EU regulators seek details of Spain auto sector aid

18th February 2009, Comments 0 comments

Spanish government will be expected to submit details on its latest auto aid package, says a European Commission spokesman.

BRUSSELS – The European Commission said Tuesday it would seek details from Spanish authorities on measures Madrid is set to take to bolster the struggling auto industry.

"It is our intention to write a letter to the Spanish authorities seeking full information concerning support for the car industry in Spain," a spokesman on competition issues told reporters.

"We have no problem at all with member states giving support to their car industry," he said, as long as it complies with rules governing state aid and Europe's single market.

"We have to, for the sake of ensuring the best chances of rapid recovery from the current recession, ensure the integrity of the single market," he added.

He said he expected that Madrid would be given five working days to respond to the commission, which polices competition issues in the 27-nation European Union.

On Friday, Spain's socialist government said it would allow auto makers to put off paying social security contributions in 2009 as part of measures to help the sector deal with plunging sales.

The government will also extend the period an unemployed auto worker can receive jobless benefits, boost spending on training and lower social security payments to auto plants that improve their safety record.

These measures still have to be approved by unions and auto maker heads.

Spain is the third-biggest car producer in Europe after Germany and France.

The auto sector accounts for six percent of Spain's gross domestic product and it employs directly or indirectly more than 350,000 people, according to Spanish industry ministry figures.

The European Commission and some EU nations have expressed growing concern recently about a tendency towards protectionism as countries try to deal with the economic downturn, notably over their auto industries.

EU Competition Commissioner Neelie Kroes warned that while Brussels is willing to show understanding as the recession bites, she would not allow competition laws to be ignored.

"We need to be flexible on procedures, yes, but not on principle," she said in remarks prepared for delivery in Paris. "Flexibility does not mean throwing out the rules."

[AFP / Expatica]

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