Europe casts doubt on Opel sale

BRUSSELS: The European Commission on Friday raised the prospect of a repeat sale of Opel, warning that planned German aid for the current bid to buy the General Motors unit could breach EU competition rules.

The latest twist in a tortuous process to sell off the US auto giant's European operations comes amid rising anger over job cuts at the troubled company, which employs more than 50,000 people across Europe.

The European Union's Competition Commissioner Neelie Kroes wrote to German Economy Minister Karl Theodor zu Guttenberg "expressing her concerns" over the funds, said a statement from the Commission, the EU's executive arm.

The statement said there were "significant indications that aid promised by German Government to New Opel was subject to the pre-condition that a specific bidder, Magna/Sberbank, was selected to acquire a majority of the shares."

GM "should be given the opportunity to reconsider the outcome of the bidding process on the basis of firm written assurances by the German authorities that the aid would be available" irrespective of the investor, it added.

Canadian auto parts maker Magna International and Russian state lender Sberbank clinched a bid last month to buy a majority of Opel, with backing from Germany which said it would provide up to 4.5 billion euros if they won.

Around 25,000 Opel employees are based in Germany and other European countries have accused German authorities of promising the aid to Magna and Sberbank in order to limit job cuts at Opel's German factories.

The money was held out by German Chancellor Angela Merkel's government just before elections in Germany on September 27. Merkel duly won a second term, winning particular praise for her leadership in the Opel sale process.

The sale was formally approved by GM and the Opel Trust, a German body that has been responsible for Opel since June, but has not been finalised.

Under a preliminary agreement, Magna and Sberbank would own 55 percent, GM would retain 35 percent and the employees would have 10 percent.

Magna and Sberbank are reported to be looking to slash around 10,500 jobs.

Kroes said in her letter to zu Guttenberg that the "conditionality" of the German aid may have excluded "alternative plans foreseeing a different distribution of restructuring measures within the EU."

Bidders for Opel originally included Belgian investment fund RHJ International, Italian auto firm Fiat and China's Beijing Automotive Industry Holding (BAIC). The choice later narrowed to Magna-Sberbank and RHJ.