Societe Nationale Maritime Corse Mediterranee, a money-losing French ferry operator partly owned by Veolia Environnement SA (VIE), must repay an extra 220 million euros ($296 million) in illegal subsidies, regulators said.
France must recoup the money -- a mix of capital increase, social payments and a “negative price” paid when it was privatized in 2006 -- because the aid harmed competition, the European Commission said. This adds to the regulators’ order in May that SNCM should repay grants since July 2007 to operate ferry routes between Corsica and Marseille during peak periods.
The sum brings total aid SNCM must repay to 440 million euros, Antoine Colombani, a commission spokesman, said by e-mail.
“The government contests the European Commission decisions on the SNCM,” French ministers including Finance Minister Pierre Moscovici said in a joint statement today. “The government doesn’t share its point of view and has initiated several procedural challenges.”
The dispute is holding up Veolia’s accord with French state-owned bank Caisse des Depots et Consignations to withdraw from their transport unit Transdev, which owns the ferry operator. Europe’s largest water company is seeking to extricate itself from the public transit business as part of Chief Executive Officer Antoine Frerot’s turnaround plan to lower debt and sell assets.
The European Union checks whether large government subsidies give a company an unfair advantage over others and can take a state to court to demand it recoup any illegal aid.
The ferry operator “could be placed in receivership” at the request of management or a creditor because of “significant strain” on cash, Veolia warned in an earnings statement on Nov. 7.
Veolia spokeswoman Sandrine Guendoul said she couldn’t provide immediate comment.
SNCM has been plagued by labor strife in the past. Veolia took an impairment loss of 77.8 million euros on non-current assets of SNCM in 2011 and 35 million euros in 2012, according to its latest annual report. The ferry operator had a net loss of 27.5 million euros last year and a 68.9 million-euro loss the previous year.
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