EU pledges scrutiny on Opel deal

The European Union has pledged to ensure job cuts and factory closures at Opel and Vauxhall are not influenced by levels of state aid given to the firm.

Competition Commissioner, Neelie Kroes said she wanted a “level playing field”, with no conditions that breached EU rules attached to funding.

The UK, Spain, Poland and Belgium fear the planned takeover of GM’s Opel will favour German factories and jobs.

Germany has offered Opel’s would-be buyer Magna a 4.5bn-euro (£4bn) loan.

Reports suggest that if the deal goes through, Magna is planning to cut about 11,000 jobs from the workforce of 45,000 in Europe.

In a letter to UK Business Secretary Lord Mandelson and his counterparts in other countries with Opel and Vauxhall plants, Ms Kroes said her department was investigating whether plans to grant aid to the new Opel owners would be based on discussions about how the firm would be restructured.

She said that any aid that “defines the geographic distribution of restructuring efforts” and gave the buyer no choice to later adapt their decisions would not be allowed.

“This is particularly important in the present case, as the emerging New Opel may need such freedom in order to secure its long-term viability,” Ms Kroes said.

A firm receiving public money “must retain full freedom to develop its activities… on the basis of its own assessment of economic conditions”, she added, saying that such aid would be “incompatible” if this key criteria was not met.

Opel’s factory in Antwerp is almost certain to close, GM has admitted, as the new buyers look to cut overheads – prompting Belgium to question the transaction.

Meanwhile Spain has written a letter to the European Commission, calling for the solution to the future of Opel to be one that works across Europe – and not just for one nation.

And in the UK, there are concerns for the future of Vauxhall.

While Magna has said it is committed to keeping Vauxhall’s Ellesmere Port plant open, doubts remain about the firm’s plant in Luton. The two sites account for most of Vauxhall’s 5,500 UK workforce.

Source: BBC News