The European Commission has decided to prevent the French Government from going ahead with a refinancing package it had agreed with the troubled train manufacturer Alstom.
At the same time, it has said that it will investigate the package to ensure that it does not break any of the European regulations regarding the use of state aid.
In the proposed package, the French State was to have purchased Alstom shares as well as providing a long-term loan to the company.
The European Commission authorised Competition Commissioner Mario Monti to adopt and implement a ‘suspension order’ by September 22, which would prevent the deal going through if the French authorities pursued its aims without the Commission’s prior approval.
Commissioner Monti said he ‘remained confident’, however, that a solution that avoided any ‘distortion of competition’ would be found.
Alstom responded to the news by requesting the suspension of trading in its shares until further notice.