EU regulators to scrutinise German billion euro loan guarantee for Opel

EUROPEAN UNION regulators have promised a stringent examination of Germany’s plan to provide billions of euro in loan guarantees for the restructuring of General Motors’ Opel unit, to ensure that it complies with the bloc’s competition rules, politicians in Belgium said yesterday.

The comments by Kris Peeters, premier of Belgium’s Flanders region, came as concerns over possible protectionism in the planned rescue deal – involving €4.5 billion in loans and credit guarantees mainly from the German government – continued to ricochet around the 27-country bloc.

There are fears that restructuring at Opel will be driven by political rather than commercial considerations. The row threatens to raise questions about member states’ commitment to the single market, and provide a challenge for José Manuel Barroso, European Commission president, who was confirmed for a second term yesterday.

GM has confirmed the Canadian-Russian consortium led by Magna International that would control Opel, intends to wind down production in Antwerp, but to keep open four German plants. Mr Peeters said he was “convinced that Antwerp is a better plant than certain plants in Germany”.

Mr Peeters was speaking after a meeting with Neelie Kroes, EU competition commissioner, in Brussels. A spokesman for Ms Kroes said afterwards the commissioner had assured the Flemish leader that she would “ensure that state aid and internal market rules would be enforced scrupulously”.

Ms Kroes signalled to European lawmakers on Monday that she would pay close attention to Germany’s plan to use an aid scheme – pre-approved under the temporary relaxation of state aid rules in the wake of the economic crisis – to cover the assistance.

“State aid granted under the temporary framework cannot be subject . . . to additional conditions concerning the location of investments and/or the geographic distribution of restructuring efforts.” Spanish government officials met union representatives from Opel and regional politicians yesterday to work out the next move against plans to cut output at the Figueruelas plant near Zaragoza. – Copyright the Financial Times Limited 2009