The continuation of beneficial arrangements after the expiry of a service contract constitutes State aid.
The practice of not charging for the use of public assets constitutes State aid.
Introduction
On 7 September 2022, the General Court ruled, in case T-642/19, JCDecaux v European Commission, that the free use of public infrastructure for profit confers and advantage in the meaning of Article 107(1) TFEU. It also ruled that free use of public infrastructure as compensation for services provided on behalf of the state also constitutes State aid, unless it satisfies the Altmark conditions.
JCDecaux [JCD] sought annulment of Commission decision 2019/2120 on State aid SA.33078.
The municipality of Brussels in Belgium and the applicant had concluded two successive contracts for the provision of various display boards such as those at bus shelters that are used for advertising purposes.
Under the first contract in 1984, JCDecaux was allowed to use the bus shelters for free in return for providing waste bins and displaying maps of the city of Brussels and other tourist information. Under the second contract in 1999, following a tender procedure, JCDecaux had to pay a fee for the use of bus shelters for advertisements.
After receiving a complaint, the Commission initiated a formal investigation which was concluded with decision 2019/2120 that found that “State aid to JCD, in an amount equivalent to the rent and taxes not paid on the advertising displays installed in the City of Brussels […] is incompatible with the internal market.” Consequently, the Commission ordered Belgium to recover the aid.
Economic advantage
JCD argued that the Commission was wrong to find that JCD derived an advantage from a compensation mechanism that was provided in the 1984 contract. According to that mechanism, JCD was allowed to use bus shelters to display advertisements for a certain period of time as a compensation for the termination of the contract.
First, the General Court recalled that a measure by which public authorities grant an exemption from economic charges which, although not involving a transfer of state resources, places the beneficiaries in a more favourable financial situation than other taxpayers constitutes State aid. [paragraph 22 of the judgment]
For the purposes of Article 107(1) TFEU, the advantage is an economic benefit which an undertaking could not have obtained under normal market conditions, in the absence of state intervention. In addition, the concept of advantage is objective, irrespective of the reasons for the measure in question. Thus, the Court concluded, the objectives pursued by the state and their justification have no bearing on their classification as State aid. [paras 23 & 24]
Then the Court noted that the fact that the compensation mechanism of the 1984 contract was specified in that contract and that it corresponded to the practice on long-term public utility contracts in Belgium did not mean that that mechanism could not constitute State aid. [para 25]
The fact that certain display boards were used beyond their due date laid down in the contract without JCD paying either rent or tax to the city of Brussels had the effect of reducing the charges which would have burdened its budget. [para 28]
After the conclusion of the 1999 contract, JCD could install and operate display boards in the city of Brussels only under the conditions laid down in that contract, according to which it had to pay rent and taxes.
Then JCD argued that it was only compensated for services it offered to the city of Brussels. The General Court rejected that argument on the grounds that compensation was not State aid only if it represented consideration for services provided by undertakings entrusted with a service of general economic interest in order to fulfil public service obligations and satisfied the Altmark conditions. [para 37]
In response to another argument of JCD that the Commission had not examined whether the city of Brussels acted as a private operator actually making a profit from its arrangements with JCD, the General Court noted that no evidence had been submitted that showed any profitability analysis by the city of Brussels. [paras 38 & 39]
Non-payment of rents and taxes
JCD contended that it had not derived any savings from not paying rents and taxes simply because it had no obligation to make such payments. Therefore, the city of Brussels had not experienced a loss of revenue.
The General Court recalled that under the 1999 contract, JCD could operate display boards only if it paid rent and taxes. Therefore, the Commission was right to conclude that there was loss of potential state revenue. [paras 48 & 49]
The reference system for rent and taxes
JCD argued that there was no uniform rate for rent or taxes in Belgium or even in Brussels.
The General Court, first, observed that the identification of the reference system is relevant only for the purpose of determining the selectivity of a public measure. In the case of individual measures, their selectivity is presumed. [para 53]
At any rate, however, the Court found that the Commission was right to take as the reference system the tax regulations of the city of Brussels. [para 54]
Moreover, the display of advertisements was indeed subject to taxation after 1999. Therefore, the non-payment of taxes did indeed entail a reduction of the state budget which constituted an advantage for JCD. [paras 55 & 61]
Compliance with the Altmark conditions
The General Court recalled that the first Altmark condition requires that the service provider is actually entrusted with the performance of public service obligations and, second, those obligations are clearly defined. That condition pursues an objective of transparency and legal certainty which requires the fulfillment of minimum criteria relating to the existence of one or more acts of public authority defining in a sufficiently precise manner at least the nature, duration and scope of the public service obligations incumbent on the undertakings entrusted with the performance of those obligations. [para 71]
Then the Court observed that the Belgian authorities did not define as a service of general economic interest the installation and operation of display boards. [para 72]
Since the four Altmark conditions are cumulative, it followed in this case that the compensation received by JCD was State aid. [para 74]
Since the service provided by JCD was not a service of general economic interest, the Court also rejected the claim of JCD that the compensation was compatible aid in compliance with the requirements of Commission decision 2012/21. [paras 77-82]
The calculation of the amount to be recovered
JCD contended that the Commission did not explain how it arrived at the amount of incompatible aid that Belgium had to recover.
The General Court, first, pointed out that although the Commission had not quantified the aid to be recovered, it correctly established the method for calculating the amount of that aid. It stated that the calculation had to be carried out for each display board, taking as a reference the rents due under the 1999 contract and the taxes generally applicable to advertising display boards. [para 87]
JCD claimed that the quantification of the amount of State aid was impossible and constituted an obstacle to its recovery.
The General Court rejected that claim. It agreed with the Commission that the calculation of incompatible State aid had to be carried out for each display board separately, taking as a reference the rents due under the 1999 contract and the taxes generally applicable to advertising boards. [para 95]
With respect to the calculation methodology, the General Court recalled that, according to settled case-law, the Commission is not required, when ordering the repayment of incompatible aid to fix the exact amount that has to be repaid. It is sufficient for the decision of the Commission to contain information enabling its addressee to determine that amount itself without undue difficulty. The Commission decision in the present case did provide sufficient guidance. [para 96]
Ten-year limitation period
JCD’s last plea was that the Commission ordered recovery more than 10 years after the aid had been granted. More specifically, it claimed that the compensation was granted to it before 31 July 2000, while the Commission’s first request for information to the Belgian authorities dated from 15 September 2011.
The General Court recalled that under Article 17(1) of Regulation 2015/1589, the Commission’s powers to recover incompatible aid are subject to a limitation period of ten years. Article 17(2) of that Regulation provides that the limitation period begins to run on the day on which the unlawful aid is granted to the beneficiary, either as individual aid or under an aid scheme, and that any measure taken by the Commission or a Member State acting at the request of the Commission in respect of the unlawful aid interrupts the limitation period. [para 100]
Then the General Court explained that the determination of the date of the granting of aid varies according to the nature of the aid. In the case of a multiannual scheme, the date of adoption of an act constituting the legal basis for the aid and the date on which undertakings are actually awarded the benefit of the aid may be separated by a period of significant time. In such a case, the aid must be regarded to have been granted to the beneficiary only on the date on which it is actually granted to it. [para 101]
In the present case, the aid measure is the maintenance and operation by JCD, without paying rents and taxes, of certain display boards between the due date laid down in the 1984 contract and the date on which it was terminated. [para 102]
The date on which the aid was granted in the present case was the date from which JCD actually benefited from the advantage consisting in the non-payment of rents and taxes. The ten-year limitation period has to be counted from that date. [para 103]
Since the first request for information sent by the Commission to the Belgian authorities was dated 15 September 2011, any aid granted to the applicant before 15 September 2001 was in any event time-barred. [para 105]
Therefore, the General Court concluded that the amount of the incompatible aid that had to be recovered was the aid that was granted after 15 September 2001. [para 106]
Since none of the pleas of JCD was successful, the General Court dismissed the appeal in its entirety.
The full text of the judgment in languages other than English can be accessed at:
