State aid: Commission approves over €22 million of public support to promote rail transport operability in the Netherlands

The European Commission has approved, under EU State aid rules, €22.2 million of public support to upgrade traffic management equipment on freight locomotives in the Netherlands. The scheme will contribute to making railway systems more interoperable in the EU without unduly distorting competition.

Commissioner Margrethe Vestager, in charge of competition policy said: “The Dutch scheme will contribute to the deployment of the European Rail Traffic Management System and to the creation of a Single European Railway Area. It will improve the competitiveness of European railways and foster the shift of freight traffic from road to rail, in line with the EU’s environmental and transport objectives, without unduly distorting competition.”

In October 2019, the Netherlands notified the Commission of their plans to support the upgrade of 99 cross-border freight locomotives with the newest European Rail Traffic Management System (ERTMS) on-board equipment. ERTMS is a safety system that ensures the compliance by trains with speed restrictions and signalling status. This system is expected to enable the creation of a seamless European railway system, and increase the safety and competitiveness of the European rail sector.

The EU Implementing Regulation on the ERTMS European deployment plan requires that about 30% – 40% of the so-called European Core Network Corridors should be equipped with ERTMS by 2023. To meet these requirements, the Netherlands plans to deploy the latest version of ERTMS on a large share of its core national railway network, which is part of the European Core Network Corridors. Consequently, the owners of the locomotives, who invested in the retrofitting of their freight locomotives with former versions of the ERTMS on-board equipment in the past, will now need to upgrade the existing equipment to ensure interoperability with the latest version of the ERTMS and will have to face significant costs.

The public support will take the form of direct grants to the owners of the locomotives, to be used for the prototyping and serial upgrades of the equipment. The public support by the Dutch state will be complemented by grants for a total of €23.8 million financed through the Connecting Europe Facility.

The Commission’s assessment

The Commission assessed the scheme under EU State aid rules, in particular the 2008 Commission Guidelines on State aid for railway undertakings and found that:

• The Dutch scheme is beneficial for the environment and for mobility as it supports rail transport, which is less polluting than road transport, while also decreasing road congestion.
• The measure is proportionate and necessary to achieve the intended objectives, i.e. the promotion of interoperability of railway systems in the EU and supports the shift of freight transport from road to rail.
• The Dutch public funding has an “incentive effect”, as railway vehicle owners would not perform the necessary upgrade of the ERTMS equipment of their freight locomotives absent the public support.

On this basis, the Commission concluded that the measure is in line with EU State aid rules.

Background

Establishing a Single European Railway Area (SERA) is part of the Commission’s agenda of a fairer and deeper internal market. Its overarching goal is to revitalise the rail sector and make European railways more innovative and competitive vis-à-vis other modes of transport. Interoperability of the European rail system is a necessary precondition for its development.

The non-confidential version of the current decision will be made available under the case number SA.55451 in the State Aid Register on the DG 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 State Aid Weekly e-News.