Tightening the ropes on standing in State aid cases
Competitors of illegal State aid recipients may challenge the legality of the aid before national courts. But who is considered a competitor?
In Dutch administrative law, he who seeks the annulment of an administrative decision has no standing unless he is considered an interested party. The addressee of a decision will generally be considered an interested party as, to an extent, will residents of an area where a large building project is to be executed. A competitor of the addressee of a decision may also be considered an interested party, provided that he is, or will imminently become active on the same product market and the same geographical market as the addressee. It may also be relevant whether the competitor will suffer damages.
Interest in State aid cases
The interest requirement is now, it appears, becoming very important in State aid cases before Dutch administrative courts. As I have written earlier in this blog, many of the cases concerning State aid law before Dutch courts may not actually be aimed at undoing the distortive effects on competition caused by the granting of illegal aid. Time to tighten the ropes on standing? Well, the Administrative Jurisdiction Division of the Council of State seems to think so.
Tightening the ropes: the case of housing corporations
On January 6th, the Administrative Jurisdiction Division ruled that a large number of housing corporations had no standing regarding subsidies granted to another large number of housing corporations (www.rechtspraak.nl, LJN BZ0794). The first hurdle was that most corporations are not active on the same geographical market as they carry out their activities in different parts of the Netherlands. The other corporations, however, also failed to meet the interest requirement. They had not demonstrated that the subsidies to other housing corporations would lead to loss of revenue on their part. No access to court, then.
National procedural autonomy and effectiveness
How does this result relate to the well-known Rewe case law? The corporations, as a final argument, claimed that the Administrative Jurisdiction Division’s reading of the interest requirement would make it effectively impossible to challenge the legality of the subsidies under State aid law. This argument was rejected. The Administrative Jurisdiction division ruled that this argument could only be made in cases where the applicants actually derived rights from EU law. As the interests of the applicants were not directly affected by the subsidies concerned, the argument that they could not challenge the subsidy decisions became effectively irrelevant from a point of view of EU law. As a side note: Please do feel free to comment if you find a way out of this circle.
Tightening the ropes part 2: the case of Dutch education abroad
Just last week, on May 29th, the Administrative Jurisdiction confirmed that this development will be continued. In a case concerning subsidies to a foundation stimulating Dutch education abroad, two other undertakings providing education abroad were denied standing because they could not demonstrate that they were active on the same product market as the recipient of the subsidy.
Outlook and comments
It remains to be seen how this development will continue in practice. Let me just make one point: it seems quite odd that a person would, prior to the qualification of a potential aid measure, have to prove that he is an actual competitor of an aid recipient who suffers losses as a result of the alleged illegal State aid – when for the actual assessment of the aid measure it suffices that the contested measure threatens to distort competition.
I would lean towards your point that the judges are likely to avoid engaging in real substantive law assessment and doing away with a case based on standing. However, the Commission is trying to address this problem with its recent amendments to the Procedural Regulation which institute cooperation with national courts and the Commission. National courts may now ask now for information from the Commission regarding a State aid case that is brought before them, or the Commission may submit its observations to the pending case before a national court concerning State aid matters (Art. 23a). Maybe that will partially deal with the problem and national court will welcome more State aid cases, but I am not sure.
As regards the conditions for legal standing, I think it is logical that national courts would prefer to restrict the standing to those individuals who are very likely to be affected by a State aid measure, as it would eliminate some potential cases brought just to start a fight with a competitor. A national court is supposed to be an authority, as not a playground for fight. But, on the other hand, since State aid litigation is so rare, lenient standing might allow for more State aid cases to be brought before national courts and encourage those who are, in fact, really harmed by State aid to finally do something about and go to the court. This is all about whether the interest to protect individual rights harmed by illegal State aid outweighs the interest to maintain the authority of the court. I am guessing the Commission would say “yes” to that.
That sounds like an interesting thought, I would be very interested in such a study as well, although I haven't yet come across one. It was my feeling when I first read the Dutch standing cases that perhaps judges would prefer to do away with a case based on standing or other procedural issues rather than having to deal with the complex questions of State aid law. To see if this rings true, it would indeed be useful to look at Member State in which NCA's have powers regarding State aid law.
I think there is another point to consider, also related to the NCA's, which is that the NCA's have been designed to enforce laws. The European Commission is also well-suited for this task. Judges(depending on their legal background) are much less equiped for this. Their role is not so much to enforce the law but to protect the interests of those affected by the violation of the standstill clause (this is somewhat oversimplified, undoubtedly you also have discussions on enforcement of 'objective' law versus protection of 'subjective' rights).
In any case, in this light it would make a lot of sense to raise the preliminary issue of whether a claimant is in fact or at least likely to be affected by the alleged violation and not to be too lenient regarding standing. I am still undecided on the merit of this argument, would you consider it reasonable in the light of EU law?
An interesting (albeit imperfect) parallel is that the European Commission has also as of recently tightened its 'standing' rules, in the sense that not every complaint requires a full investigation and decision.
I'd be interested in your thoughts
Isn’t the interpretation of standing so strict, because national judges have little knowledge of the State aid rules themselves? My feeling is that private enforcement of State aid rules might be incentivized when National Competition Authorities were to possess explicit competences in the State aid field, and, in fact, in many Member States they do. I was wondering whether there has been any study carried out concerning private litigation before national courts in Member States whose NCAs have explicit State aid competences conferred on them by national law (many new Member States plus Denmark) and those Member States whose NCAs do not have explicit competences in that field. My feeling is that if NCAs may enact administrative decisions concerning compliance with block exemption regulations and these decisions may be challenged before the courts, that gives national judges good reasons to learn more about State aid law, and incentivizes and fosters at the same time private enforcement of State aid rules. Does it sound logical to you?
It is indeed possible to challenge an illegal state aid measure under Dutch civil law. There will also be standing requirements but I believe these might be less severe in practice.
Funny, It seems like Catch XXII. According to Dutch law, is it possible to use any means of civil procedure (e.g. action) against measures of the illegal state aid? Or is the possibility restricted only to administrative law ?
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