DB Cargo Vectron (Photo: Deutsche Bahn/Marcus Henschel)

EUROPE: The European Commission has opened an in-depth investigation into whether German government support for state-owned DB Cargo is in line with state aid rules.

The commission said DB Cargo has been persistently loss-making, with its losses fully and continuously covered by parent company DB AG. The commission has received a complaint alleging this and certain other measures amount to incompatible state aid, and gives DB Cargo an undue advantage by enabling it to invest in business expansion and the renewal of its fleet without having to take profitability or liquidity into account.

Following its preliminary assessment, the European Commission announced on January 31 that it had decided to open an in-depth investigation which will consider:

  • the open-ended profit and loss transfer agreement under which DB AG has been covering DB Cargo’s losses since 2012;
  • DB AG’s provision of intra-group services to DB Cargo at potentially favourable prices;
  • the potentially advantageous group financing conditions of loans;
  • the partial coverage by the German Federal Railway Fund of the remuneration of civil servants previously employed by Deutsche Bundesbahn and currently allocated to DB Cargo.

The opening of an in-depth investigation gives Germany, the complainant and interested third parties an opportunity to submit comments.

A DB spokesperson told Railway Gazette International that DB AG and DB Cargo AG would co-operate closely with the federal government and the European Commission, saying ‘DB Cargo AG has not received any illegal state aid. Deutsche Bahn has always acted in accordance with European law.’