France to try and reverse EU sanctions on ferry firm

(PARIS) - France said Friday it would seek to reverse an EU decision to order ferry firm SNCM to pay back 220 million euros ($288 million) in state aid, which could prove a death knell for the cash-strapped company.

Following an in-depth probe triggered by a complaint by SNCM's Italian rival Corsica Ferries, the European Commission ruled Thursday that part of the state aid given to the company was incompatible with EU competition rules.

SNCM, which provides ferry services between mainland France and Corsica, Tunisia, Algeria and Sardinia, has until the end of August to "hand back the money to the taxpayers" -- in this case to the French region of Corsica.

"We will in the next few weeks file a request for a stay of execution and a plea for annulment at the European Court of Justice," the cabinet of French Prime Minister Jean-Marc Ayrault told AFP.

The EU decision could prove a death knell for the 1,400 employees of SNCM, which registered a loss of 14 million euros last year for a turnover of just 300 million euros and has suffered a string of strikes.

The European Commission said it had taken into account the need for Corsica to have effective maritime links with the mainland, and ruled that while some state compensation was justified, other types of aid gave it an "unjustified advantage."

SNCM -- which traces its roots back to 1850 -- is seen as a key link between Corsica and the mainland, and the government said Friday it needed to "defend the territorial continuity" between the island and the rest of France.