Order to reduce charges was valid

Case no. BS-16129/2023
Judgment delivered on 17 January 2024

The Danish Rail Regulatory Body
vs.
X A/S

By order of 18 September 2019, the Danish Rail Regulatory Body ordered that X A/S must reduce its charges for 2019 for some of its services at the railroad terminals in Høje-Taastrup and Taulov.

The case before the Supreme Court concerned whether the order was valid.

In the first instance, the question was whether the Danish Rail Regulatory Body could issue the order on the grounds that the charges had been set higher than the costs plus a reasonable profit, or whether it was an additional condition that it should conduct an analysis of competitive conditions etc.

The Supreme Court stated that Section 103(1) of the Danish Railway Act then in force, cf. Section 103(3), read in conjunction with a number of provisions in the Danish Order on Rail-Road Terminals, had to be understood to mean that the Danish Rail Regulatory Body had the authority to issue the order with reference to the fact that the charges had been set higher than the costs plus a reasonable profit. It was thus not an additional condition for issuing the order that the Danish Rail Regulatory Body had carried out an analysis of competitive conditions etc. This interpretation was supported by the legislative history of the Railway Act, the interpretation of Directive 2012/34/EU (the Railway Directive) and the EU Court of Justice’s judgment of 9 September 2021 in case C-144/20 (AS LatRailNet).

The case also concerned, among other things, whether the order was invalid due to failure to state reasons. X had argued in particular that it did not appear from the Danish Rail Regulatory Body’s grounds for the order that the charges had been set higher than the costs plus a reasonable profit. On the contrary, it appeared from the order that it had been issued on the grounds that it was necessary for reasons of competition etc.

The Supreme Court ruled that, based an overall assessment, the Danish Rail Regulatory Body’s grounds for the order did not amount to failure to state reasons that would render it invalid. The Supreme Court considered, among other things, that initially as legal basis for the order reference was made to Section 7(3), cf. Subsection (1), of the Order on Rail-Road Terminals on a reasonable profit, and that it also followed from appendices 1 and 2 of the order that the order was issued on the grounds of the question of the reasonable profit, which must have been clear to X. The fact that the order also referred to competitive conditions etc. could thus not lead to a different result.

The High Court had reached a different conclusion.