This is the questioned being asked in the UK and the EU about the Magna deal for Opel.
Lord Mandelson has been asking some difficult questions about the competitiveness and costs of Magna's plans for Opel. But now the EU competition chief Nellie Kroes has warned EU countries against bailouts and subsidies that:
"We cannot accept one government bribing companies in order to steal or end the jobs of another"
The problem stems from details of Magna's plan for job cuts. While German factories take the hit in absolute terms, the cuts hit the more efficient plants in Belgium, Spain and the UK relatively harder.
As the Economist puts it:
"Not even the German government’s two nominees to the Opel trust board, set up to run the company until it is sold, could bring themselves to support the plan. One of them, Manfred Wennemer, declared: 'We don’t have a solution that will eventually turn Opel into a competitive company.'"
The deal might be good short-term politics in the run up to the German general election, but the consensus view appears to be that over the long run it is bad business and bad economics.
The EU competition commission will consider the case against the deal. Don't be surprised if Magna gets cut out of the picture in favour of a restructured GM in the US.