Brussels to probe legality of 110m Imo aid package
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• by Keith Nuthall Iveco could be denied Italian state aid worth £10 million if a Brussels investigation shows that the subsidy is illegal.
European Commission chiefs think that the 32bn lire (£10m) pledge may break European Union competition laws.
If it is proved that the subsidy gives Iveco an unfair advantage over foreign EU competitors, the EC could block the payment.
The EC considers all state grants, but formal investigations are launched only when officials think the payment breaks competition laws.
National governments are allowed to pay aid to companies for "pre-competitive" research, so Iveco would have to prove the money was for basic research into the development of its vans and small lorries, and that it was not focused on the production of the Daily.
But it is clear the EC has doubts as to whether this is the case. In a statement, it said: "if the development of a new model or range of models were to be considered as industrial or pre-competitive research, every car manufacturer could claim R&D aid for every new model it brings to the market."
It added that Iveco would also have to prove it would not have carried out the work without the aid.
The Italian government wants to subsidise 2t56% of the cost of the research between 1994 and 1999.
• The EC is also investigating a 13.8m grant from the Belgian government to Ford for its Transit production line in Genk. It says the probe has been launched because of "doubts about the necessity of the aid"