(61a) GBER 2014, the aid is subject to notification to the European Commission and may be granted following its approval. In § 1, § 2, § 3 and § 4 it lays down, respectively, the list of sectors and activities that are not eligible for aid, the qualitative eligibility criteria and the quantitative eligibility criteria. Each qualitative criterion is further specified in either Annex I (for investments in the services sector) or Annex II (for investments in the industrial sector). Furthermore, § 5 and § 6 of the Ordinance establish that the investment projects referred to under the previous paragraphs may be granted with a CIT exemption, determined in accordance with the applicable Polish regional aid map;










(e)


Ordinance of the Minister of Entrepreneurship and Technology on establishing areas and assigning them to managers of 29 August 2018 (Journal of Laws 2018, item 1698) (22);










(f)


Ordinance of the Minister of Entrepreneurship and Technology on entrusting the manager of the Krakow Technology Park with issuing decisions on support and exercising control over the implementation of decisions on support of 29 August 2018 (Journal of Laws 2018, item 1699) (23);










(g)


Ordinance of the Council of Ministers on establishing the map of regional aid for 2014-2021 of 30 June 2014 (Journal of Laws 2014, item 878) (24).
















(18)


The aid is financed by the general budget of the State.




2.5.   Aid amount and aid intensity









(19)


The aid amount for the direct grant will not exceed PLN 10 735 000 (ca. EUR 2.4 million) in nominal value, and PLN 10 310 136 in discounted value (25). The aid amount for the CIT exemption is PLN 105 550 968 (ca. EUR 23.7 million) in nominal value, and PLN 102 119 412 (ca. EUR 22.9 million) in discounted value. In total, the aid amount is PLN 116 285 968 (EUR 26 084 199) in nominal value, and PLN 112 429 548 (EUR 25 219 162) in discounted value.












(20)


The Polish authorities have calculated the adjusted aid amount – that is, the maximum permissible aid amount for a large investment project – on the basis of the scaling down-mechanism set out in paragraph 20, point (c), RAG (26). The maximum permissible aid amount for the Investment Project is accordingly EUR 25 219 162. The total aid amount of EUR 25 219 162 in discounted value equals to that maximum permissible amount. The aid is planned to be paid out according to the following schedule:

Table 4


Payment schedule of the aid amount in PLN










 



Nominal/ discounted




2024




2025




Total






Grants



Nominal


 


[…]


10 735 000,00 




Discounted


 


[…]


10 310 136,46 





CIT exemption



Nominal


[…]


[…]


105 550 968,64 




Discounted


[…]


[…]


102 119 412,28 





Total



Nominal


[…]


[…]


116 285 968,64 




Discounted


[…]


[…]


112 429 548,74 








2.6.   Aid intensity and cumulation with other investment aid









(21)


The Polish authorities submit that the Investment Project is located in an “a” area, i.e., PL21 Małopolskie, one of the least developed regions in Poland with a standard regional aid ceiling (for large enterprises) of 35 % under the regional aid map for Poland. For the Investment Project, which qualifies as a large investment project (recital (13)), the maximum aid intensity resulting from the adjusted aid amount referred to in recital (20) is 26,8 % (27). The notified aid of PLN 112 429 548 (EUR 25 219 162) for the eligible costs of PLN 419 549 563 (ca. EUR 94.1 million) (both in discounted values) corresponds to an aid intensity of 26,8 %.












(22)


The Polish authorities confirmed that if the amount of eligible costs deviated from the notified eligible costs set out in recital (13), the amount of the aid granted would be adjusted so as to ensure that neither the approved maximum aid amount in discounted value (recital (20)), nor the approved aid intensity (recital (21)) would be exceeded.












(23)


The Polish authorities indicated that the aid may be cumulated with other aid or de minimis aid to cover the same eligible costs and in such a case they confirm that the rules on cumulating aid under the RAG 2014 will be complied with, and the total aid (all State aid combined) will not exceed the maximum intensity allowed.




2.7.   Own contribution









(24)


The Polish authorities confirmed that MAN Trucks will contribute at least 25 % of the total eligible costs from its own resources or from external financing, in a form that is exempted of any public financial support (28).




2.8.   Closure of a plant and possible relocation









(25)


The Polish authorities submitted that the Executive Board of MAN Trucks could not make a declaration on the basis of Article 14(16) GBER 2014 (29) (recital (17)(d)) due to the reorganisation plans within the MAN Group (recital (10)), concerning its plants in the EEA. The Polish authorities explained that the missing commitment is due to (i) the sale of its plant in Steyr, Austria (sold to WSA Beteiligungs GmbH by way of a share deal (30)) and (ii) the consolidation of truck production to two main centres – eTrucks and conventional trucks centres (31). Therefore, the aid should be notified to the European Commission.












(26)


The Polish authorities indicated that there is however no causal link between the aid and possible relocation within the meaning of the RAG 2014 (recitals (68) and (69)), and that the consolidation would have been made regardless of any State aid offer from Poland or any other country.




2.9.   Maintenance of the investment in the assisted region









(27)


The Polish authorities confirmed that the aid is awarded on the condition that MAN Trucks maintains the investment in the assisted region for a minimum period of five years after its completion within the meaning of paragraph 36 RAG (32).




2.10.   Contribution to regional development and territorial cohesion









(28)


The Polish authorities explained that the Investment Project would contribute to regional development for the following reasons:






(a)


MAN intends to create up to 1400 new jobs in the target scenario (33). MAN Trucks will maintain the existing jobs in a number corresponding to the average employment in the 12 months prior to the date of the decision on support. MAN Trucks plans to maintain and create, among others, jobs that require knowledge and skills in the area of the so-called new technologies, i.e. design with the use of information technology, database management, programming of machinery and equipment.










(b)


The quality of the jobs that will be maintained and created will be high, as evidenced by the following characteristics: the educational level of the employees (more than 10 % of employees in engineering and administrative staff is expected to hold a university degree, while the majority will have achieved secondary education or vocational training and will regularly participate in training to improve their professional qualifications), required qualifications (i.e. know-how in the field of production techniques, metallurgy, mechatronics, lean manufacturing, information technology, programming, etc.), and the average monthly total costs of remuneration for employees will exceed the sector average in industrial processing, as well as the regional and national averages in Poland in the enterprise sector.










(c)


MAN Trucks expects positive effects on employment both in manufacturing and in service industries, both at the stage of construction and after completion of the Investment Project. The existing jobs will be maintained, and new jobs will be created within the local network of MAN Trucks’ contractors or subcontractors (local suppliers of materials and service) (34). With up to 1400 new direct jobs, the cautious estimations indicate ca. 6500 – 7000 additional indirect jobs in the region (35).










(d)


MAN Trucks intends to provide training to its employees to improve general and specialised skills. In addition, MAN Trucks finances or co-finances higher education and post-graduate education in various fields, for example, production technology, engineering, computer science, and finance.










(e)


With the implementation of the Investment Project, MAN Trucks anticipates developing solutions to improve the production process and the quality of products manufactured under the Investment Project. MAN Trucks implements its Corporate Strategy 2025, within which the following areas are developed: digitalization, green technologies, informatisation, and workforce transformation.










(f)


MAN Trucks anticipates developing partnerships with local universities and technical schools in the region. It already cooperates with the Cracow University of Technology and the AGH University of Science and Technology in Cracow. MAN Trucks is also active in vocational education development through patronage over a class in the Center for Vocational and Continuing Education in Niepołomice. It also intends to maintain and develop cooperation with scientific centers, for example, in the field of mechanical engineering, electrical engineering and materials (36).










(g)


MAN Trucks is working on implementation of MAN Internship Program aimed at developing skills of students, supervision and offering opportunities of employment. The estimated annual cost of implementing the program amounts to PLN […].
















(29)


The Polish authorities submit that MAN Trucks emphasises that the Investment Project will be in line with the Polish Strategy for Responsible Development until 2020 (with an outlook until 2030) (‘SOR’), primarily, by increasing the competitiveness of the Polish economy and affecting the economic development of the region of the Investment Project. The Investment Project relates to the supply chain operations of one of the strategic sectors – the transportation sector. As such, its implementation will contribute to achieving the objectives of the SOR (point VIII SOR – part: Transport). MAN Trucks also plans to carry out activities aimed at achieving sustainable economic and social development (also objectives of the SOR) and meet certain quality criteria as part of its efforts.












(30)


The Investment Project also has some sustainability benefits. According to the Polish authorities, MAN Trucks’ production plant meets all environmental protection requirements under Polish law and MAN Group standards. The business activity within the Investment Project is to be characterised by a low negative impact on the environment, which will be confirmed by relevant certificates or an entry to the Polish Register of Cleaner Production and Responsible Entrepreneurship. MAN Trucks is certified for the Eco-Management and Audit Scheme and holds the OHSAS 18001:2007 certificate (37). A goal of MAN Trucks is to attain the CO2 neutrality of the Niepołomice plant.




2.11.   Environmental impact assessment









(31)


The Polish authorities submit that upon application to the Mayor of Town and Municipality of Niepołomice for the issuance of a decision on environmental conditions for the Investment Project (38), the mayor, in a decision on environmental conditions of 29 October 2021 (39), stated that there was no need for conducting an environmental impact assessment of the Investment Project.




2.12.   Appropriateness of the measure









(32)


The Polish authorities submit that, despite general measures to support economic development at national and regional level through investment in basic infrastructure and productive factors, large regional disparities can still be observed throughout Poland, including in the Małopolskie region, where Niepołomice is located. The gross domestic product (GDP) per capita in the Malopolskie region in 2020 (the first full year before the aid granting acts) was lower than the national average (40). The unemployment rate in Wieliczka district, where Niepołomice is more specifically located, increased in 2020 and was higher than the average in the Malopolskie region (41). In 2020, the amount of investment outlays of enterprises in the region was less than in 2019 by 2 %. The Polish authorities consider that the above confirms the relative underdevelopment of the Malopolskie region and underscores the need for more targeted intervention.












(33)


The Polish authorities submit that the CIT exemption not only contributes to the immediate financial attractiveness of the Niepołomice site, but it also encourages ongoing operations and profitability in the Malopolskie region. It can only be utilised if the investment generates taxable profit, which ensures that the incentive is conditional on the investment’s long-term success, creating a strong alignment between public support and sustainable private-sector outcomes. The direct grant, as an ad hoc aid, is an appropriate measure to supplement the State aid in the form of a CIT exemption to reduce the cost differential between the alternative location and Niepołomice. There are no other direct subventions or subsidies in Poland for investment projects conducted by large enterprises. Therefore, the Polish authorities consider that the measure is necessary to incentivise MAN Trucks to carry out the investment in Poland rather than in the alternative location












(34)


The Polish authorities argue that infrastructure developments and other general measures alone are insufficient to reduce the regional disparities. Furthermore, as the market failure addressed in this case is not related to access to finance, they contend that other forms of aid, such as guarantees or soft loans, would not be appropriate to bridge the NPV gap between the two locations and provide the necessary incentive to attract investment to the ‘a’ area. Thus, only a combination of a direct grant and CIT exemption was capable of ensuring sufficient incentive effect. Finally, the Polish authorities argue that the Commission accepted the appropriateness of direct grants to stimulate regional economic development, given the region's lower GDP per capita, wages, and higher unemployment in its past practice (42).




2.13.   Incentive effect and proportionality of the measure

2.13.1.   Formal incentive effect









(35)


The formal aid applications for the CIT exemption and for the direct grant were submitted on 31 May and 9 June 2021, respectively. Works on the Investment Project started on 15 June 2021 (recital (11)). Therefore, the Polish authorities confirm that works on the notified Investment Project started after the submission of both aid applications (43).




2.13.2.   Substantive incentive effect









(36)


The Polish authorities invoke a scenario 2 situation (location decision) within the meaning of paragraph 61, point (b), RAG 2014, to demonstrate the existence of a substantive incentive effect. They argue that, in the absence of the State aid in Poland, the investment would have been carried out in [alternative location outside the EEA], [country of alternative location outside the EEA], instead of Niepołomice, Poland, due to higher profitability of the investment in [country of alternative location outside the EEA].




2.13.2.1.   General decision-making process at the MAN Group









(37)


The Polish authorities described the general decision-making process for investments and other decisions of the MAN Group as a four-step process involving the following phases: (i) review and breakdown of the corporate strategy by the Board of Directors and its members, (ii) the necessary measures to achieve the strategy are defined under the lead of the central planning department and proposals (e.g. from production managers and experts) are discussed and evaluated from different perspectives, possible financial evaluations of alternatives are made, studies and analyses are carried out, (iii) hierarchical decision starting with the management team, gradually reducing the number of alternatives for the final Board decision, and (iv) the final decision with a project team being appointed to execute the project. The Polish authorities, however, submit that the above process is lived practice, and investments, such as the Investment Project, are not commonplace for the MAN Group.












(38)


The Polish authorities have also submitted Group-Guideline MAN 5.3 (‘MAN Guidelines’) in force at the time, that should generally cover all entities of the MAN Group. The MAN Guidelines require important projects (projects which costs amount to more than EUR […] million) to be approved by MAN SE (44).












(39)


The Polish authorities however explain that, due to its high importance and confidentiality, the Investment Project was excluded from the requirements of the general decision-making process (recital (37) and (38)) and was rather subject to an ad hoc procedure. The Polish authorities submitted that the exclusion from the general decision-making process was in line with the MAN Guidelines and was in no way questioned or challenged within the group.




2.13.2.2.   The decision-making process for the Investment Project









(40)


The Investment Project falls within the context of the MAN Group’s broader initiative, [name of the initiative] (45), encompassing strategic objectives of the MAN Group including key elements, such as adaptation to general market trends regarding e-mobility and CO2 reduction. [name of the initiative] thus addressed the full-scale transformation of the MAN Group’s operations, including enhancing production capabilities, reducing fixed costs, as well as advancing sustainable and intelligent transportation solutions across the organisation.












(41)


Within [name of the initiative], the MAN Group adopted its Production Strategy in July 2020. The latter targeted: (i) the implementation of structural changes by focusing on core competencies, synergies and utilising the global production network, and (ii) enhancing transparency and cost awareness throughout the production organisation while fostering entrepreneurial thinking and cost-consciousness. The Polish authorities explained that decisions about the future of specific plants and projects were made with consideration of the Production Strategy’s assumptions, financial profitability, and operational viability within planned projects.












(42)


To substantiate the credibility of the counterfactual scenario which they invoked, the Polish authorities provided a description of the decision-making process that was undertaken for the Investment Project. That process can be structured in five main phases:






(a)


Decision on consolidation within the MAN Group (2019),










(b)


Decision on investment in conventional trucks production (no concrete location yet) (first part of 2020),










(c)


Initial assessment of [alternative location outside the EEA] and Niepołomice as potential locations (second part of 2020),










(d)


Comparison of [alternative location outside the EEA] and Niepołomice, and State aid check (December 2020 – February 2021),










(e)


Location decision (Niepołomice) including potential State aid (29 March 2021). The Polish authorities indicate that an initial location decision took place in February 2021 but was then subject to further legal checks in February and March 2021.
















(43)


The Polish authorities explained that the Investment Project and related discussions were treated as highly confidential even within MAN (data accessible to limited number of people and the requirement to sign non-disclosure agreements (46)).












(44)


Furthermore, the Polish authorities added that the decision-making process was entrusted to MAN Trucks & Bus SE (‘MAN Trucks & Bus’), a subsidiary of MAN SE (MAN Group) and part of the VW Group as a wholly owned subsidiary directly controlled by MAN SE (currently, by TRATON SE). In this regard, it was approved internally within the MAN Group that there was no obligation for the Executive Board of MAN Trucks & Bus to obtain any additional permissions in order to make the decision on the investment in Niepołomice.





Decision on consolidation within the MAN Group and investment in conventional trucks production









(45)


The Polish authorities explain that the targets of the Production Strategy of July 2020 (recital (41)), alongside the MAN Group’s CO2 reduction targets and general market trends in e-mobility, adopted far before the location decision in March 2021, led to the decision to implement the production consolidation process within the MAN Group. As a result of the need to undertake the consolidation process, and following an initial selection of the potential investment location and financial analysis, the MAN Group decided to create one large manufacturing unit dedicated to truck production. This led to the conclusion that investment in reorganising several plants within the group was necessary. The Polish authorities submit that those considerations were outlined at a high level in the Production Strategy of 2020, and the VW and MAN sustainability reports (2020 and 2021, respectively) (of which they submitted excerpts). Consequently, the MAN Group explored potential options to create capacity for electric truck production by reorganising existing plants. This also necessitated investment in a facility producing conventional trucks.





Initial assessment of [alternative location outside the EEA] and Niepołomice (pre-selection)









(46)


The Polish authorities explained that, firstly, MAN decided that only [information about potential locations during pre-selection] were possible candidates for expanding the conventional trucks production capacity (i.e. the decisive factor […]). Consequently, MAN considered [5-15] potential locations [other information about potential locations during pre-selection] ([country A], [country B], [country C], and [country of the alternative location outside the EEA]). Initially, only general technical criteria, without financial considerations, were assessed. The Polish authorities submitted that such critical factors for the investment site included: selected and available land, existing plant or proximity to an existing plant, investment experience, administrative background, trained staff, and the European market catchment area. The Polish authorities also explained that most of the parameters constituted common knowledge within the MAN Group with the Executive Board also being familiar with them. Therefore, it was not required to gather additional, complex documentation for each parameter.












(47)


The Polish authorities explain that based solely on those factors MAN selected only two candidates for the location of the Investment Project: Niepołomice in Poland and [alternative location outside the EEA] in [country of alternative location outside the EEA]. Regarding potential EEA countries for the investment, Niepołomice – where MAN already had a truck production plant – was an obvious choice, given the production consolidation plans, technical expansion capabilities (land ownership and existing infrastructure), social responsibility (maintaining jobs), and the goal of CO2 neutrality (CO2 neutral production in Niepołomice). Since Niepołomice was the only potential location considered within the EEA, the planning focused exclusively on this site in the EEA.












(48)


According to the Polish authorities, the only other realistically possible location for the MAN Group, considering the perspective of concentrating products and similar production processes at single sites, was [country of alternative location outside the EEA]. The Polish authorities explained that [alternative location outside the EEA] was chosen for a more detailed assessment as an alternative location mostly because of the following factors: (i) group experience in investment planning and State support opportunities in [alternative location outside the EEA] ([the group’s experience regarding the incentives system of the country of alternative location outside the EEA and a previous project for which incentives offer was presented by the authorities from that country]), (ii) positive and long-term business experience of MAN in [country of alternative location outside the EEA], (iii) proximity to [plant] in [alternative location outside the EEA], and (iv) potential synergy effects (support from existing MAN personnel in [alternative location outside the EEA] and utilisation of existing facilities and infrastructure).












(49)


The Polish authorities link meetings held on 18 and 19 November 2020 (47) to this phase of the decision-making, which were evidenced by submitting calendar entries of the Head of Planning Production Trucks of MAN Truck & Bus (‘calendar entries’) and the related list of participants.












(50)


The pre-selection was conducted ad hoc as part of ongoing operations and project development, and no separate written documentation was produced or required within the MAN Group. To illustrate the rationale behind the pre-selection and the assessment done in this phase of the decision-making, the Polish authorities submitted an evaluation grid, prepared retrospectively solely for the purposes of the aid notification. According to the Polish authorities, this grid shows […] locations scored on factors mentioned in recital (47) and on one additional factor, cost-efficiency. All [5-15] locations would meet all but two factors: only [location in country B] ([country B]), Niepołomice (Poland), and in [alternative location outside the EEA] ([country of alternative location outside the EEA]) scored on cost-efficiency, while only Niepołomice and [alternative location outside the EEA] scored on land availability, indicating land availability as the decisive factor narrowing down the choice to those two locations.












(51)


In this context, the Polish authorities explained that although land availability emerged as one of the most decisive parameters, the inclusion of locations that did not meet this criterion served the purpose of ensuring that no potentially viable option was prematurely excluded. Regarding the available land in [alternative location outside the EEA], the Polish authorities explained that the MAN Group considered a land with a total area of 30 hectares already in their ownership that could be further expanded by purchasing adjacent land (48). The Polish authorities confirmed that there were no concrete contacts with the relevant municipality regarding an investment there.





Comparison of [alternative location outside the EEA]and Niepołomice









(52)


In the detailed comparison, the counterfactual investment in [alternative location outside the EEA] was seen as establishing a new plant near [plant], which would involve shifting all conventional truck production capabilities to that new plant. In contrast, the investment in Niepołomice was regarded as an expansion of the existing conventional truck manufacturing establishment. The Polish authorities explained that the new plant in [country of alternative location outside the EEA] would be nearly identical to the plant in Niepołomice after the expansion, as both would have the same production capacity and standardised construction parameters.












(53)


The Polish authorities referred to several meetings on the Investment Project taking place in this phase, evidenced by calendar entries and, for most of the meetings, the related list of participants (49). The meetings were held on 14, 17 and 18 December 2020 (with the meetings referred to in the calendar entries as ‘Incentives Poland & [country of alternative location outside the EEA], “EU incentives”, and “Location Comparison Analysis”, respectively). Further meetings were held on 2, 3 and 5 February 2021 (“Incentives in Poland & [country of alternative location outside the EEA]”, “Counterfactual Analysis”, and “Incentives Poland …”, respectively).












(54)


The Polish authorities submitted that the MAN Group decided not to conduct talks with the [authorities of the country of alternative location outside the EEA] about the possibility of implementing the Investment Project, for the following reasons: (i) MAN […] was therefore well-informed about the incentives available for investors, (ii) MAN staff from [location] was involved in negotiations regarding [entity] planned investment (50) in [country of alternative location outside the EEA] in [year] during which the [authorities of the country of alternative location outside the EEA] presented [number] sets of offers to [entity] (“[year] offers to [entity]”) (51), and could use this experience to assess the feasibility of the MAN Group’s investment, and (iii) [MAN employees] had relevant experience in assessing [country of alternative location outside the EEA]incentives. The Polish authorities further submit that the MAN Group had no doubts that if the Investment Project could be implemented in [country of alternative location outside the EEA], it may benefit from [country of alternative location outside the EEA] incentives, and that the MAN Group had reasonable belief that the [MAN employees] have the appropriate experience and competence to reliably calculate potential [country of alternative location outside the EEA] incentives.












(55)


Further to the above, the Polish authorities also submitted that it was decided, shortly after the [past experience concerning a previous project] and in accordance with [group’s approach], not to engage in contacts with the [country of alternative location outside the EEA] government at the beginning of the analysis of a potential investment project and not to address direct questions to the [country of alternative location outside the EEA] authorities regarding potential incentives for the MAN investment. It was expected that [group’s expectation regarding country of alternative location outside the EEA] (52). The Polish authorities clarified that, considering official information available, the [year] offers to [entity] and employee know-how, it was not critical to demand written documents from the [country of alternative location outside the EEA] government to assess the feasibility of obtaining incentives.












(56)


In addition, the Polish authorities explained that it was also decided to use estimates related to the types and amounts of total support in the [year] offers to [entity], proportionate to the Investment Project of the MAN Group. Additionally, drawing on the experience of the [Senior Executive] […] of [plant], various types of support were assumed, considering the specifics of the project, including support for R&D activities.












(57)


The Polish authorities also explained that the above decisions (the decision to use the [year] offers to [entity] as benchmark and the decision not to contact the [country of alternative location outside the EEA]) were taken by a member of the Management Board of MAN SE and MAN Truck & Bus and a member of the Management Board of MAN Truck & Bus, as a result of their internal discussions. This was not formalised in writing, as the MAN Group-Guidelines do not require such documentation, and no other formal documentation or email communication regarding these discussions was prepared. The Polish authorities argue that the absence of direct documentation does not invalidate the process. The evidence supporting the decision-making should include corroborating sources, such as witness statements (53) and a cohesive decision timeline that would collectively confirm the circumstances surrounding the evaluation of Poland and [country of alternative location outside the EEA].












(58)


On 11 December 2020, the Head of Planning Production Trucks of MAN Trucks & Bus requested the [Senior Executive] (also the chief executive officer (CEO)) of [plant] in [country of alternative location outside the EEA] to compile data about potential funding by the [country of alternative location outside the EEA] government and provided data on the Investment Project (number of workers, production capacity, investment costs, personnel costs). The CEO of [plant] in [country of alternative location outside the EEA], in his initial response, requested additional information and noted that for an estimate of possible [country of alternative location outside the EEA] incentives as leverage and without consulting the [country of alternative location outside the EEA] authorities, the only option was to use the [year] offers to [entity]. The CEO of [plant] in [country of alternative location outside the EEA] also noted that “the analysis is to be good enough in case of third party audit/checks”. In his subsequent reply, he provided his assumptions for a comparison of [country of alternative location outside the EEA] and Poland over a five-year period involving “running costs” and incentives in [country of alternative location outside the EEA] in the amount of approximately [EUR 200-400 million] estimating a total advantage for [country of alternative location outside the EEA] over Poland of approximately [EUR 300-500 million]. He noted that the file is “not yet ready for any discussion” since several of his own assumptions are used and that the purpose was just to have an “idea of the incentives”. He also noted that he “tried to define each assumption and we may use (of course after correcting the numbers), as much as we need for the negotiations”. The Polish authorities explain that the assumptions were discussed by a team (among others by the two employees mentioned) on an ongoing basis, i.e. not every arrangement was communicated via e-mail.












(59)


On 26 January 2021, the chief financial officer (CFO) at the MAN […] sent an updated calculation of potential incentives in [country of alternative location outside the EEA], totalling ca. EUR [250-350] million, to the CFO of MAN Trucks. This communication also included a representative of MAN Trucks & Bus, who the Polish authorities indicated was responsible for coordinating the process of obtaining financial data from both plants. In a follow up email, the CFO of MAN Trucks pointed out that the values are based on the negotiations for [entity], which planned a [number]-euro investment. He asks how sustainable the values in their case are and whether he is able to evaluate this. The CFO of the [plant] plant in [country of alternative location outside the EEA] replied that the incentives were discussed at the context of [entity]'s plans, with the explicit statement that they were not limited to [entity]'s settlement, and that the funding amount has also been significantly reduced and is thus proportional to the project (54). He mentioned that “[statement from internal communication]”, and that this is “clear to all involved”; he also mentioned that the issue is entirely up to the CEO of [plant] in [alternative location outside the EEA] (55).












(60)


On 8 February 2021, the Executive Board of MAN Truck & Bus met to discuss the Investment Project. The presentation for the meeting considered extending the plant in Niepołomice with potential State aid from Poland based on the offer for MAN and building a new plant in [alternative location outside the EEA] with potential incentives from [country of alternative location outside the EEA] based on the “offer for [entity]”, and financial calculations comparing the two options. The conclusion drawn from the calculations was that the difference in NPV between the two locations (including incentives in [country of alternative location outside the EEA] and before aid in Poland) reached an amount of EUR [28-33] million in favour of [country of alternative location outside the EEA], which could be reduced to EUR [1.5-3.5]-[2-4.5] million after aid from Poland. The remaining NPV difference was indicated as non-decisive in the light of a potential 
                              “closing of another location [Niepołomice] in the EU” and social responsibility towards existing employees in the EU. The proposed scenario was thus investing in Niepołomice, which would involve an investment of EUR 95 million with expected support from Poland in the amount of EUR 25.4 million, subject to Commission approval. The minutes of the meeting state that two investment cases were analysed. As option 1, the existing plant in Niepołomice would be extended, and as option 2 a new plant would be built in [alternative location outside the EEA] while closing the plant in Niepołomice. The minutes also mention that a discounted cash flow analysis was done for both options including incentive possibilities for option 2, [alternative location outside the EEA], and that incentives in option 1 were also subject to a notification process with the Commission. It is stated that the Executive Board approves the extension of the existing truck plant in Niepołomice based on the financial evaluation compared to [alternative location outside the EEA], and the expected subsidies from Poland (“decision of 8 February 2021”). According to the minutes, the Board also requested to “legally check the [presented] decision proposal”, and to present an update of the case in the next quarter.












(61)


The Polish authorities submitted that the final location decision was taken on 29 March 2021. Based on the minutes of the meeting, the Executive Board of MAN Trucks & Bus confirmed the decision of 8 February 2021, and stated that the two options, with expected subsidies from Poland, are financially comparable and for certain additional reasons (56), Niepołomice was the better option. The Board also addressed the question whether it was “permitted” to favour Niepołomice, given the uncertainty of receiving subsidies, which might have made choosing [alternative location outside the EEA] a more favourable decision. According to the minutes of the meeting, the Board “carefully evaluated the two options and came to the conclusion that taking into account all aspects (including, in particular, the uncertainty of getting the subsidies) Cracow [Niepołomice] is the better option”. Therefore, it was stated that the Board was “permitted” to take the decision, and, legally, there was no need to change or amend that decision.












(62)


On 14 April 2021, the Workstream Lead Transformation Production (P3) (Assistant to Board Member Production & Logistics) of MAN Trucks & Bus confirmed by email to other employees of MAN Trucks & Bus (Head of Production Trucks, Head of Planning Production Trucks, Head of Financial works and Production Controlling) and of MAN Trucks (CEO and CFO) that a member of the Management Board of MAN Trucks & Bus responsible for Production & Logistics had received a confirmation from the Head of MAN SE Group Finance Controlling (who is also CFO of MAN Trucks & Bus) that no additional committees or bodies and no release from TRATON SE was needed.




2.13.2.3.   Proportionality









(63)


According to the Polish authorities, MAN Trucks compared the financial viability of the Investment Project in two locations – Poland and [country of alternative location outside the EEA]– in an NPV model, over the period 2021-2030 (57), excluding the production figures in the years 2021 and 2022 (58). The elements of the NPV model and an overview of the development of cashflows resulting in the NPV gap was presented to the Board for the decision of 8 February 2021 (recital (60)).












(64)


The main assumptions for the preparation of the NPV model are:






(a)


All costs and revenues are discounted by the Weighted Average Cost of Capital (“WACC”) of [8-10] %, as indicated in the MAN Guidelines.










(b)


Capital expenditures (“CAPEX”), including buildings (59), machineries and equipment (60), logistics infrastructure (61) and all other expenses that are necessary to start production, were estimated to be EUR [100-120] million in Poland (62) and EUR [200-250] million in [country of alternative location outside the EEA] (63). In both locations, the highest components of CAPEX are buildings ([40-60]% of total CAPEX) and machineries and equipment ([40-60]% of total CAPEX). The substantial difference in CAPEX between the two locations, amounting to an NPV advantage of EUR [100-130] million for Poland, is justified by the nature of the investments. While the project in Niepołomice constitutes a brownfield investment (expansion of an existing plant – increase of production capacity), the counterfactual project in [alternative location outside the EEA] would be a greenfield investment (building a new plant), which would therefore involve the construction of additional infrastructure in the initial phase. In in 2021-2022 the amount of estimated CAPEX in [alternative location outside the EEA] is therefore higher than in Niepołomice. CAPEX in subsequent years (as of 2023) would remain at comparable level, as they would be incurred in relation to comparable assets and would be subject to MAN Group’s centralised purchasing procedure, which mandates that all purchases above EUR […] are conducted centrally.










(c)


Operating expenses (“OPEX”) were estimated by calculating the production and ramp-up costs. The production costs include: (i) the cost of materials (external and internal), (ii) logistics costs, and (iii) other production costs including, variable and fixed production costs, and general and administrative expenses. The basis for estimating production costs was the costs incurred by MAN in the Munich headquarter (“the status quo”). Regarding material costs, MAN assumed that for both scenarios [50-70] % of suppliers would be from [country of alternative location outside the EEA] and [30-60] % of suppliers from Germany. Accordingly, the total cost of materials, equal in both scenarios, amounts to ca. EUR […] billion expressed in NPV value. The logistics costs amounting to ca. EUR […] billion in Poland are lower than the costs in [country of alternative location outside the EEA] amounting to ca. EUR […] billion. The difference in favour of Poland is attributed to significantly higher outbound costs for [country of alternative location outside the EEA] since the main market for the Investment Project is in Europe. Other production costs, including labour costs, amount to EUR […] billion in Poland and EUR […] billion in [country of alternative location outside the EEA]. Regarding labour costs, working time for both scenarios is the same as the status quo. However, the hourly rate in Poland is EUR […], while in [country of alternative location outside the EEA] is EUR […]. Therefore, the labour cost amounts to EUR […] million in Poland and to EUR […] million in [country of alternative location outside the EEA]. Ramp-up costs are incurred only in the first years (from 2021 until 2023) and include: (i) training costs for 1400 employees in Poland (EUR […] million) and for 1870 employees in [country of alternative location outside the EEA] (EUR […] million) (64); (ii) travel expenses, concerning travel costs of some employees that need to travel to Munich to complete their training, would be EUR […] million in Poland and EUR […] million in [country of alternative location outside the EEA]; (iii) posting costs, concerning mainly costs of sending employees from one plant to another for project work for periods longer than 3 months, amounting to ca. EUR […] million in Poland and ca. EUR […] million in [country of alternative location outside the EEA]; (iv) planning costs, concerning project planning in the initial phase (e.g. hiring of consultancies) amounting to EUR […] million in Poland and EUR […] million in [country of alternative location outside the EEA]; and (v) IT costs, which relate to low-value assets and adaptation of IT tools to the new location in [country of alternative location outside the EEA], amounting to EUR […] million in Poland and EUR […] million in [country of alternative location outside the EEA]. Therefore, the total ramp-up cost amount to EUR […] million in Poland and EUR […] million in [country of alternative location outside the EEA]. In total, OPEX amount to EUR […] billion for the Polish scenario, and to EUR […] billion for the [country of alternative location outside the EEA] scenario, leading to a NPV difference of EUR [250-290] million between the two scenarios, in favour of Poland.










(d)


The calculation of revenues and taxes, for both the Polish and the [country of alternative location outside the EEA] scenario, is based on the types of trucks (light, medium and heavy range) and their respective expected volumes. Revenues are assumed to be identical in both scenarios and amount to EUR […] billion in NPV value. The profit margin on sales in both scenarios amounts to […] % of the expected revenues, implying a gross result of EUR […] million in both locations. The tax rate is 19 % in Poland (amounting to EUR […] million) and […] % in [country of alternative location outside the EEA] (amounting to EUR […] million), leading to a NPV difference of EUR [22-26] million in favour of Poland.










(e)


Residual value is included in the NPV calculations and corresponds to the difference between depreciated book values at the end of Investment Project. The residual book value amounts to EUR [25-35] million in Poland and to EUR [95-105] million in [country of alternative location outside the EEA] (65), leading to a NPV difference of EUR [63-67] million in favour of [country of alternative location outside the EEA].










(f)


The NPV model contains “Special effect” exclusive to the counterfactual scenario, which includes assumptions regarding additional volumes and respective additional cashflow (recital (64)(g)), and regarding the closure of the plant Niepołomice (recital (64)(i)) considered by the Executive Board, as set out in recital (60).










(g)


In the [country of alternative location outside the EEA] scenario only, the NPV model identifies additional production volume of [10 000 – 15 000] trucks over the period 2023-2030. This additional volume would generate an additional cash flow of EUR [130-170] million in the counterfactual. The Polish authorities have explained that the additional cash flow is based on the following assumptions. Having assessed the market in [country of alternative location outside the EEA] in the period 2019-2020 (66), MAN noticed that manufacturers that have a local production facility in [country of alternative location outside the EEA] (67) have higher market shares compared to the other competitors, as [country of alternative location outside the EEA] customers prefer to buy products that are produced locally. Consequently, MAN assumed that the Investment Project would have enjoyed the same positive impact if carried out in [country of alternative location outside the EEA]. Accordingly, MAN projected its market share growth path in [country of alternative location outside the EEA] over the period 2021-2029 for a scenario in which it has a plant in [alternative location outside the EEA] and for a scenario in which it does not. The former scenario assumed a steady growth achieving a market share of […] by 2029. In contrast, in the latter scenario, the market share of […] % would remain constant through the period. Based on the projected market shares, two production volume scenarios were calculated (volume for the relevant planning round and expected volume), with their difference indicating the additional production volumes for 2021-2029 (68) in [country of alternative location outside the EEA], further adjusted to the period considered by the NPV model (2023-2030). Additionally, MAN assumed that in [country of alternative location outside the EEA], it would have a lower margin of EUR [15 000 – 20 000] per truck, compared to VW’s margin applied in the relevant planning round (EUR [17 500 – 22 500] per truck). This reduced margin accounts for a margin price deterioration (decreasing the margin by EUR [5 000 – 10 000] per truck) and reduced costs of production (increasing the margin by EUR [1 000 – 6 000] per truck) (69). Based on the above assumptions MAN calculated the simulated margin for the relevant planning round and the simulated margin for the expected volume, with their difference indicating the additional cash flow from the additional production volumes.










(h)


With regards to the above assumptions, the Polish authorities also submitted that in their view local production is conducive to lowering selling prices, and while a company that produces abroad can also lower selling prices, it cannot do so to the same extent as a company with a local production. MAN also expected to reduce its selling price in [country of alternative location outside the EEA] only in relation to the cash volume resulting from the additional production, as a result of the reduction of its margin. Poland explained that lowering the selling prices is a common strategy, although, according to the beneficiary, it alone does not fully justify higher market shares of local producers in [country of alternative location outside the EEA].










(i)


The closure of the plant in Niepołomice would have implied additional costs amounting to EUR […] million, incurred only in the [country of alternative location outside the EEA] scenario. Such closure would have involved the sale of a land with a total area of 116 ha, based on the assumptions prevailing at the moment the location decision was taken.










(j)


The NPV model also considers incentives in Poland amounting to EUR [4-7] million and incentives in [country of alternative location outside the EEA] amounting to EUR [250-350] million. The incentives in Poland consist in a R&D support, as amounting to EUR [0.5-1.5] million per year from 2024 until 2030; according to the Polish authorities, the latter would be a tax relief not constituting State aid. (70).










(k)


To substantiate its claims regarding incentives in [country of alternative location outside the EEA], the Polish authorities provided the [year] offers to [entity], which consist of [number] letters from the [country of alternative location outside the EEA]authorities indicating an offer made to the [entity] in [year] for an investment in a large car factory that [entity] had planned to implement in [country of alternative location outside the EEA]. The total support for a [entity] investment of EUR [1 – 2] billion offered in [year] to [entity] amounted to more than EUR [1.5 – 2.5] billion. The Polish authorities have also submitted a guide to available incentives in [country of alternative location outside the EEA] in 2019 prepared by the [country of alternative location outside the EEA] Incentives Office (“Guide”), which sets out a general framework of standardised rules and various types of incentives.










(l)


According to the Polish authorities, [country of alternative location outside the EEA]’s incentive system is built around standardised measures that apply across various sectors, complemented by specific, individually negotiated “super-incentives” designed for high-priority or strategically significant investments. The Polish authorities explain that these super-incentives are not part of the general, standardised incentive framework, but rather are negotiated on a case-by-case basis to suit the specific needs of large-scale, strategically important projects. The Polish authorities further explain that the general framework of incentives sets the baseline for available support, including types of assistance and eligibility criteria, and that the negotiated incentives, such as the [year] offers to [entity], are an extension of the baseline (71), offering more flexibility and allowing for further negotiations. The Polish authorities add that it is through those individual negotiations that the precise terms and intensity of support are determined, forming the super-incentives package. However, the Polish authorities cannot confirm whether specific rules exist to govern such advanced negotiations, as they fall outside the scope of the standardised framework and appear to be the result of ad hoc arrangements. In this context, the estimations for the incentives in [country of alternative location outside the EEA] for MAN’s potential investment were based on the general framework, along with available precedents and assumptions derived from similar cases, such as the [year] offers to [entity]. The estimates included types of support recognised within the framework, which provided a baseline for the estimation. At the same time, given that each type of incentive – the level of support, qualification requirements, and intensity – would likely be subject to individualised negotiations, it was understood that any detailed conditions outlined in standardised schemes would have only limited relevance. Instead, it was expected that the final structure of the package would be shaped by discussions with the [country of alternative location outside the EEA] government, reflecting the specific circumstances of the MAN Group’s investment. The Polish authorities add that the unique and ad hoc nature of the “super-incentives package” meant that the final outcome could not be fully anticipated in advance.










(m)


The Polish authorities claim that the investment of MAN in the counterfactual scenario would meet the criteria for “tailor-made incentives”, which are: a minimum fixed investment amount of [currency of the country of alternative location outside the EEA] […] million (approximately EUR [11.5-15] million) and a focus on the production of strategic, technology-intensive products with high added value, and addressing import dependency or limited local production. The Polish authorities also argue that, given that the project would meet the core thresholds for tailor-made incentives, it was reasonable to assume that it would have qualified for discussions under the broader “super-incentive package”, involving individualised negotiations with the [country of alternative location outside the EEA] government. The Polish authorities explain that the MAN Group considered that the [year] offers to [entity] demonstrated that qualifying for the tailor-made incentives enabled further customised negotiations. Consequently, according to the Polish authorities, MAN could reasonably anticipate that its own project – exceeding the eligibility criteria by a substantial margin – would also receive an offer reflecting both the general framework of the Guide and the additional flexibility demonstrated in the [year] offers to [entity] (72). Thus, MAN’s assumptions for the [country of alternative location outside the EEA] incentives incorporated both the flexibility observed in [entity]’s experience and the principles and criteria outlined in the Guide.










(n)


According to the Polish authorities, this combination of factors allowed for a well-founded projection of the incentives that could realistically be offered to MAN. Accordingly, MAN engaged in internal communication, eventually estimating that the available incentives for the Investment Project in [country of alternative location outside the EEA] would amount to EUR [250-350] million, to be paid from 2021 until 2030. The financial support in country of alternative location outside the EEA] would be composed of several elements: [support related to land] (value: EUR [0-10 million), support for the beneficiary’s energy infrastructural needs (EUR [10-20] million) and reimbursement of its utility costs (EUR [10-20] million), several tax incentives (EUR [10-20] million) and [employment measure 1] (EUR [40-50] million), [employment measure 2] (EUR [0-10] million) and [employment measure 3] (EUR [10-20] million), coverage of certain R&D costs (EUR [0-10] million), a guarantee (EUR [50-60] million), logistics support (EUR [100-110] million) and [production-based support] (EUR [30-40] million).
















(65)


Including all costs and revenues described above, the NPV model shows that the NPV of the Investment Project in Poland, without State aid, is EUR [2.700-3.200] billion. The NPV of the Investment Project in [country of alternative location outside the EEA], including incentives in that location, is EUR [2.700-3.200] billion. The NPV difference between the two location is therefore EUR [28-33] million in favour of [alternative location outside the EEA] (73).












(66)


With State aid in Poland in the amount of EUR 25.4 million, the NPV difference between Poland and [country of alternative location outside the EEA]is reduced to EUR [3-8] million in favour of [alternative location outside the EEA].












(67)


The Polish authorities submit that MAN accepted the remaining difference in order to retain its existing workforce in Poland (in line with MAN Group’s social responsibility policy), so to avoid laying off of employees in Niepołomice (recital (60)).




2.14.   Effects on competition and trade

2.14.1.   Manifest negative effects









(68)


Poland submits that the alternative location of the investment is outside the EEA. Consequently, without aid, the investment would not have been located in an EEA region with a regional aid intensity that is higher or the same as the target region.












(69)


The Polish authorities explained that MAN could not make a declaration on the basis of Article 14(16) GBER 2014 and that this relates to the sale of one of its plants in the EEA in the two years following the aid application, as set out in recitals (25) and (26). However, Poland submits that the aid will not have a manifest negative effect as there is no causal link between the aid and the relocation for the following reasons:






(a)


The sale of the plant and reorganisation within the MAN Group was part of the wider consolidation efforts within the group in the light of the [name of the initiative] and Production Strategy of July 2020, described in recitals (38), (40) and (45). Those efforts were responses to growing trends of CO2 emission reduction already present in the market before 2020. The consolidation would be made (and has in fact been implemented) regardless of any State aid offer from Poland or any other country.










(b)


The consolidation of the truck production to two main centres was a matter of production organisation and the release of capacity at the existing operations in Munich. The main goal was to orient the existing production towards electrically powered vehicles rather than conventional combustion powered ones. The State aid from Poland was a decisive factor in the location decision, but only at the time of choosing between Niepołomice and [alternative location outside the EEA]in order to implement the consolidation strategy (recital (45)), and long after the general decision on the group’s consolidation had been made.










(c)


The Polish authorities furthermore explain that no transfers of existing fixed assets (production lines) were made as part of the planned consolidation of production at certain MAN Group production locations. Currently binding orders will be executed within the capacity of the existing facilities (i.e. MAN will execute new orders as part of the new investment and the new investment will not affect current contracts/orders).










(d)


The Polish authorities also note that MAN intends to create 1 400 new jobs as part of the Investment Project (recital (29(a)). The new jobs created will enable the operation of completely new production lines.










(e)


The Polish authorities further explain that the reorganisation will ultimately not lead to the closure of motor vehicle production in general, but to a change in the production profile at the Munich plant. The number of employees in truck production has remained constant, taking into account the standard turnover due to production fluctuations.










(f)


Concerning the sale of the plant in Steyr, MAN undertook to channel its production orders to the Steyr plant until at least May 2023 to avoid potential downtime and to safeguard jobs. The new owner took over the plant including all employees, rights, and obligations, in order to continue the production of commercial vehicles at the plant under the name “Steyr Automotive GmbH”. Accordingly, the Steyr plant has not been closed down and, to the best of MAN's knowledge, there are no plans to close it.








2.14.2.   Situation of the market









(70)


Poland considers that the Investment Project is a “scenario 2” investment and that the two locations (the selected location in Poland and the alternative location in [country of alternative location outside the EEA]) are located in the same geographical market, the European market.




2.14.2.1.   Product market









(71)


The Polish authorities explained that the activity of the Investment Project falls under NACE code (74) 29.10: manufacture of motor vehicles. The products concerned are trucks.




2.14.2.2.   Geographic market









(72)


The Polish authorities explained that the relevant market for the products from both potential locations of the Investment Project would be the same – the European market (including, [countries included in the geographical market]). It follows that the two considered locations, Poland and [country of alternative location outside the EEA], are located in and serve essentially the same geographic markets. Therefore, the verification of the capacity on the relevant market and its characteristics is not necessary in the present case.




2.15.   Transparency and monitoring









(73)


In accordance with the Transparency Communication (75), Poland indicated that the following information will be published in the EU Transparency Award Module and on the website of the State Aid Monitoring Office: the full text of the individual aid granting decisions and implementing provisions, or a link to it; the identity of the granting authorities; the identity of the individual beneficiary, the aid instrument and amount of aid; the objective of the aid, the date of granting, the type of undertaking; the Commission's aid measure reference number; the region where the beneficiary is located and the principal economic sector of the beneficiary.












(74)


Poland also undertakes to:






(a)


annually submit to the Commission the reports provided for by Article 26 of Council Regulation (EU) 2015/1589 (76); and










(b)


maintain for at least 10 years from the date of award of the aid detailed records containing the information and supporting documentation necessary to establish that all compatibility conditions are met, and provide them, upon written request, to the Commission within a period of 20 working days or such longer period as may be fixed in the request.








3.   ASSESSMENT OF THE MEASURE

3.1.   Existence of aid









(76)


According to Article 107(1) TFEU, “[s]ave as otherwise provided in the Treaties, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market”.












(77)


The qualification of a measure as State aid within the meaning of Article 107(1) TFEU requires the following cumulative conditions to be met: (i) the measure must be imputable to the State and financed through State resources; (ii) the measure must confer an advantage on its recipient; (iii) that advantage must be selective; and (iv) it must distort or threaten to distort competition and affect trade between Member States.












(78)


In the present case, the measure is imputable to the State as it was granted by the Polish authorities and is based on national legal bases adopted by Poland (recitals (16) and (17)). The measure, which takes the form of a direct grant and a CIT exemption, is imputable to the State and it is financed through State resources within the meaning of Article 107(1) TFEU, since it is financed by the general budget of the Polish State (recital (18)).












(79)


As regards the direct grant (recital (15)), the measure provides the beneficiary with an advantage which that beneficiary would normally not have obtained under normal market conditions. As regards the tax benefit (CIT exemption, recital (15)), the measure relieves the beneficiary of costs which that beneficiary would normally have had to bear under normal (corporate) tax rules. Therefore, the beneficiary benefits from an economic advantage over its competitors.












(80)


As regards the direct grant, the Commission regards it as an ad hoc aid for which, as the Court stated, the identification of the economic advantage is, in principle, sufficient to support the presumption that a measure is selective (77). This is so regardless of whether there are operators on the relevant markets that are in a comparable factual and legal situation.












(81)


As regards the CIT exemption, as noted in recital (17)(d), the national legal basis lays down provisions for a scheme under which individual aid awards may be made, without further implementing measures being required, to undertakings defined in a general and abstract manner. The Commission will carry out the selectivity analysis at the level of that scheme. To that end, the Polish authorities submitted the Act of 15 February 1992, on corporate income tax (recital (17)(c)), which is, under Polish law, the general corporate income tax system applicable in Poland to all undertakings. The national legal bases of the scheme derogate from such normal tax system, by allowing a tax exemption capped by the maximum limits in accordance with Polish regional aid map. Such derogation, in the form of a tax exemption, is only available to certain undertakings fulfilling the eligibility criteria laid down in the national legal bases of the scheme. It is therefore not available to other undertakings subject to the corporate income tax. In this context, the Commission thus notes that the scheme differentiates between operators who, in the light of the objective pursued by the corporate income tax system, are in a comparable factual and legal situation. Such differentiation does not flow from the nature or general structure of their tax system. On that basis, the Commission considers that the scheme is selective, and so is the award of individual aid under that scheme to the beneficiary. In light of the above, the aid measure is selective.












(82)


The measure is likely to affect trade between Member States since trade between Member States exists in the trucks sector and the Investment Project concerns the manufacturing and sale of trucks throughout Europe.












(83)


MAN Trucks is an undertaking offering goods on a market where there is competition. As the measure strengthens its competitive position, that measure distorts or threatens to be distort competition.












(84)


Consequently, the Commission considers that the measure constitutes State aid within the meaning of Article 107(1) TFEU. This conclusion is not contested by the Polish authorities.




3.2.   Lawfulness of the measure









(85)


Aid schemes, individual aid granted under aid schemes and ad hoc aid shall be compatible with the internal market within the meaning of Article 107(2) or (3) TFEU and shall be exempted from the notification requirement of Article 108(3) TFEU provided that such aid fulfils all the conditions laid down in Chapter I of the GBER 2014, as well as the specific conditions for the relevant category of aid laid down in Chapter III of the GBER 2014.












(86)


In the present case, the Polish authorities explained that MAN Trucks could not make a declaration on the basis of Article 14(16) GBER 2014 (recital (25)). Therefore, the planned measure cannot be exempted from the notification requirement of Article 108(3) TFEU.












(87)


By making the award of the direct grant and of the CIT exemption conditional upon the Commission’s approval (recitals (16)(a) and (17)(a)), and by having notified the measure, the Polish authorities have respected their obligations under Article 108(3) TFEU in line with Article 3 GBER 2014.




3.3.   Compatibility of the measure with the RAG 2014









(87)


According to Article 107(3), point (a), TFEU, State aid may be considered to be compatible with the internal market if it aims to promote the economic development of areas where the standard of living is abnormally low or where there is serious underemployment.












(88)


In the present case, the measure consists of an ad hoc direct grant and a CIT exemption granted before 31 December 2021 (recitals (16)(a) and (17)(a)). The legal basis for the assessment of both is therefore Article 107(3), point (a), TFEU, as interpreted by the RAG 2014, in accordance with paragraph 188 RAG 2014 and paragraph 197 RAG 2021 (78). The Commission therefore examines the measure in line with Article 107(3), point (a) TFEU by reference to the criteria laid down in the RAG 2014.




3.3.1.   Objective of promoting regional development in an area designated in accordance with Article 107(3), point (a), TFEU

3.3.1.1.   Contribution to regional development and territorial cohesion









(89)


The primary objective of regional aid is the economic development of the EU’s disadvantaged areas. By promoting and facilitating the sustainable development of assisted areas, the aid contributes to the EU’s territorial cohesion policy, which aims to improve economic and social cohesion by reducing disparities in the level of development between areas. Paragraph 40 RAG 2014 lists, on a non-exhaustive basis, a variety of indicators that Member States may use in order to demonstrate the contribution of notifiable individual investment aid to regional development: the number of direct and indirect jobs created, the commitment to enter into widespread training activities to improve the skills of the workers and young people, external economies of scale or other benefits as a result of proximity (clustering effect), technology knowledge spillovers, cooperation with research and knowledge-dissemination organisations and duration of the investment. According to paragraph 39 RAG 2014, Member States must also ensure compliance with Union environmental legislation, including in particular the need to carry out an environmental impact assessment when required by law and ensure all relevant permits. Furthermore, the project must be coherent with and contributes towards the development strategy of the area concerned (paragraph 42 RAG 2014).












(88)


The Małopolskie region is eligible for regional aid pursuant to Article 107(3), point (a), TFEU (recital (4), footnote 3). The Commission takes note of the investment’s positive regional effects, as presented by the Polish authorities (recitals (28) to (30)) and considers those positive effects as credible. Notably, the Commission considers that the direct job creation, the retention and attraction of qualified and skilled workforce in the region, the partnership with local universities and technical schools and the additional sustainability and environmental protection requirements implemented by the Investment Project represent a significant contribution to the development of the area and to the achievement of the Union’s cohesion objective.












(89)


As a rule, an investment can only be considered as a real and sustained contribution to regional development if it is viable. To ensure that the investment concerned is regarded as viable by the beneficiary itself or by third parties, that beneficiary must provide an own contribution of at least 25 % of the eligible costs (79), through its own resources or by external financing, in a form that is free of any public financial support. In addition, the investment (the aided assets) can only be considered to make a real contribution to regional development if it is sustained. That is why it must be maintained in the area concerned for a minimum period of five years (three years for small and medium-sized enterprises) after completion of the investment (80).












(90)


The Commission notes that the beneficiary, which does not qualify as a small or medium-sized enterprise, will contribute at least 25 % of the eligible costs (recital (24)), and commits to maintain the investment for five years after completion of the project in the area concerned (recital (27)).












(91)


The Commission notes the explanations given by the Polish authorities confirming that, upon application to the Mayor of Town and Municipality of Niepołomice, there was no need for conducting an environmental impact assessment of the Investment Project (recital (31)).












(92)


The Commission also notes that the Investment Project contributes toward the realization of the SOR, by increasing the competitiveness of the Polish economy, contributing to the economic development of the region and achieving the specific objectives of point VIII SOR on transport (recital (29)). The Commission further notes that the Investment Project will deliver on the economic, social and sustainability objectives set forth by the Małopolskie region (recitals (29) and (30)), while also meeting all environmental protection requirements under Polish law (recital (30)). The overall development strategy of the area also results from the fact that the Polish authorities have set up and implemented a regional aid scheme under the GBER.












(93)


Based on the above, the Commission preliminarily considers that the aided investment contributes to regional development of the target region.




3.3.1.2.   Incentive effect









(94)


According to section 3.5 of the RAG 2014, regional aid can only be found compatible with the internal market if it has an incentive effect. An incentive effect is present when the aid changes the behaviour of an undertaking in a way that it carries out additional activity contributing to the development of an area that it would not have carried out, or would only have done in a limited or different manner or in another location, if the aid was not granted. The aid must not subsidise the costs of an activity that an undertaking would carry out in any event and must not compensate for the normal business risk of an economic activity.





Formal incentive effect









(95)


According to paragraphs 64 and 65 of the RAG 2014, the formal incentive effect requirement is met if works on an individual investment start only after the application for aid has been submitted. This condition is met in the present case, as the beneficiary applied for aid on 31 May 2021 (direct grant) and 9 June 2021 (CIT exemption), while works on the Investment Project only started on 15 June 2021 (recital (11)).





Substantive incentive effect









(96)


As there are many valid reasons for a company to locate its investment in a certain region, even without any aid being granted, the RAG 2014 require the Commission to verify in detail that the aid is necessary to provide a substantive incentive effect for the investment that can be proven in two possible ways (paragraph 61 RAG 2014), that is to say that the aid: gives an incentive to invest in the area concerned because otherwise the investment would not be sufficiently profitable for the aid beneficiary (scenario 1, investment decision), or gives an incentive to locate the investment in the area concerned rather than elsewhere, because it offsets the net disadvantages and costs of investing in that area (scenario 2, location decision).












(97)


According to paragraph 62 RAG 2014, if the aid does not change the behaviour of the beneficiary by stimulating (additional) investment in the area concerned, it can be considered that the same investment would take place in the region even without the aid. Such aid lacks incentive effect to achieve the regional objective and cannot be approved as compatible with the internal market.












(98)


Therefore, as set out in section 3.5.2 of the RAG 2014, the Member State must provide clear evidence that the aid has an actual impact on the investment choice or on the choice of the investment location. To that end, the Member State must provide not only information concerning the aided project but also a comprehensive description of the counterfactual scenario, in which no aid is awarded to the beneficiary by any public authority in the EEA. The Commission has to verify that these scenarios are realistic and credible. By reference to paragraph 68 of the RAG 2014, a counterfactual scenario is credible if it is genuine and relates to the decision-making factors prevalent at the time of the decision by the aid beneficiary regarding the investment.












(99)


Paragraph 71 of the RAG 2014 indicates that for scenario 2 – which is invoked by the Polish authorities in the present case (recital (36)) – the Member State can prove the incentive effect of the aid by providing the undertaking’s documents showing that a comparison has been made between the costs and benefits of locating the investment in the assisted region concerned and those of locating the investment in an alternative location. It is clear from the Commission’s decision-making practice based on the RAG 2014 (81), that such documents should be contemporaneous to the decision-making process concerning the investment or its location. The Commission verifies whether such comparisons are realistic. For that purpose, paragraph 72 of the RAG 2014 invites the Member State to rely on official board documents, risk assessments (including the assessment of location-specific risks), financial reports, internal business plans, expert opinions and other studies related to the investment project under assessment.












(100)


According to paragraph 74 RAG 2014, if the aid does not change the behaviour of the beneficiary by stimulating (additional) investment in the area concerned, there is no positive effect for the region. Therefore, aid will not be considered compatible with the internal market in cases where it appears that the same investment would take place in the region even without the aid having been granted.












(101)


To verify the viability of the project in a scenario 2 context, all relevant costs and revenues (82) have to be taken into account, with the exception of possible subsidies available in the alternative location, where this alternative location is in the EEA.












(102)


The Commission notes that the Polish authorities submitted information documenting the decision-making process of the MAN Group and the counterfactual scenario ([alternative location outside the EEA], [country of alternative location outside the EEA]). The Commission has to verify if this counterfactual scenario is credible, i.e. that it is genuine and that it relates to the decision-making factors prevalent at the time of the decision by the beneficiary regarding the investment.












(103)


The Commission also notes that the Polish authorities provided company documents showing that a comparison has been made between the costs and benefits of locating the investment in Niepołomice and those in [alternative location outside the EEA]. The Commission has to verify whether such comparisons have a realistic basis.





[country of alternative location outside the EEA]as a credible counterfactual scenario









(104)


The Commission takes note that the Polish authorities provided documentary evidence that is contemporaneous to the location decision adopted by the Executive Board of MAN Trucks & Bus of 29 March 2021. The final location decision reaffirmed the decision of 8 February 2021 by concluding that Poland was the better option, and it confirmed that the Board was permitted to take the location decision without requiring any change or amendment to it. According to that evidence, the authenticity of which the Commission does not contest, the Board compared the two sites of Niepołomice and [alternative location outside the EEA], considered the respective financial data (NPV comparisons) as well as other criteria relevant for the location decision (recitals (60) and (61)).












(105)


For the reasons mentioned above (recital (98)), the Commission needs to assess whether the counterfactual scenario is realistic and credible. If it is not, this would mean that the aid beneficiary did not actually consider the counterfactual scenario (in the present case, [alternative location outside the EEA]) as a real alternative and the aid would therefore not change the behaviour of the beneficiary (recital (94)).












(106)


Based on the information available to it, the Commission expresses doubts that [country of alternative location outside the EEA] was a realistic and credible counterfactual location in which, in the absence of the aid from Poland, the Investment Project would have taken place. The Commission’s concerns about [country of alternative location outside the EEA] constituting a genuine counterfactual relating to the decision-making factors prevalent at the time of the final location decision stem from various factors described below.





Pre-selection phase









(107)


The Commission considers that the initial policy documents provided as evidence of the group strategy in 2020, the description of the decisions concerning the reorganisation (recital (42)(a) and (42)(b)) and the course of action taken by the MAN Group in the preliminary phase (the [name of the initiative] and Production Strategy, recitals (40), (41) and (45)) do not support the Polish authorities’ argument that [country of alternative location outside the EEA]was considered a genuine counterfactual, as those documents lay down high-level considerations that would serve as a basis for the consolidation of MAN Group’s production and related strategic decisions of the group; they were not meant to address concrete reorganisation plans and options for locations. Such documents therefore provide support only on the overall objectives (for example, CO2 reduction) explaining the reason for a global reorganisation of the company, but, as Poland does not contest, they do not support any finding on the assessment of an alternative investment in [country of alternative location outside the EEA], as this was not their objective.












(108)


The Polish authorities also argue that the company decided to depart from its standard procedure for investments, such as the present one, contained in the MAN Guidelines and to entrust the decision-making process to MAN Trucks & Bus rather than MAN SE. The Commission notes that such a decision is supported by no contemporaneous evidence.












(109)


Furthermore, the Polish authorities outlined the steps leading to the final location decision. According to the Polish authorities, upon deciding to invest in conventional trucks production, the MAN Group considered [information about potential locations during pre-selection] as potential sites for expanding its conventional trucks production capacity. The Polish authorities clarified that, during this “pre-selection” phase, the MAN Group considered [5-15 locations] [other information about potential locations during pre-selection]. The Polish authorities also explained that those locations were scored on general technical parameters well-known to the Executive Board, thus eliminating the need for complex documentation for this assessment.












(110)


However, the Commission observes that, despite repeated requests for information, the Polish authorities have not provided contemporaneous documentary evidence to support the initial assessment of [country of alternative location outside the EEA] and Niepołomice as potential locations (pre-selection), (recitals (42)(c) and (46) to (51)) other than screenshots of calendar entries of meetings (recital (49)), which would allow the Commission to assess and conclude on the credibility of the counterfactual location.












(111)


More concretely, the Polish authorities did not provide genuine contemporaneous documents regarding the review of […] locations described in recitals (46), (50) and (51) (pre-selection phase) or the criteria used for such an assessment. The general technical criteria allegedly applied at this stage of the decision-making process are only reflected in an evaluation grid prepared by the Polish authorities after the final location decision, for the notification of the measure. Setting aside the evidential value of such an ex post document, the Commission notes certain inconsistencies between the pre-selection assessment reflected by the evaluation grid, the Polish authorities’ description, and the Executive Board’s decisions.












(112)


Furthermore, in their description of the decision-making process, the Polish authorities initially explained that pre-selection criteria excluded financial considerations (recitals (46) and (47)). The evaluation grid however refers to “cost efficiency” (83) (recital (50)). Additionally, the Polish authorities explained that Niepołomice was an obvious choice for various reasons which include factors such as “social responsibility” and “CO2 neutrality” (recital (47)), which were not included in the evaluation grid. While the Polish authorities originally described the rationale for selecting [alternative location outside the EEA]and Niepołomice for a more detailed evaluation was based solely on the factors mentioned in recital (48), the evaluation grid indicates that both [alternative location outside the EEA] and Niepołomice were chosen due to “land availability” (expansion potential). The Polish authorities explained that this criterion emerged as the most decisive parameter, with ultimately only Niepołomice and [alternative location outside the EEA] meeting it and thus being selected for further consideration (recital (51)).












(113)


Concerning the fulfilment of the land availability criterion, the Commission notes that the Polish authorities highlighted the importance of such a criterion in the pre-selection phase. According to those authorities, it is precisely that criterion that has eliminated all locations except Niepołomice and [alternative location outside the EEA]. However, based on the information provided, the land available in [alternative location outside the EEA] at the time of the pre-selection, as explained by the Polish authorities, covered a total area of 30 ha (recital (51)). This area is significantly smaller than the land occupied by the Niepołomice site even prior expansion (72-hectares, and 116 ha after expansion) (recitals (9) and (64)(i)), thereby questioning the reality of the counterfactual investment in [country of alternative location outside the EEA]. Although the Polish authorities indicated the availability of possible further expansion of the land in [alternative location outside the EEA], they have not provided evidence to support this claim. The Commission also notes that there was no contact initiated with the local municipality in [alternative location outside the EEA].












(114)


Considering the above, it is unclear to the Commission which criteria or parameters were deemed decisive at the pre-selection stage of the decision-making process, and precisely which criteria led to the pre-selection of [alternative location outside the EEA] and Niepołomice. The Commission therefore currently cannot confirm that the pre-selection, as described by the Polish authorities, took place, and even assuming it did, the Commission cannot confirm why [alternative location outside the EEA] was chosen. The Commission therefore doubts that [country of alternative location outside the EEA] was a realistic and credible alternative.





Comparison of [alternative location outside the EEA] and Niepołomice









(115)


In the phase of comparison of [alternative location outside the EEA and Niepołomice, the two locations were financially compared, relying on the internal expertise from employees in [country of alternative location outside the EEA] (recitals (56), (58) and (59)). The Polish authorities confirmed that no contacts were made with [country of alternative location outside the EEA]authorities about the alternative scenario, as, in light of [previous project for which incentives offer was presented by the authorities of the country of alternative location outside EEA], it was expected that the [group’s expectation regarding country of alternative location outside the EEA] (recital (55)). Instead, the MAN Group decided to use the [year] offers to [entity] as a benchmark to estimate potential incentives in [country of alternative location outside the EEA]and calculate the NPV gap for the location decision (recitals (56) and (57)).












(116)


The Commission, however, notes the limited contemporaneous evidence documenting the comparison phase (recitals (54) to (56)) until the decision of 8 February 2021. In particular, the Commission notes the Polish authorities’ confirmation of absence of contacts with the [authorities of the country of alternative location outside the EEA]and of the absence of contemporaneous documentation on the decision to take such a course of action (recital (57)). On the one hand, the Polish authorities explained that it was not considered critical to demand written documents from the [authorities of the country of alternative location outside the EEA]to assess the feasibility of obtaining incentives for the Investment Project (recital (55)). However, on the other hand the Commission notes that the MAN Group, based on the [previous project for which incentives offer was presented by the authorities of the country of alternative location outside EEA], was fully aware that, for an ad hoc tailor-made incentive package, negotiations with the [authorities of the country of alternative location outside the EEA]were needed, but nonetheless chose to assume such an incentives package without negotiations with the authorities. Based on the above, the Commission therefore doubts that the comparison between [alternative location outside the EEA]and Niepołomice actually reflects a credible and realistic consideration of [alternative location outside the EEA] as an alternative location. In addition, since the MAN Group claims that negotiations with the [country of alternative location outside the EEA] authorities may have a significant impact on the amount of support provided, the fact that it nevertheless decided not to engage into any discussions with them can further suggest that the MAN Group gave no serious consideration to the location in [alternative location outside the EEA]. If there was a realistic potential to increase the incentive package significantly through negotiations, such increase could have had a substantial impact on the project’s profitability, going potentially far beyond the impact of the EUR 25.4 million aid offered by the Polish authorities. In those circumstances, the choice made by the MAN Group to nonetheless select the Polish location without verifying the amount of incentives available in [country of alternative location outside the EEA] could suggest that Niepołomice was in reality selected regardless of the financial impact of either the aid from the Polish authorities or of any incentives available in [country of alternative location outside the EEA].












(117)


In addition, the Commission notes that the Polish authorities have endeavoured to explain the absence of contemporaneous evidence. First, the Polish authorities explain that the general technical criteria and the parameters of […] locations were common knowledge within the MAN Group, and that no written documentation was required or produced in this stage. The Commission however considers that such an explanation does not appear to be consistent with the significance of the investment at stake, which was part of the overall reorganisation plan of the company. In addition, the Commission understands from further clarification provided by the Polish authorities that some assessment of the criteria must have occurred (recitals (50) and (51)). If some information may indeed form part of the personal knowledge of the relevant managers in charge, this would not appear to be the case for all elements (such as the availability of a piece of land that would be suitable for the counterfactual).












(118)


Second, the Polish authorities also explain the lack of contemporaneous evidence by the high degree of confidentiality surrounding the Investment Project. However, the Commission considers that the example of a non-disclosure agreement provided by the Polish authorities cannot justify the lack of documentation, as it only emphasises general confidentiality obligations, such as non-disclosure of information, normally arising from employment relations, with regard to [name of the initiative].












(119)


Finally, the Commission notes that the Polish authorities have submitted ex post testimonies of employees of the MAN Group (footnote 53). In this respect, the Commission recalls that, in line with its case practice (recital (99)), its decision has to be based on contemporaneous documents (recital (99)). Leaving aside the probative value of such ex post documents, the Commission also notes that the testimonies contained therein do not dispel its concerns. Concretely, with regard to the testimony on the decision-making process, the Commission deems that it does not provide evidence of the pre-selection phase or detail why [alternative location outside the EEA] was selected as an alternative, which would be important for demonstrating that it was genuinely considered as an option.





Comparison of Poland and [country of alternative location outside the EEA] involving incentives from [country of alternative location outside the EEA]









(120)


Even if the counterfactual scenario proved to be genuine, the Commission doubts that the comparison of Poland and [alternative location outside the EEA] had a realistic basis, considering that the Polish authorities have not proven the availability or the specific amount of the expected [country of alternative location outside the EEA] incentives used in the NPV calculations comparing the two investment locations.












(121)


To evidence the availability of [country of alternative location outside the EEA]incentives for the counterfactual investment, the Polish authorities submitted the Guide (a general framework for incentives available in [country of alternative location outside the EEA]) and the [year] offers to [entity] (as past precedent) (recital (64)(k)). The Commission, however, considers that those documents do not demonstrate that incentives in [country of alternative location outside the EEA] can be obtained automatically without the discretion of authorities, or that the grant of such incentives in the exercise of the [authorities of the country of alternative location outside the EEA]’ discretion could be realistically assumed, for the reasons outlined below.












(122)


Firstly, the Commission finds the Polish authorities’ argument – that the counterfactual investment would qualify for ‘tailor-made incentive’ (84) under the general framework of [country of alternative location outside the EEA] incentives and meet the relevant eligibility criteria for such incentive to be unsubstantiated. Contrary to what the Polish authorities claim (recital (64)(l)), only the quantifiable eligibility criterion (a required minimum fixed investment amount) can be ascertained. The Commission preliminarily considers that the qualitative eligibility criterion (85) necessitate an individual assessment by the [authorities of the country of alternative location outside the EEA]and could not be independently established in a sufficiently certain way by the MAN Group in the absence of further specification of the criterion or guidance from the authorities. The Commission deems that what is considered to be ‘strategic products’ is to be decided by the relevant authorities. The Commission has no records of any clarification on such products neither in the Guide, nor by the Polish authorities. The Polish authorities also did not explain why, concretely, the production of conventional trucks can be considered as a technology-intensive, high-added value and not locally produced or locally produced at low quantities, and how it compares to past examples of supported investments listed by the Guide (for example, carbon fiber, solar panel, aluminum flat or polypropylene production). Additionally, the Guide outlines some maximum amounts of and duration of support, highlighting the discretionary power of the authorities not only in determining investment eligibility but also in deciding the level and length of support.












(123)


Secondly, the Polish authorities argue that the [year] offers to [entity] serve as a benchmark for estimating the [country of alternative location outside the EEA] incentives for the investment in the counterfactual scenario. They also highlight that qualifying for the tailor-made incentives allows for further customised negotiations. Consequently, according to the Polish authorities, MAN could reasonably expect that its own project would also receive an offer that reflects both the general framework of the Guide and the additional flexibility demonstrated in the [year] offers to [entity] (recital (64)(m)). However, the Commission considers that the [year] offers to [entity] alone cannot provide sufficient grounds for such expectations. The Commission understands from the wording of the [year] offers to [entity] that such offers reflected the [country of alternative location outside the EEA] authorities’ willingness to enhance the standard level of support in that particular case. The Commission concludes from the [year] offers to [entity] that in [entity]’s case, [country of alternative location outside the EEA] was actively considered as a potential location, and [entity] provided detailed information about various aspects of the planned investment, allowing the authorities to adjust their incentives offer accordingly.












(124)


The Commission questions whether the [year] offers to [entity] can reasonably serve as a generally applicable benchmark for the [country of alternative location outside the EEA] incentives in the counterfactual scenario. The offers were bilaterally negotiated ad hoc incentive offers, specifically tailored to [entity]’s needs and circumstances at the time (recital (54)). The documents submitted by the Polish authorities do not to establish that the same offer or degree of flexibility would be extended to MAN’s investment in the counterfactual scenario. The [year] offers to [entity] were intended for a [investment] investment, which significantly differs from the smaller-scale investment in a different sector (trucks) that MAN anticipated. There is no evidence to suggest that the [country of alternative location outside the EEA] authorities would be inclined to provide the same level of support for a smaller investment. Additionally, the [previous project for which incentives offer was presented by the authorities of the country of alternative location was intended to be located in a less developed region which, according to the Guide, would have had more support options available compared to the most developed regions, such as the counterfactual location, [alternative location outside the EEA]. In addition, it does not appear realistic to assume a certain level of public support – in circumstances where the size, duration and type of the incentives can vary significantly depending on the grantor’s discretion – solely on the basis of a single instance where the Group managed to negotiate a certain incentive package. Even assuming that the incentives could be accurately adjusted and proportioned to the counterfactual investment by MAN’s experienced employees (recital (59)), it cannot be concluded that the same approach and flexibility, rendering the adjustments correct, would have been applied by the authorities in years following the [year] offers to [entity], given the ad hoc and negotiated nature of the incentives and, lack of clear rules governing such negotiations, as well as other contextual factors that could have influenced the authorities. Indeed, as the Polish authorities noted in their response to requests for information, the ‘unique’ and ‘ad hoc nature’ of the ‘super-incentives’ means that the final incentive amount cannot be fully anticipated in advance (recital (64)(l)).












(125)


Consequently, the Commission preliminarily considers that the availability of the [country of alternative location outside the EEA] incentives (in the absence of an offer, memorandum or other, even, informal evidence) has not been substantiated and is thus questionable in the first place.












(126)


The Commission considers this as a relevant element for evidencing a realistic comparison in accordance with paragraph 71 RAG 2014. Absent the incentives in [country of alternative location outside the EEA] (or even absent a very small share of these incentives, i.e. below 10 % of their purported value), the Investment Project in Niepołomice would be more profitable than in [alternative location outside the EEA], thus calling into question the incentive effect of the State aid. By contrast, if the incentives available in [country of alternative location outside the EEA] had had a real potential to grow significantly as a result of negotiations with the [authorities of the country of alternative location outside the EEA], they would have made the Investment Project substantially more profitable in [alternative location outside the EEA]than in Niepołomice, whether or not Poland offered the EUR 25.4 million aid to support it. According to the Polish authorities, the decision-makers simply abandoned such prospect of increasing the project’s profitability (86), but at the same time considered the relatively modest support from the Polish authorities as decisive for the location choice. The Commission has doubts as to whether such an approach can be considered realistic.












(127)


In this context, the Commission notes that the level of evidence to prove a subsidy offer in the alternative location is not specified in the RAG 2014. Although aid beneficiaries are generally able to provide a concrete offer from a third country, the Commission accepted an oral offer considering circumstantial credible evidence provided by the beneficiary confirming the existence of contacts with the relevant authorities and the credibility of the alleged financial support (87). That oral offer was subsequently formalised, which further corroborated the reality of the offer. However, in the case at hand, no offer was ever sought and no contacts were made with the [authorities of the country of alternative location outside the EEA]. In its case practice, the Commission also considered that, where a subsidy presents the characteristics of an automatic payment, it is not necessary to bring evidence of an offer by the relevant authorities; it may be sufficient for the beneficiary to provide calculations, supported by a confirmation by an independent expert, that the calculations (and the factors on which they are based) are credible (88).












(128)


However, in the present case, Poland has not provided evidence confirming that any [country of alternative location outside the EEA] incentive would be automatic. To the contrary, in the Commission’s preliminary views, the evidence provided by Poland in relation to the [year] offers to [entity] and the Guide show that the provision of incentives is subject to the discretion of authorities and is adjusted for the project at the given time.












(129)


In the light of all the factors assessed above collectively, the Commission cannot conclusively determine that [alternative location outside the EEA] was a credible and realistic alternative location in which, in the absence of the State aid by Poland, the Investment Project would have taken place.












(130)


Lastly, leaving aside the probative value of the testimony concerning the [country of alternative location outside the EEA] incentives (footnote 53), the Commission notes that it does not dispel its concerns regarding the availability of [country of alternative location outside the EEA] incentives or regarding their availability in the amount claimed. Concretely, the testimony does not prove that such incentives are automatic or available without the State’s discretion. In contrast, as it mentions the existence if an application procedure and authority evaluation (footnote 53), it confirms the Commission’s understanding that they are subject to an application procedure involving a state authority evaluation of various criteria, and possible requests for information or dialogue with the relevant authority.





Conclusion on the presence of incentive effect









(131)


The Commission considers that the formal incentive effect criterion is met in the case at hand (see recital (95)). By way of contrast, for the reasons expressed in recitals (96) to (128), at this stage, the Commission has doubts as to the credibility of the counterfactual scenario submitted by Poland and on whether a substantive incentive effect was present. The Commission invites Poland to submit further authentic and contemporary evidence and to provide further explanations on the elements raised above. The Commission calls upon interested parties to comment on the doubts raised by the Commission on the substantive incentive effect of the aid.




3.3.2.   Eligibility of the Investment Project









(132)


Pursuant to paragraph 34 of the RAG 2014, ‘initial investments’ of large undertakings (such as the beneficiary) in ‘a’ areas may benefit from regional investment aid.












(133)


The Investment Project is carried out by a large undertaking (the beneficiary) in an ‘a’ area (recital (5)).












(134)


The Investment Project concerns the ‘setting-up of a new establishment’, which is an ‘initial investment’ pursuant to paragraph 20, point (h)(a), of the RAG 2014. The Investment Project, as an ‘initial investment’ with eligible costs exceeding EUR 50 million (recital (13)), qualifies as a ‘large investment project’ pursuant to paragraph 20, point (l), of the RAG 2014.












(135)


The Commission thus preliminarily concludes that the Investment Project is eligible for regional investment aid, which means regional aid can be granted provided all compatibility conditions are met.












(136)


In accordance with paragraph 20, point (e), of the RAG 2014, and within the limits defined in that paragraph, the costs for new assets for the beneficiary’s Investment Project (see recitals (14)) are, in the Commission’s preliminary view, eligible for regional aid.




3.3.3.   Need for State intervention









(137)


According to section 3.3 of the RAG 2014, in order to assess whether State aid is necessary to promote regional development, it is necessary to first diagnose the problem to be addressed. State aid should be targeted towards situations where aid can bring about a material improvement that the market cannot deliver itself.












(138)


As established in paragraph 49 of the RAG 2014, State intervention is considered necessary for the development of the areas included in the regional aid map. The Commission notes that the NUTS 2 region of PL21 Małopolskie (in which Niepołomice is located), is eligible for regional aid pursuant to Article 107(3)(a) TFEU under the regional aid map 2014-2020 for Poland, so that there is a need for State intervention.












(139)


On this basis, the Commission preliminarily concludes that there is a need for State intervention.




3.3.4.   Appropriateness of the measure









(140)


According to paragraph 50 of the RAG 2014, the notified aid measure must be an appropriate policy instrument to promote regional development. The RAG 2014 underline that an aid measure will not be considered compatible if other less distortive policy instruments or other less distortive types of aid instruments are available. Section 3.4 of the RAG 2014 therefore introduces a double appropriateness test. Under the first appropriateness test, Member States in particular have to identify the bottlenecks to regional development and the specific handicaps of firms operating in the target region, and to clarify to what extent bottlenecks to regional development could also successfully be targeted by non-aid measures. Under the second appropriateness test, the Member State has to indicate why – in view of the individual merits of the case – the chosen form of regional investment aid is the best instrument to influence the investment or location decision.












(141)


The Polish authorities justify the appropriateness of the aid (recitals (32) to (34)) in light of the macroeconomic need of State aid for large investment projects in order to stimulate economic development at the regional level and of the necessity to bridge the NPV gap between the alternative location and Niepołomice.












(142)


As regards the first test, of whether State aid is an appropriate policy instrument to achieve the development sought, the Commission notes that the hardship of the PL21 Małopolskie region in general is confirmed by its status as a region eligible for regional aid in accordance with Article 107(3), point (a), TFEU. With a gross domestic product per capita of 51,33 % of the EU average according to the RAG 2014 (89), the region was identified amongst the disadvantaged regions of the EU. The Commission considers that infrastructural developments and other general measures alone are insufficient to reduce the given regional disparities. In this kind of economic situation, State aid has already been acknowledged by the Commission’s case practice as an appropriate means to address the economic shortcomings (e.g. in the Toray (90) and Mondi SCP (91) decisions).












(143)


As regards the question whether the measure constitutes an appropriate aid instrument, the Polish authorities argue that an investment aid in the form of a direct pecuniary advantage (a combination of direct grant and tax exemption) is necessary to incentivise the beneficiary to carry out the investment in Poland rather than in the alternative counterfactual location in [country of alternative location outside the EEA]. The Commission considers that, as argued by the Polish authorities and in line with previous Commission practice (92), other forms of aid, e.g. guarantees or soft loans, would be insufficient to bridge the NPV gap between the two alternative investment locations, and thereby offer the necessary incentive to attract the investment to the ‘a’ area in question (assuming that the aid indeed operates as an incentive, which is a separate question with respect to which the Commission has doubts). Conversely, the Commission accepts that the chosen aid package constitutes an adequate combination of aid instruments to achieve the desired objective, namely to provide the amount of aid necessary to bridge the viability gap between the locations in Poland and [country of alternative location outside the EEA]. The aid in the form of grant is appropriate, given the significant upfront capital expenditure required for such a project, while the investment is not yet being profitable. The aid in the form of tax exemption is an appropriate aid instrument to bridge the viability gap to render the investment project sufficiently profitable, while linking the benefit of aid to the revenues actually generated by the investment once effective as the tax exemption can only be utilised once the investment generates taxable profit.












(144)


On those grounds, the Commission preliminarily accepts that the regional investment aid measure provided in the form of a direct grant combined with a tax exemption represents an appropriate form of support to achieve the cohesion objective for the area concerned.




3.3.5.   Proportionality of the aid amount









(145)


According to section 3.6 of the RAG 2014, the aid amount must be limited to the minimum needed to induce the additional investment or activity in the area concerned. Therefore, the assessment of the proportionality of the aid amount can only be carried out once the counterfactual scenario has been established as credible.












(146)


For scenario 2 situations, according to paragraph 106 of the RAG 2014, the Member State must demonstrate the proportionality on the basis of documentation such as that referred to in paragraph 72 of the RAG 2014.












(147)


As a general rule, notified individual aid will be considered to be limited to the minimum, if the aid amount does not exceed the net extra costs of implementing the investment in the area concerned, compared to the counterfactual scenario in the absence of aid. Pursuant to paragraph 80 of the RAG 2014, in scenario 2 situations (location incentives), the aid amount should not exceed the difference between the NPV of the investment in the target area and the NPV of the investment in the alternative location, while taking into account all relevant costs and benefits.












(148)


As a preliminary observation, the Commission recalls that, at the present stage of the procedure, it harbours doubts as to the credibility of the counterfactual scenario that the Polish authorities have put forward and claimed incentive effect of the aid on that basis (recital (131)). Therefore, at this stage, the Commission takes the view that it cannot conclude on the proportionality of the aid amount as the aid is to be assessed in light of the extra costs of implementing the investment in the area concerned compared to the counterfactual scenario in the absence of aid.












(149)


Nevertheless, subject to that reservation, the Commission preliminarily considers that the aid intensity and the aid amount do not exceed the permissible adjusted aid intensity and the adjusted aid amount (recital (20)), calculated on the basis of eligible expenditure (93), that is, new assets and excluding leasing costs. The Polish authorities also confirmed that the cumulation of the measure with other aid (94) is excluded (recital (23)).












(150)


Even if the counterfactual scenario were considered to be credible, the Commission raises questions as to whether the aid corresponds to the net-extra costs of investing in the area concerned, compared to the counterfactual in the absence of aid. The Commission notes that the additional production volumes of [10 000 – 15 000] trucks over the period 2023-2030 allegedly identified for the [country of alternative location outside the EEA] scenario only, which would generate an additional cash flow of EUR [130 – 170] million, have not been fully substantiated as regards the existence of direct causation between the local presence in [country of alternative location outside the EEA] and the possibility to achieve a higher market share as an exclusive result of that local presence (recitals (64)(g) and (64)(h)).












(151)


In particular, although the Polish authorities have maintained that local production is conducive to lowering selling prices, and that a company that produces abroad can also lower selling prices, they have not sufficiently substantiated the assumption that local producers would gain a larger market share, which would result in larger sales volumes, and would thus achieve additional profit from such sales. Given the lack of sufficient evidence, at the present stage of the procedure, the Commission considers that the alleged larger sales volumes by local manufacturers are based on correlation rather than cause and effect.












(152)


The Commission doubts the impact that establishing a local production facility in [country of alternative location outside the EEA] has on the final sales price that local manufacturers can apply to their customers (recitals (64)(g) and (64)(h)). In particular, the Commission doubts that higher sales price are linked exclusively to the local presence in [country of alternative location outside the EEA], and that, as a consequence, the same higher prices cannot be applied also in other jurisdictions where MAN has local production facilities (notably, also in Poland). In that regard, the Commission cannot exclude the possibility, at the present stage of the procedure, that MAN could capture only part, if any, of that additional potential cash flow in the counterfactual scenario. Given that the notified aid is less than 20 % of those additional cash flows forecasted in the counterfactual scenario, any significant deviations from the forecast could call into question the proportionality of, and even any substantial incentive effect, of the aid.












(153)


In addition, given its doubts about the availability of the [country of alternative location outside the EEA] incentives or their availability in the amount ascertained by the MAN Group (recitals (122) -(125)), the Commission questions the amount of [country of alternative location outside the EEA] incentives considered in the NPV of the counterfactual scenario. Notably, the uncertainty of a negotiated offer similar to the [year] offers to [entity], makes the Commission question whether the MAN Group could involve, in the calculation of the [country of alternative location outside the EEA] incentives, the same incentive elements made available to [entity] in the [year] offers to [entity]. Due to the assumed discretionary power of the granting authorities, the Commission also questions whether the MAN Group was correct to apply in their calculation the maximum amounts per incentive element of a tailor-made incentive according to the Guide (recitals (59), (64)(j) and (64)(n).












(154)


For the reasons set out above, the Commission cannot conclude on the proportionality of the aid amount in light of the counterfactual scenario submitted and of the additional cash flows related to increased production volumes forecasted in the counterfactual scenario. The Commission calls for comments from interested parties and in particular invites Poland to further substantiate the cash flow forecasts linked to such additional production volumes, both in terms of the plausibility and in terms of the size of such volumes.




3.3.6.   Avoidance of undue negative effects on competition and trade









(155)


The Commission further analysed whether the aid has undue negative effects on competition and trade. Section 3.7.2 of the RAG 2014 explicitly lists a series of situations where the negative effects on trade and/or competition are unlikely to outweigh any positive effects that a regional aid measure might have.




3.3.6.1.   No manifest negative effect on trade: Adjusted aid intensity ceiling is not exceeded









(156)


A manifest negative effect would exist, according to paragraph 119 of the RAG 2014, where the proposed aid amount exceeds, compared to the eligible (standardised) investment expenditure (95), the maximum (adjusted) aid intensity ceiling that applies for a project of the given size, taking into account the required ‘progressive scaling down’ (96). As assessed in recital (149), the aid amount does not exceed the maximum aid intensity as established in the applicable regional aid map.












(157)


The Commission therefore preliminary concludes that there is no manifest negative effect in that regard.




3.3.6.2.   No manifest negative effect on trade: Aid does not create overcapacity in a market in absolute decline









(158)


According to paragraph 120 of the RAG 2014, a manifest negative effect arises also where the investment aid creates capacity in a market in absolute decline, as such aid is likely to crowd out competitors, or to prevent low-cost firms from entering, and risks weakening incentives for competitors to innovate. This results in inefficient market structures, which are also harmful to consumers in the long run.












(159)


This verification is however only necessary where the aid creates additional capacity on the relevant geographical market. Where the investment would have happened in any event (‘scenario 2’) in the same geographical market, the aid – provided it is limited to the minimum necessary to change the location decision – influences only the location decision, and additional capacity would have come on the relevant geographical market in any event (whatever the location). Therefore, this verification will normally be required only in ‘scenario 1’ situations (97) or in those ‘scenario 2’ situations where the alternative locations (i.e. the target region and the more viable region for the implementation of the investment project) are situated in different geographical markets (98).












(160)


In order to determine whether this verification is necessary in the case at hand, being a ‘scenario 2’ situation, the Commission has to assess and establish whether the two alternative locations are situated in different geographical markets. Only in that case does the ‘overcapacity in a declining market’ test need to be carried out.












(161)


To determine whether the two alternative locations are situated in different geographical markets, the relevant product market needs to be defined.





Product concerned and relevant product market









(162)


The product concerned is normally the product covered by the investment project. However, when the project concerns an intermediate product and a significant part of the output is not sold on the market, the product concerned may be the downstream product (99). In the case at hand, the products concerned by the Investment Project are trucks (recital (71)), which are sold as final products directly to customers.





Relevant geographical market









(163)


Poland confirmed that the two locations would target the same geographical markets. Based on the information submitted by the Polish authorities, the Commission has no reasons to call that assumption into question. Possible outcomes in terms of overcapacity or substantial market power are, therefore, in principle, likely to be the same regardless of the aid. The Commission therefore preliminarily concludes that, if the incentive effect of the aid is established during the formal investigation procedure, the overcapacity in a market in absolute decline test does not have to be carried out.




3.3.6.3.   No manifest negative effect on trade: No counter-cohesion effect









(164)


Paragraphs 121 and 139 of the RAG 2014 prohibit an EEA region with a lower project-specific viability from participating in ‘subsidy races’ to the detriment of equally weak or worse-off regions (100).












(165)


Poland submits that in the final decision-making process only one other alternative location not located in the EEA was considered for the Investment Project.












(166)


The Commission therefore preliminarily considers that the measure has no counter-cohesion effect.




3.3.6.4.   No manifest negative effect on trade: No relocation









(167)


Pursuant to paragraph 122 of the RAG 2014, where the beneficiary has concrete plans to close down, or actually closes down the same or a similar activity in another area in the EEA and relocates that activity to the target area, if there is a causal link between the aid and the relocation, this will constitute a negative effect that is unlikely to be compensated by any positive elements.












(168)


The Polish authorities explained that MAN could not make a declaration on the basis of Article 14(16) GBER 2014 and that this relates to the closure of one of its plants in the EEA in the two years following the aid application (recital (25)).












(169)


Poland has explained that the aid will not have a manifest negative effect as there is no causal link between the aid and the relocation for the reasons stated in recital (69).












(170)


The Commission notes the argument raised by Poland (recital (69)), according to which the aid only changed the location of the investment, i.e. incentivised the beneficiary to locate the investment in Poland instead of [country of alternative location outside the EEA], but did not impact the investment decision itself. The Commission notes that the investment itself is part of a larger reorganisation of the beneficiary that is independent from the aid and that the aid, assuming its incentive effect is proven, would only affect the location decision. This by itself would exclude the causal link between the aid and the relevant relocations. The Commission therefore preliminarily concludes that, if the incentive effect of the aid is confirmed after the formal investigation, there would be no causal link between the aid and the relocation.




3.3.6.5.   Conclusion on the avoidance of undue negative effects on competition and trade









(171)


In view of the above, the Commission considers that the aid as such does not trigger undue negative effects on competition and trade within the meaning of section 3.7.2 of the RAG 2014.




3.3.7.   Balancing of positive and negative effects of the aid









(172)


For the aid to be compatible, the negative effects of the aid measure in terms of distortions of competition and impact on trade between Member States must be limited and must not outweigh the positive effects of the aid to an extent that would be contrary to the common interest.












(173)


The Commission considers that if it transpires that the measure has incentive effect and is proportionate, it is unlikely to generate undue negative effects on competition, notably as the two alternative locations are not situated in different geographical markets and therefore possible outcomes in terms of overcapacity or market power would, in principle, be the same regardless of the aid. Furthermore, the measure does not have manifest negative effects on trade. In particular, the measure as such is unlikely to generate anti-cohesion effects and there is no causal link between the measure and the closure of activities elsewhere.












(174)


However, the Commission could not conclude at this point on the positive effects of the aid in view of the doubts expressed in connection with the incentive effect. Furthermore, the Commission expressed doubts on the proportionality of the measure. Since all of those elements need to be taken into account in the balancing test, the Commission is not in a position at this stage to perform such balancing.




3.3.8.   Transparency









(175)


In view of the Commission’s Transparency Communication, the Polish authorities confirmed (recital (73)) that the following information will be published in the EU Transparency Award Module and in the website of the State Aid Monitoring Office: the full text of the approved individual aid granting decision and its implementing provisions, or a link to it; the identity of the granting authority/(ies); the identity of the individual beneficiary, the aid instrument and amount of aid granted to the beneficiary; the objective of the aid, the date of granting, the type of undertaking; the Commission's aid measure reference number; the region where the beneficiary is located (at NUTS level 2) and the principal economic sector of the beneficiary (at NACE group level).












(176)


The Polish authorities also confirmed (recital (74)) that this information will be published after the granting decision has been taken, will be kept for at least 10 years and will be available for the general public without restrictions.












(177)


On this basis, the Commission preliminarily concludes that the aid complies with the transparency provisions of section 3.8 of the RAG 2014.




3.3.9.   No relevant breach of EU law









(178)


It does not result from the notification that the aid or the conditions attached to it, or the economic activities facilitated by the aid, could entail a violation of a relevant provision of Union law (101). In particular, the Commission has not sent a reasoned opinion to Polish on a possible infringement of Union law that would bear a relation to this case and the Commission has not received any complaints or information that might suggest that the State aid, the conditions attached to it or the economic activities facilitated by the aid might be contrary to relevant provisions of Union law.




3.4.   Doubts and grounds for opening









(179)


For the reasons set out above, the Commission, after a preliminary assessment of the measure, harbours doubts as to the conformity of the measure with the RAG 2014 as regards the credibility of the counterfactual scenario, the incentive effect and the proportionality of the aid.












(180)


Consequently, the Commission is under a duty to carry out all of the required consultations and, therefore, to initiate the procedure under Article 108(2) TFEU. This will give the opportunity to third parties whose interests may be affected by the granting of aid to comment on the measure. In light of both the information submitted by the Member State concerned and that provided by third parties, the Commission will assess the measure and will take its final decision.












(181)


The Member State and interested parties are invited to provide in their comments to this decision all information necessary to enable the Commission to carry out this formal investigation.
In the light of the foregoing considerations, the Commission, acting under the procedure laid down in Article 108(2) of the TFEU, requests Poland to submit its comments and to provide all such information as may help to assess the compatibility of the aid with the internal market, within one month of the date of receipt of this letter. It requests your authorities to forward a copy of this letter to the potential recipient of the aid immediately.
The Commission wishes to remind Poland that Article 108(3) of the TFEU has suspensory effect, and would draw your attention to Article 16 of Council Regulation (EU) 2015/1589, which provides that all unlawful aid may be recovered from the recipient.
The Commission warns Poland that it will inform interested parties by publishing this letter and a meaningful summary of it in the Official Journal of the European Union. It will also inform interested parties in the EFTA countries which are signatories to the EEA Agreement, by publication of a notice in the EEA Supplement to the Official Journal of the European Union and will inform the EFTA Surveillance Authority by sending a copy of this letter. All such interested parties will be invited to submit their comments within one month of the date of such publication.






(1)  
            OJ C 209, 23.7.2013, p. 1. As the aid was granted in June and December 2021 (recital (17)(a) and ((17)(a)), the RAG 2014 apply in the present case (see point 188 of RAG 2014 and point 197 of the Guidelines on regional State aid (OJ C 153, 29.4.2021, p. 1) (‘RAG 2021’) (recital (90)).

(2)  Regulation No 1 determining the languages to be used by the European Economic Community (OJ 17, 6.10.1958, p. 385).

(3)  Commission Decision of 20 February 2014 in case SA.37485 (2013/N) – Poland – Regional aid map 2014-2020 (OJ C 210, 4.7.2014, p. 1), recital (13), as prolonged by Commission Decision of 5 October 2020 in case SA.58437 (2020/N) – Poland – Prolongation of the Polish regional aid map 2014-2020 until 31 December 2021 (OJ C 430, 11.12.2020, p. 1).

(4)  Volkswagen AG is owned by several shareholders, none of them holding more than 35 % of the subscribed total capital.

(5)  At the time of the decision-making process MAN SE was involved in merger negotiations with TRATON SE; the merger between MAN SE and TRATON SE was formally finalised and entered into the German Commercial Register on 31 August 2021, i.e. five months after the location decision. Currently, MAN SE has been replaced by TRATON SE. Volkswagen AG holds 89,72 % of the shares in TRATON SE.

(6)  It does not meet the criteria to qualify as a small or medium-sized enterprise within the meaning of Commission Recommendation of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises (OJ L 124, 20.5.2003, p. 36).

(7)  
            OJ C 249, 31.7.2014, p. 1.

(*1)  
            Confidential information.

(8)  Poland submits that this is the date of the first irrevocable order (for the purchase of certain construction elements from the supplier [name of the supplier]) related to the Investment Project.

(9)  The exchange rate used to convert the values in EUR to PLN: 4.4581, i.e. the average exchange rate on 7 June 2021 (official exchange rate of the National Bank of Poland on the date of granting of the first aid measure, the CIT exemption).

(10)  The discounted values were calculated at the time of granting the first aid measure, the CIT exemption based on the decision of support of 7 June 2021, with a discount rate set in accordance with the Communication from the Commission on the revision of the method for setting the reference and discount rates (OJ C 14, 19.1.2008, p. 6), using the base rate of 0,15 % (applicable for Poland with effect from 1 June 2021) and an added margin of 100 basis points (arriving to a rate of 1,15 %).

(11)  According to paragraph 20, point (l) RAG 2014, ‘large investment project’ means an initial investment with eligible costs exceeding EUR 50 million, calculated at prices and exchange rates on the date of award of the aid.

(12)  As defined in paragraph 94 RAG 2014.

(13)  The act is available at (last accessed on 7 July 2025): https://isap.sejm.gov.pl/isap.nsf/DocDetails.xsp?id=WDU20062271658.

(14)  The act is available at (last accessed on 15 July 2025): https://www.gov.pl/attachment/33c471a9-eace-44e9-9921-122c5529a1cc.

(15)  The act is available at (last accessed on 15 July 2025): https://www.gov.pl/attachment/86b8178d-0adb-49e9-8382-56fa2133f3ee.

(16)  The act is available at (last accessed on 15 July 2025): https://www.gov.pl/attachment/32031e7f-fc09-4e48-8f4b-b69b042c1192.

(17)  The act is available at (last accessed on 15 July 2025): https://isap.sejm.gov.pl/isap.nsf/DocDetails.xsp?id=WDU20180001162.

(18)  The act is available at (last accessed on 15 July 2025): https://isap.sejm.gov.pl/isap.nsf/DocDetails.xsp?id=WDU19920210086.

(19)  The ordinance is available at (last accessed on 15 July 2025): http://isap.sejm.gov.pl/isap.nsf/DocDetails.xsp?id=WDU20180001713.

(20)  Regional investment aid registered under case no. SA.52028 (2018/X) “Regional aid program granted to some entrepreneurs for the implementation of a new investment”, effective until 31 December 2021, which was extended until 31 December 2022 by case no. SA.60914 (2020/X).

(21)  Commission Regulation (EU) No 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty (OJ L 187, 26.6.2014, p. 1).

(22)  The ordinance is available at (last accessed on 15 July 2025): http://isap.sejm.gov.pl/isap.nsf/DocDetails.xsp?id=WDU20180001698.

(23)  The ordinance is available at (last accessed on 15 July 2025): http://isap.sejm.gov.pl/isap.nsf/DocDetails.xsp?id=WDU20180001699.

(24)  The ordinance is available at (last accessed on 15 July 2025): http://isap.sejm.gov.pl/isap.nsf/DocDetails.xsp?id=WDU20140000878.

(25)  
            See footnote 10.

(26)  According to paragraph 20(c) RAG 2014, the maximum permissible aid amount for a large investment project is calculated according to the following formula: adjusted aid amount = R × (50 + 0,50 × B + 0,34 × C), R is the maximum aid intensity applicable in the area concerned, excluding the increased aid intensity for SMEs. B is the part of eligible costs between EUR 50 million and EUR 100 million. C is the part of eligible costs above EUR 100 million.

(27)  EUR 25 219 162 divided by ca. EUR 94.1 million (both in discounted value).

(28)  The Polish authorities submit that MAN Trucks’ statement in this regard is included in the attachment to the application for the CIT exemption dated 31 May 2021.

(29)  Commission Regulation (EU) No 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty (OJ L 187, 26.6.2014, p. 1).

(30)  The handover of the plant to the third party took place on 31 August 2021.

(31)  In order to create capacity for the production of trucks with alternative drive systems in Munich, part of the production of conventional trucks previously carried out at the Munich plant was to be shifted elsewhere. As a result, there would be one large manufacturing centre for the production of conventional trucks, and the production of the new generation of eTrucks (and new investments) would be close to the Munich headquarters (among other things, because of the proximity of these sites to the R&D department).

(32)  Notably, the condition is included in the Grant Agreement at §2 sec. 1, and is laid down in the applicable, in § 9 section 2 point 1(b) of the Ordinance: “
            the condition for benefiting from income tax exemption for: 1) investment costs is [...], to maintain the new investment in the region where the support was granted, for a period not shorter than: 5 years – in the case of large entrepreneurs, 3 years – in the case of micro-, small and medium-sized entrepreneurs, from the date of completion of the new investment […]
            ”. The Polish authorities also confirm that MAN Trucks declared that it intends to maintain the investment in the given area for a period longer than five years from the date of its completion.

(33)  According to the Polish authorities, in total (i.e. taking into account the already existing jobs) the Niepołomice plant may employ up to 2400 employees.

(34)  The Polish authorities indicate examples of companies in the network of MAN Trucks’ contractors or subcontractors, in the case of which the Investment Project could lead to the creation of 80 and 50 additional workplaces.

(35)  The Polish authorities base the estimation on analyses, for example, from the Economic Policy Institute (source: https://www.epi.org/publication/updated-employment-multipliers-for-the-u-s-economy/; the Polish authorities note that the data may be used also for the predictions of the European Union economy).

(36)  Part of the national conditions for granting aid is to incur costs in the scope of cooperation with entities of higher education and science or with secondary schools in the amount of at least 15 % of the value of the received grant. MAN Trucks will have to contribute for such a cooperation with its own resources (for an amount equivalent to at least 15 % of the received grant).

(37)  Eco-Management and Audit Scheme (EMAS) is a voluntary environmental management system that helps organizations reduce their environmental impact and improve their sustainability. The OHSAS 18001:2007 standard is an international standard for occupational health and safety management systems. It requires organizations to establish a systematic approach to managing occupational health and safety risks.

(38)  Information about the application is available under the following link: https://bip.malopolska.pl/api/files/2817249; the relevant entry number is A-14/21.

(39)  Information about the decision ((case: OŚR.6220.26.2021) is available under the following link: https://bip.malopolska.pl/api/files/2799468; relevant entry number B-18/21. The Polish authorities explained that it was determined that the Investment Project, considering its scale and possible threats to the environment, in light of the applicable regulations, will not have a significant impact on the environment; therefore, there was no need to carry out an environmental impact assessment.

(40)  As of 31 December 2020. In addition, the Polish authorities explain that according to the current regional aid map for Poland (2022-2027) adopted in accordance with RAG 2021, the maximum aid intensity for the Malopolskie region increased from 35 % to 40 %.

(41)  As of 28 September 2020.

(42)  The Polish authorities refer to cases Dell Poland, Commission Decision of 23 September 2009 in case C 46/2008, Toray – Commission Decision of 2 July 2020 in case SA.54226 (2019/N, OJ C 214, 4.6.2021, p.1), Mondi SCP – Commission Decision of 13 July 2017 in case SA.45584 (2016/N, OJ C 400, 24.11.2017, p. 1) and LG Chem – Commission Decision of 28 January 2019 in case SA.47662 (2017/N, OJ C 93, 20.3.2020, p. 1).

(43)  The Polish authorities submitted a confirmation of start of works (see footnote 8), and the applications with the date stamps.

(44)  Following the merger, by TRATON SE (see footnote 5).

(45)  The Polish authorities confirmed that [name of the initiative] (or ‘[name of the initiative]’) denotes the broader initiative of MAN, as opposed to being a reference to the Investment Project. Nonetheless, with regards to some specific documentation provided in the notification (calendar entries) the abbreviation ‘[the abbreviation]’ is explained to be a reference to the name used by the MAN Group for the Investment Project.

(46)  To evidence the confidential nature of the Investment Project, the Polish authorities submitted an example of a non-disclosure agreement signed on 28 September 2020.

(47)  The calendar entries refer to ‘[the abbreviation]’, see recital (40).

(48)  The exact size of the additionally required land was hard to establish, given that the other investments were considered in the same location. The Polish authorities explained that the available land in [alternative location outside the EEA] was considered for various projects: [the list of projects].

(49)  The Polish authorities explained that there were no agendas, reports, or minutes prepared for the specified meetings.

(50)  The Polish authorities explain that [information about a previous project for which incentives offer was presented by the authorities of the country of alternative location outside EEA].

(51)  The Polish authorities submitted [number] offers for a [incentives offer for the previous project from the [country of alternative location outside the EEA] to [entity]. Those incentive offers [information about a previous project for which incentives offer was presented by the authorities of the country of alternative location outside EEA].

(52)  The Polish authorities clarified this as MAN’s cautious assumption that the written offer from [country of alternative location outside the EEA] government would be likely contingent upon presenting specific and detailed investment plans in [country of alternative location outside the EEA]. MAN presumed the [country of alternative location outside the EEA] government would be open to providing written commitments once project conditions were clarified and feasibility was established.

(53)  The Polish authorities submitted two testimonies of MAN Group employees explaining the decision-making process and the [country of alternative location outside the EEA] incentives system. The first testimony explains that following the MAN Group’s strategy and consolidation plans there were two scenarios – the expansion in Niepołomice or greenfield in [alternative location outside the EEA] (the latter involving a parallel reduction of the existing plant in Niepołomice). The investment plans were treated as confidential, and the decision-making took place at the level of MAN Truck & Bus. The financial evaluation for both scenarios was prepared in contact with representatives of the plants in [alternative location outside the EEA]and Niepołomice. The State aid would reduce the NPV difference between the scenarios and taking this into consideration with the intention to maintain workplaces in Niepołomice, the management decided to apply for State aid and invest in Poland. The second testimony on the [country of alternative location outside the EEA] incentives explained that investors are able to rely on a predictable framework that allows them “
            to anticipate the level of assistance they may receive”
            . It also states that in order to receive aid a company has to apply to the relevant ministry and submit requested documents, including general information about the project, the feasibility and impact analysis of the project and the list of subsidies requested with their justification. The relevant ministry can request other information and documents during the process. Projects are evaluated by taking into account socio economic criteria like ensuring supply security of products, improvement of technological capacity, reduction of import dependency or acceleration of technological transformation (other conditions may apply depending on the incentive).

(54)  Compared to previous assumptions, the updated incentives calculation showed a significant decrease in the value of [land-related incentive element] support to EUR [amount of the incentive element] compared to the previously considered EUR [amount of the incentive element]. The Polish authorities explained this is a proportional adjustment in the incentives package, reflecting the difference in land requirements between the [year] offers to [entity] and the potential MAN investment. According to the Polish authorities, while [entity]’s offer involved a […] subsidy for […] hectares at EUR […] per square metre (a total of EUR […]), the smaller land size of 72 hectares for MAN and the fact that MAN considered also the possibility of locating the new [information about the alternative location], resulted in a more conservative assessment. Furthermore, while the older incentives assumptions were estimated for a […]-year period, the updated incentives calculation considers a […]-year period, other changes in the incentives assumptions included: [list of adjustments made to the calculations].

(55)  The partial quotes in the main text are unofficial English translations. The original German text of the CFO from the [plant] plant in [country of alternative location outside the EEA from the email communication submitted by Poland as annex to its letter of 30 September 2024 (comp(2024)7890563) is as follows: 
               “[…]”
            .

(56)  The Polish authorities explained that this refers to social responsibility considerations concerning the maintenance of workplaces in Poland, as mentioned in the minutes of the decision of the board of 8 February 2021 (recital (60)).

(57)  Poland explained that the analysis over a […]-year period is the standard timeframe used within the VW Group for the assessment of profitability of new investment projects. Moreover, adoption of a longer time horizon would not be appropriate in the group’s opinion due to changing technological conditions, prices of raw materials, labour costs and other significant costs taken into account in the analysis.

(58)  The Polish authorities explained that, although production in Niepołomice continued during 2021 and 2022 (with actual volumes of […] and […] units, respectively), these years were excluded from the model because they do not reflect the impact of the Investment Project, notably because the Niepołomice plant would have remained operational during the investment phase and production in those years would have occurred in both the factual and counterfactual scenarios. Therefore, including these years would not have influenced the comparison between the two scenarios, and thus would not have affected the investment decision.

(59)  The Polish authorities explained that “buildings” include: construction of production halls, warehouses and auxiliary infrastructure, modifications to existing facilities (in Niepołomice), administrative and technical office spaces. In [alternative location outside the EEA], “buildings” also include a land cost of EUR […] million).

(60)  The Polish authorities explained that “machineries and equipment” include the installation of production lines and equipment and specialized equipment for heavy-duty vehicles.

(61)  The Polish authorities explained that “logistics infrastructure” include: internal logistics infrastructure such as pre-assembly and sequencing areas, internal roads and loading zones.

(62)  During the notification phase, the Polish authorities corrected their assumption related to CAPEX in Poland, by removing EUR […] million of costs that were originally forecasted for 2020 (i.e. before the Investment Project).

(63)  The NPV models assume that CAPEX in [country of alternative location outside the EEA] will be higher than in Poland by EUR [60-90] million in 2021, and by EUR [60-90] million in 2022. These values have been estimated based on the costs that MAN incurred for building the existing establishment of MAN in Poland in 2005, the cost of which amounted to EUR […] million. MAN reduced these costs by assuming lower labour costs and the lower cost per square meter in [country of alternative location outside the EEA]. All costs were adjusted for inflation.

(64)  Higer costs of training in the counterfactual scenario are mainly due to greater number of employees at that location and the nature of the investment requiring the training of new employees.

(65)  During the notification phase, the Polish authorities informed that the assumptions on depreciation have been corrected in both scenarios by removing depreciation costs in 2031 (outside of the temporal scope of the Investment Project).

(66)  The Polish authorities explained that the analysis carried out by MAN concerned aggregate figures for trucks (12 tonnes or more) and tractors.

(67)  The Polish authorities referred to [competitors], both having a local production facility in [country of alternative location outside the EEA]. According to the Polish authorities, based on internal estimates prepared by MAN Trucks, [competitors] have a market share on the aggregate market for trucks and tractors of more than […] % and more than […] % respectively, which is claimed to be mainly due to their local presence in [country of alternative location outside the EEA]. The Polish authorities also submitted that factors other than local production could also have an impact on the sales volumes of [competitors]. However, MAN assumed that the same factors would positively affect sales volumes of MAN.

(68)  MAN used publicly available sources for relevant products and segments information, among others the IHS Markit analysis available at:

https://web.archive.org/web/20221201142024/https:/www.spglobal.com/mobility/en/research-analysis/global-commercialvehicle-demand-forecast-to-fall-further-in-20.html.

(69)  The Polish authorities explained that the lower costs of production are due to lower logistics and marketing expenses.

(70)  During the notification phase, the Polish authorities explained that the NPV model has been updated in this regard since it initially considered Polish R&D support incentive in the amount EUR […] million (EUR […] million per year from 2023 until 2030). The Polish authorities explained that the R&D support in 2023 has been removed, as the R&D support and CIT exemption may not be cumulated for the same investment.

(71)  The Polish authorities state that the following elements of the [year] offers to [entity] that were based on standardised rules of the [country of alternative location outside the EEA] incentive system: ‘[types of support]. The Polish authorities also note that the detailed parameters – such as the specific amounts of support, the duration of benefits, and the intensity of the incentives – were not strictly governed by the standardised rules. Instead, these details were negotiated individually and tailored specifically to the planned investment of [entity], making the final incentive package a product of ad hoc negotiations rather than a straightforward application of the standardised rules.

(72)  The Polish authorities explained that MAN’s long-standing experience in [country of alternative location outside the EEA], coupled with publicly accessible data on [country of alternative location outside the EEA]’s incentive structures in the automotive sector, support the use of [year] offers to [entity] as a relevant reference point.

(73)  In the NPV model notified to the Commission, which did not include the changes that MAN made to its financial model after the location decision, the NPV gap between the two locations was EUR [28-33] million in favour of [alternative location outside the EEA] (with NPV in Poland without aid being EUR [2.70-3.20] billion, and NPV in [country of alternative location outside the EEA] with [country of alternative location outside the EEA] incentives being EUR [2.70-3.20] billion).

(74)  Regulation (EC) No 1893/2006 of the European Parliament and of the Council of 20 December 2006 establishing the statistical classification of economic activities NACE Revision 2 and amending Council Regulation (EEC) No 3037/90 as well as certain EC Regulations on specific statistical domains (OJ L 393, 30.12.2006, p. 1).

(75)  Communication from the Commission amending the Communications from the Commission on EU Guidelines for the application of State aid rules in relation to the rapid deployment of broadband networks, on Guidelines on regional State aid for 2014-2020, on State aid for films and other audiovisual works, on Guidelines on State aid to promote risk finance investments and on Guidelines on State aid to airports and airlines (OJ C 198, 27.6.2014, p. 30).

(76)  Council Regulation (EU) 2015/1589 of 13 July 2015 laying down detailed rules for the application of Article 108 of the Treaty on the Functioning of the European Union (OJ L 248, 24.9.2015, p. 9).

(77)  Judgment of the Court of Justice of 4 June 2015, Commission v MOL, C-15/14 P, EU:C:2015:362, paragraph 60.

(78)  
            OJ C 153, 29.4.2021, p. 1.

(79)  As defined in paragraph 38 RAG 2014.

(80)  As defined in paragraph 36 RAG 2014.

(81)  Commission decision of 11 June 2024 in case SA.63470 (2022/C) (ex 2021/N) – Hungary – LIP – regional investment aid to GKN Automotive Hungary Kft. (previously Rubin NewCo 2021 Kft. (OJ L 3031, 11.12.2024, p. 1), Commission decision of 7 January 2022 in case SA.59516 (2021/N) – Hungary – LIP – regional investment aid to Volta Energy Solutions Kft. (OJ C 461, 2.12.2022, p. 1); Commission decision of 29 June 2021 in case SA.58633 (2020/N) – Hungary – LIP – regional investment aid to SKBM Hungary (OJ C 90, 25.2.2022, p. 1); Commission decision of 22 March 2022 in case SA.63328 (2021/N) – LIP – regional investment aid to SK On Hungary Kft. (OJ C 195, 2.6.2023, p. 11); Commission decision of 4 October 2018 in case SA.45359 – 2017/C (ex 2016/N) which Slovakia is planning to implement for Jaguar Land Rover Slovakia s.r.o. (OJ L 177, 2.7.2019, p. 82).

(82)  See paragraph 80 of the RAG 2014.

(83)  The “cost efficiency” criterion was further elaborated by the Polish authorities as including an evaluation based on factors such as land prices, utility costs (electricity, water, gas), labour costs.

(84)  Based on the available information, the Commission understands that [specific information about incentives country of alternative location outside the EEA].

(85)  The Guide refers to: [specific information about incentives country of alternative location outside the EEA] (recital (64)(m)).

(86)  Even though they were aware that in [year], the [the group’s experience regarding the incentives system of the country of alternative location outside the EEA and a previous project for which incentives offer was presented by the authorities from that country] (recital (64)(k)).

(87)  Commission decision of 18 March 2022 in case SA.53903 (2020/C ex 2019/NN) – Regional Investment Aid to LG CHEM 2 – LIP – Poland (OJ L 2710, 24.10.2024).

(88)  Commission decision of 8 January 2024 in case SA.107936 (2023/N) – TCTF: Aid to Northvolt Germany GmbH – Germany, OJ C 4396, 10.7.2024. The Northvolt decision was adopted on the basis of section 2.8 of the Temporary Crisis and Transition Framework. However, the legal test for evidence is not different.

(89)  See Annex 1 of the RAG 2014.

(90)  Commission decision of 2 July 2020 in case SA.54226 (2019/N) – Hungary – Regional investment aid to Toray Industries Kft. (OJ C 214, 4.6.2021, p. 1).

(91)  Commission decision of 13 July 2017 in case SA.45584 (2016/N) – LIP – Investment aid to Mondi SCP (OJ C 400, 24.11.2017, p. 1).

(92)  See in particular, Commission decision of 2 July 2020 in case SA.54226 (2019/N) – Regional investment aid to Toray Industries – Hungary (OJ C 214, 4.6.2021, p. 1), recital 94. See also Commission decision of 24 May 2017 in case SA.45359 (2016/N) – Regional investment aid to Jaguar Land Rover – LIP – SK (OJ C 422, 8.12.2017, p. 21), recital 163.

(93)  See section 3.6.1.1 of the RAG 2014.

(94)  Paragraph 92 of the RAG 2014.

(95)  The standardised eligible expenditure for investment projects by large firms is described in detail in sections 3.6.1.1 and 3.6.1.2 of the RAG 2014.

(96)  See paragraphs 86 and 20, point (c), of the RAG 2014.

(97)  See paragraph 120 of the RAG 2014.

(98)  See paragraph 139 of the RAG 2014.

(99)  See paragraph 124 of the RAG 2014.

(100)  According to paragraph 121 of the RAG 2014, the counter-cohesion effect resulting from aid to the detriment of a weaker or similarly weak EEA region would constitute a negative element in the overall balancing test that is unlikely to be compensated by any positive elements, because it runs counter the very rationale of regional aid.

(101)  See paragraph 28 of the RAG 2014.



ELI: http://data.europa.eu/eli/C/2026/710/oj
ISSN 1977-091X (electronic edition)