Europe moves to end ferry aid

THE European Commission is planning a campaign to stamp out government aid to shipping and ferry firms, similar to that carried out in the first half of the decade against airlines.

One of the main beneficiaries of the clamp-down on subsidies will be P&O, Britain's biggest ferry operator, which complains that its French cross-channel rivals have an unfair advantage because of government aid.

The campaign is likely to begin this autumn when senior Commission official Daniel Jacobs moves over to head the maritime division of the transport directorate. Mr Jacobs, currently a member of EU Transport Commissioner Neil Kinnock's cabinet, used to be in charge of monitoring state aid to airlines.

"There will be more and more cases involving state aid to shipping firms who benefit from aid almost unparalleled in any other sector," said a Commission official.

The Commission is expected this week to start proceedings against six Italian ferry companies for allegedly receiving illegal government subsidies. It is also investigating French government support to Brittany Ferries of around pounds 15m. The aid was given to the company by the French government as part of a recovery programme drawn up after it got into financial difficulties in the mid-1990s.

Indeed, P&O's cross-channel rivals are likely to suffer the most from the Commission's campaign, at a time when they are reeling from the abolition of duty-free shopping.

The Commission's campaign to ensure a level playing field in the sector will also focus on so-called shipping conferences, arrangements between shipping firms to carve-up the business on any given route.

Government aid to ports, and the levels of fees shipping operators have to pay them, could also come under Brussels scrutiny. For example, the Port of Calais charges a lot more than Dover for ferries to land there. The French government uses the money made at Calais in subsidies to smaller regional ports. This has led to accusations from P&O that it is forced to subsidise its competitors, including Seafrance, owned by the French railways SNCF.

Under EU law, subsidies in the maritime sector are still the preserve of the transport directorate DGVII, while most other state aid is controlled by the competition directorate DGIV. It is not yet known who will succeed Mr Kinnock, who is to become vice-president of the Commission next month in charge of relations with the European Parliament.