Another chapter in the long running saga about keeping SeaFrance financially afloat has come to an end.

On 15 January 2015, the General Court of the European Union ruled that the aid granted to the shipping company SeaFrance in 2010 was incompatible with the internal market, and confirmed that France will have to recover it immediately.

This ruling was made in Case T-­‐1/12 between the France and  the EU  Commission,5 where  France sought to reverse the Commission Decision ordering France to recover the state aids paid to SeaFrance through the Société Nationale des Chemins de fer Français (‘SNCF’), since those aids were considered to be incompatible with the internal market.

SeaFrance, now wound up, was a French public limited company indirectly 100% owned by the French public entity ‘SNCF’. SeaFrance operated maritime passenger and freight transport services between the ports of Calais and Dover.

From 2008 onwards SeaFrance was in serious financial difficulty. Hence, SNCF established a credit line in favour of SeaFrance. That rescue aid was approved by the Commission on 18 August 2010.6

On 18 February 2011, France notified the Commission of a further restructuring aid package in favour of SeaFrance along with a restructuring plan. That restructuring package was to be financed mainly by aid in the form of a recapitalisation of SeaFrance in the amount of Euro €223 million.

Subsequently, the recapitalisation was reduced to Euro €166 million and it was accompanied by two loans granted by SNCF. The first loan aimed to finance the company restructuring, while the second loan sought to replace a loan pertaining to one of the vessels of the fleet.

By decision of 24 October 2011, the Commission found that the rescue aid granted in 2010 and the restructuring measures in 2011 constituted state aids within the meaning of Article 107(1) TFEU, and they were incompatible with the internal market. On  this basis, the  Commission ordered France   to   immediately   recover   the   aid   from SeaFrance.

In January 2012 France brought an action for annulment before the Court against the Commission’s decision, which was registered as Case T-­‐1/12.

In its judgment of 15 January 2015, the General Court dismissed the action brought by France, and confirmed that the aid granted to SeaFrance was incompatible with the internal market.

In support of its conclusions, the General Court rejected France’s argument that the rescue aid and the two loans should have been examined on the basis of the private investor test and not been considered as one package.

The General Court first observed that the two loans coincided with the recapitalisation and that those three measures were set out in the same restructuring plan submitted to the Commission six months after the implementation of the rescued aid.

Second, SeaFrance was suffering financial difficulties both when the capital contribution was granted and when SNCF planned its loans. Third, the three measures aimed to the same purpose, i.e. financing the restructuring of SeaFrance.

Accordingly, the General Court found the Commission correctly considered that, having regard in particular to their timescale, their purpose and the circumstances at the time, the three measures were so closely linked that they were inseparable for the purpose of the private investor test.

As to the application of the private investor test in the present  case, the General  Court considered that the Commission correctly concluded that a private investor in a market economy would not have taken the risk of implementing the measures adopted by the SNCF in favour of SeaFrance.

Finally, the General Court considered that the Commission correctly assessed the compatibility of the SeaFrance restructuring aid with the internal market. In this regard, the General Court pointed out that the recipient of the aid should make a real contribution of its own, free of aid and as high as possible, necessarily amounting to 50% of its  financing needs.  SeaFrance did not  make such a contribution insofar as  its own contribution to restructuring costs was below the 5% threshold. Thus, the aid could not be regarded as compatible with the rules governing the internal market.

France has two months in which to decide whether or not to appeal to the Court of Justice of the EU, also in Luxembourg. The Court of Justice is the highest court and there can be no further appeal.

The General Court judgment should warn the Italian authorities dealing with the restructuring of the Italian shipping company Tirrenia.

Italian authorities should be aware that the form and the quantum of restructuring plans will indeed deeply scrutinised by the Commission and the EU Courts, and that the latter have already shown to be more and more strict while assessing whether aids granted to shipping companies are compatible with EU state aid rules.