EC adopts guidelines for State aid to rail undertakings

The European Commission has adopted guidelines for State aid to railway undertakings. The guidelines clarify the rules governing public funding of these businesses. This is one way the Commission is boosting the liberalisation of the industry and ensuring that public funding contributes to sustainable mobility in Europe.

The text adopted will henceforward make it possible, under certain conditions, to grant regional aid for the purchase and renewal of passenger rolling stock. The Commission is thus lifting a prohibition contained in the regional aid guidelines. It will be possible to put such aid towards the modernisation of rail transport, which is urgently required, especially in the new Member States, both in the passengers' interest and in that of 'greener mobility'. Wishing to promote sustainable mobility, the Commission is also extending this approach to public transport by road and says it will look into the possibility of giving specific support to the least polluting technologies.

The Commission is in addition adapting the rules on restructuring firms in difficulty to be able to respond to situations where the freight division of a railway undertaking has serious economic problems but cannot be restructured by the railway undertaking as a whole. The Commission says that for a transitional period up to 1 January 2010 it is willing to derogate from certain aspects of the horizontal rules to take into account the specific situation of rail freight. It is thus providing for more favourable arrangements to encourage the restructuring of freight operations, which are nevertheless obliged to ensure that their activities are kept legally separate from the rest of the railway undertaking.

Finally, the Commission draws attention once again to the general criteria applicable to the public fundingof infrastructure, and stresses that apart from the explicit derogations provided for in the guidelines, the competition rules have to be applied to the rail sector as to all the other sectors. This is particularly the case as regards the unlimited State guarantees still given to certain railway undertakings. The Commission recalls that these guarantees constitute State aid which is incompatible with the EC Treaty and therefore has to be dismantled within two years at most.