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Volkswagen, Linamar Subsidy Probes Dropped by EU Agency

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Feb. 26 (Bloomberg) -- European Union probes of aid Volkswagen AG and Linamar Corp. receive from Germany were dropped after the government reduced the planned subsidies for the companies, the European Commission said today.

Germany will cut the aid for both companies below thresholds requiring EU authorization, according to the EU’s official publication today. It didn’t quantify the subsidies the government now plans to grant the firms.

In 2011, the EU started investigating Germany’s planned 83.7 million-euro ($109.5 million) payment to Volkswagen to help the company cover the cost of changing vehicle production at a plant in the eastern German state of Saxony. About the same time, regulators also started probing 26.7 million euros in German government grants and tax breaks to help Guelph, Ontario-based Linamar build a car-parts factory in the country.

EU regulators review large government payments to companies to ensure rivals aren’t harmed by unfair state help. The EU was critical of the aid to Volkswagen at the time, saying it may boost capacity for a market with falling demand.

A similar probe into Volkswagen’s Audi unit was dropped after the Hungarian government withdrew a request for the EU to approve 49.5 million euros in subsidies to upgrade an engine and car assembly plant, regulators said.

To contact the reporter on this story: Aoife White in Brussels at awhite62@bloomberg.net.

To contact the editor responsible for this story: Christopher Scinta at cscinta@bloomberg.net

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