State aid: Romania needs to recover €570 million of incompatible aid from the rail freight operator CFR Marfa

The European Commission has found that rail freight operator CFR Marfa received at least €570 million incompatible State aid from Romania through a debt write-off and failure to collect debts from the company. CFR Marfa is the incumbent rail freight transport services provider in Romania. The company, which is fully state-owned, has been in economic difficulties for a number of years. On 18 December 2017, the Commission opened an in-depth investigation to establish whether several Romanian measures in favour of CFR Marfa were in line with EU State aid rules. The Commission found that actions by the State enforcing CFR Marfa’s social security debts and outstanding taxes towards the State budget as of June 2013 were market conform. However, with respect to the remaining identified measures, the Commission concluded that the public support from Romania gave CFR Marfa an unfair economic advantage over its competitors. Therefore, these measures constitute State aid within the meaning of EU rules. The Commission assessed the various measures under its Rescue and Restructuring Guidelines. EU State aid rules allow a State intervention for a company in financial difficulty under specific conditions. In the present case, these conditions were not met: no sound restructuring plan was notified to the Commission, there was no contribution to the cost of a restructuring by the company, nor were compensatory measures to ensure that competition distortions are limited in place. The Commission therefore concluded that the public funding granted by Romania to CFR Marfa, totaling a combined amount of at least €570 million plus interest, is incompatible with EU State aid rules and therefore needs to be recovered by Romania. Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “The rail freight market is an essential component of any economy’s transport links. Certain public support measures in favour of the state-owned incumbent CFR Marfa have given them an unfair economic advantage vis-à-vis other operators. They consist of the cancellation of public debts and the failure of public creditors to collect debts from the company. This is in breach of EU State aid rules. Romania will now have to recover the incompatible aid.” The full press release is available online in ENFRDERO