Brussels, 04/03/2003 (Agence Europe) - Competition Commissioner Mario Monti met the German Minister for the Economy, Wolfgang Clement on Monday 3 March. Mr Clement was speaking in support of state guarantees granted by the German government to the shipbuilding sector, which are currently a matter of concern to the European Commission due to the fact that they may distort competition. "The Commission feels there is a problem with the state guarantees", said Mr Clement. Mr Monti's spokesperson, Tilman Lueder, indicated that the loan guarantees in question, which allow beneficiaries to obtain more favourable funding conditions, may infringe European rules, as the premiums are fixed and in certain cases fail to reflect the actual risks taken by the shipbuilder or the entity bringing the ship onto the market (the risks are determined by the "nature" of the ship: a "high tech" ship presents a low commercial risk given the strong market demand, Ed). "We are still in discussions to see how the German guarantees can be changed. The EU may have to open a formal enquiry if an arrangement cannot be found", warned Mr Lueder. It should be noted that the Commission has been discussing this dossier with the German government for two years. Given the disloyal practises put in place by South Korean yards, the EU is looking to bring in defence mechanisms and is broadly in favour of the support measures implemented by national governments, as long as they respect European rules on state aid. The Commission, anxious to find a compromise to suit both parties, might accept granting a variable premium based on the actual risk as a possible resolution to the difference of opinion.