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21.7.2012 Official
Journal
of
the
European
Union L
195/1
II
(Non-legislative acts)
DECISIONS
COMMISSION DECISION
of 24 October 2011
on State Aid SA 32600 (2011/C) — France — Restructuring aid to SeaFrance SA granted by the
SNCF
(notified under document C(2011) 7808)
(Only the French version is authentic)
(Text with EEA relevance)
(2012/397/EU)
THE EUROPEAN COMMISSION,
information, which was provided by the French auth
orities on 4 May 2011.
Having regard to the Treaty on the Functioning of the European
Union (hereinafter: ‘TFEU’), and in particular the first
(3) On
6
April
2011,
a
competitor
of
SeaFrance,
P&O
Ferries
subparagraph of Article 108(2) thereof,
(hereinafter: ‘P&O’), filed a complaint with the
Commission against the restructuring aid.
Having regard to the Agreement on the European Economic
Area, and in particular Article 62(1)(a) thereof,
(4) By
letter
dated
22
June
2011,
the
Commission
notified
the French Republic of its decision to initiate the
procedure (hereinafter: ‘the decision to initiate the
Having called on interested parties to submit their comments
procedure’) provided for under Article 108(2) TFEU.
pursuant to the provisions cited above ( 1 ),
(5) The
Commission
invited
interested
parties
to
submit
their
Whereas:
comments on the aid in question
( 3 ). A detailed
description of the comments received by it is given in
Section V.
I. PROCEDURE
1.1. General procedural context
(6) The
French
authorities
presented
comments
on
14
July
2011 in response to the decision to initiate the
(1) By
decision
of
18
August
2010
( 2 ) the Commission
procedure, on 22 July 2011 following the complaint
approved rescue aid (hereinafter: ‘rescue aid’) in favour
by P&O, and on 19 August 2011 in response to the
of SeaFrance SA (hereinafter: ‘SeaFrance’), which France
comments by interested third parties on the decision to
has since implemented. This aid consisted of a loan for a
initiate the procedure.
maximum amount of EUR [40-70] million granted by
the SNCF to SeaFrance.
(7) On
12
September
2011,
the
French
authorities
communicated a modified restructuring plan.
(2) On
18
February
2011,
the
French
authorities
notified
restructuring aid (hereinafter ‘restructuring aid’) in
favour of SeaFrance amounting to EUR 223 million,
accompanied by a restructuring plan. By letter dated
(8) On
3
October
2011,
the
French
authorities
again
29 March 2011, the Commission requested additional
modified the restructuring plan (hereinafter: ‘the
modified restructuring plan’).
( 1 ) OJ C 208, 14.7.2011, p. 8.
( 2 ) OJ C 102, 2.4.2011, p. 2.
( 3 ) See footnote 1.

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L 195/2
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Official Journal of the European Union
21.7.2012
(9) The
Commission
and
the
French
authorities
met
[…].
A (14) Still
according
to
the
press,
Being
Bang
also
submitted
a
large number of telephone calls ( 4 ) and e-mail exchanges
bid to take over SeaFrance, the terms of which are not
also occurred throughout the procedure. On 18 October
known to the Commission. Being Bang communicated a
2011, the French authorities sent a letter to the
bid to take over SeaFrance to the Commission for
Commission, summarising the arguments presented
information. This document reached the Commission
during the previous exchanges.
outside the time limit in which interested parties could
present their comments, i.e. within 15 days of the date of
publication of the decision to initiate the procedure. In
accordance with case-law, the Commission did not
1.2. National procedural context
therefore forward it to the French authorities and will
not take it into account for the purposes of the
(10) In the context of the procedure for judicial reorganisation
present decision (
of SeaFrance, initiated on 30 June 2010, the Paris

7 ).
Commercial Court is to give a final decision on
25 October 2011 on whether SeaFrance is to go into
liquidation or continue its activity ( 5 ).
(15) None of the bids referred to in recitals (11) to (14) has
been forwarded by France to the Commission. Therefore
they will not be the subject of the present decision.
(11) Furthermore, since the opening of the judicial reorgani
sation procedure, third parties have been permitted to
submit bids to the official receiver that will enable the
1.3. Subject of the present decision
company to remain in business through its total or
partial sale. According to the information available to
(16) The
present
decision
concerns
only
the
capital
increase
the Commission, three takeover bids have been pres
notified by France in respect of SeaFrance, two loans, of
ented: one jointly by the French group Louis Dreyfus
EUR 99,8 million and EUR [40-70] million respectively,
Armateurs and the Danish company DFDS A/S (here
planned in favour of SeaFrance, and the rescue aid
inafter: ‘DFDS’) (referred to jointly hereinafter as ‘DFDS-
approved by the Commission on 18 August 2010.
LDA’), one by the trade union Confédération franaise
démocratique du travail (hereinafter: ‘the CFDT’) and
one by the SNC Being Bang Immaterial (hereinafter:
(17) The
present
decision
does
not
cover
either
the
extension
‘Being Bang’).
of the cash management agreement granted by the SNCF
to SeaFrance (SA.31331 - 2011/NN) or the financing
granted to SeaFrance by the SNCF with a view to the
exercise of the option on the vessel SeaFrance Berlioz
(12) DFDS-LDA
submitted
a
partial
bid
to
take
over
the
assets
and staff of SeaFrance for three symbolic euro (
(SA.31252 - 2010/NN). The Commission had also

6 ). It
forwarded a copy of the bid to the Commission, for
initiated the procedure provided for under Article 108(2)
information. Under this bid, DFDS-LDA would retain
TFEU in respect of these two measures on 22 June 2011.
only 460 employees (i.e. 200 fewer than proposed in
the modified restructuring plan) and would retain the
freight vessel Nord Pas-de-Calais (in addition to the
(18) In view of the urgency associated with the judicial reor
multi-purpose car ferries Berlioz and Rodin), but not
ganisation procedure – the Paris Commercial Court being
the car ferry Molière (whereas the modified restructuring
due to give its decision on 25 October 2011 –, the
plan proposes the sale of the freight vessel Nord Pas-de-
present decision concerns only the restructuring aid,
Calais and does not consider relinquishing the car ferry
which according to the modified restructuring plan,
Molière, but on the contrary early exercise of the
consists of recapitalisation and two loans, and the
purchase option on it).
rescue aid authorised for a limited period. The investi
gation procedure therefore remains open with regard to
the cash management agreement (SA.31331 - 2011/NN)
and the Berlioz financing (SA.31252 - 2010/NN).
(13) According
to
the
press,
the
CFDT
lodged
a
takeover
bid
for the company with the Paris Commercial Court on
24 August 2011. The CFDT would like to retain all
the present 1 100 employees. To this end, it is
II. DESCRIPTION OF THE BENEFICIARY
considering purchasing the SeaFrance vessels for a
symbolic euro and not taking over the company’s liabil
(19) SeaFrance
is
a
public
limited
liability
company
governed
ities. The CFDT plans to obtain a secured loan
by French law, fully owned by SNCF Participations SA,
amounting to at least EUR 50 million from banks and
also a public limited liability company governed by
also to apply to regional and local authorities for an
French law, which manages the participating interests
additional loan of EUR 80 million to be able to
of the SNCF group, which in turn is fully owned by
contend with any new crisis.
the public industrial and commercial entity ‘Société
nationale des chemins de fer franais’ (hereinafter:
‘SNCF’).
( 4 ) […].
( 5 ) Article L. 622-1, first paragraph, of the Commercial Code.
( 6 ) One euro for the tangible assets (the business, ships, slots, etc.), one
( 7 ) Judgment of 9 September 2009, Diputación Foral de lava and
euro for the intangible assets (the IT systems) and one euro for the
Gobierno Vasco v Commission, T-227/01 to T-229/01, T-265/01,
stocks.
T-266/01 and T-270/01, ECR II-3029, points 259 to 272.

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21.7.2012 Official
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of
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European
Union L
195/3
(20) SeaFrance
provides
maritime
transport
services
(freight
— the equivalent of 725 full-time redundancies, i.e.
and passengers). It operates only on the Calais-Dover
almost half the December 2009 workforce, in order
route. Its market shares on this route are as follows:
to return to a staff costs/turnover ratio of 26 % in
2013.
2007 2010
(26) The
plan
also
provided
for
an
improvement
in
produc
tivity of on-board sales depending on passenger numbers,
Passengers (*) 3
720 2
920
a change in the catering range, a redefinition of the
‘Croisière Bleu marine’ package, a review of the car-
Freight (**) 770
550 550
884
deck space management, the abandonment of trans
(*) In thousand passengers
porting individual foot passengers (effective since the
(**) In thousand units
end of 2008) and the axing of tours operating to
single destinations. Furthermore, reductions in external
charges completed the restructuring: the creation of a
(21) At the time of notification of the original restructuring
purchasing department to rationalise the purchasing
plan in February 2011, the SeaFrance fleet consisted of
procedures and improvement of internal control
the following vessels:
(launch of a computer-assisted maintenance management
project, centralised stock control on land and on board,
invitations to tender systematically open to European
— three multi-purpose car ferries (‘Ro-pax’, roll-on-roll-
shipyards for the award of contracts for withdrawal
off passenger ships) carrying passengers and freight:
from service of the vessels, reduction in advertising
the Rodin, the Molière and the Berlioz;
expenditure).
(27) Under the restructuring plan communicated on
— one vessel dedicated exclusively to freight transport:
12 September 2011, the SeaFrance capital increase
the Nord Pas-de-Calais; and
underwritten by the SNCF was to amount to only EUR
166,3 million.
— two vessels not in operation awaiting sale, the
Cézanne and the Renoir (these vessels were sold in
(28) This capital increase was to be supplemented by two
July 2011).
loans of EUR 99,8 million and EUR [40-70] million
respectively, the former intended to finance the restruc
turing proper of SeaFrance and the latter to replace the
(22) In December 2009, SeaFrance had a permanent
existing loan concerning the vessel Molière in order to
workforce of 1 550 employees.
exercise the purchase option for this vessel early (at the
beginning of the year […] instead of the end of the year
[…]). Taking up this option early was to enable
(23) SeaFrance
transports
freight
(transport
of
lorries)
and
SeaFrance to acquire, from the end of […], full
passengers (foot passengers until the end of 2008, cars,
ownership of a vessel with an estimated value of EUR
caravans, motorbikes and coaches) and also offers other
[…] million.
services, such as on-board sales ( 8 ) and foreign exchange
services.
(29) These two loans were to be granted at 6,05 % interest for
a period of 12 years with constant capital repayments.
III. DESCRIPTION OF THE AID
(30) The
French
authorities
justified
this
rate
of
6,05
%:
(24) Under
the
restructuring
plan,
as
originally
notified
in
February 2011 (hereinafter: ‘the original restructuring
plan’), the restructuring aid was to consist of a
(1) by the application of the Communication from the
SeaFrance capital increase of EUR 223 million, to be
Commission on the revision of the method for
underwritten by its sole shareholder, SNCF Participations
setting the reference and discount rates ( 9 ) (here
SA.
inafter: ‘the Reference Rates Communication’),
taking account of high collateral for a rating of
CCC, i.e. a margin of 400 basis points; and
(25) The
original
restructuring
plan
was
essentially
based
on:
(2) by the application by the SNCF, at its request, of a
— a reduction in capacity from 6 to 4 vessels;
method presented as ‘traditional’ ( 10 ), resulting in a
rate of between [6,00-6,15]% and [6,00-6,15]% ( 11 ),
based on:
— a reorganisation of the crossings schedule leading to a
decrease of 29,4 % in the number of crossings per
( 9 ) OJ C 14, 19.1.2008, p. 6.
year compared to the original crossings schedule;
( 10 ) The application of this method is presented in Annex 5 to the
French authorities' comments dated 12 September 2011
modifying the original restructuring plan.
( 8 ) Catering services, take-away sales, mainly of alcoholic beverages,
( 11 ) EURIBOR 12 months + margin + management costs = 2,18 % +
tobacco and perfumes.
[0-5] % + (between [0,00 -0,20] % and [0,10 – 0,20] %).

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Official Journal of the European Union
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— the reference rate EURIBOR 12 months (which
(33) Under the modified restructuring plan, the conditions
on 1 August 2011 stood at 2,18 %);
agreed for the two loans granted by the SNCF are now
as follows:
— a rating of SeaFrance by the SNCF at BB-, based
on financial projections covering the period
— the loans are granted at a rate established at
2011-2019 consisting of 6 ratios, i.e. the lever
8,55 % ( 18 ); France justifies this rate by referring to
age ( 12 ), gearing ( 13 ), equity ( 14 ), interest cover
the Reference Rates Communication, taking account
age ( 15 ), liquidity ( 16 ) and profitability ( 17 ) ratios,
of normal collateral for a CCC rating. Consequently
evaluated at between [0-5/20] and [15-20/20];
the margin is established at 650 basis points;
and
— the loans are granted for a 12-year term; the loan of
— the calculation of a margin (in this case [0-5] %)
EUR 99,7 million may be drawn down in four instal
resulting from the combination of the BB- rating
ments ( 19 ) and that of EUR [40-70] million in one
and a loss given default rate of between [30-
instalment; and
40] % and [40-50] %.
— each drawing must be repaid in constant annual
(31) In
addition
to
the
measures
already
announced
in
the
instalments until repayment in full at the end of
original restructuring plan and the two above-
2023.
mentioned loans, other measures were proposed in the
restructuring plan communicated on 12 September
2011, i.e.:
The other measures proposed in the restructuring plan
communicated on 12 September 2011 (see recital 31)
have been included in the modified restructuring plan.
— the sale of another vessel, the freight vessel Nord Pas-
de-Calais, in addition to the two vessels Cézanne and
Renoir sold in July 2011 in accordance with the
(34) The
estimated
financing
needs
for
the
implementation
of
original restructuring plan;
the modified restructuring plan are as follows:
— a total reduction in the workforce of 922 employees
— repayment of the credit line granted by the SNCF to
(instead of 1 550 employees in December 2009, i.e. a
SeaFrance (EUR [40-70] million);
– 60 % reduction) bringing the total wage bill/
turnover ratio to [20-25] % in 2013 and [20-25] %
in 2019;
— repayment of the cash management agreement
concluded between the SNCF and SeaFrance (EUR
[40-70] million);
— a decrease in the number of crossings per year of
5 830 crossings (i.e. an additional cut of 2 352
crossings compared to the original restructuring
— the future operating cash flows until 2017, net of the
plan), which boils down to a 37,6 % reduction
job-protection plan, existing investments and
compared to the crossings schedule of 2007;
borrowings (EUR […] million);
— the cost cover for the job-protection plan (EUR […]
— economies amounting to EUR [1-5] million (closing
million);
of two SeaFrance agencies located in Calais and Paris,
closing of the call centres in Belgium and Germany,
reduction in marketing expenditure, transfer of all
— the payments related to borrowings, including the
services by the end of 2013 to Calais, abolishing
Rodin, Berlioz and Molière loans (EUR […] million);
the quality certification of the freight vessel Nord
Pas-de-Calais and introduction of automated embar
kation checks).
— the payments related to investments, i.e. primarily the
scrubbers (EUR […] million);
(32) The
restructuring
period
defined
in
the
modified
restruc
turing plan is spread over 5 years, i.e. from 2011 to
— the intra-annual working capital requirements (WCR)
2015, whereas that provided for in the original restruc
or requirements related to operating contingencies
turing plan lasted until 2019.
(EUR […] million).
( 12 ) Corresponds to the gross financial debt/EBITDA ratio. The concept
( 18 ) The collateral for the loan of EUR 99,7 million consists of a first
of EBITDA (earnings before interest, tax, depreciation and amorti
mortgage on the Rodin (according to the French authorities, market
sation) is comparable to the concept of gross operating surplus.
value of EUR […] million, free of any pledge) and a second
( 13 ) Gross financial debt/equity ratio.
mortgage on the Berlioz (according to the French authorities,
( 14 ) Equity/total assets ratio.
market value of EUR […] million, […] and, for the loan of EUR
( 15 ) EBITDA/net financial expenses ratio.
[40-70] million, of a mortgage on the vessel Molière (according to
( 16 ) Net cash x360/turnover ratio.
the French authorities, market value estimated at EUR […] million).
( 17 ) EBITDA/turnover ratio.
( 19 ) […]

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(35) The estimated financing needs for the implementation of the modified restructuring plan amount to a
total of EUR […] million (net of proceeds from sales):
(in EUR million)
2011 2012 2013 2014 2015 2016 2017 Total
Repayment of short-term credit facilities […] […] […] […] […] […] […] […]
Future operating cash flows (from
[…] […] […] […] […] […] […] […]
December 2011)
Residual job-protection plan […] […] […] […] […] […] […] […]
Payments related to borrowings […] […] […] […] […] […] […] […]
Payments related to investments […] […] […] […] […] […] […] […]
Intra-annual WCR […] […] […] […] […] […] […] […]
Total financing needs […] […] […] […] […] […] […] […]
IV. REASONS FOR INITIATING THE FORMAL INVESTIGATION PROCEDURE
(36) The Commission concluded that the notified measure constituted aid within the meaning of
Article 107(1) TFEU and launched a detailed investigation in the light of its doubts regarding the
prospects for return to long-term viability of the company under the restructuring plan and the level
of the company’s own contribution. The Commission also wondered about the adequacy of the
measures proposed with a view to limiting the distortions of competition caused by the aid.
V. COMMENTS BY INTERESTED PARTIES
5.1. Comments by interested parties opposed to the restructuring aid
5.1.1. Complaint and comments of P&O
(37) On
29
July
2011,
P&O
communicated
comments
on
the
decision
to
initiate
the
procedure,
which
supplement its complaint.
(38) The
arguments
put
forward
in
the
complaint
and
P&O’s
comments
are
as
follows:
5.1.1.1. Concerning the difficulties of SeaFrance
(39) According
to
P&O,
SeaFrance’s
share
of
the
market
concerned
( 20 ) fell from 21 % in 2006 to 17 % in
2010 and the company’s load factor fell from 63 % in 2008 to 56 % and 58 % in 2009 and 2010
respectively, i.e. to a non-viable level.
(40) P&O
points
out
that,
for
many
years,
SeaFrance’s
losses
have
been
well
in
excess
of
its
profits
(net
losses of EUR 120 million over the period), which means that SeaFrance would be unable to offer a
return on investment to its shareholders/investors for a very long time.
Year 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Profits/losses of
– 16,8 –
1,7 –
2,8 2,6 –
3,5 3,4 14,8 –
2,4 –
3,0 –
19,0 7,9 7,27 –
13,6 –
57,7 –
36,0
SeaFrance (*)
(*) In EUR million.
Source: P&O’s comments.
( 20 ) According to P&O, the market concerned is that of short sea crossings (i.e. between Dover and France) for passengers
and freight (Short French Sea tourist and freight market).

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(41) In view of the fact that most of SeaFrance’s car ferries are
arguments already set out concerning the market shares
ro-pax (multi-purpose vessels able to carry both
of SeaFrance, its load factors and its status of firm in
passengers and freight) and that the ‘passenger’ business
difficulty.
is very seasonal, it would be crucial for SeaFrance not to
alienate the freight customers who must be assured that
the service will be provided reliably and continuously
throughout the year.
5.1.1.5. Concerning the ill-adapted nature of the internal

restructuring measures
(47) The
only
substantial
measure
proposed
by
SeaFrance
in
(42) However,
according to P&O, as regards the freight
the original restructuring plan consisted in reducing the
business, the value of the goodwill, reputation and
workforce, but the salaries would remain too high (salary
market share of SeaFrance had declined significantly,
costs/turnover ratio of 26 % compared to 15 % at P&O).
notably on account of the frequent interruptions in
Even in the case of an additional 200 redundancies, the
service (strikes, etc.), the market’s awareness of
ratio would be in the vicinity of 22 %.
SeaFrance’s difficulties and the lay-up of the freight
vessel Nord Pas-de-Calais (to keep a vessel laid up
would be very expensive, according to P&O, which also
points out that the laying-up of the vessels Cézanne and
(48) The
laying-up
of
the
vessels
Manet,
Cézanne
and
Renoir
Renoir in the port of Dunkerque would cost at least EUR
would in no way have improved the results (losses) of
1,09 million, and possibly EUR 2,4 million).
2008, 2009 and 2010 and the planned laying-up of the
freight vessel Nord Pas-de-Calais would not significantly
improve SeaFrance’s situation, especially on account of
5.1.1.2. Concerning the compatibility of the aid
the cost of keeping a vessel laid up (EUR 1.8 million per
year).
(43) P&O provides statistics to show that the market
concerned is subject to long-term structural overcapacity.
However, according to point 8 of the Communication
from the Commission – Community guidelines on State
(49) The
reduction
in
the
number
of
crossings
alleged
by
aid for rescuing and restructuring firms in difficulty (
SeaFrance is misleading as it would amount to only

21 )
(hereinafter: ‘the Guidelines’), ‘it would not be justified to
10 % and would result from the change in fleet (the
keep a firm artificially alive in a sector with long-term
vessels Cézanne and Renoir replaced by the larger
structural overcapacity or when it can only survive as a
vessel Molière). The laying-up of the freight vessel Nord
result of repeated State interventions’.
Pas-de-Calais would reduce capacity by only an additional
7 %.
5.1.1.3. Concerning the causes of SeaFrance’s difficulties
(50) The
proposals
to
improve
on-board
sales,
the
restaurants,
(44) The
causes
of
SeaFrance’s
difficulties
are
the
following:
the subcontracting and the control of advertising expen
diture are only part of normal business management, like
that of all the competitors of SeaFrance.
— over-staffing, salaries too high, vessels ill-adapted to

the market;
(51) None
of
the
measures
proposed
would
respond
to
the
— the management is not sufficiently independent of
three new market components (recession, price of fuel,
the State and social power to truly be able to
competition from Eurotunnel) and the exchange rate
manage the company according to the market;
fluctuations.
— inability to adapt to three new market components:
the rising price of fuel, a market tending towards
5.1.1.6. Concerning the market forecasts used by
recession and the competitive pressure from Euro
SeaFrance
tunnel.
(52) P&O points out that SeaFrance’s restructuring plan
forecasts a spectacular increase in its load factors (from
58 % to 80 %) on the basis of a rapid rise in demand
(45) Finally,
it
is
revealing,
according
to
P&O,
that
SeaFrance,
and/or a significant increase in its market share.
which was up for sale for a period of over three years,
did not find a buyer.
(53) However,
the
SeaFrance
forecasts
in
no
way
correspond
5.1.1.4. Concerning the difficulty of restoring long-term
to those of P&O nor to the trend in SeaFrance’s market
viability
share, which fell from 21 % in 2006 to 17 % in 2010.
The quality of the offer to freight customers would be
(46) To explain the difficulty in restoring the long-term
liable to suffer from the laying-up of the freight vessel
viability of SeaFrance, P&O essentially takes up the
Nord Pas-de-Calais and some of the customers could turn
to Eurotunnel in periods of affluence, when SeaFrance
( 21 ) OJ C 244, 1.10.2004, p. 2.
would suffer from under-capacity.

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(54) The fact that the aid measures will have effect only from
— the commitment not to extend the fleet (beyond
2016 but will permit the long-term viability of the
the three existing multi-purpose vessels);
company to be assured only from 2019, would not
comply with point 35 of the Guidelines, according to
which the duration of the restructuring plan must be
— the commitment to limit the capacity and
‘as short as possible’ and ‘must restore the long-term
frequency of crossings of the multi-purpose
viability of the firm within a reasonable timescale’. The
ferries;
laying-up of the freight vessel Nord Pas-de-Calais and
additional job reductions would not significantly
improve SeaFrance’s situation: it would save EUR
— the commitment of France/SNCF not to grant any
6 million in salary costs and EUR 7 million in vessel-
more aid;
related costs (i.e. EUR 13 million in total). P&O never
theless considers that SeaFrance would lose 50 000
freight units, i.e. EUR 5-6 million in freight revenue,
— the commitment of France/SNCF to draw up a
and that the laying-up of the freight vessel Nord Pas-
report showing verifiably that SeaFrance is
de-Calais would cost EUR 1,8 million per year in the
complying with the restructuring plan.
absence of a buyer.
5.1.1.7. Concerning the compensatory measures
(59) In conclusion, P&O asked the Commission not to

approve the restructuring aid.
(55) The compensatory measures must be added to the
measures aiming to restore viability and must therefore
be separate from them. However, according to the French
5.1.2. Comments by Eurotunnel
authorities and the decision to initiate the procedure, all
the allegedly compensatory measurers are necessary to
(60) On
29
July
2011,
the
Eurotunnel
SA
group
(hereinafter:
restore the company’s viability. There is therefore no
‘Eurotunnel’) forwarded its comments to the Commission
compensatory measure, according to P&O.
on the decision to initiate the procedure.
5.1.1.8. Concerning the company’s own contribution
(61) Eurotunnel is sceptical about the feasibility of the
increase in the load factors forecasted by SeaFrance. In
(56) According
to
P&O,
the
withdrawal
of
the
vessel
Manet
in
fact, Eurotunnel considers that the Channel has been
2008 and that of the vessels Cézanne and Renoir cannot
suffering from overcapacity for many years. The
count as a contribution since these withdrawals took
capacity of the Channel Tunnel is only 57 % used and
place well before the notification of the restructuring
the ferries have invested in vessels with very large
and the value of the vessels is minimal compared to
capacity, thereby increasing the already existing over
the total amount of the State aid, i.e. EUR 400 million,
capacity of supply. Moreover, Eurotunnel is of the
according to P&O. The French authorities apparently did
opinion that the reduction in the SeaFrance fleet from
not propose that the sale of the freight vessel Nord Pas-
6 to 4 vessels still does not allow the cross-Channel
de-Calais should count as own contribution and its value,
market to return to equilibrium. For that matter, from
estimated at EUR 12
million, would be negligible
January to February 2011, SeaFrance operated with only
compared to the total amount of State aid.
two vessels without any reduction in its overall traffic.
The load factors of 80 % for the period 2011-2019 are
therefore unrealistic. According to the Eurotunnel esti
(57) P&O suggests the sale and lease-back of the SeaFrance
mates, SeaFrance would need to increase its traffic by
vessels as own contribution.
25 %. On the basis of press articles: ‘[…] to recover
this traffic we have had to cut our prices’ ( 22 ), Eurotunnel
5.1.1.9. Concerning the conditions of granting the aid
therefore accuses SeaFrance of having conducted a price

war for a long time.
(58) P&O
suggests
that
the
restructuring
of
SeaFrance
should
be subject to the following conditions, in addition to
changes remedying the inadequacies and problems
(62) Finally,
Eurotunnel
considers
that
it
is
not
relevant
to
described:
compare the load factors of ro-pax and the railway
shuttles using the Channel Tunnel, as the latter are not
passenger/freight and they allow real-time adjustment to
— the sale and lease-back of the multi-purpose vessels
traffic demand.
fully owned by SeaFrance;
(63) With
regard
to
taking
into
account
the
fuel
surcharge,
— the transparency of costs relating to the main assets
Eurotunnel asserts that SeaFrance only invoices part of
of SeaFrance (notably the leasing of vessels);
this surcharge to its customers, i.e. EUR 8,11 per
crossing, compared to EUR 11,62 for P&O and EUR
— during the restructuring period:
14,73 for DFDS. The lost earnings for SeaFrance would
amount to EUR 1,2 million since the beginning of 2011.
— the commitment not to sell at a loss;
( 22 ) Nord Littoral of 9 April 2010 (p. 10).

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L 195/8
EN
Official Journal of the European Union
21.7.2012
(64) With
regard
to
the
nearly
50
%
redundancies,
this
loss
of
these measures are not sufficiently offset by the compen
staff should be seen in relative terms, according to Euro
satory measures and the own contribution proposed in
tunnel, as some of the employees have the possibility of
the restructuring plan. On the contrary, these measures
being reintegrated into the SNCF group, which will only
would merely maintain a firm in difficulty, incapable of
have a minimal impact on the net balance of
reducing its basic costs, on the market and would enable
employment in the region.
it to increase its capacities on a market with overcapacity.
(65) Finally,
Eurotunnel
concludes
that
the
restructuring
plan
(74) According to CLdN, the measures in question will reduce
is not only inadequate, but also fails to meet the specifi
the viability of the existing competitors by maintaining
cations of prudent investments.
on the market transport capacity which should normally
have disappeared. It would be unrealistic to rely on
5.1.3. Comments by DFDS
SeaFrance being able to achieve a load factor of 80 %,
unless the aid is used to carry out aggressive price cuts
(66) DFDS
communicated
its
comments
to
the
Commission
and to take market shares from competitors. However,
by letter dated 29 July 2011.
this strategy would be economically unsustainable in the
medium or long term for SeaFrance and would be
(67) DFDS
remains
sceptical
about
the
ability
of
SeaFrance
to
harmful for its direct competitors, i.e. P&O and Euro
recover long-term economic viability on account of the
tunnel, which operate on the same Calais-Dover route,
inadequacy of the restructuring measures in relation to its
but also, in time, for CLdN.
present financial situation. DFDS is concerned about the
effects of these new aid measures on competition in the
(75) Finally, CLdN emphasises the inadequacy of the
market concerned.
workforce cuts provided for in the restructuring plan
(which would be far from enabling SeaFrance to
(68) DFDS sent the Commission comments on the SeaFrance
approach the staff costs/turnover ratio of its competitors)
restructuring plan by e-mail dated 23 September 2011.
and the fact that the redundancy costs will be low
compared to traditional restructuring, as a large
number of SeaFrance employees will be taken on by
(69) This document reached the Commission outside the time
the SNCF.
limit within which interested parties could submit their

comments, i.e. within 15 days of the date of publication
of the decision to initiate the procedure. Furthermore, it
(76) CLdN
consequently
wishes
the
European
Commission
to
provides no new information. In accordance with case-
take a negative decision.
law, the Commission has therefore not forwarded this
document to the French authorities and will not take it
into account for the purposes of the present decision ( 23 ).
5.2. Comments from interested parties in favour of
the restructuring aid
5.1.4. Comments by CLdN
5.2.1. Comments by the SNCF
(70) On
29
July
2011,
the
CLdN
group
(hereinafter:
‘CLdN’)
(77) On
29
July
2011,
the
SNCF
communicated
comments
to
communicated its comments to the Commission.
the Commission, which correspond to the comments
made by the French authorities (see section VI).
(71) CLdN
is
a
Luxembourg-based
transport
company
which
is involved in particular in the transport of freight by
freight vessel (roll-on/roll-off or ‘ro-ro’) or by ro-pax, in
5.2.2. Comments by an economic operator wishing to remain
the Channel and the North Sea between Belgium and the
anonymous
Netherlands, on the one hand, and the United Kingdom,
(78) On
30
July
2011,
an
economic
operator
wishing
to
Ireland, Sweden and Denmark, on the other.
remain anonymous communicated its comments to the
Commission.
(72) CLdN
regards
itself
as
a
competitor
to
SeaFrance
which
would suffer considerably from the adverse consequences
of the measures implemented by the SNCF in favour of
(79) Firstly,
it
recalls
the
main
characteristics
of
the
cross-
its subsidiary SeaFrance on account of the geographical
Channel market, concluding from this that the keener
proximity of the routes operated by CLdN, i.e. Ipswich-
competition between the shipping companies and Euro
Rotterdam and Purfleet-Zeebrugge.
tunnel, the inflation in fuel pries and the volatility of the
sterling exchange rate have caused difficulties for
SeaFrance, but also pose a threat to the long-term
(73) CLdN
considers
in
fact
that
the
measures
implemented
viability of P&O and DFDS.
are very likely to have anti-competitive consequences on
freight not only on the Calais-Dover route, but also on
the neighbouring routes between the United Kingdom
(80) The
operator
in
question
considers
that
the
difficulties
of
and Belgium. It considers that the negative effects of
SeaFrance are chiefly structural (employment coefficient
too high and organisation too inflexible), but that recap
italisation combined with the restructuring of SeaFrance
( 23 ) Judgment of 9 September 2009, Diputación Foral de lava and
Gobierno Vasco v Commission, T-227/01 to T-229/01, T-265/01,
and a fleet maintained at 4 vessels can guarantee the
T-266/01 and T-270/01, ECR II-3029, points 259 to 272.
long-term viability of the company.

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EN
21.7.2012 Official
Journal
of
the
European
Union L
195/9
(81) It
considers
that
the
disappearance
of
SeaFrance
would
in
transport of hazardous goods which cannot be
fact result in a duopoly between Eurotunnel and P&O.
undertaken through the Tunnel or by a multi-purpose
However, many road hauliers work with at least 2
ferry.
shipping companies to guarantee timetable flexibility
and the profitability of their lorries.
5.2.4. Comments of tour operators and travel agencies
(82) According
to
the
operator
in
question,
if
SeaFrance
were
(88) A
large
number
of
travel
agencies
and
tour
operators
to disappear, the capacity of the other two shipping
expressed their concern regarding the possible
companies would be insufficient to cope with the
disappearance of SeaFrance (see list in the table in this
traffic in the Channel. According to the operator
recital):
wishing to remain anonymous, Eurotunnel has almost
achieved maximum capacity and therefore could absorb
Date of the
only a small proportion of the SeaFrance traffic. ‘The
comments
Name of the interested parties
overcapacity in the Channel today is […] very relative
and should not constitute a serious problem’ since as
26.07.2011
4 separate position papers: 1) R&T Tours; 2)
soon as a problem arises at one shipping company or
Sports Tours Ltd; 3) TM Ski&Travel Ltd; 4)
International Sport & Leisure
in the ports, this leads to congestion in the ports of
Calais, Dover and Dunkerque.
27.07.2011 5
separate
position
papers:
1)
Broadway
Tours;
2) Gemini Travel; 3)DE Vere Travel Group; 4)
Adaptable Travel; 5) Gower Tours Ltd
(83) Moreover,
a
single
freighter
in
the
Channel
operated
by
28.07.2011 2
separate
position
papers:
Angling
Lines
Ltd;
P&O would not guarantee the necessary transport
Acorn Ventures Ltd
capacity and would distort the market in favour of
P&O, which would in this way hold a monopoly for
29.07.2011 Bartletts
Battlefield
Journeys
Ltd
the transport of hazardous goods.
(89) In
their
opinion,
the
disappearance
of
SeaFrance
would
(84) According to the operator in question, P&O is at the
lead, on the one hand, to the emergence of an oligopoly
origin of the price undercutting; this operator believes
on the cross-Channel transport market, with the
in the viability of SeaFrance on account of the quality
consequence of a decline in the quality of the services
of management of the company (quality of cooperation
and a rise in prices and, on the other hand, a risk
with its agents), its modern fleet capable of functioning
regarding the capacity of the operators remaining on
for at least 10 years and the high motivation of its staff.
the market to cope with the passenger volume, especially
in cases where one of them is unable to provide services.
5.2.3. Comments by road haulage companies
5.2.5. Comments from the Cte d’Opale Chamber of
(85) By
letters
dated
26,
27
and
28
July
2011,
five
road
Commerce and Industry
haulage companies and representative associations
(LKW Walter Internationale Transportorganisation AG,
(90) By
letter
dated
29
July
2011,
the
Cte
d’Opale
Chamber
Youngs Transportation & Logistics Ltd, Laser Transport
of Commerce and Industry (hereinafter: ‘CCI’)
International Limited, Carna Transport Ltd and Road
communicated its comments to the Commission. The
Haulage association international group) communicated
CCI specifies that it is a public institution responsible
their comments to the Commission.
for contributing to economic development, attractiveness
and support of businesses in the Nord Pas-de-Calais
region. The CCI is also the concessionaire of the Port
of Calais and, in this capacity, runs the port.
(86) These five companies and associations express their
concerns in the event of the disappearance of SeaFrance.
In their opinion, the disappearance of SeaFrance would
result, on the one hand, in an oligopoly on the cross-
(91) Firstly, the CCI recalls the key role played by SeaFrance in
Channel transport market leading to a decline in the
the development of the Port of Calais. At the end of
quality of services and an increase in prices and, on
2008, the SeaFrance workforce comprised 1
600
the other hand, a risk regarding the capacity of the
employees, most of whom lived in the Nord Pas-de-
operators remaining on the market to be able to cope
Calais region. It also contributes to the revenue
with the volume of freight, especially in cases where one
received by the Port of Calais in respect of services to
of them is unable to provide services.
ships and goods services. In 2008, SeaFrance was also
the largest purchaser of non-port goods and services,
representing EUR 130 million per year in supplies,
services, consumables, repairs and maintenance, about
(87) If
SeaFrance
were
to
dispose
of
its
freight
vessel,
the
36 % of which were in the Nord Pas-de-Calais region.
Nord Pas-de Calais, they are also worried about the
The CCI adds that the Port of Calais plays a leading
emergence of a de facto P&O monopoly for the
role in the economic development of Pas-de-Calais.

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L 195/10
EN
Official Journal of the European Union
21.7.2012
(92) According to the CCI, the disappearance of SeaFrance
and compensates for this by the quality of the services
would have a significant impact on the development of
offered. It also points out that in view of the market
the Port of Calais on account of the loss of jobs and of
shares of SeaFrance, which are well below those of the
direct and indirect revenue generated by the company.
market leaders, both in freight and in passenger
The Nord Pas-de-Calais region has also approved the
transport, SeaFrance has little impact on prices.
implementation of the ‘Port 2015’ project which
provides for the extension of the port, the construction
of a new sea dock and the improvement of the existing
(98) The SMN considers that the adverse impacts of the fall in
structures. This project is based on operational forecasts
sterling continue to decrease as expenses, and especially
which risk being seriously affected in the event of the
technical expenses, are as often as possible denominated
disappearance of SeaFrance.
in sterling.
(93) Furthermore, the CCI is worried about the emergence of
(99) The
SMN
considers
that
SeaFrance
has
already
made
a Eurotunnel-P&O duopoly which would have a negative
significant cuts in the number of crossings and the
impact on prices and services, if SeaFrance were to
transport capacities since 2009 (– 30 % in frequency
disappear.
and – 25 % in volume) and with the 4 vessels currently
operating, SeaFrance has reached the minimum size
allowing it a sufficient rotation frequency to remain
(94) The
CCI
concludes
from
this
that
keeping
SeaFrance
in
credible.
operation is necessary in the present competitive context,
particularly as the traffic forecasts are upwards, especially
for freight transport.
(100) Finally, the SMN points out that the employees of
SeaFrance would not understand the Commission not
taking account of the consequences of the successive
5.2.6. Comments by the CFDT trade union
restructuring implemented, in terms of both working
conditions and employment at SeaFrance, but also in
(95) By
letter
dated
29
July
2011,
the
Syndicat
Maritime
Nord
the Calais employment area, which is one of the most
(hereinafter: ‘the SMN’), which belongs to the CFDT,
stricken in France.
communicated its comments to the Commission.
VI. COMMENTS BY FRANCE
(96) The
SMN
firstly
stresses
that
since
its
creation
in
1996,
SeaFrance has never been recapitalised by its sole share
6.1. Comments concerning the reasons for
holder, the SNCF. SeaFrance has therefore had to pay for
SeaFrance’s difficulties in general
the renewal of its fleet from its equity, which has had a
considerable impact on the cash position of the
(101) Regarding the difficulties of SeaFrance, the French auth
company.
orities point out that the information communicated by
P&O is largely incorrect and that, contrary to the results
of SeaFrance as presented by P&O — which contain
(97) The
SMN
also
points
out
the
disparities
existing
between
errors for the years 2002, 2004, 2005 and 2006 (see
British and French social legislation (longer working
recital 40), the cumulated losses of SeaFrance between
hours in the United Kingdom not entirely offset by
1996 and 2010 amount to EUR – 151,4 million and
smaller crews in France). On account of the staff costs/
not EUR –
169
million. The French authorities
turnover ratio, the SMN emphasises the fact that
communicated the following table, rectifying the errors
SeaFrance is not inclined to practise a low price policy
appearing in the table drawn up by P&O in its complaint:
Year 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Profits/losses of
– 16,8 –
1,7 –
2,8 2,6 –
3,5 3,4 26,2 –
2,4 4,9 –
9,3 7,9 15,4 –
20,9 –
57,7 –
36,2
SeaFrance (*)
(*) In EUR million
(102) The French authorities dispute the reasons for the
(103) In response to the argument of the competitors of
difficulties of SeaFrance put forward by P&O, i.e. that
SeaFrance that the company workforce is too large, the
the value of the goodwill, reputation and market share
French authorities point out that SeaFrance undertook a
of SeaFrance concerning freight has declined significantly
significant reduction in the workforce, as a result of
on account, in particular, of the frequent interruptions in
which nearly 725 jobs were cut, this drastic measure
service and market awareness of SeaFrance’s difficulties
being designed to enable a staff costs/turnover ratio of
(see recital 42). They counter this with the observations
26 % to be restored in 2013. This ratio would remain
of SeaFrance customers which underline the quality of
slightly higher than those obtained by Eurotunnel and
the services provided by the company and the progress
Irish Ferries. However, the activities of SeaFrance will
achieved in recent years to improve the quality of the
be quite significantly different in their implementation
services supplied (see recitals 85 to 89).
from those of the Channel Tunnel operator, whose

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EN
21.7.2012 Official
Journal
of
the
European
Union L
195/11
ratio stood at 22,5 % in 2010, and it is inconceivable,
provided the following replies to the doubts expressed by
under the French flag, for SeaFrance to manage to
the Commission concerning the return to long-term
achieve such a low ratio as Irish Ferries, whose vessels
viability expected from the restructuring plan, on the
are apparently under the Cypriot flag. The French auth
prevention of any excessive distortion of competition
orities consider that, in view of the considerable effort
and on SeaFrance’s own contribution to the restructuring
made by SeaFrance as regards redundancies, the staff
plan.
costs/turnover ratio of 26 % is sufficient and allows
SeaFrance to remain competitive. They specify that the
level of salaries paid by SeaFrance results from French
social legislation, which offers greater protection than
6.3.1. On the return to long-term viability and the restruc
that of the States where its competitors are established,
turing plan
and especially that of the United Kingdom, in particular
with regard to the minimum wage.
(108) The French authorities justify the fact that the load

factors forecasted for the coming years are higher than
those observed in the past on the basis of the intro
(104) The SeaFrance fleet, as defined in the restructuring plan,
duction from 2006 of a new information system
is not ill-adjusted. Quite the contrary, it was specifically
allowing optimisation and rationalisation of the loading
constructed for the Calais/Dover route, with the
of these vessels. In their opinion, this system in particular
exception of the vessel Molière, which had to have
has allowed low profitability crossings to be identified
conversion work carried out on it to be adapted to
and withdrawn from the SeaFrance schedule.
maritime transport in the North Sea. As regards P&O’s
Furthermore, the French authorities emphasise the fact
argument that the management of SeaFrance is not suffi
that between 2000 and 2007, the period taken into
ciently independent of the State and of worker power to
account by the Commission, SeaFrance’s operating
manage the company efficiently, the French authorities
activities were organised in the form of shuttles, irre
consider that this is an assertion which is not based on
spective of the intensity of demand.
any evidence.
6.2. Comments concerning the competitive position
(109) The French authorities also justify the lower load factors
on the Dover/Calais market
of SeaFrance’s competitors by the operating method
chosen by the competitors. In their opinion, P&O had
(105) The French authorities contest the allegations of P&O,
a large number of vessels and a ‘shuttle’ type service
Eurotunnel and CLdN concerning structural overcapacity
exerting a downwards influence on the load factor. As
of the market. In their view, the overcapacity observed is
regards DFDS, the specialised nature of its vessels would
largely attributable to the economic climate (in particular,
preclude the optimisation of its loads according to their
the economic crisis has led to a reduction in freight
individual profitability. Moreover, on account of the
traffic and rise in the sterling exchange rate). On the
length of its crossings, DFDS would be forced to offer
basis of the growth forecasts drawn up before the
a shuttle service over long periods. Finally, the high
crisis, certain operators increased their capacities but
capacity of its vessels would automatically lower the
the hoped-for growth failed to materialise on account
average load factors of DFDS through crossings with
of the economic recession. The French authorities cite
low demand.
market analyses carried out by the Dover Harbour
Board in 2005 ( 24 ) and 2008 ( 25 ) indicating long-term
growth in freight volumes.
(110) Furthermore, the French authorities reacted to the
Commission’s doubts and to the comments of third
(106) France considers that the concerns expressed by certain
parties concerning taking into account the risks (fuel
SeaFrance customers relating to the emergence of a P&O
costs, depreciation of sterling), which is necessary to
monopoly for the transport of hazardous goods on the
evaluate the credibility of the restructuring plan. They
Calais/Dover route (see recitals 83 and 87) are
emphasise firstly that the financial hedging policy in
unfounded. In fact, since there are no national or inter
the form of foreign exchange contracts will be resumed
national regulations prohibiting the transport of
by SeaFrance as soon as the judicial reorganisation is
hazardous goods on car ferries, SeaFrance could
over. They then explain that the company applies a
consider carrying out such transport during crossings
‘bunker adjustment factor’ (hereinafter: ‘BAF’) which
with low passenger numbers, for example on certain
covers about 40 % of the additional cost associated
night crossings.
with the increase in the price of fuel above EUR 285
per tonne and that after 2015, the BAF will be supple
mented by a new surcharge taking account of the
6.3. Comments concerning the compatibility of the
obligation to consume fuel with 0,1 % sulphur content.
restructuring aid
(107) As regards the compatibility of the measures notified
under the restructuring plan, the French authorities
(111) As regards the depreciation of sterling, the French auth
orities specify firstly that the policy of hedging part of
the monthly balances in sterling by forward sales based
( 24 ) http://www.doverport.co.uk/_assets/client/images/collateral/
on the budgetary rate, interrupted on account of the
30%20year%20master%20plan%20zoning%20report.pdf
( 25 ) http://www.doverport.co.uk/_assets/client/images/collateral/dover_
judicial reorganisation procedure, will be applied once
consultation_web.pdf
more as soon as this procedure is over. […]

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L 195/12
EN
Official Journal of the European Union
21.7.2012
(112) Concerning the other measures mentioned in recital 96
production of certain goods shall, in so far as it affects
of the decision to initiate the procedure, the French auth
trade between Member States, be incompatible with the
orities specify that their effects were not taken into
internal market’.
account in the business plan as they are difficult to
quantify. However, these measures would be likely to
generate savings.
(118) The classification of a measure as State aid presupposes
that the following cumulative conditions are satisfied, i.e.:
1) the measure in question confers an advantage, 2) this
(113) Finally, the French authorities point out that the staff
advantage is granted through State resources, 3) this
costs/turnover ratio should change from [20-25]% in
advantage is selective and 4) the measure in question
2012 to [20-25]% in 2019. It would approach the
distorts or threatens to distort competition and is liable
ratios of SeaFrance’s competitors.
to affect trade between Member States ( 28 ).
6.3.2. Concerning the prevention of any excessive distortion of
competition
(119) The present decision covers three aid measures: the
recapitalisation and the two loans described in recitals
(114) As regards the prevention of any excessive distortion of
28 to 33.
competition, the French authorities wish to confirm that
the sale of the two vessels, the Renoir and the Cézanne,
did indeed occur on 7 July 2011 at the price of USD
[0-10] million (EUR [0-10] million).
7.1.1. Recapitalisation of SeaFrance
(120) The French authorities themselves consider in their notifi
cation that the capital increase in favour of SeaFrance
6.3.3. Concerning SeaFrance’s own contribution to the restruc
constitutes State aid. By their notification, the French
turing plan
authorities admit that the recapitalisation measure is
imputable to the State and that it confers a selective
(115) According to the French authorities, a first part of
SeaFrance’s own contribution to the restructuring plan
advantage on SeaFrance alone.
consists of the proceeds from the sale of the vessels
Renoir and Cézanne, as well as the expected income
from the sale of the vessel Nord Pas de Calais.
(121) As regards the existence of an advantage, the
Commission considers that, for the reasons to be
explained in section 7.2.1, SeaFrance constitutes a firm
(116) The French authorities consider in addition that the two
in difficulty. In view of the very difficult situation of
loans described in recitals 28 to 33 are exempt from
SeaFrance and the fact that it has been placed under
State aid and that the loan of EUR 99,8 million must
the judicial reorganisation procedure, the company
be considered as an own contribution. According to
would be unable to cope with the implementation of
the French authorities, to evaluate the existence of aid,
its restructuring plan and its cash requirements. In such
the Commission must take only the Reference Rates
circumstances, a private operator would not have
Communication as a basis. They point out that the
contributed capital. In addition, the French authorities
Commission applied this Communication in its decision
did not even try to demonstrate that the expected
to initiate the procedure concerning the loan granted to
return corresponds to that which a private investor
SA – Czech Airlines by the publicly owned company
would have required. The measure therefore constitutes
Osinek ( 26 ) and in its decision concerning the loans
a selective advantage since only SeaFrance benefits from
granted by the Hungarian Development Bank in favour
it. It is granted through public resources, since the SNCF
of Hungarian fertiliser producer Péti Nitrogénmüvek ( 27 ).
is a public undertaking. It is imputable to the State.
They consider that, for the reasons described in recitals
28 to 33, the two loans do not constitute aid.
(122) As regards the effect on competition and on trade within
the Union, it should first be pointed out that, according
VII. ASSESSMENT OF THE AID
to established case-law, as soon as an undertaking
7.1. Existence of aid
operates in a sector where producers from various
Member States are effectively competing, any aid that
(117) According to Article 107(1) TFEU, ‘any aid granted by a
this undertaking may receive from the public authorities
Member State or through State resources in any form
is liable to affect trade between Member States and
whatsoever which distorts or threatens to distort
damage competition, inasmuch as its continuing
competition by favouring certain undertakings or the
presence on the market prevents competitors from
increasing their market share ( 29 ).
( 26 ) Decision of 24 February 2010 in case NN 1/10 (ex CP 371/09) —
Czech Republic SA — Czech Airlines — possible State aid impli
( 28 ) See, for example, Court of Justice judgment of 10 January 2006 in
cations of a loan provided by Osinek.
case C-222/04 Ministero dell’Economia e delle Finanze v Cassa di
( 27 ) Decision of 27 October 2010 on State aid C 14/09 (ex NN 17/09)
Risparmio di Firenze [2006] ECR I-289, point 129.
granted by Hungary to Péti Nitrogénmüvek Zrt (OJ L 118,
( 29 ) See in particular Court of Justice judgment of 21 March 1991 in
6.5.2011, p. 9).
case C-305/89 Italy v Commission ECR I-1603.

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EN
21.7.2012 Official
Journal
of
the
European
Union L
195/13
(123) In this respect, the fact that an economic sector has been
million also comes under the logic of restructuring
liberalised at Union level constitutes evidence that the aid
SeaFrance.
may have a real or potential effect on competition and
on trade between Member States ( 30 ).
(130) In its BP Chemicals judgment, the Court of First Instance
(124) In this context, it is important to point out that Council
clarified that in such a situation, it is appropriate to
Regulation (EEC) No 4055/86 of 22 December 1986
analyse the loans, from the point of view of State aid,
applying the principle of freedom to provide services to
not in isolation, but together with the other
maritime transport between Member States and between
measures ( 33 ).
Member States and third countries ( 31 ) fully liberalised
maritime transport between Member States as of
1 January 1993.
(131) According to the judgment of the Court of First Instance,
it is true that the mere fact that a public undertaking has
(125) In the present case, as previously established, there is
already made capital injections into a subsidiary which
modal competition with the other maritime operators
are classed as ‘aid’ does not, in principle, mean that a
in a liberalised sector and also intermodal competition,
further capital injection cannot be classed as an operation
especially with railway transport ( 32 ).
which satisfies the private market economy investor test.
However, the Court considers that, in a case which
concerned three capital injections made by the same
(126) The Commission concludes from this that the recapitali
investor over a period of two years, the first two of
sation is likely to strengthen the position of the company
which brought no return, it was for the Commission
in relation to its competitors in trade between the
to determine whether the third injection could reasonably
Member States of the Union. The measure therefore
be dissociated from the first two and classed, for the
affects trade between Member States and is liable to
purposes of the private investor test, as an independent
cause distortions of competition.
investment.
(127) In the light of the above, the Commission considers that
the measure in question constitutes State aid within the
(132) The Court considers that the considerations relevant to
meaning of Article 107(1) TFEU.
determining whether the subsequent measure could
reasonably be dissociated from the first two and
7.1.2. The loans described in recitals 28 to 33
classed, for the purposes of the private investor test, as

an independent investment, include in particular the
(128) France considers that the two loans described in recitals
timing of the capital injections in question, their
28 to 33 are granted under market conditions and
purpose and the subsidiary’s situation at the time when
therefore respect the principle of the private market
each decision to make an injection was made.
economy investor (see recital 116).
(129) The Commission does not agree with this analysis. In
(133) France does not dispute the fact that the recapitalisation
fact, in the present case, the SNCF has already granted
constitutes aid, as it has no prospect of obtaining a
aid to SeaFrance, notably rescue aid, and is planning to
return corresponding to that which a private investor
grant new aid, i.e. the recapitalisation. The loans pursue
would have demanded. This also emerges from the
the same purpose as the other aid measures, i.e. the
table in recital 35, which indicates the financing need
rescue and restructuring of SeaFrance. They will be
for the period 2011-2017. In fact the company would
granted at a time when SeaFrance is a firm in difficulty
be unable to distribute dividends during this period. In
and at the same time as the restructuring aid. This is self-
view of the considerable costs entailed in the payment of
evident as regards the loan of EUR 99,7 million, which is
the interest and principal on the loans described in
intended – just like the recapitalisation – to enable
recitals 28 to 33 and the low profit margin provided
SeaFrance to meet its current capital requirements.
for in the restructuring plan, this situation would be
However, it is also true of the loan of EUR [40-70]
very likely to continue beyond 2017 until the
million, which serves to refinance and exercise the
repayment of the loans in full in 2023. However, a
purchase option under the leasing contract for the
private investor in a traditional industry such as
vessel Molière earlier than provided for. In fact, the
maritime transport would not accept the entire absence
financing of means of production, here the vessel, is
of return on an investment amounting to EUR
closely linked to the day-to-day activities of SeaFrance.
166,3 million for a 12-year period. Since the two loans
Through the refinancing and early purchase under the
have the same purpose as the recapitalisation, i.e. the
leasing contract, SeaFrance aims to reduce its operating
financing of the restructuring costs, and since the
costs, which comes under the restructuring of the
economic situation of the company is unchanged (it is
company. Consequently, the loan of EUR [40-70]
in difficulty) and the loans are granted at the same time
as the recapitalisation, these loans cannot reasonably be
dissociated from the rescue aid and the recapitalisation.
( 30 ) Court of Justice judgment of 13 February 2003 in case C-409/00
Spain v Commission [2003] ECR I-1487.
( 31 ) OJ L 378, 31.12.1986, p. 1.
( 33 ) Judgment of the Court of First Instance of 15 September 1998 in
( 32 ) Especially with the railway transport of passengers and freight
case T-11/95 BP Chemicals v Commission [1998] ECR II-3235,
provided by Eurotunnel.
points 170 and 171.

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L 195/14
EN
Official Journal of the European Union
21.7.2012
(134) Taken as a whole, the return on the rescue aid and on
swap rate of 2,825 % ( 35 ) + average CDS ( 36 ) below B-
the recapitalisation and the two loans is below the return
(i.e. CCC) of 11,18 % + premium of 0,2 %). This
that a private market economy investor would require. In
corresponds to the data observed in April, May and
fact, as explained, the SNCF cannot expect any return on
June 2011. In addition, despite the Commission’s
the recapitalisation before 2023. Even if, considered indi
repeated requests ( 37 ), the French authorities have never
vidually, the return on the two loans corresponded to
produced a rating or a rate proposal from a private bank.
market conditions – which is not the case –, this
would not be sufficient for the measures as a whole to
be regarded as satisfying the private market economy
(140) In addition, on several occasions
( 38 ), the Commission
investor principle. The following developments are
asked the French authorities to consider external
therefore set out for the sake of completeness.
financing or to produce a rating or a rate proposal
from a commercial bank. These suggestions were not
formally followed up.
(135) The French authorities cite the Reference Rates
Communication to justify the absence of aid as regards
(141) Finally, the arguments put forward by the French auth
the two loans. They consider that, in view of the
orities under recital 116 that the Commission applied the
company rating (CCC) and the collateral offered
Reference Rates Communication in two recent
(normal), the rate must amount to 8,55
%, i.e.
procedures could not be accepted. In fact, as regards
EURIBOR 12 months plus 650 basis points. The
these two procedures, one of which is still in progress,
French authorities consider that this is a conservative
the issues were different. As regards Péti Nitrogénmüvek,
application of the Reference Rates Communication.
all the measures under examination constituted State aid.
As for Osinek, the Commission has not yet taken a final
decision and at the time when the loan was granted, no
(136) Even if the two loans were to be assessed in isolation –
aid measure had been notified.
which is not the case –, the French authorities would not
have demonstrated that they were granted at a market
rate.
(142) The Commission concludes that the loans used to
finance the own contribution and the early exercise of
the purchase option for the vessel Molière also confer an
advantage on SeaFrance. For the reasons set out in
(137) In this respect, the Commission first wishes to emphasise
recitals 121 to 126, the other three conditions for the
that, as pointed out in the first paragraph of the
existence of aid (selective advantage granted through
Reference Rates Communication: ‘The reference and
public resources, effect on competition and effect on
discount rates are applied as a proxy for the market
intra-Community trade) are also satisfied. These loans
rate and to measure the grant equivalent of aid, in
therefore constitute State aid.
particular when it is disbursed in several instalments
and to calculate the aid element resulting from interest
subsidy schemes. They are also used to check compliance
7.1.3. The rescue aid
with the de minimis rule and block exemption regu
lations.’ ( 34 ). The Reference Rates Communication
(143) For the reasons set out in recitals 30 to 47 of the
cannot therefore be binding on the Commission as
Commission decision of 18 August 2010, the loan
regards its application of the principle of the private
granted by the SNCF to SeaFrance as rescue aid
market economy operator, especially in cases where
constitutes aid within the meaning of Article 107(1)
real market data are available which are manifestly
TFEU.
different from those resulting from the methodology
set out in this Communication.
7.2. Compatibility of the three aid measures
(144) In view of the purpose of the three restructuring aid
(138) In this case, since the provider of the aid is also
measures in question and the claims made by the
supplying the loan, in order to ensure that the
French authorities in the context of their notifications,
proposed remuneration does in fact correspond to
the Commission considers that the compatibility of the
market remuneration, the Commission must take
three aid measures with the internal market must be
operators external to the SNCF as a basis. The
analysed on the basis of Article 107(3)(c) TFEU and in
Commission asked the French authorities on several
the light of the Guidelines.
occasions to produce an example of an offer from an
independent financial institution. This offer was never
produced.
7.2.1. Eligibility: firm in difficulty
(145) To be able to qualify for restructuring aid, a firm must be
regarded as a firm in difficulty within the meaning of
(139) Furthermore, the Commission also carried out a market
Section 2.1 of the Guidelines.
survey. According to the Commission’s estimates, with
normal collateral, the rate on the loans, to be in line
with market conditions, should be around 14 % (5-year
( 35 ) At 1 July 2011, Bloomberg EUSA5.
( 36 ) All sectors together.
( 37 ) […]
( 34 ) OJ C 14, 19.1.2008, p. 6.
( 38 ) See recital 9 above.

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EN
21.7.2012 Official
Journal
of
the
European
Union L
195/15
(146) In this respect, the Commission considers that SeaFrance
will take account of any rescue aid granted beforehand.
is a firm in difficulty within the meaning of point 10(a)
Aid beneficiaries will be expected to make a significant
of the Guidelines, since more than half of its registered
contribution to the restructuring plan from their own
capital has disappeared, falling from EUR 81,7 million in
resources, including the sale of assets that are not
2007 to EUR 57,7 million in 2008 and to EUR
essential to the firm’s survival, or from external
– 0,69 million in 2009 (i.e. a reduction of more than
financing at market conditions. Such contribution is a
100 %, by EUR 82,4 million between 2007 and 2009),
sign that the markets believe in the feasibility of the
and more than one quarter of that capital has been lost
return to viability. Such contribution must be real, i.e.,
over the preceding 12 months, since it fell from EUR
actual, excluding all future expected profits such as cash
57,7 million in 2008 to EUR – 0,69 million in 2009.
flow, and must be as high as possible.’ ( 39 ).
(152) Point 7 of the Guidelines also specifies that ‘it is appro
(147) In addition, SeaFrance can also be considered as being in
priate to reaffirm with greater clarity the principle that
difficulty within the meaning of point 10(c) of the
[the substantial contribution from the beneficiary to the
Guidelines on the grounds that it fulfils the criteria for
restructuring] must be real and free of aid. The bene
being the subject of collective insolvency proceedings. In
ficiary’s contribution has a twofold purpose: on the one
fact, as indicated in recital 10, SeaFrance was placed
hand, it will demonstrate that the markets (owners,
under a judicial reorganisation procedure on 30 June
creditors) believe in the feasibility of the return to
2010 by the Paris Commercial Court.
viability within a reasonable time period. On the other
hand, it will ensure that restructuring aid is limited to the
minimum required to restore viability while limiting
(148) Furthermore, the conditions set out under point 13 of
distortion of competition. […].’ ( 40 ).
the Guidelines are also satisfied as, although belonging to
the SNCF group, SeaFrance’s difficulties relate specifically
to itself and are not the result of an arbitrary allocation
(153) The Union case-law also emphasised that the own
of costs within the group.
contribution must indicate that the markets believe in
the feasibility of the return to viability ( 41 ).
7.2.2. Own contribution
(154) The French authorities informed the Commission that the
(149) In the decision to initiate the formal investigation
sale of the two vessels, i.e. the Renoir and the Cézanne,
procedure, the Commission considered that SeaFrance’s
took place on 7 July 2011, for an amount of EUR
own contribution to the restructuring effort was
3,1 million.
uncertain and insufficient according to the provisions
of the Guidelines.
(155) The planned sale of the freight vessel Nord-Pas-de-Calais
should bring SeaFrance’s contribution resulting from the
sale of the vessels to EUR [10-20] million. At the time of
(150) In the modified restructuring plan, the French authorities
notification of the original restructuring plan, the French
propose an own contribution from SeaFrance of EUR
authorities had committed to SeaFrance disposing of the
[80-130] million, consisting in the following measures:
vessels Renoir and Cézanne. These two sales took place
in July 2011. It is established decision-making practice of
the Commission that future sales of assets can be
— a loan of EUR 99,7 million at 8,55 % to finance the
accepted as own contribution on condition that the
restructuring of SeaFrance;
Member State has produced a realistic estimate of their
market value ( 42 ). In this case, the French authorities
produced two valuations for the freight vessel Nord-
Pas-de-Calais carried out by two independent experts,
— the planned sale of the freight vessel Nord-Pas-de-
both establishing the market value of the vessel at
Calais (market value estimated at EUR [0-10]
about EUR [0-10] million. The Commission points out
million by two independent experts); and
that one of the two experts had estimated the market
value of the vessels Renoir and Cézanne at USD
[0-10 000 000] in April 2011. The two vessels were
sold for a value of USD [0-10 000 000] in July 2011.
— the sale of the vessels Renoir and Cézanne in July
Consequently, the Commission considers firstly that the
2011 for an amount of USD [0-10] million, or
estimate of the market value can be considered realistic
approximately EUR [0-10] million.
and secondly that the planned sale of the freight vessel
Nord-Pas-de-Calais is acceptable as own contribution.
(151) Pursuant to point 43 of the Guidelines, ‘The amount and
( 39 ) Underlining added.
intensity of the aid must be limited to the strict
( 40 ) Underlining added.
minimum of the restructuring costs necessary to enable
( 41 ) General Court judgment of 7 December 2010 in case T-11/07
restructuring to be undertaken in the light of the existing
Frucona Koica v Commission, not yet published in the ECR, points
244 and 245.
financial resources of the company, its shareholders or
( 42 ) Decision N 488/09 Restructuring aid to POLFA ‘Tarchominskie
the business group to which it belongs. Such assessment
Zakady Farmaceutyczne’ SA, recital 47.

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L 195/16
EN
Official Journal of the European Union
21.7.2012
(156) As a preliminary point, the French authorities specified
conduct of the authority granting the aid in no way
that the loan for EUR [40-70] million intended to
shows that the markets believe in the return to viability.
finance the exercise of the purchase option on the
vessel Molière does not constitute an additional own
contribution. In fact, it replaces an off-balance sheet
contribution already existing under the leasing contract
(162) As indicated in recital 141, the Commission considers
relating to the vessel Molière. It was not therefore taken
that the reference made by France in its comments to
into account in the calculation of the total own
the decisions relating respectively to the aid granted by
contribution. Nevertheless, in so far as this financing
the publicly owned company Osinek in favour of SA –
replaces existing financing, the Commission must
Czech Airlines and the loans granted by the Hungarian
ensure that it too meets the criteria of compatibility of
Development Bank in favour of Hungarian fertiliser
the own contribution, especially that of the absence of
producer Péti Nitrogénmüvek (see recital 116) is not
aid.
relevant as, in the first of these cases, the Commission

has not yet taken a final decision and, in the second, this
is not a case of restructuring.
(157) In so far as the loans are granted by the SNCF in
accordance with point 43 of the Guidelines, the
Commission must ensure that this financing is free of
(163) In addition, as indicated previously and independently of
aid and it ‘is a sign that the markets believe in the
the question of a possible aid element in the loans, the
feasibility of the return to viability’. Such is not the
own contribution must indicate that the markets believe
case for the following three reasons, each of which
in the feasibility of the return to viability.
would suffice to support this conclusion.
(164) In this case, the financing by the SNCF could not demon
(158) Firstly, as indicated by the Commission in section 7.1.2,
strate this. In fact, the SNCF is both the grantor of aid
recitals 129 to 142 above, the conditions to which the
and the provider of the own contribution. The French
loans were subject do not correspond to market
authorities did not provide any information showing that
conditions.
a prudent independent investor would be prepared to
enter into a firm commitment to provide an own
contribution and a loan to exercise the option under
(159) According to the Commission’s estimates, with normal
the same conditions as those proposed by the SNCF.
collateral, the rate on the loans, to be in line with market
conditions, should be around 14 % (5-year swap rate of
2,825 % ( 43 ) + average CDS ( 44 ) below B- (i.e. CCC) of
11,18 % + premium 0,2 %). This corresponds to the
(165) SeaFrance’s own contribution meeting the requirements
data observed in April, May and June 2011. In
of point 43 of the Guidelines, i.e. free of aid and
addition, despite the Commission’s repeated requests (
expressing the belief of the markets in the feasibility of

45 ),
the French authorities never produced a rating or rate
a return to viability, consequently amounts to only EUR
proposal from a private bank.
[10-20] million, i.e. to less than [< 10] % of the restruc

turing costs. The 50 % threshold provided for in point
44 of the Guidelines is therefore not reached. The
Commission therefore considers that SeaFrance’s own
(160) Secondly, as shown in section 7.1.2., recitals 129 to 142,
contribution to the restructuring effort remains very
the loans in question themselves constitute State aid.
inadequate in terms of the provisions of the Guidelines.
They could not therefore be taken into consideration as
an own contribution which must be free of aid, in
accordance with the title preceding point 43 of the
Guidelines.
(166) The Commission also observes that France has not
invoked the exceptional circumstances clause provided
for in point 44 of the Guidelines or provided any
(161) Thirdly, and in any case, according to points 7 and 43 of
evidence of the existence of an exceptional situation of
the Guidelines, the real contribution serves in particular
this kind.
to show that the markets believe in the feasibility of the
return to viability ( 46 ). However, in the present case, the
authority granting the aid and the parent company are
(167) The Commission therefore concludes that the
combined in a single legal person, i.e. the SNCF, and the
requirement of a ‘real contribution, free of aid’,
measures concerned are simultaneous. Under these
provided for by the Guidelines, is not satisfied.
circumstances, this purpose cannot be complied with in
the absence of a real contribution obtained from an
investor or creditor external to the SNCF. In fact, the
7.2.3. Return to long-term viability
( 43 ) At 1 July 2011, Bloomberg EUSA5.
(168) In so far as SeaFrance’s own contribution to the restruc
( 44 ) Average CDS all sectors together.
turing effort remains very inadequate in the light of the
( 45 ) […]
provisions of the Guidelines, the Commission considers
( 46 ) General Court judgment of 7 December 2010 in case T-11/07
Frucona Koica v Commission, not yet published in the ECR,
that there is no need to assess the condition of return to
point 245.
long-term viability.

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EN
21.7.2012 Official
Journal
of
the
European
Union L
195/17
7.2.4. Prevention of any excessive distortion of competition
VIII. CONCLUSION
(compensatory measures)
(174) The capital increase of EUR 166,3 million, the loan of
(169) In the decision to initiate the procedure, the Commission
EUR 99,7 million and the loan of EUR [40-70] million
indicated that the compensatory measures proposed by
that the SNCF plans to grant to SeaFrance constitute aid
the French authorities were inadequate. In their
within the meaning of Article 107(1) TFEU. This aid is
comments in response to the decision to initiate the
incompatible with the internal market and therefore
procedure, the French authorities accepted ( 47 ) the near
cannot be implemented.
non-existence of compensatory measures
( 48 ). They
indicated that this problem would be resolved under a
modified restructuring plan.
(175) The loan granted by France, through the SNCF, as rescue
aid in favour of SeaFrance, authorised by Commission
decision of 18 August 2010, must be reimbursed
(170) Supplementary compensatory measures were indeed
immediately, together with the contractual interest due
proposed under the restructuring plan communicated
and not yet paid on the date of notification of the
on 12 September 2011, and especially the forthcoming
present decision.
sale of the freight vessel Nord Pas-de-Calais. The French
authorities also mention the already completed sale of
the vessels Renoir and Cézanne, the reduction in the
HAS ADOPTED THIS DECISION:
number of crossings (reduction by 5 830 crossings, i.e.
– 37,6 % compared to the 2007 crossings schedule) and
the reduction in market shares of SeaFrance ([10-15]% of
Article 1
the car transport market for 2012-2019, compared to
[15-20]% in 2008).
The capital increase of EUR 166,3 million, the loan of EUR

99,7 million and the loan of EUR [40-70] million that the
French Republic is planning to implement, through the SNCF,
as restructuring aid in favour of SeaFrance constitute State aid
(171) In so far as SeaFrance’s own contribution to the restruc
within the meaning of Article 107(1) TFEU and are incom
turing effort remains very inadequate in the light of the
patible with the internal market.
provisions of the Guidelines, the Commission considers
that there is no need to analyse the compensatory
measures proposed.
For this reason, these aid schemes may not be implemented.
7.2.5. Consequence of the incompatibility of the restructuring
Article 2
aid and the rescue aid
The loan granted by France, through the SNCF, as rescue aid in
(172) Following the notification of the restructuring plan by
favour of SeaFrance, referred to in the Commission decision of
France on 18 February 2011, in accordance with point
18 August 2010, constitutes aid which is incompatible with the
26 of the Guidelines, the 6-month period within which
internal market.
the loan must be reimbursed was extended until the
Commission reaches its decision on the restructuring
plan. Since the Commission considers that the
Article 3
measures notified as restructuring aid do not satisfy the
compatibility conditions provided for by the Guidelines,
1. France, through the SNCF, shall recover the aid referred to
the consequences of this incompatibility must be drawn.
in Article 2 from the beneficiary, including the contractual
The loan cannot therefore be extended any longer
interest due and not yet paid on the date of notification of
beyond the date of this decision and must therefore be
the present decision.
reimbursed without delay.
2. The
amounts
to
be
recovered
shall
bear
interest
from
the
(173) The amount to be recovered consists of the principal of
date of notification of the present decision until they are in fact
the rescue loan, plus contractual interest due and not yet
recovered.
paid on the date of notification of the present decision,
plus, from the date of the notification of the present
decision, interest calculated in accordance with Chapter
3. The
interest
shall
be
calculated
on
a
compound
basis
in
V of Commission Regulation (EC) No 794/2004 of
accordance with Chapter V of Regulation (EC) No 794/2004.
21 April 2004 implementing Council Regulation (EC)
No 659/1999 laying down detailed rules for the appli
cation of Article 93 of the EC Treaty (
Article 4

49 ).
1. The
recovery
of
the
aid
referred
to
in
Article
2
shall
be
( 47 ) See section 2.2 (bottom of page 19 and page 20) of the comments
immediate and effective.
of the French authorities.
( 48 ) Under the 2004 Guidelines on restructuring aid, compensatory
measures must be taken to minimise the adverse effects on
2. France
shall
ensure
that
the
present
decision
is
imple
trading and may comprise divestment of assets or reductions in
capacity or market presence.
mented within four months following the date of its notifi
( 49 ) OJ L 140, 30.4.2004, p. 1.
cation.

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L 195/18
EN
Official Journal of the European Union
21.7.2012
Article 5
2. France
shall
keep
the
Commission
informed
of
the
progress in the national measures taken to implement the
1. During
the
two
months
following
the
notification
of
the present decision until full recovery of the aid referred to in
present decision, France shall communicate the following
Article 2. It shall forward immediately, at the Commission’s
information to the Commission:
request, any information on the measures already taken and
planned to comply with the present decision. It shall also
(a) the principal amount of the aid to be recovered from the
provide detailed information on the amounts of aid and the
beneficiary, which comprises the amount of the loan and
interest already recovered from the beneficiary.
the interest on the loan due and not yet paid;
Article 6
(b) the amount of the interest to be recovered from the bene
This decision is addressed to the French Republic.
ficiary, which must be calculated according to the principles
set out in Article 3(3);
Done at Brussels, 24 October 2011.
(c) a detailed description of the measures already taken and
planned to comply with the present decision; and
For the Commission
(d) the documents showing that the beneficiary has been
Joaquín ALMUNIA
ordered to reimburse the aid.
Vice-President

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Document Outline

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