In the context of an action for a cease and desist order filed by the General Union of the Belgian Cleaning Sector, the Brussels Court of Appeal confirmed in a judgment dated 28 February 2019 that the appealing party (an adapted work enterprise active in Wallonia) had engaged in unfair trading practices. These practices consisted of offering abnormally low prices in the context of public tenders, largely with the benefit of illegal State aid. This judgment is interesting from several perspectives.
On the one hand, the Court of Appeal confirmed its settled case law according to which submitting abnormally low bids in the context of a public procurement procedure constitutes, in principle, an unfair commercial practice within the meaning of Article VI.104 of the Code of Economic Law. In this respect, the Court recalled that a bid which contains abnormally low prices is likely to harm competition and equality among bidders, but also, more broadly, the general interest.
On the other hand, the Court of Appeal stressed that national courts have a duty to enforce the standstill obligation set out in Article 108(3) TFEU and to protect the rights of individuals against illegal State aid. In this respect, it also recalled that the national courts are competent to order interim measures against illegal aid.
In this context, without explicitly mentioning the Deutsche Lufthansa case law (C-284/12), the Court of Appeal applied the principles of this case law to confirm its competence to interpret and apply the notion of “State aid” as long as the European Commission has not initiated a formal investigation procedure according to Article 108(2) TFEU.
The Court of Appeal then proceeded to examine the Walloon regulatory framework pursuant to which the appealing party received wage subsidies. It provided for subsidies which “manifestly” exceeded the ceilings provided for in Commission Regulation (EU) No 651/2014. In addition, the Court considered that, contrary to this Regulation, the Walloon regulatory framework also provided for subsidies for management staff.
In view of these elements, the Court of Appeal concluded that the aid in the form of wage subsidies granted to the appealing party should have been notified to the European Commission. In the absence of such notification, the aid was found to be illegal.
By way of consequence, the Court of Appeal confirmed the first and the second cease and desist orders:
“[the Court of Appeal] orders [the appealing party] (i) to cease submitting bids for public contracts at abnormally low prices within the meaning of the regulations on public contracts […], on pain of a penalty […] and (ii) to cease submitting bids for public contracts at prices taking into account the wage subsidies granted by the Walloon authorities on the basis of Articles 1001 and following of the Walloon Code of Social Action and Health, or any later similar provision, as long as such aid has not been notified to the European Commission and declared compatible with the internal market, on pain of a penalty […]”.
This judgment is of great importance for practitioners. Specifically, it has the merit of recalling the far-reaching powers of the national courts in State aid matters. Also relevant is that the Brussels Court of Appeal did not hide behind the fact that the contested measures are the subject of an investigation before the European Commission. On the contrary, it examined whether the measures at hand could be qualified as State aid and whether they should have been notified to the European Commission. Insofar as the response to both questions was positive, the Court of Appeal took stock of the case law of the Court of Justice and adopted the measures it deemed necessary to protect the interests of the competitors affected by the violation of the standstill obligation laid down in Article 108(3) TFEU.
Please contact Peter Teerlinck or Raluca Gherghinaru for further information on this case and/or for general advice on public procurement and State aid matters.