Relaxing whilst doing Competition Law is not an Oxymoron

EU Judicial Review: Major Antitrust Implications of Recent State Aid Cases, Part 2 (Real Madrid, Case T-791/16)  

with 8 comments


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.


Written by Alfonso Lamadrid

28 May 2019 at 10:30 am

Posted in Uncategorized

8 Responses

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  1. In the meantime the General Court also annulled the State aid decision in the Hércules case (in so far as it concerns Hércules) and we can expect further developments from the Elche and Valencia cases probably this year.

    Who said La Liga is over?


    28 May 2019 at 11:05 am

    • Self-congratulatory and sloppy analysis of the decision. The reality is that the GC turned down two of the arguments provided by Real Madrid (Madrid City Council did not look for the less onerous option and as a matter of fact did not even obtain an internal legal opinion, the value of the plot B-32 was €4m as argued by the EC instead of €22m as agreed by RM and MCC).

      EC’s decision was annulled on the third plea just because the EC had not valued independently the plots in Southern Madrid that had been given to RM in exchange for the alleged “€22m amount owed by MCC” under the July 2011 agreement (which turned out to be just €4m) and had assumed that the €19m value agreed by RM and MCC for those plots was correct. RM argued that those plots had also been overvalued (this would have come handy as they were planning to exchange them for the area in front of the Bernabeu although the November 2011 was not implemented as the whole transaction collapsed in August 2014 following the opening of the EC investigation). RM even admitted that the actual advantage was €11m instead of €18m.

      Had the EC valued those plots in Southern Madrid, the decision would have been upheld. From a Northern European point of view it is extraordinary that a company admits having received an advantage of €11m and gets off the hook on a technicality due the failure by the EC to provide a valuation. I guess that there is still a strong divide regarding the attitude towards taxpayers’ money

      Very glad to go into any detail of analysis if you disagree.

      Sagi Braun

      29 May 2019 at 11:52 am

      • Thanks for the kind comment…

        1) On the self congratulatory point: it may be if you feell that, but note that we pushed that jokingly (see the self-deprecating reference to the “irrititating voice”)
        2) Sloppy? 😉 Well, ok. I have simply selected and pasted the full text of certain recitals that I find of general application. Anyone can read them and extract their own conclusions. The post makes clear that I did not pretend to assess the specificities of the case (which, unlike in your case, might not matter to readers not involved in it). Your knowledged of the file and underlying facts (including those not featured in the Judgment) is certainly superior to mine, not having been involved.
        3) The GC turned down two arguments provided by Real Madrid, sure, but I don’t see the legal relevance of those .Focusing on the point that led to the annulment of the decision would appear to be more interesting for the purposes of the blog.


        4) Your comment that “had the EC valued those plots…the decision would have been upheld” and that it’s extraordinary that they “get off the hook on a technicality” proves precisely the point the post intended to make. In that refard this case is no different to the ones discussed in the previous post. If the Commission carries out a full assessment of all relevant elements brought to its attention, it will continue to win cases. If not, it will keep on losing because of this “technicality”.

        Alfonso Lamadrid

        29 May 2019 at 12:05 pm

  2. Apologies but with all due respect I have to insist that it is sloppy. Not been involved in the case either (as a matter of fact I could not care less about the club) but all the information is in the judgment. The only factor that the EC failed to consider is the value of the plots received by RM in return for the overblown compensation of €22m agreed with MCC… Agree about the poor job done by the EC. Sometimes one has to wonder whether they do actually want to win the cases…

    Sagi Braun

    29 May 2019 at 1:14 pm

    • Thanks, Sagi, for taking part in this discussion.

      Apologies for stepping in, but it is pretty clear to me (and to the people with whom I chatted about it) that Alfonso’s post did not intend to discuss the Commission decision and/or the GC judgment as such.

      His post intends to address general issues of evidence, proof and judicial review. He did not focus on the third plea because he was capricious (or sloppy). It just so happens that the third plea is the one in which the broader questions relating to the judicial review of administrative action were discussed.

      You mention that the Commission decision was annulled on a technicality. To which I answer: that’s precisely Alfonso’s point! Alfonso’s point (he knows he is free to correct me if I got this wrong) is that technicalities matter, even when it is clear that a measure amounts to State aid.

      Many times I have blogged about issues of principle, only for people to start discussing the outcome of the cases in which these issues arose. Now Alfonso knows how it feels!

      Pablo Ibanez Colomo

      29 May 2019 at 2:36 pm

      • Pablo, no need to get so agitated. The purpose of the comments section of a blog is for the readers to provide our views on those articles. I understand that you or the author may prefer that certain issues are not discussed but it is reasonable to expect that some readers may want to bring them to the author’s attention.

        If he chose to focus on the third plea, why is it not relevant that the third plea exclusively deals with the valuation of the plots received by RM as compensation for the overblown €22m compensation agreed with MCC and that even RM admitted that there was a State aid of up to €11m? Why should I not mention it in the comments?

        Sagi Braun

        30 May 2019 at 8:04 am

  3. Hi Sagi, you are of course at full liberty to raise any issue you want in the comments, and people interested about this very specific case or about State aid and urban planning may perhaps appreciate it. No problem. Comments can also be useful to enter into side debates.

    I cannot see why we would want some issues not to be discussed.

    What we are trying to explain is that your nuance is not relevant to the wider, general, point on judicial review that the post was about. As explained in the post itself we left “aside all the case specific stuff” to focus on the general reasoning.

    But it is no doubt an interesting point on the underlying facts. I would encourage you to keep up reading and commenting critically on the blog.

    Alfonso Lamadrid

    30 May 2019 at 9:40 am

  4. […] EU Judicial Review: Major Antitrust Implications of Recent State Aid Cases, Part 2 (Real Madrid, Ca… 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… Alfonso Lamadrid (Chilling Competition) […]

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