EUROPEAN COMMISSION. Brussels, C(2016) 5029 final. State Aid SA (2016/N) Germany DeltaPort GmbH & Co. KG. Sir, 1.

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1 EUROPEAN COMMISSION Brussels, C(2016) 5029 final PUBLIC VERSION This document is made available for information purposes only. Subject: State Aid SA (2016/N) Germany DeltaPort GmbH & Co. KG Sir, 1. PROCEDURE (1) On 11 December 2015, Germany pre-notified public support for an infrastructure project in the port of Wesel (Rhein-Lippe-Hafen; "RLH"). The Commission requested additional information by letter dated 1 February 2016, which Germany provided by letter dated 1 April 2016 as well as by dated 10 May (2) On 8 June 2016, Germany formally notified this support. (3) The Commission requested additional information by dated 8 June 2016, which Germany provided by dated 9 June DESCRIPTION 2.1. Objective of the notified project (4) The RLH is located in the German State of Nordrhein-Westfalen at the Wesel- Datteln-Kanal. This canal is directly connected with the river Rhine. The infrastructure in the port is owned and directly operated by the DeltaPort GmbH & Co. KG ("DP"). (5) RLH, an inland port, is a bimodal port hub that has so far mainly been used for trading mineral oil products. The total surface area of RLH is ca. 81 ha. The port is well connected with the interregional road network. With regard to the future, Seiner Exzellenz Herrn Frank-Walter STEINMEIER Bundesminister des Auswärtigen Werderscher Markt 1 D Berlin Commission européenne/europese Commissie, 1049 Bruxelles/Brussel, BELGIQUE/BELGIË - Tel

2 the port is to be developed to a universal port dealing with containers as well as break bulk cargo (Stückgut). (6) The objective of the notified project is, therefore, to extend the port by constructing a new quay wall. The measure is intended to develop the bimodal traffic in the area concerned further. By doing so, the RLH will contribute significantly to the European objective of reducing greenhouse gas emissions and air pollution and shifting traffic from roads to waterways Planned investment (7) The total investment cost of the notified project amounts to EUR (8) The notified project consists of the following measures: (a) (b) (c) (d) (e) (f) (g) Clearance of bombs and explosives from the second world war (Kampfmittelsondierung); Demolition measures (Rückbaumaßnahmen); Construction of quay facilities as vertical shore; Construction of mooring dolphins with access jetty; Backfill of the quay facilities with a view to constructing port operating areas; Deep-cut excavating with a view to constructing the necessary berths; Construction of heavy-duty platforms Financing of the investment project (9) The project will be financed through a direct grant by the regional district government of Düsseldorf (Bezirksregierung Düsseldorf) amounting to EUR The remaining part of the investment cost, amounting to EUR , will be financed by DP through loans on market terms. (10) The German authorities provided an analysis based on the funding gap 1 of the project, calculated as the difference between the discounted value of the expected net operating revenues of the investment, taking into account the revenues in port fees and operating costs, plus the discounted residual value of the infrastructure and the discounted investment costs of the project, which shows that over its estimated economic lifetime the project has a negative financial net present value (NPV) of EUR The negative NPV indicates that the project is not financially sustainable without public support. 1 The funding gap is defined as the difference between the discounted operating profits of the investment (i.e. the profits deriving from the investment plus a possible residual value of the infrastructure at the end of its estimated economic life) and the total discounted investment costs during a given reference period. 2

3 (11) As regards the main revenues stemming from the investment, the German authorities indicated that port fees (Hafengebühren) will be levied for the usage of the future quay wall The beneficiary (12) The infrastructure is owned by DP, which will also administer and operate the port itself. DP is a public undertaking, owned by the municipalities of Wesel (27.6%) and Voerde (8.8%), and by the district (Kreis) of Wesel (63.6%). (13) The infrastructure will be accessible to any interested user on a nondiscriminatory basis. All users will be charged the same port fees in accordance with established and published tariffs. (14) The German authorities provided data showing that the port fees to be charged in the future are in the same range as fees charged in ports located in the vicinity of RLH. In particular, the fees to be charged by DP will exceed those that the port of Duisburg charges and will only be slightly below those charged by, e.g., Neuss und Krefeld. Germany added that the fees charged by RLH are set at the highest possible level, given that the project concerns the construction of a new infrastructure, i.e. the "market entrance" of this new infrastructure Competition context (15) As notified, the planned investment is meant to transform RLH to a universal port apt to handle any goods suitable for bimodal transport. (16) According to Germany, the notified measure will contribute to further developing the trans-european network. RLH is part of the trans-european traffic corridor Rhine-Alps and because of its proximity to the Wesel-Datteln-Kanal ideally connected with the so-called ARA ports (Amsterdam, Rotterdam and Antwerp). (17) Germany considers the following German ports to be part of the relevant geographic market: Port Distance (km) from RLH by waterway Emmerich Duisburg Krefeld Neuss Düsseldorf Köln Distance (km) from RLH by road 3

4 (18) Germany further indicated that in the Netherlands the inland ports located closest to RLH are Venlo, Cuijk (each around 70 km by road), Nijmegen (Waal) and Arnhem (each 80 km by road). (19) While the information provided by Germany indicates a projected increase in demand in this market, the capacities provided by competing ports are close to being exhausted. Therefore, the expected additional demand in the market will focus on the new infrastructure at RLH. (20) According to Germany, the notified project will not affect competition and the internal market to an extent contrary to the common interest. In that respect, Germany indicated that once the notified project has been completed, the RLH will gradually increase its market share within the above relevant geographic market to reach market shares in the year 2027 in a range between 0.6% and 1% depending on the type of cargo Legal basis (21) The national legal basis applicable to the notified aid consists of the following: (a) GRW-Gesetz of 6 October 1969 (BGBl. I S. 1861), as last amended by Article 269 of the Regulation of 31 August 2015 (BGBl. I S. 1474) (b) Directive Regionales Wirtschaftsförderungsprogramm des Landes Nordrhein-Westfalen Infrastrukturrichtlinie (RWP NRW), Runderlass des Ministeriums für Wirtschaft, Energie, Industrie, Mittelstand und Handwerk des Landes Nordrhein-Westfalen of 31 May 2015 IV A (c) Landeshaushaltsordnung (LHO NRW) in the version of 26 April 1999, as last amended by Article 2 of the Gesetz zur Anpassung des Gesetzes über die NRW.BANK an die Gewährträgerstruktur sowie zum Prüfungsrecht des Landesrechnungshofs bei der NRW.BANK of 4 December 2012 (GV. NRW.S. 636) 2.7. Form and duration of the aid (22) As indicated above, the funding takes the form of a direct grant by the regional district government of Düsseldorf. The funding shall be disbursed in several instalments after the aid is approved by a Commission Decision. Once the project has been completed, RLH plans to start operating the new quay wall in the year Transparency commitment (23) Germany committed to ensure the publication of the following information on a comprehensive State aid website, at national or regional level: (a) (b) the full text of the individual aid granting decision and its implementing provisions, or a link to it, the identity of the granting authority, 4

5 (c) the identity of the beneficiary, the form and amount of aid granted, the date of granting, the type of undertaking (SME / large company), the region in which the beneficiary is located (at NUTS level II) and the principal economic sector in which the beneficiary has its activities (at NACE group level). (24) The information will be published within 6 months from the granting act and the information will be kept for at least 10 years and will be available to the general public without restrictions. 3. ASSESSMENT 3.1. Existence of aid (25) Article 107(1) TFEU provides that any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market. (26) The qualification of a measure as aid within the meaning of this provision therefore requires the following cumulative conditions to be met: (i) the measure must be imputable to the State and financed through State resources; (ii) it must confer an advantage on an undertaking; (iii) that advantage must be selective; and (iv) the measure must distort or threaten to distort competition and must affect trade between Member States. (27) In the present case, the existence of State aid must be examined at the level of the owner and operator of the infrastructure (DP) and at the level of the port users (shipping companies) Existence of Aid at the level of the owner and operator of the port Notion of undertaking (28) According to established case law by the Court, 2 whenever an entity is engaged in an economic activity, regardless of its legal status and the way in which it is financed, it can be considered as an undertaking within the meaning of EU competition law. (29) As regards infrastructure financing, the Court, in its judgment in Leipzig-Halle, 3 established that it is the future use of the infrastructure, i.e. its economic exploitation or not, which determines whether the funding of the construction of 2 3 See e.g. judgment in Hofner and Elsner, C-41/90, EU:C:1991:161, paragraph 21; judgment in Poucet and Pistre v. AGF and Cancava, C-160/91, EU:C:1993:63, paragraph 17; judgment in Commission v. Italy, C-35/96, EU:C:1998:303. Judgment of 24 March 2011, Flughafen Leipzig-Halle GmbH and Mitteldeutsche Flughafen AG v. Commission, T-455/08, and Freistaat Sachsen and Land Sachsen Anhalt v. Commission, T-443/08, EU:T:2011:117, confirmed by the Court of Justice, judgment in Mitteldeutsche Flughafen AG and Flughafen Leipzig-Halle GmbH v European Commission, C-288/11 P, EU:C:2012:821; see also judgment of 12 December 2000, Aéroports de Paris v. Commission, T-128/89, EU:T:2000:290, confirmed by the Court of Justice, C-82/01P, EU:C:2002:617; judgment of 17 December 2008, Ryanair v. Commission, T-196/04, EU:T:2008:585, paragraph 88. 5

6 such infrastructure falls within the scope of EU State aid rules or not. In line with this case law the Commission assessed in a series of decisions that the construction and exploitation of some types of port infrastructures constitutes an economic activity. 4 (30) The notified project concerns the construction of infrastructure in the RLH, which is commercially exploited by DP by providing port services on the market against remuneration. There is undoubtedly competition between inland ports, as also the German authorities have confirmed in the notification at issue. As such, there is a market for port services, on which DP, through its operation and economic exploitation of the infrastructure in question, is in competition with other ports. (31) Thus, DP engages in an economic activity and must, therefore, be considered an undertaking within the meaning of Article 107(1) TFEU State resources and imputability (32) As stated above, the project will be funded through a direct grant by the regional district government of Düsseldorf. The regional district governments in Nordrhein-Westfalen are, inter alia, entrusted with public tasks by the Land, for instance regional planning and development. For the project at hand, the funding will stem from public funds, namely funds granted under the GRW-Gesetz (see recital (21)). Therefore, the project is financed through State resources. (33) As regards imputability to the State, the decision to fund the specific construction project was directly taken by the German authorities. Therefore, the notified measure is imputable to the State Selectivity (34) As the public financing is granted for an individual (construction) project, the measure is selective Economic advantage (35) The public funding will be provided through grants. A grant is a non-refundable financial instrument which bears no financing cost. On the market, such a financing instrument would not be available to the beneficiary. (36) The public financing to be provided, therefore, confers an economic advantage to the beneficiary Distortion of competition and affectation of trade (37) According to established case law, when financial support granted by a Member State strengthens the position of an undertaking compared to other undertakings 4 See e.g. Commission Decision of 15 December 2009 in State Aid case no. N 385/2009 Public financing of port infrastructure in Ventspils Port, OJ C 72 of ; Commission Decision of 2 July 2013 in State Aid case no. SA (2012/N) Greece Extension of Piraeus Port, OJ C 256 of , p. 2; Commission Decision of 18 September 2013 in State Aid case no. SA (2013/N) Spain Port Authority of Bahía de Cádiz, OJ C 335 of , p. 1; Commission Decision of 27 March 2014 in State aid case no. SA Italy Port of Salerno, OJ C 156 of , p.1. 6

7 competing in intra-union trade, there is at least a potential effect on competition and trade between Member States. 5 (38) In the present case, the financial support granted by the German authorities will be used for providing the RLH with a quay wall to adapt it to meet demand in a growing market. After completion of the project, the RLH will increase its capacity. (39) The Commission takes note that Germany considers the relevant geographic market to consist of seven inland ports, including RLH, all located in the German Land Nordrhein-Westfalen (see recital (17)). The Commission further notes that RLH is in competition with other modes of transport like road and rail and could at least potentially be in competition with similar ports and intermodal platforms in Germany and the Netherlands. Given the proximity of some Dutch inland ports in relation to RLH (see recital (18)), and because there is also significant crossborder traffic between Germany and the Netherlands through road and rail transport, the measure is liable to distort competition and affect cross-border trade. (40) Thus, the project is capable of affecting competition and trade between Member States by potentially diverting commerce away from other Member States. Conclusion on the existence of aid at the level of the owner and operator (41) In light of the above, the Commission concludes that the notified measure constitutes aid to the owner and operator of the planned infrastructure. (42) The total amount of aid corresponds to the total amount of the public grant by the regional district government of the Land Nordrhein-Westfalen of EUR Aid at the level of port users (43) The information provided by the German authorities shows that the fees charged to the port users correspond to the level of fees charged in comparable ports and, therefore, constitute market prices. In addition, the RLH is in competition with other ports in the relevant geographic market and can only increase prices in line with the price developments on said market. (44) Furthermore, port users shall enjoy equal and non-discriminatory access to the infrastructure. (45) Thus, the Commission concludes that no advantage will be granted to port users and that there is, therefore, no aid granted to those users Compatibility of the aid (46) The Commission considers, in line with well-established decisional practice, 6 that investment aid for inland ports is compatible with the internal market on the basis 5 6 See e.g. judgment in Philip Morris v. Commission, Case 730/79, EU:C:1980:209, paragraph 11, and judgment in Italy v. Commission, C-372/97, EU:C:2004:234, paragraph 44. Commission Decision of 17 October 2012 in case SA.34501, Germany Extension of the inland port of Königs Wusterhausen/Wildau, OJ C176 of , p. 1, Commission Decision of 18 December 2013 in case SA (2013/N) Hungary Port of Budapest, OJ C 141 of , Commission 7

8 of Article 93 TFEU if it contributes to an objective of common interest, is necessary, proportionate and has an incentive effect, if the access to the infrastructure in question is open to all users on a non-discriminatory basis, if the aid does not lead to distortions of competition contrary to the common interest and if it complies with the transparency principles Objective of common interest (47) The Union pursues a policy of achieving a balanced combined transport system. The Union's combined transport policy aims to achieve a modal shift from road freight to other modes of transport. Improving the position of intermodal transport vis-à-vis road usage is part of this policy. (48) In the Communication entitled A Sustainable Future for Transport: Towards an integrated, technology-led and user-friendly system, 8 the Commission underlined that the development of ports and intermodal terminals is key to achieving an integrated and intelligent logistic system in the EU. The same Communication acknowledges the importance of the shift towards more environmental-friendly modes of transport. (49) Moreover, the development of inland navigation and its integration into multimodal transport is a major objective of EU transport policy. EU legal instruments such as Council Directive 92/106/EC of 7 December on the establishment of common rules for the combined transport of goods between the Member States are explicitly targeted at reinforcing transport intermodality. The White Paper on Transport Policy 10 also encourages the shift towards more environmentallyfriendly modes of transport such as rail and sea/inland waterway transport. In its Communication on the promotion of inland waterway transport NAIADES II, the Commission stated that the EU s inland waterway infrastructure is insufficiently interconnected and integrated with other modes of transport. 11 (50) The Commission considers that the project will contribute to a shift of traffic from road to waterways. As outlined by Germany, the new infrastructure will lead to an increased market share of RLH (see recital (20)). Capacities in other inland ports in the relevant geographic market are close to being exhausted and traffic in this market is projected to further increase (see recital (19)). It follows that, if the new infrastructure is not constructed, the potential future users of RLH would have to, once these existing capacities are exhausted, choose a mode of transport Decision of 1 October 2014 in State Aid case no. SA (2014/N) Hungary Development of the Győr-Gönyű National Public Port, OJ C 418 of , p. 1, Commission Decision of 18 August 2015 in case SA (2015/N) Hungary - Development of the Mohács Port, OJ C 325 of , p. 8. The Commission has previously assessed investment aid to intermodal projects on the basis of Article 93 TFEU directly and, following the CJEU ruling in the Altmark case, which precluded the direct application of Article 93 TFEU, on the basis of Article 107(3)(c) TFEU for intermodal terminals. Since the entry into force of Regulation (EC) No 1370/2007, Article 93 TFEU has become directly applicable as the legal basis for establishing the compatibility of aid for land transport not covered by that regulation and, in particular, of aid for the coordination of transport. COM(2009) 279/4, paragraph 46. OJ L 368 of , p. 38. COM (2011) 144 of Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions "Towards quality inland waterway transport NAIADES II", COM/2013/0623 final 8

9 other than inland waterways, in particular road transport. However, the Commission considers that, if the new infrastructure at RLH is constructed, road traffic will be exonerated. Therefore, a modal shift from road to waterways can be expected once the new infrastructure is in operation. (51) The Commission takes note of the need to accelerate investments in environmentally-friendly transport-modes which are part of the Trans-European Networks (TENs). The TEN-T Regulation 12 includes the RLH as one of the inland ports in the EU comprehensive network to be set in place by (52) In light of the above considerations, the Commission concludes that the project contributes to attaining the objective of common EU interest of ensuring modal shift from road to waterways Necessity, proportionality and incentive effect of the aid (53) The negative NPV (Funding Gap) of EUR over the estimated economic lifetime of the investment shows that the expected net revenues of DP do not cover the investment costs. The negative NPV indicates that the project is not viable without public support. It should also be noted that DP makes an effort to partially fund the project itself, by contributing EUR to the project with own resources financed through a loan on market terms. It is unlikely that DP would be able to obtain the full remaining amount exceeding its planned own contribution on the market. Therefore, the Commission considers that the requested aid is necessary for this project. (54) With regard to the incentive effect of the aid, according to the information provided in the notification, the application for the aid was done on 2 April Works on the project beyond planning activities have not been initiated yet and the aid will only be granted by the regional district government of Düsseldorf once the Commission has taken a decision declaring the aid to be compatible with the internal market. In addition, as shown above, DP would not be able to raise the funding required for carrying out the project itself, meaning that the project could not be carried out in absence of the aid. It follows that the aid must be regarded as having an incentive effect. (55) As regards proportionality (i.e. keeping public funding down to the minimum necessary), the amount of the aid (EUR ) is below the funding gap identified for the project ( EUR ). Therefore, the aid is proportionate. (56) In the light of the above, the Commission concludes that the aid is necessary, proportionate and has an incentive effect Access to the infrastructure in question is open to all users on a nondiscriminatory basis (57) As noted in recital (13) above, access to the port will be provided to all end-users on an open and non-discriminatory basis. 12 See Regulation (EU) No 1315/2013 of the European Parliament and of the Council of 11 December 2013 on Union guidelines for the development of the trans-european transport network and repealing Decision No 661/2010/EU. 9

10 Distortion of competition and affectation of intra-eu trade (58) Based on the information provided by Germany, which the Commission analysed and considers reasonable, the project is unlikely to have a negative impact on other ports located close to RLH. The estimations provided by the German authorities show that the notified project will lead to an increase in capacity and market share of the RLH. However, an infrastructure project like the present one by its nature leads to a sudden (upon completion) increase in capacity. Yet, the RLH is a minor port as compared to other German and European inland ports, which will not change after the implementation of the project. This is underlined by the information provided by Germany, according to which the RLH (assuming full utilization of the new infrastructure) will arrive at a total market share of around 1% in the relevant geographic market defined by Germany. (59) However, as also stated above, the market projections provided by Germany show an increase in demand for transport services in this market and, furthermore, that the existing infrastructure in the market is currently already almost fully utilized. As such, the notified project will largely cater to this increased demand and will, thereby, prevent further traffic from being diverted from inland waterways to roads. Any negative impact on other ports located close to RLH will therefore be marginal. (60) Based on the above elements, the Commission concludes that the aid for this project does not affect competition and intra-eu trade to an extent contrary to the common interest Transparency of the aid (61) Lastly, the Commission observes that Germany committed to comply with the transparency principles. 4. CONCLUSION The Commission has accordingly decided: not to raise objections to the aid granted to the owner and operator of the planned infrastructure, on the grounds that it is compatible with the internal market pursuant to Article 93 of the Treaty on the Functioning of the European Union, that the notified measure does not constitute State aid to port users in the meaning of Article 107(1) of the Treaty on the Functioning of the European Union. If this letter contains confidential information which should not be disclosed to third parties, please inform the Commission within fifteen working days of the date of receipt. If the Commission does not receive a reasoned request by that deadline, you will be deemed to agree to the disclosure to third parties and to the publication of the full text of the letter in the authentic language on the Internet site: Your request should be sent electronically to the following address: European Commission, Directorate-General Competition 10

11 State Aid Greffe B-1049 Brussels Yours faithfully For the Commission Margrethe VESTAGER Member of the Commission 11