BUCHAREST (Romania), February 24 (SeeNews) – The European Commission said on Monday that Romania needs to recover at least 570 million euro ($617 million) in incompatible state aid from rail freight operator CFR Marfa.
Romania must recover the illegal aid plus interest from CFR Marfa, the European Commission said in a press release.
"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," EC executive vice-president in charge of competition policy Margrethe Vestager said:
In 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. Measures included a debt-to-equity swap amounting to around 363 million euro in 2013 and the failure to collect social security debts and outstanding taxes of CFR Marfa, as well as debts towards CFR Infrastructura, since at least 2010.
The Commission found that the state acted in its capacity as a public authority rather than a shareholder of the company. Furthermore, even if the state had acted in its capacity as shareholder, and therefore the private market economy operator test was applicable, no private operator would have written-off its debt or abstained from actively enforcing the repayment of debts for years without a sufficient monetary compensation, the EC stressed. As a result, the Commission concluded that the public support from Romania gave CFR Marfa an unfair economic advantage over its competitors.
On the other hand, the Commission also 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.
EU state aid rules require that incompatible state aid is recovered without delay in order to remove the distortion of competition created by the aid. There are no fines under EU state aid rules and recovery does not penalise the company in question.
The Commission also said it provides six months for the implementation of the recovery decision instead of the usual four months period.
CFR Marfa was incorporated as a joint stock company on 1 October 1998, following the reorganisation of the Romanian Railways incumbent, Societatea Naţională Căile Ferate Române. CFR Marfa provides rail freight transport services of, inter alia, domestic coal, cement, chemical products, grain and oil, wood, salt and metals.
($= 0.9244 euro)