France’s government is asking for a “quick analysis,” EU Competition Commissioner Joaquin Almunia said in an interview with Bloomberg Television in Davos, Switzerland. “It’s possible our conclusion will not be the conclusion anticipated” by the country’s authorities.
EU rules restrict member governments’ aid to local companies. France is seeking EU clearance for about 7 billion euros ($9.4 billion) in state guarantees offered in October on new bonds sold by the banking division of Paris-based Peugeot, Europe’s second-biggest carmaker. The government has said it doesn’t see the guarantees as state aid that would require a full competition probe by the bloc.
Peugeot delivered 17 percent fewer vehicles last year, with the drop worsening in the fourth quarter. A push abroad with models such as the low-cost Peugeot 308 sedan has failed to insulate the company from what Fiat SpA (F) Chief Executive Officer Sergio Marchionne calls Europe’s “Carmageddon,” a regional automotive market that’s shrinking to close to a two-decade low.
The European Commission, the EU’s executive arm, must approve large government payments to companies and can impose conditions, including asset sales, to counter the advantage the aid gives the firm over rivals. State loans granted on the same terms as market investors don’t face such requirements.
“The procedure is following its normal course,” Pierre-Olivier Salmon, a spokesman for Peugeot, said today in response to Almunia’s remarks. Marianne Zalc-Muller, a spokeswoman for French Industry Minister Arnaud Montebourg, didn’t immediately respond to a voicemail message seeking comment.
Peugeot rose as much as 0.6 percent to 6.18 euros and was trading up 0.2 percent at 11:50 a.m. in Paris. The stock has plunged 52 percent in the past 12 months.
The French company has been harder hit by the European sovereign-debt crisis than competitors because it lacks a major international presence to soften declines at home. The region’s car market is forecast to drop to 12.3 million vehicles this year, 23 percent below the pre-crisis peak, IHS Automotive research company estimates. Industry sales in Europe last year fell 7.8 percent to 12.5 million cars, according to the ACEA trade group.
Peugeot is shoring up its Banque PSA Finance unit after Moody’s Investors Service said it may cut the division’s credit rating to junk because of slumping car deliveries. Moody’s confirmed Banque PSA Finance’s long-term rating of Baa3 on Jan. 18, with a negative outlook.
The French carmaker has struggled to match loan rates offered by Volkswagen AG. (VOW) Peugeot’s European deliveries fell 13 last year, leading its market share to narrow to 11.7 percent from 12.4 percent a year earlier, according to ACEA figures.