The French government’s £5.7 billion financial support package for carmakers in France could be deemed illegal.
The European Commission warned that the loans could be blocked if there were conditions obliging PSA and Renault to preserve French jobs for French workers.
Jonathan Todd, EC competition spokesman, said: “There are indications that carmakers will be obliged to maintain their centre of production in France as a condition for government support.
“If there were any conditions which would mean that aid would be subject to conditions that violated the principles of the internal market then the aid would be illegal.”
EU commissioner Neelie Kroes has been alarmed by reports that Paris has linked the loans to a requirement that production remains in France.