Zijne Excellentie De Heer Stef Blok Minister Van Buitenlandse Zaken Rijnstraat 8 NL – 2515 XP Den Haag

EUROPEAN COMMISSION

Brussels, 16.06.2020 C(2020) 3881 final

In the published version of this decision, PUBLIC VERSION some information has been omitted, pursuant to articles 30 and 31 of Council This document is made available for Regulation (EU) 2015/1589 of 13 July 2015 information purposes only. laying down detailed rules for the

application of Article 108 of the Treaty on the Functioning of the European Union, concerning non-disclosure of information covered by professional secrecy. The omissions are shown thus […]

Subject: State aid SA.57274 (2020/N) – The Netherlands Rescue aid in favour of ice skating arena Thialf

Dear Sir,

The European Commission ("the Commission") wishes to inform the Kingdom of the Netherlands that, having examined the information supplied by your authorities on the State aid referred to above, it has decided not to raise any objections, as it is compatible with the internal market pursuant to Article 107(3)(c) of the Treaty on the Functioning of the European Union (“TFEU”).

The Commission has based its decision on the following considerations:

1. PROCEDURE

(1) Following pre-notification contacts, on 25 May 2020, the Netherlands notified to the Commission its plans to grant rescue aid in favour of Thialf Onroerend Goed (OG) B.V., (“Thialf” or “the beneficiary”).

Zijne Excellentie de Heer Stef Blok Minister van Buitenlandse Zaken Rijnstraat 8 NL – 2515 XP Den Haag

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

2. DESCRIPTION

2.1. The beneficiary

(2) The beneficiary was established on 12 September 2003. The Thialf group consists of two limited liability companies: the parent company Thialf OG B.V. and its 100% subsidiary company Thialf B.V. The parent company’s sole object is the ownership and lease of the ice skating arena Thialf while its 100% subsidiary, Thialf B.V., is responsible for the operation of the ice skating arena. To that end, Thialf B.V. pays annual exploitation fees of EUR 1.050.000 which is, according to the Dutch authorities, in line with the market conditions.

(3) The beneficiary employs 25 persons and has its registered office in Fryslân, a Province in the Netherlands. According to the company reporting, Thialf is a fully publicly owned company with as shareholders the Province of Fryslân (66.67%) and the municipality of Heerenveen (33.33%). Its turnover amounted to EUR 1.2 million in 2019.

(4) The Thialf arena has a capacity of 12,500 seats and provides the infrastructure for professional ice skating sports as well as recreational use. The arena was renovated with EUR 50 million State aid to which the Commission raised no objections in 20131. It offers facilities for long track speed skating, short track speed skating, ice hockey, figure skating, ice speedway, and non-sports events.

(5) Thialf is mainly used by local citizens for its recreational purposes. The Netherlands explain that the closest ice skating arena in the Netherlands is in Elfstedenhal, in Leeuwarden, some 35 Kilometres away from Thialf, and the next one is in Groningen some 60 Kilometres away. On the sport competition side, Thialf hosts every year during a limited number of days several main skating events like the Dutch, European and World championships, and one or two Speed Skating World Cup events.

(6) The Dutch authorities explain that Thialf’ B.V.s operations are not profitable with the current package of activities and related costs. The ice skating arena is predominantly used for recreational purposes in terms of total number of visitors as well as time of use of the arena. However revenues from recreational activity account only for around […]* % of annual turnover. The Dutch authorities estimate that the entry price for recreational activities should need to be increased by 800% to make the arena profitable, which of course would have an effect on the demand and is, in their view, not realistic. The operations results became negative already in 2016 and continued to be negative in 2017, 2018 and 2019. Due to these negative results on operations, in the last season September 2019 to March 2020 Thialf B.V. was not able to pay its exploitation fee to its parent company. Until this year, Thialf was able to absorb the losses of its daughter company but with the loss of Thialf B.V. amounting to EUR -1 million for the financial year 2018/2019, the

1 Commission decision of 13.12.2013 in case SA.37373 (2013/N) – The Netherlands – Contribution to the renovation of ice arena Thialf in Heerenveen.

* Confidential information

consolidated cash flow remained negative and resulted in a liquidity crisis at the group level as well.

(7) These operating losses during the most recent years accumulated to a decrease of Thialf’s equity capital. According to financial reporting for the last financial year ending in September 2019, Thialf recorded cumulated losses of more than 50% of its subscribed capital. In effect, the cumulated losses of Thialf amount to EUR […], whereas its subscribed capital, including share premium amounts to 3.7 million.

(8) This structural liquidity crunch worsened with the COVID-19 outbreak. The decision of the Dutch authorities to prohibit events with more than 100 participants prompted Thialf to close on 12 March 2020, four weeks before its planned end of season. The estimated loss from early closure amounts to EUR […].

2.2. Description of the State guarantee on / the rescue loan

(9) As described in its notified legal basis in the form of a (draft) loan facility agreement2, the rescue aid consists of a loan amounting to EUR 2 million. In line with their respective shareholdings, the municipality of Heerenveen will provide 1/3 of the funds and the Province of Fryslân will provide 2/3 of the loan. The loan agreement will be entered into with the Province of Fryslân only.

(10) The loan shall be granted for the maximum period of six months. The loan will bear interest at a rate of 3.69% for the first six months (base rate Euribor one year + 400 basis points) and 4,19% after six months (base rate Euribor one year + 450 basis points), meaning that is not lower than the reference rate set out in the Reference Rate Communication for weak undertakings offering normal levels of collateralisation, which is currently 1-year IBOR plus 400 basis points3.

(11) The Dutch authorities have provided a liquidity plan setting out the beneficiary’s liquidity needs for a six month-period beginning July 2020 until December 2020 based on expected operating revenues and ordinary costs of the business. The projections of the company's cash flows for the next six months show a cumulated shortfall of EUR […] by December 2020, extending further thereafter. The rescue loan is to be exclusively used to finance the operating costs, in particular the maintenance costs, the staff related costs and financing costs.

(12) The Netherlands has committed to communicate to the Commission a restructuring plan for Thialf not later than six months after the rescue aid has been authorised.

(13) Finally, the Dutch authorities confirmed that the beneficiary has not received any rescue or restructuring aid in the past ten years.

2 Overeenkomst van geldlening tussen Provincie Fryslan als Kredietgever en Thialf OG B.V. als Kredietnemer (Concept). 3 Communication from the Commission on the revision of the method for setting the reference and discount rates, OJ C 14, 19.1.2008, p. 6.

2.3. Counterfactual to the Measure

(14) The Dutch authorities explained that the beneficiary cannot obtain bank loans for the amount of the aid under the current circumstances. This is due to Thialf’s liquidity crunch as well as to the outlook of the continuation of the loss-making operations of Thialf without a restructuring of its activities. These circumstances are aggravated by the uncertainty caused by the COVID-19 crisis, which led to the early closure of the facility before the usual seasonal term. Therefore private banks will not be prepared to grant a loan to Thialf under conditions that worsen their financial position even more.

(15) The Dutch authorities also explained that Thialf could not obtain the money it needs from sales of some of its assets because their value is significantly lower than the amount of cash needed. Furthermore, the assets are not liquid in the short time, since they are strictly specialised for the intended purpose of an ice skating rink.

(16) Therefore, in the absence of the rescue loan, the Netherlands claims that the beneficiary would go out of business, which would result in the direct loss of services provided by the ice skating arena.

(17) The Dutch authorities also explained that there are two important roles ice skating arena Thialf plays. One is related to the use by the local population of which […] used the arena for their recreational ice skating activities in the season 2018/2019. As explained in recital (5), there is just one other ice skating arena in the province of Fryslân that has been renovated in 2015 and which may overlap in the catchment area with Thialf. However, the Dutch authorities clarified that each arena attracts mainly its own visitors due to the low willingness of recreational users to travel. The next ice skating arena is at 66 km in Groningen and clearly out of the catchment area of Thialf. Therefore, the closure of Thialf would deprive the citizens nearby of using Thialf’s arena.

(18) The other significance of Thialf is related to the professional ice skating sport. The Dutch authorities claim that, in case of Thialf’s `exit, there would be a risk of disruption to an important service which is hard to replicate. Thialf is the only long track ice skating arena in the Netherlands that has a so-called A-status of the International Skating Union (ISU). Technically, after the renovation and significant investment in the improved ice skating facilities, the new Thialf is able to provide the best ice and the best 400-meter track for the top sportsman, in particular with regard to its training conditions. Therefore, keeping the A-status is of great importance for the professional speed skating sport in the Netherlands and for the popularity of this sport.

(19) Moreover, the international competitions that are assigned by the ISU to the Netherlands take place at Thialf. Up until now, these competitions took up a capacity of approximately twelve days per year.

3. ASSESSMENT OF THE MEASURE

(20) The Commission first assesses whether the rescue loan under scrutiny entails State aid to Thialf under Article 107(1) TFEU, and then whether such aid is lawful and

compatible with the internal market.

3.1. Existence of State aid

(21) According to Article 107(1) TFEU, "[s]ave as otherwise provided in the Treaties, 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, be incompatible with the internal market".

(22) The qualification of a measure as aid within the meaning of this provision therefore requires the following cumulative conditions to be met: (i) the measure must be imputable to the State and financed through State resources; (ii) it must confer an advantage on its recipient; (iii) that advantage must be selective; and (iv) the measure must distort or threaten to distort competition and affect trade between Member States.

(23) Prior to examining whether the rescue loan involves State aid pursuant to Article 107(1) TFEU, the Commission notes that the Netherlands has notified it as constituting State aid.

(24) The EUR 2 million loan described in section 2.2, is to be granted with public funds from the Province of Fryslân and the municipality of Heerenveen in implementation of the loan agreement which the Province of Fryslân intends to enter into with Thialf. The concept of the State for the purposes of Article 107(1) TFEU includes public authorities of provinces and regions. Therefore, the rescue loan is imputable to the State and involves State resources.

(25) It is apparent that Thialf could not obtain financing from financial institutions, at market conditions, for the amount of the rescue loan (see recital (9)) or, in the short term, sell assets to cover its cash deficit (see recital (11)). Therefore, the rescue loan provides an advantage in the form of necessary liquidity that Thialf has not and could not have obtained at market conditions.

(26) The rescue loan has been granted through the exercise of discretion to the benefit of Thialf for an ad hoc amount determined by reference to its specific liquidity needs. The loan is not part of a broader general economic policy measure to provide support to undertakings, in a comparable legal and economic situation, active in the provision of ice skating facilities or other economic sectors. As the Court has stated, where individual aid is at issue, the identification of the economic advantage is, in principle, sufficient to support the presumption that a measure is selective.4 This is so regardless of whether there are operators on the relevant markets that are in a comparable factual and legal situation. Therefore, the Commission concludes that this loan is selective within the meaning of Article 107(1) TFEU.

(27) The organisation of ice skating events and competitions is open to competition and trade between Member States. Ice skating facilities are operated throughout the

4 See judgment of 4 June 2015 Commission v MOL, C-15/14 P EU:C:2015:362, paragraph 60.

Union, some of which also host international competitions such as Max Aicher Arena in Inzell, Germany. Therefore, the aid is liable to affect trade between Member States.

(28) By granting access to funding which it would not otherwise obtain at market conditions, the rescue loan is liable to improve the position of Thialf in relation to other competing undertakings which also organise similar ice skating events within the internal market that finance their operations at market conditions. The loan consequently distorts or threatens to distort competition and affect trade between Member States.

3.2. Conclusion on the existence of aid

(29) In light of the above, the Commission concludes that the rescue loan in favour of Thialf involves State aid under Article 107(1) TFEU and will therefore assess its lawfulness and compatibility with the internal market.

3.3. Lawfulness of the aid

(30) The planned State loan has not been granted to Thialf yet and the Netherlands is thus observing the stand-still obligation laid down in Article 108(3) TFEU. Therefore, the rescue loan to the beneficiary does not constitute unlawful State aid.

3.4. Compatibility of the aid

(31) Under Article 107(3)(c) TFEU, the Commission can authorise aid if it is granted to promote the development of certain economic sectors and if this aid does not adversely affect trading conditions to an extent contrary to the common interest. In view of the nature and aims of the State aid at stake, the Commission will assess whether the rescue loan complies with the provisions on rescue aid laid down in the Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty ("R&R Guidelines").5

3.4.1. Eligibility

(32) In order to be eligible for rescue aid, an undertaking must qualify as an undertaking in difficulty pursuant to section 2.2 of the R&R Guidelines. In particular, point 20 of the R&R Guidelines stipulates that an undertaking is considered to be in difficulty when, without intervention by the State, it will almost certainly be condemned to going out of business in the short or medium term. This would be the case when at least one of the circumstances described in point 20 from letter a) to d) of the R&R Guidelines occurs.

(33) As explained in recital (7) Thialf lost more than half of its subscribed capital as a result of accumulated losses at the end of the last financial year on 30 September 2019. The company thus qualifies as an undertaking in difficulty pursuant to point 20 a) of the R&R Guidelines.

5 Communication from the Commission - Guidelines on State aid for rescuing and restructuring non- financial undertakings in difficulty (OJ C 249, 31.7.2014, p.1).

(34) According to point 21 of the R&R Guidelines, a newly created undertaking is not eligible for rescue aid. The beneficiary is not a newly created undertaking since it was established more than three years ago (see recital (2)).

(35) According to point 22 of the R&R Guidelines, a company belonging to or being taken over by a larger business group is not normally eligible for rescue aid, except where it can be demonstrated that the company’s difficulties are intrinsic and are not the result of an arbitrary allocation of costs within the group, and that the difficulties are too serious to be dealt with by the group itself. The beneficiary, Thialf, is the mother company of a group whose only, fully owned, subsidiary is the operating company Thialf B.V. The difficulties are concerning the group as a whole that until now, absorbed the losses of the daughter company. The difficulties are not the result of an arbitrary allocation of costs within the group as the exploitation fee was determined in line with market conditions (see recital (6)).

3.4.2. Contribution to an objective of common interest

(36) Under point 38(a) of the R&R Guidelines, in assessing whether the rescue aid can be declared compatible with the internal market, the Commission examines whether the State aid contributes to a well-defined objective of common interest in accordance with Article 107(3) TFEU. In this respect, the Member State must demonstrate that the aid aims to prevent social hardship or address a market failure. Under point 44 of the R&R Guidelines, this can be demonstrated in particular by showing that one of the circumstances listed from letter a) to g) are met.

(37) In this regard, the Dutch authorities refer to circumstances mentioned under the letter b) of point 44 of the R&R Guidelines, i.e. (see recitals (17) to (19)).

(38) On the basis of the information provided by the Dutch authorities, the Commission finds that there is a concrete risk of disruption of the ongoing activity of Thialf. In that respect, Thialf is predominantly used by the local population for recreational ice skating. Thialf is an important local infrastructure for amateur sport, with the closest alternative arena Elfstedenhal in Leeuwarden being located at more than 30 Kilometres and the other one in Groningen at more than 60 Kilometres. Ice skating is a very popular recreational sport in the Netherlands but recreational users have a low willingness to travel. Therefore there is hardly an overlap in visitors of the arenas and the exit of the market of Thialf would create a market failure for these users.

(39) Furthermore, the Commission notes the argument of the Netherlands that Thialf is the only ice skating arena in the Netherlands to organise high level international competitions and that given the technically demanding infrastructure to provide the highest standards needed for ice skating, Thialf’s activities would be hard to replicate by any local or nearby competitor in the short term.

(40) In that respect, point 107 of the R&R Guidelines acknowledges that, whilst the failure of a SME is relatively unlikely to involve a large degree of market failure, there is a concern that SMEs that have the potential to restructure may be prevented to do so by liquidity constraints. Thialf is a small State-owned undertaking as defined in point 13 footnote 11 of the R&R Guidelines. In the 7

notification, the Netherlands indicate their plan to restructure the operations of Thialf. Moreover, in its precedent decision regarding State aid provided to the renovation of Thialf ice skating arena, the Commission acknowledged that the exploitation of ice skating arenas is subject to market failure (see recital (4)).

(41) For the reasons above, the Commission concludes that by providing a rescue loan to Thialf, the rescue aid contributes to a well-defined objective of common interest as provided by letter b) of point 44 of the R&R Guidelines. Considering that the rescue aid contributes to the objective referred to in letter b) of point 44, the Commission does not need to assess or conclude on the objective(s) referred to in the letters other than b).

3.4.3. Appropriateness

(42) Under point 38(c) of the R&R Guidelines, the Commission will not consider an aid measure to be compatible with the internal market if other, less distortive measures allow the same objective to be achieved. In this respect, rescue aid must fulfil the conditions laid down in point 55 from letter a) to e) and 56 of the R&R Guidelines.

(43) As to point 55 letters a) and d) of the R&R Guidelines, the Commission notes that the rescue loan, covering net cash flow needs up to EUR 2 million is temporary in nature. The Netherlands committed to communicating to the Commission, no later than six months after disbursement of the first instalment to the beneficiary a restructuring plan for Thialf.

(44) According to the Dutch authorities, the rate of the rescue loan will be at least equal to the reference rate set out in the Reference Rate Communication for weak undertakings offering normal levels of collateralisation, that is to say 1-year EURIBOR plus 400 basis points (see recital (10), which is in line with requirements of point 55, letter b).

(45) The Commission notes the declaration by the Dutch authorities that the loan shall be used only to meet the identified urgent liquidity needs of the beneficiary, and in particular will cover costs of operations, such as staffing costs, financing costs and suppliers (see recital (11)). Accordingly, the beneficiary will not use the rescue aid to finance structural measures nor other activities than its current operations (letter e) of point 55 of the R&R Guidelines).

(46) In view of the information provided by the Netherlands, the Commission concludes that the rescue loan meets the conditions laid down in points 38(c) and 55 of the R&R Guidelines and therefore the form of the aid allows rescuing the beneficiary in the least distortive way.

3.4.4. Proportionality of the aid / aid limited to the minimum

(47) Under point 38(e) of the R&R Guidelines, aid must not exceed the minimum needed to achieve the objective of common interest. As specified in point 60 of the R&R Guidelines, rescue aid must be restricted to the amount needed to keep the beneficiary in business for six months. In determining that amount, the Commission takes into account the outcome of the calculation under the formula set out in Annex I of the R&R Guidelines. The Commission will authorize any aid

exceeding the result of that calculation only if it is duly justified by the provision of a liquidity plan setting out the beneficiary's liquidity needs for the coming six months.

(48) The EUR 2 million amount of the loan required by Thialf to be approved as rescue aid exceeds the result of the formula set out in Annex I to R&R Guidelines. Therefore, in line with point 60 of the R&R Guidelines, the Dutch authorities provided a liquidity plan setting out the beneficiary’s liquidity needs for the six months to come, starting from July 2020 to December 2020.

(49) The Commission has reviewed the liquidity plan and found that it reasonably reflects the liquidity needs of the beneficiary. In particular, it includes cash outflows related to legitimate expenses, such as e.g. staff related costs, suppliers and financial costs. The liquidity plan does not include uncommon or illegitimate expenses, such as e.g. financing of expansion of the premises or operations (see recital (11)). The Commission also notes that the cumulated cash shortfall over the 6 months covering July 2020 to December 2020 is commensurate with the EUR 2 million rescue loan, keeping in mind the current uncertainties on any projections for the second semester of 2020, owing to the potential impact of COVID-19. The Commission considers that the aid does not exceed the necessary minimum to keep Thialf in business for the coming six months.

(50) The Commission therefore concludes that the notified rescue aid is restricted to a minimum amount, in line with point 60 of the R&R Guidelines and is consequently proportional.

3.4.5. Negative effects

(51) Under point 38(f) of the R&R Guidelines, the negative effects of the aid on competition and trade between Member States must be sufficiently limited, so that the overall balance of the measure is positive.

(52) Under points 70 and 71 of the R&R Guidelines, aid can be granted to undertakings in difficulty in respect of only one rescue or restructuring operation. Therefore, where less than 10 years have elapsed since rescue aid, restructuring aid or temporary restructuring support were granted to the beneficiary in the past (including any such aid granted before the entry into force of the R&R Guidelines and any non-notified aid) or the restructuring period came to an end or implementation of the restructuring plan was halted – whichever occurred the latest –, the Commission will not allow further aid (the 'one time, last time' principle).

(53) The Dutch authorities confirmed in the notification that Thialf has not benefited from any rescue aid, restructuring aid or temporary restructuring support in the past 10 years. Therefore, the 'one time, last time' principle is respected.

3.4.6. Transparency

(54) According to point 38(g) of the R&R Guidelines, Member States, the Commission, economic operators and the public must have easy access to all relevant acts and pertinent information about the aid awarded. This means that the Netherlands must respect the provisions on transparency laid down in point 96 of the R&R

Guidelines. The Commission notes that the Netherlands undertakes to respect those obligations. The relevant information shall be made available on the website: https://www.fryslan.frl/beleidsthemas/kennisgevingen-europa_41633/

(55) The Commission also reminds the Dutch authorities to notify a restructuring plan for Thialf not later than six months after disbursement of the first instalment to the beneficiary as committed to in the notification, or, alternatively, communicate to the Commission proof that the guaranteed loans have been reimbursed and/or the guarantee terminated or a liquidation plan submitted in line with point 55 d) of the R&R Guidelines.

(56) In addition, the Commission reminds the Netherlands of its obligation to submit annual reports to the Commission, in accordance with point 131 of the R&R Guidelines.

3.5. Conclusion on the compatibility of the aid

(57) In the light of the findings above, the Commission concludes that the rescue loan meets the conditions of compatibility with the internal market set out in the R&R Guidelines. The Commission therefore considers that the rescue aid provided to Thialf is compatible with the internal market.

4. CONCLUSION

The Commission has accordingly decided not to raise objections to the notified individual aid on the grounds that it is compatible with the internal market pursuant to Article 107(3) c) 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 Competition State Aid Greffe B-1049 Brussels [email protected]

Yours faithfully For the Commission

Margrethe VESTAGER Executive Vice President