Opel labor leader Klaus Franz branded Volkswagen's renewed threat to pull business from Canadian auto parts supplier Magna if it acquires VW's closest German rival as tantamount to blackmail.

Magna is in a close race with Belgian finance group RHJ to gain majority control of the German carmaker and has had to play catch-up recently as management at former Opel parent General Motors had already agreed with RHJ in principle over the sale of a 50.1 percent stake.

With the board of GM set to make a decision as early as next week over the two bids that could finally end months of uncertainty over Opel's fate, European rival Volkswagen renewed on Friday its criticism of a Magna deal that is backed heavily by the German government.

Late on Friday, Opel's senior labor leader Klaus Franz fired back at VW Chief Executive Martin Winterkorn, hoping to quash a harmful debate in its infancy regarding whether a supplier like Magna should compete directly with its customers by acquiring a carmaker.

The threat not to award Magna with contracts is tantamount to blackmail, Franz said.

The VW CEO told reporters earlier that day that his company viewed the deal with suspicion, and would reconsider doing business when it came to complex components were it to pose a disadvantage, despite Magna's repeated assurances to cleanly separate its supplier operations with any automotive operations.

Whoever says a rescue of Opel through Magna poses a competitive disadvantage, is hoping for the downfall of Opel in order to gain an edge for himself and reduce his own overcapacities at the cost of Opel, Franz said.

The Opel labor leader added that Volkswagen has enjoyed state support since decades thanks to Lower Saxony controlling 20 percent.

A German federal law passed solely to protect jobs at Volkswagen allows Lower Saxony a blocking minority that stopped dead Porsche's takeover plans earlier this year.

Analysts have been skeptical whether VW really would pull business away from Magna, since VW is the biggest customer of Faurecia , a major European supplier that is majority owned by French carmaker Peugeot Citroen .

Moreover, Magna's Steyr unit already manufactures the BMW X3, Mercedes-Benz G-Class, the Chrysler 300C and both the Jeep Commander and Grand Cherokee for three different customers.

It will even expand production in the future to include making the Rapide four-door coupe for Aston Martin and the Boxster/Cayman line for Porsche , indicating that it has successfully managed to convince carmakers that technology developed in tandem does not leak to other carmakers.

(Reporting by Christiaan Hetzner; Editing by Victoria Main)

Volkswagen Germany