European court slams France for failure to recover 'illegal' subsidies

The European Court of Justice condemned France Thursday for not having recovered 220 million euros in “illegal” state aid paid to a shipping company which runs ferries between Marseille and Corsica.

The European Court of Justice ruled that subsidies to SNCM hurt competition with other shipping companies Reuters/Jean-Paul Pelissier

SNCM received the aid during its privatisation in 2006, and got European Commission approval for it at the time. But the European court later ruled that the subsidies hurt competition with other shipping companies, and ordered in May 2013 that the repayment be made within four months   a decision which France and SNCM fought to have annulled.

France argued that the subsidy was needed to avoid the loss of 1,500 jobs, serious disturbances of public order, a blockage at the port of Marseille or a disruption in the supply of necessities to Corsica.

But the court rejected the arguments, saying that Corsica could be supplied by vessels from other companies or by air. No further appeal is possible.

“The Court considers that it was not absolutely impossible for France to recover the aid,” it said in a statement released Thursday. “As regards the argument relating to social unrest, the Court holds that France has failed to establish that, if the situation arose, it could not cope with such unrest with the resources available to it.”

The European Commission could impose fines on France if it does not execute the order.

“The Court upholds the Commission’s action for failure to fulfil obligations,” it said. “France had not taken the measures necessary to recover the illegal aid.”