The General Court annuls the European Commission's approval of state aid to the Fehmarn Belt fixed link

The General Court's judgment of 13 December 2018 in case T-630/15, Scandlines vs the European Commission

By assistant attorney Adrian Kielberg and senior intern Clement Hoff Munk

Background

In 2007, Denmark and Germany agreed to construct the Fehmarn Belt fixed rail-road link. The total costs of the project are DKK 64.4 billion, which makes it the largest construction project in the history of Denmark. The Danish State prepared a model for the public financing of the project, which included essential state-aid elements in the form of favourable loans, unlimited state guarantee and tax benefits.

In July 2015, the European Commission approved the public financing model. One of the reasons given for the approval was that the project is a key element to complete the main North-South route connecting central Europe and the Nordic countries. An important project of common European interest. 

Read the Commission's press release.

Ferry operators Scandlines and Stena Line, whose ferry operations would be affected by the Fehmarn link, brought the Commission's decision before the General Court, claiming that the Danish State's financing plan was contrary to the state-aid rules. 

Read our previous mention of the case.

The General Court's judgment 

The General Court agreed with the applicants that there were manifest errors in the Commission's analysis of the state-aid scheme. The General Court held that the Commission's analysis was incomplete, insufficient and sometimes even contradictory. This indicated, according to the General Court, that the state-aid scheme might give rise to serious legal concerns. The General Court also found that the Commission ought to have initiated a formal investigation procedure, which they had failed to do.

The General Court noted that the state aid might be considered a necessary condition for carrying out a project of that size, but that the Commission's analysis had in all circumstances been insufficient and incomplete. According to the General Court, the extremely long and unforeseeable debt repayment period should have prompted the Commission to initiate a thorough investigation. The General Court also criticized the Commission's failure to impose conditions for the state guarantees before approval of the aid.

In consequence of the insufficient analysis, the General Court decided to annul the decision and refer the case back to the Commission for further consideration.

Read the General Court's judgment.