Page last updated at 09:34 GMT, Monday, 14 September 2009 10:34 UK

Warning on Opel 'political fix'

Vauxhall sign
Vauxhall employs 5,500 people in the UK

European regulators must ensure the takeover of Opel does not favour workers in German plants, UK Business Secretary Lord Mandelson has said.

General Motors is to sell its European operations to Canadian firm, Magna, prompting fears for GM's Vauxhall factories at Luton and Ellesmere Port.

Germany has offered Magna loans, but Lord Mandelson told the BBC there must be no link between aid and saved jobs.

Separately, Belgium wants the EU to probe Germany's role in the Opel sale.

Opel's factory in Antwerp is almost certain to close, GM has admitted, as the new buyers look to slash overheads.

Long-term worry

Regulators had to look carefully at the sale to ensure that state aid rules were not being broken, Lord Mandelson said.

"European governments and the commission will want to drill down into the business plans and the financial contributions by the various governments to see that European state aid rules in this Magna-GM deal are being respected.

"I think it is important to say that the European Commission should not accept anything that looks like a political fix or any linkage between aid and retention of jobs in any specific plant or country."

Lord Mandelson has been upbeat about the future of the UK Vauxhall plants - although last week he acknowledged there were likely to be job losses.

Magna has said it was committed to keeping Vauxhall's Ellesmere Port plant open. However, doubts remain about the firm's Luton plant. The two sites account for most of the firm's 5,500 UK workforce.

Magna said it would honour existing contracts at Luton until 2013, but has not given any commitment beyond this point.

The Luton plant has a contract to build Vivaro vans as part of a deal with Renault, but the French carmaker has a clause allowing it to pull out of the contract if there is a change of ownership.

Aid pledge

Some observers have criticised the UK government, arguing that it has been outmanoeuvred by its German counterpart, because Berlin has received specific commitments about safeguarding German jobs.

Magna has said it will not close any plants in Germany.

This pledge meant that the German government put pressure on GM to sell Opel and Vauxhall to Magna. It also provided a 1.5bn euro ($2.2bn; £1.3bn) bridging loan to keep Opel operating in recent months.

Last month, it also said it would lend Opel 4.5bn euros if the carmaker was sold to Magna.

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