Pre-empting possible action from the EU’s competition watchdog, American car giant General Motors has abandoned the sale of its beleaguered German arm Opel to a Canadian-Russian bidder, a deal which was marred in suspicion and resentment.
The EU’s competition watchdog has been closely eyeing the offer made to Opel by Canadian car parts maker Magna, Russian bank Sberbank and Russian car company Gaz, which was widely discredited by other member states as an infringement of EU competition rules.
GM’s decision this morning was based on improving business conditions and the strategic importance of Opel in Europe, noted a company statement.
The GM board reportedly harboured grave concerns about the potential for protracted disputes and lawsuits once the new owners had unveiled their restructuring plans for the German car maker across Europe.
A statement from the Commission acknowledged GM’s decision to drop the sale of Opel but warned that the new restructuring plans should be “based on solid economic grounds to ensure the long-term viability of Opel and sustainable jobs for Opel’s workers”.
The statement added that the EU will continue to investigate GM’s financing as well as verify that state aid is fully compliant with EU state aid and internal market rules.
A blow to Merkel and a win for Kroes
Opel refused to comment on what the automaker’s decision means for the German economy, but a spokesperson confirmed that the heart of Opel’s operations is in Germany.
More than half of Opel’s employees worldwide are located in Ruesselsheim, which is important as it harbours “the international technical development department and the central function operations such as marketing and logistics,” Andreas Kroemer told EURACTIV.
Last March, German Chancellor Angela Merkel had undersigned 4.5 million euro of state aid to rescue the German manufacturer Opel.
Behind the scenes, Merkel’s government was reportedly pushing for the deal to go ahead as the buyers were willing to accept conditions that the sale would not threaten Opel’s German-based operations and plants.
This point particularly dissatisfied Neelie Kroes, the EU’s competition commissioner, who asked the German government to clarify the conditions of the Opel sale to Magna/Sberbank/Gaz.
Kroes said there were “significant indications” that the state aid was dependent on Magna winning Opel and asked Germany to reconsider the bidding process.
A placatory letter from Germany’s finance minister, Theodor zu Guttenberg, said the German government would consider other potential deals.
The Commission said it had set a 27 November deadline for its antitrust review of the planned takeover.
The EU’s involvement has now been made largely redundant but today’s news still represents a significant victory for outgoing commissioner Kroes, who, since the onset of the crisis, has to all appearances made it her business to monitor Europe’s state aid injections and prevent distortions in the market.
Europe breathes sigh of relief
Spain, the United Kingdom and Belgium, whose economies also depend on Opel plants, were first to raise the alarm over the Canada and Russia-backed deal.
In all three countries, threatened strike actions had destabilised relations between Opel and its non-German operations.
Magna had confirmed that some 10,500 jobs could be cut overall, roughly half of these in Germany, where all four Opel plants would remain open.
GM’s decision was welcomed in the UK. The secretary-general of the country’s biggest trade union was quoted as saying “he was absolutely delighted that we have finally done the right thing for them and for us”.
The UK business secretary, Lord Mandelson, was opposed to Magna’s involvement as the sale of Opel and its British counterpart, Vauxhall, would require a multimillion-pound injection of public money for the sale to go ahead.