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Official Journal EN
of the European Union L series
2026/241 6.2.2026
COMMISSION DECISION(EU) 2026/241
of 14 July 2025
on state aid SA.21143 - Case C 41/08 (ex NN 35/08) implemented by Denmark concerning public
service contracts between the Danish Ministry of Transport and Danske Statsbaner
(notified under document C(2025) 4676)
(Only the English text is authentic)
(Text with EEA relevance)
THE EUROPEAN COMMISSION,
Having regard to the Treaty on the Functioning of the European Union, and in particular the first subparagraph of
Article 108(2) thereof,
Having regard to the Agreement on the European Economic Area, and in particular Article 62(1), point (a), thereof,
Having called on interested parties to submit their comments pursuant to the provisions(1)cited above and having regard to
their comments,
Whereas:
1. PROCEDURE
(1) Following two complaints, received on 3 February 2003 and 1 June 2006, concerning public service contracts
awarded to Danske Statsbaner SV (‘DSB’), a public undertaking and the incumbent rail undertaking in Denmark
(see recital 84), and taking into consideration information provided by Denmark(2), the European Commission
(formerly Commission of the European Communities, hereafter referred to as the ‘Commission’) initiated, on
10 September 2008, the formal investigation procedure laid down in Article 108(2) of the Treaty on the
Functioning of the European Union (‘TFEU’)(3) (formerly Article 88(2) of the Treaty establishing the European
Community (‘TEC’)(4)).
(2) The decision to initiate the formal investigation procedure was published in the Official Journal of the European
Union(5). The Commission invited Denmark and other interested parties to submit their comments.
(3) The Commission’s decision to initiate a formal investigation procedure was the subject of an application for
annulment lodged with the General Court by one of the complainants. That application was rejected as
inadmissible by Order of the General Courtof 25 November 2009(6).
(4) By letter of 17 December 2009, the Commission invited Denmark and other interested parties to submit their
comments concerning the appropriate legal basis for the review of compatibility in this case, taking account of the
entry into force of Regulation (EC) No 1370/2007 of the European Parliament and of the Council of 23 October
2007 on public passenger transport services by rail and by road and repealing Council Regulations (EEC)
Nos 1191/69(7)and 1107/70(8)(‘Regulation (EC) No 1370/2007’)(9).
(1) OJ C 309, 4.12.2008, p. 14.
(2) Information provided by submissions of Denmark of 1 June 2004, 31 October 2006, 19 December 2006, 3 January 2007, 2 February
2007, 1 March 2007, 8 June 2007, 27 July 2007, 31 October 2007, 16 January 2008, 28 February 2008 and 17 April 2008.
(3) Consolidated version of the Treaty on European Union (OJ C 326, 26.10.2012, p. 13).
(4) Treaty establishing the European Community (Consolidated version 2002) (OJ C 325, 24.12.2002, p. 33).
(5) OJ C 309, 4.12.2008, p. 14.
(6) Order of the General Court of 25 November 2009, Andersen v Commission,Case T-87/09, ECLI:EU:T:2009:468.
(7) Regulation (EEC) No 1191/69 of the Council of 26 June 1969 on action by Member States concerning the obligations inherent in the
concept of a public service in transport by rail, road and inland waterway (OJ L 156, 28.6.1969, p. 1, ELI: http://data.europa.eu/eli/
reg/1969/1191/oj; Corrigendum published in OJ L 169, 29.6.1991, p. 1) (‘Regulation (EEC) No 1191/69’).
(8) Regulation (EEC) No 1107/70 of the Council of 4 June 1970 on the granting of aids for transport by rail, road and inland waterway
(OJ L 130, 15.6.1970, p. 1, ELI: http://data.europa.eu/eli/reg/1970/1107/oj) (‘Regulation (EEC) No 1107/70’).
(9) OJ L 315, 3.12.2007, p. 1, ELI: http://data.europa.eu/eli/reg/2007/1370/oj.
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(5) At the end of the formal investigation procedure, on 24 February 2010, taking into consideration information
provided by Denmark and DSB(10), the Commission adopted Decision 2011/3/EU concerning public service
contracts between the Danish Ministry of Transport and DSB (the ‘2010 Decision’)(11). In that decision, the
Commission found that the compensation paid to DSB under the public service contracts concluded for the
periods 2000-2004 and 2005-2014 constituted State aid within the meaning of Article 107(1) TFEU (formerly
Article 87(1) TEC). The State aid was found to be compatible with the internal market pursuant to Article 93 TFEU
(formerly Article 73 TEC) under Regulation (EC) No 1370/2007, subject to conditions set out in Articles 2 and 3 of
the 2010 Decision. In this regard, Article 2 of the 2010 Decision describes a clawback mechanism to be adopted by
the Danish government as of 2010. Article 3 states that any compensation to be received by DSB from
AnsaldoBreda(12)due to the delayed delivery of rolling stock should be refunded to the Danish State.
(6) By application of 18 February 2011, one of the complainants sought the partial annulment of the 2010 Decision
before the General Court(13).
(7) By judgment of 20 March 2013 in case T-92/11(14), the General Court partially annulled the 2010 Decision. The
General Court held that the compatibility of the aid with the internal market should have been assessed under the
substantive rules in force on the date on which the aid was paid, namely under Regulation (EEC) No 1191/69. The
Commission appealed that judgment. The judgment was cross-appealed by Denmark and DSB.
(8) By judgment of 6 October 2015 in case C-303/13 P(15), the Court of Justice held that the General Court erred in
law, because insofar as aid paid after the entry into force of Regulation (EC) No 1370/2007 on 3 December 2009
should have been assessed under that Regulation instead of Regulation (EEC) No 1191/69. Thus, for aid paid after
3 December 2009, the case was referred back to the General Court. For aid paid before 3 December 2009, the
annulment of the 2010 Decision became definitive.
(9) By judgment of 18 January 2017 in case T-92/11 RENV(16), the General Court upheld the compatibility findings of
the Commission as regards the public service compensations paid after 1 January 2010 in light of the introduction
of the clawback mechanism as foreseen in Article 2 of the 2010 Decision. The General Court, however, annulled the
2010 Decision for failure to state adequate reasons with respect to the payments made after 3 December 2009 but
before 1 January 2010, which de factoconcerns one single payment of 21 December 2009, which was granted under
the second public transport service contract concluded for the years 2005 to 2014 (see recital 118). Specifically, the
Court found that the Commission had not provided an assessment of overcompensation for this period and failed
to justify why the payment was considered compatible with the internal market(17). The Court limited its review to
this period because Regulation (EC) No 1370/2007 entered into force on 3 December 2009, providing a new legal
framework for assessing State aid, while the clawback mechanism introduced by the Danish State from 1 January
2010 onwards ensured that overcompensation would be prevented. As a result, only the payment of 21 December
2009 was concerned, as it fell between the entry into force of the new regulation and the establishment of the
refund mechanism(18).
(10) Information provided by submissions of Denmark of 19 January 2009, 16 February 2009, 3 July 2009, 17 September 2009,
2 November 2009 and 24 November 2009 and information provided by submissions of DSB of 12 December 2009 and
30 December 2009.
(11) Commission Decision 2011/3/EU of 24 February 2010 concerning public transport service contracts between the Danish Ministry of
Transport and Danske Statsbaner (Case C 41/08 (ex NN 35/08)) (OJ L 7, 11.7.2011, p. 1, ELI: http://data.europa.eu/eli/dec/2011/
3(1)/oj).
(12) In 2015, AnsaldoBreda was bought by Hitachi Rail and its name was changed to Hitachi Rail Italy S.p.A. For the sake of this decision,
the former name of the company, i.e. AnsaldoBreda, existing at the time of the adoption of the 2010 Decision, will be used.
(13) The case was registered as Case T-92/11.
(14) Judgment of the General Court of 20 March 2013, Andersenv Commission, Case T-92/11, ECLI:EU:T:2013:143.
(15) Judgment of the Court of 6 October 2015, Andersenv Commission, Case C-303/13 P, ECLI:EU:C:2015:647.
(16) Judgment of the General Court of 18 January 2017, Andersen v Commission, Case T-92/11 RENV, ECLI:EU:T:2017:14.
(17) Idem, paragraph 43.
(18) Idem, paragraphs 37 and 46.
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(10) Consequently, the effects of those judgments are that the 2010 Decision has been annulled with respect to the
assessment it carried out of the compensation paid to DSB before 3 December 2009 (judgment in case T-92/11,
for failure to use the correct legal basis) and on 21 December 2009 (judgment in case T-92/11 RENV, for failure to
state reasons).
(11) By letter of 12 February 2018, the Commission requested additional information from the Danish authorities
regarding compensation paid to DSB on 21 December 2009. The Commission also invited the Danish authorities
to provide observations on the judgments mentioned above. The requested information and observations were
provided by the Danish authorities on 9 April 2018.
(12) Subsequently, further exchanges between the Commission and the Danish authorities, as well as between the
Commission and one of the complainants (see recital 98). took place.
(13) In early 2020, the COVID-19 pandemic broke out, causing a major shock to the Union’s economies and requiring a
coordinated economic response of Member States and Union institutions to mitigate the negative repercussions on
the economy of the Union. Under those exceptional circumstances, the Commission endeavoured to respond
urgently to notifications of State aid measures granted in the context of the COVID-19 outbreak, and put in place
all necessary procedural facilitations to enable a swift Commission approval process(19). During the period of the
COVID-19 crisis, the Commission had to give priority to COVID-19 State aid measures(20); as a consequence, the
completion of the formal investigation procedure on the measures at hand as well as the completion of other
procedures has been delayed.
(14) Moreover, on 24 February 2022 Russia launched a military aggression against Ukraine. The direct and indirect
effects of the Russian military aggression had economic repercussions on the entire internal market. That situation
required a swift response from the Commission to mitigate the immediate social and economic negative
repercussions in the Union. Under those exceptional circumstances, the Commission was called to respond
urgently to notifications of State aid measures granted in the context of the Ukrainian crisis(21). In the course of
2022 and 2023, the Commission had to give priority to the examination of those State aid measures(22), with
consequent further delay in the completion of the formal investigation procedure on the measures under
investigation.
(15) On 29 July 2024, the Commission sent a request for information to the Danish authorities, to which they replied on
22 October 2024, after having asked, and obtained, a prolongation of the initial deadline to submit their answers.
Upon the Commission’s request of 31 October 2024, further clarifications were provided by the Danish authorities
on 26 November 2024. These latest requests primarily aimed to clarify the scope of companies entrusted with
public service obligations and details concerning the payment made on 21 December 2009. Specifically, they
focused on verifying the correct separation of accounts, by clarifying which equity and profits should be allocated
to DSB’s public service activities and whether potential cross-subsidisation of commercial operations can be
excluded.
(16) On 4 July 2025, Denmark exceptionally agreed to waive its rights deriving from Article 342 TFEU, in conjunction
with Article 3 of Council Regulation No 1(23)and to have this Decision adopted and notified in English.
(19) Communication from the Commission to the European Parliament, the European Council, the Council, the European Central Bank, the
European Investment Bank and the Eurogroup on Coordinated economic response to the COVID-19 Outbreak, COM(2020) 112 final
of 13. 3.2020, section 5.
(20) A list of all the decisions adopted by the Commission during the COVID-19 pandemic under Article 107(2)b TFEU, Article 107(3),
point (b), TFEU and the Communication from the Commission Temporary Framework for State aid measures to support the economy
in the current COVID-19 outbreak (OJ C 91 I, 20.3.2020, p. 1) is available at this website: https://competition-policy.ec.europa.eu/
state-aid/coronavirus_en(last accessed on 4 July 2025).
(21) Communication from the Commission Temporary Crisis Framework for State Aid measures to support the economy following the
aggression against Ukraine by Russia (OJ C 131 I, 24.3.2022, p. 1).
(22) A list of all the decisions adopted by the Commission under the Temporary Crisis Framework for State Aid measures to support the
economy following the aggression against Ukraine by Russia in 2022 is available at this website: https://competition-
policy.ec.europa.eu/state-aid/temporary-crisis-and-transition-framework_en(last accessed on 4 July 2025).
(23) Regulation No 1 determining the languages to be used by the European Economic Community (OJ 17, 6.10.1958, p. 385/58, ELI:
http://data.europa.eu/eli/reg/1958/1(1)/oj).
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2. DESCRIPTION OF THE LEGAL FRAMEWORK GOVERNING THE PROVISION OF RAIL PASSENGER
TRANSPORT SERVICES
2.1. The liberalisation of rail passenger transport in the European Union and in Denmark
2.1.1. In the European Union
(17) The European Union has progressively liberalised rail passenger transport services through a series of legislative
measures aimed at opening the market, ensuring non-discriminatory access, and enhancing competition.
(18) The process began with Council Directive 91/440/EEC of 29 July 1991 on the development of the Community's
railways(24), which Member States were required to transpose by 1 January 1993. This Directive established the
founding principles for the liberalisation of rail transport by:
— Introducing the right of access to railway infrastructure for international groupings and railway undertakings
operating international passenger services; and
— Mandating the functional separation of infrastructure management from transport operations, particularly in
accounting, to ensure transparency and non-discriminatory access.
(19) This framework was expanded through the First Railway Package, consisting of Directive 2001/12/EC of the
European Parliament and of the Council(25), Directive 2001/13/EC of the European Parliament and of the
Council(26), and Directive 2001/14/EC of the European Parliament and of the Council(27). The measures set out in
these Directives, which Member States were required to transpose by 15 March 2003, aimed to:
— Strengthen non-discriminatory access to railway infrastructure;
— Improve the financial transparency of railway undertakings; and
— Establish independent regulatory bodies to oversee competition in the rail market.
(20) The Second Railway Package(28), adopted in 2004, focused primarily on rail safety and interoperability but also
provided a stronger regulatory framework to facilitate market opening.
(24) OJ L 237, 24.8.1991, p. 25, ELI: http://data.europa.eu/eli/dir/1991/440/oj.
(25) Directive 2001/12/EC of the European Parliament and of the Council of 26 February 2001 amending Council Directive 91/440/EEC
on the development of the Community's railways (OJ L 75, 15.3.2001, p. 1, ELI: http://data.europa.eu/eli/dir/2001/12/oj).
(26) Directive 2001/13/EC of the European Parliament and of the Council of 26 February 2001 amending Council Directive 95/18/EC on
the licensing of railway undertakings (OJ L 75, 15.3.2001, p. 26, ELI: http://data.europa.eu/eli/dir/2001/13/oj).
(27) Directive 2001/14/EC of the European Parliament and of the Council of 26 February 2001 on the allocation of railway infrastructure
capacity and the levying of charges for the use of railway infrastructure and safety certification (OJ L 75, 15.3.2001, p. 29, ELI: http://
data.europa.eu/eli/dir/2001/14/oj).
(28) This package included Directive 2004/49/EC of the European Parliament and of the Council of 29 April 2004 on safety on the
Community’s railways and amending Council Directive 95/18/EC on the licensing of railway undertakings and Directive 2001/14/EC
on the allocation of railway infrastructure capacity and the levying of charges for the use of railway infrastructure and safety
certification (OJ L 164, 30.4.2004, p. 44, ELI: http://data.europa.eu/eli/dir/2004/49/oj); Directive 2004/50/EC of the European
Parliament and of the Council of 29 April 2004 amending Council Directive 96/48/EC on the interoperability of the trans-European
high-speed rail system and Directive 2001/16/EC of the European Parliament and of the Council on the interoperability of the trans-
European conventional rail system (OJ L 164, 30.4.2004, p. 114, ELI: http://data.europa.eu/eli/dir/2004/50/oj); Directive 2004/51/EC
of the European Parliament and of the Council of 29 April 2004 amending Council Directive 91/440/EEC on the development of the
Community’s railways (OJ L 164, 30.4.2004, p. 164, ELI: http://data.europa.eu/eli/dir/2004/51/oj) and Regulation (EC) No 881/2004
of the European Parliament and of the Council of 29 April 2004 establishing a European railway agency (OJ L 164, 30.4.2004, p. 1,
ELI: http://data.europa.eu/eli/reg/2004/881/oj).
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(21) The most considerable progress in the liberalisation of rail passenger transport occurred with the adoption of
Directive 2007/58/EC of the European Parliament and of the Council(29) of 23 October 2007, which amended
Directive 91/440/EEC and Directive 2001/14/EC. Member States were required to transpose Directive 2007/58/EC
by 1 January 2010(30). The key provisions of Directive 2007/58/EC included:
— Granting railway undertakings the right of access to infrastructure for international passenger services,
including the possibility of picking up and setting down passengers at stations along the route (‘cabotage’),
provided the principal purpose of the service remained international; and
— Establishing conditions under which operators could offer international passenger services in competition
with existing operators.
2.1.2. In Denmark
(22) Denmark has progressively aligned its national rail passenger transport framework with the European Union's
legislative requirements.
(23) The foundational principles of Directive 91/440/EEC, including the functional separation of infrastructure
management and transport operations, as well as the right of access for international groupings, were transposed
into Danish law in 1991 through the Danish Railway Act (Jernbaneloven)(31). This act laid the groundwork for
modernising Denmark's rail sector and aligning it with the European Union’s objectives.
(24) The First Railway Package, was transposed into Danish law by Act No 1248 of 27 December 2003, introducing
reforms such as independent regulation of infrastructure access and the establishment of fair, transparent, and non-
discriminatory infrastructure charging mechanisms. This ensured a level playing field for railway undertakings and
promoted the efficient use of railway infrastructure.
(25) Denmark further implemented Directive 2007/58/EC to facilitate the liberalisation of international passenger rail
services. From 1 January 2010, railway undertakings were granted the right to operate international services,
including the possibility of providing cabotage services under conditions set by that Directive, which was
transposed into Danish law through Act No 579 of 6 June 2007. This marked a significant step in opening
Denmark's rail market to cross-border competition.
(29) Directive 2007/58/EC of the European Parliament and of the Council of 23 October 2007 amending Council Directive 91/440/EEC on
the development of the Community’s railways and Directive 2001/14/EC on the allocation of railway infrastructure capacity and the
levying of charges for the use of railway infrastructure (OJ L 315, 3.12.2007, p. 44, ELI: http://data.europa.eu/eli/dir/2007/58/oj).
(30) At European Union level, passenger transport by rail has been opened to competition on the market as of 1 January 2010 as regards
international transport (Directive 2007/58/EC) and as of 1 January 2019 as regards access to national rail networks (Directive
(EU) 2016/2370 of the European Parliament and of the Council of 14 December 2016 amending Directive 2012/34/EU as regards the
opening of the market for domestic passenger transport services by rail and the governance of the railway infrastructure (OJ L 352,
23.12.2016, p. 1, ELI: http://data.europa.eu/eli/dir/2016/2370/oj). Under Article 3 of Directive 2016/2370, even if that Directive
takes effect from 1 January 2019, its provisions regarding access to rail networks only apply to the working timetable starting on
14 December 2020). As regards competition for the market, Article 8(1) of Regulation (EC) No 1370/2007 provides that: ‘public
service contracts shall be awarded in accordance with the rules laid down in this Regulation’. Article 8(3) of that Regulation in
combination with Article 4(3) specifies that contracts for passenger transport services by rail awarded in accordance with Community
and national law and signed between 26 July 2000 and 3 December 2009 on the basis of a procedure other than a fair competitive
tendering procedure may continue until they expire, if the duration of the contract does not exceed 15 years. Regulation
(EU) 2016/2338 of the European Parliament and of the Council of 14 December 2016 amending Regulation (EC) No 1370/2007
concerning the opening of the market for domestic passenger transport services by rail (OJ L 354, 23.12.2016, p. 22, ELI: http://data.
europa.eu/eli/reg/2016/2338/oj) has introduced the obligation to competitively award public service contracts in the passenger rail
transport sector as of 3 December 2019, with a transition period ending on 24 December 2023 (Article 1(9), point (a), of that
Regulation).
(31) Act No 386 of 6 June 1991.
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2.2. The legal framework governing public service obligations in rail passenger transport
2.2.1. The European Union legislation
(26) Article 93 TFEU provides that State aid in the transport sector shall be compatible with the Treaties if it meets the
needs of transport coordination or represents reimburement for the discharge of certain obligations inherent in the
concept of a public service. This forms the legal basis for regulating public service compensation in the field of land
transport.
(27) Between 1969 and 2009, Regulations (EEC) No 1191/69 and No 1107/70 governed public service obligations and
State aid in the transport sector under Article 93 TFEU. Regulation (EEC) No 1191/69 defined public service
obligations as obligations not assumed by undertakings under normal commercial conditions and required
separate accounting to avoid cross-subsidisation. Regulation (EEC) No 1107/70 further limited the conditions for
granting aid, confirming that aid related to public service obligations must fall within defined categories.
(28) An amendment in 1991 restricted public service obligations to undertakings operating urban, suburban or regional
passenger transport and introduced public service contracts as a tool for securing adequate services. In the Altmark
judgment(32), the Court indicated that Regulation (EEC) No 1191/69 and Regulation (EEC) No 1107/70 were
deemed to have listed exhaustively the circumstances in which the authorities of the Member States could grant aid
under Article 93 TFEU. This point was further confirmed by the Court in its judgement of 16 March 2004 in the
Danish Danske Busvognmændcase (also known as the ‘Combusjudgment’)(33).
(29) This framework was replaced by Regulation (EC) No 1370/2007, effective from 3 December 2009, which clarified
and modernised the rules. It established public service contracts as the standard mechanism for the compensation
of public service obligations, aligned compensation with Altmark principles, mandated transparent calculation
methods, and required separation of accounts to prevent overcompensation and market distortion.
2.2.2. The Danish legislation
(30) Until 1 January 2000, DSB held the monopoly on national rail passenger transport services. Since then, the Danish
legislator has introduced two alternative schemes for the provision of rail passenger transport services(34):
— On the one hand, rail passenger transport operated on a commercial basis without compensation from public
authorities (‘open access’);
— On the other hand, transport operated under public service contracts with compensation from the public
authorities (‘public passenger transport services’).
(31) At the end of 2009, according to the Danish authorities, no passenger transport service was operated in a regular
manner under the open access scheme.
(32) Judgement of the Court of 24 July 2003, Altmark Trans GmbH and Regierungspräsidium Magdeburg v Nahverkehrsgesellschaft
Altmark GmbH, Case C-280/00, ECLI:EU:C:2003:415, paragraph 108.
(33) Judgment of the General Court of 16 March 2004, Danske Busvognmænd v Commission (Combus), Case T-157/01,
ECLI:EU:T:2004:76, paragraph 100.
(34) Railway Undertakings Act, (Danish: Lov om jernbanevirksomhed m.v.) No 289 of 18 May 1998 as amended subsequently. At the
beginning of 2010, the most recent consolidated version of the Railway Undertakings Act was Act No 1171 of 2 December 2004.
Railway Undertakings Act No 289 of 18 May 1998, as amended, governs rail transport operations in Denmark, distinguishing
between commercial and public service transport. It sets rules for licensing, infrastructure management, and how public service
contracts are awarded and financed, ensuring that State compensation does not distort competition.
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(32) As regards public passenger transport services, the Danish regulatory framework distinguishes between two types
of public service contracts:
— Public service contracts negotiated directly between the competent public authorities and the operator
without a prior tendering procedure. The competent authority for the negotiation of such public service
contracts is the Ministry of Transport(35);
— Public service contracts awarded following a tendering procedure. The competent authority for such contracts
awarded by tender is Trafikstyrelsen, a regulatory authority established by the Ministry of Transport(36).
(33) According to the Danish Railway Undertakings Act applicable at the time (see footnote 34), the competent
authorities were not under a legal obligation to subject the award of certain public service contracts to a tendering
procedure. In particular, § 8 of the Act provided that the Minister for Transport maydecide to submit public service
passenger transport contracts to tender, but did not impose such a requirement. The decision to award a public
service contract by way of direct negotiation or by means of a competitive procedure was at the discretion of the
competent authority.
(34) DSB operated main line, regional, and local rail passenger services under negotiated public service contracts
concluded directly with the Ministry of Transport on 20 December 1999, that is, prior to the start of their
contractual application period (1 January 2000) and before any compensation payments were made.
(35) As noted above, the applicable Danish legal framework did not require the use of tendering procedures for the
award of public service contracts. The competent authority had discretion to award such contracts either through
direct negotiation or through competitive tendering. Accordingly, the direct award of the 2000–2004 public
service contracts did not infringe national law.
2.3. The public service contract for the period 2000-2004
2.3.1. Main line and regional transport
(36) This contract concerns main line and regional transport operated as a public service by DSB during the period
2000-2004.
(37) Article 1 establishes the general framework and legal basis for the agreement between DSB and the Danish Ministry
of Transport and provides that “the objective of this Agreement is to promote the positive development of rail
passenger transport by taking as its starting point the sound financial situation of DSB, the Danish public rail
undertaking”.
(38) The following paragraphs summarise the main provisions relevant for an analysis of this public service contract.
2.3.2. Content of the contract
(39) Article 2 defines the territorial scope of the contract and specifies the sections of the network where public rail
transport services are provided under the negotiated contract.
(35) Except in the case of routes run by a number of small regional operators.
(36) The use of tendering procedures has evolved gradually over the years. In 2002, Arriva was the successful tenderer to provide a portion
of the regional public transport services in the west of Denmark. In 2007, a joint undertaking of DSB and First Group were the
successful tenderers to provide a portion of the regional public transport services in eastern Denmark and southern Sweden, including
the region’s transnational public transport links.
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(40) Article 3 defines the contractual scope of the contract, outlining the rail transport services and user services
covered. The contract does not include public transport services awarded by tender or transport under the open
access scheme, including the transport of goods under that scheme. The open access scheme refers to rail transport
services, including both passenger and freight transport, that are provided on a purely commercial basis without
State compensation. These services operate under market conditions, meaning they are not subject to public
service obligations and can be provided by private operators at their own financial risk(37).
(41) Article 4 outlines the financial framework governing payments from the Danish Ministry of Transport to DSB for
public service obligations. The contract establishes that DSB receives an annual contractual payment, which is
adjusted based on the net price index as stipulated in the Finance Act.
(42) The transport services provided by DSB are defined in detail in Article 7 of the contract. DSB is obliged to provide a
certain volume of services (measured in rail kilometres) over the term of the contract.
Table 1
Production of rail kilometres over the term of the contract
Year 2000 2001 2002 2003 2004
rail km (millions) 41,0 41,7 41,9 42,1 43,3
(43) Article 8 states, however, that the Danish Ministry of Transport may decide to launch a tendering procedure for part
of the production of rail kilometres, which would entail the end of the contract for the relevant parts of the
contract. Article 8 sets out in detail the legal regime applicable to transport services to be tendered out as well as
the legal consequences of the tendering procedure.
(44) Article 7 also lays down the rules relating to timetables and the frequency of transport services. With regard to
timetables, Article 9 provides for the coordination of schedules. Article 9 also seeks to ensure that DSB will
endeavour to create a coherent public transport system with coordination between buses and trains.
(45) Article 10 contains provisions concerning the use and acquisition of new rolling stock by DSB.
(46) Other relevant provisions are:
— Article 11, which specifies the conditions relating to infrastructure and defines the relationship with the
Danish National Railway Agency;
— Article 12, which contains provisions relating to user services;
— Article 13, which defines the penalties for poor punctuality;
— Article 14, which lays down the conditions for setting transport prices. According to this Article, the Ministry
of Transport needs to approve proposals for increases in fares on standard tickets which are additional to
those provided in Articles 14.2 and 14.3.
(47) The contract was concluded in December 1999, prior to the beginning of its period of application and in
consequence before the first compensation payments began on 1 January 2000. According to Article 19.1, the
contract was valid from 1 January 2000 to 31 December 2004, in line with a political framework agreement of
26 November 1999.
(37) See DSB Contract 2000-2004 and Competition Law Guidelines for DSB of the years 2000.
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2.3.3. The contractual payments
(48) As described in recital 41 above, the financial compensation received by DSB is defined in Article 4 of the public
service contract for the period 2000-2004.
(49) DSB retains the income from ticket sales. In addition, DSB receives a contractual payment from the Danish Ministry
of Transport for the services provided for under the contract.
(50) Article 4.1 stipulates that DSB receives a fixed annual payment from the Ministry of Transport for the operation of
long-distance and regional rail services under public service obligations.
(51) The contractual payments are described in the following table:
Table 2
Contractual payments 2000-2004
Year 2000 2001 2002 2003 2004
DKK (millions) 2 884,9 2 945,7 2 953,7 3 039,4 3 057,9
(52) The level of the contractual payments is based on DSB’s 10-year forward budget, which was adopted on 11 June
1999, and which defines DSB’s long-term financial strategy and further refined through a five-year framework
agreement signed on 26 November 1999. In addition, the amount of this payment is subject to annual adjustment
based on the net price index (nettoprisindekset).
(53) The contract also provides for adjustments to the agreed payments through supplementary contracts
(tillægskontrakter) in cases such as the acquisition of new rolling stock (Articles 4.2-4.5), expansion of service levels,
or infrastructure upgrades. Article 5.2 foresees ex post adjustments for deviations between planned and actual
service volumes, with DSB bearing the marginal cost or benefit of changes in production (measured in train-
kilometres).
(54) The compensation methodology is based on predefined parameters established by the Danish authorities, which
include projected revenue, expected productivity improvements, interest rates, return on equity, and investment
requirements. Specifically, the contractual payments were indexed annually to net retail prices and were
determined using forecasts of costs and revenues, ensuring that the level of payments covered the obligations
under the public service contract without exceeding a reasonable profit margin. The compensation was set in
advance and adjusted periodically based on updated financial data and revised estimates to maintain compliance
with State aid rules and avoid overcompensation.
(55) Article 4 also provides for a number of adaptations connected with the implementation of the five-year framework
agreement of 26 November 1999 for the rail transport sector. The five-year framework agreement of 26 November
1999 was a political agreement between the Danish government and key parliamentary parties that set strategic
priorities for the rail transport sector for the period 2000-2004. It defined investment priorities, service
commitments, and financial arrangements that were subsequently reflected in the public service contract. The
public service contract for the years 2000-2004 incorporated these commitments through specific provisions and
contractual amendments to ensure their implementation.
(56) The framework agreement led to the adoption of several specific addenda to the contract concerning:
— The acquisition and putting into service of new rolling stock (Article 10 of the contract);
— Light rail transport pools and station modernisation;
— Improving the quality of the Odense-Svendborg rail link;
— Financial incentives aimed at promoting sound traffic production on a socio-economic level.
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(57) The contractual payments cover depreciation and interest relating to the rolling stock acquired in accordance with
Article 10 of the contract.
(58) Article 5 relates to rail charges, specifically track access charges (baneafgifter) payable by DSB for the trains covered
by the contract. The contractual payments include the costs incurred by DSB for these access fees, which are set
based on the applicable track access charge rates as of 1 January 2000 and adjusted annually. The annual
adjustment mechanism accounts for changes in track access fees and planned modifications in traffic volume.
Additionally, a settlement mechanism is in place to correct for unforeseen variations in traffic levels from previous
years. However, the adjustment does not cover marginal infrastructure costs resulting from changes in traffic
volume, which remain DSB's responsibility.
2.4. The public service contract for the period 2005-2014
2.4.1. Main line and regional transport
(59) The second contract between the Danish Ministry of Transport and DSB concerns the provision of main line and
regional public transport services during the period 2005-2014.
(60) The purpose of the contract is described in the introduction as follows: ‘[t]o establish a clear framework for
performance so as to guarantee the State the best possible result in terms of rail passenger transport for the
financial resources made available to rail transport and to ensure that DSB has a sound financial situation’.
2.4.2. Content of the contract
(61) Article 1 defines the scope of the contract. It refers to the specific sections of the network on which public rail
transport services are provided under the negotiated contract.
(62) DSB retains the income from ticket sales for most routes, except for two specific public service routes: Århus–
Langå–Struer and Struer–Thisted, where the ticket revenues are allocated to the operator of the tendered traffic.
Additionally, the contract covers international rail links with Germany, including services from Copenhagen to
Hamburg via Rødby and Padborg. The contract also includes the Copenhagen–Ystad route, which had previously
been operated under an open access scheme but was later integrated into the public service contract. The
compensation mechanism takes into account indexed adjustments for inflation and net retail price changes, a
revenue-sharing model for international services, and settlement provisions to address fluctuations in traffic and
revenue projections.
(63) The transport services to be provided by DSB are defined in a traffic plan (number and spacing of trains), a stop plan
(servicing of stops) and a line plan (requirements in terms of rail connections). The three plans are described in
Article 1.3 and are included in Annex 1 (Bilag 1) to the public service contract for the period 2005-2014, as are
the rules relating to seating capacity, frequency, reliability, user satisfaction, service interruptions and other special
conditions.
(64) Article 2 concerns all forms of pricing, including specific provisions concerning journeys across the Øresund.
(65) Article 3 concerns the scope of the transport services in relation to those operated under the open access scheme. In
particular, Article 3.3 states that it is possible to extend the public transport services provided beyond the current
framework of the contract, without increasing the contractual payments. This means that DSB may introduce
additional services within the contract period but must bear the full costs of these services, as no extra
compensation is provided under the contract for such extensions.
(66) Article 4 establishes the rules, duties, and obligations associated with station modernisation, including DSB's
responsibility to develop and submit station modernisation plans to the Danish Ministry of Transport for review.
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(67) Article 5 lists DSB’s obligations relating to the operation of transport activities. Those obligations concern, among
other factors, duties of information, equipment inspections, the obligation to make rolling stock available to
operators who win tenders on certain routes, or specific conditions for the issue of tickets or passes for certain
categories of passenger.
(68) Finally, Article 6 outlines the possibility of initiating tendering procedures and the criteria for organising these
procedures on specific routes, which could lead to reduced contractual payments for the relevant services. Under
Article 6.1.1, the Ministry of Transport retains the authority to terminate portions of the contract associated with
these tenders. Should a termination occur, the contractual payment will be decreased accordingly.
(69) Other relevant provisions in the 2005-2014 contract include:
— Article 6.3 allows DSB to subcontract while stipulating that DSB remains fully liable for the subcontracted
services as if performed by itself.
— Article 10 specifies the conditions relating to infrastructure, ensuring proper coordination of railway capacity
and maintenance responsibilities;
— Article 11 contains provisions relating to user services, including obligations for passenger accessibility,
ticketing systems, and customer service requirements;
— Article 8.1 defines the penalties for poor punctuality, setting performance benchmarks and financial
deductions for non-compliance with service reliability and punctuality requirements;
— Article 9 lays down the conditions for setting transport prices. According to this article, the Ministry of
Transport must approve any fare increases beyond those predefined in the contract, ensuring transparency
and regulation of public transport pricing.
(70) These provisions help maintain service quality, infrastructure reliability, passenger rights, and financial
accountability in DSB’s public service obligations.
(71) According to Article 1.1, the contract covers the period from 1 January 2005 to 31 December 2014. The contract
was concluded on 17 May 2004 and therefore before its entry into force on 1 January 2005, and also before the
payment of any compensation under the agreement.
2.4.3. Contractual payments
(72) The financial compensation received by DSB is set out in Article 7 of the contract.
(73) As set out in Article 7.1.1 of the 2005-2014 contract, DSB retains the income generated from ticket sales (see recital
62). In addition to this, it receives payments from the Danish Ministry of Transport for the provision of the public
services specified in the contract.
(74) The contractual payments are summarised in the following table:
Table 3
Contractual payments 2005-2014
Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
DKK 2 985 3 021 2 803 2 669 2 523 2 480 2 486 2 433 2 475 2 470
(millions)
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(75) The payments made to DSB under the contract are defined in advance and incorporated into Denmark’s annual
Finance Acts (‘Acts’), which provide the legal and financial framework for public service expenditure. These Acts
are legislative instruments that approve and allocate state funds, including the payments to DSB for its public
service obligations. While the payments are not subject to automatic adjustments, they may be revised under
specific conditions outlined in the contract. One such revision is the annual adjustment for inflation, which is
calculated using the net price index as provided for in the Finance Acts. Additionally, the level of compensation is
subject to performance-based adjustments, including penalties for poor punctuality and customer satisfaction,
modifications to service levels, financial reserve deductions, cost-sharing between DSB and subsidiaries, and
extraordinary adjustments related to infrastructure projects or investments affecting public service obligations. For
example, Article 1.9.4 links part of the compensation to customer satisfaction survey results, while Article 1.7.5
and Article 1.6.3 introduce deductions where DSB fails to meet punctuality or seating capacity targets. These
mechanisms are further detailed in the annexes to the contract.
(76) The contract does not specify how the numerical level of the contractual payments was calculated. However, the
Danish Ministry of Transport has explained that these payments are based on a 10-year budget plan derived from
projections of DSB's costs and revenues. In accordance with the regulatory framework, DSB is required to maintain
separate accounts for its public service obligations and its commercial activities. The contractual payments made
under the public service contracts are therefore accounted for separately from other commercial revenues and
expenses (see recitals 90 and 91). The financial arrangements ensure compliance with national accounting
standards and EU competition rules, thereby preventing cross-subsidisation. Additionally, DSB is obliged to submit
detailed annual financial reports to the Ministry of Transport, ensuring transparency and enabling verification that
the compensation remains proportionate to the costs incurred in fulfilling the public service obligations.
(77) Among other factors, the contractual payments cover both the depreciation and interest costs arising from the
procurement of new rolling stock ordered from AnsaldoBreda. The order, which was meant to modernise and
expand DSB’s fleet, was subject to significant delivery delays, affecting the operational rollout of the new trains.
The financial impact of these investments is detailed in the following table:
Table 4
Depreciation of new rolling stock 2005-2014 (DKK millions)
Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
IC4 50 167 247 258 258 258 258 258 258 258
IC2 1 24 46 46 46 46 46 46 46 46
Local trains 15 44 74 89 89
(78) The expected delivery schedule for the annual investments in new rolling stock is presented in the following table:
Table 5
Delivery of new rolling stock
Year 2003 2004 2005 2006 2007 2008 2009 2010 2011
IC4 1 31 44 7
IC2 1 22
Local trains 14* 14* 14*
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(79) However, delays in manufacturing and delivery meant that the actual deliveries deviated from this plan. Therefore,
several provisions were inserted into the contract to take account of the delays affecting the delivery of rolling
stock and to manage the subsequent shortfall in available rolling stock.
(80) Article 7.1.2. provides for the possibility of adjusting the contractual payments annually based on the actual
delivery of new rolling stock. In cases where delivery delays occurred, financial adjustments could be made to
reflect the postponement of expected service improvements and capacity expansions. However, adjustments were
not made where they would be of less than DKK 8 million.
2.5. Dividend payments
(81) For the period 2000-2009, no clawback mechanism was in place to automatically recover potential
overcompensation. However, Finance Act No 249/1999 established a dividend policy, designed to regulate DSB’s
equity capital and ensure that surplus profits beyond expected levels were returned to the State.
(82) The Danish authorities point out that this policy was designed to regulate DSB’s equity capital and prevent the
accumulation of excessive financial resources that could distort competition. They further state that dividend
payments were financed from DSB’s earnings, reflecting efficiency gains over the years, and that these payments
functioned as a de factorefund mechanism, ensuring that any surplus profits beyond expected levels were returned
to the State.
(83) Between 2000 and 2009, DSB paid DKK 5 212 million in dividends, exceeding the amounts projected in the
10-year forward budget by DKK 3 390 million (approximately EUR 455 million). In 2008 alone, DKK 364 million
was distributed, DKK 150 million more than initially forecasted. The Danish authorities maintain that these
payments aligned with DSB’s financial planning and budget forecasts, effectively preventing overcompensation.
3. DESCRIPTION OF THE MEASURES
3.1. The beneficiary (DSB)
(84) DSB is the State-owned incumbent rail undertaking in Denmark. It operates mainline and regional passenger rail
services under public service contracts concluded with the Ministry of Transport(38). At the end of 2009, it was
also active in Sweden, Norway and the United Kingdom through its subsidiaries DSB Sverige AB, DSB Norge, and
DSB UK Ltd AS (see recital 95).
(85) In 2008, DSB had approximately 9 200 employees. Its turnover in 2008 was approximately DKK 9,85 billion
(approx. EUR 1,32 billion(39)).
3.1.1. The creation of the independent public undertaking DSB
(86) In 1999, DSB became an independent public undertaking(40). Prior to this, DSB was part of the government
appropriations system and was therefore obliged to operate any railway line at a certain minimum passenger
transportation service level. The net expenses involved in meeting this obligation were provided for through
appropriations in the annual budget.
(87) In 1999, a new financial management model for the undertaking was established. Its opening balance sheet was
prepared on the basis of a valuation of the undertaking’s assets and liabilities. The Danish authorities indicated that
for all significant items DSB obtained a second valuation by independent experts.
(38) DSB’s freight transport activities were sold to Deutsche Bahn in 2001.
(39) The conversion was made using an average exchange rate for the year 2008.
(40) Act No 485 of 1 July 1998 established the independent public undertaking DSB SV and DSB Cargo on 1 January 1999 (‘the DSB Act’).
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(88) The Danish authorities have explained that DSB’s equity capital was determined by comparison with similar
undertakings with substantial fixed assets. The undertaking’s final opening balance sheet was based on a 36 %
equity ratio, which represents the proportion of total assets financed by shareholders' equity rather than debt. A
higher equity ratio generally indicates greater financial stability and lower reliance on borrowed capital.
Additionally, the balance sheet was based on upfront financing (as indicated in recital 86, DSB was incorporated
in 1999), meaning that the necessary capital for initial investments and operations was secured in advance through
capital injections, rather than being gradually acquired through operational revenues or future financing
arrangements. Those payments are not covered by the present Decision.
(89) It should also be noted that the legal framework applying to DSB was supplemented by accounting standards and
national guidelines in the area of competition, which require the undertaking to keep separate accounts for its most
important activities and to avoid any form of cross-subsidisation. The payments for the long-distance and regional
traffic are accounted for in DSB Parent Company (DSB SOV). In particular, the financial accounts distinguish
between the revenues and costs related to the public service contracts and those linked to DSB’s commercial
operations. In order to prevent cross-subsidisation DSB SOV’s finances are divided in the business areas ‘Public
service operations (Business area A)’ and ‘Activities subject to competition (Business area B)’. This separation
ensures that State compensation granted under the public service contracts is not used to subsidise competitive
market activities, thereby complying with EU State aid rules. The financial statements of the business areas are
subject to the Accounting Regulations for DSB and the Competition Law Guidelines for DSB and are subject to
external audit.
(90) The contractual payments made to DSB on the basis of the public service contracts are therefore entered in the
accounts separately from the other activities carried out on a purely commercial basis. These accounts are subject
to regulatory oversight and reporting obligations to ensure transparency and compliance.
(91) DSB’s revenue accounts are kept for each activity and are based on a documented activity-based cost accounting
methodology using formulae for apportioning costs and revenues. For the public service contracts, this means that
all direct costs associated with fulfilling public service obligations - such as staff costs, rolling stock depreciation,
and infrastructure access charges - are allocated accordingly, while indirect costs are distributed using standardised
cost allocation keys. Revenues generated from ticket sales under the public service contracts are also accounted for
separately, ensuring that public compensation only covers the net cost of providing the public service.
3.1.2. DSB subsidiaries
3.1.2.1. DSB S-tog a/s
(92) DSB S-tog a/s is wholly owned by DSB and operates all urban and suburban rail services in Greater Copenhagen.
(93) As an independent company, the accounts of DSB S-tog a/s are kept separately from those of DSB. Similarly, DSB’s
accounting regulations provide that transactions between DSB and DSB S-tog a/s are to be conducted in accordance
with market conditions.
(94) Contracts concluded between the Danish Ministry of Transport and DSB S-tog a/s concerning the provision of
urban and suburban public transport services are not the subject matter of the Commission’s decision initiating the
procedure and, hence, of this Decision.
3.1.2.2. Other subsidiaries and ownership interests
(95) DSB owns 100 % of DSB Sverige AB, DSB Norge and DSB UK Ltd AS whose activities involve the provision of
passenger transport services and other related activities in Sweden, Norway and the United Kingdom respectively
(see recital 84).
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(96) For completeness, DSB also owns 60 % of Roslagståg AB, which, at the end of 2009, operated the Roslag line in the
Stockholm region. DSB owns the private company BSD ApS, which is responsible for the protection of intellectual
property rights. In addition, at the end of 2009, DSB and DSB S-tog a/s jointly owned the holding company
DSB Rejsekort A/S, which owned 52 % of Rejsekort A/S, a public transport electronic ticketing operator. These
subsidiaries are, however, not covered by the public service contracts under examination and maintain separate
accounts, which demonstrate that they have not received any funds allocated under the measures being assessed.
(97) The DSB Group has other purely commercial activities which are placed in affiliated and associated companies.
These companies perform DSB's foreign activities (such as DSB Roslagståg AB and DSB Tågvärdsbolag AB) and
sales of kiosk and restaurant goods (DSB Kort & Godt A/S (previously DSB Detail A/S)). DSB does not receive any
public service obligation payment for these activities.
3.2. The complainants
3.2.1. The first complainant
(98) Μr Jørgen Andersen carries out, under the trade name of Gråhundbus v/Jørgen Andersen (‘Gråhundbus’), bus
transport services in Denmark and abroad. Gråhundbus is a private undertaking providing passenger transport
services by bus, operating, in particular, a route between Copenhagen (Denmark) and Ystad (Sweden). Ystad is
connected by ferry to the island of Bornholm (Denmark).
3.2.2. The second complainant
(99) Dansk Kollektiv Traffik (‘DKT’) is a professional association representing several Danish transport operators.
4. GROUNDS FOR THE RE-ADOPTION
4.1. The 2010 Decision (2011/3/EU)
(100) Following two complaints submitted by the two complainants Mr Andersen and DKT, concerning the public service
contracts awarded to DSB, the Commission decided on 10 September 2008 to initiate the formal investigation
procedure laid down in Article 108(2) TFEU (formerly Article 88(2) TEC)(41)(the ‘Opening Decision’).
(101) In the Opening Decision, the European Commission expressed doubts about the compatibility with the internal
market of the public service compensation paid to DSB under the two public service contracts, particularly
regarding surplus profits, equity capital, and the risk of overcompensation(42). It questioned whether the
contractual payments were limited to what was necessary to cover the costs of public service obligations while
ensuring a reasonable profit(43). Concerns were also raised about delays in rolling stock deliveries(44), the
Copenhagen–Ystad route(45), and the absence of a competitive tendering process, which could indicate that
compensation was not based on actual market conditions(46).
(41) See footnote 5.
(42) See recital 129 of the Opening Decision.
(43) See recitals 81 and 128 to 129 of the Opening Decision.
(44) See recitals 91 to 100 of the Opening Decision.
(45) See recitals 100 to 103 of the Opening Decision.
(46) See recitals 104 and 107 of the Opening Decision.
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(102) The Commission then considered whether the compensation under the two public service contracts was
compatible with the internal market on the basis of Article 14 of Regulation (EEC) No 1191/69, which governs
public service obligations in transport(47), and expressed doubts about whether the compensation was strictly
limited to covering necessary costs(48). Additionally, it examined whether the Danish government's deduction of
dividends and reductions in contractual payments were sufficient to prevent overcompensation, ensuring that
public funds did not confer an undue economic advantage on DSB(49).
(103) At the end of that procedure, the Commission adopted, on 24 February 2010, its 2010 Decision(50).
(104) In that Decision, the Commission concluded that the compensation under the two public service contracts
constituted State aid under Article 107(1) TFEU (formerly Article 87(1) TEC), as the fourth Altmark criterion was
not fulfilled. The Commission, however, considered that the aid was compatible with the internal market under
Article 93 TFEU (formerly Article 73 TEC), albeit subject to certain conditions (see recitals 109 and 110).
(105) The Commission based its compatibility assessment on Regulation (EC) No 1370/2007. The Commission noted in
that respect that Regulation (EC) No 1370/2007 entered into force on 3 December 2009 and repealed Regulation
(EEC) No 1191/69. Consequently, the Commission was of the opinion that the examination of compatibility
should be based on Regulation (EC) No 1370/2007 rather than on Regulation (EEC) No 1191/69, as this was the
applicable legislation at the time of the Commission's Decision. The Commission based that position on an
understanding that the aid was unlawful aid granted in violation of Article 108(3) TFEU (formerly
Article 88(3) TEC), which, for the purpose of the application in time of legal provisions, constitutes an on-going
situation, the future effects of which are governed by the law in force at the time of the Commission decision. On
that basis, the Commission came to the following conclusions:
(106) First, the direct award of the public service contracts to DSB without public tendering was in line with Article 3(1)
of Regulation (EC) No 1370/2007 and with the transitional provisions set out in Article 8 of Regulation (EC)
No 1370/2007, permitting direct awards until 3 December 2019.
(107) Second, the public service contracts fulfil all the conditions as set out in Article 4 of Regulation (EC) No 1370/2007.
In particular, the contracts clearly defined the public service obligations and geographical areas involved
(Article 4(1)(a)); payments were based on pre-established, objective, and transparent parameters to prevent
overcompensation (Article 4(1)(b)); the contracts specified the proportion of ticket sales revenue that DSB could
retain (Article 4(2)); and the contract durations were limited to 5 and 10 years, complying with the regulation's
obligation of a 15-year maximum duration (Article 4(3)).
(108) Third, as regards the period from 2000 to 2009, the Commission estimated that DSB made profits of DKK 3 390
million (approximately EUR 455 million) higher than those forecasted in DSB’s initial 10-year budget. It was found
that the compensation exceeded the level necessary to cover the costs incurred by DSB in fulfilling its obligations
under the public service contracts, plus a reasonable profit, which Denmark considered to be 6 %. Denmark argued
that DSB had also paid DKK 3 500 million (approximately EUR 470 million) more in dividends than initially
foreseen. The Commission accepted that, by collecting these additional dividends, the Danish authorities had
corrected DSB’s surplus situation in such a way that DSB had in practice not been overcompensated during that
period. In conclusion, the Commission therefore determined in Article 1 of the 2010 Decision that the payments
of compensation under the public service contracts between the Danish Ministry of Transport and DSB in the
period from 2000 to 2009 constituted State aid under Article 107(1) TFEU (formerly Article 87(1) TEC) (Article 1,
first paragraph), which were compatible with the internal market under Article 93 TFEU, in accordance with
Regulation (EC) No 1370/2007 (Article 1, second paragraph).
(47) See recitals 124 and 131 of the Opening Decision.
(48) See recitals 128 to 129 of the Opening Decision.
(49) See recitals 88 to 90 of the Opening Decision.
(50) See footnote 11.
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(109) For the payments made as of January 2010, in order to avoid overcompensation in the future, the 2010 Decision
required Denmark to introduce a clawback mechanism as described in recitals 222 to 240 and 356 of the 2010
Decision, to be triggered if the compensation awarded to DSB were found to be too high after an ex post
examination. According to this mechanism, DSB was entitled to keep a reasonable profit (also 6 %) (see Article 2 of
the 2010 Decision).
(110) The Commission further required Denmark to ensure the repayment to the Danish State of the compensation due
to DSB from AnsaldoBreda on account of the late delivery of rolling stock (see Article 3 of the 2010 Decision).
4.2. Summary of relevant Court proceedings
4.2.1. Partial annulment of Decision 2011/3/EU by the General Court’s judgment of 20 March 2013 in Case T-92/11(51)
(111) By application lodged at the General Court Registry on 18 February 2011, Mr Andersen brought an action for
annulment of the second paragraph of Article 1 of the 2010 Decision (see recital 108) on the grounds that the aid
involved overcompensation and that the Commission had applied an incorrect legal basis when assessing the
compatibility of the aid with the internal market.
(112) Mr Andersen put forward three pleas in law in support of his action: the first plea alleged an error of law in that the
Commission considered that the Danish Government did not commit a manifest error of assessment in classifying
the Copenhagen-Ystad route as a public service and including it in the scheme of public service contracts. The
second plea alleged an error of law in that the Commission did not order recovery of the incompatible
overcompensation under the public service contracts. The third plea alleged that the Commission had made an
error of law in applying Regulation (EC) No 1370/2007 to the facts of the case instead of Regulation (EEC)
No 1191/69.
(113) The General Court, in its judgment of 20 March 2013 (‘the General Court’s first judgment’), annulled the second
paragraph of Article 1 regarding the compatibility of the aid of the 2010 Decision.
(114) The annulment was based on the finding that the Commission had applied the wrong legal basis, Regulation (EC)
No 1370/2007, instead of Regulation (EEC) No 1191/69, when assessing the compatibility of the aid with the
internal market. The General Court emphasised that for aid paid without being notified, the applicable substantive
rules are those in force at the time the aid was paid as the advantages and disadvantages created by such aid arise
during the period in which it is granted: ‘The compatibility of the aid in question with the internal market should
have been assessed under the substantive rules in force at the time when it was paid, namely under Regulation
No 1191/69’(52).
(115) According to the General Court’s first judgment, assessing aid under the rules in force at the time of payment
therefore ensures legal certainty, protects legitimate expectations, and respects the principle that substantive rules
should not be applied retroactively unless explicitly provided for by the regulation itself, which was not the case for
Regulation (EC) No 1370/2007(53).
(51) Judgment of the General Court of 20 March 2013, Andersen v Commission, Case T-92/11, ECLI:EU:T:2013:143.
(52) Idem, paragraph 46.
(53) Idem, paragraphs 45 to 50, 55 and 58.
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4.2.2. Judgment of the Court of Justice of 6 October 2015 in Case C-303/13 P, partially annulling the General
Court's first judgment(54)
(116) Following an appeal by the Commission against the General Court’s first judgment, the Court of Justice in its
judgment of 6 October 2015 in Case C-303/13 P held that, when it adopted the 2010 Decision, the Commission
ought first to have examined in the light of Regulation (EEC) No 1191/69 the aid paid under the first public service
contract concluded for the years 2000 to 2004 and the aid paid before 3 December 2009 under the second public
service contract concluded for the years 2005 to 2014, in order to ascertain whether that aid complied with the
conditions laid down in Sections II, III and IV of that regulation and was thus exempt from the notification
obligation provided for in Article 108(3) TFEU(55).
(117) As regards the aid paid before 3 December 2009, the Court of Justice confirmed the General Court’s first judgment
in so far as the latter had annulled the second paragraph of Article 1 of the 2010 Decision due to the use of the
wrong legal basis (Regulation (EC) No 1370/2007, instead of Regulation (EEC) No 1191/69).
(118) With respect to the aid paid after 3 December 2009 under the second public service contract, covering the period
2005 to 2014, the Court of Justice held that the General Court had erred in law by failing to assess whether the aid
granted during this period complied with the substantive requirements of Regulation (EC) No 1370/2007, which
became applicable on 3 December 2009.
(119) Consequently, the Court of Justice referred the case back to the General Court to reassess the lawfulness of the 2010
Decision as regards the assessment of the aid under the provisions of Regulation (EC) No 1370/2007, insofar as aid
was paid in the period following its entry into force.
4.2.3. Judgment of the General Court of 18 January 2017 in Case T-92/11 RENV reassessing the aid paid after
3 December 2009(56)
(120) In its judgment of 18 January 2017 in case T-92/11 RENV (‘the General Court’s second judgment’), the General
Court upheld the majority of the Commission's findings regarding the compatibility of public service
compensation paid to DSB under public service contracts. However, it annulled the finding of compatibility in
relation to a specific payment made on 21 December 2009 due to insufficient reasoning.
(121) More specially, in support of his action, the applicant had raised three pleas (see also recital 112 above): first, that
the Commission wrongly failed to find a manifest error in classifying the Copenhagen-Ystad route as a public
service; second, that it erred in not ordering recovery of overcompensation incompatible with the internal market;
and third, that it incorrectly applied Regulation 1370/2007 instead of Regulation 1191/69.
(122) With respect to the complainant’s first plea in law, the General Court dismissed this plea, affirming that Member
States enjoy broad discretion under EU law to define services of general economic interest (‘SGEI’), subject only to
review in case of a manifest error. The Court emphasised that the classification of the Copenhagen-Ystad route as a
public service was based on the public interest objectives of ensuring access to the island of Bornholm and
enhancing the coherence of Denmark’s transport system. Consequently, the Court found no manifest error in the
Commission’s acceptance of Denmark’s designation of the route as a public service and its inclusion in public
service contracts.
(54) Judgment of the Court of 6 October 2015, Commission v Andersen,Case C-303/13 P, ECLI:EU:C:2015:647.
(55) Idem, paragraph 54.
(56) Judgment of the General Court of 18 January 2017, Andersenv Commission, T-92/11 RENV, ECLI:EU:T:2017:14.
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(123) The General Court, in addressing the second plea, found that the Commission, in violation of Article 296 TFEU,
failed to adequately justify its decision not to order the recovery of overcompensation paid to DSB in connection
with a public service task, specifically regarding a payment made on 21 December 2009. The Court noted that the
Commission had relied on its dividends theory to assess compatibility with the internal market but had omitted
any detailed examination or reasoning concerning overcompensation during the relevant period. In contrast, the
Court acknowledged that from 1 January 2010 onwards, a refund mechanism had been introduced by the Danish
State, which, as the applicant itself admitted, effectively prevented overcompensation during that period. As a
result, the General Court annulled the contested decision only insofar as it related to the payment of 21 December
2009.
(124) The General Court rejected the third plea, finding no error in the Commission's decision to apply Regulation (EC)
No 1370/2007 to assess the compatibility of aid paid from 3 December 2009 under the second public service
contract.
4.3. Scope of the re-adoption
(125) To comply with the General Court’s first(57) and second judgments, in accordance with Article 266 TFEU, the
Commission is required to re-adopt a decision to close the formal investigation procedure applying Regulation
(EEC) No 1191/69 as the appropriate legal basis for assessing whether payments of compensation under the two
public service contracts made prior to the entry into force of Regulation (EC) No 1370/2007 on 3 December 2009
met the applicable requirements of Regulation (EEC) No 1191/69 and were exempted from prior notification
pursuant to Article 108(3) TFEU, based on the applicable provisions of Regulation (EEC) No 1191/69.
Additionally, the Commission must re-adopt its decision as regards the assessment of the payment made on
21 December 2009 under the second public service contract, assessed under Regulation (EC) No 1370/2007,
ensuring that sufficient reasoning is provided to substantiate that decision.
5. COMMENTS FROM DENMARK
(126) As indicated in recitals 11 and 12, Denmark provided comments and further explanations following the Court
judgments partially annulling the 2010 Decision, maintaining its initial positions. These comments complemented
the information submitted earlier during the formal investigation procedure that led to the adoption of the 2010
Decision (see recital 4).
5.1. Comments with respect to the block exemption under Regulation (EEC) No 1191/69
(127) Denmark argued that the compensation provided under public service contracts should be exempt from the
notification obligation if it complied with the relevant regulation. Specifically, the Danish authorities contest the
Commission’s interpretation in the Opening Decision, relying on the Combus judgment, according to which
negotiated public service contracts involving State aid are not block-exempted and must be notified to the
Commission under Regulation (EEC) No 1191/69. In contrast, the Danish authorities assert that, where Regulation
(EEC) No 1191/69 applies, compensation provided under a public service contract is exempted from the
notification requirement if it complies with that Regulation. This interpretation relies on Article 17(2) of
Regulation (EEC) No 1191/69, which explicitly exempts public service compensation fulfilling the conditions of
the Regulation from the notification obligation foreseen in Article 108(3) TFEU.
(57) To the extent that that judgment was upheld by the Court of Justice in Case C-303/13 P, i.e. insofar it annulled Article 1, second
paragraph, of the 2010 decision in relation to aid paid before 3 December 2009.
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(128) The Danish authorities argue that the conditions of Regulation (EEC) No 1191/69 are fulfilled because the
compensation is strictly limited to covering the net costs of public service obligations, as required by Articles 10
and 11 of the Regulation. They highlight that compensation is calculated based on detailed financial models,
including multi-annual budgets, which take into account all relevant factors, such as expected revenues, operating
costs, and a reasonable profit margin. Although the contracts themselves do not include a formal clawback
mechanism, the Danish authorities emphasise that surplus profits are managed through other measures, such as
dividend payments to the State and adjustments to compensation levels in subsequent contracts. They also argue
that these measures effectively prevent overcompensation. The Danish authorities also point to the public service
obligations clearly defined in the public service contracts, such as service continuity, quality, and coverage
requirements, as evidence of adherence to the Regulation’s provisions.
(129) Based on these elements, the Danish authorities maintain that the compensation provided to DSB complies fully
with Regulation (EEC) No 1191/69 and, therefore, does not require notification under EU State aid rules.
5.2. Comments with respect to the payments made before 3 December 2009
(130) The Danish authorities are of the opinion that the compensation payments made before 3 December 2009 are
compatible with the internal market.
5.2.1. Parameters to determine the compensation amounts
(131) The Danish authorities note that the Commission expressed doubts in the Opening Decision on whether the
parameters on the basis of which the compensation was calculated were established in advance in an objective and
transparent manner regarding the payments made from 2009 to 2014.
(132) The Danish authorities take the view that those doubts are due to a misunderstanding, because, as in the case of the
preceding period, the compensation was calculated on the basis of a 10-year budget for the period 2005-2014. In
response to the Commission’s doubts, Denmark provided additional clarifications, submitting the 10-year budget
for 2005-2014, which was based on specific operational and financial projections. The parameters used to
establish the level of compensation included factors such as expected inflation, ticket price adjustments,
productivity improvements, interest rates, return on equity, and projected investment in rolling stock. The Danish
authorities argued that these parameters had been set in advance and were incorporated into Danish legislation and
public transport contracts. Furthermore, Denmark maintained that the methodology applied was consistent with
that used in the previous period (1999-2008) and that the compensation had been determined using detailed
forward budget planning.
(133) The Danish authorities have submitted that budget to the Commission, together with the estimates and assumptions
underlying the budget, namely:
— a general annual inflation rate of 2,5 %,
— an increase in ticket prices of 2,5 %, in line with inflation,
— an average increase in productivity of 2,5 % a year,
— an annual interest rate of 5,15 %,
— a 6 % return on equity after tax,
— investments in rolling stock amounting to approximately DKK 10 billion,
— an increase of approximately 20 % in the number of kilometres travelled over the whole period,
— an increase of approximately 20 % in the number of passengers over the whole period,
— a payroll tax exemption for DSB’s staff.
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(134) Furthermore, Denmark states that that budget was prepared on the basis of the obligations related to track access
fees, infrastructure-related obligations, and financial adjustments made in 2003, which were later reflected in both
the contractual payments and the Finance Act to ensure alignment with the obligations set at that time. The
changes made to those obligations and the subsequent reduction in the compensation paid to DSB were, in the
meantime, incorporated into the contract before it was signed. The Ministry of Transport set out the contents of
the contract and the budget in Act No 112/2004, and this data was included in the Finance Act (see
Article 28.61.01, paragraph 10 of the Finance Act 2003).
5.2.2. No risk of overcompensation
(135) The Danish authorities have commented on the three aspects in respect of which the Commission expressed doubts
concerning a risk of overcompensation, mainly (i) DSB’s surplus profits; (ii) DSB’s equity capital and (iii) DSB’s
operating results, and have provided additional arguments, which in their view disprove the risk of
overcompensation (see for example recitals 88 to 90 and 126 to 131) of the Opening Decision).
5.2.2.1. DSB’s surplus profits
(136) First of all, the Danish authorities consider that DSB’s surplus profits are not due to overcompensation. According
to Denmark, the bases of calculation of the compensation were correct and the surplus profits are not therefore
attributable to overcompensation, but due to other circumstances. They claim in particular that the parameters
used to calculate the compensation were correctly established, and the observed surplus profits arose due to factors
that could not have been foreseen when determining the level of compensation.
(137) According to Denmark, variations in financial performance relative to initial budget projections are inherent to
multiannual public service contracts. The authorities emphasise that it is not possible to predetermine
compensation in a manner that ensures an exact match between forecasted and actual costs, revenues, and
reasonable profits. They argue that even when public service contracts are awarded through competitive tenders,
market conditions and business circumstances evolve, leading to financial outcomes that diverge from initial
projections.
(138) The Danish authorities identify several factors contributing to DSB’s improved financial performance, including:
— General economic trends and developments in the transport market;
— Productivity gains, such as reductions in labour costs or infrastructure access costs (for example following the
sale of the cargo branch);
— Changes in depreciation expenses;
— Improved financial management practices.
(139) In conclusion, Denmark contends that these factors, rather than excessive compensation, explain DSB’s surplus
profits.
5.2.2.2. DSB’s operating results
(140) With regard to the projected operating results before distribution of profits, the Danish authorities point out that
the observed improvements in results are not an indication of DSB receiving overcompensation. Rather, the
improvements are due to a range of factors -having both positive and negative effects- which could not be taken
into consideration when the level of compensation was established.
(141) Denmark considers that such variations with respect to the initial budget are inevitable in the case of multiannual
contracts relating to the discharge of a public service obligation. In such cases, it is not possible to fix the amount
of compensation in a way which makes it possible to confirm, following an ex post examination, that it
corresponded exactly to the real costs, minus the receipts and a reasonable profit.
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(142) According to the Danish authorities, even in cases where a public service obligation results from the award of a
tender, changes may occur in the market and in the situation of the undertaking concerned, such that the results
actually obtained do not correspond to the results predicted by the successful bidder when the contract was
concluded.
(143) Denmark therefore takes the view that improvements or deteriorations in results attributable to such unforeseen
factors cannot be used as an argument to claim that the compensation was fixed in a way such as to involve
overcompensation or under-compensation.
(144) In this case, the observed improvements in results are due to the combined effects of several factors such as general
economic trends, developments in the market concerned, productivity gains (for example, reductions in the cost of
labour or of access to infrastructure following the sale of the cargo branch, reductions in depreciation or
improvements in financial management).
(145) Denmark further adds that the contracts concluded with DSB are characterised by the fact that the contracting
partners agreed on payment based on usual market economy considerations, with the level of payment determined
to cover DSB’s costs while accounting for expected revenues and a reasonable profit. The fact that DSB ultimately
achieved better financial results than budgeted does not indicate that the compensation amounts fixed in the
contracts were too high. Furthermore, Denmark highlights that any surplus profits generated by DSB were subject
to the State’s dividend policy, as set out in Finance Act No 249/1999, which ensured that excess financial resources
were returned to the State rather than retained by DSB (see below recital 146).
5.2.2.3. Reduction in compensation and distribution of dividends
(146) The Danish authorities point out that, even though there was no overcompensation, the risk of overcompensation is
in any case ruled out by the Danish Government’s dividend policy as set out in Finance Act No 249/1999 and by the
subsequent reduction in compensation in the agreement concluded with DSB.
(147) Denmark takes the view that it has made sure, with its dividend policy, that DSB will not increase its equity capital
beyond the level provided for and hence beyond the level that is necessary. Although no binding legal rule was laid
down, the Danish authorities argue that the dividend policy was designed to balance two key considerations:
— Market Economy Considerations: The policy took into account the usual economic principles applied in a
market economy to determine what level of equity capital and financial structure was economically
justifiable for DSB, given its operational needs and financial position.
— Socio-Economic and Competition Considerations: The dividend policy also reflected broader socio-economic
factors, including competition-related concerns. Specifically, it was intended to ensure that DSB's equity
capital remained at an appropriate level and that operating grants were not used to create an undue financial
advantage that could distort competition.
(148) The Danish authorities state that dividend payments to the State are to be used as a means of correcting the size of
DSB’s equity capital in the years following its founding, and as a means of restoring the operating surplus if it were
subsequently to emerge that DSB did indeed achieve better results than expected. That principle follows from
Finance Act No 249/1999. The payment of dividends is to be used to regulate on an ongoing basis the structure of
DSB’s capital and, hence, the real net operating grant. The dividend policy also meant that DSB had an incentive to
improve its efficiency because the starting point was that the dividends should amount to half of DSB’s surplus after
tax. Efficiency improvements would therefore benefit DSB to a certain extent and not solely result in a subsequent
refund of the operating grant.
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(149) The Danish authorities consider that it is wholly in line with the general considerations of a market economy to be
able to use incentives in determining what constitutes a reasonable profit, as advocated by the Commission(58).
(150) Denmark points out that the application of this dividend policy led, for the period 1999-2006, in relation to the
activities undertaken to fulfil the contracts, to the State being paid almost DKK 3 billion more than the figure
initially predicted.
(151) According to the Danish authorities, the dividend policy therefore functioned de facto as a refund mechanism,
making it possible to offset any overcompensation. They emphasise that the part of DSB’s compensation which
was repaid to the State in the form of dividends is, moreover, much greater than the difference between the surplus
anticipated in DSB’s budget and that which was actually achieved. As such, the dividend policy therefore helped to
guarantee that DSB was not able to profit from the State operating grant in order to obtain a competitive
advantage -for example, by increasing its equity capital beyond the specified level or by using annual surpluses.
(152) Moreover, the Danish authorities consider that it is very difficult to establish rules relating to an a posteriori
correction of the operating grant. However, the State is able -as a result of the dividend policy, in accordance with
Danish company law- to ensure that the net operating grant is effectively corrected, if the profits for the year
exceed the level which was expected or anticipated when the contract was concluded. According to the Danish
authorities, distributions of dividends are therefore, in practice, an effective tool to guard against overcompensation.
(153) Moreover, the Danish authorities state that the Court of First Instance also established that Member States could
have a wide discretion as to the determination of compensation where that compensation depends on an
assessment of complex economic facts(59). They also point out that EU law does not contain any obligation
providing that a downwards revision of the net operating grant should always be carried out in a certain way, for
example by applying contractual rules or in an equivalent manner.
5.3. Comments with respect to the single payment of 21 December 2009
(154) The Danish authorities submit that the single payment made on 21 December 2009 should not be assessed in
isolation as it would be overly difficult, perhaps even practically impossible with an appropriate measure of
accuracy, for DSB to reconstruct its financial accounts for the period from 3 December to 31 December 2009.
Instead, the Commission should assess the single payment taking into account a pro ratacalculation based on the
annual accounts of DSB for the financial year 2009.
(155) The Danish authorities submitted that in 2009, DSB's return on equity, before paying any dividends, was below 6 %,
and there was therefore no risk of overcompensation in 2009.
(156) According to the Danish authorities, an application of the clawback mechanism to the financial year 2009 would
have resulted in no adjustment of the contractual payments made to DSB.
(58) Commission Decision 2005/842/EC of 28 November 2005 on the application of Article 86(2) of the EC Treaty to State aid in the form
of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest
(OJ L 312, 29.11.2005, p. 67, ELI: http://data.europa.eu/eli/dec/2005/842/oj); see in particular Article 5(4).
(59) Judgment of the Court of First Instance of 12 February 2008, British United Provident Association Ltd (BUPA), Case T-289/03,
ECLI:EU:T:2008:29, paragraph 214.
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(157) DSB’s profit after tax concerning public service activity in 2009, based on its 2009 annual report and without
taking into consideration affiliated and associated companies(60), was as follows (in DKK millions):
Table 6
(158) Actual profit after tax, PSO(61)only (159) 206
(160) Equity, PSO only (161) 4 399
(162) Reasonable profit at 6 % (i.e. actual profit is lower than (163) 264
reasonable profit)
6. COMMENTS FROM DSB
(164) DSB indicates that it agrees with all of the Danish authorities’ comments and confines itself to examining whether
the Commission may require recovery of the aid if it were to conclude that the public service contracts involve
State aid that is incompatible with the internal market.
(165) DSB considers that the recovery of such aid, in this case, would be contrary to the principle of the protection of
legitimate expectations, thus obstructing the application of Article 14(1) of Council Regulation (EC) No 659/1999
of 22 March 1999 laying down detailed rules for the application of Article 93 of the EC Treaty (‘the 1999
Procedural Regulation’).
(166) First, DSB does not agree with the Commission’s interpretation of Article 17 of Regulation (EEC) No 1191/69 as set
out in the Opening Decision, according to which the notification exemption laid down in that provision applies
solely to compensation for public service obligations imposed unilaterally and not to public service contracts(62).
(167) Second, DSB considers that it could legitimately take the view that the contractual payments from the Danish
Government relating to the 5-year and 10-year contracts did not constitute State aid. It considers that the situation
was not clear regarding the controls to be carried out to verify the existence of State aid in the field of land
transport. DSB takes the view that it is necessary to go back to the time when the transaction took place to assess
whether the Danish Government granted an advantage to DSB. The fact that there may be a degree of uncertainty
concerning the costs to the service provider and other possible sources of revenue could not in itself lead to the
State being prevented from concluding an agreement at a price reflecting the market conditions. According to DSB,
any agreement generally involves some uncertainty, and, in normal contractual relations, it is the undertaking which
takes on that risk. An arrangement in which DSB alone bears the risk of unforeseen fluctuations in ticket sales or
expenses would, more than any other, give DSB an incentive to improve its services and to attract more
travellers(63), enabling the State to get the best value out of the contractual payments it makes to DSB, which bears
the risk in the event of a decline in performance, for example due to poor management or loss of revenue. DSB is
therefore of the view that, at the time when the two contracts were concluded, the State acted as a rational investor
optimising its options for obtaining the best possible yield from those contracts.
(60) Based on DSB’s annual report for 2009 (see pages 80-83) and clarifications provided by the Danish authorities in 2024 according to
which the figures in the 2009 annual report account for the DSB group, including non-public service obligation related activities and
affiliated and associated companies: https://ipaper.ipapercms.dk/DSB/DSBEnglish/Reports/2009Annual/?page=1 (last accessed on
4 July 2025).
(61) Public service obligation.
(62) See recitals 119 and 120 of the Opening Decision.
(63) See, in particular, the Commission Decision of 25 January 2006, N 604/2005 – Germany – Public funding for bus operators in the
rural district of Wittenberg (OJ C 209, 31.8.2006, p. 7), recitals 78 et seq.
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(168) Third, DSB considers that it had a legitimate expectation that the contractual payments would in any case fulfil the
criteria laid down by Regulation (EEC) No 1191/69 and qualify for block exemption under that Regulation. It
expresses doubts regarding the Commission’s interpretation of Article 17 of that Regulation as set out in the
Opening Decision(64).
(169) DSB points out that Section V of Regulation No 1191/69 -which does not contain any provisions relating to the
amount of compensation- contrasts with Sections II to IV of that Regulation where public service obligations are
concerned. According to DSB, the underlying aim of Regulation No 1191/69 was to guarantee reasonable
compensation for operators. In terms of commitments entered into voluntarily, transport operators bound by
public service contracts are in a very different situation from operators on which the State unilaterally imposes
public service obligations, and this is reflected in that Regulation. In those circumstances, the Commission cannot
interpret Regulation (EEC) No 1191/69 in the light of Article 106(2) TFEU (formerly Article 86(2) TEC).
7. COMMENTS FROM DKT AS INTERESTED PARTY
7.1. Legal considerations
(170) DKT does not agree with the Commission’s preliminary views concerning the compatibility of the aid(65). It takes
the view that Regulation (EEC) No 1191/69 draws a distinction between, on the one hand, an approach based on
real costs included in Sections II, III and IV of Regulation (EEC) No 1191/69 and, on the other hand, an approach
based on the price quoted by one service provider compared with that quoted by a competitor for providing the
same service, included in Section V of Regulation (EEC) No 1191/69. According to DKT, this distinction is reflected
in the differences in nature between public service obligations and public service contracts, which are based on
different procedural requirements.
(171) Consequently, the Commission’s reasoning, based on a real cost approach and the principles associated with the
implementation of Article 106(2) TFEU (formerly Article 86 TEC), cannot be applied to the examination of a price
laid down in connection with public service contracts. DKT considers such an approach to be contrary to case-law
of the Union Courts (for example. the Combus judgment), the Commission’s practice (Community framework on
State aid in the form of public service compensation(66)) and the Opening Decision, which itself confirms the lex
specialisnature of Article 93 TFEU (formerly Article 73 TEC).
(172) Based on the observation that, in this case, the Commission intends to apply an approach based on the real costs
where public service contracts are concerned, DKT has formulated comments on that approach.
7.2. Parameters to determine the compensation amounts
(173) DKT disputes the Commission’s reasoning that the 10-year budget on which the calculation of DSB’s compensation
is based would allow the second criterion of the Altmark judgment to be fulfilled. It takes the view that those
budgets do not contain the parameters and detailed cost analysis making it possible to establish the level of
compensation required for each of the rail lines concerned.
(174) DKT considers that the information submitted by the Danish authorities to support the absence of
overcompensation is incorrect. DKT puts forward several arguments:
— DSB was able to reduce its costs significantly during participation in tendering procedures on certain lines;
— Furthermore, the public service contracts require DSB to have a sound financial situation, which reflects the
fact that the contractual payments are greater than the payments that are strictly necessary to offset costs
relating to public service obligations;
(64) See recitals 118 to 124 of the Opening Decision.
(65) See recitals 126 to 130 of the Opening Decision and 176-181 of the 2010 Decision.
(66) OJ C 297, 29.11.2005, p. 4.
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— The level of the contractual payments is not justified appropriately, and the 10-year budget was tailor-made to
guarantee DSB a certain level of profit without relying on a detailed analysis of DSB’s costs and income for
each of the lines concerned;
— The compensation system is based on an anticipated return on equity, without being limited to compensation
for additional expenditure;
— According to the calculations submitted by DKT, the main rail link between Copenhagen and Århus is
profitable, taking into account the obligations currently imposed on DSB, and should not therefore have
been the subject of a public service obligation;
— Moreover, DSB’s claimed productivity gains are not consistent with the financial data showing an increase in
staff costs in relation to income over the period concerned;
— Similarly, DKT challenges the accuracy of the DKK 1 billion reduction in the contractual payments; it claims,
rather, that the figure is DKK 647 million according to the company’s annual accounts;
— DKT claims that DSB’s targets (in train/kilometres) for the period 2000-2004 were not achieved -which would
have justified a reduction in the contractual payments- and that DSB received compensation for rolling stock
costs which it was not obliged to bear in view of the late delivery;
— Finally, DKT considers that DSB could itself have borne the costs of the financial consequences of the late
delivery of the rolling stock, particularly with regard to the replacement rolling stock, considering its
substantial profits. DKT alleges that DSB received DKK 225 million from AnsaldoBreda as compensation for
the delays, which should have been transferred to the Danish State which, according to DKT, suffered the
related loss. DSB allegedly received surplus contractual payments of DKK 104 million for rolling stock which
was not put into service.
(175) According to DKT, DSB’s high profit levels are, for the following reasons, proof that the company was
overcompensated:
— DSB’s results exceed the profit levels that a company exposed to a similar risk, namely a low risk, could
reasonably expect;
— DKT refers to a study carried out in connection with its complaint which shows that DSB’s pre-tax operating
margin (12,3 % for 1999-2004 and 12,77 % for 1999-2007) exceeds that of other rail transport companies
in Europe (2,21 %-4,47 % in the United Kingdom; 3,35 % in Sweden; 0,49-4,65 % in Germany and 0,8-3,77
% for France’s SNCF) and exceeds the level cited by the Commission in another, similar procedure(67);
— DKT considers that DSB’s profits are also far in excess of those of its domestic competitors, as far as public
service contracts are concerned (DSB (12,77 %); DSB S-tog (10,45 %); Arriva (4,39 %); Metro Service
(6,18 %));
— DKT emphasises that DSB’s profits are clearly in excess of the 6 % return on equity fixed by the Danish State
as a target for DSB, and DKT assesses these profits at DKK 3 678 million.
(176) Finally, DKT considers that the argument that the payment of dividends made it possible to avoid any
overcompensation must be disputed for the following reasons:
— Public service contracts do not contain any mechanism for refunding contractual payments in the event of
their exceeding the level that is strictly necessary for offsetting the costs of fulfilling a public service
obligation;
(67) Commission Decision of 23 October 2007, C 47/07 – Germany – Public service contract between Deutsche Bahn Regio and the
Länder of Berlin and Brandenburg (OJ C 35, 8.2.2008, p. 13).
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— In this case, the Danish State is confusing its role of investor and shareholder in a public undertaking with its
role as a public authority, which allows it to provide compensation for public service obligations;
— The collection of dividends cannot in itself cancel out either the economic effects of overcompensation or the
distortions of competition, the effects of which remain present on the market;
— The argument relating to the payment of dividends leads to discrimination between public and private
undertakings;
— The Commission’s framework for aid in the form of public service compensation provides only for the option
of carrying forward up to 10 % of an overcompensation each year(68).
— There is no direct link between overcompensation and the amount of dividends collected by the Danish State,
the principle of which was stated, moreover, in the 10-year budgets before any overcompensation was
established.
8. DENMARK’S COMMENTS ON THE OBSERVATIONS SUBMITTED BY DKT AS INTERESTED PARTY
(177) According to Denmark, DKT’s observations do not result in a different assessment of the facts in question. Denmark
maintains in particular that DSB did not receive any overcompensation.
8.1. General remarks concerning the analysis
(178) Denmark strongly disagrees with DKT’s argument that the compensation was to be determined on the basis of
analyses of the costs for each individual line. There is no legal basis which makes it possible to require that the
compensation paid under a global contract for the discharging of a public service obligation should be calculated
on the basis of analyses, at a ‘microlevel’, of each of the obligations accepted by the service provider.
(179) The Danish authorities further argue that the fixing of the level of compensation on the basis of a line-by-line
analysis is superfluous and could lead to misleading results. It would cause greater uncertainty regarding the
distribution of common charges than a summary statement of all receipts and costs connected with the discharging
of the public service obligations imposed by the contract.
(180) They point out, on the other hand, that DSB’s accounting data relating to the services related to public service
obligations may be examined independently because they are based on separate accounts.
8.2. Copenhagen-Århus link
(181) The Danish authorities do not share the view that services which can be provided without financial assistance
cannot constitute a public service obligation. The State is entitled to decide to include the provision of such
services in a service obligation that is fairly wide in scope (requirements in terms of departure times, capacity, fares,
etc.), which is the case here because this line is closely integrated with the rest of DSB’s services due to the
connecting services to the north of Århus, the connection with other lines and the splitting and combining of
trains from other sections of line.
(182) In addition, the Danish authorities have stated that the compensation paid to DSB is calculated on the basis of the
revenues and costs connected with all of its public service obligations. If lines or certain services likely to make a
profit are included, the related receipts are therefore integrated into the accounts as a whole. Consequently, the
exclusion of certain lines capable of making a profit in themselves would only result in an increase in the total aid
paid to DSB, and the inclusion of a non-loss-making line does not necessarily lead to overcompensation.
(68) Communication from the Commission, European Union framework for State aid in the form of public service compensation (2011)
(OJ C 8, 11.1.2012, p. 15).
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(183) Moreover, the Danish authorities have pointed out that DKT’s calculations concerning the Copenhagen-Århus line
are inaccurate and put forward evidence to substantiate that claim. They stress that DKT does not make it
sufficiently clear how the calculations were done, and they say they are not familiar with the figures submitted.
According to Denmark, an optimistic assessment leads to revenues on this line over DKK 300 million lower than
those cited by DKT.
8.3. Productivity
(184) The Danish authorities dispute the argument that DSB had not made significant productivity gains in 1999-2007.
They challenge DKT’s method of calculation based on a ratio between nominal staffing costs and turnover. DSB’s
turnover is influenced, however, by a number of micro- and macroeconomic factors, which means that there is no
constant proportional correlation between DSB’s production and turnover (factors: local competition, changes in
the economic situation, political priorities, inflation, changes in the social composition of passengers, etc.).
(185) The Danish authorities propose two methods for assessing the productivity of DSB’s activities:
— DSB’s production, measured in terms of the number of passenger-kilometres (increase of 1,8 % a year between
1999-2007) related to the number of employees (in full time equivalents).
— DSB’s production related to staffing costs in real terms (that is to say, corrected for wage inflation).
(186) These two methods show an increase in productivity of, respectively, 1,9 % and 2 % per year.
8.4. Reduction in the contractual payments
(187) The Danish authorities assert that the figures put forward by DKT in that regard are incorrect. The ‘contractual
payments’ appearing in DSB’s accounts and used by DKT concern both the contract concluded with the State
which is involved in this case and other payments relating to other contracts (contracts concluded by DSB in
Sweden; a contract with Hovedstadens Udviklingsråd (HUR) and a temporary transport contract on the Langå-
Struer line).
(188) They explain that the reduction of DKK 1 billion follows clearly from the Finance Act 2003 (Article 28.61.01,
paragraph 10). The Finance Acts 2003 and 2004 also show that the amounts which had been reduced in 2003
and 2004 were adjusted upwards. Denmark submits information showing that the total reduction amounted to
DKK 1 018 million.
8.5. Train-kilometres
(189) The Danish authorities state that the obligation provided for in the contract in terms of production of train-
kilometres is lower than the figure submitted by DKT, because account has to be taken of the tendering procedure
relating to the transport service for Central and Western Jutland in November 2003. They provide the correct
figures in a table, which show that, in total, DSB carried out 1,5 million train-kilometres more than was envisaged
in the contract, and it cannot be claimed therefore that DSB received compensation for services which were not
provided. In addition, they stress that DSB sent a quarterly report on its contractual production to the Ministry of
Transport.
8.6. DSB’s results
(190) Denmark considers that DSB’s provisional budget - based on a predicted 6 % profit ratio - was reasonable and
realistic. The fact that the profit ratio turned out to be higher than projected is due to a series of unforeseeable
circumstances, the effect of which the Danish Government eliminated by means of an extraordinary reduction in
the contractual payments on the one hand, and by collecting dividends on the other.
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(191) Moreover, the Danish authorities challenge the relevance of the data on the performance of European passenger rail
transport undertakings. They also highlight the difficulty of carrying out such comparisons (differences in capital
structure and level of capital invested, operating risks, macro-economic and structural factors influencing
undertakings’ accounting data) and cite a report by the European Commission which does not portray DSB as
being more profitable than its competitors on the European market.
(192) Moreover, Denmark does not dispute that the progression in DSB’s trading performance proved more favourable
than envisaged in the initial budgets. However, the Danish authorities provide clarification concerning the effects of
the changes in rates of taxation and submit a summary table of DSB’s results. The information submitted by the
Danish authorities shows that DSB recorded after-tax profits of DKK 670 million in 2007 and DKK 542 million
in 2008, respectively(69).
8.7. Dividend policy
(193) Denmark takes the view that, combined with a detailed budget, dividend policy is a highly effective way of guarding
against overcompensation because it is a tool which offers flexibility in avoiding overcompensation in the event that
the working hypotheses in the budget prove deficient. Dividend policy acts as an addition to the detailed budget
underlying the transport contract.
(194) The Danish authorities state that the compensation is defined in advance on the basis of a substantiated estimate of
income and costs and that it is not an unlimited resource for DSB. They also specify that if the real figures indicate a
shortfall compared with the provisional budget -for example, due to an unintended increase in costs (management
errors, increases in wages, costs or purchases) or due to a loss of income associated with a decline in business
compared with predicted levels, DSB is also unable to obtain additional compensation from the State. DSB
therefore assumes a share of the risk in the event of poor performance.
(195) Consequently, dividend policy plays the role of an additional safeguard against overcompensation in cases where the
results indicate a positive discrepancy compared with the provisional budget. It is a flexible instrument which the
State can use to ensure that a given amount is collected from the company.
(196) Denmark specifies that DSB was not able to profit from any advantage in terms of liquid assets so as to distort
competition on the market by offering other services, in particular by means of cross-subsidisation.
(197) While Denmark confirms that the dividend payments were not calculated solely to address potential
overcompensation, the amounts charged by the Danish Government clearly exceeded the differences between the
predicted and actual results. Any surplus achieved by DSB beyond the provisional figures was fully extracted from
the company in the form of dividends. Accordingly, Denmark argues that no overcompensation occurred.
9. ASSESSMENT OF THE MEASURES
9.1. Existence of aid
(198) The Commission's finding in Article 1, first paragraph, of the 2010 Decision, that the public service contracts under
review constituted State aid under Article 107(1) TFEU (formerly Article 87(1) TEC), remains valid, as that part of
the 2010 Decision was not challenged. Consequently, the existence of State aid will not be further assessed in this
decision as it has been established in the 2010 Decision.
(69) See recital 215 of the 2010 Decision.
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9.2. Lawfulness and compatibility of the aid
9.2.1. Relevant legal framework
(199) Article 93 TFEU is included under Title VI “Transport”, whose provisions exclusively apply to transport by rail, road
and inland waterway. Article 93 TFEU provides that aids shall be compatible if they ‘meet the needs of coordination
of transport or if they represent reimbursement for the discharge of certain obligations inherent in the concept of a
public service.’ This Article is a lex specialis in relation to Article 106(2)(70), and to Article 107(2) and (3) TFEU(71).
(200) Based on Article 93 TFEU, the Council adopted Regulation (EEC) No 1191/69 of 26 June 1969 concerning the
obligations inherent in the concept of a public service in transport by rail, road and inland waterway. As regards
passenger transport services, Regulation (EEC) No 1191/69 laid down the rules applicable to public service
obligations applicable in the field of rail transport services from 1 July 1969 until 2 December 2009 (included).
(201) Article 2 of Regulation (EEC) No 1191/69 defined public service obligations as ‘obligations which the transport
undertaking in question, if it were considering its own commercial interests, would not assume or would not
assume to the same extent or under the same conditions’. Public service obligations within the meaning of
Regulation (EEC) No 1191/69 consisted of obligations to operate(72), obligations to carry(73) and tariff
obligations(74). The parameters to be taken into account in the determination of the economic disadvantages
caused by the imposition of public service obligations and the compensation procedures were defined in Articles 5
and 10 to 13 of Regulation (EEC) No 1191/69. Where a transport undertaking operated not only services subject to
public service obligations but also other activities, Article 1(5) of that Regulation required separation of accounts as
well as putting into place mechanisms apt to avoid any cross-subsidisation between the public service division and
the division in charge of other activities.
(202) Council Regulation (EEC) No 1893/91(75) amending Regulation (EEC) No 1191/69 removed the possibility for
Member States to maintain or impose public service obligations on transport undertakings, except for those whose
activities were confined exclusively to the operation of urban, suburban or regional passenger transport services(76).
The amendment introduced in Regulation (EEC) No 1191/69 a new section on public service contracts, composed
of a single article (Article 14), offering the possibility for Member States to conclude public service contracts to
provide the public with adequate transport services(77).
(203) Under Article 17(2) of Regulation (EEC) No 1191/69, compensation paid to a transport undertaking in respect of
the financial burdens arising from its public service obligation was exempt from the notification obligation
provided for in Article 108(3) TFEU if that compensation satisfied the conditions laid down in Sections II, III and
IV of Regulation (EEC) No 1191/69. Such aid was regarded by that regulation as being compatible with the internal
market.
(70) See recital 3 of Regulation (EC) No 1370/2007.
(71) See recital 17 of the Communication from the Commission – Community Guidelines on State aid for railway undertakings (OJ C 184,
22.7.2008, p. 13).
(72) See Article 2(3) of Regulation (EEC) No 1191/69.
(73) See Article 2(4) of Regulation (EEC) No 1191/69.
(74) See Article 2(5) of Regulation (EEC) No 1191/69.
(75) Council Regulation (EEC) No 1893/91 of 20 June 1991 amending Regulation (EEC) No 1191/69 on action by Member States
concerning the obligations inherent in the concept of a public service in transport by rail, road and inland waterway (OJ L 169,
29.6.1991, p. 1, ELI: http://data.europa.eu/eli/reg/1991/1893/oj).
(76) Article 1(5) of the amended Regulation (EEC) No 1191/69 provided as follows: ‘However, the competent authorities of the Member
States may maintain or impose the public service obligations referred to in Article 2 for urban, suburban and regional passenger
transport services. The conditions and details of operation, including methods of compensation, are laid down in Sections II, III and IV.’
(77) See Article 14(1) of Regulation (EEC) No 1191/69.
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(204) Regulation (EEC) No 1107/70 further regulated the granting of aid for transport by rail, road and inland
waterway(78). That Regulation provided that Member States could not impose public service obligations involving
the granting of aid under Article 93 TFEU except for either tariff obligations not falling under Regulation (EEC)
No 1191/69(79)or transport undertakings or activities to which that Regulation did not apply.
(205) In the Altmark judgment(80), the Court indicated that Regulation (EEC) No 1191/69 and Regulation (EEC)
No 1107/70 were deemed to have listed exhaustively the circumstances in which the authorities of the Member
States could grant aid under Article 93 TFEU. This point was further confirmed by the Court in the Combus
judgment(81).
(206) Regulation (EC) No 1370/2007 repealed both Regulation (EEC) No 1191/69 and Regulation (EEC) No 1107/70; it
entered into force on 3 December 2009. Regulation (EC) No 1370/2007 applies only to the transport of
passengers by rail and other track-based modes and by road, excluding the transport of freight (Article 1).
Regulation (EC) No 1370/2007 defines the conditions under which competent authorities, where they impose
public service obligations or entrust the performance of such obligations to an undertaking, compensate public
service operators for costs incurred and/or grant exclusive rights in return for the discharge of public service
obligations. Article 8(2) of Regulation (EC) No 1370/2007 provides for a transitional period (from 3 December
2009 until 2 December 2019) allowing Member States to gradually comply with the provisions of Article 5 of that
Regulation concerning the award of public service contracts by rail and by road.
(207) Under Article 9(1) of Regulation (EC) No 1370/2007, public service compensation for the operation of public
passenger transport services paid in accordance with that Regulation shall be compatible with the common market
and exempt from the notification obligation provided for in Article 108(3) TFEU.
(208) In determining the applicable rules against which to assess the exemption of aid put into effect by Member States for
the discharge of public service obligations from the notification obligation pursuant to Article 108(3) TFEU, the
Union Courts ruled that on the applicable rules are the rules in force at the time the aid was paid(82). In particular,
in its judgment in Andersen(83) the Court of Justice, when ruling on the temporal application of Regulation (EC)
No 1370/2007 and Regulation (EEC) No 1191/69, indicated that the relevant date for determining the legislation
applicable for the exemption from notification of the compensation granted under a public service contract
awarded in the land transport sector is the date when the compensation was paid. The Court also indicated that the
aid paid to a public transport undertaking on the date at which Regulation (EEC) No 1191/69 was still in force and
which complied with the conditions laid down in that Regulation fell within the scope of a situation definitively
existing before the entry into force of Regulation (EC) No 1370/2007.
(209) As a result, where aid is paid in connection with a public service contract which was concluded when Regulation
(EEC) No 1191/69 was still in force, the Commission must examine the exemption from notification based on the
conditions laid down in Regulation (EEC) No 1191/69 for the compensation that was paid when Regulation (EEC)
No 1191/69 was still in force, i.e. before the entry into force of Regulation (EC) No 1370/2007 on 3 December
2009 for passenger transport services by rail and road. By contrast, as regards aid paid as from the date of entry
into force of Regulation (EC) No 1370/2007, the Commission must examine both the lawfulness and the
compatibility of such aid with the internal market in the light of Regulation (EC) No 1370/2007, and subject to the
transitional rules laid down in that Regulation(84).
(78) Regulation (EEC) No 1107/70. That Regulation was without prejudice to the provisions of Council Regulation (EEC) No 1192/69 of
the Council of 26 June 1969 on common rules for the normalisation of the accounts of railway undertakings (OJ L 156, 28.6.1969,
p. 8, ELI: http://data.europa.eu/eli/reg/1969/1192/oj) and of Regulation (EEC) No 1191/69.
(79) Within the meaning of tariff obligations laid down in Article 2(5) of Regulation (EEC) No 1191/69.
(80) Judgment of 24 July 2003, Altmark, mentioned at footnote 32, paragraph 108.
(81) Judgment of 16 March 2004, Combus, mentioned at footnote 33, paragraph 100.
(82) Judgment of 6 October 2015, Commission v Andersen, C-303/13 P, ECLI:EU:C:2015:647, paragraph 54; Judgment of 11 July 2018,
Buonotourist Srl v Commission, T-185/15, ECLI:EU:T:2018:430, paragraph 216; judgment of 11 July 2018, CSTP Azienda della Mobilità
SpA v Commission, T-186/15, ECLI:EU:T:2018:431, paragraph 216; judgment of 29 November 2018, Aziende riunite filovie ed autolinee
Srl (ARFEA) v Commission, T-720/16, ECLI:EU:T:2018:853, paragraph 132.
(83) Judgment of 6 October 2015, Commission v Andersen, mentioned at footnote 15, paragraphs 51-55.
(84) Judgment of 29 November 2018, Aziende riunite filovie ed autolinee Srl (ARFEA) v Commission, mentioned at footnote 82, paragraph 158.
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(210) In conclusion, payments made before 3 December 2009 and payments made as of that date need to be assessed
separately, based on the legislation in force when the public service compensation was paid. Therefore, the
Commission will assess the lawfulness of the aid paid before 3 December 2009 based on Regulation (EEC)
No 1191/69 and Regulation (EEC) No 1107/70 (section 9.2.2) and the lawfulness of the aid paid as of 3 December
2009 based on Regulation (EC) No 1370/2007 taking into account the transitional rules laid down in Article 8 of
that Regulation.
9.2.2. Lawfulness of the aid paid before 3 December 2009
9.2.2.1. Lawfulness of the aid paid before 3 December 2009 under Regulation (EEC)
No 1191/69
(211) According to the principles laid down by the Court in the present case(85), the Commission considers that
Regulation (EEC) No 1191/69 covers lawfulness of compensation paid until 3 December 2009 for public service
obligations in passenger transport services by rail complying with the conditions laid down in that Regulation.
(212) The scope of Regulation (EEC) No 1191/69 is defined as follows in Article 1(1) of that Regulation: ‘This Regulation
shall apply to transport undertakings which operate services in transport by rail, road and inland waterway.
Member States may exclude from the scope of this Regulation any undertakings whose activities are confined
exclusively to the operation of urban, suburban or regional services’.
(213) According to Article 1(5) of Regulation (EEC) No 1191/69, ’the competent authorities of the Member States may
maintain or impose the public service obligations referred to in Article 2 for urban, suburban and regional
passenger transport services. The conditions and details of operation, including methods of compensation, are laid
down in Sections II, III and IV’.
(214) Article 2(5) of Regulation (EEC) No 1191/69 clarifies that:
‘For the purposes of this Regulation, "tariff obligations" means any obligation imposed upon transport
undertakings to apply, in particular for certain categories of passenger, for certain categories of goods, or on
certain routes, rates fixed or approved by any public authority which are contrary to the commercial interests of
the undertaking and which result from the imposition of, or refusal to modify, special tariff provisions.
The provisions of the foregoing subparagraph shall not apply to obligations arising from general measures of price
policy applying to the economy as a whole or to measures taken with respect to transport rates and conditions in
general with a view to the organisation of the transport market or of part thereof.’
(215) In the present case, the services provided under the public service contracts (for which Denmark granted
compensation to DSB) relate to national and international rail passenger transport services operated by DSB, a
state-owned rail operator. The First Contract and the Second Contract therefore involved a transport undertaking
operating in sectors covered by Regulation (EEC) No 1191/69, and whose activities were not confined exclusively
to the operation of urban, suburban or regional services.
(216) According to Article 1(4) of Regulation (EEC) No 1191/69, Member States may conclude public service contracts
with a transport undertaking ‘in order to ensure adequate transport services which in particular take into account
social and environmental factors and town and country planning, or with a view to offering particular fares to
certain categories of passenger’.
(85) Judgment of the Court of 6 October 2015, Commission v Andersen, Case C-303/13 P, ECLI:EU:C:2015:647, paragraph 52.
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(217) The provisions applicable to public service contracts are detailed in Section V of Regulation (EEC) No 1191/69. This
section consists of a single article (Article 14), which provides that ‘[a] [public service contract] shall mean a
contract concluded between the competent authorities of a Member State and a transport undertaking in order to
provide the public with adequate transport services’ and specifies what such a contract may(86)and shall(87)cover.
(218) Article 14 of Regulation (EEC) No 1191/69 is built on the concept of ‘adequate transport services’(88). In this respect,
the Commission notes that Article 1(4) of Regulation (EEC) No 1191/69 allows Member States to conclude public
service contracts with a transport undertaking in order to ensure adequate transport services taking into account,
among others, social and environmental factors.
(219) The Court made clear that, when they are applicable, Regulation (EEC) No 1191/69 and Regulation (EEC)
No 1107/70 listed exhaustively the circumstances in which the authorities of the Member States may grant aid
under Article 93 TFEU(89), and that the compatibility with Community law of compensation payments falling
within the scope of Regulation (EEC) No 1191/69 must be assessed in accordance with the provisions laid down by
that Regulation(90).
(220) However, Regulation (EEC) No 1191/69 does not explicitly specify compatibility criteria for public service
contracts. Instead, it focuses on defining the framework for establishing public service contracts and compensating
public service obligations.
(221) In previous decisions, the Commission has therefore assessed the compatibility of public service contracts by
applying Article 14 of Regulation (EEC) No 1191/69, which establishes the framework for public service contracts
in the transport sector, outlining the key principles for their conclusion and the obligations they entail, in
conjunction with general principles established under Article 106(2) TFEU, relevant case law, and its decision-
making practice in other sectors(91). These principles require, first, the existence of a formal entrustment act that
clearly defines the public service obligations entrusted to the undertaking and the nature of the compensation.
Second, they require the absence of overcompensation, ensuring that the aid does not exceed what is necessary to
cover the net costs of fulfilling the public service obligations, including a reasonable profit. This approach ensures
that public service compensation complies with EU State aid rules and avoids undue distortions of competition in
the internal market(92).
(86) See Article 14(1) of Regulation (EEC) No 1191/69: ‘[…] A public service contract may cover notably: - transport services satisfying
fixed standards of continuity, regularity, capacity and quality, - additional transport services, - transport services at specified rates and
subject to specified conditions, in particular for certain categories of passenger or on certain routes, - adjustments of services to actual
requirements.’
(87) See Article 14(2) of Regulation (EEC) No 1191/69: ‘A public service contract shall cover, inter alia, the following points: (a) the nature
of the service to be provided, notably the standards of continuity, regularity, capacity and quality; (b) the price of the services covered
by the contract, which shall either be added to tariff revenue or shall include the revenue, and details of financial relations between the
two parties; (c) the rules concerning amendment and modification of the contract, in particular to take account of unforeseeable
changes; (d) the period of validity of the contract; (e) the penalties in the event of failure to comply with the contract’.
(88) Judgment of the Court of 17 September 1998, Kainuun Liikenne Oy, Case C-412/96, ECLI:EU:C:1998:415, paragraphs 33 and 34.
(89) Judgment of the Court of 24 July 2003, Altmark Trans GmbH and Regierungspräsidium Magdeburg v Nahverkehrsgesellschaft Altmark
GmbH,Case C-280/00, ECLI:EU:C:2003:415, paragraph 108.
(90) Judgment of the Court of 7 May 2009, Antrop, Case C-504/07, ECLI:EU:C:2009:290, paragraph 32.
(91) Commission Decision of 24 April 2008, N 332/08 – Denmark – Compensation to long-distance bus operators for discounts given to
certain types of passengers using long distance bus services (OJ C 46, 25.2.2009, p. 8); Commission Decision of 17 April 2008,
N 409/2008, N 410/2008 and N 411/2008 – Czech Republic – Acquisition and modernisation of rail rolling stock, vehicles for urban
transport and vehicles for regional transport (OJ C 106, 8.5.2009, p. 17); Commission Decision of 26 November 2008, C 3/08 –
Czech Republic – Public Service Compensation for Southern Moravia Bus Companies (OJ L 97, 16.4.2009 p. 14); Commission
Decision of 26 November 2008, C 16/2007 – Austria – Public service contract of Postbus in the Lienz district (OJ L 306 20.11.2009,
p. 26); Commission Decision of 25 June 2008, N 495/707 – Czech Republic – Programme d'acquisition et de modernisation de
matériel roulant ferroviaire (OJ C 152, 18.6.2008, p 21); Commission Decision of 30 April 2008, N 350/707 – Czech Republic –
Acquisition of buses (OJ C 140, 6.6.2008, p. 2).
(92) For a parallel application related to SGEIs, see Communication from the Commission, European Union framework for State aid in the
form of public service compensation (‘SGEI Framework’) (OJ C 8, 11.1.2012, p. 15, point 8).
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9.2.2.1.1. Entrustment act
(222) As regards the existence of an entrustment act, settled case-law provides that undertakings entrusted with the
operation of public service obligations must have been assigned that task by an act or several acts of a public
authority, the form of which may be determined by each Member State(93). These acts must provide a clear and
precise identification of the activities covered by the public service remit and the conditions under which such
activities have to be performed. The entrustment must exist before any compensation is paid.
(223) With respect to the entrustment, the application of Articles 1(4) and 14 of Regulation (EEC) No 1191/69 to public
service contracts in the rail passenger transport sector, along with the general principles derived from the Treaty,
requires the Commission to verify whether:
— the public transport service was entrusted by one or more acts of a public authority (see section 9.2.2.1.1.1);
— the object of the public service contract is covered by Article 14(1) of Regulation (EEC) No 1191/69 (see
section 9.2.2.1.1.2);
— the act of entrustment specified (a) the nature of the service to be provided (that is the ‘adequate transport
services’ identified by the Member State in respect of the standards of continuity, regularity, capacity and
quality), (b) the price of the service and details of financial relations between the two parties, (c) the rules
concerning amendment and modification of the contract, (d) the period of validity of the contract, (e) the
penalties in the event of failure to comply with the contract (see section 9.2.2.1.1.3)
9.2.2.1.1.1. Entrustment of the public transport service
(224) The contract concluded between the Danish Ministry of Transport and DSB constitutes an act of entrustment by a
competent authority of a Member State to a transport undertaking, which was concluded before the relevant
payments were made (see recital 36). Its purpose is to ensure the provision of adequate rail passenger transport
services in line with the public service remit (see recital 37). For the 2000-2004 contract, this is explicitly stated in
Article 2, which outlines the purpose and obligations for ensuring continuous transport services on predefined
routes (see recital 39). For the 2005-2014 contract, this is laid down in Articles 1.2 and 1.3, which define the
traffic plan and obligations for DSB (see recital 61).
(225) The contracts include specific provisions ensuring that the transport services meet fixed standards of continuity,
regularity, capacity, and quality. In the 2000-2004 contract, these requirements are detailed in Article 4 (see recital
41), while the 2005-2014 contract contains similar obligations in Article 3, specifying standards for passenger
services and response to demand fluctuations (see recital 65).
(226) These contracts can therefore be considered public service contracts within the meaning of Article 14 of Regulation
(EEC) No 1191/69, as they establish DSB’s responsibilities to provide adequate transport services in compliance
with public needs.
9.2.2.1.1.2. The object of the public service contracts is covered by Article 14(1) of Regulation (EEC) No 1191/69
(227) Both the 2000-2004 and 2005-2014 contracts meet the criteria set out in Article 14(1) of Regulation (EEC)
No 1191/69. They are designed to provide adequate public transport services through regional and intercity rail
operations, ensuring accessibility and reliability for passengers. For instance, the 2000-2004 contract identifies
specific routes and timetables in Annex 1 (see recital 44), while the 2005-2014 contract details the services to be
operated under the public service framework in Article 1.3, which outlines the traffic plan (Trafikeringsplan)
specifying routes, frequencies, and operating obligations (see recital 63).
(93) In the Judgment of the Court of 21 March 1974, BRT and Société belge des auteurs, compositeurs et éditeurs, Case C-127/73,
ECLI:EU:C:1974:25, paragraph 22, the Court held that an undertaking which invokes Article 106(2) TFEU in order to rely on a
derogation from the rules of the Treaty must be entrusted by the Member State with the operation of an SGEI.
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9.2.2.1.1.3. Elements specified in the act of entrustment
(a) Nature of the service to be provided (Article 14(2), lit. (a))
(i) The 2000-2004 contract
(228) The 2000-2004 contract specifies in Article 2.1 DSB’s obligation to operate regional and long-distance rail services
on predefined routes, ensuring continuity and quality (see recital 50). The Commission considers that the contract
meets the requirements laid down in Article 14(1), point (a), of Regulation (EEC) No 1191/69, as it defines in a
binding manner the nature, scope, and quality of the public service obligations imposed on DSB, including the
conditions under which these services are to be provided. In particular, the contract sets out clear requirements
regarding the continuity, regularity, capacity and quality of the services.
(229) Continuity is ensured through the specification of traffic production targets and the obligation to maintain a
consistent level of service over time. Article 7.1 of the contract stipulates the annual number of train-kilometres to
be operated, broken down by year in Table 2. These figures are based on the existing timetable and adjusted in
accordance with the contractual provisions. Article 7.2 further obliges DSB to maintain the service levels of the
1999 timetable until the implementation of the summer 2000 timetable, while Article 7.4 guarantees, from 2001
onwards, a minimum service frequency at all stations -at least one departure every two hours daily and more
frequent services on specified routes. These provisions provide for stable and continuous service throughout the
contractual period.
(230) Regularity is addressed under Articles 12.1 and 12.2, which define a minimum punctuality requirement of 90 % of
trains arriving within five minutes of the scheduled time. The performance is to be calculated using infrastructure
manager data (Banestyrelsen’s RDS system). The contract also allows the Ministry to assess and react to significant
changes in timetables or station service levels (Articles 7.3 and 7.5) ensuring that any deviations are monitored and
corrected. These mechanisms ensure the regularity of operations as required by Article 14(1), point (a), of
Regulation (EEC) No 1191/69.
(231) Capacity requirements are expressly laid down in Article 7.6, which states that DSB must ensure seating for
passengers on 90 % of peak-hour trains and 95 % of off-peak trains. It further provides that where standing
passengers are anticipated, the proportion must not exceed 20 % (with total occupancy capped at 125 %) for a
duration of no more than 30 minutes. These thresholds demonstrate that the contract defines clear and enforceable
conditions to ensure that DSB provides adequate capacity to meet public demand, as foreseen by Regulation (EEC)
No 1191/69.
(232) Quality of service is ensured through the general customer service provisions set out in Section 12 of the contract.
DSB is obliged to deliver its services in a way that meets predefined standards across the passenger experience.
Article 12.1 provides the overarching framework, while the Ministry retains control over the minimum acceptable
service standards. Moreover, under Article 7.7, DSB is required to implement continuous improvements to its
planning processes based on passenger load data and operational performance. These arrangements ensure that the
services provided are of a consistently high quality and subject to measurable oversight.
(233) In light of the above, the Commission considers that the 2000-2004 contract clearly defines the nature, scope and
quality of the public service obligations imposed on DSB, including objective and measurable conditions relating to
continuity, regularity, capacity and quality. These elements are laid down in a binding and enforceable manner and
thereby satisfy the conditions of Article 14(1) ), point (a), of Regulation (EEC) No 1191/69, permitting the
competent authority to grant compensation without infringing Article 93 TFEU.
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(ii) The 2005-2014 contract
(234) The 2005-2014 public service contract also contains detailed provisions specifying the nature, scope and quality of
the public service obligations imposed on DSB. Article 3.2 of the contract requires DSB to adjust its services in
accordance with actual passenger demand throughout the contractual period. This ensures that the transport offer
remains aligned with public needs and supports the objective of Regulation (EEC) No 1191/69 to guarantee
adequate and reliable public passenger transport services where such services would not otherwise be provided
under market conditions.
(235) Continuity of services is ensured through the planning and service framework set out in Article 1.3 of the contract.
DSB is required to establish and maintain a traffic plan (trafikeringsplan), stopping plan (standsningsplan), and line
plan (linjeplan), which collectively define the minimum scope and frequency of service to be delivered across 41
designated traffic segments. These plans are reviewed annually (Article 1.3.9), allowing for adjustments in response
to operational developments. The obligation to maintain comprehensive service coverage throughout the period
ensures compliance with the requirement in Article 14(1) that public service obligations be defined with regard to
their continuity.
(236) Regularity is addressed in Articles 1.7.4 and 1.7.5 of the contract, which establish minimum punctuality standards.
DSB is obliged to achieve at least 90 % punctuality, increasing to 93 % by 2014, with a margin of no more than five
minutes deviation from the published schedule. Deductions apply if these thresholds are not met. These obligations
are subject to performance monitoring, as detailed in the performance regime set out in the contract, thereby
ensuring enforceability and transparency.
(237) Capacity is covered by clear and measurable standards. Pursuant to Article 1.6.1 of the contract, DSB must ensure
that all passengers are seated on at least 90 % of trains during peak periods and 95 % during off-peak periods.
Where these levels cannot be achieved, DSB is required to operate relief trains or adjust services accordingly,
without entitlement to increased compensation or rolling stock deployment (Article 1.6.3). These contractual
obligations ensure that transport services are properly dimensioned to meet actual demand.
(238) Quality of service is governed by Articles 1.9.3 and 1.9.4 of the contract, which provide for regular customer
satisfaction surveys and a financial penalty regime in the event that performance falls below defined satisfaction
thresholds. These provisions link compensation to measurable quality indicators and create a continuous incentive
for the operator to maintain a high level of service.
(239) In view of the above, the Commission considers that the 2005-2014 contract fulfils the requirements of
Article 14(1) of Regulation (EEC) No 1191/69. It defines in a binding and verifiable manner the nature, scope and
quality of the public service obligations entrusted to DSB and sets objective conditions governing the continuity,
regularity, capacity and quality of the services. These parameters, together with the applicable monitoring and
enforcement mechanisms, ensure that the compensation granted under the contract is limited to what is necessary
to discharge the public service obligations and does not result in overcompensation.
(a) Price of the services covered by the contracts (Article 14(2), point (b))
(240) The 2000-2004 contract outlines the financial terms in Article 4.1, stating that DSB receives a fixed annual contract
payment from the Danish Ministry of Transport in return for fulfilling the public service obligations specified in
Articles 3.1 and 3.2 of the contract (see section 2.3.3). The contract explicitly provides that this payment is subject
to annual adjustment based on the development of the net price index (nettoprisindekset), thereby reflecting inflation-
linked cost variations over time. The amounts are specified in Table 1 of the contract and are based on DSB’s
updated ten-year budget, ensuring alignment between contractual obligations and anticipated costs. Further
adjustments may be made via supplementary agreements (tillægskontrakter), for instance in relation to new rolling
stock investments (Articles 4.2–4.5), station upgrades, or service extensions, with all such modifications requiring
prior agreement and recalculation of the compensation.
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(241) The contract also distinguishes between forecast and actual production volumes, allowing for ex postcorrections in
case of deviations from the planned traffic volume (Article 5.2). Moreover, Article 5 provides that DSB bears the
marginal cost or benefit of any changes in production, ensuring that additional compensation is not automatically
granted in case of variations in activity. These features reinforce the budgetary discipline embedded in the contract
and reduce the risk of overcompensation.
(242) Similarly, the 2005-2014 contract includes detailed financial arrangements in Article 7.1, stating that the
compensation to DSB must correspond to the net costs incurred in fulfilling the public service obligations (see
section 2.4.3). The contract is structured as a net cost contract, under which DSB retains the revenue from ticket
sales and receives a contractual payment intended to cover the gap between these revenues and the costs of
operating the agreed services. The compensation is calculated based on detailed budget forecasts and is adjusted
annually to reflect cost evolution, including indexation mechanisms linked to input cost categories.
(243) The contract also contains specific financial correction mechanisms that allow for downward or upward
adjustments of the payment in case of significant changes in operational parameters, quality indicators or
exogenous events (e.g. infrastructure disruptions), as described in the accompanying annexes. In particular,
Article 1.9.4 links part of the compensation to customer satisfaction outcomes, with penalties applied where
minimum standards are not met. Similarly, Articles 1.7.5 and 1.6.3 foresee financial consequences for
underperformance on punctuality or failure to provide required seating capacity.
(244) In both contracts, the scope of compensation is clearly limited to what is necessary for the fulfilment of public
service obligations. The Commission notes that the contracts define the services in detail, cap eligible costs, and
include mechanisms to deduct penalties or adjust payments to prevent any overcompensation. These arrangements
provide transparency, accountability, and a clear financial framework that ensures proportionality between
compensation and public service costs.
(a) Rules concerning amendment and modification of the contracts (Article 14(2), point (c))
(245) The 2000-2004 contract includes provisions enabling contractual amendments in response to changes in traffic
needs, policy priorities, or financial assumptions. Specifically, Article 4.2 provides for the conclusion of
supplementary agreements (tillægskontrakter) in order to adjust production and performance requirements resulting
from the acquisition and deployment of new rolling stock. This includes both the regional and long-distance
services covered by the contract. The same article stipulates that these adjustments are to be agreed upon by the
parties and reflected in a revised financial arrangement. Additional provisions in Articles 4.3 to 4.5 further allow
for amendments linked to the enhancement of local and regional services (e.g. nærbaner), station modernisation, or
service quality improvements (e.g. Odense-Svendborg line), and foresee a corresponding revision of the contract
payment. These mechanisms provide contractual flexibility to accommodate operational or policy-driven changes,
subject to agreement by both parties.
(246) The contract also refers, in Article 5.2, to ex postfinancial adjustments linked to variations in actual traffic volume,
ensuring that the financial flows reflect real service delivery. In the event of material changes to the expected level
of traffic or unforeseen developments (e.g. infrastructure works, reorganisation of DSB or the transport market),
the parties may renegotiate the contractual provisions, in particular the payment and production levels, via
supplementary contracts. The possibility to revise the contract is further supported by provisions in Article 8,
allowing for partial termination of the contract for lines subject to tendering and for proportional financial
adjustments to the contract amount.
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(247) The 2005-2014 contract further develops and systematises these adjustment mechanisms. In Article 10.5 of the
contract, it is explicitly stated that any amendment to the contract must be agreed in writing by both parties. This
ensures legal certainty and accountability while allowing flexibility in adapting to changing circumstances. In
addition to this general provision, the contract contains multiple trigger clauses across different articles that
anticipate specific types of modifications -such as changes in infrastructure access conditions, rolling stock
availability, or regulatory requirements. For instance, Article 1.3.9 requires annual updates to the traffic plan
(trafikeringsplan) based on actual developments, while Articles 1.6.3, 1.7.5, and 1.9.4 foresee automatic financial
consequences in case of underperformance, quality shortfalls, or changes in capacity requirements.
(248) These mechanisms are embedded in a contract structure that combines fixed obligations with adaptable tools,
enabling the Danish authorities and DSB to respond jointly to evolving operational, financial or regulatory needs
without undermining the enforceability of the contract or the transparency of the compensation. This contractual
design balances flexibility and predictability, thereby supporting the long-term provision of public service
obligations under changing conditions.
(a) Period of validity of the contracts (Article 14(2), point (d))
(249) The period of validity is explicitly defined in both public service contracts concluded between the Danish Ministry
of Transport and DSB.
(250) In the case of the 2000-2004 contract, Article 19.1 states that the contract applies for a fixed term from 1 January
2000 to 31 December 2004 (see recital 47). This five-year period corresponds to the political framework agreement
concluded on 26 November 1999, as referenced in Article 2.1, which sets out the basis for the contract’s
operational and financial commitments, including planned investments in new rolling stock and service
extensions. The defined contract duration reflects the anticipated life cycle of those measures and provides a clear
temporal framework for the delivery of the public service obligations.
(251) The 2005-2014 contract similarly establishes a clearly defined term. Article 1.1 of the main agreement specifies
that the contract is valid from 1 January 2005 until 31 December 2014, covering a ten-year period (see recital 71).
This duration is aligned with the underlying budgetary and investment planning cycle and is intended to support
long-term service stability, including major infrastructure and rolling stock developments foreseen under the
agreement.
(252) In both contracts, the start and end dates are set out unambiguously, providing legal certainty for the contracting
parties and for the purposes of public control. The contracts do not contain automatic renewal clauses, and any
extension or modification of the validity period would require the conclusion of a new agreement or a
supplementary contract. The fixed-term nature of the contracts is further supported by the inclusion of adjustment
and amendment mechanisms (e.g. tillægskontrakter) that allow for operational flexibility within the defined
contractual timeframe without altering its duration.
(253) Accordingly, both contracts meet the requirement laid down in Article 14(2), point (d), of Regulation (EEC)
No 1191/69, which stipulates that public service contracts must indicate their validity period.
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(a) Penalties (Article 14(2), point (e))
(254) Penalty provisions are detailed in both contracts. The 2000-2004 contract includes penalties for service disruptions
in Article 13, specifying financial deductions for non-compliance (see recital 46). The 2005-2014 contract
elaborates further in Article 8.1, outlining detailed conditions under which financial penalties or reductions in
compensation will be applied, ensuring DSB’s accountability in meeting contractual obligations (see recital 69).
Article 8.1 defines the penalties for poor punctuality, setting performance benchmarks and financial deductions for
non-compliance with service reliability and punctuality requirements. Specifically, if the percentage of trains
arriving on time falls below a set benchmark, DSB is subject to financial penalties. The level of deduction is
proportional to the degree of deviation from the punctuality target. The calculation method and thresholds are
predefined, ensuring legal certainty and enforceability. In addition to punctuality-related deductions, the contracts
also include service interruption penalties and deductions. These apply in the event of service cancellations or non-
performance attributable to DSB. In particular, the contracts foresee deductions from compensation if DSB fails to
deliver the agreed number of train-kilometres or meet specified service quality levels. These deductions are
calculated ex post and are integrated into the annual financial settlement between DSB and the Ministry of
Transport. The design and implementation of these penalty mechanisms comply with Article 14(2)(e) of
Regulation (EEC) No 1191/69, which requires that public service contracts define the sanctions applicable in case
of non-performance or inadequate performance of contractual obligations. The system in place meets this
requirement by establishing objective, quantifiable indicators for punctuality and service volume, and linking them
to enforceable financial consequences. As such, both contracts provide the competent authority with a reliable and
proportionate means to enforce compliance and protect the quality of public transport services delivered under the
contract.
9.2.2.1.1.4. Conclusion
(255) The 2000-2004 and 2005-2014 contracts fulfill all requirements under Articles 1(4) and 14 of Regulation (EEC)
No 1191/69. They clearly define the entrustment of public service obligations to DSB(94), specifying the nature of
the services, financial arrangements, amendment procedures, validity periods, and penalties. As such, they
constitute valid entrustment acts under the EU State aid framework, providing a comprehensive framework for the
operation of public rail passenger services.
9.2.2.1.2. Requirements under Sections II, III and IV of Regulation (EEC) No 1191/69
(256) The Commission observes that Section II of Regulation (EEC) No 1191/69 sets out specific rules for the early
termination or maintenance of public service obligations, and that Section III concerns transport rates and
conditions imposed in the interest of one or more particular categories of persons. Thus, the Commission
considers that neither section is applicable to the present public service contract(95). Therefore, only compliance
with the relevant provisions of Section IV of Regulation (EEC) No 1191/69 needs to be assessed.
(257) Section IV, consisting of Articles 10 to 13, provides for common compensation procedures for payments made in
respect of the financial burdens resulting from the public service obligations. In the following, the Commission will
assess compliance of the public service contracts with those provisions.
(94) The entrustment is with respect to both contracts clearly defined in line with the judgment of the Court of 20 December
2017, Comunidad Autónoma del País Vasco and Othersv Commission, Cases C-66/16 P to C-69/16 P, ECLI:EU:C:2017:999, paragraph 56;
and the judgment of the Court of 17 September 1998, Kainuun Liikenne Oy, Case C-412/96, ECLI:EU:C:1998:415, paragraphs 33
and 34.
(95) It cannot be deduced from the wording of Article 1(5) of Regulation No 1191/69 that every provision in Sections II to IV thereof
applies to both the maintenance and imposition of public service obligations (see judgment of 3 April 2014, CTP – Compagnia
Trasporti Pubblici SpA, Joined Cases C-516/12 to C-518/12, ECLI:EU:C:2014:220, paragraph 33). The reference to Sections II, III and IV
can only be to those provisions that are applicable to the obligations in question.
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9.2.2.1.2.1. Article 10 of Regulation (EEC) No 1191/69
(258) Article 10(1) of Regulation (EEC) No 1191/69 sets out the methodology for calculating the compensation amount.
For obligations to operate or to carry, the first subparagraph of that provision requires a comparison of the actual
situation with a counterfactual scenario. The second subparagraph relies on the net cost methodology, providing
that the amount of the compensation must be equal to the difference between the costs which can be allocated to
the public service activity of the undertaking and the corresponding revenues. According to Article 10(1) second
subparagraph of Regulation (EEC) No 1191/69, the latter approach is used in cases where, for the purpose of
calculating the economic disadvantage emanating from the provision of the public service, the total costs borne by
the undertaking for its transport activities were allocated amongst the different parts of its different transport
activities.
(259) In the present case, the total costs of DSB’s transport activities were allocated amongst its commercial and public
service activities (recital 89 ff.). The Commission therefore considers the method described in Article 10(1) second
subparagraph of Regulation (EEC) No 1191/69 to be applicable in this case. Even though Article 10(1) does not
make reference to a reasonable profit as being part of the compensation, the Commission observes that in the
Altmark judgment, the Court held that a measure does not constitute State aid if (in addition to the other three
Altmark criteria) “the compensation does not exceed what is necessary to cover all or part of the costs incurred in
discharging the public service obligations, taking into account the relevant receipts and a reasonable profit for
discharging those obligations.” The Commission therefore considers that, if a compensation including a reasonable
profit does not confer an advantage under the Altmark conditions, a fortioria compensation including a reasonable
profit could be considered compatible aid. Thus, if such a compensation fulfils the relevant requirements set out in
Regulation (EEC) No 1191/69, that compensation will constitute compatible aid. On those bases, the Commission
concludes that compensation payments under a public service contract falling within the scope of Regulation (EEC)
No 1191/69 may therefore include a reasonable profit.
(260) The Commission therefore needs to assess, whether the level of compensation was limited to the amount needed to
cover the costs entailed by fulfilling a public service obligation, including a reasonable profit.
(a) No cross-subsidisation between DSB’s activities
(261) With respect to DSB’s activities, the Commission notes that the public service obligation compensation is accounted
for in DSB SOV. For the purpose of this Decision, this activity will in the following be called “Business area A”.
(262) In addition to the public service obligation activities, DSB SOV also has some minor commercial activities
(accounting for 3,85 % of DSB SOV’s profit after taxes on aggregate terms for the period 2000-2009(96)). Such
activities include the sale of fuel to other operators from DSB’s fuel stocks, rental of buildings to external parties at
DSB’s stations, and the sale of commercial advertisement space. For the purposes of this Decision, these activities
will in the following be called “Business area B”. They are recorded in a separate account.
(263) The DSB Group has also other purely commercial activities which are placed in affiliated and associated companies
(25,38 % of DSB SOV’s profit after taxes on aggregate terms for the period 2000-2009). Among others, these
companies perform DSB's foreign activities (e.g., DSB Roslagstäg AB and DSB Tågvärdsbolag AB) and sales of kiosk
and restaurant goods (e.g., DSB Kort & Godt A/S (previously DSB Detail A/S)). DSB does not receive any public
service obligation payment for these activities. In DSB SOV’s accounting, the results from affiliated and associated
companies are booked as a financial income and hence contribute to the overall accounting result of DSB SOV. It is
therefore necessary to subtract the results from the affiliated and associated companies from DSB SOV to establish
the result of the public service obligation.
(96) The 2000-2009 period was chosen to reflect the period for which the 2010 Decision’s analysis was annulled, including the last
payment of December 2009.
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(264) In this context, it should be noted that the Commission is assured that no cross-subsidisation occurred (see recitals
15, 76, 89, 190). This assurance arises from the fact that the calculation of costs and revenues was conducted in
compliance with the applicable tax and accounting regulations. The legal framework governing DSB, including
accounting standards and national competition rules, mandates the maintenance of separate accounts for its
various activities. Consequently, the contractual payments made to DSB under the public service contracts are
segregated from the accounts of other commercially based activities, thereby effectively precluding cross-
subsidisation. DSB’s annual reports, which are externally audited, include a clear overview of the annual product
accounts. These annual product accounts are supplemented by an auditors’ report from DSB SV’s State-authorised
public accountants expressing an opinion as to whether DSB SOV has kept its accounts and conducted its business
activities in accordance with the respective regulatory requirements.
(a) Amount of compensation
(265) In its Opening Decision(97), the Commission expressed concerns about the possibility that the compensation
provided to DSB may have exceeded the amount necessary to cover the costs incurred in fulfilling the public
service obligations. These concerns specifically relate to a) DSB's surplus profits, b) delays in the delivery of rolling
stock, and c) the Copenhagen–Ystad link. Consistent with its 2010 Decision(98), the Commission will in the
following assess the existence of overcompensation in relation to each of these elements.
(266) As a preliminary comment, it should be noted that, in line with the Commission’s assessment in the 2010 Decision,
the Commission adopts an ex post approach to assess the presence of any overcompensation in excess of the
dividends paid by DSB to the Danish State in relation to the public service obligation activity. In 2010, the
Commission’s assessment was based on the Group’s level figures. In the present assessment, the Commission
adopts a narrower approach by isolating the figures attributable to the public service obligation activity only
(carried out by Business Area A).
(i) DSB’s surplus profits
(267) The Commission has examined the changes in DSB’s equity capital and profits, as far as its public service activities
(Business area A) are concerned for the term of the contracts in question. That examination is based on the detailed
analysis of DSB’s financial situation over the period 2000-2009, by analysing DSB’s public annual reports and the
clarifications provided by the Danish authorities in the context of the formal investigation procedure.
(268) Contrary to the complainant's (DKT’s) view that the contractual payments were tailored to guarantee DSB a certain
level of profit without detailed cost analysis (see recital 168), the Commission's assessment demonstrates that DSB’s
financial position evolved due to external economic factors, tax reforms, and adjustments in depreciation rules
rather than excessive compensation. The Commission takes note in particular of the information provided by the
Danish authorities to explain these changes in relation to the 10-year budgets, particularly with regard to the
establishment of DSB’s founding budget in 1999 and the modification of certain accounting rules and of the level
of taxation. The changes in depreciation, financial management or interest rates are also explained by Denmark
(see recitals 48 et seq.). In contrast to what the complainant claims (see recital 168), the compensation system was
in consequence not based on an arbitrary anticipated return on equity but rather on an established method of
financial planning.
(97) See recital 81 of the Opening Decision.
(98) See recitals 333 et seq. of the 2010 Decision.
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(269) The Commission considers acceptable the level of 6 % Return on Equity (‘ROE’) set as a reasonable profit on top of
the costs incurred in discharging the public service obligation(99). The Commission’s conclusion is based on a range
of indications based on the information available to it in order to assess whether the level of profit is reasonable.
Contrary to the complainant's (DKT’s) argument that DSB's profit levels exceeded those of comparable European
railway operators (see recital 168), a comparative study(100)indicates that DSB's profitability was within the range
of its peers. Indeed, while some operators exhibited lower margins, others achieved significantly higher levels of
profitability, demonstrating that DSB's financial performance was not an outlier. The Commission’s assessment is
based in particular on a study of the situation of rail undertakings in Europe(101) which presents, among other
things, a comparison of the economic profitability(102) of rail undertakings in 2004. According to that analysis,
DSB’s ROE in 2004 (9 %) corresponds to a return on assets (‘ROA’) of 3 % for the company(103). Given that the
ROE metric does not account for very different capital structures of companies, looking at economic profitability
measures such as the ROA provides a good additional benchmark. The study shows that DSB’s ROE (9 %) and ROA
(3 %) are aligned with the resulting median ROE (8,7 %) and ROA (2,5 %) for all European passenger railway
companies assessed. The study also shows that some rail undertakings had low or even negative levels of economic
profitability during the period (PKP, Eurostar, NSB), while several undertakings on the other hand had levels of
economic profitability significantly higher than DSB (Arriva Tog a/s, Chiltern Railways, Arriva Trains Wales, Great
North Eastern Railway, DB Regio AG). In addition, in 2008 the Danish State submitted to the Commission an
independent report by KPMG(104)that includes an industry benchmarking between 2004 and 2006 covering DSB
and two of its peers: Arriva and SJ. The benchmarking on both a ROE- and ROA-based methodology confirms that
DSB’s profit levels did not exceed those of Arriva and SJ between 2004 and 2006.
(270) To determine whether DSB received surplus profits, the Commission adopted an ex postapproach, analysing DSB's
actual financial results from 2000 to 2009. Although an ex-ante assessment - evaluating the forecasted costs of
fulfilling the public service obligation plus a reasonable profit - is in principle the primary way the Commission
assesses the presence of a possible overcompensation in public service contracts, the Commission deemed it more
robust in the case at hand to use an ex postapproach instead of relying on the sole ex anteassumptions underlying
DSB's 10-year budget which lack sufficient detailed substantiation and specific inputs used for the budget
forecasting exercise (incl. breakdown of costs for instance).
(271) Between 2000-2009, the actual after-tax profits made by Business area A, excluding associated and affiliated
companies as per financial accounting structure (explained in recitals 257 to 258), amount to DKK 4 669 million.
(272) To determine the surplus profits made by DSB related to the public service obligation, the Commission estimates
the difference between the actual after-tax profits made between 2000 and 2009 by DSB and the reasonable return
set at 6 % ROE in relation to the public service obligation.
(99) As set out in recitals 132 and 133, the assumption of a 6 % ROE as a reasonable profit is taken for both public service contracts and
underlying budgets. In line with the ex postapproach taken for the assessment of any potential overcompensation, as explained in
recital 265, the Commission checked the ex postlevels of profits posted by DSB vis-à-vis its peers in different years (where available).
(100) Analysis of the financial situation of railway undertakings in the European Union’, by ECORYS for the European Commission,
February 2006.
(101) Ibidem.
(102) The Commission carries out its comparisons in particular on the basis of economic profitability (ROA – return on assets) in order to
avoid the problems of comparability associated with wide differences in debt/equity structures between rail undertakings.
(103) These figures refer to DSB SOV, including Business Area B. Therefore, the actual ROE and ROA in 2004 of Business Area A are lower
than the ones indicated in the study. The actual ROE figures for Business Area A will be outlined further in the Commission’s
assessment below.
(104) Report on alleged State aid to DSB SV, KPMG, 30 January 2008.
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(273) The 6 % ROE reasonable profit for Business area A is determined by multiplying 6 % by the equity share attributable
to Business area A from 2000 to 2009. The equity share attributable to Business area A is derived from DSB’s
annual accounts by subtracting the equity tied up in affiliated and associated companies from the equity in DSB
Parent Company (DSB SOV). The Commission notes that the Danish authorities have confirmed this approach.
Table 7
Danish authorities’ submissions related to the equity share of Business area A for
DSB, 21 October 2024
(274) Considering the equity share attributable to Business area A, the 6 % ROE reasonable profit for Business area A
between 2000 and 2009 amounts to DKK 3 448 million.
(275) The Commission therefore notes that the after-tax profits of Business area A of DKK 4 669 million over the period
2000-2009, exceeded the level required to cover the costs incurred in fulfilling the public service obligation,
including a reasonable profit of 6 % ROE (DKK 3 448 million) by DKK 1 221 million. This surplus amount
therefore represents the excess profit received by DSB in relation to the public service obligation during the
2000-2009 period.
(276) The Commission observes that it is not disputed by the Danish authorities that DSB achieved higher levels of
profitability than initially forecasted in the 10-year budgets of 1999 and 2005 upon which the calculation of the
public service compensation was based.
(277) The Commission further notes, however, that, according to the Danish authorities, those surplus profits did not lead
to an excessive accumulation of capital for DSB beyond what was initially planned in the budget. The Danish
authorities argue that the surplus profits were instead returned to the Danish State through dividend payments.
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(278) The Commission therefore evaluates whether this is the case by computing the difference between the dividends
paid in excess, if any, and the surplus profits received by DSB in relation to the public service obligation(105). If this
difference is found to be zero or positive, it can be concluded that no surplus profit was kept by DSB in relation to
its public service obligation and that overcompensation can therefore be excluded.
(279) To assess whether any excess dividends were paid by DSB to the Danish State based on the profits of Business Area
A between 2000 and 2009, the Commission computes the difference between the actual dividends paid and the
reasonable dividends paid to the Danish State in relation to Business area A. If this difference is positive, it can be
concluded that DSB paid excess dividends to the Danish State in relation to its public service obligation. As will be
elaborated below, the Commission presents two possible methodologies to estimate the excess dividend paid.
(280) The Commission observes that DSB paid the Danish State DKK 5 212 million in dividends between 2000
and 2009. From this total amount, the Commission estimates that DKK 3 596 million can be attributed to the
profits generated by Business area A. This amount is computed by multiplying the proportion of Business area A’s
after-tax profits by the total dividend payments made during the 2000-2009 period(106).
Table 8
Commission’s calculations on the basis of DSB annual accounts and information received by the
Danish authorities on 21 October 2024 and 26 November 2024
(281) The Commission then estimates the expected reasonable dividend payments by multiplying the 6 % ROE reasonable
profit by a fixed dividend payout ratio of 50 %.
(105) Compared to the 2010 Decision in which the entirety of the dividends paid was considered, in the present Decision the Commission
adopts a narrower approach by estimating the excess dividends paid by DSB to the State in relation to the public service obligation.
This represents a conservative approach given that a lower amount of excess dividends is compared to DSB’s surplus profits.
(106) This methodology follows the rationale that dividends are paid in relation to the level of profits made.
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(282) The 50 % fixed dividend payout ratio represents the ‘reasonable’ or ‘expected’ dividend payments to be made by DSB
to the Danish State in line with the assumption of the dividend collection rule of half of DSB’s after-tax profits
included in the 10-year forward budget(107). The Commission analysed all DSB’s annual reports between 2000
and 2009 (using an ex postapproach) and confirmed that in many reports the ordinary dividends were based on 50
% of the year’s profits.
(283) As mentioned in recital 273, to determine the excess dividend payments to the Danish State related to Business area
A only, the Commission considers two possible methodologies.
(284) The first methodology to determine the excess dividend payments to the Danish State related to Business Area A
consists in computing the excess dividend payments at the level of the DSB Group, and then adjusting the result for
Business Area A’s profit share. The calculation steps are the followings. The reasonable dividend payment is
computed by multiplying the fixed payout ratio of 50 % by the yearly reasonable profit at DSB Group level which
is 6 % of DSB Group’s equity. The reasonable dividend payment at DSB Group level is then subtracted from the
actual dividend payment at DSB Group level to determine the excess dividend at DSB Group level. The resulting
excess dividend at DSB Group level is then multiplied by the Business area A’s share of DSB Group’s profits to
determine the excess dividend payment to the Danish State related to Business area A between 2000 and 2009.
Under this methodology, the resulting excess dividend amounts to DKK 2 045 million.
Table 9
Commission’s calculations on the basis of DSB annual accounts and information received by the
Danish authorities
(285) The second methodology to determine the excess dividend payments to the Danish State related to Business area A
consists in computing the excess dividend payments directly at the level of Business area A. The calculation steps are
the following. The reasonable dividend payment is computed by multiplying the fixed payout ratio of 50 % by the
yearly reasonable profits for Business area A only which is 6 % of Business area A’s equity. The reasonable dividend
payment at Business area A level is then subtracted from the actual dividend payment considered for Business area
A’s profit share to determine the excess dividend at the level of Business area A. Under this methodology, the
resulting excess dividend amounts to DKK 1 872 million.
(107) The Danish Government’s dividend policy was set out in Finance Act No 249/1999. The starting point of the dividend policy is that
the dividends should amount to half of DSB’s surplus after tax. This is also outlined in recitals 101-108 of the 2010 Commission
Decision.
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Table 10
Commission’s calculations on the basis of DSB annual accounts and information received by the
Danish authorities
(286) The Commission therefore notes that, under either methodology presented above, the excess dividends paid to the
Danish State for Business Area A between 2000 and 2009 exceed the surplus profit amounting at DKK 1 221
million (see recital 269) received by Business area A for carrying out the public service obligation activities.
Contrary to the DKT's assertion that the high level of DSB's profits proves overcompensation, this confirms that no
surplus profit was kept by DSB in relation to its public service obligation and that overcompensation can therefore
be excluded. Under the first methodology (see recital 278), the difference between the excess dividends paid to the
Danish State and the surplus profit received by Business area A amounts to DKK 824 million. Under the second
methodology (see recital 279), the difference between the excess dividends paid to the Danish State and the surplus
profit received by Business area A amounts to DKK 651 million(108).
(287) The assessment conducted by the Commission includes all payments received from DSB under the public service
obligation from 2000 to 2009. Therefore, both periods before 3 December 2009 and between 3 and 31 December
2009 are included in the analysis.
(288) Although only the period up to 3 December 2009 is subject to the present assessment, the Commission takes note
of the Danish authorities’ argument that singling out parts of the Commission’s assessment based on different
payments and periods would be a rather artificial exercise. However, to isolate the above-presented assessment
specifically for the period before 3 December 2009 only, the Commission considers the following methodology
that has also been proposed by the Danish authorities. The compensation under the public service contracts from
the Danish State to DSB was made on a yearly basis in twelve equal monthly instalments. Each instalment was paid
on the 21stof each month, or the following working day if the 21stfell during a weekend or a public holiday. While
the dividend payments cannot, in themselves,be allocated to balance out specific monthly compensation payments
for each year, the Commission acknowledges that in principle a pro rata share of the difference between the
calculated surplus profits before dividends and the excess dividend payment attributable to the public service
obligation activities could reasonably be said to relate to the period from 1 January 2000 until 3 December 2009.
(108) The conclusions do not change also when considering the time value of money. The Commission performed this check by applying
different values for a theorical weighted average cost of capital of DSB. The Commission also performed other sensitivity analyses by
using the reference and discount rates for Denmark published on the Commission’s website here:
https://competition-policy.ec.europa.eu/state-aid/legislation/reference-discount-rates-and-recovery-interest-rates/reference-and-
discount-rates_en(last accessed on 4 July 2025).
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(289) Taking a pro rata share of the results under both methodologies presented above would consequently amount
to 1/10 of the total (DKK 82 million or DKK 65 million) for a single year and 1/12 of this sum for a single month
(DKK 7 million or DKK 5 million) and 1/22 of this monthly sum per working day (DKK 0,31 million or DKK 0,25
million). The Commission therefore notes that the pro rata excess dividends paid to the Danish State in relation to
the public service obligation and only related to the period before 3 December 2009 exceed the surplus profits
generated by DSB Business area A. The Commission will perform a similar assessment for the single payment made
by the Danish State to DSB on 21 December 2009 in the section below.
(290) As already stated in the 2010 Decision, the Commission does -as a general principle- not consider dividends to be
an appropriate mechanism to address overcompensation(109). Dividends are dependent on shareholder decisions
and lack the automatic nature required to adjust public service compensations and prevent overcompensation in a
structured and predictable manner. Additionally, dividends are typically collected later in the financial cycle than
compensation corrections, further limiting their suitability.
(291) However, as established in the 2010 Decision, dividends may effectively serve as a de factoclawback mechanism to
address overcompensation under specific circumstances. The Commission considers that this is possible when the
following conditions are met: (1) the decision to pay dividends originates from the State, using its control as the
sole shareholder; (2) dividends function in practice to return surplus profits, reducing the risk of
overcompensation; and (3) the undertaking does not derive financial benefits from surplus funds temporarily held,
such as increased equity, acquisitions, or preferential loans(110).
(292) These aforementioned conditions are fulfilled for the period 2000-2009 (see also section 2.5 of the present
Decision and recitals 101 to 109 of the 2010 Decision):
— The Commission notes that the decision to pay dividends originated from the Danish State, which wholly
owns DSB, rather than from DSB's management. The Danish authorities provided evidence that the State
used its position as sole shareholder to ensure the collection of dividends. This is demonstrated by the
inclusion of additional dividend payments in the State’s budget planning, reflecting its control over the
process. As such, the decision to pay dividends was driven by the State’s objective to extract surplus funds
from DSB.
— The Commission observes that the additional dividends paid by DSB between 2000 and 3 December 2009
exceeded the surplus profits arising from the public service obligation by a significant margin, ranging
between 53 % and 68 %, depending on the methodology used (see recitals 278 and 279). While dividends
were not explicitly structured as a clawback mechanism, their practical effect ensured that surplus profits
were returned to the Danish State and were not retained by DSB. This aligns with the principle that, in
certain circumstances, dividends may be accepted as a practical means of addressing overcompensation(111).
— The Commission further notes that DSB did not derive any financial benefit from the surplus funds. The
Danish authorities demonstrated that the surplus profits were not used to increase DSB’s equity, fund
acquisitions, or obtain loans on more favourable terms. The dividends collected by the Danish State
effectively neutralised the economic effects of surplus profits, ensuring that DSB did not benefit financially
from funds temporarily held.
(293) The Commission concludes that the additional dividends paid by DSB between 2000 and 3 December 2009
effectively corrected any overcompensation resulting from the surplus profits. The Danish State’s control over the
dividend payments and their alignment with the objective of returning surplus profits ensured that the public
service compensation granted to DSB did not result in overcompensation.
(109) See recital 345 of the 2010 Decision.
(110) See recital 258 of Commission Decision (EU) 2019/115 of 10 July 2018 on the measures SA.37977 (2016/C) (ex 2016/NN)
implemented by Spain for Sociedad Estatal de Correos y Telégrafos, S.A. (OJ L 23, 25.1.2019, p. 41, ELI: http://data.europa.eu/eli/dec/
2019/115/oj).
(111) See recitals 258 et seq. in ibid.
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(294) In conclusion, the Commission finds that the aid granted to DSB during the period between 1 January 2000 and
3 December 2009 is compatible with the internal market under Regulation (EEC) No 1191/69. The dividends paid
by DSB to the Danish State effectively prevented overcompensation, ensuring compliance with the principles
governing State aid.
(ii) Delays in the delivery of rolling stock
(295) The overcompensation in relation to the delays of the delivery of rolling stock as asserted in the 2010 Decision has
in the meantime been paid back to the Danish State in line with Article 3 of the 2010 Decision, which states that
“[a]ny compensation due to DSB from AnsaldoBreda on account of the late delivery of rolling stock should be
repaid to the Danish State.”
(iii) Specific case of the Copenhagen - Ystad link
(296) As established in the 2010 Decision, the Commission thoroughly examined whether DSB received an advantage
through public service compensation for operating the Copenhagen–Ystad link(112). The Commission concluded
that, between 2000 and 2004, no public financing was provided for the operation of this line until its inclusion in
the public traffic scheme in 2002, and even then, no additional compensation was granted.
(297) The Commission also found that the inclusion of this line expanded DSB’s obligations without increasing
contractual payments under the public service contract, thereby eliminating the possibility of overcompensation.
Furthermore, any potential revenues from the line were already accounted for in DSB’s overall public service
compensation, as assessed in the broader examination of overcompensation for the period 2000-2004(113).
(298) Regarding the coordination with Bornholmtrafikken A/S for ferry services, the Commission determined that pricing
arrangements were non-discriminatory and aligned with specific commercial objectives(114). These arrangements
did not confer any advantage on DSB compared to competitors, nor did they result in overcompensation.
(299) In light of these considerations, the Commission reaffirms its conclusion that the public service compensation for
the Copenhagen-Ystad link was calculated in accordance with applicable rules and is compatible with the internal
market.
(iv) Conclusion
(300) In light of the above, the Commission concludes that DSB’s surplus profits demonstrate that the contractual
payments exceeded the level necessary to compensate for the costs incurred in fulfilling the public service
obligation under both public service contract, including a reasonable profit. However, in the specific circumstances
of this case, the collection of additional dividends by the Danish State - amounting to significantly more than the
surplus profits - effectively neutralised any overcompensation. As a result, the surplus profits were returned to the
State, and DSB did not retain or benefit from these funds. Payments for public service contracts made before
3 December 2009 are therefore considered compatible with the internal market.
9.2.2.1.2.2. Article 11 of Regulation (EEC) No 1191/69
(301) No tariff obligation exists in the present case. Therefore, Article 11 of Regulation (EEC) No 1191/69 is not
applicable.
(112) See recitals 375 to 385 of the 2010 Decision.
(113) See recital 378 of the 2010 Decision.
(114) See recitals 380 to 383 of the 2010 Decision.
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9.2.2.1.2.3. Article 12 of Regulation (EEC) No 1191/69
(302) Article 12 of Regulation (EEC) No 1191/69 provides that the costs resulting from the public service ‘shall be
calculated on the basis of efficient management of the undertakings and the provision of transport services of an
adequate quality.’
(303) In the case of the 2000-2004 contract, the compensation amounts were determined on the basis of a ten-year
financial plan prepared by DSB and approved by the Danish Parliament’s Finance Committee. The contract
specifies in Article 4.1 and Annex 1 that the compensation was designed to cover the expected costs of fulfilling
the defined public service obligations and contains safeguards to align compensation with actual output.
Article 5.2 foresees adjustments based on deviations between planned and realised traffic volumes. Furthermore,
minimum service levels and quality obligations are defined, including requirements on punctuality (90 % of trains
arriving on time) and seating availability (90 % in peak and 95 % in off-peak periods), as set out in Articles 7.4
and 7.6. Moreover, since DSB retains the revenue from ticket sales, it is incentivised to optimise efficiency and
maintain quality in order to attract and retain passengers. In light of these provisions, the Commission considers
that the 2000-2004 contract allows for the calculation of compensation in a manner that is compatible with the
principles of efficient management and adequate service quality under Article 12.
(304) The 2005-2014 contract further reinforces the link between compensation, efficiency, and service quality. The level
of compensation is determined using DSB’s internal cost models (see Annex 2 of the contract), which distinguish
between fixed and variable components and allow for cost attribution per service category. The contract includes
several mechanisms that promote efficient management. Notably, Articles 1.6.3, 1.7.5 and 1.9.4 provide for
financial deductions in case of non-compliance with core service standards, including capacity, punctuality, and
customer satisfaction. The contract also anticipates mid-term reviews to assess cost development and service
adaptation needs. Moreover, since DSB retains the revenue from ticket sales, it is incentivised to optimise efficiency
and maintain quality in order to attract and retain passengers. The Commission therefore considers that the
2005-2014 contract meets the requirements of Article 12 of the Regulation.
9.2.2.1.2.4. Article 13 of Regulation (EEC) No 1191/69
(305) Article 13 in connection with Article 6 of Regulation (EEC) No 1191/69 provides that the Member State’s
authorities must fix the amount of the compensation in advance, for a period of at least one year. In addition, those
authorities shall determine the factors which might warrant an adjustment of that amount. Adjustments of the
amount shall be made each year and payments of compensation fixed in advance shall be made by instalments.
(306) The compensation established under the 2000-2004 public service contract was determined in advance based on
DSB’s ten-year financial plan covering the period 1999-2008, as referred to in Article 4.1 and Annex 1 of the
contract. This financial plan, which served as the basis for the contractual compensation, was presented to and
approved by the Danish Parliament’s Finance Committee, thereby ensuring public scrutiny and budgetary
oversight. The annual compensation amounts were specified in the contract and adjusted each year according to
changes in the net price index (nettoprisindekset), as also provided for in Article 4.1, which ensured that the
compensation remained aligned with the actual evolution of cost levels during the contract period. Additionally,
Article 4.2 allowed the conclusion of supplementary agreements to accommodate changes in service levels,
notably in relation to new rolling stock or infrastructure improvements. These provisions meet the formal and
substantive requirements of Article 13.
(307) The 2005-2014 contract equally complies with Article 13 of Regulation (EEC) No 1191/69. Article 7.1 sets out the
annual compensation amount and confirms that it is paid in yearly tranches. Compensation is determined in
advance and calculated on the basis of budgeted net costs, taking into account retained revenue and cost
developments. Adjustment mechanisms are embedded in several parts of the contract. For example, Articles 1.3.9
and 10.5 allow for revisions to the traffic plan and the conclusion of supplementary agreements. Furthermore,
performance-related deductions are applied if quality or capacity obligations are not met, thereby contributing to
annual corrections. The structure of both contracts thus ensures that compensation is fixed in advance, paid in
instalments, and adjusted where justified, as required under Article 13.
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9.2.2.1.2.5. Article 1(5), point (a), of Regulation (EEC) No 1191/69
(308) Furthermore, Article 1(5), point (a), of Regulation (EEC) No 1191/69 requires transport undertakings which operate
not only services subject to public service obligations, but engage in other activities, to operate the public services as
separate division, whereby (i) the operating accounts corresponding to each of those activities are separate and the
proportion of the assets pertaining to each is used in accordance with the accounting rules in force, and (ii)
expenditure is balanced by operating revenue and payments from public authorities, without any possibility of
transfer from or to another sector of that undertaking’s activity.
(309) As already stated above (see recitals 15, 76, 89, 190 and section (a)) the Commission observes that DSB was subject
to a binding legal and regulatory framework - namely national accounting standards and competition rules - which
required the maintenance of separate accounts for its main business areas. These included ‘Public service operations
(Business Area A)’ and ‘Activities subject to competition (Business Area B)’. Revenues and costs related to the public
service contracts were booked in DSB SOV (the parent company) separately from those linked to DSB’s commercial
operations, ensuring that only the net cost of discharging the public service obligations was covered by
compensation. This structural separation, complemented by external audits and regulatory oversight of DSB’s
accounts, assured the Commission that no cross-subsidisation occurred during the contract period from 2000 to
2004. DSB’s commercial activities (e.g. advertisement, fuel sales, and foreign subsidiaries) were separately
accounted for and received no compensation for public service obligations. The accounting framework thus
ensures compliance with Article 1(5) requirements.
(310) The 2005-2014 contract contains more explicit contractual safeguards to prevent cross-subsidisation. In particular,
Article 3.2.2 of the contract stipulates that all costs associated with commercial traffic (fri trafik) must be fully
covered by the related passenger revenue, with calculations based on DSB’s internal accounting rules. This
requirement for self-financing ensures that the public compensation cannot be used to subsidise competitive
market activities. In addition, as already noted above (see recital 89 and section (a)), DSB maintained separate
accounts for public service and commercial operations, with DSB SOV’s financial statements clearly distinguishing
between Business Area A (public service) and Business Area B (commercial). These accounts were subject to both
internal controls and external audits, and cost allocation methodologies ensured that direct and indirect costs were
correctly assigned to each business area. Public compensation was recorded separately from any income generated
through commercial activities, and the Danish authorities submitted evidence of this in the form of product-level
accounts and auditors’ opinions.
(311) In light of both the contractual provisions in the 2005-2014 contract and the broader regulatory framework
applicable throughout both contract periods, the Commission concludes that the requirements of Article 1(5),
point (a), of Regulation (EEC) No 1191/69 are fulfilled for the duration of the 2000-2004 and 2005-2014 public
service contracts. The accounting and structural arrangements in place ensured the separation of public service and
commercial activities and effectively prevented cross-subsidisation.
9.2.2.2. Lawfulness and compatibility of the aid paid before 3 December 2009 under
Regulation (EEC) 1107/70
(312) Article 1 of Regulation (EEC) No 1107/70 applied to aid granted for transport by rail, road and inland waterway,
insofar as such aid relates specifically to activities within that sector. The tenth recital of that Regulation indicated
that ‘[…] it is […] necessary to specify the cases and the circumstances in which Member States may take
co-ordination measures or impose obligations inherent in the concept of a public service which involve the
granting of aids under Article 77 of the Treaty [now Article 93 TFEU] not covered by the aforesaid Regulation
[(EEC) No 1191/69]’.
(313) Article 3 of Regulation (EEC) No 1107/70 provided that ‘[w]ithout prejudice to the provisions of [...] Regulation
(EEC) No 1191/69 [...] Member States shall neither take coordination measures nor impose obligations inherent in
the concept of a public service which involve the granting of aids pursuant to Article [93 TFEU] except in the
following cases or circumstances’ listed in paragraphs (1) and (2) of that provision.
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(314) Article 3(2) of Regulation (EEC) No 1107/70 covered notably ‘compensation for public service obligations imposed
on [transport undertakings] by the State or public authorities and covering either tariff obligations not falling
within the definition given in Article 2(5) of Regulation (EEC) No 1191/69; or transport undertakings or activities
to which that Regulation does not apply’. It follows that Regulation (EEC) No 1107/70 applied only where
Regulation (EEC) No 1191/69 was not applicable. This was also confirmed by the Court that made clear that the
compatibility of compensation payments falling within the scope of Regulation (EEC) No 1191/69 must be
assessed in accordance with the provisions laid down by that Regulation(115). Since the payments made until
3 December 2009 under the measure fell under the scope of Regulation (EEC) No 1191/69 (section 9.2.2), the
Commission concludes that Regulation (EEC) No 1107/70 was not applicable to those payments.
(315) Since the payments made before 3 December 2009 fell under the scope of Regulation (EEC) No 1191/69, the
Commission concludes that it is not necessary to assess whether those payments could also have been deemed
compatible under another legal basis.
9.2.2.3. Conclusion
(316) Based on the above, the Commission concludes that the aid granted to DSB until 3 December 2009 constituted
State aid under Article 107(1) TFEU. However, this aid can be considered exempted from prior notification
pursuant to Article 108(3) TFEU, as the compensation provided to DSB complied with the relevant provisions of
Regulation (EEC) No 1191/69, and notably did not exceed the amount necessary to cover the costs of fulfilling its
public service obligations, including a reasonable profit, in accordance with Regulation (EEC) No 1191/69. Indeed,
it stems from the General Court’s judgment in the Andersen case(116) and the approach taken in the recent case
practice(117), and differently from the approach in earlier decisions, that Article 17(2) of Regulation (EEC)
No 1196/69 applies to compensation paid under public service contracts.
Therefore, aid was exempt from the notification requirement under Article 17(2) of Regulation (EEC) No 1191/69.
Consequently, the aid granted to DSB until 3 December 2009 was lawfully provided in line with Article 108(3)
TFEU.
9.2.3. Lawfulness of the aid paid on 21 December 2009
9.2.3.1. Legal basis
(317) According to the Court of Justice in its judgment of 6 October 2015 and the General Court’s second judgment of
18 January 2017, the aid paid from the entry into force of Regulation (EC) No 1370/2007 on 3 December 2009
under the second public service contract should have been assessed under that Regulation.
(318) Moreover, as highlighted in the General Court's second judgment, the 2010 Decision failed to state reasons that led
the Commission to establish the compatibility of the aid paid on 21 December 2009 with the internal market (see
recitals 9 and 120 et seq.)(118).
(319) Consequently, to comply with the General Court’s second judgment, the Commission sets out, in section 9.2.3.2, its
assessment of compatibility of the aid paid on 21 December 2009 on the basis of Regulation (EC) No 1370/2007,
in light of the transitional provisions in Article 8(3) of that Regulation. As the payment in question was made
under a public service contract that expired in 2014, the applicable version of Regulation (EC) No 1370/2007 is
the original text of that Regulation, as it applied before its first amendment made by Regulation EU) 2016/2338 of
the European Parliament and of the Council that came into force on 24 December 2017(119).
(115) Judgment of the Court of 7 May 2009, Antrop, C-504/07, ECLI:EU:C:2009:290, paragraph 32.
(116) Judgment of 18 January 2017, Andersen v Commission, mentioned at footnote [7], paragraph 27.
(117) Commission Decision (EU) 2024/2860 of 24 November 2023 on SA.32953 (2014/C) – State aid measures in favour of Trenitalia SpA
– Italy (OJ L, 2024/2860, 18.11.2024, ELI: http://data.europa.eu/eli/dec/2024/2860/oj), recitals 303 to 306; Commission Decision
C(2025) 1730 final of 24 March 2025 in case SA.18853 - C 47/2007 (NN 22/2005) implemented by Germany concerning the public
service contract between Deutsche Bahn Regio and the Länder of Berlin and Brandenburg (not yet published), recitals 215 and 281.
(118) Judgment of the Court of 5 October 2015, Commission v Andersen, C-303/13 P, ECLI:EU:C:2015:647, paragraphs 51 and 55.
(119) Namely, the amendments introduced, as from 24 December 2017, by Regulation (EU) 2016/2338.
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9.2.3.2. Exemption from prior notification on the basis of Regulation (EC) No 1370/2007
9.2.3.2.1. Scope of Regulation (EC) No 1370/2007
(320) According to Article 1(2) of Regulation (EC) No 1370/2007, that regulation ‘shall apply to the national and
international operation of public passenger transport services by rail and other track-based modes and by road,
except for services which are operated mainly for their historical interest or their tourist value.’
(321) Article 3(1) furthermore provides that ‘where a competent authority decides to grant the operator of its choice an
exclusive right and/or compensation, of whatever nature, in return for the discharge of public service obligations, it
shall do so within the framework of a public service contract’. As made clear by the Court(120), that provision lays
down the principle that public service obligations and the associated compensation must be established in the
context of such a contract.
(322) In the present case, the public transport service missions were entrusted to DSB by means of a public service
contract (see recital 33).
9.2.3.2.2. Transitional rules
(323) Under Article 8(3) of Regulation (EC) No 1370/2007 in combination with Article 4(3) of that Regulation, contracts
for passenger transport services by rail signed between 26 July 2000 and 3 December 2009 and awarded in
accordance with Community and national law on the basis of a procedure other than a fair competitive tendering
procedure may continue until they expire, if the duration of the contract does not exceed a duration comparable to
the 15 year ceiling laid down in Article 4(3).
(324) The public service contract for the period 2005-2014 was awarded directly, without a tendering procedure. The
Commission notes that, at the time of its conclusion, there was no obligation under either Danish or European
Union law to competitively award such contracts (see recitals 21, 35 and 106). The direct award was permitted
under national law (see recital 35), and European Union law did not yet require competitive tendering for public
service contracts in the rail passenger transport sector (see recital 21).
(325) As the public service contract was concluded for the period 2005-2014-i.e. for a duration not exceeding 15 years
-and was directly awarded in accordance with both European Union and national law, the Commission considers
that the transitional provision in Article 8(3) of Regulation (EC) No 1370/2007 applies. Accordingly, the contract
remained valid until its expiry.
9.2.3.2.3. Conditions for exemption from prior notification
(326) The Commission recalls that Regulation (EC) No 1370/2007 was not yet in force when the public service contract
was signed and, as set out above, the transitional provision in Article 8(3) of that Regulation applies, allowing the
contract to remain valid until its expiry. However, in accordance with the judgment of the Court of Justice of
6 October 2015 in Commission v Andersen(C-303/13 P)(121), the lawfulness of public service compensation paid to
DSB from 3 December 2009 onwards must be assessed in light of the provisions of Regulation (EC)
No 1370/2007. The Commission must therefore examine such payments under the relevant provisions of that
Regulation, in particular Article 9(1).
(120) Judgments of 25 January 2024, Obshtina Pomoroe ‘Anhialo Avto’ OOD’, C-390/22, ECLI:EU:C:2024:75 paragraph 33 and of
21 December 2023, Dobeles Autobusu Parks and Others, C-421/22, ECLI:EU:C:2023:1028, paragraph 36 and the case-law cited.
(121) Judgment of 6 October 2015, Commission v Andersen,mentioned at footnote 15, paragraph 55.
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(327) It has to be noted, that the relevant provisions do not include Article 5 of Regulation (EC) No 1370/2007, which
lays down specific rules on the award of public transport service contracts. This is because, under Article 8(3) of
that Regulation, certain existing contracts such as the 2005-2014 public service contract could remain valid
without their award being dependent on compliance with Article 5 (notwithstanding the transitional rule in
Article 8(2)) of that Regulation). As a result, also the provisions of Regulation (EC) No 1370/2007 concerning
contracts to be awarded in accordance with Article 5 of the same Regulation, do not apply to the present public
service contract. Those include Article 4(1), point (b), second sentence, Article 6(1) second sentence, as well as the
Annex to Regulation (EC) No 1370/2007, and Articles 7(2) and 7(3) of Regulation (EC) No 1370/2007. Similarly,
the provisions of Article 7(1) and 7(4) of Regulation (EC) No 1370/2007 are not applicable to the 2005-2014
public service contract given that the transparency requirements laid down in those provisions were not known at
the time of the conclusion of the public service contract and that the relevance of Regulation (EC) No 1370/2007
for the purposes of assessing the present public service contract became manifest only after the Court of Justice’s
judgment in Commission v Andersen(C-303/13 P)(122)that was rendered in 2015 once the public service contract in
question had already expired. Moreover, those provisions are designed to let interested parties either question the
planned award of a public service contract in advance (Article 7(4) of Regulation (EC) No 1370/2007) or monitor
public service contracts once they are awarded (Article 7(1) of Regulation (EC) No 1370/2007). However, relying
on Articles 7(1) and 7(4) of Regulation (EC) No 1370/2007 does not meet these objectives in this case because the
public service contract was awarded in 2005, before Regulation (EC) No 1370/2007 came into force, and has been
under formal investigation by the Commission since 2008, before Article 7(1) became applicable to payments
under the 2005-2014 public service contract as of 3 December 2009.
(328) As a consequence, the Commission will assess the exemption from prior notification of the payment of
21 December 2009 made under the public service contract for the period 2005-2014, based on the provisions of
Regulation (EC) No 1370/2007 and the general requirement to avoid overcompensation stemming from the
Treaty, the case-law, and Commission’s decision-making practice.
(329) Under Article 3(1) of Regulation (EC) No 1370/2007, ‘[w]here a competent authority decides to grant the operator
if its choice an exclusive right and/or compensation, of whatever nature, in return for the discharge of public service
obligations, it shall do so within the framework of a public service contract’. Article 4 of Regulation (EC)
No 1370/2007 specifies the mandatory content of public service contracts and the applicable general rules, which
the Commission will examine in the following section 9.2.3.2.3.1.
9.2.3.2.3.1. Compliance of the 2005-2014 public service contract with Articles 2, point (e) and 4 of Regulation
(EC) No 1370/2007
(330) According to Article 4(1), point (a), of Regulation (EC) No 1370/2007, public service contracts shall clearly define
the public service obligations with which the public service operator is to comply, and the geographical areas
concerned.
(331) A public service obligation is defined in Article 2, point (e), of Regulation (EC) No 1370/2007 as:
‘a requirement defined or determined by a competent authority in order to ensure public passenger transport
services in the general interest that an operator, if it were considering its own commercial interests, would not
assume or would not assume to the same extent or under the same conditions without reward’.
(332) In recitals 69-76 of its Opening Decision as well as in the 2010 Decision (see e.g. recital 274), the Commission
concluded that the public service contract met the first Altmark criterion and that DSB did indeed have a clearly
defined public service obligation to discharge. This conclusion was not contested before the Union Courts.
(122) Idem, paragraphs 51 to 55.
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(333) Article 4(1), point (c), of Regulation (EC) No 1370/2007 requires that public service contracts determine the
arrangements for the allocation of costs connected with the provision of public passenger transport services,
including staff, energy, infrastructure charges, maintenance and repair, rolling stock, fixed costs, and a suitable
return on capital. The public service contract meets this requirement. As described in recital 133 above, the
following ex ante parameters were used to establish the compensation levels: annual inflation rate (2,5 %), ticket
price increase (2,5 %), productivity improvement (2,5 %), interest rate (5,15 %), return on equity after tax (6 %),
investment in rolling stock (approx. DKK 10 billion), and a forecasted 20 % increase in train-kilometres and
passenger numbers. These parameters formed a coherent methodological framework addressing the key cost
categories, including a reasonable return on capital, and thus fulfil the conditions of Article 4(1), point (c), of
Regulation (EC) No 1370/2007. In addition to defining ex ante parameters for the estimation of compensation
levels, the public service contract clearly allocates the responsibility for bearing operational and capital costs. DSB
retains all ticket revenues and receives a fixed contract payment from the Ministry, which together must cover all
cost items. Clause 7.1.1 of the public service contract specifies that the only sources of income available to DSB
under the contract are the agreed contract payment and passenger revenues, and clause 7.1.2 confirms that the
contract payment covers depreciation and interest on investments in rolling stock, thereby placing the associated
capital costs with DSB. Moreover, Annex 2 (mid-term evaluation) provides a detailed breakdown of DSB’s variable
costs, which include infrastructure charges, traction energy, traincrew and locomotive staff costs, and rolling-stock
maintenance, further illustrating that these costs are borne by DSB. These provisions demonstrate that the public
service contract determines the allocation of all major cost categories to DSB, including staff, energy, infrastructure,
maintenance, rolling stock, and a return on capital. Accordingly, the contract complies with the requirement of
Article 4(1)(c) of Regulation (EC) No 1370/2007 to set out the arrangements for cost allocation.
(334) Article 4(6) of Regulation (EC) No 1370/2007 stipulates that where the competent authority requires compliance
with certain quality standards, these must be included in the public service contract. The public service contract
complies with this obligation. According to recital 69, several contractual provisions specify quality-related
obligations. Article 8.1 introduces punctuality benchmarks and penalties for non-compliance; Article 10 contains
provisions regarding infrastructure coordination; and Article 11 sets out user service requirements, including
accessibility, ticketing systems, and customer service obligations. These elements reflect clearly defined quality
standards imposed by the competent authority in line with Article 4(6) of Regulation (EC) No 1370/2007.
(335) Article 4(7) of Regulation (EC) No 1370/2007 requires that public service contracts indicate whether and to what
extent subcontracting is permitted, in order to ensure that the main operator performs a major part of the services.
This requirement is addressed in the public service contract through a combination of provisions. Article 10.4.3 of
the mainline/regional public service contract and Article 8.4.3 of the S-tog public service contract provide that DSB
may not entrust the operation of trains to any third party without the prior written consent of the Ministry of
Transport. In the absence of such consent, subcontracting of the core rail-operation services is therefore not
permitted. This establishes that DSB is required to perform the major part of the services itself, and that no residual
right to subcontract exists in this respect. In addition, Article 6.3 of the public service contract permits the
subcontracting of other services but stipulates that DSB remains fully liable for the subcontracted services as if it
had performed them itself (see recital 69). Furthermore, recital 68 confirms that, pursuant to Article 6.1.1 of the
public service contract, the Ministry retains the right to terminate parts of the contract and to tender individual
lines. These contractual mechanisms ensure that DSB cannot unilaterally divest significant portions of the contract
and that the requirements of Article 4(7) of Regulation (EC) No 1370/2007 are effectively respected.
(336) As the question of potential overcompensation under the public service contract will be examined in detail below
(see section 9.2.3.2.3.2), and the other provisions of Article 4 are not relevant in this case, the Commission
concludes that the public service contract concluded between the Danish Ministry and DSB for the period
2005-2014 establishes a structured and transparent framework for cost allocation, ticket revenue oversight, quality
standards, and subcontracting rules. Each of these elements contributes to ensuring full compliance with
Articles 4(1), point (c), 4(2), 4(6), and 4(7) of Regulation (EC) No 1370/2007, in accordance with EU principles of
proportionality, transparency, and accountability and therefore complies with Article 4 of Regulation (EC)
No 1370/2007.
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(337) In the following, the Commission must verify whether the compensation did not exceed what was necessary to
cover the costs incurred in discharging the public service obligation, taking into account the relevant receipts and a
reasonable profit.
9.2.3.2.3.2. Proportionality of the compensation
(338) The proportionality of the compensation paid to DSB under the public service contract for the period 2005-2014
with the payment made on 21 December 2009 is assessed based on the general requirement to avoid
overcompensation which flows from the Treaty, the case-law and the Commission’s decision-making practice. This
is due to the fact that the Commission in the present case cannot rely on the methodology set forth in the second
sentence of Article 4(1), point (b), of Regulation (EC) No 1370/2007 to assess the level of the payments made as of
3 December 2009 under the 2005-2014 public service contract (see recitals 320-323)(123). In the following, the
Commission will therefore verify, whether the compensation did not exceed what was necessary to cover the costs
incurred in discharging the public service obligation, taking into account the relevant receipts and a reasonable
profit.
(a) DSB’s activities
(339) The Commission notes that the public service obligation compensation is accounted for in DSB SOV. This activity is
called Business area A.
(340) DSB SOV also has purely commercial activities to a minor extent. Such activities include the sale of fuel to other
operators from DSB’s fuel stocks, rental of buildings to external parties at DSB’s stations, and the sale of
commercial advertisement space. These activities are called Business area B and kept in a separate account. The
DSB Group has also other purely commercial activities which are placed in affiliated and associated companies.
Among others, these companies perform DSB's foreign activities (e.g., DSB Roslagstäg AB and DSB Tågvärdsbolag
AB) and sales of kiosk and restaurant goods (e.g., DSB Kort & Godt A/S (previously DSB Detail A/S)). DSB does not
receive any public service obligation payment for these activities. In DSB SOV’s accounting, the results from
affiliated and associated companies are booked as a financial income and hence contribute to the overall
accounting result of DSB SOV. It is therefore necessary to subtract the results from the affiliated and associated
companies from DSB SOV to establish the result of the public service obligation.
(341) In that respect the Commission notes that the combination of legal and contractual requirements in the present case
effectively ensures the exclusion of any cross-subsidisation between public service obligations and commercial
activities. The calculation of costs and revenues was conducted in compliance with the applicable tax and
accounting regulations. The legal requirements imposed on DSB, including the national accounting standards and
competition rules, ensure that the company maintains separate accounts for its public service obligations and its
purely commercial activities. Specifically, the provisions of the public service contract mandate that contractual
payments made to DSB are recorded separately from revenues and expenses related to its commercial operations
(see recitals 15, 76, 89, 190 and section (a)). This combination of legal and contractual requirements guarantees in
principle that cross-subsidisation is avoided. This is also confirmed by an ex post check carried out by the
Commission’s services presented in the next subsection.
(a) Existence of overcompensation
(342) In line with the assessment of the existence of overcompensation with respect to the payments made before
3 December 2009, the Commission will also in the context of the single payment of 21 December 2009 assess the
existence of overcompensation with respect to a) the delays in the delivery of rolling stock and the Copenhagen-
Ystad link and b) DSB’s surplus profits.
(123) See Commission Decision of 24 March 2025 in case SA.18853, Germany, DB REGIO AG - Public service contract Berlin-Brandenburg(not
yet published); Decision (EU) 2024/2860, recital 382.
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(i) Delays in delivery of rolling stock and the Copenhagen-Ystad link
(343) The overcompensation related to delays in the delivery of rolling stock has been repaid to the Danish State, in
accordance with Article 3 of the 2010 Decision (see recitals 290 et seq.). Additionally, regarding the Copenhagen–
Ystad link, the Commission has reaffirmed that no overcompensation occurred, ensuring compatibility with the
internal market (see recital 290 et seq.). These results of the assessment are also valid for the single payment of
21 December 2009 and will therefore not be assessed again.
(ii) DSB’s surplus profits
(344) The Commission has examined the changes in DSB’s equity capital and profits, as far as its public service activities
are concerned for the term of the contracts in question. That examination is based on the detailed analysis of DSB’s
financial situation over the period 2000-2009, by analysing DSB’s public annual reports and the clarifications
provided by the Danish authorities in the context of the formal investigation procedure. Also with respect to the
single payment of 21 December 2009, the Commission adopted an ex post approach to determine whether DSB
received surplus profits. As already explained above, although an ex anteassessment is in principle the primary way
the Commission assesses the presence of a possible overcompensation in public service contracts, the Commission
deemed it more robust in the case at hand to use an ex post approach instead of relying on the sole ex ante
assumptions underlying DSB's 10-year budget which lack sufficient detailed substantiation and specific inputs used
for the budget forecasting exercise (incl. breakdown of costs for instance).
(345) The overview of DSB’s financial situation and the related methodologies used to assess the overcompensation is
provided in Tables 9 and 10 above.
(346) The Commission takes note in particular of the information provided by the Danish authorities to provide details
related to the single payment made by the Danish State to DSB on 21 December 2009. The Danish authorities find
that it would be artificial to isolate the assessment of whether the single payment made on 21 December 2009 is in
accordance with Regulation (EC) No 1370/2007, in isolation from the public service obligation activities and
payments in the rest of 2009.
(347) The public service obligation compensations from the Danish State to DSB in 2009 (and previous years) were made
in twelve equal monthly instalments. Each instalment is to be paid on the 21st of each month, or the following
working day if the 21st occurs during a weekend or a public holiday. In 2009 each monthly instalment was of DKK
221,3 million but the instalments for November and December 2009 were each reduced by DKK 217,5 million.
This reduction of DKK 435 million was a consequence of the late delivery of IC4 trains in 2009 because a part of
the public service obligation compensation in 2009 is related to interest and depreciations of rolling stock. The
reduction was made at the end of the year in accordance with the public service obligation contract.
(348) The Danish authorities find that it would be artificial to assess whether the single payment made on 21 December
2009 is in accordance with Regulation (EC) No 1370/2007 in insolation from the public service obligation
activities and payments in the rest of 2009. In this regard, the Commission notes that the analysis presented above
already includes all payments until the end of December 2009 and therefore the single payment of 21 December
2009.
(349) However, to isolate the assessment of any overcompensation (beyond the excess dividends paid to the Danish State)
in relation to the public service obligation discharged by DSB but only considering the single payment of
21 December 2009, the Commission considers the following methodology that has also been proposed by the
Danish authorities. The public service obligation payment in 2009 was one yearly amount paid in twelve monthly
instalments. While the dividend payments in 2009 cannot per sebe allocated to balance out specific monthly public
service obligation payments in 2009, the Commission notes that in principle a pro rata share of the difference
between the calculated surplus profits before dividends and the excess dividend payment relative to the public
service obligation activities could be said to relate to the period from 3 to 31 December 2009. Therefore, the
existence of any overcompensation to DSB for the public service obligation after considering the dividend
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payments made to the Danish State is assessed by taking the difference between the excess dividends paid to the
Danish State for the entire period from 2000 to 2009 and the surplus profits received by DSB in excess of the 6 %
ROE reasonable profit. The results amount to a positive difference of DKK 824 million under the first methodology
and DKK 651 million under the second methodology. Taking a pro ratashare of these results would consequently
amount to 1/10 of the total (DKK 82 million or DKK 65 million) for a single year and 1/12 of this sum for a single
month (DKK 7 million or DKK 5 million).
(350) The Commission therefore concludes that, under either methodology presented above, the pro rataexcess dividends
paid to the Danish State in relation to the public service obligation and only related to the period between 3 to
31 December 2009, including the single payment of 21 December 2009, exceed the surplus profits received by
DSB Business area A and in consequence neutralise the overcompensation.
9.2.3.3. Conclusion
(351) Based on the above, the Commission concludes that the aid granted to DSB on 21 December 2009 constituted State
aid within the meaning of Article 107(1) TFEU. However, this aid can be considered exempt from the requirement
of prior notification pursuant to Article 108(3) TFEU, as the compensation was granted in the framework of a valid
public service contract in accordance with Regulation (EC) No 1370/2007, and in particular Article 8(3) thereof.
(352) The Commission notes that the public service contract concluded for the period 2005–2014 complied with the
substantive requirements of Article 4 of Regulation (EC) No 1370/2007, and that the compensation paid did not
exceed what was necessary to cover the costs of discharging the public service obligations, including a reasonable
profit. In particular, the analysis of potential overcompensation based on a pro rata approach confirms that the
excess dividends returned to the State for the relevant period neutralised any surplus profit that may have resulted
from the payment in question.
(353) Therefore, the aid paid to DSB on 21 December 2009 was lawfully granted in accordance with Article 108(3) TFEU.
9.3. Effect of certain fiscal measures on the exemption from prior notification of the public
service compensation
(354) As established in the 2010 Decision, the payroll tax exemption initially granted to DSB was examined by the
Commission in a separate procedure(124). That procedure resulted in legislative amendments that eliminated any
potential distortion between public and private undertakings as of 1 January 2009.
(355) In the context of the public service contracts, the parameters for determining DSB’s contractual payments took into
account the tax exemption and its subsequent repeal. The Commission concluded that the exemption, even if
considered State aid, would be equivalent to ‘additional contractual payments’ under the public service contracts
and would not result in overcompensation, because the exemption reduced DSB’s operating costs for providing the
public service and, in its absence, the State would have had to increase the contractual payments by an equivalent
amount to cover the additional tax burden (see recitals 386-394 of the 2010 Decision).
(356) Given that this matter has already been addressed in the Commission’s 2010 Decision, and the legislative changes
are now fully implemented, there is no need to reopen this analysis. The Commission confirms that the
compensation system remains compatible with State aid rules, as outlined in the 2010 Decision.
(124) The payroll tax exemption for DSB was reviewed by the Commission under Case CP78/2006 following a complaint. While the
Commission did not formally classify the exemption as unlawful State aid, it acknowledged potential competitive distortions. In
response, Denmark voluntarily amended its legislation (Act No 526 of 25 June 2008), making DSB subject to the same payroll tax as
private operators from 1 January 2009. The Commission closed the case on 9 June 2009, concluding that the legislative change
resolved any competition concerns.
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10. CONCLUSION
(357) The Commission concludes that the payments of compensation made to DSB before 3 December 2009 and the
single payment made on 21 December 2009 under the public service contracts concluded between the Danish
Ministry of Transport and DSB constitute State aid within the meaning of Article 107(1) TFEU.
10.1. Conclusion with respect to the lawfulness of the aid paid before 3 December 2009
(358) The Commission considers that the aid paid to DSB before 3 December 2009 is exempted from the prior
notification obligation pursuant to Article 17(2) of Regulation (EEC) No 1191/69, as it complied with the
applicable substantive and procedural requirements set out in that Regulation.
(359) The Commission concludes that the compensation paid under the public service contracts for the periods
2000–2004 and 2005–2014 constituted State aid under Article 107(1) TFEU. However, the assessment of this aid
under Regulation (EEC) No 1191/69 demonstrates that it met the criteria for exemption from notification. First,
the aid was granted within valid public service contracts that fulfilled the requirements of Articles 1(4) and 14 of
Regulation (EEC) No 1191/69, including a clear act of entrustment, well-defined service obligations, financial
conditions, contract duration, and enforcement mechanisms. Second, the compensation complied with the
methodology provided in Article 10 of the Regulation, ensuring that the aid did not exceed the net cost of fulfilling
the public service obligations, taking into account relevant receipts and a reasonable profit.
(360) Furthermore, the Commission verified compliance with Articles 12 and 13 of Regulation (EEC) No 1191/69,
confirming that the costs covered were calculated on the basis of efficient management and adequate service
quality, and that compensation amounts were fixed in advance, subject to annual adjustment and paid in
instalments. The requirements of Article 1(5), point (a), concerning the separation of accounts and the prevention
of cross-subsidisation, were also fulfilled throughout the relevant period.
(361) While the Commission identified surplus profits beyond the reasonable return on equity, it found that such
overcompensation was effectively neutralised by the payment of excess dividends to the Danish State. These
dividend payments, made under the control of the sole shareholder, served in the specific circumstances of this
case as an effective clawback mechanism, ensuring that DSB retained no undue advantage from the compensation
granted.
(362) Accordingly, the Commission concludes that the aid paid to DSB between 1 January 2000 and 2 December 2009
meets the conditions of Article 17(2) of Regulation (EEC) No 1191/69 and was lawfully granted in accordance with
Article 108(3) TFEU.
10.2. Conclusion with respect to the lawfulness of the aid paid on 21 December 2009
(363) As regards the single payment made to DSB on 21 December 2009, the Commission concludes that this payment
constituted State aid within the meaning of Article 107(1) TFEU. Since the payment was made after the entry into
force of Regulation (EC) No 1370/2007, it must be assessed under that Regulation, and in particular under
Article 9(1) thereof.
(364) The Commission notes that this payment formed part of the overall compensation granted under the public service
contract for the period 2005–2014, which was awarded prior to 3 December 2009 and thus falls under the
transitional regime set out in Article 8(3) of Regulation (EC) No 1370/2007. The Commission has verified that this
contract met the substantive conditions of Article 4 of the Regulation, including the definition of public service
obligations, duration, parameters for compensation, allocation of risks, and quality standards. As such, the
payment was made within a valid legal framework that complies with the requirements of Regulation (EC)
No 1370/2007.
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(365) In order to assess the proportionality of the compensation and the absence of overcompensation in relation to the
specific payment of 21 December 2009, the Commission applied a pro rata methodology based on the broader
analysis of the period 2000–2009. This approach confirms that any potential overcompensation associated with
this payment was fully neutralised by the excess dividends paid by DSB to the Danish State during the same period.
These dividends effectively offset any undue economic advantage, ensuring that the aid remained within the limits
of what was necessary to discharge the public service obligation, including a reasonable profit.
(366) Accordingly, the Commission concludes that the single payment made on 21 December 2009 is exempt from the
prior notification requirement pursuant to Article 9(1) of Regulation (EC) No 1370/2007 and was lawfully
implemented in accordance with Article 108(3) TFEU.
HAS ADOPTED THIS DECISION:
Article 1
1. The State aid granted by Denmark to DSB in form of public service compensation on the basis of public service
contracts during the period from 1 January 2000 to 3 December 2009, and by a single payment on 21 December 2009
constitute State aid within the meaning of Article 107(1) TFEU.
2. The State aid referred to in paragraph 1 is exempted from prior notification pursuant to Article 17(2) of Regulation
(EEC) No 1191/69 and to Article 9(1) of Regulation (EC) No 1370/2007.
Article 2
This Decision is addressed to the Kingdom of Denmark.
If the decision contains confidential information which should not be published, 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 publication of the full text of the decision. Your request specifying the relevant information
should be sent electronically to the following address:
European Commission
Directorate-General Competition
State Aid Greffe
1049 Bruxelles/Brussel
BELGIQUE/BELGIË
Stateaidgreffe@ec.europa.eu
Done at Brussels, 14 July 2025.
For the Commission
Teresa RIBERA
Executive Vice-President
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