Judgment of the General Court Seventh Chamber of 5 May 2021, ITD and Danske Fragtmænd v Commission, T-561/18

• Date: 05 May 2021
• Year: 2021

53

2. COMPETITION: STATE AID

Judgment of the General Court (Seventh Chamber) of 5 May 2021, ITD and Danske

Fragtmænd v Commission, T-561/18

Link to the complete text of the judgment

State aid – Postal sector – Compensation for the discharge of the universal service obligation – Decision

not to rais e any objections – Calculation of the compensation – Net avoide d cost methodology – Taking

into account the intangible benefits of the universal service – Use of funds granted as compensation –

State guarantee of redundancy payments in the event of bankruptcy – VAT exemption for certain

transactions carried out by the universal service provider – Accounting allocation of common costs

between universal service activities and non-universal service activit ies – Capital contribution from a public

undertaking in order to av oid the bankruptcy of its subsidiary – Complaint from a competitor – Decision

finding no State aid after the preliminary examination stage – Existing aid – Advantages granted on a

periodic basis – Whether imputable to the State – Private investor test

Post Danmark is a universal postal service provider in Denmark that is wholly owned by PostNord,

which is, in turn, owned by the public authorities (Kingdom of Denmark and Kingdom of Sweden). It

benefited from a series of measures granted by the public authorities which formed the subject of a

complaint from a competing undertaking concerning, inter alia, compensation for the provision of the

universal postal service in Denmark, which had been notified to the Commission.

By its decision of 28 May 2018 (‘the contested decision’), the Commission found that the

compensation for the provision of the universal postal service over the period from 2016 to 2019,

notified by the Danish authorities, constituted State aid compatible with the internal market. The

Commission also took a view on the measures challenged in the complaint of one of the applicants.

First, it found that the guarantee provided by the public authorities under which, in the event of the

undertaking’s bankruptcy, they undertook to pay, without any consideration in return, the costs

relating to the redundancy payments for former civil servants, constituted existing aid. Secondly, the

Commission considered that a Danish administrative practice that allowed exemption from VAT for

customers of mail-order companies when those companies chose to purchase a transport service

from Post Danmark and a capital increase made in February 2017 by PostNord to its subsidiary Post

Danmark, did not constitute State aid. The Court annuls that decision in so far as it found, at the end

of the preliminary examination stage, that, first, the exemption from VAT and, secondly, PostNord’s

capital increase in favour of Post Danmark did not constitute State aid.

In its judgment, by which the Court partially annuls the contested decision, clarification is given

concerning the criteria for assessing the compatibility of compensation for the cost of the universal

service obligation, the starting point for the limitation period for recovery of the aid, the classification

of a guarantee as State aid, the imputability to the State of national measures taken pursuant to a

directive and measures taken by a public undertaking, and on the private investor in a market

economy test in assessing a measure taken in favour of a company on the verge of bankruptcy.

Findings of the Court

In the first place, the Court holds that the applicants have not provided evidence of serious difficulties

as regards the compatibility of the compensation received by Post Danmark for the provision of the

universal postal service. In its examination of the arguments relating to that compensation, it recalls

that Article 106(2) TFEU seeks to prevent, through the assessment of the proportionality of the aid,

that the operator responsible for the public service benefits from funding which exceeds the net costs

of the public service. Thus, as part of the review of proportionality, it is for the Commission to

compare the amount of the planned State aid with the net costs of the public service missions

performed by the beneficiary of that aid.