Greencore wins restructuring aid court battle

THE Government has been ordered to redistribute more than €145 million in restructuring aid after the High Court found it had miscalculated the amount due to each party.

The case had been brought to the courts by Greencore Group plc and Irish Sugar Ltd, trading as Greencore Sugar, against the Government, the Minister for Agriculture and Food, Ireland and the Attorney General. The Irish Farmers Association, as representative of the sugar beet growers, and the Machine Contractors Association, were notice parties.

Greencore brought it because it claimed it deserved more than the €98 million it had been allocated. The other €47.1 million was allocated to sugar beet farmers and contractors.

Greencore made its claim on the basis that the €98 million failed to take into account Greencore’s losses resulting from the major reform of the EU sugar market.

That reform saw the company’s withdrawal from sugar production here.

At yesterday’s hearing Mr Justice Frank Clarke said: “The government reached its conclusion (on how to distribute the money) on a legally incorrect basis. It therefore follows that the government decision must be quashed.”

The judge ruled that the losses to be calculated were those resulting from the closure of Greencore’s plant at Mallow only and not the general losses consequent on the restructuring of the sugar industry.

He found there was a “deliberate decision” by the government not to offer any compensation to Greencore and prejudgement by the government of the issue of aid allocation.

However, he rejected claims by Greencore of objective bias on the part of the government.

There may have been “unguarded comments” by the Minister for Agriculture to the media on the matter but there was no objective bias, he held.

The judge also suggested there may be errors or overstatement by Greencore in relation to how it had assessed its own likely losses as a result of closure of its Mallow plant.

It was not likely, he said, that Greencore incurred substantial losses due to the closure of the Mallow plant. While it had lost a future income stream, that was due to overall reform of the sugar industry and not just the plant closure. Greencore’s losses could also be offset in part against the fact that the Mallow plant could now be used in a more profitable way.

In his decision, the judge found the government’s decision failed to achieve the “sound economic balance” as required by the relevant EC regulations and that it had relied heavily on flawed analysis by Indecon of losses incurred by the various parties.

Greencore said afterwards it was very pleased with the outcome of the Judicial Review.

A spokesman for the Department of Agriculture said: “We will study the outcome and its implications.”