2006/947/EC: Commission Decision of 7 December 2005 on the State aid implemented by Belgium for ABX Logistics (No C 53/2003 (ex NN 62/2003)) (notified under document number C(2005) 4447) Text with EEA relevance
Date: 2005-12-07
Institutions: European Commission
Subjects: Belgium, State aid, aid for restructuring, control of State aid, rail transport, transport company

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L 383/21

COMMISSION DECISION

of 7 December 2005

on the State Aid implemented by Belgium for ABX Logistics (No C 53/2003 (ex NN 62/2003))

(notified under document number C(2005) 4447)

(Only the French and Dutch texts are authentic)

(Text with EEA relevance)

(2006/947/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

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

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

Having called on interested parties to submit their comments
pursuant to the provisions cited above (1) and having regard to
their comments,

Whereas:

1.

PROCEDURE

(1)

(2)

By letter dated 28 November 2002, registered in the
Commission on 29 November 2002 (No DG Tren/A
71122), the Belgian authorities notified a scheme of rescue
aid for ABX Logistics (F, D and NL subsidiaries, and group).
The aid (case N 769/2002) was approved by Commission
Decision on 21 January 2003.

By letter dated 17 February 2003, Belgium notified a
restructuring plan for ABX Logistics, which was registered
by the Commission on 17 February 2003 (No Tren A/
13396). Through the notification and other pieces of
information at its disposal, the Commission was informed
that Belgium had implemented certain amounts from
public funds for ABX Logistics in addition to the notified
restructuring plan. By letters dated 7 May 2003, Belgium
provided the Commission with further information.

(3)

By letter dated 24 July 2003 (SG(2003) D/231003), the
Commission informed Belgium of its decision to initiate the
procedure (case No C 53/03) laid down in Article 88(2) of
the Treaty in respect of these measures.

(4) After it had been agreed that confidential data should be
removed, the Commission Decision to initiate the proced-
ure was published in the Official Journal of the European
Union (2). The Commission invited interested parties to
submit their comments on the measures in question.

(5)

By letter dated 29 August 2003 (Loyola de Palacio
incoming mail No 2805), the Belgian authorities submitted
their comments on the initiation of the procedure.

(6)

(7)

(8)

(9)

The Commission received comments on this subject from
interested third parties. It transmitted them to Belgium by
letter dated 18 February 2004 (No D (2004) 2823), giving
it the opportunity to comment, and received its comments
by letter dated 18 March 2004 (No A/15992).

In the meantime the Belgian authorities provided further
information by letters dated 12 December 2003 (No A/
37839), 19 December 2003 (No A/38582) and 12 Novem-
ber 2004 (No A/35928) and updated the ABX restructuring
plan by letters dated 14 January 2005 (No A/2010),
24 February 2005 (No A/4889) and 14 March 2005 (No A/
6690). Further information was received by letters dated
18 August 2005, 31 August 2005, 2 September 2005 and
26 September 2005.

By letter dated 4 May 2005 the Commission informed
Belgium of its decision to extend proceeding No C 53/03 to
cover the new information notified. After the Belgian
authorities had agreed that confidential data should be
removed, the Commission decision to initiate the procedure
was published in the Official
the European
Union (3). The Commission invited interested third parties
to submit their comments on the measures in question.

Journal of

The Commission received comments on this subject from
It
the Belgian authorities and interested third parties.
transmitted the third parties' comments to Belgium by letter
dated 18 July 2005, giving it the opportunity to comment,
and received its comments by letter dated 18 August 2005.
This correspondence was followed by notification letters
dated 2 September 2005 and 29 September 2005.

(10) By letter dated 3 August 2005, after the time limit allowed
for submitting comments on the extension of the above
procedure, the Italian authorities sent the Commission a
letter of complaint concerning the sale of ABX Logistics
Worldwide. By letter dated 19 August 2005 the Commis-
sion asked the Belgian authorities to send it their opinion
on the facts given in the letter from the Italian authorities.
The Belgian authorities replied by letter dated 15 September
2005.

(1) OJ C 9, 14.1.2004, p. 12.
(2) See footnote 1.

(3) OJ C 142, 11. 6.2005, p. 2.

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(11) Lastly,

the Belgian authorities provided various other
information during November 2005, in particular by letter
dated 1 December 2005 (No A/30862).

France with a view to further improving operating profit (6).

2.

GENERAL CONTEXT OF THE RESTRUCTURING OF

ABX

2.1.

The principal stages of the procedure

(12) Further to the more detailed information provided when
the procedure was initiated, the Commission notes briefly
that between 1998 and 2001 the Belgian railways (‘SNCB’)
acquired a collection of individual companies. At the time,
the collection had not yet been legally gathered together
under a holding company, but nevertheless it formed the
ABX Logistics network, comprising some 107 consolidated
subsidiaries worldwide, 89 % of whose sales were made in
Europe, 6 % in Asia and 5 % in America.

(13) This case concerns the restructuring of the network notified

by the Belgian authorities on 17 February 2003.

(14) The main information notified and the doubts expressed by
the Commission when the procedure was initiated/extended
are recapitulated below.

2.1.1. Notification of 17 February 2003

(15) The original restructuring plan provided, firstly, that SNCB's
107 ABX subsidiaries, which were owned by different ABX
holding companies, were to be consolidated under a general
holding company. Secondly, since the subsidiaries ABX
Logistics (Deutschland) GmbH (‘ABX-D’), ABX Logistics
Holding (Nederland) BV (‘ABX-NL’) and ABX Logistics
(France)
they were to be
restructured in order to become viable again.

(‘ABX-F’) were in difficulty,

(16) The operational restructuring measures consisted essen-
tially in (i) reorganising the legal structures by integrating all
the legal entities of the group under one lead company (4),
(ii) disposing of and closing assets (5), and (iii) other
operational measures in Germany, the Netherlands and

(4)

In order to (i) create a cohesive, autonomous group; (ii) facilitate
synergies between the entities in the group; and (iii) make it possible
to open up the capital to an external industrial or financial investor.
(5) This involved the sale of three subsidiaries (Rheinkraft, Safety First
and Worldpack) with a combined turnover of EUR 98,5 million, the
closure of sites (7 agencies and 3 warehouses in Germany, 4 agencies
in France and 2 agencies in the Netherlands) and the sale and rent-
back of buildings and other fixed assets.

(17) To this end,

the Belgian authorities had notified the
Commission that SNCB would provide most of the finance
needed for the restructuring. The amounts initially notified
were EUR 91,6 million in conversion by SNCB of debt into
capital (long-term financing) for ABX-D, -NL and –F, and
EUR 140 million in refundable credit (short-term financing)
granted by SNCB to the same undertakings.

2.1.2. The Commission's doubts as at 23 July 2003

(18) When it initiated the investigation procedure, the Commis-
sion provisionally expressed its doubts about a number of
aspects.

(19) Existence of aid: First of all, it expressed doubts about the
statement by the Belgian authorities that the disbursement
of funds (in the form either of refundable loans or of
conversion of debt into equity) by SNCB as part of the
restructuring of ABX was an ordinary intra-group transac-
tion and did not constitute state aid within the meaning of
Article 87 of the Treaty.

(20) Restructuring — eligibility: The Commission also expressed
its doubts about the eligibility of ABX-D, -NL and -F for
restructuring aid, since it was not clear how far the rest of
the restructuring firms
the ABX group might support
financially.

(21) Restructuring — viability, distortion and limiting the aid: The
Commission also expressed its doubts concerning the
financial part of the ‘restructuring’ plan, which proposed to
meet the long-term financial requirements (need of equity)
of the ABX entities concerned with essentially short-term
financing (refundable credit of EUR 140 million). Accord-
ingly, the Commission also doubted that such financing
could allow the entities concerned to return to sustainable
viability,
the proposed compensatory measures
(especially capacity reductions) were enough to avoid
distortion of the market contrary to the common interest
and that such alleged aid would not enable ABX to have
potentially surplus cash.

that

(22) The Commission also expressed its doubts about the alleged
absence of state aid and the compatibility of
the (re)
investments by SNCB in ABX and the means used to
finance them (possible guarantees, cross-subsidies, direct

(6) These measures were to be effected mainly by (i)

improving
productivity (cutting staff by some 690 FTE in the
three
restructuring countries, including the impact of closing agencies);
(ii) reducing costs; and (iii) renegotiating lease contracts.

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financing, compliance with the directives in force). This was
particularly the case with the following measures:

2.1.4. Extension of the procedure on 3 May 2005

(a) Acquisition of ABX by SNCB. This concerns invest-
ments by SNCB between 1998 and 2001 amounting
to EUR 672,4 million (since revised to EUR 433,8 mil-
433,8 million (7)
the ABX
network, and certain information concerning the
allocation of guarantees granted either by SNCB or by
the government for financing (re)investments in ABX,
whose substance had to be checked.

for the ‘acquisition’ of

(b) Other amounts. The Commission also had doubts
about the legality/compatibility of the payment in
2001 of other subsidies totalling EUR 150 million
(since revised to EUR 114,6 million (8) granted by
SNCB to ABX-D, -NL and –F, which were paid without
being notified to the Commission in advance. The
Commission's doubts in this respect concerned the
presumed absence of aid and the compatibility of such
potential aid.

(c)

in 2004 of

Parallel amounts. The Commission also expressed its
doubts about the statement by the Belgian authorities
that the conversion into capital
loans
granted by SNCB to ABX totalling EUR 21 million
(since revised to EUR 12,1 million (9), hereinafter
for ABX Logistics (Ireland) Ltd
‘parallel amounts’,
(EUR 3,2 million), ABX Logistics (Portugal) Lda.
(EUR 2 million), ABX Logistics (Singapore) Pte Ltd.
(EUR 3,8 million) and ABX Logistics International
(Belgium) NV/SA (EUR 12 million) (‘ABX-Irl’, ‘ABX-P’,
‘ABX-Sing’ and ‘ABX-B’ respectively), constituted a
normal
transaction within the SNCB group. The
Belgian authorities considered that this amount would
be paid ‘outside the notified restructuring’ and did not
therefore constitute state aid within the meaning of
Article 87 of the Treaty. The Commission's doubts in
this respect also concerned, therefore, the compat-
ibility of this potential aid.

2.1.3. Supplementary notifications

(23) By letters dated 14 January and 24 February 2005, the
Belgian authorities supplemented the original notification
with information substantially altering the ABX restructur-
ing plan. The changes concerned in particular an increase
by SNCB and the ABX group in the financing for the
restructuring, the sale of ABX-France in the form of a
management buyout (‘MBO’) at less than the market price,
further capacity reductions, substantial internal restructur-
ing measures and the proposed sale at the market price of
the entire ABX group.

(7) See the section entitled ‘Financial implications in figures’.
(8) See the section entitled ‘Financial implications in figures’.
(9) See the section entitled ‘Financial implications in figures’.

(24) The Commission extended the investigation procedure —
supplementing rather than replacing the original procedure
this extra
— with regard to two main aspects of
information:
the ABX
for
the change in the budget
restructuring and the terms of the sale of ABX-France in
particular but also of ABX-WW (ABX Worldwide), the new
ABX holding company set up during the restructuring.

(25)

In the new situation, therefore, the following amounts were
to be contributed:

(a)

(b)

EUR 157,4 million instead of the EUR 50 million in
equity for the restructuring of ABX in Germany, to
bring ABX-D to an equity level of EUR 14,4 million
(at 31 December 2004), compared with a balance
sheet total of EUR 234 million (at 31 December
2003);

EUR 10,6 million instead of the EUR 12,6 million in
equity for the restructuring of ABX in the Netherlands,
to bring ABX-NL to an equity level of EUR 9,3 million
(at 31 December 2004), compared with a balance
sheet total of EUR 35,7 million (at 31 December
2003).

For ABX-D and –NL, these amounts take the form of a
increase either through the conversion of
capital
existing debt or through the contribution of new
equity;

(c)

EUR 223 million to enable an MBO of part of ABX in
France. This amount is permanent expenditure for
SNCB and consists in particular of debt write-offs and
covering future losses.

(26) As to the sale at a loss of ABX-F (MBO), the Commission
raised doubts about the presence of state aid in the funds
contributed by SNCB to the purchaser. Concerning the
proposed sale of ABX-WW, the Commission stressed the
need to provide all the necessary information, so that it
could check that the company was effectively being sold at
the market price.

2.1.5. Further information

(27)

In particular by letter dated 9 June 2005, Belgium provided
the Commission with a whole set of information concern-
ing the extension of the procedure, while emphasising and
supplementing other details concerning the case as a whole.

(28) By letter dated 1 December 2005, Belgium submitted
certain supplementary information basically clarifying
earlier points and expressing a new commitment as regards
the presence of ABX in Germany.

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2.2.

Activities of ABX

(29) Apart

from the ABX activities summarised above and
described in the initiation of the procedure, the Belgian
and commercial
authorities
positioning of ABX Logistics Worldwide is clearly that of
a ‘transport managing company’ or ‘freight forwarder’.

strategic

state

that

the

(30) As such, ABX carries out transport logistics operations.
According to the expert study commissioned by the
Commission (‘Jacobs’) (10), logistics consists generally speak-
ing in ‘managing how and when to transport resources to
the place where they are needed’. According to this study, in
the case of ABX it
is a question more specifically of
optimising the continuous flow of equipment over an
interconnected transport network and through nodal
warehousing points.

(31) The Belgian authorities add that freight forwarders do not
usually own transport assets (lorries, boats, planes, etc.) but
use haulage companies; this is confirmed by Jacobs.

(32)

In this particular case, apart from a few exceptions mainly
in the Netherlands, the ABX group's transport capacity is
almost entirely subcontracted. The number of
lorries
owned in the Netherlands has been declining steadily since
2001, and the objective is to reduce it to zero. In 2001,
ABX Logistics in the Netherlands owned 240 lorries, which
figure was reduced to 166 in 2002, 138 in 2003 and 110 in
2004.

(33) For domestic and international road transport operations,
ABX Logistics subcontracts the transport activity proper to
independent road hauliers. For air and maritime transport,
ABX Logistics acts as a broker, buying the necessary
transport capacity on behalf of its customers from shipping
lines or airlines.

(34) The table below clearly confirms this strategic positioning:
only 3 % of the lorries used by ABX Logistics are owned or
leased by group companies (11).

(35) Transport capacity of ABX Logistics

Owned (or leased)

Subcontracted

Transport capacity
(lorries)

Transport capacity
(planes)

Transport capacity
(ships)

3 %

0

0

97 %

100 %

100 %

(10) Jacobs Consultancy: Capacity of ABX Logistics and Sernam markets,

final report, May 2004.

(11) Letter from the Belgian authorities, 24.2.2005, p. 13.

(36) ABX's place in the different market segments: According to the
Belgian authorities, in 2003 49 % of ABX's operations were
in the road transport market, 42 % in the air and sea
markets and 8 % in the contract logistics market, which
comes under the warehousing of goods.

(37) Given its level of activity in Germany, the Netherlands and
France, ABX is not among the five leading firms in the
individual markets at national
(road, air, sea and
contract logistics), and this is confirmed by Jacobs.

level

(38) Growth potential of

concerned — general:
the markets
According to both the Belgian authorities and Jacobs,
despite recent difficulties due in particular to the events of
11 September 2001, demand for
services
continues to grow. According to Jacobs, this is due to the
growth of Europe's population, consumers'
increasing
preference for a variety of products to choose from, growth
in consumers' purchasing power and increasing outsour-
cing of
to logistics
specialists.

services by producers

logistical

logistical

(39) Growth potential in Germany: Jacobs considers that there is
considerable potential for growth in the German logistics
market. The trend of subcontracting logistical services in
the German market over the last eight years indicates that
both supply and demand could grow by 15 % to 20 %
annually in the years ahead.

(40) Growth potential in the air market: Both Airbus and Boeing
forecast that the number of cargo aircraft will double in the
next 15 to 20 years on account of the increase in air freight,
which will exceed that in air passenger transport. Airbus
forecasts a tripling of freight transport, with average annual
growth of 5,7 % (6,4 % according to Boeing) between now
and 2021. These high growth margins should also give a
growth margin for carriers and logistics operators.

(41) Growth potential in the road market: The expert states that, in
Europe as a whole, road transport is an industry with low
barriers to entry which therefore suffers from long-term
structural overcapacity (12), which has been confirmed
during the last five to seven years when prices have fallen.
However, the overcapacity concerns the firms carrying out
the transport operations in question; this is not the case
with ABX, which ‘organises’ the transportation but does not
carry it out. According to Jacobs, there is a strong growth
trend in the road freight transport market. Consequently,
such a market trend should also ensure a margin of growth
for carriers and logistics operators.

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

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(42) Growth potential in the maritime market: According to Jacobs,
growth in the maritime freight forwarding sector was 7 %
on average between 1998 and 2002. Future growth in
maritime freight transport will depend on more general,
global developments.

(47) Acquisition of Dubois (subsequently an important part of ABX in
France). The Belgian authorities state that, for the period
1998-2002, the calculation available to SNCB resulted in an
internal rate of return (IRR) of 12,7 % for a weighted
average cost of capital (WACC) of 9,5 % and a net present
value (NPV) of EUR 9,7 million, making it possible to
expect a reasonable return on investment.

2.3.

Creation of the ABX network

2.3.1. Acquisition of companies in the ABX network by SNCB

(43) Although the transactions for the acquisition of the ABX
network by SNCB, which by their very nature cannot
contain advantages for ABX, are not the subject of this
Decision,
the Commission highlights their main stages
below (as presented by the Belgian authorities) by way of
general background.

(48) Acquisition of Gruppo Saima Avandero (subsequently ABX in
Italy). The Belgian authorities state that, for the period
1998-2002, the calculation available to SNCB resulted in an
internal rate of return (IRR) of 13,0 % for a weighted
average cost of capital (WACC) of 9,0 % and a net present
value (NPV) of EUR 51,8 million, making it possible to
expect a reasonable return on investment.

(49)

In response to the Commission's question about possible
cross-subsidies used by SNCB to finance its investments in
ABX,
the Belgian authorities provided the following
clarifications:

(44) The Belgian authorities explained that SNCB decided to
acquire the different companies in the ABX Logistics group
on the basis of business plans which, at the time of the
investment, suggested a rapid return to profitability. For
Thyssen Haniel Logistik (‘THL’)/Bahntrans, Dubois and
Saima Avandero (which became ABX in Germany, France
the acquisition conditions are briefly sum-
and Italy),
marised below.

(a)

They state that ‘for the period from 1998 to 2002 as
whole, state support is not enough to cover the public
service mission expenses [of SNCB]’ (13). They stress
that
in 2001 the Belgian Court of Auditors had
already stated that ‘as regards the investment and
operating functions, for the period as a whole, except
exceed
for
resources for both functions, so that there is nothing
to indicate a disposal, by balance, between the two
public service missions and the other activities [of
SNCB]’ (14).

appropriations

cumulatively

1997,

(45) Acquisition of THL/Bahntrans (subsequently ABX in Germany):
According to the information provided by the Belgian
authorities in October 2000, the purchase price for the THL
group as a whole was DEM [...] (*) million (Thyssen group)
plus DEM [...] million (Deutsche Bahn AG). The group's
business had been valued at DEM [higher value than the
above purchase price (**)] million by Coopers & Lybrand (of
which DEM [...] million for the groupage business) and at
DEM [...] million, taking account of the holding company's
costs. When it made this acquisition, SNCB assumed the
commitments of the former shareholders with regard in
particular to an existing guarantee on a building in Munich.
The lower-than-market price of EUR [...] million (DEM
[...] million) was paid by the former shareholders of
Bahntrans, Thyssen Handelsunion and Deutsche Bahn, on
1 October 1998.

(46) ABX-D made losses from the time of acquisition onwards.
These considerably weakened the financial structure of the
undertaking, whose equity turned negative in 1999. This
situation, which lasted until 2005, led SNCB as the parent
company to issue a comfort letter concerning the risk
associated with the negative equity position.

(b) They also state

that

‘since

the operating and
investment costs of SNCB in regard to its public
service tasks are not even covered by the state
support, SNCB has resorted to borrowing for the
balance of its needs’ (15). This is also valid, therefore,
for the SNCB resources used for investments in ABX,
...
which were ‘not financed by specific borrowings,
but from its general cash resources’ (16).

(50) Lastly, the Belgian authorities explain that, following these
acquisitions, SNCB addressed a number of comfort letters
to the creditors of several ABX subsidiaries, in particular to
creditors of ABX-D and ABX Spain. The Belgian authorities
consider that these comfort letters are part of the usual
relations between a parent company and its subsidiaries in a
market economy.

(13) Letters from the Belgian authorities dated 23.12.2003, registered on
29.12.2003 under No A/38604, and that registered on 20.6.2003
under No A/23465.

(14) Report of the Belgian Court of Auditors, 18.5.2001, p. 221.
(15) Letter from the Belgian authorities, registered 20.6.2003 under No

A/23465.

(*) Confidential data
(**) The exact figure has been deleted and replaced by this formula.

(16) Letter from the Belgian authorities dated 29.8.2003, registered on
29.8.2003 (Loyola de Palacio cabinet incoming mail No 2805), p. 12.

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2.3.2. Reinvestments made by SNCB in 2001

(51) Capital increase in Germany. At the end of 2000 and in 2001,
SNCB increased the capital of its German subsidiary (ex-
Bahntrans) with a cash contribution of EUR 17,5 million
and by converting short-term loans from SNCB amounting
to EUR 55 million into capital. The decision was based on
recommendations and analyses made by the Boston
Consulting Group (‘BCG’).

(52) The BCG documents put forward the following arguments

and recommendations:

(a)

(b)

the ABX Group presented an opportunity to create
significant value and a strategic interest for SNCB;

financial
were needed to capture this potential;

investment and strengthened management

(c)

(d)

(e)

invest-
the self-financing by SNCB of this financial
ment was considered at the time to be the best option;

in the implementation of this strategy of creating
value through ABX Logistics, a priority matter for
SNCB was to turn around Bahntrans;

in conclusion, BCG's experts concluded that
the
recovery plan should be implemented for two reasons:

— if successful,

the turnaround would make it
possible to continue the ABX Logistics strategy,
‘which has a value creation potential of more
than EUR 300 million’;

— even if only partly successful, the turnaround
would make it possible to put a higher price on
the resale value of Bahntrans.

(53) The Belgian authorities state that the IRR of the total investment of EUR 72,5 million which could be
expected at the time of the investment was 8 % to 10 %, depending on the profit forecasts selected. This
internal rate of return is comparable to the cost of capital for SNCB at the time.

Calculation of the IRR for SNCB's reinvestments in ABX Germany in 2001 of EUR [...]million

Yearly growth rate of
EBIT

Discount rate

Year

Discount factor

Turnover

Pre-tax operating profit

Use of the surplus EUR
[...]million at the acquisi-
tion price

Investment of EUR [...]
million in 2001

Free Cash Flows

Weighted average cost of
capital

Total discounted cash
flow

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

Terminal
value

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

2001

2002

2003

2004

2005

2006

Terminal
value

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

9 %

[...]

[...]

[...]

[...]

[...]

[...]

[...]

IRR

10,04 %

(54) Capital increase of EUR 12,2 million in the Netherlands. the
strategic plan for the ‘Dutch stage’ (ex-Kerstin Hunik group,
acquired in February 1999 and also comprising the
holdings in Ireland) consisted in:

(a)

strengthening domestic activities through the acquisi-
tion of a company operating in national distribution
in the Netherlands; the company's volume of business
was 2 000 consignments a day, and SNCB's manage-
ment considered that a volume of 6 000 consign-
ments would be necessary to work profitably in
national distribution;

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(b)

(c)

continuing the restructuring of Kersten Hunik Hold-
ing (renamed ABX Logistics Holding BV), acquired in
1999;

selling the maritime transport activities (‘rederijen’)
Kersten Hunik Scheepvaartmaatschappij BV and Link
Line Europa BV, thereby generating EUR 1 million in
cash;

(d)

in practice,
follows:

the financing needs were supplied as

— EUR 9,2 million in short-term credit from SNCB
was converted into capital in March 2001;

— in September 2001 SNCB increased the capital of
ABX Logistics Holding by EUR 10 million. This
sum was intended to finance the acquisition of
Wegtransport BV by ABX Logistics Holding. The
price paid for the shares was EUR [...] million,
the balance of EUR [...] million remaining
available to cover any price adjustments resulting
from due diligence;

— altogether, the Belgian authorities consider that
the amount of financing granted by SNCB to the
Dutch subsidiary (excluding the acquisition price
of EUR [...] million for Wegtransport) was
therefore EUR 9,2 million in March 2001 plus
EUR 3 million in September 2001, i.e. a total of
EUR 12,2 million;

— in their view, this recapitalisation was justified by
the prospect of a return to profitability in 2002
the Dutch activities, as reflected in the
for
positive profit trend forecast at the end of 2000:

2000A

Budget 2001
(drawn up at
end 2000)

Budget 2002
(drawn up at
end 2001) (*)

Turnover

54,1

60,9

Operating
profit (EBIT)

- 2,59

- 2,73

86,4

0,68

(*)

includes the turnover from the acquisition of Wegtran-
sport.

(55) The Belgian authorities consider that, on the basis of the profit forecasts available at the time, the internal

rate of return for this investment of EUR 12,2 million is about 11 %.

Calculation of the internal rate of return (IRR) for SNCB's reinvestments of EUR 12,2 million in ABX
Netherlands in 2001 (EUR million)

Yearly growth rate of
EBIT

Discount rate

Year

Discount factor

[…]

[…]

[…]

[…]

2000A

Terminal
value

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

Plan 2003
(**)

Plan 2004
(**)

Plan 2005
(**)

Terminal
value

Budget
2001
drawn up
at end
2000

Budget
2002
drawn up
at end
2001 (*)

Turnover

[…]

Pre-tax operating profit

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

Recapitalisation of EUR
12,2 million in 2001

Free Cash Flows

Weighted average cost of
capital

[…]

[…]

9 %

[…]

[…]

[…]

[…]

[…]

[…]

Total discounted cash
flow

[…]

[…]

[…]

[…]

[…]

[…]

[…]

IRR

11,3 %

includes the turnover from the acquisition of Wegtransport

(*)
(**) Historical data not available. Ex post revaluation carried out on the basis of (1) an expected gross operating margin of [...] % in

2003 and (2) an annual growth rate of [...] % of turnover and profit from 2004.

L 383/28

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Official Journal of the European Union

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(56) Capital increase of EUR 30 million in France. In December
2001 SNCB increased the capital of the French company
acquired in 1999-2000 in order to start a debt securitisa-
tion programme that would make it possible to obtain a
line of bank credit of EUR 70 million. The capital increase
had been imposed by Société Générale, the provider of
for ABX Logistics (France) SA, as an essential
credit
precondition for
that company's
commercial debt portfolio.

the securitisation of

(57) According to the Belgian authorities, the ABX Logistics
(France) financial forecasts available at that time revealed
the prospect of a return to profitability within the
framework of a recovery plan. As a result of measures to
improve operations (IT, audit of distribution processes,
closures and disposals, harmonisation of working condi-
the plan forecast an
tions,
improvement
from —
EUR 19,6 million in 2001 to EUR 4,6 million in 2003.

integration of activities),

in operating profit

(EBIT)

Forecast profit trend for ABX Logistics France (at September
2001)

Turnover

Operating profit
(EBT)

Net profit

2000
actual

516,0

- 6,1

- 2,1

2001 bud-
get

2002 fore-
cast

2003 fore-
cast

631,0

626,0

664,0

- 19,6

- 8,2

- 28,4

- 11,6

4,6

4,0

Source: Recovery plan, page 43; conversion rate: EUR 1 = FRF 6,55957

(58) SNCB thought that this securitisation transaction would
make it possible to substitute external financing for short-
term financing by SNCB. In the short term, it was possible
to inject a large proportion of the excess cash released by
the securitisation into the ABX cash pool, thus enabling the
companies which were members of it to partly reimburse
their own exposures to SNCB.

(59) The Belgian authorities consider that the profit forecasts available at the time indicate an IRR of 14 % for

this investment of EUR 30 million.

Calculation of the internal rate of return (IRR) for SNCB's reinvestments of EUR 30 million in ABX France in
2001 (EUR million)

Yearly growth rate of
EBIT

Discount rate

Year

Discount factor

[…]

[…]

[…]

[…]

Terminal
value

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

2000
actual

2001
budget

2002
forecast

2003
forecast

Plan
2004 (*)

Plan
2005 (*)

Terminal
value

Turnover

Net profit

Recapitalisation of EUR
30 million in 2001

Free Cash Flows

Weighted average cost of
capital

Total discounted cash
flow

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

9 %

[…]

[…]

[…]

[…]

[…]

[…]

[…]

IRR

14,0 %

(*) Historical data not available. Ex post revaluation carried out on the basis of (1) an expected gross operating marging of [...] % in

2004 and [...] % in 2005 and (2) an annual growth rate of [...] % for turnover and profit from 2004
[...] % on the basis of pre-tax operating profit (EBT)

(**)

28.12.2006

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Official Journal of the European Union

L 383/29

2.3.3. ‘Parallel contributions’ from SNCB to ABX

(60) The Belgian authorities specified that, when it acquired the
companies
in Ireland and Portugal and the Air&Sea
activities in Belgium, SNCB took over all or part these
companies' debts of and then converted them into capital.
According to the authorities, these capital conversions,
which they describe as ‘parallel contributions’, were aimed:

(a)

either at making it possible for certain companies to
merge and achieving the objective of simplifying the
group in legal terms (Ireland, Portugal),

(b)

or at maintaining transport licences (Ireland),

(c)

or at enabling the companies to continue their
Air&Sea activities with a minimum level of equity so
as to obtain external means of financing (Air&Sea
Belgium).

(61) According to Belgium, the rebuilding of the equity and the
rapid return to profitability were ensured by virtue of: (1)
the ratio of their losses to their turnover, (2) the total
amount of
the conversions, and (3) by the financial
projections (2003 budget) made by management at the end
of 2002, which forecast a return to equilibrium towards the
end of 2003. The subsidiaries were not to be regarded as

firms ‘in difficulty’, and their situation is not comparable
therefore to the three undertakings in difficulty identified in
the original restructuring plan. According to the Belgian
authorities, the specific, one-off assistance given by SNCB
to these subsidiaries is a normal
financing transaction
between certain subsidiaries and a parent company in the
course of business and is therefore entirely compatible with
the market-economy private investor principle.

(62) The 2003 budget

for the three companies concerned,
drawn up at the end of 2002,
indicated there was a
prospect of a return to equilibrium, or quasi-equilibrium
(losses of less than EUR 1 million), within 12 months from
the introduction of the plan.

Net profit 2002

Net profit budgeted
for 2003 (*)

ABX Logistics (Ireland)
Ltd.

ABX Logistics (Portugal)
Lda

ABX Logistics Int. (Bel-
gium) SA/NV

- 0,3

- 3,5

- 2,0

0,0

- 0,3

- 0,8

(*) Budget drawn up by the management in September 2002.

Key financial data for 2002 of the companies in Ireland and Portugal and Air&Sea Belgium (EUR million)

(1)

(2)

Turnover
2002
(actual)

Operating
profit
(EBIT)
2002
(actual)

Net profit
2002
(actual)

Net losses
2002 as %
of turn-
over

Total amount of conver-
sions

Acc. to
original
plan (*)

Actually
carried out

ABX Logistics (Ireland) Ltd.

ABX Logistics (Portugal) Lda.

ABX Logistics Int. (Belgium) SA/NV

31,4

13,7

39,0

- 1,3

- 0,5

0,2

- 0,3

-1 %

- 3,5

-25 %

3,2

2,0

- 2,0

-5 %

12,0

17,2

4,3

2,0

2,0

8,3

(*) Conversions into capital: EUR 91,6 million + provision of extra funds: EUR 140 million, including a safety margin of EUR

21 million allocated to the subsidiary.

(63) The Belgian authorities provided calculations of the internal
rate of return (IRR) for each transaction. The calculations,
which are not presented here in detail, are comparable in
method to those for the reinvestments in 2001 (which are
presented). In each case they give an IRR of between 9,6 %
and 12,7 %.

Nevertheless, at
the Belgian
authorities provided an estimate of the internal rate of
return for this investment, which was 10,9 %.

the Commission's request,

(64) SNCB also made an investment of EUR 3,8 million in ABX
Singapore. According to the Belgian authorities,
the
assistance concerning ABX Singapore definitely does not
the Treaty.
fall within the scope of Article 87 of

(65) SNCB also issued, in 2000, a guarantee of EUR 3 million
for the construction of a building in Singapore. The Belgian
authorities consider that this transaction is also outside the
scope of the Treaty. They subsequently stated that the debt
guaranteed is covered primarily by the building, which is
regarded as a property situated in a dynamic, booming
market. The building was sold in 2005.

L 383/30

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Official Journal of the European Union

28.12.2006

2.4.

Role of the state in SNCB's decisions

concerning ABX

(66) Further to the information provided on this subject in the
initiation of the procedure, the Commission here sum-
marises certain aspects concerning SNCB and the potential
influence of the state on its decisions.

bodies, whether existing or prospective, undertake any
commercial, industrial or financial operations directly or
indirectly relating, in whole or in part, to its object or which
would be likely to facilitate or promote the attainment or
development thereof … .”

2.4.1. SNCB's board of directors and activities

(67) SNCB is an autonomous public undertaking. As such it is
not subject to bankruptcy law under the Law of 21 March
1991 reforming certain economic public undertakings (17).
Its object is to carry passengers and goods, but it can carry
on any commercial activity directly or indirectly associated
with that object. Its organs are the board of directors (BoD),
the management board (MB) and the managing director
(MD). The BoD has ten members, including the MD. The
directors (18) are appointed by the King and chosen
according to the complementarity of
their qualifica-
tions (19).

(68) Although SNCB is free to carry on any activities compatible
with its object, the Belgian legislator has introduced certain
limited mechanisms for checking whether an autonomous
public undertaking is infringing the law, its statutes or the
management contract. The main mechanism is the presence
in the management bodies, particularly the board of
directors and the management board, of a government
commissioner, who ensures that the law, the statutes of
SNCB and the management contract are observed.

2.4.2. Conclusions of the Court of Auditors

(69)

In May 2001 the Belgian Court of Auditors issued a
report (20) on SNCB which provides several important clues
about clarifying the influence of the state on the decisions
taken by SNCB with regard to its commercial activities. The
report states, firstly, that ‘the object of SNCB is defined as
follows: “The object of the company is the carriage of
passengers and goods by rail. The Company may, on its
own or through a stake in Belgian, foreign or international

(17) In particular Articles 2, 3, 8, 12 and 41.
(18) According to the information provided by Belgium, the function of
director (all members of the BoD) is incompatible with the task or
functions of a Member of the European Parliament, a member of the
legislative chambers, a Minister or Secretary of State, a member of
the Council or Government of a Community or a Region, a governor
of a province, a member of a Provincial Executive or a member of
SNCB's staff.

(19) According to the Court of Auditors (p. 46), the removal of directors
currently requires the assent of a two-thirds majority of the board of
directors.

(20) Court of Auditors: The sound use of public funds by SNCB. Audit
carried out pursuant to the resolution of the House of Representa-
tives of 11 May 2000, Brussels, May 2001

The original text of the Law of 23 July 1926 setting up
SNCB did not specify the object of the company. The Law
of 1 August 1960 (amending the above Law) included the
object in its provisions, on the basis of
the following
considerations: “The draft Law submitted to you therefore
determines the object of SNCB, stipulating that the latter
may lawfully undertake any activity associated with the
operation of the network,
in particular the running of
buffets, snack bars, etc. …, the building of rolling-stock for
its use, the organisation of all road transport with a view to
facilitating the carriage of goods … .”

The object of SNCB, therefore, is deliberately defined very
widely. Furthermore, the definition contains no geographic
restriction … The object may be determined in such a way
as to justify any commercial or even financial activity.’

(70) Secondly, with regard to SNCB's expenditure on ABX, the
Court of Auditors describes the approach to drafting
certain parts of the report: ‘Given the autonomy of SNCB,
the level of risk to be prevented and the challenges, special
attention has been paid to acquisition decisions in the
context of the development of the ABX network. This
analysis is concerned basically with clarifying the condi-
tions in which those decisions were taken and are followed
up,
in order in particular to illustrate the difficulties of
implementing the legal provisions which enable the state to
avoid any threat to the undertaking's ability to fulfil its
public service obligations’ (21).

(71) Accordingly, the Court of Auditors reaches the following

conclusions:

(a)

‘the change in the strategy of expanding the ABX
network was manifestly initiated by the management
[of SNCB]’ (22).

(21) Report of the Court of Auditors, 18.5.2001, p. 142.
(22) Report of the Court of Auditors, 18.5.2001, p. 151.

28.12.2006

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Official Journal of the European Union

L 383/31

(b)

‘a wide-ranging autonomy has been granted to the
public undertaking [SNCB] as regards its non-rail
investments
in
commercial activities’ (23).

and its acquisition of holdings

(c)

‘the decisions taken by SNCB in regard to these
[commercial] activities are limited only by compliance
with its object and the provisions of the Law of
21 March 1991 which are designed to prevent the risk
of a threat to the performance of its public service
tasks’ (24).

(d)

‘investments in non-rail commercial activities are not
… approved in advance, so that state control relies
entirely on the intervention of
the Government
Commissioner’ (25).

(e)

current

legal provisions, which grant

‘The
the
Government Commissioner a right to bring proceed-
ings and the Minister a right of cancellation in respect
of decisions jeopardising the performance of
the
public service tasks [of SNCB], do not provide a
sufficient guarantee that the objective of the perma-
nence of those tasks is satisfied’ (26).

(72)

It is in this context of awareness of the risk threatening
SNCB's public service activities and the inadequacy of the
means of supervision available to the state for limiting such
risks that the action of the Government Commissioner and
the Minister responsible reported by the Court of Auditors
should be seen. Thus, on 2 March 2000, the Government
Commissioner was concerned to check whether
the
investment in the Italian arm of ABX ‘… does not prejudice
the performance of the public service tasks [of SNCB]
…’ (27). On 28 April 2000, the Minister for Mobility and
Transport expressed the wish that ‘the strategic operations
of the undertaking should be long-term ones and should
make it possible to ensure its viability and sustainabil-
ity’ (28). On 31 May 2000, the Minister for Mobility and
Transport spelt out ‘… the conditions for the exercise of
supervision by the state in the event of an acquisition or
equity participation …’ (29), remarks which followed those
of the Government Commissioner on 26 May 2000 when
he emphasised ‘… the need for commercial activities to be
compatible with the object of SNCB and the task conferred
on it by statute …’ (30).

(23) Report of the Court of Auditors, 18.5.2001, p. 142.
(24) Report of the Court of Auditors, 18.5.2001, p. 141.
(25) Report of the Court of Auditors, 18.5.2001, p. 154.
(26) Report of the Court of Auditors, 18.5.2001, p. 154.
(27) Report of the Court of Auditors, 18.5.2001, p. 152.
(28) Report of the Court of Auditors, 18.5.2001, p. 150.
(29) Report of the Court of Auditors, 18.5.2001, p. 153.
(30) Report of the Court of Auditors, 18.5.2001, p. 153.

2.4.3. Council of Ministers involvement in the restructuring of

ABX

that date,

(73) When it initiated the investigation procedure, the Commis-
sion referred to the record of the Council of Ministers
meeting of 22 February 2002 and the related press
release (31), which clearly show the involvement of
the
in the decision on the
Government, at
restructuring of ABX:
from the Prime
the Council of Ministers approved a set of
Minister,
measures concerning the activities of ABX. The following
decisions were taken on the basis of the information and
strategic considerations transmitted by SNCB: the setting-
up by SNCB of a holding company bringing together all the
activities of ABX, … .’

‘On a proposal

2.4.4. SNCB's financing capacity from 1998 to 2001

(74) The Commission found that between 1998 and 2001 SNCB
was by itself in a sufficiently good financial position to
obtain loans on the market. This is borne out in particular
by:

(a)

(b)

the fact that in 1998 SNCB had a healthy balance
sheet structure, with a debt to equity ratio of 51 % in
1998, 54 % in 1999, 62 % in 2000 and 90 % in 2002,
and made a consolidated profit (32);

the study by the independent expert, Nera, which
indicates that SNCB's average indebtedness during this
period was sustainable when compared with that of
similar undertakings in the same sector. According to
Nera, such a sustainable level corresponds to a debt/
equity ratio of between 0,8/1 and 1,25/1 (33). In the
same study, Nera concludes that SNCB's ratio did not
exceed these values between 1997 and 2001 (34).

(75) Nevertheless, from 2002 SNCB's financial position deterio-
rates. Its financial debts, as expressed in the consolidated
accounts, went up from EUR 3,9 billion in 2001 to
EUR 5 billion in 2002 and EUR 6,2 billion in 2003,
compared with total consolidated debts of EUR 8,6 billion
in 2001, EUR 9,6 billion in 2002 and EUR 10,7 billion in
2003, whereas its equity fell from EUR 4,9 billion in 2001
to EUR 4,4. billion in 2002 and EUR 4,2 billion in 2003.
Taking account only of financial debts with less than one
year and more than one year to run (35), the ratio increases
from 80 % in 2001 to 114 % in 2002 and 150 % in 2003,
years when SNCB posted a consolidated loss.

(31) Available on the web at: http://www.belgium.be/
(32) Letter from the Belgian authorities dated 29.8.2003, registered on
29.8.2003 (Loyola de Palacio cabinet incoming mail No 2805), p. 4.

(33) Nera report, p. 58.
(34) According to Nera (appendix D.1. p. 7), the debt/equity ratio changed
from 0,6 in 1997, 1998 and 1999 to 0,8 in 2000 and 1,0 in 2001.
(35) For the period 1998 to 2001, SNCB established the abovementioned
ratio by including long-term financial debts due within the year,
which explains the difference between 90 % and 80 % for 2001 and
a difference for the following years.

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Official Journal of the European Union

28.12.2006

3.

DETAILED DESCRIPTION OF THE ABX

RESTRUCTURING AND PRIVATISATION MEASURES

(76) The activities of the ABX group were brought together in a
holding company called ABX Logistics Worldwide NV/SA
(‘ABX-WW’) (36). In addition, the Air&Sea activities, which
hitherto came under the different ABX national entities, are
already largely gathered under ABX Logistics Air&Sea
Worldwide SA/NV, a subgroup of the newly founded ABX-
WW, hereinafter referred to as ABX Air&Sea (37).

This consolidation is part of a thorough restructuring of all
the group's activities, begun in 2002. The restructuring also
includes both operational measures (integration of different
entities, setting-up of a central service, organisation into
profit centres, capacity reductions and productivity efforts,
etc.) and financial measures intended to restore the group's
financial structure and viability. Taking account of these
restructuring measures, SNCB signed a sale agreement for
ABX-Worldwide group with an investor, subject to the
Commission's approval of the restructuring.

The main features of the restructuring are described below.

(77) The Belgian authorities state that, as a result of

this
restructuring, ABX-WW returned to operating profitability
in 2004 (EBIT of EUR 11,6 million) and should return to
net profitability in 2006 (net profit of EUR 10,7 million) (38).
(38).

3.1.

Integration and reorganisation of the ABX

group

(78) Various measures integrating the companies of the ABX
group have been put into effect: integration of the group's
management
IT
systems,
financial management and human resources
management.

(Phoenix programme),

structure

the

(79) Phoenix. The Belgian authorities state that the programme is
intended to integrate the international management of the
group's various activities, harness operational synergies,
concentrate purchasing volumes at a smaller number of
suppliers, strengthen the Corporate Centre by providing it
with the IT processes, skills and tools necessary for the
tasks, coordinate commercial and
performance of

its

(36) This consolidation took place on 29 December 2003, except for the
(France), which were
international activities of ABX Logistics
disposed of at the end of December 2004. According to the Belgian
authorities, these activities are profitable or close to being so. The
entities concerned are ABX Logistics Air&Sea (France) SAS, Road
International, Mitjaville S.A.S. and Lacombe Transports Internatio-
naux Sarl.

(37) The Air&Sea activities in Belgium, Asia and America have already
been consolidated under ABX-Air&Sea. The Air&Sea activities in the
Netherlands were so consolidated in early January 2005. The transfer
of the Air&Sea activities in Germany was deferred for two reasons: (i)
it was apparent that the transfer would generate an accounting profit
of EUR [...] million in the books of ABX Logistics (Deutschland)
GmbH in the year of the transfer but would subsequently entail a
recurrent cash drain of EUR [...] million a year; and (ii)
the
lose the
transaction would make ABX Logistics (Deutschland)
financial resources generated by the securitisation of
the debts
associated with these activities, i.e. EUR [...] million. These resources
should be obtained from other sources of
financing, which is
impossible to achieve while the company's balance sheet structure
has not been strengthened.

(38) Letter from the Belgian authorities, 9.6.2005. These are updated
figures, which may therefore differ from the forecasts of January
2005.

operational activities between countries and the quality of
customer service through ‘product’ teams, and strengthen
local management's desire, and awareness of the need, to
work together with the other entities in the group.

(80)

IT. The Belgian authorities state that the integration of IT
systems is intended to integrate existing systems, rationalise
applications and introduce general solutions for the group.

(81) Financial centralisation. The team for the financial manage-
ment of the group's headquarters was strengthened so as to
centralise this function within the group. Thus the financial
control and cash management teams were strengthened,
and new teams were installed for the consolidation of
profits and the management of accounts receivable. The
quality of the financial information was improved by the
above-mentioned IT integration projects and the standardi-
sation of the financial information transmitted from the
countries to group headquarters.

(82) As part of the financial centralisation, ABX introduced a
mechanism for pooling the cash of all the companies in the
group. This
cash pooling led the ABX group in
January 2001 to open, with a guarantee from SNCB, a
single cash credit
line for a maximum amount of
EUR [...] million at a financial establishment.

The Belgian authorities informed the Commission that the
lending bank receives a commercial consideration for this
line of EUR [...] million, and that there is a consideration of
[...] basis points for the guarantee provided in January 2001
by SNCB for the credit line.

(83) Human resources. A director of human resources for the
group was hired in November 2003, with the task of
introducing the structures and processes for coordinating
the management of the subsidiaries' human resources and
common procedures for the recruitment, assessment and
remuneration of the group's senior executives and ‘high
potentials’. A European Works Council will be set up in
2005.

(84) The Belgian authorities state that the centralisation of the
coordination functions makes the central services more
efficient. The cost of the central service, which consists of
the costs of international customer and/or multiproduct
the
global accounts, central
structure (financial, legal, human resources and commu-

IT costs and the costs of

28.12.2006

EN

Official Journal of the European Union

L 383/33

is

reinvoiced to the ABX-WW subsidiaries
nication),
through licence and service fees. The reinvoicing amounts
to about [...] % of the turnover of the ABX-WW subsidiaries
and covers the costs associated with the protection and use
of
the services which headquarters
performs for the subsidiaries.

the brand and all

(85)

In addition, citing a recent study (39), the Belgian authorities
point out that the costs of the ABX-WW structure are lower
than average for groups of similar size, taking all sectors
together. As regards the size of the headquarters relative to
the size of the group, the figures show that the geometric
mean of all the groups studied is 186 staff at headquarters
out of a total staff of 10 000. The mean is higher than the
figure for ABX, which has 60 staff in the central service out
of a total of 10 000.

(86) ABX's operations are divided into a number of profit
centres, each being an activity that is meant to be viable in
its own right by 2006 (including the Road Domestic
activities in Germany, where the difficulties were greatest).

3.2.

Measures specific to ABX Germany

(87) Operational measures. Apart from the operational restructur-
ing measures described in the initiation of the procedure,
additional measures involving the disposal of subsidiaries
and activities, closures of agencies and activities, and
productivity gains will result in an overall reduction of 64
sites (- 69 %), EUR 184 million in turnover (- 30 %), 1 589
full-time jobs (- 43 %) and 405 062 m2 in surface area (-
56 %) (40) by the completion of the restructuring plan in
principle at the end of 2005, with a return to viability for
the group in 2006-2007.

(88) By letter dated 1 December 2005, the Belgian authorities
also stated that ‘given the unfavourable trend of the market
in Germany, and taking the requirements in the Commis-
sion's guidelines into account, ABX is working on a plan
allowing it to reduce [...] the scope of its domestic road
transport activities in Germany. (…)

The plan has not yet been finalised. ABX Logistics can,
however, give the Commission a commitment that by [...] it
will reduce its domestic road courier service in Germany
through closures, disposals or partnerships, with the goal of
reducing the current number of agencies (30) controlled by
ABX to [...]. ABX could, moreover, remain a [...] shareholder
in about [...] of the [...] sites.’

(89) Productivity gains. According to the information commu-
the operational
the Belgian authorities,

nicated by

(39) Source: Collis D., Young D. and Goold M., ‘The Size, Structure and
Performance of Corporate Headquarters’, Harvard Business School
Strategy Working Papers Series, 2003; ABX Logistics.
(40) Letter from the Belgian authorities, 14.1.2005, p. 23.

restructuring measures
improvement (theoretical, at constant turnover)
Germany's operating margin of some EUR 14,6 million.

in Germany will generate an
in ABX

(90) Financial restructuring. SNCB plans to convert a debt of
EUR 50 million into capital, to make EUR 100 million of
additional equity available and to convert EUR 7,4 million
of interest into capital. The measures will be carried out as
soon as they have been approved by the Commission. This
capital contribution should enable ABX-D to bring its
equity level at 31 December 2004 up from — EUR 143 mil-
lion (since updated to — EUR 141,2 million)
to
EUR 14,4 million. According to the Belgian authorities,
such a total is needed for ABX-D in order to bring about the
proposed privatisation of ABX-WW (41).

(91) Expected results. The application of all

these measures
should, according to the business plan, restore ABX-D to
operational viability from 2006 (EBIT of EUR [...] million)
and to net viability from 2007 (net profit of EUR [...] mil-
lion).

3.3.

Measures specific to ABX Netherlands

(92) Operational measures. Apart from the operational restructur-
ing measures described in the initiation of the procedure,
the disposals of subsidiaries and activities, closures of
agencies and subsidiaries, and productivity gains will result
in an overall reduction of 4 sites (- 44 %), EUR 14 million in
turnover (- 21 %), 93 FTE staff (- 22 %) and 18 400 m2 in
surface area (- 28 %).

(93) Productivity gains. According to the information commu-
nicated by the Belgian authorities, the operational restruc-
turing measures in the Netherlands will generate an
improvement (theoretical, at constant turnover)
in ABX
Netherlands' operating margin of some EUR 5,7 million at
the latest by the return of the group to viability, expected
for 2006-2007.

(94) Financial restructuring. SNCB plans to convert a debt of
EUR 10 million and interest of EUR 0,6 million into capital,
as soon as these measures have been approved by the
Commission. This capital contribution should enable ABX-
NL to bring its equity level at 31 December 2004 up from
— EUR 1,3 million (since updated to — EUR 1,5 million)
to EUR 9,3 million. According to the Belgian authorities,
such a total is needed for ABX-NL in order to bring about
the proposed privatisation of ABX-WW (42).

(41) Letter from the Belgian authorities, 24.2.2005, p. 12.
(42) Letter from the Belgian authorities, 24.2.2005, p. 12.

L 383/34

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(95) Expected results. The application of all

these measures
should, according to the business plan, restore ABX-NL to
operational viability from 2005 (EBIT of EUR [...] million)
and to net viability from 2006 (net profit of EUR [...] mil-
lion).

3.4.

Divestiture of domestic road activity in France

(96) The Belgian authorities

stated that,

faced with the
difficulties of ABX-F, regarded as critical for the viability
of the whole ABX group, SNCB was divesting the domestic
road activities of ABX France through an MBO. Since the
MBO was described in detail when the procedure was
extended,
the
domestic activities of ABX-F were sold in an MBO at a
negative market price of EUR [...] million. The sale became
effective on 31 March 2005 at midnight. The other
activities of ABX-F were transferred to ABX-WW.

is only pointed out here briefly that

it

(97) Two auditing firms, Deloitte and Ernst & Young Transaction
Advisory Services, reached the conclusion that the negative
sale price of EUR [...] million for the domestic division of
ABX-F is appropriate and represents a market value.

(98) According to the Belgian authorities, ‘SNCB decided not to
continue with its investment in ABX France: the recapita-
lisation measures notified in February 2003 will not be
implemented. The measures concerning France — includ-
ing the MBO — were part of a rationale of controlled,
socially responsible disengagement, allowing more than
2 300 jobs to be saved. SNCB is withdrawing from France:
once the MBO has been completed, the only activity of ABX

3.4.2. Cost of the different scenarios

France is three profitable logistics contracts, which will be
maintained until the end of [...] and which generate a
turnover of only EUR 29 million. ABX France will then no
longer have any operational activity and will probably be
put into liquidation’ (43). ‘Therefore, while the divestiture in
France may be considered to be part — in the broad sense
— of the restructuring of the ABX Logistics group, the
activities of ABX Logistics
in France are not being
restructured in the same sense as the measures notified
for Germany and the Netherlands’ (44).

3.4.1. Selection of an MBO

(99)

It should be noted that with regard to the domestic part of
ABX's activities the Belgian authorities compared the MBO
scenario (management buyout) with a voluntary liquidation
scenario and concluded that the MBO was the less costly
solution. When it extended the procedure, the Commission
questioned this reasoning, saying that it would also be
pertinent
to compare the MBO with a compulsory
liquidation scenario, on the grounds that a private investor
placed in a comparable position would seek the least costly
solution, without excluding a court-ordered liquidation if
this should prove more attractive economically.

(100) The Belgian authorities maintain that a court-ordered
liquidation would in any event be more expensive than the
MBO and also that, despite the Commission's doubts, the
comparison with a voluntary liquidation is not only socially
more responsible, but is still the pertinent comparison, for
the reasons summarised below.

(101) The Belgian authorities compared the costs of the three options — MBO, voluntary liquidation and

court-ordered liquidation — as detailed in the table below (45):

MBO

Voluntary or
amicable
liquidation

Court-ordered
or compulsory
liquidation

Negative equity at 30/9/2004

Losses expected in last quarter 2004

Negative equity estimated at 31/12/2004

Of which, debt to SNCB

Reductions in value of intangible assets

Capital gain on sale of Contract Logistics to MGF, not yet recorded

[…]

[…]

[…]

[…]

[…]

[…]

Capital gain on transfer of Eurocargo, Air&Sea, Mitjavile and Lacombe

[…]

Finalisation of current redundancy programme (PSE4) — 2004
expenditure

Coverage of losses 2005 for activities not included in the MBO

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

(43) Letter from the Belgian authorities, 9.6.2005, p. 18.
(44) Letter from the Belgian authorities, registered on 16.6.2005 under

No 15050, p. 18.

(45) Letter from the Belgian authorities, 2.9.2005.

28.12.2006

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Official Journal of the European Union

L 383/35

Cash impact for SNCB before choice of divestiture scenario

(Negative) transfer price — maximum

Coverage of losses during redundancy programme negotiation period —
2005
Coverage of losses for 4 extra months — 2006 (risk)
New redundancy programme for remaining staff
Termination of lease contracts
Termination of other contracts

Risk […] for SNCB […]
Commercial debts to suppliers at 31.12.2004
Company's debts to staff
Redundancy programme for staff of ABX France
Compensation of creditors — Leases
Compensation of creditors — Other contracts

Risk of the SNCB guarantee being used for debts to Soc. Gen/Natexis

Loss of value of the ABX LOGISTICS group
Cost of additional redundancies following drop in volume

Impact on the need for operating capital

Impact on cost of financing SNCB's bank debt
Impact on cost of financing bank debt of ABX LOGISTICS

MBO

Voluntary or
amicable
liquidation

Court-ordered
or compulsory
liquidation

[…]

[…]

[…]

[…]

[…]

[…]

-15

-8
-6

[…]

[…]

-8
-6

-112

-45

-14
-7

-346

Total cost SNCB

- 137,5

-183

(102) As for the difference in cost between the MBO and the
voluntary liquidation (basically the cost of a redundancy
programme for the remaining staff and the coverage of
losses while the programme was being negotiated), the
this was verified and
Belgian authorities
confirmed by Ernst & Young. The accounting firm
concluded as follows: ‘… we conclude that on an overall
level the price differential between the scenario of the
Management Buy-Out and the scenario of the Liquidation
of Domestic Road Transport Activities amounting to EUR
45,5 million to be fair and reasonable’.

state that

(d)

the impact on the group's need for working capital,
and

(e)

the impact on the cost of financing the ABX Logistics
group and SNCB itself following a default by one of
their subsidiaries.

(104) Risk of [...] (EUR [...] million). According to the Belgian
authorities (46), ‘the scenario of a court-ordered liquidation
would expose SNCB to a [...] risk that would call
its
responsibility into question. [...] (47), [...] (48), [...] (49)’ (50).

(103) According to the Belgian authorities, the cost of the court-
ordered liquidation is much higher than the net assets of
ABX France at the time when the transaction was effected
(i.e. — EUR [...] million) on account of:

(105) The Belgian authorities also cite as an example a recent

decision [...] (51).

(a)

the risk for SNCB [...];

(b)

the loss of customers that would result from the
deterioration of ABX's image, and the impact of that
loss on the value of the ABX Logistics Worldwide
group;

(c)

the costs of making staff redundant who had become
surplus following the loss of customers;

(106) The Belgian authorities consider that

‘the Commission
should confine itself to ascertaining the existence of the
risk and its plausibility, and to establishing that, faced with
that risk, a private operator would have probably sought, in
the same situation, to avoid a court-ordered liquidation and
opted for a voluntary liquidation. [...]’ (52).

(46) Letter from the Belgian authorities dated 9.6.2005, registered on

16.6.2005 under No 15050, p. 22.

(47) [...].
(48) [...].
(49) [...]
(50) Letter from the Belgian authorities dated 9.6.2005, registered on

16.6.2005 under No 15050, p. 22.

(51) Letter from the Belgian authorities, 9.6.2005, Annex C 4.
(52) Letter from the Belgian authorities dated 9.6.2005, registered on

16.6.2005 under No 15050, p. 22.

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(107) The French law firm Grand, Auzas et Associés drew SNCB's
attention to this risk at the end of 2004 and confirmed its
analysis of it in writing.

(108) Similarly, the law firm Linklaters informed the Belgian

authorities that if ‘[...] (53) [...]’ (54).

(109) If SNCB [...], the Belgian authorities consider that it should
have at least financed a redundancy programme for the
remaining 1 300 employees, i.e. at a cost of EUR [...] million,
and compensated the creditors of ABX France (EUR 8 mil-
lion for the property creditors and EUR 6 million for the
others).

(110) Loss of value for the ABX group following the loss of customers (EUR 112 million). The Belgian authorities
consider that a court-ordered liquidation of the domestic road activity in France would have caused a
serious and permanent deterioration in the group's image and reputation and entailed a loss of customers
detrimental to the group as a whole. Their estimate of the loss of value for the ABX group is given in the
table below.

The Belgian authorities consider that the loss of turnover would have been partly compensated by the
immediate disappearance of the direct transport costs. But the indirect costs (structural costs) could have
been reduced only gradually (by staff redundancies in proportion to the volume of activities lost) over a
three-year period in order to return to the situation prior to the application for a court-ordered
liquidation. The impact of the loss of customers on operating profit (EBIT) would have been greatest,
therefore, in the first year and would have declined in the following two years until the return to the
situation prior to the application for a court-ordered liquidation.

Reduction in the value of the group due to the decline in volume following the court-ordered liquidation of
ABX LOGISTICS France S.A.

EUR million, based on the forecasts available at end 2004

2005

2006

2007

Total

Road International France

In France

Air&Sea France

Road Germany

Air&Sea Germany

Road Domestic Netherlands

Budgeted gross margin

[…]

[…]

[…]

Loss of customers in %

30 %

15 %

7,5 %

Estimated impact on EBIT

[…]

[…]

[…]

8,8

Budgeted gross margin

[…]

[…]

[…]

Loss of customers in %

10 %

6 %

2 %

Estimated impact on EBIT

[…]

[…]

[…]

3,1

Outside France

Budgeted gross margin

[…]

[…]

[…]

Loss of customers in %

30 %

15 %

7,5 %

Estimated impact on EBIT

[…]

[…]

[…]

46,7

Budgeted gross margin

[…]

[…]

[…]

Loss of customers in %

5 %

3 %

1 %

Estimated impact on EBIT

[…]

[…]

[…]

3,1

Budgeted gross margin

[…]

[…]

[…]

Loss of customers in %

30 %

15 %

7,5 %

Estimated impact on EBIT

[…]

[…]

[…]

3,3

(53) [...]
(54) Letter from the Belgian authorities, 9.6.2005, Annex C.2.

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EUR million, based on the forecasts available at end 2004

2005

2006

2007

Total

Road Domestic Belgium

Other countries and product lines

Budgeted gross margin
Loss of customers in %
Estimated impact on EBIT

Budgeted gross margin
Loss of customers in %
Estimated impact on EBIT

Total

Budgeted gross margin
Loss of customers in %

Estimated impact on EBIT

[…]

[…]

[…]

[…]

30 %

5 %

[…]

[…]

[…]

[…]

[…]

15 %

7,5 %

[…]

[…]

[…]

3 %

1 %

455,6
14 %

61,6

489,7
7 %

34,4

519,7
3 %

16,4

16,5

25,2

112,4

(111) In this respect the Belgian authorities also stated that,
the European
Justice of
according to the Court of
Communities,
‘It must … be accepted that a parent
company may also, for a limited period, bear the losses
of one of its subsidiaries in order to enable the latter to
close down its operations under
the best possible
conditions. Such decisions may be motivated not solely
by the likelihood of an indirect material profit but also by
other considerations, such as a desire to protect the group' s
image or to redirect its activities’ (55).

had suspended payments. The potential extra cost of
financing is estimated at 100 basis points (1 %) for the bank
debt of ABX Logistics (about EUR 240 million) and at 50
basis points for the bank debt of SNCB (about EUR 900 mil-
lion) not assumed by the Belgian state. On the premise that
the extra cost would be neutralised over three years, the
Belgian authorities consider that the extra cost of financing
SNCB's debt would therefore be about EUR 14 million and
that of financing the debt associated with ABX Logistics
would be about EUR 7 million.

(112) Costs of shedding staff who had become redundant following the
fall
in volume (EUR [...] million). As indicated above, the
Belgian authorities assumed that the indirect costs could
have been gradually reduced by layoffs over a three-year
period in order to return to equilibrium. The estimates
adopted by the Belgian authorities are approximately 1 000
layoffs (i.e. some 550 persons in Germany, 200 in France,
100 in Belgium and 200 in the rest of the world).

(113) Impact

on the ABX group's need for working capital
(EUR 45 million). The Belgian authorities consider that a
court-ordered liquidation of the group would have led to
significant pressure from the suppliers of the rest of the
group to renegotiate the time limit for payment of their
invoices
required instead of
payment within 30 days of the end of the month). They
calculate that a reduction of 7 days in the average time for
paying suppliers would have led to an immediate need for
cash of about EUR 45 million.

immediate payment

(e.g.

3.4.3. Other

considerations

put

forward by

the Belgian

authorities

(115) As well as the comparisons of the estimated costs of the
different scenarios, the Belgian authorities consider that
other factors are taken into account by investors when the
question of the disposal or closure of an activity arises.

(116) Thus they consider that an adjudication of bankruptcy
could have caused industrial
trouble leading to an
interruption of ABX Logistics' activities at the sites not
affected by the liquidation (international activities), which
would have had an impact on traffic to other countries or
even on SNCB's traffic. A private company in the same
situation would, according to them, also have taken
account of the very considerable, similar risks and opted
for voluntary liquidation.

(114) Impact on the average cost of financing for SNCB and ABX
Logistics Worldwide (EUR 14 million + EUR 7 million).
According to the Belgian authorities, the average cost of
financing for SNCB and ABX Logistics at their respective
banks could have been increased if one of their subsidiaries

(55) Case C 303/88 Italian Republic v Commission (Eni-Lanerossi) [1991]

ECR I-1433, paragraph 21.

(117) More generally, according to the Belgian authorities,

‘it is
not correct that a private investor, especially a European
the size of SNCB, would definitely choose
one of
compulsory liquidation if
it were less expensive than
voluntary liquidation. Other private companies, in the same
circumstances, have opted for a voluntary liquidation

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scenario with the financing of a redundancy programme for
the workers affected by the closure of activities’ (56).
According to the assessment requested by the Belgian
authorities from a law firm specialising in labour law
(Claeys & Engels), there are several recent examples of
private companies which have adopted such conduct.

(118) The Belgian authorities also state that the private company
TNT acted in the same way as SNCB by deciding to divest
itself of its loss-making national transport activities and
part of its contract logistics activities in France rather than
have them wound up voluntarily or by a court (57).

(119) Lastly, with regard to corporate restructuring, the Belgian
authorities quote the Commission communication of
March 2005, which states in particular that ‘the preserva-
tion of social cohesion, which is a distinctive characteristic
of the European social model, requires the introduction of
accompanying policies designed to reduce the social costs
to a minimum and to promote the search for alternative
sources of
(…) The restructuring of
enterprises is often seen to be an essentially negative
phenomenon, and its immediate effects on employment or
working conditions are highlighted in most cases. (…). It is
therefore necessary to accompany these changes in such a
way as to ensure that their effects on employment and
working conditions are as short-lived and limited as
possible’ (58).

jobs and income.

(120) In conclusion, the Belgian authorities state that SNCB chose

the MBO scenario for the following reasons:

(a)

(b)

cost and risk significantly less than in the court-
ordered or voluntary liquidation scenarios;

limited impact on the value and image of the ABX
Logistics Worldwide group;

(c) more acceptable social consequences (preservation of
1 300 jobs in France in the new private company
Cool Jet);

(d)

social responsibility of SNCB towards its suppliers and
creditors to act in a responsible way, like any other
European undertaking of its size.

3.5.

Reduction of the ABX network

(121) The restructuring of the ABX group involved considerable
reductions in its freight forwarding capacity. In this activity,
capacity is measured in an appropriate way by indicators
such as invoiced turnover, number of sites, warehousing
area or number of wage-earners.

(56) Letter from the Belgian authorities dated 9.6.2005, registered on

16.6.2005 under No 15050, p. 21.

(57) Letter from the Belgian authorities, 2.9.2005, p. 6.
(58) Commission communication — Restructuring and employment —
anticipating and accompanying restructuring in order to develop
employment: role of the European Union, COM(2005) 120 final, pp.
2-3.

(122) According to the Belgian authorities, the total operational
restructuring measures applied to the ABX-WW group go
significantly beyond the measures originally planned.

The original plan provided for the sale of 3 subsidiaries
with a turnover of EUR 98,5 million, the closure of 7
agencies and 3 warehouses in Germany, 4 agencies in
France, 2 agencies in the Netherlands, and a reduction of
690 FTE (including the impact of the agency closures).

The capacity reduction measures notified during 2005 will
have the effect by the end of the restructuring exercise of
reducing the number of sites by 176 (- 31 %), turnover by
EUR 624 million (- 21 %), staff by 5 827 FTE (- 40 %) and
surface area by 917 377 m2 (- 54 %) (59).

The additional commitments regarding Germany, which
Belgium made in November 2005, will
increase this
reduction.

(123) The Belgian authorities state that the area reductions and
disposals carried out since 2002 and those provided for
recently are as large as possible, and that further reductions
would lead to the dismantling of
the ABX Logistics
network. In their view, the existence of an international
for the strategic and commercial
network is essential
positioning of ABX and its competitors; dismantling the
network would have a serious adverse effect, which would
jeopardise the group's competitive structural position in the
market, the possibility of carrying out the restructuring
plan and the group's attraction for potential partners in the
context of a privatisation.

companies

the group's

They consider in this respect that the divestiture of the
domestic parcel delivery services in France cannot be
replicated in Germany; the integration of the domestic and
in
international activities of
Germany and the Netherlands is more advanced than in
France because of the integration of IT operations and
systems and the high proportion of common customers;
this greater integration is the result not only of
the
structure of the German market but also of the history of
ABX Logistics — the international and domestic depart-
ments in France having been integrated in 2003 only and
in a partial manner, whereas in Germany domestic parcel
delivery services and international freight forwarding by
road had coexisted in a single entity since the merger in
1996 of THL and Bahntrans (which became ABX in
Germany).

(59) According to the data at the Commission's disposal, this consists

basically of warehousing area.

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They add that, both in Germany and the Netherlands, a
further decline in the density of the Road network would
lead to exit from the German market, given the comparison
of the number of sites owned by ABX Logistics and its
competitors in each of these countries.

(126) The Belgian authorities stated that, following its decision to
restructure and dispose of ABX, SNCB started negotiations
with various potential buyers. Accordingly,
it mandated
ABX-WW and Petercam to represent it for the purposes of
the sale.

Comparison of the number of Road sites of ABX Logistics
and its main competitors in the German and Dutch markets
(before allowing for further reduction commitments in
Germany) (60)

Germany

Schenker/
Stinnes

IDS (Elix)

Dachser

DHL/Danzas

ABX Logistics

57

37

34

32

30

Netherlands

DHL/Danzas
(Van Gend&-
Loos)

Frans Maas

Vos Logistics

Wim Bosman

ABX Logistics

Source: Websites; estimates by ABX Logistics

17

13

10

8

4

They emphasise that the divestitures occur at a time when
ABX's main competitors are acquiring parcels delivery and
groupage companies, particularly in Germany, with a view
to expanding their own domestic courier network in that
country.

3.6.

Loans granted by SNCB to ABX in 2002

(124) SNCB granted loans to various ABX subsidiaries.

In April-May 2002, SNCB granted its Belgian subsidiary
ABX Logistics group NV three loans (EUR 50 million,
EUR 10 million and EUR 29 million), which were
remunerated at variable rates. According to the Belgian
authorities, the average rate for these loans was [...] %,
[...] % and [...] % respectively.

On 30 June 2004 the loans were called in by SNCB and
allocated direct to ABX Germany, ABX Netherlands and
ABX France at the respective interest rates of [...] %, [...] %
and [...] %.

3.7.

Privatisation of ABX-WW

(125) According to the Belgian authorities, ‘SNCB confirmed its
willingness to privatise ABX Logistics Worldwide within six
months of
the Commission decision approving the
restructuring plan. (…) A binding agreement in principle
(“Term sheet”) was concluded by SNCB Holding with a
potential buyer and signed on 22 March 2005. The
agreement was subject, however, to a condition precedent
that
the Commission would adopt a positive decision
authorising the restructuring plan.’ (61)

(60) Table submitted by the Belgian authorities.
(61) Letter from the Belgian authorities, 9.6.2005, p. 26.

(127) In June 2003 ABX-WW began preliminary discussions with
an initial partner, an industrial group. In March and June
2004 a draft memorandum of understanding was drawn
up. Between June and August 2004 the negotiations were
suspended for reasons peculiar to this initial potential
partner.

(128) In June 2004 ABX-WW contacted a second industrial
partner. However, in September 2004, this second potential
partner indicated that it wanted to put an end to the
negotiations with ABX-WW.

(129) At the end of August 2004 contact was established with a
third potential partner, another industrial group. However,
these negotiations ended when successful talks were held
with a
fourth partner, which in November 2004
transmitted to SNCB the above-mentioned binding offer
for the takeover of ABX-WW. It was with this candidate,
hereinafter referred to as ‘Yvan’, that SNCB signed the sale
agreement and the above-mentioned Term Sheet (letter of
intent) in March 2005.

(130) According to the Term Sheet, Yvan undertook, subject to a
positive decision from the Commission,
to invest an
amount of between EUR [60 and 150 (**)] million, of which
EUR [...] million for
the payment of ABX Logistics
Worldwide shares to SNCB Holding. The remainder of
the investment by Yvan would be used as follows:

(a)

(b)

EUR [...] million to provide back-to-back cover
(borrowing and on-lending operations) for an SNCB
guarantee for a building in [...];

EUR [...] million in the form of a subordinated loan
granted to ABX Logistics Worldwide in order to
finance:

— the transaction costs, including the costs of Yvan
and in particular its strategic, legal and financial
advisers. These costs are estimated to be between
EUR [...] and [...] million;

— the financing needs associated with possible
withdrawal or possible requests for guarantees
on the part of certain financial
institutions
following the change of shareholder. The balance
of
the amount of EUR [...] million after
transaction costs, i.e. EUR [...] to [...] million, is
intended to meet the need for financing resulting
from such withdrawals.

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(131) The Term Sheet provides

to the usual
conditions and due diligence in disposal cases, Yvan and
SNCB will be obliged to sell the ABX group as soon as the
condition precedent concerning the Commission's decision
is removed.

subject

that,

If this condition is not removed, Yvan and SNCB could in
certain circumstances no longer be bound by the sale
agreement.

(132) Lastly,

‘after

stated that

the Belgian authorities

the
privatisation of ABX-WW, SNCB will be free from all off-
balance sheet commitments, guarantees and comfort
letters. [...] There will no longer be any need for the
comfort letters, which will cease to apply once the financial
measures for the recapitalisation of the German subsidiary
are authorised by the Commission and implemented’ (62).

4.

OBSERVATIONS FROM INTERESTED PART IES

4.1.

Initiation of the procedure

(133) In light of the circumstances of the case, and in particular
the conclusions outlined by the Commission in the
initiation of the procedure, the following interested parties
have separately and independently submitted the following
observations.

(134) Firstly the arguments of an initial group of third parties
were presented, namely 1. Association for the promotion
of competition and fair play in the haulage, logistics and
transport industry, Cologne, 2. H.A.L.T.E., 3. Ziegler, 4.
Freshfields, Bruckhaus, Deringer (representing Deutsche
Post AG), 5. The Professional body of Flemish freight
transporters and logisticians (SAV). Their arguments are
summarised below (63).

It

(135) Regarding the restructuring plan. The interested parties stress
the intrinsic weaknesses of the original restructuring plan
proposed by ABX.
is disputed whether the entities
concerned are eligible for restructuring aid since they are
part, at least financially, of a group of companies which
should be able to co-finance the proposed measures. It is
stressed that restructuring aid can be authorised only in
conjunction with a viable restructuring plan ensuring the
long-term restoration of profitability. However, the inter-
ested parties take the same line as in the initiation of the
procedure, which found that, given the lack of funding and
that the operational restructuring measures are inadequate,
follows that
this plan would not
approving aid which does not
lead to viability would
distort competition in a way contrary to the Community's
interests.

restore viability.

It

(136) In general terms, the probability of restoring a normal level
of capital profitability was not made explicit, any more so
than the conditions for this development in terms of overall
market growth,
improving
productivity and quality of service and changing client
behaviour.

increases in market share,

(137) The planned restructuring and rationalisation measures are
adaptations to changes in the parcel service and logistics
business which ABX should have carried out several years
ago and which other companies in the sector have already
completed at considerable cost. Approval of the plan by the
Commission would only prolong a long-standing distor-
tion of the market and shift the financial difficulties onto
the
in
particular medium-sized, privately funded businesses, even
confronting some of them with insurmountable difficulties.

companies which have

already restructured,

(138) Regarding state interference. The delays in restructuring ABX
are to a large extent the result of continued interference by
SNCB in the daily running of ABX and the fact that
members of ABX's board of directors are appointed for
political reasons. Some interested parties point out the lack
of transparency in the selection of directors both in the
ABX Logistics group and,
in ABX Logistics
Worldwide. These directors are appointed in a discretionary
way by the management of SNCB based on political
criteria, which prevents the company being managed
autonomously. It was noted in particular that management
decisions are taken for ABX either by the Council of
Ministers or the management of SNCB, and that it cannot
be claimed that ABX has been managed by its own
executive committee.

therefore,

(139) Regarding the restructuring of the subsidiary in France. The sum
needed to refinance this
subsidiary has been under-
estimated. The original plan underestimates the level of
aid required simply to balance the losses incurred since the
network of ABX subsidiaries was set up. Overall,
the
business recovery forecasts are unrealistic and cannot be
achieved without subsequent additional aid, and without
capturing the market
to the detriment of competitors
through a policy of market disruption.

(140) Regarding the privatisation of ABX. Some interested parties
called for ABX to be privatised. One criticism voiced is that
this privatisation is merely a plan, without any signs to
indicate that such a sale is actually going to be made.

(141) Regarding the purchase and expansion of the ABX network. The
third parties mentioned above feel that ABX has operated in
the parcel delivery and logistics services sector since 1998
through illegal state aids which have seriously distorted
competition on the market. It was only possible to create
the ABX network because of massive sums of state aid
granted by SNCB.

(62) Letter from the Belgian authorities, 9.6.2005.
(63) Although not all the arguments set out below have been made
individually by the above parties, they still summarise the main
points made in this group of comments.

(142) The following is a list of arguments put forward by a
second group of interested third parties, namely 6. FGTE
CFDT Route (Federal Road-Users' Union), 7. National
Federation of Transport Unions CGT, 8. the Royal Belgian

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Road Hauliers' Federation, 9. ABX Logistics — representa-
tives of the German group ABX Logistics. Their arguments
are summarised below (64).

(143) The interested parties made several comments on the
situation of ABX's employees. They point out that several
hundred employees have already been affected by earlier
social plans in France and that jobs in logistics are under
threat. The representatives of the German subsidiary note
also that around 4 000 jobs have been lost since 1998, and
that 2 000 related sub-contracting jobs have also been cut.
In addition they point out that ABX is on the verge of being
privatised and that the work done to this end should not be
undone.

(144) The National Federation of Transport Unions CGT calls
more specifically for the creation of a mandatory social
pricing policy in order to fight ‘economic dumping’ which
appears to be practised by ABX's competitors in France.

(145) However,

the Royal Belgian Road Hauliers' Federation
(FRBT) points out that ABX cooperated by voluntarily
showing it its books. The FRBT can therefore confirm that
current
rules on licences and vehicle insurance are
complied with.

(146) It is also noted that the management of ABX (Belgium) S.A.
sent the Commission, after the deadline for comments to
be submitted, a petition from drivers working in ABX
Belgium's various regional distribution centres explicitly
calling for a positive decision in the ABX restructuring case.

4.2.

Extension of the procedure

(147) The following interested parties have separately and
independently submitted the following observations with
the aim of extending the procedure.

(148) Firstly the arguments of an initial group of third parties are
presented, namely 1.
‘HALTE’; 2. Freshfields Bruckhaus
Dehringer; 3. BCA — Belgian Courrier Association; 4. Mr
Robert Ziegler (65); 5. Febetra (Royal Belgian Federation of
Carriers and Logistics Service Providers); 6. SAV — the
Royal Professional Association of Freight Transporters in
the Flemish Region and Brussels Capital Region. Their
arguments are summarised below (66).

(149) These parties essentially express their doubts regarding the
compatibility of aid received by ABX and call for fair
competition conditions to be restored, in particular in the

(64) Although not all the arguments set out below have been made
individually by the above parties, they still summarise the main
points made in this group of comments.

(65) According to the letter sent by the Chairman of the Board of
Directors of the Ziegler Group dated 18.8.2005, Mr Robert Ziegler is
not authorised to address the Commission alone on behalf of the
Ziegler Group or Ziegler SA.

(66) Although not all the arguments set out below have been made
individually by the above parties, they still summarise the main
points made in this group of comments.

light of the increase in aid notified and taking account of
the considerable share of this highly competitive market
held by ABX, particularly in Germany. Any aid approved
should, however, be accompanied by sufficient concessions
from ABX. Regarding the sale of part of ABX France, the
parties call for checks to ensure the sale was made without
giving rise to new aid payments. Selling ABX is considered
a positive step provided that it is done in line with market
conditions. However,
the sale should only lead the
Commission to take a less severe decision regarding the
aid received by ABX if it is not sold.

(150) Furthermore, Mr Ziegler indicated that one repayment of a
EUR 140 million loan granted to ABX was not made, that
there is a risk that ABX will be given an advantage when the
this
ABX group is privatised given the conditions of
privatisation, that SNCB did not go through with the sale of
ABX-France, that it is unrealistic to restructure ABX under
current management and business strategy conditions and
that
the impact of ABX going bankrupt would be
significant.

(151) The following is a list of arguments put forward by a
second group of
interested third parties, namely 1.
ABARENT N.V., 2. DOL & SERVICES, 3. Pierre Lepoint,
4. Geert Lagae BVBA, 5. WEVETRA — Werner Vranckx
Transport, 6. Claude Bogaerts, 7. Johan Vergote, 8. Cooljet,
9. UPTR — the Professional Road Transport Union, 10. Van
Hauwermeiren Transport ‘BA.AN’ BVBA, 11. SD Transport
BVBA, 12. Gincotrans, 13. Vervoer Marc Cobbaert, 14.
François Timmermans, 15. Tractrans, 16. GPF, 17. Transport
Fabrice, 18. SOS Transport, 19. Eddy Ommeslag. Their
arguments are summarised below (67).

(152) Most of these third parties indicated that they did not wish
the Commission to jeopardise the jobs of thousands of
subcontractors working for ABX by adopting a negative
decision.

(153) Cool Jet stated that the activities acquired in the MBO could
be viable following recovery, and that this should be carried
out in line with a detailed strategic plan of action within 3
years of work resuming; the sale price takes account of
reasonably expected and budgeted losses;
the activities
taken over do not account for a significant market share
(1,5 % of the parcel and express delivery market in France)
and lastly that Cool Jet employs 1300 people, jobs which
would have been lost if Cool Jet had not been able to
purchase the activities in question.

(67) Although not all the arguments set out below have been made
individually by the above parties, they still summarise the main
points made in this group of comments.

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(154) However, UPTR states that it was able to access ABX's
books in all transparency and notes the group's improved
results. The group became profitable at operational level for
the first time in 2004. UPTR encourages the Commission
to take a decision quickly in order to enable ABX to be
privatised, thereby ensuring the stability of a loyal operator
whose presence benefits the Belgian road transport sector.

(155) The Commission also received, after

the procedural
deadlines, a complaint regarding the sale of ABX-WW
claiming that SNCB Holding did not comply with the
conditions of a transparent, open and non-discriminatory
procedure when privatising ABX Logistics and thereby
deterred the investors lodging the complaint.

5.

COMMENTS FROM BELGIUM

5.1.

Initiating and extending the procedure

(156) The basic points made in Belgium's comments regarding
the initiation and extension of the procedure are mainly set
out
in the descriptive section. The other points are
summarised below.

(157) Regarding the imputability of some actions to the Belgian State.
The Belgian authorities have pointed out throughout this
case that the Belgian State was in no way involved within
the meaning of the Court of Justice's Stardust decision in
SNCB's decision-making regarding ABX Logistics. They also
reiterated that the onus is on the Commission to prove any
such imputability.

(158) Regarding investments in ABX, the Belgian authorities have
repeated throughout the proceeding that the State did not
intervene in decisions taken by SNCB.

(159) Regarding the press release from the Council of Ministers of
22 February 2002, the Belgian authorities pointed out (68)
that:

(a)

(b)

(c)

‘the public authorities cannot legally impose decisions
or guidelines on the managing bodies of autonomous
public companies (such as the SNCB) in matters which
do not concern their public service task (such as the
management of ABX Logistics)’.

‘in the press release of 22 February 2002 the Council
of Ministers merely expressed its support for some
guidelines on the restructuring of ABX Logistics
(guidelines which in any case were not finally accepted
by SNCB's board of directors, except for one which it
had already adopted itself before 22 February 2002)’.

‘the fact that at their inter-cabinet meetings or on
other occasions the public authorities were made
aware of reports or studies pertaining to SNCB and
ABX Logistics is simply the normal behaviour of a

(68) Letter from the Belgian authorities, 29.8.2003, p. 16.

shareholder who ensures that he keeps abreast of the
major developments in his investments’.

5.2.

Reply from the Belgian authorities on the
observations made by third parties

(160) In response to the observations made by the interested
parties regarding the selection of directors on the basis of
their political affiliation, the Belgian authorities state that
the operations of ABX Logistics do not concern SNCB's
public service tasks. These activities, and management of
them, therefore come completely under the autonomous
management of the SNCB. Consequently, the procedure for
appointing directors for ABX Logistics is simply that laid
down in Belgian law for every public limited company to
which that law applies. The appointment of directors to
ABX Logistics or
its subsidiaries thus complies with
transparent procedures laid down in law, and is therefore
not done arbitrarily on the basis of political affiliation.

(161) Regarding the funding of

the ABX Logistics network. The
Belgian authorities confirm that SNCB's balance sheet
structure was healthy until 2001 and that the consolidated
result was in the black between 1998 and 1999.

(162) Belgium's arguments regarding the (re)investments. In addition
to the indications from the Belgian authorities regarding the
(re)investments as summarised in the statement of facts, the
that SNCB's timely
Belgian authorities also point out
intervention regarding the subsidiaries in question (Ger-
many, France, the Netherlands, Ireland, Portugal, Belgium)
is in line with the principle of the private investor in a
market economy. What is more, it should be noted that the
interventions concerning ABX Logistics Singapore are not
covered by Article 87 of the Treaty.

(163) Regarding the comments made by third parties on the
extension of the procedure, the Belgian authorities point
out
that in their previous reactions they have already
responded to comments which only echo the Commis-
sion's misgivings.

(164) Regarding the statement by Mr Robert Ziegler, the Belgian
authorities state that the Commission has been notified of
the temporary loan of EUR 140 million and the new
measure aimed at capitalising this loan. Neither SNCB nor
ABX can make any commitment pending approval. The
same applies to the contribution of EUR 157,4 million of
own funds for restructuring ABX-Germany as well as for
the other notified measures. Regarding the potential
advantage which ABX could gain through being privatised,
the Belgian authorities refer
to the ‘fairness opinion’
prepared by KPMG and sent to the Commission which
indicates that ‘the terms of the proposed sale to [Yvan] are

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fair market value’.
fair and reasonable and represent
Regarding the alleged failure to sell ABX France,
the
Belgian authorities note that they indicated which parts
were sold. Regarding the conditions of this sale, they refer
in particular to the report by Ernst & Young which states
that ‘the price valuation for Road Domestic Transport
Activities amounting to (…) is fair’. Finally, regarding the
question on the consequences of the possible bankruptcy of
the ABX group, the Belgian authorities can only stress the
serious consequences both for ABX Logistics Worldwide
and for SNCB Holding were the Commission to adopt even
a partially negative decision.

(165) Sale of ABX-WW. According to the Belgian authorities,
SNCB Holding was under no obligation to privatise ABX
Logistics Worldwide by issuing an invitation to tender.

(166) The Belgian authorities point out that close examination of
the Commission's state aid practices relating to privatisa-
tions shows that, in the absence of an invitation to tender,
the Commission only checks that assets are sold at market
price on the basis of an assessment by an independent
expert. Therefore, in line with this, the Belgian authorities
submitted to the Commission an independent assessment,
carried out by the consultants KPMG Corporate Finance, of
the conditions of the sale of ABX Logistics Worldwide.

The funds which the SNCB made available to the ABX
group favour that company over other companies operat-
ing on its markets.

By exclusively favouring the ABX group or its subsidiaries,
these measures distort or threaten to distort competition in
those activities which are subject to free competition.

Lastly, these measures affect trade between Member States
as the investigated competitive activity is also carried out in
several other Member States. This conclusion also applies to
favouring the group's companies operating
measures
in accordance with the
outside the Community. Firstly,
‘Tubemeuse’ decision (69) and taking account of
the
interdependence between the markets on which Commu-
nity undertakings operate,
it is possible that aid might
distort competition within the Community, even if the
undertaking receiving it exports almost all its production
outside the Community. Secondly, as this is a case of an
international transport group operating globally in compe-
tition with other Community operators, the aid granted to
one of the group's companies operating in third countries
strengthens the group as a whole and therefore affects trade
between Member States and distorts, or threatens to distort,
intra-Community competition.

6.

COMMISSION'S ASSESSMENT

6.1.

Presence of state aid

(170) In addition, as the measures in question mobilise SNCB's
resources, they must be regarded as implementing State
resources (public funds).

(167) 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 competi-
tion by favouring certain undertakings or the production of
certain goods shall,
insofar as it affects trade between
Member States, be incompatible with the common market’.

(171) Due to the fact that SNCB is state-owned and its specific
status as a public undertaking, the SNCB's resources remain
constantly under public control. This conclusion is backed
up by the observation that SNCB is subject to the Law of
21 March 1991 under which it
is granted specific
protection against the risk of bankruptcy, comparable to
a guarantee from the State.

(168) Firstly the Commission notes that the above measures
concerned a number of companies which had formed part
of the ABX network since it was established and which had
then been integrated into the ABX group when the holding
company ABX-WW was founded. It considers that even
before this holding company was legally established these
companies formed, within the SNCB group, a distinct
financial unit (‘the ABX group’) which should be seen as the
relevant entity in the following assessment.

(172) The Court states in Stardust Marine (70) that: ‘it should be
recalled that it has already been established in the case-law
of the Court that Article 87(1) EC covers all the financial
means by which the public authorities may actually support
undertakings, irrespective of whether or not those means
are permanent assets of the public sector. Therefore, even if
the sums corresponding to the measure in question are not
permanently held by the Treasury,
they
constantly remain under public control, and therefore
available to the competent national authorities, is sufficient
for them to be categorised as State resources’.

the fact

that

(169) The Commission notes straight away that three of the four
criteria set out in Article 87(1) of the Treaty are met
‘threatening to distort
(‘favouring certain undertakings’
competition’ and ‘affecting trade between Member States’).

(69) Case C-142/87 Belgium v Commission, (Tubemeuse) [1990] (ECR I-

959, paragraph 35).

(70) Case C-482/99 France v Commission, (Stardust Marine) [2002] (ECR I-

4397, paragraph 37).

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(173) In addition, also in Stardust Marine, at paragraph 52, the
Court states that: ‘…the mere fact that a public undertaking
is under State control is not sufficient for measures taken by
that undertaking, such as the financial support measures in
question here,
is also
necessary to examine whether the public authorities must
be regarded as having been involved, in one way or another,
in the adoption of those measures’.

to be imputed to the State.

It

(174) Another condition needed for measures taken by a public
undertaking to constitute State aid is that the measures are
not the same as those which would be taken by a private
investor in a similar situation.

(175) As a result,

the Commission will assess each of

the
measures taken by the SNCB in favour of the ABX group to
check whether each one is both imputable to the State and
the likely behaviour of a private investor in this
not
situation. If both these conditions are fulfilled, the measures
are deemed to constitute State aid and the Commission will
analyse the subject and amount of this.

6.1.1. Investments made in 2001 and parallel contributions

(176) The Belgian authorities pointed out that the reinvestments
made in 2001 by SNCB in the ABX group's German, Dutch
and French operations were based on positive financial
forecasts and the advice of business development experts.

(177) The profitability calculations set out above appear to be
based on acceptable business development forecasts, as far
as SNCB was able to predict in 2001.

(178) The investments in Germany are based on an expert
opinion which calculated that by successfully turning
around ABX-D the ABX strategy could be continued,
potentially creating EUR 300 million compared with the
injection of EUR 50 million, and based on an adequate
intrinsic return.

(179) Regarding the investment of EUR 30 million in France, the
profitability calculations indicate that
the SNCB could
achieve an internal rate of return of between 8 and 14 %.
Moreover, this investment has made it possible to start a
programme to securitise receivables so the company can
get a bank credit line of EUR 70 million.

(180) The Commission considers

that

there is

insufficient
justification, in the case of the investment made in 2001
in ABX-NL, for basing the calculation of the IRR on the
capital gain after deducting the costs of acquiring Wegtran-
sport, as is proposed by the Belgian authorities. However,
considering that the SNCB's total investment includes this
acquisition cost and as a result is EUR 19,2 million rather
the investment is
than EUR 12,2 million, the IRR of
between 8,9 % and 10,2 %,
remains
acceptable, in particular in the light of the fact that when
the investment was made, the entire ABX-NL was expected

and therefore

to become profitable again within the very short period of
two years.

(181) Likewise, the estimation of rates of profitability of the
‘parallel contributions’ to the capital of the companies in
the ABX group in Ireland, Belgium, Portugal and Singapore
(which were not in financial difficulty) gave an expected
IRR of between 9,6 % and 12,7 %, and appears acceptable.

financial

(182) The Commission also points out that until the end of 2001
SNCB's
to finance its
structure allowed it
commercial development without placing an excessive
burden on its financial structure (debt/equity ratio rising
from 0,6 to 0,9 between 1997 and 2001), which was not
the case from 2002.

(183) Lastly, it should be noted that all these investment decisions
are part of a group strategy. In these circumstances SNCB
was justified in taking account not only of the expected
intrinsic return on each of these operations, but also the
positive effects expected at group level.

(184) The Commission therefore concludes that, in the light of
the prospects at the time, SNCB acted as a private investor
would have done by making reinvestments in 2001 and
making ‘parallel contributions’, and that these measures do
not constitute state aid.

(185) However,

the Commission notes

that SNCB gave a
guarantee to ABX Singapore without requiring payment,
which is not what a private investor would have done.
Given that this guarantee was granted in June 2000 when
ABX started arousing public interest and the public
authorities intervened with regard to SNCB, and taking
account in its analysis of all potential forms of aid, the
Commission feels that granting this guarantee without
payment may involve state aid. As this guarantee was
awarded to a company in the ABX group at a time when
the decision to reorganise and restructure the network had
already been taken and this was underway, the Commission
will investigate this aid together with the other restructur-
ing measures
taken by the ABX group, which has
incorporated ABX Singapore.

6.1.2. Recapitalisation measures

(186) The meeting of the Belgian Council of Ministers in February
2002 constitutes irrefutable proof of the Belgian Govern-
ment's involvement, from that day on, in SNCB's manage-
ment of the ABX case. The measures taken to recapitalise
ABX Germany (for a sum of EUR 157,4 million) and ABX
Netherlands (for a sum of EUR 10,6 million) were notified
by Belgium after
this date, and have not yet been
implemented. Belgium has presented these measures not
as wise investments, but as restructuring aid. There is
therefore no doubt that these measures must be classed as
state aid and investigated as restructuring aid.

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(187) The letter of intent which SNCB had to issue for its German
subsidiary because the latter's equity was negative from the
month in which it was bought, was re-issued annually until
2005 by SNCB, including during a period when there is no
doubt that SNCB's decisions regarding ABX can be imputed
to the State. As this letter contains commitments compar-
able to a guarantee and SNCB received no payment for this,
the Commission considers that there are elements of state
aid. However, since the recapitalisation of ABX Germany by
SNCB, which is the subject of this Decision, effectively and
definitively gives the company's creditors the security which
they sought
intent, which then
becomes inapplicable, there will be no need to conduct a
separate, redundant investigation relating to the recapita-
lisation measures themselves.

through the letter of

(193) This rate is permitted in view of the usual bank rates given
in similar situations (71). The Commission concludes that
this guarantee has not given the ABX group an advantage
constituting state aid. Besides, even if it were considered
that the rate demanded by a private investor would have
been a few basis points higher or even double, it would
have resulted in a negligible advantage in view of the other
aid measures (EUR 0,07 million per year) and would not
have changed the following assessment of the compatibility
of all the restructuring aid measures.

6.1.3. Loans in 2002

6.1.5. Other SNCB off-balance sheet commitments

(188) SNCB granted loans to ABX Logistics NV and to ABX-D, -
NL and -F from April and May 2002, i.e. during a period in
which there is no doubt that SNCB's decisions regarding
ABX can be imputed to the State.

(189) As indicated in the descriptive section, these loans resulted
in remuneration of between [...] and [...] %. The Commis-
sion considers that this level of remuneration is inadequate
in view of the situation of the companies concerned. It uses
the Commission's reference rate, set at 5,06 %, as an
indicator of an appropriate level, which was also used for
setting the rate of the rescue aid granted in January 2003 to
ABX Germany.

(190) The Commission concludes that these loans contain an
element of state aid. On the basis of the above reference
rate increased by 400 basis points for a firm in difficulty,
but
the Commission
estimates the sum of the aid element corresponding to
this loan at around EUR 8 million.

also undergoing restructuring,

(191) As the loans were given to several companies in the ABX
group at a time when the decision to reorganise and
restructure the network had already been taken and was
being implemented, the Commission will investigate this
aid together with the other measures to restructure the ABX
group, which has incorporated the retained activities of the
companies which benefited from these loans.

6.1.4. Guarantee granted for setting up a cash pool

(192) As stated in the description of the restructuring measures,
the Belgian authorities pointed out
the overdraft
facility of EUR [...] million opened by the ABX group with a
financial establishment results in commercial remunera-
tion, and that the guarantee set up in January 2001 by
SNCB for this credit line is subject to a remuneration of [...]
basis points.

that

some companies

(194) The Belgian authorities maintained that in addition to the
guarantees taken out at the time of the original acquisition
of
the only new
guarantees issued by SNCB in favour of the ABX group
are the two above guarantees in favour of ABX Singapore,
taken out at the end of 2005, and the approval of the
overdraft facility for the cash pool. However, SNCB did
issue a number of letters of intent.

in the network,

(195) The Belgian authorities are of the view that these letters of
intent, which do not
involve any remuneration, are
standard practice in a market economy in dealings between
a parent company and its subsidiaries. In the case in point,
with the exception of the letter for ABX Germany which
has already been assessed and a letter of intent in favour of
ABX Spain for EUR 12,3 million, the Commission noted
that none of the new letters of intent of which it is aware
and which have been issued since 2000 (when ABX started
arousing public interest) contains terms which are legally
binding on SNCB. The Commission deems that the letter of
intent in favour of ABX Spain is equivalent to a bank
guarantee, given that SNCB undertakes to grant ABX Spain
the funds needed to repay its debts to the bank. The
Commission recalls that the aid element in question is
made up of the cost of the guarantee which the company
would have had to pay to obtain the loan and which is in
addition to the cost of the loan itself;
in any case this
amount remains limited and corresponds to a few basis
points. Therefore, even though the margin of [...] basis
points paid by the ABX group to SNCB is adequate, the
resulting aid element remains marginal (EUR 0,02 million
per year). Even if
the cost of a guarantee should be
considerably higher, for example double this amount, or
[...] basis points, which seems high, the aid element itself
would still be marginal (EUR 0,04 million per year) and
would not alter the conclusions on the restructuring aid.

(71) For example, the rate of [...] basis points paid by a subsidiary of ABX

to its banks for their bank guarantee.

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6.1.6. Disposal of the Road domestic France business

(196) As the choice and the conditions of ABX France disposing
of its Road domestic France business were clearly imputable
to the Belgian State,
the Commission must check the
arguments put forward by the Belgian authorities to justify
the choice of an MBO as being in line with what a private
investor would have done under the same circumstances.

(197) Cost of the scenario chosen by SNCB. the total cost of the
divestiture scenario chosen by SNCB is EUR 137,5 million,
or EUR [...] million corresponding to the business' negative
net assets at the time of disinvestment, and a negative
selling price of EUR [...] million.

disposal (between EUR [...] million and EUR [...] million).
Further,
in their
the Belgian authorities take account
assessment of an additional amount of EUR 15 million for
losses incurred in the first four months of 2006.

(203) As a result, as ABX France would also have had to pay
various penalties for breach of contracts (at a cost estimated
by the Belgian authorities of EUR 14 million) and cope
with the consequences for the group's other businesses of
loss of access to the French market, it is reasonable to
consider that amicable liquidation would have led SNCB to
bear a higher cost than that of the employees purchasing
Road domestic France.

(198) The Commission notes that two independent experts have
confirmed that this sum of EUR [...] million corresponds to
the negative value of the Road domestic France business
sold to the employees.

(204) Cost of court-ordered liquidation. According to the Belgian
authorities, the cost of court-ordered liquidation would be
EUR 346 million, or EUR [...] million for
the sold
company's negative net assets when the disposal decision
was taken, and EUR [...] million in other additional costs.

Deloitte Corporate Finance reviewed the business plan of
the company in question and evaluated it using the
discounted cash flows method. The business plan covers
the years 2005 to 2008. The assessment concludes that the
value of ABX-F domestics corresponds to the above
negative price. This was confirmed by Ernst & Young
Transaction Advisory Services who reviewed the estimates
made by Deloitte.

Given that these two independent experts used the standard
and appropriate assessment methods,
the Commission
accepts that this price corresponds to the market price and
that the buyer of the Road domestic France activity did not
receive state aid when making this purchase.

(199) Cost of voluntary liquidation: according to the Belgian
authorities, the cost of voluntary liquidation would be
EUR 183 million, or EUR [...] million for the negative net
assets when the disposal decision was taken, and EUR [...]
million in other additional costs.

(205) In the Commission's view, given the difference between the
options of disposal and voluntary liquidation,
is
unjustified to consider that,
in the case of obligatory
liquidation, SNCB would have had to bear all the EUR [...]
million amounting to the net negative assets at the time the
disposal decision was taken, as by definition it would not
have sought to pay off the creditors of its subsidiary.

it

(206) Among the other additional costs, the Belgian authorities
consider that, in this case, SNCB should have been able to
bear a risk [...] of EUR 58 million.

(207) The Belgian authorities provided the Commission with
several points to back up this theory,
in particular an
opinion from the experts Linklaters and Grand Auzas et
Associés stating that the option of court-ordered liquida-
tion would expose SNCB to a real and non-negligible risk
[...] calling its liability into question.

(200) In the case of a voluntary liquidation plan, SNCB would
have to pay off all the creditors of the liquidated company
which were not covered by the liquidated assets.
It is
therefore legitimate to include the amount of EUR [...]
million.

(208) The Commission does not deny that, in certain exceptional
cases, some national legislation provides for the possibility
of third parties to bring proceedings against the share-
holders of a liquidated company,
in particular if these
shareholders may be considered [...] and/or as being guilty
of mismanagement.

(201) The other additional costs taken into account by the
Belgian authorities comprise in particular EUR [...] million
for the redundancy programme which should have been
carried out by SNCB during the liquidation, and EUR [...]
million incurred through losses which would have been
made by the ABX group throughout the negotiations for
this programme.

(202) Both these estimates seem reasonable. In terms of the
redundancy programme, the amount breaks down into an
acceptable redundancy cost of EUR [...] per employee; the
expected amount of losses incurred while this programme
was carried out is comparable to the level of losses for
the time of
2005 in the company's business plan at

(209) However, in the case in point, although French law does
provide for this possibility and the Belgian authorities have
provided some indications of such a risk, they have not
sufficiently erased the doubts expressed regarding this case
when the procedure was extended in April 2005. The
Commission concludes that it is not legitimate in this case
to include
scenario the
EUR 58 million which, according to the Belgian authorities,
are linked to the risk of [...].

among the

costs of

this

(210) Similarly, the Commission considers that, in view of the
special status of SNCB, it is unlikely that SNCB's financing
cost would have been significantly affected by the court-

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Official Journal of the European Union

L 383/47

ordered liquidation of Road domestic France, contrary to
the view taken by the Belgian authorities. However, it is
possible to accept that this liquidation could have entailed
an additional cost to paying the ABX group's bank debts,
estimated by the Belgian authorities at no more than
EUR 7 million.

The Belgian authorities estimated this additional cost at
EUR 35 million. As the scale and therefore the cost of these
redundancies should correspond to the amount of business
lost, the same cautious hypothesis as above results in an
estimated value of
two thirds of additional costs, or
EUR 24 million.

(211) The Belgian authorities' simulation also takes account of an
impact on the group's need for working capital, as the
creditors of the entire group could, once Road domestic
France was put into liquidation, demand a drastic reduction
in their repayment schedules. The estimated impact of this
at EUR 45 million, based on the average deadline for
repayment given by suppliers being reduced by one week,
or around 15 %, seems acceptable. Even if the impact could
have been reduced for the clients of the group's subsidiaries
which were in good financial health, it could have been
considerably more than one week in the case of the clients
of the other subsidiaries in financial difficulties when the
business went into liquidation in France.

(212) Lastly,

the Belgian authorities consider that

liquidating
Road domestic France would also have resulted in the
group's other activities losing between 5 and 30 % of
clients in the year of
liquidation. As the group offers
integrated services in Europe, and its different operations
are highly interdependent, it is reasonable to expect that a
court-ordered liquidation could have tarnished the image of
the other activities in the group and caused business to
drop off, especially since the activity and/or the country in
the
question are close to the activity and country of
company which would have been liquidated, as is reflected
in the assessments made by the Belgian authorities. This
reasoning cannot be applied to the chosen MBO option. On
one hand this solution actually protects the group's image;
on the other, the disposal contract for Road domestic
France contains a cooperation agreement between the
company consolidating the activities sold by MBO and the
international operations of ABX-F remaining within the
ABX group, meaning that the ABX group's clients will still
have access to a service in France. The Commission notes
that it is difficult to confirm client losses of up to 30 %.
Thus, bearing in mind the fact that the group's various
subsidiaries share several joint major clients, and given the
importance of France in the group's international activities
in France, Germany and the Netherlands (which is between
14 and 36 %),
cost of
EUR 112 million expected by the Belgian authorities, the
Commission considers that, when assessing the impact this
it is wise to work with estimated costs of a
will have,
maximum loss of 20 % of clients in the first year in the
worst affected activities, totalling around EUR 75 million.

additional

than the

rather

(213) It is also reasonable to accept the possibility that this drop
in business would have led the group to make staff
cutbacks, as the company could have been forced to lay off
more staff in order to avoid losing too great a gross margin.

(214) Overall, the Commission considers that, rather than the
sum of EUR 346 million cited by the Belgian authorities,
the court-ordered liquidation of Road domestic France
could have resulted in SNCB bearing a cost of at least 7 +
45 + 75 + 24, or EUR 151 million (excluding the possible
risk of [...]) which is higher than the cost of the scenario put
forward by SNCB.

(215) Conclusion. Upon completing this assessment the Commis-
sion feels that the choice made by SNCB to sell its Road
domestic France business to the employees, and the
arrangements it adopted for this, can be considered in line
with the choice which a private investor, guided solely by
financial considerations, would have made and therefore
that this operation contains no elements of state aid.

(216) The Commission based the above analysis only on the
assumptions which it considered reasonable and sufficiently
motivated. These estimates lead one to consider that the
discrepancy between the scenario chosen by SNCB and the
alternatives to liquidation would be at least EUR 13 million,
which should more than cover any margin of error in the
estimates selected following the assessment.

6.1.7. Sale of ABX-WW

(217) The Commission notes that the SNCB went to great lengths
in particular by using a

to find a buyer for ABX-WW,
specialised company.

(218) Regarding the sale price and conditions of ABX-Worldwide,
the Commission takes account of the report by KPMG who
were asked to check, from a financial (‘fairness’) point of
view, the offer for sale of all ABX-WW's remaining assets, as
described above.

(219) KPMG's report (72) is based essentially on a comparison
between two methods of evaluation: the discounted cash
flow method (DCF) which involves calculating the current
net value of expected future revenue; and the capitalised
earnings method (CEA) which consists of comparing
several levels of a company's expected revenue (turnover,
EBITDA, EBIT, etc.) in relation to others in the same sector
by applying the multiplier coefficients of the market in
question.

(220) Given that the expert carried out a detailed assessment of
the disposal and used recognised calculation methods for
this type of fairness option, the Commission considers that

(72) KPMG: Yvan Project — Valuation summary, Presentation to NMBS/

SNCB Holding NV/SA, 26 May 2005 v2.2.

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KPMG's final conclusion that ‘the term of the proposed sale
to Yvan is fair and reasonable and represents fair market
value’ is acceptable. It concludes that the disposal of ABX-
WW does not involve any element of state aid in favour of
the purchaser, provided that this is done at the agreed price
and is subject to only the usual and financially justifiable
adjustments applicable in the event of disposal.

(221) The conditions of disposal will ensure that Yvan gives
Belgium a sale price and a commitment to make substantial
contributions which will reduce public money earmarked
for this by Belgium. These conditions also ensure that
SNCB effectively disposes all the ABX group's operations.

6.2.

Compatibility of restructuring aid

(222) The Commission will now look at the compatibility of the
state aids which it has just identified with its Guidelines on
State aid for rescuing and restructuring firms in difficulty.
The Belgian authorities' original notification was made in
2003 and resulted in proceedings being opened in 2003
on the basis of the 1999 Community Guidelines for State
aid for rescuing and restructuring firms in difficulty (73)
(‘the 1999 guidelines’). However, on one hand, updating the
restructuring plan after the new guidelines came into force
allows for a considerable increase in the amount of aid
originally planned; on the other, the above assessment
shows that SNCB granted illegal aid to the ABX group. In
the light of these factors and points 103 and 104 of the
2004 Community guidelines on State aid for rescuing and
restructuring firms in difficulty (74) (‘the 2004 guidelines’)
the Commission will examine all these aids in the light of
the latter text, while taking account of the fact that the plan
was originally notified under the 1999 guidelines. In any
the aid in
case,
question may be declared compatible under both the 1999
guidelines and the 2004 guidelines.

the following assessment shows that

Secondly, and more importantly, ABX's operations in
Germany, France and the Netherlands
faced serious
financial difficulties, which are described in the decision
approving rescue aid to ABX, and thereby indisputably
constitute firms in difficulty, as noted by the Commission
in that Decision (75). However, at the time, these played a
key role in the ABX group's strategy and in its ability to
provide integrated logistics and transport
in
Europe. They also made a decisive contribution (about
60 % in 2002) to the group's turnover, such that the
serious difficulties they faced threatened the survival of the
group as structured at the time.

services

(224) Furthermore, the Commission considers that the rest of the
ABX group was unable to make a greater contribution to
funding its restructuring.

(225) The Belgian authorities stated that,

through disposals,
external funding and productivity gains (particularly in
the Netherlands and Spain), ABX-WW generated
Italy,
EUR 24,3 million which enabled it to partially fund the
restructuring of the group.

(226) The sale of assets, combined with the internal rationalisa-
tion measures, substantially reduces the scale of the ABX
group:
the number of sites will be reduced by 31 %,
turnover by 21 %, staff (FTE) by 40 % and (warehousing)
area by 54 %. These figures are significantly higher in
Germany, with reductions up to 69 %, before taking
account of
the commitments made by Belgium in
November 2005. It is considered that further disposals of
assets could ensure the group becomes viable as an
integrated network of multimodal
logistic services in
Europe.

(227) The healthy parts of the group have supported the other
parts which are in difficulty, thereby helping them recover.
For example, ABX Logistics (Belgium) NV/SA wrote off a
sum of EUR 10,6 million owed by ABX Netherlands.

6.2.1. Eligibility

that

(223) The Commission notes, on the basis of several relevant
indications,
the ABX group as a whole must be
considered a firm in difficulty within the meaning of point
11 of the 2004 guidelines. Firstly, the group's operating
losses ballooned during 2001 and 2002 up to EUR 50 mil-
lion in 2002; losses also increased, the net result rising
from -EUR 73 million in 2000 to -EUR 186 million in
2002; financial charges rose throughout the same period
from EUR 15 million to EUR 41 million, while debt
increased from EUR 442 million to EUR 512 million.

(73) OJ C 288, 9.10.1999, p. 2.
(74) OJ C 244, 1.10.2004, p. 2.

(228) Lastly, it should be noted that the entire group, whose cash
has been pooled since 2001, is [...] in a negative liquid
position as the cash released by the profit-making parts of
the business has been absorbed by the loss-making ones.

(229) The overdraft of the cash pool is still negative and often
close to the authorised overdraft limit of EUR [...] million
(for example EUR -[...] million in June 2005), and the group
owes [...] in short-term liquid assets:

(75) Decision No C(2003) 245 final of 21.1.2003: State aid No 769/2002
Rescue aid for ABX Logistics (F, D, NL subsidiaries and the group).
Published on the Commission website at: http://europa.eu.int/comm/
secretariat_general/sgb/state_aids/transports-2002/n769-02-fr.pdf
(available in French only).

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Official Journal of the European Union

L 383/49

Consolidated liquid position of ABX Logistics
Worldwide S.A.

the quality of the ABX group's restructuring plan and its
return to sustainable viability.

31.12.2003

31.12.2004

30.06.2005

EUR million

Bank current accounts
Financial debts of over
one year maturing during
the year
Short-term bank over-
draft

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

Net liquid position

- 36,8

- 62,2

- 114,4

(230) Lastly, the Commission notes that, although the holding
company ABX-WW was only created in 2003, as a
financial entity the group is not a new firm within the
meaning of the 2004 guidelines as it was formed by
merging several pre-existing entities in the same sector, and
that the group's new structure was set up precisely to aid
restructuring.

6.2.2. Restoring viability

(231) The provisional results expected for ABX-WW, ABX-D and
ABX–NL, as indicated in the descriptive section above and
based on realistic assumptions, predict a return to viability
between 2006 and 2007.

(232) Moreover, the financial results have improved significantly
since 2002, the year in which the restructuring plan was
drawn up. The operational results (EBIT) of ABX-Logistics
Worldwide S.A. have improved from -EUR 28,7 million
(2002) to +EUR 11, million (2004). The operational result
of ABX Logistics (Deutschland) GmbH (excluding Air&Sea)
went from -EUR 32, million to -EUR [...] million over the
same period, and that of ABX Logistics Holding (Neder-
land) BV is almost balanced by going from -EUR 6, million
to -EUR [...] million.

(233) In addition to this undeniable financial recovery witnessed
in recent years, the descriptive section shows that the ABX
group is evidently undergoing a real organic restructuring
which will restore its viability in a sustainable manner.

6.2.3. Avoidance of undue distortions of competition

(235) According to the 2004 guidelines, compensatory measures
must be taken to attenuate as far as possible any adverse
effects the aid may have on competitors. Otherwise, the aid
will be regarded as contrary to the common interest.

(236) The ABX group has already embarked on greatly reducing
its capacity. As previously mentioned, between now and
the end of the restructuring operation it will make dramatic
cut backs in the number of its sites, its operating area,
turnover and staff numbers in order to make reductions in
ABX-WW of up to 54 %, in ABX-D of up to 69 %, in ABX-
NL of up to 44 % and in ABX-F of up to 76 % (mainly in
the form of disposal and by closing offices). These cuts will
be boosted further still, on the German market, by the
additional commitments taken by the Belgian authorities in
[...] 2005. These cuts, which go considerably further than
those set out in the original plan, will free up parts of the
market to competitors.

(237) The Commission feels that these closures and disposal
measures can be considered proportionate given their
quantitative scale, the weakness of ABX's residual market
share in freight forwarding (less than 2 % in Germany, 1 %
in the Netherlands in 2002), the necessity of having a
minimum network in several European countries in order
to maintain a viable intermodal logistics service in Europe,
and lastly the fact that the transport logistics market is not
saturated and is a growth sector, as analysed in Section 2.2.
It should not be forgotten that the ABX group owns almost
no means of transport and is therefore practically non-
operational as a road haulier.

(238) In addition, on the basis of information submitted by the
Belgian authorities, the Commission has verified that a very
large part of the cuts in capacity are in short-term ancillary
activities. These additional cuts affect around 19 % of a total
of 31 % of sites cut, 12 % of a total 21 % reduction in
turnover, 15 % of a total 40 % in staff cuts and 40 % of a
total 54 % reduction in warehousing area.

(234) Lastly, the Commission considers that signing a prelimin-
ary contract of sale for the entire ABX Logistics WW group
which makes disposal obligatory, subject to approval and
the normal conditions in the event of disposal, and
accompanied by substantial investment commitments from
the private buyer, is a further indicator which determines

6.2.4. Aid limited to the minimum

(239) The 2004 guidelines require the amount and intensity of

the aid to be limited to the minimum.

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Official Journal of the European Union

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(240) In the light of this the Commission notes, firstly, that the recapitalisation will cause the group to have a
debt/equity ratio of 80 % once the notified measures have been implemented. This rate would be 155 %
after eliminating the goodwill of EUR 146 million currently in the group's accounts.

ABX LOGISTICS Worldwide S.A., consolidated balance sheet

31.12.03

31.12.04

30.6.05

31.12.05
before
conver-
sion

31.12.05
after con-
version

31.12.05
after con-
version
and elim-
ination of
goodwill

31.12.06

31.12.07

Consolidated equity

Financial debts

Debt ratio

185,8

369

173,9

414,3

158

407

131,9

407

300

239

154 [...]

239 [...]

199 %

238 %

258 %

309 %

80 %

155 % [...]

[...]

[...]

[...]

(241) The Commission feels that this second figure of 155 % can
also justifiably be taken into consideration given that much
of this goodwill comes from the original acquisition of
ABX-D (EUR [...] million) and NL (EUR [...] million), the
capacities of which will be greatly reduced by the
restructuring (exacerbated by the [...] commitments to
reduce presence in Germany communicated by the Belgian
authorities in December 2005). The Belgian authorities also
feel that instigating restructuring measures would lead to all
the goodwill
the German and Dutch subsidiaries
disappearing from SNCB's accounts [...].

for

(242) However,

these two ratios of 80 and 155 % are still
significantly higher than the equivalent ratios noted in the
cases of competitors comparable to the ABX group. For
example, the average (weighted by turnover) of the ratios of
competitors is around 43 % (and would fall to 16 % were
account taken of DPWN, which did not, however, seem
sufficiently comparable to be included).

(243) This shows that the ABX group will be recapitalised at a
lower level than the sector average and will not have any
surplus resources due to its financial structure.

restructuring plan, either
through external funding obtained at market conditions.

from his own resources or

(247) To do this, the Commission starts by determining the total
cost of the restructuring, net of productivity gains and the
reduced need for working capital.

Net cost of restructuring

Redundancies, closures

- 49,0

Cash drain during restructuring (net productivity gains)

- 121,0

Debt to SNCB (prior to 2002)

Interest on SNCB debts (debt prior to 2002 + rescue
aid)

Repayments of credits and loans following bank
withdrawals

Repayments by Yvan of other guarantees and debts to
ABX's creditors

Reduction in working capital needed

- 60,0

- 8,0

[...]

[...]

29,1

Total

- 296,6

(244) Secondly, the Commission reiterates that ABX-WW's net
liquid position has been negative since 2003, so the ABX
group has no surplus cash available.

(248) The Commission feels that it is justified in deducting the
in particular for the

costs set out in the above table,
following reasons:

(245) Thirdly, account should be taken of the fact that the price
which the SNCB should receive in payment of the sale of
ABX-WW shares helps reduce the effective amount of aid.
It would have been the same for the group and its
competitors, as well as for SNCB and Yvan,
if the aid
contributed by SNCB were reduced by as much, the sale
were made for a token price, and the corresponding
funding contributed directly by the buyer.

(246) Furthermore, the Commission must also ensure that the aid
contribution to the

recipient makes

substantial

a

(a)

the amount of EUR 49 million corresponds to costs
incurred directly by the
such as
redundancy fees and the cost of closing subsidiaries;

restructuring,

(b)

the amount of EUR 121 million corresponds to the
cash drain of the entities restructured between 2003
and 2005. It corresponds essentially to the corrected
restructuring,
investment needed for
EBITDA of
items. The
financial charges and some exceptional

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L 383/51

Commission is assured, on the basis of information
sent by the Belgian authorities, that the investments
taken into account are mainly IT-related investments,
and in any case remain below the amount of
repayments. IT-related investments make up one of
the important elements of the reorganisation and
increase in productivity of the group. The Belgian
authorities have confirmed that these investments do
not involve any increase in capacity. The Commission
has also assured itself that the exceptional elements
linked to restructuring the
mainly cover
company;
the reorganisation and
productivity measures (redundancies in the central
operations, legal simplification measures, other pro-
ductivity measures, etc.) needed to ensure viability is
restored.

costs
this concerns

restructuring period itself,

It should be noted that the cost of the cash drain
during the
totalling
EUR 150,9 million, is here reduced by the positive
effects expected as a result of the restructuring and
which generates a positive cash flow in this period of
EUR 29,9 million, making a net cost presented here of
EUR 121 million.

(c) Other funding needs at the end of 2005 must be
covered before ABX-WW is transferred in order to
restore the group's financial structure. These concern
the debts owed to SNCB which will be
either
(EUR 60 million) and the
converted into capital
resulting interest (EUR 8 million), or withdrawals
from bank accounts made between 2003 and 2005
(EUR [...] million), or lastly the planned take-over by
Yvan of existing guarantees and debts (EUR [...]
million);

the specific difficulties of

needed for restructuring. In this case, the Commission feels
it can accept an own contribution of less than 50 % in the
light, particularly, of
the
restructuring operation (on which 13 000 jobs depend
directly in Europe), the scale of the cuts in capacity (cuts up
to 50 % mainly in short-term ancillary activities), the risk
that a further reduction could pose to the viability of the
ABX-WW's international transport logistics network, the
fact that the original notification was made under the 1999
guidelines which did not provide for a minimum rate, and
the privatisation of ABX-WW, which is also a factor which
determines the group's viability and the absence of future
aid to the group.

(251) Other elements show that the markets believe the viability
of the company can be restored, in accordance with the
2004 guidelines. For example,
the Commission again
points out that the ABX group was able to obtain an
overdraft of (EUR [...] million from a financial establish-
ment, guaranteed by SNCB, which for reasons of caution
has not been taken into account in the above calculation of
the recipient's contributions, given that the Commission
was not able, in the light of the premiums paid to the bank
and to SNCB, to completely exclude the possibility of any
state aid. Furthermore, private banks continue to grant
sizeable amounts of short-term credit to the ABX group
without comfort letter or public guarantee.

(252) The Commission therefore feels

the
condition that aid must be limited to the minimum and
that the firm has to make a sizeable contribution to its
restructuring costs from its own resources.

this meets

that

6.2.5. One time, last time

(d) The reduction in working capital needed results from
improved management of
the group's commercial
relations with its clients and suppliers, and is deducted
from the restructuring costs.

(253) The Commission again notes that the ABX network was
established from 1998 and that at no time has the
Commission approved restructuring aid for this network
prior to this Decision.

(249) The ABX group has mobilised a number of

external

its own
resources or
resources obtained at market
conditions in order to finance these measures. These were
mainly generated by the sale of assets to third parties
(EUR 24,2 million), the previously described repurchase of
the operations being restructured by the healthy parts of
ABX or by the holding company ABX-WW (EUR 22,6 mil-
lion) and by the healthy parts of the group writing off debts
and providing funding (EUR 10,6 million + 6 million).
These concerted efforts made by the healthy parts of the
group make a real contribution to the recipient, which is
the group as a whole. In addition to this is the funding
provided by Yvan (EUR [...] million). The total amount of
these own contributions is EUR [...] million.

(250) The above assessment shows that the percentage of the
recipient's own contributions is at least 43,4 % of funds

(254) The Commission also considers that the planned privatisa-
tion of the ABX group should not only guarantee its return
to sustainable viability, but also uphold the ‘one time, last
time’ principle by making it considerably less likely that
public funds will be injected into the firm once it has been
privatised.

6.2.6. Conclusion

(255) In the light of the above, the Commission concludes that
the aid granted by SNCB as part of the restructuring of the
ABX group are in line with the criteria set out in both the
1999 and the 2004 guidelines,
therefore
compatible with Article 87(3) of the Treaty. It notes in
particular that the healthy parts of the ABX group have

and are

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Official Journal of the European Union

28.12.2006

made substantial contributions to funding those parts in
difficulty and,
in addition to this contribution, that the
group has substantially reduced its capacity in exchange for
the aid. In addition, the privatisation of the ABX group
means not only that the group will be viable in future, but
also precludes the possibility of it being granted any other
State aid in future.

(256) Lastly, the Commission once again notes that the political
guidelines in the field of state aid to the railways sector,
which it set out in its Decision of 2 March 2005 in Case No
N 386/2004, provide a horizontal examination of the
issues
raised by the unlimited guarantee which rail
companies have in several Member States.

HAS ADOPTED THIS DECISION:

Article 1

1. The aid investigated in this Decision, granted by the Belgian
railways (Société nationale des chemins de fer belges, SNCB) as part of
the restructuring of the ABX Logistics group, is compatible with
the common market under the conditions provided for in
Article 2.

2. The funds used by SNCB to finance the disvestiture of part
of ABX Logistics (France), and the other financing operations
investigated in this Decision, in particular the investments of
capital in 2001 and the ‘parallel contributions’, do not constitute
state aid.

Article 2

The Commission authorises the restructuring aids set out in
Article 1(1) on the condition that the ABX Logistics group is sold
within [...] of the date of notification of this Decision, at market
price, to a buyer who has no legal links to SNCB, and in line with
the commitments regarding conditions of purchase and finan-
cing proposed by the potential buyer as described in this
Decision.

Article 3

Belgium shall inform the Commission within two months of the
date of notification of this Decision of the measures taken to
comply with it.

Article 4

This Decision is addressed to the Kingdom of Belgium.

Done at Brussels, 7 December 2005.

For the Commission

Jacques BARROT

Vice-President