Europaudvalget 2023-24
EUU Alm.del Bilag 404
Offentligt
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EUROPEAN
COMMISSION
Brussels, 13.2.2024
C(2024) 959 final
COMMISSION DECISION
of 13.2.2024
on the measures
State aid SA.52162 (2019/C) (ex 2018/FC) - Denmark
State aid SA.52617 (2019/C) (ex 2018/FC) - Sweden
implemented by Denmark and Sweden for Øresundsbro Konsortiet
(Text with EEA relevance)
(Only the English text is authentic)
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COMMISSION DECISION
of 13.2.2024
on the measures
State aid SA.52162 (2019/C) (ex 2018/FC) - Denmark
State aid SA.52617 (2019/C) (ex 2018/FC) - Sweden
implemented by Denmark and Sweden for Øresundsbro Konsortiet
(Text with EEA relevance)
(Only the English text is authentic)
PUBLIC VERSION
This document is made available for
information purposes only.
THE EUROPEAN COMMISSION,
Having regard to the Treaty on the Functioning of the European Union (‘TFEU’), and in
particular the first subparagraph of Article 108(2) thereof,
Having regard to the Agreement on the European Economic Area, and in particular Article
62(1)(a) thereof,
Having called on interested parties to submit their comments pursuant to the provisions
1
cited
and having regard to their comments,
Whereas:
1.
1.1.
(1)
PROCEDURE
The formal complaint
On 16 April 2013, ForSea
2
(the ‘Complainant’) filed a complaint with the
Commission alleging that the State guarantees granted by Denmark and Sweden
(together, the ‘States’) in favour of Øresundsbro Konsortiet I/S (the ‘Consortium’) in
respect of the Øresund Fixed Link (the ‘Fixed Link’) constitute unlawful State aid,
1
2
OJ C 109, 22.3.2019, p. 46, and OJ C 109, 22.3.2019, p. 72.
It was Scandlines Øresund I/S that, on 16 April 2013, filed the complaint with the Commission.
In January 2015, Scandlines Øresund I/S was bought by the HH Ferries Group and was renamed as HH
Ferries I/S. On 9 November 2018, the HH Ferries Group announced that it would change its name to
ForSea.
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and that that State aid is incompatible with the internal market.
3
The Complainant
operates a ferry service between Helsingør, Denmark, and Helsingborg, Sweden
across the northern, and narrowest part of the Øresund strait.
(2)
The Commission sent a request for information to the States on 13 May 2013. The
States submitted a joint reply, registered on 28 June 2013. The Commission
requested additional information on 15 October 2013, to which the States replied on
11 December 2013 and 12 March 2014.
On 2 December 2013, the Complainant submitted additional information. By letter of
8 January 2014, the Complainant submitted further documentation on the State
guarantees and alleged that, in addition to the guarantees, the Consortium also
benefited from a favourable taxation regime in Denmark.
4
Following the
Complainant’s submission, the Commission sent a request for information to the
States on 21 February 2014. On 11 March 2014, Sweden informed the Commission
that it had no comments on the alleged tax advantages. Denmark submitted its reply
on 24 April 2014.
On 15 May 2014, the Commission sent another request for information to Denmark,
to which it replied on 13 June 2014.
On 24 March, and on 2, 3, 24, and 28 April 2014, the Complainant submitted
additional information in the form of an annual report of the Consortium, press
articles and a note on the alleged tax advantages. The Commission did not forward
those submissions to Denmark or Sweden.
On 20 May 2014, the Complainant submitted further information. On 4 June 2014,
the Commission invited the States to provide comments on the Complainant’s
submission of 20 May 2014. The States submitted a joint reply on 26 June 2014.
On 30 May, and on 3 and 17 June 2014, the Complainant submitted further
information related to press articles. The Commission did not forward those
submissions to Denmark or Sweden.
On 18 June 2014, the Complainant submitted supplementary information. On
30 June 2014, the Commission forwarded that submission to the States. On
1 September 2014, the States submitted a joint reply.
On 27 August, and again on 8 and 9 September 2014, the Complainant submitted
additional information related to press articles. The Commission did not forward
those submissions to Denmark or Sweden.
On 15 September 2014, the States submitted a joint statement and additional
information.
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
3
4
This complaint was registered as SA.36558 for Denmark and as SA.36662 for Sweden.
This part of the complaint was registered as SA.38371.
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1.2.
(11)
The 2014 decision
On 15 October 2014, the Commission adopted a decision
5
(the ‘2014 decision’)
finding, firstly, that the public financing of the road and rail hinterland connections to
the Fixed Link and the Danish ‘joint taxation regime’ should not be considered as
State aid within the meaning of Article 107(1) TFEU. Secondly, the Commission
decided not to raise objections against ‘the Danish special tax measures for
depreciation of assets and carry-forward losses and the guarantees granted by
Denmark to the Consortium’ on the ground that, although those measures constituted
State aid within the meaning of Article 107(1) TFEU, they were compatible with the
internal market on the basis of Article 107(3), point (b) TFEU. In the same decision,
the Commission considered that ‘the guarantee granted to the Consortium by
Sweden’ was existing aid within the meaning of Article 1(b), point (i) of Council
Regulation No 659/1999
6
(‘Regulation 659/1999’) and Article 144 of the Act of
Accession of Norway, Austria, Finland and Sweden
7
(‘Act of Accession of Austria,
Finland and Sweden’), in relation to which there was no reason to initiate the
procedure to propose appropriate measures regarding existing aid schemes
8
. The
Commission also found that ‘the States and the Consortium could have legitimate
expectations that the Commission would not call into question the State guarantees
and the tax measures on the basis of State aid rules’. The Commission based that
finding on the specific circumstances of the case and on the general policy adopted
by the Commission that financing measures for the construction and operation of
infrastructure definitively adopted before the judgment of the General Court of 12
December 2000 in
Aéroports de Paris
9
(the ‘Aéroports
de Paris
judgment’) can no
longer be called into question on the basis of State aid rules, because public
authorities could legitimately consider that such measures did not constitute State
aid, and, accordingly, did not need to be notified to the Commission (see further,
recital (504)) Additionally, the Commission found in the 2014 decision that, given
that ‘the State guarantees and the fiscal benefits are, in any event, compatible with
the internal market’, it was not necessary to determine whether those legitimate
expectations extended beyond the date of the
Aéroports de Paris
judgment.
5
Commission decision C(2014) 7358 final of 15 October 2014 in case SA.36558 (2014/NN) and
SA.38371 (2014/NN) – Denmark and SA.36662 (2014/NN) – Sweden – Aid granted to Øresundsbro
Konsortiet (OJ C 418, 21.11.2014, p. 1 and OJ C 437, 5.12.2014, p. 1).
Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of
Article 108 of the Treaty on the Functioning of the European Union, OJ L 83, 27.3.1999, p. 1.
Act concerning the conditions of accession of the Kingdom of Norway, the Republic of Austria, the
Republic of Finland and the Kingdom of Sweden and the adjustments to the Treaties on which the
European Union is founded, OJ C 241, 29.8.1994, p. 21.
Article 18 of Regulation 659/1999 provides: ‘Where the Commission, in the light of the information
submitted by the Member State pursuant to Article 17, concludes that the existing aid scheme is not, or
is no longer, compatible with the common market, it shall issue a recommendation proposing
appropriate measures to the Member State concerned’.
Judgment of the General Court of 12 December 2000,
Aéroports de Paris
v
Commission,
T-128/98,
EU:T:2000:290.
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8
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1.3.
(12)
Partial annulment of the 2014 decision
On 12 February 2015, the Complainant brought an action for annulment, pursuant to
Article 263 TFEU, before the General Court, against the 2014 decision. By its ruling
of 19 September 2018, the General Court partially annulled the 2014 decision (the
‘Øresund judgment’)
10
, insofar as the Commission decided not to raise objections
with respect to the guarantees granted by the States to the Consortium or the aid
relating to depreciation of assets and carrying forward of losses granted by Denmark
to the Consortium.
The General Court dismissed the action as to the remainder. In particular, it rejected
the Complainant’s arguments in respect of the Commission’s finding that the
measures for the public financing of the road and rail hinterland connections, and the
Danish ‘joint taxation regime’, did not constitute State aid within the meaning of
Article 107(1) TFEU. The General Court also rejected the argument that the
Commission had erred in law by finding that the Consortium and the States could
claim the benefit of legitimate expectations that precluded recovery, in the event that
the aid granted to the Consortium should be considered incompatible with the
internal market, for the period before the
Aéroports de Paris
judgment.
The
Øresund
judgment was not appealed.
Exchanges following the
Øresund
judgment
On 22 October 2018, the Commission sent a request for information to the States,
requesting factual information and evidence on the guarantees provided to the
Consortium, to which the States replied on 10 December 2018.
On 10 December 2018, the Commission services had a meeting with the
Complainant.
On 11 December 2018, the States provided the Commission with a note on the
possible implications of the
Øresund
judgment and a future Commission decision.
On 17 December 2018, the Commission services had a meeting with the States and
the Consortium, to discuss the economic and financial aspects of the Fixed Link, in
relation to which the Commission services had sent preparatory questions to the
States on 10 December 2018.
Scandlines Danmark ApS and Scandlines Deutschland GmbH (together,
‘Scandlines’) submitted a letter to the Commission on 21 December 2018 in relation
to the
Øresund
judgment and its link with the judgment of the General Court of
13 December 2018 on Fehmarn Belt,
Scandlines
v
Commission
(‘Scandlines
Fehmarn Belt
judgment’)
11
.
(13)
(14)
1.4.
(15)
(16)
(17)
(18)
(19)
10
Judgment of the General Court of 19 September 2018,
HH Ferries and Others
v
Commission,
T-68/15,
EU:T:2018:563.
Judgment of the General Court of 13 December 2018,
Scandlines Danmark ApS and Scandlines
Deutschland GmbH
v
Commission,
T-630/15, EU:T:2018:942.
11
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(20)
The States submitted additional information on 21 December 2018 to follow up on
the meeting held on 17 December 2018. Denmark submitted further information on
17 January 2019, and the States provided further information on 21 January 2019 in
this respect.
On 30 January and on 1 February 2019, Stena Line Scandinavia AB (‘Stena Line’)
submitted information to the Commission in relation to the
Øresund
judgment and its
link with the judgment of the General Court of 13 December 2018 on Fehmarn Belt,
Stena Line
v
Commission
(‘Stena
Line Fehmarn Belt
judgment’)
12
.
On 6 February 2019, the Commission requested further information from the States
in view of the meeting held on 17 December 2018 and the information provided on
21 December 2018, which was provided on 29 March 2019.
The Opening decision
By letter dated 28 February 2019, the Commission informed the States that it had
decided to initiate the procedure laid down in Article 108(2) TFEU in respect of the
State guarantees granted by the States to the Consortium for the financing of the
Fixed Link and the special tax rules on depreciation of assets and on carry-forward of
losses that Denmark granted to the Consortium (the ‘Opening decision’).
The Opening decision was published in the Official Journal of the European Union
on 22 March 2019
13
. The Commission invited interested parties to submit their
comments within one month.
The formal investigation procedure
On 23 April 2019, the Complainant, Scandlines, and Stena Line submitted comments
in relation to the Opening decision. On 2 and 8 May 2019, the Commission
forwarded those comments to the States. On 17 May 2019, three further interested
parties (Föreningen Svensk Sjöfart (‘FSS’), Grimaldi Group (‘Grimaldi’) and
Trelleborg Hamn AB (‘Trelleborg Port’)) submitted comments in relation to the
Opening decision. On 7 June 2019, the Commission forwarded those comments to
the States. The States included their reply to those submissions in their comments of
8 July 2019 on the Opening decision (recital (28)).
On 24 April 2019, the States provided an informal proposal to the Commission for a
mutually agreed timetable for the formal investigation procedure.
On 24 June 2019, Stena Line submitted additional comments. On 25 June 2019, the
Commission forwarded those additional comments to the States. The States did not
submit a reply specifically related to that submission.
On 8 July 2019, the States sent their comments to the Commission in respect of the
Opening decision.
Judgment of the General Court of 13 December 2018,
Stena Line Scandinavia AB
v
Commission,
T-
631/15, EU:T:2018:944.
Supra,
footnote 1.
(21)
(22)
1.5.
(23)
(24)
1.6.
(25)
(26)
(27)
(28)
12
13
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(29)
(30)
On 28 August and 9 October 2019, the Commission services held telephone
conferences with the States and the Consortium.
On 18 November and 9 December 2019, the Complainant submitted additional
information, which the Commission forwarded to Denmark on 16 December and to
Sweden on 20 December 2019. On 20 December 2019, the Complainant submitted
additional information. On 4 February 2020, the Commission forwarded those
additional comments to the States. The States did not submit a reply specifically
related to the submissions of 18 November, 9 December or 20 December 2019.
On 22 April 2020, the States submitted a note to the Commission on the basis of
which, on 23 April 2020, the Commission services held a virtual meeting with the
States and the Consortium.
On 28 May 2020, the Commission services held a virtual meeting with the States and
the Consortium. On 29 May 2020, the Commission submitted questions to the States,
to which they replied on 2, 17 and 18 June 2020. On 17 June 2020, the States
submitted a note to the Commission on the future refinancing needs of the
Consortium.
On 17 June 2020, the Commission services held a virtual meeting with the
Complainant.
On 1 July 2020, the Complainant submitted further comments to the Commission.
On 1 July 2020, the States submitted further information to the Commission on the
future refinancing of the Consortium.
On 13 July 2020, the States submitted further comments to the Commission, on the
basis of which, on 17 September 2020, the Commission services held a virtual
meeting with the States and the Consortium. On 21 September 2020, Denmark
submitted additional information.
On 1 September 2020, the States submitted further information to the Commission
on the future refinancing of the Consortium.
On 17 September 2020, the Complainant submitted further comments. On
18 September 2020 and on 14 October 2020, the Commission forwarded those
additional comments, and the comments of 1 July 2020 (recital (34)), to the States, to
which the States replied on 11 November 2020.
On 28 September 2020, the States submitted further information to the Commission.
On 14 October 2020, the Commission sent questions to Denmark. On
16 December 2020, Denmark submitted a reply to those questions. On
29 January 2021, the Commission services requested further clarifications from
Denmark which were discussed on 3 February 2021 during a virtual meeting
between the Commission services, the States and the Consortium. On 4 February and
7 April 2021, Denmark submitted further information to the Commission.
On 29 April 2021, the Complainant submitted further observations to the
Commission.
(31)
(32)
(33)
(34)
(35)
(36)
(37)
(38)
(39)
(40)
(41)
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(42)
On 10 May 2021, the Commission services requested further clarifications from
Denmark which were discussed on 27 May 2021, during a virtual meeting between
the Commission services, Denmark and the Consortium.
On 3 June 2021, the Commission sent questions to the States to which they replied
on 16 June 2021. On 23 June 2021, the Commission services held a virtual meeting
with the States and the Consortium.
On 4 June 2021, the Commission services held a virtual meeting with the
Complainant. On 10 June 2021, the Complainant submitted replies to the
Commission on questions raised during the virtual meeting of 4 June 2021.
On 5 October 2021, the Complainant submitted information to the Commission.
On 22 November 2021, the Commission services held a virtual meeting with the
States.
On 25 November 2021, the States provided further information.
On 20 February 2022, the Commission sent questions to Denmark. On 28 May 2022,
Denmark replied to those questions.
On 28 October 2022, the Commission services sent some preliminary observations
relating to its formal investigation to the States, which were discussed during a
virtual meeting between the Commission services, the Consortium, and the States on
5 December 2022. On 6 December 2022 the Commission services sent, as follow-up,
some further reference information to Denmark. On 3 and 16 May 2023, the States
replied to the preliminary observations of the Commission services of 28 October
2022. On 9 June 2023, the Commission services held a virtual meeting with the
States and the Consortium on which the Commission services sent further
preliminary observations to the States on 20 July 2023.
On 3 July 2023, the States submitted information to the Commission on a potential
commitment with regards to the future State guarantees.
On 22 September 2023, the Commission services held a virtual meeting with the
States and the Consortium.
On 2, 11, and 27 October 2023, the Commission requested further information from
the States, to which they replied on 7 November 2023.
On 3 January 2024, Trelleborg Port submitted a letter to the Commission, stating that
if, within two months, the Commission had not defined its position, it would
promptly bring an action against the Commission’s failure to act before the General
Court of the European Union.
On 29 January 2024, the States submitted a commitment that the Consortium would
finance new debt, and refinance existing debt, on market terms.
By letters of 15 August 2023 and of 22 September 2023, the States exceptionally
agreed to waive their rights deriving from Article 342 TFEU, in conjunction with
(43)
(44)
(45)
(46)
(47)
(48)
(49)
(50)
(51)
(52)
(53)
(54)
(55)
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Article 3 of Regulation 1/1958
14
, and agreed to have this decision adopted and
notified in the English language, only.
2.
2.1.
(56)
DETAILED DESCRIPTION OF THE PROJECT AND ALLEGED AID
MEASURES
The Fixed Link
The Fixed Link is a 16 km long fixed link for road and railway traffic between the
Swedish coast and the Danish island of Amager, and is composed of a toll-funded
bridge, the artificial island of Peberholm, and an immersed tunnel. It provides a
direct connection between Copenhagen, in Denmark, and Malmö, in Sweden, and
was constructed as the longest combined road and rail bridge in Europe.
The Fixed Link was constructed between 1995 and 2000 and has been in operation
since July 2000.
The Fixed Link was on the first list of Trans-European Transport Network (‘TEN-T’)
priority projects endorsed by the European Council in 1994. The States referred to an
analysis from 2010 on the TEN-T priority projects, in which the Commission stated
that the Fixed Link ‘has contributed to a great increase of the traffic and it has a very
important positive impact on the development of the regions of Copenhagen and
Scania’.
15
The Fixed Link connects the ‘Nordic Triangle road and rail links’ (TEN-T
priority project 12) via Denmark and via the ‘Fehmarn Belt’ (TEN-T priority project
20) with Germany and Central Europe.
The objective of the States, with the Fixed Link, was to create an improved road and
rail traffic connection between Denmark and Sweden, and, thereby, provide the
necessary conditions for more intense and extensive cultural and economic
cooperation, and for the development of a common labour and housing market in the
Øresund region, to the benefit of both States. The Fixed Link would also
significantly improve the accessibility of the airports of Copenhagen and Malmö,
located on either side of the Øresund strait.
In addition, the construction of road and rail hinterland connections was necessary in
both States to make the Fixed Link functional. That hinterland infrastructure
connects the Fixed Link with the respective national road and rail network systems in
Denmark and Sweden. Denmark and Sweden agreed that it was their responsibility to
construct those connections on their respective territories
16
.
(57)
(58)
(59)
(60)
14
Regulation No 1 determining the languages to be used by the European Economic Community (OJ 17,
6.10.1958, p. 385).
TEN-T Priority Projects – Progress Report 2010, European Commission, Directorate General for
Mobility and Transport, 2010.
Article 8 of the Treaty of 23 March 1991 between the Government of Denmark and the Government of
Sweden concerning a Fixed Link across the Sound.
15
16
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2.1.1.
(61)
Legal setup and tasks of the Consortium
The States set out the legal and operational aspects of the construction, management,
and operation of the Fixed Link on 23 March 1991 in the ‘Treaty of 23 March 1991
between the Government of Denmark and the Government of Sweden concerning a
Fixed link across the Sound’ (the ‘Intergovernmental Agreement’). The
Intergovernmental Agreement includes, as an attachment, an additional protocol
determining details on the States’ joint and several guarantee obligation (see further,
recital (85)) (the ‘Additional Protocol to the Intergovernmental Agreement’). The
Intergovernmental Agreement, including the Additional Protocol to the
Intergovernmental Agreement, was ratified by Sweden on 8 August 1991 and by
Denmark on 24 August 1991. The Intergovernmental Agreement and the Additional
Protocol to the Intergovernmental Agreement entered into force on exchange of the
instruments of ratification in Stockholm on 24 August 1991.
With the Intergovernmental Agreement, the States agreed to jointly finance,
construct, and operate the Fixed Link. To that end, Article 10 of the
Intergovernmental Agreement provides that it is for Denmark and Sweden to each
form a limited liability company, wholly owned by the respective States. Article 10
of the Intergovernmental Agreement, further, provides that those companies should,
in turn, form a consortium that would own the Fixed Link, and would be
‘responsible, on their joint account and as one entity, for the project design and any
other preparations for the Fixed Link, as well as for its financing, building, and
operation’. That setup was chosen so that the States would remain the ultimate
owners of the companies involved, and, thus, all profits and losses generated by the
Fixed Link would lie with the States.
The Intergovernmental Agreement was implemented by the States in their national
laws: (i) in Sweden, through the Government bill 1990/91:158 on an agreement
between Sweden and Denmark on a fixed link across Øresund (‘Government bill
1990/91:158’) of 25 March 1991 that was adopted by the Swedish Parliament
decision of 12 June 1991
17
(the ‘Swedish Parliament decision’), and (ii) in Denmark,
through the ‘Act on the construction of the Øresund fixed link’ (Act No 590 of
19 August 1991) (the ‘Construction Act’)
18
.
Section 5 of the Construction Act provides that the Danish Minister for Transport
would set up a holding company. Section 6 of the Construction Act specifies that that
holding company would set up a public limited liability company, responsible for the
Danish road and rail hinterland connections. That limited liability company would
enter into a consortium agreement with a limited liability company set up by
Sweden. Sund & Bælt Holding A/S (‘Sund & Bælt’), was established as a 100 %
Danish State-owned holding company on 4 December 1991. On 9 December 1991,
Sund & Bælt established the limited liability company, A/S Øresundsforbindelsen
(‘A/S Øresund’).
(62)
(63)
(64)
17
18
Riksdagsskrivelse 1990/91:379.
The Construction Act, together with the Act for the Construction of a Fixed Link across Storebælt
(Consolidated Act No 260 of 4 May 1998), was replaced by Act No 588 of 24 June 2005 concerning
Sund & Bælt Holding A/S.
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(65)
Section 4 of the Government bill 1990/91:158, as adopted by the Swedish Parliament
decision, provides that the Swedish National Road Administration and the Swedish
National Rail Administration
19
would set up a Swedish company to be responsible
for the Swedish road and rail hinterland connections and to enter into a consortium
agreement with a Danish State-owned company. On 30 August 1991, Sweden
formed a limited liability company: Svensk-Danska Broförbindelsen AB
(‘SVEDAB’), which is 100 % owned by the Swedish State, through the Swedish
National Road Administration (50 %) and the Swedish National Rail Administration
(50 %)
20
.
Through a consortium agreement and its additional protocol dated 27 January 1992
(the ‘Consortium Agreement’), A/S Øresund and SVEDAB established the
Consortium (i.e. Øresundsbro Konsortiet I/S)
21
, and laid down its ownership
structure. The Consortium Agreement entered into force upon approval by the
Governments of Denmark and Sweden on 13 February 1992. In accordance with the
Intergovernmental Agreement, the Consortium Agreement provides that
,
the
Consortium owns and is responsible for the planning, project design, financing,
construction, operation and maintenance of the Fixed Link, and other operations in
association therewith
22
. A/S Øresund and SVEDAB own jointly, on a fifty-fifty
basis, all of the Consortium’s assets and all of its rights
23
. Both the profits and the
losses derived from the activities of the Consortium are shared equally by the two
partner companies, A/S Øresund and SVEDAB. In relation to any third party, A/S
Øresund and SVEDAB are jointly and severally liable for the Consortium’s
obligations
24
.
The Consortium cannot engage in activities other than those related to the Fixed
Link, as defined in Section 1 of the Consortium Agreement. The Consortium is not
responsible for the construction of the road and rail hinterland connections to the
Fixed Link. The States delegated that task to the parent companies of the
Consortium, i.e., A/S Øresund and SVEDAB, which are responsible for the planning,
project design, financing, construction, operation and maintenance of those
connections in their respective countries
25
.
As already clarified at recital 48 of the Opening decision, the formal investigation,
and, therefore, this decision, do not concern the measures in favour A/S Øresund and
SVEDAB, relevant to the financing of the road and rail hinterland connections. The
In 2010, the Swedish National Road Administration (Vägverket) and the Swedish National Rail
Administration (Banverket) merged into Trafikverket (the Swedish Transport Administration).
With effect from 1 January 2008, following a decision by the Swedish Government, the Swedish
National Road Administration and the Swedish National Rail Administration handed over the mandate
to exercise the ownership rights of SVEDAB to the Swedish Ministry of Enterprise, Energy and
Communications.
Established as ‘Øresundskonsortiet’, it changed its name to ‘Øresundsbro Konsortiet’ with effect from
January 2000.
Article 10 of the Intergovernmental Agreement and Section 1 of the Consortium Agreement.
Article 11 of the Intergovernmental Agreement and Section 3 of the Consortium Agreement.
Article 11 of the Intergovernmental Agreement and Section 3 of the Consortium Agreement.
Section 2(5) of the Consortium Agreement.
(66)
(67)
(68)
19
20
21
22
23
24
25
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Commission found in the 2014 decision that those measures do not constitute State
aid within the meaning of Article 107(1) TFEU, and, in the
Øresund
judgment, the
General Court rejected the action for annulment brought by the Complainant as
regards those measures. The Commission notes, in this respect, that the Complainant
has not appealed the
Øresund
judgment.
2.1.2.
(69)
Financing model for the Fixed Link
Article 1 of the Intergovernmental Agreement refers to a ‘toll-financed’ Fixed Link.
The Intergovernmental Agreement also specifies, in Article 14, that the costs of the
project design and other preparations for the Fixed Link, as well as its construction,
maintenance, and operation, shall be fully covered by the Consortium through user
charges. Article 14, further, stipulates that Denmark and Sweden agreed that no
subsidies should be granted for the activities of the Consortium from the budgets of
the respective States.
Section 4(6) of the Consortium Agreement provides, in essence, that the toll charges
to be levied on the users of the Fixed Link are intended to cover the costs of
planning, project design, construction, operation, and maintenance of the Fixed Link.
The Consortium is to determine and levy the toll charges, in accordance with the
principles agreed by the Danish and Swedish Governments. As stated in the
preparatory notes to the Construction Act
26
(‘preparatory notes to the Construction
Act’), and in the Government bill 1990/91:158, the revenues from road and rail
collected by the Consortium for the use of the Fixed Link are intended to finance the
road and rail hinterland connections, as well. In practice, this happens through the
payment of dividends by the Consortium to the parent companies.
The toll-financing includes fees from users for the use of the toll road, and fees paid
by Trafikverket (the ‘Swedish Transport Administration’) and Banedanmark (the
‘Danish State Rail Administration’) for the use of the Øresund railway line. The
Swedish Transport Administration and the Danish State Rail Administration pay a
fixed annual amount to the Consortium, established in the Additional Protocol to the
Intergovernmental
Agreement
and
amounting
to
DKK 150 million
(EUR 20.10 million
27
)
28
,
29
for each of them, adjusted with the general price
evolution.
The preparatory notes to the Construction Act include an estimate of the planning,
project design, and construction costs of the Fixed Link and the Danish road and rail
hinterland connections, amounting to DKK 11.7 billion
30
(EUR 1.57 billion) and
DKK 3.2 billion (EUR 0.43 billion) respectively. Government bill 1990/91:158
Proposal for an Act on the construction of a fixed link across the Øresund, LFF1990-1991.2.178,
delivered on 2 May 1991 by the Danish Minister for Transport.
Denmark conducts a fixed exchange rate policy for its Danish krone (DKK) against the euro at
EUR 1 = DKK 7.46038. This exchange rate is applied throughout this decision when calculating the
approximate EUR equivalent of DKK.
Price level on 1 January 1991.
Paragraph 4 of the Additional Protocol to the Intergovernmental Agreement.
At 1990 price level.
(70)
(71)
(72)
26
27
28
29
30
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includes a range for the costs of the Fixed Link of SEK 10 to 12 billion
31
(EUR 1.33 billion to EUR 1.60 billion)
32
and a maximum amount for the cost of the
hinterland of SEK 1.9 billion (EUR 0.25 billion). The Government bill 1990/91:158
specifies that the lowest value of the range corresponds to the Swedish estimate and
the highest value to the Danish estimate. To those amounts the financing costs were
to be added. The Fixed Link was partially co-financed by the Union, with a grant of
EUR 127 million under the TEN-T Framework. Following the completion of the
Fixed Link in 2000, the Consortium’s interest-bearing net debt totalled
DKK 19.6 billion
33
(EUR 2.63 billion). The States explained that, since the opening
of the Fixed Link, the revenues have always exceeded operating costs and the
operation of the Fixed Link has not been financed with debt.
(73)
When founded, the Consortium was provided with initial capital by its parent
companies, of a total of DKK 50 million (EUR 6.70 million), pursuant to Section
4(1) of the Consortium Agreement and as provided for by Article 11 of the
Intergovernmental Agreement. Article 11 of the Intergovernmental Agreement also
provides that the Consortium shall raise loans to finance the Fixed Link, and Article
12 of the Intergovernmental Agreement provides that the States shall ‘jointly and
severally guarantee the obligations in respect of the [Consortium]’s loans and other
financial instruments used in connection with the financing’. This is reflected in
Section 4(3) of the Consortium Agreement, which provides that the capital
requirements of the Consortium shall ‘be satisfied by obtaining loans or the issuance
of financial instruments in the open market, with security in the form of Swedish and
Danish government guarantees’.
The Consortium raised loans as liquidity needs arose during the planning and
construction phase. The debt is regularly refinanced with the purpose, as the States
explained, of reducing the overall financing costs. The Consortium entered into
several types of financial transactions: bonds under certain bond programmes
(recitals (75) to (78)), individual loans (recital (79)), credit facilities (recital (80)),
and derivatives (recitals (81) to (83)). Those transactions each have their own
maturity date.
The Consortium has established two standard Medium Term Note (‘MTN’) bond
programmes, one directed towards the European bond market (the ‘EMTN
programme’) and the other directed towards the Swedish bond market (the ‘Swedish
MTN programme’). Through those MTN bond programmes, the Consortium has
raised the majority of its capital needs. The States explained that the main benefit of
the bond programmes is that the Consortium can make several issuances of debt
instruments under the same programme in a time- and cost-efficient manner. The
bond programmes consist of a series of documents, including an information
(74)
(75)
31
32
At 1990 price level.
According to Eurostat, the average exchange rate, in 1990, between the ECU and the Swedish krona
amounted to ECU 1 = SEK 7.5205. This exchange rate is applied to calculate the approximate EUR
equivalent of SEK.
Construction and financing costs of the Fixed Link shown as net debt in 2000 prices.
33
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memorandum
34
, which is the central programme document. The establishment of a
bond programme does not, per se, mean that any debt has been established. As such,
it is possible to have a bond programme without any underlying bonds. The debt is
only established when bonds are issued to investors.
(76)
The Consortium’s first bond programme was a EMTN programme established on
21 September 1995, and which is updated on an annual basis. The States explained
that those updates are done to reflect an update of risk factors and to supply correct
information to the market on the Consortium, its management, certain important
events, etc. Those updates are required as part of the ongoing information obligations
to the financial markets. The maximum aggregate principal amount of the EMTN
programme increased from USD 1 billion (EUR 0.76 billion)
35
to USD 2 billion
(EUR 2.17 billion)
36
in 2000, and to USD 3 billion (EUR 2.41 billion)
37
in 2004.
The Swedish MTN programme, under which the Consortium could take out loans in
Swedish krona, with an aggregate principal amount of SEK 3 billion
(EUR 0.35 billion)
38
was established on 2 December 1996. The Swedish MTN
programme has been updated on an ad hoc basis. Updates
39
include, for example, the
addition of issuing credit institutions under the programme, or an entitlement for the
Consortium to issue loans in euro instead of krona. The aggregate principal amount
of the Swedish MTN programme has been updated on two occasions and amounts,
since 2000, to SEK 10 billion (EUR 1.17 billion)
40
.
The Consortium has obtained bonds under those EMTN and Swedish MTN
programmes in order to finance and refinance the costs of planning and construction
of the Fixed Link. Once a bond under the EMTN programme or the Swedish MTN
programme has become due and needs to be refinanced, the origination process
commences and arrangements with a bank regarding the specific details of that bond
are negotiated and set forth in the pricing terms document of that bond (amount,
interest rate, payment details, etc).
(77)
(78)
34
An information memorandum describes the programme, including the terms and conditions that will
apply to the debt instruments issued under the programme, and includes descriptive information about
the issuer (in this case the Consortium).
According to Eurostat, the average exchange rate, in 1995, between the ECU and the US dollar
amounted to ECU 1 = USD 1.3080 (source: Eurostat). This exchange rate is applied to calculate the
approximate EUR equivalent of USD.
According to Eurostat, the average exchange rate, in 2000, between the Euro and the US dollar
amounted to EUR 1 = USD 0.9236. This exchange rate is applied to calculate the approximate EUR
equivalent of USD.
According to Eurostat, the average exchange rate, in 2004, between the Euro and the US dollar
amounted to EUR 1 = USD 1.2439. This exchange rate is applied to calculate the approximate EUR
equivalent of USD.
According to Eurostat, the average exchange rate, in 1996, between the ECU and the Swedish krona
amounted to ECU 1 = SEK 8.5147. This exchange rate is applied to calculate the approximate EUR
equivalent of SEK.
Implemented e.g. by supplementary agreement of 22 September 1998 and by supplementary agreement
of 3 February 2000.
It was also possible to issue loans in euro up to the corresponding maximum amount.
35
36
37
38
39
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(79)
As set out at recital (74), the Consortium also directly obtained several loans, outside
the context of those MTN programmes. In particular, during the construction phase
of the Fixed Link, the Consortium obtained several loans from the European
Investment Bank (‘EIB’), by entering into finance contracts that contain the terms
and conditions of the loan, and the Consortium obtained loans directly from private
lenders, entering into standalone loan agreements.
Furthermore, the Consortium has held credit facilities with certain banks for
overnight payment purposes and for short term variations in liquidity. The credit
facilities were established in 1994 and are renewed every four years.
Finally, the loans are usually, but not necessarily, combined with a derivative
transaction to re-allocate and mitigate the financial risk related to the loan (such as
interest rate exposure or currency risks), or to optimise the entire portfolio of
financial transactions. Such instruments, mostly swap transactions, are entered into
between the Consortium and relevant banks offering those financial products.
Usually, a derivative transaction is entered into with the same bank that arranged the
loan, but this is not mandatory.
In order to enter into such a transaction, an International Swaps and Derivatives
Association (‘ISDA’) master agreement (‘ISDA Master Agreement’) is signed with
each counterparty. The ISDA Master Agreement is a framework agreement issued by
the ISDA. The framework consists of standard base documentation, which ensures
that all transactions between the Consortium and the particular counterparty bank are
subject to the same documentation, and that all transactions will be subject to netting
in case a party becomes insolvent or enters default in other ways.
The Consortium has also entered into Global Master Repurchase Agreements with
certain banks, with the aim of entering into repurchase transactions
41
, primarily for
use as collateral for derivative transactions. However, no transactions have been
entered into pursuant such agreements and, as such, the agreements have never been
utilised.
Description of alleged aid measures
As noted at recital 50 of the Opening decision, the formal investigation procedure
covers the following measures taken to finance the construction and operation of the
Fixed Link: (i) the State guarantees granted by Sweden and Denmark for loans and
financial instruments taken out by the Consortium, (ii) the Danish rules applicable to
the Consortium with regard to loss carry-forward and (iii) the Danish rules applicable
to the Consortium with regard to the depreciation of assets. Section 2.2.1 further
elaborates on point (i) and Section 2.2.2 elaborates on point (ii) and (iii). As noted at
recital 51 of the Opening decision, the formal investigation procedure does not cover
other possible measures granted by Denmark or Sweden to the Consortium, A/S
Øresund, SVEDAB, Sund & Bælt, or any other related company. Recital 48 of the
Opening decision clarified that the measures in favour of SVEDAB and A/S
(80)
(81)
(82)
(83)
2.2.
(84)
41
A repurchase agreement is a type of financial transaction in which a borrower sells a financial security
to a lender in exchange for cash with a simultaneous agreement to buy it back in the short term.
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Øresund, relevant to the financing of the road and rail hinterland connections, do not
constitute State aid within the meaning of Article 107(1) TFEU.
2.2.1.
The State guarantee model
2.2.1.1.
(85)
Legal set up of the State guarantee model
According to Article 12 of the Intergovernmental Agreement, the States undertook to
jointly and severally guarantee all loans and other financial instruments taken out by
the Consortium in connection with the financing of the Fixed Link. The Additional
Protocol to the Intergovernmental Agreement states that those guarantee agreements
should be provided without charging a guarantee premium
42
. For the purposes of this
decision, the Commission uses the term ‘State guarantee model’ to refer to the
overall arrangement consisting of the joint and several State guarantee obligation
deriving from Article 12 of the Intergovernmental Agreement and implemented in
Danish and Swedish legislation (see further, recitals (86) to (90)), the administration
of that obligation by the Danish National Bank and the Swedish National Debt Office
(see further, recitals (91) to (102)) and the implementation of that obligation by
means of specific guarantee agreements relating, for example, to bond programmes
and individual loans (see further, recitals (103) to (116)).
As described at recital (63), the joint and several State guarantee obligation for the
Consortium’s borrowing, deriving from the Intergovernmental Agreement, was
implemented in Swedish and Danish national legislation in 1991, via the Swedish
Parliament decision and the Construction Act.
In Denmark, the joint and several State guarantee obligation for the Consortium’s
borrowing was implemented by Section 8 of the Construction Act. This was
subsequently replaced by Section 11 of Act No 588 of 24 June 2005
43
(the ‘Sund &
Bælt Act’). Both provisions are substantially identical and provide that the Danish
State shall guarantee the obligations relating to the Consortium’s loans and other
financial instruments that are used in connection with the financing of the Fixed
Link.
44
The preparatory notes to the Construction Act state that Section 8 of the Construction
Act entails that the Danish State guarantees the interest and principal payments and
other commitments relating to loans and financial instruments that the Consortium
uses for financing the Fixed Link. Those preparatory notes further clarify that the
background for Section 8 of the Construction Act is Article 12 of the
Paragraph 1 of the Additional Protocol to the Intergovernmental Agreement provides: ‘Denmark and
Sweden are agreed that no charge or the like shall be levied by the two states for the guarantee
undertakings assumed by them in respect of the consortium’s loans and other financial instruments used
in connection with the financing’.
Act No 588 of 24 June 2005 on Sund and Bælt Holding A/S.
The original text of Section 8 of the Construction Act reads as follows: ‘Den danske stat garanterer for
forpligtelser vedrørende konsortiets lån og andre finansielle instrumenter, som benyttes i forbindelse
med finansieringen af Øresundsforbindelsen’. The text of Section 11 of the Sund & Bælt Act reads as
follows: ‘Den danske stat garanterer for forpligtelser vedrørende Øre sundsbro Konsortiet I/S’ lån og
andre finansielle instrumenter, som benyttes i forbindelse med finansieringen af den faste forbindelse
over Øresund.’
(86)
(87)
(88)
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43
44
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Intergovernmental Agreement, which entails that the States guarantee jointly and
severally those obligations and that the States mutually hold equal responsibility.
Those preparatory notes also state that it had not been the intention of the States,
when deciding on the organisational set up (recital (62)), to limit their liability as
economic guarantors for the financing of the Fixed Link.
(89)
In Sweden, Section 7 of Government bill 1990/91:158, as adopted by the Swedish
Parliament decision, includes a request for the Swedish parliament to authorise the
Government, or the authority determined by the Government, to assume on behalf of
the Swedish State, jointly and severally with the Danish State, a guarantee for the
Consortium’s loans and other financial instruments that are used in connection with
the financing of the planning, project design, construction and operation of the Fixed
Link. Section 4 of Government bill 1990/91:158, as adopted by the Swedish
Parliament decision, includes the proposed organisation structure and financing of
the Fixed Link, including the guarantee obligation. It provides that the Consortium
will initially need significant financial funding which the Consortium should obtain
by raising loans on the market. That borrowing shall be jointly and severally
guaranteed by the States, which entails that both States individually guarantee the
entire amount, with a right of recourse against each other for half of the amount.
Section 4 of Government bill 1990/91:158, as adopted by the Swedish Parliament
decision, further provides that like this, the Consortium should be able to finance the
Fixed Link on favourable terms. The total guarantee commitments related to the
Fixed Link were estimated to reach approximately SEK 15 billion
(EUR 2.01 billion)
45,46
at the time of its completion, and included construction and
financing costs. It was also noted that, for projects like the Fixed Link, with large
investments over several years, it was extraordinarily difficult to estimate an exact
amount, since the project costs in current prices depended, inter alia, on future
interest rates and general price trends. The Government therefore intended to return
to the Parliament with a report on how the project would progress. Furthermore, it
was stated that during the initial years of the operational phase, the Consortium
would experience negative results, since revenues from user tolls would be
insufficient to completely cover the Consortium’s costs. That deficit would be
covered either by the holding companies, through contributions, or by the
Consortium, through loans. The Government bill 1990/91:158 states that the best
solution would be that the Consortium obtained the necessary funds itself, with a
joint and several guarantee from the States. Correspondingly, the total guarantee
commitments in this respect were estimated to reach approximately SEK 1.8 billion
(EUR 0.24 billion)
47,48
. The Government intended, in this regard, to report to the
Parliament on the progress of the project.
The Consortium Agreement recalls this joint and several State guarantee obligation
for the Consortium’s borrowing. It provides, at Section 4(3): ‘The Consortium’s
According to Eurostat, the average exchange rate, in 1991, between the ECU and the krona amounted to
ECU 1 = SEK 7.4793. This exchange rate is applied to calculate the approximate EUR equivalent of
SEK.
At 1991 price level.
Supra,
footnote 45.
At 1991 price level.
(90)
45
46
47
48
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capital requirements for the planning, project design and construction of the [Fixed
Link], including loan servicing costs, and for covering the capital requirements
arising as a consequence of book losses which are expected to occur for a number of
years after the [Fixed Link] has been opened to traffic, shall, in accordance with that
agreed in the [Intergovernmental Agreement], be satisfied by obtaining loans or the
issuance of financial instruments in the open market with security in the form of
Swedish and Danish government guarantees.’
2.2.1.2.
(91)
Administration of the State guarantee model
In Sweden, the competence and obligation to jointly assign guarantees for all
financing needed by the Consortium in relation to the Fixed Link was delegated to
Riksgäldskontoret (the ‘Swedish National Debt Office’) by decisions of the Swedish
Government of 13 February 1992 (K91/1443/3, K92/320/3), 1 April 1993
(K91/1443/3, K93/202/3) and 23 June 1994 (K91/1443/3, K94/1680/3).
The decision of the Swedish Government of 13 February 1992 (K91/1443/3,
K92/320/3) approved the Consortium Agreement.
The decision of the Swedish Government of 1 April 1993 (K91/1443/3, K93/202/3)
authorised the Swedish National Debt Office to issue, jointly and severally with the
Danish State, guarantees in the amount of SEK 600 million (EUR 65.78 million)
49
and DKK 600 million (EUR 80.42 million). This related to financing for the
Consortium’s planning and project design.
The decision of the Swedish Government of 23 June 1994 (K91/1443/3, K94/1680/3)
authorised and imposed a commitment on the Swedish National Debt Office to
administer and issue guarantees on behalf of the Swedish State and jointly and
severally with the Danish State to cover all of the Consortium’s financing needs for
costs related to the planning, project design, construction and operation of the Fixed
Link, in accordance with the Intergovernmental Agreement. The decision of the
Swedish Government of 23 June 1994 has not been subject to amendments.
In Denmark, Nationalbanken (the ‘Danish National Bank’) received a corresponding
delegation through the Construction Act. In Denmark, the government debt is
managed by the Danish National Bank, on behalf of the Ministry of Finance, through
a power of attorney. Therefore, when the Construction Act authorised the Danish
Ministry of Finance to assume – jointly and severally with the Swedish State – a
guarantee on behalf of the Danish State for the financing of the Fixed Link, it also
authorised the Danish National Bank to assume this joint and several State guarantee
obligation.
As noted at recital 30 of the Opening decision, the Danish National Bank and the
Swedish National Debt Office define the general framework for the Consortium’s
financing policy (see further, recitals (97) to (102)), and supervise the
implementation of the State guarantee model when the Consortium signs new loan
agreements or uses other financial instruments in connection with the financing of
According to Eurostat, the average exchange rate, in 1993, between the ECU and the Swedish krona
amounted to ECU 1 = SEK 9.1215. This exchange rate is applied to calculate the approximate EUR
equivalent of SEK.
(92)
(93)
(94)
(95)
(96)
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the Fixed Link (see further, recitals (103) to (116)). In their comments in response to
the Opening decision
50
, the States provided further details on those elements, which
are included in the overview below.
(97)
On 16 December 1997, the Danish National Bank and the Swedish National Debt
Office (on behalf of the States) and the Consortium signed a tripartite cooperation
agreement (the ‘1997 Cooperation Agreement’) to regulate some of the parties’
dealings, including the right of recourse of the Danish National Bank and the
Swedish National Debt Office against the Consortium, and the Consortium’s
reporting and information obligations to them (see further, recital (99)). That
agreement was supplemented by an agreement between the Consortium and the
Swedish State (through the Swedish National Debt Office), concluded on 23 October
2000 (see further, recital (100)). The 1997 Cooperation Agreement was replaced by a
new tripartite cooperation agreement, concluded on 8 November 2004 (the ‘2004
Cooperation Agreement’) (see further, recital (101)). That agreement was
supplemented by an agreement between the Consortium and the Swedish State
(through the Swedish National Debt Office), concluded on 14 November 2012 (see
further, recital (102)).
The 1997 and 2004 Cooperation Agreements contain a number of formal terms,
rights, and obligations for the parties. The States explained that those practical
administrative arrangements by the Swedish National Debt Office and the Danish
National Bank were introduced in order to give the States an opportunity to monitor
and influence the Consortium’s financing policy, and to ensure that the Consortium
does not exceed its mandate and that a financing policy is followed that minimises
the States’ long-term risk. According to the States, that mechanism further ensured
that the aid granted to the Consortium does not go beyond what is necessary.
The 1997 Cooperation Agreement specifies that the Danish National Bank and the
Swedish National Debt Office intend to limit their right of recourse, in case of
activation of guarantees, to the Consortium, and, therefore, not to use it against the
parent companies. It contains a repayment plan, which can be adjusted from time to
time, risk limits for liquidity investments and derivative transactions by the
Consortium, and specifies certain information and reporting obligations. That
agreement also provides certain details on borrowing and derivative transactions that
are guaranteed by the States. As such, the Consortium shall obtain approval from the
Danish National Bank and the Swedish National Debt Office for all the Consortium’s
transactions, such as loans and ISDA Master Agreements. The Consortium shall not
enter into transactions with counterparties that have not received the prior approval
of the Danish National Bank and the Swedish National Debt Office. The Consortium
shall obtain the approval of the Danish National Bank and the Swedish National Debt
Office for all contract documentation in connection with the Consortium’s
borrowing. The Danish National Bank and the Swedish National Debt Office will
assess whether the individual agreements are, or may become, of importance for the
scope of their joint and several State guarantee obligation, their risk, and all other
circumstances that may affect the guarantee obligation or the guarantee providers.
The States’ comments in response to the Opening decision also refer to information provided by the
Swedish and the Danish authorities in SA.36558, SA.36662, SA.51262 and SA.52617, prior to the
notification of the formal investigation procedure to the States.
(98)
(99)
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(100)
The supplemental agreement of October 2000 between the Consortium and the
Swedish State defines guidelines for the Consortium’s State guaranteed borrowing
and portfolio management, and specifies that, if the Consortium complies with those
guidelines, individual transactions would not need to be approved by the Swedish
National Debt Office before they are entered into by the Consortium. For
transactions for which compliance with the guidelines might be unclear, the
Consortium should first contact the Swedish National Debt Office and explain why
those transactions might be considered as being covered by the agreement.
The 2004 Cooperation Agreement lists certain obligations and risks concerning the
Consortium’s financial management. The Consortium shall have a financial policy
containing guidelines and rules for financial management and financial risk
management. The financial policy and financial strategy are adopted each year by the
Consortium’s board of directors, and shall take account of comments of the Danish
National Bank and the Swedish National Debt Office. The 2004 Cooperation
Agreement contains a section on the information and reporting obligation, recalls the
right of recourse of the Danish National Bank and the Swedish National Debt Office,
recalls the obligation of the Consortium to obtain the approval of all contract
documentation in connection with its borrowing and with its entering into ISDA
Master Agreements, and the need for written consent from the Danish National Bank
and the Swedish National Debt Office to alter terms or conditions of a guaranteed
transaction. In the event that the Consortium enters into transactions falling outside
the guidelines stated in the Consortium’s financial policy, the Danish National Bank
and the Swedish National Debt Office have the joint and separate right to require the
Consortium to cease, run down, or refrain from transactions as part of its financial
management. The Consortium shall also draw up, and continuously update, the plan
for the long-term development of the Consortium’s financial liabilities, including a
presentation of planned repayment and dividends.
The supplemental agreement of November 2012 between the Consortium and the
Swedish State specifies that, if the Consortium complies with its financial policy
within the meaning of the 2004 Cooperation Agreement, individual transactions do
not need to be approved by the Swedish National Debt Office before the Consortium
enters into them. For other transactions, which do not comply with the financial
policy, the Consortium should obtain the written approval of the Swedish National
Debt Office to ensure that the specific transaction is covered by the joint and several
State guarantee obligation.
2.2.1.3.
Implementation of State guarantee model
(101)
(102)
(103)
The Commission will first describe the implementation of the State guarantee model
as it was applied until the
Øresund
judgment of 19 September 2018 (see further,
recital (104) to (115)). Recital (116) provides further details for the period thereafter.
In the period prior to the
Øresund
judgment, debt instruments (such as bonds) issued
under the EMTN programme
51
were all guaranteed by the States. This was
formalised in the form of a deed of guarantee signed by the States on 21 September
1995 in respect of the EMTN programme, established on the same day. With their
‘Programme’ means the programme for the issuance of debt instruments established by the Consortium.
(104)
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signature, the States jointly and severally guaranteed to the holders of the instruments
that if for any reason the Consortium fails to pay any guaranteed sum when due and
payable, the States shall, within four business days of written demand by a holder
upon both States and the Consortium, unconditionally pay that sum. The deed of
guarantee was an integral part of the information memorandum. The deed of
guarantee signed on 21 September 1995 did not include a direct reference to the
Intergovernmental Agreement or subsequent implementing legislation, however, the
EMTN programme acknowledged the establishment of the Consortium pursuant to
the Intergovernmental Agreement.
(105)
The subsequent EMTN programme updates also referred to the deed of guarantee of
21 September 1995, and the validity of that deed of guarantee was confirmed by the
States in letters of 10 February 2000. On 22 May 2001, a new deed of guarantee was
signed in respect of the EMTN programme update, published on the same date. The
deed of guarantee, signed on 22 May 2001 by the States, had substantially the same
conditions as the deed of guarantee signed by the States on 21 September 1995. The
subsequent annual updates of the EMTN programme all referred to that deed of
guarantee of 22 May 2001.
Each time the Consortium issued bonds under the EMTN programme, the Danish
National Bank and the Swedish National Debt Office confirmed that such bonds
were subject to the deed of guarantee. The deed of guarantee of 21 September 1995
applied to bonds under the EMTN programme until 2000, whilst the deed of
guarantee of 22 May 2001 applied to bonds under the EMTN programme from 2001.
The States explained that this means that the Danish National Bank and the Swedish
National Debt Office did not issue a specific guarantee for each individual bond, but
confirmed that an already-issued deed of guarantee covered the individual bond
under the EMTN programme, by consenting to the pricing terms of that loan and
confirming their acceptance.
Bonds issued under the Swedish MTN programme were also subject to a guarantee
from the States. A deed of guarantee was issued on 2 December 1996 in favour of the
holders of debt instruments issued under the Swedish MTN programme. Individual
bonds issued under the Swedish MTN programme were subject to that guarantee
agreement. The Swedish MTN programme referred back to the Intergovernmental
Agreement. Each time an individual bond was issued under the Swedish MTN
programme, bonds were approved by the Danish National Bank and the Swedish
National Debt Office, without explicitly mentioning that the deed of guarantee
covered the individual bond.
For the stand-alone loan agreements, such as those from the EIB, the Consortium
signed finance contracts with the financial institution. Attached to each finance
contract was a guarantee agreement document. Those guarantee agreements between
the States and financial institutions covered the entire loan facility pursuant to a
respective finance contract. The guarantee agreement referred to the
Intergovernmental Agreement. The last guarantee agreement related to EIB loans
was entered into by Sweden and Denmark on 22 October 2001.
(106)
(107)
(108)
(109)
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(110)
The Consortium also obtained loans directly from private lenders, entering into
stand-alone loan agreements. All of those loans were guaranteed by the States on the
basis of individual guarantee agreements, and in line with the obligations in the
Intergovernmental Agreement and the Consortium Agreement.
As for the credit facilities held by the Consortium with a bank for overnight payment
purposes and for short term variations in liquidity, Denmark and Sweden entered into
a new guarantee agreement for each refinancing. The credit facilities were
established in 1994 and are renewed every four years. Those guarantee agreements
referred back to the Intergovernmental Agreement, the Construction Act, the
Swedish Parliament Decision and the Government decisions of 1 April 1993
(K91/1443/3, K93/202/3) and 23 June 1994 (K91/1443/3, K94/1680/3).
In addition, each ISDA Master Agreement was accompanied by a guarantee
agreement between the Swedish National Debt Office and the Danish National Bank,
and the respective counterparty, in implementation of the Intergovernmental
Agreement, the Construction Act, the Swedish Parliament decision and the
Government decisions of 1 April 1993 (K91/1443/3, K93/202/3) and 23 June 1994
(K91/1443/3, K94/1680/3). That guarantee agreement covered the individual
transactions under the ISDA Master Agreement. The Swedish National Debt Office
and the Danish National Bank did not issue individual guarantee agreements at
transaction level, and did not specifically confirm that the guarantee associated with
the ISDA Master Agreement applied.
Finally, the Global Master Repurchase Agreements were also accompanied by a
guarantee agreement between the Swedish National Debt Office and the Danish
National Bank, and the respective counterparty, in implementation of the
Intergovernmental Agreement, the Construction Act, the Swedish Parliament
decision and the Government decisions of 1 April 1993 (K91/1443/3, K93/202/3)
and 23 June 1994 (K91/1443/3, K94/1680/3). As mentioned at recital (83), no
transactions have been entered into pursuant such agreements and, as such, no
individual guarantee agreements.
The various guarantee agreements all created directly applicable and general
obligations for Sweden and Denmark, and rank
pari passu
with all other unsecured
unsubordinated obligations and indebtedness of the Swedish National Debt Office
and the Danish National Bank. The guarantee agreements are unconditional; the
investors are not obliged to seek to enforce the claim from the Consortium but may
address claims to the Swedish National Debt Office and the Danish National Bank
directly upon default.
The guarantees are continuing guarantees, but are
de facto
limited to the term of the
loan or transaction that the guarantee secures. In case there are no transactions under
a master agreement, for example, with a certain counterparty, that counterparty has
no claim against the Swedish National Debt Office or the Danish National Bank,
despite the existence of a guarantee; hence the guarantee may only cover actual debt
of the Consortium, until the time that debt is fully repaid.
(111)
(112)
(113)
(114)
(115)
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(116)
With respect to the period following the
Øresund
judgment, the States informed the
Commission that no further State guaranteed debt was issued. The last State
guaranteed refinancing, therefore, occurred on 24 August 2018. This is because the
Consortium’s Board of Directors decided to avoid, to the extent possible, State
guaranteed borrowing in the period up to the Commission’s final decision. For the
required refinancing that was needed by the end of 2020, to avoid that such
refinancing would be automatically covered by the existing guarantee agreements,
the Consortium initiated amendments to the annual update of the EMTN programme
in June 2020. In order to keep options open, the relevant pricing terms of the
programme now specify whether the instruments to be issued are guaranteed or not.
The special Danish rules on loss carry-forward and depreciation
2.2.2.1.
The Danish corporate income tax system
2.2.2.
(117)
In Denmark, corporate income tax is levied in accordance with the Danish Corporate
Income Tax Act
52
. Other rules relevant for corporate income tax purposes are to be
found in other Danish acts, such as the Danish Tax Assessment Act
53
, the Danish Act
on the Taxation of Income and Property
54
, and the Danish Tax Depreciation Act
55
.
The Danish Tax Assessment Act provides rules for how tax laws are applied to both
individuals and companies. The Danish Corporate Income Tax Act establishes the
tax rate applicable to companies, and details rules that are specifically relevant for
the taxation of companies. The Danish Tax Depreciation Act provides rules
regarding the depreciation of assets used for commercial purposes.
The legal entities that are subject to Danish corporate income tax are listed in Section
1 of the Danish Corporate Income Tax Act. The Danish corporate income tax system
makes a distinction between separate entity taxation and taxation of transparent
entities. As a general rule, only corporations are subject to Danish corporate income
tax (i.e. separate entities for tax purposes), as partnerships are treated as transparent
for tax purposes. Limited liability companies, such as A/S Øresund, the Danish
partner in the Consortium, are listed at Section 1 of the Danish Corporate Income
Tax Act. Partnerships, such as the Consortium, are not listed at Section 1, and are
treated as transparent entities for tax purposes. This means that Danish corporate
income tax rules apply only to the Danish partner in the Consortium, A/S Øresund,
and not to the Consortium, itself. The Consortium Agreement, in Section 12.4,
confirms that it falls upon A/S Øresund and SVEDAB to declare the profit or the loss
of the Consortium, for tax purposes.
(118)
52
53
54
55
The Danish Corporate Income Tax Act ‘Selskabsskatteloven’.
The Danish Tax Assessment Act ‘Ligningsloven’.
The Danish Act on the Taxation of Income and Property ‘Statsskatteloven’.
The Danish Tax Depreciation Act ‘Afskrivningsloven’.
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(119)
For legal entities subject to Danish corporate income tax, the rules regarding loss
carry-forward and depreciation are laid down, respectively, in the Danish Tax
Assessment Act, the Danish Corporate Income Tax Act, and the Danish Tax
Depreciation Act.
For the partnership between A/S Øresund and SVEDAB in the Consortium, each
partner recognises its 50 % share of the taxable income or loss of the partnership.
A/S Øresund, being subject to the Danish corporate income tax, has a proportional
right to (i) depreciate on the basis of the partnership’s assets, and (ii) deduct and
carry-forward (for future deduction) its part of the partnership’s losses, to determine
the taxable income.
For the determination of the taxable income (‘tax base’), reference must be made to
Section 4 of the Danish Act on the Taxation of Income and Property. That section
lists the items that constitute taxable income. The section is broadly worded and
includes almost all income, whether principal or accessory in nature, and whether
received in money or money’s worth. In computing taxable gross income, all income
is pooled. In general, no schedular system or basket system applies for purposes of
deducting expenses or off-setting losses from one income source against profits from
another income source, or for purposes of carrying forward losses.
In general, the profit and loss account in the annual report is the starting point for
determining taxable income, although a separate profit and loss account for tax
purposes must be drafted. Income and expenses are generally recognised on an
accrual basis. For income, this means that income is taxable in the year in which the
taxpayer becomes entitled to the income. Expenses are normally deductible in the
year in which the obligation to pay them is incurred.
Expenses incurred in acquiring, securing or maintaining income are deductible
(Section 6(a) of the Danish Act on the Taxation of Income and Property). The
corporate income tax rules allow the carry-forward of tax losses. However, the
conditions and limits of the loss carry-forward rules have changed over the relevant
period (1991-2016) (see further, recitals (135) to (142)). No loss carry-back is
allowed.
Under the Danish corporate income tax system, depreciation deducted for tax
purposes need not conform to the depreciation shown in the annual accounts. The
rate and method of depreciation for tax purposes depends on the asset group being
depreciated (immovable property, plant, machinery, equipment, etc).
The Danish tax depreciation rules do not prescribe a mandatory tax depreciation
requirement. Rather, the rules of the Danish Tax Depreciation Act set out the
maximum annual depreciation allowed for tax purposes. Accordingly, companies
subject to corporate income tax in Denmark may delay the application of the
depreciation allowances for tax purposes, without losing their right to depreciation.
For buildings, depreciation may be taken for the first time in the year of acquisition
or the year in which construction is finalised. Depreciable assets are valued at the
acquisition cost for purposes of depreciation.
(120)
(121)
(122)
(123)
(124)
(125)
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(126)
(127)
In Denmark, the digital tax return filing system is called DIAS
56
, which has been
implemented as from 2014.
Due to the mandatory joint taxation regime in Denmark, the company that heads the
joint taxation group (the management company) is the company that submits
information on taxable income and tax losses for all members of the joint taxation
group. The individual members of the joint taxation group still submit a tax return of
their own that contains information on intercompany transactions. When the
management company files a tax return for a given tax year, which includes losses
for one or more members of the joint taxation group, the management company must
specify: the taxable income (whether positive or negative) for each member of the
joint taxation group, which means that the loss is registered in the year where it
occurs; the utilisation by each member of their own carried-forward losses; the offset
for the year between profit- and loss-making entities; the utilisation by each entity of
carried-forward losses from other entities that are available to them (joint taxation
losses); and the remaining tax losses end of the tax year specified per member of the
joint taxation group and per year in which the tax loss arose. A first in, first out
(‘FIFO’) principle exists for the utilisation of tax losses, meaning that the oldest
losses must be utilised first. A tax loss carried-forward that can be utilised in a given
tax year, must be used in that year, otherwise it will be forfeited
57
. The use of losses
carried forward in the annual tax returns of a company is, therefore, essentially
automatic.
There are validations within the DIAS system to ensure that the registered data is in
line with the expectations of the system.
The ordinary deadline
58
for submission of a tax return is six months after the tax year
ends
59
. After a tax return has been filed, the tax authorities issue a tax assessment.
There is no fixed deadline for the issuing of a tax assessment, as its issuance is
dependent on the tax return being filed. The assessment is, however, normally issued
during October of the following year, with a final settlement due on 20 November.
The tax to be paid is already visible on the submitted tax return. The tax assessment
is merely an acceptance of the data submitted through the tax return. The tax
assessment is automatically generated, save to the extent that it may subsequently be
amended following a manual audit by the tax authorities.
(128)
(129)
56
57
58
Prior to 2014, the tax returns were done on paper, but the same principles applied.
According to Section 12(3) of the Danish Corporate Income Tax Act.
It is possible to apply for an extension of the ordinary filing deadline, if there is a valid reason for so
doing. Such an application is individually assessed by the Danish tax authorities, and, if the reason is
deemed appropriate, an extension is granted. It is normally not possible to get an extension that goes
beyond 30 September of the following year. In some years, the Danish tax authorities have granted a
general extension of the ordinary filing deadline for all entities, for example, during the COVID-19
pandemic.
For A/S Øresund, the deadline is, therefore, 30 June of the following year.
59
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2.2.2.2.
(130)
Legal setup of the special Danish rules on loss carry-forward and
depreciation
As indicated at recital (84), the formal investigation procedure – and, therefore, this
decision – covers the special Danish rules applicable to the Consortium, with regard
to loss carry-forward and depreciation. As such, this decision will analyse the special
Danish rules on loss carry-forward and depreciation by reason of A/S Øresund’s
position as a partner in the Consortium. A/S Øresund’s own activities, independent
of its participation in the Consortium, concern the Danish road and rail hinterland
connections, and are not considered to constitute State aid (recital 48 of the Opening
decision); the special Danish rules on loss carry-forward and depreciation, as they
apply to A/S Øresund’s own activities, are, therefore, outside of the scope of this
decision.
The Opening decision, at recital 49, also referred to the joint taxation regime with
Sund & Bælt. However, since the Commission had found in the 2014 decision that
that measure does not constitute State aid, and, in the
Øresund
judgment, the General
Court upheld the 2014 decision as regards that measure, the joint taxation regime is
not part of the scope of the formal investigation procedure.
When A/S Øresund was established, and despite being subject to Danish corporate
income tax, it was not subject to the Danish rules regarding loss carry-forward and
depreciation under the Danish Tax Assessment Act and the Danish Tax Depreciation
Act. Rather, Section 11 of the Construction Act provided for a special rule on the
applicable time period for loss carry-forward, and Sections 12 and 13 of the
Construction Act provided for a special rule on the maximum rates for depreciation.
Those special rules on loss carry-forward and depreciation applied both to the
taxable income of A/S Øresund’s own activities (not covered by this decision
(recital (130)), and to the taxable income in light of its 50 % ownership of the
Consortium.
In 2005, the Construction Act, including the special Danish rules on loss carry-
forward and depreciation, was incorporated into the Sund & Bælt Act. The special
rule on loss carry-forward could be found in Section 12 of the Sund & Bælt Act, and
the special rule on depreciation could be found in Sections 13 and 14 of the Sund &
Bælt Act. Both provisions remained unchanged as compared to the provisions of the
Construction Act.
The special Danish rules on loss carry-forward and depreciation were repealed by
Act No 581 of 4 May 2015, which entered into force on 1 January 2016, amending
the Sund & Bælt Act, such that, since 1 January 2016, A/S Øresund has been subject
to the normal Danish corporate income tax system, including with regard to loss
carry-forward and depreciation in the Danish Corporate Income Tax Act, the Danish
Tax Assessment Act, and the Danish Tax Depreciation Act.
2.2.2.3.
The special Danish rules on loss carry-forward
(131)
(132)
(133)
(134)
(135)
The Construction Act established, in Section 11, that A/S Øresund could carry-
forward its losses for a period of 15 tax years, and, for losses incurred before the
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Fixed Link was put into service, for a period of 30 tax years
60
. That rule is referred to
in this decision as the ‘1991-2001 LCF’. For the period from the entry into force of
the Construction Act, in 1991, up to and including the tax year 2001, under Section
15 of the Danish Tax Assessment Act
61
, the general rule applicable to legal entities
subject to Danish corporate income tax was that they could carry-forward losses
incurred during a specific tax year, and deduct them from their taxable income, for
five subsequent years
62
. Within the periods referred to, under both acts, the loss
could, however, only be carried forward to a later tax year, if it could not be deducted
from the taxable income in a previous tax year. Under both acts, tax losses could not
be carried back for utilisation in previous tax years.
(136)
By Section 8 of Act No 313 of 21 May 2002, Section 15 of the Danish Tax
Assessment Act
63
was amended and the generally applicable five year limitation of
loss carry-forward was abolished
64
. By Section 14 of Act No 313 of 21 May 2002,
the Construction Act
65
was also amended, to abolish the 15 year limitation
66
. The
amendments had an effect on losses that occurred in the tax year 2002 or later, as
provided for by Section 19(3) of Act No 313 of 21 May 2002. The resulting loss
carry-forward rule applicable to A/S Øresund as from the tax year 2002 is referred to
in this decision as the ‘2002-2012 LCF’.
Legal entities subject to Danish corporate income tax, including A/S Øresund, could,
therefore, carry-forward their losses incurred in the tax year 2002 up to and including
the tax year 2012
67
(recital (138)) without any limits in time or amount.
(137)
60
The Opening decision, at recital 37, incorrectly stated that Section 11 of the Construction Act allowed
the Consortium to include, in the total amount of losses that could be carried forward, losses resulting
from the deduction of operating expenses incurred prior to the start of the operation of the Fixed Link.
The Danish Tax Assessment Act applicable for this period: Act No 660 of 19 October 1989.
Section 15 of the Danish Tax Assessment Act stated that ‘If the taxable income calculated for a tax year
shows a loss, that loss may be deducted from the taxable income for the next five subsequent years.
However, during that period, the deduction may be carried forward to a subsequent income year only if
it cannot be included in the taxable income of a previous year.’
Consolidated Act 887 of 8 October 2001 as last amended by Section 5 of Act 271 of 8 May 2002, in
which Section 15 remained unchanged with regard to the five year limitation period compared to the
Act No 660 of 19 October 1989.
Section 8 of Act No 313 of 21 May 2002 replaced the words ‘next five subsequent’ with ‘following’.
Act No 313 of 21 May 2002 amended Act No 353 of 16 May 2001, which constituted the consolidated
version of the Construction Act, as amended by Act No 894 of 3 December 1997, Act No 986 of
20 December 1999, and Act No 217 of 28 March 2001. Those amendments did not concern Section 11.
Act No 313 of 21 May 2002 did not amend the second sentence of Section 11 concerning the losses
incurred before the Fixed Link or the Danish road and rail hinterland connections were put into service.
Provided the tax year 2012 started before 1 July 2012.
61
62
63
64
65
66
67
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(138)
By Act No 591 of 18 June 2012
68
, Section 15 of the Danish Tax Assessment Act was
repealed. At the same time, Act No 591 of 18 June 2012 introduced a limitation on
the utilisation of losses carried-forward, by adding Section 12 to the Danish
Corporate Income Tax Act
69
. Section 12 of the Danish Corporate Income Tax Act
applied to tax years starting on or after 1 July 2012.
The limitation in the new Section 12 of the Danish Corporate Income Tax Act
provided that legal entities subject to Danish corporate income tax were still allowed
to deduct losses from previous tax years in their future taxable income for an
unlimited period of time; however, only a loss amounting to DKK 7 500 000
(EUR 1 005 311)
70,71
, plus, if an additional loss remained, an amount corresponding
to a maximum of 60 % of the taxable income in excess of DKK 7 500 000
(EUR 1 005 311)
72
, could be deducted in a given year. Hence, legal entities subject
to Danish corporate income tax were not allowed to offset all their profits in a certain
tax year with losses. The limitation, nonetheless, did not lead to the expiry of their
losses; remaining losses could still be deducted in future tax years. For legal entities
subject to group taxation, this threshold applied for the entire group on a
consolidated basis, i.e. not for each entity separately.
With respect to A/S Øresund, the rule on loss carry-forward provided for by Section
12 of the Sund & Bælt Act
73
and amended on 21 May 2002 (recital (136)), did not
change, and continued to apply to A/S Øresund even after the introduction of the new
Section 12 of the Danish Corporate Income Tax Act
74
.That rule did not refer to any
limitation as to the utilisation of carried forward losses. The first tax year of A/S
Øresund to which the 2013-2015 LCF applied was the tax year 2013.
By Act No 581 of 4 May 2015, Section 12 of the Sund & Bælt Act was repealed with
effect as of 1 January 2016, and A/S Øresund became subject to the normal rules of
the Danish Corporate Income Tax Act.
A summary of the special Danish rules on loss carry-forward is set out at Table 1.
(139)
(140)
(141)
(142)
68
Act amending the Danish Corporate Income Tax Act, the Withholding Tax Act, the Tax Control Act,
the Tax Administration Act and various other Acts (among which the Danish Tax Assessment Act).
Section 12(1) of the Danish Corporate Income Tax Act stated: ‘If taxable income shows a loss, that loss
may be deducted when calculating the taxable income for the following tax years, in accordance with
the rules laid down in paragraphs 2 and 3.’
Indexed annually.
In 2012 prices.
In 2012 prices.
The Construction Act was replaced by the Sund & Bælt Act in 2005 (recital (87)).
Since the generally applicable rule changed on 18 June 2012 (and remained in force until 2016 as
explained at recital (141), the Commission will refer to the rule applicable to A/S Øresund in that period
as the ‘2013-2015 LCF’.
69
70
71
72
73
74
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Table 1: Special Danish rules on loss carry-forward
Year
1991
Name of measure
1991-2001 LCF
A/S Øresund
Losses expire after
(i) 15 years
(ii) 30 years for costs incurred prior
to Fixed Link being put into service
No limits as to the utilisation of
losses
Applicable rule: Section 11 of the
Construction Act
2002
2002-2012 LCF
Losses do not expire
No limits as to the utilisation of
losses
Applicable rule: Section 11 of the
Construction Act, as amended by
Section 14 of Act No 313 of 21
May 2002
2013
2013-2015 LCF
No change
Applicable rule: Section 12 of the
Sund & Bælt Act (which replaced
Section 11 of the Construction Act)
No limits as to the utilisation of losses
Applicable rule: Section 15 of the Danish
Tax Assessment Act
Losses do not expire
No limits as to the utilisation of losses
Applicable rule: Section 15 of the Danish
Tax Assessment Act, as amended by
Section 8 of Act No 313 of 21 May 2002
Losses do not expire
Limit on the utilisation of losses:
(i) a carried forward loss of DKK
7.5 million can always be deducted from
taxable income
(ii) Additional losses cannot reduce the
taxable income by more than 60 % in any
subsequent year
Applicable rule: Section 12 of the Danish
Corporate Income Tax Act (repeal of the
above-noted Section 15 of the Danish Tax
Assessment Act)
2016
N/A
Losses do not expire
Limit on the utilisation of losses:
(i) a carried forward loss of DKK
7.5 million can always be deducted
from taxable income
(ii) Additional losses cannot reduce
the taxable income by more than
60 % in any subsequent year
Applicable rule: repeal of Section
12 of the Sund & Bælt Act
No change
Applicable rule: Section 12 of the Danish
Corporate Income Tax Act
Other entities subject to Danish
corporate income tax
Losses expire after five years
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2.2.2.4.
(143)
The special Danish rules on depreciation
Pursuant to Sections 12 and 13 of the Construction Act, the maximum annual
depreciation rate, applicable to all assets of A/S Øresund, was set at 6 % of the initial
acquisition costs, on a straight-line basis
75
. When the total depreciation reached 60 %
of the acquisition costs, the depreciation rate would be limited to maximum 2 % of
the acquisition cost, annually. The acquisition costs were defined as the total
construction costs. The special Danish rule on depreciation applied both to A/S
Øresund’s own assets
76
and its right to depreciation on 50 % of the Consortium’s
assets
77
. As noted at recital (84), the formal investigation procedure – and, therefore,
this decision – is limited, in this regard, to analysing the effect of A/S Øresund’s
right to depreciation on 50 % of the assets of the Consortium (recital 48 of the
Opening decision). The depreciation, at a maximum rate of 6 %, could start as from
the tax year the Fixed Link was put into service – no depreciation was allowed prior
to the entry into service.
When the Construction Act was established, up to and including the tax year 1998,
the 6 % / 2 % rate corresponded to the depreciation rates of 6 % / 2 % and straight-
line method applicable to the category ‘buildings and installations’, pursuant to
Section 22 of the Danish Tax Depreciation Act
78
, which applied to legal entities
subject to Danish corporate income tax, during that period. The Danish Tax
Depreciation Act requires legal entities subject to Danish corporate income tax to
use, depending on the category of assets, a specific depreciation method, including
maximum depreciation rates
79
. According to the Danish Tax Depreciation Act, the
category ‘buildings and installations’ had, compared to the other categories of assets,
a lower maximum depreciation rate, to reflect the long lifespan of ‘buildings and
installations’. The Construction Act however, established a uniform annual
depreciation rate of maximum 6 % / 2 % on a straight-line basis, applying to all
assets of A/S Øresund, without any differentiation by category of assets. The rule
applicable to A/S Øresund is referred to in this decision as the ‘1991-1998 DEP’.
For tax years starting from 1999 onwards, the normal depreciation rate for ‘buildings
and installations’ set in the Danish Tax Depreciation Act decreased to 5 %
80
and, for
Under the straight-line method, assets are depreciated by a fixed amount each year, until they are fully
depreciated.
Construction costs for the Danish road and rail hinterland installations are capitalised as assets in the
balance sheet of A/S Øresund.
Construction costs for the Fixed link are capitalised as assets in the balance sheet of the Consortium.
Consolidated Act No 597 of 16 August 1991.
The only other category relevant to the Fixed Link was ‘machinery and equipment’. According to
consolidated Act No 597 of 16 August 1991, the maximum depreciation rate for that category was 30 %
on a declining balance basis (reduced to 25 % from 2001). Under a declining balance method, assets are
depreciated by a proportion of their value net of depreciation each year, meaning that the depreciation is
reduced as the net value of the asset approaches zero. The Danish authorities further explained that until
the tax year 2008, railroad installations such as tracks, signals and overhead cables were generally
treated as ‘machinery and equipment’. As of the income year 2008, the rate for railroad installations in
the Danish Tax Depreciation Act changed to 7 %, on a declining balance basis.
Section 17 of Act No 433 of 26 June 1998, amending the Danish Tax Depreciation Act (Consolidated
Act No 932 of 24 October 1996).
(144)
(145)
75
76
77
78
79
80
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tax years starting from 1 July 2007 onwards, to 4 %
81
. Those maximum depreciation
rates applied until the asset was fully depreciated (no limitation to 2 % after 10 years
as in the Danish Tax Depreciation Act applicable until then
82
). The depreciation rate
for A/S Øresund remained at 6 % / 2 %, pursuant to Sections 12 and 13 of the
Construction Act, and Sections 13 and 14 of the Sund & Bælt Act
83,84
.
(146)
Depreciation is generally optional for legal entities subject to the Danish corporate
income tax, as there is no obligation to claim a depreciation allowance for tax
purposes. The depreciation rate can vary from year to year at the taxpayer’s
discretion, within the limits of the maximum rate set. This flexibility also applied for
A/S Øresund.
By Act No 581 of 4 May 2015, Section 12 of the Sund & Bælt Act was repealed with
effect as of 1 January 2016, and A/S Øresund became subject to the normal rules of
the Danish Tax Depreciation Act.
A summary of the special Danish rules on depreciation is set out at Table 2.
Table 2: Special Danish rules on depreciation
Year
1991
Name of measure
1991-1998 DEP
A/S Øresund
All assets are depreciated at a
rate of up to 6 % on a straight-
line basis until total sum of
depreciations reaches 60 % of
acquisition
costs
and
subsequently at a rate of up to
2 % on a straight-line basis.
Applicable rule: Sections 12 and
13 of the Construction Act
No change
Applicable rule: Sections 12 and
13 of the Construction Act, then
Sections 13 and 14 of the Sund
& Bælt Act
Other entities subject to Danish corporate
income tax
‘Buildings and installations’ are depreciated at
a rate of up to 6 % on a straight-line basis until
the total sum of depreciations reaches 60 % of
acquisition costs and subsequently at a rate up
to 2 % on a straight-line basis.
‘Machinery and equipment’ are depreciated at
a rate up to 30 % on a declining balance basis.
Applicable
rule
(for
buildings
and
installations): Section 22 of the Danish Tax
Depreciation Act.
‘Buildings and installations’ are depreciated at
a rate of up to 5 % on a straight-line basis.
‘Machinery and equipment’ are depreciated at
a rate up to 30 % on a declining balance basis.
(This rate was reduced to 25 % on a declining
balance basis in 2001).
Applicable
rule
(for
buildings
and
installations): Section 17 of the Danish Tax
Depreciation Act, as amended by Act No 433
of 26 June 1998
(147)
(148)
1999
1999-2007 DEP
81
Section 2 of Act No 540 of 6 June 2007, amending the Danish Tax Depreciation Act (Consolidated Act
No 856 of 8 August 2006).
See footnote 78.
Although the maximum depreciation rate applicable to A/S Øresund remained at 6 % up to and
including the tax year 2015, the Commission uses, in this decision, the term ‘1999-2007 DEP’ to refer
to the rule applicable to A/S Øresund in the period in which the normal depreciation rate was 5 %, and
the term ‘2008-2015 DEP’ to refer to the rule applicable to A/S Øresund in the period in which the
normal depreciation rate was 4 %.
During that period, some amendments were also introduced for the category ‘machinery and
equipment’. The rates however remained higher than the 6 % applicable to A/S Øresund.
82
83
84
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2007
2008-2015 DEP
No change
Applicable rule: Sections 13 and
14 of the Sund & Bælt Act
‘Buildings and installations’ are depreciated at
a rate of up to 4 % on a straight-line basis.
‘Machinery and equipment exclusively used
for commercial activities’ is depreciated at a
rate of 25 % on a declining balance basis,
infrastructure installations (such as railroad
installations) at a rate of 7 %.
Applicable
rule
(for
buildings
and
installations): Section 17 of the Danish Tax
Depreciation Act, as amended by Act No 540
of 6 June 2007.
No change
2016
N/A
The normal rules of the Danish
Tax Depreciation Act apply:
‘Buildings and installations’ are
depreciated at a rate of up to
4 % on a straight-line basis.
‘Machinery and equipment
exclusively used for commercial
activities’ is depreciated at a
rate of 25 % on a declining
balance basis, infrastructure
installations (such as railroad
installations) at a rate of 7 %.
Applicable rule (for buildings
and installations): Section 17 of
the Danish Tax Depreciation
Act, as amended by Act No 540
of 6 June 2007 (repeal of
Sections 13 and 14 of the Sund
& Bælt Act.
2.3.
(149)
Past contacts between the Commission and the Consortium
By letter dated 1 August 1995, the Consortium informed the Commission of the State
guarantee model granted free of charge by the States in its favour for the financing of
the Fixed Link. The Consortium asked the Commission to confirm that the State
guarantee model should not be considered as State aid, or, should the Commission
have reservations as to the validity of that interpretation, to approve the State
guarantee model as compatible State aid.
By letters to the Danish and Swedish authorities of 27 October 1995 (the ‘1995
letters’), the Commission services
85
confirmed that the construction and operation of
the Fixed Link did not constitute an economic activity, and that the State guarantee
model did not need to be notified as State aid
86
.
Director General of the Directorate General for Transport.
The 1995 letters stated as follows:
‘After examining the arrangements undertaken by both [S]tates in relation to the Øresund link, the
Commission’s services are of the opinion that the guarantee is attached to an infrastructure project of
public interest, improving the countries’ infrastructure and transport services. Guaranteeing investment
in public goods cannot, in principle, be considered as [S]tate aid in the sense of Article 92.1:
governments provide many such goods and services because of the inability of the market system to
(150)
85
86
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(151)
3.
(152)
Following those letters, the States did not take any further steps to obtain the
Commission’s approval for the financing model of the Fixed Link.
G
ROUNDS FOR INITIATING THE PROCEDURE
The Commission initiated the formal investigation procedure on 28 February 2019.
In the Opening decision, adopted on that date, it provided its preliminary assessment
of the measures, and raised doubts as to their compatibility with the internal market.
Qualification of the alleged aid measures
On the basis of the preliminary investigation, the Commission preliminarily
concluded that Denmark and Sweden granted State aid, within the meaning of
Article 107(1) TFEU, to the Consortium for the financing of the Fixed Link, in the
form of State guarantees, and that Denmark granted further State aid to the
Consortium, in the form of special Danish rules on loss carry-forward and
depreciation (recital 100 of the Opening decision).
However, the Commission did not find itself in a position to make a definitive
assessment as to the qualification of the measures as individual aid or as an aid
scheme, and could not establish the number of measures or the date(s) on which they
were granted (recital 108 of the Opening decision).
More specifically, the Commission had doubts as to whether the State guarantees
should be considered as an aid scheme, or whether they should be considered as
individual aid granted when the Consortium was established, or as individual aid
granted each time a financial transaction of the Consortium is approved by the
national authorities (recital 110 of the Opening decision).
As regards the special Danish rules on loss carry-forward and depreciation, the
Commission preliminarily considered those measures as having been granted with
the same purpose and scope as the State guarantees and, therefore, could not
conclude on their specific nature, number, or granting date(s) (recitals 109 and 110 of
the Opening decision).
Consequently, the Commission also had doubts as to whether all or some of the
measures constituted existing or new aid (recital 117 of the Opening decision).
3.1.
(153)
(154)
(155)
(156)
(157)
provide these goods effectively. These goods tend to be indivisible and collectively consumable by all
citizens whether they pay for them or not.
A public good, such as the current infrastructure project guaranteed by the two governments, benefits
society in a collective manner. As it is not conferred upon any specific enterprise or industry, it does not
fall within the scope of Article 92.1, but constitutes a general measure of economic policy and land
planning.
Consequently, on the basis of the information at its disposal, the services of the Directorate-General for
Transport consider that the guarantee issued by your government for the construction of the Øresund
link does not fall under the scope of Article 92.1, and […] should not be notified to the Commission.’
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3.2.
(158)
Compatibility assessment
The States had argued that, should the Commission consider the measures to
constitute State aid, it should assess their compatibility on the basis of Article 107(3),
point (b) TFEU, which allows aid to promote the execution of an important project of
common European interest. In 2014, the Commission established the principles
according to which the Commission assesses the public financing of such projects,
with the adoption of the Communication for the analysis of the compatibility with the
internal market of State aid to promote the execution of important projects of
common European interest
87
(the ‘IPCEI Communication’)
88
. Although during the
preliminary investigation, the Commission did not conclude on the granting date of
the measures, it considered it obvious that the State guarantees and the special
Danish rules on loss carry-forward and depreciation were first put in place before the
entry into force of the IPCEI Communication. The Commission, therefore,
considered that the IPCEI Communication was not applicable, as such, but
considered that, since it consolidates Commission practice as regards the
compatibility assessment of aid on the basis of Article 107(3), point (b) TFEU, the
basic guiding principles set out therein would be of use for the Commission’s
assessment (recital 129 of the Opening decision).
The Commission took the preliminary position that the measures were intended to
promote an important project of common European interest (recital 127 of the
Opening decision). However, in light of the
Øresund
judgment, the Commission
considered it appropriate to assess the extent to which the measures involved
investment aid, only, or both investment aid and operating aid, a question on which
the Commission could not conclude in the preliminary investigation (recital 134 of
the Opening decision). Furthermore, the Commission had doubts as regards the
necessity (recital 143 of the Opening decision) and proportionality (recital 152 of the
Opening decision) of the measures, as it did not have all of the information necessary
to determine the reasonable limits on the amount and duration of the State guarantees
and the special Danish rules on loss carry-forward and depreciation. In addition, the
Commission was not in a position to definitively conclude on whether the measures
resulted in undue distortions of competition that cannot be outweighed by their
positive effects (recital 157 of the Opening decision), and could not assess the
existence, or the conditions of mobilisation of, the guarantees (recital 160 of the
Opening decision).
Legitimate expectations
Finally, the Commission noted that it would further examine, in the context of the
formal investigation procedure, the precise period during which the Consortium,
Sweden, and/or Denmark could invoke legitimate expectations, should the measures
be found to constitute incompatible State aid (recital 181 of the Opening decision).
(159)
3.3.
(160)
87
88
Commission communication (2014/C 188/02), OJ C 188 of 20 June 2014, p. 4.
Replaced by Commission communication C(2021)8481 of 25 November 2021.
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4.
(161)
C
OMMENTS RECEIVED FROM INTERESTED PARTIES
This section summarises the comments submitted to the Commission on the Opening
decision by six interested parties
89
. Those interested parties are all involved in the
shipping industry (ferry operators, ports, and associations). They expressed concern
over the alleged State aid in favour of the Consortium. Overall, they consider that the
measures constitute individual and, partially, new aid that is incompatible with the
internal market, for which the States cannot claim legitimate expectations.
Several of those interested parties submitted that the General Court, in the
Øresund
judgment, limited the Commission’s discretion as regards the outcome of the formal
investigation procedure, because the General Court’s reasoning constitutes a
prima
facie
finding on the unlawfulness of the aid. According to those interested parties,
those restrictions relate both to the qualification of the aid measures as individual aid
or schemes, as well as to their compatibility with the internal market. In that regard,
they recall that the Court’s judgments are binding on the Commission pursuant to the
first paragraph of Article 266 TFEU.
As they consider the financing model for the Fixed Link to be comparable to that of
the Fehmarn Belt Fixed Link between Denmark and Germany, several interested
parties further argue that the reasoning of the General Court in the
Scandlines
Fehmarn Belt
judgment and the
Stena Line Fehmarn Belt
judgment must also be
taken into consideration by the Commission, as those cases concern the same issues.
The comments from Scandlines, Stena Line, FSS, Grimaldi Group, and Trelleborg
Port, to a large extent, overlap. For ease of reference, therefore, those comments will
be referred to below as comments from ‘Scandlines et al.’.
Existence of aid within the meaning of Article 107(1) TFEU
The Complainant confirmed that it considers that both the State guarantee model and
the special Danish rules on loss carry-forward and depreciation constitute State aid,
since the Consortium should be considered as an undertaking, the measures are
imputable to the Danish and/or Swedish States (as applicable), are liable to affect
trade between Member States, confer a selective advantage on the beneficiary, and
distort competition. For the sake of clarity, the Complainant recalls that the taxation
of the financial result of the Consortium occurs at the level of its two parent
companies, which, on the Danish side, is A/S Øresund.
Although not comprised in the scope of the Opening decision, the Complainant also
added that already the fact that Denmark and Sweden directly assigned the
Consortium as the sole constructor and operator of the Fixed Link, without running a
public procurement procedure to award a concession to exploit the infrastructure,
would, in and of itself, present an economic advantage, and result in State aid.
Additionally, Stena Line, Scandlines, Grimaldi and FSS explicitly argued that they
consider the Consortium to be an undertaking within the meaning of Article 107(1)
TFEU, as it is engaged in an economic activity by offering transport services in
The Complainant, Scandlines, Stena Line, FSS, Grimaldi, and Trelleborg Port.
(162)
(163)
(164)
4.1.
(165)
(166)
(167)
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return for remuneration. They add, in this respect, that they consider it irrelevant, for
determining whether the Consortium performs an economic activity, that the
Consortium determines its own prices.
4.2.
(168)
Classification as a scheme or individual aid
The Complainant and Scandlines et al. commented upon the reasoning in the
Opening decision, which considers that there are three possible ways of classifying
the alleged aid related to State guarantee model, namely, as (i) an aid scheme, (ii)
individual aid, granted when the Consortium was established, or (iii) individual aid,
granted each time a financial transaction of the Consortium is approved by the
national authorities.
The Complainant and Scandlines et al. argue that the State guarantee model and the
special Danish rules on loss carry-forward and depreciation do not qualify as aid
schemes within the meaning of Article 1(d) of Council Regulation (EU) 2015/1589
of 13 July 2015 laying down detailed rules for the application of Article 108 of the
Treaty on the Functioning of the European Union
90
(‘Regulation 2015/1589’), as the
aid is granted specifically to the Consortium, for a specific project, and as,
furthermore, the condition that it must be possible to grant aid awards ‘without
further implementing measures being required’ is not met, given that each State
guarantee has to be specifically approved by either the Danish or Swedish State prior
to its issuance. Therefore, the aid should be considered as individual aid (i.e., ad hoc
aid). In this respect, the Complainant and Scandlines et al. refer to the
Øresund
judgment
91
, and the Complainant notes that paragraph 83 of the
Øresund
judgment
‘only referred back to the Commission, the analysis concerning the time when the
State guarantees were granted, their number and whether they should be classified as
new or existing aid, not whether they constituted aid schemes’.
The Complainant argues that Section 2.1 of the Commission Notice on the
application of Articles 87 and 88 of the EC Treaty to State aid in the form of
guarantees
92
(the ‘2008 Guarantee Notice’) implies that the amount of State aid in a
guarantee must be assessed at the moment when it is issued, which is the moment
when the risk associated with the guarantee is taken on by the State. The
Complainant argues that the States did not take on any risk associated with a
guarantee through the Intergovernmental Agreement or the Consortium Agreement,
that Article 12 of the Intergovernmental Agreement does not constitute a legally
enforceable right, and that, in order for a guarantee to be considered granted, it must
be possible to measure its extent, which is not possible on the basis of those
agreements, since there is no limit as regards time and amount
93
.
In this respect, the Complainant claims that the Consortium is required to obtain the
consent of the States for all contractual obligations related to loan and securities’
(169)
(170)
(171)
90
91
92
93
OJ L 248, 24.9.2015, p. 9.
Paragraphs 77, 80, and 83.
OJ C 155, 20.6.2008, p. 10.
The Complainant refers, in this respect, to Section 3.2 of the 2008 Guarantee Notice.
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transactions that are to be covered by guarantees issued by the States.
94
As an
example, the Complainant argues that it is explicitly set out in the MTN programmes
that each debt transaction agreed under those programmes, which is to be supported
by a guarantee, requires the Consortium to obtain an individual approval from each
of the guarantors for that specific debt transaction. As such, while the Complainant
acknowledges that the Intergovernmental Agreement constitutes a pledge, or a
commitment, by and between the States that they will issue guarantees, they argue
that this pledge or commitment is not unconditional. The Complainant submits that
the MTN programmes lay down the framework conditions for issuing guarantees in
order to facilitate the Consortium obtaining loans, by allowing the Consortium to
show potential creditors the conditions under which a guarantee may be issued. The
Complainant, further, submits that the deed of guarantee signed by the States in 1996
set forth that the States only guarantee debt instruments which have been subject to
approval by the States prior to their respective issuance – such approvals have been
made in relation to each issuance of debt instruments under the Swedish MTN
programme.
(172)
As another example, the Complainant submits that, in order for the provisions of the
deed of guarantee dated 22 May 2001 to apply to any tranche of debt instruments
issued by the Consortium under the EMTN programme, such tranche of debt
instruments must have been approved by each of the States in writing prior to the
time of issue of such tranche of debt instruments.
The Complainant submits that, up until November 2019, the States had issued nearly
250 specific guarantees. This includes 96 guarantees under the EMTN programme,
34 guarantees under the Swedish MTN programme, 44 guarantees for loans from
private lenders, 14 guarantees regarding credit facilities for short-term loans in
commercial banks, 60 guarantees for obligations under ISDA Master Agreements,
and 1 guarantee for a Global Master Repurchase Agreement. The Complainant
provided a detailed overview of the various financial instruments and the various
State guarantees in relation thereto.
As part of that overview, the Complainant also submits that the deeds of guarantee
contain provisions stipulating that the guarantee can be withdrawn by the States. In
this respect, the Complainant mentions, for example, Section 2.3 of the deed of
guarantee dated 22 May 2001, which sets out that the States are entitled to revoke the
guarantee under certain circumstances, even though such revocation shall not release
the States from their respective obligations under the 2001 deed of guarantee in
existence prior to the date of revocation.
Furthermore, the Complainant submits that, should Article 12 of the
Intergovernmental Agreement be considered to confer a legal right to aid in the form
of State guarantees, that aid measure has since changed, because the conditions
attached to the guarantees have been fundamentally altered. For example, the
conditions of the guarantees under the Swedish MTN programme changed the States’
undertakings from secondary guarantees to personal guarantees. If the
Intergovernmental Agreement were to be considered as granting the Consortium a
The Complainant refers to the 1997 Cooperation Agreement and the subsequent 2004 Cooperation
Agreement, which, in their opinion, both contain such a provision.
(173)
(174)
(175)
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State guarantee, the guarantee would be considered as a secondary guarantee
according to Swedish law, because there is no clear basis for interpreting the
guarantee as a personal guarantee. It is a general principle under Swedish law that a
guarantee is to be interpreted as a secondary guarantee unless there is a clear basis
for interpreting the guarantee as a personal guarantee. The qualification as a
secondary guarantee means that the guarantor’s responsibility is subsidiary and the
obligation to pay arises only when the debtor itself is unable to fulfil its obligations.
The creditor must, therefore, prove the debtor’s inability to pay before it can make a
claim to the guarantor. A secondary guarantee is, in general, also not considered as
an impediment to bankruptcy under Swedish law. A personal guarantee requires a
clear written or oral commitment in which it is normally stated that the guarantor is
responsible ‘for own debt’, and, thus, has primary responsibility. A creditor does not
have to prove the debtor’s inability to pay. A personal guarantee is, under Swedish
law, considered an impediment to bankruptcy because the conditions governing the
guarantee prohibit the creditor from filing for bankruptcy of the debtor. The
Complainant submits that the guarantees related to the Swedish MTN programme are
personal guarantees. Therefore, if the Commission found that the Intergovernmental
Agreement conferred a legal right on the Consortium to a State guarantee, then the
conditions for that State guarantee have been substantially changed through the
Swedish MTN programme. Therefore, the guarantees related to the Swedish MTN
programme, like all guarantees issued by the States with such changed conditions,
constitute new aid.
(176)
In addition, after the Commission adopted the final decision in the Fehmarn Belt case
on 20 March 2020
95
(the ‘Fehmarn Belt final decision’), the Complainant submitted
an analysis of the implications of that case for the assessment of the Fixed Link. The
Complainant considers that, in contrast to the Fehmarn Belt case, the national
regimes that give the Consortium a right to State guarantees do not consist of merely
one legislative text and one agreement, but of several different acts and agreements,
jointly forming the conditions governing the guarantees. Furthermore, the
Intergovernmental Agreement is an international agreement between two dualist
States, which do not recognise the direct applicability
per se
of international
agreements. Also, the Consortium had not yet been created when the
Intergovernmental Agreement was concluded on 23 March 1991, nor when the
Consortium Agreement was signed on 27 January 1992. The Consortium was only
registered with the Swedish Companies Registration Office on 23 July 1993. So long
as there is no beneficiary, no legal right can be conferred. Nor does the national
implementation of those agreements lead to the conclusion that the entry into force of
the implementing acts conferred on the Consortium the legal right to finance the
Fixed Link by way of State guaranteed loans. The Complainant, further, submits that
the 1997 Cooperation Agreement is different from the Agreement of 29 May 2017
between Femern A/S and the Danish Central Bank, the Ministry of Finance and the
Ministry of Transport
96
in that the former contains detailed provisions
97
on the
parties’ relations regarding the issuance of guarantees.
95
Commission decision C(2020) 1683 final, of 20 March 2020, in case SA.39078 - 2019/C (ex 2014/N)
on the State aid which Denmark implemented for Femern A/S, OJ L 339, 15.10.2020, p.1.
See recital 256 of the Fehmarn Belt final decision.
96
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(177)
(178)
As such, the Complainant considers that each individual State guarantee agreement
constitutes a separate ad hoc aid.
In the opinion of Scandlines et al., the Commission is disregarding Regulation
2015/1589, and is violating the principle of supremacy of Union State aid law over
national law, when it states, at recital 107 of the Opening decision, that the position
of the Complainant has to be balanced against the States’ argument that the States’
authorities are giving effect to the State guarantees as set out in the
Intergovernmental Agreement, the Consortium Agreement, and their national law. In
the view of Scandlines et al., the Commission must apply the legal provisions of
Regulation 2015/1589 strictly.
Moreover, Scandlines et al. consider that the Commission treats the aid as falling
under an aid scheme and disregards the ad hoc nature of the aid, by arguing that the
aid measures could constitute individual aid granted at one point in time, in 1992,
which violates Article 1(d) and 1(e) of Regulation 2015/1589 and the
Øresund
judgment. They consider that it cannot be accepted that so many separate State
guarantees, over 100 granted for different financial transactions, amounts, and
durations, over a period of more than 25 years, the terms or the necessity of which
could not be foreseen in 1992, were granted in one instance. Such a conclusion
would presuppose the existence of a general provision authorising the granting of
multiple aid measures, which they consider could only be possible under an aid
scheme. FSS and Trelleborg Port also refer to the position of the Court of Justice in
case C-438/16 P
98
, in which it rejected the concept of a ‘scheme of aid schemes’.
Classification as new aid or existing aid
According to the Complainant, the limitation period with regard to the State
guarantee model was interrupted on 13 May 2013, when, following the complaint,
the Commission requested information from Denmark and Sweden. Hence, as the
State guarantee model consists of several individual aid measures, all guarantees
granted after 13 May 2003 constitute new aid. The Complainant argues that the
granting moment is the moment when the risk associated with the guarantees is taken
on by the States. Before that moment there is no transfer of State resources. The
Complainant, therefore, concludes that a new guarantee is granted each time the
States issued an approval for a specific loan or financial instrument. According to the
(179)
4.3.
(180)
97
The Complainant provided the following quotes: Paragraph 14: ‘[t]he Consortium shall, as soon as
possible, obtain the approval from both Guarantors for all the Consortium’s transactions, such as loans
including bank credits and derivative transactions. The Guarantors assess in this connection whether the
transactions have or could come to have an importance for the scope of the guarantee liability, the
Guarantor’s risk and all circumstances that may come to affect the guarantee / the Guarantors. The
Guarantors will maintain the preparedness necessary to ensure that their approval of a transaction can
be given before the time-limit for acceptance, except in case of extraordinary circumstances’. Paragraph
15: ‘[t]he Consortium is not to enter into derivative transactions with counterparts that have not on
beforehand been approved by the Guarantors.’ Paragraph 16: ‘[t]he Consortium shall obtain the
approval from the Guarantors of all contractual documentation in relation to its loans and derivative
transactions.’
Judgment of the Court of Justice of 19 September 2018,
Commission
v
France and IFP Energies
Nouvelles,
C-438/16 P, EU:C:2018:737, paragraph 71.
98
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Complainant, nearly 90 of these approvals (see recital (173)) have been issued after
13 May 2003, and thus constitute new aid.
(181)
In addition, the aid contained in the special Danish rules on loss carry-forward and
depreciation, granted as from 10 years prior to the interruption of the limitation
period, constitutes new aid.
Stena Line, Scandlines, and Grimaldi also start from the position that there is ad hoc
aid each time a new loan or credit facility transaction is agreed. They refer, in this
context, to the judgment of the Court of Justice in
France Télécom
(the ‘France
Télécom
judgment’)
99
, which states that Article 15(2) of Regulation 659/1999 ‘refers
to the grant of aid to a beneficiary, not the date on which an aid scheme was adopted.
The determination of the date on which aid was granted may vary depending on the
nature of the aid in question. Thus, in the case of a multi-annual scheme, entailing
payments or advantages granted on a periodic basis, the date on which an act forming
the legal basis of the aid is adopted and the date on which the undertakings
concerned will actually be granted the aid may be a considerable period of time
apart. In such a case, for the purpose of calculating the limitation period, the aid must
be regarded as not having been awarded to the beneficiary until the date on which it
was in fact received by the beneficiary.’ Stena Line, Scandlines and Grimaldi
consider it evident that that principle also applies to ad hoc aid. They consider the aid
in the form of State guarantees to be granted in two ways: first, every time the
Consortium takes out a loan covered by a State guarantee, and, second, every time
the Consortium does not pay the market premium for such loans. The aid contained
in the special Danish rules on loss carry-forward and depreciation is granted every
time the Danish authorities make use of the special provisions in order to grant anew
the advantages prescribed under them. Consequently, according to Stena Line,
Scandlines, and Grimaldi, all State guarantees, and the advantages contained in the
special Danish rules on loss carry-forward and depreciation, granted after 2003
constitute new aid.
Compatibility of the aid measures
Qualification of the project in light of the IPCEI Communication
The Complainant does not object to the Commission using the basic guiding
principles set out in the IPCEI Communication for the compatibility assessment. It
recalls that the aid element must be quantified, that any operating aid must be
separated from investment aid, that the necessity and proportionality of the measures
must be established, and that the mobilisation conditions must be identified and
demonstrated as sufficient.
Determination of the aid element
The Complainant emphasises that the aid element must be determined, both for the
State guarantees and the special Danish rules on loss carry-forward and depreciation,
and that knowledge of how to determine the aid element, while there is no
Judgment of the Court of Justice of 8 December 2011,
France Télécom SA
v
European Commission,
Case C-81/10 P, EU:C:2011:811, paragraphs 80-82.
(182)
4.4.
4.4.1.
(183)
4.4.2.
(184)
99
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requirement for a final precise figure, is an essential prerequisite for assessing the
necessity and proportionality of the aid.
(185)
Stena Line, Scandlines, and Grimaldi submit that it is difficult for them to calculate
the aid amount under the State guarantee model and the special Danish rules on loss
carry-forward and depreciation. Concerning the State guarantees, the aid would not
only consist of the absence of a requirement to pay a (market) premium, but, since it
is unlikely that any private party would offer such guarantees due to the very high
risk involved in the project, also of the entire amount of the guaranteed loans.
Trelleborg Port submits that it is not possible to determine the aid amount, given that,
in the 2014 decision, there are no parameters allowing for its quantification. Since, at
the time the State guarantees were granted, the Consortium’s prospects of
profitability were such that nobody was willing to grant it any guarantee at all, the
aid element does not merely consist of the difference between the market premium
for the guarantee and the premium actually paid, but also of the State guarantee
itself. The value of the State guarantee corresponds to the underlying loan value.
Trelleborg Port adds that, with regard to the special Danish rules on loss carry-
forward and depreciation, the aid element corresponds to the difference between the
amount that the Consortium would have paid, if the ordinary tax rules were applied,
and what it has actually paid.
The granting of operating aid
The Complainant refers to the
Øresund
judgment
100
, Article 10 of the
Intergovernmental Agreement, Article 4(3) of the Consortium Agreement, recital 50
of the 2014 decision
101
, and the 1997 and 2004 Cooperation Agreements, in arguing
that it is common ground that the State guarantees cover both the construction costs
and the operating costs of the Fixed Link. The Complainant and Stena Line consider
that the State guarantees permit the Consortium to disregard costs when setting its
prices
102
. The Complainant considers it necessary, both for the State guarantees and
the special Danish rules on loss carry-forward and depreciation, to draw a distinction
between the aid for the construction of the Fixed Link and the aid for the operation of
the Fixed Link.
The Complainant also refers to the
Scandlines Fehmarn Belt
judgment
103
, in
recalling that aid granted beyond the point in time when the amount of the
beneficiary’s debt has reached a level at which its income is likely to exceed
Paragraphs 108, 111, and 116.
The Complainant refers also to paragraph 107 of the
Øresund
judgment in this regard.
As an example, the Complainant considers that the Consortium’s price reduction to the freight segment,
introduced on 29 November 2019, would not have been possible without the State guarantees. The
example specifically concerned all vehicles from 9 meters length, which, according to the Complainant,
had a price reduction of 15 % on the normal rate during the night, and all vehicles of more than 20
meters, which would be charged the same rate as vehicles between 9 and 20 meters. As such, they argue
that the price reduction is solely aimed at diverting freight traffic from the Complainants’ ferry service
to the Fixed Link. Stena Line argues that, shortly after the Fixed Link opened in 2000, the Consortium
dumped its toll prices for cars and trucks by 40 % and 50 %, respectively.
Paragraph 242.
(186)
4.4.3.
(187)
(188)
100
101
102
103
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operating costs and debt repayments under normal market conditions, and, therefore,
before the debt has been repaid in full, may be regarded as operating aid. The
Complainant, further, commented on recital 124 of the Opening decision, and noted
that the risks of the Fixed Link project were limited after the Fixed Link was put into
service. It considers the State guarantees for loans taken out to meet the
Consortium’s operating costs as inappropriate, and not necessary for the investment
in the Fixed Link to be made (which differentiates this case from the
Hinkley Point
C
104
project). For operating aid to be justified, it must also be limited in time, and
declining.
(189)
Stena Line, Scandlines, and Grimaldi consider that operating aid, which is
prohibited, is not merely aid granted during the operational phase of the project, but
all aid relating to operating costs including during the construction phase of the
project
105
. This means that aid granted to the Consortium may not cover any
refinancing loans, since such loans, in their interpretation of paragraph 111 of the
Øresund
judgment, constitute prohibited operating aid. The Complainant considers
that, like for the State guarantees, for the State aid derived from the special Danish
rules on loss carry-forward and depreciation, a distinction must be made between aid
for the construction of the Fixed Link and aid for the operation of the Fixed Link.
Stena Line, Scandlines, and Grimaldi do not consider that infrastructure projects like
the Fixed Link justify blurring the line between investment aid and operating aid, as
allegedly suggested at recital 131 of the Opening decision. Furthermore, large scale
projects, in particular, should not be allowed to benefit from operating aid
106
. Stena
Line, Scandlines, and Grimaldi also provide several arguments to demonstrate that
the
Hinkley Point C
judgment is not applicable to the present case. Finally, they
strongly oppose the Commission’s suggestion, at recital 132 of the Opening decision
on the possible equivalence of State guarantees and an upfront capital injection.
According to the Complainant, an economic assessment of the Internal Rate of
Return (‘IRR’) and the Net Present Value (‘NPV’) of the Consortium
107
(see further,
recital (201)) indicates that the Consortium would have been able to finance the
Fixed Link on commercial terms without the State guarantees as from 2003, which it
argues also indicates that aid from that point forward constitutes operating aid.
(190)
(191)
104
Judgment of the General Court of 12 July 2018,
Republic of Austria
v
European Commission,
T-356/15, EU:T:2018:439.
In this context, they refer to paragraphs 106 and 108 of the
Øresund
judgment.
The interested parties refer specifically to paragraph 14 of the Commission Guidelines on Regional
State aid for 2014-2020 (OJ C 209, 23.7.2013, p. 1.), which provide that ‘... large companies are more
likely to be significant players on the market concerned and, consequently, the investment for which the
aid is awarded may distort competition and trade on the internal market.’
Report prepared by Dr. Sten Nyberg, Professor of Economics at Stockholm University and Chairman of
the Center for European Law and Economics, Stockholm, and Dr. Mattias Ganslandt, Associate
Professor of Economics at the School of Economics and Management, Lund University, and Director of
the Center for European Law and Economics, Stockholm.
105
106
107
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4.4.4.
(192)
Necessity of the aid
In order to assess whether the aid is necessary, the Complainant considers that the
Commission should carry out a calculation similar to that included in its decision of
2015 regarding the Fehmarn Belt
108,109
, where it calculated the IRR of the project and
compared it to the weighted average cost of capital (‘WACC’). As such, aid can only
be necessary if the IRR is lower than the WACC. For the purpose of that calculation,
the Complainant notes that the Consortium, itself, considers the lifetime of the Fixed
Link to be at least 100 years. A separate analysis of the necessity of the aid with
respect to the operational phase of the Fixed Link must be carried out. In the
Complainant’s opinion, it is irrelevant for the assessment of the necessity of the aid
to evaluate whether or not the measures were adopted at a time when it was generally
considered that the public financing of infrastructure projects was not covered by
Union State aid rules. As concerns the question of whether a large-scale
infrastructure project such as the Fixed Link could be carried out without public
support, the Complainant indicates that the development, financing, construction, and
operation of the Channel Tunnel
110
were all performed by private companies, subject
to a public competition in which private companies were granted a concession.
The results of the economic assessment of the Fixed Link that the Complainant
commissioned in September 2019 (recital (191)), and, in particular, of the IRR and
the WACC of the Consortium under different scenarios, are summarised at
recitals (201) to (206).
Proportionality of the aid
The Complainant and Scandlines et al., referring to the
Øresund
judgment
111
, submit
that the aid is not proportionate, because the State guarantees and the special Danish
rules on loss carry-forward and depreciation are not limited in time, in amount, or in
number, and are not linked to specific financial transactions. Moreover, the debt
repayment period is unclear, and fluctuates.
Furthermore, the Complainant and Scandlines et al. consider it important to note that
the General Court held in its
Scandlines Fehmarn Belt
judgment
112
and its
Stena Line
Fehmarn Belt
judgment
113
that aid may be necessary and proportionate only until
‘“the point in time when the beneficiary would be able, on the basis of its cash flow,
Commission decision of 23 July 2015 on State aid SA.39078 (2014/N) (Denmark) for the financing of
the Fehmarn Belt fixed link project, (C(2015) 5023 final), OJ 2015 C 325, p. 1, recital 103, and the
Scandlines Fehmarn Belt
judgment, paragraph 211.
Initially the Complainant referred to the decision referred to in footnote 108, however when the final
decision was adopted in that case, the Complainant provided further observations (see further,
recital (199)).
Commission decision 88/568/EEC of 24 October 1988 relating to a proceeding under Article 85 of the
EEC Treaty (IV/32.437/8 – Eurotunnel) (OJ L 311, 17.11.1988, p. 36) and Commission decision
C(2015)1816 final of 22 June 2005 in case State aid N 159/2005 – United Kingdom – EWSI Channel
Tunnel Freight Support Funding (OJ C 314, 10.12.2005, p. 2).
Paragraphs 118 to 139.
Paragraph 242.
Paragraph 213.
(193)
4.4.5.
(194)
(195)
108
109
110
111
112
113
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to borrow on the open market without the support of State guarantees or State loans”.
That point is normally reached when the amount of the beneficiary’s debt has
reached a level at which its income is likely to exceed operating costs and debt
repayments under normal market conditions, and therefore before the debt has been
repaid in full’. Some of the interested parties add that ‘[a]id in excess of that level
may, therefore, be regarded as operating aid, for which the Commission has not
provided any justification in the contested decision.’ According to the interested
parties, it is, therefore, evident that the aid must be limited to the point in time when
the beneficiary is able to borrow on its own on the open market.
(196)
The Complainant refers to the General Court’s findings in its
Scandlines Fehmarn
Belt
judgment
114
, in claiming that aid is proportionate up to the amount at which the
project becomes profitable. Furthermore, the General Court found, in the
Øresund
judgment, that it is not relevant for the assessment of proportionality that other forms
of financing by the States would have a higher financial burden on the State
budget
115
, or that more direct forms of aid might have been liable to generate more
significant aid
116
. The Complainant, further, claims, by referring to the 2014 annual
report of SVEDAB, that, at least by 2012, the Consortium reached the breakeven
point, where there was no net profit or loss, and that the following year the
Consortium would have been able to distribute a dividend, or share in profits, to its
parent companies. The Complainant, further, refers to the Standard&Poor’s Global
Ratings research update from 18 November 2016, noting that the Consortium started
paying down debt in 2004, five years ahead of schedule, and that, from 2000, the
operating profit of the Consortium was, and has remained, positive. The Complainant
notes that the equity of the Consortium became positive in 2016 and, that, according
to the Consortium, it started distributing dividends to the parent companies in 2018,
when a DKK 1.1 billion (EUR 0.15 billion) dividend for the tax year 2017 was paid
out, and that, in 2018, the parent companies decided to increase the annual dividend
payment, with the effect that the Consortium’s debt was, thereafter, expected to be
repaid only in 2050, which is substantially later than the previously expected year
2033. In addition, the Danish State takes money out of A/S Øresund for purposes
other than repayment of the debt related to the costs of the Danish road and rail
hinterland connections. As a consequence, the repayment period for the Consortium
has been extended. On the basis of those observations, the Complainant considers it
evident that the income of the Consortium is quite substantial, apparently even
enough to finance other projects, and likely to exceed operating costs and debt
repayments under normal market conditions.
In this regard, the Complainant also recalls that, among the major Danish publicly-
owned companies to which the Danish State has provided guarantees, including
those responsible for the construction and operation of the Great Belt bridge and for
the Fehmarn Belt Fixed Link, the Consortium is the only one that does not pay any
premiums for the State guarantees, while almost all others pay 0.15 % on outstanding
debt. According to the Complainant, this clearly shows that the construction and
operation of the Fixed Link could be achieved with less aid than a 0 % premium.
Paragraph 224.
Paragraph 191 and 153.
Paragraph 153.
(197)
114
115
116
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(198)
The Complainant makes specific reference to recital 150 of the Opening decision, at
which the Commission stated that it appeared that the special Danish rules on loss
carry-forward and depreciation were expected to contribute to the viability of the
project, thereby rendering the effects of the guarantees and the advantage of those
special rules interdependent. The Complainant considers this statement to be
incorrect. The special Danish rules on loss carry-forward and depreciation constitute
additional advantages over the State guarantees and cannot be considered as
interdependent for the purposes of State aid rules. The Complainant urged the
Commission to request the tax declarations of the Consortium in order to make a
correct calculation of the size of the advantage that those special rules provided to
the Consortium.
The Complainant also submitted observations after analysing the proportionality
analysis contained in the Fehmarn Belt final decision. The Complainant notes, in
particular, the difference between
ex ante
risk (before construction) and
ex post
risk
(after the Fixed Link entered into service), the need to re-evaluate the State aid after
construction, and the restrictions (scope limited to construction, priority given to
repayment of State-subsidised loans, and a guarantee fee), which are also necessary
to ensure proportionality of State aid for the Fixed Link.
Stena Line further argued that, in view of the fact that the Fixed Link was profitable,
and the Consortium had positive cash flows exceeding its operating and debt
repayment costs by 2004, State aid to the Consortium has not been proportionate
since at least 2004.
As noted at recitals (191) and (193), the Complainant commissioned an economic
assessment on the Consortium’s IRR and WACC for the purposes of analysing
whether, and when, the Consortium could have financed the Fixed Link on market
terms, without State guarantees. The Complainant argues that the State guarantees
have two effects on the financing. First, the guarantees enabled the Consortium to get
into debt above 100 % of its equity and debts during its first 17 years of operation
(negative equity until 2016). Second, the guarantees enabled the Consortium to
borrow at a lower cost than comparable companies (the Consortium obtained a AAA
credit rating). The Complainant adds that the State guarantees have resulted in an
actual average maturity (close to five years) of the Consortium’s debt, which is very
short compared to the economic lifetime of the assets (more than 100 years). The
assessment concludes that in 2003 or 2004, i.e., just a few years after the entry into
service of the Fixed Link, the Consortium could have financed the Fixed Link on
commercial terms without the State guarantees. In all scenarios, (referring to the
sensitivity scenarios performed), State aid was no longer needed as from 2009 or
2010 onwards. In order to come to this conclusion, the study made several analyses,
including a comparison of the IRR of the Consortium with a WACC calculation
based on 37 comparable companies, market conditions for debt and equity in
Denmark (see further, recital (202)), and an estimation of the market value of the
Consortium during the years 2000 to 2018 (see further, recital (203)).
The economic assessment includes an analysis of the Consortium’s annual reports,
which shows that the Consortium’s IRR, based on a linear projection of the
operational result over a 100-year period, is 7.2 % (before tax), and, if the period is
limited to 40 years, the IRR is 6.2 %. The WACC of comparable non-subsidised
companies dropped below the IRR of the Consortium in 2004 in the 100-year
(199)
(200)
(201)
(202)
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scenario
117
. Thus, according to the Complainant, from that point in time, State aid
was no longer needed (during the global financial crisis, the WACC temporarily
went above the IRR in the 100-year scenario, but, since 2009, the WACC has stayed
below the IRR). In the 40-year scenario, the WACC of comparable companies has
stayed below the IRR since 2010.
(203)
An estimation of the Consortium’s market value (based on discounted cash flows)
during the years 2000 to 2018 shows that the value of the discounted cash flows
exceeds the cost of the project as from 2003 (calculated with the Consortium’s
average interest rate based on a linear projection of the operational results over a
100-year period). The Complainant submits that further sensitivity analysis shows
that the conclusions are robust, both for shorter and longer periods of cash flows. In
particular, the analysis shows that, in all scenarios, the discounted amount of future
cash flows is higher than the total cost as from 2009. On that basis, the Complainant
concludes that it should have been attractive for a commercial actor to acquire the
Consortium as from 2003, or, in any event, as from 2009. In the Complainant’s view,
this indicates that the Consortium would have been able to finance the Fixed Link on
market terms, without the State guarantees, from 2003, or at least from 2009.
The Complainant also provided an analysis, by the same authors, of the
Consortium’s funding gap. In 1999, prior to the Fixed Link’s entry into service, the
WACC of comparable companies was slightly higher (8.0 %) than the IRR (7.2 %)
of the Fixed Link project. This resulted in a funding gap of DKK 2.9 billion
(EUR 0.39 billion) in 1999, justifying limited State aid. For the sake of
completeness, the Complainant notes that the funding gap was DKK 5.9 billion
(EUR 0.79 billion) in 2000, due to a higher WACC of comparable companies
(9.3 %) but stresses that, already from the Fixed Link’s entry into service, the State
guarantees were too generous.
According to the analysis, thanks to the State guarantees, the Consortium could
finance its costs entirely by debt with an interest rate on that debt of only 3 % in
1999 and 3.5 % in 2000. This means that the WACC of the Consortium was only
3 % to 3.5 % (100 % debt financing). The IRR of 7.2 % is therefore considerably
higher than the WACC of the Consortium, and the State guarantee model is
disproportionate and unjustified. The State aid should only result in a reduction of
the WACC by 0.8 % (from 8 % to 7.2 %) so that the WACC of the Consortium is
equal to the IRR of the Fixed Link project. According to the report, the
disproportionate State aid, in terms of NPV, amounted to DKK 54.3 billion
(EUR 7.28 billion), when quantified with the interest rate of the Consortium in 1999
and to DKK 41.8 billion (EUR 5.60 billion), when quantified with the interest rate in
2000.
The authors of the report also provided an additional analysis of the NPV of the
Consortium, based on a comparison of the interest rate applicable to the Consortium
and the interest rate of a company with 100 % AAA debt financing. The purpose of
the analysis was to quantify the amount of the disproportionate State aid. The
According to the report, the analysis of the comparable companies and market conditions for debt and
equity in Denmark shows that during the period 2000-2018 the WACC of comparable companies
dropped from 9.3 % to 3.0 %. For Sweden, this was respectively 8.7 % and 3.3 %.
(204)
(205)
(206)
117
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analysis is based on the fact that, if the IRR is higher than the average annual interest
rate of the Consortium, the Fixed Link will have a positive NPV, or the yield of the
project is higher than the costs. Also on that basis, the Complainant stresses that the
State guarantees were too generous and already resulted in disproportionate State aid
from the Fixed Link’s entry into service. This conclusion is further supported by an
analysis of annualised returns and annuities.
(207)
In addition, the Complainant provided a memorandum relating to some of the
Commission’s findings in the Fehmarn Belt final decision with respect to the
financing of the Fixed Link, in particular as concerns proportionality.
Finally, the Complainant submitted observations on the Consortium’s 2020 annual
report, as, in spring 2020, the Consortium launched a number of initiatives
transferring its debt from borrowing guaranteed by the States, to borrowing without
State guarantees. The Complainant observed the associated credit ratings, and
concluded that State-owned entities already enjoy an advantage due to the fact that
the State is the owner, which, in the eyes of their creditors, implies higher collateral
security. The Complainant also notes that the amount raised by loans without State
guarantees in 2020 represents about 28 % of the Consortium’s gross borrowing,
which further illustrates that the State guarantees were already disproportionate
during the first years of operation.
Stena Line refers to the IPCEI Communication, recalling that a funding gap
calculation may only include eligible costs. Given that the road and rail hinterland
connections are considered to be a separate project, Stena Line argues that the costs
of such facilities are irrelevant for calculating how much aid the Fixed Link may
benefit from. In this regard, Stena Line notes that the Consortium adjusted its
dividend policy in 2018, in order to primarily focus on maximum debt reduction in
the owner companies, A/S Øresund and SVEDAB, which are in charge of the road
and rail hinterland connections. Stena Line argues that this constitutes clear evidence
that State aid to the Consortium for the Fixed Link finances ineligible costs.
Prevention of undue distortion of competition and balancing test
According to the Complainant, the aid contained in the State guarantees and the
special Danish rules on loss carry-forward and depreciation causes undue distortion
of competition.
The Complainant states that it was never the objective of the Fixed Link project to
replace the ferry services between Helsingborg and Helsingør, nor was this
considered a necessary or unavoidable consequence thereof. Further, they recall that
the link between the ports of Helsingborg and Helsingør, which are both part of the
TEN-T network, connects the TEN-T roads E47, E4 and E20, and, thus, central
Europe to the Nordic countries. The Complainant refers to one of the main objectives
of the TEN-T, which is to contribute to low greenhouse gas emissions, clean
transport, and low carbon emissions, and notes that its zero emission ferries are a
green alternative to the Fixed Link. Finally, the Complainant refers to the
Commission’s White Paper on a roadmap to a Single European Transport Area
118
, in
White Paper, Roadmap to a Single European Transport Area – Towards a competitive and resource
efficient transport system, C(2011) 144 final, paragraph 59.
(208)
(209)
4.4.6.
(210)
(211)
118
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which the Commission noted that ‘the elimination of tax distortions and unjustified
subsidies and free and undistorted competition are […] necessary to establish a level
playing field between modes which are in direct competition’. The Complainant
considers that the socio-economic outcome of the disappearance of its ferry service
would be disastrous. In this context, the Complainant recalls that the State guarantees
allow the Consortium to set the toll charges for the Fixed Link at artificially low
levels, which permits the Consortium to increase its traffic volumes and its market
share. The State guarantees allow the Consortium to take higher risks, with
bankruptcy, de facto, excluded. The Complainant also points to another mechanism
that leads to market distortion, which is linked to the objectives of the States to foster
traffic across the Fixed Link. Since the Consortium is supported by the States, the
objective of the Consortium would also shift from strict profit maximisation to
increasing traffic volume. This is made possible thanks to the State guarantees.
4.4.7.
(212)
Mobilisation conditions of the State guarantees
Referring to the 2008 Guarantee Notice, the Complainant recalls that the
Commission is not entitled to authorise aid in the form of State guarantees unless the
Commission knows beforehand the conditions for triggering those guarantees.
According to the Complainant, there are no conditions for the mobilisation of the
guarantees determined in the loan agreements concluded between the Consortium
and the financial institutions concerned, and the Commission is, consequently, not in
a position to find that the State guarantees are compatible with the internal market.
Legitimate expectations
The Complainant and Scandlines et al. argue that the
Øresund
judgment should be
interpreted in such a way that legitimate expectations on the part of the Consortium
and the States are excluded after the
Aéroports de Paris
judgment.
Accordingly, they submit that, in the
Øresund
judgment
119
, the General Court
expressly held that legitimate expectations could exist only for the period before the
Aéroports de Paris
judgment, and not, as the Commission seems to suggest at
recital 178 of the Opening decision,
at least
until 2000.
The Complainant refers to the case law as cited in the
Øresund
judgment
120
, listing
the three cumulative conditions that must be satisfied for a claim of entitlement to the
protection of legitimate expectations to be well founded: (i) precise, unconditional
and consistent assurances originating from authorised and reliable sources must have
been given to the person concerned by the authorities; (ii) those assurances must be
such as to give rise to a legitimate expectation on the part of the person to whom they
are addressed; and (iii) the assurances given must comply with the applicable rules.
4.5.
(213)
(214)
(215)
119
120
Paragraph 322.
Paragraph 306: judgment of the General Court of 30 June 2005,
Branco
v
Commission,
T‑347/03,
EU:T:2005:265, paragraph 102 and the case-law cited; judgment of the General Court of 23 February
2006,
Cementbouw Handel & Industrie
v
Commission,
T‑282/02, EU:T:2006:64, paragraph 77;
judgment of the General Court 30 June 2009,
CPEM
v
Commission,
T‑444/07, EU:T:2009:227,
paragraph 126.
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(216)
While the Complainant and Scandlines et al. acknowledge the presence of legitimate
expectations until the
Aéroports de Paris
judgment, they consider that the assurances
given by the Commission in the 1995 letters were no longer in compliance with the
applicable rules after that judgment. Scandlines et al. submit that, in any case, the
right to rely on legitimate expectations would expire after the end of a transition
period of three years that allows the beneficiary to adjust its behaviour in view of the
new legal circumstances
121
.
Moreover, the Complainant argues that, after the
Aéroports de Paris
judgment, there
can be no doubt that a prudent and alert economic operator could have foreseen that
the Commission could potentially adopt a decision finding that the aid measures
concerned were subject to State aid rules. The Complainant and Scandlines et al.
consider that the States and the Consortium should have adjusted their behaviour in
accordance with the judgment, and that the period between the
Aéroports de Paris
judgment and the alleged interruption of the limitation period must be considered as
an ample amount of time to adjust, and to notify the aid measures concerned to the
Commission.
Finally, the Complainant argues that, even if the Commission were to consider that
the States granted two State guarantees in 1992, constituting individual ad hoc aid, it
is clear that the principle of legitimate expectations cannot be invoked for the period
after 13 May 2003. If that were not the case, the States would be allowed to invoke
the principle of legitimate expectations in order to continue to provide State
guarantees to the Consortium, without the payment of any premium and without any
limitation as to the amounts to be guaranteed and the time during which they can be
granted, for as long as they consider necessary.
Recovery of aid
Scandlines et al. consider that the aid contained in the special Danish rules on loss
carry-forward and depreciation and the State guarantees granted since 2003 should
be recovered. This concerns, in particular, the State guarantees for all loans taken out
to refinance the initial debt, and also the aid for all other operating costs covered by
loans. Trelleborg Port stresses that the actual State guarantees must be revoked, in
addition to having the Consortium pay back the difference between the market
premium and the premium paid. Stena Line argued that recovery must be requested
of (i) any aid granted after 2004 (since, at least as from 2004, the Consortium would
have been able to borrow on market terms); (ii) operating aid granted between 2003
and 2004; and (iii) for 2003-2004, the difference between the Fixed Link prices
based on actual costs and the below-cost based pricing, as well as of State guarantees
and State loans
122
covering any operating costs.
The Complainant adds that, even if the Commission were to declare the aid
compatible with the internal market, this would not have the effect of regularising the
(217)
(218)
4.6.
(219)
(220)
121
Reference is made to the judgment of the General Court of 16 October 2014,
Alcoa Trasformazioni
v
Commission,
T-177/10, EU:T:2014:897, paragraph 72.
Stena Line did not submit any further or specific information as to which State loans they are referring
to.
122
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measures, implemented contrary to Article 108(3) TFEU, ex post facto, and interest
should be applied from the date each new aid was granted.
(221)
FSS, Trelleborg Port, and Grimaldi submit that the State guarantees and the special
Danish rules on loss carry-forward and depreciation have not been notified to the
Commission under Article 108(3) TFEU, and, therefore, constitute unlawful aid.
This includes the State guarantees and the aid contained in the special Danish rules
on loss carry-forward and depreciation that was granted after the adoption of the
2014 decision, which was subsequently annulled. Since there is no evidence to
suggest that Denmark and Sweden have stopped granting State guarantees and aid
derived from the special Danish rules on loss carry-forward and depreciation, the
Commission should adopt a decision ordering Denmark and Sweden to stop granting
new guarantees and Denmark to stop granting aid related to the special Danish rules
on loss carry-forward and depreciation, and to suspend existing State guarantees and
advantages related to the special Danish rules on loss carry-forward and depreciation
until the Commission has taken a decision on their compatibility with the internal
market.
The Complainant considers that the disproportionate State aid to the Consortium has
created lasting consequences, which have to be corrected by forward-looking
measures. Simply ending the State aid by recalling and ending the State guarantees
would not suffice to establish a level playing field for the Fixed Link and the ferries.
In this context, the Complainant refers to paragraph 96 of the
Øresund
judgment, in
which the General Court pointed out that the Commission had suggested that
liquidation of the Consortium would be legally impossible, having regard to the
Intergovernmental Agreement. Since the 2008 Guarantee Notice considers that more
favourable funding terms obtained by enterprises whose legal form provides for
exemption from ordinary rules on bankruptcy or other insolvency procedures may
constitute State aid, the Consortium would continue to enjoy a significant advantage,
even after the States cease to issue specific State guarantee agreements.
The Complainant considers that such forward-looking measures need to restore
normal costs, normal objectives, and normal commercial risks of the Fixed Link
operator. Specifically, they consider three possible solutions for restoring normal
market conditions for traffic across the Øresund, namely, privatisation of the Fixed
Link, incorporation of the Fixed Link as a public company with floating shares listed
on the stock exchanges in Copenhagen and/or Stockholm, or granting a concession to
an independent operator on commercial terms.
C
OMMENTS RECEIVED FROM THE
S
TATES
This section describes the States’ comments on the Opening decision. Those
comments contain the States’ remarks on the comments of the interested parties that
were submitted to the States’ authorities in a non-confidential format. This section
also includes further information submitted by the States in response to specific
questions from the Commission.
Factual clarifications to the Opening decision
The States provided factual clarifications to the descriptive part of the Opening
decision.
(222)
(223)
5.
(224)
5.1.
(225)
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(226)
Specifically, the States clarify that there is no legal basis for providing State loans to
the Consortium in either Swedish or Danish law. This is a clarification to recital 31
of the Opening decision, where it is stated that the Consortium is able to obtain State
loans from the Danish National Bank against an annual fee of 0.15 % of the
outstanding loan values, plus an annual interest rate set by the Minister of Finance.
The States specify that this may be based on a confusion between the financing of the
Consortium and the financing of A/S Øresund, the Danish parent company of the
Consortium. According to Section 7(1) of the Construction Act (now Section 10(4)
of the Sund & Bælt Act), when deemed appropriate, the Danish Minister of Finance
is empowered to cover A/S Øresund’s funding needs through State loans.
The States underline that the direct consequence of the Intergovernmental
Agreement, the Swedish and Danish implementing legislation, and the Consortium
Agreement is that, from the day on which the Consortium was founded, the States
have been obliged to guarantee all loans and other financial instruments, taken out by
the Consortium to finance the Fixed Link. While the Swedish National Debt Office
and the Danish National Bank are responsible for the practical administration of the
guarantees, in relation to specific loans and financing arrangements, they do not have
the competence to refuse to grant the Consortium the necessary guarantees to fund
the project.
As such, the Consortium Agreement was approved by Denmark on 4 February 1992,
and by Sweden on 13 February 1992. The Consortium Agreement, therefore, entered
into force on 13 February 1992. The States, further, clarified that the Consortium is
not registered with the Swedish Companies Registration Office, as claimed by the
Complainant (recital (176)), as it has unique legal personality. It was, however,
registered for VAT and social security fees as of 23 July 1993. Registration with the
Swedish Companies Registration Office is not necessary in order for the Consortium
to acquire rights and obligations.
The States provided further details on what is provided for in the Swedish Parliament
decision in relation to the joint and several State guarantee obligation (recital (89)),
and on the practical administration of the joint and several State guarantee obligation
by the Swedish National Debt Office (recitals (91) to (94)). As for the
implementation of the State guarantee obligation in Denmark, the States referred to
Section 8 of the Construction Act and to the preparatory notes to the Construction
Act, related to Section 8 (recital (95)).
The States specified that the practical administrative arrangements by the Swedish
National Debt Office and the Danish National Bank (through the Cooperation
Agreements) were introduced in order to give Sweden and Denmark an opportunity
to monitor and influence the Consortium’s financing policy. The mechanism gives
the States the opportunity to ensure that the Consortium does not exceed its mandate,
and that a financing policy is followed that minimises the States’ long-term risk. The
mechanism, thus, allows the States to ensure that the aid granted to the Consortium
does not go beyond what is necessary.
The States provided an updated overview of the outstanding debt of the Consortium.
(227)
(228)
(229)
(230)
(231)
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5.2.
5.2.1.
(232)
Existence of aid within the meaning of Article 107(1) TFEU
The Consortium as beneficiary
The States acknowledge the Consortium as a beneficiary of the State guarantee
model. The Danish authorities do not accept, however, that the Consortium is a
beneficiary of the special Danish rules on loss carry-forward and depreciation. They
note, in that respect, that the Consortium is a partnership that, as regards Danish tax
rules, is transparent. It is, thus, not the Consortium, but A/S Øresund, only, that could
possibly have benefited from the special Danish rules on loss carry-forward and
depreciation, and, moreover, only as regards half of the income and costs incurred by
the Consortium.
According to Danish tax law, all partnerships are tax transparent. It is, thus, not the
fact that the Consortium is tax transparent that benefits A/S Øresund; rather, it is the
special Danish rules on loss carry-forward and depreciation. Those rules are created
especially for A/S Øresund, in its capacity as a partner in the Consortium. A/S
Øresund does not carry out any own activities in a competitive market, and, thus, A/S
Øresund does not receive State aid within the meaning of Article 107(1) TFEU. The
Danish authorities, further, submit that the case at hand must be distinguished from
case C-128/16 P
123
, in which the Court considered that a fiscally transparent entity
was the beneficiary of tax measures, because the Consortium’s tax transparency
means that any possible tax advantage is received by its owners.
For those reasons, the Danish authorities maintain that the Consortium did not obtain
any economic advantage as a result of the special Danish rules on loss carry-forward
and depreciation.
No economic activity by the Consortium
The States maintain their position as outlined in Section 4.2.1 of the Opening
decision, that the planning, construction, and operation of the Fixed Link cannot be
considered as an economic activity falling within the scope of Article 107(1) TFEU.
In the States’ view, the construction and operation of the Fixed Link are classic
examples of the exercise of public planning power, which are not, and ought not to
be, covered by Article 107(1) TFEU. Consequently, the State guarantee model and
the special Danish rules on loss carry-forward and depreciation fall outside the scope
of Union State aid rules.
In their response to the Opening decision, the States refer to their previous
submissions, provided in the context of the preliminary investigation procedure for
cases SA.36558, SA.38371, and SA.36559, and confirm that they maintain the
positions set out therein. In that regard, the States submitted that, until the early
2000s, under a long-standing decision-making practice, the Commission had
consistently held that the construction by a public authority of infrastructure, open to
all potential users on non-discriminatory terms, did not constitute an economic
activity falling within the scope of Union competition rules. Rather, such activities
(233)
(234)
5.2.2.
(235)
(236)
123
Judgment of the Court of 25 July 2018,
Commission
v
Spain and Others,
C-128/16 P, EU:C:2018:591.
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were considered to be an exercise of public (planning) power, in order to provide
general transport infrastructure.
(237)
The States submitted that the objectives they sought to achieve by constructing the
Fixed Link are clearly and exclusively public policy aims, relating, in particular, to
furthering cultural, regional, and economic development and cooperation between
two countries. They argued that the
Aéroports de Paris
judgment and the
Leipzig
Halle
judgment of the General Court of 24 March 2011, upheld by the Court of
Justice on 19 December 2012
124
(the ‘Leipzig
Halle
judgments’), do not necessarily
apply to infrastructure projects, such as the Fixed Link. Contrary to airports, the
development and operation of cross-border bridges, which require the conclusion of
international agreements, cannot be implemented by ordinary investors. The
construction and operation of bridges has not undergone a liberalisation similar to the
airport sector. The Fixed Link can be distinguished from the situation in the
Leipzig
Halle
judgments, they claim, as the construction of the Fixed Link was never meant
to expand the Consortium’s commercial activities; the Consortium came into
existence with the sole aim of carrying out public policy aims, and not to pursue
economic activities.
The States, further, submit that the Consortium’s activities exclusively relate to the
construction and operation of the Fixed Link, i.e., public duties, which are a direct
consequence of public planning measures. The basic conditions for the Consortium’s
economic operations are predetermined, and the result of the States’ exercise of
public power. The Consortium performs its public duties in a ringfenced economic
circuit; thus, there is no risk that its financing activities on the basis of the State
guarantee model could be used to cross-subsidise other activities, not relating to its
public tasks. In this sense, the Consortium’s activities and means of financing are
comparable to those of (other) public authorities that charge a cost-based fee for
providing specific public goods or services to their users, such as the production of
certain official documents, for example, passports and driver licences, and health and
animal welfare checks of veterinary agencies. When State-owned entities are
exclusively empowered to carry out such public duties in a closed economic circuit,
their activities must be considered to be an exercise of public power. The States
recall that, in that respect, the Consortium is 100 % publicly owned, and no private
operator could benefit from the State guarantee model.
The States, further, submitted that the Consortium cannot be considered as
competing with the Complainant’s ferry services. While the Consortium’s pricing
policy may affect the Complainant’s business, that is not the consequence of a
competitive relationship between two comparable actors offering substitutable
services on the same market. Rather, while the Complainant offers a commercial
ferry service, the Consortium offers a public good, in the form of access to a
particular piece of road and rail infrastructure. When the Consortium sets the price
for that public good, it acts within the framework of the public policy decision
concerning the financing of the Fixed Link, including the road and rail hinterland
Judgment of the General Court of 24 March 2011,
Freistaat Sachsen and Land Sachsen-Anhalt and
Others
v
Commission,
Joined Cases T-443/08 and T-455/08, EU:T:2011:117; upheld on appeal in
judgment of the Court of Justice of 19 December 2012,
Mitteldeutsche Flughafen AG and Flughafen
Leipzig-Halle GmbH
v
Commission,
C-288/11 P, EU:C:2012:821.
(238)
(239)
124
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connections. Thus, the relationship between the Consortium and the Complainant
differs fundamentally from ordinary competitive relationships.
(240)
Nevertheless, the States provided further arguments on the classification of the State
guarantee model and of the special Danish rules on loss carry-forward and
depreciation as aid schemes versus individual aid, on their classification as new
versus existing aid, and on the existence of legitimate expectations.
Classification of the State guarantee model as a scheme or individual aid
In the States’ view, the characterisation of the State guarantee model is an essential
issue, and the assessment must have due regard to the purpose of Regulation
2015/1589, and to the practical consequences of this characterisation, both for the
Fixed Link and for other similar cases.
In the States’ view, the wording of Regulation 2015/1589 provides that the State
guarantee model consists of ad hoc aid, and not aid schemes. As such, the States
consider that the State guarantee model is not aimed at ‘undertakings defined within
the act in a general and abstract manner’ and, further, that it is ‘linked to a specific
project’. According to the States, this is supported by the fact that the Consortium is
a special purpose vehicle with tasks associated with the Fixed Link, and that the State
guarantees provided to the Consortium are inextricably linked, and restricted, to
activities associated with the construction and operation of the Fixed Link.
Consequently, the States submit that the State guarantee model consists of individual
aid.
The States consider that the State guarantee model in this case is fundamentally
different from, for example, indirect guarantees granted to public undertakings in the
form of national legislation ruling out bankruptcy
125
.
The States refer, in this context, to the legal literature that provides examples of aid
schemes coming within the definition in the second part of Article 1(d) of Regulation
2015/1589, including a scheme under which a specific undertaking receives annual
compensation for losses incurred in providing a service of general economic
interest
126
and tax incentives, unlimited in amount or time, granted to specific
undertakings.
127
Such schemes are, in the States’ view, also fundamentally different
in purpose and nature from the State guarantee model granted to the Consortium.
Moreover, according to the States, the Intergovernmental Agreement and the
implementing legislation in Sweden and Denmark clearly show that the joint and
several State guarantees were granted to the Consortium indefinitely and irrevocably
in 1992, as a legal and economic precondition for the Consortium’s obligation to
They refer in this context to the judgment of the Court of 3 April 2014,
French Republic
v
European
Commission,
C-559/12, EU:C:2014:217.
Mederer, W., Pesaresi, N. and Van Hoof, N., EU Competition law: Volume IV, State aid, Book 1,
Claeys & Casteels, 2008, p. 566.
Heidenhain, M., ed., European State Aid Law: A Handbook, Beck/Hart, 2010, pp 587-588; and
Sinnaeve, A. and Slot, P. J., ‘The new regulation on State aid procedures’, Common Market Law
Review 36, Issue 6, 1999, pp. 1153-1194, p. 1161.
5.3.
(241)
(242)
(243)
(244)
(245)
125
126
127
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establish and operate the Fixed Link. As such, both States have a clear and
unequivocal legal obligation vis-à-vis each other and vis-à-vis the Consortium to
ensure that subsequent financial transactions falling within the scope of the
Intergovernmental Agreement and the implementing legislation are guaranteed by
the States. The States argue that the fact that this requires subsequent administration
from the Swedish National Debt Office and the Danish National Bank does not mean
that the States have any choice to refuse to guarantee such transactions.
(246)
Therefore, the State guarantee model should, in the opinion of the States, be
characterised as consisting of two individual ad hoc aids, granted when the
Consortium was established on 13 February 1992. As from that day, the States have
been legally obliged to guarantee all financing required by the Consortium to
establish the Fixed Link and put it into service. The States consider this conclusion
supported both by the legal arrangements and the economic rationale of the State
guarantee model.
In relation to the legal arrangements, the States argue that, while the Swedish
National Debt Office and the Danish National Bank are responsible for the practical
administration of the guarantee agreements in relation to specific loans and financing
arrangements, they do not have any competence to refuse the Consortium the
guarantee to fund the project. Further, while the Swedish National Debt Office and
the Danish National Bank, from time to time, issue, reissue, or confirm the original
guarantees vis-à-vis a specific lender, this does not change the States’ legal
obligation, vis-à-vis the Consortium, to guarantee the Consortium’s financial
commitments concerning the project.
The States note that the wording of the relevant provisions of the Intergovernmental
Agreement, the substance of the implementing national legislation, and the
Consortium Agreement have not been amended since their adoption. As the legal
basis from which the Consortium derives the right for its financing to be State
guaranteed remains unaltered, the States consider that the State guarantees were
definitively and irrevocably granted to the Consortium at the time it achieved a legal
right to obtain State guaranteed funding, i.e., from the day it was founded.
The States provided further details on the implementation of the Swedish joint and
several State guarantee obligation in the context of the Complainant’s claim that the
Swedish guarantees were changed from secondary to personal guarantees
(recital (175)). The States submitted that the original joint and several State
guarantee obligation has never changed. The State guarantee obligation towards the
Consortium was established by the Swedish Parliament decision, following up on the
Intergovernmental Agreement. The Swedish Parliament decision was later
implemented by the decision of the Swedish Government of 1 April 1993
(K91/1443/3, K93/202/3) and the decision of the Swedish Government of 23 June
1994 (K91/1443/3, K94/1680/3), by which the Swedish National Debt Office was
commissioned to issue guarantees. None of those decisions regulate in detail how the
terms of the individual guarantee agreements were to be determined. Instead, this
was to be decided upon and implemented by the Swedish National Debt Office.
There has been no subsequent decision by the Swedish Parliament in this context,
nor any decision by the Swedish Government, which would have amended the State
guarantee obligation established by the Swedish Parliament decision. The individual
deeds of guarantee serve to fulfil the right already given to the Consortium. The
(247)
(248)
(249)
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deeds of guarantee are indeed to be interpreted as personal guarantees. This,
however, does not constitute a change of the Swedish guarantee obligation to the
Consortium and does not go beyond the rights given to the Consortium in the
Intergovernmental Agreement or in the Swedish Parliament decision. Furthermore,
the States note that the Swedish National Debt Office does not have the legal power
or mandate to amend or extend the original joint and several State guarantee
obligation – or to issue a new guarantee – without a new Government decision. The
variations in the wording used in the reissued guarantee documents in respect of the
individual loans are to be interpreted as different implementations of the original
joint and several State guarantee obligation and not as new individual guarantees.
(250)
As regards the implementation of the Danish joint and several State guarantee
obligation, the States explained that the State guarantee obligation as provided by the
Construction Act has not changed since it entered into force. The mobilisation
conditions are not expressly provided for in that legislation, thus, by default, this
guarantee obligation will be considered as a ‘simpel kaution’. Danish law on
guarantees distinguishes between ‘simpel kaution’ and ‘selvskyldnerkaution’. A
‘simpel kaution’ means that the party calling upon the guarantee must show to the
guarantor that the principal (the debtor) is unable to pay its obligations. Normally
this requires either (i) that it has been established during an execution (i.e., that
party’s attempt to execute its claim against the principal’s assets) that the principal is
unable to pay its obligations as they fall due; or (ii) that the principal has been taken
under bankruptcy or similar insolvency proceedings. A ‘selvskyldnerkaution’ means
that the party calling upon the guarantee can ask the guarantor to pay if the principal
has failed to make payment in due time. According to Danish jurisprudence on
guarantees, a guarantee is normally interpreted as a ‘simpel kaution’ unless there is a
clear basis for interpreting it as a ‘selvskyldnerkaution’. Thus, unless the guarantee is
clearly described as a ‘selvskyldnerkaution’, the party calling upon the guarantee will
have to show to the guarantor that the principal is unable to pay its obligations as
they fall due.
In practice, the conditions for mobilisation are further specified in the guarantee
agreements issued under the various financial transactions. It follows from the
wording of those guarantee agreements that they are unconditional and, thus, the
investors are not obliged to seek to enforce a claim against the Consortium, but may
address the guarantors directly upon default. The creditors are not obliged to activate
any insolvency steps. On the other hand, there is a specific provision in the EMTN
programme, in the EIB loans, and in the ISDA Master Agreements governing a
potential insolvency situation. According to that provision, all creditors undertake
not to accelerate any insolvency preparations or proceedings or to activate or
participate in filing for bankruptcy, reconstruction, administration, dissolution, etc.,
so long as the guarantees cover the obligations of the Consortium.
The States also referred to the Fehmarn Belt final decision and, in particular, pointed
to the observation that, at recital 253 of that decision, the Commission emphasised
that the act governing the construction and operation of the Fehmarn Belt Fixed Link
contains a clear commitment by the State to finance the construction costs by State
loans and/or State guarantees, under which the Minister of Finance has authorisation
to decide on the mix of State loans versus State guarantees, only. They further
pointed to recital 256 of the Fehmarn Belt final decision, stating that the Minister of
Finance has limited discretion, only, regarding the implementation of State loans and
(251)
(252)
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State guarantees. In the Øresund case, the Danish National Bank and the Swedish
National Debt Office are responsible for the practical administration of the
guarantees in relation to specific loans and financing arrangements, without any
competence to refuse to grant the Consortium the necessary guarantees to fund the
project. Thus, the States submit, in the Øresund case, the States’ discretionary power
is even more limited that in the Fehmarn Belt case.
(253)
Furthermore, the States note that the Commission emphasised that the aid granted to
Femern A/S – the special purpose vehicle responsible for the construction and
operation of the Fehmarn Belt Fixed Link – is exclusively related to the financing of
the planning and construction of that fixed link, to the exclusion of other projects and
activities. The States submit that the same applies in the Øresund case. The
Consortium is a ‘special purpose vehicle’ that must not carry out activities other than
those associated with the Fixed Link. An overall assessment of the scope of the
guarantees that takes account of the fact that the Consortium cannot carry out other
activities could in their view only lead to the conclusion that the guarantees are
linked to a specific project.
The States conclude that for the same reasons as in the Fehmarn Belt case, the
Consortium is clearly not awarded new aid every time a new transaction, which is
guaranteed, is entered into. The Fehmarn Belt final decision, therefore, confirms the
States’ view that the State guarantees should be characterised as two individual ad
hoc aids granted when the Consortium was established in 1992.
The economic rationale of the State guarantee model is to minimise the total
financing costs of the project. That aim would be undermined if each State had
discretion as to whether to issue a specific guarantee agreement vis-à-vis the
Consortium. The model would not function as a financing mechanism if the
Consortium needed to ‘apply’ to the States for a State guarantee each time the
Consortium were to take out a new loan. Also, it would make no market economic
sense to assume, on the one hand, that the Consortium has the characteristics of an
‘undertaking’, in competition with other market operators, and, on the other hand, to
assume that this undertaking would have accepted responsibility for the financing of
the Fixed Link, without having, first, obtained a clear legal right to finance its
construction costs with State guarantees, from the outset. Moreover, the States argue
that the fact that the granting occurred in 1992 is also confirmed by economic reality,
in particular, by the financial markets. In the summary of Standard & Poor’s credit
analysis of the Consortium of 18 November 2016, it is stated that ‘[t]hese guarantees,
according to their wording, irrevocably and unconditionally cover all of
Øresundsbron’s debt and interest payment’. For that reason, Standard & Poor’s links
the rating on the Consortium’s debt to the long-term rating for Sweden and Denmark
– i.e., AAA.
Finally, the States argue that the general principles in Union State aid law and case-
law support the conclusion that the aid derived from the State guarantee model was
granted when the Consortium was established. In their view, the commitments to
guarantee the Consortium’s loans for the Fixed Link were firm, precise, and
unconditional when the Consortium was established. The aid derived from the State
guarantee model was, thus, granted in 1992, when the Consortium obtained an
unconditional and irrevocable legal right to make use of the State guarantee model to
finance its commitments relating to the specific project, even if those future financial
(254)
(255)
(256)
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arrangements had not yet been entered into (i.e. even if the guarantees had not
actually been ‘paid out’ yet).
5.4.
(257)
Classification of the State guarantee model as new aid or existing aid
The States refer to Article 17(2) of Regulation 2015/1589, stating that the limitation
period of ten years (for recovery) shall begin on the day on which the unlawful aid
has been awarded to the beneficiary as individual aid.
The States consider that the ten year limitation period expired on 13 February 2002,
which is ten years after the Consortium was established, on 13 February 1992. All
aid related to the State guarantee model is, therefore, existing aid and cannot be
recovered.
In addition, the Swedish authorities maintain that any possible aid was definitively
granted prior to its accession to the Union, and prior to the entry into force of the
EEA Agreement
128
, on 1 January 1994. Accordingly, the joint and several State
guarantee provided by Sweden is existing aid, in accordance with Article 1(b), point
(i) of Regulation 2015/1589 and Article 144 of the Act of Accession of Austria,
Finland and Sweden.
In the States’ view, the fundamental distinctions between ‘new aid’ and ‘existing
aid’, and between ‘aid schemes’ and ‘ad hoc aid’, aim to strike a balance between
two fundamental considerations: (i) effective enforcement of the State aid rules; and
(ii) legal certainty for the Member States, the aid recipient, and its contractual
partners, which have adjusted their situation in reliance on the aid.
From that perspective, the States add that it was a fundamental legal and economic
assumption for launching the project, and for incurring the expenditure associated
with the construction of the Fixed Link, that the Consortium was granted the State
guarantees from both participating States, and that those State guarantees would
remain valid until the Consortium’s debt was fully repaid.
The States, further, note that any interested party or potential competitor could have
complained to the Commission or have invoked Article 108(3) TFEU directly before
national courts as from the establishment of the Consortium, and within the
respective time limits under Union and national law. After the expiration of those
time limits, the Commission does not have the competence to order recovery, or to
impose appropriate measures for the future. They argue that it would give rise to
unacceptable legal uncertainty for the Consortium and the States if the Commission
were to have this competence several decades after the project was launched and the
debt had been incurred.
The States add that the practice of refinancing loans on an ongoing basis has ensured
minimal overall borrowing costs, and that State guaranteed loans which, as a
consequence, are taken out on an ongoing basis should not lead to the Consortium
being treated differently from if it had, instead, in 1992, chosen to incur debt as long-
term State guaranteed loans that would not need to be refinanced.
Agreement on the European Economic Area (EEA), OJ 1994 L 1, 3.1.1994, p. 3.
(258)
(259)
(260)
(261)
(262)
(263)
128
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(264)
Based on the above arguments, the States maintain that aid deriving from the State
guarantee model was definitively and irrevocably granted to the Consortium on
13 February 1992.
Nevertheless, and considering the States’ point of view that the aid deriving from the
State guarantee model is existing aid and therefore, cannot be recovered, the States
have committed to ensure that the Consortium will finance new debt, and refinance
existing debt, on market terms. Therefore, the existing aid to the Consortium deriving
from the State guarantee model will be phased out as the Consortium’s outstanding
debt instruments expire. The States provided the Commission with an overview of
the transition to market terms of the remaining debt, and the expected repayment
profile. That debt will be refinanced on market terms as it matures and the need for
refinancing arises. Therefore, the future financing on market terms will gradually be
implemented when future refinancing needs occur. The States confirmed, in this
context, that the Consortium has not obtained any new State guaranteed financing or
refinancing since the
Øresund
judgment (recital (116)). Therefore, in practice, the
phasing out has already started.
Comments on the special Danish rules on loss carry-forward and depreciation
As to the special Danish rules on loss carry-forward and depreciation, Denmark
argues that, should they need to be considered as falling under State aid rules, the
measures would have to be considered mainly as ‘existing aid’.
Denmark argues (also referring to arguments that had been submitted in the context
of SA.38371 (2014/CP)) that the Construction Act established, from the outset, and
in light of the specific circumstances where infrastructure construction costs entailed
an obvious need for long-term planning of A/S Øresund’s financing, that A/S
Øresund would be subject to more favourable loss carry-forward rules than under the
general Danish Tax Assessment Act (Section 15). Thus, in the preparatory notes to
the Construction Act, the legislator explicitly stated that the reason for granting an
extended limitation period for loss carry-forward in 1991 was that A/S Øresund
would not be able to benefit from the generally applicable rules on loss carry-forward
(with a limitation of five years), due to significant expenditure, combined with a lack
of profits during the construction period. Denmark notes that the losses incurred prior
to the entry into service of the Fixed Link were, basically, due to interest on the loans
that were necessary for the construction of the Fixed Link. Financing costs (interest)
are not part of the acquisition costs that can be capitalised as an asset in the balance
sheet of the Consortium, on the basis of which depreciation can be applied. Interest
costs are, however, deductible as an expense according to the general rule on
deduction of interest in the general Danish Act on the Taxation of Income and
Property
129
and, therefore, generated losses in the initial phase of the project.
On the special Danish rule on depreciation, Denmark argues that, under Section 12 of
the Construction Act, A/S Øresund was covered by a separate legal basis regarding
depreciation of the initial acquisition costs of the project. Denmark noted that the
normal depreciation rules (i.e., the generally applicable rules) were found in the
Danish Tax Depreciation Act. Denmark referred, in this context, to the preparatory
‘Statsskatteloven’, Section 6(1)(e).
(265)
5.5.
(266)
(267)
(268)
129
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notes to the Construction Act, which state that those provisions correspond to similar
provisions applicable in regard to ‘buildings and other installations’ under the Danish
Tax Depreciation Act that was in force at the time, i.e., Section 22 of the
consolidated Act No 597 of 16 August 1991. Denmark explained that the special
Danish rule on depreciation was to be considered as a practical rule allowing a
uniform regime for all assets, that was originally, if anything, detrimental to the
Consortium, as the least favourable rate of depreciation was applied to all assets
(other items, such as machinery, could normally be depreciated faster than at
6 % / 2 %, but for A/S Øresund, the 6 % / 2 % applied as a maximum).
(269)
In the Danish authorities’ opinion, the special Danish rules on loss carry-forward
cannot be viewed as advantages that have to be examined separately from the State
guarantee model. The rules applying to A/S Øresund pursue the same aim as the
State guarantee model, namely, to ensure the financing of the Fixed Link, at the least
cost. Moreover, the amounts contained in those tax advantages are inextricably
linked to the State guarantee model, and the combined net effect neutralises any tax
benefit that A/S Øresund may have received. In particular, the total amount of aid
(gross grant equivalent) granted through the State guarantee model is reduced to the
extent that the special Danish rules on loss carry-forward entail a lower tax liability
and, therefore, a lower debt burden for the Consortium. Conversely, had A/S
Øresund not been subject to the special rules, the Consortium would have had a
higher debt burden, and thus a higher amount of aid would have been granted
through the State guarantee model. In other words, the special Danish rules on loss
carry-forward applying to A/S Øresund had, as their basic aim, improving the
financial robustness of the project, thereby lowering the risk associated with
providing loans to the Consortium.
Denmark, further, submits that, if any of the special Danish rules on loss carry-
forward should be subject to State aid rules, the relevant period to consider potential
advantages as a result of the loss carry-forward rules is limited to the period from
1 January 2013 until 31 December 2015, i.e., three years. For the period starting with
tax year 2002 and up to and including the tax year 2012, no advantage existed since
all legal entities subject to Danish corporate income tax could carry-forward their
losses without any limitation in future tax years. The special rule on loss carry-
forward as it was in place before that period, should be considered as existing aid
granted with the entry into force of the Construction Act. Denmark notes in this
context that the 1991-2001 LCF differs significantly from the situation applicable in
the
France Télécom
judgment. The Construction Act established, from the outset,
and in light of the specific circumstances of A/S Øresund, that A/S Øresund would
be subject to more favourable rules on loss carry-forward in light of the long-term
planning of the financing of an infrastructure investment. The potential advantage
should be considered as granted, at the latest, when the losses occurred, and the fact
that the losses are utilised at a later date is irrelevant for the purpose of determining
when the advantage was granted, and, thus, for the assessment of whether the aid is
now existing aid. Such advantage was, therefore, not determined, and dependent,
upon a yearly regulation of the tax contribution as in
France Télécom,
and could only
be removed by amending the legislation.
Denmark also provided further details on the annual tax returns of A/S Øresund, in
particular on the losses carried-forward and utilised since 1992, and on the annual
depreciated amounts. Denmark confirmed that losses were utilised that occurred
(270)
(271)
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more than five years earlier (and, therefore, under the normal rules would have
expired). Moreover, for the period 2013-2015, 100 % of the profits was offset with
carried-forward losses, which would not have been possible under the normal
taxation rules, due to the limit that applied. Denmark, further, confirmed that the first
depreciation in relation to the Fixed Link assets occurred with regard to the tax year
2004, at a rate of 6 %; at the time, the rate of depreciation under the normal taxation
rules was 5 %. A/S Øresund also made use of the possibility to depreciate at 6 % in
the period starting with its tax year 2008, when the depreciation rate under the
normal taxation rules was 4 %. In addition, Denmark confirmed that the total
accumulated depreciation amount remained below 60 %, up to and including the tax
year 2015, after which the special Danish rules on loss carry-forward and
depreciation were repealed.
5.6.
(272)
Compatibility of the aid measures
The States did not consider it appropriate or necessary to comment in detail on the
doubts raised in the Opening decision on the compatibility of any possible aid to the
Consortium, in light of their position regarding the presence of State aid and the
qualification as existing aid, as described in Sections 5.2 to 5.5.
Legitimate expectations
In the States’ view, the General Court, in the
Øresund
judgment, did not adopt a
position on legitimate expectations for the period after the
Aéroports de Paris
judgment. Thus, they disagree with the interested parties, who all argued that the
General Court’s judgment should be interpreted in a way that legitimate expectations
are excluded for the Consortium and the States after 12 December 2000.
The States request that, if the Commission’s State aid assessment leads it to become
relevant to determine the precise point in time from which the States and the
Consortium could no longer rely on legitimate expectations, the Commission take the
specific circumstances of the project into account.
Specifically, they consider, first, that it must be acknowledged that the Consortium
and the States did have legitimate expectations in relation to the measures before the
Aéroports de Paris
judgment, and, thus, throughout the entire construction phase
during which the Consortium’s debt was incurred. After that, the States and the
Consortium had little room to amend the financing model. The States submit that, in
such a situation, in order to be effective, legitimate expectations obtained prior to that
judgment must continue to produce effects beyond the date of the judgment. As such,
even if the States and the Consortium cannot rely on legitimate expectations after
December 2000, the Consortium’s expectations about how it would be able to
finance and refinance its construction debt were formed prior to the
Aéroports de
Paris
judgment. If that judgment removed the Consortium’s possibility to (re)finance
itself with State guarantees, it would effectively threaten the Consortium’s continued
operation, and, in practice, retroactively remove the States’ and the Consortium’s
legitimate expectations prior to December 2000.
Second, for more than 20 years after the Consortium Agreement in 1992, and for
more than 12 years after the entry into service of the Fixed Link, none of the
interested parties (including the Complainant) complained about the State guarantees
5.7.
(273)
(274)
(275)
(276)
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available to the Consortium, or about the special Danish rules on loss carry-forward
and depreciation.
(277)
Third, the
Aéroports de Paris
judgment did not give the Consortium or the States any
reason to believe that the Fixed Link was covered by State aid rules. The judgment
was very specific and was, at the time, treated as an airport sector case, linked to the
liberalisation of that sector. Furthermore, as mentioned at recital (276), neither the
Commission nor any third party gave the Consortium or the States reason to doubt
the lawfulness of the Consortium’s financing for more than 12 years after the start of
the Fixed Link’ operation.
Therefore, in light of those three arguments, and in light of the particular
circumstances of this case, the States submit, first, that aid measures benefiting the
Consortium after the
Aéroports de Paris
judgment, and until the construction debt
has been fully repaid, should also be covered by legitimate expectations. Otherwise,
the Consortium’s and the States’ legitimate expectations prior to December 2000
would be meaningless.
Second, and in any event, the States consider that legitimate expectations continued
until the General Court annulled the 2014 decision on 19 September 2018, as neither
the Consortium nor the States realised that the Commission’s examination in the
2014 decision had been insufficient, prior to that date.
Third, and in any event, the States consider that the Consortium and the States had
legitimate expectations until the Commission adopted its 2014 decision, which was
subsequently challenged before the General Court, as the 1995 letters produced the
same legal effects as a no aid decision. Since that letter was not challenged, or in any
other way questioned by the Commission before the 2014 decision, the States
enjoyed legitimate expectations.
Fourth, and in any event, the States are of the view that the Consortium and the
States had legitimate expectations at least until they received the Commission’s letter
of 13 May 2013, with which the complaint was forwarded.
Forward-looking measures
The States consider that none of the forward-looking measures or structural remedies
proposed by the Complainant have any legal basis in Union State aid law, and
should, therefore, be disregarded. They note, in this context, that Article 345 TFEU
provides that the TFEU shall in no way prejudice the rules in Member States
governing the system of property ownership. According to case-law
130
, Member
States are free to determine, in their internal systems, the system of property
ownership, including whether they want to establish State-owned companies.
In the context of the Complainant’s claim that the Consortium would continue to
enjoy a significant advantage, even after the States cease to issue specific State
guarantees because of the exemption from bankruptcy (recital (222)), the States
Judgment of the Court of Justice of 20 March 1985,
Italy
v
Commission,
C-41/83, EU:C:1985:120,
paragraph 22 and judgment of the Court of Justice of 30 April 1974,
Sacchi,
C-155/73, EU:C:1974:40,
paragraph 14.
(278)
(279)
(280)
(281)
5.8.
(282)
(283)
130
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submitted that nothing prevents, as a matter of principle, the Consortium from being
subject to ordinary bankruptcy procedures under Danish or Swedish law. This is
clearly illustrated by the observation that there is a specific reference to a potential
insolvency situation in the EMTN programme, the EIB loans, and in the ISDA
Master Agreements (recital (251)).
6.
6.1.
(284)
A
SSESSMENT OF THE MEASURES
Assessment of the existence of aid within the meaning of Article 107(1) TFEU
Article 107(1) TFEU lays down that ‘any aid granted by a Member State or through
State resources in any form whatsoever which distorts or threatens to distort
competition by favouring certain undertakings or the production of certain goods
shall, in so far as it affects trade between Member States, be incompatible with the
internal market’.
On the basis of this provision, the qualification of a measure as State aid requires the
following cumulative conditions to be met: (i) the recipient of the measure is an
undertaking; (ii) the measure is imputable to the State and is financed through State
resources; (iii) the measure confers a selective advantage on its recipients; and (iv)
the measure distorts or threatens to distort competition and is likely to affect trade
between Member States.
The Opening decision expressed, at recital 100, the Commission’s preliminary view
that the State guarantees granted by the States to the Consortium for the financing of
the Fixed Link, as well as the special Danish rules on loss carry-forward and
depreciation, constitute State aid within the meaning of Article 107(1) TFEU.
Economic activity and notion of undertaking
The Commission notes that the State aid rules only apply where the recipient of an
aid is an ‘undertaking’. The Court of Justice has consistently defined undertakings as
entities engaged in an economic activity, regardless of their legal status and the way
in which they are financed
131
. Any activity consisting of offering goods and/or
services in a given market is an economic activity
132
. An entity that carries out both
economic and non-economic activities is to be regarded as an undertaking only with
regard to the former
133
.
(285)
(286)
6.1.1.
(287)
131
Judgment of the Court of Justice of 12 September 2000,
Pavlov and Others
v
Stichting Pensioenfonds
Medische Specialisten,
Joined Cases C-180/98 to C-184/98, EU:C:2000:428, paragraph 74; judgment of
the Court of Justice of 10 January 2006,
Ministero dell’Economia e delle Finanze
v
Cassa di Risparmio
di Firenze SpA , Fondazione Cassa di Risparmio di San Miniato and Cassa di Risparmio di San
Miniato SpA,
C-222/04, EU:C:2006:8, paragraph 107.
Judgment of the Court of Justice of 16 June 1987,
Commission
v
Italy,
118/85, EU:C:1987:283,
paragraph 7; judgment of the Court of Justice of 18 June 1998,
Commission
v
Italian Republic,
C-35/96
EU:C:1998:303, paragraph 36; judgment of the Court of Justice of 12 September 2000,
Pavlov and
Others
v
Stichting Pensioenfonds Medische Specialisten,
Joint Cases C-180/98 to C-184/98,
EU:C:2000:428, paragraph 75.
Aéroports de Paris
judgment, paragraph 108.
132
133
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(288)
In addition, for a certain activity to be classified as an economic activity, it is
irrelevant whether a private investor could have carried out the same activity
134
.
Once an entity engages in economic activities, regardless of its legal status, or the
way in which it is financed, it constitutes an undertaking within the meaning of
Article 107(1) TFEU, and the State aid rules may apply to financial advantages
granted by the State or through State resources to that entity
135
.
The Union Courts have, moreover, held that services normally provided for
remuneration may be classified as an economic activity, and that the essential
characteristic of remuneration lies in the fact that it constitutes consideration for the
service in question
136
. It follows that it is the nature of the activity carried out that
determines whether an entity is an undertaking for the purposes of State aid law.
In the
Aéroports de Paris
judgment
137
, the General Court ruled that the operation of
an airport had to be seen as an economic activity. Subsequently, the
Leipzig Halle
judgments concluded that, if an airport runway will be used for economic activities,
its construction also constitutes an economic activity, and thus its funding may fall
within the ambit of State aid rules. While those cases relate specifically to airports, it
appears that the principles developed by the Union Courts are also applicable to the
construction of other infrastructure that is indissociably linked to an economic
activity
138,139
, as confirmed by the General Court in the
Belgian ports
judgment
140
.
The Commission already stated, at recitals 74 to 76 of the Opening decision, that it
could be considered
prima facie
that the Consortium is engaged in an economic
activity and should be considered as an undertaking. The States claim that the
Consortium is not an undertaking, as it does not carry out an economic activity
(Section 5.2.2). In the States’ view, the construction and operation of the Fixed Link
are classic examples of the exercise of public powers, which are not, and ought not to
be, covered by Article 107(1) TFEU.
(289)
(290)
(291)
134
See, to that effect, judgment of the Court of 19 February 2002,
Wouters, Savelbergh and Price
Waterhouse Belastingadviseurs BV
v
Algemene Raad van de Nederlandse Orde van Advocaten,
C-309/99, EU:C:2002:98, paragraph 58.
Judgment of the Court of 17 February 1993,
Christian Poucet
v
Assurances Générales de France and
Caisse Mutuelle Régionale du Languedoc-Roussillon
and
Daniel Pistre
v
Cancave,
Joint Cases
C-159/91 and C-160/91, EU:C:1993:63, paragraph 17.
Judgment of the General Court of 20 September 2019,
Havenbedrijf Antwerpen and Maatschappij van
de Brugse Zeehaven
v
Commission,
T-696/17 EU:T:2019:652, paragraph 75.
Paragraph 125, confirmed by the Court of Justice in its judgment of 24 October 2002,
Aéroports de
Paris
v
Commission,
C-82/01 P, EU:C:2002:617.
Judgment of the Court of Justice of 14 January 2015,
Eventech
v
The Parking Adjudicator,
C-518/13,
EU:C:2015:9, paragraph 42; judgment of the General Court of 15 March 2018,
Naviera Armas
v
Commission,
T-108/16, EU:T:2018:145, paragraph 119.
See also paragraph 202 of the Commission Notice on the notion of State aid as referred to in Article
107(1) of the Treaty on the Functioning of the European Union C/2016/2946, OJ C 262, 19.7.2016, p.
1.
Judgment of the General Court of 20 September 2019,
Havenbedrijf Antwerpen and Maatschappij van
de Brugse Zeehaven
v
Commission,
T-696/17 EU:T:2019:652, paragraphs 98-107.
135
136
137
138
139
140
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(292)
It is true that Article 107(1) TFEU does not apply where States act ‘by exercising
public power’
141
, or where public entities act in their capacity as public authorities
142
.
An entity may be deemed to act by exercising public power, where the activity in
question forms part of the essential functions of the State, or is connected with those
functions by its nature, its aim, and the rules to which is it subject
143
.
The Commission considers that an overall assessment is necessary, and that, to
qualify as acting by exercising public power, the Consortium’s activity should be
connected with the essential functions of the State, by its nature, its aim, and the
rules to which it is subject. Only non-economic activities may fall within the concept
of the exercise of public power
144
.
According to settled case-law
145
, the qualification of economic activity should be
based upon factual elements, namely the provision of goods or services on a given
market. The Consortium, as the owner and operator of the Fixed Link infrastructure,
is active on the market of providing a transport service for remuneration to citizens
and undertakings: the Consortium will charge a fee (toll) from the users of the road
section of the Fixed Link for crossing the Øresund strait; in addition, the Swedish
Transport Administration and the Danish State Rail Administration pay a fee for the
use of the railway infrastructure on the Fixed Link. The Consortium’s revenues from
road and rail are intended to finance the total cost of planning, project design,
construction, maintenance and operation of the Fixed Link, and also the costs of the
construction of the road and rail hinterland connections, through the distribution of
dividends to the parent companies (recital (70)).
It should be noted that the Consortium has not been granted specific public powers in
relation to the construction and operation of the Fixed Link, but it will construct and
operate the infrastructure as an economic operator. The construction and commercial
operation of large infrastructure projects does not, in itself, constitute an exercise of
public powers, and the construction and operation of the Fixed Link is governed by
an economic logic, given that it is financed to a very large extent by user fees
146
.
Indeed, the activities of the Consortium are very different from what, in the past, has
been held to be part of public power activities, such as the army or the police, air
navigation safety and control, maritime traffic control and safety, anti-pollution
surveillance, organisation, financing and enforcement of prison sentences,
Judgment of the Court of Justice of 16 June 1987,
Commission
v
Italy,
118/85, EU:C:1987:283,
paragraphs 7 and 8.
Judgment of the Court of Justice of 4 May 1988,
Bodson,
30/87, EU:C:1988:225, paragraph 18.
See, in particular, judgment of the Court of Justice of 19 January 1994,
SAT Fluggesellschaft mbH
v
Eurocontrol,
C-364/92, EU:C:1994:7, paragraph 30 and judgment of the Court of Justice of 18 March
1997,
Calì & Figli,
C-343/95, EU:C:1997:160, paragraphs 22 and 23.
Judgment of the Court of Justice of 26 March 2009,
SELEX Sistemi Integrati SpA
v
Commission,
C-113/07 P, EU:C:2009:191, paragraph 70.
For example, judgment of the Court of Justice of 16 June 1987,
Commission
v
Italy,
EU:C:1987:283,
paragraph 7.
Judgment of the Court of Justice of 29 October 1980,
Van Landewyck,
Joined Cases 209/78 to 215/78
and 218/78, EU:C:1980:248, paragraph 88; judgment of the Court of Justice of 16 November 1995,
FFSA and Others,
C-244/94, EU:C:1995:392, paragraph 21; judgment of the Court of Justice of 1 July
2008,
MOTOE,
C-49/07, EU:C:2008:376, paragraphs 27 and 28.
(293)
(294)
(295)
141
142
143
144
145
146
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development and revitalisation of public land by public authorities, and the collection
of data to be used for public purposes on the basis of a statutory obligation imposed
on the undertakings concerned to disclose such data
147
.
(296)
There is a market for crossing the Øresund strait, in particular, because the service
was already provided for remuneration by an existing ferry operator, which is a
private undertaking operating under market conditions. Hence, the transport services
provided by the Consortium are in competition with the transport services provided
by ferry operators. The Commission does not accept the States’ argument,
summarised at recital (239), that the Consortium cannot be considered to compete
with the ferry services. As the States admit, the Consortium’s pricing policy can
significantly affect the Complainant’s business. Whether the Consortium was
conceived with the intention of competing with the ferry service or not
148
, it is
offering a service to cross the Øresund strait, which directly affects the competitive
position of the already-established market operators. The Commission, therefore,
concludes that the Consortium, in operating the Fixed Link, is engaged in an
economic activity.
In addition, the Commission notes that an activity that consists of offering goods or
services on a market does not acquire the character of the exercise of public power
solely because a Member State chose to grant a public entity a monopoly to offer the
goods or services in question
149
. In that regard, the Commission recalls that the
question of whether a market exists for certain services may depend on the way those
services are organised in the Member State concerned, and that, due to political
choice or economic developments, the classification of a given activity can change
over time
150
. The mere fact that a public company falls within the competence of a
Minister, however, does not preclude it from being regarded as carrying on an
economic activity
151
. In addition, the mere fact that an entity is established on the
Commission decision of 7 December 2011 on State aid SA.32820 (2011/NN) - United Kingdom - Aid
to Forensic Science Services, OJ C 29, 2.2.2012, p. 4, paragraph 8; judgment of the Court of Justice of
19 January 1994,
SAT Fluggesellschaft mbH
v
Eurocontrol,
C-364/92, EU:C:1994:7, paragraph 27;
judgment of the Court of Justice of 26 March 2009,
Selex Sistemi Integrati v Commission,
C-113/07 P,
EU:C:2009:191, paragraph 71; Commission decision of 16 October 2002 on State aid N 438/02 -
Belgium - Aid to port authorities, OJ C 284, 21.11.2002, p. 2; judgment of the Court of Justice of
18 March 1997,
Calì & Figli,
C-343/95, EU:C:1997:160, paragraph 22; Commission decision of
19 July 2006 on State aid N 140/06 - Lithuania - Allotment of subsidies to the State Enterprises at the
Correction Houses, OJ C 244, 11.10.2006, p. 12; Commission decision of 27 March 2014 on State aid
SA.36346 - Germany - GRW land development scheme for industrial and commercial use, OJ C 141,
9.5.2014, p. 1; judgment of the Court of Justice of 12 July 2012,
Compass-Datenbank GmbH,
C-138/11, EU:C:2012:449, paragraph 40.
See also judgment of the General Court of 20 September 2019,
Havenbedrijf Antwerpen and
Maatschappij van de Brugse Zeehaven
v
Commission,
T-696/17, EU:T:2019:652, paragraph 100, where
the General Court dismissed the claim that the absence of competition meant that an activity could not
be classified as economic.
See, to that effect, judgment of the Court of Justice of 23 April 1991,
Höfner and Elser
v
Macrotron,
C-41/90, EU:C:1991:161, paragraphs 22-23.
Commission Notice on the notion of State aid as referred to in Article 107(1) of the Treaty on the
Functioning of the European Union, C/2016/2946, OJ C 262, 19.7.2016, p. 1, paragraph 13 (and case-
law cited).
Aéroports de Paris
judgment, paragraph 109.
(297)
147
148
149
150
151
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basis of an international agreement does not mean that the activity carried out by that
entity is the exercise of public power; this must be assessed on a case-by-case basis,
in light of the activity carried out by that entity
152
. The Commission considers that
the crucial question is whether, by operating the Fixed Link, the Consortium is
providing a good or a service on a market. The Commission notes that that is clearly
the case, as set out above.
(298)
The Commission notes, further, that, even if it could be found that the Consortium
exercises some powers as a public authority, this does not, in itself, preclude its other
strands of activity from being an economic activity. It follows from settled case-law
that an entity may, in parallel, carry out an economic activity and public power
153
.
In any event, it is clear that the States’ authorities have decided to introduce a market
mechanism, as the Fixed Link was always intended to be operated as a commercially
exploited, toll-funded
154
infrastructure. This goes against the argument that the
activity of the Consortium would be the exercise of public power.
Therefore, the Commission considers that the operation of the Fixed Link constitutes
an economic activity.
In light of the case-law referred to at recital (290), the construction of infrastructure
that is indissociably linked to that economic activity, also constitutes an economic
activity. It is clear from the Intergovernmental Agreement (recital (61)) that the
construction of the Fixed Link cannot be dissociated from its future operation. In
addition, the Consortium Agreement (recital (66)) considers the construction and the
operation of the Fixed Link as one project. The Commission finds, on that basis, that
the construction of the Fixed Link is indissociably linked to its operation. As the
operation of the Fixed Link constitutes economic activity, so, too, does its
construction.
The Commission, therefore, concludes that the Consortium, in carrying out the
construction and operation of the Fixed Link, is engaged in economic activities. As a
result, the Consortium must be considered as an undertaking for the purposes of
Article 107(1) TFEU, with respect to those activities.
State resources and imputability to the States
With regard to the State origin of the advantages resulting from the application of the
measures, the concept of State aid is broader than that of a subsidy. This is because it
embraces not only positive benefits, such as subsidies and capital injections, but also
measures which, in various forms, mitigate the charges which are normally included
See, to that effect, judgment of the Court of Justice of 19 January 1994,
SAT Fluggesellschaft mbH
v
Eurocontrol,
C-364/92, EU:C:1994:7, in particular paragraph 19.
See judgment of the Court of Justice of 24 October 2002,
Aéroports de Paris
v
Commission,
C-82/01 P,
EU:C:2002:617, paragraphs 76 to 78, and, to that effect, judgment of the Court of Justice of 19
December 2012,
Mitteldeutsche Flughafen AG and Flughafen Leipzig-Halle GmbH
v
Commission,
,
C-288/11, EU:C:2012:821, paragraph 43.
In contrast to a service provided free of charge, see judgment of the Court of Justice of 14 January
2015,
Eventech
v
The Parking Adjudicator,
C-518/13, EU:C:2015:9, paragraph 43.
(299)
(300)
(301)
(302)
6.1.2.
(303)
152
153
154
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in the budget of an undertaking and which, therefore, without being subsidies in the
strict sense of the word, are similar in character and have the same effect
155
.
(304)
The Opening decision, at recital 79, preliminarily concluded that the State
guarantees, granted by Denmark and Sweden without the payment of any fee, as well
as the special Danish rules on loss carry-forward and depreciation granted to the
Consortium by Denmark, involve State resources, and are imputable to the States.
This was not disputed by the States or any of the interested parties.
A measure by which public authorities grant certain undertakings favourable tax
treatment, although not involving a positive transfer of funds, places beneficiaries in
a more favourable financial situation than other taxpayers, and constitutes a transfer
of State resources
156
.
Furthermore, the creation of a risk of imposing an additional burden on the State in
the future, by constituting a guarantee on terms that do not correspond to those of the
market, is sufficient to be considered a transfer of State resources
157
. The same is
true, for instance, when guarantees are granted by a Member State, without requiring
the payment of a premium on market terms from the beneficiary of the guarantee.
The Commission, therefore, concludes that the arrangement of the State guarantee
model, obliging the States to guarantee the financial instruments for the financing of
the Fixed Link, without the payment of any fee, involves Danish and Swedish State
resources and that the special Danish rules on loss carry-forward and depreciation
involve Danish State resources. As the State guarantee model was set up by Denmark
and Sweden, it is imputable to the States. Similarly, the special Danish rules on loss
carry-forward and depreciation derive from the Construction Act, which is a
legislative act adopted by Denmark; and are, therefore, imputable to Denmark.
Selective economic advantage
According to settled case-law, in order to determine whether a State measure
constitutes State aid, it is necessary to establish whether the recipient undertaking
receives an economic advantage that it would not have obtained under normal market
(305)
(306)
(307)
6.1.3.
(308)
155
See inter alia judgment of the Court of Justice of 8 November 2001,
Adria-Wien Pipeline GmbH and
Wietersdorfer & Peggauer Zementwerke GmbH
v
Finanzlandesdirektion für Kärnten,
C-143/99,
EU:C:2001:598, paragraph 38; judgment of the Court of Justice of 15 July 2004,
Spain
v
Commission,
C-501/00, EU:C:2004:438, paragraph 90, and the case law cited therein; judgment of the Court of
Justice of 15 December 2005,
Italy
v
Commission,
C-66/02 EU:C:2005:768, paragraph 77; judgment of
the Court of Justice of 10 January 2006,
Ministero dell'Economia e delle Finanze
v
Cassa di Risparmio
di Firenze,
C-222/04, EU:C:2006:8, paragraph 131, and the case law cited therein.
See, for example, judgment of the Court of Justice of 15 March 1994,
Banco Exterior de España,
C-387/92, EU:C:1994:100, paragraph 14; judgment of the Court of Justice of 9 October 2014,
Ministerio de Defensa and Navantia,
EU:C:2014:2262.
Judgment of the Court of Justice of 1 December 1998,
Ecotrade Srl
v
Altiforni e Ferriere di Servola
SpA (AFS),
C-200/97, EU:C:1998:579, paragraph 41; judgment of the Court of Justice of 19 March
2013,
Bouygues and Bouygues Télécom
v
Commission and Others,
Joined Cases C-399/10 P and C-
401/10 P, EU:C:2013:175, paragraphs 137, 138 and 139.
156
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conditions, i.e., in the absence of State intervention
158
. Only the effect of the measure
on the undertaking is relevant; not the cause or the objective of the State
intervention
159
. To assess this, the financial situation of the undertaking following the
measure should be compared with the financial situation in which it would have been
if the measure had not been introduced.
(309)
Furthermore, to fall within the scope of Article 107(1) TFEU, a State measure must
favour ‘certain undertakings or the production of certain goods’. Hence, not all
measures which favour economic operators fall under the notion of aid, but only
those that grant an advantage in a selective way to certain undertakings or categories
of undertakings or to certain economic sectors.
The Commission also notes that a single aid measure may consist of combined
elements, if, having regard to their chronology, purpose, and the circumstances of the
undertaking at the time of their intervention, they are so closely linked that they are
inseparable from one another. In that context, a combination of elements may be
categorised as State aid where the State acts in such a way as to protect one or more
operators already on the market
160
.
6.1.3.1.
(311)
The State guarantee model
(310)
A public guarantee, granted on preferential terms, may grant the borrower an
advantage by enabling it to borrow at an interest rate that would not have been
obtainable on the market without the guarantee
161
. Under Article 12 of the
Intergovernmental Agreement, the States undertook to jointly and severally
guarantee all loans and other financial instruments taken out by the Consortium in
connection with the financing of the Fixed Link. The Consortium is not required to
pay an annual guarantee premium on the outstanding debt covered by the State
guarantee model, as provided for by Additional Protocol to the Intergovernmental
Agreement (recital (85)). The Consortium Agreement recalls that joint and several
State guarantee obligation for the Consortium’s borrowing (recital (90)). The States
have not provided any evidence that the absence of a guarantee premium is in line
with market terms; they do not even argue that such would be the case. Since the
benefit of a guarantee is that the risk associated with the guarantee is carried by the
guarantor, that guarantor would normally be remunerated by an appropriate premium
for such risk-carrying. There is clearly a risk associated with the guarantees for the
financing of the Fixed Link and therefore such guarantees would not be available on
the market without the requirement to pay a premium. In the
Øresund
judgment
162
,
the General Court held that the grant of a guarantee on terms not equivalent to
Judgment of the Court of Justice of 11 July 1996,
Syndicat français de l'Express international (SFEI)
and others
v
La Poste and others,
C-39/94, EU:C:1996:285, paragraph 60; judgment of the Court of
Justice of 29 April 1999,
Spain
v
Commission,
C-342/96, EU:C:1999:210, paragraph 41.
Judgment of the Court of Justice of 2 July 1974,
Italy
v
Commission,
C-173/73, EU:C:1974:71,
paragraph 13.
Judgment of the General Court of 12 November 2013,
MOL Magyar Olaj- és Gázipari Nyrt.
v
Commission,
T-499/10, EU:T:2013:592, paragraph 67.
Judgment of the Court of Justice of 8 December 2011,
Residex Capital
v
Gemeente Rotterdam,
C-275/10, EU:C:2011:814, paragraph 39.
Paragraph 120.
158
159
160
161
162
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market terms, is, as a rule, liable to confer an advantage on the beneficiary. In this
case, the States, moreover, went beyond simply granting a guarantee to the
Consortium on non-market terms, but, in fact, undertook a legal obligation to
guarantee all of the Consortium’s borrowing in connection with the financing of the
Fixed Link, without requiring any compensation for the States undertaking the risks
associated with that obligation. The Commission notes that, as the beneficiary of that
obligation, the Consortium would have enjoyed an immediate advantage, as from
when that obligation was granted, insofar as it had an enforceable right to State
guarantees in respect of all of its borrowing needs in connection with the financing of
the Fixed Link. The Commission finds, therefore, that in setting up a State guarantee
model by incurring an obligation to guarantee the financial instruments for the
financing of the Fixed Link without requiring the payment of a guarantee premium
on market terms, the States conferred an advantage on the Consortium in the form of
lower financing costs.
(312)
According to settled case law, when Member States adopt measures benefiting
specific entities, the identification of an advantage, in principle, allows its selective
nature to be presumed
163
. This is because it is normally easy to conclude that such
measures have a selective character, as they reserve favourable treatment for one or
few undertakings
164
. In the present case, given that the advantage specifically
concerns the Consortium, the State guarantee model constitutes a selective advantage
in favour of the Consortium within the meaning of Article 107(1) TFEU.
6.1.3.2.
(313)
The special Danish rules on loss carry-forward and depreciation
In Denmark, partnerships, such as the Consortium, are treated as transparent entities
for tax purposes. This means that the Danish tax rules only apply to the Danish
partner of the Consortium, A/S Øresund, and not to the Consortium, itself
(recital (118)). In this context, the Commission first must assess whether the
Consortium should be considered as a beneficiary of the special Danish rules on loss
carry-forward and depreciation (see further, recitals (314) to (319)). Second, the
Commission must assess to what extent those rules conferred a selective advantage
on the beneficiary that it would not have obtained under normal taxation rules (see
further, recitals (320) to (347)).
6.1.3.2.1. The beneficiary of the special Danish rules on loss carry-forward and
depreciation
(314)
To establish which entity should be considered as beneficiary of the special Danish
rules on loss carry-forward and depreciation, the Commission notes that, for the
purposes of the application of State aid rules, separate legal entities may be
considered to form one economic unit with regard to an economic activity. That
economic unit is then considered to be the relevant undertaking. In this respect, the
163
Judgment of the General Court of 13 December 2017,
Hellenic Republic
v.
Commission,
T-314/15,
EU:T:2017:903, paragraphs 78 and 79.
Judgment of the Court of Justice of 4 June 2015,
Commission
v
MOL,
C-15/14 P, EU:C:2015:362,
paragraphs 60 et seq.; Opinion of Advocate General Mengozzi of 27 June 2013,
Deutsche Lufthansa,
C-284/12, EU:C:2013:442, paragraph 52.
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Court of Justice considers the existence of a controlling share and other functional,
economic, and organic links to be relevant
165
.
(315)
The Commission considers that, for the purposes of the economic activity of the
Fixed Link, A/S Øresund, insofar it is involved in that economic activity, and the
Consortium form a single undertaking. The Consortium is a partnership between a
limited liability company set up by the Danish State (A/S Øresund) and a limited
liability company set up by the Swedish State (SVEDAB) (recitals (64) and (65)).
A/S Øresund, holding 50 % of its shares, is, together with SVEDAB, liable jointly
and severally against third parties for any obligation which may arise for the
Consortium in connection with its operations; and it nominates four of the eight
board members
166
.
The Commission recalls that the economic activity of the Fixed Link consists in the
planning, project design, construction, maintenance, and operation of the Fixed Link.
The costs of the project design and other preparations for the Fixed Link, as well as
its construction, maintenance, and operation, shall be fully covered by the
Consortium through user charges (recital (69)). That cost of the Fixed Link includes
a cost related to Danish corporate income tax. As described at recital (118), however,
the Consortium, itself, is not subject to taxation, as it is a partnership that is tax
transparent. The special Danish rules on loss carry-forward and depreciation are part
of the Construction Act (and were incorporated in the Sund & Bælt Act in 2005), and
apply to the taxable income of A/S Øresund. Due to A/S Øresund’s 50 % ownership
of the Consortium, this includes 50 % of the taxable income deriving from the
activities of the Consortium. The financial model (i.e. the entirety of financial flows,
including all costs and revenues) of the economic activity of the Fixed Link, on the
Danish side, therefore, involves not only the Consortium, but also A/S Øresund,
insofar as A/S Øresund is responsible for the payment of taxes relating to that
economic activity.
The Commission considers that the payment of those taxes cannot be separated from
the economic activity of the Fixed Link. This is because the entire cost of the Fixed
Link (and costs of the road and rail hinterland connections) is to be financed by user
charges, collected by the Consortium. Those charges constitute income that is subject
to corporate income tax – payable at the level of A/S Øresund – on the basis of the
Danish Corporate Income Tax Act. As such, while the charges that the Consortium
levies for using the Fixed Link constitute revenue, they also attract a cost in the form
of the related tax payments. In practice, the organisational and financial setup
provides for a payment of dividends by the Consortium to the parent companies,
which will not only finance the cost of the hinterland connections, but also the tax
liabilities related to the Fixed Link. Therefore, any reduction in the amount of tax
liability connected to the activity of the Fixed Link is of benefit to the undertaking
engaged in that economic activity. As a consequence, it benefits the Consortium as it
reduces a financial burden that the Consortium would otherwise have to bear, given
Judgment of the Court of Justice of 16 December 2010,
AceaElectrabel Produzione SpA
v
Commission,
C-480/09 P, EU:C:2010:787, paragraphs 47 to 55; judgment of the Court of Justice of 10 January 2006,
Cassa di Risparmio di Firenze SpA and Others,
C-222/04, EU:C:2006:8, paragraph 112.
Sections 3.1, 3.2, and 8.2 of the Consortium Agreement.
(316)
(317)
165
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that it is the Consortium’s income stream that is used to discharge A/S Øresund’s tax
liability stemming from the income generated by the Fixed Link.
(318)
Moreover, the Danish authorities have observed (recital (269)), that the total amount
of aid (gross grant equivalent) granted through the State guarantee model is reduced
to the extent that the special Danish rules on loss carry-forward and depreciation lead
to a lower debt burden for the Consortium. It follows that, conversely, had A/S
Øresund, in light of its ownership of 50 % of the Consortium, not been granted those
special rules, the Consortium would have had a higher debt burden, and thus,
according to the logic followed by the Danish authorities, a larger amount of aid
would have been granted through the State guarantee model. This confirms the
Commission’s view that the Consortium and A/S Øresund should be considered to be
a single undertaking for the purposes of the economic activity of the Fixed Link and
that it is that single undertaking that should be considered as a beneficiary of the
special Danish rules on loss carry-forward and depreciation, and, that, as a
consequence, the Consortium is also a beneficiary.
In light of the considerations set out at recitals (314) to (318), the Commission
considers that, should the special Danish rules on loss carry-forward and depreciation
create a selective advantage, the Consortium would be a beneficiary of that
advantage.
6.1.3.2.2. Selective advantage
(320)
Having established that the single undertaking, and therefore, also the Consortium,
would be a beneficiary of an advantage created by the special Danish rules on loss
carry-forward and depreciation (recital (319)), the Commission must establish
whether those rules create such an advantage. To do so, given that the Consortium is
transparent for Danish tax purposes (recital (118)), and given that A/S Øresund is
responsible for the payment of the taxes relating to 50 % of the economic activity of
the Fixed Link (recital (120)), the Commission must examine the tax liabilities of
A/S Øresund, resulting from the activities of the Consortium. To determine whether
the special Danish rules on loss carry-forward and depreciation create such an
advantage, the tax liabilities under those rules must be compared with the tax
liabilities to which A/S Øresund would have been subject under the normal taxation
rules, i.e. in the absence of those special rules.
For a measure to fall within the scope of Article 107(1) TFEU, it must, within the
context of a particular legal system, favour ‘certain undertakings or the production of
certain goods’ over others which are in a legal and factual situation that is
comparable, in light of the objective pursued by the system of reference
167
(this is
usually referred to as the ‘three-step test’ and further explained in the next recital).
However, as set out at recital (312), when Member States adopt measures benefiting
specific entities, the identification of an advantage, in principle, allows its selective
See, to that effect, judgment of the Court of Justice of 5 December 2023,
Engie
v
Commission,
joined
cases C-451/21 P and C-454/21 P, EU:C:2023:948, paragraph 106 and judgment of the Court of Justice
of 2 February 2023,
Spain, Lico and Others
v
Commission,
joined cases C-649/20 P, C-658/20 P and
C-662/20 P, EU:C:2023:60, paragraph 46 and the case law cited therein; see also judgment of the Court
of Justice of 21 December 2016,
Commission
v
World Duty Free Group and Others,
C-20/15 P and
C-21/15 P, EU:C:2016:981, paragraph 54 and the case law cited therein.
(319)
(321)
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nature to be presumed. In the present case, given that the special Danish rules on loss
carry-forward and depreciation concern specifically A/S Øresund and the
Consortium, to the extent those rules constitute an advantage, that advantage is
selective.
(322)
Nevertheless, in order to determine whether the single undertaking enjoyed a
selective advantage by virtue of the special Danish rules on loss carry-forward and
depreciation, the Commission assessed those measures under the standard three-step
analysis established by the Union Courts
168
. First, the system of reference must be
identified, that is, the ‘normal’ taxation rules
169
. Second, it must be determined
whether a given measure constitutes a derogation from that system, insofar as it
differentiates between economic operators that, in light of the objective intrinsic to
the system, are in a comparable factual and legal situation. If the measure constitutes
a derogation from the system of reference, and, thus, is prima facie selective, it needs
to be established, in the third step of the test, whether the derogation is justified by
the nature or the general scheme of the system. In this context, it is for the Member
State to demonstrate that the differentiated tax treatment derives directly from the
basic or guiding principles of that system
170
.
6.1.3.2.2.1. Selective advantage: special Danish rules on loss carry-
forward
(323)
As recalled at recital (322), in order to classify a national tax measure as ‘selective’,
the Commission must begin by identifying the system of reference, that is the
‘normal’ tax system applicable in the Member State concerned. The determination of
the system of reference is of particular importance in the case of tax measures, since
the existence of an economic advantage for the purposes of Article 107(1) TFEU
may be established only when compared with ‘normal’ taxation. Thus, determination
of the set of undertakings that are in a comparable factual and legal situation depends
on the prior definition of the legal regime in light of whose objective it is necessary,
where applicable, to examine whether the factual and legal situation of the
undertakings favoured by the measure in question is comparable with that of those
which are not.
As noted at recital (118), Section 1 of the Danish Corporate Income Tax Act lists the
legal entities that are subject to Danish corporate income tax. Limited liability
companies, such as A/S Øresund, are included in that list. In addition, as noted at
recitals (135) and (136), the relevant loss carry-forward rules can be found in the
Danish Tax Assessment Act (Section 15) for the periods between 1991 and 2012,
and in the Danish Corporate Income Tax Act (Section 12) for the following periods
(recitals (138) and (139)). Those rules determine the conditions and limits for the
Judgment of the Court of Justice of 8 September 2011,
Commission
v
Netherlands,
C-279/08 P,
EU:C:2011:551, paragraph 62; judgment of the Court of Justice of 8 November 2001,
Adria-Wien
Pipeline,
C-143/99, EU:C:2001:598.
Judgment of the Court of Justice of 28 June 2018,
Andres
v
Commission,
C-203/16 P, EU:C:2018:505,
paragraph 88.
Judgment of the Court of Justice of 8 September 2011,
Paint Graphos and others,
Joined Cases
C-78/08 to C-80/08, EU:C:2011:550, paragraph 49 et seq.; judgment of the Court of Justice of 29 April
2004,
GIL Insurance,
C-308/01, EU: C:2004:252.
(324)
168
169
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carry-forward of loss for tax purposes for legal entities subject to Danish corporate
income tax (including limited liability companies). As already explained at
recital (117), the Danish Tax Assessment Act provides rules for how the tax laws are
applied to both individuals and companies, and the Danish Corporate Income Tax
Act determines the entities subject to corporate income tax, the rate and other rules
relevant for the taxation of companies.
1991-2001 LCF
(325)
First, as noted by Denmark (recital (267)), for the 1991-2001 LCF, the generally
applicable rule on the carry-forward of losses was found in Section 15 of the Danish
Tax Assessment Act. That act includes income tax rules for both individuals and
companies, and forms part of the corporate income tax system (together with the
relevant income tax acts, in particular, the Danish Corporate Income Tax Act). As
such, the Danish Corporate Income Tax Act determines which entities must pay
corporate income tax, and the Danish Tax Assessment Act provides the parameters
by which the amount they need to pay is determined. One of the factors that
determines that amount is whether the taxable entity has any carried forward losses
that it may use to reduce its taxable base. Section 15 of the Danish Tax Assessment
Act established that, for the 1991-2001 LCF period, losses could be carried forward
in the taxable income of the taxpayer for the five subsequent years (recital (135)).
The limitation of five years was an integral part of the generally applicable loss
carry-forward rule (a general measure, applicable without distinction to all economic
operators), rather than an exception to a broader legislative framework
171
. In this
regard, it must be noted that that five-year limitation is inseparable from the general
corporate income tax system, which provides for the carry-forward of tax losses, as
those rules are relevant to determine the tax base. The Commission finds that the
relevant system of reference for the assessment of the 1991-2001 LCF is the Danish
corporate income tax system, including, in particular, Section 1 of the Danish
Corporate Income Tax Act and Section 15 of the Danish Tax Assessment Act, which
provided that, for the purposes of assessing the amount of corporate income tax
payable by a legal entity subject to that tax (including limited liability companies),
losses could be carried forward for a maximum period of five years. The tax
provisions included in the Construction Act, including the 1991-2001 LCF, do not
form part of that system, as they apply to one particular project, only. The relevant
objective of the Danish corporate income tax system is to establish a general system
of taxation for companies on their profits, and, more specifically, to provide rules
relating to the determination of the tax base, including rules allowing carry-forward
of losses (and depreciation of assets) for all companies, without distinction. It is,
therefore, against the benchmark of both Section 1 of the Danish Corporate Income
Tax Act and Section 15 of the Danish Tax Assessment Act, and, in light of the above
objective, that the 1991-2001 LCF must be assessed under the second step of the
three-step analysis (recitals (326) and (327)).
Second, the Commission notes that, under Section 11 of the Construction Act, A/S
Øresund could carry-forward losses for 15 tax years or, for losses incurred before the
Fixed Link was put into service, for 30 tax years. This also applied to 50 % of the
See, for example, judgment of the Court of Justice of 28 June 2018,
Andres
v
Commission,
C-203/16 P,
EU:C:2018:505, paragraphs 103 and 104.
(326)
171
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losses of the Consortium, in light of A/S Øresund’s 50 % ownership. If A/S Øresund
had been subject to the normal rules under the system of reference (including Section
15 of the Danish Tax Assessment Act), its losses would have expired earlier, and
those expired losses would have no longer been available to offset profits in A/S
Øresund’s tax returns
172
. Accordingly, Section 11 of the Construction Act constituted
a derogation to the system of reference, conferring an advantage to A/S Øresund, as
compared to other legal entities (including limited liability companies) subject to
Danish corporate income tax, as it could carry-forward its losses to reduce its tax
burden for a longer period than would have been available to those entities. As noted
by the Commission at recitals (314) to (319), this also benefits the Consortium,
insofar as a reduction in A/S Øresund’s tax burden results in a reduction in the
Consortium’s financial burden.
(327)
The Commission finds, moreover, that A/S Øresund, which, for the purposes of the
application of the special Danish rules on loss carry-forward and depreciation, is a
single undertaking with the Consortium (recital (315)), should be considered as being
in the same factual and legal situation as other legal entities (including limited
liability companies) subject to Danish corporate income tax, in light of the objectives
intrinsic to the system of reference. As noted at recital (325), the relevant objective
of that system of reference is to establish a general system of taxation for companies
on their profits, and, more specifically, to provide rules relating to the determination
of the tax base, including rules allowing carry-forward of losses (and depreciation of
assets) for all companies, without distinction; this is regardless of whether or not they
engage in certain projects. Denmark confirmed that the special Danish rules on loss
carry-forward and depreciation were created for A/S Øresund, and apply in its
capacity as partner in the Consortium (recital (233)). The preparatory notes to the
Construction Act indicate that the 1991-2001 LCF was put in place by analogy to the
rule applicable to the Great Belt bridge. The Danish authorities had explained, during
the preliminary investigation phase, that this was because of the extraordinary nature
of the construction project characterised by considerable costs over a prolonged
period of time, still coupled with reasonable prospects of long-term viability. The
Commission notes, however, that the Danish tax system (including the normal loss
carry-forward rule under Section 15 of the Danish Tax Assessment Act) does not
distinguish between entities according to the size of the projects they undertake.
While it is true that A/S Øresund is responsible for a large investment, it is not
precluded that other limited liability companies could undertake similarly significant
investments, or investments for which losses can be expected to extend beyond five
years. The scope of the Fixed Link project, therefore, does not alter the fact that, in
light of the objective of taxing profits, A/S Øresund is in the same legal and factual
position as other legal entities (including limited liability companies) subject to
Danish corporate income tax. In other words, the fact that A/S Øresund – including
via its 50 % ownership of the Consortium – is responsible for a large infrastructure
investment, does not differentiate its position, legally or factually, for the purposes of
the system of reference, from other limited liability companies subject to Danish
In practice, it is Sund & Bælt that files the corporate income tax returns for its group members. In
addition to the separate tax returns filed for its group members, Sund & Bælt files a consolidated
corporate income tax return for the group. For the ease of reading and in the context of this decision, the
Commission referred to the tax returns of A/S Øresund and to the submission of the tax returns by A/S
Øresund.
172
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corporate income tax. Therefore, the Commission finds that the 1991-2001 LCF as it
applied to A/S Øresund clearly derogated from the general system applicable in
Denmark, as it differentiated between economic operators that are in a comparable
factual and legal situation in light of the objective pursued by the tax system
concerned.
(328)
Third, the Commission finds that the derogation noted at recital (327) is not justified
by the nature or the general scheme of the system. The Commission recalls that a
measure, which is prima facie selective, may still be found to be non-selective if it is
justified by the nature or general scheme of that system. This is the case where a
measure derives directly from the intrinsic basic or guiding principles of the system
of reference, or where it is the result of inherent mechanisms necessary for the
functioning and effectiveness of the system
173
. External policy objectives, which are
not inherent to the general tax system, cannot be relied upon for that purpose
174
. It is
up to the Member State concerned to demonstrate that a measure, which is, at first
sight, selective, is justified by the nature or general scheme of its tax system
175
.
The Commission notes that the Danish authorities had argued, in the course of the
preliminary investigation, that the special Danish rules on loss carry-forward and
depreciation can be regarded as justified by the logic of the system due to the
extraordinary character of the entire Fixed Link project in terms of its size and
purpose, making it incomparable to any other infrastructure project that has been
subject to Danish corporate income tax. In that regard, the Commission recalls that
the objective of the system of reference is to establish a general system of taxation
for companies on their profits, and, more specifically, to provide rules relating to the
determination of the tax base, including rules allowing carry-forward of losses for all
companies, without distinction (recital (325)). As indicated at recital (327), the
system of reference does not distinguish between entities according to the size of the
projects they undertake, and it is not precluded that other limited liability companies
could undertake similarly significant investments, or investments for which losses
can be expected to extend beyond five years. In those circumstances, the
Commission does not consider that the character of the Fixed Link project would
justify a different treatment for A/S Øresund, in view of the nature and general
scheme of that system. In other words, the Commission does not consider that such
different treatment would be consistent, necessary, and proportionate in light of the
guiding principles of the Danish tax system. At recital 90 of the Opening decision,
Judgment of the Court of Justice of 8 September 2011,
Paint Graphos and others,
Joined Cases
C-78/08 to C-80/08, EU:C:2011:550, paragraph 69.
Judgment of the Court of Justice of 8 September 2011,
Paint Graphos and others,
Joined Cases
C-78/08 to C-80/08, EU:C:2011:550, paragraphs 69 and 70; judgment of the Court of Justice of
6 September 2006,
Portugal
v
Commission,
C-88/03, EU:C:2006:511, paragraph 81; judgment of the
Court of Justice of 8 September 2011,
Commission
v
Netherlands,
C-279/08 P, EU:C:2011:551;
judgment of the Court of Justice of 22 December 2008,
British Aggregates
v
Commission,
C-487/06 P,
EU:C:2008:757; judgment of the Court of Justice of 18 July 2013,
P Oy,
C-6/12, EU:C:2013:525,
paragraphs 27 et seq.
Judgment of the Court of Justice of 15 November 2011,
Commission and Spain
v
Government of
Gibraltar and United Kingdom,
Joined Cases C-106/09 P and C-107/09 P, EU:C:2011:732, paragraph
146; judgment of the Court of Justice of 29 April 2004,
Netherlands
v
Commission,
C-159/01,
EU:C:2004:246, paragraph 43; judgment of the Court of Justice of 6 September 2006,
Portugal
v
Commission,
C-88/03, EU:C:2006:511.
(329)
173
174
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the Commission noted that the Danish authorities had not sufficiently demonstrated
why, and to what extent, the size and the purpose of a project would be sufficient to
justify different tax treatment. Following the adoption of the Opening decision, the
Danish authorities did not bring any new evidence to the attention of the Commission
that would alter the Commission’s view, and so did not discharge the burden of proof
of the third step
176
. The Commission, therefore, concludes that the measure does not
constitute a justified derogation to the application of the system of reference, directly
resulting from the basic or guiding principles of that tax system.
(330)
The Commission, therefore, finds that the 1991-2001 LCF resulted in a selective
advantage to A/S Øresund, connected to the economic activity of the Fixed Link. As
noted at recital (319), the Consortium would be the beneficiary of any selective
advantage created by the special Danish rules on loss carry-forward and depreciation,
in view of the fact that both A/S Øresund and the Consortium form a single
undertaking for the purpose of the economic activity of the Fixed Link. Therefore,
the Commission concludes that the 1991-2001 LCF resulted in a selective advantage
to the Consortium.
2002-2012 LCF
(331)
For the 2002-2012 LCF, the Commission recalls that, as noted at recital (136), the
Danish Tax Assessment Act (Section 15) was amended on 21 May 2002, and no
longer imposed any limitation on the possibility for legal entities (including limited
liability companies) subject to Danish corporate income tax to carry-forward their
losses. The Commission does not consider that that specific legislative amendment
impacted either (i) the scope of the system of reference for the 2002-2012 LCF, as
compared to the 1991-2001 LCF, or (ii) the objective of that system of reference.
The Commission, therefore, finds that, for the 2002-2012 LCF period, the system of
reference provided that legal entities (including limited liability companies) subject
to Danish corporate income tax were entitled to carry-forward their losses, without
any limitation with respect to the period within which losses could be carried
forward. The Commission, therefore, finds that the relevant system of reference for
the assessment of the 2002-2012 LCF is the Danish corporate income tax system,
including, in particular, Section 1 of the Danish Corporate Income Tax Act and
Section 15 of the Danish Tax Assessment Act, which provided that, for the purposes
of assessing the amount of corporate income tax payable by a legal entity subject to
that tax (including limited liability companies) losses could be carried forward
without time limitation.
The Commission notes that, similar to the Danish Tax Assessment Act, the
Construction Act was amended to remove the limitation of 15 years that had been
applicable to A/S Øresund according to the 1991-2001 LCF. In those circumstances,
for losses incurred as from the tax year 2002, A/S Øresund was subject to the same
rule as was present in the generally applicable rules (i.e. no limitation in time to
carry-forward losses). In other words, A/S Øresund was not subject to a derogation
from the system of reference.
(332)
176
Judgment of the Court of Justice of 8 September 2011,
Paint Graphos and others,
Joined Cases
C-78/08 to C-80/08, EU:C:2011:550, paragraph 65.
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(333)
Consequently, the Commission concludes that the 2002-2012 LCF did not result in a
selective advantage for A/S Øresund. As a result, the 2002-2012 LCF did not, either,
result in a selective advantage for the Consortium. Therefore, the 2002-2012 LCF did
not constitute State aid to A/S Øresund or the Consortium.
2013-2015 LCF
(334)
For the 2013-2015 LCF period, the generally applicable loss carry-forward rule is
found in Section 12 of the Danish Corporate Income Tax Act. As noted at
recital (138), Act No 591 of 18 June 2012, Section 15 of the Danish Tax Assessment
Act was repealed. At the same time, Act No 591 of 18 June 2012 added Section 12 to
the Danish Corporate Income Tax Act, which introduced a new limitation on the
utilisation of losses carried-forward, which applied to tax years starting on or after
1 July 2012. Under those changes, legal entities (including limited liability
companies) subject to Danish corporate income tax could carry-forward losses for an
unlimited period. However, only a loss amounting to DKK 7 500 000
(EUR 1 005 311) plus, if an additional loss remained, an amount corresponding to a
maximum of 60 % of the taxable income in excess of DKK 7 500 000
(EUR 1 005 311), could be deducted in a given tax year (recital (139)). That
limitation was an integral part of the generally applicable loss carry-forward rule,
rather than an exception to a broader legislative framework. The Commission,
therefore, finds that the relevant system of reference for the assessment of the
2013-2015 LCF is the Danish corporate income tax system, including, in particular,
Sections 1 and 12 of the Danish Corporate Income Tax Act, which provided that, for
the purposes of assessing the amount of corporate income tax payable by a legal
entity (including limited liability companies) subject to that tax, losses could be
carried forward without limitation in time, but could only be utilised to offset profits
subject to the limitations as set out in Section 12. As already explained at
recital (325), the objective of the Danish corporate income tax system is to establish
a general system of taxation for companies on their profits, and, more specifically, to
provide rules relating to the determination of the tax base, including rules allowing
carry-forward of losses and deprecation of assets (for all companies, without
distinction).
The Commission notes that, prior to the amendment to the Sund & Bælt Act of
4 May 2015 (recital (134)), the limitations in terms of the amount of losses that could
be utilised that applied to legal entities subject to Danish corporate income tax
(including limited liability companies) by virtue of the system of reference did not
apply to A/S Øresund. Therefore, in relation to the tax years 2013, 2014, and 2015,
A/S Øresund could offset its entire profit base by utilising losses carried forward,
which it would not be able to do if it were subject to the normal rules, under the
system of reference. As noted at recital (327), A/S Øresund is in a similar factual and
legal position to other limited liability companies that are subject to Danish corporate
income tax. The Commission, therefore, considers that, for the 2013-2015 LCF, A/S
Øresund enjoyed a derogation from the normal taxation rules, which placed it in a
more advantageous position than other undertakings in a similar legal and factual
situation as regards the objective of the system of reference. In that regard, the
Commission notes that, unlike for the 2002-2012 LCF, no amendment was made to
the Sund & Bælt Act to reflect the amendment to the Danish Corporate Income Tax
Act. Therefore, by declining to make such an amendment, the Danish authorities
allowed A/S Øresund to enjoy a more advantageous position than other limited
(335)
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liability companies subject to Danish corporate income tax. The combination of the
amendment to the Danish Corporate Income Tax Act, and the absence of a
corresponding amendment to the Sund & Bælt Act, therefore, must be considered as
constituting a derogation to the system of reference, conferring an advantage on A/S
Øresund as compared to other legal entities (including limited liability companies)
subject to Danish corporate income tax, as it could use its losses to reduce its tax
liability, without the limitations that applied to those other entities. Those other
entities were in a similar legal and factual situation to A/S Øresund, in light of the tax
system of reference, which had the objective of setting up a general system of
taxation for companies and their profits.
(336)
As noted at recital (329), the Danish authorities had argued, during the course of the
preliminary investigation, that the special Danish rules on loss carry-forward and
depreciation can be regarded as justified by the logic of the system of reference due
to the extraordinary character of the Fixed Link project in terms of its size and
purpose, making it incomparable to any other project subject to Danish corporate
income tax. As noted at recital (329), the Commission does not consider that the
character of the Fixed Link project would justify a different treatment for A/S
Øresund, in view of the nature and general scheme of the system of reference.
Following the Opening decision, the Danish authorities did not submit any further
evidence that would alter the Commission’s view. The Commission, therefore,
concludes that the 2013-2015 LCF does not constitute a justified derogation to the
application of the system of reference, directly resulting from the basic or guiding
principles of the Danish corporate income tax system.
The Commission, therefore, finds that the 2013-2015 LCF resulted in a selective
advantage to A/S Øresund. Since the Consortium and A/S Øresund form a single
undertaking for the purpose of the economic activity of the Fixed Link
(recital (315)), the single undertaking is a beneficiary of the selective advantage
created by the 2013-2015 LCF, and, as a consequence, the 2013-2015 LCF resulted
in a selective advantage to the Consortium.
The Commission recalls that the special Danish rules on loss carry-forward were
repealed with effect from 1 January 2016, following which A/S Øresund has been
subject to the normal Danish corporate income tax system (recital (134)). The
Commission, therefore, notes that no further selective advantage in favour of A/S
Øresund or the Consortium, in respect of the rules on loss carry-forward, has been in
place since that date.
6.1.3.2.2.2. Selective advantage: special Danish rules on depreciation
(339)
As noted at recital (118), Section 1 of the Danish Corporate Income Tax Act lists the
legal entities that are subject to Danish corporate income tax. Limited liability
companies, such as A/S Øresund, are included in that list. Denmark noted that, for
the entire period under assessment, the normal rules for tax depreciation are found in
the Danish Tax Depreciation Act (recital (268)), which sets the maximum
depreciation rates, the depreciation methods, and the possible limitations for the
different categories of depreciable assets, for tax purposes, by entities subject to
Danish corporate income tax. As such, the Danish Corporate Income Tax Act
determines which entities must pay corporate income tax, and the Danish Tax
(337)
(338)
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Depreciation Act sets the rates and thresholds according to which such entities may
depreciate their assets, in order to offset that depreciation against their taxable base.
1991-1998 DEP
(340)
For the 1991-1998 period, Section 22 of the Danish Tax Depreciation Act
determined that the normal depreciation rate for buildings and installations was, for
the period up to and including the tax year 1998
177
, 6 % on a straight-line basis until
reaching 60 % of the acquisition costs, and, thereafter, limited to 2 % of the
acquisition cost, annually (recital (144)). The Commission finds that the system of
reference for the 1991-1998 DEP is the Danish corporate income tax system,
including, in particular, Section 1 of the Danish Corporate Income Tax Act,
combined with the generally applicable rules of the Danish Tax Depreciation Act,
which provides for the rates, methods, and possible limitations for the depreciation of
fixed assets. With regard to buildings and installations, that system of reference
provided, during the relevant period, for depreciation at a rate of 6 % (with a
limitation to 2 %, after the cumulated depreciation had reached 60 %). As already
explained at recital (325), the relevant objective of the Danish corporate income tax
system is to establish a general system of taxation for companies on their profits,
and, more specifically, to provide rules relating to the determination of the tax base,
including rules allowing carry forward of losses and depreciation of assets, for all
companies, without distinction. The system of reference, therefore, provided that
buildings and installations could be depreciated for tax purposes at a rate of up to
6 % (with the above-noted limitation). Other types of assets had higher maximum
depreciation rates in that system of reference, in accordance with the Danish Tax
Depreciation Act.
As explained at recital (143), in the Construction Act, the depreciation rate for A/S
Øresund was set at 6 % / 2 % of the initial acquisition costs, which meant that a
single general rule on depreciation was applied to all assets of A/S Øresund,
including its 50 % share on the assets of the Consortium. According to the
preparatory notes to the Construction Act, that rate corresponded to comparable
provisions applicable to buildings and installations under the Danish Tax
Depreciation Act, in force at the time. Denmark explained that the rule applicable to
A/S Øresund was to be considered as a practical rule, allowing a uniform regime for
all assets that was originally, if anything, detrimental to A/S Øresund, as the least
favourable rate of depreciation was applied to the entire project (other items, such as
machinery, could normally be depreciated at a higher rate than at 6 % / 2 %, but for
A/S Øresund, a flat rate applied) (recital (268)). As a result of the provisions in the
Construction Act, therefore, A/S Øresund could apply a single deprecation rule but
could, for none of the asset categories, depreciate at a faster rate than other legal
entities subject to Danish corporate income tax.
The Commission, therefore, finds, that the 1991-1998 DEP did not constitute a
derogation capable of resulting in a selective advantage to A/S Øresund, or, by
extension, the Consortium, as compared to the ‘normal’ taxation set out in the system
of reference. Therefore, the 1991-1998 DEP did not constitute State aid to A/S
Øresund or to the Consortium.
At least as from 1991 - the period before is not relevant for this assessment.
(341)
(342)
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1999-2007 DEP and 2008-2015 DEP
(343)
The Commission notes that, on 26 June 1998, the Danish Tax Depreciation Act was
amended, such that, as from the tax year 1999, the normal depreciation rate for
buildings and installations decreased to a maximum of 5 % (Section 17 of the Danish
Tax Depreciation Act). At the same time, the rule according to which a 2 %
depreciation rate applied after ten years was abolished. On 6 June 2007, the Danish
Tax Depreciation Act was amended further, such that, as from the tax year 2008, the
normal depreciation rate for buildings and installations decreased to maximum 4 %
(recital (145)). The Commission finds that the system of reference for the 1999-2007
DEP is the Danish corporate income tax system, including, in particular, Section 1 of
the Danish Corporate Income Tax Act, combined with the generally applicable rules
of the Danish Tax Depreciation Act, which provides for the rates, methods, and
possible limitations for the depreciation of fixed assets. Those rules provided that, for
the purposes of assessing the amount of corporate income tax payable by a legal
entity subject to that tax (including limited liability companies), buildings and
installations could be depreciated at a rate of 5 % for the 1999-2007 DEP period, and
for the 2008-2015 DEP period at a rate of 4 %. The Commission does not consider
that the legislative amendments of 26 June 1998 and 6 June 2007 impacted the
objective of that framework, as compared to the 1991-1998 DEP period.
Second, those changes were not reflected in the Construction Act (or, later, the Sund
& Bælt Act), which maintained the rate of 6 % / 2 % on the entire asset base. Inthat
context, the Commission first analysed the effect of the 2 % rate applicable to A/S
Øresund, once the accumulated depreciation reaches 60 % and the effect of the non-
differentiated deprecation of the entire asset base. On the first point, the Commission
notes that, for the entire period from the establishment of A/S Øresund and the
Consortium, until the tax year 2016, the 2 % rate was not of any practical relevance,
since the overall amount of the Consortium’s assets that could be depreciated by A/S
Øresund had not yet reached 60 % (recital (271)). On the second point, the
Commission notes that the 6 % depreciation rate applied to the Consortium’s entire
asset base that was subject to Danish tax rules (that is, the 50 % owned by A/S
Øresund), without differentiating between ‘buildings and installations’ and other
assets that might potentially have a more favourable depreciation regime in the
Danish Tax Depreciation Act. In that context, the Danish authorities, in particular,
referred to railroad installations, such a tracks, signals and overhead cables
(recital (144) and footnote 79), but also noted that the effect of applying a faster rate
of depreciation on those assets had never been examined or estimated in detail. The
Commission considers that, even if more favourable depreciation regimes on certain
assets were not applicable to A/S Øresund, and therefore, to its depreciation of those
specific assets, for the large majority of its assets (the project consisting of,
essentially, the construction of a bridge and a tunnel), A/S Øresund was allowed to
depreciate at a higher rate than it would have been able to under normal taxation
rules. A higher rate of depreciation can lead to the faster depreciation of an asset,
which allows the reduction of the tax base to occur more intensely in the early years
of an asset’s life; the fiscal effect of this over the total lifespan of the asset, therefore,
could be comparable to a free loan. The Commission notes, in this context, that it is
only relevant to consider the period until the tax year 2016, since, as from that year,
A/S Øresund was subject to the normal rules. By declining to amend the
Construction Act, or the Sund & Bælt Act, to impose a similar limitation on the
maximum rate of depreciation for A/S Øresund as under the normal rules, the Danish
(344)
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authorities allowed it to enjoy an advantageous position over other legal entities
subject to Danish corporate income tax. The combination of the amendments to the
Danish Tax Depreciation Act, and the absence of corresponding amendments to the
Construction Act or the Sund & Bælt Act, therefore, must be considered as
constituting a measure in favour of A/S Øresund. The Commission considers that
A/S Øresund enjoyed a derogation from the system of reference, as, for the reasons
explained at recital (327), the 1999-2007 DEP and 2008-2015 DEP differentiated
between economic operators that are in a comparable factual and legal situation in
light of the objective of the system of reference.
(345)
As noted at recital (329), the Danish authorities had argued, during the course of the
preliminary investigation, that the special Danish rules on loss carry-forward and
depreciation can be regarded as justified by the logic of the system of reference, due
to the extraordinary character of the Fixed Link project in terms of its size and
purpose, making it incomparable to any other project subject to Danish corporate
income tax. As noted at recital (329), the Commission does not consider that the
character of the Fixed Link project would justify a different treatment for A/S
Øresund, in view of the nature and general scheme of the system of reference.
Following the Opening decision, the Danish authorities did not submit any further
evidence that would alter the Commission’s view. The Commission, therefore,
concludes that the 2013-2015 LCF does not constitute a justified derogation to the
application of the system of reference, directly resulting from the basic or guiding
principles of the Danish corporate income tax system.
The Commission, therefore, concludes that the 1999-2007 DEP and the 2008-2015
DEP resulted in a selective advantage to A/S Øresund. As noted at recital (319), the
Consortium would be a beneficiary of any selective advantage created by the special
Danish rules on loss carry-forward and depreciation, in view of the fact that both A/S
Øresund and the Consortium form a single undertaking for the purpose of the
economic activity of the Fixed Link. Therefore, the Commission concludes that the
1999-2007 DEP and the 2008-2015 DEP resulted in a selective advantage to the
Consortium.
The Commission recalls that the special Danish rules on depreciation were repealed
with effect from 1 January 2016, following which A/S Øresund has been subject to
the normal Danish corporate income tax system (recital (134)). The Commission,
therefore, notes that no further selective advantage in favour of A/S Øresund or the
Consortium, in respect of the rules on depreciation, has been in place since that date.
Distortion of competition and effect on trade between the Member States
Aid granted by a Member State that strengthens the position of an undertaking as
compared to other undertakings competing in intra-Union trade must be regarded as
affecting trade between Member States
178
. A measure granted by the State is
(346)
(347)
6.1.4.
(348)
178
Judgment of the Court of Justice of 14 January 2015,
Eventech
v
The Parking Adjudicator,
C-518/13,
EU:C:2015:9, paragraph 66; judgment of the Court of Justice of 8 May 2013,
Libert and others,
Joined
Cases C-197/11 and C-203/11, EU:C:2013:288, paragraph 77; judgment of the General Court of 4 April
2001,
Friulia Venezia Giulia,
T-288/97, EU:T:2001:115, paragraph 41.
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considered to distort or threaten to distort competition when it is liable to improve
the competitive position of the recipient, compared to its competitors.
(349)
At recital 97 of the Opening decision, the Commission preliminarily concluded that,
without it being necessary to decide whether the measures are liable to distort
competition and affect trade between Member States on the market for construction
and operation of (cross-border) bridges, it is clear that the grant of a selective
advantage may strengthen the position of the Consortium on the market for transport
services to cross the Øresund strait, compared to other undertakings, such as, in
particular, ferry operators.
The Consortium is active on the market for the construction and operation
179
of
(cross border) bridges and on the market for transport services to cross the Øresund
strait. On the latter, the Consortium competes in trade between Member States with
undertakings providing alternative transport services, ferry services, in particular.
It is clear from the preparatory notes to the Construction Act that the traffic on the
Fixed Link would consist, in addition to newly generated traffic, of the existing
traffic on the southern ferry routes on the Øresund, the shift of traffic from other
ferry routes in the Øresund, as well as from the ferry routes over the Kattegat and the
Baltic Sea. In addition, the Danish Minister for Transport was authorised to close
down the existing Danish State Rail Administration ferry service across the Øresund
(other than the service between Helsingør, Denmark and Helsingborg, Sweden), after
the Fixed Link had been put into service. Government bill 1990/91:158 noted that the
Helsingør – Helsingborg ferry service was assumed to remain operating even if part
of the traffic would be transferred to the Fixed Link. All other ferry services across
the Øresund, however, were assumed to cease operating. Government bill
1990/91:158 also made reference to competition from ferry services on other routes
between Sweden, Germany and Jutland, Denmark.
Moreover, the Consortium’s annual reports provide market share figures, which, as
such, is a strong indication of competition. The 2005 annual report provides data on
the evolution of passenger traffic across Øresund between 1999 and 2005. The data
show that the Dragør-Limhamn service had its last year of operation in 1999, with
1.6 million passengers. The number of passengers served by the ‘Hydrofoils
Copenhagen – Skåne’ dropped from 3.6 million passengers in 1999 to 150 000 in
2002, after which it stopped operating. The number of passengers served by the
Complainant dropped from 14.3 million in 1999 to 13.3 million in 2000, and, further,
to 11.5 million in 2001.
The Commission considers that the findings as described at recitals (351) and (352)
evidence the potential competition that exists between the Fixed Link and ferry
operators, operating ferry routes across the Øresund. The measures that confer a
selective advantage on the Consortium were liable to strengthen the Consortium’s
financial position, and, as a result, to distort that competition. Since the Consortium
and the ferry operators are operating on a market providing transport services across
(350)
(351)
(352)
(353)
179
The Commission recalls in this context that it established at recital (301) that the construction of the
Fixed Link cannot be dissociated from its future operation.
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the Øresund, between Denmark and Sweden, that competition affects trade between
Member States.
(354)
In light of the foregoing, the Commission considers that the measures entailing a
selective advantage may be considered as affecting intra-Union trade and are liable to
distort competition.
Conclusion on the existence of aid
On the basis of its assessment at recitals (287) to (354), the Commission concludes
that the State guarantee model, according to which the States provided an enduring
commitment to guarantee the financial instruments for the financing of the Fixed
Link, and which Denmark and Sweden granted to the Consortium, constitutes State
aid within the meaning of Article 107(1) TFEU. The Commission also concludes that
the 1991-2001 LCF, the 2013-2015 LCF, the 1999-2007 DEP, and the 2008-2015
DEP, which Denmark granted to A/S Øresund, and which result in an advantage to
A/S Øresund and, therefore, the Consortium as part of the same single undertaking
for the purpose of the economic activity of the Fixed Link (recital (319)), constitute
State aid to the Consortium within the meaning of Article 107(1) TFEU. The
2002-2012 LCF and the 1991-1998 DEP do not constitute State aid to the
Consortium within the meaning of Article 107(1) TFEU.
Classification as a scheme or individual aid
In the Opening decision, at recital 108, the Commission expressed doubts as to
whether the State guarantees should be considered as an aid scheme, whether they
should be considered as individual aid, granted when the Consortium was
established, or whether they should be considered as individual aid, granted each
time a financial transaction of the Consortium is approved by the national authorities.
At recital 107 of the Opening decision, the Commission stated its preliminary view
that the administration of the guarantees in relation to specific financial transactions
cannot be considered in isolation from the State guarantees granted in 1992, and, at
recital 109, the Commission noted that its preliminary qualification of the guarantees
as individual aids should also be applied to the tax measures. Given that the
Commission could not conclude on the question of whether the support measures
constitute a scheme or individual aid measures, it could not conclude either on the
date at which the guarantees and the tax measures were granted, as well as their
number.
To determine whether the aid measures qualify as aid schemes or individual aid, the
Commission must examine the nature of the aid measures, in light of the definitions
set out in Regulation 2015/1589.
According to Article 1(d) of Regulation 2015/1589,‘“aid scheme” means any act on
the basis of which, without further implementing measures being required, individual
aid awards may be made to undertakings defined within the act in a general and
abstract manner and any act on the basis of which aid which is not linked to a
specific project may be awarded to one or several undertakings for an indefinite
period of time and/or for an indefinite amount’.
6.1.5.
(355)
6.2.
(356)
(357)
(358)
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(359)
In contrast, ‘individual aid’ is defined at Article 1(e) of Regulation 2015/1589 as ‘aid
that is not awarded on the basis of an aid scheme and notifiable awards of aid on the
basis of an aid scheme’.
The State guarantee model
6.2.1.1.
Scheme or individual aid
6.2.1.
(360)
The Commission considered at recital 103 of the Opening decision that the first
situation included in the definition of an aid scheme cannot be considered applicable
to the State guarantee model as it is not aimed at ‘undertakings defined within the act
in a general and abstract manner’, but at the Consortium, specifically. Neither the
States, nor any interested party, submitted arguments to the contrary. As noted at
recital (169), the Complainant and Scandlines et al. referred to the
Øresund
judgment
to support their view that the State guarantee model cannot constitute a scheme.
According to the Complainant, the Commission should not even assess whether the
State guarantee model could constitute a scheme (recital (169)). The Commission
notes, however, that such analysis is required since the General Court annulled the
2014 decision with regard to the special Danish rules on loss carry-forward and
depreciation, and the State guarantees granted to the Consortium (recital (12)). The
Commission gave effect to the
Øresund
judgment by opening the formal
investigation procedure in which the nature of measures as individual aid or a
scheme was an explicit ground for opening that procedure (recital (155)).
Following its formal investigation, the Commission concludes that the State aid
deriving from the State guarantee model cannot be considered as a scheme, as
explained further at recitals (362) and (363).
First, the aid deriving from the State guarantee model is not granted on the basis of
an act that provides for individual aid awards to be made to undertakings defined
within the act in a general and abstract manner. The Construction Act provides for a
special rule applicable specifically to the Consortium. The State guarantee model,
therefore, does not fulfil the first condition in the definition of an aid scheme as set
out at Article 1(d) of Regulation 2015/1589.
Second, the Construction Act explicitly specifies the project concerned as the
financing of the Fixed Link. Both the States and the interested parties consider that
the aid deriving from the State guarantee model is linked to that specific project. The
Commission notes that Article 2 of the Intergovernmental Agreement specifies that
the Fixed Link shall be built as a combined road and rail link, consisting of a twin-
track railway and a four-lane motorway, and that it shall extend from an artificial
peninsula at Kastrup Airport and cross the Øresund strait via an immersed tunnel to
an artificial island and from there proceed as a combined high- and low bridge to join
Sweden to the south of Linhamn. In addition, Annex 1 to the Intergovernmental
Agreement provides a detailed description of the technical design of the Fixed Link.
Thus, at the time when the State guarantee model was set up and integrated into the
Consortium Agreement, the project was, both in terms of geographical location and
technical design, very specifically and clearly defined. Moreover, in the
Øresund
judgment, the General Court explicitly considered that the aid relating to the State
(361)
(362)
(363)
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guarantees must be regarded as linked to a specific project
180
. The Commission,
therefore, concludes that the State guarantee model is linked to a specific project and
that, therefore, the State guarantee model does not fulfil the second condition in the
definition of an aid scheme as set out at Article 1(d) of Regulation 2015/1589.
(364)
In light of the foregoing the Commission concludes that aid deriving from the State
guarantee model does not fulfil the definition of an aid scheme as set out at Article
1(d) of Regulation 2015/1589.
The aid deriving from the State guarantee model should, therefore, be qualified as
one or more individual aid measures, within the meaning of Article 1(e) of
Regulation 2015/1589.
6.2.1.2.
(366)
Granting date
(365)
It remains to be determined whether the State guarantee model consists of individual
aid granted when the Consortium was established, or whether it consists of a series of
individual aid measures, granted each time a financial transaction of the Consortium
is guaranteed by the States.
Based on the case-law of the Union courts
181
, it is well established that the aid
granting date refers to the date when the legal right to receive the aid is conferred on
the beneficiary under the applicable national regime.
As stated at recital (85), the joint and several guarantee of all loans and other
financial instruments taken out by the Consortium in connection with the financing
of the Fixed Link, was established in 1991, with Article 12 of the Intergovernmental
Agreement, which was ratified by Sweden on 8 August 1991 and by Denmark on
24 August 1991 (recital (61)). The guarantee obligation deriving from the
Intergovernmental Agreement was implemented in Swedish and Danish national
legislation in 1991, by the Construction Act and the Swedish Parliament decision
(recital (63)). The Consortium Agreement recalls the States’ guarantee obligation to
the Consortium. Section 4(3) of the Consortium Agreement provides the legal basis
for the financing of the Fixed Link: ‘The Consortium’s capital requirements for the
planning, project design and construction of the [Fixed Link], including loan
servicing costs, and for covering the capital requirements arising as a consequence of
book losses which are expected to occur for a number of years after the [Fixed Link]
has been opened to traffic, shall, in accordance with that agreed in the
[Intergovernmental Agreement], be satisfied by obtaining loans or the issuance of
financial instruments in the open market with security in the form of Swedish and
Danish government guarantees’ (recital (90)).
On the basis of the provisions of the Consortium Agreement, the Consortium could
take out State guaranteed loans to finance the planning and construction phases of the
Fixed Link. The Consortium could further increase its debt by guaranteed loans in
the first years after the Fixed Link had been put into service. This provision was
Øresund
judgment, paragraph 80.
Judgment of the General Court of 25 January 2018,
BSCA
v
Commission,
T-818/14, EU:T:2018:33,
paragraph 72 and case-law cited therein.
(367)
(368)
(369)
180
181
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necessary since it was expected that the Fixed Link would be loss making for the first
number of years. This means that the operating profit, in the first years, would not be
sufficient for the Consortium to cover the financing costs on the debt it would have
built up during the planning and construction phases. Therefore, during the first
number of years, the Consortium would need to incur further debt. The Consortium
Agreement, however, did not provide for a right to any further guarantees to finance
the operations of the Fixed Link. In this context, the States confirmed that no State
guarantees have been provided to finance the operations of the Fixed Link. It is clear
from the Consortium’s annual reports that the revenues, as from the first year of
operation, exceeded the operating costs and the operating profit was positive. Up to
and including 2003, that operating profit was, although positive, smaller than the
financing cost and therefore, the debt increased. As from 2004, the operating profit
was sufficient to contribute to debt reduction, and, consequently, the overall debt was
reduced, year by year.
(370)
However, notwithstanding the analysis at recital (369), the Consortium could, based
on the provisions of the Consortium Agreement, use the State guarantees to refinance
its debt (relating to the planning and the construction phases), during the operational
phase. This, however, does not mean that the Consortium Agreement provided for
the possibility for the States to finance the operations of the Fixed Link. This is also
clear from Section 6 of the Consortium Agreement, according to which the entire
cost of planning, project design, financing, construction, operation and maintenance
of the Fixed Link was to be covered by the operating revenues. In other words, the
operating revenues should not only be sufficient to cover the operating costs, but
should be sufficient to cover the entire cost of the Fixed Link, including the
construction and related financing costs of the Fixed Link (and the hinterland
connections). The Commission notes that this point was not clear in the 2014
decision. Recital 50 of the 2014 decision referred to two State guarantees ‘for loans
that the Consortium had taken out in order to finance the construction and operation
of the [Fixed Link] infrastructure project’. It was on this basis that the General Court,
in the
Øresund
judgment
182
, considered that the State guarantees could cover
operating costs incurred during the operational phase. This point was further clarified
during the formal investigation procedure.
In light of the foregoing, the Commission considers that the State guarantee model,
including the underlying guarantee agreements, does not cover the operations of the
Fixed Link. Rather, it guarantees the financing for investment in the planning and
construction of the Fixed Link.
The States provided further clarifications on the administration of the State guarantee
obligation. In Sweden, the competence and obligation to jointly assign guarantees for
all financing needed by the Consortium in relation to the planning and construction
of the Fixed Link has been delegated to the Swedish National Debt Office
(recital (91)). In Denmark, this competence and obligation has been delegated to the
Danish National Bank (recital (95)). The Swedish National Debt Office and the
Danish National Bank define the general framework for the Consortium’s financing
policy and supervise the implementation of the State guarantee obligation when the
Consortium signs new loan agreements or uses other financial instruments in
Øresund
judgment, paragraphs 107 and 108.
(371)
(372)
182
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connection with the financing of the Fixed Link. The 1997 Cooperation Agreement
and 2004 Cooperation Agreement (recitals (97) to (102)) contain a number of formal
terms, rights and obligations of the parties. The Cooperation Agreements give the
States an opportunity to monitor and influence the Consortium’s financing policy, to
ensure that the Consortium does not exceed its mandate, and to ensure that a
financing policy is followed that minimises the States’ long-term risk. According to
the States, this mechanism further allowed the States to ensure that the aid granted to
the Consortium does not go beyond what is necessary.
(373)
As outlined at recital (74), in practice, the Consortium regularly takes out new loans
to refinance its planning and construction costs, often through the issuance of bonds
under previously established programmes such as the EMTN programme.
Guarantees exist at several levels. The EMTN and the Swedish MTN programmes
each include a deed of guarantee. As described at recitals (103) to (108), this is a
deed in favour of the holders (i.e. the investors into the bond) under which the
Danish National Bank and the Swedish National Debt Office have agreed jointly and
severally to guarantee all sums the Consortium is legally liable to pay. Recitals (107)
and (108) clarify that, when the Consortium issues bonds under the EMTN
programme, the Danish National Bank and the Swedish National Debt Office
confirm that the specific bond is subject to the respective deed of guarantee. Under
the Swedish MTN programme, the bonds are approved by the Danish National Bank
and the Swedish National Debt Office, without confirmation of the respective deed
of guarantee (recital (108)). Concerning the stand-alone loan agreements, as
described at recitals (109) and (110) the Consortium signs finance contracts with
financial institutions. Attached to each finance contract is a guarantee agreement
document. Furthermore, guarantee agreements are also issued for credit facilities
(recital (111)) and for ISDA Master Agreements (recital (112)). According to the
interested parties, each such deed of guarantee, confirmation, bond approval, or
guarantee agreement should be considered as an individual aid, granted at the time
such guarantee agreement is signed, because the Consortium is required to obtain an
individual approval by the guarantors for a specific debt transaction. Furthermore,
the deeds of guarantee contain provisions stipulating that the guarantee can be
withdrawn by the States.
The States clarified that the fact that individual financial transactions require
subsequent administration by the Swedish National Debt Office or the Danish
National Bank, however, does not mean that they or the States have any option to
refuse to guarantee such transactions (see recital (245)). Although a guarantee for
one specific loan or bond could be refused (for example because of risks associated
with that loan or bond), the Swedish National Debt Office and the Danish National
Bank would still have the obligation to provide all necessary guarantees for the
financing of the Fixed Link. In such case, they would need to guarantee another
transaction so that the Consortium could obtain the required guaranteed financing.
The Commission is of the view that the advantage to the Consortium deriving from
the State guarantee model resides, essentially, in the fact that the Consortium is the
beneficiary of the joint and several State obligation to guarantee its borrowing in
respect of the Fixed Link project. Based on the wording of Section 4(3) of the
Consortium Agreement, the Consortium Agreement conferred on the Consortium the
legal right to finance the planning and construction of the Fixed Link by way of debt
instruments benefitting from State guarantees, when the Consortium was established
(374)
(375)
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on 13 February 1992. It is A/S Øresund and SVEDAB, both 100 % owned by the
respective States, that established the Consortium, upon approval of the Consortium
Agreement by the Governments of Denmark and Sweden on 13 February 1992
(recital (66)). The organisational arrangement chosen for the implementation of the
guarantees, requiring ex-ante approval of the Swedish National Debt Office and the
Danish National Bank, for individual transactions, is not intended to limit or
materially alter the States’ responsibility to guarantee the financing costs in question,
as further explained in the following recitals.
(376)
As such, the Commission considers that the Consortium Agreement is the legal act
by which the aid in the form of State guarantees was definitively granted to the
Consortium. Denmark and Sweden, based on the Intergovernmental Agreement,
undertook, with the Consortium Agreement, a legal obligation to guarantee loans and
financial instruments taken out by the Consortium for the purposes of financing the
planning and construction of the Fixed Link. The Consortium was formally
established via the Consortium Agreement, which recalled the fact that the
Consortium had the right to the State guarantees. In those circumstances, it can be
considered that the Consortium has enjoyed the legal right to benefit from the State
guarantees as from its establishment, which crystallised the States’ guarantee
obligation that was set out in the Intergovernmental Agreement. As that legal right
has remained in place consistently since that time, and its scope did not change (see
also recital (387), in that regard), the Commission considers that the State guarantees
were definitively granted on 13 February 1992
183
. The Commission considers that,
for the reasons set out below, the arrangements for implementing the State
guarantees do not change this fact.
Even though the States, through the Swedish National Debt Office or the Danish
National Bank, might be able to refuse to guarantee a specific new debt contract the
Consortium would like to conclude, they retain the obligation to guarantee all
necessary financing for the Fixed Link (recital (374)). This also applies in relation to
the Complainant’s argument that the deeds of guarantee contained provisions that the
deeds could be withdrawn (recital (174)). The Commission finds that, even if
individual deeds of guarantee may be withdrawn, this does not mean that the States’
obligation to guarantee the necessary financing for the Fixed Link would be lifted.
Another deed of guarantee could, for example, be set up in that regard, or the
financing could be guaranteed by means of individual, stand-alone guaranteed loans.
The Commission considers that the approvals or confirmations by the Danish
National Bank or the Swedish National Debt Office (recital (373)) cannot be
considered as new grants of aid, since those transactions are a mere implementation
of the guarantee obligation the States undertook with the Consortium Agreement.
The Commission, further, notes that, when embarking on major investments, it is
customary for an investor to require a certain amount of stability in the financial
planning for the investment. Without being able to make reasonable estimations
concerning the financial conditions that will be applicable to an investment, investors
are unlikely to risk the time and resources required to achieve the project. The
The Commission notes that the States’ commitment to ensure that the Consortium will finance new debt
and refinance existing debt on market terms (recital (265)) does not alter this finding.
(377)
(378)
(379)
183
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Commission notes, in that regard, that the economic rationale of the State guarantee
model was to minimise the total financing costs of the project (recital (255)). The
State guarantee model was already described in the Intergovernmental Agreement,
and, so, was defined before the investment got underway. As such, it should be
considered as one of the fundamental conditions applicable to the investment, upon
which the financial planning of the investment was prepared. The application of the
State guarantee model, therefore, was clear from the outset, and was an inherent part
of the financial model, on the basis of which the Consortium undertook a significant
investment.
(380)
The Commission notes the Complainant’s assertion at recital (170) that, according to
Section 2.1 of the 2008 Guarantee Notice, the amount of State aid in a guarantee
must be assessed at the moment it is issued. The Complainant argues that this means
that the guarantee must be considered as granted when the risk associated with it is
taken on by the State. It argues that there is no risk associated with the State
guarantee model through the Intergovernmental and Consortium Agreements, and
that Article 12 of the Intergovernmental Agreement does not constitute a legally
enforceable right. In addition, it considers that, in order for a guarantee to be
considered granted, it must be possible to measure its extent, which is not possible on
the basis of the Intergovernmental or Consortium Agreements, since there is no limit
in time and amount. The Complainant also refers to Section 3.2 of the 2008
Guarantee Notice, in support of that claim. The Complainant, further, considers that,
even if the Intergovernmental Agreement could be considered as conferring a legal
right to aid in the form of the State guarantees, the conditions of those guarantees
have since been fundamentally altered, for example, by the MTN programmes
changing the States’ undertakings from secondary to personal guarantees
(recital (175)).
The Commission does not agree with the Complainant’s assertions.
Firstly, as stated at recital (367), State aid is considered to be granted on the date
when the unconditional legal right to receive it was conferred on the beneficiary
under the applicable national regime. The Commission concluded, at recital (376),
that that right was conferred upon the Consortium on the date of its establishment.
Secondly, Section 2.1 of the 2008 Guarantee Notice states that State aid connected
with a guarantee is granted ‘at the moment the guarantee is given, not when it is
invoked nor when payments are made under the terms of the guarantee.’ As
explained by the States (recital (227)), as from the date the Consortium was founded,
the States have been obliged to guarantee the loans and other financial instruments
taken out by the Consortium to finance the Fixed Link; the Swedish National Debt
Office and the Danish National Bank do not have the competence to refuse to grant
the Consortium the necessary guarantees to fund the project. The guarantee should,
therefore, be considered as having been given on the date of the Consortium’s
establishment.
Thirdly, the Commission notes that the Complainant suggests that the guarantee must
be considered as granted when the risk associated with it is taken on by the State, and
that there is no risk associated with the State guarantee model through the
Intergovernmental and Consortium Agreements. In that regard, Section 2.1 of the
2008 Guarantee Notice states that the benefit of a State guarantee is ‘that the risk
(381)
(382)
(383)
(384)
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associated with the guarantee is carried by the State’. The Commission considers
that, as the States have been obliged to guarantee the Consortium’s debt financing in
connection with the Fixed Link since its establishment, the Consortium has enjoyed
the benefit of the risks associated with that guarantee obligation and its subsequent
implementation being carried by the States as from that date.
(385)
Fourthly, the Commission notes that the Complainant claims that Article 12 of the
Intergovernmental Agreement does not constitute a legally enforceable right, in
particular, due to the dualist legal systems of the States (recital (176)). In a dualist
legal system, international law becomes valid at a national level only once it has been
incorporated into national law. The Commission notes that it does not consider that
the Intergovernmental Agreement, on a standalone basis, created a legally
enforceable right but rather, that the Consortium obtained the right to the State
guarantees as from the date of the Consortium Agreement (recital (376)).
Furthermore, Sweden ratified the Intergovernmental Agreement on 8 August 1991
and Denmark on 24 August 1991 (recital (61)). The States implemented it into their
national legal orders, through the Swedish Parliament decision and the Construction
Act. Those national laws created legally enforceable rights in the States, which,
along with the Consortium Agreement, gave rise to the enforceable guarantee
obligation in favour of the Consortium.
Fifthly, the Commission does not agree with the Complainant’s claim that a
guarantee cannot be considered granted unless its extent can be measured. Section
2.1 of the 2008 Guarantee Notice states that ‘[w]hether or not a guarantee constitutes
State aid, and, if so, what the amount of that State aid may be, must be assessed at
the moment when the guarantee is given.’ The Commission notes that the structure
of this sentence indicates that (i) the determination of whether a guarantee constitutes
State aid, and (ii) if so, the amount of that aid, can be two separate, consecutive steps.
This provision of the 2008 Guarantee Notice, therefore, provides that the
Commission should, firstly, establish whether a guarantee constitutes State aid, and,
only if it confirms that it does, should it, secondly, determine the amount of that aid.
In those circumstances, it is incorrect to say that aid cannot be considered to be
granted unless its extent can be measured, as the assessment of the amount of the aid
should only be made after it has already been established that the aid has been
granted. Section 3.2 of the 2008 Guarantee Notice does not alter that conclusion.
That section sets out a list of cumulative conditions, which, if fulfilled, allow the
presence of State aid to be ruled out regarding an individual State guarantee. Point
(b) of that section notes that one of those conditions is that the ‘extent of the
guarantee can be properly measured when it is granted’. This, however, does not
require such measurement to be possible in order for aid to exist; rather, it may allow
for the absence of aid to be established.
Finally, concerning the Complainant’s claim that the nature of the guarantees has
been fundamentally changed, the Commission notes that, for the purposes of
determining the date on which the State aid deriving from the State guarantee model
was granted to the Consortium, the key issue is to identify the date on which the
Consortium received a legally enforceable right to that aid. As concluded at
recital (375), the Consortium has had that right as from its establishment. As from
that date, the States have been obliged, vis-à-vis the Consortium, to guarantee the
entire cost of financing of the Fixed Link. As noted at recital (384), the advantage for
the Consortium of the guarantee obligation is the fact that the States are obliged to
(386)
(387)
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undertake the risks connected with the financing of the planning and construction of
the Fixed Link. That advantage, and the right to it, has not been altered since it was
established. As explained by the States (recital (249)), in the legal setup by means of
the Intergovernmental Agreement, the Swedish Parliament decision, the decision of
the Swedish Government of 1 April 1993 (K91/1443/3, K93/202/3) and the decision
of the Swedish Government of 23 June 1994 (K91/1443/3, K94/1680/3), there are no
details on how the terms of the individual guarantee agreements were to be
determined. Instead, this was to be decided upon and implemented by the Swedish
National Debt Office. There is no subsequent decision by the Swedish Parliament in
this context, nor any decision by the Swedish Government, that would have amended
the State guarantee obligation established by the Swedish Parliament decision. The
individual deeds of guarantee and guarantee agreements serve to fulfil the right
already given to the Consortium. On the Danish side, as set out at recital (250), there
are no details on mobilisation conditions in the Construction Act, implementing the
Intergovernmental Agreement. Those mobilisation conditions are only specified in
the guarantee agreements under the various financial transactions. As the States
acknowledge, the deeds of guarantee and individual guarantee agreements are indeed
to be interpreted as personal guarantees (‘selvskyldnerkaution’ in Danish law). This,
however, does not constitute a change of the joint and several guarantee obligation,
and does not go beyond the rights given to the Consortium in the Consortium
Agreement, implementing the Intergovernmental Agreement. In any event, the
Commission notes that, while the question of whether a guarantee is personal or
secondary (or ‘simpelkaution’ versus ‘selvskyldnerkaution’) may affect the legal
relationship between the Consortium and its creditors, or those creditors and the
States, it does not alter the fundamental legal obligation of the States to provide
guarantees for the Consortium’s activities in relation to the Fixed Link. As noted at
recitals (311) and (375), the advantage to the Consortium of the State guarantee
model, and therefore, the aid deriving from it, is inherent in that legal obligation, and
that has not been altered since the Consortium was established on 13 February 1992.
(388)
The Commission concludes that the State aid deriving from the State guarantee
model must be considered as one individual aid, granted by the two States to the
Consortium on 13 February 1992.
The special Danish rules on loss carry-forward and depreciation
In the Opening decision, the Commission considered, at recital 109, that the
definition in the relevant legal acts of the Danish tax measures under assessment,
seemed to be open-ended in terms of amount and duration, but that it was specifically
related to the Consortium’s activity with respect to the project. As those measures
seemed to have been granted with the same purpose and scope as the State
guarantees, the Commission’s considerations mentioned in the Opening decision
concerning the qualification of those guarantees as individual aids were also to be
applied as regards the tax measures.
6.2.2.1.
The special Danish rules on loss carry-forward
6.2.2.
(389)
6.2.2.1.1. 1991-2001 LCF
(390)
The Construction Act established, from the outset, that A/S Øresund would be
subject to more favourable loss carry-forward rules than under the general Danish
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Tax Assessment Act. Already in 1991, it was clear that the general loss carry-
forward period of five years would not be sufficient to utilise the losses incurred for
the project to offset profits. In the preparatory notes to the Construction Act, the
legislator explicitly stated that the reason for granting an extended limitation period
for loss carry-forward in 1991 was that A/S Øresund would not be able to benefit
from the generally applicable rules on loss carry-forward (with a limitation of five
years), because of the significant expenditure sustained in the construction period,
combined with the fact that A/S Øresund would not, in the same period, be able to
procure any profits (recital (267)).
6.2.2.1.1.1. 1991-2001 LCF: Scheme or individual aid
(391)
(392)
The Commission considers that the State aid deriving from the 1991-2001 LCF
cannot be considered as a scheme.
First, the aid deriving from the 1991-2001 LCF is not granted on the basis of an act
that provides for individual aid awards to be made to undertakings defined within the
act in a general and abstract manner. Rather, the Construction Act provides for a
special rule applicable to A/S Øresund, specifically.
Second, the Construction Act explicitly specifies the project it concerns as being the
construction and operation of the Fixed Link. The Commission, therefore, considers
that the aid deriving from the 1991-2001 LCF must be regarded as linked to a
specific project, as the advantage inherent to the aid is linked solely to losses
incurred in the context of the Fixed Link project, to the exclusion of other projects or
activities. The aid deriving from the 1991-2001 LCF, therefore, does not fulfil the
definition of an aid scheme as set out at Article 1(d) of Regulation 2015/1589.
The aid deriving from the 1991-2001 LCF should, therefore, be qualified as one or
more individual aids, within the meaning of Article 1(e) of Regulation 2015/1589.
6.2.2.1.1.2. 1991-2001 LCF: Granting date
(395)
The 1991-2001 LCF constitutes State aid in the form of a tax advantage. The
Commission recalls that it has previously found that State aid deriving from
advantageous tax treatment is granted on an annual basis, upon the acceptance of the
beneficiary’s tax declaration by the tax authorities
184
, as that is the moment the
advantage usually materialises for such State aid. The Commission, therefore,
considers that the special Danish rules on loss carry-forward and depreciation should,
similarly, be found to be granted on an annual basis, unless there are clear reasons for
departing from that approach.
The Commission considers that, as far as the 1991-2001 LCF is concerned, there are
clear reasons for departing from that approach, as set out further at recitals (397) to
(403).
See, for example, Commission decision (EU) 2018/859 of 4 October 2017 on State aid SA.38944
(2014/C) (ex 2014/NN) implemented by Luxembourg to Amazon (OJ 2018 L 153, p. 1). This approach
has been accepted by Union Courts – see, for example, judgment of the General Court of 12 May 2021,
Luxembourg
v
Commission,
Joined Cases T-816/17 and T-318/18, EU:T:2021:252, paragraphs 153 and
339.
(393)
(394)
(396)
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(397)
The Commission notes that the Danish authorities explained (recital (267)) that the
losses incurred by the Consortium before the Fixed Link was put into service were,
essentially, due to interest incurred on the loans, which were necessary for the
construction of the Fixed Link. As Denmark explained (recital (267)), given the
significant initial expenditure on the investment, and the lack of profits for the Fixed
Link during its construction period, the generally applicable rule on loss carry-
forward, with a limitation of five years, would not have been sufficient to enable
those losses to be utilised to offset profits. In other words, in order to carry out the
investment in the Fixed Link, the Consortium was obliged to incur significant losses,
and, without application of a special rule, it would not have been possible for those
losses to be usefully carried forward, so that they could offset profits in future years.
As a result, as part of the conditions for the investment into the Fixed Link by the
Consortium, and to establish the long-term planning of the financing of the
construction of the Fixed Link, the Danish legislator established the 1991-2001 LCF.
The Danish authorities note that, together with the State guarantee obligation, the
1991-2001 LCF was established at the outset, in order to ensure the financing of the
significant investment in the Fixed Link, at the least cost (recital (269)). The 1991-
2001 LCF enabled A/S Øresund to offset future profits with non-expired losses,
thereby reducing its tax base. This resulted in an advantage for the Consortium. At
the same time, however, the 1991-2001 LCF allowed for a higher liquidity base, with
the objective of lowering the debt burden. A lower overall debt burden, also meant a
lower overall guaranteed amount, and, therefore, less State aid in the form of the
guarantees.
As noted at recital (379), when embarking on major investments, it is customary for
an investor to require a certain amount of stability in the financial planning for the
investment. Without being able to make reasonable estimations concerning the
financial conditions that will be applicable to an investment, investors are unlikely to
risk the time and resources required to achieve the project. The Commission notes, in
that regard, that the 1991-2001 LCF was established with a view to providing
specific tax treatment to the Fixed Link investment, in order to facilitate its long-term
financial planning and to minimise the overall cost of the investment. That tax
treatment was defined by the Construction Act before the investment got underway,
and, as such, should be considered as one of the fundamental conditions applicable to
the investment (along with the State guarantee obligation and the State guarantee
model), upon which the financial planning of the investment was prepared. As such,
the application of the 1991-2001 LCF was clear from the outset, and was an inherent
part of the financial model, on the basis of which the Consortium would engage to
undertake a significant investment. In particular, the Commission notes that the
legislative intent behind the enactment of the 1991-2001 LCF, as evidenced by the
preparatory notes to the Construction Act, was to enable the meaningful utilisation of
losses incurred as a result of the construction of the Fixed Link.
The Commission also notes, as concluded at recital (330), that the right for A/S
Øresund to carry-forward its losses for a longer period than permissible under normal
Danish taxation rules presented an advantage as from the establishment of that right.
The advantage of being able to carry-forward losses for a longer period, coupled with
the fact that it was clear from the beginning that significant losses would be incurred
so as to ensure the use of that longer period, meant that the advantage associated with
the 1991-2001 LCF was obvious from the outset. This is different from the situation
(398)
(399)
(400)
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in, for example, the
France Télécom
185
judgment, where the advantage deriving from
a special tax treatment could only be confirmed on an annual basis upon the
establishment of the rate of business tax applicable under the normal tax rules
186
.
(401)
Section 11 of the Construction Act established, from 1991, a preferential rule for A/S
Øresund, insofar as it had the right to carry-forward its losses for a longer period than
other legal entities subject to corporate income tax. In enacting the Construction Act,
Denmark committed to allow A/S Øresund to enjoy the legal right to that longer
carry-forward period. The Construction Act provided, at Section 6, that the Fixed
Link was to be developed by a consortium between a limited liability company set up
by the Danish State (via a holding company) and a limited liability company set up
by the Swedish State. A/S Øresund was established as limited liability company on
9 December 1991 (recital (64)) and the Consortium was established, through the
Consortium Agreement, on 13 February 1992 (recital (66)). The Commission has
found that the advantage deriving from the 1991-2001 LCF benefits the Consortium,
as it reduces the tax liability which its income must be used to discharge
(recital (317)). The fact that that advantage would accrue to the Consortium via the
1991-2001 LCF was obvious from the outset (recital (400)). The legal right to that
advantage to the Consortium was established in law, via the Construction Act, before
the Consortium was even established.
On the basis of those elements (recitals (397) to (401)), the Commission considers
that the advantage deriving from the 1991-2001 LCF was established in order to
facilitate the financing of the Fixed Link investment (an investment that would
obviously lead to significant losses being incurred, which could not be used within
five years), and to support that investment. The advantage resulted from the
Construction Act itself, and constituted one of the conditions for investment. From
the moment the Consortium was established, and was able to enjoy the legal right to
the advantage established by the Construction Act, the 1991-2001 LCF was liable to
distort competition and affect trade between Member States, by strengthening the
Consortium’s position on a market that is open to competition and trade between
Member States. In those circumstances, the Commission concludes that there are
clear reasons for finding that the aid deriving from the 1991-2001 LCF was not
granted on an annual basis, but, rather, was granted at one time, upon the
establishment of the Consortium.
The Commission, moreover, notes that the materialisation of the advantage deriving
from the legal right to the longer carry-forward period occurred automatically,
without any discretion on the part of A/S Øresund, the Consortium, or the Danish
authorities. For the determination of its annual corporate income tax liability, A/S
Øresund is subject to the same process as any other legal entity (including limited
liability companies) subject to Danish corporate income tax. As described at
recital (127), each year, under the mandatory joint taxation regime in Denmark, the
undertaking that heads the joint taxation group submits information on taxable
income and tax losses for all members of that group. The tax return states, for each
member of the group, the taxable income, the utilisation of own carried-forward
Supra,
footnote 99.
Judgment of the General Court of 30 November 2009,
France
v
Commission,
Joined Cases T-427/04
and T-17/05, EU:T:2009:474, paragraphs 321-323.
(402)
(403)
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losses, the utilisation of losses from other members of the group, and the remaining
tax losses. Legal entities subject to Danish corporate income tax do not have
discretion on the use of carried forward losses. According to the Danish Tax
Assessment Act, and, since 18 June 2012, according to the Danish Corporate Income
Tax Act, a tax loss carried forward that can be utilised in a given tax year must be
utilised in that year; otherwise, it will be forfeited. Tax losses carried forward must
be utilised according to the FIFO principle, meaning that the oldest tax losses must
be utilised first. The annual tax assessment, issued by the tax authorities, is
automatically generated. Every year the tax authorities then select entities whose tax
returns are manually audited. In those circumstances, given the absence of discretion
at the moment of the beneficiary’s tax declaration and the acceptance of the tax
return by the authorities, the Commission concludes that the submission of the
annual tax returns does not amend the fact that the aid had already been granted in
1992. The submission of the tax returns, therefore, represented merely a formal step
necessary to obtain the aid already granted, rather than a request for an annual grant
of aid.
(404)
The Commission, therefore, concludes that the 1991-2001 LCF constitutes one
individual aid, for the purposes of supporting a significant investment, which was
granted to the Consortium by Denmark on 13 February 1992.
6.2.2.1.2. 2013-2015 LCF
(405)
As noted at recital (333), the Commission concluded that there was no advantage to
A/S Øresund or the Consortium that derived from the 2002-2012 LCF, as, for that
period, A/S Øresund was subject to the same rules on loss carry-forward as other
undertakings in Denmark. Therefore, the 2002-2012 LCF did not constitute State aid
to A/S Øresund, or, by extension, the Consortium (recitals (333) and (355)).
As explained at recital (138), by Act No 591 of 18 June 2012, a limitation on the
access to carry-forward losses was introduced for undertakings in Denmark. That
limitation did not apply to A/S Øresund, however, as the provisions of the
Construction Act, as amended in 2002, and incorporated in the Sund & Bælt Act,
remained in force until 2016. It was only by Act No 581 of 4 May 2015 that Section
12 of the Sund & Bælt Act was repealed with effect of 1 January 2016, and that A/S
Øresund became subject to the normal rules of the Danish Corporate Income Tax
Act. The Commission, therefore, concluded, at recital (337), that the 2013-2015 LCF
constituted an advantage for A/S Øresund, and, therefore, also for the Consortium.
The aid measure consists of a combination of elements (recital (334)) as A/S
Øresund obtained a right to a selective advantage over other undertakings in a similar
situation, by virtue of the fact that the rules applicable to A/S Øresund provided for a
derogation from the system of reference, leading to a selective advantage.
6.2.2.1.2.1. 2013-2015 LCF: Scheme or individual aid
(407)
(408)
The Commission considers that the aid deriving from the 2013-2015 LCF cannot be
considered as a scheme.
First, the aid deriving from the 2013-2015 LCF is not granted on the basis of an act
that provides for individual aid awards to be made to undertakings defined within the
act in a general and abstract manner. The 2013-2015 LCF provides for a special rule
(406)
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applicable specifically to A/S Øresund. That aid, therefore, does not fulfil the first
condition in the definition of an aid scheme, as set out at Article 1(d) of Regulation
2015/1589.
(409)
Second, the Construction Act, as amended in 2002, and incorporated into the Sund &
Bælt Act, explicitly specifies the project it concerns as being the construction and
operation of the Fixed Link. The Commission, therefore, considers that the aid
deriving from the 2013-2015 LCF must be regarded as linked to a specific project, as
the advantage inherent to the aid is linked solely to losses incurred in the context of
the Fixed Link project, to the exclusion of other projects or activities. The aid
deriving from the 2013-2015 LCF, therefore, does not fulfil the second condition in
the definition of an aid scheme as set out at Article 1(d) of Regulation 2015/1589.
The aid deriving from the 2013-2015 LCF, therefore, does not fall within the
definition of an ‘aid scheme’ within the meaning of Article 1(d) of Regulation
2015/1589. It must, therefore, be qualified as one or more individual aids, within the
meaning of Article 1(e) of Regulation 2015/1589.
6.2.2.1.2.2.
(411)
2013-2015 LCF: Granting date
(410)
As noted at recital (395), State aid deriving from tax advantages is usually
considered to be granted on an annual basis, unless there is reason to determine that
the advantage connected to that aid materialised at a different time. The Commission
does not consider that, as far as the 2013-2015 LCF is concerned, there are clear
reasons for departing from that approach The situation applying to the 1991-2001
LCF as set out at recitals (396) to (404) is fundamentally different from the situation
applying to the 2013-2015 LCF, as set out at recitals (412) to (417).
The Commission has concluded that the 1991-2001 LCF constitutes one individual
aid, for the purposes of supporting a significant investment, which was granted to the
Consortium by Denmark on 13 February 1992 (recital (404)). In particular, in
reaching that conclusion, the Commission noted that the 1991-2001 LCF was
established with a view to facilitating the long-term planning of the Fixed Link
investment, the advantage resulted from the Construction Act itself, and was one of
the fundamental conditions upon which the financial planning of the investment was
prepared (recital (399)).
The Commission, first, notes that the aid deriving from the 2013-2015 LCF cannot
be considered as having been granted before 18 June 2012, when the Danish
Corporate Income Tax Act was amended (recital (138)), and the Sund & Bælt Act
was not. Before that amendment was applicable, A/S Øresund and the Consortium
could not benefit from any advantage resulting from that amendment.
The Commission, further, notes that the Fixed Link entered into service in July 2000.
The decision to invest in the Fixed Link, and the financial planning of the
investment, was carried out before that time.
In those circumstances, the Commission considers that the 2013-2015 LCF must be
distinguished from the 1991-2001 LCF, insofar as it could not be deemed to have
been implemented in order to support the financial investment into the Fixed Link, or
to have been a condition for such investment, or to ensure the feasibility of the long-
term financial planning of the investment, given that the decision to invest, and,
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(413)
(414)
(415)
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indeed, the investment, had been completed long before the 2013-2015 LCF became
applicable. As a result, the Commission finds that the reasons for which it
determined that the advantage connected to the aid deriving from the 1991-2001 LCF
was granted on one occasion, which are based significantly on the fact that the long-
term investment planning of the Fixed Link relied on the 1991-2001 LCF, the
certainty that it had been granted, and the need to be sure that it could be taken into
account in the financial planning, do not apply to the 2013-2015 LCF.
(416)
Furthermore, the Commission notes that, between the 1991-2001 LCF and the
2013-2015 LCF, there was the 2002-2012 LCF, which the Commission has
concluded did not constitute State aid to A/S Øresund or to the Consortium
(recitals (333) and (355)). The 2013-2015 LCF represented a reintroduction of
advantageous treatment, despite the fact that it was no longer required for the
investment planning. In that regard, the 2013-2015 LCF would have the effect of
supporting day-to-day operations of A/S Øresund or the Consortium, rather than the
initial investment in the Fixed Link.
The Commission, therefore, does not consider that there are clear reasons to depart
from the usual approach that tax advantages are granted on an annual basis. It
follows that the aid deriving from the 2013-2015 LCF can be considered as having
been definitively granted at the moment of the acceptance by the tax authorities of
A/S Øresund’s tax returns relating to the tax years in the 2013-2015 LCF period, in
which a higher amount of losses could be utilised.
The Commission, therefore, considers that the State aid deriving from the 2013-2015
LCF constitutes several grants of individual aid, granted from 2014
187
onwards, on
an annual basis, at the moment of the acceptance of A/S Øresund’s tax returns by the
authorities, and until the acceptance of the tax return for the tax year 2015. The
2013-2015 LCF was repealed by Act No 581 of 4 May 2015, applicable as from the
tax year 2016.
6.2.2.2.
Special Danish rules on depreciation
(417)
(418)
6.2.2.2.1. 1999-2007 DEP and 2008-2015 DEP
(419)
As explained at recital (145), by Act No 433 of 26 June 1998, the normal maximum
depreciation rate for buildings and installations set in the Danish Tax Depreciation
Act decreased to 5 %, and, by Act No 540 of 6 June 2007, to 4 %. The depreciation
rate for A/S Øresund, however, remained at 6 % / 2 %, pursuant to Sections 12 and
13 of the Construction Act and the corresponding Sections 13 and 14 of the Sund &
Bælt Act, which remained in force until 2016. As noted at recital (344), it was by
declining to change the rules applicable to A/S Øresund to reflect the changes to the
normal taxation rules that the Danish State placed A/S Øresund in a more
advantageous position than other legal entities subject to Danish corporate income
tax. It is only by Act No 581 of 4 May 2015, which entered into force on
1 January 2016, that Section 13 and 14 of the Sund & Baelt Act were repealed and
that A/S Øresund became subject to the normal rules of the Danish Corporate Income
Tax Act and the Danish Tax Depreciation Act. The aid measure consists of a
The tax return relating to the tax year 2013 being in 2014.
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combination of elements (recital (344)) as A/S Øresund was placed in a more
advantageous position over other undertakings in a similar situation, by virtue of the
fact that the Sund & Bælt Act provided for a more beneficial tax treatment and,
therefore, derogated from the amended Danish Tax Depreciation Act, which was
more restrictive and which did not apply to A/S Øresund, but to other undertakings
that are legally and factually comparable. As concluded at recital (319), any
advantage to A/S Øresund created by the special Danish rules on loss carry-forward
and depreciation is also an advantage to the Consortium.
6.2.2.2.2. 1999-2007 DEP and 2008-2015 DEP: Scheme or individual aid
(420)
(421)
The Commission considers that the State aid deriving from the 1999-2007 DEP and
the 2008-2015 DEP cannot be considered as being granted on the basis of a scheme.
First, that aid is not granted on the basis of an act that provides for individual aid
awards to be made to undertakings defined within the act in a general and abstract
manner. The Construction Act, as incorporated in the Sund & Bælt Act, refers to A/S
Øresund explicitly as being entitled to the special Danish rule on depreciation. The
aid deriving from the 1999-2007 DEP and the 2008-2015 DEP, therefore, does not
fulfil the first condition in the definition of an aid scheme, as set out at Article 1(d) of
Regulation 2015/1589.
Second, the 1999-2007 DEP and the 2008-2015 DEP must be regarded as being
linked to a specific project, since the aid deriving from those measures covers an
advantage linked to the depreciation of the investment costs of the Fixed Link, to the
exclusion of other projects or activities. This is because the Construction Act, and the
Sund & Bælt Act, explicitly specify the relevant project as the construction and
operation of the Fixed Link. The aid deriving from the 1999-2007 DEP and the
2008-2015 DEP, therefore, does not fulfil the second condition in the definition of an
aid scheme as set out at Article 1(d) of Regulation 2015/1589.
The aid deriving from the 1999-2007 DEP and the 2008-2015 DEP, therefore, does
not fall within the definition of an ‘aid scheme’ within the meaning of Article 1(d) of
Regulation 2015/1589. It must, therefore, be qualified as one or more individual aids,
within the meaning of Article 1(e) of Regulation 2015/1589.
6.2.2.2.3. 1999-2007 DEP and 2008-2015 DEP: Granting dates
(424)
As noted at recital (395), in the case of State aid deriving from tax advantages, that
advantage usually materialises on an annual basis, unless there are reasons to
consider that another view is justified. The Commission considers that, as far as the
aid deriving from the 1999-2007 DEP and the 2008-2015 DEP is concerned, it
appears that the aid would, in theory, be granted on an annual basis. However, as A/S
Øresund had discretion as to when it could depreciate its assets in its tax returns
(recital (125)), in practice, the advantage materialised on a less frequent basis
(recitals (425) to (428)).
The Commission first notes that the advantage inherent in the aid deriving from the
1999-2007 DEP cannot be considered as having been granted before 26 June 1998,
when the normal depreciation rate for buildings and installations set in the Danish
Tax Depreciation Act decreased to 5 %, and a similar change was not applied to the
depreciation rules applicable to A/S Øresund. Similarly, the advantage inherent in the
98
(422)
(423)
(425)
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aid deriving from the 2008-2015 DEP cannot be considered as having been granted
before 6 June 2007, when the normal depreciation rate for buildings and installations
set in the Danish Tax Depreciation Act decreased to 4 %, and a similar change was
not applied to the depreciation rules applicable to A/S Øresund. Therefore, it cannot
be argued that, because the rule applicable to A/S Øresund was, as such, already part
of the Construction Act, that also the aid should be considered as being granted with
the Construction Act.
(426)
The Commission further notes the situation applying to the 1991-2001 LCF as set out
at recitals (396) to (404) is fundamentally different from the situation applying to the
1999-2007 DEP and the 2008-2015 DEP. When the Danish Tax Depreciation Act
was amended on 26 June 1998 and on 6 June 2007, the decision to invest in the
construction of the Fixed Link had already been taken, and, in fact, the Fixed Link
was almost ready to be put into operation. As such, unlike the 1991-2001 LCF
(recital (399)) the decision of the Danish State to offer A/S Øresund more
advantageous tax depreciation conditions than other legal entities subject to Danish
corporate income tax cannot be considered to be one of the fundamental conditions
underpinning the financial planning of the investment. In particular, the Commission
notes that, at the time that financial planning was being undertaken, the Danish
authorities did not consider it necessary to grant A/S Øresund advantageous
treatment as compared to other limited liability companies subject to corporate
income tax as regards asset depreciation rules – in fact, the Danish authorities even
consider that the 1991-1998 DEP was actually detrimental to A/S Øresund / the
Consortium (recital (268)). The aid deriving from the 1999-2007 DEP and the
2008-2015 DEP, therefore, cannot be considered to be aid granted to support the
investment in the Fixed Link. In those circumstances, the considerations that led the
Commission to conclude that the 1991-2001 LCF was granted as one individual aid
upon the creation of the Consortium, notably, due to the necessity of the 1991-2001
LCF for the financial planning of the Fixed Link investment, do not apply to the
1999-2007 DEP or the 2008-2015 DEP. The Commission notes that the aid deriving
from the 1999-2007 DEP and the 2008-2015 DEP should, therefore, more properly
be considered to support the day-to-day operations of A/S Øresund and the
Consortium, rather than the initial investment into the Fixed Link.
The Commission notes that A/S Øresund would have relied on the rules applicable to
it at the time of submitting its tax returns, in order to determine its tax liabilities for a
given year. Unlike the utilisation of tax loss carry-forward, which is automatically
applied (recital (127)), in Denmark, legal entities subject to Danish corporate income
tax may choose when to depreciate their assets, and at what rate, in their tax returns,
within the limits provided for by the applicable law (recital (125)). A/S Øresund
could, therefore, choose the moment at which it wanted to depreciate its assets at a
rate beyond that provided for in the Danish Tax Depreciation Act. As a result, the
advantage deriving from the 1999-2007 DEP and the 2008-2015 DEP would not
have automatically materialised each year upon the annual acceptance of the tax
returns, if no depreciation beyond the rate available under normal Danish taxation
rules had been applied.
In those circumstances, the Commission considers that the advantage associated with
the higher rate of depreciation available to A/S Øresund, in light of the absence of an
amendment to the rules applicable to it to reflect the limitations in the general law,
would have materialised at the moment of the acceptance of the tax returns in which
(427)
(428)
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it applied such a higher rate of depreciation (recital (129)). It is at that moment, also,
that the State aid deriving from the 1999-2007 DEP and the 2008-2015 DEP would
have been able to distort competition, or affect trade between Member States.
(429)
The Commission, therefore, considers that the aid deriving from the 1999-2007 DEP
and the 2008-2015 DEP constitutes a number of individual aids, granted by Denmark
from 2000
188
onwards, at the moment of the acceptance of A/S Øresund’s tax returns
in which it applied a depreciation rate beyond the rate provided for in the Danish
Depreciation Act, until the acceptance of the tax return for the tax year 2015. The
2008-2015 DEP was repealed with effect from 1 January 2016 by Act No 581 of
4 May 2015, applicable as from the tax year 2016.
Classification as new or existing aid
Having established that the aid measures constitute individual aid not awarded on the
basis of an aid scheme, and their granting dates, the Commission must determine, for
each of the aid measures, whether they constitute new or existing aid.
New aid, pursuant to Article 1(c) of Regulation 2015/1589, is all aid that is not
existing aid, including alterations to existing aid.
‘Existing aid’ is defined at Article 1(b) of Regulation 2015/1589, as follows:
‘(i)
without prejudice to Articles 144 and 172 of the Act of Accession of Austria,
Finland and Sweden … all aid which existed prior to the entry into force of the
TFEU in the respective Member States, that is to say, aid schemes and
individual aid which were put into effect before, and are still applicable after,
the entry into force of the TFEU in the respective Member States;
authorised aid, that is to say, aid schemes and individual aid which have been
authorised by the Commission or by the Council;
6.3.
(430)
(431)
(432)
(ii)
(iii) aid which is deemed to have been authorised pursuant to Article 4(6) of
Regulation (EC) No 659/1999 or to Article 4(6) of [Regulation 2015/1589], or
prior to Regulation (EC) No 659/1999 but in accordance with this procedure;
(iv) aid which is deemed to be existing aid pursuant to Article 17 of [Regulation
2015/1589];
(v)
aid which is deemed to be an existing aid because it can be established that at
the time it was put into effect it did not constitute an aid, and subsequently
became an aid due to the evolution of the internal market and without having
been altered by the Member State. Where certain measures become aid
following the liberalisation of an activity by Union law, such measures shall
not be considered as existing aid after the date fixed for liberalisation’.
(433)
In connection with Article 1(b), point (iv) of Regulation 2015/1589, Article 17(3) of
Regulation 2015/1589 provides that any aid of which the limitation period of ten
years has expired shall be deemed to be existing aid. Article 17(2) provides that the
The tax return relating to the tax year 1999 being in 2000. In practice, the first granting date would not
occur before the acceptance of the tax return of tax year 2004, since Denmark confirms that A/S
Øresund did not depreciate for earlier tax years (recital (271)).
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limitation period shall begin on the day on which the unlawful aid is awarded to the
beneficiary either as individual aid or as aid under an aid scheme. Any action taken
by the Commission or by a Member State, acting at the request of the Commission,
with regard to the unlawful aid shall interrupt the limitation period. Each interruption
shall start time running afresh.
6.3.1.
(434)
State guarantees: new or existing aid
The Commission concluded at recital (388) that the aid deriving from the State
guarantee model was definitively granted to the Consortium by the Consortium
Agreement and as from the day it was founded on 13 February 1992. In light of that
conclusion, it is necessary to determine whether the aid deriving from the State
guarantee model falls within any of the definitions of existing aid under Article 1(b)
of Regulation 2015/1589.
Firstly, the Commission recalls that the Complainant filed its complaint with the
Commission on 16 April 2013, alleging that the State guarantee model constituted
illegal State aid. The Commission sent a request for information to Denmark and
Sweden, in respect of that complaint, on 13 May 2013. The Commission considers
that that request for information constituted an action taken by the Commission with
regard to the aid deriving from the State guarantee model, which, pursuant to Article
17 of Regulation 2015/1589, would have interrupted the limitation period in
connection with aid granted as from 13 May 2003 (that is, ten years before the
request for information).
The Commission notes, however, that the limitation period connected with the aid
deriving from the State guarantee model expired on 13 February 2002, that is, ten
years after the date it was granted. That limitation period had, therefore, expired by
the time the Commission’s request for information of 13 May 2013 could have
interrupted it.
In those circumstances, the Commission concludes that the aid deriving from the
State guarantee model, granted by Denmark and Sweden to the Consortium,
constitutes existing aid within the meaning of Article 1(b), point (iv) of Regulation
2015/1589.
Secondly, the Commission notes that the Swedish authorities argue that any possible
aid granted by Sweden in connection with the Fixed Link was granted prior to its
accession to the Union, and prior to the entry into force of the EEA Agreement, on
1 January 1994.
As noted at recital (432), under Article 1(b), point (i) of the Regulation 2015/1589,
aid that existed prior to the entry into force of the TFEU in Sweden is considered
existing aid. That is, however, without prejudice to Articles 144 and 172 of the Act
of Accession of Austria, Finland and Sweden. According to Article 144 of that Act,
‘…among the aids applied in the new Member States prior to access only those
communicated to the Commission by 30 April 1995 will be deemed to be “existing
aids”…’.
At recital 113 of the Opening decision, the Commission indicated that, if the aid
deriving from the State guarantee model, granted to Sweden by the Consortium,
should be considered as having been granted in 1992, as it was not communicated to
101
(435)
(436)
(437)
(438)
(439)
(440)
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the Commission at the time, it could not be considered as existing aid on the basis of
Article 1(b), point (i) of Regulation 2015/1589.
(441)
The Commission recalls, however, that, at the time when the State guarantee model
was put in place by Sweden, it was clear Commission practice to find that the
construction and operation of transport infrastructure was not considered to
constitute an economic activity
189
. In those circumstances, the Commission considers
that it is understandable that the State guarantee model was not communicated to the
Commission as aid that existed prior to the entry into force of the TFEU because, at
that time, such measure was not generally considered as constituting State aid.
In any event, the Commission notes that the Fixed Link project was approved as one
of the priority projects under TEN-T by the European Council in December 1994
(recital (58)). Prior to the Council’s approval of its inclusion in that list, the States
had communicated the outline of the project, including their intention to finance it by
way of the State guarantee model, to the Commission. Therefore, even though the
State guarantee model did not qualify as State aid prior to Sweden’s accession to the
Union, it had nevertheless been communicated to the Commission by 30 April 1995,
in the context of the preparation for its inclusion in the TEN-T priority project list.
Consequently, the Commission considers that the aid deriving from the State
guarantee model, granted by Sweden to the Consortium, constitutes existing aid
within the meaning of Article 1(b), point (i) of Regulation 2015/1589.
Moreover, as noted at recital (387), the advantage for the Consortium of the State
guarantee model is the fact that the States are obliged to undertake the risks
connected with the financing of the planning and construction of the Fixed Link –
that advantage, and the right to it, has not been altered since it was established. The
Commission notes that the replacement of Section 8 of the Construction Act by
Section 11 of the Sund & Bælt Act is not relevant in this context since both
provisions are substantially identical (recital (87)).
In light of the considerations set out at recitals (434) to (444), the Commission
concludes that the aid deriving from the State guarantee model, granted by Denmark
and Sweden to the Consortium, constitutes existing aid, within the meaning of
Article 1(b), point (iv) of Regulation 2015/1589. In addition, the Commission
concludes that that aid, granted by Sweden to the Consortium, constitutes existing
aid within the meaning of Article 1(b), point (i) of Regulation 2015/1589.
The special Danish rules on loss carry-forward: new or existing aid
6.3.2.1.
(446)
1991-2001 LCF: new or existing aid
(442)
(443)
(444)
(445)
6.3.2.
The Commission concluded at recital (404) that the aid deriving from the 1991-2001
LCF was granted to the Consortium by Denmark on 13 February 1992. In light of
that conclusion, it is necessary to determine whether the aid deriving from the 1991-
2001 LCF falls within any of the definitions of existing aid under Article 1(b) of
Regulation 2015/1589.
See
Øresund
judgment, paragraph 308.
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(447)
Firstly, as noted at recital (435), the Complainant filed its complaint, alleging that the
State guarantee model constituted illegal State aid, on 16 April 2013, in relation to
which the Commission sent a request for information to the States on 13 May 2013.
At that point in time, neither the complaint, nor the Commission’s request for
information, made reference to the special Danish rules on loss carry-forward and
depreciation. The Commission concluded that that request for information
interrupted any limitation period in connection with that aid that had not expired by
13 May 2003 (recitals (434) to (437)). On 8 January 2014, the Complainant
submitted further documentation, alleging that the Consortium also benefited from
special Danish rules on loss carry-forward and depreciation. The Commission sent a
request for information to the States concerning the special Danish rules on loss
carry-forward and depreciation on 21 February 2014 (recital (3)).
The Commission considers that the request for information of 21 February 2014
constituted an action taken by the Commission with regard to the special Danish
rules on loss carry-forward and depreciation, including the aid deriving from the
1991-2001 LCF, which, pursuant to Article 17 of Regulation 2015/1589, would have
interrupted the limitation period in connection with aid granted as from 21 February
2004 (that is, ten years before that request for information).
The Commission notes, however, that the limitation period connected with the aid
deriving from the 1991-2001 LCF expired on 13 February 2002, that is, ten years
after the date it was granted. That limitation period had, therefore, expired by the
time the Commission’s request for information of 21 February 2014 could have
interrupted it.
In those circumstances, the Commission concludes that the aid deriving from the
1991-2001 LCF, granted by Denmark to the Consortium, constitutes existing aid,
within the meaning of Article 1(b)(iv) of Regulation 2015/1589.
6.3.2.2.
2013-2015 LCF: new or existing aid
(448)
(449)
(450)
(451)
The Commission concluded at recital (418) that the aid deriving from the 2013-2015
LCF was granted to the Consortium by Denmark on an annual basis, at the moment
of the authorities’ acceptance of A/S Øresund’s tax returns, until the acceptance of
the tax return for the tax year 2015. In light of that conclusion, it is necessary to
determine whether the aid deriving from the 2013-2015 LCF falls within any of the
definitions of existing aid under Article 1(b) of Regulation 2015/1589.
Firstly, as noted at recital (447), on 21 February 2014, the Commission sent a request
for information concerning the alleged aid deriving from the special Danish rules on
loss carry-forward and depreciation to the States. The Commission concluded at
recital (448) that that request for information constituted an ‘action taken’ by the
Commission with regard to the special Danish rules on loss carry-forward and
depreciation. The 2013-2015 LCF forms part of those rules. As such, all aid deriving
from the 2013-2015 LCF was granted after the action taken by the Commission and,
therefore, does not constitute existing aid within the meaning of Article 1(b), point
(iv) of Regulation 2015/1589.
(452)
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(453)
Secondly, the Commission notes that the aid deriving from the 2013-2015 LCF does
not fulfil the conditions of any of the other sub-paragraphs of Article 1(b) of
Regulation 2015/1589.
The Commission, therefore, concludes that the aid deriving from the 2013-2015
LCF, granted by Denmark to the Consortium, constitutes new aid, within the
meaning of Article 1(c) of Regulation 2015/1589.
The special Danish rules on depreciation: new or existing aid
6.3.3.1.
1999-2007 DEP: new or existing aid
(454)
6.3.3.
(455)
The Commission concluded, at recital (429), that the State aid deriving from the
1999-2007 DEP was granted from 2000 onwards, at the moment of the authorities’
acceptance of A/S Øresund’s tax returns in which it applied a depreciation rate
beyond the rate provided for in the Danish Tax Depreciation Act. In light of that
conclusion, it is necessary to determine whether the aid deriving from the 1999-2007
DEP falls within any of the definitions of existing aid under Article 1(b) of
Regulation 2015/1589.
Firstly, the Commission notes that, as explained with respect of the 1991-2001 LCF
(recital (452)), the request for information it sent on 21 February 2014 constituted an
‘action taken’ by the Commission with regard to the special Danish rules on loss
carry-forward and depreciation.
As such, the limitation period for any aid granted as from 21 February 2004 was
interrupted on 21 February 2014 and that aid, therefore, does not constitute existing
aid within the meaning of Article 1(b), point (iv) of Regulation 2015/1589.
The limitation period for any aid granted before 21 February 2004, however, expired
by the time it could have been interrupted and, therefore, constitutes existing aid
within the meaning of Article 1(b), point (iv) of Regulation 2015/1589. The
Commission notes that Denmark confirmed at recital (271) that, in practice, A/S
Øresund did not claim depreciation in its tax returns prior to 21 February 2004, so no
aid that could be qualified as existing aid under that Article was, in fact, granted.
Secondly, the Commission notes that the aid deriving from the 1999-2007 DEP does
not fulfil the conditions of any of the other sub-paragraphs of Article 1(b) of
Regulation 2015/1589.
The Commission, therefore, concludes that the aid deriving from the 1999-2007
DEP, granted by Denmark to the Consortium, constitutes new aid, within the
meaning of Article 1(c) of Regulation 2015/1589, insofar as it was granted after 21
February 2004.
6.3.3.2.
2008-2015 DEP: new or existing aid
(456)
(457)
(458)
(459)
(460)
(461)
The Commission concluded, at recital (429), that the State aid deriving from the
2008-2015 DEP was granted at the moment of the authorities’ acceptance of A/S
Øresund’s tax returns in which it applied a depreciation rate beyond the rate provided
for in the Danish Tax Depreciation Act, until the acceptance of the tax return for the
tax year 2015. In light of that conclusion, it is necessary to determine whether the aid
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deriving from the 2008-2015 DEP falls within any of the definitions of existing aid
under Article 1(b) of Regulation 2015/1589.
(462)
Similarly as for the 1999-2007 DEP (recital (456)), the request for information the
Commission sent on 21 February 2014 constituted an ‘action taken’ by the
Commission so that, also for the 2008-2015 DEP, the limitation period would have
been interrupted on 21 February 2014. As such, the limitation period for any aid
granted as from 21 February 2004 would have been interrupted on 21 February 2014
and does not constitute existing aid within the meaning of Article 1(b), point (iv) of
Regulation 2015/1589.
In that regard, the Commission notes that any aid deriving from the 2008-2015 DEP
necessarily has been granted after 21 February 2004, and so does not constitute
existing aid within the meaning of Article 1(b), point (iv) of Regulation 2015/1589.
Secondly, the Commission notes that the aid deriving from the 2008-2015 DEP does
not fulfil the conditions of any of the other sub-paragraphs of Article 1(b) of
Regulation 2015/1589.
The Commission, therefore, concludes that the aid deriving from the 2008-2015
DEP, granted by Denmark to the Consortium, constitutes new aid, within the
meaning of Article 1(c) of Regulation 2015/1589.
Legality of the aid
Article 108(3) TFEU requires Member States to inform the Commission, in
sufficient time to enable it to submit its comments, of any plans to grant aid. In
addition, the standstill obligation in that Article prohibits a Member State from
putting its proposed measure into effect before the Commission has adopted a final
decision.
Article 1(f) of Regulation 2015/1589 notes that new aid put into effect in
contravention of Article 108(3) TFEU is unlawful.
The Commission concluded at recitals (454), (460) and (465) that the aid deriving
from the 2013-2015 LCF, the 1999-2007 DEP, and the 2008-2015 DEP constitutes
new aid. The Commission notes that Denmark put those measures into effect without
first notifying them to the Commission and awaiting the Commission’s decision in
their regard. Denmark, therefore, put those new aid measures into effect in
contravention of Article 108(3) TFEU.
For completeness, the Commission notes that the Consortium had informed the
Commission of the existence of the State guarantee model in relation to the Fixed
Link project by its letter of 1 August 1995 (recital (149)).
Even if that letter could possibly be understood to also cover the special Danish rules
on loss carry-forward and depreciation as they were part of the Construction Act in
1991 (see further, recital (504)(c)), such that it could be determined that the
Commission had been informed of the plans to grant the aid deriving from those
measures, this would not alter the conclusion that Denmark put those measures into
effect in contravention of Article 108(3) TFEU, given that it did not await the receipt
of a Commission decision before so doing.
(463)
(464)
(465)
6.4.
(466)
(467)
(468)
(469)
(470)
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(471)
In any event, the Commission considers that the letter of 1 August 1995 could not be
considered as constituting a notification of the new aid measures (recitals (454),
(460) and (465)) which were granted at the earliest, as from the acceptance of A/S
Øresund’s tax return for the tax year 2004 (recitals (418) and (429)), that is, almost
ten years after the letter of 1 August 1995 was submitted to the Commission.
The Commission, therefore, concludes that the aid deriving from the 2013-2015
LCF, the 1999-2007 DEP, and the 2008-2015 DEP constitutes unlawful aid.
Compatibility assessment
State guarantees and 1991-2001 LCF
The Commission concluded, at recitals (388) and (404), respectively, that the aid
deriving from the State guarantee model and the 1991-2001 LCF constitutes
individual aid, and, at recitals (445) and (450), respectively, that it constitutes
‘existing aid’.
Article 22 of Regulation 2015/1589 provides that the Commission can propose
appropriate measures to the Member State concerned where the Commission has
concluded that an existing aid scheme is not, or is no longer, compatible with the
internal market. This does not apply, however, to individual existing aid. Therefore,
given that the Commission cannot propose appropriate measures in relation to
individual existing aid, it is not necessary to assess its compatibility with the internal
market.
The Commission, therefore, concludes that it is not necessary for the Commission to
determine whether the aid deriving from the State guarantee model or the 1991-2001
LCF is compatible with the internal market.
The Commission notes, however, that, going forward, the Consortium has agreed not
to avail itself of its right to State guarantees without a market conform premium, to
finance new debt, or refinance existing debt. To that end, the States have committed
(recital (265)) to ensure that the Consortium will finance new debt, and refinance
existing debt, on market terms. Therefore, the aid to the Consortium deriving from
the State guarantee model will be phased out as the Consortium’s outstanding debt
instruments expire. The States provided the Commission with an overview of the
transition to market terms of the remaining debt, and the expected repayment profile
(recital (265)). The States confirmed, in this context, that the Consortium has not
obtained any new State guaranteed financing or refinancing since the
Øresund
judgment (recital (265)).
The Commission recalls that the Complainant claims (recital (222)) that more
favourable funding terms obtained by enterprises whose legal form provides for an
exemption from ordinary rules on bankruptcy or other insolvency procedures may
constitute State aid, such that the Consortium would continue to enjoy a significant
advantage even after the States cease to issue specific State guarantees. Without
determining whether it is correct to say that the Consortium is exempted from such
rules or procedures (which is denied by the States), the Commission notes that such
an exemption would, first, be inherent in the establishment of the Consortium itself,
and second, if such exemption did constitute State aid, such State aid would, in any
event, not be covered by the scope of the formal investigation procedure which is
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(472)
6.5.
6.5.1.
(473)
(474)
(475)
(476)
(477)
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limited to the State guarantee model and the special Danish rules on loss carry-
forward and depreciation.
6.5.2.
(478)
2013-2015 LCF, 1999-2007 DEP and 2008-2015 DEP
The Commission concluded that the aid deriving from the 2013-2015 LCF
constitutes new aid (recital (454)), granted on an annual basis, when the tax returns
of A/S Øresund are accepted by the authorities (recital (418)). It also concluded that
the aid deriving from the 1999-2007 DEP and the 2008-2015 DEP constitutes new
aid (recitals (460) and (465)), granted after 21 February 2004 onwards, at the
moment of the authorities’ acceptance of A/S Øresund’s tax returns in which it
applied a depreciation rate beyond the rate provided for in the Danish Tax
Depreciation Act, until acceptance of the tax return for the tax year 2015
(recital (429)).
In the course of the preliminary investigation procedure, Denmark and Sweden had
argued that, should the Commission consider the support measures to constitute aid,
it should assess their compatibility on the basis of Article 107(3)(b) TFEU, which
allows aid to promote the execution of an important project of common European
interest.
The IPCEI Communication
190
, sets out the principles according to which the
Commission assesses the public financing of such projects. Paragraph 52 of the
IPCEI Communication provides that ‘in the case of non-notified aid, the Commission
will apply the [IPCEI] Communication if the aid was granted after its entry into
force, and the rules in force at the time when the aid was granted in all other cases’.
The IPCEI Communication entered into force on 1 July 2014.
It follows from recital (429) that the aid granted on the basis of the 1999-2007 DEP
was granted before 1 July 2014, and that at least part of the aid granted on the basis
of the 2013-2015 LCF and of the 2008-2015 LCF was granted after that date.
However, since the IPCEI Communication consolidates the Commission practice as
regards the compatibility assessment of aid on the basis of Article 107(3)(b)
TFEU
191
, the basic guiding principles set out therein are also informative for the
Commission’s assessment of the aid granted before its entry into force.
One of those basic guiding principles is the principle of proportionality, which
requires that aid measures do not exceed what is necessary to attain their objectives.
On 25 November 2021, the Commission adopted a revised Communication on State aid rules for
Important Projects of Common European Interest (OJ C 528 of 30 December 2021, p. 10). Since that
communication only applied as from 1 January 2022, it is not relevant for any aid granted before that
date. In any event, the Commission notes that the provisions on proportionality assessment in the 2014
IPCEI Communication and the 2021 revision are substantially similar.
See, for example, Commission decision of 17 March 2009, in case N 157/2009 – Denmark – Financing
of the planning phase of the Fehmarn Belt fixed link, OJ C 2002, 27.08.2009, p. 1; Commission
decision of 13 March 1996 concerning fiscal aid given to German airlines in the form of a depreciation
facility, OJ L 146, 20.06.1996, p. 42; Commission decision of 22 December 1998, N 576/98 in case N
576/98 – United Kingdom – Channel Tunnel Rail Link, OJ C 56, 26.02.1999, p. 6; and Commission
decision of 13 May 2009 in case N 420/08 – United Kingdom – Restructuring of London & Continental
Railways, OJ C 183, 5.08.2009, p. 2.
(479)
(480)
(481)
(482)
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Thus, if the construction and operation of the Fixed Link could have been achieved
with less aid, then the aid would not be considered proportionate. This principle is
also laid down in paragraph 28 of the IPCEI Communication.
(483)
In Section 5.4.4 of the Opening decision, the Commission expressed doubts as to the
proportionality of the support measures, including the special tax measures. The
Commission noted, at recital 151 of the Opening decision, that it did not have all of
the elements to determine the limits on the amount and duration of the State
guarantees and the tax advantages that could be considered reasonable. From
recital 152 of the Opening decision, it can be deduced that this was a prerequisite to
allow for a proper quantification method of the aid involved and its limitation.
Therefore, the Commission expressed doubts as regards the proportionality of the
measures under examination.
The States did not submit any further information in reply to the Opening decision
that could allow the Commission to determine any limits on the amount and duration
of the aid derived from the 2013-2015 LCF, the 1999-2007 DEP and the 2008-2015
DEP that could be considered as proportionate, or to quantify the aid involved. In
particular, the States did not submit a funding gap model, which is required by
paragraph 31 of the IPCEI Communication, which provides that ‘[t]he maximum aid
level will be determined with regard to the identified funding gap in relation to the
eligible costs. If justified by the funding gap analysis, the aid intensity could reach up
to 100 % of the eligible costs. The funding gap refers to the difference between the
positive and negative cash flows over the lifetime of the investment, discounted to
their current value on the basis of an appropriate discount factor reflecting the rate of
return necessary for the beneficiary to carry out the project notably in view of the
risks involved. The eligible costs are those laid down in Annex […]’.
The States submitted that they would encounter several methodological challenges in
setting up such funding gap model and indicated a risk that such funding gap
calculations would point to overcompensation of the Consortium.
Moreover, the States did not consider it appropriate or necessary to provide further
comments on the compatibility of any possible aid to the Consortium in light of their
position on the existing aid qualification of the State guarantee model and the no aid
classification of the special Danish rules on loss carry-forward and depreciation. In
addition, the States did not comment on the economic assessment of the Fixed Link
that the Complainant commissioned (recitals (191), (193), and (201) to (206)), and
which was forwarded to the States (recitals (30) and (38)).
On that basis, the Commission finds that the States failed to demonstrate that the aid
derived from the 2013-2015 LCF, the 1999-2007 DEP and the 2008-2015 DEP was
proportionate.
Since the States failed to establish the proportionality of the aid derived from the
2013-2015 LCF, the 1999-2007 DEP or the 2008-2015 DEP, the Commission
concludes that that aid is not compatible with the internal market. In light of this, it is
unnecessary to determine whether the Fixed Link concerns a project that is eligible in
accordance with the IPCEI Communication or whether the measures are necessary
and do not lead to undue distortions of competition that cannot be outweighed by
their positive effects.
(484)
(485)
(486)
(487)
(488)
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7.
(489)
RECOVERY
In accordance with the TFEU and the established case-law of the Union Courts, the
Commission is competent to decide that the Member State concerned shall alter or
abolish aid when it has found that it is incompatible with the internal market
192
. The
Union Courts have also consistently held that the obligation on a Member State to
abolish aid regarded by the Commission as being incompatible with the internal
market is designed to re-establish the previously existing situation
193
.
In this context, the Union Courts have established that this objective is attained once
the recipient has repaid the amounts granted by way of unlawful aid, thus forfeiting
the advantage which it had enjoyed over its competitors on the internal market, and
the situation prior to the payment of the aid is restored
194
.
In line with the case-law, Article 16(1) of Regulation 2015/1589 states that ‘where
negative decisions are taken in cases of unlawful aid, the Commission shall decide
that the Member State concerned shall take all necessary measures to recover the aid
from the beneficiary.’
Article 16(1) of Regulation 2015/1589 also provides, however, that ‘[t]he
Commission shall not require recovery of the aid if this would be contrary to a
general principle of Union law’. In this respect, it has been ruled that the
Commission is required to take into consideration, on its own initiative, exceptional
circumstances that provide justification, pursuant to Article 16(1), for it to refrain
from ordering the recovery of unlawfully granted aid where such recovery is contrary
to a general principle of Union law
195
. The Commission, therefore, must, first, assess
whether such circumstances existed (Section 7.1), and, second, decide on the
methodology for recovery of aid (Section 7.2).
Legitimate expectations
The States argue that recovery should be prevented by the principle of legitimate
expectations. The principle of protection of legitimate expectations is a general
principle of Union law
196
, which confers rights on individuals
197
. In accordance with
settled case-law, the right to rely on the principle of the protection of legitimate
(490)
(491)
(492)
7.1.
(493)
192
193
Judgment of 12 July 1973,
Commission
v
Germany,
C-70/72, EU:C:1973:87, paragraph 13.
Judgment of 21 March 1990,
Belgium
v
Commission,
C-142/87, EU:C:1990:125, paragraph 66;
judgment of 15 September 2022,
Fossil
v
Commissioner of Income Tax,
Case-705/20, paragraph 42.
Judgment of 17 June 1999,
Belgium
v
Commission,
C-75/97, EU:C:1999:311, paragraphs 64 and 65,
judgment of 8 December 2011,
Residex Capital IV
v
Gemeente Rotterdam
,Case C‑275/10,
EU:C:2011:814, paragraph 34.
Judgment of the Court of Justice of 24 November 1987,
Rijn-Schelde-Verolme (RSV) Machinefabrieken
en Scheepswerven NV
v
Commission,
223/85, EU:C:1987:502.
Judgment of the Court of Justice of 3 May 1978,
August Töpfer & Co. GmbH
v
Commission,
112/77,
EU:C:1978:94, paragraph 19.
Judgment of the Court of Justice of 19 May 1992,
Mulder and Others
v
Council and Commission,
Joint
Cases C-104/89 and C-37/90, EU:C:1992:217, paragraph 15.
194
195
196
197
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expectations extends to any person in a situation where a Union institution has
caused him or her to have justified expectations
198
.
(494)
Three cumulative conditions must be satisfied for a claim of entitlement to the
protection of legitimate expectations to be well founded. First, precise,
unconditional, and consistent assurances originating from authorised and reliable
sources must have been given to the person concerned. Second, those assurances
must be such as to give rise to a legitimate expectation on the part of the person to
whom they are addressed. Third, the assurances given must comply with the
applicable rules
199
.
The Court has consistently held that the right to rely on the principle of the protection
of legitimate expectations extends to any person to whom an institution has given
rise to justified hopes. In addition, the Court has accepted that legitimate
expectations can arise only where an institution itself has given precise assurances
that the measure in question does not constitute State aid
200
. In principle, there is also
no right to legitimate expectations on the part of recipients of aid unlawfully
implemented
201
.
The Commission recalls that it has previously found
202
that – at least up until the date
of the
Aéroports de Paris
judgment, of 12 December 2000 – Denmark, Sweden, and
the Consortium had legitimate expectations that measures in relation to the Fixed
Link did not constitute State aid. This was confirmed by the General Court in the
Øresund
judgment
203
.
The Commission notes that it is the position of the Complainant and Scandlines et al.
that the
Øresund
judgment excluded the existence of legitimate expectations for the
Consortium and the States, as from the
Aéroports de Paris
judgment (recitals (213)
and (214)). The Commission disagrees with this position.
At paragraph 322 of the
Øresund
judgment, the General Court dismissed the action
against the 2014 decision insofar as it concerned the Commission’s finding that the
Consortium and the States could claim the benefit of legitimate expectations for the
period before the
Aéroports de Paris
judgment. With respect to the period thereafter,
Judgment of the Court of Justice of 11 March 1987,
Van den Bergh en Jurgens and Van Dijk Food
Products (Lopik)
v
Commission of the European Communities,
265/85, EU:C:1987:121, paragraph 44
and the case-law cited therein.
Judgment of the General Court of 30 June 2005,
Branco
v
Commission,
T-347/03, EU:T:2005:265,
paragraph 102 and the case-law cited therein; judgment of the General Court of 23 February 2006,
Cementbouw Handel & Industrie
v
Commission,
T-282/02, EU:T:2006:64, paragraph 77; judgment of
the General Court of 30 June 2009,
CPEM
v
Commission,
T-444/07, EU:T:2009:227, paragraph 126.
See judgment of the Court of Justice of 22 June 2006,
Belgium and Forum 187 ASBL
v
Commission,
Joint Cases C-182/03 and C-217/03, EU:C:2006:416, para 147; judgment of the Court of Justice of
24 November 2005,
Germany
v
Commission,
C-506/03, EU:C:2005:715, paragraph 58.
Judgment of the Court of Justice of 11 November 2004,
Daewoo Electronics Manufacturing España SA
(Demesa) and Territorio Histórico de Álava – Diputación Foral de Álava
v
Commission,
Joined Cases
C-183/02 P and C-187/02 P, EU:C:2004:701, paragraphs 44 and 45, and the case law cited therein.
2014 decision, recitals 140 to 153, and Opening decision, recitals 169 to 179.
Øresund
judgment, paragraphs 297-328.
(495)
(496)
(497)
(498)
198
199
200
201
202
203
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at paragraphs 327 and 328, the General Court noted that the 2014 decision did not
make a conclusive finding. The General Court found that it was not necessary for it
to give a ruling on the arguments, in that regard.
(499)
In those circumstances, the Commission considers that the General Court has left the
question of the point until which the protection of legitimate expectations applied, in
this case, to the examination of the Commission. Accordingly, in Section 6 (the
conclusion of the Opening decision), the Commission noted that it would look at the
precise period during which the beneficiary, Sweden and/or Denmark could invoke
legitimate expectations, should the measures be found to constitute incompatible
State aid.
As found at recitals (454), (460), (465) and (472), the aid deriving from the
2013-2015 LCF, the 2008-2015 DEP and the 1999-2007 DEP constitutes unlawful,
new State aid, which is incompatible with the internal market (recital (488)). The
Commission must, therefore, determine until when the parties could have relied upon
legitimate expectations in respect of that aid.
Prior to the
Aéroports de Paris
judgment, it was clear Commission practice to find
that the construction and operation of transport infrastructure did not constitute
economic activity
204
. In the
Aéroports de Paris
judgment, however, the General
Court acknowledged that the operation of an airport could be seen as an economic
activity.
Therefore, as stated in the Notice on the Notion of State aid, the traditional view that
the public funding of the construction and operation of much infrastructure fell
outside of State aid rules changed with the
Aéroports de Paris
judgment. Paragraph
209 of that Notice states:
‘[d]ue to the uncertainty that existed prior to the Aéroports de Paris judgment,
public authorities could legitimately consider that the public funding of
infrastructure granted prior to that judgment did not constitute State aid and that,
accordingly, such measures did not need to be notified to the Commission. It
follows that the Commission cannot put such funding measures definitively
adopted before the Aéroports de Paris judgment into question on the basis of State
aid rules. This does not imply any presumption as regards the presence or absence
of State aid or legitimate expectations as regards funding measures not
definitively adopted before the Aéroports de Paris judgment, which will have to
be verified on a case-by-case basis.’
(503)
As noted at recitals (418) and (429), the aid deriving from the 2013-2015 LCF, the
1999-2007 DEP, and the 2008-2015 DEP concerns aid that was not definitively
granted before 12 December 2000. It must, therefore, be verified whether the
legitimate expectations enjoyed by Denmark, Sweden, and the Consortium extended
beyond that date in this case.
In order to carry out that verification, the Commission recalls, in the first place, the
circumstances that led it to conclude, in the 2014 decision and in the Opening
See the
Øresund
judgment, paragraph 308.
(500)
(501)
(502)
(504)
204
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decision, that legitimate expectations arose in this case, as set out at recitals 144 to
153 of the 2014 decision and recitals 170 to 179 of the Opening decision:
(a)
prior to the
Aéroports de Paris
judgment, when the Fixed Link project was
being planned and constructed, the Commission’s position was to consider the
public financing of infrastructure as public goods, and not an economic
activity. This position was clearly set out in various soft law instruments
205
, as
well as certain Commission decisions
206
(see recital 144 of the 2014 decision
and recital 170 of the Opening decision);
on 1 August 1995, the Consortium wrote to the Commission, asking for
clarification as to whether the guarantees would constitute State aid. In that
context, as noted at recital 148 of the 2014 decision and recital 174 of the
Opening decision, the Commission found it relevant to note that the
Consortium’s letter was submitted to the Commission prior to the entry into
force of Regulation 659/99 and Regulation (EC) No 794/2004
207
, which
introduced new formalities for State aid notifications, including notification
forms, and electronic submission through the SANI system, with validation by
Member States’ Permanent Representations
208
;
by the 1995 letters to Denmark and Sweden, the Commission services
confirmed that the construction of the Fixed Link did not fall under the scope
of State aid rules, and did not need to be notified to the Commission. This was
fully consistent with the Commission practice, at the time (see 2014 decision,
recital 150 and Opening decision, recital 176). Even if the Consortium’s letter
(b)
(c)
205
See, for instance, Community guidelines on the application of Articles 92 and 93 of the EC Treaty and
Article 61 of the EEA Agreement to State aids in the aviation sector, OJ C 350, 10.12.1994, p. 5.
Paragraph12 refers explicitly to bridges: ‘The construction of enlargement of infrastructure projects
(such as airports, motorways, bridges, etc.) represents a general measure of economic policy which
cannot be controlled by the Commission under the Treaty rules on State aid.’; Commission White Paper
of 22 July 1998 on Fair payment for infrastructure use: A phased approach to a common transport
infrastructure charging in the framework in the EU (COM (1998) 466 final), paragraph 43; Green Paper
of 10 December 1997 on Sea Ports and Maritime Infrastructure (COM (97) 678 final), paragraph 42;
Communication from the Commission to the Council and to the European Parliament of 13 February
2001: Reinforcing Quality Services in Sea Ports: A key for European transport, (COM (2001) 35 final).
See, Commission decisions of 14 September 2000, on State aid N 208/2000 – Netherlands – Subsidy
Scheme for Public Inland Terminals (SOIT), OJ C 315, 4.11.2000, p. 22; Commission decision of
17 July2002, on State aid N 356/2002 – United Kingdom - Network Rail, OJ C 232, 28.09.2002, p. 2;
Commission decision of 20 December 2001, on State aid N 649/2001 – United Kingdom – Freight
Facilities Grant, paragraph 45, OJ C 45, 19.02.2002, p. 2; Commission decision of 8 March 2006, on
State aid N 284/2005 – Ireland – Regional Broadband Programme: Metropolitan Area Networks
(“MANs”), phases II and III, paragraph 34, OJ C 207, 30.8.2006, p. 2; Commission decision of
2 August 2002 on State aid C 42/2001 – Spain – Terra Mitica SA, paragraphs 64 and 65, OJ L 91,
8.4.2003, p. 23; Commission decision of 20 April 2005, on State aid N 355/2004 – Belgium – PPP
Antwerp International Airport, paragraph 34, OJ C 176, 16.7.2005, p. 11; Commission decision of 11
December 2001, on State aid N 550/2001 – Belgium - Partenariat public privé pour la construction
d’installations de chargement et de déchargement, paragraph 24, OJ C 24, 26.1.2002, p. 2,; Commission
decision of 20 December 2001, on State aid N 649/2001 – United Kingdom – Freight Facilities Grant
(FFG), OJ C 045, 19.02.2002, p. 2. See also paragraph 201 of the Notice on the Notion of State aid.
Commission Regulation (EC) No 794/2004 of 21 April 2004 implementing Council Regulation (EC)
No 659/1999 laying down detailed rules for the application of Article 93 of the EC Treaty, OJ L 140,
30.4.2004, p.1.
Ibid., Articles 2 and 3.
206
207
208
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of 1 August 1995 only concerned the guarantees, the response gave rise to
legitimate expectations with respect to the special Danish rules on loss carry-
forward and depreciation and the operational phase of the project, as it was the
entire activity of the Consortium, that is, both the construction and operation,
which fell outside of State aid rules, independent of the form that the State
financing took (2014 decision, recital 152, and Opening decision, recital 177,
confirmed by the General Court in the
Øresund
judgment, paragraph 313); and
(d)
in addition, the Fixed Link was approved as a TEN-T project, and received
Union funding, further indicating that the Commission had been duly informed
that the measure in the form of State guarantees would be implemented
(recitals (58) and (442)) (2014 decision, recital 151).
(505)
The Commission recalls that, as noted at recitals (371) and (399), the State aid
deriving from the State guarantee model and the 1991-2001 LCF was granted to
support the investment in the planning and construction of the Fixed Link. The State
aid deriving from the 2013-2015 LCF, 1999-2007 DEP, and 2008-2015 DEP should
be considered as supporting the operation of the Fixed Link (recitals (416) and
(426)).
The Commission notes that the reasons for which it originally found that legitimate
expectations arose in relation to the Fixed Link project (recital (504)) were rooted in
the fact that the 1995 letters explicitly confirmed the practice of the time of
considering that infrastructure projects did not fall within the ambit of State aid rules.
Those letters were sent in response to the Consortium’s letter to the Commission of
1 August 1995, requesting clarity as to whether the State guarantee model to support
the construction of the Fixed Link would qualify as State aid.
In the
Aéroports de Paris
judgment, the General Court confirmed that the operation
of public infrastructure could constitute State aid
209
.
As noted at recital (471), the Commission does not consider that the Consortium’s
letter of 1 August 1995 could have been considered as constituting a notification of
the new aid measures, which were first granted almost ten years after that letter was
sent and for which it cannot be reasonably assumed that the Consortium could have
included them in their letter, since all three measures find their origin in a future
amendment of the normal tax rules, which was not applicable to A/S Øresund.
Similarly, the Commission does not consider that the 1995 letter, confirming the
non-application of State aid rules to the investment taken at that time, can properly
be deemed to also cover aid for day-to-day operations that was granted after the
Aéroports de Paris
judgment, and after the construction had been completed.
Apart from the 1995 letters, the Commission is not aware of the Consortium or the
States having received any assurances that would fulfil the three cumulative
conditions necessary to give rise to legitimate expectations (recital (494)).
The Commission, therefore, does not find any reason to consider that the States or
the Consortium could have held legitimate expectations that the new aid measures,
Paragraph 123.
(506)
(507)
(508)
(509)
(510)
209
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covering the day-to-day operations of the Fixed Link, granted after the
Aéroports de
Paris
judgment, would not have constituted State aid.
(511)
The Commission, therefore, finds that, as from 12 December 2000 – the date of the
Aéroports de Paris
judgment – the States and the Consortium could no longer hold
legitimate expectations that support for the day-to-day operations of the project did
not constitute State aid.
The Commission notes that the situation of the aid deriving from the State guarantee
model and the 1991-2001 LCF may not necessarily be the same as that of the aid
deriving from the 2013-2015 LCF, the 1999-2007 DEP, and the 2008-2015 DEP,
given that the State aid deriving from the State guarantee model and the 1991-2001
LCF was definitively granted to the Consortium on 13 February 1992 to enable the
investment into the Fixed Link (recitals (388) and (404), and recitals (371) and
(399)), before the 1995 letters were issued. Given, however, that the aid deriving
from the State guarantee model and the 1991-2001 LCF constitutes existing aid that
is not subject to recovery (recitals (473) to (475)), the Commission is not required to
make a determination as to whether the Consortium or the States could have
maintained legitimate expectations beyond the
Aéroports de Paris
judgment in
relation to the aid to support the investment into the construction of the Fixed Link.
The Commission, therefore, concludes that the new aid deriving from the 2013-2015
LCF, the 1999-2007 DEP, and the 2008-2015 DEP, since it was granted after
12 December 2000, is not precluded from recovery by virtue of the application of the
principle of legitimate expectations. That aid must, therefore, be recovered.
Methodology for recovery
When ordering the recovery of aid declared incompatible with the internal market,
the Commission’s decision should include information that enables the addressee of
the decision to calculate the amount of aid to be recovered without overmuch
difficulty
210
. In order to re-establish the situation that existed on the internal market
prior to their granting, recovery shall cover the period starting on the date when the
aid was put at the disposal of the beneficiary until effective recovery. The amount to
be recovered shall bear interest until effective recovery.
Unlawful aid found to be incompatible with the internal market must be recovered
from the recipients of the aid
211
. To restore the situation that existed on the internal
market prior to the granting of the aid, the recipient needs to repay the aid to forfeit
the advantage which it has enjoyed over its competitors on the market. The
Commission noted at recitals (314) to (319) that A/S Øresund and the Consortium
form a single undertaking for the purposes of the economic activity of the Fixed
Link; that any advantage assigned to the single undertaking for that economic
activity also benefits the Consortium as part of the undertaking; and that any
reduction in the costs connected to the activity of the Fixed Link is of benefit to the
See, to that effect, judgment of the Court of Justice of 18 October 2007,
Commission
v
France,
C-441/06, EU:C:2007:616, paragraph 29 and case-law cited.
Judgment of the Court of Justice of 29 April 2004,
Germany
v
Commission,
C-277/00, EU:C:2004:238,
paragraph 75.
(512)
(513)
7.2.
(514)
(515)
210
211
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Consortium, as it is the income of the Consortium that is used to discharge the
liabilities of the Consortium. In light of those circumstances, and in order to re-
establish the situation that existed on the internal market prior to the granting of the
aid measures, the aid could be recovered either from the Consortium or from A/S
Øresund, as part of the single undertaking, since it is the Consortium that bears any
reduction or increase in the costs related to the Fixed Link.
(516)
The aid deriving from the 2013-2015 LCF was granted on an annual basis, at the
time when the authorities accepted A/S Øresund’s tax returns. The aid deriving from
the 1999-2007 DEP and 2008-2015 DEP was granted at the moment of the
authorities’ acceptance of A/S Øresund’s tax returns, in which it applied a
depreciation rate beyond the rate provided for in the Danish Tax Depreciation Act.
To quantify the amount to be recovered, a comparison needs to be made between the
tax A/S Øresund actually paid, and the amount of tax it should have paid if the
generally applicable loss carry-forward and depreciation rules had been applied,
calculated on the dates the tax saved would have been due in each tax year. This
comparison, between the tax actually paid and the amount of tax that should have
been paid, is required for each tax return submitted
212
and accepted by the tax
authorities after 21 February 2004.
The Commission, further, notes that the effect of the special Danish rules on loss
carry-forward and the special Danish rules on depreciation cannot be considered in
isolation, since depreciation has an impact on the taxable income of a taxpayer, and
can have an impact on the losses carried forward. Moreover, the entire period, from
the first acceptance of a tax return since 21 February 2004 until the date of recovery,
needs to be taken into account, as losses carried forward can have an impact on the
taxes actually paid in future years.
Regarding the 2008-2015 DEP, in particular, the Commission notes that A/S
Øresund could, with each tax return, decide whether or not it would depreciate part
of its assets. It is those actual choices that need to be taken into account when
comparing the tax paid by A/S Øresund with the tax that it should have paid, if the
general depreciation rules had been applicable and applied (‘the counterfactual tax
return’). If A/S Øresund, in a certain year, depreciated at a higher rate than permitted
under the generally applicable rules, that surplus depreciation should be taken into
account in the counterfactual tax return of the first year for which A/S Øresund chose
not to depreciate its Fixed Link assets (or only did so at a rate lower than the
generally applicable rule), and only up to the depreciation rate allowed under the
general rules. Each depreciation surplus remaining should, for calculation purposes,
be considered in the counterfactual tax return of the following year until the
cumulative depreciated amount in A/S Øresund’s tax returns and in the
counterfactual tax returns are equal.
CONCLUSION
The Commission concludes that the State guarantee model put in place by the States
for the loans taken up by the Consortium for financing the planning and construction
Where applicable, a correction by the Danish tax administration in the context of a tax audit should be
taken into account.
(517)
(518)
8.
(519)
212
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costs of the Fixed Link constitutes State aid, within the meaning of Article 107(1)
TFEU, to the Consortium.
(520)
The State guarantee model was granted as one individual ad hoc aid on 13 February
1992, when the Consortium was established. That measure constitutes existing aid.
Nevertheless, the Commission notes that the States committed to ensure that the
Consortium will finance new debt and refinance existing debt on market terms.
Therefore, the aid to the Consortium deriving from the State guarantee model will be
phased out as the Consortium’s outstanding debt instruments expire.
The Commission concludes that the 2002-2012 LCF and the 1991-1998 DEP do not
constitute State aid, within the meaning of Article 107(1) TFEU.
The Commission concludes that the advantages deriving from the 1991-2001 LCF,
the 2013-2015 LCF, the 1999-2007 DEP, and the 2008-2015 DEP constitute State
aid, within the meaning of Article 107(1) TFEU, granted by Denmark to the single
undertaking of A/S Øresund and the Consortium, and therefore the Consortium, on
an individual ad hoc basis. The aid deriving from the 1991-2001 LCF constitutes one
individual ad hoc aid, which qualifies as existing aid. The aid deriving from the
1999-2007 DEP constitutes grants of individual ad hoc aid, which would qualify as
existing aid if it were granted before 21 February 2004, and which qualifies as new,
unlawful aid insofar as it was granted as from 21 February 2004. The aid deriving
from the 2013-2015 LCF, and the aid deriving from the 2008-2015 DEP, constitute
individual ad hoc aids, which qualify as new aid, which Denmark implemented
unlawfully. Those aid measures that qualify as new aid are not compatible with the
internal market. As no aid under those measures was granted before 12 December
2000, recovery is not precluded by the application of the principle of the protection
of legitimate expectations. Denmark must recover the unlawful and incompatible aid
granted under the 2013-2015 LCF, 1999-2007 DEP, and 2008-2015 DEP.
(521)
(522)
HAS ADOPTED THIS DECISION:
Article 1
The 2002-2012 LCF and the 1991-1998 DEP do not constitute State aid, within the meaning
of Article 107(1) the Treaty on the Functioning of the European Union.
Article 2
The State guarantee model, granted by the States, as well as the 1991-2001 LCF, granted by
Denmark, constitute State aid, within the meaning of Article 107(1) the Treaty on the
Functioning of the European Union, to the single undertaking of A/S Øresund and the
Consortium, and, therefore, to the Consortium. That aid constitutes existing aid.
Article 3
The advantages deriving from the 1999-2007 DEP granted by Denmark constitute State aid,
within the meaning of Article 107(1) the Treaty on the Functioning of the European Union, to
the single undertaking of A/S Øresund and the Consortium, and, therefore, to the Consortium.
That aid constitutes existing aid to the extent that it was granted before 21 February 2004.
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Article 4
The advantages deriving from the 1999-2007 DEP, insofar as they were granted as from 21
February 2004, the advantages deriving from the 2008-2015 DEP, and the advantages
deriving from the 2013-2015 LCF constitute State aid, within the meaning of Article 107(1)
the Treaty on the Functioning of the European Union, to the single undertaking of A/S
Øresund and the Consortium, and therefore to the Consortium. That aid constitutes new aid
that was unlawfully put into effect by Denmark in breach of Article 108(3) of the Treaty on
the Functioning of the European Union, and is incompatible with the internal market.
Article 5
(1)
(2)
Denmark shall recover the aid referred to in Article 4 from the single undertaking of
A/S Øresund and the Consortium.
The sums to be recovered shall bear interest from the date on which they were put at the
disposal of the single undertaking of A/S Øresund and the Consortium until their actual
recovery.
The interest shall be calculated on a compound basis in accordance with Chapter V of
Regulation (EC) No 794/2004 and to Regulation (EC) No 271/2008 amending
Regulation (EC) No 794/2004.
Article 6
(1)
(2)
Recovery of the aid granted referred to in Article 4 shall be immediate and effective.
Denmark shall ensure that this Decision is implemented within four months following
the date of notification of this Decision.
Article 7
(1)
Within two months following notification of this Decision, Denmark shall submit the
following information:
(a)
(b)
(c)
(d)
(2)
the total amount of aid, referred to in Article 4, received by the single undertaking
of A/S Øresund and the Consortium;
the total amount (principal and recovery interest) to be recovered from the single
undertaking of A/S Øresund and the Consortium;
a detailed description of the measures already taken and planned to comply with
this Decision;
documentation demonstrating that the single undertaking of A/S Øresund and the
Consortium has been ordered to repay the aid.
(3)
Denmark shall keep the Commission informed of the progress of the national measures
taken to implement this Decision until recovery of the aid granted referred to in Article
4 has been completed. It shall immediately submit, on simple request by the
Commission, information on the measures already taken and planned to comply with
this Decision. It shall also provide detailed information concerning the amounts of aid
and recovery interest already recovered from the single undertaking of A/S Øresund and
the Consortium.
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Article 8
This Decision is addressed to the Kingdom of Denmark and the Kingdom of Sweden.
If the decision contains confidential information which should not be published, please inform
the Commission within fifteen working days of the date of receipt. If the Commission does
not receive a reasoned request by that deadline, you will be deemed to agree to publication of
the full text of the decision. Your request specifying the relevant information should be sent
electronically to the following address:
European Commission
Directorate-General Competition
State Aid Greffe
B-1049 Brussels
[email protected]
Done at Brussels, 13.2.2024
For the Commission
Margrethe VESTAGER
Executive Vice-President
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