The European Commission has opened an in-depth investigation to determine whether the public financing model of the Fehmarn Belt fixed rail-road link is in line with EU State aid rules. This follows the EU General Court's annulment of a previous Commission decision approving the support.
Commissioner Margrethe Vestager, in charge of competition policy, said: "The Fehmarn Belt link will contribute to the cross-border integration of the two regions it will connect. The Commission previously approved support measures for the financing of the link in 2015, but the Court annulled this decision, finding that the Commission should have opened an in-depth investigation. Today's opening of such an investigation is an invitation for all stakeholders to provide their input, which will allow the Commission to adopt a new, well-informed final decision”.
The Commission has today opened an in-depth investigation under EU State aid rules into Denmark's public financing model for the Fehmarn Belt fixed rail-road link between Denmark and Germany.
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 and the corresponding rail and road connections on land. 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 the fixed link, as well as for the upgrading of the Danish on-land road and rail (“hinterland”) connections. Germany is responsible for the financing and upgrading of its own hinterland connections, and is not subject to the Commission's investigation.
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 fixed link.
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. In particular, the Commission considered that:
- the financing measures granted to Femern Landanlæg for the planning, construction and operation of the hinterland connections in Denmark did not constitute State aid; and
- it was not necessary to conclude whether the public financing measures granted to Femern A/S for the sole purpose of planning, constructing and operating the Fehmarn Belt fixed rail-road link constituted State aid. This is because they would in any case be in line with EU State aid rules since they promoted the execution of an important project of common European interest.
In December 2018, following an appeal against the Commission's 2015 decision by Scandlines and Stena Lines, 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
Tocomply with the General Court's December 2018 judgment, the Commission has today opened an in-depth investigation under EU State aid rules into the measures in support of the fixed link granted by Denmark to Femern A/S.
At this stage, the Commission is not in a position to conclude whether the measures constitute State aid, in view of the uncertainty as regards the economic character of the fixed link.
These types of measures can be considered as aiming to promote an important project of common European interest.
In its investigation, the Commission will focus in particular on the following elements, as required by the Court:
(i) the nature of the measures and whether they constitute individual aid or aid schemes;
(ii) the compatibility of the measures with EU State aid rules and especially the qualification of the measures as investment and/or operating aid, as well as their necessity and proportionality.
The opening of the in-depth investigation gives all interested parties the opportunity to submit their comments. It does not prejudge the outcome of the investigation.
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.