EC opens inquiry into Bull state aid

BRUSSELS - The European Commission has launched an inquiry into French state aid for Bull, the troubled computer company, writes Andrew Marshall.

The issue threatens to create a rift between Brussels and Paris, which has made or is considering making capital injections to several state- owned or state-controlled companies. Karel Van Miert, the Competition Commissioner, has said he will be tough on breaches of EC state aid rules and is said to be unhappy over the French government's approach to Bull.

The French government was not entitled to give the company Fr2.5bn ( pounds 300m) in February that was given as an advance on future aid, the Commission said yesterday.

France has not yet announced a restructuring plan for Bull, which has lost Fr15bn in the past three years, but any package is likely to include more cash. The company is reported to have asked for Fr9.2bn to help restore itself to profitability, and it is on a list of 21 companies scheduled for privatisation. The French industry ministry said yesterday that a restructuring plan was imminent. It may include sales of some units and closure of plants, though with concern over foreign ownership and unemployment mounting in France, these will be highly politically charged decisions.

Cie des Machines Bull is 72 per cent owned by the government, with France Telecom, the state telephone company, holding another 16.2 per cent. IBM has 5.7 per cent and NEC of Japan 4.4 per cent, with the remainder held by the public.