ANNOUNCEMENT 09 Feb 2011In February 2011, the government of Greece announced a change in private-sector financial support.
NUMBER OF INTERVENTIONS
the letter from the EC to Greece - Brussels, 13.07.2011 C (2011) 4943. Available from : < http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_32544 >
On 9 February 2011, Greece notified several measures in favour of the Greek Railway company TRAINOSE S.A.
TRAINOSE is a large company, active in the provision of rail freight and passengers transport services, and, as non-core activity, international coach services. In 2010 it had a turnover of EUR 102.7 million, with losses of EUR 187.3 million, and about 1.532 employees. It is the sole provider of railway transport services in Greece. TRAINOSE was established in 2005, as a subsidiary of OSE S.A. (hereinafter: "OSE"). It was then transformed into a holding company and its operations were divided among subsidiary companies. In December 2008, in order to further enhance the physical separation between infrastructure management and transport operations, as well as to open up the transport operations market to competition, TRAINOSE became a completely separate legal entity, entirely independent from OSE and owned 100% directly by the State.
The State support measures that Greece notified to the Commission are summarised below:
- The Greek authorities envisage writing off a debt of EUR 714 million towards OSE for infrastructure charges, provision and maintenance of rolling stock and other services, accrued by TRAINOSE over the period 2007-2010.
- The submitted Restructuring Plan provides for the transfer of five freight terminals from OSE to TRAINOSE, with a total estimated value of EUR 110.056.769.
- The Restructuring Plan designed by Greece for TRAINOSE provides for the transfer of 620 of its current employees, who enjoy quasi-civil servant status and privileges, to other public sector employers, and to reduce the salaries of employees who remain in TRAINOSE by 37%.Future new employees will be hired on private sector salaries (average annual salary 50% of the average for the Remaining employees), and will be subject to ordinary Greek labour law.
- According to the notification, the Greek authorities increased the equity of TRAINOSE in 2009 with EUR 60 million, and intend to perform a second injection of capital, of EUR 65 million, in 2011.
- The Greek authorities envisage starting compensating TRAINOSE for carrying out a passenger transport public service obligation (hereinafter: "PSO"). The PSO is restricted to a maximum of EUR 50 million per year.
- TRAINOSE will conclude with OSE a number of Service Level Agreements (hereinafter: "SLAs"), concerning various services required for its operations. These SLAs will concern: a) the provision of rolling stock maintenance; b) the provision of rolling stock leasing; c) personnel training; d) office rental; and e) coach rental. According to the Greek authorities, all SLAs will be concluded on market terms and conditions. With the exception of the rolling stock leasing SLA (see next recital), the Greek authorities estimate the SLA's cost for TRAINOSE at EUR 32 million for 2011.
The commission found that the measure constitutes State aid withinthemeaning of Article 107(1) TFEU and gave the followingassessment:
"The EU rail freight market was first opened to competition on 15 March 2003 on the trans-European rail freight network with the first railway package. The second railway package liberalized all international freight transport on 1 January 2006, and national rail freight from 1 January 2007. Notwithstanding the liberalisation of freight transport, in Greece, TRAINOSE is so far the sole provider of such services. Yet any potential undue advantage to TRAINOSE might place at disadvantage from the outset potential new entrants on the freight transport market. In addition, rail freight is in competition at least with road freight transport, and therefore road freight transporters might also be affected.
With regards to passenger transport, as from 1 January 2010, the third railway package opened the market for international passenger transport. While this only concerns international services, it does include the cabotage on these lines. At any rate, as established by the Court in the Altmark Trans judgment, the fact that a transport company is active only in one Member State does not exclude the possibility of aid having distorting effects on intra-EU trade. In this respect, it must be noted that since 1995 several countries have, opened unilaterally their rail passenger transport. In this respect, any advantage granted to a rail transport company in one Member State may reduce the possibility for a competitor from another Member State to trade on this geographic market. Furthermore, there is no lower threshold or percentage in terms of the size of the company or the amount of aid under which effect on intra-EU can be excluded." (par. 121-122 of the letter from the EC to Greece - Brussels, 13.07.2011 C (2011) 4943)
The EC added that at this stage, it is doubtful that the proposed measures, if they were qualified to involve aid, could be compatible as restructuring aid, as not all of the requirements of the Rescue and Restructuring Guidelines seem to be met.
The Commission has decided to initiate the formal investigation procedure provided for in Article 108(2) TFEU in respect of the measures described above.
A state measure in the GTA database is assessed solely in terms oftheextent to which its implementation affects the extent ofdiscriminationagainst foreign commercial interests. On this metric,the state aidproposed here is discriminatory.