Monti tells Paris to halt Alstom aid

Date:18/09/03

By Peter Chapman

MARIO Monti, the competition commissioner, yesterday issued Paris with a one-week ultimatum to suspend a controversial deal for engineering giant Alstom.

The move, endorsed by all commissioners, is the EU executive's latest tangle with the French government, after its admission that it is likely to breach, until 2006, the 3% of national income ceiling for government budget deficits in the EU's Stability and Growth Pact.

Paris is also in trouble with Brussels over state aid to France Telecom and the failure to reclaim €450-million worth of aid to computer maker Bull.

Monti said France has until 22 September to find new ways of helping Alstom that do not breach the EU's state aid rule book - and do not allow the state a stake in the company.

The move effectively vetoes current French plans to take part-ownership of the company and from issuing a syndicated loan worth up to €300 million.

"The Commission has authorized that I adopt and execute the suspension order at the latest on 22 September," Monti told a news conference.

In the meantime, intense negotiations are expected to continue between Monti and officials in Paris.

Alstom makes trains, ships and power stations and has recently posted huge losses. This followed a drop in demand for its products and a massive increase in costs.