Andersen v Commission (Judgment) [2017] EUECJ T-92/11 (18 January 2017)

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(State aid — Rail transport — Aid granted by the Danish authorities to the public undertaking Danske Statsbaner (DSB) — Public service contracts for the supply of rail passenger transport services between Copenhagen and Ystad — Decision declaring the aid compatible with the internal market subject to certain conditions — Temporal application of rules of substantive law — Service of general economic interest — Manifest error of assessment)

Jørgen Andersen, residing in Ballerup (Denmark), represented by J. Rivas Andrés and M.-I. Rantou, lawyers,

European Commission, represented by L. Armati and T. Maxian Rusche, acting as Agents,

Kingdom of Denmark, represented by C. Thorning, acting as Agent, assisted by R. Holdgaard, lawyer,

Danske Statsbaner (DSB), established in Copenhagen (Denmark), represented by M. Honoré, lawyer,

Dansk Tog, established in Copenhagen, represented by G. van de Walle de Ghelcke, J. Rivas Andrés and F. Nissen Morten, lawyers,

APPLICATION based on Article 263 TFEU seeking the partial annulment of Commission Decision 2011/3/EU of 24 February 2010 concerning public transport service contracts between the Danish Ministry of Transport and Danske Statsbaner (State aid C 41/08 (ex NN 35/08)) (OJ 2011 L 7, p. 1),

composed of S. Papasavvas (Rapporteur), President, E. Bieliūnas and C. Iliopoulos, Judges,

having regard to the written part of the procedure and further to the hearing on 11 October 2016,

1 Under the trade name of Gråhundbus v/Jørgen Andersen, the applicant, Mr Jørgen Andersen, runs bus transport services in Denmark and in other countries. In particular, he operates a route between Copenhagen (Denmark) and Ystad (Sweden). Ystad is connected by ferry to the island of Bornholm (Denmark).

2 Danske Statsbaner (DSB) is the incumbent rail transport operator in Denmark. At the time of the facts at issue, DSB was wholly owned by the Danish State and operated railway passenger transport and connected services only.

3 Since DSB’s monopoly was abolished on 1 January 2000, there have been two systems for the provision of passenger rail transport services in Denmark: the free traffic system, operated on a commercial basis, and the public service traffic system, governed by public service contracts that may provide for payment of compensation for the routes operated.

4 During the period from 2000 to 2004, DSB was awarded a first public transport service contract relating to long-distance and regional lines. From 15 December 2002, that contract also covered the route between Copenhagen and Ystad, which had previously been subject to a free traffic system.

5 During the period from 2005 to 2014, DSB was awarded a new public transport service contract concerning long-distance and regional lines, international routes to and from Germany and the route between Copenhagen and Ystad too.

6 Following two complaints, one of them made by the applicant, concerning the public service contracts awarded to DSB, the European Commission decided, on 10 September 2008, to initiate the formal investigation procedure laid down in Article 108(2) TFEU.

7 At the end of that procedure, the Commission adopted, on 24 February 2010, Decision 2011/3/EU concerning public transport service contracts between the Danish Ministry of Transport and Danske Statsbaner (State aid C 41/08 (ex NN 35/08)) (OJ 2011 L 7, p. 1; ‘the contested decision’).

The public transport service contracts concluded between the Danish Ministry of Transport and Danske Statsbaner constitute State aid within the meaning of Article 107(1) [TFEU].

The State aid is compatible with the internal market pursuant to Article 93 [TFEU] in so far as the conditions of Articles 2 and 3 of this Decision are complied with.’

9 By application lodged at the Registry of the General Court on 18 February 2011, the applicant brought an action seeking annulment in part of the contested decision. The Kingdom of Denmark and DSB intervened in the proceedings in support of the form of order sought by the Commission.

10 By judgment of 20 March 2013, Andersen v Commission (T-92/11, not published, EU:T:2013:143), the General Court annulled the second paragraph of Article 1 of the contested decision and ordered the Commission to bear its own costs and to pay the costs incurred by the applicant, with the exception of those arising from the interventions. In addition, it ordered the Kingdom of Denmark to bear its own costs and to pay those incurred by the applicant arising from its intervention and, last, ordered DSB to bear its own costs and to pay those incurred by the applicant arising from its intervention.

11 By an appeal, lodged at the Registry of the Court of Justice on 3 June 2013, the Commission sought to have set aside the judgment of 20 March 2013, Andersen v Commission (T-92/11, not published, EU:T:2013:143). By their cross-appeals, DSB and the Kingdom of Denmark also sought to have that judgment set aside.

12 By document lodged at the Court Registry on 30 September 2013, Dansk Tog, an association governed by Danish law established in Copenhagen, applied for leave to intervene in the proceedings in support of the form of order sought by the applicant. By order of 3 April 2014, the President of the Court of Justice granted that application.

13 By judgment of 6 October 2015, Commission v Andersen (C-303/13 P, ‘the judgment on appeal’, EU:C:2015:647), the Court of Justice set aside the judgment of 20 March 2013, Andersen v Commission (T‑92/11, not published, EU:T:2013:143) inasmuch as, by that judgment, the General Court had, as regards the aid paid from 3 December 2009 under the second public transport service contract concluded for the years 2005 to 2014, annulled the second paragraph of Article 1 of the contested decision. In that regard, the Court of Justice took the view that the Commission ought to have examined, in the light of Regulation (EC) No 1370/2007 of the European Parliament and of the Council of 23 October 2007 on public passenger transport services by rail and by road and repealing Council Regulations (EEC) Nos 1191/69 and 1107/70 (OJ 2007 L 315, p. 1), and subject to the transitional rules mentioned in paragraph 51 of its judgment, both the legality and the compatibility with the internal market of the aid paid from 3 December 2009 under the second public transport service contract concluded for the years 2005 to 2014. In addition, the Court dismissed the remainder of the appeal and the cross-appeals as well, referred the case back to the General Court for judgment, in the light of the three pleas of the application, taking account of Article 8(3) of Regulation No 1370/2007, on the legality of the contested decision in so far as the later declared that the aid paid from 3 December 2009 under the second public transport service contract concluded for the years 2005 to 2014 was compatible with the internal market, and reserved the costs.

Procedure and forms of order sought after the referral back to the General Court

14 On 27 October 2015 the Registry of the General Court requested the parties to submit, within two months from the date of service of the judgment on appeal, their written observations, in accordance with Article 217(1) of the Rules of Procedure of the General Court, on the conclusions to be drawn from that judgment in the present proceedings.

15 The applicant, the Commission, DSB and the Kingdom of Denmark lodged their observations with the Court Registry within the period prescribed.

16 By a letter registered on 24 February 2016 with the Court Registry, the Commission requested that a hearing be held.

17 By a letter registered on 25 February 2016 with the Court Registry, DSB requested the reopening of the written part of the procedure and authorisation for a new exchange of written pleadings. That request was not granted.

18 On a proposal from the Judge-Rapporteur, the General Court (Third Chamber) decided to open the oral part of the procedure.

19 In its observations on the conclusions to be drawn from the judgment on appeal, the applicant claims that the Court should:

– order the Commission to pay the costs relating to the proceedings before the General Court and the Court of Justice;

– order the Kingdom of Denmark and DSB to bear the costs incurred in connection with their interventions before the General Court and their cross-appeals before the Court of Justice.

20 In its observations on the conclusions to be drawn from the judgment on appeal, the Commission contends that the Court should:

21 In its observations on the conclusions to be drawn from the judgment on appeal, DSB submits that the Court should:

22 In its observations on the conclusions to be drawn from the judgment on appeal, the Kingdom of Denmark submits that the Court should reject all the pleas raised by the applicant.

23 In support of its action, the applicant raises three pleas, alleging, first, that the Commission erred in law in not finding a manifest error of assessment in the classification of the Copenhagen-Ystad route as a public service and in its inclusion in the scheme of public service contracts; second, that the Commission erred in law in not ordering recovery of the overcompensation paid to DSB for carrying out a public service task, in so far as it was incompatible with the internal market; and, third, that the Commission manifestly erred in law by applying Regulation No 1370/2007 instead of Council Regulation (EEC) No 1191/69 of 26 June 1969 on action by Member States concerning the obligations inherent in the concept of a public service in transport by rail, road and inland waterway (OJ, English Special Edition, Series I Chapter 1969(1), p. 276).

24 In the present case, it is appropriate for the third plea in law to be examined first, followed by the second and then the first.

Third plea in law, alleging that the Commission erred in law in applying Regulation No 1370/2007 instead of Regulation No 1191/69

25 The applicant submits, in essence, that the Commission erred in law in basing its assessment of the compatibility of the aid referred to in the contested decision on the regulation in force when that decision was taken, namely Regulation No 1370/2007. In the alternative, the applicant argues that the Commission ought to have provided adequate reasons for its decision to apply that regulation instead of Regulation No 1191/69.

26 More specifically, the applicant submits that, the contested decision concerning non-notified aid, the Commission should have applied the substantive rules in force at the time when that aid was paid, namely, Regulation No 1191/69. In his view, Regulation No 1370/2007 could not be applied retroactively, the conditions for retroactive application not having been satisfied.

27 In that regard, concerning, in the first place, the aid paid before 3 December 2009, it suffices to note that, in the judgment on appeal, the Court of Justice held that, when it adopted the contested decision, the Commission ought first to have examined in the light of Regulation No 1191/69 the aid paid under the first public transport service contract concluded for the years 2000 to 2004 and the aid paid before 3 December 2009 under the second public transport service contract concluded for the years 2005 to 2014, in order to ascertain whether that aid complied with the conditions laid down in Sections II, III and IV of that regulation and was thus exempt from the notification obligation provided for in Article 108(3) TFEU.

28 It follows from the foregoing that, as regards the aid paid before 3 December 2009, the Court of Justice confirmed the judgment of 20 March 2013, Andersen v Commission (T-92/11, not published, EU:T:2013:143), in so far as the latter had annulled the second paragraph of Article 1 of the contested decision. It is not, therefore, for the General Court to adjudicate on the present plea to the extent that it concerns the aid paid before 3 December 2009.

29 So far as concerns, in the second place, the aid paid from 3 December 2009, it follows from paragraph 55 of the judgment on appeal that the Commission ought to have examined in the light of Regulation No 1370/2007 and subject to the transitional rules mentioned in paragraph 51 of that judgment both the legality and the compatibility with the internal market of the aid paid from 3 December 2009 under the second public transport service contract concluded for the years 2005 to 2014.

30 In that regard, the applicant argues, in his observations on the conclusions to be drawn from the judgment on appeal, that, pursuant to the transitional provisions set out in Article 8(3) of Regulation 1370/2007, and even with regard to the aid paid after 3 December 2009, the Commission should have assessed whether that aid had originally been awarded in accordance with the provisions of Regulation 1191/69. In the applicant’s view, the public transport service contracts at issue did not meet the formal requirements set out in Article 14 of Regulation No 1191/69.

31 It is worth noting that, at the hearing, the applicant withdrew his arguments based on the application of Article 8(3) of Regulation No 1370/2007. Accordingly, in holding that, with regard to the aid paid from 3 December 2009, the Commission ought to have examined its legality and the compatibility with the internal market in the light of Regulation No 1370/2007, the Court of Justice entirely deprived the third plea raised by the applicant of its substance.

32 Moreover, as regards the argument, raised in the alternative, that the Commission did not adequately state the reasons why it had applied Regulation No 1370/2007, it is clearly unfounded. More specifically, the applicant criticises the Commission for not explaining what the impact was of Regulation No 1370/2007 not containing the distinction in Regulation No 1191/69 between a system under which the competent authorities may ‘maintain or impose public services obligation’ and a ‘contract or contractual system’. Last, he adds that the Commission should have set out the reasons why the application of Regulation No 1191/69 would not have resulted in a different decision. In that regard, it is sufficient to note that, in recitals 306 to 314 of the contested decision, the Commission set out the seven reasons why it had taken the view that its assessment had to be based on the law applicable at the time it had taken its decision, namely, Regulation No 1370/2007. In so doing, and notwithstanding the lack of analysis comparing the two regulations at issue, the Commission did provide adequate reasons for its decision on that point.

33 Accordingly, it is appropriate that the present plea be rejected, to the extent that it concerns the aid paid from 3 December 2009 under the second public transport service contract concluded for the years 2005 to 2014.

Second plea in law, alleging that the Commission erred in law in not ordering recovery of the overcompensation paid to DSB for carrying out a public service task in so far as it was incompatible with the internal market

34 The applicant claims, in essence, that, after noting, first, that the contractual payments made to DSB had gone beyond what was necessary to cover the costs incurred in discharging a public service obligation and, second, that the collection of dividends by the Kingdom of Denmark could not be assimilated to a claw-back provision, the Commission should have taken the view that those payments constituted overcompensation incompatible with the internal market and ordered the repayment of the aid at issue. The applicant adds, in the reply, that it follows from the judgment of 24 July 2003, Altmark Trans and Regierungspräsidium Magdeburg (C‑280/00, EU:C:2003:415), that the test set out by legislation is the only test that could determine whether or not the overcompensation was compatible with the internal market. The applicant argues that, in the contested decision, the Commission merely looked into the issue of whether there had been overcompensation, without carrying out the test to determine whether or not the overcompensation was compatible with the internal market. He concludes that, in so doing, the Commission erred in law. Last, in his observations on the conclusions to be drawn from the judgment on appeal, the applicant claims that, when examining the issue of overcompensation, the Commission ought, first, to have established either that DSB had in fact received overcompensation or that it had not and, then, to have established whether or not the contracts at issue included an effective claw-back mechanism.

35 As a preliminary point, it is appropriate to note that, in support of the present plea, the applicant invokes the overcompensation allegedly received by DSB in order to argue that the aid at issue is incompatible with the internal market, citing the judgment of 24 July 2003, Altmark Trans and Regierungspräsidium Magdeburg (C-280/00, EU:C:2003:415), whereas, in the context of that judgment, the issue of the existence of overcompensation is a criterion used to examine the issue of the existence of aid within the meaning of Article 107(1) TFEU. In view of the substance of the line of argument expounded by the applicant, the present plea must be regarded as relating to the infringement of Regulation No 1370/2007 and, more specifically, of Article 9 thereof, in accordance with which public service compensation for the operation of public passenger transport services or for complying with tariff obligations established through general rules paid in accordance with the same regulation is compatible with the internal market.

36 Moreover, it should be recalled that, in the judgment on appeal, the Court of Justice referred the case back to the General Court for judgment on the legality of the contested decision in so far as the latter had declared that the aid paid from 3 December 2009 under the second public transport service contract concluded for the years 2005 to 2014 was compatible with the internal market.

37 In those circumstances, only the aid paid from 3 December 2009 remains at issue in the context of the present plea. It is apparent from the documents in the case-file, and this is not disputed, that, from 1 January 2010, the Danish State introduced a refund mechanism in order to avoid any overcompensation in the future. The applicant moreover admitted, during the hearing, that such a mechanism had allowed overcompensation to be avoided from 1 January 2010. Therefore, the present plea is effective only in respect of the sole payment after 3 December 2009 and before 1 January 2010, namely: that of 21 December 2009.

38 In that regard, it must be recalled that the present plea alleges that the Commission erred in law in not ordering recovery of the overcompensation paid to DSB for performing a public service task in so far as that was incompatible with the internal market.

39 In order to examine the merits, it is appropriate, first, to examine ex officio whether the contested decision is reasoned as regards the issue of the compatibility with the internal market of the aid paid on 21 December 2009.

40 Indeed, a statement of reasons that is wanting or inadequate amounts to infringement of essential procedural requirements for the purposes of Article 263 TFEU and constitutes a ground involving a matter of public policy that may, even must, be raised by the European Union judicature of its own motion (see judgment of 2 December 2009, Commission v Ireland and Others, C‑89/08 P, EU:C:2009:742, paragraph 34 and the case-law cited).

41 The question thus arises as to whether, in the present case, the statement of reasons for the contested decision as regards the assessment of the compatibility with the internal market of the aid paid on 21 December 2009 enabled, first, the person concerned to have sufficient information to make it possible to ascertain whether the act was well founded or whether it was vitiated by a defect permitting its legality to be contested before the European Union judicature and, second, that judicature to review the legality of that act (see, to that effect, judgment of 15 November 2012, Council v Bamba, C-417/11 P, EU:C:2012:718, paragraph 49 and the case-law cited).

42 In the present case, it is apparent from the contested decision that the Commission found that there had been no overcompensation, given that the amount of the excessive dividends paid to the Danish State, which wholly owns DSB, significantly exceeded that of the surplus profits of DSB. The operative part of that decision, according to which the public transport service contracts concluded between the Danish Ministry of Transport and DSB are compatible with the internal market, relates to the entirety of the aid at issue, namely, both the aid paid under the first public transport service contract (2000-2004) and the aid paid under the second public transport service contract (2005-2014) as well.

43 However, the contested decision contains no assessment of the overcompensation relating to the period after that from 1999 to 2008, and therefore to the period in which the payment at issue was made.

44 It is apparent from, inter alia, recital 335 of the contested decision that, in order to make a ruling on the existence of any overcompensation, the Commission examined the changes in DSB’s equity capital and profits, as far as its public service activities were concerned, relying upon the detailed analysis of its financial position over the period 1999 to 2006 and on additional information provided by the Danish authorities regarding the financial years 2007 and 2008.

45 At the hearing, the parties were requested to express their views on how, failing any information to that effect in the contested decision, the Court was to assess the existence of overcompensation in relation to the aid paid between 3 and 31 December 2009. Except in particular cases such as, inter alia, those provided for by the rules of procedure of the EU Courts, those Courts may not base their decisions on a point raised of their own motion, even one involving a matter of public policy, without first inviting the parties to submit their observations on that point (judgment of 2 December 2009, Commission v Ireland and Others, C‑89/08 P, EU:C:2009:742, paragraph 57).

46 In that regard, the Commission indicated that it would have liked, when preparing the contested decision, to see the Kingdom of Denmark adopt a refund mechanism from 1 January 2009. In that case, the taking into account of the entry into force of that mechanism would have immediately followed the analysis relating to the years 1999 to 2008 and there would have been no lacuna in the contested decision. The Commission adds that, although the Court reads the contested decision taking into account the introduction of a refund mechanism from 1 January 2010, only the payment of 21 December 2009 is concerned, in so far as it was made between the entry into force of Regulation No 1370/2007 and the establishment of the refund mechanism.

47 First, the applicant recalled at the hearing that, in his response to the Court’s measure of organisation of procedure, he had mentioned that the date to be taken into consideration was part of the Commission’s empirical assessment and should not affect the Court’s assessment regarding the period examined. Second, with regard to the date mentioned for the first time by the Commission during the hearing, namely: 1 January 2009, the applicant noted that the contested decision had been adopted on 24 February 2010 and that Article 2 thereof decided that the Kingdom of Denmark was to introduce, in all public transport service contracts, the refund mechanism described in recitals 222 to 240 and 356 of the contested decision, which did not refer to that date.

48 The Kingdom of Denmark argued that it was not for the Court to give a ruling on the question of whether the payment of 21 December 2009, even though it had not formally been subject to the refund mechanism, was lawful. According to the Kingdom of Denmark, that argument is new and, as a result, inadmissible.

49 The parties were requested to respond to that plea of inadmissibility raised by the Kingdom of Denmark.

50 The applicant stated that the second plea of the application concerned the Commission’s ‘dividends theory’ and its ‘reasoning in the abstract, without specifying a precise date’. He added that the present dispute was part of the second plea as it had been ‘pleaded before the General Court’.

51 The Commission stated that it was not in agreement with the applicant’s position that the payment of 21 December 2009 had been made in accordance with the ‘dividends theory’, that theory being an ex post assessment. On the basis of the information available to it, the Commission indicated that the contested decision involved a two-stage analysis, the ex post assessment followed immediately by the introduction, or at least by the requirement to introduce, a refund mechanism.

52 As regards the issue of the admissibility of the argument relating to the payment of 21 December 2009, it is sufficient to point out that, contrary to what the Kingdom of Denmark argues, the present issue concerns not the lawfulness of the aid, but its compatibility with the internal market in so far as, in the same way as with the aid paid before 3 December 2009, the Commission is considered to have made use of the ‘dividends theory’ in order to ascertain whether it was compatible with the internal market. However, it must be stated that that issue is directly linked to the second plea raised by the applicant at the stage of the application, according to which the Commission erred in law in not ordering recovery of the overcompensation paid to DSB for performing a public service task in so far as that was incompatible with the internal market. In addition, it is apparent from the application, particularly from paragraphs 99 to 120 thereof, that the applicant criticises the Commission’s line of argument irrespective of the dates it uses. The applicant moreover reiterated that position at the hearing. Therefore, in so far as, on the one hand, it is no longer for the Court to rule on the aid paid before 3 December 2009 following the judgment on appeal and, on the other, the Kingdom of Denmark introduced a refund mechanism from 1 January 2010, the second plea may properly be raised only in connection with the issue of the compatibility with the internal market of the payment of 21 December 2009. In those circumstances, the plea of inadmissibility raised by the Kingdom of Denmark can only be rejected.

53 Furthermore, for want, in the contested decision, not only of any assessment of overcompensation relating to the period in which the payment at issue was made, but also of any information concerning that period, the Court is not in a position to rule on the argument presented by DSB in its observations on the conclusions to be drawn from the judgment on appeal alleging that the second plea has become devoid of purpose since, in 2009, the return on its equity was, before payment of the dividends, well below 6%.

54 Accordingly, it follows from the foregoing that, for the reasons set out in paragraph 43 above, in particular, the contested decision must be annulled for failure to state adequate reasons in so far as it concerns the payment of 21 December 2009.

First plea in law, alleging that the Commission erred in law in not finding a manifest error of assessment in the classification of the Copenhagen-Ystad route as a public service and in its inclusion in the scheme of public service contracts

55 The applicant claims that the classification of a service as a service of general economic interest (‘SGEI’) or public service must be subject to the scrutiny of the Commission. In his view, in exercising such scrutiny, the Commission had a duty to assess whether the Member State in question had committed a manifest error of appreciation. It concluded that the Commission could not confine itself, as it did in the present case, simply to accepting the arguments of the Danish State without a careful, diligent, impartial examination or review.

56 In that regard, it might be recalled that, according to settled case-law, Member States have broad discretion to define what they regard as an SGEI and, consequently, the definition of such services by a Member State may be questioned by the Commission only in the event of manifest error (see judgment of 22 October 2008, TV2/Danmark and Others v Commission, T‑309/04, T‑317/04, T‑329/04 and T‑336/04, EU:T:2008:457, paragraph 101 and the case-law cited).

57 It must in addition be recalled that, as regards the scope, in the context of State aid control, of the Commission’s obligation to examine, that institution is under an obligation, in the interests of sound administration of the fundamental rules of the Treaty relating to State aid, to conduct a diligent and impartial examination, and that obligation requires, in particular, careful examination of the information with which the Member State provides the Commission (see judgment of 22 October 2008, TV2/Danmark and Others v Commission, T‑309/04, T‑317/04, T‑329/04 and T‑336/04, EU:T:2008:457, paragraph 183 and the case-law cited).

58 In the present case, it should be borne in mind that the Commission stated, in recital 269 of the contested decision, that it was clear from the Danish Rail Transport Act that DSB was responsible for discharging a public service on the basis of contracts negotiated with the Danish Ministry of Transport, which defined in detail which lines DSB had an obligation to operate and the punctuality, quality and frequency of the train services to be provided over a specified period. Recital 270 of that decision states that Denmark demonstrated that the objective of the public transport service contracts at issue was to establish a coherent and comprehensive transport system guaranteeing a quality service for passengers and meeting Denmark’s transport operation targets. So far as concerns the route between Copenhagen and Ystad, the contested decision recalls, in recital 271 thereof, that that line was operated successively as ‘free traffic’ until 2002, then as ‘public service traffic’ but without additional compensation until 31 December 2004, and was subsequently included in the public transport service contract for the period 2005-14.

59 First, the applicant claims that the argument set out in recital 272 of the contested decision relating to the special fares applicable to DSB to promote links with Jutland (Denmark) seems to have been constructed after the fact, in so far as recital 382 of that decision makes it clear that that fare was designed to be in line with the commercial objectives of the ferry linking the town of Ystad with the island of Bornholm, and not those of DSB, that it was only rarely applied and that it was no longer available as of the date of the contested decision. The applicant adds that it is difficult to understand the reasons why the Commission relied upon such an argument.

60 In that regard, it must be pointed out that, as the Commission rightly notes, the recitals to which the applicant refers are placed, in the contested decision, in two different parts of the legal assessment. Thus, recital 272 concerns the definition of the public service obligation, whereas recital 382 concerns the absence of overcompensation. Consequently, the points on the special fares in recital 382 of the contested decision are of no relevance in the context of the present plea.

61 As regards recital 272 of the contested decision, the Commission indicated that the stated objective of the Danish authorities was to connect the island of Bornholm not only to Copenhagen, but also to the rest of Denmark. It next made reference to DSB’s special fares offer as one example of the elements introduced to encourage links between Jutland and the island of Bornholm. As has been recalled in paragraph 58 above, the objective of the public transport service contracts at issue was to establish a coherent and comprehensive transport system guaranteeing a quality service for passengers and meeting Denmark’s transport operation targets. The link between the island of Bornholm and Jutland was covered by that objective. Therefore, the reference to the special fares applied by DSB does not, as such, appear among the various elements used by the Commission to justify the inclusion of the Copenhagen-Ystad route in the public service contracts at issue. The applicant’s argument relating thereto is therefore ineffective and can only be rejected.

62 Second, the applicant claims that the reasoning relating to the servicing of the Swedish towns also seems to have been constructed after the fact, as no trace of that line of argument can be found in the public documents that led to the Danish authorities’ decision. According to the applicant, however, if DSB’s trains stop in the Swedish towns, that is not owing to the desire to provide a public service, but to the fact that the line between the towns of Fosieby (Malmö) and Ystad is single-track and DSB’s trains must let other trains pass.

63 In that regard, it must be recalled that the Commission indicated, in recital 272 of the contested decision, that the Danish authorities had considered that the existence of a rail service took account of certain specific concerns not addressed by the existing bus service, such as the servicing of the neighbouring Swedish towns along the train route, with three stops in the Swedish towns of Fosieby (Malmö), Svedala and Skurup, with the aim of reinforcing the options for access to the island of Bornholm.

64 It is common ground between the parties that DSB embarks and disembarks passengers in the abovementioned Swedish towns. It follows that the stops in those towns, and more specifically those planned in Svedala and Skurup, are not merely to meet technical requirements, but also have the aim, as the applicant himself acknowledges, of providing passenger transport for persons residing in Sweden and working in Denmark and, therefore, also pursue a public service objective. That finding is not called into question by the circumstance, even supposing it to have been proved, that the buses occasionally used by DSB as replacements for its trains do not stop in those towns. Moreover, given that it is common ground that DSB embarks and disembarks passengers in those Swedish towns, the applicant could not with advantage argue that there was no demand for a stop between those towns and that the Commission should have analysed whether such demand existed before adopting the contested decision.

65 In addition, the applicant notes that, if the Danish authorities really wished to subsidise stops in Fosieby (Malmö), Svedala and Skurup, they could have done so at much lower cost by subsidising his coach line instead of imperilling it by introducing the competition provided by the publicly-financed public service. On that point, it is moreover sufficient to note that, since July 2009, the applicant has benefited from a financial compensation scheme, introduced by the Danish authorities and approved by the Commission, intended to offset the reductions it grants to certain categories of passengers. The present argument must therefore be rejected.

66 Third, the applicant states that he operated the Copenhagen-Ystad route without subsidy between 1981 and 2009 and with a subsidy from then on. He adds that, in accordance with the judgment of 15 June 2005, Olsen v Commission (T‑17/02, EU:T:2005:218), he must, in order to prove that the Kingdom of Denmark committed a manifest error of appreciation, demonstrate that his activity made it possible to ensure services comparable to those provided by DSB in terms of continuity, regularity and frequency. In his view, the services he provides on the Copenhagen-Ystad route are superior or, at the very least, comparable to that of DSB in terms of continuity, regularity, frequency, capacity and rates, thus making it unnecessary to create an SGEI or a public service. He adds that, as regards that line, there was no ‘market failure’ that needed to be addressed. In his view, only ‘market failure’ could have served as a basis for the classification of the Copenhagen-Ystad link as a public service. Last, as regards more specifically the links with Jutland, he states that because passengers going from Jutland to Ystad must change trains at Copenhagen central station, they could use his coach service, which also has vehicles departing from that station.

67 In that regard, it might be recalled that Article 1 of Regulation No 1370/2007 states that the purpose of Regulation No 1370/2007 is to define how, in accordance with EU law, competent authorities may act in the field of public passenger transport to guarantee the provision of services of general interest which are among other things more numerous, safer, of a higher quality or provided at lower cost than those that market forces alone would have allowed. To that end, that regulation lays down the conditions under which competent authorities, when imposing or contracting for public service obligations, compensate public service operators for costs incurred or grant exclusive rights in return for the discharge of public service obligations.

68 In addition, Article 2(e) of Regulation No 1370/2007, upon which the Commission relies in the contested decision, defines a public service obligation as a requirement defined or determined by a competent authority in order to ensure public passenger transport services in the general interest that an operator, if it were considering its own commercial interests, would not assume or would not assume to the same extent or under the same conditions without reward.

69 Moreover, according to the case-law, while evidence of market failure may be a relevant factor for declaring State aid compatible with the internal market (see, to that effect, judgment of 6 October 2009, Germany v Commission, T-21/06, not published, EU:T:2009:387, paragraph 58), such evidence is not an essential condition, for, in any case, a State may justify aid by the pursuit of a legitimate objective in the public interest (judgment of 9 June 2016, Magic Mountain Kletterhallen and Others v Commission, T-162/13, not published, EU:T:2016:341, paragraphs 78 and 79).

70 Thus, there are various reasons that can justify a Member State’s decision to entrust, for consideration, to undertakings the performance of public service obligations. Therefore, contrary to what the applicant argues, the attribution of such obligations to DSB was not solely conditional upon the finding of ‘market failure’. In those circumstances, the elements used in the contested decision for including the Copenhagen-Ystad route in the public service contracts at issue, including the desire to reinforce the options for access to the island of Bornholm for the sake of improving the service to the territory, are not vitiated by a manifest error of assessment. Consequently, the existence of a comparable transport service, supposing it were proved particularly on the basis of the particularities of rail transport mentioned in recital 25 of Regulation No 1370/2007, and the fact that, for travellers originating from Jutland, the applicant’s buses can be used to reach Ystad are not, in the present case, such as to prove that the contested decision was unlawful. Accordingly, the reference to the judgment of 15 June 2005, Olsen v Commission (T‑17/02, EU:T:2005:218), is of no relevance in this case.

71 It follows from all the foregoing that the applicant has not established that the Commission had erred in law in not finding a manifest error of assessment in the inclusion of the Copenhagen-Ystad route in the public service contracts at issue. Nor has he shown that the Commission did not conduct a diligent impartial examination.

72 That conclusion is not called into question by the references made by the applicant to the Community Guidelines for the application of State aid rules in relation to rapid deployment of broadband networks (OJ 2009 C 235, p. 7). In that regard, the applicant claims that it is apparent from those guidelines that the Commission normally believes that only ‘market failure’ can be the basis for classifying an activity as a public service. However, it is sufficient to point out, as the Commission also notes, that those guidelines are not applicable to land transport and that, therefore, the applicant cannot usefully rely upon them in order to prove that the Commission erred in law. Therefore, the argument that it follows from those guidelines that only ‘market failure’ can be the basis for classification as a public service is ineffective and can only be rejected.

74 Pursuant to Article 219 of the Rules of Procedure, in decisions of the General Court given after its decision has been set aside and the case referred back to it, it is to decide on the costs relating to the proceedings instituted before it and to the proceedings on the appeal before the Court of Justice.

75 Under Article 134(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Moreover, under Article 134(2) of the Rules of Procedure, where there is more than one unsuccessful party the General Court is to decide how the costs are to be shared. Since the applicant and the Commission have been partially unsuccessful, each party should be ordered to bear its own costs.

76 Under Article 138(1) of the Rules of Procedure, the Member States which intervened in the procedure are to bear their own costs. Paragraph 3 of that article provides that the General Court may order an intervener other than those referred to in paragraphs 1 and 2 to bear his own costs. The Kingdom of Denmark, DSB and Dansk Tog must be ordered to bear their own costs.

1. Annuls the second paragraph of Article 1 of Commission Decision 2011/3/EU of 24 February 2010 concerning public transport service contracts between the Danish Ministry of Transport and Danske Statsbaner (State aid C 41/08 (ex NN 35/08)) in so far as it concerns the payment of 21 December 2009;

3. Orders Mr Jørgen Andersen, the European Commission, Dansk Tog, the Kingdom of Denmark and Danske Statsbaner (DSB) to bear their own costs.

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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Andersen v Commission (Judgment) [2017] EUECJ T-92/11 (18 January 2017) URL: http://www.bailii.org/eu/cases/EUECJ/2017/T9211.html Cite as: [2017] EUECJ T-92/11, EU:T:2017:14, ECLI:EU:T:2017:14

Court of Justice of the European Communities (including Court of First Instance Decisions)