EU Commission concerned over German Opel aid

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The Independent Online

The European Commission voiced concern yesterday over Germany's planned aid for a consortium led by Magna to take a majority in carmaker Opel and suggested that General Motors Co. be allowed to "reconsider" the deal.

GM is expected to sell a majority of Opel to Canadian auto parts maker Magna International and Russian lender Sberbank — a consortium heavily favored by Berlin — under a deal announced in September.

Germany offered aid worth €4.5bn (£4.1bn) to support the deal, and hopes other European countries that have Opel plants will contribute to financing that. Adam Opel GmbH has its headquarters in Ruesselsheim, Germany.

European Union Competition Commissioner Neelie Kroes wrote to Germany's economy minister, Karl-Theodor zu Guttenberg, to voice her concerns about the aid, the EU's executive Commission said.

She pointed to "significant indications that aid promised by German Government to New Opel was subject to the precondition that a specific bidder, Magna/Sberbank, was selected," according to a statement from Brussels.

Kroes "indicated that such a precondition for the aid would be incompatible with ... state aid and internal market rules," it added.

She said GM and "should be given the opportunity to reconsider the outcome of the bidding process on the basis of firm written assurances by the German authorities that the aid would be available, irrespective of the choice of investor or plan" to ensure Opel's long-term viability, the Commission said.

The German Economy Ministry had no immediate comment.

The Magna-Sberbank bid beat out a rival offer from Brussels-based investment firm RHJ International.

The deal announced last month would see the consortium take a 55 per cent stake in Opel, with GM keeping 35 per cent and 10 per cent going to employees.

Belgium called for the European Commission to investigate the deal amid concern that Germany may have sought to protect its own plants at the cost of others.

The Magna plan calls for Opel's four plants in Germany to be kept open, but a factory in Antwerp, Belgium risks being closed.

Kroes' letter said preliminary inquiries suggested that the German aid may have been "de facto conditioned" to Magna's selection, based on a plan discussed with Berlin "in particular with regard to the geographic distribution of the restructuring measures," the Commission said.

"There are therefore grounds for concern that such conditionality has affected the decision ... thereby excluding alternative plans foreseeing a different distribution of restructuring measures within the EU," it added.

Opel and sister brand Vauxhall employ some 49,000 people in Europe — about half of them in Germany — and have plants in countries including Spain, Poland and Britain.

Magna has said some 10,500 jobs could be cut overall, 4,500 of them in Germany.