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France Unfairly Propped Up Ferry Operator SNCM

by Ulrika Lomas,, Brussels

22 November 2013

On the basis of two judgments from the General Court of the European Union, the European Commission has called on France to claim back from Société Nationale Corse Méditerranée (SNCM) illegitimate state aid worth EUR220m (USD297m) provided to the ferry company as part of its restructuring and privatization.

The Commission has concluded that it had not been established that France, in opting for privatization, behaved like a prudent investor in a market economy nor that it chose the least costly solution for public finances.

Under the European rules, firms in difficulty, such as SNCM, may receive state aid for restructuring if certain conditions are met, namely: they must offer realistic prospects of a return to viability in the long term, they must make a sufficient contribution to restructuring costs to reduce the burden on the taxpayer and they must limit distortions of competition resulting from public aid through compensatory measures. These conditions prevent inefficient firms from being artificially kept in operation in the market thanks to public aid, and thereby safeguard competition within the single European market to the benefit of other users and taxpayers alike.

The Commission has found that the restructuring plan accompanying this aid did not enable SNCM to return to long-term viability without availing itself of further public aid. Moreover, SNCM's own contribution to restructuring costs was highly inadequate, it concluded.

In a separate decision, the Commission has decided to take France to the European Court of Justice for its failure to recover unlawful grants made to SNCM for the "additional service" on the Marseilles-Corsica ferry link during the tourist season. In an earlier decision back in May 2013, the Commission had concluded that this aid was also incompatible with the EU rules on state aid. The aid in this case should have been recovered four months after that decision, but six months later France has yet to take any action.

TAGS: marine

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