March 8, 2012 / 5:40 PM / 7 years ago

EU Commission plans regulatory holiday for auto sector

BRUSSELS, March 8 (Reuters) - The European Commission will temporarily stop issuing rules that may push up costs for carmakers or restrict them from closing plants, its industrial chief said amid calls by the sector for a Europe-wide solution to overcapacity problems.

Faced with an estimated 20 percent overcapacity, Europe’s carmakers this week called on European Union leaders to agree to plant closures and politically toxic job cuts to ensure their survival.

The EC — the EU’s executive arm — is aware of the auto industry’s strategic importance in Europe, EU Commissioner for Enterprise and Industry Antonio Tajani said in a statement on Thursday.

“We are intensifying efforts to strengthen the tools already available. In particular, I have instructed my directorate-general to implement a regulatory moratorium to avoid new costs and limit relocations,” Tajani said.

“I also intend to propose to my colleagues to examine the possibilities of similar initiatives in their areas of expertise,” he said.

The Commission was exploring various options and the length of the moratorium, said Carlo Corazza, Tajani’s spokesman.

“We want to stop for a number of years putting on the table new regulations concerning the auto industry,” Corazza said.

The Commission can penalise EU governments if they prevent companies from relocating their operations across the 27-country European Union in breach of EU single market rules based on the free movement of people, goods and services in the region.

However, actions against protectionism have been rare.

From 2007-12, Europe’s car industry shut or is planning to close three factories compared with 10 closures in the United States, according to figures from IMC-Auto.

There are 241 plants in 27 countries across Europe. EU national governments generally oppose plant closures because of the political impact. (Reporting by Foo Yun Chee; Editing by Jon Loades-Carter)

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