Green light to Fret SNCF restructuring by EC
Brussel – The Commission decided on 02-03-2005 to approve the financing arrangements for the restructuring of Fret SNCF, which has been in serious financial difficulties for several years. The measures examined are part of a comprehensive restructuring plan to make the operator viable again. The Commission considered that this plan was compatible with the European rules to the extent that it was strictly geared to restructuring Fret SNCF and includes measures to reduce capacity and bring forward the date for opening up the French rail market.
Jacques Barrot, Commission Vice-President in charge of the transport portfolio, said of the decision: â€œEurope needs efficient, competitive rail freight. Todayâ€™s decision will enable Fret SNCF to become viable again, in a more open market. This operation shows that the changes taking place in the industry are essential if we are serious about giving rail transport a prominent place again in the European freight market.â€
The restructuring plan provides for reorganising production, improving productivity, reviewing the companyâ€™s business policy and injecting fresh capital. This capital injection will serve to modernise Fret SNCFâ€™s rolling stock and to overhaul its financial structure. It is in two parts: a sum of â‚¬700 million from SNCF, financed by divestment of assets, and a State contribution not exceeding â‚¬800 million.
The Commission, recalling that revitalising the rail industry is a centrepiece of European transport policy, has examined whether the aid to Fret SNCF meets the criteria of the Community guidelines. It has concluded that the aid enables Fret SNCF to become viable again by the end of 2006 and that it is strictly limited to its restructuring needs. In addition, the authorised measures are subject to certain conditions concerning a reduction in Fret SNCFâ€™s traffic volume during restructuring and an earlier date for opening up the French rail freight market; these provisions will ensure that the aid does not constitute a barrier to the development of other operators, which also contribute to developing the carriage of goods by rail.
The French authorities have undertaken to link payment of the aid instalments to the opening up of the market. Payment of the second instalment will be made conditional on the prior opening of the international freight routes. The third instalment will not be payable before the national market is opened up, which in any case is due to take place before 31 March 2006.
This aid should be sufficient to secure a viable future for Fret SNCF, which will not be eligible for any more restructuring aid for 10 years. This â€œone time, last timeâ€ principle will apply to SNCF as a whole, as long as Fret SNCF is not legally separate from its other activities.
As the sector is in the process of being opened up, the Commission will shortly propose a framework setting out how it intends to monitor State aid during this transition period. This framework will be based on the principles of transparency, non-discrimination and proportionality.