EUROPEAN COMMISSION Brussels, 21.12.2020 C(2020) 9581 final PUBLIC VERSION This document is made available for information purposes only. Subject: State Aid SA.59863 (2020/N) – Sweden Amendment to State Aid SA.57710 (2020/N) – COVID-19: Compensation for damages suffered by passenger ferries due to COVID-19 Excellency, 1. PROCEDURE (1) By electronic notification of 14 December 2020, Sweden notified an amendment (the “measure” or the “new scheme”) to aid scheme SA.57710 (2020/N) (the “initial scheme”), which the Commission approved by decision SA.57710 (2020/N) (the “initial Decision”)1 under Article 107(2)(b) of the Treaty on the Functioning of the European Union (“TFEU”). (2) Sweden exceptionally agrees to waive its rights deriving from Article 342 TFEU, in conjunction with Article 3 of Regulation 1/1958,2 and to have this Decision adopted and notified in English. 1 Commission Decision C(2020) 4668 final of 6 July 2020, State aid SA.57710 (2020/N) - Sweden COVID-19: Compensation for damages suffered by passenger ferries due to COVID-19, OJ, C 236, 17 July 2020. 2 Regulation No 1 determining the languages to be used by the European Economic Community, OJ 17, 6.10.1958, p. 385. Utrikesminister Ann Linde Utrikesdepartementet Arvfurstens palats Gustav Adolfs torg 1 SE - 103 23 Stockholm Commission européenne/Europese Commissie, 1049 Bruxelles/Brussel, BELGIQUE/BELGIË - Tel. +32 22991111 2. DESCRIPTION OF THE MEASURE (3) The Swedish authorities have explained that the COVID-19 outbreak has had a significant impact on the Swedish economy and Swedish companies. Reduced demand in affected areas, reduced travelling and disruptions in transport and supply chains have affected Swedish companies, resulting in an unprecedented amount of notices of lay-offs and short-term lay-offs. (4) As of 14 March 2020, as an immediate consequence of the COVID-19 outbreak, the Swedish Ministry for Foreign Affairs advised against non-essential travel to all countries. On 16 March 2020, the Commission invited Member States to take coordinated action to restrict non-essential travel from third countries into the EU3. (5) Several Member States closed their borders: in particular, Denmark, Poland and Finland closed their borders on 14, 15, and 19 March 2020 respectively. Norway also closed its borders on 16 March 2020. Norway lifted some of its restrictions as of mid-July, while Poland’s border was re-opened as of 13 June 2020. The borders of Denmark and Finland remain closed for Swedish passengers to date, without any indication as to when they would re-open. (6) As a result of those restrictions the Swedish authorities registered a rapid and dramatic decline in passenger numbers, and several ferry companies were forced to reduce traffic, cancel lines and take vessels out of traffic. Between 16 and 24 March 2020, 10 vessels were taken out of traffic and seafarers working on board those vessels have been placed on short-term lay-off. The affected companies however still incurred labour costs, as well as capital costs for the vessel, port fees, etc., while the vessels no longer generated any revenues. (7) On 6 July 2020, the Commission approved the initial scheme in State Aid SA.57710 (2020/N) – Sweden COVID-19: Compensation for damages suffered by passenger ferries due to COVID-19 (Swedish Ordinance (2020:730)).4 Under the initial scheme aid may be granted, as compensation for damages, for employees’ wage costs incurred by the beneficiary shipping companies between 13 March 2020 and 31 December 20205. The damages under the initial scheme are calculated for the period between 24 March and 31 July 2020. (8) The Swedish authorities therefore note that either the ferries are in traffic and benefit from aid under Ordinance (2001:770), approved in SA.467406, or are at 3 See: https://ec.europa.eu/info/live-work-travel-eu/health/coronavirus-response/travel-and- transportation-during-coronavirus-pandemic/travel-and-eu-during-pandemic_en. 4 See footnote [1]. 5 As clarified in recital (11) of the initial decision, shipping companies in Sweden (including passenger ferry companies) can already benefit from tax deductions on wage-related costs of seafarers that work on vessels engaged in maritime transport, under Ordinance (2001:770) on shipping aid. Aid pursuant to this Ordinance was approved by the Commission by decision of 16 December 2019 (Commission decision of 16 December 2019 in case SA.46740 (2016/N), OJ, C 25, 24 January 2020, see: https://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_46740 ). 6 See footnote [5]. 2 quay and benefit from aid under the initial scheme during the relevant period as compensation for damages due to the COVID-19 outbreak. The Swedish authorities submitted that aid pursuant to the initial scheme considerably contributed to reduce the damage caused by the COVID-19 outbreak. (9) The Swedish authorities note that the COVID-19 continues to spread. This results in a number of travel restrictions being continuously in force since the beginning of the pandemic. In particular, it has not been possible for all Swedish citizens to travel to Finland since March 2020. In fact, according to instructions issued by the Finnish Border Guard, Sweden belongs to Restriction category 1, i.e. Swedish citizens are not allowed to enter the country unless they for example work in Finland or have to attend a funeral7. The Swedish authorities submit that those restrictions concerning entry to Finland will continue until at least 12 January 2021. The Finnish Government also recommends avoiding unnecessary travel from Finland to Sweden8. (10) The Swedish authorities submit that three shipping companies with in total four ferries offer services between Sweden and Finland. Two of those ferries were taken out of traffic9. In addition, the Swedish authorities note that Denmark has different kinds of travel restrictions in force since March 2020. Currently, according to the Danish Police authorities, Sweden is classified as a “banned country”, i.e. persons who reside in Sweden and other countries classified as banned cannot enter Denmark unless they have a valid purpose such as a job there or have to attend a funeral10. There is no information available when such restrictions will end. The Danish Government also recommends avoiding unnecessary travel from Denmark to Sweden.11 (11) The Swedish authorities submit that two shipping companies with in total five ferries offer services between Sweden and Denmark.12 7 https://www.raja.fi/current_issues/guidelines_for_border_traffic 8 Recommendations for Finnish citizens going to Sweden, available at the following link: https://thl.fi/en/web/infectious-diseases-and-vaccinations/what-s-new/coronavirus-covid-19-latest- updates/travel-and-the-coronavirus-pandemic 9 The Swedish authorities explained that the following shipping companies offer ferry services between Sweden and Finland: (i) shipping company Eckerö with the ferry Eckerö going from Gris s lehamn to Åland; (ii) shipping company Tallink Silja with the ferry Galaxy going from Stockholm to Åbo and Symphony going from Stockholm to Åland/Helsingfors (Symphony is taken out of traffic. No other ferry from the list of aid eligible ferries operates the same route as Symphony; (iii) shipping company Viking with the ferry Cinderella going from Stockholm to Åland (Cinderella is taken out of traffic. No other ferry from the list of aid eligible ferries operates the same route as Cinderella). 10 https://coronasmitte.dk/en/entry-into-denmark/persons-resident-in-banned-countries 11 Recommendations for Danish citizens going to Sweden, available at the following link: https://um.dk/da/rejse-og-ophold/rejse-til-udlandet/rejsevejledninger/sverige/ (only in Danish). 12 The Swedish authorities explained that the following shipping companies offer ferry services between Sweden and Denmark: (i) Forsea Helsingborg with the ferry Aurora going from Helsingborg to Helsingör; (ii) Shipping company Stena Line with the ferries Stena Danica, Stena Jutlandica and Stena Vinga (out of traffic in August) going from Göteborg to Fredrikshamn and Stena Nautica going from Halmstad to Grenå. 3 (12) Other restrictions introduced by the Swedish government and concerning bans on non-essential travel to Sweden from all countries except Member States, the United Kingdom, Norway, Iceland, Liechtenstein and Switzerland continue to apply and affect the number of passengers travelling on ferries. (13) The Swedish authorities explain that the shipping companies operating those ferries are therefore unable to carry out traffic as a direct result of the partial bans between Sweden and Finland or Denmark and that the situation will continue for the foreseeable future. During the period between September and October 2020, almost all the ferries which were temporarily taken out of traffic in the previous months were back in some form of traffic. Nevertheless, in November 2020, due to the continued travel restrictions, two ferries were again temporarily taken out of traffic and will be still out of traffic at least for some time in 2021. In addition, there is a concrete risk that other ferry companies are forced to take further ferries temporarily out of traffic. (14) The Swedish authorities therefore wish to prolong Ordinance (2020:730) on temporarily amended shipping aid approved by the Commission on 6 July 2020 on the basis of the partial bans in force in the period between 1 August and 31 December 2020, in particular in view of the restrictions in place for ferries operating between Sweden and Finland or Denmark. Under the new scheme, only damages resulting from those travel restrictions and only for those ferries that are at quay can be compensated. The travel restrictions considered are one-way restrictions (regarding trips from Sweden and not to Sweden) affecting only Swedish citizens or Swedish residents. The damages will therefore be calculated as the lost revenues on the restricted routes from the eligible ferries and the eligible population subtracted with savings in the relevant variable costs (compared to the same period in 2019).