Release Date:
Release ID: 1197

‘State aids are still distorting competition’ - ERFA and RFG meet EU DG TREN.

State aids to the railways in several member states are still causing distortions in the market for rail freight across Europe.

This is the message given by the European Rail Freight Association (ERFA), representing the interests of the new rail freight operators and selected shippers and Rail Freight Group (RFG), the representative group of the UK rail freight industry, at a meeting with EU DG TREN head of unit Mrs M. Wolfcarius and her team.

Press Release

The meeting was a follow-up to ERFAs and RFGs complaint in December 2006 about DB CEO H. Mehdorns request for political support to finance DB's expansion policy requiring an investment of up to 15 billion. According to ERFAs and RFGs information, DB still plans to finance the expansion of passenger traffic in France due to the expected competition from SNCF in Germany, the acquisition of integrated CEE railways and of selected marshalling yards, rolling stock, rail ports, depots and northern maritime terminals.

Furthermore, the request by DB for German Government finance to replace cast iron brake blocks on their wagon fleet by quieter ones would enable DB to have a modernised wagon fleet at Government expense a benefit not available yet to other wagon owners.

Whereas state aids to fund infrastructure are generally acceptable if all market actors can benefit, the EU DG TREN rules do not allow subventions to operators or customers if they are likely to distort the market.

ERFA and RFG also expressed their concern to EU DG TREN about any state aids going to vertically integrated companies (infrastructure management (IM) and railway undertakings (RU) within a single holding company) unless there is, as a minimum, full compliance with the regulations separating essential functions. They pointed out that, without this and the parallel transparency, there is the potential that these state aids, when allocated to an integrated company like DB AG and SNCB might end up financing parts of the businesses of this group which are in competition with private sector operators who receive no state subvention.

The Communication of EU DG TREN of 3rd May 2006 {COM(2006) 189 final (page 34) clearly states that, in order to comply with EU legislation, each entity (IM and RU etc) should have its own staff, information systems and protected entry to premises to ensure independence of essential functions, with separate staff contracts and minimal contact between different groups.

In the cases of integrated groups such as DB (Germany) and SNCB (Belgium), to list only 2 holding companies out of 11 in the EU, RFG and ERFA pointed out that support functions such as legal departments, IT services, accountancy, etc. are situated on the holding company level and used by all subsidiaries. Thus, these integrated groups cannot be considered to be fully independent according to the relevant EU legislation.

To conclude, ERFA and RFG asked EU DG TREN to carry out an in-depth analysis of the independence of essential functions in all such holding groups on an urgent basis and take action to ensure that structures are changed if they do not comply.

RFG and ERFA requested that the EU published its guidelines on the applicability of state aids in the railways sector; EU DG TREN responded that this would be put out to consultation with stakeholders and member states in the autumn. They confirmed that they are very much interested in any input of RFG and ERFA in this matter.


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