Corsica Ferries says France abused power over aid to SNCM

Corsica Ferries says France abused power over aid to SNCM; to file EU complaint

Corsica Ferries said the French government has abused its power in granting millions in restructuring aid to state-run ferry operator Societe Nationale Corse-Mediterranee (SNCM) and confirmed that it intends to file a formal complaint with EU regulators.

Chief executive Pierre Mattei told that Paris is 'using its huge power against fair competition'.

The privately-owned group confirmed that it intends to file a complaint to the EU's competition services within a few weeks, after discussing the matter with officials in Brussels this week.

Mattei added that the case is urgent as a delegation of public services, of which the SNCM is the incumbent, is up for tender at the end of this year for the period Jan 2007-Dec 2013.

In-mid September, the European Commission said it had extended its investigation into the aid given to SNCM, following changes made by the French authorities to their original plans for aid.

The investigation, which began in August, will determine whether new subsidies granted to SNCM are compatible with EU rules on state aid.

The subsidies in question were granted prior to the partial sell-off of SNCM to private investors Veolia Transport SA and Butler Capital Partners Ltd.

Changes to the restructuring plan include a 142.5 mln eur capital increase subscribed prior to the partial sell-off by state-owned Compagnie Generale Maritime et Financiere (CGMF), and CGMF's assumption of responsibility for 15.5 mln eur in health insurance contributions for SNCM retirees.

This will be followed by a second recapitalisation of 35 mln eur by new shareholders Veolia and Butler Capital Partners and the state through CGMF (8.75 mln eur).

The state last year agreed to sell 38 pct of SNCM to Butler Capital Partners, 28 pct to Veolia and 9 pct to employees. It still holds a 25 pct stake.

The commission approved the sale in late May.

The government's original plan to sell the entire company to Butler had triggered large-scale protests - including the hijacking of a cargo ship by SNCM workers at the end of September last year, an episode which ended when French troops stormed the ship.

In mid-June last year, the EU's lower court, the European Court of First Instance, annulled the commission's decision to approve 76 mln eur aid to SNCM in 2003.

The court said the commission's decision to give a green light to the aid -- based on assessing the minimum amount of aid required to secure the financial viability of the company -- was 'vitiated by a manifest error of assessment'.

Corsica Ferries operates ferry services between mainland France/Italy and Corsica/Sardinia. Although based in France, the company operates under an Italian flag.

SNCM carries passengers and freight from France to Corsica, Algeria, Tunisia and Sardinia.

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