EU will hold up deal for Rover

Both Alchemy's plan to take over Rover and the potential rival consortium bid, brokered by former Rover chief John Towers, could fall foul of Brussels, the Independent on Sunday has learned.

According to Alchemy, the deal to buy Rover from BMW is now certain to be called in for review by Mario Monti, the European competition commissioner, if a deal is signed later this month.

"It is not a possibility, it is a racing certainty," said John Moulton, managing partner of Alchemy.

He added that his concern was not that Brussels would block the deal, but that it would take months to clear, so adding to Rover's problems and making it impossible to save.

Both BMW and Alchemy are currently lobbying Mr Monti's office to speed its review of the deal. It was Mr Monti's refusal to approve the £152m of grant aid promised by the Government for Longbridge which precipitated BMW's decision to sell Rover.

However, the situation is even worse for the potential rival offer, which has yet to be put to BMW.

Mr Towers' proposals are backed by financial support from the Department of Trade & Industry. But legal experts have said that not only would Brussels look at this closely, it would also almost certainly block any financial support from the DTI.

Tom Usher, a partner at SJ Berwin, the solicitors, said that the "financial guarantees" suggested for Mr Towers' deal implied indirect aid designed to give a firm stability.

"If it gives a competitive advantage over, say, another bidder, generally it is illegal unless there is a cultural or social justification. They could argue there was here, but I very much doubt it would work," said Mr Usher. "Alchemy is a straightforward, transparent bid with no state aid. EU rules dictate there must be fairness in any public auction, which this would be if another bidder did come forward. This all sounds like archaic 1970s-style government guarantees."

The DTI spokesman only admitted that the department was aware of Mr Towers' bid and would not discuss financial assistance. However, it is understood that Stephen Byers, the Trade and Industry Secretary, is keen to find a rival to Alchemy and is willing to put up government money to aid a second bidder.