EU to Inspect Porsche’s $55M German Grant

(CN) - Germany's plan to fuel development of the Porsche Macan, a compact crossover sports utility vehicle, with a $55 million grant will go before regulators, the European Commission said Wednesday.

While Leipzig is eligible for regional aid to further the development of certain economic sectors, it appears that the German grant increases Porsche's market share beyond acceptable thresholds, according to the commission. Porsche is a division of the Volkswagen-Porsche Group.

The German government informed the commission about the aid in December 2011 when it announced plans to invest $55 million to help the automaker develop the new Porsche Macan. The entire project will cost more than $650 million, according to a commission statement.

Launching an investigation gives interested third parties an opportunity to comment on Germany's investment into Porsche, and the commission will determine if the aid was necessary to attract other investors to the project, according to the commission.

If regulators find the investment was necessary, then the commission will decide whether the benefits of Germany's actions outweigh the distortion of competition and trade between member states.

"Given the high market shares of Volkswagen-Porsche and the capacity increase brought about by the investment the commission has to undertake an in-depth assessment of the aid," the commission said. "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."

The commission is also still investigating other similar allegations against Volkswagen-Porsche. Further disclosure about these probes will follow resolution of certain confidentiality, according to the Commission.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit