European Commission Seeks Legal Action In Subsidy Row

The European Commission taking Spain to the European Court of Justice in Luxembourg over its failure to recover around 111 million euros in what it calls illegal state aid to its shipyards. The EU executive said in a statement it had asked Spain in early December to recover the aid, paid in the form of 18,451 billion pesetas in special tax credits in 1998 to the state-owned merchant shipyards grouped in holding company Sociedad Estatal de Participaciones Industriales (SEPI). "Despite reminders, Spain has not complied with the decision, which it was obliged to execute within two months. Faced with such a situation, the Commission is obliged to act," it said in a statement. The Commission said the aid was out of line with a package that it had cleared to allow Spain's state-owned shipyards to be restructured in August 1997. It said that Spain itself had challenged the Commission decision on the aid in the Court of Justice, but that did not mean it could suspend action on the order to recover the aid.