Claims the Pentagon skewed bidding rules for a tanker jet contract in favour of an American manufacturer will have serious consequences for EU-US relations, a French minister said Wednesday.

France's President Nicolas Sarkozy (L) speaks with employees in the French tyre and valve manufacturer Schrader in Pontarlier, eastern France, on March 9, 2010 during a visit dedicated to employment and professional training.

US aerospace giant Boeing is to win a 35 billion dollar (26 billion euro) contract to build an aerial refueling tanker plane for the US air force after Northrop Grumman and its European partner EADS dropped their joint offer.

Both European officials and EADS, which owns French-based planemaker Airbus, claim that the Pentagon altered bidding rules for the contract in order to favour Boeing's all-American offer over the European bid.

"This is a serious matter," Pierre Lellouche, France's minister for Europe, told reporters after a meeting of President Nicolas Sarkozy's cabinet.

"Naturally, we're talking about the arms market, so it's not a classic matter of international law and the World Trade Organisation, but we're going to respond," he said, without saying what France's response would be.

"I can assure you that there will be consequences. The president will act on the matter at the appropriate time. This matter is in no way finished.

"It's a serious matter. I've always been in favour of a strong Europe in the Atlantic alliance, but it's something that has to work both ways.

"It's obvious that if we bend to the Pentagon's fait accompli and if no-one says anything then Europe's credibility is finished. Europe has to exist and therefore its industry has to exist and make itself respected," he said.

The Pentagon insists that the bidding process was fair and that it will buy the aircraft that best fits the needs of the air force for the price.

But the European Commission has protested and a German minister has accused the United States of protectionism, warning that Berlin would take up the issue at the political level and at the World Trade Organisation.