UK questions Magna plans for GM's Opel: report

A man walks past the Opel assembly plant in Antwerp September 11, 2009.

LONDON (Reuters) - Britain has questioned the viability of Magna International's plan to buy General Motors' European arm, Opel, in a letter to European competition chief Neelie Kroes, the Financial Times reported on Thursday.

In the letter, obtained by the Financial Times, British business secretary Peter Mandelson says the Canadian company's restructuring plan would be open to political intervention, too expensive and punitive of productive plants.

"We do not believe the case has been demonstrated that the current Magna proposal is commercially the most viable plan," the FT quoted Mandelson as saying in the letter, which it says was sent to Kroes on Tuesday.

The European Commission issued a statement on Wednesday reiterating that it would examine whether Germany had tied 4.5 billion euros ($6.7 billion) in promised state aid to the preservation of Opel plants there.

Canadian automotive supplier Magna MGa.TO and Russian partner Sberbank SBER03.MM have agreed to buy a majority stake in Opel, the main European arm of General Motors GM.UL, and are in talks to work out the final details.

They plan to cut about 10,500 jobs from an Opel workforce of 50,000 across Europe.

Britain is concerned the German aid could spell more job losses for British workers at the two plants in England.

"Capacity at highly efficient plants in Britain and Spain is planned to be under-utilized, in favor of higher utilization of some of GM's other less efficient plants," Mandelson said in his letter, according to the business daily, urging the EC to "ensure a commercially-based outcome rather than one determined by political intervention and subsidies."

(Reporting by Daniel Fineren; Editing by Gary Hill)