Brussels Investigates State Aid To Porsche
Porsche’s soon-to-be 100 percent owner Volkswagen is making money hand over fist. At the same time, the German tax payer is contributing 43.67 million euros to the expansion of Porsche’s plant in Leipzig, Germany, where the new Macan will be made starting in 2014. This has attracted the attention of EU competition regulators.
German authorities agreed to donate a direct grant of 43.67 million euros and an investment premium to the cause of the Leipzig plant. According to Reuters, EU competition regulators will examine whether the transaction is in breach of EU state aid rules. Latest word from Brussels:
“The Commission will check whether the aid is necessary and proportionate to provide an incentive for the investment and whether its contribution to regional development outweighs the distortion of competition.”
Porsche spokesman Hans-Gerd Bode says it’s for the good of Leipzig and vicinity:
“We’re taking steps to improve the structures of the regional economy. That’s fully in line with aid guidelines.”
Auto manufacturers everywhere have become quite skilled asking for government assistance. All they have to do is say: "if you don't provide this many Dollars/Euros/Kronen, I'll take my factory and its jobs to the Democratic Republic of Congo". Which strikes fear in the hearts of politicians, and they will quickly comply.
Ok. EU. Germany. Balance both. Who wins?
I would think the Germans could justify this as assisting the redevelopment of the former East Germany. The EU should back off. If Germany doesn't make money, southern Europe doesn't get their bailouts.
Porsche thinks an affordable sports car would damage their recently-divorced orthodontist market, but selling this Murano knock-off won't?