EU to strictly apply state aid, competition rules – Barroso

October 9, 2009

European Commission President Jose Manuel Barroso speaks at a news conference at the EU Commission headquarters in Brussels October 3, 2009. (File photo)      REUTERS/Francois Lenoir   (BELGIUM POLITICS)   BRUSSELS, Oct 9 (Reuters) – European Commission President Jose Manuel Barroso said on Friday he would strictly enforce the European Union’s competition and state aid rules, despite calls for a less rigorous approach.

Barroso, who secured a second five-year term last month, has promised a new industrial policy to increase Europe’s competitiveness but has given few details.

Some economists say the EU’s state aid rules, intended to prevent any undue distortions of competition, should no longer be applied so rigorously because European markets are now more open and face strong competition from non-EU countries.

But asked during a debate on the state of Europe whether state aid rules got in the way of building an industrial policy, Barroso expressed confidence in the “instruments we have at our disposal” .

“We are going to implement the rules … to protect the integrity of the internal market,” he said.

France has long said the strict application of EU competition rules on mergers, public procurement and state aid stands in the way of a more pro-active industrial policy.

The global economic crisis has hit the auto and banking sectors particularly hard. But Barroso distanced himself from calls for large-scale restructuring of the auto sector, saying they were based on an outdated understanding of the sector.

France and Germany have also signalled they would oppose Europe-wide restructuring of the auto sector.

The state aid and competition rules will be under close scrutiny when the European Commission, the EU’s competition watchdog, decides on the planned takeover of loss-making carmaker Opel by Canadian automotive group Magna.

Critics say Germany distorted the level playing field of the EU’s single market by offering state aid to Opel to save jobs in Germany.

(Reporting by Timothy Heritage; Editing by David Cowell)

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