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Swissterminal files complaint with Federal Administrative Court

Swissterminal has launched a complaint against federal funding for Gateway Basel Nord, whose main backer is Swiss Railways (SBB), which is, by the way, looking to sell up to 49% of its ailing freight affiliate, SBB Cargo 

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Swissterminal has lodged a formal complaint with the Swiss Federal Administrative Court against federal funding for the planned container terminal project Gateway Basel Nord, a competitor project to its Basel (Frenkendorf) terminal. This complaint follows the decision of the Swiss Federal Office of Transport (FOT) in July 2018 to publicly fund three quarters of the costs of the first project stage.

 

The funding proposal for the first phase of GBN was submitted by its backers, SBB Cargo, Hupac and Contargo, over three years ago.

Swissterminal's Frenkendorf terminal, a RoLa train passing by in the foreground
Swissterminal's Frenkendorf terminal, a RoLa train passing by in the foreground

Family-owned company Swissterminal, which includes freight train operator SchweizerZug (Swiss Train) considers the federal-funded project "a severe threat to competition in terms of container terminal handling services." The company claims a breach of economic freedom as well as a restriction of competition law and international regulations for free trade. Swissterminal also argues that it is directly affected by the future project, but that it has not been granted any participatory rights in the current planning procedure whatsoever.

 

The complaint filed with the Swiss Federal Administrative Court on 14 September 2018 is directed against both Gateway Basel Nord AG (GBN AG), in which Swiss Railways (SBB) is the main shareholder, and the FOT. The complaint calls for a repeal of the decree issued on 4 July 2018 as it "violates applicable law in many ways."

 

The complaint states that the FOT has not carried out the mandatory fact-finding process in a proper manner, but rather in an extremely biased way, because it simply followed the reasoning of the future gateway operators without any verification. Examples of this are forecast volume development, claimed productivity growth, and predicted shift of traffic from road to rail.

 

The complainant furthermore argues that the FOT failed to assess the legitimacy of market entry of GBN AG as a state-owned enterprise. GBN AG’s main shareholder is SBB Cargo, which is a subsidiary of SBB AG and therefore 100% state-owned. At the same time, SBB is a co-owner of Hupac, which is a minority shareholder of GBN AG. However, the authorities have not considered whether this kind of state involvement complies with applicable law pertaining to the existing market, which is heavily sustained by private companies, in Swissterminal’s view.

 

It also argues the financing of the remaining quarter of Gateway Basel Nord is questionable. Even though this part of the funds required should be met by GBN AG itself, the fact is that SBB Cargo is highly indebted and does not have the appropriate means for funding itself. It therefore needs to be examined whether the funds required originate from funds that SBB AG received for its subsidised business unit. If so, this would represent unlawful cross-subsidisation.

 

Another key issue of the complaint is the infringement of economic freedom and fair competition through the federal government’s commitment to subsidise nearly CHF83M. "The federal funds will finance a project through which private market players will be squeezed out of the market and ultimately eliminates or, at least, massively distorts current competition.

 

"The FOT’s decision also violates international regulations because the free trade agreements between Switzerland and the EU clearly rule out such kinds of federal subsidies that lead to impediments to the international movement of goods linked to the EU market."

 

Swissterminal records that it has not been granted any kind of participatory rights in connection with the current subsidy procedure, even though GBN affects its business environment to a higher extent than any other company in the market. The federal office’s refusal went so far that Swissterminal received the decree issued on 4 July 2018 only after filing a formal request. It says it has has still not been granted access to the files underlying the FOT’s decision.

SBB AG is looking to sell up to 49% of SBB Cargo AG
SBB AG is looking to sell up to 49% of SBB Cargo AG

As it happens, SBB AG is looking for (a) minority shareholder(s) to take a stake in its freight division, SBB Cargo AG. The intention is to sell anything between 10% and 49% of the shares, according to market interest, to strengthen the company’s position in the market.

 

The deal would include trains carrying Swiss imports and exports, intermodal and block train services. It does NOT include any of the activities of SBB Cargo International AG.

 

The latter company was formerly a 100% SBB Cargo AG affiliate, but in 2010 Hupac acquired a 25% strategic stake in order to keep it in the market in the face of severe pressure from DB Cargo. As of January 2019, SBB Cargo International AG will be separated from the SBB group.

 

SBB explained that it needs to shore up SBB Cargo AG. The company lost money until 2012, but from 2013 onwards has achieved positive results. Annual turnover amounts to around CHF200M.

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