RAIL TRANSPORT : DEUTSCHE BAHN'S REQUEST FOR STATE AID SAID TO BE ILLEGAL.

According to its competitors, the German state railway company, Deutsche Bahn (DB), is attempting to obtain illegal state aid from the federal government in order to finance its expansion policy over the next few years. In letters dated 18 December, signed by the British association, Rail Freight Group (RGF), and relayed by the European rail freight association (ERFA), they expressed their concerns to commissioners Jacques Barrot (transport) and Neelie Kroes (competition).

The affair started with a letter dated 20 October 2006 signed by Hartmut Mehdorn, the president of Deutsche Bahn AG, and addressed to a German member of parliament, in which he explains why DB needs additional capital resources to maintain its position as "European champion". Mr Mehdorn gives details of a series of the group's planned investments worth in the region of 12 billion. These include the purchase of ICE high speed trains that would be able to compete with the French SNCF on its own tracks in order to counterbalance the growing number of French railways in Germany (for the sum of roughly 900 million), investments in marshalling yards and also, to a considerable degree, rolling stock, railports and depots (1.5 - 2 billion), funds to take full control of integrated state-owned railways in Eastern Europe (1-3 billion) and to allow DB to remain competitive in transport markets that are open to...