On 19 June 2019, the General Court handed down an interesting judgment on the legal standing of competitors of aid recipients to seek the annulment of a Commission decision in State aid matters (Case T-353/15).
The case concerned the sale of the Nürburgring complex in Germany, including the well-known Formula 1 race track, a leisure park, hotels and restaurants, via a tender procedure in 2013. An unsuccessful tenderer in this procedure, NeXovation, lodged a complaint before the Commission arguing that the procedure for the sale of these State assets was discriminatory and lacked transparency. According to NeXovation, the sale of the Nürburgring resulted in unlawful State aid because another company, Capricorn, was authorised to buy the assets under the price offered by NeXovation. In addition, NeXovation claimed that the winning candidate Capricorn also benefitted from the incompatible State aid that had been granted by the German authorities for the construction of the Nürburgring complex between 2002 and 2012.
The Commission dismissed NeXovation’s complaint, stating that any potential recovery of the incompatible aid previously granted to the sellers of the Nürburgring would not concern Capricorn because there was no economic continuity between the operators at issue (‘the first contested decision’). As regards the organisation of the tender procedure, the Commission concluded that the sale of the Nürburgring to Capricorn did not constitute State aid (‘the second contested decision’).
NeXovation challenged these decisions before the General Court.
As a preliminary remark, it is important to understand that the Commission’s review in State aid matters involves two phases. The first phase is the preliminary examination phase where the Commission verifies whether there are serious doubts regarding the qualification of the measure(s) as compatible State aid. If the Commission concludes that there are no such doubts, then it does not have to initiate the formal investigation procedure. It is only during the formal investigation procedure that interested parties are called upon to submit comments on the measure(s) at issue.
In the case at hand, the first contested decision was adopted after the finalisation of the formal investigation procedure. The second contested decision was adopted after the preliminary stage of the procedure for reviewing aid and not after a formal investigation procedure.
This has an important impact on NeXovation’s legal standing to challenge the decisions.
As regards the first contested decision, the Court decided that NeXovation did not have legal standing to sue. Indeed, the Court recalled its case-law (notably, the Plaumann case) according to which the applicant must prove that it is individually and directly concerned by the decision for which it seeks the annulment (Article 263(3) TFEU). The Court concluded that, even though NeXovation was a potential competitor of Capricorn and that it had taken an active and important role in the procedure before the Commission (lodged a complaint, observations, etc.), the fact that NeXovation was not present on the relevant market at the time it introduced the application before the Court proves that it could not be substantially affected by the decision of the Commission. The General Court therefore declared the appeal inadmissible regarding the first contested decision.
Conversely, the Court ruled that NeXovation was an interested party and had legal standing to challenge the second contested decision. In this context, the Court recalled its case-law that an interested party is presumed to have standing to sue in order to safeguard its procedural rights when it contests a decision adopted before the formal investigation procedure refusing to qualify a measure as State aid. The reason behind this is that, since the measure is not qualified as State aid and therefore no formal investigation procedure is initiated, the interested party will not be able to make observations. Accordingly, an interested party will only be able to benefit from the procedural guarantee provided for in Article 108(2) TFEU if they are able to challenge the decision not to raise objections. However, in such cases, the Court can only review if the Commission should have had serious doubts so as to be obliged to initiate the formal investigation procedure.
Eventually, the General Court dismissed all the applicant’s pleas, concluding that the Commission ought not to express serious doubts. The Court considered for instance that the tender deadline for making offers was known by all the candidates, thereby creating a transparent process. It also concluded that, even though NeXovation’s offer was higher, it did not provide a proof of secured financing and that, consequently, the acceptance of Capricorn’s lower offer was not discriminatory.
Please contact Pierre de Bandt, Jeroen Dewispelaere or Raluca Gherghinaru for further information on this case and/or for general advice on State aid and public procurement.