The European Commission (EC) has launched an investigation into the UK Government's Northern Rock restructuring package.
Under the EC Treaty’s rules on state aid, the commission will examine whether the Government’s nationalisation plan impedes on competition in the sector.
The Government’s notified aid measures may be declared compatible with EC law if compliant with three key measures:
- Restoration of long-term viability without further state support
- Aid limited to the minimum necessary to implement the restructuring
- Avoidance of undue distortions of competition
"The commission needs to open a formal investigation into UK measures to restructure Northern Rock to ensure legal certainty, notably in view of the large scale of the aid measures, the background of current conditions in financial markets and the risks of distortion of competition,” EC competition commissioner Neelie Kroes says.
The EC says it has not received all the details of the restructuring plan and will request further information from UK authorities. Third parties are also invited to comment.
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