Denmark

• Author: Th. Jestaedt; J. Derenne; T. Ottervanger
• Profession: Jones Day; Lovells; Allen & Overy
• Pages: 117-126

Contenidos

• 2. Executive Summary.
• 2. 1 Member State legal system and availability of judicial relief.
• 2. 2 The direct effect of Article 88 (3) EC.
• 2. 3 The enforcement of negative Commission decisions.
• 2. 4 The implementation of positive Commission decisions.
• 3. Member State cases.
• 4. Assessment of the existing system.
• 5. Summaries of cases brought under section 11a of the Competition Act.

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2. Executive Summary

In Denmark, cases contesting infringements of Article 88 EC are submitted to the ordinary courts. There exist no procedural or substantive provisions specifically dealing with EC State aid law. Consequently, the legal basis for any procedure concerning the direct effect of Article 88 (3) must be founded on Articles 87 and 88 EC.

A Danish court may order the repayment of illegal aid at the request of a public authority or a private party in accordance with the general rules of Danish law. Further, the courts may order the responsible public authority to pay damages to third parties, including competitors.

There seem to be no published State aid cases decided by Danish courts.

In 2000, the Danish Competition Act was amended to include regulation of State aid that has no effect on trade between Member States. This regulation contains a procedural and economic possibility for undertakings to have contested State aid investigated and tried easily, and the number of State aid cases before the competition authorities is quite comprehensive (ten per year approximately).

2. 1 Member State legal system and availability of judicial relief

Under Danish law there exist no rules or regulations specifically dealing with the enforcement of EC State aid law. Thus, the ordinary Danish courts also deal with proceedings concerning EC State aid.

Proceedings may be brought before the local City Courts ("Byretten"), subject to appeal to the High Courts ("Landsretten"). However, if a case involves the examination of a public acta decision to grant aid - or is directed at or started by a public authority, proceedings may start in the High Courts, or may be referred to the High Courts by the City Courts. Further, any civil case with an economic value exceeding DKK 1 million may be brought directly before the High Courts.

Judgments of the High Courts may be appealed to the Supreme Courts ("Højesteret").

The ordinary courts may grant injunctions in cases involving State aid, provided that the relevant general conditions are met. Injunctions may be granted by the Bailiff's Courts ("Fogedretten"), which are subdivisions of the City Courts. If an injunction is granted, confirmatory proceedings before the ordinary courts have to be initiated within eight days.

In 2000, the Danish Competition Act was amended and a special provision concerning State aid having no effect on trade between Member States was included in section 11a.

The wording of that provision is as follows:

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11a(1) The Competition Council may issue orders for the termination or repayment of aid granted from the public funds, which has been granted to the benefit of specific forms of business activities.

(2) An order pursuant to subsection (1) may be issued, where the aid

i. directly or indirectly has as its object or effect the distortion of competition, and

ii. is not legitimate according to public regulation.

(3) The minister in question or the relevant Supervisory Board makes the decision regarding the legitimacy of aid granted according to public regulation, unless otherwise provided for by law. Such decisions must be made not later than four weeks after receipt of the Competition Council's inquiry. The Competition Council may prolong this deadline.

(4) An order for repayment of aid pursuant to subsection (1) may be issued to private undertakings, to private foundations and to corporate undertakings which are wholly or partly owned by the public. The Minister for Economic and Business Affairs may lay down further rules to the effect that orders for repayment of aid may also be issued to specific corporate undertakings, which are wholly or partly owned by the public.

(5) The Competition Council's powers pursuant to subsection (1) to order repayment of aid becomes statute-barred five years after payment. In accordance with the Act on Calculation of Interest, the Competition Council fixes the amount of interest accrued in connection with a repayment order pursuant to subsection (1), including rules that the interest due may be calculated from the time of payment of the distortive aid.

(6) Upon notification, the Competition Council may declare that on the basis of the facts in its possession, the public aid is not covered by subsection (2) (i) and accordingly, there are no grounds for issuing an order pursuant to subsection (1). The Council may lay down further rules on notification, including rules on the use of specific notification forms.

The concept of State aid corresponds to the concept under Article 87 EC.

In relation to section 11a(6), it should be noted that such declaration does not exclude the possibility that the Commission is competent to assess whether or not the State aid in question is covered by Articles 87 and 88 EC.

Private parties cannot directly rely upon section 11a in civil courts. However, a complaint can be made to the Competition Council and its decisions under sections 11a(1) and (6) can bePage119 brought before the Danish Competition Appeals Tribunal. Appeals may be lodged by the party to whom the decision is addressed and by other parties who have an individual and substantial interest in the case. Such parties could be the public authority granting the State aid, the party obtaining the State aid or a competitor to such a party.

Decisions made by the Competition Council under the Competition Act cannot be brought before any other administrative authority than the Competition Appeals Tribunal and cannot be brought before the courts of law until the Appeals Tribunal has made its decision. The Competition Appeals Tribunal consists of a Chairman, who must be qualified for the position of Supreme Court Judge, and four other members, two proficient in economics and two in law. The procedure before the Appeals Tribunal is largely similar to that of a civil court.

An appeal must be lodged with the Competition Appeals Tribunal within four weeks of the decision having been communicated to the party concerned. If heavily justified, the Appeals Tribunal may disregard the fact that the time limit has been exceeded.

Decisions made by the Competition Appeals Tribunal can be brought before the ordinary courts within eight weeks of the decision having been communicated to the party concerned. If that time limit is exceeded, the decision of the Appeals Tribunal is final.

2. 2 The direct effect of Article 88 (3) EC

The procedures described in section 2.4 may generally be considered available in the ordinary courts.

As mentioned above, Danish law today contains procedural and substantive provisions specifically dealing with questions relating to the granting of State aid covered by the Danish Competition Act. However, it does not contain any procedural or substantive provisions specifically dealing with EC State aid law. Consequently, the legal basis for any procedure concerning the direct effect of Article 88 (3) EC must be founded on Articles 87 and 88 EC.

It follows from general principles of law that a third party who can establish a sufficient legal interest may challenge public acts in court. This principle will apply to public acts granting State aid covered by Article 87 EC. Moreover, a decision made by the Competition Appeals Tribunal concerning State aid under section 11a of the Danish Competition Act may be challenged in court by persons with sufficient legal interest.

It is likely that a competitor would be able to establish a sufficient legal interest for it to have standing in procedures challenging the legality of an act granting State aid in breach of Articles 87 and 88 EC, if based on non-compliance with Article 88 (3) EC.

Under Danish law, a public authority may incur liability for damages caused by that authority's failure to observe obligations placed on it. It may be assumed that such liability could occur were a public authority to breach the obligation to notify State aid under ArticlePage120 88 (3) EC, and a third party could establish that the decision to grant the aid damaged its interests. A claim for damages may also be based directly on the rules on Member State liability developed by the ECJ.

However, it is unlikely that the recipient of illegal aid could incur liability for damage sustained to competitors or other third parties.

The injunction procedure may be available for a third party and/or competitor in order to hinder the implementation of a decision to grant aid which contravenes the notification requirement under Article 88 (3) EC.

2. 3 The enforcement of negative Commission decisions

A Danish court may order the repayment of illegal aid at the request of a public authority in accordance with the general rules of Danish law. This implies that an authority may generally recover payments made in breach of the relevant rules, even if this is due to a mistake by the authority itself. It may generally be assumed that the Danish courts will follow this rule, also taking into account the ECJ's case law concerning the recovery of illegal aid.

Moreover, a third party may be able to obtain a judgment ordering repayment of illegal aid against the recipient. Further, the courts may order the public authority responsible to pay damages to third parties, including competitors, under the same conditions, as a means of enforcing a negative Commission decision. The fact that third parties suffering loss due to the recovery of the aid from the recipient may be in a position to claim damages from the authority is likely to be problematic. Finally, injunctions may be granted against the implementation of aid which the Commission has declared illegal. In this situation, the Bailiff's Court ("Fogedretten") can rely on the Commission's decision.

2. 4 The implementation of positive Commission decisions

Provided that a third party, which may be a competitor, has sufficient legal interest, it may invoke the procedures described in section 2.1 to challenge decisions of public authorities giving effect to aid approved by the Commission.

A competitor would have to claim that the act was illegal, arguing that the basis on which the act was founded, i.e. the Commission decision to approve the aid was not correct.

Consequently, the legal basis for challenging the legality of aid approved by the Commission would in effect be the jurisprudence of the ECJ concerning Articles 87 and 88 EC.

3. Member State cases

As at 31 March 2005, there are no published Danish court cases in which Articles 87 and/or 88 EC have been applied.

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There are no published Danish court cases in which section 11a of the Competition Act has been applied.

However, after the introduction of section 11a into the Danish Competition Act, the Danish competition authorities have issued numerous decisions concerning local State aid. Section 5 of this study lists cases brought under section 11a of the Competition Act (not Articles 87 and 88 EC), categorised by topic.

4. Assessment of the existing system

To our knowledge, there exist no State aid cases decided by the Danish courts. However, since the introduction of a State aid provision to the Danish Competition Act, the Danish competition authority has dealt with a number of cases concerning State aid that does not affect trade between Member States.

In some of these cases it seems that the Danish competition authorities have dealt with State aid under the Danish regulation, even though it could be argued that the relevant State aid was capable of affecting trade between Member States. Thus, for example, in the Horesta case (Danish Competition Authority's decision of 24 April 2002), the Competition Authority considered a complaint concerning State aid that seemed to be above the de minimis level, without referring the case to the Commission.

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5. Summaries of cases brought under section 11a of the Competition Act

CULTURAL ISSUES

29.09.04

Spøttrup municipality

A riding school complained that a competitor could rent facilities at a lower rent than it could itself. Held to distort competition, but legitimate according to public regulation.

28.04.04

Tangsø Sportcenter - Lemvig municipality

Tangsø Sportcenter complained that the contribution from Lemvig municipality to the establishment and operation of Lemvig swimming bath amounted to State aid. Held to distort competition, but legitimate according to public regulation.

28.01.04

Mandø-centeret

State aid given to Mandø-centeret in general and not for specific purposes. No action taken as State aid would, in the future, only be given after presentation of vouchers.

28.01.04

Bonnier Publications A/S

VAT exemption for daily newspapers and not for magazines and weekly papers was found not to distort competition.

28.08.04

Amazing Sun Varde ApS - Varde municipality

Complaint that public funds for swimming baths were used to reduce prices on solarium services that were exposed to competition. The Competition Authority recommended that the municipality separate the accounts of the solarium from those of the swimming baths.

28.08.02

Tommy Havdrup

Complaint about distortion of competition due to State aid given to some public dancing schools and not to private dancing schools. The Competition Authority advised the municipality on how to avoid distortion of competition.

28.11.01

Herning Centralbibliotek (library)

Notification to the Competition Authority of a data-providing service offered by the library to private firms. Declaration given as service did not distort competition.

31.10.01

Gyldendal's Encyclopædi

Complaint about State aid given to the on-line version of Encyclopedia. No action taken as on-line version stopped.

25.08.99

Lyngby Bio XYZ - Lyngby-Taarbæk municipality

Complaint about distortion of competition due to State aid granted to one out of two cinemas in the municipality.

25.08.99

Dansk Magasinpresses Udgiverforening

Complaint about distortion of competition due to VAT exemption for daily newspapers, which cannot be given to magazines and weekly papers.

28.04.99

Horsens Internet café I/S - Horsens municipality

Complaint about distortion of competition since the municipality, in co-operation with 2 public schools, opened two free internet cafés for young people aged between 14 and 24. Held to be legitimate according to public regulation.

25.03.98

2 private internet cafés

Complaint about distortion of competition due to a public youth club's use of free access to PCs and internet for its members.

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CATERING TRADE

24.09.03

Gitte Nielsen - Grenaa municipality

Gitte Nielsen complained that the café of a cultural house received State aid. Held that the café did not receive State aid as accounts were separated from the other activities of the cultural house.

27.08.03

Stenvad Kro - Nørre Djurs municipality

Complaint about distortion of competition due to State aid granted to cafés placed in connection with sport and culture centres. Held not to distort competition as there were no competing cafés in the area and as the profit was small. Recommended that the cafés have separated accounts.

26.03.03

HORESTA - Jelling municipality

Complaint about subsidies to a public building where a catering firm was placed. Held that the aid was not used on activities exposed to competition.

29.08.01

Haderslev barracks cafeteria

Complaint about distortion of competition due to the use of the cafeteria at the barracks. Use of cafeteria for private business purposes stopped.

EDUCATION

24.11.04

Aalborg Tekniske Skole

Complaint that design students from two universities were preparing projects free of charge for business near the universities. Held not to be State aid as the Competition Authority found that the business had expenses with teaching the students and that the value of the students' work was often dubious.

28.04.04

PKV-Landtransportskolen

PKV complained that the school for transportation on land cross-subsidised courses exposed to competition with aid given to courses not exposed to competition. Held that PKV did not cross-subsidise.

26.11.03

Brancheforeningen Private Kursus Virksomheder - Skolen for luftfartsuddannelser

Complaint about cross-subsidisation from the education of air mechanics (which received aid) to the education of pilots (which received no aid). Held that some of the State aid was legitimate according to public regulation. Another part concerned education on an international market that affected trade between Member states, for which reason this part was remitted by the Competition Authority for treatment by the Commission. However, the latter decision was changed by the Competition Appeals Tribunal, stating that referral would only be necessary if it was proven that cross-subsidisation had occurred.

29.01.03

Danpep project

A private institution complained that the Danpep project distorted competition, as it received aid for the completion of surveys by private practice doctors, mapping patients' satisfaction with treatment. The survey was carried out in cooperation with the research unit at the University of Aarhus. Held to be legitimate according to public regulation

29.08.01

Brancheforeningen PKV - Sko-len for luftfartsuddannelser

PKV complained that an aviation school cross-subsided aid given to courses that were not exposed to competition toPage124 courses exposed to competition. Held to be legitimate according to public regulation.

27.01.99

Institut for Musik og Kreativitet - Statens Musikråd

Complaint about the administration of aid to post-qualification training of musicians. Held that the criteria for obtaining aid were non-transparent for the applicants and based on discretion. The criteria were changed.

INFRASTRUCTURE

28.01.04

Dragør municipality

Complaint that Dragør municipality had sold a property to Copenhagen Airport at a price below the market price. After a concrete assessment of the selling price it was held that the selling price corresponded with the market price and that therefore no aid had been given to the airport.

27.02.02

DTL - Storebæltsforbindelsen

Complaint that the tariffs for using the Great Belt Bridge distorted competition between road and train traffic as the part of the bridge carrying lorries paid a relatively smaller part of the capital expenditures compared with the part that carried trains. Based on an overall assessment of the prices, the Competition Authority did not interfere.

27.02.02

The shipping line Jens Larsen

A shipping line complained that competition was distorted due to the fact that owners of vessels below 100 tons could obtain a preferential tax treatment if they also had a vessel above 100 tons. Held to be legitimate according to public regulation.

16.12.98

FDB - Andelsfægeselskabets Læsø a.m.b.a.

FDB complained that the ferry tariff was lower for carriers domiciled on Læsø than for carriers domiciled outside the island. Held to be legitimate according to public regulation.

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HEALTH CARE

27.04.05

Aalborg municipality

Aalborg municipality had miscalculated its hourly price for home care which could affect private undertakings competing with the municipality. A correct recalculation showed that the mistakes counterbalanced, with the effect that the hourly price was correct and no distortion of competition had occurred.

24.11.04

A private supplier of home care services

A private supplier of home care services complained that competition was distorted by the VAT regulation that excepted public services from VAT. The Competition Authority agreed but decided not to take any action as the relevant ministries decided to change regulation.

24.11.04

Tårnby municipality

Complaint that the municipality used a specific firm as supplier of laundry services in the home care sector. Held not to be State aid as the municipality's expenses to laundry did not exceed the cost paid to the laundry service provider.

29.09.04

Aalborg municipality

The municipality based its hourly rate for home care services on its expected savings for becoming more efficient. Held to put private service providers at a disadvantage. Suggested that the municipality make a refund if the expected savings were not reached.

29.09.04

Århus county

The county paid private doctors' marketing expenses in connection with a campaign against flu which was found to distort competition vis-à-vis private immunisation clinics. The municipality was asked not to favour specific business in future campaigns.

17.12.03

Aalborg municipality

The municipality based its calculation of the hourly rate for home care services on the allocated amount of hours and not the hours spent by the municipality's employees, which was the way in which private undertakings should have calculated the rate. Moreover the rate used included wages from employees in training that private undertakings could not employ. Held that the hourly rate should be calculated according to the same principles as were used by private undertakings.

29.08.01

Sydals municipality

An owner of an inn complained that the municipality did not add VAT to its prices for delivering meals to senior citizens. Held to be legitimate according to public regulation.

26.08.98

Ballerup municipality

Experiment with free dental care to elderly in the municipality. Private dental clinics were not included in the experiment. Held that the experiment should not last for a longer period than necessary for its purpose.

17.06.98

Vejle County

A pharmacy complained that the municipality handed out drugs free of charge to patients not hospitalised. Held not to distort competition significantly.

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OTHER AREAS

15.12.04

Copenhagen municipality

A private supplier to a public purchase organisation complained that Copenhagen municipality had calculated a price requirement wrongly. Held that competition was not distorted due to the fact that there were no public suppliers in the purchase organisation.

27.08.03

Gallup A/S - National Institute of Social Reach

Gallup complained that the public-owned National Institute of Social Reach used public funds to reduce the price on activities exposed to competition. Held that public funds were not used to reduce prices.

27.11.02

Copenhagen municipality

A private interpreting bureau complained that the municipality only gave private doctors a salary for the use of interpreters if they had used the bureau of the municipality. The municipality changed this practice before a formal decision was reached.

25.09.02

Næstved municipality

The municipality notified an agreement to the Competition Authority according to which the municipality would not charge a rent on a property if the tenant, being a private company, paid expenses for maintenance and operation of the property instead of paying rent. Held not to be aid.

24.04.02

HORESTA - Arbejdsmarkedets Feriefond

HORESTA, an employer association within the hotel and tourist business, complained that only funds and independent institutions could obtain aid. Held to be legitimate according to public regulation.

24.04.02

Vejr2 A/S - DMI

Vejr2 complained that DMI, which had been granted public services, was using funds allocated to the public services to reduce prices on its activities exposed to competition. Held that no cross-subsidisation occurred. DMI was recommended to keep separate accounts.