The Government has put forward "very strong arguments" to the European Commission in defence of its grant of £1 million to a livestock shipping company in 1997-1998, which the Commission said breached EU rules.
The Commission said last Wednesday that the £1 million grant paid to Celtic Ferries should be recovered with interest from the company within two months as such a payment was incompatible with the single market.
Yesterday it was learned the Commission had invited the Government to detail its arguments as to why the money should not be recovered from the company involved.
The Commission had accepted that there were special circumstances at the time and that it had taken the view that the beneficiaries of the measures taken then should be regarded as being the Irish livestock producers.
In 1997 the only direct ferry service for carrying animals to the Continent was withdrawn and financial assistance was made available to the State towards the operation of the MV Purbeck from October 1997 to April 1998.
In its submission, the Government said that given the importance of the live trade and to protect incomes and prevent market destabilisation, it was left with no option but to take exceptional measures to restore market access.
It was against that background that the £1 million State assistance was made available and the ship maintained Continental market access and protected Irish farmers against the economic consequences which would have resulted from denial of such access, the submission went on.
In its operating period, more than 40,000 cattle and significant numbers of pigs and sheep were carried on the vessel which also carried other cargo to the Continent.
Government sources said yesterday that the Commission was examining the case again in light of the submission and it was awaiting its response. Since 1998, the live cattle trade has increased in importance and there are now almost 20 designated cattle ships and three roll-on/roll-off ferries available to the trade.