EN Official Journal of the European Union L 225/180

COMMISSION DECISION

of 8 July 2008

concerning the measures C 58/02 (ex N 118/02) which France has implemented in favour of the Société Nationale Maritime Corse-Méditerranée (SNCM)

(notified under document C(2008) 3182)

(Only the French text is authentic)

(Text with EEA relevance)

(2009/611/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

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

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

Having called on interested parties to submit their comments pursuant to those articles (1), and having regard to their comments,

Whereas:

1. PROCEDURE

(1) On 18 February 2002, the French Republic notified the Commission of the planned restructuring aid for Société Nationale Maritime Corse-Méditerranée (SNCM) (2), completed on 3 July 2002 (3). The restructuring aid consisted in the recapitalisation of SNCM by the Compagnie Générale Maritime et Financière (CGMF) (4) for the sum of EUR 76 million.

(2) By letter of 19 August 2002, the Commission notified the French authorities of the decision to initiate the formal investigation procedure pursuant to Article 88(2) EC laid down in Article 6 of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article 93 of the EC Treaty (5).

(3) On 8 October 2002 (6), the French authorities communicated to the Commission their comments on the decision of 19 August 2002 (7).

(4) At the request of the French authorities, meetings were organised with the Commission on 24 October 2002, 3 December 2002 and 25 February 2003.

(5) In the context of initiating the procedure, the Commission received observations from two undertakings, namely Corsica Ferries France (CFF) on 8 January 2003 (8) and the Stef-TFE group on 7 January 2003, and from various French regional and local authorities on 18 December 2002 and 9 and 10 January 2003. It sent those observations to France for its comments by letters of 13 and 16 January and 5 and 21 February 2003.

(6) The French authorities submitted their comments on the observations of CFF and Stef-TFE on 13 February 2003 (9) and 27 May 2003 (10).

(7) On 16 January 2003, the Commission sent a request for additional information to which the French authorities replied on 21 February 2003.

(8) By letter of 10 February 2003 (11), the French authorities expanded their arguments seeking to demonstrate that the planned aid complied in every respect with the Community Guidelines on State aid for rescuing and restructuring firms in difficulty (12) (the 1999 Guidelines).

(9) At the Commission’s request, on 25 February 2003 (13), the French authorities forwarded a copy of the shareholders agreement binding SNCM and the Stef-TFE group.

(10) By decision 2004/166/EC of 9 July 2003 (the 2003 decision) (14), the Commission approved, under certain conditions, the grant of restructuring aid to SNCM payable in two parts, one of EUR 66 million and the other of a maximum amount of EUR 10 million to be determined on the basis of net products arising from disposals of assets made after the adoption of the 2003 decision.

(11) On 13 October 2003, CFF brought an action for annulment of the 2003 decision before the Court of First Instance of the European Communities (the CFI) (Case T-349/03).

(12) On 8 September 2004, the Commission decided to regard the amendments requested by France on 23 June 2004, namely the swap of the vessel Aliso with the vessel Asco in the list of vessels which SNCM was authorised to use following the 2003 decision and the sale of the Aliso instead of the Asco, were not such as to call into question the compatibility with the common market of the restructuring aid authorised by the 2003 decision (15).

(13) By decision of 16 March 2005 (the 2005 decision), the Commission approved the payment of the second part of the restructuring aid, for EUR 3,3 million, which brought the total amount of restructuring aid to EUR 69 292 400.

(14) On 15 June 2005, in Case T-349/03, the CFI annulled the 2003 decision on account of an incorrect assessment of the minimal nature of the aid. That judgment resulted in returning the Commission back to the formal investigation procedure initiated by decision of 19 August 2002 and rendering inoperative the decisions of 8 September 2004 and 16 March 2005, which were based on the annulled 2003 decision.

(15) On 25 October 2005 (16), the French authorities sent the Commission information relating to the financial situation of the company since the notification of the planned restructuring aid of 18 February 2002.

(16) On 17 November 2005 (17), the French authorities provided information relating to the updating of the 2002 restructuring plan and the rebuilding of SNCM’s capital (18).

(17) On 15 March 2006, a briefing note on the market, the business plan (revenue part) and the account of the provisional results were delivered to the Commission by the French authorities (19). Other documents were delivered to the Commission on 28 March 2006 and 7 April 2006 (20). In the latter mail, the French authorities also called on the Commission to classify, on account of its ‘public service compensation’ nature, a part of the 2002 restructuring aid, in particular the amount of EUR 53,48 million, not as a measure taken under a restructuring plan but as non-aid in accordance with the Altmark (21) case-law or as an autonomous measure independent of the restructuring plan pursuant to Article 86(2) EC.

(18) On 21 April 2006, a planned merger under which the undertakings Veolia Transport (VT) (22) and Butler Capital Partners (BCP) acquired joint control of SNCM (23), was notified to the Commission pursuant to Article 4 of Council Regulation (EC) No 139/2004 (24). A decision approving the merger process was adopted by the Commission on 29 May 2006 (25).

(19) On 21 June 2006 (26), the French authorities sent the Commission the order of 26 May 2006 of the Ministry of Economics, Finance and Industry approving financial transactions carried out by CGMF, Decree No 2006-606 of 26 May 2006 transferring SNCM to the private sector and the order of 26 May 2006 approving financial transactions carried out by SNCF.

(20) Information concerning the public service delegation and the aid of a social nature relating to the operation of services to Corsica was sent to the Commission on 7 June 2006 (27).

(21) On 13 September 2006, the Commission decided to initiate the procedure laid down in Article 88(2) EC concerning the new measures implemented in favour of SNCM while integrating the restructuring plan notified in 2002 (28) (the 2006 decision).

(22) On 16 November 2006, France sent the Commission its comments on the 2006 decision (29).

(23) On application by a number of interested parties to extend the time-limit for submitting comments by one month (30), the Commission decided to grant that additional period to all interested parties (31).

(24) The Commission received comments from CFF (32) and STIM d’Orbigny (STIM) (33) which were forwarded to the French authorities by post on 20 February 2007. A third party also sent comments which were also forwarded to the French authorities, and withdrawn by that party on 28 May 2008.

(25) The French authorities sent their observations on the comments of the interested third parties on 30 April 2007 (34).

(26) On 20 December 2007, CFF lodged a complaint in respect of State aid against SNCM which completed the sending of information of 15 June 2007 and 30 November 2007. That complaint concerns Article 3 of the new public service delegation agreement signed in June 2007 between the Collectivité territoriale de Corse (Corsican regional authorities) and the Compagnie Méridionale de Navigation-SNCM group for 2007 to 2013. According to CFF, the application of that clause would mobilise new financial resources for SNCM in the region of EUR 10 million for 2007. Furthermore, it stated that the compensation paid to SNCM in respect of public service obligations is State aid which is, moreover, unlawful since it has not been notified to the Commission.

(27) Since a certain amount of information was sent to the Commission after expiry of the time-limit initially set for 13 February 2007 (35), the Commission informed the interested parties of its decision to extend the period for submitting comments of third parties to 14 March 2008.

(28) On 26 March 2008, the Commission forwarded the comments of the interested third parties to France, which communicated its comments on 28 March 2008, 10 April 2008 and 28 April 2008.

2. IDENTIFICATION OF THE RECIPIENT OF THE MEASURES COVERED BY THIS DECISION

(29) The recipient of the measures covered by this decision is the Société Nationale Maritime Corse-Méditerranée (SNCM), which groups together several subsidiaries in the maritime sector and operates sea transport of passengers, cars and heavy goods vehicles on the routes between mainland France and Corsica, Italy (Sardinia) and the Maghreb (Algeria and Tunisia).

(30) SNCM is a limited liability company which came into being in 1969 with the merger of the Compagnie Générale Transatlantique and the Compagnie de Navigation Mixte, both established in 1850. At that time called Compagnie Générale Transméditerranéenne, it was renamed Société Nationale Maritime Corse-Méditerranée in 1976, after the Société Nationale des Chemins de Fer (SNCF) had acquired a share in its capital. The company was chosen by the French Government to implement the principle of territorial continuity with Corsica, bringing maritime transport fares into line with SNCF rail transport fares on the basis of an agreement concluded on 31 March 1976 for a term of 25 years. The French Government had already entrusted the Compagnie Générale Transatlantique with the operation of services to Corsica through an earlier agreement of 23 December 1948.

(31) At the time of the notification of the recapitalisation in 2002, 20 % of SNCM was held by SNCF and 80 % by CGMF. As a result of the flotation of the capital of SNCM on 30 May 2006 (see paragraph 18 of this decision), BCP and VT hold 38 % and 28 % respectively of SNCM’s capital, while CGMF retains capital in the amount of 25 % (9 % of the capital is reserved to employees).

(32) The main subsidiaries of SNCM are Compagnie Méridionale de Navigation (CMN) (36), the Compagnie Générale de Tourisme et d’Hôtellerie (CGTH) (37), Aliso Voyage (38), Sud-Cargos (39), the Société Aubagnaise de Restauration et d’Approvisionnement (SARA) (40), Ferrytour (41) and Les Comptoirs du Sud (42).

(33) Following the disposal of the high-speed vessels Aliso in September 2004 and Asco (43) in May 2005, the SNCM fleet comprises 10 vessels (5 car-ferries (44), 4 mixed vessels (freight and passenger) (45) and a high-speed vessel (NGV) operating principally from Nice (46)), 7 of which it holds in its name (47).

(34) For the sake of completeness, it should be recalled that the regular sea transport services between the ports of mainland France and Corsica have been operated since 1948 under a public service operated by SNCM and CMN between 1976 and 2001 pursuant to a framework agreement concluded originally for 25 years. In accordance with the Community rules in force (48) and following the European invitation to tender (49) organised by the Corsican regional authorities (50), SNCM and CMN jointly secured the public service delegation to operate services from Marseille to Corsica in exchange for financial compensation during the period 2002 to 2006.

(35) Since the public service delegation expired at the end of 2006, the aforesaid public service by sea, being the subject of a new European invitation to tender (51), was awarded to the SNCM – CMN group from 1 May 2007 to 31 December 2013 for a subsidy of approximately EUR 100 million per annum.

(36) Similarly, obligations relating to the frequency of services are imposed on all operators providing services to the island from Toulon and Nice. On those routes, since 2002 Corsican residents and other categories of passengers are entitled until 2013 to social aid established pursuant to Commission decisions of 2 July 2002 (52) and 24 April 2007 (53).

3. COMPETITIVE ENVIRONMENT

(37) SNCM operates primarily on two distinct markets for both passenger traffic and goods traffic: services to Corsica and the Maghreb, from France, and, to a lesser extent, services to Italy and Spain.

3.1. Services to Corsica

(38) The operation of passenger transport services to Corsica is a market characterised by the fact that it is highly seasonal. It is distinguished by seasonal peaks of passenger numbers which may be up to ten times those of the slackest periods, which requires operators to provide a fleet which can absorb those peaks. Half of the turnover is made in July and August. Further, there is an imbalance in respect of the direction of the route, even in peak periods: in July, for example, departures from the mainland are full whereas the return is almost empty. As a result, the average annual passenger rates of the vessels are relatively low.

(39) SNCM is the very first operator to link Corsica to the French mainland. Broadly speaking, two thirds of its activities are carried on between Marseille and Corsica under a public service delegation; the other third of its activities are routes with other departure points or destinations (Nice-Corsica, Toulon-Corsica, international routes to Sardinia or the Maghreb).

(40) SNCM has always had a monopoly over its principal activity. Since 1996, however, it has faced competition which has grown very quickly. Accordingly, Corsica Ferries France (CFF) is the dominant player in services by sea between the mainland and Corsica and its market share has not stopped increasing. Although it has only been present on that market since 1996, CFF has seen its ‘passenger’ traffic increase […] (54) per year between 2000 and 2005, and that growth continues. Thus, today, nearly […] passengers by sea between the mainland and Corsica take a CFF ferry, whereas only […] use a SNCM service, and CMN transports the remaining passengers, that is […].

(41) The position attained by CFF over seven years on the market under consideration is also reflected in the number of passengers transported per season between Corsica and mainland France. The diagram below shows that CFF’s market share went from 45 % in 2000 to […] % in 2007 and SNCM’s from 53 % to […] % during the same period, with a difference of more than a million passengers transported. Diagram 1 Number of passengers transported per season (May-September) between mainland France and Corsica — 2000 to 2007 seasons

(42) The other minor competitors to SNCM operating services to Corsica are Compagnie Méridionale de Navigation (CMN), Moby Lines, Happy Lines and TRIS.

(43) In 2006 and 2007, SNCM’s capacity and its market shares for services to Corsica have decreased, with a reduction of […] % on the availability of seats (- […] % for services from Nice and […] % for services from Marseille).

(44) However, the continued reduction of market shares demonstrates that the renewal of confidence on the part of passengers, which had been greatly damaged by the strikes and disruptions caused by the social conflicts of 2004 and 2005, in particular at the time of the privatisation of the undertaking, is very slow. It is a necessary condition for curbing the reduction of SNCM’s market share recorded in those recent years. In that context, the rise in turnover in 2007 is reassuring for the viability of the undertaking although it has ceded considerable market share to the advantage of its only competitor, whose market share is easily greater today.

(45) Passenger transport by sea between the mainland and Corsica has grown on average by 4 % over the last 15 years; its growth should continue, with an increase of […] % also forecast for 2008 for moderate growth over the next years. None the less, new players do not appear to be seeking to enter that market. At the time of the call for tenders put out by the Office des Transports de Corse to award the public service delegation to operate services by sea to a number of Corsican ports over the period 2007 to 2013, no candidates other than CFF and SNCF-CMN came forward, even though part tendering on a given route was possible.

(46) CFF, SNCM’s main competitor, greatly increased its passenger capacity from 500 000 to […] million between 1999 and 2007 (of which […] % increase between 2006 and 2007), which enabled it to increase its traffic (from […] million in 2005 to […] million in 2007) and its market share. For structural reasons, that policy results nonetheless in lower passenger rates for CFF than for SNCM, with a difference in the region of […] percentage points in 2007. For SNCM, the average passenger rate in 2007 was […] %, which is normal having regard to the fact that the market is very seasonal (see above).

(47) As regards freight traffic to Corsica, in 2005 SNCM held around […] % of the Marseille-Toulon market to Corsica.

(48) SNCM and CMN have a de facto near-monopoly for unaccompanied general goods transport. Under the public service delegation contract, the two firms operate frequent services from Marseilles to all Corsican ports.

(49) For accompanied trailers loaded onto ferries, accounting for 24 % overall of general goods transport measured in linear metres, there is competition among all the passenger transport operators. SNCM and CMN also have the main share of the market in this accompanied transport. The other operators, in particular CFF, have a 10 % share, that is 2 % of the overall market.

(50) For accompanied automotive vehicles (55) loaded onto ferries (approximately 24 % of general goods traffic in 2003), SNCM and CMN also hold the majority of the relevant market. However, since 2002 CFF has been developing its services and holds approximately […] % of the market.

3.2. Services to the Maghreb

(51) Tunisia and Algeria are an important market of approximately 5 million passengers, with air transport predominating. In that connection, transport by sea represents about 15 % of traffic. While Algeria represents a significant maritime market of approximately 560 000 passengers, Tunisia is a smaller market in the region of 250 000 passengers.

(52) The French maritime transport market to the Maghreb has seen steady growth over recent years, of around 13 % between 2001 and 2005. Having regard to the prospects for growth in tourism in that region, maritime transport should see an annual growth rate of around 4 % by 2010.

(53) In Algeria, SNCM fills the position of second operator on the market to Tunisia after the Entreprise Nationale de Transport Maritime de Voyageurs (ENTMV), an Algerian public undertaking. The market share of SNCM has increased from 24 % in 2001 to […] % in 2005.

(54) SNCM fills the position of second operator on the market to Tunisia after the Compagnie tunisienne de navigation (CTN). Although SNCM has lost market share to CTN since 2001, going from 44 % to […] % in 2004, an improvement was, however, recorded in 2005 ([…] %).

4. DESCRIPTION OF THE MEASURES COVERED BY THIS DÉCISION

4.1. The 2002 recapitalisation of SNCM

4.1.1. Description

(55) Following the Commission decision of 17 July 2002 to authorise rescue aid to SNCM (56), the French authorities notified the Commission on 18 February 2002 of planned restructuring aid to SNCM. That measure involved the recapitalisation of SNCM, through its parent company, CGMF, for the sum of EUR 76 million, EUR 46 million of which was for restructuring costs (57). That capital increase was intended to increase SNCM’s capital from EUR 30 million to EUR 106 million.

(56) In accordance with the 1999 guidelines, the French authorities submitted to the Commission a restructuring plan (58) for SNCM concerning 5 points: (i) a reduction in the number of crossings and the redeployment of its vessels between the different routes (a reduction in services to Corsica and an increase in those to the Maghreb) (59); (ii) a reduction of four vessels of its fleet which was to provide EUR 21 million of liquid assets; (iii) the transfer of certain property assets; (iv) a reduction in staff (60) of approximately 12 % which, combined with a fair wage policy, was to make it possible to reduce crew costs from EUR 61,8 million in 2001 to […] EUR […] million on average from 2003 to 2006 and ground costs from EUR 50,3 million in 2001 to EUR […] million over the same period; (v) the closure of two of its subsidiaries, the Compagnie Maritime Toulonnaise and the Corsica Marittima company, the residual activities of which would be taken over by SNCM.

(57) Following the observations made by the Commission in its decision of 19 August 2002, the French authorities, in their letter of 31 January 2003, set out the improvements made to the restructuring plan on the following points: — commitments and details concerning wage policy, — a plan for reducing costs in intermediate purchases, — a commitment that SNCM would not initiate a fares war with its competitors operating services to Corsica.

(58) On the last point, the French authorities state that ‘SNCM makes that commitment without reservations, because it takes the view that a fares war of its own making would be inconsistent neither with its strategic positioning nor its interest because it would lead to a reduction in its receipts, its usual practices and its expertise’.

(59) In their restructuring plan, the French authorities submitted to the Commission a detailed financial model for 2002 to 2007 on the basis of median hypotheses relating to a series of variables (61). The financial projections show, inter alia, a return to profitability from 2003. Table 1 Financial model for 2002-2007 (EUR million) 2000 2001 2002 2002 2003 2004 2005 2006 2007 Realised Realised Plan Realised Plan Plan Plan Plan Plan Turnover 204,9 204,1 178 205,8 […] […] […] […] […] Operating subsidies 85,4 86,7 74,5 77,7 […] […] […] […] […] Current result –14,7 –5,1 1,2 –5,8 […] […] […] […] […] Net result –6,2 –40,4 23 4,2 […] […] […] […] […] Capital 67,5 29,7 119 33,8 […] […] […] […] […] Net financial debt (excl. leasing) 135,8 134,5 67,7 144,8 […] […] […] […] […] Financial ratios […] […] […] […] […] Current results/turnover + SUBSIDIES –5 % –2 % 0 % –2 % […] […] […] […] […] Capital/debt on balance sheet 50 % 22 % 176 % 23 % […] […] […] […] […] Figures for 2000, 2001 and 2002 taken from 2001 and 2002 SNCM annual reports.

(60) According to the French authorities, the EUR 76 million capital contribution and the return to profitability, expected from 2003, should make it possible to raise the company’s capital from its level of about EUR 30 million at the end of 2001 to EUR 120 million in the short term (2003) and then to EUR […] million at the end of the period covered by the plan (2006 to 2007). That was to lead to a reduction in debt from EUR 145 million in 2002 to levels of EUR […] million to EUR […] million from 2003 to 2005. In the last years of the plan, an increase in debt was forecast by the company because of the replacement of one or two vessels (unrestricted ownership).

(61) The French authorities also provided a sensitivity study of expected results in relation to working hypotheses in respect of traffic on different routes. On that basis, the different simulations show that SNCM ought to return to profitability in the situations contemplated.

4.1.2. Determination of the amount of the recapitalisation

(62) The method chosen by the French authorities (62) to determine the amount of the recapitalisation involves calculating the need for financing on the basis of the average capital/debt ratio of 5 European shipping companies recorded in 2000. In spite of the differences in the balance sheets of those undertakings, the average found by the French authorities comes to 79 %. The French authorities submit that the financial projections for 2002 to 2007 give an average capital/debt ratio of 77 % with capital to reach EUR 169 million in 2007. Such a level of capital was to be obtained by means of a recapitalisation of EUR 76 million and the success of the action provided for in the restructuring plan.

4.2. Measures subsequent to the 2002 recapitalisation

4.2.1. Preliminary remark

(63) The recapitalisation and the restructuring plan of 2002 did not have the results expected and, from 2004, the economic and financial situation of SNCM greatly deteriorated. Both internal factors (social conflicts, insufficient and belated achievement of productivity objectives, loss of market share) and external factors (reduced appeal of Corsica as a destination, acquisition of market share by CFF, management errors by the State) (63) as well as the increase in the cost of fuel contributed to this deterioration.

(64) Accordingly, SNCM’s ordinary profits come to EUR – 32,6 million in 2004 and EUR – 25,8 million in 2005. Net profit was EUR – 29,7 million in 2004 and EUR – 28,8 million in 2005.

(65) The deterioration in SNCM’s economic and financial situation led the French authorities to sell assets over and above what was laid down in the 2002 restructuring plan and required by the 2003 decision and to initiate a procedure to seek private partners. Table 2 List of assets sold by SNCM since 2002 (64) Proceeds of disposal Date Disposals proposed in the notification (in EUR) 25 165 000 Aliso (replacing Asco, in accordance with the decision of 8 September 2004 of the Commission) […] 30.9.2004 Napoléon […] 6.5.2002 Monte Rotondo […] 31.7.2002 Liberté […] 27.1.2003 All Schuman property […] 20.1.2003 Additional disposals required by the Commission in its decision of 9 July 2003 (in EUR) 5 022 600 SCI Espace Schuman […] 24.6.2003 Southern Trader […] 22.7.2003 Someca […] 30.4.2004 Amadeus […] 12.10.2004 CCM […] (65) — Additional disposals occurring after the decision of July 2003 (in EUR million) 12,6 Asco […] 24.5.2005 Sud-Cargos […] 15.9.2005 Sales of flats of SNCM’s housing stock (formerly occupied by SNCM staff) […] September 2003 to 2006 Total (EUR million) 42,385

4.2.2. Measures subsequent to the 2002 recapitalisation

(66) Following an open, transparent and non-discriminatory selection procedure (66), an agreement was finally reached on 13 October 2005 between the State, BCP and VT in a very difficult social and financial context. Thus VT is SNCM’s industrial operator (28 % holding) whereas BCP is the key shareholder with a holding of 38 %. The State undertook, in particular as regards salaried staff, to retain a shareholding in the company of 25 % (67). BCP and VT drew up a business plan for SNCM which was notified to the European Commission on 7 April 2006.

(67) The memorandum of understanding, under which 75 % of SNCM’s capital is to be sold to private purchasers, was signed on 16 May 2006 by the parties (BCP, VT and CGMF).

(68) Section II of the memorandum of understanding provides that CGMF undertakes to approve, subscribe to and fully pay up an increase in SNCM’s capital totalling EUR 142,5 million.

(69) Following the increase in capital, it is envisaged that SNCM’s share capital be reduced by cancellation of shares to be brought back to the legal minimum for a limited liability company not making a public offer.

(70) In addition to the increase in capital, CGMF undertakes to make EUR 38 million available to SNCM, in the form of a current account advance. That current account advance, which will be paid by SNCM to a trustee (the bank CIC), is intended to finance the part of the ‘generosity’ cost which is in addition to amounts payable under provisions of law and those relating to agreements in the event of a plan to reduce staff implemented by the purchasers (68). The payment of compensation over and above compensation paid in accordance with statutory provisions and provisions under agreements is done on an individual and case-by-case basis corresponding to salaried staff who have left the undertaking and whose employment contract was terminated.

(71) Section III of the memorandum of understanding provides that CGMF, following those transactions, is to sell to private purchasers its shares representing 75 % of the shares making up the share capital of the undertaking and the […] intended to finance the part of the planned redundancy scheme over and above any obligations under agreements or statutory obligations.

(72) Section III of the memorandum of understanding also provides for the joint and concurrent subscription by the purchasers and CGMF of new shares totalling EUR 35 million and a current account contribution of EUR 8,75 million by BCP/VT, made available to SNCM on the basis of its cash requirements. Paragraph III.2.7 of the memorandum of understanding provides that the value of the shares of CGMF is to be equal, at all times, to their original nominal value increased by […] % of their paid up nominal value, multiplied by J/365, J being the number of days since the date of realisation, subject to deduction of all amounts paid (for example dividends). Those conditions do not apply in the case of receivership or liquidation of the company by the court.

(73) The memorandum of understanding (Section III.5) includes a right to sell SNCM which may be exercised concurrently by the purchasers should one of the following events occur inasmuch as they have the effect of calling into question the credibility of their business plan and the viability of the company: — Non-award of the public service delegation for public services by sea to Corsica for the period commencing 1 January 2007 […], — Any negative decision of the European Commission or a judgment of the Court of First Instance or of the Court of Justice, such as a refusal of the transaction or the imposition of conditions having a substantial impact on the value of the company […].

(74) Section VII of the memorandum of understanding provides that CGMF is to pay a part of the labour commitments of SNCM in terms of the costs of mutual benefit societies of its retired workers for an amount valued at EUR 15,5 million from the day of the transfer of ownership of the undertaking.

(75) The detailed rules of governance of the undertaking are set out in Section IV of the memorandum of understanding. It provides that there will be a change in the way that SNCM is managed; it will be converted into a limited liability company with a board of directors and a supervisory board. The latter will be made up of 10, then 14 members. It will be chaired provisionally by a representative of the State. If the DSP is entrusted to SNCM, the President of the supervisory board will be replaced by a representative of BCP. The board of directors has the task of carrying out the operational management of SNCM.

(76) On 26 May 2006, the French Government confirmed the sale of SNCM as well as the measures cited above.

(77) In the light of the foregoing, the memorandum of understanding contains three types of state measures justifying an examination as regards the Community system of State aid: — the sale of 100 % of SNCM at a negative price of EUR 158 million (capital contribution of EUR 142,5 million and payment of the costs of mutual benefit societies for a total of EUR 15,5 million), — the current account advance by CGMF for the sum of EUR 38,5 million for staff laid off by SNCM, — the increase in capital of EUR 8,75 million to which CGMF subscribed jointly and concurrently with the contribution in the amount of EUR 26,25 million of VT and BCP.

5. SUBJECT MATTER OF THE PRESENT DECISION

(78) This final decision relates to the measures implemented by France in favour of SNCM since 18 February 2002, namely: — the capital contribution of CGMF to SNCM for the sum of EUR 76 million in 2002 (including EUR 53,48 million for public service obligations and the balance for restructuring aid), — the negative sale price of SNCM by CGMF for the sum of EUR 158 million, — CGMF’s contribution of EUR 8,75 million, — payment by CGMF of certain additional social measures for the sum of EUR 38,5 million.

(79) This decision does not concern the examination of financial compensation paid or to be paid to SNCM for public service obligations for the period 2007-2013, which is the subject of a separate procedure.

6. GROUNDS LEADING TO THE ADOPTION OF THE COMMISSION DECISIONS OF 2002 AND 2006

6.1. Initiation of the 2002 formal investigation procedure

(80) In its decision to initiate the procedure of 19 August 2002, the Commission, while recognising that SNCM was an undertaking in difficulty, expressed its uncertainty as to the compatibility of the measure notified with the criteria set out in point 3.2.2 of the 1999 guidelines in force at the time.

(81) The Commission voiced certain doubts regarding the restructuring plan having regard to the absence of an analysis of the causes for the undertaking’s losses. In particular, the Commission raised questions concerning the links between the losses and the public service obligations, the impact of SNCM’s policy of purchasing vessels on its income statements and the measures contemplated for increasing the undertaking’s productivity.

(82) Moreover, the Commission noted certain lacunae in the restructuring plan, in particular the absence of specific measures to reduce the amount of intermediate consumption and the absence of a reference to SNCM’s future pricing policy.

(83) The Commission also raised questions regarding the relevance of the calculation method adopted by the French authorities to determine the amount of the recapitalisation and regarding some of the hypotheses on which to base financial simulations.

6.2. The extension of the 2006 formal investigation procedure

(84) By its decision of 13 September 2006, the Commission decided to extend the 2002 formal investigation procedure to the measures laid down in connection with the sale of SNCM to the private sector.

(85) First of all, in view of the invitation of the French authorities of 7 April 2006 (see recital 17 of this decision) to examine a part of the 2002 capital contribution in the light of the Altmark case-law, the Commission raised uncertainty in that regard as to compliance with the conditions (in particular the second and the fourth) laid down by the Community court in that judgment (69).

(86) In the event that that amount is categorised as aid compatible with Article 86(2) EC, the Commission took the view, in its decision of 2006, that the new amount of aid to be assessed in the light of the guidelines for restructuring aid was EUR 15,81 million. In so far as the amount of restructuring aid is noticeably lower than that notified in 2002 and approved in 2003, the Commission expressed doubts as to whether it was appropriate to maintain all of the compensatory measures imposed on SNCM by the 2003 decision.

(87) The Commission also expressed doubts as to whether the conditions imposed by the 2003 decision had been complied with, namely the principle of price leadership and the frequency of services to Corsica.

(88) As regards the negative price at which SNCM was sold, the Commission had doubts regarding compliance of the recapitalisation by the State prior to the sale of SNCM with the principle of the private investor in a market economy. In particular, the Commission expressed doubts as to the validity of the calculation of the liquidation costs which the State shareholder would be required to pay in the event of the liquidation of SNCM.

(89) The Commission questioned whether the financial measures might be justified under the guidelines on rescue and restructuring aid.

(90) It also cast doubts concerning the second recapitalisation of EUR 8,75 million so far as concerns observance of the principles of concomitance of the individual and public investment and the similarity of the subscription conditions within the meaning of the case-law.

(91) Finally, the Commission expressed doubts as to whether the additional social measures of EUR 38,5 million of aid could constitute an indirect advantage for the undertaking. It also noted the risk of conflict with the supplementary redundancy payments as part of the risks borne by reasonable investors.

7. POSITION OF THE FRENCH AUTHORITIES

7.1. The 2002 recapitalisation

7.1.1. The sum of EUR 53,48 million in the light of the Altmark case

7.1.1.1. Fulfilment of the four Altmark criteria

(92) In their letter of 7 April 2006 and in connection with the comments submitted following the 2006 decision, the French authorities called upon the Commission to find that, on account of its ‘public service compensation’ nature for the period 1991 to 2001, a part of the capital increase of 2002, namely EUR 53,48 million, does not constitute State aid in the light of Altmark, considering that the four conditions laid down in that judgment are fulfilled in the present case.

(93) As regards, specifically, the second condition in Altmark, the French authorities note that under the Altmark judgment, only the parameters of the calculation must be established in advance in an objective and transparent manner. In the present case, they state that the amount of EUR 53,48 million was paid in November 2003 on the basis of calculation parameters established prior to the period in question (1991-2001) (70).

(94) Accordingly, in the opinion of France, the fact that the payment of the revaluation for under-compensation occurred a posteriori does not call into question its conclusion that the parameters on the basis of which the compensation of EUR 53,48 million is calculated were clearly established in an objective and transparent manner prior to the performance of public service tasks.

(95) In respect of the fourth condition in Altmark, the French authorities take the view that that refers to characteristics of an undertaking entrusted with a public service task fitting the description of average good management but, on the other hand, makes no reference to any requirement of minimum or average profitability of the undertaking in question.

(96) In that regard, the French authorities consider that SNCM may be entitled to a ‘presumption of sound management’ in the period 1991 to 2001 and that no ‘presumption of poor management’ can be made against it by the mere fact of financial losses suffered in the period 1991-2001. According to the French authorities, SNCM’s losses are not to be ascribed to poor management but to the rigidity of the agreements signed in 1991 and 1996 and to the sudden disruption in the historic market of that company owing to the transition from a monopoly to a highly competitive environment. SNCM therefore acted as an averagely well-run undertaking would act.

(97) France notes that the public operator was the only undertaking capable of taking on those obligations in terms of annual regularity and frequency of service and did so in spite of the arrival in 1996 of a private operator, which only operated certain lines and only during the high season. Moreover, no other undertaking existed in the strict sense whose costs could be used as a reference for determining whether or not the level of compensation granted to SNCM exceeded the costs necessarily incurred in the performance of public service obligations. According to the French authorities, it would therefore be difficult to compare the costs structure of SNCM and that of other shipping companies, having regard to the specific nature of the activity of the latter and the market on which it operates.

(98) In spite of the practical impossibility of finding an undertaking which could be used as a reference point for that period, France believes that it sought to provide, during its dealings with the Commission which took place in 2005 and 2006, objective and justifiable evidence proving the nature of SNCM as a ‘typical well-run and adequately equipped undertaking’ and demonstrating that the fourth criterion laid down in the Altmark judgment is fulfilled (71).

(99) France considers, moreover, that a comparison based on the evidence available relating to the costs structure of CFF and that of SNCM is far from being inconsistent with the presumption of SNCM’s good management, above all because it does not make it at all possible to take into account a not inconsiderable part of the costs of the public service activity which relates to the transport of goods.

(100) In addition, France states that, in a case like this, it is possible to take the view that the case-law which led to the judgment in Altmark (and in particular the Ferring case) must be understood as a review only as to the absence of overcompensation. In that respect, the French authorities state that the subsidies granted did not exceed the costs actually borne by SNCM on account of the public service obligations with which it is entrusted, as the Commission pointed out in its decision of 30 October 2001 (72).

(101) Finally, the French authorities maintain that the fact that the Altmark case-law applies to the public service agreement of 2002 to 2006 should contribute to dispelling the doubts concerning the applicability of that case-law to the compensation for public service costs relating to the period from 1991 to 2001. According to France, the compensation granted from 1991 to 2001 and from 2002 to 2006 is similar inasmuch as the parameters for defining it, namely onerous public service requirements, the presence of only one undertaking in a position to assume those requirements and a pattern of taking into account operating costs, are identical.

(102) In conclusion, France takes the view that the existence of public service obligations, in conjunction with the absence of over-compensation in the period 1991 to 2001, confirms that the 4 conditions in Altmark are fulfilled.

7.1.1.2. The compatibility of the amount of EUR 53,48 million in the light of Article 86(2) EC

(103) If the Commission were to conclude that that intervention were State aid within the meaning of Article 87(1) EC, the French authorities submit that the autonomous and independent measure of the 2002 restructuring plan is compatible in terms of Article 86(2) EC, since that basis of compatibility was not challenged by the Court of First Instance in its judgment in Case T-349/03.

(104) The French authorities point out that, in this case, the amount in question is a measure which should not be assessed in the light of the guidelines on restructuring aid of 1999 or 2004 and, in particular, should not be taken into account when evaluating the conditions imposed in the 2002 plan. According to France, the 2004 guidelines on restructuring aid (point 68) cannot justify the inclusion of EUR 53,48 million into restructuring aid.

(105) In that respect, France states that the amount of EUR 53,48 million covering compensation for public service costs for the period 1991 to 2001 is not a measure granted during restructuring, irrespective of whether it relates to the restructuring plan notified in 2002 or its updating, but rather a measure preceding the restructuring plans in question. Moreover, the French authorities submit that a measure designed to offset the costs burdening undertakings on account of their public service obligations is not in the nature of restructuring aid as defined in the guidelines.

(106) The French authorities submit that, even if that amount was notified in connection with the total cash injection in respect of restructuring aid, the Commission is not bound by the classifications adopted by the Member States and that, on the other hand, it is for the Commission to reclassify a measure, depending on the circumstances, as non-State aid, or, on the contrary, to classify a measure as State aid even though the Member State in question did not present it in that manner.

7.1.2. The balance notified for restructuring aid

(107) In the light of the foregoing, France takes the view that, if the amount of EUR 53,48 is considered to be free from aid elements or if it is classified as aid compatible with Article 86(2) EC, the amount of aid which must be considered to be restructuring aid under the 2002 notification would amount, not to EUR 76 million, but to EUR 15,81 million.

7.2. Measures subsequent to the 2002 recapitalisation

(108) France recalls, first, that the seriousness of the industrial action of 2004 to 2005 and the deterioration in the economic and financial situation of SNCM led the State shareholder to launch a procedure for selecting private investors in January 2005 and to implement urgent measures (in particular the sale of Asco and the shareholding in Sud Cargos (73).

7.2.1. The negative transfer price of SNCM

(109) Pursuant to the relevant Community case-law, the French authorities call upon the Commission to consider that the negative sale price of SNCM of EUR 158 million does not contain any measure which may be classified as aid within the meaning of Article 87(1) EC in so far as the French State acted like a private investor in a market economy.

(110) First of all, France observes that the final price of EUR 158 million, which is lower than the negative price which the purchasers asked for initially at the time of their audit of SNCM, is the result of a negotiation of transfer of control conducted in connection with an open, transparent and non-discriminatory competitive tendering procedure and, on that ground, does in fact constitute a market price.

(111) France takes the view that, in so far as that search for a private partner for SNCM was made in an open, transparent and non-discriminatory competitive tendering procedure, at the end of which the best bid was chosen, the sale price is a market price.

(112) According to the French authorities, the negative sale price of EUR 158 million took place in the most favourable conditions for the State in accordance with Community case-law and the Commission’s line of decisions and contains no aid element. France takes the view that that negative price is lower than the liquidation cost which the State would have to bear in the event of the liquidation of the undertaking.

(113) That is the only conclusion which can be reached irrespective of whether the approach followed is that stemming from the case-law of the Court of Justice of the European Communities (the Gröditzer case-law’ (74)) or that based on the analysis of the actual liquidation costs of SNCM (the ABX decision (75)).

(114) As regards the first method, based on the Gröditzer case-law, France states that that judgment confirmed the Commission’s assessment in its decision of 8 July 1999, to the effect that ‘the cost of liquidation comprises only the liquidation value of the asset’s (76).

(115) In that respect, the reports of CGMF (77) and Oddo-Hastings (78) estimate the liquidation value of the assets at a minimum of EUR […] million on 30 September 2005 (79).

(116) Accordingly, in so far as the State as the owner and shareholder of a company is responsible for its debts only up to a maximum of the liquidation value of their assets (the Hytasa case (80)), France asserts that the liquidation value of the assets of the company estimated at EUR […] million is considerably higher than the negative sale price of EUR 158 million.

(117) On the second method, France states that it follows from the Commission decision on the State aid implemented by Belgium for ABX Logistics, in which the Commission examined a negative sale price, having, as in this case, the character of a market price, by comparing it to the costs which the State shareholder would actually bear in the event of a voluntary liquidation or compulsory liquidation as assessed by an independent third party. According to France, the Commission recognises in particular in that decision the legality of a certain number of costs which can result from an action ‘en comblement de passif’ (to make good liabilities) by creditors or from the liquidation for other branches of the group liquidating its subsidiary.

(118) On the basis of the CGMF and Oddo-Hastings reports cited above, the French authorities submit that the actual costs which the French Republic would have to bear as a shareholder amounted to between EUR […] and […] million on 30 September 2005.

(119) That method takes account, in particular, of the risk that the French State would be called upon ‘en comblement de passif’ if the court were to consider it to be managing de facto SNCM. The French authorities believe that the risk of an action ‘en comblement de passif’ cannot be averted, particularly in light of a precedent of the Cour de Cassation (Court of Cassation) in France (81). Accordingly, in several letters to the Commission, the French authorities submitted that a situation in which a national court orders the State to make good the liabilities of the undertaking which it manages is a scenario which is more than plausible and that it had to be taken into account in calculating the actual cost of a possible liquidation of SNCM.

(120) On 30 September 2005, the residual value of SNCM’s assets (EUR […] million) was, after payment of preferential debts, EUR […] million. Other cost elements taken into account under the action ‘en comblement de passif’ against the State include, inter alia, the costs of termination of the principal operating contracts, the costs related to the cancellation of the lease purchasing conditions of vessels and the payment of unsecured debts, which would lead to a shortfall in assets of EUR […] million. The French authorities consider that the State would have been ordered to pay between […] and […] % of that amount.

(121) Furthermore, the French authorities take the view that, because of its dependency on SNCM, and in accordance with another French case (82), the liquidation of the undertaking might have led the court to order the payment of damages to employees. According to that case-law, the French authorities believe that it would be very likely that a court would fix the amount of additional compensation on the basis of the compensation which would be paid under a social plan submitted prior to the liquidation.

(122) Applying the Aspocomp case-law to the present case, France considers that the State would have been called upon to pay additional redundancy payments for a total cost of between EUR […] and […] million, which would have led ultimately to a total liquidation cost chargeable to the State of between EUR […] and […] million.

(123) According to that approach, the analysis of actual costs which would have been paid by the State shareholder shows that the cost to the State of the sale of SNCM at a negative price of EUR 158 million is lower than the actual cost which it would have had to bear in the event of the compulsory liquidation of the undertaking.

(124) In conclusion, the French authorities consider that that amount cannot be classified as State aid.

7.2.2. The joint capital contribution of the shareholders

(125) France takes the view that, through that shareholding, it acted like a well-informed investor because, first, it intervened concurrently as a minority shareholder alongside BCP and VT and, secondly, that shareholding enjoys a fixed capital return of […] % per year, which exempts the State from exposure in respect of performance of the business plan. France states that that rate of return is very satisfactory for a private investor (83). It states, however, that no payment would be due in the event that SNCM is put into receivership or compulsory liquidation or the cancellation clause is exercised by the purchasers.

7.2.3. The additional social measures (aid to individuals)

(126) France takes the view that, by relying on the Commission’s practice in previous decisions, in particular the SFP – Société française de production file (84), that that financing constitutes aid to individuals which does not benefit the undertaking. Accordingly, the implementation from public funds of additional social measures for persons laid off, without those measures relieving the employer from its usual responsibilities, falls within the scope of the social policy of the Member States and is not State aid.

7.2.4. Conclusion

(127) If the Commission were, however, to classify part or all of the new measures as State aid, France draws the Commission’s attention to the fact that the new measures, by ensuring that SNCM becomes viable again, allows competition to be maintained on the markets in question, in particular the market in services to Corsica. According to France, that aspect is one of the principles of the guidelines in the rescue of an undertaking in difficulty as noted, in the present case, by the Commission (recital 283 of its annulled decision) and by the Court of First Instance in its judgment in Case T-349/03. In particular, the latter pointed out that the Commission could consider, in exercising its wide discretion, that the presence of an undertaking was necessary to prevent the emergence of an increased oligopolistic structure of the markets in question.

(128) As regards the determination of any compensatory measures to be imposed on SNCM, France suggests that the Commission take into account the structure of the market. Accordingly, a reduction in SNCM’s capacity would be such as to strengthen the position of CFF on the market of services to Corsica as dominant from then on (85).

(129) According to the French authorities, the restructuring plan, as updated, complies with the compatibility criteria set out by the Commission in its 1999 and 2004 guidelines. All of the measures laid down in the context of SNCM’s privatisation also serve to restore SNCM’s long term viability from the end of 2009 and are restricted to the minimum necessary for that return to viability.

7.3. The lifting of the restrictions placed by the annulled decision of 2003

(130) The French authorities recall, on the one hand, that the conditions imposed by decision of 2003 were all implemented and complied with in the period from 2003 to 2006. On the other hand, the French authorities consider that those measures are no longer necessary to prevent a distortion of competition and that their continuation would be contrary to the principle of proportionality having regard to the limit on the amount of restructuring aid, henceforth reduced to EUR 15,81 million. In particular, the French authorities take the view that it is necessary to lift the conditions which might still apply, namely those relating to the prohibition on modernising SNCM’s fleet, the observance of the principle of price leadership in tariff matters and the maintenance of frequency of services.

8. COMMENTS OF INTERESTED PARTIES

8.1. The decision to initiate the 2002 formal investigation procedure

8.1.1. Comments of Corsica Ferries (CFF)

(131) Disputing, first, that SNCM is an undertaking in difficulty within the meaning of the guidelines (86), CFF raises the question whether SNCM can become profitable on the non-subsidised routes. Moreover, CFF notes that, contrary to what is stated in the restructuring plan (87), services are still operated to Livorno.

(132) On the subject of cost reduction, CFF regrets that it does not have access to particular parts of the restructuring plan about which its representatives have levelled criticism (88).

(133) CFF is of the view that the calculation by the French authorities resulting in the sum of EUR 76 million is purely notional (89) while the capital to debt ratio of 79 % decided upon by the French authorities seems exaggerated (90). So far as concerns SNCM’s shareholdings, CFF notes that some of the subsidiaries are of no relevance to the activities of the shipping company’s activities (91).

(134) CFF concludes that the planned aid circumvents the cabotage regulation and renders the invitation to tender for Marseilles to Corsica services meaningless. CFF emphasises that the planned aid should not result in facilitating a more aggressive commercial bid on the part of SNCM. It suggests that restructuring aid should not be granted until 2007 and only if SNCM loses the next tender in 2006, which would be the only scenario that would genuinely put the public shipping company in difficulty.

8.1.2. Comments of the Stef-TFE group (92)

(135) According to the Stef-TFE group, SNCM’s shares in CMN should be analysed as purely financial assets. According to the Stef-TFE group, CMN and SNCM are independent and in competition with each other on routes other than those from Marseilles, even though both are co-contractors under the public service delegation contract.

(136) The letter states that the Stef-TFE group would undertake ‘to buy back all or part, and preferably all, of SNCM’s shares in CMN’, whose value it estimates at between EUR 15 and 17 million, if the Commission were to take the view, under conditions it might impose in its final decision, that ‘such a transfer is necessary to ensure that the restructuring plan is properly balanced’.

8.1.3. Comments of representatives of local authorities

(137) The mayor of the city of Marseille, the president of the general council of Bouches-du-Rhône and the president of the regional council of Provence-Alpes-Côte d’Azur pointed out the economic importance of SNCM’s role in the regional economy.

(138) The president of the regional council of Provence-Alpes-Côte d’Azur added that the conditions for SNCM’s restructuring plan to guarantee viability appear to be satisfied.

(139) The president of the executive council of the Assembly of Corsica submitted a resolution of that assembly of 18 December 2002 at which that assembly issued ‘a favourable opinion’ regarding SNCM’s planned recapitalisation.

8.1.4. Comments of the Corsica Transport Office

(140) The Corsica Transport Office (OTC) (93) emphasised that the tender issued for the public service delegation contract had resulted in only one bid being submitted, namely that of the CMN and SNCM group. Wishing to maintain a reliable high-quality service, the Corsican regional and local authorities included in the contract financial mechanisms for compensation or correction linked with the efficiency and reliability of services. Moreover, it noted that the Corsican regional and local authorities took account of supply trends since 1996 in services from ports in mainland France in order to limit the public service obligations to services operated from Marseilles.

(141) The OTC also notes that the disappearance of SNCM ‘would immediately lead to a major reduction in services’ as it is currently the only company capable of meeting the requirements of the contract with regard to passenger transport. It notes, in addition, the influence of SNCM in the Corsican economy.

8.2. The decision to extend the procedure of 2006

8.2.1. Comments of Corsica Ferries (CFF)

(142) CFF notes the size of the amounts in question, their disproportionate nature in relation to SNCM’s turnover and the fact that they were paid to SNCM before the Commission took a view on classification pursuant to Article 87(1) EC.

(143) CFF draws the Commission’s attention to the fact that the French State’s support for SNCM is a strategic step in the development of CFF. Those unauthorised measures enable SNCM to have a very aggressive tariff policy on the routes in respect of which CFF has been present for 10 years and on which, for the first time since it was set up, it is losing market share.

(144) CFF takes the view that there are alternatives to the presence of SNCM on all the routes at issue, falling within and outwith the public service delegation, which have various advantages both for SNCM and for competition in general. As regards the public service delegation (94), CFF takes the view that SNCM should reduce its services in respect of the routes operated under the pubic service delegation in order to prevent abuse of its dominant position on that market and avoid new investments and in order to implement a social plan restricted to 120 seasonal positions without having to terminate contracts for an indefinite term, which are more costly. So far as concerns the routes outwith the public service delegation, CFF suggests that SNCM withdraw a seasonal vessel.

8.2.1.1. The 2002 recapitalisation

(145) In respect of the amount of EUR 53,48 million, CFF wonders whether, there might be double counting in the calculation of the compensation of EUR 787 million authorised by the decision of the Commission in 2001.

(146) CFF considers that, in spite of the fact that Altmark is subsequent to the signing of the public service delegation, the compensation paid pursuant to the latter must be examined in the light of the criteria laid down by that case-law. In that respect, CFF submits that, with the exception of the first criterion, the criteria in Altmark are not satisfied.

(147) In respect of the fourth criterion in Altmark, CFF shares the Commission’s doubts as to whether SNCM may be regarded as having been a well-run and adequately equipped undertaking. In that regard, CFF draws the Commission’s attention to the fact that nearly 50 % of SNCM’s losses were concentrated in the years 2000 and 2001, which suggests that SNCM’s losses were not attributable exclusively to the public service obligations.

(148) As for the possibility of assessing that amount in the light of Article 86(2) EC, CFF considers that the Court of First Instance called upon the Commission to make an assessment merely as to the classification of that amount as aid and not as to whether it was justified pursuant to that article. The Commission was required to determine whether that amount was excessive in relation to the additional costs entailed by the public service obligations.

8.2.1.2. Measures subsequent to the 2002 recapitalisation

(149) In respect of the process of competitive tendering for the transfer of the company, CFF takes the view that it was not fully transparent in so far as the undertaking selected, namely BCP, no longer controls the operations of SNCM, having handed over to the VT group. Furthermore, since the financial conditions had changed to become much more favourable to the purchasers, CFF raise the question of the principle of the equal treatment of investors which ought to have prevailed throughout the transaction.

(150) As regards the negative transfer price of EUR 158 million, CFF is uncertain whether the criterion of the well-informed investor in a market economy applies to the present case. First, CFF wonders whether the view can be taken that the transaction at issue was managed by the State at the same time as a significant and concurrent action of private operators involved in comparable circumstances, although the State recapitalised the company before the joint recapitalisation of the shareholders and the new restructuring plan. On the other hand, CFF considers that, in the face of the serious financial circumstances of SNCM, a well-informed investor would have acted sooner in order not to have his investment depreciate (95).

(151) CFF takes the view that the reference to the ABX Logistics case is irrelevant. Besides the fact that the circumstances of that case cannot be transposed to the present case, SFF notes a significant contribution of the recipient of the aid in that case, which was clearly not the case with SNCM. Furthermore, according to CFF, the decision of the Commission in 2006 did not take account of the costs related to the risk of action by the court in a liquidation of the undertaking concerned. In that respect, CFF submits that the national case-law relied on by France to justify the costs related to SNCM’s liquidation do not apply to the present case (96).

(152) CFF takes the view that the application of the Community case-law in Gröditzer and Hytasa to the present case can only lead to the conclusion that the State did not act like a private investor in so far as, in terms of that case-law, the capital contribution of the State was related to the sale of 75 % of its holding in SNCM, reducing accordingly the prospects of profit in return.

(153) Finally, CFF considers that the comparison between the liquidation costs and the recapitalisation costs should take into account the value of the assets, which is, in both cases, transferred to the purchaser. CFF submits that the value of the asset sold to the purchasers varies between EUR 640 million and EUR 755 million (97), compared to the market value of the fleet used by SNCM which CFF valued at between EUR 644 million and EUR 664 million in August 2006.

(154) As regards the determination of the measures subsequent to the recapitalisation of 2002 as restructuring aid, CFF is of the opinion that, although SNCM fulfils the conditions of an undertaking in difficulty under the 2004 guidelines in the period preceding the first recapitalisation of EUR 142,5 million, that classification becomes very questionable for the period preceding the second increase of capital of EUR 8,75 million inasmuch as the undertaking’s capital was built up again.

(155) As regards the viability of the undertaking, CFF notes that the sale of SNCM is only partial and is not irrevocable having regard to the cancellation clauses negotiated with the purchasers. Those factors are important elements of uncertainty as regards the will and the ability of the purchasers to turn SNCM around and therefore secure the prospects of the undertaking’s long-term viability. Further, CFF states that, unlike what is required by the 2004 guidelines, the French authorities did not contemplate discontinuation of the activities which remained structurally poor even after the restructuring (98). In addition, CFF expresses its scepticism regarding the plan for reducing costs despite the fleet becoming larger (99) and the planned reduction of staff in particular in the light of the failure of the 2002 social plan.

(156) CFF is in doubt as to whether the new aid is limited to the minimum on account, first, of a lack of clarity as to what the social costs cover and, secondly, the content of the minutes of SNCM’s meeting of 28 April 2006 according to which a part of that aid would be used to cover the operating losses of the company in 2006 and 2007. CFF also considers that the purchasers of SNCM do not contribute substantially to the restructuring of the undertaking.

(157) In order to prevent unwarranted distortions of competition, CFF considers it necessary to renew and specify the compensatory measures imposed on SNCM in 2003 and to add new measures relating to the reduction of SNCM’s presence on the market (100). CFF considers, moreover, that a part of the measures imposed on SNCM by the 2003 decision were not complied with (101).

(158) Regarding the nature of the second recapitalisation of EUR 8,75 million, CFF takes the view that, in addition to the concurrence of public and private investment, the private action must be significant and carried out in comparable conditions in order that the State action is validated. In the present case, those two conditions are not satisfied. First, the shareholding of the purchasers, closely linked to the first increase of capital of EUR 142,5 million, is not significant. Secondly, the action of the purchasers was not carried out in comparable conditions to those of the state action, in particular by virtue of the cancellation clauses and the expected profitability of the minority shareholdings of CGMF.

(159) As regards the social measures of EUR 38,5 million, CFF disputes the classification of that amount as aid to individuals. Although it true that that amount directly benefits SNCM’s employees, CFF submits that that measure could give rise to indirect positive effects for SNCM, in particular in terms of calming of social relations.

8.2.2. Comments of STIM d’Orbigny (Stef-TFE group)

8.2.2.1. The 2002 recapitalisation

(160) STIM submits that through payment of the sum of EUR 53,48 million as public service compensation the State compensated SNCM twice for the same public service obligations. Moreover, STIM takes the view that that payment does not satisfy the criteria laid down in Altmark.

(161) As regards, specifically, the second and fourth criteria in Altmark, STIM disputes, first, the existence of parameters established in advance in an objective and transparent manner and, secondly, the comparability of SNCM’s and CMN’s ratios in the period from 1991 to 2001 (102) and claims, in that respect, that the information given to the Commission was manifestly biased (103).

8.2.2.2. Measures subsequent to the 2002 recapitalisation

(162) As regards the negative disposal price of EUR 158 million, STIM takes the view that that price is not a market price resulting from an open and non-discriminatory competitive tendering procedure because the recapitalisation took place under different conditions from those which must normally guide a private investor. STIM considers that the revalued net ledger assets would allow, in the worst of cases, a liquidation without costs for the State, or even yielding a gain on liquidation, that the sale price is derisory compared to the value of the undertaking (estimated at EUR 350 million by STIM) and that the aid is disproportionate in relation to the undertaking’s needs.

(163) STIM also draws the Commission’s attention to the exorbitant nature of the cancellation clause in respect of the transfer to the private sector.

(164) Finally, STIM disputes the justification for the negative sale price acclaiming that liquidation took place under socially difficult circumstances, which seems unrealistic.

(165) As regards the second recapitalisation of EUR 8,75 million, STIM considers that that capital contribution does not comply with the principle of the private investor in a market economy having regard to the inadequacy of the guarantees on return on investment. STIM challenges the argument regarding concurrence of private and public investment to deny that that contribution is State aid. Such concurrence, although it is settled, is only an indication and cannot be, in itself, a classification criterion (104). STIM states, finally, that that contribution is a guarantee given to purchasers by the French Government that SNCM has indeed been awarded the public service delegation to operate services to Corsica.

(166) As regards the EUR 38,5 million of aid to individuals, STIM takes the view that that amount is in fact intended to give SNCM the means to comply with certain essential aspects of the recovery plan submitted to the Commission which have not been implemented, in particular the reduction of staff.

8.2.2.3. Compatibility with the 2004 guidelines

(167) STIM takes the view that the aid received by SNCM is not limited to the minimum. The contribution of STIM and the purchasers to the restructuring plan is insufficient having regard to the conditions imposed in the 2004 guidelines and it is not demonstrated that SNCM’s situation was so exceptional that it justified a lower contribution. Furthermore, STIM notes the disproportionate nature of the aid granted in 2006 in so far as it enabled SNCM to set up reserves to cover future losses. Finally, the fact that SNCM did not provide for disposal of the assets which were not essential to the survival of the undertaking is contrary to the requirements laid down by the 2004 guidelines.

(168) STIM considers that the amounts were paid in breach of the principle of uniqueness established by the 2004 guidelines. The deterioration in the undertaking’s financial situation and the social conflicts cannot be analysed as exceptional and unforeseeable circumstances for which the recipient company is not responsible.

(169) Accordingly, STIM demands additional compensation of half of the aid contributed, namely EUR 98,25 million, through the disposal of an additional vessel and its direct and indirect SNCM holdings in CMN. In that respect, STIM states that those holdings are not strategic as provided in the guidelines on restructuring aid as they are not ‘essential to the firm’s survival’ nor are they inalienable assets.

(170) STIM also submits that the alleged synergies between SNCM and CMN do not exist inasmuch as SNCM has no real role in the management and development of CMN. STIM states, finally, that the shareholders’ agreement linking the two undertakings has not existed since 15 March 2006, when CMN gave notice that it was no longer bound by it, as held by the Cour d’Appel de Paris.

8.2.3. Comments of SNCM

(171) SNCM sent the Commission a copy of a file summarising its economic and competitive position, together with legal advice assessing the risk that, in connection with liquidation proceedings, the State intervention would be characterised by the courts as de facto management of the company for the period preceding privatisation.

(172) Consulted by SNCM, the […] firm arrived at the conclusion that, on the basis of the company’s social documents supplemented by correspondence, speeches and minutes of the auditing bodies, the French State […] (105) (106) (107) The report also notes that […] (108) Finally, the report refers to […].

(173) On that basis, SNCM’s expert concludes that it is very likely that the Tribunal de Commerce de Marseille would have characterised the French State as de facto manager.

(174) Moreover, according to the findings in, inter alia, the reports of the Court of Auditors, the mismanagement attributable to the French State (109), de facto manager of SNCM, contributed to SNCM’s stated shortfall in assets. The loss caused by mismanagement amounted to […].

(175) In that context, according to SNCM’s expert, there is no doubt that the French State would be ordered to bear all or a part of the shortfall in assets under an action ‘en comblement de passif’, having regard to the very strong involvement of the State in SNCM’s management, its manifest acts of mismanagement and the size of its financial resources.

(176) On the basis of the relevant case-law, SNCM’s expert concludes that, if SNCM had been liquidated, the State would certainly have been ordered to pay all of SNCM’s social security debts. That would have resulted in the State shareholder being made liable for an estimated share of between […] and […] % of the stated shortfall in assets (namely between EUR […] and […] million). Consequently, by deciding to privatise SNCM while strengthening in advance its capital in the sum of EUR 158 million, the French State acted like a well-informed investor.

9. OBSERVATIONS OF FRANCE ON THE COMMENTS OF THE INTERESTED PARTIES

9.1. Observations of France on the comments of the interested parties concerning the decision to open the 2002 formal investigation procedure

9.1.1. The comments of Corsica Ferries

(177) The French authorities have indicated that some of the data submitted by CFF concerning SNCM’s services were inaccurate.

(178) The French State is of the opinion that, contrary to what is maintained by CFF, the restructuring plan was devised in such a way as to turn SNCM around as soon as possible and create the right conditions to ensure its medium- and long-term viability. The French authorities note that a significant part of the cost reduction programme has already been implemented (110). Further, in 2001 SNCM earmarked EUR 21,3 million to finance restructuring measures, in particular the scheme to safeguard jobs.

(179) In respect of the determination of the amount of the aid, the French authorities confirm that a 0,79 capital/debt ratio is quite typical for the balance sheets of most shipping companies, except in special situations (111).

9.1.2. Comments of Stef-TFE

(180) The French authorities conclude that the description which Stef-TFE gives of relations between SNCM and CMN in performing the public service contract does not reflect reality.

(181) According to the French authorities, the decision of SNCM and CMN to enter into a joint venture in which they are jointly and not severally responsible has in no way ‘been rendered obligatory by the overall character of the consultation’, contrary to Stef-TFE’s observations. The decision to set up a SNCM-CMN joint venture was the result of an analysis made by the two companies which showed that the continuation in that form of their original natural partnership gave them the best chances, in particular in terms of competitiveness, to win the tender. CMN’s entry into that venture therefore resulted from a well-considered decision on its part based on an evaluation of its own interests and not on an obligation arising out of the tender as such.

(182) The French authorities explain that, contrary to Stef-TFE’s observations, the companies SNCM and CMN are neither independent nor in direct competition. Such a situation would be in conflict with the very principle of the single public service delegation contract to which they are co-signatories.

(183) The French authorities maintain that SNCM’s share in CMN’s capital cannot be construed as a purely financial asset, as Stef-TFE appears to allege. In conclusion, France’s position is that SNCM’s shareholdings in CMN are highly strategic in nature. In its opinion, the transfer of those holdings would not only make no sense commercially but would also be tantamount to a major strategic error.

9.1.3. Observations of France on the comments of the representatives of the local authorities

(184) Although France approves as a whole of the content of the letter of the president of the Region of Provence-Alpes-Côte d’Azur, it is nonetheless anxious to state that, contrary to what is asserted in point 2 of that letter (112), the supply of services between mainland France and Corsica is not ‘in excess of demand’ and SNCM’s fares policy complies with commitments which it made not to start a fares war and not to be a ‘price leader’.

9.2. Observations of France on the comments of the interested parties concerning the 2006 decision

(185) In general, France notes that many of the observations of STIM and CFF are identical to those submitted to the Commission in 2003. In particular, they note that CFF’s comments were submitted to the Court of First Instance in the action for annulment of the Commission decision of 9 July 2003 and were, for the most part, rejected both by the Commission and the Court.

(186) Concerning the public service delegation for the Marseille-Corsica routes, France challenges any argument that the procedure for the award of the public service delegation agreement was unlawful. Further, according to France, the existence of national procedures before the competent national courts as Community courts of ordinary jurisdiction implies that there is no Community interest for the Commission in examining questions relating to the procedure to award the public service delegation agreement.

9.2.1. The early implementation of the measures laid down in the first restructuring plan and its amendments

(187) The answer of the French authorities to the general remark concerning the early implementation of measures which may be classified as aid by France is that that implementation is justified by the specific features of the procedure, that is to say, the annulment in 2005 of the authorisation decision of the Commission of 9 July 2003, and not by an intention on the part of the French authorities to disregard their obligations under the EC Treaty. Indeed, France states that it has always kept the Commission informed of developments in the matter and with the different measures adopted since January 2005, in accordance with the duty to cooperate in good faith between the Member States and the Commission.

(188) Concerning those recent measures, the French authorities consider that since none of them constitute aid, Article 88(3)EC is not, ultimately, applicable to them and, accordingly, there is no obligation to suspend their application.

9.2.2. The 2002 recapitalisation

(189) First, the French authorities state that they did not cast doubt on the applicability of the Altmark judgment while noting, on the other hand, certain difficulties in applying the test laid down by that judgment, since the amount in question preceded it and could not therefore have taken into account those new criteria.

(190) France points out that the EUR 53,48 million in question is part of the EUR 69,3 million declared compatible by the Commission in 2003. The doubts expressed by the Commission in its initiation decision of 2006 do not therefore concern the compatibility of those measures, which are not called into question, as STIM seems to state in its observations, but concern the aid nature of that amount granted as compensation for public service costs.

(191) According to France, the observations of CFF and STIM do not call into question the applicability to the present case of the first and second Altmark conditions.

(192) In respect of the third criterion in Altmark, the French authorities deny the argument put forward by CFF and STIM that the payment of that sum necessarily results in overcompensation because the Commission authorised, by its decision of 30 October 2001, the payment of EUR 787 million as compensation for public service costs. In that respect, France states that the Commission, in its 2003 decision, stated that those obligations had been undercompensated and that the amount of EUR 53,48 million was justified as public service compensation.

(193) Regarding the fourth Altmark condition, the French authorities submit that, despite the absence of a reference undertaking and thus the impossibility of establishing an overall comparison between SNCM and other undertakings, as noted also by CFF, they endeavoured to provide information serving to make the most exact comparison possible with similar undertakings, that is to say, primarily with CMN. France also challenges the argument raised by STIM and CFF that the structural costs of SNCM are greater than those of CMN. Even if that were to be the case, the French authorities consider that the productivity ratios of SNCM are very similar to those of CMN. In conclusion, SNCM was managed as well as CMN to which STIM at no point refers as a badly-run undertaking.

(194) France states that the losses suffered between 1991 and 2001 were not attributable only to the public service delegation, as CFF appears to assert, but that the public service obligations prevented SNCM from adapting to the change in the competitive environment. The French authorities also state that those losses are not concentrated in the period 2000 to 2001 but gathered pace over that period on account of the increase in the round trips made by CFF.

(195) Concerning the compatibility of the EUR 53,48 million paid as compensation for public service costs in accordance with Article 86(2) EC, the French authorities note that, first, in its 2003 decision, the Commission had already declared that amount as compatible with that article and, secondly, the CFI did not call it into question in its judgment in Case T-349/03.

9.2.3. Measures subsequent to the 2002 recapitalisation

(196) As regards the sale process, France states that from its outset it provided for classic selection criteria based primarily on the price offered for the increase in value of SNCM’s stock and, secondarily, on other criteria (industrial plan, social plan and so on), including the amount which the candidates were prepared to invest in the company for a recapitalisation. France firmly challenges the argument put forward by third parties that the process of putting up for sale was not transparent and notes that, in the present case, the State itself went beyond its legal and statutory obligations, substantial and restrictive as they were, provided for in the event of transfer of public shareholdings. France notes that the development following BCP’s offer again to take up 100 % of SNCM’s stock occurred in a very difficult financial and social context and that VT’s joining BCP’s offer did not change the commercial and financial terms of the transaction (except for capital ownership).

(197) As regards the negative price of EUR 158 million, the French authorities note that, having regard to SNCM’s financial situation on 30 September 2005, the undertaking was sold at a market price and that the sale was economically more advantageous than a liquidation of the undertaking. In that respect, the French authorities state that the application of the criterion of the private investor in the event of a transfer of undertaking similar to liquidation must not be regarded in the same way as the search for ‘profitability of public action’ but as the prevention of greater losses which the shareholder would have to suffer through a more costly liquidation.

(198) In respect of the price paid, France challenges the argument that SNCM was transferred at a price which did not reflect its actual value (113).

(199) The French authorities also refute CFF’s argument that the market value of SNCM’s fleet was underestimated, which CFF assessed at between EUR 406,5 million and EUR 426,5 million. The French authorities argue that the vessels taken into account in CFF’s calculation do not correspond to those held in SNCM’s name on 30 September 2005. The absence of discounts applied to the market value of the vessels does not take account of the background in which a potential compulsory liquidation of those assets takes place and, finally, the date chosen to calculate that market value, August 2006, is not the date of potential liquidation of SNCM to which reference must be made, that date being 30 September 2005. However, France notes that, if the calculation proposed by CFF was to be accepted, the negative price would be three times lower than the liquidation value of the assets required by the Gröditzer case-law, which would therefore be more favourable than the cases presented to the Commission by the French authorities.

(200) In response to CFF’s argument calling into question the application of the Gröditzer case-law by referring to the fact that the capital contribution of the State in SNCM was linked to the sale of 75 % of its holding, reducing in proportion the prospects of profit in return, the French authorities note that the negative sale price of EUR 158 million does correspond to the sale of the entirety of SNCM’s capital, followed by a new investment by the State of 25 % giving a return of […] % per year. Accordingly, France takes the view that the return on investment remains guaranteed by virtue of its shareholding of 25 % in the company in so far as that holding enjoys a guarantee of very high return.

(201) France also challenges the argument put forward by CFF on the non-application to the present case of the ABX approach, taking as a basis in particular the analysis of the actual liquidation costs of SNCM and the risk that the State could be considered to be liable for the liabilities of the undertaking in an action ‘en comblement de passif’ as provided for by French insolvency procedures and confirmed by national case-law (judgment of the Court of Appeal of Rouen of 22 March 2005). Although the French authorities consider that their conduct as manager of SNCM cannot be described as being ‘wrongful’ in that action, they insist that there is a very high risk that an order would be made against the State by a national court for the shortfall in SNCM’s assets owing to flexible criteria for characterisation of mismanagement as provided for in Article L-651-2 of the Commercial Code and pursuant to the case-law cited above which can be transposed to the present case.

(202) In respect of the capitalisation of EUR 8,75 million, France notes that, contrary to the contentions of CFF and STIM, that capital contribution does not constitute State aid on account of the concurrence of that investment, the similarity of its subscription conditions and the higher-than-average return obtained by the State via CGMF.

(203) In particular, the French authorities submit that the principle of equality of investors is not called into question by the existence of cancellation clauses since the latter were laid down in connection with the 100 % sale of SNCM and not with the EUR 35 million recapitalisation which followed it.

(204) Further, France submits that its investment is much lower than that of the purchasers, since it is only the sum of EUR 8,75 million which must be compared to the investment made by the purchasers (EUR 26,25 million). The first recapitalisation of EUR 142,5 million should be examined only in the course of the comparison with the liquidation price.

(205) Finally, France challenges STIM’s argument that that contribution is a guarantee given to private purchasers that SNCM has indeed been awarded the public service delegation to operate services to Corsica. The French authorities submit that that increase in capital is prudent and irrespective of the undertaking’s performance and that the award of the public service delegation to SNCM does not serve to improve the return expected on that investment.

(206) As regards the EUR 38,5 million of social measures, France repeats the argument that those measures are aid to individuals and that their payment by the State cannot be considered to give an indirect advantage to the undertaking in so far as they are in addition to SNCM’s statutory obligations and its obligations in agreements. Moreover, France recalls that those measures do not permit the departure of employees who would remain, in their absence, the responsibility of SNCM.

(207) Contrary to CFF’s argument, the French authorities state that the EUR 38,5 million does not correspond to implementation of reductions in staff provided for in the 2003 social plan because those reductions have, despite the delay, already been implemented. The new social plan is therefore in addition to the first social measures of 2003.

9.2.4. Compatibility with the guidelines

(208) France considers that, in the light of the foregoing, the amount of aid to be assessed in the light of the guidelines is EUR 15,81 million.

(209) Contrary to the contentions of CFF, the French authorities consider that, having regard to point 11 of the 2004 guidelines, the first recapitalisation, although enabling SNCM to build up its capital, did not take away its nature of an undertaking in difficulty in so far as that recapitalisation was intended to ensure the continuation of the company’s activities.

(210) France refutes CFF’s contentions that it did not again have to inject money into the undertaking given that SNCM could have had recourse to bank credit. In that regard, the French authorities note that, on 24 August 2005, the banks refused to grant new cash lines to SNCM and that, accordingly, the only alternatives conceivable were privatisation or the liquidation of the undertaking.

(211) France challenges the arguments put forward by CFF and STIM concerning the failure of the 2002 restructuring plan which, despite some delay, was implemented and made it possible to achieve the objectives in 2005. The deterioration in SNCM’s economic and financial situation owing to factors external to the undertaking itself then made necessary the extension of the plan notified in 2002 and the introduction of new measures.

(212) France takes the view that SNCM has good prospects for recovery and that the measures contemplated by the new shareholders, in particular the implementation of the social plan, the reinstatement of services and the renewal of certain vessels, will enable the undertaking to return to viability. In that regard, France observes that on account of the revenues deriving from the public service delegation (approximately […] of SNCM’s turnover) and in view of the extent of the fixed costs and the difficulties in redeploying the 6 vessels used on the Marseille-Corsica route, the public service delegation constitutes an essential element of the undertaking’s strategy and its viability.

(213) On the limitation of the aid to the minimum, France believes that it limited to the strict minimum the restructuring costs necessary to enable the restructuring to be carried out. To that effect, the French authorities note that, as the Commission recognised in its 2003 decision, the undertaking has itself contributed sufficiently to the restructuring plan from its own resources by virtue of the disposal of assets for the sum of EUR 30,2 million. In addition, having regard to other disposals made by SNCM for the sum of EUR 12,2 million, the total of the undertaking’s own contribution comes to EUR 42,4 million. France considers that that amount is much greater than the amount of own contributions necessary to approve the restructuring aid, which finally amounts to EUR 15,81 million, since the other measures are not State aid.

9.2.5. The conditions imposed by the Commission decision of 2003 and the possible new compensatory measures

(214) Contrary to the contentions of STIM and CFF, the French authorities state that they complied with all of the conditions imposed by the 2003 decision, to which they were bound until the end of 2006, in particular the maintenance of the fleet of 11 vessels and the application of lower fares than those of its competitors.

(215) Indeed, France considers that, under the new final decision, the level of compensatory measures to be imposed on SNCM must be adapted in so far as the amount of restructuring aid was henceforth EUR 15,81 million rather than EUR 69,3 million.

(216) In that respect, France challenges STIM’s observations concerning the possibility that the Commission may require SNCM to sell its shareholding in CMN as a compensatory measure. France challenges STIM’s argument that the description of strategic assets was called into question in the 2004 guidelines as opposed to those of 1999.

(217) As regards measures referred to by CFF intended to reduce SNCM’s market presence, the French authorities recall that, as the Commission noted, moreover, in its 2003 decision (recital 87), there is no excess capacity on the markets concerned (France — Corsica — the Maghreb) and that a reconfiguration of services to Corsica under and outwith the public service delegation would jeopardise the viability of the undertaking.

(218) As for the argument raised by CFF that the implementation of the measures described above in favour of SNCM involves a serious risk of eliminating its main competitor on the mainland France-Corsica market, namely CFF, the French authorities submit that, having regard to the current structure of the market on which CFF is in the majority, the maintenance of a competitive structure depends on the authorisation of SNCM’s restructuring plan and the presence of the latter on the market in question.

10. ASSESSMENT OF THE MEASURES

(219) Article 87(1) of the EC Treaty provides: ‘Save as otherwise provided in this 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’.

(220) The classification of a national measure as State aid as provided for in Article 87(1) EC requires the following cumulative conditions to be fulfilled, namely: (1) the measure in question confers a selective economic advantage; (2) that advantage is financed via State resources; (3) that advantage distorts or threatens to distort competition and, finally, (4) that advantage has an effect on trade between Member States (114).

(221) The Commission notes that SNCM received State resources totalling EUR 274,54 million via CGMF wholly owned by the French Government.

(222) Since SNCM operates in the maritime transport sector, open to competition within Europe, the potential economic advantage that it has received is likely to distort competition and to have an effect on trade between Member States.

(223) The fact that the cabotage market to the Mediterranean islands was, until 1 January 1999, temporarily exempt from the application of Council Regulation (EEC) No 3577/92 of 7 December 1992 applying the principle of freedom to provide services to maritime transport within Member States (maritime cabotage) (115) does not exclude prima facie that subsidies granted for operating cabotage routes to the Mediterranean islands under a public service delegation could have an effect on trade between Member States and distort competition.

(224) In any event, even if subsidies granted for operating cabotage routes could not have an effect on trade between Member States or entail distortions in competition before 1 January 1999, the situation changed after that date since, in accordance with Regulation (EEC) No 3577/92, cabotage activities were from then on open to all Community operators. In addition, it should be stated that SNCM does not carry on only cabotage transport but also operates on the international maritime market, which was liberalised by Council Regulation (EEC) No 4055/86 of 22 December 1986 applying the principle of freedom to provide services to maritime transport between Member States and between Member States and third countries (116).

(225) Accordingly, the Commission considers in the present case that the last three criteria of Article 87(1) EC cited in paragraph 220 of this decision are fulfilled. The following sections examine in turn, in respect of each measure, the existence of a selective economic advantage and, where applicable, compatibility with the common market of measures classified as State aid.

10.1. The capital contribution of EUR 53,48 million for public service compensation

(226) Although in its decision of 2003 the Commission recognised the public service compensation nature of a part of the EUR 76 million, namely EUR 53,48 million, for operating services to Corsica between 1991 and 2001, the Commission had assessed the capital contribution in its entirety, namely EUR 76 million, in terms of restructuring aid in so far as that amount had been notified by the French authorities for that purpose. In its judgment in Case T-349/03 annulling the Commission decision of 2003, the Community judicature called on the Commission to examine the sum of EUR 53,48 million in the light of the its judgment in the Altmark case.

(227) Moreover, the French authorities requested the Commission to consider that, by virtue of its ‘public service compensation’ nature, a part of the 2002 restructuring aid does not constitute aid in the light of the Altmark case-law.

(228) Since the French authorities relied on the application to the present case of the Altmark case-law and, in some circumstances, the derogation provided for in Article 86(2) EC, the Commission is required to make a ruling in that respect as those arguments have decisive importance in France’s reasoning (117).

10.1.1. Introductory remarks

(229) First of all, the Commission notes that, despite the fact that the ruling in Altmark is subsequent to the implementation of the abovementioned measure, the criteria laid down by the Community judicature in that case are applicable to the present case.

(230) As recently pointed out by the Court of First Instance (118), the Court of Justice did not impose temporal limits on the scope of the statements made in the judgment in Altmark. In the absence of such temporal limits, those statements following from Article 87(1) EC are therefore fully applicable to the factual and legal situation of the present case.

(231) It should be noted, fir