The €18.5 billion (US$24.4) refinancing deal struck between the French government and the ailing PSA Peugeot-Citroen group, which includes a €7 billion (US$9.3 billion) state guarantee, is causing headaches to the automaker for the second time in as many months.
In November, talks about advancing the alliance with General Motors’ European operations into a full-scale merger were put on ice because the conditions under which the funds are to be granted rule out any job cuts from the French automaker.
Now Reuters is reporting that, according to French financial publication Les Echos, the European Union is challenging the terms of the French bailout. EU Competition Commissioner Joaquin Almunia said that the refinancing of Banque PSA Finance constitutes “state aid”.
Les Echos claims that the EU started probing the deal after an unnamed competitor filed a formal complaint. The commission’s officials didn’t return calls and Peugeot did not comment on the issue.
By Andrew Tsaousis
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