The European Commission has opened an investigation into the payment of proposed grant aid of €52.7 million ($69 million) to Dell to assist the company with the setting up of a new factory in Poland.
In a statement EU competition Commissioner Neelie Kroes said: "We need to investigate all the effects of this aid to verify that it contributes to regional development and to ensure that it will not reinforce Dell's position or create significant capacity in a market on the decline in the EEA."
Dell Products Poland is wholly owned by US-based corporation Dell Inc and plans to set up a new plant in Lodz for the production of desktops, notebooks and servers which is expected to create up to 3 000 jobs.
According to the statement the costs to be taken into account for the calculation of the aid amount to €189.58 million with the proposed aid totalling €52.73 million.
While regions such as Lodz are entitled to offer grants to off-set structural disadvantage, the Commission said large scale aid presents a "higher risk of distorting competition".
The investigation will concentrate on whether the regional aid thresholds have been respected and whether the benefits outweigh the resulting distortion of competition.
Labour Party senator Alan Kelly said the Commission's decision had implications for Ireland. "It is important that when Ireland is seeking to attract and retain major employers, that we are operating on an even playing field," he said.