The European Commission is to investigate the £1 million subsidy paid by the Government to Gaelic Ferries last October to provide emergency access by beef producers to European markets.

The investigation, under state aid procedures, will seek to establish if the assistance represents an unfair subsidy to either beef producers or to the ferry company.

A statement from the Agriculture Directorate of the Commission yesterday said that the Government would have 30 days to produce details of the aid and its case for making it.

The withdrawal of live export facilities by other ferry companies in the face of animal welfare protests had led to fears of a glut on the Irish market and the Government decided to subsidise a special Cork-Cherbourg ferry in September.

Since then, more than 15,000 head of cattle have been transported to France by Gaelic Ferries, predominantly weanlings exported for fattening. A spokesman for the Department of Agriculture said that the subsidy was crucial to sustain prices and a legitimate means of ensuring farmers access to their markets. The aid was duly notified at the time to the Commission, but implemented before the latter had time to make its position known.

The Commission expresses particular concern that the State failed to use a public tendering procedure although the Government insists that it corresponded with six companies at the time and took the best value offer.