European Commission: Danish waste water fee system involves no state aid

Commission decision of 19 April 2018

By assistant attorney Søren Overgaard Eriksen

In 2013, the Danish Parliament passed Act no. 902 of 4 July 2013 amending Act on Payment Rules for Waste Water Utilities, etc. The Act introduced a so-called “staircase model” granting a discount on waste water charges. The discount depends on the amount of water discharged: The more water discharged, the greater the discount.

Representatives of the food industry complained that the arrangement would equal state aid to the advantage of those companies that stood to benefit from higher discounts on their waste water fee. The question was therefore referred to the European Commission which assessed whether the new fee system conferred an economic advantage to certain large users and, as such, constituted state aid. The Commission also assessed whether a market economy operator subject to the same pricing constraints as the Danish waste water utilities would be able to obtain the same discounts as those provided under the “staircase model”.

The Commission found that having big companies as customers contributes decisively to the profitability of Danish waste water treatment plants. In fact, the Commission concluded that for a private operator to be able to retain the big companies as customers, it would be necessary to offer the same discounts as introduced by the amending act. The big ones will typically be capable of treating their own waste water, should the waste water discharge fee become too high. Furthermore, the charges paid by these larger users still cover the costs incurred by the waste water treatment plants for the service.

The Commission therefore concluded that the “staircase model” did not confer an advantage to certain users and therefore did not constitute state aid.

Read the Commission's press release.