EN Official Journal of the European Union L 225/1

COMMISSION DECISION

of 24 April 2007

relating to the aid measure implemented by Belgium in support of Inter Ferry Boats (C 46/05 (ex NN 9/04 and ex N 55/05))

(notified under document C(2007) 1180)

(Only the Dutch and French texts are authentic)

(Text with EEA relevance)

(2009/608/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Community, and in particular the first subparagraph of Article 88(2) thereof,

Having regard to the Agreement establishing the European Economic Area, and in particular Article 62(1)(a) thereof,

After having invited the interested parties to present their observations in accordance with the aforementioned Articles,

Whereas:

1. PROCEDURE

1.1. Cases NN 9/04 and N 55/05

(1) By letter of 12 August 2003, registered as received by the European Commission on 20 August 2003 (TREN/A(03)27718), the Belgian authorities notified, under Article 88(3) of the Treaty, the rescue and restructuring measures introduced by Société Nationale des Chemins de Fer Belges (SNCB) for its subsidiary Inter Ferry Boats (IFB) in the form of a framework agreement concluded on 7 April 2003.

(2) On 13 October 2003 (D (03)17546), the Commission asked the Belgian authorities to provide further information. A bilateral meeting on this subject was held with the Belgian authorities on 12 December 2003. At this meeting, the IFB restructuring plan was submitted to the Commission.

(3) The Belgian authorities replied to the Commission’s letter by letter of 7 January 2004, registered as received by the Commission on 13 January 2004 (TREN/A (04)10708). This letter stated that the measures notified had been introduced. Consequently, the case was registered as NN 9/04. A second meeting was held on 30 April 2004. The Belgian authorities sent the additional documents requested by the Commission at this meeting by letter of 15 June 2004, registered as received by the Commission on 21 June 2004 (TREN/A(04)23691).

(4) By letter of 26 January 2005 (D(05)100339), the Commission asked the Belgian authorities to provide further information. This was sent by letter of 25 March 2005, registered as received by the Commission on 30 March 2005 (TREN/A(05)7712).

(5) By letter of 28 January 2005 (SG(2005)A1133), the Belgian authorities informed the Commission of SNCB’s intention to further increase IFB’s capital, this not being provided for in the agreements notified on 12 August 2003. The Commission recorded this case as notification N 55/05.

(6) By letter of 29 March 2005 (D(05)106199), the Commission asked the Belgian authorities to provide further information. This was sent by letter of 28 April 2005, registered as received by the Commission on 3 May 2005 (SG(2005)A(05)4155).

(7) By letter of 31 May 2005 (D(05)111096), the Commission asked the Belgian authorities to provide further information. This was sent by letter of 30 June 2005, registered as received by the Commission on 1 July 2005 (TREN/A(05)16598).

(8) A meeting between the Commission and the Belgian authorities was held on 16 September 2005. At the meeting, the Commission asked the Belgian authorities to provide it with further information. This was sent by email on 21 October 2005, registered as received by the Commission on 24 October 2005 (TREN/A(05)27067).

1.2. Case C 46/05

(9) By letter of 7 December 2005, the Commission informed Belgium of its decision to initiate the procedure provided for in Article 88(2) of the Treaty in respect of the measures in question.

(10) The Commission’s decision to initiate the procedure was published in the Official Journal of the European Union (1). The Commission called on interested parties to present their comments on the measure in question. The Commission has not received comments from interested third parties on this subject.

(11) Belgium replied to the letter informing it that the procedure had been initiated by letter of 14 February 2006, registered as received by the Commission on 15 February 2006 as TREN/A/13934. It withdrew its notification of 28 January 2005 in the same letter.

(12) The meetings between the Commission and the Belgian authorities took place on 1 June 2006 and 25 July 2006. The Belgian authorities provided additional information to the Commission by letter of 29 June 2006, registered as received by the Commission the same day as TREN/A/25806, by letter of 20 September 2006, registered the same day as TREN/A/32665, and by emails sent on 16 and 21 November 2006, registered as TREN/A/37638 and TREN/A/37981.

(13) By letter of 30 November 2006, received by the Commission on 5 December 2006 and registered as TREN/A/39219, the Belgian authorities forwarded a letter from Mr Karel Vinck which concerned the current file. The Belgian authorities sent this letter in support of their argument that SNCB’s decisions in this matter were not attributable to Belgium, but solely to SNCB.

(14) By letter of 5 February 2007 (D (07)302095), the Commission asked the Belgian authorities to provide further information. Belgium sent this information by letter of 6 February 2007, registered as received by the Commission on 7 February 2007 (A(07)24246), by letter of 8 February 2007, registered as received by the Commission on 9 February 2007 (A(07)23613), by letter of 13 February 2007, registered as received by the Commission on 15 February 2007 (A(07)24201), and by letter of 15 February 2007, registered as received by the Commission on 16 February 2007 (A(07)24362).

(15) By letter of 15 March 2007 (D (07)306248), and at a meeting held on 16 March 2007, the Commission asked the Belgian authorities to provide further information. Belgium sent this information by letter of 30 March 2007, registered as received by the Commission the same day (A (07)28411).

2. DETAILED DESCRIPTION OF THE RESCUE AND RESTRUCTURING MEASURES

2.1. The parties to the framework agreement on the rescue and restructuring of IFB

2.1.1. IFB

2.1.1.1. Description of the company

(16) IFB is a limited liability company incorporated under Belgian law. SNCB holds 89,03 % of the share capital. The other shareholders are CNC Transports, a 93,8 % subsidiary of SNCF (7,41 %), ICF (2,08 %), and EWS (English Welsh and Scottish Railway — 1,22 %).

(17) IFB was set up on 1 April 1998 by the merger of the following three companies: Ferry Boats SA, Interferry SA and the ‘rail’ division of Edmond Depaire Ltd. As shown by Belgium by means of an extract from the register of companies, this merger was a takeover, during the course of which Ferry Boats SA took over Interferry SA; the rail division of Edmond Depaire was subsequently incorporated in the merged entity. IFB has therefore taken over the legal personality of Ferry Boats, which was set up in 1923.

(18) IFB mainly pursues two types of activity, logistics for rail transport and combined transport (IFB Logistics) and the operation of continental combined transport terminals (IFB Terminals). The firm’s activities have been described in detail in points 16 to 29 of the letter initiating the formal investigation.

(19) To these activities must be added the holdings and subsidiaries which IFB has or had in Belgium and abroad in companies operating maritime and continental terminals and in transport companies. These holdings and subsidiaries have been described in detail in points 30 et seq. of the letter initiating the formal investigation. Belgium has informed the Commission that certain factual information contained in that letter was either not entirely correct or that the situation had since changed. The factual changes which have occurred since the letter initiating the investigation was sent are described in the subsequent points. For all other matters, see the decision initiating the investigation procedure (points 30 to 49).

(20) IFB’s holdings in the terminals in Belgium. IFB withdrew from the terminal in Zeebrugge. Point 39 of the letter initiating the investigation procedure states that it has sold its shares in the investment group OCHZ. In reality, IFB has sold its shares to Hesse-Noord Natie, with which it jointly operates the terminal.

(21) Point 41 of the letter initiating the investigation procedure states that IFB owns a 16,76 % share of the company Dry Port Mouscron-Lille. Belgium has informed the Commission that, following an increase in the company’s additional capital on 29 June 2006, in which IFB did not participate, and the entry of a private investor, DELCATRANS, in the company’s capital, its holding has been reduced to 11,07 %

(22) IFB’s holdings in the terminals in France. IFB sold its 30 % shareholding in the company Nord France Terminal International OU (hereinafter NFTI-ou) to CMA-CGM in autumn 2006. Following this transaction, IFB has a shareholding of only 2 % in CNC Transports, since renamed Naviland Cargo.

2.1.1.2. Markets concerned and IFB’s market shares

(23) The Commission established in the decision initiating the procedure (points 50 to 54) that, for IFB Logistics’ activities, it was necessary to distinguish between two different product markets: the shipping activities and the logistics activities. These markets have been defined as national markets and IFB Logistics’ market share has been calculated as between 2 % and 5 %.

(24) As regards the terminals market, the decision initiating the procedure (points 55 to 59) distinguishes between the continental terminals and the maritime terminals. In the meantime IFB has disposed of all its shareholdings in the maritime terminals. Neither the interested parties nor Belgium have contested the definition contained in the decision initiating the procedure.

(25) The rail freight market is an ancillary market of these two markets. Since 2003, it has been open for the transportation of international freight to and from Belgium, as provided for in Council Directive 91/440/EEC of 29 July 1991 on the development of the Community’s railways (2). This opening-up of international freight was supplemented by the opening-up of the national freight market on 1 January 2007, as provided for in Directive 91/440/EEC and implemented in Belgium by Royal Decree of 13 December 2005.

2.1.2. SNCB

(26) SNCB was set up by the Belgian Act of 23 July 1926 establishing the Société Nationale des Chemins de Fer Belges (3). Since 14 October 1992 (4), it has been an autonomous public undertaking and a public limited company (5).

(27) Belgium reformed SNCB’s structure on 1 January 2005. It was divided into three distinct companies, namely: — SNCB Holding, a holding company which owns 100 % of the shareholding in the other two companies, these being: — Infrabel, the railway infrastructure operator, and — the new SNCB, the railway company in charge of transport services. The Belgian State owns 100 % of the share capital in SNCB Holding.

(28) The management bodies of SNCB are the Management Board, the Executive Committee and the Chief Executive. The Management Board is composed of 10 members, including the Chief Executive. The directors are appointed by the King, by decree debated in the Council of Ministers.

(29) The Belgian Government is represented on the Management Board by a Government Commissioner. The Government Commissioner can call upon the Belgian authorities in order to revoke a decision of the Management Board relating to any matter not connected to the fulfilment of public service assignments if that decision ‘is prejudicial to […] the implementation of public service duties’ (Article 23, paragraph 2, of the Act).

2.2. The financial difficulties encountered by IFB in 2001 and 2002

(30) It is necessary first of all to analyse the reasons which caused these financial difficulties, and then to describe the reactions of the IFB’s and SNCB’s directors.

2.2.1. The financial difficulties

(31) The principal reason for IFB’s difficulties reside in the financial difficulties encountered by its holdings in France, all situated in the port of Dunkerque, in 2001 and 2002. The financial difficulties also concerned the activities of ‘IFB Logistics’ and ‘IFB Terminals’, which suffered losses in 2002.

(32) As indicated in diagram 1, the total amount of IFB’s losses in the 2002 financial year was EUR 110 million. EUR 12,2 million concerned operating losses before adjustment of the accounts at the level of IFB Logistics (EUR 4,7 million) and IFB Terminals (EUR 7,5 million). To this is added an operating loss of EUR 1,2 million at the level of the holding in OCHZ. These losses, totalling EUR 13,4 million, constitute 12 % of the total losses. The balance of the losses in 2002, EUR 96,6 million, stemmed from reductions in value and provisions within the context of the necessary adjustment of the accounts following the problems which the company had encountered in France and Belgium. 75 % of these reductions in value and provisions stemmed from IFB’s holdings. Of this proportion, 76 % concerned the holdings in France. Diagram 1 Breakdown of losses in 2002 (EUR million)

2.2.2. The response from IFB and SNCB management

(33) Since the end of 2000, IFB has no longer paid the invoices sent to it by SNCB for the provision of its train services. In 2001 and especially in 2002, IFB continued this practice, which SNCB tolerated. Thus, at the end of January 2003 IFB found itself with unpaid SNCB invoices with a total value of EUR 63 million. The non-payment of these invoices explains why IFB was able to survive despite serious financial difficulties.

(34) On 21 May 2002, IFB’s Management Board found that, following the losses sustained since the end of 2000, capital funds had fallen to less than half of the share capital. As provided for in Article 633 of the Belgian Companies Code, IFB convened an extraordinary general meeting of IFB shareholders.

(35) During the course of this meeting, SNCB, as the majority shareholder stated its commitment to support IFB for the operational expenses by the means of a cash advance of EUR 2,5 million. This commitment by SNCB was approved by SNCB’s Management Board. On the basis of this commitment, the shareholders decided provisionally to continue with IFB’s operations and requested that IFB’s Management Board draw up a complete restructuring plan, including the subsidiaries and the management of the terminals.

(36) The SNCB’s Management Board, at its meeting on 19 July 2002, summarised the situation of its subsidiary IFB. IFB’s Chief Executive described the group’s situation; the Management Board then took the following decision: ‘The Board agrees to a contribution of EUR 2,5 million which is required to ensure cash flow requirements and to guarantee the continuity of IFB until the end of October 2002 (this amount constitutes an advance on a likely increase in capital).’

(37) During the second half of 2002, following approval by the Management Board, the cash advance of EUR 2 500 000 was transferred by SNCB to IFB, according to the following timetable: — 6.8.2002: transfer of EUR 1 000 000, — 17.9.2002: transfer of EUR 1 000 000, — 30.9.2002: transfer of EUR 500 000.

(38) This advance bore interest at a rate of 3,1 %; it was fully repaid in July 2003. Repayment was in two stages: — on 15 July 2003, IFB repaid EUR 1 500 000 of this sum, plus interest of EUR 40 422,04; — on 23 July 2003, the balance of EUR 1 000 000, plus interest of EUR 26 883,35, was repaid by IFB to SNCB.

(39) On 19 September 2002, IFB’s Chief Executive instructed two auditors to compile a special report in order to evaluate the financial state of the company. In light of the conclusions of this report, submitted to IFB on 4 December 2002 and subsequently to SNCB, on 20 December 2002 SNCB’s Management Board gave its consent in principle to underwrite an increase in IFB’s capital. On 24 December 2002, the Extraordinary General Meeting of Shareholders (‘EGM’) of IFB likewise accepted this proposal.

(40) IFB’s senior management, with the aid of consultants McKinsey, drew up a restructuring plan for IFB. This plan, which is described in detail in points 73 to 86 of this decision, was approved by IFB’s Management Board on 23 March 2003.

(41) The management of the two companies (IFB and SNCB) subsequently finalised the details for the rescue and restructuring of IFB in a ‘framework agreement on the restructuring of IFB’, which was signed by the two companies on 7 April 2003. At a second EGM, IFB shareholders agreed to continuing IFB’s activities on the basis of this framework agreement.

2.3. The rescue and restructuring measures in the ‘framework agreement on the restructuring of IFB’ of 7 April 2003

(42) Article 2 of the framework agreement stipulates that implementation of the measures agreed between the parties will be in two phases, namely a rescue period and a period of restructuring.

2.3.1. Terms and conditions governing the rescue measures

(43) Article 3 of the framework agreement provides for the following rescue measures: — the granting of a recoverable advance of EUR 5 million, — the granting of a credit facility up to a maximum of EUR 15 million, and — the granting of a provisional extension for the payment of IFB’s debts of EUR 63 million in relation to SNCB.

(44) The duration of these measures was limited to 12 months; however, they were tacitly extended by mutual agreement by the parties until the date of the increase in capital.

(45) The interest rate on the recoverable advance and the sums deducted against the credit facility is equivalent to the reference interest rate applied by the Commission for State aid. The interest is capitalised, and payment is made at the same time as the payment of the debts due.

(46) The debts of EUR 63 million are subject to conventional late payment interest of 5,4 %. The interest is capitalised and paid at the same time as the payment of the principal debt.

(47) The interest owed to SNCB by IFB for the debts and the credit facility was EUR 2,2 million in 2002, EUR 3,9 million in 2003, EUR 4,7 million in 2004, and EUR 5,2 million in 2005, and will be EUR 4,4 million in 2006.

(48) Article 7 of the agreement provides that IFB relinquishes the time-barring of its debts to SNCB.

(49) This set of measures was implemented as of the signing of the framework agreement, on 7 April 2003. However, IFB did not make use of the recoverable advance.

2.3.2. Terms and conditions governing the restructuring measures

(50) Article 4 of the framework agreement, ‘Terms governing the package of measures “restructuring measures”’, is worded as follows: ‘The Parties confirm their intention to implement the following measures insofar as they conform to a restructuring plan approved by their two Boards of Directors, by the Belgian State and if necessary by the EC, and subject to the approval of IFB’s shareholders: — The conversion into capital of a recoverable advance of EUR 5 million, — The conversion into capital of the credit facility for a maximum amount deducted of EUR 15 million […], — The conversion into capital of debts of […] EUR 63 million, — Potentially and on the condition that the two parties are in agreement on the matter, an additional increase in capital […]’.

(51) The implementation of this increase in capital is subject to a condition precedent, provided for in Article 5 of the framework agreement, namely Commission approval in the light of State aid rules. Article 5 is worded as follows: ‘The commitments entered into by SNCB […] are subject to the following condition precedent. The parties will ask the Belgian State to notify the EC of this framework agreement as swiftly as possible. The parties will also ask The Belgian State, in the event that the EC has good reason to consider within the context of this communication that the [framework agreement] includes the granting of State aid (as referred to in Article 87 of the EC Treaty, to notify the [framework agreement] under Article 88(3) of the EC Treaty. In order to enable the EC to adopt a position, [the framework agreement] will at all events not be implemented within a period of 15 working days from the date of notification to the EC. If [the framework agreement] is considered by the EC to be global State aid, it will not be implemented until the EC has explicitly or implicitly approved the aid concerned and, where appropriate, subject to the limits and according to the conditions set out in the approval provision. Should the EC consider [the framework agreement] partially or totally to constitute State aid, and in the event that and insofar as this aid is declared incompatible with the common market, the parties would then discuss in good faith the feasibility of any additional measures requested in respect of IFB, but with no obligation to implement these additional or adjusted measures if the circumstances in which the aid must be given are considered to be absolutely unjustified.’

(52) Belgian civil law provides that, once the condition precedent is fulfilled, the agreement is valid retroactively.

(53) In their reply to the initiating letter, the Belgian authorities informed the Commission that the capital increase will be made exactly as agreed between the parties in the framework agreement, if the Commission approves it. It will be EUR 95,3 million, made up as follows: (EUR) Conversion into capital of the credit facility 15 million Conversion into capital of IFB’s debts to SNCB 63 million Conversion into capital of the interest accumulated for the credit facility and debts in the years 2002 to 2006 (only partly for 2006) 17,3 million Total 95,3 million

(54) The Belgian authorities informed the Commission that the increase will not concern the total amount of interest accumulated in 2006, in order to ensure that IFB’s debt to equity ratio corresponds to the average level of its competitors, and is not greater. It also no longer includes the recoverable advance, since IFB has not made use of this facility.

(55) In their reply to the letter initiating the procedure, the Belgian authorities also informed the Commission that they were withdrawing the notification of 28 January 2005, in which they had informed the Commission of SNCB’s and IFB’s intention, in addition to what was provided for in Article 4 of the framework agreement, to proceed with an increase in additional capital of EUR 5 million by a contribution in kind of a 47 % shareholding in the company TRW (6) by SNCB.

(56) The restructuring plan provided for in Article 4 was communicated to the Commission at a meeting with the Belgian authorities on 12 December 2003. Its implementation commenced from 2003, and it was completed at the beginning of 2005.

(57) The restructuring plan comprised two parts, which correspond to two different strategies concerning on the one hand the group’s French subsidiaries and on the other hand the Belgian activities of IFB. The strategy selected for France is the complete divestiture of its shareholdings, whereas the strategy selected for Belgium is the restructuring of the company with a view to continuing its operations.

2.3.2.1. The divestiture of the subsidiaries operating the terminals in France

(58) As explained in this decision and, in more detail, in points 30 onwards in the letter initiating the procedure, IFB pursued a strategy of divestiture of its French subsidiaries. This policy was achieved by selling the shareholding in NFTI-ou in November 2006.

(59) The total cost of divestiture of the IFB subsidiaries in France amounted to EUR 39,1 million. The following table reproduces the allocation of these costs in relation to the five subsidiaries. The net borrowing requirements and the figures concerning the various companies are explained in further detail in the following points. Divestiture of french shareholdings: Summary of costs incurred (in M EUR) ACIMAR NFTI-ou IFB FRANCE DPD TOTAL INVESTMENTS Capital depreciation on debts 3,9 0,8 2,8 7,5 Capital depreciation on investments 16,7 0,1 5,1 22,0 Capital increase 1,7 1,7 Total cost 3,9 18,5 0,9 7,9 31,1 Interest due on 30.6.2006 +7,7 Current account fluctuation 9.2002 – 12.2002 +0,5 Capital appreciation on SSTD sale –0,2 Total cost of divestiture of French investments 39,1

(a) Net borrowing requirement

(60) The table has been based on the accounting Statements of 27 September 2002. They distinguish between the following amounts: — A sum of EUR 31,1 million corresponding to the capital losses on debts, capital losses on shareholdings together with the increase in capital of NFTI-ou of EUR 1,7 million; — A sum of EUR 7,7 million in outstanding interest corresponding to the amount of interest accumulated between the end of 2002 and 30 June 2006 on behalf of the recoverable advance and the extension for payment which served to finance the divestiture; — A sum of EUR – 0,2 million corresponding to the capital appreciation on the sale of SSTD; — A sum of EUR 0,5 million corresponding to the difference between the accounting statements of 27 September 2002 and the amount of the actual capital depreciation accounted for on 31 December 2002.

(61) This last sum of EUR 0,5 million corresponds to the flow of funds between IFB’s French shareholdings and IFB between 27 September 2002 and the end of 2002 and must be included in the table in order to be able to reconcile the actual capital depreciation accounted for at the end of 2002 with the total requirement calculated on the basis of the situation on 27 September 2002. As regards the IFB’s borrowing requirement, there is no reason to take account of this amount; IFB’s borrowing requirement relative to the divestiture of its French shareholdings is therefore EUR 38,6 million.

(62) The borrowing requirement for the divestiture of IFB’s shareholdings in France has been financed by SNCB. IFB utilised EUR 30,9 million of its financial headroom obtained by the granting of the provisional credit facility of EUR 15 million and by the provisional non-recovery of the existing debts of the order of EUR 63 million to finance the divestiture. EUR 7,7 million of finance correspond to interest due for this sum by virtue of the framework agreement of 7 April 2003, which provides that the interest is not paid until the time of the payment of the principle debt (or converted into capital at the same time as the principal debt).

(b) Acimar

(63) The company Acimar achieves its total turnover from a transport contract with the company Arcelor. This contract expired on 31 December 2005; at the time of the IFB audit in the second half of 2002, the contract was generating annual losses […] (7). Since attempts to renegotiate this contract with Arcelor have failed, SNCB has decided to file for Acimar’s bankruptcy, and to seek legal redress. IFB has non-recoverable debts in respect of Acimar of EUR 3,9 million, which constitute the cost of divestiture.

(c) NFTI-ou

(64) As regards NFTI-ou, which was a company controlled jointly by IFB and Port Autonome de Dunkerque (Port of Dunkerque Authority), and operated the terminals in the port of Dunkerque, SNCB opted for divestiture by selling its shareholding.

(65) IFB’s shareholding in NFTI-ou required IFB, under the terms of a letter of intent, to finance a share of the losses corresponding to its shareholding in the company. Furthermore, IFB guaranteed security for a bank loan to the company with […], which had a value of EUR 2,9 million.

(66) In order to divest its shareholding in the company, IFB negotiated with Port Autonome de Dunkerque the lifting of the commitments resulting from the letter of intent. In return, IFB contributed to an increase in the capital of NFTI-ou, this having become necessary to allow the company to continue operating, amounting to EUR 1,7 million, and conceded part of its share capital to Port Autonome de Dunkerque for the nominal cost of EUR 1. Following this operation, IFB held only 30 % of the share capital.

(67) IFB and Port Autonome de Dunkerque subsequently sought and found a buyer, CMA-CGM, for the IFB shares […]. Taking the selling price into consideration, the total cost of divestiture for IFB was EUR 18,5 million, comprising EUR 1,7 million for the increase in capital and EUR 16,7 million for the depreciation in capital realised by the shareholding.

(d) IFB France

(68) IFB France, which subsequently became AGEP, was sold to NFTI-ou […] which represented a depreciation in capital of EUR 0,1 million. Since IFB divested itself of NFTI-ou at the same time, the transfer to NFTI-ou resulted in the divestiture by sale of IFB France. Before the sale, IFB was obliged to abandon its debts on IFB France totalling EUR 0,8 million. The total cost of divestiture of IFB France was therefore EUR 0,9 million.

(e) Dry Port Dunkerque

(69) IFB’s shareholding in Dry Port Dunkerque was characterised by the same features as its shareholding in NFTI-ou: a letter of intent obliged IFB to make good the company’s operating losses.

(70) IFB divested this shareholding by liquidation and by selling some of its assets, namely its 8,6 % shareholding in NFTI-ou held by Dry Port Dunkerque. Here, contrary to the situation in NFTI-ou, IFB’s partners could not insist that the company should continue in business.

(71) IFB could not realise its debts on Dry Port Dunkerque (EUR 2,8 million), and had to accept the capital depreciation of its shareholding (EUR 5,1 million). The total cost of the liquidation was therefore EUR 7,9 million.

(f) SSTD

(72) The company SSTD is a profitable company. Following the loss of its main client and in view of the strategic decision to exit the French market, IFB decided to sell it at the beginning of 2005, which generated a small profit.

2.3.2.2. The restructuring plan for the continuation of activities in Belgium

(73) IFB drafted a plan with consultants McKinsey for the restructuring of IFB’s activities in Belgium. This restructuring plan was in two parts: — Restructuring of ‘IFB Logistics’, — Restructuring of ‘IFB Terminals’. The essential idea behind this plan is to limit the activities of IFB to its core business, that is to say the logistics activities and the operation of the terminals in Belgium, and to divest and sell the activities which are not essential to the economic viability of the core business. It is necessary to outline the financial results of the restructuring, together with the various measures taken to accomplish these results (general measures, measures relating to the logistics activity, measures relating to the terminal activity, investments).

(a) Financial results of the restructuring

(74) After adjustments for depreciation, reductions in value and provisions for risk and charges (operational cash flow), the restructuring plan anticipated the following financial results which were largely confirmed by the results obtained: (EUR million) 2004 2005 2006 (1st half) Total during the restructuring period Projected operational cash flow 3,9 4,3 2,35 10,550 Resulting operational cash flow 4,875 3,079 2,475 10,429

(75) The projections for the IFB financial results were based essentially on the following elements, of which IFB was aware at the time the restructuring plan was adopted: — Centralisation of ‘Railbarge’ traffic on one terminal, and a perceptible increase in volumes. The centralisation of ‘Railbarge’ traffic allows optimisation of the operational model, and an increase in revenue, as handling undertaken there up till then by third parties could be integrated into the group. Furthermore, IFB gained an important new client, CSAV, which envisaged placing orders for a volume of 50 000 TEU from 2004; — Significant reduction in both personnel and maintenance costs. These measures are outlined in more detail in points 78 to 83 of this decision; — A new agreement concerning the operation of the rail terminal at Cirkeldyck, which allowed the provision of important synergies with the adjacent terminal MSC Home Terminal; — An increase in volume at the terminal in Muizen, following a new contract entered into with Unilog; — Very positive general projections for the intermodal transport market, which has undergone spectacular growth since the start of the year 2000.

(b) Measures taken toward restructuring

(76) The conclusion of a new collective labour agreement at company level and changes to the working regulations enabled a higher rate of activity to be achieved (the number of working days per annum was increased by 13 with effect from 1 January 2004) at a lower cost (pay for weekend work and team work was reduced with effect from 1 October 2003).

(77) The administrative and commercial services were centralised in Berchem, which enabled the site in Ghent to be closed and the capacity of the one in Zeebrugge to be reduced.

(78) These measures contributed to limiting the personnel required in order to reduce IFB’s general overheads by around EUR 2,55 million per annum (8) in total. IFB reduced its personnel from 210 FTE (9) in September 2002 to 175 FTE at the beginning of 2006, which represents a reduction of 17 %. These reductions can be presented in detail as follows: — For the directly operated terminals (except subsidiaries), personnel was reduced from 110 FTE in September 2002 to 96 FTE at the beginning of 2006, a reduction of 13 %, — As regards the logistics activities of IFB, personnel was reduced from 60 FTE in September 2002 to 49 FTE at the beginning of 2006, a reduction of 19 %, — Personnel assigned to ‘sales and marketing’ and other central support functions (finance, human resources, etc.) was reduced from 40 FTE in September 2002 to 31 FTE at the beginning of 2006, a reduction of 23 %.

(79) The restructuring plan provided for the following 10 measures, which were intended to allow an improvement of EUR 5,7 million. Measures Benefit 1. Effect of the reduction in the wages bill […] 2. Consultancy and outsourcing […] 3. Reductions in value and exceptional depreciation […] 4. Handover of the non-profitable branches in the North European Network […] 5. Loss of volume of conventional traffic […] 6. Recovery of wagons maintenance provisions […] 7. Increase in intermodal […] 8. Revision of Railbarge contract (price increase and product re-engineering) […] 9. Increase in commissions for representation (agent) […] 10. Reduction in general overheads […]

(80) While carrying out the restructuring plan, which was completed at the end of 2004, two additional measures were taken: — For the terminal at Cirkeldijck, the price of handling was increased, — In general, traffic was analysed and, as a consequence, re-directed in consultation with the clients.

(81) The restructuring of the ‘IFB Terminal’ activities, which was completed in 2005, required seven measures, which are described in further detail in points 103 to 107 in the decision initiating the procedure.

(82) In addition to the measures initially anticipated, IFB Logistics completed an in-depth analysis of its rail products, which revealed the existence of several unprofitable products, which IFB has since ceased to offer.

(83) For other products, this analysis demonstrated the need for improvements in the technical plan. These improvements were made, notably in the intermodal container transport sector.

(84) The restructuring of Mainhub together with the restructuring of Zomerweg involved the need for new investments […], essentially for investments in renewals […] as well as miscellaneous investments, […].

2.4. Description of the reasons which led to the initiation of the procedure on 7 December 2005

(85) In its notification, Belgium considered that the measures in question did not constitute State aid, as they were not attributable to Belgium, and, in any case, SNCB had behaved like a private investor in a market economy.

(86) The Commission had doubts as to whether the granting of a payment extension for the existing debts of EUR 63 million and their conversion, together with the conversion of the interest of EUR 11 million pertaining to them, into share capital constitutes State aid. Its doubts concerned whether SNCB’s conduct could be attributed to its owner, The Belgian State, and whether SNCB has behaved as a private investor in a market economy would have done.

(87) The Commission also has doubts as to whether the granting of a recoverable advance of EUR 5 million and the granting of a credit facility of EUR 15 million, the conversion of the credit facility of EUR 15 million and the interest of EUR 2,5 million pertaining to it into share capital, and the contribution in kind of EUR 5 million of new share capital, consisting of SNCB’s shareholding in TRW, constitute State aid.

(88) Inasmuch as this aid constitutes cash aid, the Commission doubts that it can be declared to be compatible with the common market as rescue aid, as it has been granted for a period of more than 12 months.

(89) The Commission had some doubts as to whether the aid package could be declared to be compatible with the common market as restructuring aid.

(90) Its doubts concerned the respective applicability at the time of the 1999 (10) Community guidelines for State aid for the rescue and restructuring of businesses in difficulty (hereinafter the 1999 guidelines) and the 2004 (11) Community guidelines concerning State aid for the rescue and restructuring of businesses in difficulty (hereinafter the 2004 guidelines), whether the measures taken were sufficient to mitigate, as far as possible, the unfavourable consequences of the aid on competitors, whether the aid was limited to a strict minimum and whether IFB’s own contribution to the restructuring aid was sufficient.

(91) Belgium sent its comments by letter of 14 February 2006, which was supplemented by letters of 29 June 2006, 20 September 2006, 16 November 2006 and 21 November 2006.

(92) In its reply, Belgium repeated its position that the measures in question do not constitute aid, as they are not attributable to the Belgian State, and because SNCB as a private investor would have done in a market economy.

(93) Belgium then considered that if the measures in question constituted State aid, they should be analysed on the basis of the 1999 guidelines for rescue and restructuring aid, and not on the basis the 2004 guidelines. Furthermore, Belgium considered that the measures are compatible with the common market as rescue and restructuring aid.

3. BELGIUM’S COMMENTS

(94) Belgium’s position can be summarised as follows.

3.1. Belgium’s observations on the procedure

(95) In their reply, the Belgian authorities informed the Commission that they had reservations regarding the length of the examination. They believe they have legitimate expectations as to the legality of provisionally maintaining the rescue measures until the Commission takes a final decision on the restructuring plan.

(96) The communications of 12 August 2003 (registered by the Commission as NN 9/04) and 28 January 2005 (registered by the Commission as N 55/05) are, according to the Belgian authorities, intended to provide the Commission with all information needed to check whether or not SNCB’s measures in support of IFB constitute State aid within the meaning of Article 87(1) of the Treaty. According to the Belgian authorities, it is only if the measures concerned were deemed to be State aid that the Commission would have been (and would be) required to consider the communications as notifications under Article 88(3) of the Treaty.

(97) The Belgian authorities consider, more particularly, that the communication of 12 August 2003 did not concede that the rescue and restructuring measures in support of IFB constituted State aid or therefore that the rescue measures could be regarded as non-notified State aid. The Belgian authorities consider that the measures were not subject to the obligation of prior notification and to the requirement not to be put into effect within the meaning of Article 88(3) of the Treaty.

(98) The Belgian authorities made a similar statement regarding the communication of 28 January 2005 in which Belgium informed the Commission about an additional capital increase of EUR 5 million.

3.2. Absence of ‘State aid’ within the meaning of Article 87(1) of the Treaty

3.2.1. Absence of State resources

(99) Belgium considers that neither the rescue measures nor the restructuring measures granted to IFB were financed from State resources. SNCB is said to have financed these measures exclusively from its own resources, without mobilising State resources in any way.

(100) According to Belgium, the fact that SNCB is a public undertaking within the meaning of Article 2 of Commission Directive 80/723/EEC of 25 June 1980 on the transparency of financial relations between Member States and public undertakings as well as on financial transparency within certain undertakings (12) is not sufficient to establish that the measures in question, which had been financed by SNCB, were financed from State resources. Belgium considers that it is necessary to distinguish between, on the one hand, SNCB’s own resources, which arise from revenues generated by its activities and, on the other hand, the funds allocated by the State for SNCB’s public service responsibilities. Since the funds allocated by the State were not sufficient to finance the expenses incurred in connection with such responsibilities in their entirety, Belgium concludes that there is no possibility that State resources were used by SNCB to finance measures to support IFB.

(101) Belgium considers that SNCB’s capital is not at the disposal of the Belgian authorities, but is used for SNCB’s business purposes. As a consequence, Belgium considers that it is not ‘at the disposal of the public authorities’, as required by the Stardust Marine (13) ruling.

(102) Finally, Belgium considers that any reduction in SNCB’s own funds owing to the measures granted to IFB would not have entailed any ‘loss’ for the State (14), since the resources would in no way have otherwise had to be transferred to the State budget.

3.2.2. Absence of liability on the part of the Belgian State

(103) As regards the granting of a cash advance of EUR 2,5 million in the second half of 2002, the Belgian authorities consider that SNCB’s decision to grant this advance is not attributable to the Belgian State.

(104) Belgium puts forward the following arguments to demonstrate its non-liability: — The SNCB’s strategic decision to restructure IFB, rather than allowing it to go bankrupt, was taken independently by SNCB’s executive committee. In particular, IFB’s future was not the subject of the studies commissioned at the end of 2001 by the Belgian Government for the company ABX, nor of the decisions concerning ABX which the Belgian Council of Ministers adopted in 2002, — The decision to grant an advance to IFB had been taken by SNCB’s executive committee. Belgium admits that the executive committee decided to submit this measure to the SNCB’s Management Board, but considers that the granting of this cash advance did not require approval by SNCB’s Management Board since, by virtue of the delegation of authority of the Management Board to the executive committee, the latter was empowered to bind SNCB for amounts up to EUR 2,5 million, — This advance did not form part of a restructuring plan or other plan or measure which had been submitted to the Belgian State or in respect of which any consultation had taken place with the Belgian State, — Other factors such as the relatively small size of the advance and its provisional nature equally confirm the conclusion that the granting of this advance can not be attributed to the Belgian State.

(105) As regards the non-payment of SNCB’s invoices by IFB, the Belgian authorities consider that SNCB’s Management Board were not informed of the fact the IFB was no longer settling SNCB’s invoices until December 2002, i.e. when it had decided in principle to increase IFB’s capital.

(106) The Belgian authorities consider furthermore that the action or lack of action by the Management Board, by the executive committee and by the Chief Executive are not attributable to the Belgian State, either before or after the conclusion of the framework agreement. They argue that there is no involvement of the Belgian State whatsoever (in the sense of the ‘Stardust Marine’ case-law) in SNCB’s decision-making process concerning the taking of measures in respect of IFB.

(107) According to the Belgian authorities, the measures taken by SNCB in respect of IFB are measures concerning an SNCB subsidiary which does not itself undertake public tasks and which is no longer associated with the performance of public tasks by SNCB. IFB’s activities are therefore solely commercial activities, outside of any public tasks. Thus, still according to the Belgian authorities, they are not subject to State control as the Belgian authorities are required to respect SNCB’s independence as regards matters which are not public tasks.

(108) As regards the role of the Government Commissioner, the Belgian authorities say that the IFB file was never submitted to them and that, therefore, they were not competent to intervene, given that the Government Commissioner did not express comments at any stage on the measures taken in respect of IFB and that he also did not intend to take any action whatsoever. Furthermore, they maintain that they did not intervene in any way in SNCB’s decision-making process concerning IFB, or during the period preceding the conclusion of the framework agreement, or during the subsequent period.

(109) As regards the three items identified by the Commission in the letter initiating the procedure (points 143 to 150), namely the submission of the restructuring plan for approval by the Belgian State, the press articles demonstrating a strong influence by the Belgian Government on SNCB during the year 2003, and the scope, contents and the terms of the framework agreement, the Belgian authorities consider that these factors are not sufficient to establish responsibility in the sense of the Stardust Marine case-law.

(110) regards the approval of the restructuring plan by the Belgian State, the Belgian authorities consider that this provision of the framework agreement did not in any way aim to grant the Belgian authorities such competence as to be able to judge the contents of the restructuring plan, but was inspired by the fact that SNCB wanted the restructuring plan, like the framework agreement, to be communicated to the Commission.

(111) As regards the press articles, the Belgian Government considers that these do not contain any indication of intervention by the Belgian Government in this case, for the following reasons: — In the article which appeared in La Libre Belgique on 19 May 2003, SNCB’s press department explains that the Commission had not yet been asked to give the green light for the IFB case, since ‘the federal authority still has to speak’. According to the Belgian Government, these comments refer exclusively to the ‘communication’ of the measures in support of IFB by the Belgian State to the Commission, — In the article which appeared in La Libre Belgique on 18 December 2002 (in the version published on the website www.cheminots.be), Mr Karel Vinck is quoted as follows: ‘A sufficient financial headroom is required for the management of the company’. According to the Belgian authorities, this statement exclusively concerns the fulfilment of SNCB’s public tasks, and expresses the idea that the Belgian authorities are competent to agree objectives to be achieved for the fulfilment of the public tasks with SNCB by means of the legal instrument of the management contract, but that the achievement of these objectives is the responsibility and falls within the competence of SNCB’s Management Board.

(112) Finally, the Belgian authorities sent the Commission a written statement by Mr Karel Vinck, Chief Executive of SNCB at the time of the events, confirming the absence of any involvement of the Belgian authorities in the granting, by SNCB to IFB, of the rescue and restructuring measures which are the subject of this dossier. Such a letter, signed by Mr Vinck on 17 November 2006, was received by the Commission on 5 December 2006.

(113) As regards the scope, contents and terms of the framework agreement, the Belgian authorities repeat their position that, even if the restructuring measures are important for the future of IFB, the Belgian authorities do not have the power of approval, authority to control the basis issue, or the right to be consulted in this case.

3.2.3. Principle of a private investor in a market economy

(114) Belgium considers that, following the reasoning developed by the Commission in the ABX Logistics (15) decision, the Commission should analyse separately, on the one hand, the funds which SNCB awarded to IFB to finance the divestiture of its French subsidiaries and, on the other hand, the funds which SNCB granted to IFB to finance the pursuit of its activities in Belgium.

3.2.3.1. Divestiture of French shareholdings

(115) In the ABX Logistics decision, the Commission is said to have confirmed that, since ABX France was not in a position to support the costs of disinvestment itself, SNCB would be acting as would a ‘private investor in a market economy’ in taking charge of these costs.

(116) Belgium considers the same conclusion applies as regards the cost of divestiture, for IFB, of its French shareholdings. It is attempting to show that, for each one of these companies, IFB opted for the least expensive method.

(117) As regards Acimar, Belgium has provided the following table: Acimar — judicial administration followed by liquidation Financial situation in 2002 (in EUR million) 2001 2002 Turnover EBT Total balance (31.12) Net worth (31.12)

Cost of alternatives (in EUR million) Performance of contract Judicial administration Cash drain 1.1.2003-31.12.2005 Capital depreciation debts 31.12.2002 Total –14,7 –3,9 Comments — The attempts of the business during the year 2002 to obtain a revision of the contractual conditions failed; the duration of the contract was until 31.12.2005. — The performance of the contract implied an important annual cash drain. — In these circumstances, a request for judicial settlement was the least expensive solution. — During the settlement period, the operating losses were financed by the client. — Acimar ceased trading on 1.9.2003.

(118) As regards NFTI-ou, Belgium has provided the following table: NFTI-ou — Handover Financial situation in 2002 (in EUR million) 2001 (16) 2002 Turnover EBT Total balance (31.12) Net worth (31.12)

Cost of alternatives (in EUR million) Continued Partial sale Increase in capital + repayment to ING credit Settlement plan Actual cash drain (CH annual of EUR – 3,7 million) (100 % letter of intent) Capital depreciation of shareholding Capital depreciation of debts 31.12.2002 Sale price (EUR 1) – 30 % shareholding Total –36,2 –18,5 Comments — On the basis of a ‘letter of intent’, IFB was obliged to make contributions to the current account. — IFB guaranteed security for a bank loan to NFTIou for which repayment has been requested by ING. — In these circumstances, IFB negotiated with the other shareholder, the Independent Port of Dunkerque (PAD): — An increase in the capital of NFTIou part of which was underwritten by IFB, — The release of IFB from its commitments issued in the letter of intent, and PAD’s commitment to seek a buyer for the balance of IFB’s shareholding in NFTIou, by means of the transfer of a nominal sum to PAD for a part of IFB’s shareholding in NFTIou to be reduced to 30 % (including the shareholding in DPD). — The sale of the remaining 30 % shareholding is currently in progress.

(119) Belgium informed the Commission that filing for bankruptcy for NFTI-ou had never been envisaged, given that the continuation of business by NFTI-ou offered the prospect of profitability. According to Belgium, the sale of IFB’s shareholding of 30 % to CMA-CGM on 2 November 2006 […] and the full recovery of the sums awarded in the form of advances to the current account demonstrate the viability of this company.

(120) As regards IFB France, which subsequently became AGEP, Belgium has provided the following table: IFB France (AGEP) — Cession a NFTI-ou Financial situation in 2002 (in EUR million) 2001 2002 Turnover EBT Total balance (31.12) Net worth (31.12)

Cost of alternatives (in EUR million) Liquidation Transfer NFTI-ou Relinquishing of debts Capital depreciation on shareholding Capital appreciation on completion of asset transfer Asset deficiency (14 FTE) Total –1,7 –0,8 Comments — Faced with the risk of forced liquidation or of voluntary liquidation, IFB negotiated with PAD the transfer of title of IFB France to NFTI-ou by the means of the abandonment of debt by IFB. — The liquidation of the company would have led to greatly increased costs (capital depreciation on shareholdings, risk of coverage of liabilities as representing founder and/or sole director).

(121) As regards Dry Port Dunkerque, Belgium has provided the following table: Dry Port Dunkerque (DPD) — Liquidation with partial sale Financial situation in 2002 (in EUR million) 2001 2002 Turnover EBT Total balance (31.12) Net worth (31.12)

Cost of alternatives (in EUR million) Continued Liquidation with partial sale of assets Actual cash drain (Actual CH of EUR – 0,5 million) (100 % lettrer of intent) Capital depreciation of debts Capital depreciation of shareholding Total –10,4 –7,9 Comments — A letter of intent obliges IFB to make contributions to the current account in order to cover the operational losses of DPD. — After the divestiture in NFTI-ou, a buyer for the shareholding in DPD was sought but could not be found. — IFB negotiated the volontary liquidation of DPD, by means of a nominal sum for the shareholding of 8,6 % in NFTI-ou.

(122) As regards SSTD, Belgium provided the following table: SSTD: Cession Context: — IFB owns a shareholding of 50 %. — SSTD had profitable activities which continued until the beginning of 2005. — At the end of 2004, SSTD lost its main client (representing 40 % of its turnover). — This loss led to the decision to sell the shareholding in SSTD. — The sale of the shareholding was intervened at the beginning of 2005 and was completed with a negligible capital appreciation (positive but negligible impact on the borrowing requirements).

(123) The Belgian authorities concluded that IFB chose the least costly solution as regards the French subsidiaries.

3.2.3.2. Restructuring and continuation of IFB’s activities in Belgium

(124) As regards the financing of the restructuring and the continuation of IFB’s activities in Belgium, Belgium considered that SNCB also behaved as an informed private creditor/investor in a market economy would have done, as the financial result of the alternative — the cessation of activities in Belgium — would have been, for SNCB, much less attractive and much more costly.

(125) Belgium presented the following calculations to illustrate the alleged cost of the liquidation of IFB’s activities in Belgium and the alleged cost of remaining in business, subject to the capital increase.

(a) Net cost to SNCB if IFB had gone bankrupt in 2003

(126) Belgium determined IFB’s net current value from IFB’s balance sheet of 31 December 2002. According to the Belgian authorities, the value of IFB’s fixed assets which could theoretically have been realised if IFB had filed for bankruptcy in January 2003 included tangible fixed assets and financial fixed assets (shareholdings).

(127) For the tangible fixed assets, Belgium retained an amount of EUR 6,9 million. To justify this calculation, Belgium refers to the study ‘Bankruptcy auctions: costs, debt recovery, and firm survival’ (17), which concludes that the rate of recovery of the bundle of debts in a bankruptcy scenario is on average 33 %. When calculating the assets recovered, Belgium applied this rate to the tangible fixed assets which appeared in IFB’s balance sheet totalling EUR 20,9 million (excluding the fixed assets under construction of EUR 1,9 million, for which a zero rate of recovery was used).

(128) For the financial fixed assets (shareholdings), Belgium assumed a value of EUR 1,9 million, which corresponds to their complete accounting value on the IFB balance sheet on 31 December 2002.

(129) For the current assets, Belgium proposed the following value estimates: — IFB’s commercial debts: these concern a total of EUR 25,6 million of which EUR 18 million are considered to have been collected, which corresponds to a rate of recovery of 70 % for the short term debts. This rate is based on the average determined in the study ‘Liquidation of Ormet Corporation’ (18), — Other IFB debt: this involves a total of EUR 7 million of which EUR 4,5 million are considered to have been to be collected. The amount of EUR 7 million can be broken down into EUR 2,5 million of debts for the subsidiaries DPD and OCHZ, and EUR 4,5 million in VAT. A rate of recovery of 100 % is assumed for the VAT debt, and a rate of recovery of 0 % for the two subsidiaries, — Liquid assets and accruals and deferred payments: this involves a total of EUR 6,4 million which is considered to have been recovered in its entirety.

(130) The application of this set of rates of recovery gives rise to a total recovery of EUR 37,5 million on the assumption of the bankruptcy/liquidation of IFB, as indicated in diagram 2. Diagram 2 Recovery of assets (EUR million)

(131) Furthermore, the Belgian authorities deducted the amount of the recovery which could be expected for IFB’s liabilities. These liabilities rose to a total of EUR 76,9 million, not counting the debts of EUR 63 million in respect of SNCB for unpaid invoices from the period 2000–02. They are detailed below: (a) Social liability: an estimated total of EUR 2,9 million for the IFB workforce, after subtraction of SNCB personnel seconded to IFB; (b) Taxes, salaries and social security: a total of EUR 1,4 million due but not paid (taken from the balance sheet of 1 January 2003; (c) Provisions and deferred taxes: a sum of EUR 34,7 million has been retained, from a total of EUR 40,8 million recorded from liabilities on the balance sheet of 31 December 2002. This variance is explained by the following items which would not have been a liability in the event of the liquidation of IFB: — maintenance of terminals: EUR 3,3 million, — maintenance of logistics operation: EUR 0,9 million, — provisions for personnel restructuring: EUR 1,9 million, (d) IFB’s financial debt totalling EUR 15 million. The financial debt of EUR 15 million, contracted with credit institutions […], was guaranteed by IFB’s commercial receivables. For this reason, and with regard to the preservation of SNCB’s credit in the banking market, it is clear that this debt would also have been repaid to the credit institutions before the eventual repayment of SNCB’s receivables; (e) The commercial debt to bodies other than SNCB, totalling EUR 22,9 million. On the basis of the above calculations, the IFB’s net asset value for SNCB, excluding debts to SNCB, would have been EUR – 39,4 million, i.e. the value of the assets recovered (EUR 37,5 million) from which the total sum of the commitments to be honoured due to liabilities (EUR 76,9 million) is subtracted, excluding debts to SNCB.

(132) The Belgian authorities consider that, in the event of liquidation, in order to avoid significant damage to its commercial reputation, SNCB would have absorbed the cost of IFB’s negative net asset value. In this respect, they emphasise that most of IFB’s creditors are also clients, suppliers, creditors, debtors or partners of SNCB.

(133) Moreover, the cessation of the IFB’s activities, again according to the Belgian Government, would have give rise to a major social liability for SNCB, which can be estimated at 530 FTE (full time equivalents) (19). These 530 FTE are made up as follows: — On the one hand, some 50 of SNCB’s personnel seconded to IFB who would have had to return SNCB in the event of bankruptcy, — On the other hand, around 480 FTE of SNCB whose employment depended on IFB remaining in business. This estimate is obtained from the following calculation. IFB’s share of the total turnover of SNCB’s Freight division is 8,1 %. This ratio, when applied to the total number of SNCB personnel employed directly or indirectly by the Freight division on 31.12.2002, indicates that around 609 FTE depend upon IFB being in business. Of these 609 FTE, it has been assumed that 129, or 21 %, would be able to retain a job despite IFB’s bankruptcy, as a result of SNCB’s specific initiatives to regain a share of the traffic previously generated by IFB. This ratio of 21 % corresponds to the number of Sabena jobs which could be saved by launching SN Brussels Airlines in the aftermath of Sabena’s bankruptcy.

(134) The Belgian Government considers that, since SNCB was at the time finalising its business plan ‘MOVE 2007’, which foresaw the shedding of 10 000 jobs, almost a quarter of its personnel, between 2003 and 2007, the opportunity to reassign personnel rendered redundant as a result of the cessation of IFB’s activities was practically zero as regards both seconded personnel returning to SNCB or personnel linked to the Freight activity remaining with SNCB.

(135) Consequently, the Belgian Government proposed to add the cost of the surplus staff thus generated for SNCB to the direct cost of the negative net value of IFB, at least during the five-year period from 2003 to 2007. With a total average salary of EUR 46 200 per FTE per annum […], the total cost of this social liability would therefore be EUR 122,4 million.

(136) In order to justify this calculation, Belgium first of all explained that the SNCB personnel made redundant due to the cessation of IFB’s activities could not be laid off, given that these personnel have the status of ‘statutory employee’ (20).

(137) Following the meeting of 1 June 2006, the Belgian authorities sent the Commission a less pessimistic scenario for the calculation of the net value and social liability which would have been borne by SNCB in the event of the liquidation of IFB. This scenario proposes the following two changes: — SNCB would not have paid the total bundle of debts, but only those of creditors which were […], suppliers […] or partners […] of SNCB; on this assumption, the sum of IFB’s liability which would have been paid by SNCB would have been EUR 13 million […], — The IFB buyer would have largely continued to use SNCB’s services; on this assumption 79 % of the 609 FTE employed by SNCB and assigned as indirect support for IFB would have been able to keep their job; on this assumption, the additional social cost to be borne by SNCB would have been limited to EUR 41,1 million (this last sum corresponds to the salary costs of the 50 FTE seconded by SNCB to IFB along with 21 % of the 609 FTE referred to above).

(138) The total cost which would have been borne by SNCB in the event of the liquidation of IFB in these two scenarios, as estimated by the Belgian authorities, is represented in the following table: Net cost — sums retained in the response Difference in the ‘optimistic’ hypotheses Net cost — adjusted sums Total asset value 64,6 64,6 Non-recovered assets –27,1 –27,1 Social costs –2,9 –2,9 Taxes, salaries and social security –1,4 –1,4 Provisions and deferred taxes –34,7 –34,7 Priority loans and other financial debt –15 –15 Non-SNCB commercial debt –22,9 9,9 –13 Recovery value –39,4 –29,5 Social liability to the SNCB – 122,4 81,3 –41,1 Net cost for SNCB of filing for bankruptcy by IFB – 161,8 –70,6

(b) Valuation of IFB in a business-as-usual scenario

(139) Belgium proposed to calculate IFB’s value in a ‘business-as-usual’ scenario according to the ‘discounted cash flows’ or ‘DCF’ method. The parameters used for this analysis are as follows.

(140) The 10-year DCF analysis is based on IFB’s balance sheet of 31 December 2002, and on the restructuring plan drawn up in February–March 2003, including projections to the end of 2005. For the year 2006, when the restructuring of IFB brought about the stabilisation of the business, the trading profit had been set at 3,2 % of turnover. From 2006, the working assumption is an annual growth of 3 % of turnover which, at a constant margin, leads to a pre-tax rate of profit growth of 3 %. The resulting discounted cash flows are compounded to a weighted average cost of capital (WACC) of 8 %. The value of the terminals has been calculated on the assumption of a continuing annual growth of 3 %.

(141) These calculations lead to valuation of the business at around EUR 29,1 million (excluding shareholdings and provisions), as shown in diagram 4. Diagram 4 Value of ifb based on discounted cash flows — Assumptions and results (EUR million)

(142) According to the Belgian Government, an analysis based on multiples (dependent on the results obtained in 2005) confirms the valuation obtained on the basis of the DCF method. The ‘multiples’ valuation (with more cautious multiples than the sector averages) indicates a value for the business of around EUR 28,7 million, as shown in diagram 5. Diagram 5 Value of the ifb business (EUR million)

(143) The Belgian Government considers that the actual results obtained by IFB in the years 2003, 2004 and 2005 also confirm that the DCF valuation, and the assumptions upon which it is based, were realistic.

(144) The Belgian Government considers that IFB’s shareholdings, namely the EUR 1,9 million entered as assets in IFB’s balance sheet of 31 December 2002, should be added to IFB’s value as calculated excluding provisions and shareholdings.

(145) IFB’s total value, including the shareholdings, was therefore EUR 31 million on 31 December 2002.

(146) Still according to the Belgian Government, the value of provisions, estimated at EUR 34,2 million (21), along with the financial debt amounting to EUR 15 million, should be deducted from this value of the business.

(147) This results in a net value of EUR – 18,2 million for the SNCB shareholding in IFB in the business-as-usual scenario. This calculation is illustrated in diagram 6.

(148) As in the preceding estimate of the cost borne by SNCB in the event of the liquidation of IFB, the above calculations do not take account of the debts of EUR 63 million resulting from the unpaid invoices during the period between 2000 and 2002. Diagram 6 Evaluation of the investment option, January 2003 (EUR million)

(c) Comparison of the two scenarios and conclusion

(149) Based on the Belgian Government’s analysis, the two scenarios would give the following results: — The net cost to SNCB of the bankruptcy and liquidation of IFB would be a net loss of EUR 161,8 million (reduced to EUR 70,6 million in the revised estimate), — The decision to invest EUR 15 million to allow IFB to remain in business would lead to a considerable reduction in the loss of value for SNCB, which would therefore be no more than EUR 18,2 million, a gain of EUR 143,6 million compared with the scenario of bankruptcy and liquidation (EUR 52,4 million compared with the revised estimate).

(150) Consequently, the Belgian Government considers that SNCB, in agreeing the measures in question, had behaved as a private investor in a market economy would have done.

3.2.4. Absence of distortion of competition

(151) Finally, Belgium considers, as regards the part of the measures serving to finance the divestment of the French subsidiaries, that an amount of aid which is strictly limited to the actual costs incurred following the cessation of business cannot be considered to distort competition. That part of the financing would therefore not be covered by the scope of Article 87(1) for this reason.

3.3. Compatibility of the rescue measures with the guidelines

3.3.1. IFB is not a newly created business

(152) Belgium considers that since IFB was founded in 1923 and has, by means of a merger by takeover, acquired a company, along with a branch of activity in 1998 (see description in part 2 of this decision), there can be no doubt that IFB has had legal personality for more than 80 years and cannot therefore be considered a ‘newly created business’.

3.3.2. The rescue measures are compatible with the 1999 guidelines

(153) According to the Belgian Government, the fact that the duration of the rescue measures is more than 12 months would not have the effect of ruling out the possibility of their being compatible with the common market on the basis of the 1999 guidelines. Belgium considers that SNCB maintained the rescue measures with the sole aim of covering the period necessary for the Commission to take the final decision in this case.

(154) Since point 24 of the 1999 guidelines provides that authorisation of the rescue measures remains valid until the Commission rules on the restructuring plan, the Belgian authorities request the Commission not to invoke the duration of its own approval procedure for the rescue measures in order to contest the duration of the continuation of these measures, and to approve the rescue measures, on the basis of point 24 of the 1999 guidelines.

(155) The Belgian authorities consider that the suspension of the capital increase pending examination by the Commission necessarily means the continuation, as a provisional and precautionary measure, of the payment period which IFB is allowed within the framework of the rescue measures, as the sole alternative would have been voluntary liquidation. Finally, according to the Belgian authorities, during the course of its examination, the Commission had never have expressed any reservation regarding the provisional continuation of the rescue measures.

3.3.3. The restructuring measures are compatible with the 1999 guidelines

3.3.3.1. Applicability of the 1999 guidelines

(156) Belgium considers that SNCB’s commitment to underwrite the increase in capital of IFB should be analysed within the context of the 1999 guidelines and not those of 2004.

(157) In order to justify this point of view, Belgium maintains that the two conditions established by the Commission in point 240 of the decision initiating the procedure for the applicability of the 1999 guidelines are met. As a reminder, in point 240 of the decision initiating the procedure, the Commission concluded, as regards the interpretation of points 102 to 104 of the 2004 guidelines for this case, that ‘if SNCB decides not to award the new asset to IFB, and if the evidence is forthcoming that SNCB was engaged in converting its receivables into capital before the publication of the 2004 guidelines, the Commission would have to examine in its final decision the aid granted to IFB by the SNCB on the basis of the 1999 guidelines’.

(158) As regards the first condition, Belgium observes that, in its reply to the letter initiating the procedure, it had retracted the increase in capital notified on 28 January 2005, and that consequently, the first condition was fulfilled.

(159) As regards the second condition, Belgium considers that there can be no doubt that the increase in capital of IFB currently proposed would be put into effect as agreed by the parties, under the condition precedent of the Commission’s agreement, in the framework agreement of 7 April 2003.

(160) In order to underline this point, the Belgian authorities draw the Commission’s attention to: — Point 4 of the preamble to the framework agreement of 7 April 2003, which confirms that the Management Board of SNCB has already approved the underwriting of an increase in capital of IFB, — Article 4 of the same contract, which confirms the reciprocal intention of both parties to proceed with an increase in capital of IFB.

(161) As regards the second point, the Belgian authorities draw attention to the fact that, under Belgian law (the law applicable to the framework agreement), a contract arises from the sole consensus of the contracting parties, and that in this case, Article 4 of the framework agreement expressly confirms without any ambiguity the consensus of SNCB and IFB to proceed with an increase in capital of IFB by converting SNCB’s receivables from IFB into capital retroactively to 7 April 2003.

(162) The Belgian authorities point out that, under Belgian law, obligations which are subject to a condition precedent remain fully binding, and the implementation of the condition precedent has a retroactive effect on the contract which takes effect from the date of signature.

3.3.3.2. Measures to limit the adverse effects on competition as much as possible

(163) The Belgian authorities emphasise that the IFB’s market shares are well below 10 % of the markets involved in this case. Consequently, they consider that the anti-competitive effects resulting from the State aid involved cannot be considered to be significant. They point out notably that, by virtue of point 36 of the 1999 guidelines, ‘if the firm’s [beneficiary of the aid’s] share of the relevant market is negligible, it should be considered that there is no undue distortion of competition’ (22), and that, for the application of Article 81(1) EC, the Commission considers the anti-competitive effects of agreements concluded by businesses having market shares smaller than 10 % to be insignificant (23).

(164) As regards the activities of IFB Logistics and IFB Terminal more particularly, the Belgian authorities make the following comments.

(165) The mitigating measures on the freight transhipment market. The Belgian Government observes that IFB’s share of the terminals market in the Antwerp region is less than 7 %, and that during the period 2002-2005 the terminals market in this region experienced a rate of growth of 10,7 % per annum on average, whereas the volumes transported by IFB increased by only 4,1 % per annum on average.

(166) The Belgian Government added that, by implementing the restructuring plan, IFB had considerably reduced its transhipment capacity, as described in part 2 of the initiating letter (points 25 to 29). With regard to the circumstance that, with the exception of the DPD terminal, all of the assets sold are still in operation today, the Belgian authorities consider that the takeovers are to be considered as real and substantial compensatory measures. According to the Belgian Government, the set of takeovers would represent a reduction in IFB’s capacity from 1,5 million TEU in 2002 to 1,1 million TEU at the end of 2005, i.e. a reduction of 27 %.

(167) The Belgian authorities added that the implementation of the restructuring plan by IFB has not been accompanied by pricing measures which had the aim or effect of increasing IFB’s market share. They observe that IFB increased its prices by an average of 4,2 % (24), whereas the industrial annual rate of inflation was 1,9 %.

(168) The mitigating measures on the logistics market. The initiating letter considers (paragraphs 258-260) that the measures ‘proposed’ did not concern the logistics market, and that IFB had been able to increase its volume in this market. The Belgian authorities put forward five arguments to show that sufficient mitigating measures have been taken in the logistics market.

(169) First, IFB had taken measures which have led to a reduction in its capacity in the logistics market. The total number of wagons of which IFB is the owner or which are subject to a long-term lease fell from 744 units in 2002 (25) to 377 units at the beginning of 2006 (26). This is a reduction of 49 %.

(170) The reduction in IFB’s logistics capacity also resulted from the fact that IFB’s shareholding in the company CNC (now Naviland Cargo) weakened, from 10 % in 2002 to 2 % currently.

(171) Second, the Belgian authorities consider that IFB’s share of the logistics market is well below 5 %, if the geographical extent of this market is limited to Belgian territory. It is appropriate then, by virtue of point 36 of the guidelines, to ask whether the anti-competitive effects resulting from State aid in this case can be considered to be perceptible. According to the Belgian authorities, IFB cannot be considered to be capable of exercising a perceptible influence on the competitive element of the logistics market. For the same reason, it was difficult, according to the Belgian Government, to consider the distortions of competition resulting from the aid from which IFB benefited as perceptible, and so only very limited measures appear necessary in order to limit unfavourable consequences for IFB’s competitors.

(172) Third, the Belgian authorities propose to put into perspective the development of IFB’s logistics activity in order to respond radically to the Commission's assertion that IFB had been ‘able to increase its volume in this market in a significant way’ during the period in question. According to the Belgian authorities, the following facts had to be taken into account: — For the combined (intermodal) transport sector, the volumes transported by IFB experienced annual growth in the order of 9,9 % during the period 2002–05, which is less than the average annual growth of 12 % observed in the ARA region for the same period, — In the conventional transport sector, IFB is a totally marginal player, even assuming that the market is restricted to Belgium. IFB’s share, both in volume and value, is less than 1 %.

(173) In addition, the origin of IFB’s turnover in growth in its logistics activity, according to the Belgian Government, is to be found to some extent in the growth of the ‘bulk’ sub-sector (bulk transport). In 2003, IFB’s turnover on bulk was only EUR 3,3 million. In 2004, IFB obtained two bulk transport contracts of significant volume. Firstly, a contract for the transport of coal […] which generated a turnover […] in 2004 and […] in 2005. Secondly, a contract for the bulk transport of aggregates which yielded an increase in turnover […] in 2004 and […] in 2005. IFB achieved a profit margin on these two contracts, which adequately confirms the absence of anti-competitive practices on the part of IFB.

(174) Fourth, the Belgian Government considers that IFB’s opening-up of its terminals to competitors in the logistics market is also to be considered as an important mitigating measure.

(175) Fifth, the Belgian Government considers that the limited distortions of competition which could be considered to result from the restructuring aid to IFB are further reduced by the following factors: — The liberalisation of rail freight transport in Belgium. The Belgian authorities, in compliance with the applicable European rules, opened this market to competition (from March 2003 for international transport, followed by total liberalisation on 1 January 2007) (27). This opening-up did not fail to have an effect, as shown by the activities of the companies DLC and, more recently, Fret SNCF. In its decision N 386/04, Fret SNCF, the Commission considered such liberalisation to be a compensatory measure for competitors, — Several other competitors of SNCB/IFB (among which are Rail4Chem, Railion Nederland, TrainSport, DFG, EWS, Connex and ACTS) have already received or in all probability will receive their operating licences shortly, — The SNCB (B-Cargo) already currently provides traction services to IFB’s competitors, whether suppliers of combined (intermodal) transport such as companies as HUPAC, CNC (Naviland Cargo), Conliner, Danzas/DHL Express Cargo and ICF, or suppliers of ‘forwarding’ services such as Transfesa, K+N, Nauta, NTR, Panalpina, Rail&Sea, Railog, Chemfreight, Rhenania, TMF, Gondrand, RME Chem, RME fret and East Rail Expedition, — As the Commission noted in its decision in case N 386/04, Fret SNCF, the conditions between rail and road are not identical, to the detriment of rail.

(176) According to the Belgian Government, the liberalisation measures have led to substantial capacity increases in the logistics market, as shown by the activities of IFB’s competitors during the period 2003-2005. According to the Belgian Government, competition concentrated on the intermodal sector, where five of IFB’s competitors launched a total of 12 new links in this period.

3.3.3.3. Limitation of the increase in capital to the minimum

(177) According to the Belgian Government, SNCB and IFB carried out an in-depth analysis of IFB’s capital requirements on the basis of the results as at 31 December 2005 and the forecasts for the year 2006. The aim was to allow IFB to pursue its activities in the freight transhipment and logistics markets with a level of solvency comparable to its competitors in these markets.

(178) In relation to the information communicated before the decision initiating the procedure (see points 265 to 269), SNCB and IFB have compiled additional information about the average level of solvency of, on the one hand, IFB’s competitors operating terminals and, on the other hand, of transport companies in competition with IFB. The levels of solvency (which must be understood as the relationship between capital base and total balance sheet) of the companies in question are set out in Diagram 16. Diagram 16 Level of solvency — sample of comparable companies, 2004 (*)

(179) Diagram 16 shows that the median level of solvency of the terminal operators is 56,6 %, whereas the median level of solvency of the transport companies is 20,4 %. Since IFB is active in both sectors, IFB’s level of solvency, as a function of the ‘benchmarks’ referred to, should be less than 35,6 %. This last percentage has been calculated by weighting IFB’s operational fixed assets in the following way: — 42 % of IFB’s operational fixed assets (measured by their net accounting value, that is to say after amortisations and depreciation) are allocated to the terminals activities, — 58 % of IFB’s operational fixed assets are allocated to the transport (logistics) activity.

(180) The Belgian authorities made the observation that IFB’s target level of solvency is also in line with the actual level of solvency of companies such as Gosselin (38,9 %) and Hupac (34,9 %), which, like IFB, combine the operation of terminals with logistics activities.

(181) Based on IFB’s target level of solvency IFB of 35,6 % and a total debt of EUR 128,1 million (estimate as at 30 June 2006), the increase in capital of IFB, according to the Belgian authorities’ calculations, should therefore imply a conversion of debt into capital of at least EUR 95,3 million.

3.3.3.4. IFB’s own contribution

(182) According to the Belgian authorities, SNCB’s total contribution to the restructuring of IFB is EUR 95,3 million, i.e. the forecast amount of additional capital. The sums committed to the French part of the group should be subtracted from this amount, i.e. EUR 39,1 million. The balance, i.e. EUR 56,2 million, therefore represents SNCB’s contribution to the restructuring of the group’s non-French activities.

(183) Later, the Belgian authorities specify that the borrowing requirements for IFB’s non-French activities for the restructuring period (from 1 January 2003 to 30 June 2006), were EUR 106,3 million. Of these requirements, EUR 56,2 million will be covered by SNCB and EUR 50,1 million by means of IFB’s own resources. IFB’s contribution to the total cost of restructuring its activities in Belgium will be 47,1 %.

(184) The following table shows the financing details: Finance requirements and sources (Assuming the conversion of receivables of EUR 63 million constitutes a ‘cost’ of restructuring.) (EUR 1000) Restructured division French divestitures Total Period: 1.1.2003-30.6.2006 A. FINANCE REQUIREMENTS A.1. Restructuring costs A.1.1. Gross operating loss (‘cash drain’) excluding the effect of productivity gains –27 916 –27 916 (equivalent to the gross operating loss in 2002; pro rata for 6 months in 2006 A.1.2. Exceptional charges –32 –32 A.2. Capital requirements during restructuring A.2.1. Variation in working capital (additional) –7 865 –8 000 –16 685 A.2.2. Investments in renewal in non-financial fixed assets –6 611 –6 611 A.2.3. Investments in financial fixed assets (shareholdings) – 782 –1 700 –2 482 A.3. Repayment of debts and interest A.3.1. In favour of creditors (financiers) other than the SNCB A.3.1.1. Interest payments –2 351 –2 351 A.3.1.2. Repayment of financial debts –16 559 –16 559 A.3.2. In favour of the SNCB A.3.2.1. Repayment of debt prior to 2003 –33 200 –29 800 –66 000 A.3.2.2. Payment of interest accumulated from 31.6.2005 on debt prior to 2003 –6 800 –5 200 –11 000 A.3.2.3. Payment of interest accumulated from 31.6.2005 on credit facility –2 200 – 300 –2 500 A.3.2.4. Payment of interest from second half of 2005 and first half of 2006 –3 100 –2 100 –6 200 A.4. Taxes (accrual from 1999 tax year) –77 –77 Total of requirements A.1 + A.2+ A.3 + A.4 – 106 313 –47 100 – 153 413 B FINANCE SOURCES B.1. Financed by the SNCB B.1.1. Credit facility (to be subsequently converted into capital) 13 300 1 700 15 000 B.1.2. Additional capital (over and above the conversion of the credit facility 42 920 37 380 90 300 Total SNCB contribution (subtotal B.1) 56 220 39 080 95 300 B.2. Financed by IFB’ s own resources B.2.1. Productivity gains: B.2.1.1. Partial or total disappearance of gross operating loss in column A.1.1 26 167 26 167 B.2.1.2. Gross operating surplus in 2004, 2005 and 2006 10 429 10 429 B.2.2. Financial receipts 1 368 1 368 B.2.3. Variation in requirement and working capital (reduction) 2 687 2 687 B.2.4. Sale of non-financial fixed assets (essentially the OCHZ terminal in 2004) 4 771 4 771 B.2.5. Sale of financial fixed assets (shareholdings) 1 267 8 020 9 287 B.2.6. Financial debts entered into with credit institutions 3 300 3 300 B.2.7. Exceptional receipts 1 105 1 105 Total IFB contribution (subtotal B.2) 50 093 8 020 58 113 Total of sources (B.1 + B.2) 106 313 47 100 153 413 Financed by the SNCB as a % of the total 52,9 % Financed by IFB as a % of the total 47,1 % OWN CONTRIBUTION PRIVATE INVESTOR

(185) Belgium provides the following details on this table.

(186) The financing requirements cover the following categories: — Direct costs of restructuring (section A.1): these costs comprise principally the cumulative gross operating loss (‘cash drain’), without taking account of the productivity gains. If the productivity gains which IFB achieved during the implementation of its restructuring plan are not taken into account, the gross operating loss in 2003, 2004 and 2005 would be the same as in 2002, that is to say an annual sum of EUR 8 million to be financed, as shown in the table below. The financing requirement for 2006 has been limited to half of this sum, on the assumption of an increase in capital on 30 June 2006. Totalled over the entire period of restructuring, the gross operating loss which IFB would have incurred in the absence of productivity gains is EUR 27,9 million, (EUR million) 2002 2003 2004 2005 Forecast 2006 Budget (up to 30.6) Period 2003 to 30.6.2006 cumulative Operating profit (47 357) (2 960) 5 740 3 007 1 213 + Amortisations and reductions in value of fixed assets 6 286 5 139 2 585 1 605 802 + Reductions in value of current assets 6 433 (258) (1 851) (554) 0 + Provisions 26 662 (4 670) (1 599) (980) 460 Gross operating profit (7 976) (2 749) 4 875 3 079 2 475 7 680 Gross operating loss (‘cash drain’) excluding the effect of gains in productivity (7 976) (7 976) (7 976) (3 988) (27 916) — Capital requirements during restructuring (variations in working capital requirements and investments during restructuring, section A.2): these costs consist of necessary investments during the restructuring period. An increase in working capital was necessary in order to finance the works in progress, to absorb the difference between receivables and commercial debts and to maintain sufficient liquidity. Investments in renewals of tangible fixed assets were necessary for the continuation of IFB’s activities during the implementation of the restructuring plan. They were not aimed at expanding IFB’s capacity but were rather investments in renewal of assets which had come to the end of their life cycle and were entirely amortised, together with various investments such as vehicles, computers, minor building renovations etc. The investment of EUR 0,6 million in financial fixed assets in 2004 was linked to the restructuring of the subsidiary IFB Maritime Germany: IFB Maritime Germany was taken over by Haeger & Schmidt International and the shareholding in RKE owned by Haeger & Schmidt International was transferred to IFB, — Repayment of debts and interest (section A.3): apart from interest and repayment of financial debts to credit institutions, this category accounts for interest and repayment of debts to SNCB. The debt of EUR 33,2 million is the portion of the debt of EUR 63 million which does not relate to the French subsidiaries. The interest of EUR 1,4 million payables in 2006 is the interest which does not form part of the increase in capital (in order to minimise the increase in capital). The other interest (for a total of EUR 9,7 million) forms part of the increase in capital. All this interest is interest on the debts linked to IFB’s non-French activities, — Taxes (section A.4): the taxes paid in 2004 are an accrual from the 1999 tax year.

(187) According to Belgium, these finance requirements were partly covered by IFB and partly by SNCB. As regards IFB’s contribution (section B.2), Belgium provided the following additional information: — During the restructuring period, IFB achieved important gains in productivity (see section B.2.1). These achievements improved the gross operating profit, as a result of which the loss in 2002 disappeared partially in 2003 and entirely in 2004, 2005 and 2006. Furthermore, a surplus was made in 2004 and 2005, which should also be the case in 2006. These achievements confirm the forecasts made on the basis of the data possessed by the company IFB during the development of the restructuring plan (see points 74 and 75 of this decision), — Various financial revenues (section B.2.2): these account for EUR 1,4 million. These financial revenues arise from interest which IFB was able to accumulate on its bank accounts. These revenues were foreseeable at the time of the restructuring plan, as they correspond to the ‘Euribor’ interest for the sums which IFB could reasonably expect to see in its accounts in view of the forecasts in its restructuring plan, — Extraordinary revenues (section B.2.8): these account for EUR 1,1 million. These extraordinary revenues arise from capital appreciation which IFB was able to achieve from the sale of 263 EAOS wagons […]. In 2003, during the preparation of the restructuring plan, this capital appreciation was foreseeable, as the market for EAOS wagons was experiencing important growth due to the increased demand for this type of wagon in Eastern Europe, — In 2004 and 2005, IFB freed up around EUR 2,7 million by lowering its working capital requirement (section B.2.3), — IFB financed the restructuring costs partly by the sale of assets (sections B.2.4 and B.2.5). Besides the sale of various assets of relatively limited importance, this part of the contribution principally consisted of divestiture in 2004 of assets utilised at the OCHZ terminal. The co-ownership rights (50 %) of these assets utilised by OCHZ were ceded […] (see line B.2.4 in 2004) and IFB recovered an additional sum of EUR 0,9 million in working capital from OCHZ (see line B.2.5 for 2004), — in 2003, IFB obtained a bank loan for a sum of EUR 2 million from ING Bank (see line B.2.6). In 2006, IFB financed the purchase of ‘reach stackers’ by means of an external loan of EUR 1,3 million,

(188) Belgium considers that it has contributed to the restructuring plan from its own resources, as required by the 1999 guidelines.

4. ASSESSMENT

4.1. Evaluation of the aid character of the rescue and restructuring measures

(189) According to Article 87(1) of the Treaty, ‘any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, insofar as it affects trade between Member States, be incompatible with the common market’.

4.1.1. Aid granted by the State or through State resources

(190) The first question to be considered is whether SNCB’s financial support for IFB was ‘granted by a State or through State resources’. According to the case-law of the Court of Justice of the European Communities in Stardust Marine (28), this criterion is fulfilled if, on the one hand, it concerns State resources, and if, on the other hand, their granting is attributable to the State, that is to say Belgium.

4.1.1.1. State resources

(191) The Commission notes that SNCB is a public undertaking within the meaning of Article 2 of Directive 80/723/EEC: the Belgian State owns 100 % of the share capital of SNCB, and the Management Board, along with the Chief Executive, are appointed by the King, by decree debated in the Council of Ministers. Thus, the criteria in Article 2(2)(a) and (c) of that Directive are fulfilled.

(192) In this context, ‘… it should be recalled that it has already been established in the case-law of the Court that Article 87(1) EC covers all the financial means by which the public authorities may actually support undertakings, irrespective of whether or not those means are permanent assets of the public sector. Therefore, even if the sums corresponding to the measure in question are not permanently held by the Treasury, the fact that they constantly remain under public control, and therefore available to the competent national authorities, is sufficient for them to be categorised as State resources’ (29).

(193) Consequently, the Commission estimated in its letter initiating the procedure (points 136 to 138) that the sums put at IFB’s disposal must be categorised as State resources.

(194) Belgium contests the fact that all the resources at SNCB’s disposal constitute State resources. The Commission responds to the three arguments by Belgium as follows:

(195) The proposed distinction between SNCB’s resources allocated to public service assignments and the resources allocated to commercial activities is not relevant in the light of the Stardust Marine ruling. In effect, this ruling concerns the resources of a public bank, which demonstrates well that the resources of a public undertaking allocated to commercial activities can constitute State resources.

(196) The argument that SNCB’s capital is not at the disposal of Belgium, but allocated to the social aims of SNCB cannot be accepted either. The fact that Belgium owns 100 % of SNCB’s capital, that this remains under continuous public control and that the State could at any moment decide to privatise SNCB, demonstrates that the capital of this company is at the disposal of the Belgian State. Furthermore, the Commission notes that the Belgian State appoints the administrators of the Management Board, together with the Chief Executive, which bestows upon it a certain control over the business.

(197) The argument that the measures granted to IFB by SNCB do not lead to any loss of the Belgian State’s capital is factually incorrect: as Belgium is the owner of SNCB, any bad investment which diminishes the SNCB’s value also diminishes the Belgian State’s capital.

(198) The Commission therefore concludes that the measures examined were financed by State resources.

4.1.1.2. Imputability

(199) As regards the imputability of the State measures concerned, the Stardust Marine ruling states that ‘… the mere fact that a public undertaking is under State control is not sufficient for measures taken by that undertaking, such as the financial support measures in question here, to be imputed to the State. It is also necessary to examine whether the public authorities must be regarded as having been involved, in one way or another, in the adoption of those measures. …’ (30).

(200) It is therefore clear from the case-law of the Court of Justice that the criterion of imputability to the State must be examined by the Commission on a case-by-case basis. The Court of Justice admits that as a general rule, ‘… it will be very difficult for a third party, precisely because of the privileged relations existing between the State and a public undertaking, to demonstrate in a particular case that aid measures taken by such an undertaking were in fact adopted on the instructions of the public authorities.’ According to the same case-law, ‘… it must be accepted that the imputability to the State of an aid measure taken by a public undertaking may be inferred from a set of indicators arising from the circumstances of the case and the context in which that measure was taken’ (31).

(201) The Court of Justice then clarifies which criteria may be utilised to demonstrate imputability: ‘The imputability to the State of an aid measure taken by a public undertaking may be inferred from a set of indicators arising from the circumstances of the case and the context in which that measure was taken. In that respect, the Court has already taken into consideration the fact that the body in question could not take the contested decision without taking account of the requirements of the public authorities (see, in particular, Van der Kooy, paragraph 37) or the fact that, apart from factors of an organic nature which linked the public undertakings to the State, those undertakings, through the intermediary of which aid had been granted, had to take account of directives issued by a Comitato Interministeriale per la Programmazione Economica (CIPE) (Case C-303/88 Italy v Commission, cited above, paragraphs 11 and 12; Case C-305/89 Italy v Commission, cited above, paragraphs 13 and 14). Other indicators might, in certain circumstances, be relevant in concluding that an aid measure taken by a public undertaking is imputable to the State, such as, in particular, its integration into the structures of the public administration, the nature of its activities and the exercise of the latter on the market in normal conditions of competition with private operators, the legal status of the undertaking (in the sense of its being subject to public law or ordinary company law), the intensity of the supervision exercised by the public authorities over the management of the undertaking, or any other indicator showing, in the particular case, an involvement by the public authorities in the adoption of a measure or the unlikelihood of their not being involved, having regard also to the compass of the measure, its content or the conditions which it contains’ (32).

(202) In the letter initiating the procedure (points 140 to 150), as regards the imputability of the measure the Commission distinguished between the period prior to the conclusion of the framework agreement on 7 April 2003 and the period subsequent to this contract. In view of Belgium’s observations, it would appear more appropriate to distinguish between three different periods: — the period prior to 19 July 2002 (date of the decision by SNCB’s Management Board to approve the granting of a cash advance and to accept that an increase in capital for IFB was ‘probable’), — the period between 19 July 2002 and 20 December 2002 (date of the decision by SNCB’s Management Board to approve the principle of an increase in IFB’s capital and authorising the executive committee to negotiate the framework contract of 7 April 2003), — the period subsequent to 20 December 2002.

(203) As regards the period prior to this decision of the Management Board, the question is whether the tolerance demonstrated by SNCB’s manag