Cross-Channel ferry operator LD Lines has rejected claims it was given unfair state aid for its new Dover-Boulogne operation and other services.

P&O claims that alleged subsidy by SMPAT, (Syndicat Mixte de l’Activite Transmanche). flouts French and European Union laws, and intends to apply to the administrative court in Rouen for an injunction against the local authority group.

P&O cited criticism by the French public spending watchdog the Cour des Comptes over the Newhaven-Dieppe service, but LD Lines claims this report predates its involvement in the service in March 2007.

LD Lines has responded by claiming that aid from the Department of the Seine Maritime region to operate a cross channel route from Dieppe was notified by the respective authority in Europe as well as in France, in accordance with the law. All concerned authorities agreed to this "Delegated Public Service."

It warned that it reserved the right to take action in its turn to defend its reputation against what it contends are unfounded accusations by P&O.

Officials at last month's launch of the service between Dover and Boulogne were insistent that no subsidies were paid to LD Lines. to attract the operator to the French port.

Francis Leroy, chief executive of Boulogne chamber of commerce, said such payments would be against European law.

However, the chamber was keen to see a replacement service as early as possible following the demise of SpeedFerries, the fast ferry operator.

It has invested millions of euros in port facilities which will provide a new berth for LD Lines, part of the century old Louis Dreyfus Armateurs Group, which admitted risking initial financial losses to launch its Dover/Boulogne/Dieppe service six months ahead of schedule.

In a statement, LD Lines said: "Considering the very tough economic and competitive climate of the market, LD Lines would prefer to focus its energies and resources on developing cross channel trade and business for the company’s new and existing customers, rather than become embroiled in futile debates, prejudicial as well as unwarranted. LD Lines reserves the right to take any measures necessary to protect the company’s name and reputation."