German chancellor Angela Merkel has said the European Commission would critically examine the French government auto sector rescue plan.

Merkel said in a television interview at the weekend the planned French aid, like assistance offered in other countries, would be scrutinised by the European Union.

"The EU Commission will examine the question 'Is this a distortion of competition or not?'," Merkel said in a ZDF broadcast aired on Sunday, according to Reuters. She added that protecting domestic companies "is not a solution" to the economic crisis.

The report noted that France had angered its partners by announcing a EUR6bn (US$7.8bn) loan to Renault and PSA Peugeot-Citroen in return for an unwritten pledge not to close French sites and that, as the world's top exporter of goods, Germany was particularly vulnerable to any rise in protectionism.