EC Investigates Aid to Volvo’s Gent Plant

LONDON – The European Commission launches an inquiry into whether an €6 million ($7.5 million) grant the Flemish regional government intends to give to Volvo Car’s Gent, Belgium, plant in support of training is illegal under EC rules on state aid.

The EC is investigating whether the aid in fact encourages the auto maker to undertake additional training activities in support of a new medium-size vehicle platform to build Ford, Jaguar and Volvo cars. If Volvo would have carried out training in any case, the grant would not be necessary and would be considered operating aid and, therefore, prohibited under anti-competition laws.

This is not the first inquiry of its kind, an EC spokesman tells Ward’s.

The EC acted against Ford Motor Co.’s plant in Genk, Belgium, on the same grounds last year. It ruled $8 million of local government aid was legal, while $7.6 million was not.

Earlier this year in a case against General Motors Corp. in Antwerp, Belgium, $2.7 million was approved, but a further $4 million was found incompatible with EU law.

These and other cases have raised suspicions the auto industry is attempting to bend competition rules. But EC officials stress the infringements are merely local and involve relatively small sums of money.

The EC inquiry was prompted after the Belgian government filed notice of its intention to award the aid to Volvo.

Volvo opened its Gent plant in 1965 and currently employs 4,800 people. Last year, the plant produced 240,000 vehicles.