PARIS, Sept 2 The Court of Justice of the
European Union (ECJ) is set to reject on Thursday an appeal by
the French state against a ruling forcing France-Corsica ferry
operator SNCM to pay back 220 million euros of illegal state
aid, court documents show.
SNCM received the aid during its privatisation in 2006, and
got European Commission approval for it at the time, but in 2012
the ECJ's first-level General Court ordered it to repay the aid
following a complaint by SMCM competitor Corsica Ferries.
An appeal against that order by the French state and SNCM -
now 66 percent owned by transport firm Transdev, itself a joint
venture between water and waste firm Veolia and French
state bank CDC - is likely to be rejected, in line with a
January recommendation from the court's advocate-general.
Advocate-General Melchior Wathelet rejected the French state
and SNCM's arguments and proposed the ECJ dismiss the appeals.
The Luxembourg-based court generally follows the
No further appeal is possible and the European Commission,
which has ordered SNCM to repay after the court's first ruling,
could impose fines on France if it does not execute the order.
SNCM has racked up cumulative losses of 250 million euros
and has a second state-aid repayment claim - also of 220 million
euros - hanging over it, which it is also appealing. The second
claim relates to aid given in 2007-2013.
Veolia has long said that the only way to protect SNCM from
the claims is to go under Chapter 11-style court protection, and
continue the viable part of the business under a new legal
structure, with new shareholders and with part of the company's
staff and assets.
The French state, which owns a direct 25 percent stake in
SNCM besides its indirect stake via CDC, came round to this view
in July, but has promised the unions not to seek court
protection before the end of October.
A source familiar with the situation told Reuters that if
SNCM runs out of cash to pay salaries and fuel before then,
court protection could be necessary before that date.
Transdev has said it will put no more new funds into SNCM
and efforts to find a buyer have foundered. Norway's Siem
Shipping and Mexico's Baja Ferries have considered
buying SNCM, on condition of guarantees that they would not have
to repay the aid, which its shareholders cannot give.
The long-running SNCM saga has stopped Veolia from selling
part of its Transdev stake to CDC, as the state bank does not
want to take over majority control of Transdev as long as it
owns the troubled ferry operator, whose unions have launched
several strike actions in the past years.
(Reporting by Geert De Clercq; editing by Susan Thomas)