Report: GM should be allowed to reconsider the sale of Opel
By Andrew C., 27 Aug, 2010. 0 Comments
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EU competition head Neelie Kroes is recommending that General Motors Co. reconsider its decision to sell Opel to Magna International Inc. and its Russian partner Sberbank. Kroes' statements cannot be held lightly since the EU is tasked to enforce the EU's competition laws and may choose to block takeovers when it determines that a violation was committed. Kroes cited the preconditions that the German government imposed on GM to select Magna/Sberbank to acquire a majority of the shares.
These preconditions are said to be incompatible with EU state aid and internal market rules. In a statement, Kroes said that GM and the Opel Trust should be given the chance to reconsider the result of the bidding process and be assured by the German authorities that aid would be given regardless of which investor is chosen. It was heavily anticipated that GM will be inking the deal to sell 55% of Opel to Magna/Sberbank last Thursday but it didn't happen on that day due to the EC's concerns regarding the circumstances surrounding the 4.5 billion euro ($6.71 billion) aid package offered by Germany if GM chose Magna's bid over RHJ International.
Despite GM's preference for RHJ's bid, the carmaker was pressured by the German government, which eventually convinced GM to choose Magna/Sberbank. As the parties work on finalizing the agreement, other European countries have shown their disappointment and have gone as far as to accuse Germany of promising state aid to limit job cuts at Opel's German factories. Last Friday, Kroes sent a letter to German Economy Minister Karl Theodor zu Guttenberg with regards to the EU's concerns.
She said state financial aid is intended to resolve problems due to the economic and financial crisis and should not be used to impose political constraints concerning the location of production activities within the EU. After preliminary inquiries, Kroes found that Berlin's promised aid to New Opel was conditioned to the selection of Magna/Sberbank. The EU also found that it was tied up to a business plan that included plans to restructure Opel plants in several countries. The EU is worried that Germany's placing of conditions influenced the decision by GM and the Opel Trust and excluded alternative plans that would have had a different distribution of restructuring measures within EU countries. [via autonews]
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