The operation of passenger transport services to Corsica is a market characterised by the fact that it is highly seasonal. It is distinguished by seasonal peaks of passenger numbers which may be up to ten times those of the slackest periods, which requires operators to provide a fleet which can absorb those peaks. Half of the turnover is made in July and August. Further, there is an imbalance in respect of the direction of the route, even in peak periods: in July, for example, departures from the mainland are full whereas the return is almost empty. As a result, the average annual passenger rates of the vessels are relatively low.

SNCM is the very first operator to link Corsica to the French mainland. Broadly speaking, two thirds of its activities are carried on between Marseille and Corsica under a public service delegation; the other third of its activities are routes with other departure points or destinations (Nice-Corsica, Toulon-Corsica, international routes to Sardinia or the Maghreb).

The other minor competitors to SNCM operating services to Corsica are Compagnie Méridionale de Navigation (CMN), Moby Lines, Happy Lines and TRIS.

In 2006 and 2007, SNCM’s capacity and its market shares for services to Corsica have decreased, with a reduction of […] % on the availability of seats (- […] % for services from Nice and […] % for services from Marseille).

However, the continued reduction of market shares demonstrates that the renewal of confidence on the part of passengers, which had been greatly damaged by the strikes and disruptions caused by the social conflicts of 2004 and 2005, in particular at the time of the privatisation of the undertaking, is very slow. It is a necessary condition for curbing the reduction of SNCM’s market share recorded in those recent years. In that context, the rise in turnover in 2007 is reassuring for the viability of the undertaking although it has ceded considerable market share to the advantage of its only competitor, whose market share is easily greater today.

Passenger transport by sea between the mainland and Corsica has grown on average by 4 % over the last 15 years; its growth should continue, with an increase of […] % also forecast for 2008 for moderate growth over the next years. None the less, new players do not appear to be seeking to enter that market. At the time of the call for tenders put out by the Office des Transports de Corse to award the public service delegation to operate services by sea to a number of Corsican ports over the period 2007 to 2013, no candidates other than CFF and SNCF-CMN came forward, even though part tendering on a given route was possible.

CFF, SNCM’s main competitor, greatly increased its passenger capacity from 500 000 to […] million between 1999 and 2007 (of which […] % increase between 2006 and 2007), which enabled it to increase its traffic (from […] million in 2005 to […] million in 2007) and its market share. For structural reasons, that policy results nonetheless in lower passenger rates for CFF than for SNCM, with a difference in the region of […] percentage points in 2007. For SNCM, the average passenger rate in 2007 was […] %, which is normal having regard to the fact that the market is very seasonal (see above).

As regards freight traffic to Corsica, in 2005 SNCM held around […] % of the Marseille-Toulon market to Corsica.

SNCM and CMN have a de facto near-monopoly for unaccompanied general goods transport. Under the public service delegation contract, the two firms operate frequent services from Marseilles to all Corsican ports.

For accompanied trailers loaded onto ferries, accounting for 24 % overall of general goods transport measured in linear metres, there is competition among all the passenger transport operators. SNCM and CMN also have the main share of the market in this accompanied transport. The other operators, in particular CFF, have a 10 % share, that is 2 % of the overall market.

1. (i)
   a reduction in the number of crossings and the redeployment of its vessels between the different routes (a reduction in services to Corsica and an increase in those to the Maghreb)60;
2. (ii)

   a reduction of four vessels of its fleet which was to provide EUR 21 million of liquid assets;

3. (iii)

   the transfer of certain property assets;

4. (iv)
   a reduction in staff61 of approximately 12 % which, combined with a fair wage policy, was to make it possible to reduce crew costs from EUR 61,8 million in 2001 to […] EUR […] million on average from 2003 to 2006 and ground costs from EUR 50,3 million in 2001 to EUR […] million over the same period;
5. (v)

   the closure of two of its subsidiaries, the Compagnie Maritime Toulonnaise and the Corsica Marittima company, the residual activities of which would be taken over by SNCM.

• commitments and details concerning wage policy,

• a plan for reducing costs in intermediate purchases,

• a commitment that SNCM would not initiate a fares war with its competitors operating services to Corsica.

On the last point, the French authorities state that ‘SNCM makes that commitment without reservations, because it takes the view that a fares war of its own making would be inconsistent neither with its strategic positioning nor its interest because it would lead to a reduction in its receipts, its usual practices and its expertise’.

According to the French authorities, the EUR 76 million capital contribution and the return to profitability, expected from 2003, should make it possible to raise the company’s capital from its level of about EUR 30 million at the end of 2001 to EUR 120 million in the short term (2003) and then to EUR […] million at the end of the period covered by the plan (2006 to 2007). That was to lead to a reduction in debt from EUR 145 million in 2002 to levels of EUR […] million to EUR […] million from 2003 to 2005. In the last years of the plan, an increase in debt was forecast by the company because of the replacement of one or two vessels (unrestricted ownership).

The French authorities also provided a sensitivity study of expected results in relation to working hypotheses in respect of traffic on different routes. On that basis, the different simulations show that SNCM ought to return to profitability in the situations contemplated.

Accordingly, SNCM’s ordinary profits come to EUR – 32,6 million in 2004 and EUR – 25,8 million in 2005. Net profit was EUR – 29,7 million in 2004 and EUR – 28,8 million in 2005.

In the light of the foregoing, France takes the view that, if the amount of EUR 53,48 is considered to be free from aid elements or if it is classified as aid compatible with Article 86(2) EC, the amount of aid which must be considered to be restructuring aid under the 2002 notification would amount, not to EUR 76 million, but to EUR 15,81 million.

Pursuant to the relevant Community case-law, the French authorities call upon the Commission to consider that the negative sale price of SNCM of EUR 158 million does not contain any measure which may be classified as aid within the meaning of Article 87(1) EC in so far as the French State acted like a private investor in a market economy.

First of all, France observes that the final price of EUR 158 million, which is lower than the negative price which the purchasers asked for initially at the time of their audit of SNCM, is the result of a negotiation of transfer of control conducted in connection with an open, transparent and non-discriminatory competitive tendering procedure and, on that ground, does in fact constitute a market price.

France takes the view that, in so far as that search for a private partner for SNCM was made in an open, transparent and non-discriminatory competitive tendering procedure, at the end of which the best bid was chosen, the sale price is a market price.

According to the French authorities, the negative sale price of EUR 158 million took place in the most favourable conditions for the State in accordance with Community case-law and the Commission’s line of decisions and contains no aid element. France takes the view that that negative price is lower than the liquidation cost which the State would have to bear in the event of the liquidation of the undertaking.

On the second method, France states that it follows from the Commission decision on the State aid implemented by Belgium for ABX Logistics, in which the Commission examined a negative sale price, having, as in this case, the character of a market price, by comparing it to the costs which the State shareholder would actually bear in the event of a voluntary liquidation or compulsory liquidation as assessed by an independent third party. According to France, the Commission recognises in particular in that decision the legality of a certain number of costs which can result from an action ‘en comblement de passif’ (to make good liabilities) by creditors or from the liquidation for other branches of the group liquidating its subsidiary.

On the basis of the CGMF and Oddo-Hastings reports cited above, the French authorities submit that the actual costs which the French Republic would have to bear as a shareholder amounted to between EUR […] and […] million on 30 September 2005.

On 30 September 2005, the residual value of SNCM’s assets (EUR […] million) was, after payment of preferential debts, EUR […] million. Other cost elements taken into account under the action ‘en comblement de passif’ against the State include, inter alia, the costs of termination of the principal operating contracts, the costs related to the cancellation of the lease purchasing conditions of vessels and the payment of unsecured debts, which would lead to a shortfall in assets of EUR […] million. The French authorities consider that the State would have been ordered to pay between […] and […] % of that amount.

Applying the Aspocomp case-law to the present case, France considers that the State would have been called upon to pay additional redundancy payments for a total cost of between EUR […] and […] million, which would have led ultimately to a total liquidation cost chargeable to the State of between EUR […] and […] million.

According to that approach, the analysis of actual costs which would have been paid by the State shareholder shows that the cost to the State of the sale of SNCM at a negative price of EUR 158 million is lower than the actual cost which it would have had to bear in the event of the compulsory liquidation of the undertaking.

In conclusion, the French authorities consider that that amount cannot be classified as State aid.

If the Commission were, however, to classify part or all of the new measures as State aid, France draws the Commission’s attention to the fact that the new measures, by ensuring that SNCM becomes viable again, allows competition to be maintained on the markets in question, in particular the market in services to Corsica. According to France, that aspect is one of the principles of the guidelines in the rescue of an undertaking in difficulty as noted, in the present case, by the Commission (recital 283 of its annulled decision) and by the Court of First Instance in its judgment in Case T-349/03. In particular, the latter pointed out that the Commission could consider, in exercising its wide discretion, that the presence of an undertaking was necessary to prevent the emergence of an increased oligopolistic structure of the markets in question.

According to the French authorities, the restructuring plan, as updated, complies with the compatibility criteria set out by the Commission in its 1999 and 2004 guidelines. All of the measures laid down in the context of SNCM’s privatisation also serve to restore SNCM’s long term viability from the end of 2009 and are restricted to the minimum necessary for that return to viability.

CFF concludes that the planned aid circumvents the cabotage regulation and renders the invitation to tender for Marseilles to Corsica services meaningless. CFF emphasises that the planned aid should not result in facilitating a more aggressive commercial bid on the part of SNCM. It suggests that restructuring aid should not be granted until 2007 and only if SNCM loses the next tender in 2006, which would be the only scenario that would genuinely put the public shipping company in difficulty.

According to the Stef-TFE group, SNCM’s shares in CMN should be analysed as purely financial assets. According to the Stef-TFE group, CMN and SNCM are independent and in competition with each other on routes other than those from Marseilles, even though both are co-contractors under the public service delegation contract.

The letter states that the Stef-TFE group would undertake ‘to buy back all or part, and preferably all, of SNCM’s shares in CMN’, whose value it estimates at between EUR 15 and 17 million, if the Commission were to take the view, under conditions it might impose in its final decision, that ‘such a transfer is necessary to ensure that the restructuring plan is properly balanced’.

The mayor of the city of Marseille, the president of the general council of Bouches-du-Rhône and the president of the regional council of Provence-Alpes-Côte d’Azur pointed out the economic importance of SNCM’s role in the regional economy.

The president of the regional council of Provence-Alpes-Côte d’Azur added that the conditions for SNCM’s restructuring plan to guarantee viability appear to be satisfied.

The president of the executive council of the Assembly of Corsica submitted a resolution of that assembly of 18 December 2002 at which that assembly issued ‘a favourable opinion’ regarding SNCM’s planned recapitalisation.

The OTC also notes that the disappearance of SNCM ‘would immediately lead to a major reduction in services’ as it is currently the only company capable of meeting the requirements of the contract with regard to passenger transport. It notes, in addition, the influence of SNCM in the Corsican economy.

CFF notes the size of the amounts in question, their disproportionate nature in relation to SNCM’s turnover and the fact that they were paid to SNCM before the Commission took a view on classification pursuant to Article 87(1) EC.

CFF draws the Commission’s attention to the fact that the French State’s support for SNCM is a strategic step in the development of CFF. Those unauthorised measures enable SNCM to have a very aggressive tariff policy on the routes in respect of which CFF has been present for 10 years and on which, for the first time since it was set up, it is losing market share.

SNCM sent the Commission a copy of a file summarising its economic and competitive position, together with legal advice assessing the risk that, in connection with liquidation proceedings, the State intervention would be characterised by the courts as de facto management of the company for the period preceding privatisation.

On that basis, SNCM’s expert concludes that it is very likely that the Tribunal de Commerce de Marseille would have characterised the French State as de facto manager.

In that context, according to SNCM’s expert, there is no doubt that the French State would be ordered to bear all or a part of the shortfall in assets under an action ‘en comblement de passif’, having regard to the very strong involvement of the State in SNCM’s management, its manifest acts of mismanagement and the size of its financial resources.

On the basis of the relevant case-law, SNCM’s expert concludes that, if SNCM had been liquidated, the State would certainly have been ordered to pay all of SNCM’s social security debts. That would have resulted in the State shareholder being made liable for an estimated share of between […] and […] % of the stated shortfall in assets (namely between EUR […] and […] million). Consequently, by deciding to privatise SNCM while strengthening in advance its capital in the sum of EUR 158 million, the French State acted like a well-informed investor.

The French authorities have indicated that some of the data submitted by CFF concerning SNCM’s services were inaccurate.

The French authorities conclude that the description which Stef-TFE gives of relations between SNCM and CMN in performing the public service contract does not reflect reality.

According to the French authorities, the decision of SNCM and CMN to enter into a joint venture in which they are jointly and not severally responsible has in no way ‘been rendered obligatory by the overall character of the consultation’, contrary to Stef-TFE’s observations. The decision to set up a SNCM-CMN joint venture was the result of an analysis made by the two companies which showed that the continuation in that form of their original natural partnership gave them the best chances, in particular in terms of competitiveness, to win the tender. CMN’s entry into that venture therefore resulted from a well-considered decision on its part based on an evaluation of its own interests and not on an obligation arising out of the tender as such.

The French authorities explain that, contrary to Stef-TFE’s observations, the companies SNCM and CMN are neither independent nor in direct competition. Such a situation would be in conflict with the very principle of the single public service delegation contract to which they are co-signatories.

The French authorities maintain that SNCM’s share in CMN’s capital cannot be construed as a purely financial asset, as Stef-TFE appears to allege. In conclusion, France’s position is that SNCM’s shareholdings in CMN are highly strategic in nature. In its opinion, the transfer of those holdings would not only make no sense commercially but would also be tantamount to a major strategic error.

The answer of the French authorities to the general remark concerning the early implementation of measures which may be classified as aid by France is that that implementation is justified by the specific features of the procedure, that is to say, the annulment in 2005 of the authorisation decision of the Commission of 9 July 2003, and not by an intention on the part of the French authorities to disregard their obligations under the EC Treaty. Indeed, France states that it has always kept the Commission informed of developments in the matter and with the different measures adopted since January 2005, in accordance with the duty to cooperate in good faith between the Member States and the Commission.

Concerning those recent measures, the French authorities consider that since none of them constitute aid, Article 88(3)EC is not, ultimately, applicable to them and, accordingly, there is no obligation to suspend their application.

First, the French authorities state that they did not cast doubt on the applicability of the Altmark judgment while noting, on the other hand, certain difficulties in applying the test laid down by that judgment, since the amount in question preceded it and could not therefore have taken into account those new criteria.

France points out that the EUR 53,48 million in question is part of the EUR 69,3 million declared compatible by the Commission in 2003. The doubts expressed by the Commission in its initiation decision of 2006 do not therefore concern the compatibility of those measures, which are not called into question, as STIM seems to state in its observations, but concern the aid nature of that amount granted as compensation for public service costs.

According to France, the observations of CFF and STIM do not call into question the applicability to the present case of the first and second Altmark conditions.

In respect of the third criterion in Altmark, the French authorities deny the argument put forward by CFF and STIM that the payment of that sum necessarily results in overcompensation because the Commission authorised, by its decision of 30 October 2001, the payment of EUR 787 million as compensation for public service costs. In that respect, France states that the Commission, in its 2003 decision, stated that those obligations had been undercompensated and that the amount of EUR 53,48 million was justified as public service compensation.

Regarding the fourth Altmark condition, the French authorities submit that, despite the absence of a reference undertaking and thus the impossibility of establishing an overall comparison between SNCM and other undertakings, as noted also by CFF, they endeavoured to provide information serving to make the most exact comparison possible with similar undertakings, that is to say, primarily with CMN. France also challenges the argument raised by STIM and CFF that the structural costs of SNCM are greater than those of CMN. Even if that were to be the case, the French authorities consider that the productivity ratios of SNCM are very similar to those of CMN. In conclusion, SNCM was managed as well as CMN to which STIM at no point refers as a badly-run undertaking.

France states that the losses suffered between 1991 and 2001 were not attributable only to the public service delegation, as CFF appears to assert, but that the public service obligations prevented SNCM from adapting to the change in the competitive environment. The French authorities also state that those losses are not concentrated in the period 2000 to 2001 but gathered pace over that period on account of the increase in the round trips made by CFF.

Concerning the compatibility of the EUR 53,48 million paid as compensation for public service costs in accordance with Article 86(2) EC, the French authorities note that, first, in its 2003 decision, the Commission had already declared that amount as compatible with that article and, secondly, the CFI did not call it into question in its judgment in Case T-349/03.

As regards the sale process, France states that from its outset it provided for classic selection criteria based primarily on the price offered for the increase in value of SNCM’s stock and, secondarily, on other criteria (industrial plan, social plan and so on), including the amount which the candidates were prepared to invest in the company for a recapitalisation. France firmly challenges the argument put forward by third parties that the process of putting up for sale was not transparent and notes that, in the present case, the State itself went beyond its legal and statutory obligations, substantial and restrictive as they were, provided for in the event of transfer of public shareholdings. France notes that the development following BCP’s offer again to take up 100 % of SNCM’s stock occurred in a very difficult financial and social context and that VT’s joining BCP’s offer did not change the commercial and financial terms of the transaction (except for capital ownership).

As regards the negative price of EUR 158 million, the French authorities note that, having regard to SNCM’s financial situation on 30 September 2005, the undertaking was sold at a market price and that the sale was economically more advantageous than a liquidation of the undertaking. In that respect, the French authorities state that the application of the criterion of the private investor in the event of a transfer of undertaking similar to liquidation must not be regarded in the same way as the search for ‘profitability of public action’ but as the prevention of greater losses which the shareholder would have to suffer through a more costly liquidation.

The French authorities also refute CFF’s argument that the market value of SNCM’s fleet was underestimated, which CFF assessed at between EUR 406,5 million and EUR 426,5 million. The French authorities argue that the vessels taken into account in CFF’s calculation do not correspond to those held in SNCM’s name on 30 September 2005. The absence of discounts applied to the market value of the vessels does not take account of the background in which a potential compulsory liquidation of those assets takes place and, finally, the date chosen to calculate that market value, August 2006, is not the date of potential liquidation of SNCM to which reference must be made, that date being 30 September 2005. However, France notes that, if the calculation proposed by CFF was to be accepted, the negative price would be three times lower than the liquidation value of the assets required by the Gröditzer case-law, which would therefore be more favourable than the cases presented to the Commission by the French authorities.

In response to CFF’s argument calling into question the application of the Gröditzer case-law by referring to the fact that the capital contribution of the State in SNCM was linked to the sale of 75 % of its holding, reducing in proportion the prospects of profit in return, the French authorities note that the negative sale price of EUR 158 million does correspond to the sale of the entirety of SNCM’s capital, followed by a new investment by the State of 25 % giving a return of […] % per year. Accordingly, France takes the view that the return on investment remains guaranteed by virtue of its shareholding of 25 % in the company in so far as that holding enjoys a guarantee of very high return.

France also challenges the argument put forward by CFF on the non-application to the present case of the ABX approach, taking as a basis in particular the analysis of the actual liquidation costs of SNCM and the risk that the State could be considered to be liable for the liabilities of the undertaking in an action ‘en comblement de passif’ as provided for by French insolvency procedures and confirmed by national case-law (judgment of the Court of Appeal of Rouen of 22 March 2005). Although the French authorities consider that their conduct as manager of SNCM cannot be described as being ‘wrongful’ in that action, they insist that there is a very high risk that an order would be made against the State by a national court for the shortfall in SNCM’s assets owing to flexible criteria for characterisation of mismanagement as provided for in Article L-651-2 of the Commercial Code and pursuant to the case-law cited above which can be transposed to the present case.

In respect of the capitalisation of EUR 8,75 million, France notes that, contrary to the contentions of CFF and STIM, that capital contribution does not constitute State aid on account of the concurrence of that investment, the similarity of its subscription conditions and the higher-than-average return obtained by the State via CGMF.

In particular, the French authorities submit that the principle of equality of investors is not called into question by the existence of cancellation clauses since the latter were laid down in connection with the 100 % sale of SNCM and not with the EUR 35 million recapitalisation which followed it.

Further, France submits that its investment is much lower than that of the purchasers, since it is only the sum of EUR 8,75 million which must be compared to the investment made by the purchasers (EUR 26,25 million). The first recapitalisation of EUR 142,5 million should be examined only in the course of the comparison with the liquidation price.

Finally, France challenges STIM’s argument that that contribution is a guarantee given to private purchasers that SNCM has indeed been awarded the public service delegation to operate services to Corsica. The French authorities submit that that increase in capital is prudent and irrespective of the undertaking’s performance and that the award of the public service delegation to SNCM does not serve to improve the return expected on that investment.

As regards the EUR 38,5 million of social measures, France repeats the argument that those measures are aid to individuals and that their payment by the State cannot be considered to give an indirect advantage to the undertaking in so far as they are in addition to SNCM’s statutory obligations and its obligations in agreements. Moreover, France recalls that those measures do not permit the departure of employees who would remain, in their absence, the responsibility of SNCM.

Contrary to CFF’s argument, the French authorities state that the EUR 38,5 million does not correspond to implementation of reductions in staff provided for in the 2003 social plan because those reductions have, despite the delay, already been implemented. The new social plan is therefore in addition to the first social measures of 2003.

France considers that, in the light of the foregoing, the amount of aid to be assessed in the light of the guidelines is EUR 15,81 million.

Contrary to the contentions of CFF, the French authorities consider that, having regard to point 11 of the 2004 guidelines, the first recapitalisation, although enabling SNCM to build up its capital, did not take away its nature of an undertaking in difficulty in so far as that recapitalisation was intended to ensure the continuation of the company’s activities.

France refutes CFF’s contentions that it did not again have to inject money into the undertaking given that SNCM could have had recourse to bank credit. In that regard, the French authorities note that, on 24 August 2005, the banks refused to grant new cash lines to SNCM and that, accordingly, the only alternatives conceivable were privatisation or the liquidation of the undertaking.

France challenges the arguments put forward by CFF and STIM concerning the failure of the 2002 restructuring plan which, despite some delay, was implemented and made it possible to achieve the objectives in 2005. The deterioration in SNCM’s economic and financial situation owing to factors external to the undertaking itself then made necessary the extension of the plan notified in 2002 and the introduction of new measures.

France takes the view that SNCM has good prospects for recovery and that the measures contemplated by the new shareholders, in particular the implementation of the social plan, the reinstatement of services and the renewal of certain vessels, will enable the undertaking to return to viability. In that regard, France observes that on account of the revenues deriving from the public service delegation (approximately […] of SNCM’s turnover) and in view of the extent of the fixed costs and the difficulties in redeploying the 6 vessels used on the Marseille-Corsica route, the public service delegation constitutes an essential element of the undertaking’s strategy and its viability.

On the limitation of the aid to the minimum, France believes that it limited to the strict minimum the restructuring costs necessary to enable the restructuring to be carried out. To that effect, the French authorities note that, as the Commission recognised in its 2003 decision, the undertaking has itself contributed sufficiently to the restructuring plan from its own resources by virtue of the disposal of assets for the sum of EUR 30,2 million. In addition, having regard to other disposals made by SNCM for the sum of EUR 12,2 million, the total of the undertaking’s own contribution comes to EUR 42,4 million. France considers that that amount is much greater than the amount of own contributions necessary to approve the restructuring aid, which finally amounts to EUR 15,81 million, since the other measures are not State aid.

Contrary to the contentions of STIM and CFF, the French authorities state that they complied with all of the conditions imposed by the 2003 decision, to which they were bound until the end of 2006, in particular the maintenance of the fleet of 11 vessels and the application of lower fares than those of its competitors.

Indeed, France considers that, under the new final decision, the level of compensatory measures to be imposed on SNCM must be adapted in so far as the amount of restructuring aid was henceforth EUR 15,81 million rather than EUR 69,3 million.

In that respect, France challenges STIM’s observations concerning the possibility that the Commission may require SNCM to sell its shareholding in CMN as a compensatory measure. France challenges STIM’s argument that the description of strategic assets was called into question in the 2004 guidelines as opposed to those of 1999.

As regards measures referred to by CFF intended to reduce SNCM’s market presence, the French authorities recall that, as the Commission noted, moreover, in its 2003 decision (recital 87), there is no excess capacity on the markets concerned (France — Corsica — the Maghreb) and that a reconfiguration of services to Corsica under and outwith the public service delegation would jeopardise the viability of the undertaking.

As for the argument raised by CFF that the implementation of the measures described above in favour of SNCM involves a serious risk of eliminating its main competitor on the mainland France-Corsica market, namely CFF, the French authorities submit that, having regard to the current structure of the market on which CFF is in the majority, the maintenance of a competitive structure depends on the authorisation of SNCM’s restructuring plan and the presence of the latter on the market in question.

According to the Court of Justice, in so far as a State measure is to be regarded as compensation for the services provided by the recipient undertaking in order to discharge public service obligations, so that that undertaking does not enjoy a real financial advantage and the measure thus does not have the effect of putting them in a more favourable competitive position than the undertakings competing with them, such a measure is not caught by Article 87(1) EC.

However, in order for such compensation to escape classification as State aid, a certain number of cumulative conditions must be fulfilled (see footnote 67 of this decision).

As regards, in particular, the fourth criterion identified by the Court of Justice in Altmark, it must be stated that SNCM was not chosen following a public procurement procedure serving to select the candidate able to provide the services at the lowest cost for the authority.

In the absence of a public procurement procedure, the Commission considers that it is for the Member State to show that the level of compensation paid to SNCM does not exceed the costs incurred by an average well-run and adequately equipped undertaking, taking into account the relevant revenues and a reasonable profit for discharging the obligations, in accordance with the case-law of the Court.

In the present case, the French authorities themselves recognise in their records of 16 November 2006 that is impossible in practice to find an undertaking which might serve as a reference point for that period of 1991-2001 because of the public service obligations of SNCM, which is the only undertaking able to take on those obligations. In those circumstances, the French authorities endeavoured to provide information serving to make the most exact comparison possible with similar undertakings, that is to say, primarily with CMN, stating, however, that those two undertakings did not have the same operating conditions as those imposed on SNCM by public service obligation agreements between 1991 and 2001.

In that regard, the Commission takes the view that, in the light of the arguments of the French authorities, the latter did not demonstrate in what respect the undertakings they judged to be similar constituted the reference point as required by Community case-law. In that context, the Commission notes that the information sent by France regarding undertakings does not make it possible to assess the degree of similarity relied on or to analyse the impact of the differences in operating conditions claimed in the comparison which should be made for the purposes of applying the fourth criterion above.

In those circumstances, the Commission considers that, on the basis of the information and data sent by the French authorities in the present proceedings, the latter still fail to prove that the fourth criterion in Altmark is fulfilled.

Having regard to the foregoing arguments, the Commission takes the view that the measure in question gave SNCM an economic advantage. Given that the measure only benefited SNCM, that economic advantage was selective. Consequently, the compensation granted to SNCM under the 1991 and 1996 agreements for the sum of EUR 53,48 million constitutes State aid within the meaning of Article 87(1) EC.

Since the French authorities have relied on the derogation provided for in Article 86(2) EC, the Commission will use the same approach and the same grounds as those of the 2001 decision in order to assess the measure in question.

Under that article, the payment of State aid may escape the prohibition laid down in Article 87 of the EC Treaty provided that the sole purpose of the aid in question is to offset the extra costs incurred in performing the particular task assigned to an undertaking entrusted with the operation of a service of general economic interest and that the grant of the aid is necessary in order for that undertaking to be able to perform its public service obligations under conditions of economic equilibrium.

• verify whether the services whose management has been entrusted to SNCM can be qualified as a service of general economic interest, and

• examine whether the amount of the subsidies awarded to SNCM in the context of its public service obligations for maritime services to Corsica matches the excess costs borne by SNCM to satisfy the fundamental requirements of the public service contract.

On the basis of the foregoing, the Commission takes the view that the measure in question constitutes State aid which is compatible with the common market in accordance with Article 86(2) EC. Since the measure was implemented on 14 November 2003, the Commission finds that that State aid was unlawful.

• The private intervention must come from economic operators. That is not the case with an acquisition of a holding by employees in the capital of the undertaking concerned183,
• The private intervention must be significant. That is not the case, for example, where such private intervention relates only to 3,3 % of the total amount involved184,
• The private intervention must also be concurrent with the public intervention. The Court has thus confirmed the Commission’s analysis that public contributions may constitute State aid when private investments in the same undertaking are made only after the allocation of the public contributions185. The Commission accepts, however, sometimes to take account of private intervention which took place shortly after public intervention, in particular when the private investor has already signed a letter of intent at the time of the public intervention186.

The Commission notes, first, that the shares in SNCM were transferred to the economic operators BCP and VT. Following the transfer transaction, the State had to contribute concurrently a sum of EUR 8,75 million to the undertaking in order to maintain the 25 % holding in SNCM in accordance with its commitment in particular vis-à-vis the employees.

Next, the contribution of the French State of EUR 8,75 million must be compared to the contribution of the private purchasers, that is EUR 26,25 million. That distribution follows, as stated previously, from the commitment of the French authorities to maintain a 25 % holding in the undertaking concerned. Since the private intervention relates to 75 % of the total amount, the Commission considers it to be significant. Moreover the Commission notes, solely in the interest of completeness, that the private partners have a sound financial structure, that the acquisition of SNCM fits perfectly into their entrepreneurial strategy and that the business plan of those purchasers provides for a return to profitability for the end of 2009.

As regards, finally, the concurrent nature of the two capital contribution transactions, the Commission’s expert verified that that capital had been paid by all SNCM’s shareholders, including CGMF.

It was verified that, on 31 May 2006, the management board of SNCM stated that the two transactions cited above had been carried out. In particular, the related and concurrent increase in capital of all shareholders for the sum of EUR 35 million took place on 31 May 2006. It took place in two concurrent stages: (i) a first increase in capital of […] shares to which the purchasers subscribed in full, in cash and at nominal value (EUR […]), and (ii) a second increase in capital of […] shares (a quarter paid up) to which the purchasers ([…] shares, that is, EUR 26,25 million) and the French State ([…] shares, that is, EUR 8,75 million) subscribed in part, under the same conditions, namely subscription in cash for a nominal amount of EUR […].

The public and private capital contributions are therefore plainly concurrent.

In the light of the foregoing, the Commission considers that the criteria laid down by the case-law to exclude automatically the aid nature of the measure in question are fulfilled. The Commission therefore considers that the French State’s capital contribution of EUR 8,75 million does not confer any economic advantage on SNCM since that contribution was made in parallel to a contribution of private capital under comparable conditions in accordance with Community case-law.

In any event, the Commission is of the opinion that the rate of return of the State’s contribution, that is, […] % per annum, constitutes adequate long-term profitability for capital invested by a private investor.

In that regard, the Commission notes that the fixed yield of the State’s capital investment in SNCM exempts the latter from any exposure in respect of performance of the business plan since that yield is completely dissociated from the performance (upwards or downwards) of the undertaking. Accordingly, the grant of the public service delegation will not enable the State to increase the yield expected from its holding.

The Commission’s expert concluded that in terms of risks the French State’s capital contribtution bore more similarity to a bond at a fixed rate than to an investment in shares. It follows that the rate of return of […] % should be compared to the rate for bonds in the French private sector at the time of the transaction. According to the Commission’s expert, that rate was established at 4,15 % at the end of May 2006.

The Commission considers, finally, that the existence of the clause to cancel the sale of SNCM is not such as to call into question the principle of equal treatment of investors. That clause relates, in fact, to the entire sale of SNCM to private purchasers and not to the concurrent investment (EUR 35 million) by private investors (EUR 26,25 million) and the State (EUR 8,75 million) in the privatised SNCM.

In the light of the foregoing, the Commission finds that the measure at issue does not constitute State aid within the meaning of Article 87(1) EC.

In that respect, the Commission confirms that, in compliance with the memorandum of understanding signed by the parties, the escrow account may be used solely for the purpose of financing compensation paid to individuals whose employment contracts with SNCM have been terminated prematurely. Therefore, it is neither the intention nor the effect of those measures to make it possible for employees to leave who, without those measures, would have been able to remain the responsibility of SNCM.

The Commission also notes that the grant of that compensation to workers laid off after the sale of SNCM was approved by the State in the exercise of its public authority and not by the company.

Furthermore, the Commission notes that those additional social measures go beyond the compensation provided for by social legislation and the applicable collective agreements. The costs arising out of the application of the latter therefore continue to be borne in their entirety by SNCM.

Finally, the Commission observes that those additional social measures will be implemented if, once SNCM has been sold, the purchasers decide to reduce staff numbers. In other words, that compensation does not relate to the planned staff reductions provided for under the 2002 restructuring plan.

Therefore, the Commission is of the opinion that the cost of the additional social compensation does not overlap either with the cost of the social plans borne by the State which were in existence prior to the transfer, or with the social costs estimated previously in the event of the compulsory liquidation of SNCM.

Accordingly, the additional social measures do not constitute charges arising out of the normal application of the social legislation applicable to cases where employment contracts have been terminated.

For the sake of completeness, the Commission notes that, even when the amount of EUR 38,5 million is added to the State’s capital contribution of EUR 142,5 million, the adjusted negative selling price of EUR 196,5 million is still well below the cost of compulsory liquidation of SNCM (see point 3 of this decision).

As regards the compatibility of State aid for restructuring with Article 87(3)(c) EC, according to the case-law, the Commission’s decision must state the reasons why it considers the aid to be justified having regard to the conditions laid down in the Guidelines, in particular, the existence of a restructuring plan, satisfactory demonstration of long-term viability and the proportionality of the aid in the light of the recipient’s contribution to it.

As suggested by the Court in its 2005 judgment and set out in point 137 of the 2006 extension decision, the fact that the aid amount validated under the 1999 Guidelines was subject to a downward adjustment raises the question as to the continuation of compensatory measures imposed by the Commission in its 2003 decision.

1. (i)

   to refrain, until 31 December 2006, from acquiring new ships and signing contracts for building, ordering or chartering new or refurbished ships;

2. (ii)

   to use, until 31 December 2006, only the 11 ships already in SNCM’s possession;

3. (iii)

   to dispose of all its direct and indirect holdings in Amadeus France, Compagnie Corse Méditerranée, Société Civile Immobilière (SCI) Schuman, Société Méditerranéenne d’Investissements et de Participations, SOMECA;

4. (iv)

   to refrain, until 31 December 2006, from pursuing a fares policy in respect of published fares intended to offer lower fares than those of each of its competitors for equivalent destinations and services and identical dates;

5. (v)

   to limit, until 31 December 2006, the annual number of round trips on the various sea links to Corsica.

The Commission expert has verified that all the conditions laid down in the 2003 Commission decision were implemented.

With regard to the replacement of the Aliso by the Asco, the Commission notes that the Asco and the Aliso are ‘sister ships’, that is twin vessels built using the same plans and by the same shipyard. They have exactly the same size, shape and capacity. The Commission finds that the swap of the two ships does not result in an increase in SNCM’s capacity. The Commission also notes that the composition of SNCM’s authorised fleet may only be modified for reasons beyond SNCM’s control. In the present case, the Commission is of the opinion that the problems which SNCM encountered in disposing of the Asco were beyond the company’s control. The Commission considers that if SNCM had found a buyer for the Aliso instead of the Asco, the sale of the Aliso would have had the same effect on the Company’s capacity as the sale of the Asco and that the French authorities would have complied with the restructuring plan with regard to the sale of four vessels from SNCM’s operational fleet.

As for condition (v), the expert confirmed that SNCM had complied with the number of crossings during the 2005 and 2006 financial years. However, the company had exceeded the standard maximum number of seats available on crossings departing from Marseilles in 2005 and 2006 and, to a very slight extent, the maximum number of linear metres offered on crossings departing from Toulon in 2005 and 2006 and from Marseilles in 2006.

With regard to the last point, the Commission notes, however, that exclusive cabin occupancy per family makes it difficult to estimate accurately the extent to which the standards were exceeded. That single factor should not therefore result in SNCM’s being considered to have failed to meet the conditions imposed upon it by the 2003 decision.

In the light of the foregoing, the Commission concludes that SNCM implemented the compensatory measures imposed by the 2003 decision.

The Commission observes that SNCM has complied with almost all the compensatory measures in the 2003 decision. In view of the large reduction in the amount of aid approved under the 1999 Guidelines compared to the amount approved in 2003 (the amount in question having led the Commission to impose the abovementioned conditions), the Commission does not deem it necessary to impose additional conditions or requirements to avoid a distortion of competition which would be contrary to the common interest.