Brussels, 2 May 2013
State aid: Commission orders France to recover incompatible aid received by SNCM
Following an in-depth investigation, the European Commission has concluded that public service compensation which Société nationale Corse-Méditerranée (SNCM) and Compagnie Maritime de Navigation (CMN) have been receiving since 1 July 2007 for “basic” shipping services between Corsica and Marseille to ensure territorial continuity is in line with EU rules on state aid applicable to public services. However, the aid received by SNCM for an “additional service” to cover peak periods during the holiday season does not compensate a real public service need (see MEMO/13/396). These grants have given an unjustified advantage to SNCM, which should therefore hand back the money to the taxpayers.
According to Commission Vice-President Joaquín Almunia, responsible for competition: “Citizens need efficient public services that meet real needs. It is only to be expected that taxpayers should compensate for the cost of Corsica’s public shipping service, which is needed to mitigate the constraints of being an island. Conversely, when the market is able to meet the needs of passengers under the same conditions, taxpayers should not normally be asked to contribute to favour a particular operator. EU rules make it possible not only to maintain healthy competition but also to ensure the transparency of the financing granted and the good use of public money.”
SNCM and CMN are maritime transport operators that are operating the route between Corsica and Marseille for the period 2007-2013 under a public service delegation agreement concluded with the Corsican regional authorities and the Corsican Transport Board. As a result, these companies receive public service compensation. In addition to a “basic service” providing passenger and freight transport throughout the year, the public service delegation also covers an "additional service” operated by the SNCM alone, designed to meet peak passenger transport needs.
In response to a complaint from a competitor, the Commission opened an in-depth investigation in June 2012 (see IP/12/703).
Following this investigation, the Commission considers that the compensation granted to SNCM and CMN for the basic public service is compatible with EU rules. The basic service fills a real gap in the market and is intended, in the context of a territorial continuity policy, to mitigate the constraints of being an island by ensuring regular transport services between the French mainland and Corsica. Moreover, while the procedure for awarding the public service delegation did not permit effective competition, the Commission considers that the compensation for this service did not exceed what was necessary to cover the net cost of providing the service, and that there are sufficient mechanisms in place to prevent over-compensation.
However, granting compensation for the “additional service” is not justified as the operators on the market were capable of meeting demand during the peak period. Including it within the scope of a public service thus infringes Council Regulation No 3577/92 on maritime cabotage and undermines the Commission’s decision-making practice in relation to services of general economic interest. As a result, the compensation paid to SNCM since 2007 for this additional service does not comply with Union rules on state aid and must therefore be refunded.
The Commission assessed the measure under the rules governing the provision of services of general economic interest (SGEI). Since the public service delegation agreement was concluded before the adoption of the Commission's new SGEI package (see IP/11/1571), the transitional provisions of the new package apply in this case. The rules of the new package apply fully to all compensation granted after 2013.
The Member States have a wide margin of manoeuvre as regards describing a service as a general interest service. The Commission must, however, ensure that public funding granted for the provision of such services does not unduly distort competition in the internal market.
The non-confidential version of the decision will be made available in the State Aid Register under number SA.22843 on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.