The European Commission has obtained guarantees from the French government on the absence of protectionist measures in the French plan for aid to the automotive sector, the EC said in a February 28 2009 statement.

In a letter to European Competition Commissioner Neelie Kroes, French secretary of state for industry Luc Chatel said that French authorities had undertaken not to implement aid measures to the automotive sector that would contravene the principles of the internal market.

"In particular, the loan agreements with manufacturers would not contain any condition regarding either the location of their activities or a preference for France-based suppliers."
 
This letter follows repeated contacts between the EC and the French authorities since the announcement of the French plan for aid to the automotive sector on February 9 2009.
Euronews reported that France has proposed a six billion euro state loan for Renault and Peugeot-Citroen with an alleged unwritten pledge not to close facilities in France during the loan period, which could be up to five years.

Germany, Slovakia and the Czech Republic, eastern Europe’s biggest car producer, have all aired opposition to the French plan, claiming it undermines the single market.

The EC statement quoted Kroes as saying: "I am satisfied with the guarantees set out by the French authorities on the absence of protectionist elements in the plan for aid to the automotive sector. This result shows the importance and the usefulness of a dialogue with the Commission at the planning stage of national aid plans. It was important for the Commission to remove all ambiguity in this case, as Europe must avoid a return to protectionism and its negative consequences for employment in Europe. I am particularly vigilant in this respect."

Following the announcement of the French plan for aid to the automotive sector, on February 9, the Commission has had regular discussions with the French authorities, the EC said.

"As a result, the French authorities have declared that the envisaged aid measures would not affect the freedom of manufacturers to develop their economic activities in the internal market, and in particular would not prevent the manufacturers from adapting their production to future market developments, by revising their strategic plans if necessary. The loan agreements to be concluded with the manufacturers will not contain any condition concerning either the location of their activities or the requirement to prioritise France-based suppliers."

The EC said that it "will of course monitor closely the implementation of this plan".