Commission approves €1.9 billion German State aid in favour of DB Cargo conditional on implementation of restructuring plan

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The European Commission has concluded that a German State aid measure of €1.9 billion to support DB Cargo, one of Europe’s leading rail freight operators, is in line with EU State aid rules. DB Cargo is a 100% subsidiary of the State-owned, vertically-integrated German rail operator Deutsche Bahn AG (‘DB AG’).

Following a complaint from a competitor, the Commission opened an in-depth investigation in January 2022 into four following areas:

• the open-ended profit and loss transfer agreement between DB AG and DB Cargo, under which DB AG has been covering DB Cargo’s losses since 2012;
• DB AG providing intra-group services to DB Cargo at potentially favourable pricing terms;
• the advantageous group financing conditions of loans; and
• the partial coverage by the German Federal Railway Fund of remuneration for those civil servants who were previously employed by Deutsche Bundesbahn, the former national railway company, and are currently allocated to DB Cargo.

The Commission’s assessment

The Commission found that the profit and loss transfer agreement involved State aid. The agreement has now been discontinued and will no longer be in place as of 1 January 2025. The Commission has found that the three other measures do not constitute State aid. In the Commisison’s view, the State did not influence the intra-group agreements and loans granted to DB Cargo, which were transactions in the course of ordinary day-to-day business. The Commission also found that the partial coverage of remuneration for civil servants was in line with market conditions.

Commission assessed the State aid granted to DB Cargo through the profit and loss transfer agreement under the Guidelines on rescue and restructuring aid. The Commission has found that aid compatible with the internal market, having assessed the ongoing transformation and restructuring plan for DB Cargo that provides for a package of measures streamlining the company’s activities and reducing its costs with a view to guaranteeing its long-term viability by end 2026. The Commission is satisfied that divestitures of activities and assets of DB Cargo, committed by Germany, will mitigate distortions of competition brought about by that State aid. The Commission also took into account that rail freight is indispensable as a lower-emissions alternative to road transport to bring about sustainable logistics circuits. The Commission thus concluded that the aid is in line with EU State aid rules.

Background

EU State aid rules, more specifically the Guidelines on rescue and restructuring aid, enable Member States to support companies in difficulty, under certain strict conditions. In order for restructuring aid to be approved, the plan must ensure that the viability of the company can be restored without continued State support, that the company contributes sufficiently to the costs of its restructuring and that distortions of competition created by the aid are addressed through compensatory measures, including in particular structural or behavioural measures.

The non-confidential version of the decision will be made available under the case number SA.50952 in the State aid register on the Commission’s competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.