EU probes French subsidies for rail operator SNCF

The European Commission announced Wednesday an in-depth investigation into whether France breached EU rules on state support by subsidising the freight division of national rail operator SNCF.

Fret SNCF was converted into a commercial company at the start of 2020, part of President Emmanuel Macron’s controversial overhaul of the debt-laden operator.

But for 12 years before that, Fret SNCF’s losses were covered by its state-controlled parent SNCF.

“Based on its preliminary examination, the commission has concerns that certain measures in favour of Fret SNCF, taken during the period 2007-2019, are not in line with EU state aid rules,” it said.

Under investigation are 4 to 4.3 billion euros ($4.3-$4.7 billion) paid by SNCF to Fret SNCF between 2007 and 2019, and 5.3 billion euros in debt that was written off before it became a commercial company.

A further capital injection of 170 million euros made when it became a commercial entity is also under scrutiny.

The European Commission, the Brussels-based EU executive, oversees competition and state aid laws in the single market and can compel firms to pay back improper subsidies.

But the opening of an in-depth inquiry does not mean that its mind had been made up, and France and other interested parties will now have an opportunity to respond.

France said it was ready to cooperate fully and has all the information it needs to make its case.

“The government is approaching this procedure with confidence, given the reforms and efforts undertaken,” Transport Minister Clement Beaune said.

“We are more than ever determined to guarantee and develop the position of rail freight in France.”