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Northern Rock: Commission will investigate possibility of state aid
January 22, 2008 4:19 PM
As reported by Forbes, the European Commission says it will analyse any new British government support for Northern Rock.
A spokesman for EU the Competition Commissioner is reported as saying: 'The UK authorities have been in regular contact with the Commission since last September concerning support for Northern Rock.
'Any UK government support for Northern Rock beyond the rescue aid authorised by the Commission (last year) will have to be assessed by the Commission to verify whether there are elements of state aid involved and, if so, whether the aid is compatible with the guidelines on restructuring aid,' he added.
'In particular, the company needs to be restored to commercial viability without further state aid in the future and there need to be capacity reductions to offset the distortive effect of the aid received.'
Local Liberal Democrat Euro MP, Diana Wallis, said:
"It was inevitable that the proposals announced yesterday would attract the attention of Competition Commissioner, Neelie Kroes.
"It seems to me that the Commission's approval will depend on whether the UK Treasury will take a hands off approach, so it can be considered a commercial operation and what share of the equity the taxpayer will get back".
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