VW Files Complaint with European Court over Saxony Subsidies

09/17/96

Reuters reported that Germany's Volkswagen AG announced on Friday that it had filed a complaint with the European Court of Justice. The complaint arises out of the carmaker's dispute with the European Commission over subsidies that the East German state of Saxony tried to pay the carmaker to build a plant within its borders.

VW, Europe's largest carmaker, said the complaint specifically responds to the EC decision to block a portion of the subsidies it received.

The German government also said that it would file a complaint with the Luxembourg court, but emphasized that its decision to file the suit before a Sept 16 deadline would not block its efforts to reach a solution with the EC in Brussels.

The EC agreed to a compromise last week, a deal that calls for the approval of the disputed 91 million marks worth of subsidies in return for which Bonn would block an equal amount of federal aid that has been approved but not yet paid out. Talks between Bonn and Brussels will continue. Germany has said it would withdraw its complaint if a mutually agreeable solution was found.

For its part, Volkswagen responded to the EC's ruling against the subsidies by threatening to withdraw its investment from Saxony, a region plagued by high unemployment, and by filing its complaint. The carmaker did not say whether it would withdraw the complaint if a deal was reached.

Paul Dever -- The Auto Channel