The European Commission said Wednesday it
will examine if the Romanian government undersold a car plant to
Ford Motor Co. last month and offered to write off the factory's
debts in return for Ford's promise to keep on workers and turn out a
specific number of vehicles.
If EU regulators find that Ford was planning to benefit from a
debt write-off not offered to other potential bidders, they could
stop that part of the sale from going ahead.
The EU executive has ordered Romania to halt any state subsidies
to the plant at Craiova _ effectively freezing the sale _ until it
finishes looking into how the government privatized the debt-laden
factory that it took over last year after the previous owner, South
Korea's Daewoo Motor Co., went bankrupt in 2000.
EU rules prevent governments from favouring one company over
rivals by showering it with public money.
The EU said it would look carefully at how Romania had funded the
privatization and sale of the plant this year, especially how it
extracted promises from the only bidder for the plant, U.S-based
Ford, that may have seen Romania agree to write off the factory's
The Dearborn, Michigan-based car maker agreed last month to pay
57 million euros ($77.9 million) for a 72.4 per cent stake in the
state-owned Automobile Craiova and has vowed to invest another 675
million euros ($923 million) to upgrade and expand car production
Regulators said they would have to check whether conditions that
the Romanian government attached to the sale _ making at least
200,000 cars within the first four years of privatization and
keeping on all 3,900 workers _ had lowered the price.
``If this is the case, the privatization could involve elements
of state aid,'' it said.
They also want to check reports that Romania had promised Ford
the government would write off or guarantee Daewoo's debts in the
country and did not make similar commitments to other companies
interested in buying the plant.
General Motors and JC Russian had signalled interest in bidding
for Craiova earlier this year as Romania's low-wage workers and
membership of the European Union make it an attractive location for
The plant is currently not manufacturing cars and now only sells