2002/610/EC: Commission Decision of 30 January 2002 on the aid scheme which France is planning to implement for the start-up of new short sea shipping services (Text with EEA relevance) (notified under document number C(2002) 372)
Date: 2002-01-30
Institutions: European Commission
Subjects: France, State aid, control of State aid, maritime transport, transport lines

25.7.2002

EN

Official Journal of the European Communities

L 196/31

II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 30 January 2002

on the aid scheme which France is planning to implement for the start-up of new short sea ship-
ping services

(notified under document number C(2002) 372)

(Only the French text is authentic)

(Text with EEA relevance)

(2002/610/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

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

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

Having called on interested parties to submit their comments
pursuant to the abovementioned articles and having regard to
their comments,

Whereas:

I. PROCEDURE

(1)

(2)

By letter dated 13 October 2000, the French authorities
notified the Commission of a planned aid scheme to
facilitate the start-up of new short sea shipping services.

By letter dated 22 December 2000, the Commission
informed France of its decision to initiate the procedure
laid down in Article 88(2) of the EC Treaty in respect of
the operating aid to cover the costs of running new
services. By the same letter, the Commission informed
France that it had decided to raise no objections to the
financing of preliminary feasibility studies.

(3)

(4)

(5)

(6)

(7)

The Commission decision to initiate the procedure was
published in the Official Journal of the European Commu-
nities (1). The Commission invited interested parties to
submit their comments on the measure.

The Commission received comments from interested
parties. It forwarded them to France, which was given an
opportunity to react, and received comments from
France by letter dated 3 August 2001.

II. DETAILED DESCRIPTION OF THE AID

The objective of
the scheme which the Commission
decided to review is to alleviate the financial difficulties
inherent in starting up new short sea shipping services.

The aid is to be paid for a maximum of three years and
is to be limited to 30 % of the eligible expenditure, with
a ceiling in absolute figures of EUR 1 million in the first
year, two-thirds of the amount granted in the second
year and one third of this amount in the third year.

Aid may be granted only to projects involving several
players in the transport chain and shippers. The projects
funded must concern the creation of a new service either
(a) between French ports or (b) between a French port
and a port in another Member State.

(1) OJ C 37, 3.2.2001, p. 16.

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(8)

The eligible costs correspond to the expenditure eligible
under Council Regulation (EC) No 2196/98 of 1 October
1998 concerning the granting of Community financial
assistance for actions of an innovative nature to promote
combined transport (1), that is to say:

(a) the cost of hiring, leasing or amortisation of combi-
semi-trailers,

nations of vehicles
swap bodies or containers of 20 feet or more);

(lorries,

trailers,

(b) the cost of hiring, leasing or amortisation of rolling
stock (including locomotives) and inland waterway
and seagoing vessels subject, in the case of inland
waterway vessels, to compliance with the specific
rules on structural improvements to inland waterway
transport;

(c) investment expenditure or the cost of hiring, leasing
or amortisation of installations permitting tranship-
ment between railways, inland waterways, shipping
routes and roads;

(d) the cost of using rail, inland waterway and maritime
infrastructures, with the exception of harbour dues
and transhipment costs;

(e) expenditure relating to the commercial operation of
techniques,
technologies or equipment previously
tested and approved, in particular transport informa-
tion technology;

(f) the cost of measures related to staff training and the
dissemination of project results, as well as expenses
for information and communication action to make
new transport services known.

Expenditure and/or costs under (a), (b), (c) and (e) are
eligible provided the beneficiaries undertake to keep the
equipment on the route concerned.

Grounds for initiating the procedure

(10)

(9)

In its decision initiating the procedure, the Commission
expressed reservations as to whether the implementing
arrangements guarantee that the operating aid is both
necessary and strictly proportionate to the set objective.
The Commission expressed doubts about the following
points in particular:

(a) the planned aid measures must contribute to redu-
cing the share of road traffic by integrating short sea
shipping in the intermodal chain of door-to-door
transport services. By contrast, they must not result
in diversion of traffic flows between neighbouring
ports, or between transport modes which also have a
positive role to play in the framework of a sustain-

(1) OJ L 277, 14.10.1998, p. 1.

able mobility policy, such as the railways or inland
waterway transport;

(b) in order to ensure the financial transparency of the
aid scheme, to facilitate monitoring and to avoid the
risk of cross-subsidies, the Commission decision initi-
ating the procedure stressed that
the legal entity
receiving the aid must have a separate accounting
system so that the financial flows for funding the
projects selected can be clearly identified;

In this connection,

(c) the Commission also stressed that the criteria which
the French authorities intended to apply in order to
select the projects to be funded had not been speci-
fied sufficiently clearly.
the
Commission considered that only projects which
would be viable in the long term and likely to make
a real contribution to the development of short sea
shipping should be selected to receive operating aid.
The arrangements must also guarantee that there
would be no discrimination on grounds of nation-
ality between any operators in the transport chain
and shippers;

(d) the Commission also stated that, as the aim of the
aid is exclusively to facilitate the start-up of short sea
shipping services which will be commercially viable
in the long term, it considered that, in principle, such
aid should not be granted in addition to financial
compensation for public service obligations imposed
on the same services.

III. COMMENTS FROM INTERESTED PARTIES

Following publication of
the decision to initiate the
procedure, several interested parties (shipping operators
and port authorities) submitted their comments to the
Commission. In essence, they shared the Commission’s
doubts and stressed the need to avoid the danger that,
instead of leading to a reduction in the share of road
traffic and a corresponding increase in the share carried
by sea, the opening of new short sea shipping services
traffic away from the existing shipping
could divert
services run by other operators from other ports and to
the new services receiving the aid. Some interested
parties expressed concern that the aid must be kept to a
reasonable level, particularly when the national aid was
combined with Community support for pilot actions for
combined transport (PACT). The importance of estab-
lishing a clear, transparent procedure at national level for
selecting the projects to receive aid was also stressed to
take account, in particular, of the impact of the aid on
the relevant market.

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IV. COMMENTS FROM FRANCE

(15)

(11)

The French authorities stressed their intention to imple-
ment the scheme in a transparent, non-discriminatory
manner, taking care not to support projects which could
distort competition against other alternative modes to
road transport. By contrast, they were against making
the start-up of a new service conditional on prior agree-
ment by the public authorities concerned and the opera-
tors already on the market. As regards the level of aid,
the French authorities accepted that in cases where the
operating aid is combined with other Community aid
schemes, the ceiling of 30 % of eligible expenditure will
apply to the combined total of national plus Community
aid.

V. ASSESSMENT OF THE AID

(12)

(13)

(14)

The measures in question constitute aid covered by
Article 87(1) of the Treaty. They are funded from State
resources and benefit individual undertakings by cutting
the costs which they would normally have to bear. Since
the undertakings are operators on the market in short
sea shipping, which is an international economic activity
open to competition from other operators
in the
Community, it can be assumed that this case meets the
criterion of affecting trade between Member States.

Paragraphs 2 and 3 of Article 87 allow certain exemp-
tions from the prohibition in paragraph 1 of the same
Article. The Commission considers that none of
the
exemptions listed in paragraph 2 applies to the aid
scheme in question. Since its objective is to facilitate the
the Commission
development of short sea shipping,
considers that its compatibility with the common market
must be assessed in the light of the exemption allowed
by paragraph 3(c).

The Community guidelines on State aid to maritime
transport (1) specify which aid programmes may be set
up to support the Community’s maritime interests. In
particular, point 2.2 states that, besides the objectives of
safeguarding Community employment, preserving mari-
time know-how in the Community and improving safety,
further objectives of the common transport policy may
also be taken into account, such as the construction of a
Community framework for sustainable mobility and, as
part of this, the promotion of short sea shipping and the
development of its full potential.

(1) OJ C 205, 5.7.1997, p. 5.

In its communication on the development of short sea
shipping (2), the Commission stressed the contribution
which this mode of
transport could make towards
promoting sustainable, safe mobility, strengthening cohe-
sion within the Union and increasing the efficiency of
transport, taking an intermodal approach. It also recog-
nised that short sea shipping must be promoted at all
levels, whether Community, national or regional.

(16)

The Commission has supported a large number of
projects on short sea shipping both under the fourth
framework programme for research and development
activities or PACT and also under the MEDA accompa-
nying financial and technical measures or from the
European Regional Development Fund (ERDF). However,
the main obstacle to development of this mode of trans-
port is the high cost of starting up new services.

(17)

The aid scheme proposed fits into this context. The
objective is, with the aid of a national programme, to
supplement the Community aid from PACT in order to
finance additional projects, some of which would not be
eligible for Community support because only national
operators are taking part.

(18) However, in order to qualify for exemption under Article
87(3)(c), these measures must be strictly proportional to
the objective set and must have no negative effect on
trading conditions to an extent which is not compatible
with the common interest. The Commission also notes
in
that these measures constitute operating aid which,
is incompatible with the Treaty (3). Such aid
principle,
can be authorised only in exceptional cases,
in accor-
dance with the Community guidelines on State aid for
environmental protection (4), the guidelines on regional
aid (5) and the Community guidelines for State aid in the
agriculture sector (6).

(19)

In the case in point, if the Commission finds that the
objective of the aid proposed fits in with its policy to
promote short sea shipping it must nevertheless make
sure that the arrangements will lead to no distortion of
competition which is incompatible with the common
interest.

(20)

In the light of the grounds for initiating the procedure
and of
the
the comments
Commission has found as follows.

from interested parties,

(2) COM(1999) 317 final.
(3) See, in particular, the decisions to initiate the procedure provided
for by Article 93(2) of the Treaty in cases C 2/97 (OJ C 93,
22.3.1997) and C 21/98 (OJ C 227, 28.8.1999).

(4) OJ C 72, 10.3.1994, p. 3.
(5) OJ C 74, 10.3.1998, p. 9.
(6) OJ C 28, 1.2.2000, p. 2.

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(21)

(22)

(23)

the railways or

The French authorities have given an undertaking to
support only projects which have been demonstrated —
by a preliminary feasibility study in particular — to
make an effective contribution to reducing the share of
road traffic without diverting traffic away from other,
more environmentally friendly modes of transport, such
as
inland waterways. Accordingly,
priority will be given to selecting combined transport
projects. In addition, the French authorities have made it
clear that ‘new’ short sea shipping services means any
service with a point of departure and point of destination
differing from the existing services on the market in
question. The Commission considers that these commit-
ments, combined with the introduction of a transparent
project selection procedure (see recital 23), avoid the
danger that the objective set for the aid scheme proposed
could lead to diversion of traffic incompatible with the
common interest.

In order to qualify for this aid, a separate legal entity will
have to be formed between the partners involved in the
service proposed. In practice, this separate legal entity
will imply setting up a separate accounting system from
those of the partners. The Commission considers that
establishment of a separate entity set up solely for the
purpose of qualifying for the measures in question will
ensure the financial
the aid scheme.
According to the information submitted by the French
authorities, separate accounts would have to be kept for
any other economic activities conducted by the entity.

transparency of

The French authorities have also stated that the start-up
aid for new short sea shipping services may not be
combined with compensation for public service obliga-
tions granted for the same service. By contrast, the aid
may be combined with Community support, particularly
from the PACT programme or its successor, the future
in this case the
Marco Polo programme. However,
French authorities have stated that the ceiling of 30 % of
eligible expenditure will apply to the combined total of
national plus Community aid. The Commission considers
that application of the ceiling of 30 % of eligible expen-
diture in the event of combination of national and
Community aid helps to limit the impact of the aid on
competition in the sector.

(24)

In the course of the review procedure, the French autho-
rities gave details of
the project selection procedure.
They stated that the submission must contain the rele-
vant details listed in Article 6(2) of Regulation (EC) No
2196/98, particularly:

— the identification of the project, of the applicants and

of the beneficiary,

— the amount of financial assistance requested,

— the objectives of and reason for the project, customer
potential, prices and service performance, expected
receipts and return,

— the itemised costs by heading,

— the need for assistance and information on other

sources of financing,

— the expected impact in terms of creating direct or

indirect employment,

— the benefits to the environment and safety, compared

with the existing situation.

(25)

The French authorities also stated that applications for
aid will
include a feasibility study accompanied by a
business plan demonstrating the viability of the project.
The file will be submitted for endorsement to a selection
panel under the auspices of the Ministry for Transport
and made up, alongside representatives of the Ministry,
of one representative of the Intermodal and Combined
Transport Bureau (which represents France in the PACT
programme) plus one representative from the Ministry
for Financial Affairs. The panel may also hear qualified
experts acting in an advisory capacity.

(26)

To ensure transparency and equal treatment of operators
during the project selection procedure, the French autho-
rities have given an undertaking to observe the following
procedures:

(a) a call for expressions of interest will be published
periodically (for example, at the beginning of each
year) in the form of a notice in the Official Journal of
the European Communities giving details of
the
arrangements for the aid scheme, the procedure to
be followed and the selection criteria;

(b) In the case of projects between a port in France and
a port in another Member State, a declaration of
intent will be published in the Official Journal of the
European Communities giving details of the objective
of the project and of the aid ceiling proposed. This
will invite interested parties to express their interest
If any interested party
within 15 working days.
opposes the aid scheme, stating the reasons,
the
scheme will have to be notified to the Commission
for prior authorisation.

(27)

The Commission considers that the combined effect of
the project selection procedure described in recital 24,
which the French authorities have given an undertaking
to put into place, and of the need for prior authorisation
from the Commission in the event of opposition from
any party affected by the launch of a new international
service guarantees transparency and non-discrimination
on grounds of nationality between operators in the
transport chain.

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(28)

The Commission also notes that the aid is planned for a
maximum of three years and is degressive. This duration
corresponds to the maximum period for Community
financing under the PACT programme. The Commission
considers that the limited duration of the aid scheme,
combined with the fact that it is degressive and the
twofold ceiling, both in absolute figures and as a percen-
tage of eligible expenditure, will limit the impact of the
measures on competition in the sector.

VI. CONCLUSION

(29)

In the light of the foregoing, the Commission concludes
that the doubts as to the compatibility of the operating
aid which France is planning to implement for the start-
up of new short
sea shipping services have been
removed,

HAS ADOPTED THIS DECISION:

Article 1

The State aid which France is planning to implement for the
start-up of new short sea shipping services is compatible with
the common market within the meaning of Article 87(3)(c) of
the Treaty.

Implementation of the aid is accordingly authorised.

This Decision is addressed to the French Republic.

Article 2

Done at Brussels, 30 January 2002.

For the Commission

Loyola DE PALACIO

Vice-President