The European Commission, noting how some European Union countries are trying to save their own car makers, said it will use the force of law to fight countries which give unfair support to their national car industries, be it in the EU or the US. The threat comes as the US and EU governments are rushing to prop up their auto industries in the midst of the worst economic crisis in 60 years. “We have no interest in the collapse of the US car industry, but what happens there to help them must follow international rules.

 We will not hesitate to take the necessary steps if that should not happen,” EU Industry Commissioner Guenter Verheugen said. He had previously said he favoured shoring up the car industry in his homeland of Germany, where Chancellor Angela Merkel is trying to do the same, while French President Nicolas Sarkozy has made no bones about the fact he wants French carmakers saved, even if they have to cut back their plants in other EU countries, which has led to a standoff with the Czech Republic, which holds the rotating EU presidency, and which hosts French car factories. The Brussels-based executive will make sure that national governments stick to the rules on fair competition “both inside and outside the (EU) single market,” Verheugen stressed.

The comments come as car makers in the US and EU member states are appealing for government support to see them through the worst economic downturn in 60 years. US giants GM and Chrysler have already received USD 17.4 billion (13.6 billion Euro) in emergency government loans, but said they would need nearly 10 billion more in federal aid over the coming months if they were to turn the corner. GM said that it would sell its Swedishbased subsidiary, Saab, and could do the same with German subsidiary Opel. Saab filed for bankruptcy protection, while Opel has reportedly asked the German government for 3.3 billion Euro (USD 4.2 billion) in loan guarantees. Verheugen said the Commission intended to protect GM’s European subsidiaries, adding, “We do not believe that you can solve the overcapacity problem by throwing the weakest people off the sledge.” But he also stressed that any aid to Opel would have to be accompanied by thorough restructuring plans, placing the blame for the situation squarely on GM.

“The problems do not simply stem from the sales crisis, they are the result of years of management failure in the (GM) headquarters in Detroit. The European tax-payer cannot foot the bill for it just like that,” he said. Opel is expected to unveil a new business week amidst speculation that it might look for government support, perhaps even combined with independence from GM. But Verheugen warned against inflated political promises, saying that the situation would depend on GM’s own plans. “Politicians should not create hopes that they can’t fulfill by engaging in pseudo-activity,” he warned. The car industry accounts for some 12 million jobs across Europe, but it has been especially hard hit by the global economic crash, with new passenger car registrations in January slumping by 27 percent compared with the same month last year. The European car manufacturers’ umbrella group, ACEA, called on the EU to protect the industry by allowing state lending support, boosting funding by the European Investment Bank and bringing in measures to encourage consumers to buy new cars.