EU Court Upholds Bans on Grants to VW

Europe's highest court upheld a decision today banning part of the state subsidies paid by the state of Saxony to Volkswagen for two of its factories there. The European Court of Justice, based in Luxembourg, rejected requests by the German government, Saxony officials, and VW to permit subsidies that were declared illegal by the European Commission, which enforces EU rules on state aid to business. In 1996, the Commission had approved roughly €270 million ($313 million) in state subsidies to VW that were meant to offset some of the disadvantages of the region. However, the Commission rejected an additional €120 million ($139 million), saying they were incompatible with EU law. Saxony's economics minister has said the state will accept the decision and does not think the ruling with negatively affect the region's economic performance.