Magna’s plans to acquire Opel, GM’s European arm, may face a problem

AS THE week commences when General Motors is set to conclude a deal to sell Opel, its European arm, the American car giant finds that the European Union has thrown a spanner into the engine bay. Late on Friday October 16th the European Union’s competition commissioner, Neelie Kroes, tentatively suggested what everyone else saw plainly when the bidding process for Opel concluded in early September: the winner got a big push from Germany that gave it an unfair advantage. Mr Kroes belatedly has come to the conclusion that this might fall foul of the EU’s competition rules.

The potential area of dispute is over €4.5 billion ($6.7 billion) of German state aid to Opel that was apparently only available if GM chose Magna, a Canadian car-parts maker, and its partners, Sberbank, Russia’s largest retail bank, and GAZ, Russia’s second-largest carmaker, to take over the business. Magna’s bid was alluring to Germany’s government as the Canadian firm promised to keep open all four of Opel’s factories in Germany with minimal job losses, regardless of their efficiency. This would look appealing at any time but saving German jobs was a priority as elections loomed at the end of September. Without a favourable deal for Opel Chancellor Angela Merkel may have suffered at the polls and thus found it trickier to pull together her favoured coalition. …