by Alessandra Cardone

MILAN, Feb. 21 (Xinhua) -- Italian Prime Minister Paolo Gentiloni warned against fiscal and social dumping within the European Union (EU) on Wednesday, as a struggle to avoid the loss of some 500 jobs at a Whirlpool-Embraco factory near Turin continued.

"We cannot allow forms of fiscal and social dumping, at least within the EU," Gentiloni said in an address at an ITC research center in Milan, later broadcasted by his office. "This is why the government has made Embraco an exemplary case: because it concerns the way of being together in the European Union," Gentiloni added.

The term "fiscal dumping" usually refers to the practice of offering very low taxes in order to lure investments or businesses in its own state, which is considered unfair in terms of competition.

Embraco is a Brazilian unit of U.S. appliance maker Whirlpool, which produces refrigeration compressors and has a plant at Riva di Chieri near Turin, in northwest Piedmont region.

In January, Embraco announced it would lay off 497 workers out of total 537, within its plan to relocate its production from Turin to Slovakia by 2018.

The announcement angered Italy's government, which was trying to negotiate redundancy and other welfare measures with the management to reduce the social costs of the relocation.

It also became a critical issue in the public debate, due to the approaching of the general elections in March.

Italy appealed to the European Commission in order to verify whether Slovakia somehow offered incentives to the Brazilian firm that may amount to state aid, which was not allowed within the EU internal market.

On Tuesday, Italian Minister for Economic Development Carlo Calenda met EU Commissioner for Competition Margrethe Vestager in Brussels to discuss the issue.

The EU official promised to look thoroughly into the matter, and that the Embraco case would become a concern for the EU executive body "in case taxpayers' money had been used," Ansa news agency reported.

In a press conference in Brussels on Wednesday, Vestager said the EU needed time to ascertain whether the case involve a wrong use of funds, but also that it would make sure internal market rules were not disobeyed.

"Everyone may have a reason to move, that is not our business, but it becomes a concern for us if taxpayers' money is involved," Ansa quoted the competition commissioner as saying.

"Funds should be used to create new jobs and not to move jobs from one country to another," Vestager added.

In the same hours, Calenda announced Italy's national agency for inward investment Invitalia held a meeting in Rome with a foreign firm possibly interested in buying the production facility near Turin. No further details about the company involved were unveiled.

Calenda added he would meet the unions next week in Turin to update them on the government's efforts to find an alternative solution to the Embraco plant closure, Ansa also reported.

Finally, Italy's Economy Minister Pier Carlo Padoan on Wednesday said the EU should be severe with Slovakia, in case a misuse of state aid to attract firms from other EU countries was proved.

"I have complete confidence in the competence and impartiality of Competition Commissioner Vestager," Padoan told La7 TV channel.

"If there has been state aid, which is possible, I expect the European Commission to take severe measures, because it would be a serious violation of internal market rules."