Friday, November 16, 2007

Romania addresses EC investigation of Ford deal

By Paul Ciocoiu for Southeast European Times in Bucharest - 15/11/07

Last week, Romania's privatisation agency sent European Commission (EC) officials in Brussels the answers to a series of questions related to an investigation of the country's recent deal with Ford Motor Company.

The EC is examining whether Romania committed state aid violations in the sale of the Automobile Craiova car plant to Ford.

EU Competition Commissioner Neelie Kroes said, "The EC entirely supports Romania's privatisation strategy. Yet, we have to make sure the privatisation process was open and transparent, without illegal state aids. In this case, I suspect that the state-aids regulations have been encroached upon."

Jonathan Todd, an EC spokesman, said that "illegal state-aids" mean "any aids granted without a prior notification of the Commission".

Prime Minister Calin Popescu Tariceanu and Ford of Europe's Director for Business Strategy, Lyle Waters, signed the privatisation contract on September 12th during the Frankfurt Auto Fair. Ford agreed to buy 72.4% of the plant for 57m euros.

Romania reportedly canceled the plant's debts and guaranteed payments of the company's debts to other former Daewoo branches. Additionally, Romania required that Ford agree to -- during the next four years -- a minimum production level of 200,000 cars and the continuation of the plant's current activity, as well as hiring all employees of the former Daewoo factory.

The EC investigation will ascertain whether these conditions resulted in a lower price than if the sale had been unconditional.

The Authority for State Assets Recovery (AVAS), Romania's privatisation agency, said the government's answers to the EC's queries were drafted by all state institutions involved in the privatisation of the Romanian car manufacturer. The answers were not released, however, because they contain confidential elements about the process.

AVAS assured Brussels that the privatisation took place according to the communitarian procedures and in a transparent manner.

Ford Europe's president, John Fleming, said the company was disappointed by the EC's investigation, adding he was under the impression the privatisation complied with EU regulations.

The EC does not have a deadline for completing its investigation, though they generally last approximately 18 months.

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