After appeal Europe's competition enforcer launched an in-depth investigation on the 14.06.2019  into public financing for a planned €8.7 billion ($9.8 billion) rail and road tunnel linking German and Danish islands after a court ordered a closer look to see if it constitutes illegal state aid.

The European Commission is probing Denmark's public financing model for the Fehmarn Belt project, a nearly 12-mile submerged tunnel between the island of Lolland in Denmark and the island of Fehmarn in Germany.

Watchdogs initially signed off on the plan in July 2015 after finding it was in line with state aid rules, but a pair of ferry operators challenged the decision at the European Court of Justice.

The Fehmarn Belt, expected to include a double-track railway and a four-lane highway, is part of a broader North-South route connecting central Europe and the Nordic countries. Denmark estimated the tunnel would cost about €7.4 billion in 2014 and that connections to existing routes in the country would cost about €1.3 billion. Germany is financing connections to its routes separately.

The commission signed off on Denmark's plan to finance the onshore portion of the project through state-owned Femern Landanlæg, saying that it did not constitute state aid. The commission also approved financing for the tunnel portion through Femern A/S, another state-owned entity, but said it wasn't necessary to decide if that measure qualified as state aid, because it constitutes an "important project of common European interest."

Scandlines AG and Stena Line, which both operate ferry routes in the region, challenged the commission's decision in November 2015. The General Court annulled the commission's approval of a portion of the financing in December after finding that a formal investigation should have been opened.

In December, the General Court confirmed the commission's decision in regard to Femern Landanlæg but annulled its approval of the aid to Femern A/S for the tunnel financing. The court said the commission should have opened a formal investigation to assess the "necessity and  proportionality" of that portion of the project.

The commission said in June's statement that it has opened the investigation to comply with the court's ruling. The agency said it is not currently in a position to determine if the Femern measures constitute state aid, because of uncertainty about the "economic character" of the tunnel. Its probe will focus on determining whether the financing counts as investment or operating aid, as well as the level of financing and the need for it.  Visit https://www.law360.com/competition/articles/1169233/eu-probing-8-7b-tunnel-project-s-financing-after-appeal.

25/19.