The 25-acre site in Haiming, west of Innsbruck, housed hundreds of prisoners during World War II. They were made to build a dam for a hydroelectric power plant.
The camp was demolished after the war, and the plot was unused by power company Tiwag until it was acquired by one of Austria's largest bacon and sausage producers, Handl Tyrol.
A group of locals and heirs of former landowners in the area have grouped together to challenge the legality of the sale, claiming that they were forced to sell the land at low rates by the Nazis. They also say that the land was only sold on the guarantee that it would be used for the construction of a power plant, and that Handl Tyrol has nothing to do with generating energy.
However, a commission after the war found that the land was lawfully obtained by Tiwag's predecessor company, and that the heirs to the landowners should not receive compensation.
Handl Tyrol says that the dispute only involved Tiwag and the claimants, adding that it is now the legal owner and that its plans to build a factory would not be delayed.
Planning permission has been granted for the factory, and Handl Tyrol has already started clearing the site for construction.