Introduction
This article reviews two judgments concerning a claim that compensation does not constitute State aid and a complaint that the Commission had failed to act, respectively. The latter case is particularly interesting because it is probably the only judgment in the past decade or two that the Court of Justice has actually upheld a claim that the Commission breached Article 265 TFEU in the field of State aid.
Compensation
On 26 September 2024, the Court of Justice, in case C-710/22 P, JCDecaux v Commission, rejected the appeal of JCDecaux against the judgment of the General Court in case T-642/19, JCDecaux v Commission.[1] In that judgment, the General Court dismissed JCDecaux’s action for the annulment of Commission decision 2019/2120 which found that Belgium had offered incompatible State aid to JCDecaux which provides advertising in street displays and at bus stops or train stations.
JCDecaux had been granted a contract without prior competitive selection by the municipality of Brussels. When the contract was terminated early, it was allowed to use for a certain period of time the displays at bus stops owned by the municipality without paying any fee. The Commission found that the direct granting of the contract and the free use of displays involved State aid. One of the main pleas of JCDecaux was that the free use of the displays were intended to compensate it for the loss of revenue resulting from the early termination of the contract.
The CJEU, first, recalled the meaning of the concept of advantage in Article 107(1) TFEU.
“(43) The concept of advantage, which is intrinsic to the classification of a measure as State aid, is an objective one, irrespective of the motives of the persons responsible for the measure in question. Accordingly, the nature of the objectives pursued by State measures and their grounds of justification have no bearing whatsoever on whether such measures are to be classified as State aid. Article 107(1) TFEU does not distinguish between the causes or the objectives of State aid measures, but defines them in relation to their effects”.
“(44) In that regard, in so far as the economic advantage referred to in the decision at issue consists in JCDecaux’s continued use of the displays at issue […] without paying rent or taxes to the City of Brussels, the General Court correctly held, […], that the fact that that advantage was intended to compensate for an alleged loss suffered by that undertaking as a result of the early removal of certain advertising displays […] does not imply that that compensation cannot constitute State aid.”
“(45) In response to JCDecaux’s argument to the effect that the Commission found, incorrectly, in the decision at issue that the City of Brussels had not conducted itself like a market operator, the General Court rightly recalled, […], that, in order to determine whether a State measure constitutes aid, it is necessary that objective and verifiable evidence clearly show that the Member State concerned took, before or at the same time as conferring an economic advantage, the decision to compensate, by means of the measure actually implemented, for damage allegedly caused to a co-contractor in the performance of its contractual obligations”.
“(46) In that regard, the General Court held, […], that there was no evidence in the documents on the Court’s file that the City of Brussels had carried out an analysis of the loss allegedly incurred by JCDecaux as a result of the early removal of certain advertising displays […] or of the profit that could be earned from the continued use of the displays at issue. In addition, the General Court held, […], that there was no evidence in the file that the City of Brussels had ‘monitored the implementation of the compensation mechanism established by the 1984 contract’.”
“(47) Furthermore, […], the General Court noted, in essence, that, in any event, the wish to establish, through the 1999 contract, a form of compensation intended to preserve the economic balance of the 1984 contract did not exempt the national administration from carrying out an assessment of the existence and extent of the loss which may have been incurred by JCDecaux as a result of the early removal of certain displays”.
“(48) It follows from the foregoing considerations that the General Court, although it did not rule out the possibility that the terms of the 1999 contract may have contained a mechanism intended to compensate JCDecaux, also considered, however, that such compensation did not preclude, in an analysis of the existence of State aid under Article 107(1) TFEU, a finding that there was an economic advantage for the purpose of applying that provision. Accordingly, the General Court, […], was able to find, […], that the continued use by JCDecaux of the displays at issue after the removal dates […] constituted an economic advantage for the purposes of Article 107(1) TFEU, even though that continued use was intended to compensate that undertaking for the early removal of certain displays”.
“(49) As regards, in the second place, the method for calculating the amount of the aid to be recovered, […], the General Court did not err in law in finding that the compensatory purpose pursued by the Belgian authorities was not such as to call into question the categorisation as an economic advantage for the purposes of Article 107(1) TFEU. Accordingly, the General Court cannot be criticised for having failed to invalidate, in the light of that purpose, the method for calculating the amount of the aid to be recovered established in the decision at issue.
Failure to act
The system of State aid control of the European Union is based on two fundamental principles: the obligation of Member States to notify to the Commission all new aid and the exclusive competence of the Commission to assess the compatibility of the aid with the internal market.
The integrity of this system is safeguarded by the right of competitors and other interested parties to submit complaints to the Commission. A search of DG Competition’s data base indicates that since 2000, the Commission adopted decisions in about 600 complaints or an average of 25 per year [the Commission receives more complaints which it rejects without any further investigation or formal decision].
Article 12(1) of Regulation 2015/1589 [the Procedural Regulation] stipulates that “The Commission shall examine without undue delay any complaint submitted by any interested party in accordance with Article 24(2) […]”. Article 24(2) provides that “Any interested party may submit a complaint to inform the Commission of any alleged unlawful aid or any alleged misuse of aid.”
In 2021, a group of British, French and Dutch fishermen submitted a complained to the Commission alleging that the Netherlands had granted unlawful aid to trawlers fishing with electric nets. The Commission considered that the funding was granted in the context of the commons fisheries policies and that it did not constitute State aid. The Commission also replied to the complainants that any claims of infringement of fishing rules had to submitted to the responsible Directorate-General for fisheries, not DG Competition.
On 13 November 2024, in case T-141/23, Merling v Commission, the General Court held that the Commission had failed to act in accordance with Article 265 TFEU.[2] It is probably the first time, at least in the past two decades, that an EU court has found that the Commission has infringed Article 265 [previously Article 232 TEC] in the field of State aid.
The General Court, first, recalled that in the field of State aid, the situations in which the Commission is required to act in respect to unlawful or incompatible aid are laid down in the Procedural Regulation. [paragraph 69 of the judgment]
Then it referred to the rights of interested parties under Article 24(2) of the Procedural Regulation and the obligation of the Commission under Article 15(1) of that Regulation to decide that the measure does not constitute aid, or that the aid is compatible with the internal market, or that it has doubts and to initiate the formal investigation procedure. [paras 70-71]
Next, the General Court examined whether the Commission had sufficient information before it to take one of the three decisions mentioned above or to consider that the aid was existing.
The General Court found that since the Commission had not adopted any decision in relation to the alleged aid identified by the complaint, although it was required to do so, it failed to act. [para 76]
The General Court also responded to the request of the applicants to order the Commission to adopt, within two months, a decision on the basis of the Procedural Regulation. It reiterated the established principle that EU courts do not have jurisdiction to issue instructions to the institutions against which actions are brought on the basis of Articles 263 and 265 TFEU. It is for the institution concerned to take the necessary measures to comply with a judgment, both in the context of an action for annulment and in an action for failure to act. [para 79]
On the basis of the above findings, the General Court proceeded to declare that the Commission had failed to fulfil its obligations under Regulation 2015/1589 in respect of the alleged State aid.
[1] The full text of the judgment can be accessed at:
[2] The full text of the judgment, in languages other than English, can be accessed at:
