EU antitrust watchdog in talks with Germany over 200 bln euro support plan

BRUSSELS, Oct 3 (Reuters) - The European Commission, which oversees EU antitrust policy, said on Monday it was talking with Germany about its energy support package, which critics say will distort competition in the bloc by giving an advantage to German business.

The 200 billion euro ($195.24 billion) "defensive shield", including a gas price brake and a cut in sales tax for fuel, is designed to protect companies and households from the impact of soaring energy prices.

"We are fully committed to preserving a level playing field and a single market, and avoiding harmful subsidy races," a European Commission spokesperson told a news conference when asked about the German package.

"What I can say is that we are in contact with the German authorities on this matter," the spokesperson continued, without elaborating, but noting that it was talking to other national authorities too.

The Commission, which supervises competition policy in the 27-nation EU, rules on whether state aid is legal or not after being notified by members of their plans.

The EU commissioner for the internal market, Frenchman Thierry Breton, reacted to the German plan in a tweet on Friday, saying the EU needed to be vigilant about the level playing field and asked what room for manoeuvre other EU members had.

The German package dwarfs what other EU governments have set aside. Support measures are also a headache for the European Central Bank in its fight against inflation, which has hit 10%.

Euro zone finance ministers meeting in Luxembourg on Monday were expected to pledge that national financial shields against soaring energy costs will be temporary and targeted.

European Commission President Ursula von der Leyen said in a speech on Saturday that the European Union needed to find a common response to the crisis of energy costs.

"Without a common European solution, we seriously risk fragmentation," she said.

($1 = 1.0244 euros) (Reporting by Philip Blenkinsop; Editing by Jan Harvey)