Government withdraws Intel state aid plans

2 Mar 2005

Minister for Enterprise, Trade and Employment Micheál Martin TD this afternoon confirmed that the Government has withdrawn proposals to the European Commission to grant state aid to Intel Ireland for its Fab 24 operation in Kildare.

The decision to withdraw the aid was taken in view of the commission’s decision to open a formal investigation, which could take up to 18 months to complete, and the clear indications from the commission that the aid would not be approved at the end of that process, the minister stated.

The pending ruling by the commission’s competition directorate could have serious implications for the Intel expansion. However, it is understood that for the time being the construction project will continue to plan.

Minister Martin said that the decision has been taken in agreement with Intel and IDA Ireland in view of the pending commission ruling to open a formal inquiry into the notification. He said that he was disappointed with the outcome of the aid notification. “This is an excellent project that will create new jobs and will generate significant benefits for the local economy. As such, I would have thought it is precisely the type of project that European regional aid provisions, which of course,we are fully entitled to avail of, were intended to encourage.

“It seems inconceivable that an investment of this size by such a company would not involve substantial innovation, both process and product innovation, and a significant amount of this innovative activity will occur in Leixlip. Indeed, in all of my discussions on this case, I have emphasised the vital importance of attracting this type of investment in leading-edge technologies to Europe if we are to make progress in relation to the Lisbon Agenda, which President Barroso has so strongly supported since becoming President of the Commission.”

Minister Martin continued: “It should be pointed out that Ireland was the only location in Europe considered by Intel for this investment. Had Ireland not succeeded in winning the project, it would have been lost to Europe. At present Intel employ more than 5,000 people at its Irish operation. Since 1989, Intel and the Irish Government have invested €5bn in the Leixlip operation.

“Intel is one of the most innovative companies in the world with a track record, stretching over several decades, of creating new products and markets and the Government and IDA will continue to work closely with them,” Minister Martin concluded.

Last May, the Government announced Intel’s additional €1.6bn investment in its Irish operation in Leixlip, Co Kildare. This investment was designed to equip the Leixlip facility with the technology to produce the next generation of microprocessors and other products.

According to the Department of Enterprise, Trade and Employment, the proposed grant aid was notified to the commission on 14 June 2004 and detailed discussions have been ongoing with the commission since then. It became apparent in the course of these discussions that the commission were adopting a different interpretation of the provisions in the Multisectoral Framework on which the IDA and the Department of Enterprise were relying in proposing to grant the aid (this was the first case in which these provisions were being applied).

Substantial further information was supplied to the commission and a number of meetings were held and further submissions were made in an attempt to resolve these differences.

Minister Martin met with both Commissioner Mario Monti, when he was Commissioner for Competition, and Commissioner, and Neelie Kroes, when she succeeded him in that post, to highlight the importance of this proposal and the fact that the Irish Government was firmly of the view that the proposed aid came within the terms of the Multisectoral Framework. In addition, the Taoiseach Bertie Ahern TD wrote to President Barroso on two occasions and spoke to him about the matter in support of the stance taken by Minister Martin.

According to Minister Martin, Commissioner Kroes has now indicated that she is not prepared to approve the aid package at this stage. Instead, she intends to propose to the College of Commissioners the opening of a formal investigation into the proposal. While the commission indicated that it would attempt to complete the investigation within six months, the relevant regulation allows them up to 18 months to complete such an investigation.

By John Kennedy