2006/367/EC: Commission Decision of  20 October 2004  on the State aid partly implemented by France for the  Sernam  company  (notified under document number C(2004)3940)   (Text with EEA relevance)
Date: 2004-10-20
Institutions: European Commission
Subjects: France, State aid, aid for restructuring, control of State aid, delivery, railway industry, road transport, subsidiary, transport company

29.5.2006

EN

Official Journal of the European Union

L 140/1

II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 20 October 2004
on the State aid partly implemented by France for the ‘Sernam’ company
(notified under document number C(2004)3940)

(Only the French text is authentic)

(Text with EEA relevance)

(2006/367/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

1. PROCEDURE

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

Having regard to the Agreement on the European Economic
Area, and in particular the first subparagraph of Article 62(2)
thereof,

Having regard to the Community Guidelines on State aid for
rescuing and restructuring firms in difficulty, (1)

(1)

(2)

Having regard to Council Regulation (EC) No 659/1999 of 22
March 1999 laying down detailed rules for the application of
Article 93 of the EC Treaty, (2)

Having called on interested parties to submit their comments
to those provisions and having (3) regard to their
pursuant
comments,

Whereas:

By letter of 23 May 2001 (No D/288742), the Commis-
its decision to authorise re-
sion informed France of
structuring aid for Sernam (hereinafter referred to as the
‘decision of 23 May 2001’ or the ‘Sernam 1 decision’).

the

indicating that

By letter of 17 June 2002 (registered on the same day
under No A/60693), the French authorities submitted
a first annual report on the restructuring of Sernam and
a new memorandum of understanding between SNCF
and Geodis,
aid approved on
23 May 2001 had been implemented under conditions
different from those on the basis of which the Commis-
sion had taken its decision of 23 May 2001. By letter of
30 October 2002 (registered on 31 October 2002 un-
der No A/69194), France transmitted additional
infor-
mation. On 27 November 2002 the Commission sent
replied by letter of
a letter
30 January 2003 (registered on 31 January 2003 under
No A/12246). Meetings between the French authorities
and the Commission took place on 29 August 2002,
25 February 2003 and 22 March 2004. Additional
information was supplied by the French authorities at
the meeting of 22 March 2004 and by letter of
14 April 2004.

to France to which it

(1) OJ C 288, 9.10.1999, p.2.
(2) OJ L 83, 27.3.1999, p.1. Regulation last amended by Regulation

(3)

(EC) No 794/2004 (OJ L 140, 30.4.2004, p.1).

(3) OJ L 182, 1.8.2003, p.2.

The Commission commissioned an independent expert
to carry out market research, the report of which was
submitted in early June 2004.

L 140/2

EN

Official Journal of the European Union

29.5.2006

(4)

(5)

(6)

(7)

Moreover, by letter of 8 July 2002 (registered on
15 July 2002 under No A/62493),
the Commission
received a complaint (submitted jointly by several com-
plainants, hereinafter referred to as ‘the complainants’)
concerning the Sernam dossier. Meetings between the
complainants and the Commission took place on 3 Sep-
tember 2002 and 29 January 2003. By letter of 13 De-
cember 2002 (registered on 17 December 2002 under
No A/72603), the complainants served notice on the
Commission for the first time to take action, indicating
that they would otherwise institute proceedings for fail-
ure to act, a notice which they repeated by letter of
24 April 2003. (1) Subsequently, they sent the Commis-
sion additional
including one dated 4 February
2003 (2) and two dated 28 February 2003, one of
which was sent on 4 March 2003, (3) and a letter of
10 March 2003 (4) and one of 15 September 2003. (5)
The complainants served notice on the Commission for
the second time urging it to take steps, indicating again
that they would otherwise bring an action for failure to
act, by letters dated 13 and 18 February 2004, (6) and
transmitted further letters on 19 May, (7) 10 June and
9 September. The Commission’s replies included letters
of 7 February 2003 (response to the first notice),
25 February, 17, 20 and 21 March and 8 May 2003
(response
and
19 March 2004 (response to the second notice).

first notice)

repeat of

to the

letters,

the

By letter of 30 April 2003, the Commission informed
France of its decision to initiate the procedure provided
for in Article 88(2) of the EC Treaty in respect of this
aid (Decision C 32/03).

The Commission decision to initiate the procedure was
published in the Official Journal of the European Union. (8)
The Commission called on interested parties to submit
their observations on the aid in question.

The Commission received observations on this matter
from interested parties which it forwarded to France by
letter of 26 September 2003 asking it
to comment,
which it did by letter of 26 November 2003.

2. DESCRIPTION

What follows is a brief description of the aid. For more
details, please refer to the decision of 23 May 2001 and
the decision of 30 April 2003 to initiate the procedure.

all

activities

involved in parcel

services.
together
A reorganisation in 1993 led to the creation of Sernam
Domaine and its subsidiary Sernam Transport SA. Ser-
nam Domaine remained part of SNCF whereas Sernam
Transport SA was set up as a 100% subsidiary of SNCF
which in turn had 24 subsidiaries (9) through which it
carries out its road transport operations.

(9)

The group established in 1993 consisting of Sernam
Transport SA and its subsidiaries (hereinafter referred to
as the ‘Sernam Transport group’) has always more or
less been in financial equilibrium. However, the business
results of Sernam Domaine steadily deteriorated from
it was only in 1996, partly because of
1992 but
considerable
that
unrest within
a recovery plan could be drawn up. Nevertheless, the
SNCF has studied ways and means of improving Sernam
Domaine’s situation as its performance continued to get
worse.

industrial

SNCF,

(10) On 1 February 2000 Sernam Domaine was transformed
into a 100% subsidiary of SNCF and a new limited
referred to as ‘SCS Sernam’)
partnership (hereinafter
was then created by SNCF with separate legal person-
ality. It comprises the fixed assets of the former Sernam
Domaine and the financial assets of Sernam Transport
SA. Consequently, SNCF’s subsidiary Sernam Transport
SA has become a 100% subsidiary of SCS Sernam while
nevertheless
remaining a separate company and the
holding company of its 24 subsidiaries.

(11)

The present decision concerns the restructuring of SCS
Sernam (even though it was transformed into a Société
Anonyme following the memorandum of understanding
signed between SNCF and Geodis on 21 December 2001
and though 15% of SCS Sernam sold to Geodis and
Cogip respectively was taken over by SNCF).

2.1. Sernam’s structure

2.2. Sernam’s activities

(8)

As indicated in the decision of 23 May 2001, Sernam
the SNCF bringing
was set up in 1970 as part of

(1) Registered on 25 April 2003 under No A/18967.
(2) Registered on 7 February 2003 under No GAB. LdP 490.
(3) Registered on 5 March 2003 under No A/14685.
(4) Registered on 11 March 2003 under No GAB Loyola de Palacio

899.

(5) Registered on 17 September 2003 under No A/29815.
(6) Registered at DG Tren on 26 February 2004 under No A/14167.
(7) Registered on 24 May 2004 under No A/21123.
(8) OJ C 182, 1.8.2003, p.2. The deadline by which interested parties
could submit comments expired on 1 September 2003. At the
request of the interested parties that had submitted comments, the
Commission extended the deadline until 15 September 2003.

(12)

Since its inception in 1970, Sernam has mainly been
engaged in parcel services (less-than-truckload transport)
on the groupage market which basically includes tradi-
tional mail services (delivery normally between 24 and
48 hours) and express mail services (delivery normally
in less than 24 hours) and, to a lesser extent, on the
charter market (point-to-point full truckload transport)
and in logistics (warehousing, storage, order picking,
assembly).

(9) On 31 December 2000 there were 24 small subsidiaries.

29.5.2006

EN

Official Journal of the European Union

L 140/3

(13) As indicated in the Sernam 1 decision,

‘groupage may
generally be defined as an activity which consists of
collecting the goods from the sending customer, con-
centrating the goods at a sending agency, carrying them
to the destination agency and finally delivering them to
the destination customers. Groupage operations are ne-
cessary to optimise the use of means of transport; the
groupage company ensures the transport of grouped
parcels coming from various shippers and intended for
several
related to the goods
transport market, groupage constitutes a market by
itself, characterised by the size of the units transported
(from one package to batches of several tonnes) and by
the fact that it involves the transport of parcels from
various shippers to several recipients’.

recipients. While it

is

For all of its activities, Sernam has made use essentially
of transport by road (lorries). The carriage of parcels by
conventional railways was abandoned with the introduc-
tion of the new transport plan mentioned in the re-
structuring plan. Since then, Sernam has developed
a new railway transport concept known as ‘Train Bloc
Express’ (hereinafter referred to as ‘TBE’) which is used
as the key element in transporting traditional and ex-
press mail flows over distances exceeding 400 km in-
cluding the transport of SNCF customer baggage and
the transport of newspapers between the Paris region
and southern France.

the total

turnover of €552
In 2000 about 58% of
million was connected with groupage activities in France
(basically conventional and express mail services and
night-time deliveries). About 18% of turnover was con-
nected with freight, 10.7% with logistics activities, 6.3%
with newspaper and baggage transport on behalf of
SNCF, 4% with various activities such as the transport
of supplies and 3% with international activities.

The French authorities also indicate that ‘Sernam traffic
directly served by TBE already represents € […]* million
in turnover (out of € […] million groupage turnover)’.
In 2003 Sernam’s real turnover was €414 million and it
was expected to reach €443 million in 2006.

(14)

(15)

(16)

(17)

2.3. Sernam’s market capacity (expert study)

(18)

The Commission has commissioned market
research
from an independent expert (hereinafter referred to as
‘the expert’)
the market
to determine the capacity of
segments in which Sernam operates and its position on
these markets. (1)

(19) According to the expert, Sernam is described as the
leading express mail distributor in France even though,
according to the expert, this estimation depends on how
the market is defined. Sernam operates in particular on
the French national market. In 2000 Sernam had 7% of
the groupage and parcel dispatch markets (for specific
parameters (parcels)), Geodis had 12% and La Poste
25%. In terms of market shares of the French groupage
market, La Poste held 28.1%, Geodis 15.3%, Deutsche
Post 8.7%, TNT 7.9%, Mory 6.4%, Sernam 5.2%, fol-
lowed by 13 other major companies which held be-
tween 4 and 0.8% of the market.

(20)

In terms of the number of sites in France (by groupage,
standardised parcels and express), the expert lists Geo-
dis/Calberson with 204 sites, TNT with 120, La Poste
TAT and Geopost DPD with 85, Sernam with 57,
Groupe Joyeau (now part of Schenker) with 53 and
DPWN with 20 sites.

(21) According to the expert, Sernam operates mainly in the

following segments:

— the groupage/express mail segment in France (con-
sisting of sorting (groupage) and the carriage by
road and rail of parcels or batches of several tonnes
normally within less than 24 hours);

— the groupage/traditional mail

in France
(consisting of sorting (groupage) and the carriage by
road and rail of parcels or batches of several tonnes
normally between 24 and 48 hours);

segment

In 2003 road transport
for Sernam accounted for
€[…] million in turnover. €[…] million of this activity
is directly provided by Sernam and €[…] million by
a Sernam subsidiary, Sernam Transport Route, herein-
after referred to as ‘STR’. Sernam uses […] traction units
(44t), […] semi-trailers (24t), […] trailers (between 3.5t
and 12t) and […] light vehicles (less than 3.5t). Sernam,
as a group, uses […] lorries and […] paid drivers. Of
these totals, […] lorries and […] drivers come from
STR. […].

— to a lesser extent in the following segments: freight,
logistics, order picking, assembly and international
mail services.

(1)

Jacobs Consultancy: Capacity of ABX Logistics and Sernam markets,
Framework contract No TREN/CC/04-2002, Order No 2004/001/14
– S07.30053, May 2004.
* The items in square brackets and marked by an asterisk refer to
business secrets or confidential information that has been taken
out.

L 140/4

EN

Official Journal of the European Union

29.5.2006

(22)

the
Express groupage/mail: According to the expert,
market for express parcel delivery, normally within 24
hours, has shown strong growth in Europe and in
particular in France over the past 20 years but the rapid
entry of transport companies in this sector has led to
In France, however, a distinction
a drop in prices.
should be made between international express, which
has expanded tremendously during the past 15 years,
and national express, which has shown more modest
growth. National express services are nevertheless ex-
pected to show some growth in the future, in particular
as a result of the general economic recovery expected in
France. According to the expert,
the
national express market will basically depend on the
growth of electronic commerce. The expert
further
points out that 74% of the leading French companies
already make regular use of express mail services.

the growth of

(27)

(28)

Since giving up its traditional railway transport opera-
tions, Sernam has basically made use of grouped goods
transport by road (by lorry) while at
the same time
working out an innovative concept, known as ‘Train
Bloc Express’ or ‘TBE’, which will be explained below
in the comments from France. It is appropriate, there-
fore,
the road transport
market and the rail transport market.

to examine the capacity of

Road transport in Europe: The expert indicates that for
Europe as a whole road transport – which is a key
element of groupage/mail/parcel services – is an industry
that newcomers find easy to join and which therefore
structural overcapacity, (1) as
suffers
borne out by the fact that over the past five to seven
years there has been a fall in prices.

from permanent

(23)

groupage/mail: Traditional

Traditional
groupage/mail
consists of the carriage, normally by road but also by
rail, and usually through intermediary grouping/break-
down of shipments, of parcels of
less than 3 tonnes
between two destinations, normally within 24 to
48 hours.

(29)

The expert states that in any case the relevant French
market is in general characterised by fierce competition
and that there is a strong trend towards concentrations
between companies.

(24) With regard to these market segments in France, the

(30)

Rail transport: Three sub-groups are identified:

expert notes that:

— The

groupage market

stagnating,
although it is expected that the market will show
some growth.

segment

is

— The traditional parcel

transport segment

(specific
parameters (parcels)) will continue to shrink with
the general decline of mail volumes which are being
replaced by electronic mail.

(25)

In this regard, the expert concludes that the traditional
groupage/mail market
even
though some market growth is expected, and that the
carriage of parcels (specific parameters)
is in decline
because of the rise in electronic mail.

is basically

stagnating

(26) As indicated above, groupage constitutes a market by
is related to the goods transport
itself, although it
market. Groupage operations are characterised by the
sorting of goods and by their size (from a parcel to
batches of several tonnes) as well as by the fact that it
involves carrying these parcels from various shippers to
recipients. The two aspects of groupage are
several
therefore sorting and carrying goods of a particular
size. While sorting enables optimisation of the use of
modes of
the efficient carriage of goods
nevertheless remains the main objective of the whole
operation.

transport,

— The expert does not expect growth in groupage and
mail carried by conventional railway services. Com-
petition is intense and there is a trend for companies
on the markets to - concentrate. Moreover, Sernam's
possibilities of using trains to transport parcels are
reduced as the SNCF is limiting the number of
stations it serves.

— This applies to the carriage of

freight by conven-
tional trains and that carried by high-speed trains
(‘TGV’) n France.

— According to the expert, TBE as developed by Ser-
nam has a certain potential for growth although it is
not very substantial for the railway mail market in
France as a whole because it
is currently only
a small part of
the market. Express rail courier
services as operated through TBE have the disadvan-
tage that there are at least two stops necessary for
unloading. (2)

(1) Even though the recent enlargement seems to be calming the
current situation temporarily. Nevertheless,
that many
transport companies seem to subcontract the carriage of goods by
road to cheaper transport operators from the new Member States is
bound to increase competitive pressure on prices in the road haul-
age market.

the fact

(2) A first stop to transfer the goods from lorries to TBE at departure
and another stop on arrival of the TBE to transfer the goods onto
lorries.

29.5.2006

EN

Official Journal of the European Union

L 140/5

(31)

The Commission's expert has referred in particular to
a study compiled by Mercer Management Consulting:
Mercer on Travel and Transport, Volume X, Number 1,
Fall 2003/Winter 2004, which notes that the current
competitive positioning of freight railways is frustrating
but by no means hopeless. Railways offer advantages
that ought to be exploited but this calls for a partial
rethinking of the concept of railway freight transport.

(32) According to these experts, the railway networks, with
their high cost, can best be exploited through the use of
differentiated products and pricing, together with sophis-
ticated yield management. But
for such a system to
work, the sales culture must be changed, with value‑-
based pricing taking the place of prices negotiated in
accordance with bargaining power.

(33)

To this end, Mercer believes that a railway transport
company should ensure that its products are standar-
dised, value priced, and easy for customers to under-
stand. According to Mercer, the measures to be taken
should cover the following:

(a) product modules should be introduced (e.g. accord-
the

reliability of

ing to booking time, price or
transport product on offer);

(b) next, core products should be defined (e.g. standard
or express transport time, and a low‑cost product);
and

(c) customised transport solutions should be introduced

for these different types of products.

(34)

In the light of
the conclusion
these expert opinions,
must be that courier services by normal trains is beset
by overcapacity and has no future, courier services by
classic high‑speed trains are limited and courier services
by TBE have some growth potential within the French
national market although this segment is not particu-
larly developed at present.

(hereinafter referred to as ‘RFF’), SNCF (EPIC) has had
the following objectives: (2)

— operating rail transport services on the national rail-
way network in accordance with public service prin-
ciples and

— discharging infrastructure management tasks in ac-
cordance with
through
same
a mandate assigned to it by RFF on the basis of
a formal agreement.

principles

the

(36)

SNCF has a board of directors composed of 18 mem-
(ii)
bers, namely (i) seven government representatives,
five members chosen on the basis of
special
competence, with at least one representing railway users,
appointed by decree and (iii) six members, of whom one
the
representing management, elected by the staff of
corporation and its subsidiaries. The chairman of
the
board of directors is appointed, on a proposal from the
board, by a decree of the Council of Ministers. (2)

their

(37) Moreover, as regards the development of groupage and
(TBE concept), the French
express mail carried by rail
authorities note that ‘Sernam does not have a monopoly
of TBE as any operator may ask Fret SNCF for an
equivalent service. To date, however, none of Sernam’s
competitors has explicitly asked Fret SNCF for such
a service. Fret SNCF confirms that
is prepared to
supply an equivalent service, on the same conditions,
to any operator asking for it. Sernam has responded
positively to requests for technical cooperation on TBE
made by an operator who wished to evaluate its rele-
vance and efficiency.’

it

2.5. Commission Decision of 23 May 2001 ‘Sernam

1’ - Background

By letter of 23 May 2001 (No D/288742, dossier
No NN 122/00 (ex N 140/00) – France), the Commis-
sion informed France of its decision that the logistical
cooperation since 1 February 2000 (lease of sites and
wagons) between SNCF and SCS Sernam does not
constitute State aid whereas the measures for commer-
cial assistance to and turnaround of SCS Sernam, taken
by SNCF and to be implemented between the beginning
of 2001 and the end of 2004, constitute State aid
compatible with the EC Treaty.

2.4. SNCF - Background

(38)

(35)

SNCF, set up as a société anonyme in 1938, became
a commercial
industrial public corporation (hereinafter
referred to as ‘EPIC’) (1) with effect from 1 January 1983.
Since the change made by the Act of 13 February 1997
setting up the public corporation Réseau Ferré de France

(1) Governed by Articles 18 to 26 of the Act of 30 December 1982 on
guidelines for internal transport (LOTI). An EPIC cannot go bank-
rupt or be subject to seizure.

(2)

Information taken over from SNCF's Internet site: http://www.sncf.
com

L 140/6

EN

Official Journal of the European Union

29.5.2006

(39)

(40)

(41)

The Commission has authorised a total amount of aid
of €503 million, (1) of which €448 million restructuring
aid and €55 million for baggage, press and supplies
contracts between SNCF and Sernam. This authorisation
was based on a number of basic conditions which
formed part of the dossier examined.

This aid was authorised on the basic condition that
Sernam would be privatised. 60% of Sernam's capital
was to be taken over by Geodis, (2) a transport and
logistics company under general
law quoted on the
second market of the Paris Stock Exchange. 56.6% of
its capital belongs to private investors (the two major
shareholders are the Société Générale, through the Sal-
vépar group, which holds 26.6% of
its capital and
29.7% of voting rights, and AGF-VIE with 8.4% of the
capital and 9.5% of voting rights). 43.3% of the capital
and 48.6% of voting rights belong to SNCF.

In this way, Geodis should have become entirely liable
for SCS Sernam's debts without limitation (3) and cov-
ered the additional costs of Sernam's restructuring up to
€67 million. In turn, Sernam undertook to reduce the
number of its operating sites from 107 to 72 over the
period from 1999 to 2004, reduce its turnover by 18%,
reduce its staff and implement restructuring with the
abovementioned budget and within the prescribed time-
frame, i.e. before the beginning of 2004.

— the reduction of Geodis’s shareholding to 15% of
Sernam's shares which, although itself in difficulties,
was initially due to take over 60% of the shares;

— the additional takeover of 15% of Sernam's shares
by another company, Compagnie générale d’investis-
sement et de participation (COGIP). COGIP is 34%
owned by Geodiset and 66% by Sofivir; (4)

— the extension by one year of the period of restruc-

turing;

— the

of

public

increase

by
€41 million, corresponding to a net
increase in
financial requirements for restructuring Sernam due
to the delay of the initial plan; (5)

injection

capital

— the presumed absence of

the €67 million private
capital
injection planned by Geodis which was in-
tended to reduce the intensity of the aid proportion-
ally;

— the lack of adequate counter-measures to offset the

modification of the initial restructuring plan;

2.6. Initiation of the procedure ‑ Background

— the return of Sernam to viability within a reasonable

period;

(42)

Following the first annual
report and following the
abovementioned complaint, the Commission noted that
part of the aid had been paid even though particular
basic elements of the Sernam 1 decision had not been
complied with.
In this regard, the Commission found
that there had been misuse of aid and expressed doubt
especially on the following points:

— the change in the status of SCS Sernam into a public
limited company (société anonyme),
reducing
Geodis' liability for Sernam's debts to its own capital
contribution;

thus

(1) This amount consisted of €448 million (2 938 million French
francs) of restructuring aid and about €7 million initial capital
injection paid by SNCF on 1 February 2000 when it transferred
these activities from its assets base to its new 100% subsidiary
Sernam SCS (details in table 3) and €34 million plus €21 million
(FF 222 million plus FF 140 million) in the form of baggage, press
and supplies contracts; the total authorised therefore amounted to
€503 million (FF 3 300 million). For more details,
see the
Sernam 1 decision and the initiation of procedure No C 32/03.
(The figures in euros and the conversion into French francs are
rounded to the nearest million in the text of the present decision.)

(2) For

the record: Geodis would acquire 60% of Sernam against
payment of a symbolic €1 (see para. 51 of the Sernam 1 decision).

(3) No limitation of liability in limited partnerships.

— the prevention of undue distortion of competition;

— compliance with the ‘one time, last time’ principle;

— aid limited to the minimum necessary;

— implementation of the restructuring aid in confor-

mity with the Sernam 1 decision;

— compatibility with the Treaty of all aid qualified or

requalified as new aid and/or misuse of aid.

Because of
a new analysis of Sernam's restructuring plan.

these doubts,

it is necessary to undertake

(4) Sofivir itself is held by shareholders who are natural persons and by

Crédit agricole.

(5) For a breakdown of this amount, see the initiation of procedure

C 32/03.

29.5.2006

EN

Official Journal of the European Union

L 140/7

(43) When initiating procedure C 32/03,

to

been

found

compliant with

the Commission
emphasised that it was necessary to ascertain that the
elements which in the decision to initiate the procedure
had
the
be
Sernam 1 decision would be finalised correctly (in
particular to ensure efficient competition on the relevant
markets on 31 January 2003 (1) – this concerns the
contracts concluded between SNCF and SCS Sernam
for the transport of customer baggage, the transport of
newspapers and the transport of SNCF supplies). The
these doubts made it
Commission also stressed that
necessary to carry out a new analysis of the dossier on
the basis of an updated comprehensive restructuring
plan that took account of the new circumstances.

2.7. Subsequent developments

(44)

Following the Commission's initiation of the procedure
and in accordance with the clauses on the lapsing of
validity laid down in the agreement between SNCF and
Geodis on the one hand and COGIP on the other in the
event
that the Commission initiates the procedure or
that the case is brought before the Court of Justice of
the European Communities, (2) SNCF has had to take
back the 15% of Sernam's shares acquired by Geodis
and COGIP respectively.

(45) According to the latest information supplied by France,
the amount of aid provided by the French Republic to
Sernam from the time of its conversion into subsidiaries
was €489.1 million. This amount
is composed of
€6.7 million initial capital, €419.6 million capital trans-
action, €33.5 million equity loan and €29.3 million
railwaymen. (3)
corresponding to additional costs
This total sum corresponds to the €448 million restruc-
turing aid of the plan approved by the Commission in
May 2001, increased by €41 million to take account of
the new circumstances that have occurred since the
Commission's decision (in return for additional efforts,
in particular in terms of site closures).

for

(46)

The other developments announced by France, mainly
when it submitted its comments on the initiation of the
procedure, such as the updating of Sernam's restructur-
ing plan, are summed up below in the section on the
comments from France.

(1)

(2)

In accordance with Council Directive 93/38/EEC of 14 June 1993
coordinating the procurement procedures of entities operating in the
water, energy, transport and telecommunications sectors (OJ L 199,
9.8.1993, p. 84) as amended by Directive 98/4/EC of the European
Parliament and of the Council (OJ L 101, 1.4.1998, p. 1). Directive
93/38/EEC has been replaced by Directive 2004/17/EC of
the
(OJ L 134, 30.4.2004,
European Parliament and of the Council
p. 1).
In its decision to initiate the procedure, the Commission noted that
these clauses on lapsing of the agreement were contrary to Com-
munity law.

(3) Compensation paid by SNCF to Sernam for the additional costs for

(47) Moreover, […] the French authorities served […] notice
of their decision to put Sernam up for sale. The condi-
tions of this sale are as follows:

— a transparent and non-discriminatory process

— search for a European buyer

— sale at market price.

(48)

To this end, the French authorities instructed a bank to
look for potential buyers at European level. According
to the indications of the French authorities, the deadline
for this sale is […].

(49) Accordingly, the Commission takes cognizance of

the
intention of the French authorities to sell the Sernam
company in its entirety (including assets and liabilities).

3. OBSERVATIONS FROM INTERESTED PARTIES

(50)

The joint observations from various third parties, which
wish to remain anonymous, are summed up below. In
light of the circumstances of the case and in particular
the conclusions outlined by the Commission when it
initiated the procedure,
these third parties have sub-
mitted the following observations.

(51) Authorisation for the restructuring plan depended on
the sale of most of
the shares which SNCF held in
Sernam’s capital to a private investor who would make
a commitment to make his ‘own’ 20% contribution to
Sernam’s restructuring costs.

(52)

Sernam should have provided a sufficient quid pro quo
for this restructuring aid in the form of a reduction of
least 18%) and market shares to
its turnover (by at
preclude all unwarranted distortion of competition.
In
this regard, the complainants note that the Commission
has stated in the fourth paragraph of point 75 of its
summary that ‘While France has proposed the closure of
[…] (4) additional sites of Sernam, it is not clear, on the
this countermeasure would be sufficient
one hand,
and, on the other hand, if it would be acceptable, given
the new context of the dossier as described above’. The
complainants take the view that
the closure of addi-
tional sites is in no way a sufficient countermeasure,
given the significant increase (by at least €108 million
(€67 + 41 million)) of the amount of restructuring aid
sought for Sernam and the extension of the restructur-
ing period by at least one year.

if

railwaymen employed by Sernam.

(4) Unpublished confidential information.

L 140/8

EN

Official Journal of the European Union

29.5.2006

(53)

(54)

(55)

In particular,

The amount of aid authorised in 2001 should not have
exceeded the minimum necessary to restore Sernam to
the Commission should ensure
viability.
that henceforth Sernam will not have at
its disposal
liquid assets enabling it to continue, as is currently the
case, to charge prices below market level and ‘poaching’
experienced personnel
from its competitors (see para-
graph 96 of the Commission’s summary).

the opinion that Sernam
The complainants are of
should not be authorised to restart
its restructuring
and continue to have access to aid and distort competi-
tion solely because it (and SNCF) does not comply with
the conditions laid down in the decision of 23 May
2001.

The Commission ought to reject any new investment
and development plan submitted by Sernam/SNCF and
France as Sernam/SNCF and Geodis deliberately contra-
vene the provisions of the restructuring plan authorised
by the Commission's decision and because they have
agreed not to participate in any Commission investiga-
tion of this initial restructuring plan in the light of the
suspensory clauses of the memorandum of understand-
ing signed by SNCF and Geodis.

(56) On the basis of the ‘one time,

last time’ principle for
the grant of aid, the Commission should ensure that
Sernam is not authorised to receive additional aid.
Given that
the measures taken by SNCF to privatise
Sernam and implement the approved restructuring plan
have proved insufficient to restore Sernam to viability
within the prescribed period,
the Commission should
take the measures necessary to ensure that Sernam is
put into liquidation and no longer has access to new
State aid.

(57)

submitted additional

By letter of 19 May 2004, registered on 24 May 2004,
these third parties
information
showing that the number of shutdowns in the transport
sector in France rose by 21.37% in the twelve months
preceding March 2004 (source: INSEE). According to the
third parties,
the serious financial difficulties in the
French road transport sector are due ‘to the economic
slump but also to structural causes. Transport compa-
nies have no room for manoeuvre for lack of capital
they are
resources and company cash. Consequently,
unable to cope when they lose a contract or when one
of their customers goes bankrupt. As they often have
insufficient guarantees, transport companies have more
difficulty gaining confidence among bankers, shippers
and also their suppliers’.

(58) Moreover,

the third parties give various examples of
customers of company ‘X’ (1) to whom Sernam report-
edly still only recently offered prices 10% to 30 % below
those offered by company ‘X’:

Customers of ‘X’

Reduction of price
proposed by Sernam
compared with that
of ‘X’

Customer 1

Customer 2

Customer 3

Customer 4

Customer 5

Customer 6

‑30%

‑15%

‑10%

‑20%

‑20%

‑20%

Region

Amiens

Paris

Paris

Paris

Paris

Paris

(59) Moreover, these third parties indicate that Sernam has
systematically attracted personnel from company ‘X’, (2)
offering 30% bonuses on the wages paid by company
‘X’.

(60)

The third parties conclude that Sernam is trying to use
the aid it receives in order to gain a competitive advan-
tage on the market at the expense of its competitors.
They ask for a negative decision and immediate recovery
of the aid already granted to Sernam. They also ask that
the possible sale of Sernam should take place under the
same conditions as those imposed on Geodis in 2001
and that it should take the form of an appropriate call
for tenders.

4. COMMENTS FROM FRANCE

(61)

By letters of 19 June 2003, 26 November 2003 and 14
April 2004, France submitted comments in response to
the Commission’s initiation of the procedure and to the
comments made by the third parties and following
working meetings that had taken place.

SUMMARY OF COMMENTS FROM FRANCE

(62)

The French authorities consider that they have provided
all the information required in response to the doubts
expressed by the Commission:

— Sernam’s turnover has been significantly reduced;

(1) Operating in the same market segment as Sernam.
(2)

In particular in the Paris region.

29.5.2006

EN

Official Journal of the European Union

L 140/9

— SNCF will not act

in lieu of Geodis

to cover
Sernam’s working capital requirement. This capital
need, estimated as €67 million in 2001, is now only
€7.8 million and will be financed from current bank
credit lines;

— the sales prices of mail

services, groupage and
express services have effectively increased between
2000, 2001 and 2002;

— the newspaper, baggage and supplies markets, whose
value has not changed, have been opened to compe-
tition;

— Sernam has obtained its quality certificate, namely

the CLIQ label;

— Sernam has changed over to express mail;

this has been one of
success of Sernam’s recovery plan;

the key elements for

in fact,
the

— the development of TBE has likewise been one of

the main elements of Sernam’s development.

(63) Moreover, as the Commission recognised in its decision
to initiate the procedure, the other elements of the plan
have been complied with:

— the closure of sites has been started and continues

beyond the Sernam 1 decision;

— 4/5 of

the personnel have been renewed within
a period of two years, following the return of rail-
waymen to SNCF, which has made it possible to
establish a new internal communication system on
the ground and to underpin local
to
develop a new result-oriented culture;

initiatives

— production sites are being reorganised;

— employee training has been set up;

— the new transport plan has been established;

— the changeover of computer systems to those of

Geodis has also been carried out.

(64) Only the association of Sernam with the Geodis group
has not been possible within the conditions and the
deadline laid down in the memorandum of understand-
ing signed between SNCF and Geodis on 21 April 2000.

has taken over 15% of the shares in Sernam acquired by
Geodis and COGIP respectively.

on

June

2001

compatibility).

the French authorities believe that

(66) With regard to the resolutive clauses of the memoranda
signed between SNCF and Geodis and between SNCF
and COGIP,
these
were neither exorbitant nor contrary to Community
law, account being taken of the risks assumed by the
investor. As no Commission decision had been taken by
31 December 2000 (the date linked to the resolutive
clauses), Geodis had accepted to extend the memoran-
dum of understanding of 21 April 2000 until
(this memorandum included
30
a suspensive clause linked to the adoption by the
Commission before 31 December 2000 of a final deci-
sion
the
Sernam 1 decision was taken on 23 May 2001. Accord-
this decision
ing to the French authorities, however,
took effect only on 14 September 2001, two months
after
the
memorandum had lapsed and SNCF was obliged to
renegotiate a new memorandum with Geodis.
is
recalled that even though SNCF is the leading share-
holder in Geodis, holding 45% of its capital, it does not
control it and, moreover, cannot take part in voting on
decisions by Geodis concerning Sernam. SNCF therefore
to oblige Geodis to apply
had no power enabling it
a memorandum that had lapsed, even if the decision
was applicable from the moment it was notified to the
Member State. On the other hand, SNCF has done
everything in its power to apply the restructuring plan.

it was published. At

the meantime,

that point

in time,

In

It

(67)

The French authorities conclude that neither Sernam or
SNCF nor the French authorities can be blamed for the
lapsing of
the first memorandum (on account of the
absence of a final decision regarding Geodis before
for
30 June 2001),
the
second memorandum and the changes
imposed by
Geodis compared with the first memorandum (because
of its financial difficulties).

the length of negotiations

(68) Nevertheless, according to the French authorities the
lapsing of
these agreements has not prevented the
further strengthening of synergies between Geodis, CO-
GIP and Sernam. […].

COMMENTS FROM FRANCE IN MORE DETAIL

4.2. Period of implementation of the plan

4.1. The lapsing of SNCF’s agreements with Geodis

and COGIP

(65)

The French authorities indicate that the memoranda of
understanding between Geodis and COGIP have lapsed
with the Commission’s initiation of the procedure for
which it was a resolutive condition. Consequently, SNCF

(69)

The French authorities indicate that although reorganisa-
the
tion measures had been taken right
application of
the restructuring plan could not be
started until 1 January 2003 with the arrival of
Mr Charles Henri Brousseaud as the president and chief
executive officer and Mr Jean Michel Tremelet as finan-
cial director of Sernam, i.e. after six months’ delay.

from 2000,

L 140/10

EN

Official Journal of the European Union

29.5.2006

4.3. €41 million increase in aid

(70)

France indicates that this financing requirement basically
corresponds to financing the losses recorded during the
period needed for negotiation and to adapt the plan to
the new circumstances. These new circumstances result
from changes that have taken place at Geodis and in the
general economic environment during the period in
which the Commission has been investigating the dos-
sier following the Sernam 1 decision.

(a) Impact of

rail services
the worsening quality of
(€[…] million): Following a two-week strike in
spring 2001, SNCF had to accept the suspension of
the use of
the railway transport plan around the
Villeneuve St-Georges nodal point. To limit the loss
of customers, Sernam had to replace it as a matter
of urgency by a road transport plan which, given
the urgency of the situation, could not be optimised
and prices for which could not be negotiated under
favourable conditions. As a result, Sernam sustained
a loss which may be evaluated at €[…] million in
2001, including €[…] million loss in turnover and
€[…]million costs of exceptional
litigation which
Sernam has had to bear.

of

uncertainty

(from June

(b) Unforeseen delay in implementation of the recovery
plan (€[…] million): On top of this worsening of
rail services came the operating losses during seven
to De-
months
cember 2001) connected with the difficult negotia-
tions with Geodis. As the agreements between SNCF
and Geodis had lapsed at the end of 2000, SNCF
was obliged to renegotiate a new memorandum of
understanding with Geodis at
the end of 2001
(21 December 2001) while the other parties that
had expressed an interest
in the takeover in the
tendering procedure had in the meantime turned
their attention to other investment. These discus-
sions were all the more difficult as Geodis’s own
position had deteriorated in the course of 2001.
the new agreements
This delay in the signing of
caused a concomitant extension of
the period in
which heavy losses were sustained because of the
delay in implementing the recovery plan which
could only start on 1 January 2002. The accumu-
losses amount to about €[…]mil-
lated additional
lion.

financing of

(c) Additional costs of agency closures (€[…] million)
and overall savings on extra costs relating to rail-
waymen (€[…] million): The main reason why the
level of
the restructuring plan was
exceeded (€[…] million) was that the costs of clos-
ing down agencies (dismissals, tightening‑up of so-
cial
legislation, etc.) proved higher than expected.
Overall it was offset by a lower than expected extra
for personnel with railwayman status (€[…]
cost
million). Requests by members of full‑time person-
nel to return to SNCF were more numerous and
were submitted sooner than expected but the geo-
graphic requirements they expressed slowed down

full‑time staff

reassignment, contributed to disrupting the
their
workings of the agencies and added to the financial
burden connected with their return compared with
what would have been the case under an ordinary
social plan. The initial plan made provision for
retaining […] members of
(railway-
men). In practice, only […] railwaymen stayed on at
Sernam,
i.e. producing savings on the additional
costs originally expected, estimated at €[…] million.
At the same time, since these returns to SNCF were
quicker (almost […]in November 2000 alone and
nearly […] over a four‑month period in 2001) and
in greater numbers than expected, Sernam was ob-
liged in 2001 to take on, as a matter of urgency,
staff under private contract, who had not received
prior training, and in greater numbers than origin-
ally envisaged.
In the end, the additional workers
were gradually integrated, generating an additional
cost of dismissals compared with the forecasts of
the initial plan.

(d) Profit-sharing loan (€ […] million):

In accordance
with the memorandum of understanding signed
with Geodis on 21 December 2001, the amount of
the profit-sharing loan actually paid by SNCF was
reduced by the amount of investment already made
and charged to the financial years 2000 and 2001.
Accordingly,
the loan paid was
reduced by €[…]million.

the amount of

4.4. The €67 million expected from Geodis (under

the decision of 23 May 2001)

financed to the

railwaymen (more than 1 600 workers

(71) According to the French authorities, the total cost of
restructuring of €515 million indicated in the Sernam
1 decision should be
tune of
€448 million by SNCF and €67 million by Geodis. The
high sum of €61 million in working capital requirement
(hereinafter referred to as ‘WCR’) is due to the disrup-
tion at the end of 2000 connected with the mass return
of
returned
in 2000). France indicates that this sum represented the
amount of an operating loan granted by Geodis to
Sernam (to finance the WCR). This disruption caused
delays and incidents
leading to
in goods
extensive litigation and a major extension of customer
the average period of
credit. At
recovery of
exceeded four
months. The French authorities indicate that during the
first half of 2002 the WCR forecast had diminished to €
[…]million, evaluated on the basis of an average credit
of about 30 days’ turnover and financed from current
bank loans. On 31 December 2002 this WCR had
diminished to only € […] million financed from current
bank credit
the measures
lines. According to France,
taken by Sernam to reduce the working capital require-
ment
the
it possible
€67 million initially indicated, which was to be financed
by Geodis, will now no longer be necessary.

the end of 2000,

from customers

thus make

to assert

transport,

claims

that

29.5.2006

EN

Official Journal of the European Union

L 140/11

4.5. Sernam’s prices

(72)

(73)

The French authorities indicate that Sernam has since
1995 implemented a new strategy of increasing charges
re‑evaluating its
intended to restore its profitability,
revenue from express and traditional mail services. This
policy is reflected in the company’s performance, as
indicated below.

Express mail services: In order to enable a comparison
between Sernam’s position and the market, Sernam has
used the price per kilo as an indicator. Sernam’s average
weight by dispatch is higher than the average weight by
dispatch of the market ([…] kg compared with 29 kg at
end June 2003). The dispatch price per kilo is digressive
in relation to weight (the heavier a dispatch, the lower
its price per kilo). In order to be able to make the data
comparable, Sernam has made a comparison of
the
prices per kilo for dispatches weighing between 25 and
35 kg, i.e. the average weight of dispatches recorded on
the express market.

Sernam’s price/kg indicator is increasing and this in-
crease is even higher than the market level. Sernam’s
price per kilo increase is therefore significantly higher
than that of the market. This finding is confirmed by
the data available in the second quarter of 2003 except-
ing Sernam's night deliveries.

(76)

Traditional mail: The French authorities indicate that the
same analysis has been carried out in respect of dis-
patches weighing between 95 and 105 kg (average
dispatch weight recorded on the mail market).

(77)

(78) 2nd quarter 2003
Mail

Sernam

Sernam in
95‑105 kg
range

Market

Price/kilo in €

[…]

[…]

0.33

Weight by dispatch
in kg

[…]

[…]

98.00

2nd quarter 2003 Ex-
press

Sernam
(overall)

(74) Sernam
in the 25 to
35 kg range

Market (same
weight)

Price/kilo in €

[…]

[…]

1.07

(78)

For Sernam’s dispatches within the market average
weight category, Sernam’s price is € […]/kg, i.e. above
market level.

Weight by dispatch
in kg

[…]

[…]

29.00

(74)

For Sernam’s dispatches in the average market weight
category, Sernam’s price is therefore € […]/kg, with an
average market price of €1.07/kg. In this average weight
category, the price charged by Sernam would therefore
be above the market level.

(75) Moreover, the French authorities indicate that Sernam’s
price rise was […] points in the first quarter of 2003
compared with the first quarter of 2001, whereas the
market rose by 13 points. At the same time, Sernam’s
weight per dispatch rose quite significantly ([…] points
up) compared with the market (down 7 points). Inas-
much as the price per kilo is digressive with weight, if
the average weight of Sernam’s dispatches rises signifi-
cantly while the market price goes down,
it could be
expected that the value of Sernam’s price/kg indicator
that
would drop substantially. The fact

is, however,

(79) Moreover, the French authorities indicate that Sernam's
price rise in relation to the market is […] higher over
the period from the first quarter of 2001 to the first
quarter of 2003 (and identical for the period from the
first quarter of 2001 to the second quarter of 2003). At
the same time, Sernam’s weight by dispatch has risen
slightly ([…] points up) compared with the market
(down 3 points). As the price per kg is digressive with
weight, the rise in Sernam’s price per kilo has therefore
also been more marked than that of the market. This
finding is confirmed by the data available in the second
quarter of 2003.

4.6. Trend in Sernam's performance

(80)

The French authorities indicate first of all is that Sernam
is not legally bound to compile consolidated accounts.
Consequently, Sernam cannot be reproached for failing
to have published information concerning such ac-
counts. Nevertheless, the French authorities have trans-
mitted to the Commission Sernam’s consolidated finan-
cial statements for 2002.

L 140/12

EN

Official Journal of the European Union

29.5.2006

(81)

The French authorities have supplied the following data showing the trend in performance since
2000 and up to the forecasts for 2006:

2000

2001

2002

03 fore-
seen

03 actuel

2004

2005

2006

Turnover

552

573

449

430

414

431

452

449

Gross operating surplus

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

Depreciation appropriation

no data

[…]

[…]

[…]

no data

[…]

[…]

[…]

Provisions appropriation

no data

[…]

[…]

[…]

no data

[…]

[…]

[…]

Restructuring costs

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

Remission of profit-sharing
loan

no data

[…]

[…]

[…]

no data

[…]

[…]

[…]

Financial result

no data

[…]

[…]

[…]

no data

[…]

[…]

[…]

Result before tax

-104.0

-102.0

-78.3

-87.7

-85.0

-40.9

0.1

3.4

(82) According to these figures, and on the basis of the restructuring measures planned and already
partly implemented, Sernam should attain a neutral result in 2005 and begin to make a profit in
2006.

4.7. Sernam’s market shares

(83) According to the French authorities, the table showing the classification of operators by activity,
compiled by the statutory auditors on the basis of figures published in Logistique Magazine, shows
that Sernam dropped from third to tenth place on the French courier market between 1998 and
2002, and from fifth to sixth place for express mail over the same period. This table has been
reproduced by the French authorities:

1988

2001

2002

Sernam

Logistique Maga-
zine

Sernam

Logistique Maga-
zine

Logistique Maga-
zine

Market
share in
%

Ranking

Mail services in
France

Express services
in France

6.5

8.5

4

5

Market
share in
%

5.17

7

Ranking

3

5

Market
share in
%

4.4

7.39

Ranking

8

6

Market
share in
%

4.59

5.3

Mail international

0.9

16

1.36

12

1.23

12

1.79

Ranking

Market
share in
%

Ranking

8

5

8

3.82

10

4.52

0.64

6

8

29.5.2006

EN

Official Journal of the European Union

L 140/13

1988

2001

2002

Sernam

Logistique Maga-
zine

Sernam

Logistique Maga-
zine

Logistique Maga-
zine

Market
share in
%

Ranking

Market
share in
%

Ranking

Market
share in
%

Ranking

Market
share in
%

Ranking

Market
share in
%

Ranking

Express interna-
tional

1

9

2.21

7

1.01

7

1.14

6

0.83

5.4

4.98

4.23

4.21

3.38

4.8. Drop in turnover

(84) According to the letter from the French authorities of 14 April 2004, the trend in Sernam’s

turnover is as follows:

Turnover‑1

Sernam’s turnover

2000

2001

2002

2003
(forecast)

2003
(actual)

2004

2005

2006

552

573

449

430

414

431

452

449

100

104

81

78

75

n.a.

n.a.

n.a.

4

4

‑ 22

‑ 4

‑ 6

n.a.

n.a.

n.a.

‑ 19

‑ 22

‑ 25

‑22

‑18

‑19

Sernam’s turnover in million
€

Sernam’s turnover (base 100
in 2000)

Annual drop in turnover in
million €

% change in turnover be-
tween 2000 and the year in-
dicated

Turnover‑2

Gross data Express mail
correction for market trend)

in figures (without

2000

2001

2002

2003 (fore-
cast)

% change be-
tween 2000-
2003

[…]

[…]

Turnover Sernam’s express in million €

Sernam’s mail turnover in million €

Ratio: Sernam’s express/traditional mail

Turnover express + mail (*)

Turnover express (*)

% share mail (*)

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

L 140/14

EN

Official Journal of the European Union

29.5.2006

Turnover‑3

Express mail data in points
2000) (data corrected for market effects)

(base 100 in

2000

2001

2002

2003

% change be-
tween 2000-
2003

Sernam express (corrected for market
effects)

[…]

[…]

[…]

[…]

[…]

Sernam mail (corrected for market ef-
fects)

[…]

[…]

[…]

[…]

[…]

express/mail ratio (corrected for market
effects)

[…]

[…]

[…]

[…]

(*) Information not directly resulting from the data provided by the French authorities but added by the Commission.

(85) According to the information provided by France, the change in Sernam's turnover in mail services
and express services between 2000 and 2003 shows that Sernam’s share of the two markets has
diminished and Sernam has tended to focus more on express services.

(86)

Sernam’s turnover fell by 18% between 2000 and 2005. The part of
turnover linked with
traditional mail services reportedly fell by […]% and that linked with express services by […]%
between 2000 and 2003. If account is taken of the corrections made by the French authorities to
in Sernam’s turnover for mail services over the same
take market trends into account, the fall
period is even greater ([…]%), while that for express services is only slightly less, namely […]%
instead of […]%.

(87) Moreover, according to the information supplied by the French authorities, there has been a certain
the express/traditional mail ratio was […] in 2000 and […] in 2003.
shift
in focus in that
Accordingly, the share of
traditional mail services in Sernam's activities has diminished to the
benefit of express services. Viewed in a different way, however, if account is taken of the combined
turnover for traditional and express services,
traditional services constitute the major part of
Sernam's activities, […] in 2000 and […] % in 2003 compared with […]% and […]%, respectively,
for express services.

4.9. Staff reduction

(88)

The number of people employed by Sernam has diminished as follows:

1999

2000

2001

2002

2003

2004

2005

Decision of 23 May 2001

5 050

3 900

2 600

Sernam’s staff on 31 Dec.

4 257

3 800

3 259

2 995

[…]

(89) According to the decision of 23 May 2001, staff numbers should have been reduced to 2600
workers in 2004. In reality, however, there were still 2 995 employees in 2004 but […] in 2005, i.
e. a lower number than the 2004 target.

(90)

The reduction of the number of employees thus recommended should enable important savings to
be made and give Sernam the flexibility and adaptability necessary to achieve its innovative
objectives.

29.5.2006

EN

Official Journal of the European Union

L 140/15

4.10. Closure and reorganisation of sites

(91)

Closure of sites: The French authorities indicate that Sernam will go beyond the targets fixed in its
decision of 23 May 2001 regarding the closure of sorting centres:

1999

2000
(31 Dec.)

2001
(30 June)

Target end
2002

Target end
2003

Targets decision of 23
May 2001

107

87

80

74

72

32.71%

(on 31 Dec. of each
year)

2001
(31 Dec)

2002
(31 Dec)

2003
(31 Dec)

2004
(31 Dec)

2005
(31 Dec)

Number of Sernam’s
sites

% change between
1999 and 2005

87

74

62

61

61

‑43

According to the French authorities, the data in italics are forecasts.

(92)

Reorganisation of sites: Sernam’s former network was poorly adapted to making profits because
there were too many sites, they were poorly located (some sites were very costly because they were
situated in the city centre (Paris)) and it had sorting centres that were unsuitable in the way that
they were laid out. (1) The reduction by nearly half of the number of sites and the partial relocation
of sorting activities from the city to the outskirts and to sites geared to road transport connections
has enabled Sernam to reduce its expenditure on rents by half and has been among the key
elements for rationalisation and improved efficiency in its groupage and mail activities with a view
to sustainably restoring the company’s viability.

4.11. Relocation and modernisation of remaining sites

(93)

Twenty-five of Sernam’s traditional operational sites have physical conditions incompatible with
they are
current productivity ratios in this sector. Mostly located in major cities, however,
nevertheless indispensable for the continuity and integrity of the Sernam network.
In order to
restore the sites to viability, Sernam has embarked upon a policy of site modernisation where the
geographic position is satisfactory (three sites concerned) and relocation where this is not the case
(25 sites concerned), with operations relocated either to existing facilities renovated by Sernam or
to new facilities.

(1) The French authorities indicate that the premises used were partly dilapidated. Their position was often right in the
centre of town and not, as most competing couriers, in logistic areas on the city's outskirts, more quickly accessible
from main trunk roads and better placed in relation to industrial areas concentrating most of Sernam's customers.
Such a location has an impact on the unduly high rents which Sernam has had to pay. Mixed rail/road facilities
(railway platform on one side, road on the other) have since May 2001 been used purely on the road side. For road
transport purposes, these facilities are used as one-sided platforms. Such use makes them insufficiently productive
(more surface area than a classic two-sided facility, consequently more distance covered by parcels on the platform,
consequently more handlers to move them around and more risk of damage to parcels). Moreover, the premises are
unsuitable for modern equipment: the lanes around the platforms are too cramped and make manoeuvres to place
goods on the platform more difficult (involving longer procedures than at an installation with a normal configura-
tion), and even impossible in some segments, preventing the operator from getting their lorries onto the platform at
the loading bays which would make for better platform management. Following the adjustments of Sernam's portfolio
and because of the general economic downturn, a large number of facilities were oversized.

L 140/16

EN

Official Journal of the European Union

29.5.2006

(94)

This modernisation and relocation plan will make it possible to improve the network’s operating
result of € […] million (in a full year, outside the Ile de France region affected by two relocations
and two site modernisations). At these modern facilities, secured and optimised, Sernam (i) will
reduce platform surface by 50%, (ii) reduce the number of administrative platform staff by […]%,
(iii) reduce the number of disputes regarding damaged parcels, (iv) reduce the number of parcels
stolen and (v) and optimise the placement of carriers on platform while reducing their immobilisa-
tion. Relocation to new facilities leads to 15% average savings on current rents.

4.12. New computer systems

(95) With the assistance of Geodis, Sernam has switched its computer system to two new management

software packages (‘Aanael’ and ‘Alizée 2000’) which should optimise Sernam’s future operations.

4.13. From ‘traditional mail’ to ‘express’

(96)

in January 2003 Sernam merged its traditional mail and
The French authorities indicate that
express mail transport plans into a single ‘express’ road (1) transport plan (2) based on Train Bloc
Express (TBE). Thanks to this transport plan, Sernam is now properly equipped to focus purely on
express services and on delivering all products with express quality service (Cliq certification, (3)
which guarantees the security, reliability,
the packages carried) even
though only about one third reportedly constitutes a genuine express mail service. (1) This quality
guarantee for the customer has in particular made it possible to significantly reduce the costs linked
with ongoing disputes while at the same time substantially reducing the working capital require-
ment. (4)

timing and traceability of

(97)

[…]% of overall
Sernam’s turnover broken down by different
turnover (corresponding to […]% of its customers)
is realised with express mail customers for
mixed products where Sernam does not compete with services on offer from pure courier firms
which have no express services. The […]% of the turnover generated by these customers includes:

types of customers shows that

— […]% linked with express services

— […]% linked with mail services

— […]% linked with freight services.

(98)

The remaining […]% of Sernam’s turnover is generated by customers who do not make use of
express services.

Indication given by the French authorities at a meeting on 22 March 2004.

(1)
(2) The services are as follows: (i) ‘Urgence Xpres’: same-day delivery within a couple of hours (using HST holds), (ii)
‘Livraison de nuit’ (night-time delivery between 4 and 8 am in private compartment), (iii) ‘H Xpress’: next-day delivery
before noon, (iv) ‘Avantage Xpress’: next-day delivery before 6 pm, (v) ‘Tempo Xpress’: delivery within 48/72 hours in
Europe, (vi) ‘Lot Xpress’: transport of batches from 1 to 25 tonnes in France and in Europe and (vii) ‘Disram’:
industrial distribution of palettes.

(3) The ‘Cliq’ certificate guarantees reliability at all transport stages, effective response throughout the network, the

certainty of clear procedures and real-time transparency in the event of any anomalies occurring.

(4) The working capital requirement linked with a customer claims recovery time of over four months at the end of 2000
was an important factor for the €67 million financial requirement mentioned above. This cost could be reduced to €
[…] million on 31 December 2002 and should attain the normal standards in this sector by the time the
restructuring plan is fully implemented.

29.5.2006

EN

Official Journal of the European Union

L 140/17

4.14. From ‘road’ to ‘rail’ (Train Bloc Express)

(99)

The Train Bloc Express or ‘TBE’ concept: Train Bloc Express or TBE (1) is a shuttle train running at
high speed according to a fixed time schedule and with a fixed number of wagons dedicated to the
transport of traditional mail and especially express mail, which forms part of a service project that
simultaneously offers Quality, Reliability, Security, Speed (160 km/h on conventional
lines,
200 km/h on HST lines) and allows late collection (hence better groupage).

(100) According to the French authorities, ‘the specific features of this offer of services are connected with
the railways as a mode of transport (the TBEs are monitored with the same managerial control as
HST trains even though they do not necessarily run on HST lines.) TBE forms part of a policy of
sustainable development (it supplements road haulage in a market segment – express – where
12 tonne lorries now travel at speeds of 110 km/h which will be called into question in the near
future in the framework of European regulations. (2) Moreover,
is fully consistent with the
guidelines of the White Paper on Transport Policy for 2010 and the interoperability schemes of
the national railway networks. Sernam has chosen the TBE formula to progressively change over
from traditional mail to express mail’.

it

(101) According to the French authorities, a TBE wagon can carry about 100 m³ of goods. The 1 500 m³
per day carried by TBE in 2002 correspond to about 30 lorries a day. In 2006, Sernam intends to
transport the equivalent of about 120 lorries a day by TBE, i.e. 6000 m³, which will at the same
time relieve the burden on the roads and help spare the environment.

(102) Competitiveness of TBE: The two TBE rail shuttles which each night link Paris and Orange on the
one hand and Paris, Bordeaux and Toulouse on the other hand travel at 160 km/h and even
200 km/h on high‑speed lines in operation between these cities, which is particularly competitive
for an express mail service.

(103) According to the French authorities, ‘Express is currently developing on long hauls through the use
of dedicated fast vehicles. In this regard, TBE is one of the alternatives enabling Sernam to free
itself from the need to use road transport. Sernam’s traffic directly served by TBE today accounts
for € […]million in turnover (of the total groupage turnover of € […] million). Sernam’s transport
plan is technically organised around the TBE concept and it is therefore indelibly linked with this
technique. (2)

(104) According to the French authorities: “The express mail companies use light road vehicles (12 t) to
carry their express freight. Over long north-south distances, Sernam uses a railway formula with
higher traction costs (i.e. without distorting competition). However, this extra traction cost is offset
by other optimisations of the transport plan (late collection, therefore better groupage), to which
must be added advantages in terms of service (speed, reliability, security, care for the environ-
ment (2)).”

(105) TBE already saturated: According to the French authorities,

the various TBEs
operating in France is already saturated and Sernam is studying ways and means of operating
other TBEs.
links, Sernam
In order to meet the growing demand for the abovementioned rail
intends from 2005 to relocate four mixed agencies to facilities well connected to the railway
network, with double the capacity for accommodating TBEs. (3) Sernam has already started
negotiations to ensure that by 1 January 2005 SNCF will be able to provide it with the
recommended additional capacity.

the capacity of

(1) These TBEs consist of conventional rolling stock that has been technically improved to run at 200 km/h on high-
speed lines: i) conventional locomotives with greater traction capacity, ii) conventional wagons with special axles, iii)
train set of limited length (maximum 9 to 12 wagons, depending on the line) with automatic electronic braking
distribution between the wagons according to their position in the set so as to prevent coupling breaks. Moreover, the
train sets which are arranged in inseparable groups of wagons have a reliability level equivalent to that of the HST. On
the basis of railway knowhow acquired in the past, Sernam has in this way been able to work out a new concept: TBE.

(2) Commission’s underlining.
(3) This would involve (i) two additional shuttles plying between Paris and Orange, (ii) a shuttle between Paris and

Bordeaux and (iii) a shuttle between Paris and Toulouse.

L 140/18

EN

Official Journal of the European Union

29.5.2006

(106) Moreover, with regard to Sernam’s multimodal system (bringing together

the four operating
accounts of the four multimodal hubs (Paris-Chevaleret, Bordeaux, Toulouse, Orange)), the French
authorities indicate that the result of the hubs have been projected onto the years 2004 to 2010 in
the framework of a gradual strategy to replace mail traffic by express traffic, in particular in long-
distance services (national north-south link).

(107) The gradual replacement of mail traffic by express traffic on rail links (encouraged by the pressure
of rules and regulations which penalise lorries on long-distance journeys by imposing speed limits)
will make it possible to enhance the results of the multimodal formula in successive stages during
the period 2005-2010. As the multimodal hubs are configured to handle express services, this
replacement will proceed at constant cost as the value transported increases.

(108)

It should be noted that in 2007 the increase in the performance of the hubs will be (slightly)
slowed down following the establishment of the new hub at […] and a new rail shuttle system
developed in conjunction with the SNCF whose fixed development costs will be amortised in 2007.

(109) The operating account for multimodal services for 2003 to 2010 breaks down as follows:

2003

2004

2005

2006

2007

2008

2009

2010

CA TOTAL

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

of which partners’ contribu-
tion

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

TOTAL EXTERNAL SUB-
CONTRACTING

TOTAL INTERNAL SUB-
CONTRACTING

GROSS OPERATIONAL
MARGIN

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

COSTS OF OPERATIONS

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

NET MARGIN

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

GENERAL & ADMI-
NISTRATIVE COSTS

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

OPERATING RESULT

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

29.5.2006

EN

Official Journal of the European Union

L 140/19

(110) The table shows a steady trend with a turnover that
should more or less double and an operating result that
should more or less triple over seven years.

(111) Partners

for national and international TBE:

In the
this system appears attractive also for

medium term,
other undertakings engaged in the mail services sector.

(112) According to the French authorities,

“Sernam is cur-
rently looking for other partners so as to obtain, as
soon as possible, the technical cooperation necessary for
its recovery. This technical cooperation will enable Ser-
nam to use a partner’s sites, share the variable costs and
have only its commercial team present on the site. The
purpose of these partnerships in the medium term is to
secure the continuity of the undertaking’s development
(and in particular of its TBE service) and in the short
term to speed up the attainment of the objectives of the
business plan (e.g. technical cooperation)”.

(113)

“The contribution of a partnership is in fact necessary
to optimise the TBE tool which, taking account of the
requirements of express services in term of reliability,
security, speed and compatibility with environmental
in ensuring Sernam's future.
criteria,
Moreover,
in express services railways
become more of a competitive tool as traction distances
lengthen (speed becoming an increasingly critical
fac-
tor).”

it is clear that

is instrumental

(114)

“Under these circumstances, TBE is a tool that is bound
to expand on international and transborder connections.
Linking up with a partner of
international stature is
therefore imperative to develop the full potential of TBE.
At present, the express market is a market dominated by
players offering international services. Consequently, Ser-
nam needs this linkage with partners to be able to
pursue its express mail strategy”.

(115)

“The French authorities therefore confirm that it is part
of their strategy to strive for Sernam to link up with
a partner in its own interest”.

(116) Moreover,

for 2005 Geodis, whose express and mail
service plans are exclusively focused on road transport,
intends
to use the TBE formula on long distances
through Sernam. Other express courier services, such as
TAT Express, have also informed Sernam that they are
interested in this formula.

(117) Avoiding a monopoly by Sernam: It is recalled that in
France Sernam is a pioneer in the development of mail
transport by rail through the TBE formula as, according
to the indications provided by the French authorities,
Sernam is the only undertaking developing a new rail-
way groupage concept. Nevertheless, according to the

not

“Sernam does

authorities, (1)

French
have
a monopoly on TBE as any operator may ask Fret
SNCF for an equivalent service. To date, however, none
of Sernam’s competitors has submitted an explicit re-
quest
is
to Fret SNCF. Fret SNCF confirms that
prepared to provide an equivalent service on the same
terms to any operator asking for it. For its part, Sernam
has given a favourable response to requests for technical
cooperation on TBE made by an operator who wished
to evaluate its relevance and its efficiency.”

it

4.15. Competition in SNCF’s newspaper, baggage

and supplies contracts

(118) As indicated in their report of 17 June 2002, the French
authorities and SNCF have complied with all the obliga-
tions to which they had committed themselves. They
explained that they had opened up these contracts to
competition in accordance with their commitment made
by letters of 4 December 2000 and 10 April 2001. In
response to paragraph 77 of the decision to initiate the
procedure, the French authorities specify below the dates
on which these contracts were opened up to competi-
tion in the Official Journal of the European Communities,
together with their amounts.

(119) The services provided by Sernam concerned the follow-

ing:

— transporting personal files between sorting centres

— transporting business documents

from the Main

Lines directorate

— transporting tickets for Main Lines

— transporting supplies for the equipment,

infrastruc-

ture and purchasing directorates

— transporting daily newspapers and magazines

— transporting baggage.

(120) Regarding the first four services: The Commission has
been informed of
the corresponding
the renewal of
contracts. This renewal was completely in accordance
with the commitments made to the Commission to
make the award of these contracts open to competition
(call for tenders).

(1) Letter from the French authorities of 14 April 2004, registered on

15 April 2004 under No A/18141.

L 140/20

EN

Official Journal of the European Union

29.5.2006

(121)

In order to meet this commitment, SNCF asked Sernam
by letter of 20 June 2001 to cancel
the following
contracts on 31 January 2002:

— Transport

contract between Sernam and SNCF

(Equipment Directorate)

— Transport contract between Sernam and SNCF (In-

frastructure Directorate)

— Transport contract between Sernam and SNCF (Pur-

chasing Directorate)

— Contract between Sernam and SNCF for transporting
business documents of the Main Lines Directorate

— Contract between Sernam and SNCF for transporting

personal files

— Contract between Sernam and SNCF for diffuse

transport.

(122) The contract between Sernam and SNCF for transport-
ing tickets was not covered by this letter because, having
been signed belatedly, SNCF had directly assigned the
31 January 2002 deadline to it as recommended by the
Commission.

(123) On 20 July 2001, the following notices for the opening
of the above contracts to competition were published in
the Official Journal of the European Communities with the
deadline for replies from candidates fixed at 31 Au-
gust 2001.

(124) Development since July 2001: Two candidates presented
themselves after the notice had been published: Sernam
and TCS. The SNCF Purchase Directorate did not accept
TCS’s application as TCS could only to a very limited
extend meet SNCF’s demand and,
in particular, could
not cope with large and heavy shipments.
In the
absence of new acceptable candidates, SNCF asked Ser-
nam by letter of 10 October 2001 to regard its pre-
vious letter of 20 June 2001 as invalid and to extend all
contracts until 31 October 2002.

(125) By letter of 19 October 2001, Sernam confirmed its
agreement to extend the contracts to 31 October 2002.
By letter of 31 January 2002, the Purchase Directorate
extended the contract to 31 October 2002.

(126) Development in 2002: At the beginning of 2002, a call
for applications was issued with a view to launching
the following
a call
contracts before 31 October 2002:

the award of

tenders

for

for

— Transport

contract between Sernam and SNCF

(Equipment Directorate)

— Transport contract between Sernam and SNCF (In-

frastructure Directorate)

— Transport contract between Sernam and SNCF (Pur-

chasing Directorate)

— Contract between Sernam and SNCF for transporting
business documents of the Main Lines Directorate

— Contract between Sernam and SNCF for transporting

tickets

— Contract between Sernam and SNCF for transporting

personal files

— Contract between Sernam and SNCF for diffuse

transport.

(127) This call for applications specified the characteristics of
the traffic flows of goods transported, the criteria for
selecting applicants, the forecast contract values updated
from the data of the first nine months of 2001, and the
rules for awarding contracts.

(128) The contracts were split up into four segments, for each
of which separate calls for tenders would be issued in
order to take account of the specific features relating to
the nature of
the sector, synergies existing between
contracts, and the importance for low-volume and frag-
mented contracts to be grouped together with industrial
higher-volume traffic in order
to be able to offer
a competitive service.

(129) Accordingly, each contract comprised mail, express and
freight services and each candidate had to be able to
propose in each case the performance of all of these
services.

(130) Under this procedure, a new periodic indicative notice
(PIN) common to all
the contracts were published
together with a consultation announcement in the Offi-
the European Communities of 18 Febru-
cial
ary 2002 for each of the four following contracts (lots):

Journal of

— transporting personal files between sorting centres

— transporting Main Lines business documents

— transporting Main Lines tickets

— transporting supplies (for the Purchasing, Equipment,
Infrastructure and Diffuse Transport directorates).

29.5.2006

EN

Official Journal of the European Union

L 140/21

(131) The deadline for responding was 27 March 2002, by
which date three applications had been submitted:

with one year renewable, making a maximum total of
three years before issuing a new call for tenders. The
the contract was evaluated at €36.1 million
value of
under the economic conditions obtaining in June 2002.

— Sernam: for all the lots

— TCS: for all the lots

— Chronopost: for lot 1 only.

(132) TCS applied for all the lots but its turnover of less than
€100 million did not qualify it to make a bid for lot 4.
Moreover, as TCS was specialised in the transport of
“small packages”, it could not meet the demand for the
transport of heavy parcels and freight
required for
lots 2 and 3. Consequently, TCS could be consulted
only for lot 1 for “personal files”.

(133) Chronopost wished to be consulted only for lot 1 for

“personal files”.

(134) Sernam was the only party bidding for all the lots and
the only one that complied with the conditions to take
part in all four consultations.

(135) Following the call for tenders,

lot 1 was awarded on
31 July 2002 to TCS, a company outside the SNCF
group, which started providing its services on 4 Novem-
ber 2002. The value of this contract has been evaluated
at €4.5 million over a three-year period.

(139) For transporting newspapers, a consultation announce-
ment was published in the Official Journal of the European
Communities of 8 July 2002. There were two applica-
tions, one from the Beugniet company, a subsidiary of
Bourgey Montreuil,
from Sernam. As
and another
Beugniet did not have the structures required for the
the contract, only Sernam’s application was
scope of
deemed admissible.

(140) SNCF’s task of transporting newspapers requires a major
organisational structure covering virtually the whole of
French territory. It involves collecting newspapers from
taking them to distribution centres,
printers/binders,
delivering them from there to 350 agents and providing
rapid transport between the collection and distribution
centres.

(141) By opening the newspaper transport market to competi-
tion, SNCF's aim was to find a service provider with an
existing collection and distribution network already in
use for other transport operations and not one which
did not yet have a proper structure and would therefore
be obliged to create facilities practically dedicated to
newspaper transport or to subcontract these activities.

(136) On 26 December 2002, the contract for transporting
business documents of the Main Lines Directorate, com-
mencing on 1 January 2003, was signed with Sernam
for the sum of €2.12 million and for a two-year period
with one year renewable, making a maximum of three
years.

(142) Accordingly, in order to ensure that applicants did have
the proper organisational or structure commensurate
with the scope of
the contract, SNCF took the view
that their turnover ought to be substantially above the
value of the contract.

(137) The contract for transporting tickets of the Main Lines
Directorate commencing on 1 January 2003 was signed
with Sernam on 26 December 2002 for the sum of
€1.57 million covering a two-year period plus one year
renewable, making a maximum of three years.

(138) The transport contracts of the equipment, infrastructure,
purchasing and diffuse transport directorates commen-
cing on 1 February 2003 were signed with Sernam on
26 February 2003.
the contract
was intended to be four years at the most but, account
being taken of the lack of sufficient applicants, SNCF
decided to limit the term of the contract to two years,

Initially, the term of

The value of the contract for the transport of news-
papers had been estimated at approximately €29 million
a year prior to the contract notice. In order to express
this requirement in terms of the structure expected from
applicants, the minimum amount of turnover required
from bidders in the contract notice was three times the
annual value of the contract, i.e. exceeding the rounded
sum of €100 million.

(143) Beugniet, whose turnover in 2001 was €24 million,

obviously did not have the required size.

L 140/22

EN

Official Journal of the European Union

29.5.2006

(144) Consequently, a new contract was concluded with Ser-
nam, commencing on 1 February 2003. For the same
reasons as for the supplies transport contract, the term
the contract was limited to two years with the
of
possibility of
year, making
it
a maximum of three years before a new call for tenders.

extending

for one

be consulted only with regard to lot 1 “personal files”.
Lot 1 was awarded to TCS. Since Sernam was therefore
the only remaining company that had submitted an
application and qualified for lots 2, 3 and 4,
it was
with Sernam that the contracts were concluded.

(145) For a maximum of

the contract value
three years,
calculated in the light of the volume of services pro-
vided in 2002 amounts to €95.65 million under the
economic conditions obtaining in November 2002.

(151) The French authorities have also informed the Commis-
sion that the fact that Sernam had made a bid for all
the lots was in no way a condition for obtaining the
contract.

(146) For transporting accompanied baggage of Main Lines
customers, a consultation notice was published in the
of
Official
22 May 2002. Four companies responded but only
Sernam’s application was declared admissible. The other
three applications were rejected:

Communities

European

Journal

the

of

(147)

the application by the company B2S because it had
applied only for the management of the customer call
centre whereas the consultation notice specified that the
contract was indivisible;

(148)

the company TCS because it lacked the structures ne-
cessary to meet the requirements of the contract;

(149)

the company FIXEMER because it had not submitted the
application file requested.

(150) As only Sernam's application was found to be admissi-
ble, the new contract was concluded with effect from
1 April 2003. The term of the contract was also limited
to two years, with a possible extension by one year
before a new call for tenders. The value of the contract,
calculated on the basis of the services provided in 2002,
is €40.3 million under the economic conditions obtain-
ing in October 2002 over a maximum period of three
years. Moreover, the French authorities have informed
the Commission that the consultation announcement for
“lot 4”
included as a selection criterion a minimum
turnover which TCS did not attain. This criterion was
necessary because “lot 4” concerns the transportation of
large industrial objects (HST axles, sleepers, etc.), making
it necessary to work with companies with a sizeable
turnover and substantial means at their disposal. On the
supplied, moreover,
basis
of
4,
distinction
a
and lot 1. As described above,
lots 2 and 3,
lot 4 involves
transporting large industrial objects,
lots 2 and 3 transporting “heavy mail” and “freight”
and lot 1 the transportation of “personal files”. As TCS
was specialised in transporting small packages, it could

information

be made

between

should

the

lot

(152) Conclusion: The value of the five contracts concluded
with Sernam has been estimated, on the basis of fore-
casts, at €175.74 million.
In its decision of 23 May
2001, the Commission indicated that, over a period of
eleven months in the financial year 2000, the contracts
represented a
i.e.
€181 million over three years. Taking account of the
fact that the contract for personal files was not awarded
to Sernam (€4.5million for three years), comparison of
the two amounts shows a slight drop in current mone-
tary value despite the general price trend.

about €55.3 million,

value of

(153)

and regular

is clear from the information and the supporting
It
documents provided that
the French authorities have
met their commitment to open the supplies, newspaper
to competition by launching
and baggage contracts
transparent
tendering procedures. Even
though only one of these calls for tenders has led to
a change in service provider, the opening‑up of these
contracts
it possible to
confirm that the contracts concluded between Sernam
and SNCF in no way constitute aid within the meaning
of Article 87 of the Treaty.

to competition now makes

5. SUMMARY OF NEW DEVELOPMENTS FOLLOWING

SERNAM 1

(154) The new elements since the Sernam 1 decision are

summed up below:

(a) Geodis has not

taken over 60% of Sernam as
planned, but only 15%, like COGIP which has like-
wise acquired 15% of Sernam;

(b) The 15% acquired by Geodis and COGIP was sur-
rendered to SNCF following the initiation of
the
procedure by the Commission which led to the
interruption of the second memorandum of under-
standing which SNCF signed with Geodis and CO-
GIP respectively;

29.5.2006

EN

Official Journal of the European Union

L 140/23

(c) The Sernam limited partnership (SCS Sernam) was
transformed into a joint‑stock company [société
anonyme] (so as to enable Geodis to acquire a 15%
share with the result
is no longer
entirely responsible for Sernam);

that Geodis

(d) The period of restructuring is extended by one or

two years (from 2004 to 2005-2006);

(e) The amount of aid should increase by €41 million;

(f) According to the complainants, Sernam continues to
charge aggressive prices on the market, whereas the
French authorities indicate the contrary;

(g) The French authorities indicate that they have com-
plied with the number of site closures, the staff cuts
and the decrease in turnover as provided for in the
Sernam 1 decision;

(h) The French authorities indicate that they have com-
plied with the transport contracts between SNCF
and Sernam should be opened to competition;

(i) Sernam is developing a new range of express ser-

vices;

(j) The range of express services is linked with the
innovative development of TBE which is operating
that can be further
segment
in a new market
improved and is therefore not affected by overcapa-
city. This is in contrast with Sernam’s groupage/mail
services which operate in market segments that are
stagnating and even in decline. Road transport,
instrument for the
which is normally the essential
transport of mail
(grouped or ungrouped), repre-
sents a market segment with structural overcapacity,
even though it
is currently regarded as being in
equilibrium, following the Union’s enlargement.

(155)

the initial

is recalled that

It
restructuring cost was
€515 million. (1) France intends to increase the initial
restructuring aid from €448 million by €41 million,
making a total of €489 million in restructuring aid.

6. ASSESSMENT

6.1. Existence of aid

(156) Under Article 87 (1) of the Treaty, “any aid granted by
a Member State or through State resources in any form
whatsoever which distorts or threatens to distort com-
petition by favouring certain undertakings or the pro-
in so far as it affects
duction of certain goods shall,
trade between Member States, be incompatible with the
common market.”

(1) €448 million of this amount was covered by restructuring aid and

€67 million by the contribution from Geodis.

(157) Even though the

that

elements

featured in the
Sernam 1 decision are still in existence, it is incumbent
on the Commission to ascertain that the four criteria of
Article 87(l) are effectively met
the measures
for all
to be implemented before or after
implemented or
it should also take
In this context,
23 May 2001.
account of the development of Community law and in
particular the judgment of the Court of Justice in the
Stardust Marine case. (2)

(158) According to this judgment, it is necessary to verify for
every subsidy that the decision to pay it is imputable to
the State in order to establish whether one of the four
criteria of Article 87(1) - the “State resources” criterion
- is met.

6.1.1. Public resources

(159) According to the description given above, it should be
noted that SNCF, as an EPIC [industrial and commercial
public undertaking], is a public undertaking within the
meaning of Commission Directive 2000/52/EC of
26 July 2000 amending Directive 80/723/EEC of
25 June 1980 on the transparency of financial relations
between Member States and public undertakings (3) as
the public authorities may exercise directly or (159)
indirectly a dominant influence on SNCF by virtue of
financial
their ownership of
participation in it or the rules which govern it.

it or because of

their

(160) Consequently, the €503 million and €41 million which
SNCF/the French State has paid to Sernam are public
resources.

6.1.2. Imputability to the State

(161) Under these conditions, there is a strong presumption
that SNCF is acting under State control. This presump-
tion is based on several “indicators” highlighted by the
Court in the Stardust Marine case. (4)

(2)

Judgment of 16 May 2002 in case C-482/99, France v Commission,
Reports, p.I-4397.

(3) OJ L193, 29.7.2000, p.75
(4)

in one way or another,

In paragraph 52, the Court states that‘… the only fact that a public
undertaking is under State control
is not sufficient for measures
taken by that undertaking, such as the financial support measures in
question here, to be imputed to the State. It is also necessary to
examine whether the public authorities must be regarded as having
been involved,
in the adoption of those
measures.’
For this purpose, the judgment mentions a number of ‘indicators’
that can be used to show that an aid measure taken by a public
undertaking is imputable to the State, such as requirements on the
‘its integration into the structures of
part of the public authorities,
its activities and the
the public administration,
exercise of
in normal conditions of
competition with private operators, the legal status of the under-
taking (in the sense of its being subject to public law or ordinary
company law), the intensity of the supervision exercised by the
public authorities over the management of the undertaking, or any
other indicator showing, in the particular case, an involvement by
the public authorities in the adoption of a measure or the unlikeli-
their not being involved, having regard also to the
hood of
its content or the conditions which it
compass of the measure,
contains.’

the latter on the market

the nature of

L 140/24

EN

Official Journal of the European Union

29.5.2006

(a) Of the 18 members of the SNCF board of directors,
seven directly represent the public authorities, show-
ing a certain level of supervision exercised by the
public authorities (even though these seven mem-
bers of the board do not represent the majority).

(162) Under these conditions, the Commission considers that
the payment at issue of public resources by SNCF to
Sernam is imputable to the French State and that the
State guarantees granted to SNCF constitute aid.

(b) Its legal status as an EPIC, which does not come
under general company law, puts SNCF in a position
allowing it to pursue its activities outside normal
conditions of competition with private operators.

6.1.3. The other criteria of Article 87(1)

(c) Moreover, because of

its EPIC status, which rules
out bankruptcy or other insolvency procedures, the
Commission finds, in the light of its Notice on State
aid in the form of guarantees, (1) that SNCF has an
unlimited guarantee from the State and can thus
obtain on the market credit conditions that are
more favourable and available only to companies
to private company law. (2) Since SNCF
subject
grants risk capital
funds covered by an unlimited
and unpaid guarantee to a company in financial
difficulties such as Sernam, which operates on mar-
kets open to competition (groupage/mail services/
road transport), there is, in the light of the above-
mentioned Notice, an advantage granted to the
beneficiary undertaking. (3) Even if
the State does
not make payments under the guarantee granted,
aid exists within the meaning of Article 87(1) of the
Treaty as soon as the guarantee is offered.

(d) Finally, according to paragraph 15 of the Commu-
nity Guidelines on State aid for rescuing and re-
structuring firms in difficulty, “restructuring aid […]
may come from State holding companies or public
investment companies” and paragraph 17 “where
funding is provided or guaranteed by the State to
an enterprise that is in financial difficulties […] it
must be deemed likely that the financial transfers
involve State aid”.

(1) OJ C 71, 11.3.2000, p.14
(2) The Commission Notice on State aid in the form of guarantees
provides in paragraph 2.1.1 that ‘State guarantees thus generally fall
within the scope of Article 87(1), if trade between Member States is
affected and no market premium is paid.’ In paragraph 2.1.2 it states
that ‘the benefit of a State guarantee is that the risk associated with
the guarantee is carried by the State. This carrying of a risk by the
State should normally be remunerated by an appropriate premium.
Where the State forgoes such a premium, there is both a benefit for
the undertaking and a drain on the resources of the State. Thus,
even if no payments are ever made by the State under a guarantee,
there may nevertheless be a State aid under Article 87(1). The aid is
granted at
the
moment at which the guarantee is invoked or the moment at which
payments are made under the terms of the guarantee.’ In paragraph
2.1.3 it states that ‘The Commission also regards as aid in the form
of a guarantee, the more favourable funding terms obtained by
enterprises whose legal
form [i)] rules out bankruptcy or other
insolvency procedures or [ii)] provides an explicit State guarantee
or[iii)] coverage of losses by the State.’

the moment when the guarantee is given, not

(3) Markets open to competition are by definition not markets closed to
competition de facto or de jure, in which case the State could have
imposed public service obligations or contracts through which
a company may in certain cases benefit from financial compensation
by the State.

it

is noted that

(163) Application of the other criteria of Article 87(1): Ac-
cording to the information at the Commission’s dispo-
sal,
the other elements determining
whether of not there is State aid as established in the
Sernam 1 decision are still present. Accordingly,
the
conclusion of the Sernam 1 decision that State aid is
involved in Sernam’s
still upheld,
namely:

restructuring is

— the logistical cooperation between SNCF and the
SCS Sernam limited partnership since 1 Febru-
ary 2000 does not constitute State aid and

— the other measures (commercial assistance and turn-
around) do constitute State aid within the meaning
of Article 87(1).

(164) Consequently,

it is found that the measures that have
been or will be implemented before or after 23 May
2001 to restructure Sernam constitute State aid within
the meaning of Article 87(1) of the Treaty.

6.2. Legal basis

(165) As announced when the abovementioned procedure was
initiated, the Commission will below analyse the new
facts in order to ascertain to what extent they are or are
not in conformity with the Sernam 1 decision.

(166) Moreover, the Commission will verify to what extent the
new factual situation today – compared with the Ser-
nam 1 decision – is compatible overall with the guide-
last
in particular with regard to the 'one time,
lines,
time' principle.

29.5.2006

EN

Official Journal of the European Union

L 140/25

6.3. Compatibility

understanding between SNCF and Geodis because
there was still time to do so;

6.3.1. Structure of the analysis

(167)

Initially, the analysis will ascertain to what extent the
€503 million in aid, previously authorised in 2001, has
been used improperly and whether in this analysis it
will be found that
illegal aid paid
amounting to €41 million is compatible.

the additional

(168) Secondly, the elements of the 2001 decision that have
been complied with will be clarified. In light of these
elements, Sernam’s eligibility for restructuring aid will
be re‑analysed as well as its potential for returning to
viability.

(169) This will be followed by the measures which the Com-
mission intends to take to prevent distortion of compe-
tition and guarantee that the amount of aid approved in
this decision will be kept to a minimum.

— or

refraining from paying the aid approved on
23 May 2001 and, where appropriate, notifying the
new granting conditions.

(174) The fact

is that France did neither of

these things.
it started the payment of aid, failed to apply
Instead,
the Sernam 1 decision (and therefore the memorandum)
correctly and also failed to notify the changes of the
granting
the
in
Sernam 1 decision and Article 88(3) of the Treaty.

conditions

violation

of

(175)

It is the Commission’s opinion that the failure to apply
the Sernam 1 decision and consequently the failure to
apply the memorandum of understanding between
SNCF and Geodis and the unlawful grant of part of the
aid which was paid under circumstances not approved
by the Commission is imputable to France, to whom
this decision was addressed.

6.3.2. Misuse of aid authorised by the Sernam 1 decision

(176)

(170) First of all, the Commission cannot accept the argument
adduced by the French authorities that the lapsing of
the first memorandum of understanding concluded on
21 April 2000 between SNCF and Geodis is imputable
neither to Geodis nor to SNCF or the French authorities
on the grounds that the Sernam 1 decision was not
final before 30 June 2001,
the date on which the
extension of the memorandum between SNCF and Geo-
dis expired.

(171) The fact is that the Sernam 1 decision was notified to
the French authorities on 23 May 2001, i.e. more than
one month before the expiry of the extension of the
memorandum between SNCF and Geodis. (1)

(172) Article 254(3) of the Treaty provides that “ … decisions
shall be notified [by the Commission] to those to whom
they are addressed and shall
take effect upon such
notification.” Moreover, Article 242 of the Treaty pro-
vides that “actions brought before the Court of Justice
shall not have suspensory effect. The Court of Justice
may, however,
so
require, order that application of the contested act shall
be suspended”.

that circumstances

it considers

if

(173) Accordingly,

the

on
decision notified
23 May 2001 was applicable from that date, on which
it took effect. France therefore had the choice of:

France

to

— either fully (and immediately) applying the decision
of 23 May 2001 in order to be able to pay the
authorised aid – in which case it
should have
the memorandum of
ensured the application of

It is because of the French authorities’ failure to apply
the memorandum of
the
Sernam 1decision was not correctly implemented with
regard to:

understanding

that

— the first memorandum of understanding, as ex-
tended, because Geodis
took over only 15% of
Sernam instead of the 60% originally planned (this
share was subsequently equalled by COGIP, which
likewise took a 15% share in Sernam);

— the conclusion of

the second agreement between
SNCF and Geodis/COGIP (2) which could not be
relied upon against the Commission and led to the
application of clauses on breach of contract between
SNCF and Geodis/COGIP respectively. Consequently,
the 15% which Geodis and COGIP had each ac-
quired in Sernam were returned to SNCF which
thus again became the 100% owner of Sernam;

in order

— the transformation of Sernam into a limited partner-
ship (SCS)
to make Geodis indefinitely
responsible for Sernam’s debts. To this must be
added the transfer of the risk which Geodis had to
assume vis‑à‑vis SNCF concerning (i) the amount of
investment necessary to turn Sernam around, (ii) the
appropriate reduction of Sernam’s operating costs,
and (iii) a significant defection by customers in this
period of financial uncertainty;

— the absence of payment of €67 million by Geodis;

— partial payment of the total amount of aid approved
by the Sernam 1 decision, even though the condi-
tions laid down in this decision were no longer met;

(1) The said memorandum was therefore still in force and should have
been applied by the French authorities (even though Geodis may
already has been experiencing financial difficulty on 23 May 2001).

(2) This was the second agreement between SNCF and Geodis but

obviously the first agreement between SNCF and COGIP.

L 140/26

EN

Official Journal of the European Union

29.5.2006

— payment of additional aid amounting to €41 million,
essentially due to the delay in Sernam’s linkage to
Geodis, of which the French authorities informed the
Commission
of
17 June 2002 even though such an additional sum
should have been the subject of a full re‑notification
of the dossier;

annual

report

their

only

in

tional mail activities to express mail services, and in
particular the changeover to an innovative service in
railway transport focusing on the new combination of
“range of express
services” and “Train Bloc Express
(TBE)” which occupies a new market segment whose
full potential remains to be developed.

been

— extension of the restructuring plan which had ori-
period
ginally
envisaged
from 1999 to 2004, and which must now end in
2005‑2006 (the time when Sernam should be re-
stored to financial equilibrium), i.e. one to two years
later than planned.

the

for

(177) According to the Guidelines, (1)

“The company must
fully implement
the restructuring plan that has been
accepted by the Commission and must discharge any
other obligations laid down in the Commission decision.
The Commission will regard any failure to implement
the plan or to fulfil the other obligations as misuse of
the aid”.

(178)

to

has

been

failure

In light of the above, the Commission concludes that
there
the
Sernam 1 decision of 23 May 2001 with regard to the
above mentioned elements and confirms that this failure
constitutes misuse of the aid within the meaning of the
Article
(EC)
659/1999 and paragraph 43 of the Guidelines.

comply with

Regulation

1(g)

of

(179)

follows that

the amount of €41 million paid as
It
additional aid by SNCF to Sernam, which is a direct
consequence of this misuse (as it was paid because of
the delay in linkage), should be declared incompatible
with the Treaty and must be paid back in the appro-
priate form (with interest).

6.3.3. Elements in conformity with the Sernam 1 decision

(182) Moreover,

in paragraph 3.2.4. of

Commission specifies
a restructuring plan may be amended.

the

the
the Guidelines,
conditions under which

(183) With regard to the dossier at

issue,

the Commission

notes the following:

— Apart from the sale of Sernam which has not (not
yet) been carried through, the restructuring plan as
initially envisaged is moving ahead basically accord-
ing to plan. Essentially this involves reorganising the
transport plan, reorganising and reducing the num-
ber of sites, the turnover and the staff as provided
for in the initial plan and even going beyond the
reduction envisaged in the Sernam 1 decision, and
also refocusing activities on an innovative develop-
ment concept (TBE).

— The

company’s

difficulties

noted

prior

to

23 May 2001 necessarily remain unchanged.

— The objective of
remains the same.

the viability of restructuring also

— There is only a one‑

to two‑year delay in the

restructuring period initially recommended.

— In connection with the initiation of the procedure
the Commission is reinvestigating
its

for this dossier,
the overall situation of 2001 in the light of
updating to 2003-4.

(180) However, the Commission notes that the French autho-
rities have met several of their objectives in accordance
with the Sernam 1 decision. For instance,
they have
opened the contracts between SNCF and Sernam to
competition.

(184) Having regard to these elements, the Commission con-
cludes that the aid investigated for the purposes of this
decision meets the criteria of paragraph 3.2.4. of the
abovementioned Guidelines. Consequently, the aid exam-
ined does not constitute new restructuring aid and the
“one time, last time” principle does not apply.

(181) Moreover,

has

with

France

complied

the
Sernam 1 decision with regard to the number of clo-
sures of Sernam’s sorting centres and their reorganisa-
tion, employee training, development in terms of staff
reduction, phasing in a new transport plan, switching
computer systems to those of Geodis, reducing turnover
by 18% between 2000 and 2005, non‑replacement by
the €67 million which Geodis will not
the State of
provide to Sernam, changeover from Sernam’s tradi-

(1) Paragraph 43.

6.3.4. Eligibility for restructuring aid

(185) The Commission confirms the elements set out in the
Sernam 1 decision with regard to Sernam’s eligibility for
restructuring aid, in respect of which it has in fact not
raised any doubt in its decision to initiate the procedure
87,
(C
the
Sernam 1 decision contains considerations
regarding
the concept of a company in difficulty, a newly created
company and 'one time, last time' aid.

paragraphs

32/03).

82

to

In

29.5.2006

EN

Official Journal of the European Union

L 140/27

Sernam’s

(186) Even though Sernam was eventually reconverted from
an SCS (limited partnership) to a société anonyme and
although
longer
a constituent element of
the analysis of
eligibility remains unchanged. This is due, in particular,
to the fact that the company's difficulties noted before
23 May 2001 necessarily remain unchanged and the
objective of restructuring also remains the same.

privatisation

the dossier,

no

is

6.3.5. Restoring viability

(187) Even though Sernam’s privatisation did not take place as
envisaged in the Sernam 1 decision, Sernam has con-
tinued to carry out many elements of the initial restruc-
turing plan while adding a range of new elements,
indicating that a genuine change is in progress and
raising prospects that Sernam will eventually restore its
viability.

(188) Reorganisation of sites: This reorganisation of operating
sites appears to be a key element to restore the viability
of a company such as Sernam. The reasons adduced by
the French authorities such as the transactions referred
to above with regard to the organisation of these sites,
their geographic location and their excessive numbers
constitute essential rationalisation towards greater effi-
ciency and lower costs of future operations.

(189) Staff cuts: Furthermore, the reduction of the number of
staff is quite considerable, from 5050 persons in 1999
to […]in 2005, which should make it possible to make
substantial savings and give Sernam the flexibility and
adaptability necessary to attain its innovative objectives.

(190) Computer system: With the assistance of Geodis, Ser-
nam has changed over its computer system to two new
management software packages (“Aanael” and “Alizée
2000”) which should optimise its future operations.

(191) The “Xpress” range: The new express range has made it
possible to classify transported products in several cate-
gories with the advantages of express services. In this
way, Sernam has aligned its services in accordance with
a modern operating concept as recommended by ex-
perts to ensure profitable operation on a market with
growth potential.

(192)

“TBE”: Moreover, by centring its activities around the
certified “express” range of services, Sernam has also
been able to focus its new road transport plan on
“TBE”, a highly innovative concept. The combination of
“express services” and TBE has enabled Sernam to attain
a current turnover of € […] million, of the total group-
age turnover of € […] million. Moreover,
the TBE
concept, combined with the new range of express
services seems to be fully consistent with the approach
recommended by the abovementioned experts to make
railway transport attractive. As TBE is profitable on
minimum distances of 400 km and its speed is in any

case faster than the speed limits on the road, it should
be possible for TBE to be fully competitive with long-
distance lorry transport, even if a minimum of
two
stops for unloading appear necessary. (1) The competi-
tiveness of TBE should be further enhanced if the speed
limit on the road is further reduced below that cur-
rently allowed for small and medium‑sized lorries.

(193) The success of TBE, which according to the French
the concept meets

authorities is assured, shows that
a genuine need on the French national market.

transport

(194) This interest is another element showing that the diver-
sification started by Sernam in order to become gradu-
ally specialized in mail
through TBE may
indeed have an economic future. The trend toward
regionalisation of the French mail and express market
could explain the interest kindled by TBE which by
It should
definition operates only on long distances.
further be borne in mind that the opening-up of the
railway market,
initiated by the Commission, should
eventually enable Sernam to gain a foothold in a new
segment of
In this scenario
(whether of national or international scope), and taking
account of
imposed by the present
decision, Sernam should enter into one or more part-
nerships with other companies in order to achieve its
objectives.

the international market.

the conditions

(195) Sernam’s overall viability: Sernam has been able to
eliminate almost entirely, and through its own restruc-
turing efforts, the €67 million requirement which Geo-
dis would have had to contribute to Sernam’s restructur-
ing. This shows that Sernam has been able indepen-
the
dently to carry through an important part of
planned reorganisation, which will be very conducive in
particular for the future management of
its working
capital requirement.

(196) Moreover, the forecasts of the business plan in terms of
Sernam’s performance seem plausible, given the other
elements of rationalisation it has implemented, in parti-
cular as regards sites (number,
location and organisa-
tion), staff, activities and WCR and having regard to the
innovative concepts developed and established by Ser-
nam (the express range and TBE) and the industrial
partnerships which it intends to conclude (a condition
of the present decision) to enable it to extend its railway
activities (TBE), not only on the national express market
but also in international express services which have
grown considerably in recent years and for which the
prospects remain promising.

(1) One stop to transfer the goods from lorries onto TBE at its point of
the departure and another on the arrival of TBE to transfer the
goods onto lorries.

L 140/28

EN

Official Journal of the European Union

29.5.2006

(197) Even in the absence of the abovementioned €41 million
in additional aid, the Commission takes the view that
Sernam should be able to restructure successfully by the
deadline set. It has been noted that even though Sernam
aid authorised in the
has only
the
a part of
its performance in
Sernam 1 decision at its disposal,
2003 was already slightly better than expected (a fall of
€85 million before tax in 2003 as against an expected
fall of €87 million) and should break even as forecast in
Sernam’s business plan around 2005‑2006.

(198) Taking the abovementioned factors into account,

Commission is of
restored
permanent
to
a reasonable period of
French authorities.

the
the opinion that Sernam could be
viability within
time, as announced by the

financial

6.3.6. Preventing distortion of competition - Reduction of

capacity

(199) According to the information from the French autho-
rities, Sernam has already substantially reduced its capa-
city and is planning further cuts in addition to those
provided for in the Sernam 1 decision by the end of the
restructuring period 2005‑2006 by reducing the num-
ber of sites, staff and turnover. Moreover, Sernam is
shifting its focus from groupage/traditional mail services
to express mail services and also from road transport to
a new rail concept, TBE. The TBE concept
is being
developed in a new market segment where there is no
overcapacity and may provide capacity for additional
growth at national and international
level. The French
authorities have thus met a number of criteria laid
down in the Sernam 1 decision.

6.3.7. Preventing distortion of competition – Specific com-

pensatory measures

(200) The Commission notes first of all that:

— measures should be taken to attenuate the unfavour-
able consequences of aid for competitors as much as
possible;

— the limitation or forced reduction of Sernam’s pre-
sence on the market or markets concerned in which
the company operates is a compensatory measure
for the benefit of its competitors;

— compensatory measures could take different forms,
depending on whether or not the company is oper-
ating in a market where there is overcapacity.

national markets of groupage, traditional mail services
and express mail services. These markets nevertheless
involve an essential element of road and rail transport.

(203) Rail transport (TBE concept): As regards the develop-
ment of groupage and mail transported by express rail
services (TBE concept), the French authorities have con-
firmed to the Commission that “Sernam does not have
a monopoly of TBE as any operator may ask Fret SNCF
for an equivalent service. To date, however, none of
Sernam’s competitors has explicitly asked Fret SNCF for
such a service. Fret SNCF confirms that it is prepared to
supply an equivalent service, on the same conditions, to
any operator asking for it. Sernam has responded posi-
tively to requests for technical cooperation on TBE made
by an operator who wished to evaluate its relevance and
efficiency.”

(204) Railway groupage as practiced by Sernam through TBE
and the new express range is a new market
to be
developed where there is no structural overcapacity.
Taking account also of the fact that the French autho-
rities have provided the necessary assurances that Ser-
nam cannot have a monopoly on this market,
the
Commission considers that Sernam need not take any
compensatory measures as a quid pro quo for the aid in
this market segment and may continue to develop its
services within it.

(205) Road transport: However, there is structural overcapacity
in road transport throughout Europe, and therefore also
in France. Moreover,
the French traditional groupage
market is regarded as stagnating and that for the trans-
port of standardised packages (parcels) is in decline.

(206) The interested parties indicate that the market is exacer-
bated by the closure of companies
in the relevant
market in France, which are more numerous than those
in the previous year, and the market is also affected by
in particular on the part of
strong price competition,
Sernam.

(207) Groupage and express: Sernam occupies a strong posi-
tion on the groupage/traditional mail market and in
particular
and has
a significant market share compared with a large num-
ber of other market participants.

express market

in France

the

(201) Next, the Commission notes the following:

(202) The markets concerned: The Commission notes that the
main markets in which Sernam operates are the French

the restructuring plan,

(208) Misuse of aid: Moreover, taking account of the misuse
of aid established above and the extension of the period
of
the Commission takes the
view that Sernam should take a specific compensatory
measure by permanently withdrawing from market seg-
ments with overcapacity so as to warrant approval of
part of the aid at issue.

29.5.2006

EN

Official Journal of the European Union

L 140/29

(209) The immediate consequence of granting State aid in
markets with structural overcapacity or in decline is
that a company that would have had to give up its
business on account of the stated difficulties would be
enabled to artificially occupy market shares for which
to the detriment of
there is a very strong demand,
financially sound competing companies. Care should
therefore be taken to avoid driving away financially
sound competitors from the market to the benefit of
those that appear to be unable to survive by their own
efforts.

(210) Bearing this in mind, the Commission is of the opinion
that Sernam should permanently withdraw from market
segments with overcapacity,
in this case the market
segment of groupage/traditional mail carried by road.

(211) Even though Sernam has already started this withdrawal,
the Commission believes that it is not enough and that
such it should be sustained. The Commission therefore
considers it necessary to impose conditions which (i)
will enable Sernam to continue moving through inno-
vative diversification towards a market segment to be
developed (and therefore without overcapacity) and (ii)
will make it possible to replace Sernam’s services by
services of other operators (which will have the effect of
freeing up Sernam’s market shares in these segments) in
market segments with overcapacity or stagnation or in
decline. These conditions are as follows:

— Sernam will be able to develop only its activities in
the transport of mail by rail (TBE concept). In this
connection, SNCF guarantees that it will offer to any
other operator that so requests the same conditions
as those granted to Sernam to develop freight trans-
port by rail or TBE.

— As a quid pro quo, Sernam must over the next two
years starting from the date on which this decision
is notified,
fully replace its own road transport
resources and services by road transport resources
and services of one or more companies in which
SNCF does not have a majority share.

— Sernam’s own road transport resources and services
refers to all the means of road transport – i.e. road
transport vehicles – of Sernam of which it has full
ownership or which it leases or rents.

— The companies that take over Sernam’s road trans-
port activities must provide all the road transport
services using their own resources.

(212) The obligation to carry out this replacement will cer-
tainly be a challenge to the company. About € […] mil-
lion of Sernam’s turnover comes from its road transport
activities out of a total turnover of €414 million and €
[…] million groupage turnover. However, replacing its
should be possible without
road transport activities
affecting its viability, mainly because of
the following
reasons:

— Sernam should quickly commit

services by road – i.e.

to one or more
company partnerships in order to replace its parcel
transport
road transport
vehicles – at the points of departure and arrival of
Sernam’s rail service (TBE). As company partnerships
and Sernam's franchising of road transport have in
any case been planned and announced by the French
authorities, this condition will secure the implemen-
tation of these plans.

— Since Sernam’s restructuring centres around combin-
ing its new express range with the new TBE rail
transport concept whose economic prospects seem
to be quite solid and creditable, Sernam should be
able to position itself in a new market segment to
be developed.

(213) Moreover, at the request of the Commission, which has
emphasised that Sernam should not gain a monopoly
position in express freight transport services by rail, the
French authorities have confirmed in writing (1) that any
other operator potentially interested in performing mail
transport services by rail will be able to benefit from
the same conditions as those granted to Sernam. Ac-
cordingly,
the Commission considers that any risk of
a de facto or de jure monopoly emerging is excluded, and
only the barriers to market entry remain. (2)

(214) Furthermore, the strategy of developing TBE is fully in
line with the Commission’s transport policy as it
is
conducive to the road–to-rail modal shift. In this regard,
the Commission considers that a company which diver-
sifies in such a way as to make it possible to shift large
volumes of goods from road to rail over long distances
deserves to be given the opportunity to translate this
into practice, provided that it effectively withdraws from
market segments where there is overcapacity.

(215) Consequently,

the Commission considers that

the fol-

lowing objective has been achieved:

— Sernam’s restructuring

— to ensure that its sustainable viability is restored

(1) Letter from the French authorities of 14 April 2004
(2) These barriers to market entry should a priori consist essentially of
the know-how needed for operating such services and the config-
uration of wagons properly adapted to these requirements, given the
fact that, at least Sernam’s case, railway traction will be operated by
SNCF.

L 140/30

EN

Official Journal of the European Union

29.5.2006

— by focusing its road transport activities on express
transport and replacing its road activities by

rail
those of other companies independent of SNCF

— in a way that does not affect trade between Member
States to an extent contrary to the common interest.

(216) However, the Commission takes account of the French
authorities’
intention to sell off Sernam in its entirety
(including assets and liabilities) by […]. In this connec-
tion, the Commission recalls that if such a transaction is
effected at market price through a transparent procedure
that is open to all competitors, as ascertained by an
independent expert, and Sernam is sold to a party that
has no legal links with SNCF, the acquiring party need
refund the sum of €41 million that has been
not
In accordance with the Court’s
declared incompatible.
case law, the buyer could not be considered as having
benefited from an advantage over other operators on
the market.

(217) The Commission also recalls that, if Sernam is sold in
its entirety (assets and liabilities) as intended by the
French authorities, the conditions of the decision (take-
over of Sernam’s road activities by other companies and
diversification of its activities towards rail freight) should
in any case apply. On the other hand, should Sernam
sell
its assets en bloc, the Commission recalls that the
above two conditions concerning the company’s restruc-
turing will not apply as Sernam will no longer operate
in its current legal form and will cede its market shares
to the independent acquiring party (which will de facto
continue its activities with Sernam's assets).

6.3.8. Aid limited to the minimum

with

comply

authorities

the failure of

justified as it

(218)Asmentioned above, the need for €41million in additional
the
aid is basically a consequence of
French
the
to
Sernam 1 decision. The payment of such an amount in
additional aid is not
is intended for
a company which is still basically operating in market
segments with structural overcapacity, stagnation and
even decline. Moreover, Sernam should not have surplus
liquid assets which it could allocate to activities that
could cause distortion on the market and would not be
in particular
connected with the restructuring process,
in terms of prices charged. Accordingly, it is the Com-
mission’s view that the grant of €41 million in (218)
additional aid on top of the total sum of €503 million
initially notified and approved in the Sernam 1decision
is not justified.

(219) Moreover, the replacement of Geodis’s contribution to
Sernam’s restructuring, as initially planned, by possible
aid of €67 million may be excluded on the grounds that
such a contribution will no longer be necessary. The
injection of €67 million which Geodis was to
capital
line has been financed by
provide through a credit
reducing Sernam’s credit to its customers. In order to
raise the €67 million, Sernam could have assigned its
customer receivables through discounts or securitisations
to obtain corresponding resources from a financial
in-
In fact, Sernam has adopted a more funda-
stitution.
mental approach, reducing the length of customer credit
which has enabled it
to raise the funds needed and
thereby correspondingly reduce its working capital re-
quirement. Such a process is in fact preferable to the
external financing option as described above because it
improves Sernam’s balance-sheet and provides greater
security for future transactions (given the reduced dura-
tion of customers’ credit).

(220) The Commission can therefore accept that Sernam has
replaced the absence of a €67 million contribution from
Geodis by an equivalent,
indeed better, measure than
with external funding by mobilising funds that remained
blocked in customer credit for too long.

(221) Consequently, the intensity of the aid granted to restruc-
situation (indicated as
ture Sernam in the present
Sernam 2 in the table below)
is 81% compared with
87% intensity in Sernam 1. This takes account of the
fact that Sernam has from its own resources made up
the €67 million financing requirement which Geodis
was to provide and should likewise make up from its
the additional €41 million financing
own resources
requirement, which Sernam should be able to do in
particular through the sale of
its road activities and
other means.

(222) To the sum of €556 million (1) should be added the
€34 million and €21 million compensation provided by
SNCF in the form of contracts between SNCF and
Sernam for the transport of baggage, newspapers and
supplies during the 11 months SCS Sernam’s financial
year 2000, which were regarded as compatible State aid
in the Sernam 1 decision. Since France has kept
its
commitment to open up the contracts for the transport
of supplies, newspapers and baggage for SNCF,
the
Commission can uphold its view recorded in the Ser-
nam 1 decision that the sum of €55 million paid under
the abovementioned contracts for 11 months of
the
financial year 2000 may be authorised in the framework
of Sernam’s restructuring.

(1) Comprising the financing of
restructuring to the amount of
€448 million by SNCF,
the
€67 million which Geodis was to provide (Sernam has reduced this
financing requirement by implementing restructuring measures from
its own resources) and the financing from Sernam’s resources of the
€41 million in proposed additional aid.

financing by Sernam of

the

29.5.2006

EN

Official Journal of the European Union

L 140/31

(223) Restructuring costs

€ million

Sernam 1

Change

Sernam 2

Restructuring costs

515

41

556

Total (1)

515

556

€ million

Sernam 1

Sernam 2

Aid granted for con-
tracts in million €

Total (4) Total amount
of aid

55

503

55

503

Financing sources

€ million

Sernam 1

Change

Sernam 2

6.3.9. Implementation and compliance with conditions

Financing of restructur-
ing by SNCF

448

Financing by Geodis

67

‑ 67

Financing by Sernam

Other funds to be pro-
vided by Sernam

67

41

448

0

67

41

Total (2)

515

556

Intensity of aid for re-
structuring Sernam 1 in
%

87

Intensity of aid for re-
structuring Sernam 1 in
%

Aid granted for con-
tracts in € million

55

Total (3)

55

81

55

55

€ million

Sernam 1

Sernam 2

Financing of restructur-
ing by SNCF

448

448

(224) France is requiring to submit an annual report on the
development of restructuring and compliance with the
present decision. The first report must be submitted not
later
the date on which the
present decision is notified.

than six months after

7. CONCLUSIONS

(225) The Commission concludes that France has paid the
amount of €503 million (1)
in aid under conditions
different from those approved in the Sernam 1 decision
and has unlawfully paid the sum of €41 million in
additional aid.

(226) However, taking account

— of

the written commitment given by the French
authorities, following the Commission’s express re-
quest, that Sernam will not be favoured by SNCF
and will not be able to acquire a monopoly in the
(express) transport of rail freight,

— of

the thorough restructuring started by Sernam
(with regard to its operating sites, transport plan,
capacity reduction already carried out and essential
innovations in the new express range and TBE), and

— of the conditions imposed by the present decision,

the Commission considers that the sum of €503 million
in aid for Sernam is compatible with the Treaty as

— Sernam can

restored
a reasonable period of time;

be

to

viability within

(1) This amount consists of €448 million paid by SNCF as restructuring
totalling

aid proper and €55 million aid for
€503 million.

the contracts,

L 140/32

EN

Official Journal of the European Union

29.5.2006

— competition will not be distorted to a degree con-

trary to the common interest;

financial

the total amount of

— aid will be reduced to the minimum necessary in
that
requirements
approved by the Sernam 1 decision (€570 million (1))
is reduced by €67 million because Geodis will not
make its contribution, but has nevertheless been
- financed by mobilising Sernam’s resources, and/or
the additional aid of €41 million will have to be
recovered with interest.

HAS ADOPTED THIS DECISION:

Article 1

The State aid of €503 million for the Sernam company
1.
approved in May 2001 is compatible with the common market
under the conditions laid down in Articles 3 and 4.

The State aid of €41 million provided by France to the

2.
Sernam company is incompatible with the common market.

Article 2

France shall take all the measures necessary to recover
1.
from the beneficiary the aid referred to in Article 1(2) that has
already been unlawfully placed at the beneficiary’s disposal.

2.
Recovery shall take place immediately in accordance with
the procedures of national law to the extent that these proce-
dures permit the immediate and effective implementation of
this Decision. The aid to be recovered shall
include interest
from the day on which the aid was placed at the beneficiary's
disposal to the day on which the aid is recovered. Interest shall
be calculated on the basis of the reference rate used for the
calculation of the subsidy equivalent for aid granted for regio-
nal purposes.

b) In return, Sernam shall, in the next two years as from the
day on which this Decision in notified, fully replace its own
road transport resources and services by road transport
resources and services of one or more companies that are
legally and economically independent of SNCF and are
chosen in accordance with an open, transparent and non-
discriminatory procedure.

Sernam’s own road transport resources and services means
all of the road resources – i.e. road transport vehicles – of
the Sernam company of which it has full ownership or
which it leases or rents.

The companies that take over Sernam’s road activities shall
perform the road transport services using their own re-
sources.

In the event that Sernam sells its assets en bloc by […]at
2.
market price through a transparent and open procedure to
a company that has no legal link with SNCF, the conditions of
paragraph 1 shall not be applicable.

Article 4

Any partial or full sale of Sernam shall be effected at market
price and through a transparent procedure that is open to all
its competitors. Under these conditions, the Sernam company
shall,
if it continues to exist, be responsible for paying back
the aid of €41 million.

Article 5

Within two months of
the date on which this Decision is
notified, France shall inform the Commission of the measures
taken to comply with it.

Article 6

Article 3

This Decision is addressed to the French Republic.

Subject to paragraph 2, the following conditions shall be

1.
complied with:

a) Sernam may develop only its activities to carry mail by
railway in accordance with the Train Bloc Express (TBE)
concept. In this regard, SNCF guarantees that it will offer to
any other operator who so requests the same conditions as
those granted to Sernam to develop TBE freight transport
by rail.

Done at Brussels, 20 October 2004.

By the Commission

LOYOLA DE PALACIO
Vice‑President

(1) This amount consists of €448 million from SNCF, €55 million for
the contracts and €67 million which Geodis had to contribute.