The European Commission has announced the initiation of a detailed investigation into the granting of Hungarian state aid to Dunaferr, Hungary-based subsidiary of Ukrainian steel producer Industrial Union of Donbass (ISD).
The Hungarian authorities in January 2007 stated that investment aid was granted to Dunaferr in December 2006 under a scheme previously approved by the European Commission. The scheme in question establishes tax incentives to increase production investment in Hungary's less-developed areas. Nevertheless, the European Commission has voiced doubts whether Dunaferr, the only integrated steel works in Hungary, is being respectful of the 2002 Multi-sectoral Framework which prohibits aid for investment projects in the steel industry because of the sector's structural overcapacity.
Since the Hungarian authorities claim that the aid only covers products outside the steel sector, the Commission will predominantly focus on the classification of certain products