The European Commission said it has opened an in-depth investigation to determine whether PSA Peugeot Citroën group's (PEUGF.PK) restructuring plan is compatible with the European Union's state aid rules.
The Commission said the opening of an investigation in no way prejudges its final outcome. It allows interested third parties to submit their comments and increases legal certainty for the aid beneficiary when the Commission adopts its decision.
The restructuring plan notified by France includes a guarantee of 7 billion euros as well as grants and repayable advances of 85.9 million euros.
The plan comprises a restructuring of the industrial organisation and the administrative structures, and a research and development project in the field of hybrid technologies. It forecasts a return to viability in 2015 and a number of compensatory measures to limit distortions of competition.
The commission said it plans to verify whether the assumptions underlying the restructuring plan to restore the company's long-term viability without continued state support are sufficiently realistic, in particular given the recent trend on the car market. The commission said it needs to check that the compensatory measures are proportionate to the distortions of competition created by the grants awarded.
The PSA group produces and sells vehicles under the Peugeot and Citroën brands. In 2011 it sold more than 3.5 million vehicles and parts throughout the world.
In February the Commission granted temporary approval for a state guarantee covering the market issues of Banque PSA Finance for 1.2 billion euros of the 7 billion euros announced. Banque PSA Finance is wholly owned by the PSA group and provides financing for sales by the group.
State aid to firms in difficulty is a type of aid that is most likely to distort competition because it may allow firms to remain on the market that would not have been able to do so by themselves.
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