Swissterminal files complaint with Federal Administrative Court against federal funding for Gateway Basel Nord

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17. September 2018
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Swissterminal files complaint with Federal Administrative Court against federal funding for Gateway Basel Nord

Swissterminal, leading provider of container terminal services in the Basel area, has lodged a formal complaint with the Swiss Federal Administrative Court against the federal funding for the planned container terminal project Gateway Basel Nord. This complaint follows the decision of the Swiss Federal Office of Transport (FOT) in July 2018 to publicly fund three quarters of the costs of the first project stage.

The family-owned company Swissterminal considers the federal-funded project a severe threat to competition in terms of container terminal handling services. In its complaint to the Swiss Federal Administrative Court the company claims a breach of economic freedom as well as a restriction of competition law and international regulations for free trade. Swissterminal also argues that it is directly affected by the future project, but that it has not been granted any participatory rights in the current planning procedure whatsoever.

The complaint filed with the Swiss Federal Administrative Court on 14 September 2018 is directed against both Gateway Basel Nord AG (GBN AG), in which Schweizerische Bundesbahnen (SBB) is the main shareholder, and the FOT. The complaint calls for a repeal of the decree issued on 4 July 2018 as it violates applicable law in many ways according to Swissterminal.

Deficient fact-finding process

The complaint states that the FOT has not carried out the mandatory fact-finding process in a proper manner, but rather in an extremely biased way, because it simply followed the reasoning of the future gateway operators without any verification. Examples of this are the forecasted volume development, the claimed productivity growth, and the predicted shift of traffic from road to rail.

Neglection of duty to assess legitimacy of market entry of GBN AG as a state-owned enterprise

The complainant furthermore argues that the FOT failed to assess the legitimacy of market entry of GBN AG as a state-owned enterprise. GBN AG’s main shareholder is SBB Cargo, which is a subsidiary of SBB AG and therefore 100 percent state-owned. At the same time, SBB is a co-owner of Hupac, which is a minority shareholder of GBN AG. However, the authorities have not considered whether this kind of state involvement complies with applicable law pertaining to the existing market, which is heavily sustained by private companies, Swissterminal argues.

Unlawful cross-subsidisation

In Swissterminal’s view, the financing of the remaining quarter of Gateway Basel Nord is questionable as well. Even though this part of the funds required should be met by GBN AG itself, the fact is that SBB Cargo is highly indebted and does not have the appropriate means for funding itself. It therefore needs to be examined whether the funds required originate from funds that SBB AG received for its subsidised business unit. If so, this would represent an unlawful cross-subsidisation.

Infringement of economic freedom and fair competition

Another key issue of the complaint is the infringement of economic freedom and fair competition through the federal government’s commitment to subsidise nearly CHF 83 million. The federal funds will finance a project through which private market players will be squeezed out of the market and ultimately eliminates or, at least, massively distorts current competition. The FOT’s decision also violates international regulations because the free trade agreements between Switzerland and the EU clearly rule out such kinds of federal subsidies that lead to impediments to the international movement of goods linked to the European Union’s market.

Participatory rights denied

In its complaint with the Swiss Federal Administrative Court Swissterminal records that it has not been granted any kind of participatory rights in connection with the current subsidy procedure, even though Gateway Basel Nord affects its business environment to a higher extent than any other company in the market. The federal office’s refusal went so far that Swissterminal only received the decree issued on 4 July 2018 after filing a formal request. However, up until today, Swissterminal has not been granted access to the files underlying the FOT’s decision. This fact is part of the complaint as well.