2003/879/EC: Commission Decision of 24 June 2003 on State aid which the Netherlands proposes to implement to assist NV Huisvuilcentrale Noord-Holland (HVC) (Text with EEA relevance) (notified under document number C(2003) 1909)
Date: 2003-06-24
Institutions: European Commission
Subjects: Netherlands, State aid, control of State aid, waste incineration

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COMMISSION

COMMISSION DECISION

of 24 June 2003

on State aid which the Netherlands proposes to implement to assist NV Huisvuilcentrale Noord-
Holland (HVC)

(notified under document number C(2003) 1909)

(Only the Dutch text is authentic)

(Text with EEA relevance)

(2003/879/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Com-
munity, and in particular the first subparagraph of Article
88(2) thereof,

Having regard to the Agreement on the European Economic
Area, and in particular Article 62(1)(a) thereof,

Having called on interested parties to submit their comments,
pursuant to the provisions cited above (1),

Whereas:

(3)

(4)

The Commission's decision to initiate the procedure was
published in the Official Journal of the European Commu-
nities (2). The Commission called on interested parties to
submit their comments.

The Netherlands
to the
submitted its
Commission by letter dated 11 October 2002, which
was registered on 16 October 2002.

comments

(5)

The Commission received no comments from interested
parties.

1. PROCEDURE

(1)

By letter dated 27 November 2001, the Dutch authori-
ties notified the Commission of the abovementioned aid
in accordance with Article 88(3) of the EC Treaty which
for the construction of a
it proposes to implement
container terminal. The notification was registered by
the Secretariat-General of
the Commission on 5
December 2001 under the reference N 840/2001. By
letter dated 5 February 2002, the Commission requested
further information. A technical meeting took place
between Dutch representatives and the Directorate-
General for Energy and Transport (DG TREN) on 26
March 2002. The replies from the Dutch authorities
were received on 28 May 2002 and on 5 June 2002,
registered respectively under numbers SG (2002) A/
5441 and DG TREN A/59943.

(2)

By letter dated 17 July 2002, the Commission informed
the Netherlands of its decision to initiate the procedure
in accordance with Article 88(2) of
the Treaty with
regard to the proposed aid. This procedure was regis-
tered as C 51/2002.

2. DETAILED DESCRIPTION OF THE AID

2.1. Objective

(6)

By means of the construction of a container terminal at
Alkmaar (province of North Holland), the aid is intended
to promote household waste transport by inland water-
ways
instead of by road. The terminal, primarily
intended for the transshipment of household waste from
the municipalities, is located in the immediate vicinity of
a waste incineration plant at Alkmaar and has been
operational since April 2001. The terminal will consti-
tute an essential link in the chain of transport by water
to Alkmaar coming from the municipality of Zaanstad
and the province of Flevoland. The overall cost of
constructing the terminal is EUR 7 714 262. The term-
inal consists of a quay wall along North Holland Canal, a
travelling container crane and an area for the transfer of
goods.

(1) OJ C 212, 6.9.2002, p. 2.

(2) See footnote 1.

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2.2. Beneficiary

(11)

(7)

(8)

(9)

(10)

for

The beneficiary of the aid is NV Huisvuilcentrale Noord-
Holland, hereinafter referred to as ‘HVC’. HVC operates a
plant
the incineration of household waste for
disposal. HVC is a limited liability company whose
shares are owned by municipalities and collaborative
groups of municipalities in the northern part of the
province of North Holland and in the province of Flevo-
land and by a public electricity company (1). The munici-
palities established HVC for the disposal of the house-
hold waste they collect. HVC's core activity is operating
a large waste incineration plant at Alkmaar. HVC
processes about 465 000 tonnes of waste a year.

the transport

The municipalities located at a short distance from
HVC's incineration plant deliver their household waste
themselves by road to the HVC plant, using refuse
collection lorries. For the other municipalities, HVC runs
transshipment stations in Almere, Den Helder, Lelystad,
Noordoostpolder, Oudeschild, Zaanstad and Urk and is
in charge of
from the transshipment
stations to its Alkmaar incineration plant. For a period
of five years from taking the terminal into service, HVC
is obliged to supply at least 115 000 tonnes of waste a
year by waterway from Lelystad and at least 35 000
tonnes from Zaanstad. If HVC fails to meet the condi-
tions for the award of
the Province may
demand repayment
in accordance with that General
Administrative Law Act.

the grant,

HVC passes on all transport and transshipment costs to
the municipalities through an equalisation payment. The
municipalities defray these costs by imposing municipal
waste charges. Transport by water involves an increase
of the transport levy paid by the municipalities of about
EUR 3,60 per tonne, a substantial sum in relation to the
total amount of the levy (about EUR 12,90 per tonne in
2001), amounting to an increase of approximately 28 %.

The investment aid will keep HVC's transport costs to
the incineration plant lower, entailing a concomitant
reduction in the cost to be paid by the municipalities.
Accordingly,
the transport costs to be borne by the
municipalities will increase by only EUR 1,80 per tonne
(about 14 % of the price), an amount which the munici-
palities may well be able to bear without introducing
higher waste charges. The Dutch view is that without
the province's contribution the project would not be
viable and would have to be cancelled.

(1) Energie Noord West (ENW) has a 15 % minority interest in HVC.

In order to receive the subsidy, HVC had to build and
operate the container terminal in Alkmaar (operational
since April 2001) which can also be used for transship-
ment activities of
interested third parties. HVC will
become the owner of the terminal and will be able to
provide transshipment services in accordance with its
own commercial criteria. There is no obligation on how
to operate the terminal. HVC pursues various types of
activities: waste incineration, transport and operation of
transshipment stations.

2.3. Eligible costs and aid intensity

(12)

The aid consists of a once-only investment subsidy from
the province of North Holland. The eligible costs consist
of a direct investment in the construction of the multi-
functional container terminal
in Alkmaar. The invest-
ment costs for the terminal are EUR 7 714 262. The
subsidy amounts to EUR 5 309 226. The percentage of
aid is therefore 68,82 %.

2.4. Grounds for initiating the procedure

(13)

The Commission's decision to initiate the procedure in
accordance with Article 88(2) of the Treaty and to ask
the Netherlands for additional information resulted from
an initial examination of the notified intention to grant
aid. There was particular concern about the proportion-
ality of the aid. The Commission normally considers
State aid with an aid intensity exceeding 50 % for trans-
port infrastructure as not compatible with the Treaty,
unless it is shown that the main beneficiary of the facil-
ities is not capable of financing a higher amount without
State intervention (2) and that the project would not be
realised without the envisaged aid.

(14)

The Commission expressed doubts in particular on the
following issues:

(a) the necessity and proportionality of 68,82 % aid
intensity for the realisation of the project, as the
container terminal has already been built and has
been operational since April 2001;

(b) the possible impact of the terminal on other inland

waterway terminals;

(c) the possible impact of the terminal on the waste

disposal and recovery market;

(d) the method of operating the terminal after the first

five years.

(2) Commission Decision of 31 January 2001, N 597/2000, Nether-
lands (OJ C 102, 31.3.2001, p. 8); Commission Decision of 14
September 2001, N 208/2000, Netherlands, SOIT (OJ C 315,
4.11.2000, p. 22); Commission Decision of 15 November 2000,
N 755/1999, Italy, Bozen (OJ C 71, 3.3.2001, p. 71).

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3. COMMENTS FROM THE NETHERLANDS

(19)

(15)

The Netherlands indicated it was because the province of
North Holland was prepared to contribute towards the
costs of waterborne transport via the notified subsidy
that the municipalities cooperating in the HVC frame-
work opted exclusively for waterborne transport and
hence for the construction of a container terminal.

Finally, the Netherlands pointed out that after the first
five years the terminal would be operated in the same
way. The sole difference is that HVC will no longer be
obliged to transport particular quantities of household
waste by water. However, there is no reason to assume
that HVC's shareholders will after five years decide to
abandon the use of water transport. There will be no
change with regard to possible use by third parties.

4. ASSESSMENT OF THE MEASURE

4.1. Existence of aid within the meaning of Article

87(1) of the EC Treaty

(16)

(17)

Since all transport and transshipment costs are borne by
public entities, the Netherlands considers that HVC does
not derive a direct or indirect advantage from the
subsidy. If the subsidy is regarded as aid, the aid intensity
would vary from 68,8 % (if the subsidy is related only to
Alkmaar) to 27,3 % (if the subsidy is related to the entire
project which includes
at Zaanstad and
Lelystad).

facilities

(20) Article 87(1) of the Treaty provides that ‘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
common market’.

Because of its location, the Alkmaar terminal does not
affect other inland waterway terminals. Attention is
drawn to the fact that the regional demand for terminal
capacity exists almost exclusively at locations along the
Noordzeekanaal
(North Sea Canal) between IJmuiden
and Amsterdam. This is because for goods supplied by
seagoing vessels it is much cheaper to transport them in
the Netherlands by road rather than by inland waterway
vessels.
In the case of transport by inland waterway
vessel, goods would normally have to be transshipped
twice (first from a seagoing vessel to an inland waterway
vessel and next from that vessel to a lorry to take them
to their final destination) whereas goods carried by road
need to be transshipped only once (from the seagoing
vessel onto the lorry). This is also clear from the fact that
since the Alkmaar terminal started operating in April
2001 no goods of third parties have been transshipped.

(21)

The provisions of the Treaty on State aid apply exclu-
sively to undertakings. The concept of undertaking
encompasses every entity engaged in an economic
activity, regardless of the legal status of the entity and
the way in which it is financed (1). Activities consisting
of offering goods and services on a particular market
must be regarded as economic activities (2).

(22)

The Community rules on State aid apply exclusively to
measures meeting all of the criteria laid down in Article
87(1) of the Treaty.

4.1.1. Transfer of State resources

(23) Under the notified measure, HVC will receive a State
grant for the construction of a terminal at Alkmaar.
the notified measure
Consequently,
involves a transfer of State resources.

is clear

that

it

4.1.2. Favouring certain undertakings

(18)

The subsidy will be used exclusively to mitigate the costs
of transport and transshipment of household waste from
the municipalities and not for HVC's activities in the
field of waste incineration. Moreover, it is highly unlikely
that any waste other than the household waste from the
shareholders that is incinerated in the HVC plant will be
supplied by inland waterway vessel. Consequently, the
terminal does not give HVC any advantage compared
with other waste incineration plants. Moreover,
the
Netherlands has stated that HVC at any rate is not active
incinerating waste intended for
on the market
recovery.

for

(24)

The subsidy does not confer an advantage on HVC with
regard to the transport and transshipment of household
waste coming from the municipalities because the
subsidy is used exclusively to reduce the price paid by
the municipalities.

(1) Judgment of the Court of Justice of 23 April 1991, Höfner and Elser
v Macrotron, C-41/90, [1991] ECR I-1979, point 21; judgment of
the Court of Justice of 18 June 1998, Commission v Italy, C-35/96,
[1998] ECR I-3851, point 36.

(2) Judgment of the Court of Justice of 16 June 1987, Commission v

Italy, 118/85, [1987] ECR 2599, point 3.

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(25) However, providing a container terminal gives HVC a
quantifiable economic advantage over its competitors on
the market for terminal operations (offering transship-
ment services to interested third parties), even though
the subsidised infrastructure will be open to all potential
the
users under normal market conditions. Under
proposed measure, HVC receives a State contribution
towards costs arising from the investment in a terminal
for combined transport whereas other domestic under-
from other Member States
takings or undertakings
which are active in this field do not receive such a
contribution.

(29)

it cannot be excluded that
the Treaty. Consequently,
there will be an impact on trade between the Member
States.

the Treaty and is

In view of the above, the Commission concludes that the
notified aid measure is aid within the meaning of Article
87(1) of
incompatible with the
common market unless the aid qualifies for one of the
derogations provided for in the Treaty. Moreover, the
Commission also takes the view that Article 87(1) refers
the Treaty (e.g.
to the fact
Article 73) can allow aid under particular circumstances.

that other provisions of

4.1.3. Selectivity

(26)

The aid measure favours a particular undertaking (HVC)
and is therefore selective in nature.

4.2. Legal basis for the assessment

(27)

(28)

4.1.4. Effects on trade and distortion of competition

Pursuant to Council Regulation (EEC) No 259/93 of 1
February 1993 on the supervision and control of ship-
ments of waste within,
into and out of the European
Community (1), as last amended by Commission Regu-
lation (EC) No 2557/2001 (2), the Member States have,
with regard to waste intended for disposal, particular
powers to limit cross-border transport in order to imple-
ment the principles of proximity, priority for recovery
and self-sufficiency. These principles do not apply to the
transfer of waste for recovery that may be effected by
another undertaking in the Community. Consequently,
HVC's activities with regard to waste intended for
disposal
(transport, transshipment and incineration) at
the most have a very limited impact on trade between
the Member States.

activities of

The Alkmaar container terminal will also be open to
transshipment
interested third parties.
Accordingly, HVC will become active on the market for
operating container terminals, a market which has been
liberalised
rules
governing the freedom of establishment and the freedom
to provide services laid down in Articles 43 and 49 of

in accordance with the

general

(1) OJ L 30, 6.2.1993, p. 1.
(2) OJ L 349, 31.12.2001, p. 1.

(30) Article 73 of the Treaty declares aid to be compatible
with the Treaty if it meets the needs of coordination of
transport. The concept of coordination as used in Article
73 implies more than facilitating the development of an
industry, it involves some form of planning by the State.

(31)

Investment

In general, providing infrastructure for inland shipping is
a task for the State within its responsibilities for land
planning and the development of an integrated and
sustainable transport system.
in transport
infrastructure therefore entails more than only commer-
cial considerations by an undertaking operating on the
market for providing transport infrastructure. Accord-
ingly, the Commission takes the view that there may be
a need for State intervention for coordinating measures
in the field of investment in inland waterway transport
infrastructure, as it is unlikely that the market forces will
come up with the necessary investment on the basis of
purely commercial considerations.

(32)

Consequently, as the Commission already noted in its
decision of 17 July 2002 to initiate the procedure in
accordance with Article 88(2) of the Treaty, Article 73
of the Treaty is the appropriate legal basis for analysing
investments in infrastructure for transshipment facilities
for inland shipping and evaluating its compatibility with
the common market.

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(33)

Council Regulation (EEC) No 1107/70 of 4 June 1970
on the granting of aids for transport by rail, road and
inland waterway (1), as last amended by Regulation (EC)
No 543/97 (2), implements Article 73 of the Treaty and
provides for specific exemptions for aid deemed to meet
the needs of coordination of inland transport. For inland
shipping, however,
these exemptions expired on 31
December 1999 and are no longer applicable in accord-
ance with Council Regulation (EC) No 2255/96 of 19
November 1996 amending Regulation (EEC) No 1107/
70 (3). At this stage, the Commission considers that, in
the absence of secondary legislation Article 73 may be
applied directly to investment aid for inland shipping (4).

(34)

Consequently,
the Commission will apply Article 73
directly in evaluating the notified aid to be granted for
the construction of a container terminal at Alkmaar.

(35) According to the Commission's normal practice, three
requirements must be fulfilled so that the aid meets the
needs of coordination of transport within the meaning
of Article 73 of the Treaty (5):

(a) the State contribution to overall financing is neces-
sary for achieving the project or the activity in the
interest of the Community;

(b) access

to the subsidised infrastructure must be

possible on non-discriminatory terms;

(c) the aid must not give rise to distortion of competi-
tion to an extent contrary to the common interest.

(a) Necessity and proportionality of the aid

(36)

The Community has for some time pursued a policy of
promoting the development of a balanced intermodal
transport system and fostering the transfer of goods
from road to other more environmentally friendly trans-
port modes (6). The Commission's White Paper on trans-
port policy (7) states that
transport by water is less
harmful
than transport by road.
Moreover, the new Marco Polo proposal (8) seeks to shift
the expected increase in international goods transport of

to the environment

(1) OJ L 130, 15.6.1970, p. 1.
(2) OJ L 84, 26.3.1997, p. 6.
(3) OJ L 304, 27.11.1996, p. 3.
(4) Commission Decision of 14 September 2000, N 208/2000, Nether-
lands, SOIT (OJ C 315, 4.11.2000, p. 22), Commission Decision of
20 June 2001, N 219/2001 Austria, Pilotprogramme Donau (OJ C
244, 1.9.2001, p. 2) and Commission Decision of 31 January 2001,
N 597/2000, Netherlands, Subsidieregeling bedrijfsgebonden vaar-
wegaansluitingen (subsidy scheme for inland waterway sidings) (OJ
C 102, 31.3.2001, p. 8).

(5) Ibid. See also COM(2000) 5 final of 26 July 2000, Commission
proposal for a regulation of the European Parliament and of the
Council concerning granting of aid for the coordination of transport
by rail, road and inland waterway.

(6) See the Commission's Green Paper on fair and efficient pricing,
COM(1995) 691 of 20 December 1995, the Commission's White
Paper on fair payment for infrastructure use, COM(1998) 466 of 22
July 1998 and the Council Resolution of 14 February 2000 on the
promotion of intermodality and intermodal freight transport in the
European Community (OJ C 56, 29.2.2000, p. 1).

(7) European transport policy for 2010: time to decide, COM(2001) 370 of

12 September 2001.

(8) COM(2002) 54 final of 4 February 2002.

(37)

(38)

(39)

12 billion tonnes/kilometre a year from congested roads
to short sea shipping, rail and inland waterway trans-
port.

The Commission takes the view that an intermodal and
the future can be
system for
sustainable transport
brought about only if priority is given to investment in
infrastructure. Freight transport by water may require
costly and specialised equipment which road transport
would not require. By contributing to the costs of such
inland waterway transport will be able to
facilities,
compete financially with road transport. However,
if
infrastructure for intermodal
terminals were not co-
financed by the public
sector, operators pursuing
economic activities would not invest in them as there
would be no guarantee of viability without State
funding.
the
construction of a container terminal is not a particularly
viable commercial option, given the relatively low
density of industry in the Alkmaar region.

In the case under consideration here,

Transport of household waste by water instead of by
road involves higher operating costs, most of
them
connected with the construction of the Alkmaar term-
inal. Even with the provincial subsidy, the municipalities
concerned would still have to bear substantial extra costs
each year
the
subsidy, waste transport to HVC would continue to take
place by road.

transport by waterway. Without

for

The Netherlands argue that if all investment needed to
enable transport by waterway (facilities in Zaanstad and
Lelystad) is taken into account, the aid intensity would
be only 27,3 %. The Commission does not share this
view as the subsidy granted by the province of North
Holland exclusively relates to the construction of the
Alkmaar container terminal which has been operational
since April 2001 and was notified as an individual
project. Consequently, the aid level is 68,8 % of the costs
of the terminal.

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(40) Nevertheless, the Commission considers that such a high
planned level of subsidy level is necessary to realise the
project and is justified by the environmental benefit of
the measure which serves the common Community
interest. In this connection, it is also important to note
that the subsidy will lead to a lesser increase of the trans-
port levy which HVC charges to the municipalities. The
actual support to HVC is therefore less, because a signifi-
cant part of the subsidy is passed on to the municipali-
ties in the form of a lesser increase of the transport levy.
With regard to this aspect, the Commission asks that the
Netherlands send it a report each year showing that the
subsidy has been effectively passed on in accordance
with the provisions of recitals 9 and 10 of the present
Decision.

(44)

The Netherlands argues that the beneficiary does not
operate on the market for waste intended for recovery.
In light of
information provided on HVC's
website (1), a certain amount of interest on the part of
the beneficiary in this market cannot be completely
excluded.

the

(45) However, no comments have been received from inter-
ested third parties. Consequently,
the Commission
assumes that competitors operating existing terminals or
operating on the market for waste intended for recovery
do not consider the planned aid as a threat to their
competitive position on the market.

(46) Accordingly, the Commission considers that the environ-
mental benefit of the project will be considerably higher
than a potential
impact on competition and that the
subsidy will
therefore not distort competition to an
extent contrary to the common interest.

(b) Access to the subsidised infrastructure on non-discrimina-

tory terms

(47)

It follows that the initial doubts raised by the Commis-
sion on the opening of the procedure no longer exist.

(41)

The container terminal will be destined mainly for the
transshipment of household waste from the municipali-
ties in order to promote its transport by inland water-
ways instead of by road. Nevertheless,
it will also be
suitable for the transshipment of cargo belonging to
third parties on non-discriminatory terms and at going
In particular, according to the notified
market rates.
conditions for granting the subsidy, HVC has to ensure
that transshipment is offered to interested third parties
at competitive rates and at a competitive speed, with
sufficient
and
opening times in accordance with what is required by
the market.

and transshipment

capacity

storage

(42) HVC will be under an obligation by the province of
North Holland for five years to transport specified quan-
tities of household waste by water. There is, however, no
reason to assume that HVC's shareholders will decide
after this period to abandon the system.

(c) No inadmissible distortion of competition

5. CONCLUSION

(48)

In view of the above, the Commission concludes that the
aid measure is compatible with the EC Treaty in accord-
ance with Article 73 thereof,

HAS ADOPTED THIS DECISION:

Article 1

The notified aid which the Netherlands is planning to imple-
ment for HVC is compatible with the common market within
the meaning of Article 73 of the Treaty.

Article 2

The Netherlands shall submit an annual report to the Commis-
sion showing that the province's subsidy is effectively used to
reduce the extra costs of municipalities resulting from the
transport of household waste by water.

(43)

Regarding the possible activity of HVC on the market of
container terminals, it has to be noted that although no
other facilities for the transshipment of containers exist
in the Alkmaar region, there has been little or no interest
shown by third parties to use the Alkmaar terminal since
April 2001. Therefore it can be concluded that
the
possible impact of the Alkmaar terminal on other term-
inals would be very limited.

The report should also indicate the transshipment services
provided by HVC to third parties as well as the eventual profits
obtained with this activity.

(1) http://www.huisvuilcentrale.nl

‘Our products are compost, renewable energy (in the form of electri-
city and heat), ferrous and non-ferrous metals, bottom ash and fly
ash (...)’.

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L 327/45

This Decision is addressed to the Kingdom of the Netherlands.

Article 3

Done at Brussels, 24 June 2003.

For the Commission

Loyola DE PALACIO

Vice-President