State aid: Commission approves Danish public financing of Fehmarn Belt fixed rail-road link

railway 2020

(Cristian S., Unsplash)

This article is brought to you in association with the European Commission.


The European Commission has concluded that the public financing model of the Fehmarn Belt coast-to-coast infrastructure between Denmark and Germany is in line with EU State aid rules.

Executive Vice-President Margrethe Vestager, in charge of competition policy said: “The Fehmarn Belt fixed link will contribute to the cross-border integration of the two regions it will connect. It will be key to complete the main North-South route connecting central Europe and the Nordic countries to the benefit of the European economy. Following an in-depth investigation, we concluded that the Danish measures to support this project of common European interest are in line with EU State aid rules, as the positive effects of the project clearly outweigh any potential distortion of competition.”

The Fehmarn Belt fixed rail-road link is a key element to complete the main North-South route connecting central Europe and the Nordic countries. It includes an undersea tunnel between Rødby on the island of Lolland in Denmark and Puttgarden in Germany. The tunnel will be approximately 19 kilometres long and consist of an electrified, double-track railway and a four-lane motorway.

Based on an intergovernmental agreement between Denmark and Germany, Denmark will be the sole owner and will bear the full risk for the financing of this tunnel, as well as for the upgrading of the Danish on-land road and rail (“hinterland”) connections. In Denmark, two public undertakings have been entrusted with the planning, construction and operation of the project: A/S Femern Landanlæg for the Danish hinterland connections and Femern A/S for the coast-to-coast infrastructure.

The financing of the Danish hinterland connections were previously confirmed to involve no State aid and were therefore not part of this investigation. As Germany is responsible for the financing and upgrading of its own hinterland connections, those were also not part of the investigation.

In July 2015, the Commission approved the public financing model of the Fehmarn Belt fixed rail-road link between Denmark and Germany under EU State aid rules.

Following an appeal against the Commission’s 2015 decision by Scandlines and Stena Line, in December 2018 the General Court partially annulled the Commission’s decision on procedural grounds (Judgments T-630/15 and T-631/15). The General Court confirmed the Commission’s decision with respect to the financing granted to Femern Landanlæg for the hinterland connections. However, it found that the Commission should have opened a formal investigation under EU State aid rules to assess the measures granted by Denmark to Femern A/S before adopting its decision.

The Commission investigation

In June 2019, to comply with the General Court’s December 2018 judgment, the Commission opened an in-depth investigation into the measures granted by Denmark to Femern A/S in support of the fixed link.

The investigation confirmed that the capital injections, the State guarantees on loans and the State loans granted by Denmark to Femern A/S constitute State aid under EU rules in view of the economic character of the coast-to-coast infrastructure. Furthermore, the Commission concluded those measures constitute individual aid as opposed to an aid scheme and that they qualify as investment aid.

The Commission found that the project qualifies as an Important Project of Common European interest (IPCEI) and assessed the measures under the Communication on IPCEI. The Commission concluded that all the compatibility criteria set out by the Communication are met.

With respect to the proportionality of the measures in question, following the opening of the in-depth investigation, the Danish authorities submitted up to date financial figures to the Commission.

Furthermore, following discussions with the Commission, the Danish authorities implemented certain changes to the financing structure of the project. These changes include, among others, limiting the public financing to the minimum necessary to make the investment happen. More specifically, they limited the use of State guarantees and State loans up to a maximum debt amount of €9.3 billion and to maximum the first 16 years of operations.

Based on the updated figures submitted by Denmark and the changes to the financing structure, the Commission concluded that the public measures are proportionate, in line with EU State aid rules.

The Commission concluded that the measures are necessary and that the positive effects of the project clearly outweigh any potential distortion of competition, in line with the requirements of the Communication on IPCEI.

On this basis, the Commission concluded that the capital injections, the State guarantees on loans and the State loans granted by Denmark to Femern A/S are in line with EU State aid rules.

The Commission also assessed certain other measures such as tax measures and concluded that they do not constitute State aid within the meaning of EU State aid rules.

Background

Traditionally, public support for the construction and operation of infrastructure projects was considered not to involve State aid. However, there have been important market developments, which led to increasingly commercial use of such infrastructures. The EU Court of Justice confirmed that public funding of infrastructure investment projects is subject to EU State aid rules when the infrastructure is intended to be commercially exploited (Joined Cases T-443/08 and T-455/08 Leipzig Halle). Therefore, public funding for projects like the Fehmarn Belt fixed link must be assessed under EU State aid rules to the extent they are confirmed to be economic in nature.

EU State aid rules allow Member States to grant support for such infrastructure investments to stimulate economic growth, subject to certain conditions – this includes in particular the need to avoid overcompensation and to ensure that there is a level playing field in the market.

The non-confidential version of the decision will be made available under the case number SA.39078 in the State Aid Register on the competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.

Advertising

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Europe is now practically divided as in the Cold War

Millions of people eat octopus- here’s why we shouldn’t

EU future at stake: MEPs broadly welcome Commission’s recovery package proposals

Ukraine-EU deal sees the light but there’s no defeat for Russia

European elections: A chance to repel both nationalism and no-deal Brexit

In The Bahamas, Guterres sees impact of ‘Category Hell’ hurricane, ‘powered by climate change’

A young European voice on Grexit: too high a bill and too big a deal!

Presidents of pan-European youth organisations call upon the European Council to preserve the Schengen principles

Missile strike kills at least 12 civilians, including children, in Syria’s Idlib: UN humanitarians

Fight against money laundering and terrorist financing: Commission assesses risks and calls for better implementation of the rules

UN monitoring team in Yemen verifies pullout of armed forces from crucial port zones

Half the world’s population is still offline. Here’s why that matters

Appreciation of euro to continue

These 5 start-ups are shaping the future of Africa’s cities

This cheap, 700-year old solution could change billions of lives

Burundi election countdown amid ‘deteriorating’ human rights situation

These clothes were designed by artificial intelligence

The Brussels bureaucracy blocks the Youth Guarantee scheme

Is it just visa-free travel that Erdogan demands from the EU to not break the migration deal?

Guterres expresses ‘grave concern’ following explosion at large political rally for reform-minded Ethiopian Prime Minister

The Commission tells Berlin it is legally obliged to help Eurozone out of stagnation

The MH17 tragedy to put a tombstone on Ukrainian civil war

A strong European Union is a united European Union

EU decides “in absentia” of civil society

‘Working night and day’, UN health agency seeks to prevent global coronavirus crisis

Collective action now, the only way to meet global challenges, Guterres reaffirms in annual report

Consultant in Forensic Technology – 1969

US must abide by humanitarian refugee accords: UN refugee agency

How ‘small’ is Europe in Big Data?

Brazilian health: right or privilege?

The secret weapon in the fight for sustainability? The humble barcode

AXA and Fremtind discuss how AI and analytics is changing insurance claims forever

This is why mountains matter more than you think

Africa must ‘value youth’ in the drive towards lasting peace, young envoy tells Security Council

EU to gain the most from the agreement with Iran

How secure is blockchain?

3 lessons from running an AI-powered start-up in Africa

Which countries have the highest unemployment rates?

Close to final agreement on the EU Banking Union

4 innovative renewable energy projects powering Europe’s green future

Why schools should teach the curriculum of the future, not the past

Lack of access to clean water, toilets puts children’s education at risk, says UN

More Germans are swapping planes for trains because of climate worries

‘Race against time’ to help women who bore brunt of Cyclone Idai: UN reproductive health agency

The world needs a grand coalition to tackle climate change

A Sting Exclusive: “Leading by example! EU must push for UN deal to avoid dangerous climate change”, European Parliament Vice-President Ulrike Lunacek cries out from Brussels

The role companies play in boosting growth in emerging markets

EP stands up for democracy in Hungary during COVID-19

Siemens-Alstom merger: Can Germany and France lobby to circumvent EC’s rejection, against EU consumers’ interests?

Turkey’s foreign bribery enforcement framework needs to be urgently strengthened and corporate liability legislation reformed

South Sudan: €48.5 million in additional EU humanitarian aid

EU prepares itself to fight back against hostile propaganda

Libya: Thousands seek shelter in health clinics from Tripoli fighting, UN warns

Each for Equal is the women’s day theme – these maps of the world show how far we have to go

The fatal consequences of troika’s blind austerity policy

COVID-19 poses a dramatic threat to life in conflict zones

Bahamas: ‘Clock is ticking’ to help those who lost everything in Hurricane Dorian, says UN

6 things to know about press freedom around the world

Elections in Britain may reserve a surprise for May’s Tories

OECD presents analysis showing significant impact of proposed international tax reforms

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s