In a decision earlier today, the German Federal Court of Justice
(Bundesgerichtshof, BGH) ruled that companies can bring court
action the challenge state aid granted to their competitors.
Companies doing business in Germany will in the future have to
ensure that all their transactions with governmental entities and
government-owned companies are fully in line with European Union
State aid rules, to avoid court challenges by competitors.
Today's case was brought by German air carrier Lufthansa,
challenging the conditions the local airport of Frankfurt-Hahn
granted to low-cost carrier Ryanair. The Frankfurt-Hahn airport is
operated by a publicly-owned company. According to Lufthansa, the
conditions for using that airport for Ryanair ran afoul of EU rules
that allow state aid only in very limited circumstances. The
question before the court was whether a private party has standing
to bring a court action against the grant of a subsidy to a
Court action is clearly possible if state aid is granted through
instruments of administrative law, such as tax benefits. In those
cases, competitors that are directly affected may seek redress
before the administrative courts. Today's case before the BGH
concerned potential benefits derived through civil-law
transactions, a contract between the airport and Ryanair. Notably,
the German courts of appeal have been divided on the issue. A
number of courts of appeal have found that state aid law can never
be a basis for companies to challenge private-law transactions of
The BGH ruled today that private complainants are allowed to bring
such actions against private-law transactions through which their
competitors are granted an unfair advantage. They can base such
action on a section of the German Civil Code that makes it a tort
to violate a law that protects a particular party (Section 823(2)
Civil Code). According to the BGH, Article 108(3) of the EU Treaty
(TFEU), which prohibits the grant of illegal subsidies, is a law
that protects competitors of the recipient of state aid.
This judgment of the German court is in line with efforts of the
European Commission to enhance the enforcement of EU state aid
rules by member state courts. In 2006, the European Commission
published a study (co-coordinated by Jones Day) that summarized the
private enforcement of EU state aid laws at member state level.
Last year, the Commission adopted a communication on the
enforcement of the state aid rules at Member State level that calls
for an improved enforcement.
By 27 December 2016, the Croatian Parliament needs to implement the Directive 2014/104/EU on antitrust damages actions, which is expected to streamline the procedure for private individuals and businesses to sue for damages...
The European Commission recently published its preliminary report on the E-commerce Sector Inquiry, identifying potential competition concerns in cross-border e-commerce of digital content and consumer goods.
The German government has recently published a bill that would significantly amend the criteria for determining whether an M&A transaction is subject to German merger control.
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