Fret SNCF under EU’s microscope for state aid rules compliance

The rail freight subsidiary of SNCF, Fret SNCF, is subject to investigation by the European Commission. The investigation’s objective is to determine whether financial measures taken in favour of the rail freight company between 2007-2019 comply with state aid rules.

As the European Commission underlines, “Fret SNCF has constantly been loss-making, except in 2021. From 2007 to 2019, its losses were continuously covered by its parent company SNCF through intra-group cash advances, which constitute State resources because of shareholding and control by the State”.

The fact that the loss-making company survived for so many years solely due to considerable financial injections and dept write-offs concerned the EU Commission and led it to launch an in-depth investigation.

In particular, the Commission will examine three specific parameters of the financial relations between Fret SNCF and its state-owned mother company, which are:

• The cash advances made by SNCF in favour of Fret SNCF from at least the beginning of 2007 until Fret SNCF’s conversion into a commercial company (on 1 January 2020), the amount of which is estimated to be between 4 and 4.3 billion euros;
• The cancellation of the financial debt (amounting to 5.3 billion euros in total, including the above cash advances) of Fret SNCF through legislation in 2019 at the time of its conversion into a commercial company;
• The capital injection of 170 million euros made at the time of Fret SNCF’s conversion into a commercial company.

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