EUROPEAN COMMISSION

Brussels, 3.9.2020 C(2020) 5974 final

PUBLIC VERSION

This document is made available for information purposes only.

Subject: State Aid SA.58157 (2020/N) – COVID-19 - Aid to Danish airports and to airlines that land in and depart from Denmark

Your Excellency,

1. PROCEDURE

(1) By electronic notification of 17 August 2020, Denmark notified two aid schemes (Measure 1 and Measure 2 or ‘the measures’) to support Danish aviation in the form of direct grants to airlines that land in and depart from Denmark and to Danish airports, in accordance with Article 108(3) of the Treaty on the Functioning of the European Union (“TFEU”).1 Denmark modified the notification on 2 September 2020.

(2) The measures were notified as compatible under Article 107(3)(b) TFEU in light of the Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak (“Temporary Framework”).2

1 The two measures were pre-notified to the Commission on 24 July 2020. During the pre-notification phase, several telephone conferences between the Danish authorities and the Commission services took place.

2 Communication from the Commission - Temporary framework for State aid measures to support the economy in the current COVID-19 outbreak, OJ C 91I, 20.3.2020, p. 1, as amended by Communication from the Commission C(2020) 2215 final of 3 April 2020 on the Amendment of the Temporary Framework for State aid measures to support the economy in the current COVID-19

Mr. Jeppe Kofod Ministry of Foreign Affairs Asiatik Plads 2 DK-1448

Commission européenne/Europese Commissie, 1049 Bruxelles/Brussel, BELGIQUE/BELGIË - Tel. +32 22991111

(3) Denmark exceptionally agrees to waive its rights deriving from Article 342 TFEU, in conjunction with Article 3 of Regulation 1/1958,3 and to have this Decision adopted and notified in English.

2. DESCRIPTION OF THE MEASURES

2.1. Objective of the measures

(4) The objective of the measures is to support air traffic in Denmark in order to allow airlines and airports to restore their level of operations in Denmark to that before the COVID-19 outbreak.

(5) In particular:

(a) Measure 1 aims at covering certain airport charges due by airlines serving scheduled passenger flights from any of the 13 Danish airports from 1 August 2020 until 31 December 2020, to restore the air connectivity within Denmark and to/from Denmark; (b) Measure 2 aims at supporting Danish airports serving scheduled flights within and to/from Denmark by way of direct grants per departing passenger from 1 August until 31 December 2020 on the basis of airport charges applicable in March 2020.

2.2. National legal bases and granting authority

(6) The measures are based on a Ministerial Decree of 30 June 2020.4 In addition, the Danish Ministry of Transport, Construction and Housing has prepared a draft executive order for the administration of each measure.

(7) The granting authority is the Danish Ministry of Transport, Construction and Housing. The latter is also the competent authority for the management of the measures.

2.3. Form and budget of the measures

(8) The measures provides aid in the form of direct grants.

(9) The maximum budget of the measures amounts to a total of DKK 180 million (approximately EUR 24 million), broken down as follows:

(a) Measure 1: DKK 150 million (approximately EUR 20 million);

outbreak, OJ C 112I , 4.4.2020, p. 1, by Communication from the Commission C(2020) 3156 final of 8 May 2020 on the Amendment of the Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak, OJ C 164, 13.5.2020, p. 35 and by Communication from the Commission C(2020) 4509 final of 29 June 2020 on the 3rd Amendment to the Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak, OJ C 218, 2.7.2020, p. 3.

3 Regulation No 1 determining the languages to be used by the European Economic Community, OJ 17, 6.10.1958, p. 385.

4 Decree of the Ministry of Transport and Housing No. 262 of 30 June 2020.

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(b) Measure 2: DKK 30 million (approximately EUR 4 million).

(10) The aid may not be granted before the Commission has adopted a decision declaring Measure 1 and Measure 2 compatible with the internal market. Both measures will remain in effect until the maximum budget has been paid out or until the period of grant expires (i.e. 31 December 2020).

2.4. Sectoral and regional scope of the measures

(11) The measures cover air passenger scheduled services within and to/from Denmark.

(12) There are 13 airports/aerodromes in Denmark that serve scheduled flights.5 Some of the airports serve both international and domestic flights, other airports serve only domestic flights, and one airport serves only international flights.

2.5. Beneficiaries

(13) The beneficiaries of the measures are:

(a) As regards Measure 1, all airlines serving scheduled passenger flights from/to any of the 13 airports in Denmark from 1 August 2020 until 31 December 2020. The estimated number of beneficiary airlines is approximately 150.6 Cargo flights and general aviation will not be a part of the aid measure, as the measure is designed to restore connectivity within and to/from Denmark.

(b) As regards Measure 2, the 13 airports in Denmark serving scheduled passenger flights (including two aerodromes).

(14) Beneficiaries are not eligible for aid under Measures 1 and 2 if they do not provide a statement declaring: (a) If they are medium or large enterprises7: that they were not already in difficulty8 on 31 December 2019;

(b) If they are small or micro enterprises9 already in difficulty on 31 December 2019: that, at the moment of granting of the aid, they are not

5 (AAL), Airport (AAR), Aarhus City Airport (harbour), (BLL), (RNN), Kastrup (CPH), Copenhagen City Airport (water aerodrome), Airport (RKE), Airport (EBJ), Karup Airport (KRP), Læsø Airport (BYR), Airport (EKAT), Sønderborg Airport (SGD). The yearly number of passengers is normally between around 10,000 up to 30,000,000, depending on the airport in question.

6 Corresponding to around 50% of the number recorded in 2019.

7 As defined in Annex I to the Commission Regulation (EU) No 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty (“General Block Exemption Regulation), OJ L 187, 26.6.2014, p. 1.

8 As defined in Article 2(18) of the General Block Exemption Regulation.

9 As defined in Annex I to the General Block Exemption Regulation.

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subject to collective insolvency procedure under national law and that they have not received rescue aid10 or restructuring aid.11

2.6. Eligible costs, aid amount and procedure

Measure 1

(15) The eligible costs are the airport charges paid by airlines on scheduled passenger flights at the 13 Danish airports (namely, take off charges and passenger charges including security, but excluding parking and ground handling charges) from 1 August 2020 until 31 December 2020.

(16) The aid amount corresponds to 25% of the eligible costs. That level of compensation may be increased, in a non-discriminatory manner, in one or more stages if it appears necessary to achieve the aim of the measure. In any event, such an increase will not affect the commitment that the overall maximum aid amount per undertaking will be respected (a cap of EUR 800 000 per undertaking). Similarly, the Ministry of Transport, Construction and Housing may reduce the level of compensation or the eligible period if air services are restored sooner than expected.

(17) Beneficiaries must send their application to the Ministry of Transport, Construction and Housing. The application will consist of the following documents:

- application for support including an indication of activity, a declaration of the eligible costs and aid amount;

- a copy of the airport charges for which aid is sought; and

- a declaration on the honour to comply with the EU State aid rules.

(18) The aid will be granted pursuant to a legally binding act taken by the Danish Ministry of Transport, Construction and Housing from the date on which the Commission has adopted a decision declaring the measure compatible with the internal market until 31 December 2020, up to the limits of the funds available. The granting act should indicate the beneficiary and the maximum amount of aid or key parameters to calculate the precise amount of aid so that there is no discretion at the moment of the payment. The aid will be paid out based on the airport charges for flights completed until 31 December 2020 (based on declarations that can be submitted until 31 January 2021 for the charges of the preceding month of December 2020). Actual payment may take place later in 2021.

(19) The measure contains a recovery mechanism with interests in case the beneficiary submits incorrect information or in case of overcompensation.

10 Alternatively, if they have received rescue aid, they have reimbursed the loan or terminated the guarantee at the moment of granting of the aid under the Temporary Framework.

11 Alternatively, if they have received restructuring aid, they are no longer subject to a restructuring plan at the moment of granting of the aid under the Temporary Framework.

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Measure 2

(20) The eligible costs are airport charges (namely, take off charges, passenger charges including security, but excluding parking and ground handling charges) on the basis of the rates applicable in March 202012, adjusted to the number of monthly departing passenger actually registered over the period from 1 August 2020 until 31 December 2020.

(21) The aid amount corresponds to 25% of the eligible costs. That level of compensation may be increased, in a non-discriminatory manner, in one or more stages if it appears necessary to achieve the aim of the measure. In any event, such an increase will not affect the commitment that the overall maximum aid amount per undertaking will be respected (a cap of EUR 800 000 per undertaking). Similarly, the Ministry of Transport, Construction and Housing may reduce the level of compensation or the eligible period if air services are restored sooner than expected.

(22) The application procedure applicable under that Measure is similar to the one applicable under Measure 1 (see recital (17)), except that the airports will submit the airport charges applicable on 1 March 2020 and the number of passengers registered on the month for which they submit an application for aid.

(23) The aid will be granted pursuant to a legally binding act taken by the Danish Ministry of Transport, Construction and Housing from the date on which the Commission has adopted a decision declaring the measure compatible with the internal market until 31 December 2020, up to the limits of the funds available. The granting act should indicate the beneficiary and the maximum amount of aid or key parameters to calculate the precise amount of aid so that there is no discretion at the moment of the payment. The aid will be paid out based on the airport charges applicable in March 2020 adjusted by the number of departing passengers registered by the beneficiary over the period from 1 August 2020 until 31 December 2020 (based on declarations that can be submitted until 31 January 2021 for the charges of the preceding month of December 2020). Actual payment may take place later in 2021.

(24) The measure contains a recovery mechanism with interests in case the beneficiary submits incorrect information or in case of overcompensation.

2.7. Cumulation

(25) The Danish authorities confirmed that beneficiaries of Measure 1 and of Measure 2 may also benefit from other measures under the Temporary Framework and/or from de minimis aid and/or from aid under the General Block Exemption Regulation. The Danish authorities have confirmed that, insofar as a beneficiary may benefit from multiple measures under the Temporary Framework and/or from de minimis aid and/or from the General Block Exemption Regulation, the maximum thresholds on aid amounts per beneficiary, as specified in the

12 In order to benefit from Measure 2, there is no requirement that airports adopt a particular policy for airport charges for the period August to December 2020 (for example lower the level of airport changes to the extent of the aid received), whereby the airports would merely pass-on the aid to airlines that would be the actual beneficiaires of the measure.

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Temporary Framework, in the de minimis Regulation and in the General Block Exemption Regulation, will be respected.

2.8. Commitments made by the Danish authorities

(26) For both measures, the Danish authorities committed:

(a) To ensure that aid is not granted to medium or large enterprises that were already in difficulty on 31 December 2019. If the aid is granted to micro and small enterprises that were already in difficulty on 31 December 2019, the Danish authorities committed to ensure that those enterprises, at the moment of granting of the aid, are not subject to collective insolvency procedure under national law and that they have not received rescue aid or restructuring aid. If those enterprises have received rescue aid, the Danish authorities will make sure that, at the moment of granting the aid, those enterprises will have reimbursed the loan or terminated the guarantee. If those enterprises have received restructuring aid, the Danish authorities will make sure that, at the moment of granting of the aid, those enterprises will no longer be subject to a restructuring plan;

(b) To ensure that in case of cumulation with aid under the Temporary Framework, with de minimis aid and/or with aid under the General Block Exemption Regulation, that the provisions of the relevant Regulations will be respected;

(c) To comply with all the monitoring and reporting provisions in section 4 of the Temporary Framework as amended, including the obligation to publish relevant information on each individual aid above EUR 100 000 on the national State aid website or the Commission’s IT tool within 12 months from the moment of granting.13

3. ASSESSMENT

3.1. Legality of the measure

(27) By notifying the measures before putting it into effect, the Danish authorities have respected their obligations under Article 108(3) TFEU.

3.2. Existence of State aid

(28) Article 107(1) TFEU defines State aid as “any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States”.

(29) For a measure to be categorised as aid within the meaning of Article 107(1) TFEU, all the conditions set out in that provision must be fulfilled. First, the measure must be imputable to the State and financed through State

13 Referring to information required in Annex III to Commission Regulation (EU) No 651/2014, Annex III to Commission Regulation (EU) No 702/2014 and Annex III to Commission Regulation (EU) No 1388/2014.

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resources. Second, it must confer an advantage on its recipients. Third, that advantage must be selective in nature. Fourth, the measure must distort or threaten to distort competition and affect trade between Member States.

(30) The two notified measures are imputable to the State, since they are based on a Ministerial Decree of the Ministry of Transport, Construction and Housing and will be administered by a ministerial agency. The granting authority is the Danish Ministry of Transport, Construction and Housing.

(31) The two notified measures confer an advantage on airlines and airports in the form of grants. They thus relieve the beneficiaries of costs that they would have had to bear under normal market conditions.

(32) The two notified measures are selective, since they concern only beneficiaries of a specific sector, namely airlines and airports.

(33) The two notified measures are liable to distort competition, since they strengthen the competitive position of airlines and airports. They also affect trade between Member States, since both airlines and airports are active in the aviation sector, in which intra-Union trade exists.

(34) In view of the above, the Commission concludes that the measures constitute aid within the meaning of Article 107(1) TFEU. The Danish authorities do not contest that conclusion.

3.3. Compatibility

(35) Since the measures both involve aid within the meaning of Article 107(1) TFEU, it is necessary to consider whether they are compatible with the internal market.

(36) Pursuant to Article 107(3)(b) TFEU the Commission may declare compatible with the internal market aid “to remedy a serious disturbance in the economy of a Member State”.

(37) By adopting the Temporary Framework on 19 March 2020, the Commission acknowledged (in section 2) that “the COVID-19 outbreak affects all Member States and that the containment measures taken by Member States impact undertakings”. The Commission concluded that “State aid is justified and can be declared compatible with the internal market on the basis of Article 107(3)(b) TFEU, for a limited period, to remedy the liquidity shortage faced by undertakings and ensure that the disruptions caused by the COVID-19 outbreak do not undermine their viability, especially of SMEs”.

(38) The objective of Measure 1 and Measure 2 is to give airlines and airports an incentive to re-establish air routes within and from/to Denmark and thus enable the recovery of air connectivity, and broadly support the general economy and development of the country by providing support to airlines and airports in a comprehensive manner.

(39) The two measures form part of a series of measures conceived at national level by the Danish authorities to remedy a serious disturbance in their economy. The measures are important to ease the liquidity constraints of the beneficiaries, and

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are of a scale that can reasonably be anticipated to produce effects across the Danish aviation sector.

(40) Furthermore, the two measures have been designed to meet the requirements of a specific category of aid (“Limited amounts of aid”) described in section 3.1 of the Temporary Framework.

(41) The aid takes the form of direct grants (see recital (8)).

(42) The overall nominal value of those direct grants will not exceed EUR 800 000 per undertaking; all figures used are gross, that is, before any deduction of tax or other charges (see recitals (16) and (21)). The measures therefore comply with point 22(a) of the Temporary Framework.

(43) Aid is granted under the measures on the basis of a scheme with an estimated budget as indicated in recital (9). The measures therefore comply with point 22(b) of the Temporary Framework.

(44) Aid will not be granted to medium or large undertakings that were already in difficulty on 31 December 2019 (see recital (14)). The measures therefore comply with point 22(c) of the Temporary Framework.

(45) Aid can be granted to micro or small enterprises that were already in difficulty on 31 December 2019 provided that they are not subject to collective insolvency procedure under national law, and that they have not received rescue aid14 or restructuring aid15 (see recital (14)(b)). The measures comply with point 22(c) bis.

(46) Aid will be granted pursuant to a legally binding act taken by the Danish Ministry of Transport, Construction and Housing no later than 31 December 2020. The act should indicate the beneficiary and the maximum amount of aid or key parameters to calculate the precise amount of aid so that there is no discretion at the moment of the payment. Actual payment may take place later in 2021. As explained in recitals (17) and (22), beneficiaries will be able to submit declarations until 31 January 2021 for the charges of the preceding month of December 2020 only for the purpose of calculating the precise amount of aid. The measures therefore comply with point 22(d) of the Temporary Framework.

(47) Both measures have a short term duration and aim at providing support to the airlines and airports in order to enable the recovery of air connectivity. The incentives granted are deemed proportionate to the minimum required by airlines and airports to re-establish connections within Denmark and to/from Denmark.

(48) The Danish authorities confirm that the monitoring and reporting rules laid down in section 4 of the Temporary Framework will be respected (see recital (26)(c)).

14 Alternatively, if they have received rescue aid, they have reimbursed the loan or terminated the guarantee at the moment of granting the aid under the Temporary Framework.

15 Alternatively, if they have received restructuring aid, they are no longer subject to a restructuring plan at the moment of granting of the aid under the Temporary Framework.

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(49) The Commission therefore considers that the measure is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State pursuant to Article 107(3)(b) TFEU since it meets all the relevant conditions of the Temporary Framework.

3.4. Cumulation

(50) The Danish authorities further confirm that the aid under the measure may only be cumulated with other aid, provided the specific provisions in the sections of the Temporary Framework are respected and the cumulation rules of the relevant Regulations are respected (see recital (25)).

4. CONCLUSION

In view of the above, the Commission has accordingly decided not to raise objections to the aid on the grounds that it is compatible with the internal market pursuant to Article 107(3)(b) of the Treaty on the Functioning of the European Union.

If this letter contains confidential information which should not be disclosed to third parties, please inform the Commission within fifteen working days of the date of receipt. If the Commission does not receive a reasoned request by that deadline, you will be deemed to agree to the disclosure to third parties and to the publication of the full text of the letter in the authentic language on the Internet site: http://ec.europa.eu/competition/elojade/isef/index.cfm.

Your request should be sent electronically to the following address:

European Commission, Directorate-General for Competition State Aid Greffe B-1049 Brussels [email protected]

Yours faithfully,

For the Commission

Margrethe VESTAGER Executive Vice-President

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