Chillin'Competition

Last week the General Court annulled yet another Commission State aid decision in the Real Madrid case. This is an important development for at least 3 reasons:

1) First, because it is a “we told you!” scenario (add an irritating voice to that). Two months ago we wrote this post about “how the Court approaches judicial review of complex economic assessments when the burden of proof is on the Commission”. The conclusion was that “it won’t be difficult for the Commission to continue to win cases if it incorporates this logic [of not avoiding the examination of any relevant factor when it bears the burden of proof ] into its day-to-day. If that does not happen, we are likely to witness a series of annulments (…) My bet is that I will be making a few future cross references back to this prediction” (underlining featured in the original post). That prediction is faring well after only two months.

[Note that albeit the recent FC Barcelona annulment discussed in that post also had to do with Spanish football, the substance of the cases is completely different: one was about taxes and the other about urban planning].

2) Second, it confirms a trend. Over the past few months the EU Courts have annulled over a dozen decisions. Many of you will have heard me saying that for a few years many of the most interesting legal discussions in EU Law were happening in the field of State aid. All these cases show that EU judicial review is not meaningless. In fact, they show exactly what EU judicial review is about. We’ll discuss all this very soon.

3) Third, it is –sadly- the only thing that Real Madrid has won this year. All the matches I lost to my eldest playing the game picture above over the weekend (no kidding) don’t count…

For exactly the same reasons we outlined in the previous post, the lessons from these judgments are equally applicable to antitrust. Leaving aside all the case specific stuff, here is the general reasoning:

• Recital 89 reiterates the standard of judicial review for complex economic assessments (which, as you know, is the same for all areas of competition law);
• Recital 114 summarizes Real Madrid’s key argument about the implications of bearing the burden of proof: “Relying on various cases, the applicant asserts that the Commission bore the burden of proving that there had been State aid and that it was not for it to evaluate merely some of the benefits of the transaction in a selective and isolated manner”.
• At 116, the Judgment invokes the case law according to which “the Commission is required to carry out a complete analysis of all the factors that are relevant to the transaction at issue and its context”(my emphasis).
• At 118, the Court adds that “to assess the lawfulness of the contested decision, it is necessary to take into account the information at the Commission’s disposal or available to it at the date on which it adopted that decision. In that regard, if it should prove to be the case that the Commission’s assessment is contradicted or placed in doubt by information of which it was unaware during the administrative procedure, it must be established whether such information could have been known to and taken into consideration by it at the appropriate time and, if that were the case, whether that information should as a matter of course have been considered by the Commission, at least as relevant data” (read this together with the two Judgments commented upon in our previous post and you will see pretty much the same language);
• At 123, the Judgment places emphasis on whether a particular point (which the Commission did not explore) had been submitted during the administrative procedure. Interestingly, the Court made sure about this by requiring the applicant to confirm it “in a reply to a written question”
• At 125, the Court finds that “by merely examining the value of Plot B-32, the Commission did not take into consideration all the aspects of the transaction at issue and its context. Contrary to what it was required to do, it thus could not have carried out a complete analysis of all the relevant factors, for the purposes of establishing not only the valuation of the amount of aid, but also, above all, whether there was in fact an advantage resulting from the measure at issue, considered in the light of all the relevant factors (my emphasis).
• Failure to properly examine all the relevant circumstances and context to the measures automatically results in the annulment of the Decision (128): “The Commission therefore has not proven to the requisite standard that the measure at issue conferred an advantage to the applicant”.

The Bottomline(s)

… are exactly the same ones discussed at the bottom of our previous post on this topic.