On 29 September 2021, the French Council of State confirmed a decision of the Administrative Court of Appeal of Marseille of 22 February 2021, in which a claim of EUR 86 million by Corsica Ferries for compensation of damages resulting from the granting of unlawful State aid to a competing shipping operator, Société nationale maritime Corse-Méditerranée (SNCM), was found to be well-established.
The dispute was raised by Corsica Ferries against the Territorial Collectivity of Corsica, a public authority, which granted to SNCM the right to operate the ferry service between the port of Marseille and Corsica from 2007 to 2013. In exchange for the services provided, the Territorial Collectivity of Corsica paid SNCM an annual amount of financial compensation. According to the public authority, this compensation was in line with the European State aid rules for so-called services of general economic interest (SGEIs).
However, following a complaint lodged by Corsica Ferries in 2007, the European Commission held in its Decision 2013/435/EU that the financial compensation awarded to SNCM in respect of the “additional” passenger service to be provided during peak periods constituted illegal State aid incompatible with the internal market. The European Commission considered that “the inclusion of the additional service in the scope of the public service does not correspond to a real public service need and [...] France has in this case committed a manifest error of assessment in classifying [it] as a SGEI” (§167). According to the Commission, there was no indication that the basic passenger service, which was reinforced over the spring-summer period, was not sufficient by itself to meet user demand, even in peak periods. The Commission subsequently ordered the French government to recover the financial assistance provided to SNCM in contravention with State aid rules.
On 1 March 2017, this Decision was confirmed by the General Court of the EU.
The decision of the French Council of State confirms the principle of liability of the public authority for the distortion of competition causing harm to another company. Therefore, it is in line with the Communication from the European Commission on the enforcement of State aid rules by national courts published on 30 July 2021. This Communication explains that “[t]he Court of Justice has repeatedly held that affected third parties can bring such actions for compensation for damages before national courts […]. […] Member States are required to compensate for loss and damage caused to individuals as a result of breaches of Union law for which the State is responsible” (§§88 and 89). It is worth noting that national courts that fail to adopt remedies in order to safeguard the rights of third parties affected by the consequences of the granting of illegal State aid measures may also give rise to liability on the part of the Member State. National courts therefore play a key role in the implementation and control of State aid rules.
Please contact Pierre de Bandt or Jeroen Dewispelaere for further information about this case and/or for general legal advice relating to State aid law.