EC orders Spain to recover state aid from rail operator

25 Jul 16

The European Commission has ordered Spain to recover illegal state aid it granted to a state-owned railway operator for the construction of a high speed train testing centre.

 

Following an investigation opened in March last year, the commission concluded Spanish plans to finance the project to the tune of €358.6m breach state aid rules. The investigation also uncovered that Spain had already paid funds to the rail operator, without disclosing these to the commission.

A commission statement said the state aid “does not meet a genuine objective of common interest”, nor does it “contribute to promoting sustainable development in the region”.

Spain notified the commission of its plans to grant the public funding to railway operator Administrador de Infraestructura ferroviaria in 2013.

ADIF  would build and then own the testing centre, which would contain a railway circuit where trains can run at very high speeds (up to 520 kilometres per hour), with additional installations for testing, approval and tuning of mobile rail equipment, infrastructure and superstructure elements.

However, the commission’s investigation found that Spain had in fact already paid out €140.7m to ADIF since 2011, before the commission’s decision, in violation of state aid rules.

The commission added that the project is also out of line with the European Union’s state aid rules because there does not appear to be any interest in the market to develop projects that run at such high speeds, because they are not considered commercially viable.

Therefore, it said that the absence of demand for these services would mean the testing centre was limited to testing the commercially viable speeds of around 320-350km/h. Testing centres already exist in the EU and tests are performed on commercial railway networks for this purpose, so the Spanish centre would only duplicate these existing infrastructures.

The commission also found that despite the public funding allocated, no private investor had shown interest in participating and the centre was expected to generate losses for the entire period of operation.

“The public funding would thus create a distortion of competition by subsidising a new entrant in the market,” the commission said. “The aid was incompatible with the internal market and [the commission] ordered Spain to recover the funds which have already been disbursed to the company.”

Last week, the commission also referred Greece to court for its failure to recover illegal state aid from Hellenic Shipyards, near Athens. The commission has requested the cash-strapped nation be hit with a fine of around €6m.

The commission first made the order for Greece to recover €250m from the shipyard in 2008. In 2012, the European Court of Justice, where Greece will now be referred, condemned Greece’s inaction.

Greece will also be referred to the ECJ for its failure to transpose the EU’s directive on a single European railway area into national law, along with Luxembourg and Romania.

The commission has also said it will pursue legal action against a number of other member states as part of its monthly announcement of decisions on action against member states who fail to implement EU law.

Luxembourg will also have to stand before the ECJ for failure to transpose a directive on packaging and labelling, Austria will be referred over restrictions on foreign ski instructors, the Czech Republic is accused of illegally shipping toxic waste to Poland, and Bulgaria of failing to sufficiently protect endangered species of birds. 

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