European Commission launches probe into financial dealings between Portsmouth City Council and MMD
AN EU investigation has been launched into financial dealings between Portsmouth City Council and cargo firm MMD over claims their deal could amount to a breach of state aid rules.
The European Commission has revealed it has opened an in-depth probe to assess ‘several financing measures’ by the local authority for the benefit of the company, based at Portsmouth International Port.
It follows a complaint by a UK competitor that MMD has an unfair advantage over its rivals as it receives revenue grants from the council, which has owned the firm since 2008.
But Portsmouth North MP Penny Mordaunt has questioned whether any EU ruling is ‘short-sighted’ in light of the UK’s decision to leave the union, with an exit plan set to be thrashed out in the new year.
The measures under investigation include – annual revenue grants to cover trading losses of MMD provided by PCC as of 2009, a long-term financing facility provided by the council, an acquisition of two cranes by the council and their subsequent long-term lease to MMD.
The investigation will also look into security for a bank overdraft facility provided by the council.
Investigoators will aim to establish whether these measures provided MMD with an ‘unfair advantage’ over its competitors, in breach of EU state aid rules.
At the same time, the Commission has concluded that the terms of the original acquisition of MMD by the council in 2008 were in line with market conditions and as such did not involve state aid.