Commission Decision (EU) 2026/241of 14 July 2025on 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)

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 OJ C 309, 4.12.2008, p. 14. 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 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. , 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) Consolidated version of the Treaty on European Union (OJ C 326, 26.10.2012, p. 13). (formerly Article 88(2) of the Treaty establishing the European Community (TEC) Treaty establishing the European Community (Consolidated version 2002) (OJ C 325, 24.12.2002, p. 33). ). (2) The decision to initiate the formal investigation procedure was published in the Official Journal of the European Union OJ C 309, 4.12.2008, p. 14. . 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 Court of 25 November 2009 Order of the General Court of 25 November 2009, Andersen v Commission, Case T-87/09, ECLI:EU:T:2009:468. . (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 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).

and 1107/70 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). (Regulation (EC) No 1370/2007) OJ L 315, 3.12.2007, p. 1, ELI: http://data.europa.eu/eli/reg/2007/1370/oj. . (5) At the end of the formal investigation procedure, on 24 February 2010, taking into consideration information provided by Denmark and DSB 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. , the Commission adopted Decision 2011/3/EU concerning public service contracts between the Danish Ministry of Transport and DSB (the 2010 Decision) 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). . 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 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. 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 The case was registered as Case T-92/11. . (7) By judgment of 20 March 2013 in case T-92/11 Judgment of the General Court of 20 March 2013, Andersen v Commission, Case T-92/11, ECLI:EU:T:2013:143. , 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 Judgment of the Court of 6 October 2015, Andersen v Commission, Case C-303/13 P, ECLI:EU:C:2015:647.

, 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 Judgment of the General Court of 18 January 2017, Andersen v Commission, Case T-92/11 RENV, ECLI:EU:T:2017:14. , 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 facto concerns 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 Idem, paragraph 43. . 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 Idem, paragraphs 37 and 46. . (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

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. . During the period of the COVID-19 crisis, the Commission had to give priority to COVID-19 State aid measures 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). ; 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 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). . In the course of 2022 and 2023, the Commission had to give priority to the examination of those State aid measures 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). , 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 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). and to have this Decision adopted and notified in English. 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 OJ L 237, 24.8.1991, p. 25, ELI: http://data.europa.eu/eli/dir/1991/440/oj. , 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 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). , Directive 2001/13/EC of the European Parliament and of the Council 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). , and Directive 2001/14/EC of the European Parliament and of the Council 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). . 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 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).

, adopted in 2004, focused primarily on rail safety and interoperability but also provided a stronger regulatory framework to facilitate market opening. (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 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). 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 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). . 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) Act No 386 of 6 June 1991. . 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. 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 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.

, 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 Busvognmænd case (also known as the Combus judgment) 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. . (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 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. : 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) 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 Except in the case of routes run by a number of small regional operators. ; 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 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.

. (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 may decide 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. (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 See DSB Contract 2000-2004 and Competition Law Guidelines for DSB of the years 2000. . (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 Year20002001200220032004rail km (millions)41,041,741,942,143,3 (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 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. 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 Year20002001200220032004DKK (millions)2884,92945,72953,73039,43057,9 (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. (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. (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 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 Year2005200620072008200920102011201220132014DKK (millions)2985302128032669252324802486243324752470 (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) Year2005200620072008200920102011201220132014IC450167247258258258258258258258IC21244646464646464646Local trains1544748989 (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 Year200320042005200620072008200920102011IC4131447IC2122Local trains141414 (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 facto refund mechanism, ensuring that any surplus profits beyond expected levels were returned to the State. (83) Between 2000 and 2009, DSB paid DKK 5212 million in dividends, exceeding the amounts projected in the 10-year forward budget by DKK 3390 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

DSB’s freight transport activities were sold to Deutsche Bahn in 2001. . 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 9200 employees. Its turnover in 2008 was approximately DKK 9,85 billion (approx. EUR 1,32 billion The conversion was made using an average exchange rate for the year 2008. ). 3.1.1. The creation of the independent public undertaking DSB (86) In 1999, DSB became an independent public undertaking Act No 485 of 1 July 1998 established the independent public undertaking DSB SV and DSB Cargo on 1 January 1999 (the DSB Act). . 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. (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). (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) See footnote 5. (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 See recital 129 of the Opening Decision. . 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 See recitals 81 and 128 to 129 of the Opening Decision. . Concerns were also raised about delays in rolling stock deliveries See recitals 91 to 100 of the Opening Decision. , the Copenhagen–Ystad route See recitals 100 to 103 of the Opening Decision. , and the absence of a competitive tendering process, which could indicate that compensation was not based on actual market conditions See recitals 104 and 107 of the Opening Decision. . (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 See recitals 124 and 131 of the Opening Decision. , and expressed doubts about whether the compensation was strictly limited to covering necessary costs See recitals 128 to 129 of the Opening Decision. . 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 See recitals 88 to 90 of the Opening Decision. . (103) At the end of that procedure, the Commission adopted, on 24 February 2010, its 2010 Decision See footnote 11. . (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 3390 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 3500 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).

(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 Judgment of the General Court of 20 March 2013, Andersen v Commission, Case T-92/11, ECLI:EU:T:2013:143. (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 Idem, paragraph 46. . (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

Idem, paragraphs 45 to 50, 55 and 58. . 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 Judgment of the Court of 6 October 2015, Commission v Andersen, Case C-303/13 P, ECLI:EU:C:2015:647. (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 Idem, paragraph 54. . (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 Judgment of the General Court of 18 January 2017, Andersen v Commission, T-92/11 RENV, ECLI:EU:T:2017:14. (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. (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 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. 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.

1. 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. (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. (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. (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. (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 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). . (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 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. . 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 rata calculation 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. (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

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). , was as follows (in DKK millions): Table 6 Public service obligation. (158) Actual profit after tax, PSO only (159) 206 (160) Equity, PSO only (161) 4399 (162) Reasonable profit at 6 % (i.e. actual profit is lower than reasonable profit) (163) 264 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 See recitals 119 and 120 of the Opening Decision. . (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 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.

, 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. (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 See recitals 118 to 124 of the Opening Decision. . (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 See recitals 126 to 130 of the Opening Decision and 176-181 of the 2010 Decision. . 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 OJ C 297, 29.11.2005, p. 4. ) and the Opening Decision, which itself confirms the lex specialis nature 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; 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 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). ; 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 3678 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; 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 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). . 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. (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 1018 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. (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

See recital 215 of the 2010 Decision. . 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. 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)

See recital 3 of Regulation (EC) No 1370/2007. , and to Article 107(2) and (3) TFEU 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). . (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 See Article 2(3) of Regulation (EEC) No 1191/69. , obligations to carry See Article 2(4) of Regulation (EEC) No 1191/69. and tariff obligations See Article 2(5) of Regulation (EEC) No 1191/69. . 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 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). 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

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. . 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 See Article 14(1) of Regulation (EEC) No 1191/69. . (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. (204) Regulation (EEC) No 1107/70 further regulated the granting of aid for transport by rail, road and inland waterway 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. . 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 Within the meaning of tariff obligations laid down in Article 2(5) of Regulation (EEC) No 1191/69. or transport undertakings or activities to which that Regulation did not apply. (205) In the Altmark judgment Judgment of 24 July 2003, Altmark, mentioned at footnote 32, paragraph 108. , 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 Judgment of 16 March 2004, Combus, mentioned at footnote 33, paragraph 100. . (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 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. . In particular, in its judgment in Andersen Judgment of 6 October 2015, Commission v Andersen, mentioned at footnote 15, paragraphs 51-55. 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 Judgment of 29 November 2018, Aziende riunite filovie ed autolinee Srl (ARFEA) v Commission, mentioned at footnote 82, paragraph 158. . (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 Judgment of the Court of 6 October 2015, Commission v Andersen, Case C-303/13 P, ECLI:EU:C:2015:647, paragraph 52. , 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.

(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 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. and shall 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. cover. (218) Article 14 of Regulation (EEC) No 1191/69 is built on the concept of adequate transport services Judgment of the Court of 17 September 1998, Kainuun Liikenne Oy, Case C-412/96, ECLI:EU:C:1998:415, paragraphs 33 and 34. . 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 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. , 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 Judgment of the Court of 7 May 2009, Antrop, Case C-504/07, ECLI:EU:C:2009:290, paragraph 32. . (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 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). . 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 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). . 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 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. . 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).

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. (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. (241) The contract also distinguishes between forecast and actual production volumes, allowing for ex post corrections 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 post financial 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. (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. (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 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 Others v 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. , 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 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. . 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. 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 fortiori a 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

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. ). 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. (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 See recital 81 of the Opening Decision. , 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 See recitals 333 et seq. of the 2010 Decision. , 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. (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 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 post approach taken for the assessment of any potential overcompensation, as explained in recital 265, the Commission checked the ex post levels of profits posted by DSB vis-à-vis its peers in different years (where available). . 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

Analysis of the financial situation of railway undertakings in the European Union’, by ECORYS for the European Commission, February 2006. 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 Ibidem. which presents, among other things, a comparison of the economic profitability 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. 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 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. . 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 Report on alleged State aid to DSB SV, KPMG, 30 January 2008. 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 post approach, 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 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).

(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 4669 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. (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 3448 million. (275) The Commission therefore notes that the after-tax profits of Business area A of DKK 4669 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 3448 million) by DKK 1221 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. (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 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. . 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 5212 million in dividends between 2000 and 2009. From this total amount, the Commission estimates that DKK 3596 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 This methodology follows the rationale that dividends are paid in relation to the level of profits made. . 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 %. (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 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. . The Commission analysed all DSB’s annual reports between 2000 and 2009 (using an ex post approach) 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 2045 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 1872 million. 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 1221 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 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). . (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 21st of each month, or the following working day if the 21st fell 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.

(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 See recital 345 of the 2010 Decision. . 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 facto clawback 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 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). . (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

See recitals 258 et seq. in ibid. . 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. (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 See recitals 375 to 385 of the 2010 Decision. . 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 See recital 378 of the 2010 Decision. . (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 See recitals 380 to 383 of the 2010 Decision. . 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 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. 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. (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 Judgment of the Court of 7 May 2009, Antrop, C-504/07, ECLI:EU:C:2009:290, paragraph 32. . 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

Judgment of 18 January 2017, Andersen v Commission, mentioned at footnote [7], paragraph 27. and the approach taken in the recent case practice 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. , 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.) Judgment of the Court of 5 October 2015, Commission v Andersen, C-303/13 P, ECLI:EU:C:2015:647, paragraphs 51 and 55. . (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 Namely, the amendments introduced, as from 24 December 2017, by Regulation (EU) 2016/2338. . 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 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. , 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) Judgment of 6 October 2015, Commission v Andersen, mentioned at footnote 15, paragraph 55. , 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).

(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) Idem, paragraphs 51 to 55. 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. (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.

(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) 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. . 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. (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 ante assessment 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 se be 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 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 rata share 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 rata excess 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 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. . 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. 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. (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