European Commission approves €374 million scheme for Italian rail freight companies

The European Commission (EC) has approved, under EU State aid rules, €374 million Italian support to compensate rail freight transport companies for the damage suffered during the period between 12 March and 31 May 2020 due to the coronavirus pandemic and the restrictions that Italy and other countries had to implement to limit the spread of the virus.

“This €374 million measure will enable Italy to compensate rail freight transport companies for the damage suffered as a result of the coronavirus pandemic and the related restrictions,” Margrethe Vestager, Executive Vice-President of the EC, said. “We continue working closely with all Member States to ensure that national measures to support all sectors that were hit by the crisis, including the rail sector, can be implemented as quickly as possible, in line with EU rules.”

Since the beginning of the pandemic, Italy put in place an array of measures to limit the spread of the virus, including notably a ban on production and trade activities, free movement restrictions, and occupational health and safety requirements.

The restrictions in place between 12 March and 31 May 2020 had, in particular, a direct negative impact on demand for rail freight transport services, due to the limited production and trade of goods transported by rail. As a result, rail freight companies experienced a significant drop in transport volumes and revenues, compared to the same period in 2019. At the same time, they continued to face various costs, in particular additional expenditures to implement enhanced sanitary and hygiene measures. Under the notified scheme, eligible beneficiaries will be entitled to receive compensation in the form of direct grants for the damage suffered during the relevant period.

The measure will be open to companies active along the rail freight transport and logistics chain, including: (a) rail freight carriers; (b) wagon keepers, whose main business is to lease out rail freight wagons; and (c) freight forwarders and multimodal transport operators, which organise transport and logistics on behalf of freight owners.

The European Commission believes that the coronavirus pandemic qualifies as such exceptional occurrence, as it is an extraordinary, unforeseeable event having a significant economic impact. As a result, exceptional interventions by Member States to compensate for damages linked to the outbreak are justified. The EC found that the Italian aid scheme will compensate damages that are directly linked to the coronavirus pandemic. It also found that the measure is proportionate, as the envisaged compensation does not exceed what is necessary to make good the damage.