IP/99/837
Brussels, 10 November 1999
Commission to investigate French development aid
to Saint-Pierre-et-Miquelon for a cruise vessel
The European Commission has decided to launch a formal investigation
procedure into state aid granted by France in 1996 in the form of
development aid in relation to a cruise vessel for use in Saint-Pierre-etMiquelon by Compagnie des Îles du Levant (CIL). The Commission has
doubts about the development aid character of the project since the vessel
appears mainly to have been used outside Saint-Pierre-et-Miquelon. It also
notes that the operator (and eventual owner) of the vessel, CIL, is a
subsidiary of a commercially viable French company. In view of these
concerns, the Commission has doubts whether the measure is compatible
with the common market.
Background
Following media reports in late 1998, the Commission became aware that France
had, in 1996, granted development aid in relation to the acquisition of a cruise vessel
for use in the archipelago of Saint-Pierre-et-Miquelon, situated in the North Atlantic
Ocean close to Canada, by CIL. The aid, which had not been notified to the
Commission, was in the form of tax breaks for the investors and had an aid intensity
of 34%. Its objective, according to France, was to facilitate development and
economic growth in Saint-Pierre-et-Miquelon by boosting tourism.
The Commission has to evaluate the project in accordance with the Seventh
Directive on Aid to Shipbuilding, which allows eligible projects to benefit from aid in
the form of development assistance to developing countries. For the purposes of the
directive, eligible beneficiary countries include not only developing countries
classified as such by OECD, but also all overseas countries and territories in
association with the EU, including the overseas territories of France. In accordance
with the directive, the aid must comply with the OECD Understanding on Export
Credits for Ships.
While the project appears to comply with the OECD rules, the Commission considers
it doubtful that the vessel will contribute in any significant way to the development of
Saint-Pierre-et-Miquelon, since it appears that it will be in the archipelago for
approximately 10 days per year only.
The vessel was constructed in the French yard Alstom Leroux Naval, and was
delivered in 1998. It was financed by private investors who subsequently leased the
vessel to CIL. The investors were entitled to deduct their investment costs from their
taxable income in accordance with a fiscal scheme (“Loi Pons”) approved by the
Commission which encourages productive investments in the departments and
territories overseas.
The tax breaks enabled CIL to hire the vessel at a very low price. CIL is the operator
(and eventual owner) of the vessel. It is registered in Wallis and Futuna and is a
subsidiary of the French company Compagnie des Îles du Ponant. It is obliged to
exploit the vessel for a minimum of 5 years mainly to and from Saint-Pierre-etMiquelon. Furthermore, after the 5 years CIL is obliged to buy the vessel from the
investors.
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