Renault move provokes Belgian Commissioner

Date: 13/03/1997

RENAULT'S decision to pull out of Vilvoorde has concentrated the mind of Competition Commissioner Karel van Miert.

Already worried about the prospect of companies 'subsidy shopping' between member states, the Belgian Commissioner was stung into action by the loss of 3,100 of his fellow citizens' jobs and a subsequent application for state aid to help Renault open a plant in Spain.

Van Miert's staff are working on new guidelines to end a practice which, they fear, is undermining the single market and bringing the EU into disrepute with the public.

The Spanish government had asked for permission to pay 12 million ecu to Renault to encourage the company to modernise and expand capacity at its plant in Valladolid. The plan included the hiring of 500 extra workers and an increase in output of the Clio model.

But Madrid decided to withdraw its application at the end of last week when it became clear that this was going to embroil the government in controversy. As the industry ministry said, it was hardly worth it for such a small amount of aid.

In addition to working on new guidelines, the European Commission will also try to plug aid loopholes in a review of the structural funds regime which is due to take place before 1999.

At the moment, firms which choose to invest in regions with incomes well below the EU average can receive aid worth three-quarters of their investment from structural funds. This falls to half for regions hit by the decline of traditional industries.