The European Commission has opened an in-depth investigation to assess whether certain French support measures in favour of Fret SNCF are in line with EU State aid rules.
The beneficiary of the measures is Fret SNCF SAS, a wholly owned subsidiary of the French railway operator SNCF SA (‘SNCF’). Fret SNCF has been constantly loss-making, except in 2021. In the period from 2007 to 2019, its losses were continuously covered by its parent company SNCF through intra-group cash advances, which constitute State resources because of shareholding and control by the State.
The Commission’s investigation
At this stage, based on its preliminary examination, the Commission has concerns that certain measures in favour of Fret SNCF, which were taken during the period 2007-2019, are not in line with EU State aid rules. Therefore, the Commission has opened an in-depth investigation into the existence of State aid and, if proven, its compatibility with the abovementioned State aid rules. The measure in questions are:
- The cash advances made by SNCF in favour of Fret SNCF from at least the beginning of 2007 until Fret SNCF’s conversion into a commercial company (on 1 January 2020), the amount of which is estimated to be between EUR 4 and 4.3 billion;
- The cancellation of the financial debt (amounting to EUR 5.3 billion in total, including the above cash advances) of Fret SNCF through legislation in 2019 at the time of its conversion into a commercial company;
- The capital injection of EUR 170 million made at the time of Fret SNCF’s conversion into a commercial company.
The Commission is now carrying out a more in-depth investigation to determine whether its initial concerns are confirmed. The opening of an in-depth investigation gives France and other interested third parties, including the beneficiary, the opportunity to comment. It does not prejudge in any way the outcome of the investigation.
Background
Under EU State aid rules, public interventions in favour of companies can be considered free of State aid when they are made on terms that a private operator would have accepted under market conditions (the market economy operator principle – MEOP). If this principle is not respected, the public interventions involve State aid within the meaning of Article 107 of the Treaty on the Functioning of the European Union, because they confer an economic advantage on the beneficiary that its competitors do not have.
The non-confidential version of the decision will be made available under the case number SA.61880 in the State aid register on the Commission’s competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.