Brussels, 30/04/2008 (Agence Europe) - The draft guidelines on State aid to railway companies, which was submitted for consultation in December 2007 (see EUROPE 9572), was adopted on Wednesday 30 April by the European Commission. These guidelines apply solely to railway operators and are designed to accompany the gradual movement towards the opening-up of the railway market (for both freight and passengers) and to provide encouragement for the States, particularly the new Member States, which are struggling to open up their markets. As we anticipated in July last year, the guidelines of the Commission recognise State aid for regional purposes for the renewing of rolling stock in the poorest regions, ban limitless State guarantees and clarify the rules for railway debt to be written off. The new rules will be applicable once they have been published in the Official Journal of the EU.
Writing off debt- It will remain authorised for the State to write off the debt of the company, but only under certain conditions: State aid must only be used to write off certain well-defined debts, which must have been contracted before 15 March 2001. For States which joined the EU after this date, the cut-off date will be the date of their accession; the debts in question must be linked directly to railway transport or construction activities, or the management or use of railway infrastructure; the writing-off of the debt must be carried out only for companies faced with excessive indebtedness and the evaluation of this criterion must take account of gains in productivity to be anticipated for the company; aid must not exceed this objective, put the company into a situation which is more favourable than that of other companies or confer any competitive advantage, even in the short term; aid designed to write off debt must not be paid for out of any levies imposed on other rail operators. Aid for the renewal and purchase of rolling stock - the guidelines recognise the use of regional aid. The Commission has made investments in regional, urban and sub-urban railway transport possible in the poorest regions of the EU. Company restructuring - restructuring in the "freight" sector - The Commission has authorised aid for restructuring to be paid in favour of the freight branch of the company (in principle, a branch of a business which has no legal personality of its own cannot benefit from restructuring aid). These provisions may not, however, be applied on an interim basis except for restructuring projects notified before 1 January 2010 and thus to branches bringing together all freight transport activities. In its clarification of the rules in this field, the Commission based its analysis on the "SNCF Freight" decision of 2004 (see EUROPE 8901). Limited purchase guarantees- The Commission takes the view that unlimited guarantees (more favourable credit conditions obtained by companies whose legal status excludes the possibility of bankruptcy or insolvency) in a sector which is open to competition are incompatible with the Treaty and call for them to be removed, for businesses operating both on competitive and non-competitive markets, before 1 January 2010. The guidelines also clarify the conditions for aid to be paid for transport coordination (use of infrastructure, external costs and interoperability) and the public funding of infrastructure. (A.By).