(i)

Aid resulting from two similar statements in PNL’s annual reports of 2017 and 2018 announcing that PNL would receive capital injections from its parent company (PostNord Group AB) on market conditions in the coming year.

(ii)

a capital injection of DKK 115 million (approximately EUR 15.4 million) (2) from PostNord Group AB into PNL (see recital (2)(ii)).

(iii)

Alleged cross-subsidization between Post Danmark A/S and PNL, in that PNL would make use of facilities such as trucks, staff and cabotage warehouses covered by the compensation that Post Danmark A/S receives for its universal service obligation approved in the 2018 Universal Service Obligation (“USO”) compensation decision (3).

(i)

The two statements in PNL’s annual reports of 2017 (6) and 2018 (7) (see recital (1)(i)) did not entail the granting of an advantage;

(ii)

the capital injection of DKK 115 million (approximately EUR 15.4 million) from PostNord Group AB into PNL (see recital (1)(ii)) implemented in 2018 (the “2018 capital injection” or “the measure”), did not constitute State aid; and

(iii)

the alleged cross-subsidisation between Post Danmark A/S and PNL (see recital (1)(iii)) was not established, and thus the measure did not constitute State aid.

Source:

Source:

(i)

On 20 December 2018, the first tranche of DKK 70 million (approximately EUR 9.37 million) was transferred to PNL.

(ii)

The second tranche of DKK 15 million (approximately EUR 2.01 million) was paid out in May 2019, following an evaluation carried out by PostNord Group of PNL’s performance in Q1 2019, and

(iii)

The remaining tranche of DKK 30 million (approximately EUR 4.02 million) was paid out in November 2019, following an evaluation of PNL’s performance from April to October 2019.

(a)

The State exercises its influence through the election of external Board members, establishing an “arm’s length” relation between the State as owner and the company’s Board (35), whereby the company is run on its own terms and based on what serves the company best (36). However, there are no specific written rules on how the Danish Board members should act at Board meetings, apart from the general guidelines of arm’s length for the Danish Board members. There are no obligations for the Danish Board members to brief the Danish owner before, during or after the Board meetings. The owner also does not get insight on a regular basis into what has been discussed at the Board meetings, unless of course the Board decides to bring a case to the attention for the Minister.

(b)

The State, as owner, sets the overall strategic framework in agreement with company management, while the Board handles the strategic direction within this framework (37).

(c)

The Board of Directors, in consultation with the relevant “owner” minister, must set concrete financial goals, such as expected returns comparable to those of private investors (38).

(d)

The Board’s composition and qualifications are reviewed regularly, at least annually, between the minister and the chair of the Board (39).

(a)

Similar to privately owned companies, the general meeting of State-owned enterprises is the company’s highest decision-making body and the forum in which the shareholders exercise their influence. The Government is therefore, in accordance with the Swedish corporate governance model and by corporate law, as reiterated in the Swedish’s State Ownership Policy, not entitled to instruct the companies to act in a certain way other than through the general meeting.

(b)

Board members of State-owned companies, like those in private companies, are legally required under the Swedish Companies Act to act independently and in the best interests of the company, bearing personal responsibility and potential liability for their actions (41). This duty applies equally to civil servants serving on the Board (so-called “investment directors”, which have the same mandate, responsibility and tasks as other Board directors (42)) (43). No written or informal behaviour expectations are conveyed by the State to the members of the Board on how to act in their respective capacities as Board members. This would clearly contravene the Swedish corporate governance model and policy on separation of functions of each governance body under the Swedish Companies Act.

(c)

Under the State’s Ownership Policy, the work within the Government offices is allocated so that the responsibility for sector-specific legislation for PostNord AB typically resides with divisions other than those involved in the management of State-owned enterprises. This maintains the separation of the roles of the State as owner and regulator.

(d)

With respect to section 3.2 in the Swedish State’s Ownership Policy, it follows that in certain specific cases “owner instructions” are decided upon by the general meeting of the State-owned company in question (44). However, no owner instructions have been decided upon for PostNord AB. In this respect it may be noted that a decision by the general meeting is a prerequisite for such instructions to be binding upon the Board.

(e)

Section 4.3.4 of the Swedish State’s Ownership Policy provides for a so called “coordination responsibility”, which entails that “whenever the company is faced with particularly important decisions, the board of directors should, through the chairman, coordinate in writing its view with that of the representatives of the owner. It is incumbent upon the board to decide the cases in which such coordination via the chairman is required ahead of a particular board decision.” This is the only case in the governance model for Swedish State-owned enterprises where the owner is entitled to express its view on operational matters, and it is incumbent upon the Board to decide the cases in which such coordination via the chairman should occur prior to a particular board decision. With respect to the 2018 capital injection, no such coordination took place with the Swedish owner since it did not fall within the “coordination responsibility”. Further, it may be noted that this coordination responsibility has historically been applied in a very limited number of cases in relation to all the Swedish State-owned enterprises (45).

(a)

Regarding the assessment of the organic links between, on the one hand, the Danish and Swedish States and, on the other, PostNord AB (49): (i) the case concerns a standard intra-group capital injection from the parent company, PostNord Group AB, to PNL to restore its equity; the 2018 capital injection into PNL was a pure business decision of no particular importance to PostNord AB; it was only brought before the ultimate parent company, PostNord AB, for formal reasons (see recital (14)); (ii) importantly, the approval of the capital injection by PostNord AB only required a simple majority of the Board according to the Shareholders’ Agreement; in accordance to the minutes of PostNord AB’s Board meeting concerning this topic, no civil servant expressed a view or opinion about the approval of the 2018 capital injection and all members of the Board of Directors approved the decision; (iii) there is also no evidence of a dialogue between PostNord AB and the owner States in relation to the 2018 capital injection. The provisions in the Shareholders’ Agreement concerning the undertaking to act in good faith in relation to each other and the resolution of deadlock, to which the General Court refers in paragraph 67-68 of the judgment in case T-525/20, were not triggered in relation to this decision (50), as this was a simple majority decision, the general rule for board decision making under the Swedish Companies Act (51). The mere existence of a deadlock clause (point 3.11 of the Shareholders’ Agreement) does not demonstrate relevance to the decision to grant the 2018 capital injection.

(b)

Regarding the existence of a dialogue between the members of PostNord AB’s Board and the Danish and Swedish States (52), there was no such dialogue between PostNord AB and the Danish and Swedish States on the restructuring of “the Danish Business” relating to PNL. In fact, the term “the Danish business” used in the 2017 annual report is not a uniform or predefined concept within PostNord; its meaning depends entirely on the context in which it is used. Specifically, in relation to the restructuring of “the Danish Business,” the key reference is the October Agreement, where “Danish business” clearly refers to Post Danmark A/S and the financing of its new production model (53).

(c)

Regarding the nature of PostNord AB’s activities (54), the core purpose of PostNord AB and PostNord Group is to provide nationwide postal services in Denmark and Sweden (directly or through their postal distribution subsidiary PostNord Sverige AB and Post Danmark A/S), and, through rural delivery services for customers, to provide basic financial services in Sweden. On the other hand, PNL was not entrusted with the provision of services of general economic interest, but provided only road freight logistics services and courier services to customers. The activities of PNL fell within the outer limits of PostNord AB’s corporate purpose – “and directly or through subsidiaries or associated companies, to operate activities in accordance therewith”. PNL was of secondary importance to PostNord AB and PostNord Group and a hypothetical bankruptcy of PNL would not have resulted in any significant political or societal consequences for Denmark, including in its role as postal service regulator (55). Indeed, it would not have affected Post Danmark’s ability to fulfil its universal service obligation if PNL had not been operating at the time of the 2018 capital injection. In fact, PNL and Post Danmark A/S operated in distinct business areas. While some services were exchanged between these companies, these transactions were of limited economic importance and occurred only when explicitly requested by the purchasing company. These services covered terminal rentals, staff support, administrative assistance, and transport using excess lorry capacity, among others. All services were provided at arms length, meaning full costs – including a margin – were invoiced between the two entities.

(d)

Regarding the compass of the 2018 capital injection (56), the amount of the capital injection – equal to a mere 0,3 % of PostNord Group’s total revenues – should be seen in light of the abovementioned secondary importance of PNL for PostNord AB and PostNord Group.

(a)

Regarding the assessment of the organic links between, on the one hand, the Danish and Swedish States and, on the other, PostNord AB (57), the Swedish State has not in any way been involved in or influenced the decision-making process with respect to the 2018 capital injection by providing instructions or otherwise since: (i) each of the directors of the Board nominated by the State(s), including any civil servants, acts independently from the State and serve in their personal capacity as Board members and not as representatives of the State (which would be a violation of Swedish law, their fiduciary duties, and principles of good corporate governance) (see recital (37)); (ii) the Swedish Constitution (Freedom of the Press Act (58)) requires distinguishing between actions taken by an official in its official capacity versus in its capacity as a holder of “another position” (e.g., as a member of the Board of PostNord AB) and the Swedish Supreme Administrative Court has ruled that serving on a company board is such a separate role (59); (iii) the decision regarding the 2018 capital injection did not trigger the “coordination responsibility” between PostNord AB’s Board of Directors and the Swedish State under the Swedish State’s Ownership Policy (see recital (37)(e)); (iv) there are no special “circumstances surrounding the appointment of the members of the management bodies of a public undertaking [such as PostNord AB] […] capable of establishing that that undertaking has a limited margin of independence from the State which controls it” (60).

(b)

Still regarding the assessment of the organic links (61), the roles of the Swedish State as owner of PostNord AB and postal regulator are strictly separated. The governance of PostNord AB is handled by the Department for State-Owned Enterprises of the Ministry of Enterprise and Innovation (“DSOE”), which is entirely separate from the ministry regulating the postal sector (see recital (37)(c)). Therefore, the employees of DSOE (including any civil servants also having an assignment as directors of the Board of PostNord AB) are not simultaneously performing any duties with respect to the regulation of the postal sector market, such duties being handled by other Government Officials in another division/department. Thus, civil servants in DSOE are not performing their official duties in areas of activity with a direct link to PostNord AB and it cannot therefore be inferred that there is a likelihood for these civil servants “to maintain informal contacts with agents of the ministries to which they belonged and, thus, to relay the influence of the said States in the decision-making process within PostNord”. Finally, as per the Shareholders’ Agreement entered into by the States, as regards the representatives of the States, the Board in PostNord AB consists of eight Board members (and no deputies) – out of eleven – appointed by the shareholders’ meeting (section 3.2.1) and each of the States nominates four (sections 3.2.2 – 3.2.4). This means that the States are not appointing any board members (62). In this context, the Shareholders’ Agreement ensures each owner's Board nominations are respected, which is essential for influencing the company's strategic direction. The Board acts independently, and the States are not present at board meetings. Standard provisions like voting thresholds or acting in good faith are common in such agreements and do not imply State control or imputability, especially since the agreement binds only the shareholders, not the company itself.

(c)

Regarding the nature of PostNord AB’s activities (63), there exists no direct link between the areas of activities of the Swedish State and the area of activity of PNL. PNL’s activity consisted in road freight logistics service and courier services to customers in Denmark and the company did not provide postal services in Sweden. Hence, the 2018 capital injection (at the time) would not have had any impact, positive or negative, on the fulfilment of the universal postal service obligations in Sweden. Furthermore, PostNord AB’s articles of association and Swedish corporate law require the company to operate on a purely commercial basis, with no public policy objectives unless explicitly stated. Therefore, even the universal postal service obligations must be fulfilled commercially.

(a)

whether the deciding entity could take the contested decision without “taking account of the requirements of the public authorities”;

(b)

whether, apart from organic factors linking it to the State, it had to take account of directives of a government;

(c)

its integration into the structures of the public administration;

(d)

the nature of its activities;

(e)

the exercise of its activities on the market in normal conditions of competition with private operators;

(f)

the legal status of the undertaking (i.e. subject to public law or ordinary company law);

(g)

the intensity of supervision exercised by public authorities over its management, and;

(h)

any indicator showing, in the particular case, any involvement by the public authorities in the adoption of the measure, or the unlikelihood of their not being involved, having regard also to its “compass” (“ampleur”), its content, or the conditions it contains.

(a)

The deciding entity (PostNord Group) could take the decision to inject the capital injection into PNL without “taking account of the requirements of the public authorities”. This is because the decision of PostNord Group to inject capital into PNL happened following a request of PNL. PNL took the decision to request capital during an extraordinary general meeting of its board on 30 November 2018. PostNord AB, in line with the internal governance policy of PostNord, was involved in the decision-making process since the intended capital injection exceeded SEK […] million. While it is highly likely that Denmark and Sweden were aware of the intended capital injection (notably since two board members were also active as civil servants in Denmark and Sweden respectively), it does not appear that the States, nor the two civil servants that are Board members, expressed any particular view regarding the capital injection for PNL. This is confirmed by the minutes of PostNord AB’s board meetings of 7 December 2018 and 11 December 2018. Moreover, as follows from the above, the decision to implement a capital injection was incited by the management of PostNord Group and not by PostNord AB (see recital (55)(a)).

(b)

PostNord AB and its subsidiaries are not integrated in the public administration of Sweden and/or Denmark (see recital (55)(c)).

(c)

PostNord AB’s activities and those of its subsidiaries (i.e. PostNord Group and PNL) are, in general, purely commercial and exercised in normal conditions of competitions with private operators, excluding certain of Post Danmark’s activities (e.g. USO). In any event, PNL’s activities are purely commercial (see recital (55)(e)).

(d)

PostNord Group, via PostNord AB, is 100% owned by Denmark and Sweden, as are almost all its subsidiaries, including PNL. Despite PNG being a publicly owned company, it is governed by private law (see recital (55)(f)).

(a)

Organic links between PostNord AB and the Danish and Swedish States. According to the General Court, the Commission’s investigation should provide additional details regarding the circumstances surrounding the appointment by the States of PostNord’s Board of Directors’ members (simultaneously performing senior management duties in government ministries in Denmark and in Sweden, in areas of activity with a direct link to public undertakings – including PostNord) (75). Considering that the judgment in case T-525/20 found that the organic factors were capable of constituting a non-negligible imputability indicator (76), further evidence may help the Commission to assess how the Board of Directors of PostNord operates and the degree of (in)dependence of its members from their respective national authorities (77). Namely, it is not yet entirely clear whether the members of the Board of Directors of PostNord AB, and in particular the two members of the Board that were civil servants, in any way are required to report or reported back to the national authorities on Board discussions or maintained informal contacts with the ministries to which they belong allowing those public authorities to influence the decision-making process in PostNord as regards the 2018 capital injection. This is in particular because the Swedish and Danish authorities referred to a “coordination responsibility” between the State owners and the Board of Directors of the State-owned company under Section 4.3.4 of the Swedish State’s Ownership Policy (see recital (37)(e)), to “owner instructions” (see recital (37)(d)), to “owners dialogue” and to matters that can be brought to the attention of the Swedish Ministry of Enterprise and Innovation (Department of ownership of State-owned enterprises) by the chairman of the Board on an ad-hoc basis in order to inform the Ministry on important issues that are deemed vital and natural for an owner to be aware of (see recital (39)). The Commission is also aware of an obligation on PostNord AB to consult its owners under Article 4.3 of the Rules of Procedure (see recital (40)). The investigation may provide further information as to whether PostNord AB’s Board of Directors’ decision to adopt the 2018 capital injection fell under, or should have been considered to fall under these provisions. Furthermore, it is not clear whether the Danish authorities have put in place any safeguards – similar to the safeguards that the Swedish authorities have described in recitals (37)(c) and (43)(b) – in place for those civil servants who have been nominated by Denmark and appointed as directors of PostNord AB’s Board by the shareholders’ meeting.

(b)

Existence of a dialogue between the members of PostNord’s Board of Directors and the Danish and Swedish States. The investigation may determine whether, in light of PostNord AB’s annual report for 2017, the “dialogue with the owners on financing the restructuring of the Danish business” comprised also PNL or only Post Danmark’s activities, as, based on this report, the Danish business could be understood to encompass both Post Danmark and PNL.

(c)

The nature of PostNord’s activity. Although PNL is not responsible for the universal postal service, it still needs to be determined to what extent the capital injection to PNL may have had an impact on the fulfilment of the universal service obligation, considering that the capital injection to PNL “had to be approved by the board of directors of PostNord, a company whose corporate purpose is, primarily, to provide postal services in Denmark and Sweden and operate activities in accordance with those services”, which is why “the decisions taken by its board of directors were deemed to coincide with such a corporate purpose” (78). Thus, the Commission needs to determine to what extent the 2018 capital injection may have had an impact, positive or negative, on the fulfilment of the universal service obligations of PostNord AB and its group.

(d)

The “compass” of the capital injection to PNL. The Commission has to analyse – together with the above-mentioned indicators – whether the non-negligible amount of the capital injection to PNL of approximately EUR 15.4 million was of critical importance for the beneficiary of the capital injection (PNL), whose economic viability was depending on it (79). In addition, this amount exceeded the threshold above which capital injections within the group had to obtain approval from PostNord AB, the parent company of that group, whose Board of Directors had close links with the Danish and Swedish States. Indeed, since decisions on internal group capital injections exceeding SEK […] million (approximately EUR […] million) need to have the approval of the Board of Directors of PostNord AB, the amount of the 2018 capital injection exceeding the aforementioned threshold could indicate the involvement of the Danish and Swedish States in the adoption of that measure.

(a)

At the time of the analysis, PNL had been regularly loss making since 2013 despite a turnaround plan launched in 2017, implemented in 2018 and that consisted, as a large part, of a set of measures of renegotiating contracts with freight and courier customers? [or other contracts?] through a commercial clean-up phase with effect from 1 January 2019 and with the objective of restoring the company to profitability starting in 2020.

(b)

PNL’s EBIT had been almost consistently negative, severely deteriorating in the latest years (2017, 2018).

(c)

PostNord explained that PNL’s losses of 2018 were exceptional losses related to losing […] customers (82). Based on the information provided, it is difficult to assess to what extent this represents exceptional circumstances, or whether these events are just part of the regular business of a company in this sector.

(d)

The business plan underpinning the 2018 capital injection rests on revenue increases (both prices and volumes are expected to increase – a rather optimistic assumption which appears to lack a clear justification or benchmarking) and cost optimization measures, The measures foreseen in the plan do not appear to imply any costs and could therefore theoretically have been implemented earlier.

(e)

PostNord explains that a major factor for success of the turnaround plan for PNL was the fact that the entire senior management of PNL was replaced during 2017, which may be true but is difficult to quantify and therefore to take into account in a MEIP assessment.