CELEX: 62014TJ0386
State aid
Banking sector
Aid granted to Danish bank FIH in the form of a transfer of its impaired assets to a new subsidiary and the subsequent purchase thereof by the Danish Financial Stability Company
State aid for banks during the crisis
Decision declaring the aid compatible with the internal market
Definition of aid
Private investor test
Private creditor test
Calculation of the amount of the aid
Obligation to state reasons

Background to the dispute
General background
One of the two applicants, FIH Erhvervsbank A/S (‘FIH’), is a limited liability company established in accordance with Danish banking legislation and supervised by the Danish banking authorities. FIH and its subsidiaries are wholly owned by the other applicant, FIH Holding A/S (‘FIH Holding’).
Like other banks, FIH benefited from certain measures adopted by the Kingdom of Denmark in order to stabilise its banking sector. In June 2009, FIH received a hybrid tier 1 capital injection of DKK 1.9 billion (approximately EUR 225 million) under the Danish Law on State-funded capital injections. That law had been approved by the Commission as an aid scheme compatible with the internal market by Decision C(2009) 776 final of 3 February 2009 on State aid scheme N31a/2009 — Denmark. According to that decision, the aid scheme was open to fundamentally sound and solvent banking establishments.
In July 2009, the Kingdom of Denmark granted FIH a State guarantee totalling DKK 50 billion (approximately EUR 6.31 billion) under the Danish Law on financial stability. That law was also approved as a State aid scheme compatible with the internal market by Decision C(2009) 776 final. FIH used the entire guarantee to issue bonds. As of 31 December 2011, the total amount of State-guaranteed bonds issued by FIH was DKK 41.7 billion (approximately EUR 5.56 billion), which constituted 49.94% of FIH’s balance sheet. Those bonds were due to mature in 2012 and 2013.
Between 2009 and 2011, Moody’s ratings agency downgraded FIH’s rating from A2 to B with negative outlook.
In order to overcome the liquidity problems that the maturity profile of the bonds was going to create, it appeared necessary to reduce FIH’s balance sheet significantly. On 6 March 2012, the Kingdom of Denmark therefore notified a package of measures to the Commission. Two phases were envisaged.
During the first phase, the most problematic assets (in particular, property loans and derivatives) were to be transferred to NewCo, a new subsidiary of FIH Holding. NewCo’s initial liabilities consisted of two loans from FIH and an equity stake of DKK 2 billion (approximately EUR 268 million). In that context, the Financial Stability Company (‘the FSC’), a public body set up by the Danish authorities in the context of the financial crisis, also provided NewCo with funding in the amount necessary to refinance its assets (DKK 13 billion), so as to enable FIH to repay its State-guaranteed loans.
During the second phase, the FSC was to buy the shares in NewCo, which would be wound up in an orderly manner thereafter.
FIH Holding and the FSC concluded several side-agreements relating to NewCo’s situation during that winding-up process. In particular, FIH Holding gave an unlimited loss guarantee to the FSC, guaranteeing that the FSC would fully recover the amounts it paid and the capital it provided to NewCo. The FSC agreed to finance and to recapitalise NewCo during the winding-up process, if that proved to be necessary.
By Decision C(2012) 4427 final of 29 June 2012 on State aid SA.34445 (12/C) (ex 2012/N) — Denmark, the Commission concluded that the measures notified constituted State aid to NewCo and the FIH Group. Nevertheless, for reasons of financial stability it temporarily approved the package of measures for a period of six months or, if the Kingdom of Denmark submitted a restructuring plan during that period, until the Commission adopted a final decision on that restructuring plan.
By the same decision, the Commission initiated a formal investigation procedure in respect of those measures. In particular, it expressed doubts as to the proportionality of the measures and their limitation to the minimum necessary. It also considered whether the FIH Group’s own contribution was sufficient and whether distortions of competition were sufficiently limited.
On 2 July 2012, FIH repaid the Kingdom of Denmark the hybrid tier 1 capital of DKK 1.9 billion (approximately EUR 225 million) it had received in 2009. Thanks to the early repayment of that capital, the FSC was able to finance almost the entire amount of DKK 2 billion required for the purchase of NewCo.
On 4 January 2013, the Kingdom of Denmark submitted a restructuring plan, the final version of which is dated 24 June 2013.
On 3 October 2013, the Kingdom of Denmark submitted a package of proposals for commitments, the final version of which is dated 3 February 2014, in order to address the concerns expressed by the Commission in the context of the investigation procedure.
Contested decision
On 12 March 2014, the Commission notified the Kingdom of Denmark of Decision 2014/884/EU of 11 March 2014 concerning State aid SA.34445 (12/C), implemented by Denmark for the transfer of property-related assets from FIH to the FSC (
OJ 2014 L 357, p. 89
; ‘the contested decision’). The aid in question was declared compatible with the internal market by virtue of Article 107(3)(b) TFEU, in the light of the restructuring plan and the commitments made.
According to the contested decision, the measures in favour of FIH constituted State aid within the meaning of Article 107(1) TFEU.
In the first place, the Commission noted that the measures in question involved State resources, since they had been financed by the FSC, a State-owned company using public resources. First, the FSC had made a cash payment of DKK 2 billion (approximately EUR 268 million) for the equity stake in NewCo. Second, the FSC had committed itself to fund NewCo’s assets while FIH repaid its State guaranteed loans (see paragraph 6 above). Thirdly, the FSC had foregone part of the interest due in order to pay for the guarantee from FIH Holding against NewCo’s losses (see paragraph 8 above).
In the second place, the Commission considered that the measures provided an advantage to the FIH Group. It considered that, contrary to the assertions of the Danish authorities, these measures did not observe the principle of the market economy operator. In that regard, the contested decision indicates, in a graph, the Net Present Value (‘NPV’) of the share purchase agreement for various liquidation values of NewCo’s assets, ranging from DKK 5.1 billion to DKK 28.3 billion. The probability of each situation materialising is indicated by the dotted line (from 0.1% to 7.5%). According to the Commission, in the most likely situations, the return is slightly negative.
According to the contested decision, the expected return of the measures at issue depends on the future stream of revenue from cash flows, discounted to the present day in order to derive its net present value ‘NPV’ using an appropriate discount rate.
The contested decision thus concludes that, according to the calculation of the Commission’s external expert, the overall probability-weighted average NPV of the share purchase agreement amounts to DKK 726 million. As a result, the share purchase agreement generates a loss rather than a profit for the FSC. Moreover, a market economy operator would have required an equity remuneration of at least 10% per annum on a similar DKK 2 billion investment (approximately EUR 268 million), which would have generated about DKK 1.33 billion over the seven-year existence of NewCo.
In the third place, the Commission stated that the measures concerned only the FIH Group and NewCo and were, therefore, selective.
In the fourth place, the Commission considered that the measures were likely to distort competition and to have an effect on trade between Member States.
According to the Commission’s calculations, supported by reports from external experts, the aid amount was approximately DKK 2.25 billion (approximately EUR 300 million). To quantify the amount of aid, the Commission considered the following:
—
the benefit related to the share purchase agreement formula (DKK 0.73 billion) stemming from a mere 25% equity upside participation over a seven-year investment period (according to the Commission, a straightforward equity investment would entail a 100% participation in the equity returns);
—
the annual equity investment remuneration foregone over a seven-year investment period (DKK 1.33 billion);
—
the excess interest payments by NewCo on the first loan to FIH and its initial funding (DKK 0.33 billion);
—
the payment of excess administration fees to FIH for asset management and hedging (DKK 0.14 billion).
As a mitigating factor, the Commission considered that the early cancellation of government guarantees amounting to DKK 0.28 billion should be deducted from the total aid amount.
As regards the compatibility of the aid, the Commission examined the measure on the basis of Article 107(3)(b) TFEU and in the light of the Communication from the Commission on the treatment of impaired assets in the Community banking sector (
OJ 2009 C 72, p. 1
; ‘the Impaired Assets Communication’) and the Communication from the Commission on the application, from 1 January 2012, of State aid rules to support measures in favour of banks in the context of the financial crisis (
OJ 2011 C 356, p. 7
; ‘the Restructuring Communication’).
In that regard, the Commission noted that the remuneration required for the equity stake was based on the effective net capital relief of the measures. It assessed the gross capital relief effect of the measures at DKK 375 million, and the equivalent transfer value at DKK 254 million above the real economic value, which ought to be remunerated and clawed back. In addition, DKK 143.2 million in excess fees should be recovered.
According to the Commission, an early payment of DKK 254 million (with a value date of 1 March 2012) reduced the net capital relief effect from DKK 375 million to DKK 121 million. Therefore, the payment of a one-off premium of DKK 310.25 million with a value date of 30 September 2013, plus an annual payment of DKK 12.1 million (corresponding to an annual remuneration of 10% of the capital relief) and the recovery of the excess administration fees would make the measures compatible with the Impaired Assets Communication.
In view of these different elements, the Commission considered that the measures were proportionate, limited to the minimum and ensured a sufficient contribution from FIH, in accordance with the Impaired Assets Communication.
Next, the Commission checked the compatibility of the measures with the Restructuring Communication. It thus considered that a comprehensive restructuring plan had been submitted, demonstrating that FIH would restore its long-term viability without State aid. Moreover, according to the Commission, the restructuring plan ensured adequate burden-sharing and sufficient mitigation of distortion of competition.
In the light of the foregoing, the contested decision declared the aid compatible with the internal market.
Procedure and forms of order sought
By application lodged at the Court Registry on 24 May 2014, the applicants brought the present action.
The applicants claim that the Court should:
—
annul the contested decision;
—
order the Commission to pay the costs.
The Commission contends that the Court should:
—
dismiss the action as in part inadmissible and in part unfounded;
—
order the applicants to pay the costs.
On the Proposal of the Judge-Rapporteur, the Court decided to open the oral procedure and, by way of measures of organisation of procedure provided for under Article 89(3)(a) of the Rules of Procedure of the General Court, requested the parties to answer certain written questions. The parties answered those questions within the prescribed period.
The parties presented oral argument and replied to the questions put by the Court at the hearing on 25 February 2016.
Law
In support of their action, the applicants raise three pleas in law alleging, first, infringement of Article 107(1) TFEU in so far as the contested decision did not correctly apply the market economy operator principle, secondly, errors in the calculation of the amount of State aid and of incompatible aid and, thirdly, infringement of the obligation to state reasons.
The first plea, alleging incorrect application of the market economy operator principle
Arguments of the parties
By their first plea, the applicants claim that the contested decision is contrary to Article 107(1) TFEU, in so far as the Commission found that the measures were not compatible with the market economy operator principle. According to the applicants, the Commission was wrong to find that the transfer of assets constituted State aid inasmuch as no market economy operator would have invested on equivalent terms and conditions.
In that regard, the Commission failed to take into consideration the pre-existing risk for the Kingdom of Denmark of suffering very large losses on the DKK 1.9 billion (approximately EUR 225 million) hybrid tier 1 capital injection and the DKK 42 billion in State guaranteed bonds issued by FIH. According to the applicants, the transfer of assets was intended to do away with the risk of FIH face liquidity difficulties or even having to be wound up.
The applicants claim that, according to the estimates made by an external consultant in June 2012, the Kingdom of Denmark risked suffering a net loss of DKK 3.8 billion on the State guaranteed bonds and DKK 1.9 billion on the hybrid tier 1 capital injection if FIH defaulted. Therefore, the estimated net loss dwarfs the State aid amount calculated by the Commission at DKK 2.25 billion.
The applicants add that, at the time of the transfer of assets, the Kingdom of Denmark had to face two risk scenarios. First, the risk associated with the State guaranteed bonds and the hybrid capital injection in the context of a possible default of FIH. Second, the risk associated with the transfer of assets itself, arising from the possibility that the transferred asset portfolio might perform worse than expected. However, under the transfer agreement, any loss caused would be borne by FIH. The applicants complain that the Commission failed to examine, in the contested decision, whether the transfer of assets reduced significantly (or even removed) the first risk, namely, the risk of default by FIH.
According to the applicants, instead of analysing whether, in similar circumstances, a private operator would have granted the same funding, the Commission should have considered the conduct of a private operator facing the same risks as the Kingdom of Denmark. In reality, a private creditor would not be in the same situation as a private investor operating in normal market economy conditions (‘a private investor’), in the sense that the former might have to accept a loss-making transaction if this was a means of avoiding greater losses.
The applicants argue that, given the risk of suffering the losses identified in paragraph 38 above (DKK 5.7 billion), the terms of the transfer of assets were not manifestly more generous to FIH than those that a prudent operator in a market economy (a private creditor) would have agreed to.
The applicants note that, in relation to the State’s exposure, the DKK 1.9 billion (approximately EUR 225 million) hybrid tier 1 capital injection into FIH was replaced with a DKK 2 billion (approximately EUR 268 million) equity investment in NewCo. In addition, FIH Holding offered an unlimited loss guarantee. Moreover, whereas the hybrid tier 1 capital was not covered in the event of FIH’s bankruptcy, the equity investment in NewCo was backed by collateral and by a loss guarantee given by FIH Holding. Furthermore, FIH was under an obligation to use the DKK 2 billion received from the FSC to redeem State guaranteed bonds, thereby further reducing the latter’s exposure. Finally, in case of default, FIH would have to distribute an estimated dividend of no less than 90%.
The applicants maintain that a private creditor would have tried in the same way to reduce its exposure to a debtor experiencing financial difficulties. In the light of the foregoing, the applicants consider that there was no State aid in the transfer of assets and that, therefore, the contested decision must be annulled for being contrary to Article 107(1) TFEU.
The Commission disputes the applicants’ arguments.
According to the Commission, the applicants overlook the distinction drawn in the case-law between the applicability of the market economy operator principle and its actual application. It contends that that principle must be applied if the Member State concerned has acted in its capacity as a market operator and not in its capacity as a public authority. As to the application of the principle, only the benefits and obligations linked to the situation of the State as shareholder, to the exclusion of those linked to its situation as a public authority, are to be taken into account.
Accordingly, the applicants’ thesis on the treatment of pre-existing liabilities arising from the capital injection and guarantees is at odds with the case-law. The applicants overlook the fact that those measures were State aid in favour of FIH and therefore clearly arose from the State’s behaviour as a public authority. Consequently, the Commission could not have given any weight to the risk of those losses.
For the same reasons, the Commission contends that the applicants are mistaken to claim that it erred in looking at the Member State as an investor and not as a creditor. The Commission notes that the applicants identify no other pre-existing debts owed by FIH to the State as a market operator.
As regards the risk situation associated with the probability of default of FIH Holding, the Commission points out that it enjoys broad discretion when it has to carry out a complex economic appraisal, as in the present case. It adds that, under the unlimited loss guarantee offered by FIH Holding, the relevant risk was that any losses suffered by the FSC during NewCo’s winding-up (in particular if it had to be recapitalised) would exceed the ability of FIH Holding to meet those losses. The lower NewCo’s liquidation value (and hence the higher the losses faced by the FSC), the less likely it would be that FIH Holding could honour all of its obligations under that guarantee. The Commission estimated a loss expectation of 16% over the entire distribution of potential liquidation values, corresponding to the implied default rate of a financial institution with a Moody’s B1 rating, which was the rating assigned to FIH when the packet of measures was agreed. In conclusion, the Commission considers that it properly evaluated the risk of default of FIH Holding in relation to the latter’s unlimited loss guarantee to the FSC.
In its rejoinder, the Commission states that, having decided that the market economy investor principle was applicable, it applied that principle in the contested decision.
Findings of the General Court
Article 107(1) TFEU provides that, save as otherwise provided in the Treaties, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market.
For a measure to be classified as aid within the meaning of Article 107(1) TFEU, all the conditions set out in that provision must be satisfied. First, there must be intervention by the State or through State resources. Second, the intervention must be liable to affect trade between Member States. Thirdly, it must confer an advantage on the recipient by favouring certain undertakings or the production of certain goods. Fourthly, it must distort or threaten to distort competition (judgment of 17 May 2011, Buczek Automotive v Commission,
T-1/08
,
EU:T:2011:216
, paragraph
).
More specifically, with regard to the condition relating to advantage, it must be borne in mind that, in accordance with settled case-law, the concept of aid is broader than that of a subsidy because it embraces not only positive benefits, such as subsidies themselves, but also measures that, in various forms, mitigate the charges that are normally included in the budget of an undertaking and, without being subsidies in the strict sense of the word, are therefore similar in character and have the same effect (judgment of 17 May 2011, Buczek Automotive v Commission,
T‑1/08
,
EU:T:2011:216
, paragraph
).
Again, according to settled case-law, Article 107(1) TFEU does not distinguish between measures of State intervention by reference to their causes or aims but defines them in relation to their effects (judgment of 17 May 2011, Buczek Automotive v Commission,
T‑1/08
,
EU:T:2011:216
, paragraph
).
Finally, it has been held that, in order to determine whether a State measure constituted aid for the purposes of Article 107 TFEU, it is necessary to establish whether the recipient undertaking received an economic advantage which it would not have obtained under normal market conditions (judgment of 17 May 2011, Buczek Automotive v Commission,
T-1/08
,
EU:T:2011:216
, paragraph
).
It must be pointed out that action taken by public authorities in respect of the capital of an undertaking, in whatever form, may constitute State aid where the conditions set out in Article 107 TFEU are fulfilled (judgment of 6 March 2003, Westdeutsche Landesbank Girozentrale and Land Nordrhein-Westfalen v Commission,
T-228/99 and T-233/99
,
EU:T:2003:57
, paragraph
).
In order to determine whether such action is in the nature of State aid, it is necessary to assess whether, in similar circumstances, a private investor of a size comparable to that of bodies managing the public sector might have been prompted to take the measure in question. In particular, the relevant question is whether a private investor would have entered into the transaction in question on the same terms and, if not, on what terms he might have done so. The comparison between the conduct of public and private investors must be made by reference to the attitude which a private investor would have had at the time of the transaction in question, having regard to the available information and foreseeable developments at that time (see, to that effect, judgment of 6 March 2003, Westdeutsche Landesbank Girozentrale and Land Nordrhein-Westfalen v Commission,
T-228/99 and T-233/99
,
EU:T:2003:57
, paragraphs
and
).
However, it must be noted that, as regards the recovery of public debts, there is no need to examine whether the public bodies in question acted like public investors whose behaviour should be compared to the conduct of a private investor pursuing a structural policy, whether general or sectoral, guided by the longer-term prospects of profitability of the capital invested. Those bodies must in reality be compared to a private creditor seeking to obtain payment of sums owed to it by a debtor in financial difficulties (judgments of 29 June 1999, DM Transport,
C‑256/97
,
EU:C:1999:332
, paragraphs
and
; of 24 January 2013, Frucona Košice v Commission,
C‑73/11 P
,
EU:C:2013:32
, paragraph
; of 11 July 2002, HAMSA v Commission,
T‑152/99
,
EU:T:2002:188
, paragraph
; and of 17 May 2011, Buczek Automotive v Commission,
T‑1/08
,
EU:T:2011:216
, paragraph
).
When a firm faced with a substantial deterioration of its financial situation proposes an agreement or series of agreements for debt arrangement to its creditors with a view to remedying the situation and avoiding liquidation, each creditor must make a decision having regard to the amount offered to it under the proposed agreement, on the one hand, and the amount it expects to be able to recover following possible liquidation of the firm, on the other. Its choice is influenced by a number of factors, including the creditor’s status as the holder of a secured, preferential or ordinary claim, the nature and extent of any security it may hold, its assessment of the chances of the firm being restored to viability, as well as the amount it would receive in the event of liquidation. If it turned out, for example, that, in the event the firm was liquidated, the realisation value of its assets was sufficient to cover only mortgage and preferential claims, ordinary claims would have no value. In such a situation, acceptance by an ordinary creditor of the cancellation of a major part of its claim would not be a real sacrifice (judgment of 11 July 2002, HAMSA v Commission,
T-152/99
,
EU:T:2002:188
, paragraph
).
It must be stated that the mere fact that a public undertaking has already made capital injections into a subsidiary that are classed as aid does not automatically mean that a further capital injection cannot be classed as an investment satisfying the market economy investor test (judgment of 15 September 1998, BP Chemicals v Commission,
T‑11/95
,
EU:T:1998:199
, paragraph
).
Finally, the market economy investor test is not an exception that applies only if a Member State so requests. Where it is applicable, that test is among the factors the Commission is required to take into account for the purposes of establishing the existence of aid (judgment of 5 June 2012, Commission v EDF,
C‑124/10 P
,
EU:C:2012:318
, paragraph
). Consequently, where it appears that the private investor test could be applicable, the Commission is under a duty to ask the Member State concerned to provide it with all relevant information enabling it to determine whether the conditions governing the applicability and the application of that test are met (judgments of 5 June 2012, Commission v EDF,
C‑124/10 P
,
EU:C:2012:318
, paragraph
, and of 3 April 2014, Commission v Netherlands and ING Groep,
C-224/12 P
,
EU:C:2014:213
, paragraph
).
It is in the light of those principles that the first plea in law must be examined, which raises the question whether the Commission applied the appropriate test for assessing the existence of aid in the present case. According to the applicants, in essence, the Commission should have applied the market economy creditor principle to the Kingdom of Denmark’s conduct in order to take into account the risk of financial losses had the measures at issue not been taken. By contrast, the Commission claims to have applied the correct test, namely, the private investor principle. It disputes the applicants’ arguments, contending that any pre-existing debts to the Kingdom of Denmark resulting from the capital injection and guarantees could not be taken into account, since the latter had acted in its capacity as a public authority in adopting those measures that constituted aid. In that regard, it must be noted that, even if the contested decision remains silent on the reasons that led the Commission to ignore the measures adopted in 2009 in its analysis of the measures notified in 2012, the Commission stated in its written pleadings that the reason was that the 2009 measures constituted State aid.
Therefore, it falls to the General Court to establish whether, in its assessment of the measures notified in 2012, the Commission was bound to take into account that, in 2012, the Kingdom of Denmark was facing certain risks arising from the capital injection and guarantees granted in 2009, as the applicants claim, or whether, as the Commission contends, it could ignore that circumstance.
It is logical to consider that a rational economic operator would have taken into account its exposure arising from a capital injection and a guarantee granted to a company in subsequent financial difficulty to determine whether it would be reasonable for it not to act and let the risk potentially materialise or whether, on the other hand, it would be prudent to adopt certain measures to prevent the risk materialising. Such a decision would be taken having regard to the information available and foreseeable developments at that time. That choice would be influenced by a number of factors, such as the degree of exposure (namely the amount of the capital injection and the amount covered by the guarantee), the likelihood of the risk’s materialisation, the chances of recovering funds in the event of the company being wound up, the duration of the winding-up procedure as well as the cost and risks inherent in the adoption of the measures proposed and the chances of the company being restored to viability.
As the applicants correctly point out, an economic operator in a situation such as that in the present case, in which it has previously granted a capital injection and a guarantee to the company concerned, is akin to a private creditor seeking to minimise its losses rather than a private investor seeking to maximise the profitability of the funds that it might invest where it so wishes. Whereas the mere inactivity of a private creditor is liable to have financial consequences for him, the decision of a private investor to invest for the first time in one company rather than another is essentially guided by his prospects of profit.
It can be rational for an economic operator, having invested capital in a company to which he has also granted a guarantee, to adopt measures involving loss where they substantially reduce, if not eliminate, the risk of losing his capital and the enforcement of the guarantee.
More specifically, it may be economically rational for the Kingdom of Denmark to accept measures such as a transfer of impaired assets, in so far as they have a limited cost and involve reduced risk and that, without such measures, it would be highly likely that it would have to bear losses in an amount greater than that cost.
With regard to the objective of the rules on the control of State aid, it would be illogical if, in order to respect them, a Member State were required to make a transfer of considerable funds, which had become highly likely, to an undertaking, if it is shown that it could avoid that expense by adopting measures having a lower cost, which latter conduct would be economically rational.
In the present case, the contested decision does not examine the cost that would have arisen had the Kingdom of Denmark not adopted measures in 2012 following from the DKK 1.9 billion (approximately EUR 225 million) hybrid tier 1 capital injection and the State guarantee totalling DKK 50 billion (approximately EUR 6.31 billion), taken on the basis of Decision C(2009) 776 final.
In that respect, it must be declared that the contested decision applied an incorrect legal test, namely, the market economy investor principle, instead of examining the measures in the light of the market economy creditor principle, irrespective of the result to which that analysis would have led. The Kingdom of Denmark’s conduct, when it adopted the measures at issue in 2012, cannot be compared to that of an investor seeking to maximise its profit, but that of a creditor seeking to minimise the losses to which it is exposed in the event of inaction. In those circumstances, it must be held that the contested decision used an incorrect reference framework for its analysis.
It should be added that it is not for the Court, in the context of the present proceedings, to rule on the result to which the Commission’s application of the private creditor test would have led in the circumstances of the present case. Therefore, it is for the Commission, by applying the correct legal test, to draw the appropriate conclusions from the fact that the 2009 measures constituted State aid declared compatible with the internal market, possibly establishing, for the purposes of that analysis, whether the aid-equivalent was equal to the total amount of those measures or to only part thereof. It follows from the case-law that, where a State grants a guarantee for a bank loan to a company in difficulty without adequate consideration, the guarantees must be regarded as aid equal to the amount of the loan guaranteed. In those circumstances, that aid cannot be included in the calculation of the normal cost for the State of winding up the company in question (see, to that effect, judgment of 28 January 2003, Germany v Commission,
C‑334/99
,
EU:C:2003:55
, paragraph
). In that context, it is to be noted that it is clear from the decision of 2009 that the aid scheme was open to fundamentally sound and solvent banking establishments and that the guarantee could only be granted in exchange for payment of a market oriented premium.
In the light of the foregoing, it must be concluded that the Commission committed an error in law in applying an incorrect legal test.
The arguments from the case-law put forward by the Commission do not invalidate that finding.
First, it must be stated that the judgment of 3 April 2014, Commission v Netherlands and ING Groep (
C‑224/12 P
,
EU:C:2014:213
), given within weeks of the contested decision’s adoption, indicates in paragraphs 31 to 37 that the Commission could not refuse to apply the market economy operator principle to the amendment to the repayment terms of a capital injection solely on the ground that the initial capital injection constituted State aid (see, to that effect, judgment of 2 March 2012, Netherlands v Commission,
T‑29/10 and T‑33/10
,
EU:T:2012:98
, paragraphs
to
).
It is true that, as the Commission contends, the case giving rise to that judgment of 3 April 2014, Commission v Netherlands and ING Groep (
C‑224/12 P
,
EU:C:2014:213
), concerned the applicability of the market economy operator principle (which the Commission did not apply to the amendment to the repayment terms) rather than its concrete application. Nevertheless, it illustrates that, in order to assess the existence of aid in a subsequent measure, the fact that a previous measure contains an element of aid is not sufficient for refusing to take into account the effect of that measure. If the Commission’s argument was correct, the market economy operator principle would never apply to the subsequent amendment of a measure that initially contained an aid element. Therefore, its decision would not have had to be annulled, as it was by the EU judicature in that case. Furthermore, as the Court stated in that judgment, what is decisive in the assessment of the subsequent measure is whether the conduct of the State satisfies an economic rationality test (judgment of 3 April 2014, Commission v Netherlands and ING Groep (
C‑224/12 P
,
EU:C:2014:213
, paragraph
).
It must be noted that, in the present case, the Commission failed to examine whether, by adopting the 2012 measures instead of allowing the risk of losing the capital injection to materialise and of the enforcement of the guarantee, the Kingdom of Denmark’s conduct satisfied an economic rationality test.
Secondly, the Commission refers to the judgment of 5 June 2012, Commission v EDF (
C‑124/10 P
,
EU:C:2012:318
), in which the Court declared, in paragraph 79, that only the benefits and obligations linked to the situation of the State as shareholder, to the exclusion of those linked to its situation as a public authority, were to be taken into account in the application of the market economy investor principle. On the basis of that judgment, the Commission contends that, the grant of State aid manifestly being linked to the situation of the Kingdom of Denmark as a public authority, there is no need to take account of the capital injection and guarantee in the assessment of the existence of aid in the measures at issue.
It must be noted that the abovementioned case concerned a Commission decision refusing to apply the market economy investor principle in its assessment of the reconversion of a tax debt as a capital contribution for the benefit of a company wholly owned by the State. At first instance, the General Court held, without being criticised by the Court of Justice, that the Commission could not base its decision only on purely formal criteria, such as the fiscal nature of the debt or the use of legislation to waive payment of the debt, to decline to apply the market economy operator test. On the contrary, the Commission was required to examine whether the argument that the waiver of the tax claim as part of the restructuring of a balance sheet and an increase of capital could satisfy that criterion was well founded. In particular, it follows from that judgment that an economic advantage must, even where it has been granted through fiscal means, be assessed in the light of the private investor test if, on conclusion of the global assessment that may be required, it appears that, notwithstanding the fact that the means used were instruments of State power, the Member State concerned conferred that advantage in its capacity as shareholder of the undertaking belonging to it (judgment of 5 June 2012, Commission v EDF,
C‑124/10 P
,
EU:C:2012:318
, paragraph
).
It must be noted that, in the judgment of 5 June 2012, Commission v EDF (
C‑124/10 P
,
EU:C:2012:318
), the Court declared that the Commission was required to take into account the State’s capacity as a shareholder and creditor in respect of an undertaking in order to analyse an increase in capital in the form of waiving a fiscal debt. In addition, it follows from that judgment that the use of instruments of State power does not alter the fact that the State can be regarded as acting as a rational economic operator. Therefore, contrary to the Commission’s argument, that judgment cannot be invoked in support of its position in the present case. Moreover, it must be noted that the judgment of 24 January 2013, Frucona Košice v Commission (
C‑73/11 P
,
EU:C:2013:32
), confirms that the fiscal origin of the debt, thus arising from the State’s capacity as a public authority, is not the decisive factor in determining whether to decline to apply the private creditor principle.
Thirdly, the judgment of 24 October 2013, Land Burgenland and Others v Commission (
C‑214/12 P, C‑215/12 P and C‑223/12 P
,
EU:C:2013:682
), cited by the Commission, concerned the privatisation of a bank carried out for a significantly lower price than that offered by another bidder. In its decision, the Commission rejected the argument that the tenderer offered better prospects of not resorting to a legal guarantee granted by the Land (‘Ausfallhaftung’) in the event of suspension of payments by the bank. The Court held that the Commission was fully entitled to refuse to take account of the legal guarantee at issue since, by that grant, the State pursued objectives other than that of making a profit and exercised its prerogatives as a public authority (judgment of 24 October 2013, Land Burgenland and Others v Commission,
C‑214/12 P, C‑215/12 P and C‑223/12 P
,
EU:C:2013:682
, paragraphs
to
).
It follows that that judgment was concerned with the specific application of what was the correct test, namely, the private seller principle, and the elements to be taken into account as part of that application. Therefore, that case differs from the present case, in which the Commission applied an incorrect legal test.
It is for the Commission, as part of its application of the correct legal test, if necessary to give due effect to the judgment in
Land Burgenland
, in which the guarantee at issue covered neither a specific period nor a specific amount and was not granted in exchange for payment of a premium or by means of a market mechanism (see, to that effect, judgment of 24 October 2013, Land Burgenland and Others v Commission,
C‑214/12 P, C‑215/12 P and C‑223/12 P
,
EU:C:2013:682
, paragraph
).
In the light of the foregoing, it must be concluded that the Commission ought to have analysed the measures at issue by reference to their nature, their subject matter and their objectives, taking account of the context in which they arose, namely, the reduction of the Kingdom of Denmark’s exposure arising from the capital injection and the guarantee granted, instead of applying the private investor principle, irrespective of the result of that analysis. Where, as in the present case, the State, the owner of capital of a bank in financial difficulties and the guarantor of part of the obligations of the latter, intervenes in a transfer of impaired assets, it is not, a priori, inconceivable that it might act for a purpose comparable to that which a private creditor would have pursued in order to reduce its exposure.
In those circumstances, the first plea must be upheld.
The second plea, alleging errors in the calculation of the amount of the State aid and of the incompatible aid
By their second plea, the applicants claim that the Commission made several errors in the calculation of the State aid and of the incompatible aid. They allege five errors of assessment committed by the Commission in that regard, namely, errors concerning the calculation of the value of the assets transferred, the risk of FIH becoming insolvent, the remuneration of the FSC for its equity investment, the interest payable to the FSC for its funding of NewCo and the amount of capital relief resulting from the transfer of assets.
As is apparent from the analysis of the first plea in law, the contested decision used an incorrect reference framework for its analysis and it is not for the Court, in the present proceedings, to rule on the outcome to which its application would have led in the present case (paragraphs 69 and 70 above). Therefore, there is no need for the Court to examine the second plea in law, alleging calculation errors committed by the Commission, any more than there is any need to rule on the admissibility of the fifth head of claim of the present plea raised by the Commission.
The third plea, alleging infringement of the obligation to state reasons
Arguments of the parties
By their third plea, the applicants claim that the contested decision is vitiated by failure to state adequate reasons, contrary to Article 296(2) TFEU and Article 41(2)(c) of the Charter of Fundamental Rights of the European Union.
In particular, the applicants submit that the other Member States and interested third parties will be unable to understand, on the basis of the contested decision, how the Commission arrived at the figures mentioned in recitals 97, 103, 116 and 117 of that decision. The contested decision contains no mention of the market value or the real economic value of the loan portfolio, those values having been calculated by the external expert consulted by the Commission. Moreover, the latter does not explain the essential considerations that led it to choose the figures and assumptions it used to calculate the market value and the real economic value of the loan portfolio. The applicants also criticise the Commission for providing a very general description of the method used to calculate the amounts identified in recitals 93, 113 and 116 of the contested decision.
According to the applicants, the Commission ought to have afforded them access to both the external experts’ reports in their entirety. The technical memorandum and the summary of the second expert’s report that were sent to them were insufficient to explain the decision. Furthermore, the Commission’s refusal to provide access to certain information is in itself a breach of important procedural requirements. Even if the applicants accept that the Commission may state the reasons for its decisions by referring to an expert’s report, this implies that that report is available to all directly interested parties.
The applicants add that the contested decision does not explain why the Commission did not accept the figure of DKK 275 million, used a date prior to the transaction completion date of 2 July 2012 and did not examine the question whether the transfer of assets was compatible with the market economy investor principle.
The Commission considers that the third plea must be rejected as unfounded.
Findings of the General Court
In accordance with the second paragraph of Article 296 TFEU, legal acts are to state the reasons on which they are based. Furthermore, under Article 41(2)(c) of the Charter of Fundamental Rights, the right to good administration includes the obligation of the administration to give reasons for its decisions.
It has consistently been held that the extent of the obligation to state reasons depends on the nature of the measure in question and on the context in which it was adopted. It must disclose clearly and unequivocally the reasoning followed by the institution that adopted the measure, in such a way as to enable the Court to carry out its review, on the one hand, and to enable the persons concerned to ascertain the reasons for the measure so that they can defend their rights and ascertain whether or not the measure is well founded, on the other (judgment of 6 March 2003, Westdeutsche Landesbank Girozentrale and Land Nordrhein-Westfalen v Commission,
T‑228/99 and T‑233/99
,
EU:T:2003:57
, paragraph
).
It is not, however, necessary for the reasoning to go into all the relevant facts and points of law, since the question whether the statement of reasons meets the requirements of the second paragraph of Article 296 TFEU must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question (judgment of 6 March 2003, Westdeutsche Landesbank Girozentrale and Land Nordrhein-Westfalen v Commission,
T‑228/99 and T‑233/99
,
EU:T:2003:57
, paragraph
).
In particular, the Commission is not obliged to adopt a position on all the arguments relied on by the parties concerned, but it is sufficient if it sets out the facts and the legal considerations having decisive importance in the context of the decision (judgment of 6 March 2003, Westdeutsche Landesbank Girozentrale and Land Nordrhein-Westfalen v Commission,
T‑228/99 and T‑233/99
,
EU:T:2003:57
, paragraph
).
It is in the light of those considerations that the applicants’ claims must be examined.
First, concerning the head of claim alleging that it is impossible for the other Member States and interested third parties to understand how the Commission calculated the market value and the real economic value of the loan portfolio, and how it arrived at the figures mentioned in recitals 97, 103, 116 and 117 of the contested decision, it must be observed that the applicants may not rely upon an alleged failure to state adequate reasons in respect of a third party. They admit, moreover, that the Commission provided them with the relevant information in that regard during the administrative procedure. It must be noted that, as the Commission observes, the contested decision provided a succinct description of the method used to calculate the market value of NewCo’s assets (recitals 91 to 93) and that used to calculate the real value (recital 116).
Therefore, contrary to the applicants’ claims, the contested decision sets out the essential considerations upon which the Commission based its reasoning relating to the calculation of the market value and the real economic value. Furthermore, it must be stated that the applicants were able to put forward, in the context of the second plea in law, numerous arguments aiming to challenge the merits of those calculations, which indicates that they were in a position to understand those calculations.
Secondly, concerning the head of claim relating to the independent expert’s report, as a preliminary point, it must be noted that it is open to the Commission to make use of independent experts if it considers it appropriate, as it has done on many occasions in State aid matters. Therefore, in this case, the contested decision cannot be criticised for relying on the expert’s report of 7 June 2012. Moreover, as mentioned above, the contested decision is not limited to referring, in general terms, to the independent expert’s report, but sets out the essential considerations of the Commission’s reasoning.
In that context, the argument concerning the refusal to give the applicants access to the two experts’ reports in their entirety must be rejected. As the Commission rightly pointed out, the procedure for the control of State aid is a procedure initiated with regard to the Member State responsible for granting the aid. That procedure not being initiated against the recipient of the aid, the latter may not rely on the rights of the defence (judgment of 24 September 2002, Falck and Acciaierie di Bolzano v Commission,
C‑74/00 P and C‑75/00 P
,
EU:C:2002:524
, paragraphs
and
). Interested parties have only the right to be involved in the administrative procedure to the extent appropriate in the light of the circumstances of the case (judgment of 25 June 1998, British Airways and Others v Commission,
T‑371/94 and T‑394/94
,
EU:T:1998:140
, paragraph
). Finally, it must be stated that the Commission’s failure to make the experts’ reports available to the applicant is irrelevant for the purposes of establishing whether there has been an infringement of the obligation to state reasons (judgment of 15 June 2005, Corsica Ferries France v Commission,
T‑349/03
,
EU:T:2005:221
, paragraph
).
Thirdly, as regards the alleged failure to state adequate reasons concerning the gross capital relief effect of the measures in the amount of DKK 375 million, instead of DKK 275 million, it must be noted that recital 116 of the contested decision states that the Commission arrived at that result on the basis of information provided by the Danish financial supervisory authority, in the application of its Impaired Assets Communication. Furthermore, the applicants put forward numerous arguments aiming to challenge the merits of that calculation in the context of the fifth head of claim of the second plea in law, which indicates that they were in a position to understand that calculation. In particular, it is apparent from paragraph 146 of the application and paragraph 73 of the reply that they understood that the amount of capital relief resulted from a reduction in the liquidity risk buffer of DKK 275 million and a reduction in the buffer against other risks, in particular credit risk, of DKK 100 million. The obligation to state reasons must be distinguished from the question whether the reasons given are sound, which goes to the substantive legality of the contested measure (judgment of 5 October 2012, Evropaïki Dynamiki v Commission,
T‑591/08
, not published,
EU:T:2012:522
, paragraph
). This head of claim cannot, therefore, be upheld.
Fourthly, concerning the alleged failure to state adequate reasons relating to the reference date for the evaluation of the loan portfolio, it follows from the contested decision, in particular from recitals 27, 29 and 94 and footnotes Nos 30 and 72, that the loan portfolio was assessed on the basis of its composition as of 31 December 2011, taking into consideration the evolution of its quality until 2 July 2012, namely, the transaction completion date. It is apparent from, in particular, the expert’s report of 16 September 2013, to which the contested decision refers, that the Commission adopted that approach because, despite its later completion date, the transaction was intended to have retroactive effects as of 31 December 2011.
In that respect it must be noted that, according to the case-law, the reasons given for a measure adversely affecting a person are sufficient if that measure was adopted in circumstances known to that person which enable him to understand the scope of the measure concerning him (judgments of 28 November 2013, Council v Manufacturing Support & Procurement Kala Naft,
C‑348/12 P
,
EU:C:2013:776
, paragraph
, and of 6 October 2015, Technion and Technion Research & Development Foundation v Commission,
T‑216/12
,
EU:T:2015:746
, paragraph
). Having been sent by the Commission to the applicants during the administrative procedure and attached to the application, the expert’s report of 16 September 2013 forms part of the circumstances known to the latter. This head of claim must therefore be rejected.
Fifthly, concerning the head of claim alleging failure to state adequate reasons for the Commission’s refusal to apply the market economy creditor principle, it is undisputed that the contested decision is based on the application of the private investor principle. According to the case-law, the statement of the reasons on which a decision adversely affecting a person is based must allow the Court to exercise its power of review as to the legality of the decision and must provide the person concerned with the information necessary to enable him to decide whether or not the decision is well founded (judgment of 11 July 1985, Remia and Others v Commission,
42/84
,
EU:C:1985:327
, paragraph
).
It must be noted that, in the present case, the Commission provided the legal considerations having decisive importance in the context of the decision. It follows from the contested decision that it was based on the application of the private investor principle, thereby enabling the applicants to challenge the merits of that decision and the Court to carry out its power of review in the context of the first plea. In those conditions, irrespective of whether the contested decision is well founded on that point, that claim alleging inadequacy of the reasons stated must be rejected.
In light of the foregoing, the third plea in law must be rejected as unfounded.
Costs
Under Article 134(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the Commission has been unsuccessful, it must be ordered to bear its own costs and to pay those incurred by the applicants, in accordance with their pleadings.

On those grounds,
THE GENERAL COURT (Sixth Chamber)
hereby:

1.
Annuls Commission Decision 2014/884/EU of 11 March 2014 on State aid SA.34445 (12/C) implemented by Denmark for the transfer of property-related assets from FIH to the FSC;

2.
Orders the European Commission to pay the costs.

Frimodt Nielsen
Dehousse
Collins
Delivered in open court in Luxembourg on 15 September 2016.
[Signatures]
(
*1
)	Language of the case: English.