EU pursues France over Alstom rescue plan

1st February 2005, Comments 0 comments

BRUSSELS, Feb 1 (AFP) - The European Commission threatened Tuesday to take legal action against France unless it "immediately" fulfils pledges it made last year to secure EU approval of a rescue plan for engineering giant Alstom.

BRUSSELS, Feb 1 (AFP) - The European Commission threatened Tuesday to take legal action against France unless it "immediately" fulfils pledges it made last year to secure EU approval of a rescue plan for engineering giant Alstom.

EU competition commissioner Neelie Kroes wrote to French Finance Minister Herve Gaymard last week warning that she plans to take the case to the European Court of Justice (ECJ) if its concerns were not met in the next few weeks.

"We haven't yet taken a decision to refer France to court. What we would like the French government to do is to immediately implement the measures that they promised to do," said Kroes' spokesman, Jonathan Todd.

"If that didn't happen, and if we had to go to court ... the aid is illegal and illegal aid has to be repaid," he added, as talks got underway between EU officials and experts from the French finance ministry.

In Paris, the finance ministry stressed that the commitments made to the European Commission would be "naturally respected ... as rapidly as possible."

In Brussels the EU executive's spokesman said the talks were "constructive" and would continue to seek implementation by Paris of key commitments made last year.

"Close contacts between Ms Kroes' services and the French authorities (will) continue with a view to ensuring rapid implementation of the concrete measures to open up the French railway rolling stock market," he said.

On July 7 last year the EU commission cleared a French government bailout for Alstom on condition that the troubled engineering giant seek industrial tie-ups within four years.

The approval opened the way for Alstom to receive about EUR 2.285 billion (USD 2.75 billion) in state aid coupled with assistance from creditor banks.

Under the accord with Brussels, Alstom agreed to hive off 30 percent of its activities and to divest an additional EUR 800 million in other areas to be specified at a later stage.

Brussels identified in particular Alstom's transport and energy businesses as being ripe for tie-ups with other groups - which it said must have no involvement with the French state.

In addition the French state agreed to abandon any shareholding in Alstom within a year of the group obtaining an investment-grade rating from credit agencies, and in any event no later than 2008.

According to the French business daily Les Echos, which first reported the EU threat, at issue are several measures concerning the opening of the rail network to competition and measures to transfer into national law EU directives on the handling of tenders for contracts in the public sector.

Kroes has reminded Gaymard that companies that competed with Alstom could at any time make a formal complaint that conditions negotiated by Gaymard's predecessor Nicolas Sarkozy had not been respected, the paper said.

German engineering giant Siemens said in December that it had decided not to challenge the aid package, reportedly so as not to cause difficulties between Germany and France.

The commission spokesman said that the July agreement must be respected in full. "If it is not respected in full then she will seek the aid to be declared illegal by the court," said Todd.

According to her spokesman, the EU commissioner had warned Gaymard that she intended to propose "imminently" to the full EU commission that it take legal action against France before the EU's top court in Luxembourg.

Todd said that this meant "at most a few weeks".

© AFP

Subject: French News

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