Rover plant rescue suffers setback

THE INDEPENDENT
Philip Thornton
Transport Correspondent

NEGOTIATIONS AIMED at saving Rover's Longbridge plant were thrown into confusion yesterday after Europe's competition chief warned he might block BMW's bid for UK state aid. Officials in London, Brussels and Frankfurt scrambled to dampen speculation after Karel Van Miert appeared to say that BMW, Rover's parent, had made no official proposal to locate its future Rover plant in Hungary.

Mr Van Miert's spokesman blamed a "problem of English" after the Competition Commissioner said there was "some doubt" as to whether there was genuine competition between the UK and Hungary to win the plant, and therefore on the need for UK state aid. The UK Government has offered grants worth pounds 150m to BMW towards its pounds 1.7bn plan to modernise Longbridge.

Under EU rules car makers bidding for subsidies have to show they could have made the same investment in another European country. Mr Van Miert said: "From the Hungarian side, we have learnt there are no official proposals from the company to locate the plant in Hungary."

It was up to BMW to come up with evidence for the UK Government to prove that the company was really considering a second site, he said. His comments caused consternation in Whitehall and at Rover, which said BMW had not yet sent details of the UK offer and the Hungarian alternative to Mr Van Miert.

A spokesman for the Department of Trade and Industry said it was waiting for BMW's supervisory board to approve the deal before the EU could be formally notified. "BMW has made it clear that the agreement was won against significant competition from Hungary," he said.

Rover said: "We are confident the agreement reached in principle with the UK Government conforms with the requirements of EU competition policy." Mr Van Miert's spokesman said the commissioner meant to say he needed to see evidence that Longbridge had won the investment in a fair competition.