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SPEECH/ 09/388

Neelie Kroes

European Commissioner for Competition Policy

Address to debate on restructuring of European car industry ( Opel case)

Figures and graphics available in PDF and WORD PROCESSED

P lenary session of European Parliament

Strasbourg, 14 th September 2009

Honorable Members,

I n the framework of the present debate I have been asked to touch upon a question of great interest for the European public: the public financing of Opel/Vauxhall by one or more European governments.

As you know, last Thursday the Opel Trust, in which General Motors and the German authorities have equal representation, announced that it has approved the sale by GM of a majority stake in its European Opel/Vauxhall operations to the consortium of Magna International and Sberbank. This decision by the owners of Opel has been supported by the German Government, which promised to grant to New Opel public funds up to 4.5 billion euros (with the possible participation of other European governments).

The Commission has kept in touch with all the Member States concerned through out the process which led to this transaction. In particular, the Commission organised two informal Ministerial Meetings on 13th March and 29th May, after which statements were released to the press. In addition, the Commission had contacts with several Member States and participated in information meetings with GM. The Commission is also aware of the controversies regarding the respective merits of the restructuring plans presented by different bidders, including the doubts publicly expressed by certain members of the Opel Trust.

Concerning the public financing of the GM/Magna transaction, we have been informed that the German Government intends to avail itself of a pre-existing approved scheme under the Commission's Temporary Framework for State aid measures to support access to finance in the current financial and economic crisis. I intend to verify carefully whether this scheme can be used in this case. You will understand that I cannot take a position at this stage, since the deal is not yet finalised and a number of aspects are still being negotiated.

However, at this moment, it is important that I should outline to you the most relevant considerations.

In particular, I have to underline that state aid granted under the Temporary Framework cannot be subject - de jure or de facto - to additional conditions concerning the location of investments and/or the geographic distribution of restructuring efforts.

Such conditions would create unacceptable distortions in the Internal Market and could trigger a subsidy race which would significantly damage the European economy in the present delicate moment. Moreover, if the restructuring of a European company was determined by non-commercial conditions attached to public financing, there would be the risk that the company would not be able to restore its long term viability. This risk to viability is all the greater due to the current, weakened state of the entire European car industry, which suffers from considerable over-capacity. A failed restructuring would result in great damage for the company and its workers, negative spillovers for the whole sector, and a waste of taxpayers' money.

These principles will guide my assessment in the Opel case. I will verify whether non-commercial protectionist conditions are attached to public funding, de jure or de facto. The Commission will examine not only the legal conditions that may be attached to a final aid package, but also the entire context in which the aid is granted. I will be particularly interested to find out whether the German authorities have effectively linked the provision of aid to a single bidder and, if so, to find out why they regarded that bidder's business plan as preferable from an industrial and commercial point of view.

In the short term, it is a sad fact that because of the curr ent state of over-capacity in the car industry, any plan to restore the profitability of Opel/Vauxhall will require job losses across the company as a whole and plant closures. All the plans to save Opel/Vauxhall presented by different potential investors have foreseen both plant closures and job cuts. However, a serious restructuring is the only way to ensure viable and stable jobs for the future.

The Commission cannot and should not try to dictate where such cuts will fall, nor can it try to prevent them. We will however be scrutinising the process carefully to ensure that it is based on commercial considerations, designed to sustain viable jobs, and not protectionist motives.

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