Willie Penrose (Westmeath, Labour)
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Question 93: To ask the Minister for Enterprise, Trade and Employment if he has sought clarification from the European Commission regarding State aid for industrial projects following the decision in regard to Intel; the outcome of discussions with the Commission; and if he will make a statement on the matter. [12101/05]

Pádraic McCormack (Galway West, Fine Gael)
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Question 97: To ask the Minister for Enterprise, Trade and Employment the reason the proposed granting of aid to Intel Ireland in respect of Intel's FAB 24-2 investment in its Irish operation at Leixlip, County Kildare, was allowed to progress to such a stage that notification was given to the European Commission, only to be withdrawn upon comment by the Commission about its legality; and if he will make a statement on the matter. [12066/05]

Micheál Martin (Cork South Central, Fianna Fail)
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I propose to take Questions Nos. 93 and 97 together.

The announcement of the proposed aid to Intel on 19 May 2004 pointed out that the grant was subject to EU approval. The proposed aid was required to be notified to the European Commission for approval under the multisectoral framework on regional aid for large investment projects. Under this framework, which came into general effect on 1 January 2004, large investment projects are generally not eligible for investment aid where, as in the case of Intel, the aid recipient accounts for more than 25% of the sales of the product concerned. However, the framework also provides that investment aid for such cases will be authorised where the company concerned creates, through genuine innovation, a new product market. Intel, IDA Ireland and my Department were satisfied that the company's proposal demonstrated that it would create a new product market through genuine innovation. 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. However, the European Commission took a different view, based on a very narrow interpretation of the provision on which we were relying. As this was the first case in which this provision was applied, we had no reason to believe that the European Commission would take such a restrictive view.

The Government's decision to withdraw the notification, having consulted Intel, should not be interpreted to mean that we agree with the Commission's view. The formal investigation which the Commission proposed to hold would have entailed the Commission providing certain details of the company's proposal to third parties including, in particular, Intel's competitors. As the Commission had informed us that it did not believe it would approve the proposed aid, even after this procedure, the company's reluctance to participate in a pointless exercise and risk exposure of its business secrets was understandable.

In relation to the implications of this case for aid for industrial projects generally, the vast majority of inward investment projects do not need to enter into this approval process. For the very small number that do, each project has to be examined in the context of its individual elements and the same issue would only arise if the company concerned has a market share of more than 25% in relevant product markets. While IDA Ireland considers the outcome of the Intel case to be unhelpful in the progress of investment projects of this size, it does not see this having an overall directly negative impact on Ireland's ability to attract foreign direct investment.