February 10, 2009 / 11:32 AM / 11 years ago

UPDATE 1-Germany worried French car aid may be unfair -source

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BERLIN, Feb 10 (Reuters) - Germany is not happy about French support for struggling car makers PSA Peugeot Citroen (PEUP.PA) and Renault (RENA.PA) and is concerned that competition laws may be distorted, a senior government source said.

“We need to ensure that no one gets a competitive advantage,” the source told Reuters on Tuesday, speaking under condition of anonymity. “Nothing should be approved which contravenes EU support guidelines,” the source added.

France on Monday pledged 3 billion euros ($3.89 billion) in loans for the car makers, saying the two companies had promised to safeguard French jobs in return. The source said the German government expected the French plans would be subjected to EU review as quickly as possible.

France’s move has put Berlin under more pressure to provide support for its own car industry, the source said.

“But we won’t create any new instruments,” the source added.

However, the source added that carmakers might choose to take advantage of other state provisions, such as a 100 billion euro fund to assist struggling German firms. The fund is part of Germany’s second round of stimulus measures for the economy.

Reporting by Rene Wagner, writing by Dave Graham

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