Opel Stronger than Microsoft, Intel in Fighting the EU?
Do you remember that very strong European Competition czar who battled Microsoft and Intel, accusing them of anti-competitive behavior?
The question now is: will she be strong enough to battle Germany’s Angela Merkel?
The story is simple. General Motors' European arm, Opel, was struggling and was in danger of going bankrupt by the end of the year. Brussels-based financial investor RHJ International and Canadian auto parts maker Magna showed interest in buying it. The GM negotiator indicated he would prefer RHJ's bid, which required less state aid.
But around a month ago, weeks before general elections, German chancellor Angela Merkel announced she favored a consortium made of Magna and Russia's Sberbank as buyer for the auto-maker and offered 4.5 billion euros ($6.75 billion) in taxpayers money to Opel.
Opel also has factories in other European countries, such as the UK, Spain, Belgium and Poland. And the German state funds were promised to Magna-Opel with one condition: the company wouldn’t shut down any factory in the country. Only abroad.
Great news for German workers, not so good for the other Europeans who will end up losing their jobs even if, in some cases, their factories run more efficiently.
Now the European Competition commissioner Neelie Kroes is trying to get European common market rules respected. She would like to see the German authorities proving that the money offered is not linked to a specific bidder and said GM and the Opel Trust should be given an opportunity to reconsider a buyer “in order to ensure the long-term viability of New Opel”.
The German government says the state aid would have been available to all buyers in any case. And to make things even harder for Neelie Kroes, the other bidder, RHJ, has already said it’s no longer interested.
Brussels could veto the Opel deal and oblige Germany to run a second bidding round, but it doesn’t want to be responsible for tens of thousands of potential job losses. Especially not in the largest European Union economy.
This is a race against time, the longer discussions go on, the more difficult it will be to save Opel. The EU Competition boss’s job here is to be sure that, in any given case of state aid, EU laws are respected and the company which receives it will be restructured and will become more efficient in the long term.
Unfortunately, it seams that it’s easier to fight multinational companies than have your own member states respect the rules. And it also looks like it’s easier to make the Commission turn a blind eye to anti-competitive behavior when you are the EU largest economy.