EU says German aid could stymie Opel deal

EU says German aid could stymie Opel deal
The European Commission told the German government on Friday that its planned aid package for carmaker Opel could breach EU competition rules - and said US auto giant General Motors should be allowed to reconsider the sale of its German unit.

European Commissioner for Competition Neelie Kroes wrote to German Economy Minister Karl Theodor zu Guttenberg “expressing her concerns” on the aid, said a statement from the Commission, the EU’s executive arm.

The letter said there were “significant indications that aid promised by German Government to New Opel was subject to the pre-condition that a specific bidder, Magna/Sberbank, was selected to acquire a majority of the shares.”

“Commissioner Kroes explained that GM and the Opel Trust 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.”

Zu Guttenberg said on Saturday he did not think the sales talks would have to be repeated. Speaking during a break in coalition negotiations, he said, “I think we found the right answer.”

But cryptically, he also said he could understand why the Commission might want to go over things again. “There was possibly one or other statement over the last months which could be misunderstood. Not from me,” he said.

Canadian auto parts maker Magna International and Russian state lender Sberbank won a bid last month to buy a majority share of General Motors’ European unit Opel, which employs more than 50,000 people across the continent.

Chancellor Angela Merkel’s government, keen to safeguard the jobs of Opel’s 25,000 German employees, agreed to sweeten the deal with €4.5 billion worth of public money.

She had been keen to secure a rescue deal after months of wrangling, before the parliamentary election on September 27. The preliminary agreement was signed on September 10. Merkel won the election and now has to try to make the deal stick.

The Berlin financing irritated many other European governments as it was contingent on other public money being added to the pot in other countries where Opel has plants, such as Britain, Spain, Poland and Belgium.

They are less than enthusiastic about stumping up cash to support a deal that they see as only guaranteeing German jobs and keeping German plants up and running.

With Opel losing money fast, dependent on a market where too many cars are being made for too few customers, Magna is reported to be looking to cut around 10,500 jobs.

Kroes said in her letter to zu Guttenberg that the “conditionality” of the German aid may have excluded “alternative plans foreseeing a different distribution of restructuring measures within the EU.”

Other bidders for Opel included Belgian investment fund RHJ International, Italian auto firm Fiat and China’s Beijing Automotive Industry Holding (BAIC).

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