Spain had planned to finance the full €358.6 million investment cost for the test centre near Malaga in Andalusia. The Centro de Ensayos de Alta Tecnología Ferroviaria (CEATF) is a railway circuit where trains can run at speeds of up to 520 km/h.
Spain notified the Commission of its plans in September 2013, but an investigation found that Spain had already paid €140.7 million to ADIF, in violation of EU rules, the Commission said.
"The Commission's investigation further concluded that the project is not in line with EU state aid rules, because it does not meet a genuine objective of common interest. There does not appear to be any interest in the market to develop products that run at such high speeds, because they would not be commercially viable," it said.
"In the absence of demand for such specific services, the use of the CEATF facility would in practice have been limited to testing trains and equipment up to the commercially viable speeds of 320-350 km/h, for which testing centres already exist in the EU and tests are performed on commercial rail networks. The CEATF would only duplicate these existing infrastructures," the Commission said.
No private investor showed an interest in participating in the funding, and CEATF was expected to generate losses throughout its entire period of operation, the Commission said.
The project would not promote sustainable development in the Andalusia region, the Commission said. It would create temporary jobs in the construction sector during the building of the infrastructure, but this would come at disproportionate high public costs.