France Ordered to Recover $800M Bailout From SNCF

(CN) – The European Court of Justice cracked the whip Wednesday on France’s national transportation carrier SNCF for failing to return nearly $800 million in illegal state aid.

When France received conditional authorization in 2001 for what was then a $623 million bailout of the SNCF subsidiary Sernam, the European Commission attached several conditions that Sernam failed to meet.

In 2004, the commission told Sernam that it would either have to withdraw from the transportation market if it wanted to keep the $623 million, or it would have to sell its assets en bloc by June 30, 2005.

Sernam chose the latter option, but it again failed to meet the commission’s conditions for the sale, namely that the assets would be sold to to a company that had no legal link with SNCF.

Indeed a former management team of Sernam created the company Financière Sernam to buy Sernam’s assets en bloc.

The commission had also ordered France to recover new, incompatible aid of $50 million, but this amount remained outstanding as well.

In 2012, SNCF brought an action before the European General Court to challenge a conclusion by the commission that the illegal aid Financière Sernam would have to return amounted to nearly $800 million.

SNCF appealed to the Court of Justice, Europe’s highest court, when the General Court dismissed its action in 2015.

On Wednesday, Europe’s highest court dismissed the appeal and affirmed that the General Court’s judgment must stand.

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