The European Commission will closely examine the 7.8-billion-euro (10.1-billion-dollar) aid package for France's auto industry announced by President Nicolas Sarkozy, a spokesman for EU Competition Minister Neelie Kroes said Tuesday, dpa reported.
"If the aid was linked to conditions to keep production at home, then it would be illegal and will not be approved by us," Jonathan Todd told journalists in Brussels. "We want to know all the details."
He noted that Kroes was "worried" about media reports that loans of 3 billion euros each, over five years, to France's two large carmakers, Renault and PSA Peugeot Citroen, were linked to commitments by the two companies not to outsource production to other countries and to buy parts only from French producers.
The aid package also included a loan of 500 million euros for Renault Trucks, a subsidiary of AB Volvo of Sweden, 2 billion euros in aid to the financial services branch of Renault and Peugeot and 600 million euros for French auto industry suppliers.
On Monday, in announcing the aid, Sarkozy only said that the two companies had committed themselves "not to shut any factories for the duration of the loan and to do everything to prevent redundancies."
However, in previous declarations regarding state aid to France's carmakers, he had repeatedly voiced the demand that they commit themselves to building their cars exclusively on French territory.
In so doing, he not only alerted EU anti-protectionist watchdogs, but also antagonized officials in fellow EU member countries Slovakia and the Czech Republic.
Czech President Mirek Topolanek, who currently holds the rotating EU presidency, said that Sarkozy's comments threatened the ratification of the EU's Lisbon Treaty by the Czech parliament.
He also charged that Sarkozy's "protectionist" comments would lead to "an escalation of similar actions" and prolong the economic crisis.
Slovak Prime Minister Robert Fico threatened "to send home (French energy provider) GDF" if France repatriated auto production from his country.
In a nationally televised interview on Thursday, Sarkozy said he would like to see French car production brought home from foreign sites, and specifically cited the Czech Republic.
With France's notoriously truculent trade unions exploiting the economic crisis to try to halt Sarkozy's ambitious economic reforms and popular anger growing about the generous aid packages handed out to French banks, the French president is under great pressure to protect jobs.
On January 29, an estimated 2.5 million people took part in demonstrations to protest the government's economic policies and to demand more aid for small and mid-sized companies and for consumers.