Paris - In an apparent compromise with the European Commission, the French government is prepared to drop a condition in an aid package to its auto industry that has been criticized as anti-competitive, the daily Le Figaro reported on Wednesday.

Citing a source in the government, the daily said that Paris was now prepared to drop a requirement that car makers Renault and PSA Peugeot Citroen would not shut any French factories for five years in exchange for loans of 3 billion euros (3.86 billion dollars) each.

The aid package will now contain only a minimum number of conditions, the unnamed source said, but added that the "moral commitment by the car makers" not to outsource production was in now way called into question.

The conditions that had been attached to the aid package have been criticized as being against European competition regulations by European Competition Commissioner Neelie Kroes. (dpa)