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EU backs aid for motor industry

Publication date: 03 March 2009

Plans put forward to aid the motor manufacturing sector by both the Spanish and Italian governments have escaped objections from Brussels under EU state aid rules.

The European Commission had asked authorities in both countries to provide some more details of how the schemes would work. The concern in the Spanish case was that assistance under the €4bn aid plan might depend manufacturers’ willingness to guarantee local jobs.

In the Italian case, where the €1.2bn plan includes incentives for car owners to trade in their older cars for new models and credit guarantees to banks to finance purchases, there were worries that aid might also be tied to commitments by manufacturers.

But officials in Brussels said that clarifications had been provided, and were satisfactory. ”On the basis of the information we have received from the Spanish authorities there would not seem to be any such conditions attached,” said a spokesman for EU competition commissioner Neelie Kroes.

He added that the Italian scheme also did not appear to be discriminatory.

Over the weekend, similar doubts which the commission had raised over the €6bn plan put forward by the French authorities were similarly resolved – in that case, by a letter from France’s industry minister which assured Brussels that France would not implement measures that were in breach of the principles of the single market.

This largely removes any ongoing threat to car aid packages by EU member states under the state aid rules. Brussels, however, is still weighing up an aid plan proposed by the Swedish government. The sticking-point here appears to focus mainly on the level of state guarantees that can be offered.

Source: The Financial Times

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