UPDATE 2-EU opens state aid probe into Ford Romania deal

REFILE-EU opens state aid probe into Ford's Craiova

(Adds Romanian government statement)

BRUSSELS, Oct 10 (Reuters) - The European Commission said on Wednesday it had opened an in-depth investigation into possible illegal aid granted in the privatisation of Romania's Automobile Craiova and its sale to Ford Motor Co (F.N: Quote , Profile , Research ).

It said Romania had attached specific conditions to the privatisation of Craiova, formerly called Daewoo Romania and whose parent company went bankrupt, including a minimum production level and the retention of all former employees.

"The Commission has to verify whether these conditions resulted in a lower sales price than if the privatisation had been unconditional. If this is the case, the privatisation could involve elements of state aid," the EU executive said in a statement.

Daewoo Automobile Romania was created in 1994 but its parent company Daewoo went bankrupt in 2000. The Commission said no investor could be found for the Romanian subsidiary because of its "critical" debt situation so the state took it over and renamed it Automobile Craiova.

It said it was also investigating a special law passed for the privatisation.

"If the new investor were to benefit from a debt write-off by the state whereas the debt situation of Automobile Craiova allegedly deterred a number of potential investors from submitting a bid, the investor would have received state aid as well," the Commission said.

Romanian Prime Minister Calin Tariceanu said he was concerned to ensure economic growth and jobs with the privatisation.

"Through the privatisation contract I have asked that a production volume and number of jobs be ensured."

He said he respected the Commission's right to start investigations but added that Romania has the right to consolidate its economy.

The Commission, the European Union's top antitrust regulator, also said it had told Romania to suspend the granting of any unlawful aid until the Commission had taken a decision on its compatibility.

Source: [url=http://investing.reuters.co.uk/investing/financeArticle.aspx?type=mergersNews&storyID=2007-10-10T115420Z_01_L10496965_RTRIDST_0_ROMANIA-STATEAID-EU-UPDATE-2.XML]Reuters.uk[/url]