Daewoo Electronics Manufacturing SA (DEMESA) would have received aid in the form of investment subsidies and too important tax exemptions. Therefore in June 1996, three manufacturer's associations filed a complaint against DESEMA.
In December 1997, the European Commission opened the procedure by decision notified to Spain.
According to the European Commission, the three following aids are incompatible with the common market and have to be recovered:
- the occupation of a site during nine months without economic counterpart
- the acquisition of a land at a price below the market price
- the excess in 5% of 20% of the costs eligible under the EKIMEN scheme.
The two tax benefits are also incompatible and have to be withdrawn. These benefits are about the fiscal credit granted by the Provincial Government of Alava corresponding to 45% of the cost of the investment and a reduction of the tax base. These constitute State aid by reason of their selective nature and from the
