(CN) — France did not break the law by giving tax relief to fishing companies after a massive oil spill in the Bay of Biscay in 1999, the EU’s top court ruled Thursday.
The case involves a French relief scheme for the fishing industry after the Erika, an aging tanker transporting heavy fuel for the French oil company Total, broke apart off the northwestern coast of France during a severe storm in December 1999, spilling thousands of tons of oil into the Bay of Biscay.
Later in December, another severe storm in southern France added more woes to the fishing industry.
France in turn helped struggling fishermen and fishing companies by reducing their social security payments in half for six months in 2000. With the effects of the spill and storm so severe to all of France's fishing industry, the relief was provided to all French fishermen and fishing companies.
But in 2004 the European Commission, the EU's executive branch, objected to that move, arguing that France unfairly gave the French fishing industry a leg up over EU competitors through its relief scheme.
The commission ordered France to recoup the relief money given to the fishing industry. Initially, France ignored the commission's demands. But a European Court of Justice ruling in 2011 forced France to seek to recover the money from the fishing industry. France was ordered to recoup money from employers’ contributions to social security that equaled the reduction in employees’ contributions.
With a French fishing company, the Compagnie des pêches de Saint-Malo, now seeking court relief, the Council of State, France's highest court over administrative justice matters, sought input from the European Court of Justice.
The 27 governments that make up the EU are largely forbidden from providing aid to private businesses, thus ensuring fair competition within the EU bloc. These restrictions cover everything from government grants, interest and tax relief, government holdings of a company, and providing goods and services on preferential terms.
The Luxembourg-based court ruled Thursday that the relief scheme was valid and that French fishing companies did not benefit unfairly. It noted that fishing companies “merely act as an intermediary” for workers' social security payments and therefore the relief could not be seen as a “direct advantage.”
“The commission erred in law,” the ruling said, by arguing that “the reductions in social security contributions were, as a whole, measures favoring fisheries undertakings in that they were relieved of certain charges which they would normally have had to bear.”
Courthouse News reporter Cain Burdeau is based in the European Union.
Follow @cainburdeau
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