EU PANEL PROBES FRANCE'S SUBSIDIES TO BRITTANY FERRIES

EU PANEL PROBES FRANCE'S SUBSIDIES TO BRITTANY FERRIES

The European Commission is investigating alleged unfair French government subsidies to cross-channel ferry company Brittany Ferries.

The move serves as a signal that the commission, the European Union's executive arm, will not allow France to unfairly prop up its struggling maritime industries.The commission investigation covers three main areas: favorable bank loans, reduced port charges at the company's home ports of Cherbourg and Le Havre, and a deal where leasing charges for ferries were cut by private shareholders in return for a bigger stake in the ferry company.

The formal investigation follows the French government's failure to convince the commission's transport officials in private that all the deals are above suspicion.

The French government is suspected of leaning on France's biggest bank, Credit Agricole, to give Brittany Ferries advantageous loan terms that it would not have been able to find on the private market.

The port charges are being examined to determine if they were just meant to support Brittany Ferries, or if rival ferry and other shipping companies could also qualify.

The ferry company, originally founded to export fresh vegetables and local products from Brittany, was one of France's regional success stories in the 1980s.

Brittany Ferries, however, has been struggling in the last few years to curb losses on its routes between western France and southern England.

Price competition from English Channel ports, the Channel Tunnel, and the huge fluctuations of the British currency against the franc have turned around its fortunes.

In the last two years, it has increasingly turned to the government for help and also launched ultimately fruitless talks with its main rival, P&O Ferries, to stop the damaging decline in ferry fares.