Kroes warns EU over ‘stealing’ car jobs

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Europe’s competition chief on Thursday delivered a blunt warning to EU member states against “bribing” car companies in an attempt to “steal” jobs from other countries, saying such behaviour risked sparking a trade war.

Neelie Kroes, competition commissioner, who will decide whether a deal brokered by Germany to sell General Motors’ European Opel business to the Canadian car parts supplier Magna complies with state aid rules, told an audience in New York that she was “examining carefully” Berlin’s conditions for the rescue.

“We cannot accept one government bribing companies in order to steal or end the jobs of another,” said Ms Kroes.

“We cannot accept companies becoming addicted to aid. Such behaviours are a recipe for a trade war and poverty – not a way out of this recession.”

The commissioner’s comments were aimed at Europe's car industry in general, but she quickly cited the planned Opel restructuring, which is expected to lead to thousands of job losses.

GM’s UK, Belgian and Spanish employees would bear the brunt of those losses in the rescue, according to figures floated by Magna.

“We do not accept geographic operating obligations as a legitimate part of aid. We stopped France earlier this year from implementing such ideas and we would not hesitate to halt other problematic aid if it comes to our attention. For that reason, I am currently examining carefully the conditions for the rescue by Germany of GM’s European arm, Opel,” said Ms Kroes.

The UK has told the commissioner that Magna’s restructuring blueprint, for which the company is seeking €4.5bn ($6.6bn) of German-led European government aid, is too expensive, unfair in its treatment of more productive plants and susceptible to “political intervention”.

There has been considerable disquiet over the restructuring proposals across Europe, with politicians in Belgium, Spain and UK – all of which house Opel plants – claiming that the plan, involving Canada’s Magna International, is politically motivated and designed to protect German jobs.

The commissioner made clear yesterday that she considered downsizing in the car industry essential. “Europe’s car companies are producing millions of cars a year more than the European market wants,” she said. “The car industry’s difficulties must invoke reform as well as sympathy.”

Ms Kroes’ remarks came as the German authorities indicated for the first time that they planned to give her officials details of the aid plan for Opel within a fortnight.

Peter Hintze, Germany’s deputy economy minister, said in Brussels: “I am very confident that we can persuade the Commission we are acting fully in compliance with EU law.”

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