GERMANY: The European Commission has concluded that Germany’s provision of €1·9bn to support the national railway’s freight business DB Cargo is in line with EU state aid rules.
Following a complaint from a competitor, the Commission opened an in-depth investigation in January 2022 looking at four issues: an open-ended profit and loss transfer agreement under which DB has been covering DB Cargo’s losses since 2012; DB providing intra-group services to DB Cargo on potentially favourable terms; advantageous group financing conditions; and the partial coverage by the German Federal Railway Fund of remuneration for civil servants who were previously employed by Deutsche Bundesbahn and are currently allocated to DB Cargo.
The Commission found that the profit and loss transfer agreement involved state aid, but has now been discontinued and will no longer be in place as of January 1 2025.
The three other measures do not constitute state aid; in the Commission’s view, the state did not influence the intra-group agreements and loans, which were transactions in the course of ordinary business. The partial coverage of remuneration for civil servants was in line with market conditions.
The Commission assessed the state aid under the guidelines on rescue and restructuring, which enable EU member states to support companies in difficulty to ensure their viability without continued support. The Commission found the aid to be compatible with the internal market, and is satisfied that divestitures of DB Cargo activities and assets will mitigate distortions of competition.
The Commission said it also took into account that rail freight is ‘indispensable as a lower-emissions alternative to road transport’.
Responding to the Commission’s November 29 announcement, DB management board member for Freight Dr Sigrid Nikutta said the Commission’s decision confirms the course taken for the transformation of DB Cargo.