Brussels, 31/05/2010 (Agence Europe) - The European Commission has given some clarification on the letter it sent the French government on 11 February 2010, in which it asked to be informed, within two months, of the action the French government intended to take to remove the implicit unlimited state guarantee which, the Commission held, French National Railways (SNCF) would enjoy as an “EPIC” (Industrial and Commercial Public Establishment). In the letter, which was revealed by French newspaper Les Echos, the Commission drew parallels between this implicit unlimited guarantee for the SNCF and the one it challenged on 26 January 2010 for the French Post Office (La Poste), which has since given up its EPIC status to become a limited company in order to comply with the criteria demanded for postal market liberalisation.
The Commission said that the aim of its letter was to remind the French government of its obligations under the guidelines adopted by the Commission in April 2008 which provide the framework for state aid to rail companies in the context of market liberalisation in that sector. These guidelines were to clarify the rules within the context of the opening up of the market and bring legal security to all operators, allowing them better conditions for investment. The guidelines stated that the unlimited state guarantees enjoyed by come companies in some EU countries infringed European law and should be removed by 22 July 2010. According to the Commission, “EPIC” status gives the SNCF an unfair advantage over its competitors, in that the state acts as final guarantor on the company's commitments, without limit of value or time, thereby freeing it from common law on bankruptcy and insolvency. Moreover, with this state guarantee, the SNCF also enjoyed a better financial rating, meaning that it can get finance at better rates. The state guarantee should, then, be considered as illegal state aid.
On 31 May, France decided to refer the matter to the European courts to press its arguments. It does not agree that the SNCF's “EPIC” status brings with it an implicit public guarantee and says that amending French Railways' “EPIC” status, something the trade unions fear will happen, is “out of the question”.
France is not an isolated case and, according to AFP, the Commission has sent similar letters to Italy, the United Kingdom and Portugal. The spokeswoman for the competition commissioner would not, however, confirm this to be the case. (F.G./transl.rt)