EU to Investigate French Subsidies to La Méridionale and Corsica Linea
The European Commission has opened an in-depth investigation into the subsidies being provided to two French ferry companies, La Méridionale, which was recently acquired by CMA CGM Group, and Corsica Linea. France contends the subsidies are critical because the ferry services provide a vital public service for passengers and freight to the island, but the EU has strict rules that government public subsidies.
Under the EU State aid rules on public service compensation, companies can receive a state grant for the extra cost of providing a public service. This enables member states to grant aid for the provision of public services, but the EU keeps tight controls to ensure the companies are not overcompensated and fair competition remains.
In December 2022, France awarded a total of five contracts to Corsica Linea and La Méridionale for passenger and freight services from Marseilles to ports on Corsica. The compensation for the two firms is approximately $925 million for the service between 2023 and 2030.
La Méridionale is the older of the two firms operating since 1931 and today with for RoPax vessels on routes to Corsica and Tanger. CMA CGM acquired the firm in May 2023 which was having financial difficulties committing to revitalize the operation. Recently they ordered two new ferries to be built in China for the service.
Corsica Linea, also a French company, was started in 2016 for service from Marseilles to Corsica, Algeria, and Tunisia. They currently run two ferries and six combination cargo vessels.
The EU Commission reports it wants to assess whether the public service compensation granted to the two companies is in line with EU State aid rules. They are requesting additional information looking at the provision of RoRo freight services to determine if as provided in the contracts it is justified as a public service under the rules. They are also looking at the availability of commercial services or the launch of commercial services from neighboring ports.
The investigation will seek to confirm the procurement process and that the contracts are justified by a public service need. France, as well as other interested parties, have the right to submit comments as part of the investigation process.