Food group Greencore is likely to get a bigger slice of the €145.5 million in EU compensation for the closure of the Irish sugar industry, following a court ruling yesterday. Barry O'Halloranreports.

Greencore had been the Republic's sole processor of beet through its subsidiary, Irish Sugar. But it halted this in 2005, when EU supports were withdrawn, which meant the business was no longer viable.

In return, Brussels pledged to pay €145.5 million compensation to the Irish industry. Greencore has always maintained that under EU rules, it should get 90 per cent of this.

However, the Government last year decided that one-third of the total should be paid to the farmers and contractors (who worked on harvesting the beet).

Greencore challenged this in the High Court, which yesterday shot down the Government's decision, ruling that it was unlawful as it breached EU rules. Mr Justice Clarke's decision means that the Government now has to reassess how to allocate the compensation.

Justice Clarke did not say that the group should get 90 per cent of the €145.5 million, but he found there was a "deliberate decision" by the Government not to offer any compensation to Greencore and that it prejudged the issue of aid allocation.

He also suggested there may be errors or overstatement by Greencore on how it had assessed its own likely losses from the closure of its Mallow plant.

The company yesterday welcomed the court's decision.

Chief executive David Dilger said: "I have a very clear view in relation to this and I have not changed my view," he said. Padraig Walshe, president of the Irish Farmers' Association (IFA), which represents the majority of the 3,900 farmers who supplied Greencore with sugar beet, said the IFA was "considering the ramifications" of the decision.

Last night's Cabinet appointments mean that Mary Coughlan, the Minister for Agriculture who decided on the issue last year, will now have the responsibility for reassessing how the compensation is distributed.