General Court dismisses State aid challenge against Commission’s decision declaring UK aid compatible with the internal market

07/11/14

In August 2010, UK telecommunications operator, Vtesse, brought a challenge in the General Court against the Commission’s decision to declare State aid compatible with the internal market under Article 107(3)(c) TFEU. The aid was public funding to assist the winner of a public tender to set up next generation access broadband networks in Cornwall and the Scilly Isles. Vtesse raised a number of arguments challenging the merits of the Commission’s decision; it also alleged a breach of its procedural rights flowing from the Commission’s decision to approve the aid without initiating the formal investigation procedure under Article 108(2) TFEU.

The United Kingdom government, BT and Poland each intervened to support the Commission.

In a judgment handed down on 5 November 2014, the General Court comprehensively rejected Vtesse’s appeal. In relation to the grounds of appeal challenging the merits of the decision, the Court found Vtesse had failed to pass the “individual concern” test and therefore did not have standing to challenge merits of the decision. The Court held that it was necessary for Vtesse to show, amongst other things, a significant adverse effect on its position in the market and that it had not done so.

In relation to Vtesse’s procedural challenge, the Court examined whether or not Vtesse had discharged the burden of showing that the material before the Commission should have raised doubts in its mind as to the compatibility of the aid with the TFEU. Referring to the Kronoply case, the Court found that Vtesse could not rely on arguments it had advanced about the merits generally where those arguments were not addressed in terms to the existence of doubts concerning compatibility. It held that, since Vtesse had not formulated its pleas in that way, it was not for the Court to interpret them “as essentially seeking to safeguard the applicant’s procedural rights”; that would be to re-define the subject-matter of the action in that case. On the substance, Vtesse had failed to set out in its application any evidence which would prove the existence of doubts. In addition, Vtesse did not have any right to submit to the Commission its observations on the answers given by the United Kingdom authorities at the stage preceding a decision to initiate a formal investigation procedure.

Judgment