Germans join British in Irish Steel case

AS the Minister for Enterprise and Employment, Mr Bruton, introduced the second stage of the Irish Steel Bill in the Seanad, it emerged that the German Steel Federation is joining British Steel in taking the European Commission to court over its approval of the State's aid package.

However, a spokesman for the Minister said last night that he was fully confident that the takeover package agreed with Ispat International would go ahead and that the Government would succeed in any court challenge.

The German Steel Federation claimed the aid package subsidised Irish Steel by some DM205 (£88) per tonne. In the case of Maxhutte, a Bavarian steel plant, which the Commission recently refused aid, the subsidies would have totalled just DM30 (£13) per tonne, the association said. It would thus join British Steel and challenge the aid package through the courts.

Last month, the EU Commission formally approved the sale of Irish Steel to Ispat International by authorising £38 million in Government aid. The decision followed an agreement by EU industry ministers last December to approve the package, subject to a range of conditions.

British Steel, which competes directly with Irish Steel, is claiming the use of Article 95 of the Treaty of Paris to approve individual subsidy cases is illegal. The Irish Steel aid was approved under this article. Irish Steel has said that it is not concerned by the British Steel threat, which could take several years to get to court.

The spokesman for the Minister said last night that, despite the decision of the German federation to join the objection, he remained confident that the package would not be overturned. British Steel is already taking legal action about EU approval for aid granted to six other steel plants in 1993.

Encouraged by British Steel, the British government held up approval of the sale of Irish Steel for months, before finally agreeing after the terms of the deal were modified. Under EU law, the deal had to be approved unanimously because of the State aid package, which involved a £20 million cash injection and the write off of loans. The legislation now before the Seanad will formalise the sale of the plant for the nominal sum of £1 to the Indian company, Ispat International, which is already running the operation.

Germany was one of the states which objected to the original rescue package for Irish Steel in October. However the German government, along with a number of other EU governments, withdrew its objection after an initial modification of the deal. Britain was then left as the only objector and lengthy negotiations followed before a deal was agreed.