EU Ombudsman’s decision reinforces lack of access to justice in State aid matters

In a disappointing decision, the European Ombudsman has confirmed the EU Commission’s interpretation of the State aid rules that only competitors can have the status of “an interested party”.

This means that persons whose competitive interests are not affected by unlawful State aid have no right to participate in the Commission’s decision-making process, even if the aid affects other interests, such as property rights, their health and the environment they live in. This has also an impact on access to justice because without the status of an interested party, members of the public and NGOs do not have standing to challenge such decisions before the Courts of the EU, even where the aid contravenes EU environmental law.

The initial complaint to the European Commission concerned an alleged unlawful State aid granted by the Flemish Region in Belgium to a municipal water provider. The complainant’s claim was threefold. First, he stated that his family home had been expropriated and that the expropriation only served the private interest of the water provider. He considered that his right to property had been infringed and that he suffered moral and financial damage. Second, he was concerned about the quality of drinking water provided to him in view of the dependency of his own water provider on the water provider allegedly receiving State aid. Third, the complainant referred to a risk of drinking water shortage because the water provider’s decision to change the use of the waterpark basin from “safety” to “production”.

The European Commission refused the complaint on the ground that, according to Article 24(2) of the Council Regulation 2015/1589 laying down detailed rules on State aid decision-making, only “interested parties” could submit a formal complaint. It explained that these are parties whose own interests might be affected by the granting of aid, for example competitors or trade associations, which was not the case of the complainant. Nevertheless, the Commission registered the information contained in the complaint as general market information.

The complainant turned to the European Ombudsman, who confirmed the conclusion of the Commission. First, she recalled that Article 1(h) of Regulation 2015/1589 defines an “interested party” as “any Member State and any person, undertaking or association of undertakings whose interests might be affected by the granting of aid, in particular the beneficiary of the aid, competing undertakings and trade associations”. Second, she noted that, according to the case-law of the CJEU (cases C-83/09 and 323/82), that term covers an indeterminate group of persons which includes, among others, competing undertakings of the beneficiary.

The Ombudsman then referred to Article 11a of the Implementing Regulation, which requires interested parties to fill in a form when making a State aid complaint. That form invites complainants to “explain why and to what extent the alleged State aid affects their competitive position or the competitive position of the person/firm they represent”.

In a strange twist of logic, this led the Ombudsman to conclude: “it is clear that in order to be considered as an interested party, one needs to demonstrate that the alleged State aid affects one’s competitive position.” In the case at hand, the complainant failed to demonstrate that he competes with the beneficiary of the alleged State aid and/or that his competitive position would be affected by the granting of that aid. Therefore, he could not be regarded as an “interested party” within the meaning of the State aid rules.

The Ombudsman’s restrictive interpretation of the concept of “interested party” under Article 1(h) of Regulation 2015/1589 excludes any person who is not in a competitive relationship with the beneficiary of the aid. This is in direct conflict with the wording of Regulation 2015/1589 and the case law cited in the decision, both of which specifically indicate that the term is not confined to that category of persons. This is significant because only “interested parties” can participate in the Commission’s decision-making process and have standing to challenge the Commission’s decision before the CJEU.

The Ombudsman’s decision is particularly regrettable because it completely disregards the fact that the complaint referred to environmental issues and possible breaches of environmental law. Yet, Article 9(3) of the Aarhus Convention obliges the EU to provide access to justice for members of the public to challenge decisions which contravene EU environmental law.

It is worth noting that the issue of access to justice to challenge EU State aid decisions is currently before the Aarhus Convention Compliance Committee in a communication brought by Ökobüro.

Submissions of both Ökobüro and the Commission can be found here.