BUCHAREST (Romania), December 18 (SeeNews) – The European Commission said on Monday it has opened an in-depth investigation into Romanian state aid for rail freight operator CFR Marfa, saying debt write-offs may have given the company an unfair advantage in breach of EU State aid rules.
The Commission's investigation will be looking at a number of state support measures in favour of CFR Marfa, such as a debt-to-equity swap amounting to 1.67 billion lei ($425 million /360 million euro) in 2013 and at the failure to collect, since at least 2010, the social security debts and outstanding taxes of CFR Marfa, and of its debts to CFR Infrastructura.
A state intervention in a company can be considered free of state aid within the meaning of EU rules when it's carried out at conditions that a private investor would have accepted, the Commission said in a press release.
The Commission will now assess whether this was the case for CFR Marfa's public creditors or whether, on the contrary, the state intervention has given CFR Marfa a selective economic advantage over its competitors and constitutes state aid.
"The rail freight market is an essential component of any economy's transport links. CFR Marfa is the incumbent in this market in Romania and has benefited from the cancellation of public debts and the failure of public creditors to collect debts owed by it," commissioner Margrethe Vestager, in charge of competition policy, said.
"We need to check whether a private investor would have acted in the same way as the public authorities did here and, if not, to assess whether these measures are compatible with EU State aid rules."
Unlike passenger rail transport, the freight rail transport market in Romania is highly competitive, with numerous private operators, some having gained considerable market share following liberalisation of the market in 2007, the commission said.
In March 2017, the Association of Romanian Private Rail Freight Operators filed a formal complaint with the Commission alleging that CFR Marfa had received State aid in breach of EU rules.
If the Commission were to conclude that CFR Marfa has received State aid, it would then assess whether this could be compatible with EU rules that authorise certain categories of aid.
The Commission will now investigate further to find out whether its initial concerns are confirmed or not. The opening of an investigation gives interested third parties the opportunity to submit comments. It does not prejudge the outcome of the investigation.
CFR Marfa is the incumbent fully state-owned rail freight transport services provider in Romania and has been in economic difficulties for a number of years. It was incorporated as a joint stock company in 1998, following the reorganisation of the Romanian Railways incumbent, Societatea Naţională Căile Ferate Române (SN CFR).
The company provides rail freight transport services of inter alia domestic coal, cement, chemical products, grain and oil, wood, salt and metals.
(1 euro=4.6260 lei)