European Commission: Spain aid granted to railway operator ADIF for high-speed train test centre in Andalusia not in line with EU state aid rules

BRUSSELS, 27-Jul-2016 — /EuropaWire/ — The Commission has concluded that aid granted by Spain to railway operator ADIF for the construction of a high-speed train test centre in Andalusia does not meet a genuine objective of common interest. In particular, it does not contribute to promoting a sustainable development in the region.

The Commission has investigated in-depth Spanish plans to finance the full investment costs in the amount of €358.6 million for the construction of a test centre for high-speed trains and related equipment near Malaga in Andalusia (the “Centro de Ensayos de Alta Tecnología Ferroviaria”, CEATF). The CEATF is a railway circuit where trains can run at very high speeds (up to 520 km/h) with additional installations for testing, approval and tuning of mobile rail equipment, infrastructure and superstructure elements.

Under the plans notified by Spain to the Commission in September 2013, the public funding was to be awarded to the Spanish railway infrastructure operator, Administrador de Infraestructura ferroviaria (ADIF), which would own the CEATF. The Commission’s investigation revealed that in fact Spain already paid out, from 2011, €140.7 million to ADIF before the Commission’s decision, in violation of EU rules.

The Commission’s investigation further concluded that the project is not in line with EU state aid rules, because it does not meet a genuine objective of common interest. There does not appear to be any interest in the market to develop products that run at such high speeds, because they would not be commercially viable. In the absence of demand for such specific services, the use of the CEATF facility would in practice have been limited to testing trains and equipment up to the commercially viable speeds of 320-350 km/h, for which testing centres already exist in the EU and tests are performed on commercial rail networks. The CEATF would only duplicate these existing infrastructures.

The Commission also found that, despite the public funding allocated, no private investor showed an interest in participating in the funding. In fact, the CEATF was expected to generate losses throughout its entire period of operation.

Moreover, the Commission found that the project does not contribute to the objective of promoting a sustainable development of the Andalusia region. It would only have had limited short-term effects by creating temporary jobs in the construction sector during the building of the infrastructure. This would have come at disproportionate high public costs and Spain was not able to show that the benefits of the project would have offset the construction costs and the operating losses.

The public funding would thus create a distortion of competition by subsidising a new entrant in the market. On this basis, the Commission concluded that the aid was incompatible with the internal market and ordered Spain to recover from ADIF the funds which have already been disbursed to the company.

Background

The CEATF project was notified in September 2013 and initially assessed under State aid rules for Research, Development and Innovation (R&d&I) which allow public support for R&D&I projects and research infrastructures under certain conditions.

The 2014 R&D&I rules provide that unlawful aid (i.e aid paid out before the Commission has taken a decision on its compatibility with EU state aid rules) should be assessed in accordance with the rules applicable at the date of its award.

Since the investigation revealed that aid had already been disbursed from 2011, the Commission then assessed the compatibility of the aid directly under Article 107(3) of the Treaty on the Functioning of the European Union, which allows Member States to grant aid for the development of certain economic activities provided it does not unduly affect competition and trade between Member States. This is because the then applicable 2006 R&D&I rules did not contain specific provisions as regards aid to research infrastructures.

More information will be available on the Commission’s competition website, in the public case register under the case number SA.37185 once potential confidentiality issues have been cleared.

SOURCE: European Commission