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Competition Law

Analysis - debate - current awareness

Field Fisher Waterhouse , 14 NOV 2014

The bridge

John Cassels

Partner

The bridge
Are EU Member State governments free to finance and build infrastructure without thinking about EU state aid rules? Historically, infrastructure projects were considered to fall outside the scope of the EU rules on state aid. This was because building and operating infrastructure was considered a public good or general measure of national policy rather than an economic activity.

However, in 2000, the EU Courts decided that the operation of an airport was an economic activity and, therefore, the use of public funds to build and operate transport infrastructure could be state aid. In 2006, when the EU Commission opened an investigation into the financing of a new runway at Leipzig-Halle airport in Germany, it found that the project did indeed involve state aid. One of the interesting issues considered in the case was whether the construction and the operation of the runway infrastructure could and should be considered separately. In this particular instance, the EU Courts decided that they should not be. However, the EU Courts did foresee the possibility that transport infrastructure might in some circumstances be a consequence of the exercise of State authority (e.g. security, air traffic control) rather than economic activity and, therefore, not subject to state aid rules.

The line between economic activity and non-economic State authority is often unclear and can vary from country to country (for example, air traffic control services are provided by commercial operators in some Member States). It can also vary over time: activities that were State authority can become economic activities.

Therefore, the recent decision of the EU Commission in the Oresund Bridge project is of interest. The Oresund Bridge is a rail/road link between Denmark and Sweden. In 2013, a complaint was made to the EU Commission alleging that the project involved unlawful state aid in the form of guarantees, tax advantages, special rules on asset depreciation, and the construction and operation of access roads and railways on each end of the bridge. The full Commission decision is not yet available. However, we know that it found that the guarantees, tax breaks and special rules on depreciation, were state aid, but were nonetheless permitted because they were necessary to realise the project which is of common EU interest. The construction of the access roads and railways were not aid, because they were general infrastructure forming a part of the public transport network in Denmark and Sweden.

If you are interested in these issues, please do not hesitate to contact John Cassels at john.cassels@fieldfisher.com
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