BRUSSELS (AFX) - The European Commission said there is "no immediate need" for it to take action against Germany following the government's response to concerns over the privatisation of its 81 pct stake in Landesbank Berlin (LBB).
A spokesman for EU competition commissioner Neelie Kroes said that it has taken its current position in the light of "clarifications" made by Germany at the end of last week -- in particular, on the question of employment guarantees.
"The Commission has concluded that at this stage there is no immediate need... to take further action".
Kroes wrote to Germany on March 17 after the commission received indications that a Berlin parliament resolution required the buyer of the bank to guarantee that a certain number of jobs would be maintained in Berlin.
The spokesman said this led to fears the resolution would lead to the sale taking place on a discriminatory basis.
However, the government's reply on Friday afternoon last week allayed such fears.
"We note with satisfaction that, in that reply, the German federal government specified that... the employment conditions would not be a relevant criterion taken into account for the selection of bids," the spokesman told reporters.
"We also note with satisfaction that... as regards the Berlin parliament resolution... the parliament does not manage the sales process (and) that the... resolutions are only expressing a political opinion".
He added that it has been informed that the parliament "would be bound by EU law and would not be bound by that resolution" "when it is called to authorise or note the sales agreement.
He also said that, while the government did not think it necessary to inform 14 pre-selected bidders of the bank that the employment criterion was not applicable, the commission was informed that such communication was made indirectly by advisors to the bidders.
"We note with satisfaction that the financial advisors to the Berlin authorities, UBS, sent a clarification letter to all these 14 pre-selected bidders, highlighting that the sale would be decided on the basis of the economic attractiveness of the offer and, in particular, the price, and not the employment (conditions)".
The commission had warned the German government that it faced court action if it breached the terms of a 2004 ruling, in which the EU executive approved aid to the troubled bank on condition that the bank be privatised in a transparent, non-discriminatory and competitive manner.
This consisted of a 1.75 bln eur capital injection, state guarantees of 21.6 bln eur and an agreement that the government would underwrite any claims made against the bank in pending litigation.
It also demanded that the bank be sold by the end of this year.
The commission said all the information made by the government to clarify its position was confirmed to the EU executive today by the monitoring trustee of the 2004 decision.
With the city state of Berlin having to sell its stake in LBB by the end of 2007, it has asked potential buyers to hand in non-binding offers by Thursday.