France fired back at Brussels on Friday, saying it was right to ask Renault to scrap its plans to move its Clio car production to Turkey as the group agreed last year to save jobs in return for state aid. The EU competition watchdog is demanding an explanation for France's opposition to the transfer and seeking assurances that state help to the industry will not affect companies' ability to act freely.
France's EU affairs minister Pierre Lellouche on Friday said France's state-sponsored deal with carmakers, sealed in February 2009, met EU laws and was approved by the EU Competition Commission.
"Nothing in the commitments we made, forbids the state shareholder to discuss Renault's strategy with management and to express its wish of seeing a car for the European market produced in the European Union," Lellouche said in a statement. The state owns 15 percent in Renault and on Thursday, Industry Minister Christian Estrosi said it could increase that to as much as 20 percent to give a stronger voice in the carmaker's affairs.
Lellouche said Renault had pledged to do all it could to prevent job losses and the code of good practice, which bound French carmakers, excluded the closure of any plant in France.
Economy Minister Christine Lagarde on Friday joined a fast-growing chorus of ministers defending the government's position on Renault. "It is legitimate that, first, as shareholders we are consulted, second that we ask ourselves questions, third that we give our opinion. That is exactly what is going on," Lagarde said.
French President Nicolas Sarkozy has summoned Renault boss Carlos Ghosn to a meeting on Saturday to discuss plans to move the production of its new Clio car to its Bursa factory in Turkey when the new model IV is launched in 2013.
The Turkish plant already produces 180,000 Renault cars a year. Lellouche said France would answer the EU Commission's questions, in a statement released to the public on Thursday, when it officially received them. EU affairs minister Estrosi said he had tried to contact European Competition Commissioner Neelie Kroes on Friday to discuss Renault but had not been able reached her.
Meanwhile, Budget Minister Eric Woerth said France was not planning yet to increase its holding in Renault but would do it if it had to.
"Today, it (a stake increase) is not planned," Woerth said. "If we have to do it, we will... Considering we help this company (Renault) - we put a lot of money in the car industry - it would seem to me paradoxical to invest elsewhere." Renault shares, which have gained more than 9 percent so far this year, were down 1.44 percent at 39 euros by 1043 GMT.