Introduction
The Commission, in its 2016 Notice on the Notion of State Aid, made an important distinction between “indirect” beneficiaries and “secondary” beneficiaries of state aid. All state aid measures have secondary effects for the simple reason that direct aid recipients do not function in isolation from the rest of the economy. When they spend the aid they receive, third parties benefit too [e.g. the manufacturer of the equipment that is purchased with the help of the aid]. The crucial difference between secondary and indirect beneficiaries is that the secondary ones are not identified or otherwise specified in the aid measure. By contrast, third parties become indirect beneficiaries when the aid measure requires the direct aid recipients to pass on the aid to identified or specified third parties. Then the Commission must assess, first, whether there is state aid for indirect beneficiaries [e.g. whether they are undertakings], in addition to direct beneficiaries and, second, whether any such aid is compatible with the internal market.
On 16 October 2025, the Court of Justice of the EU [CJEU] in case C-59/24 P, Netherlands v European Gaming and Betting Association & Commission had to answer the question whether the Commission was obliged to examine the presence of indirect aid when the notified measure concerned solely the direct beneficiaries.1
The Netherlands appealed against the judgment of the General Court of 15 November 2023, in case T-167/21, European Gaming and Betting Association v Commission, by which the General Court annulled Commission decision SA.44830 concerning the prolongation of gambling licences in the Netherlands. The judgment of the General Court was reviewed here on 19 December 2023. It can be accessed at:
https://www.lexxion.eu/en/stateaidpost/indirect-advantage/
Gambling, lotteries and other games of chance are prohibited in the Netherlands, unless authorised. Authorisation is granted via licences to certain organisations that commit to distribute their proceedings to charities in arts, sports, and other fields of common interest.
The European Gaming and Betting Association [EGBA] had claimed that the prolongation of the betting licences without any competitive selection, or payment by the licensees of any additional fee constituted state aid. The General Court agreed with the Commission’s assessment that the prolongation did not confer any advantage to the licensees because they were required to disburse all their revenue except for a small amount they could withhold to cover their costs plus reasonable profit. Nonetheless, the General Court concluded that the Commission had failed to determine whether the prolongation granted an indirect advantage to the recipients of the proceeds from the games of chance and other licensed gambling activities. This was because some of the beneficiary charities may have been involved in economic activities, despite the fact that they were categorised as charities under Dutch law.
So, the issue contested before the CJEU was the extent of the obligation of the Commission to identify the presence or absence of an indirect advantage.
The Notice on the Notion of State Aid
The CJEU began its analysis by referring to the 2016 Commission Notice on the notion of state aid.
“(6) According to paragraph 115 of the Commission Notice on the notion of State aid as referred to in Article 107(1) [TFEU] (OJ 2016 C 262, p. 1; ‘the notice on the notion of State aid’):
‘An advantage can be conferred on undertakings other than those to which State resources are directly transferred (indirect advantage). … A measure can also constitute both a direct advantage to the recipient undertaking and an indirect advantage to other undertakings, for instance, undertakings operating at subsequent levels of activity. … The direct recipient of the advantage can be either an undertaking or an entity (natural or legal person) not engaged in any economic activity. …’
‘(7) Paragraph 116 of that notice provides:
‘Such indirect advantages should be distinguished from mere secondary economic effects that are inherent in almost all State aid measures (for example through an increase of output). For this purpose, the foreseeable effects of the measure should be examined from an ex ante point of view. An indirect advantage is present if the measure is designed in such a way as to channel its secondary effects towards identifiable undertakings or groups of undertakings. This is the case, for example, if the direct aid is, de facto or de jure, made conditional on the purchase of goods or services produced by certain undertakings only (for example only undertakings established in certain areas). …’”
The admissibility of the complaint by the EGBA
The Netherlands claimed that the General Court erred in finding that indirect state aid had been granted to charities and other recipients of the proceeds from gambling and lotteries without, first, stating why it considered the complaint by the EGBA admissible.
The CJEU began its analysis by recalling that “(51) in the context of the procedure for reviewing State aid provided for in Article 108 TFEU, the preliminary stage of the procedure for reviewing aid under Article 108(3) TFEU, which is intended merely to allow the Commission to form a prima facie opinion on the partial or complete conformity of the aid in question with the internal market, must be distinguished from the stage of the review under Article 108(2) TFEU. It is only at the latter stage, which is designed to enable the Commission to be fully informed of all the facts of the case, that the TFEU imposes an obligation on the Commission to give the ‘parties concerned’ notice to submit their comments”.
“(52) It follows that where, without initiating the formal investigation procedure under Article 108(2) TFEU, the Commission finds, by a decision taken on the basis of Article 108(3) TFEU, that aid is compatible with the internal market, the persons intended to benefit from those procedural guarantees may secure compliance therewith only if they are able to challenge that decision before the EU judicature. For those reasons, an action for the annulment of such a decision brought by a person who is concerned within the meaning of Article 108(2) TFEU is to be declared to be admissible where that person seeks, by instituting proceedings, to safeguard the procedural rights available to him or her under the latter provision”.
“(53) Moreover, it should also be borne in mind that the obligation on the General Court to state reasons under the second paragraph of Article 296 TFEU and Article 36 and the first paragraph of Article 53 of the Statute of the Court of Justice of the European Union requires it to disclose in a clear and unequivocal manner the reasoning that it has followed, in a way that allows the interested parties to understand the justification for the decision taken and permits the Court of Justice to exercise its powers of review”.
“(54) That obligation to state reasons for its judgments does not require the General Court to provide an account that follows exhaustively and one by one all the arguments put forward by the parties to the case. The reasoning may therefore be implicit, on condition that it enables the persons concerned to know the grounds on which the judgment under appeal is based and provides the Court of Justice with sufficient material for it to exercise its powers of review on appeal”.
The CJEU stressed that “(55) the obligation to state reasons is an essential procedural requirement that must be distinguished from the question whether the reasoning is well founded, which goes to the substantive legality of the measure at issue”.
“(57) In that regard, it should be noted that, …, contrary to the argument made by the Kingdom of the Netherlands, the Commission did not submit that that complaint was inadmissible.”
“(58) Furthermore, it must be held that, in so far as, …, the General Court … it accepted implicitly that that complaint was admissible.”
“(59) Given that the admissibility of that complaint was not disputed, the General Court was entitled, in so far as it considered that the complaint was admissible, to examine it on the merits without first setting out why it considered that that complaint was admissible and that there was no need to raise, of its own motion, the question of the admissibility of that complaint.”
“(60) It cannot therefore be held that the General Court failed to fulfil its obligation to state reasons by not giving the reasons why it had found that the second complaint in the third part of the first plea was admissible.”
Consequently, the CJEU rejected the plea of the Netherlands claiming infringement of Article 296 TFEU.
Presence of indirect state aid
The Netherlands submitted that the General Court failed to state reasons as to why the question of indirect state aid to charities was relevant to the assessment of the alleged state aid to licence holders.
“(66) The General Court noted that it was clear from the Netherlands legislation on gambling submitted to the Commission for assessment that part of the proceeds generated by gambling activities had to be remitted, by the licence holders, exclusively to bodies that serve the common interest as designated in the licences. … it observed that the Commission had based its analysis that there was no advantage for the licence holders specifically on their obligation to remit part of their proceeds to bodies that serve the common interest. … it considered that, when the decision at issue was adopted, the Commission had information on the measure at issue available to it which should have led it to examine whether the Netherlands legislation was designed in such a way as to channel the proceeds generated by the activity of the licence holders towards, primarily, the bodies that serve the common interest designated by the licences.”
“(67) The General Court specified, …, referring to its case-law and to paragraphs 115 and 116 of the notice on the notion of State aid, that when examining a measure, the Commission could have to consider whether an advantage could be regarded as granted indirectly to operators other than the immediate recipient of the transfer of State resources. According to the General Court, the Commission should therefore have sought to ascertain whether the measure at issue conferred an indirect advantage on bodies that serve the common interest. It noted that the decision at issue was nevertheless ‘silent’ on that issue.”
“(68) The General Court found that the Commission had not examined whether the measure at issue conferred an indirect advantage on the bodies to which the licence holders had to remit part of their proceeds, while the remittance of part of the proceeds generated by the activity of the licence holders to bodies that serve the common interest designated by those licences constituted one of the main features of the legislation concerned. The General Court considered that, in so doing, the Commission had ruled out the possibility, without further details, that that issue could give rise to serious difficulties in the classification of the measure at issue as State aid, which the formal investigation procedure alone could have resolved.”
“(69) Having regard to those considerations of the General Court, it must be held that the General Court set out the reasons why it considered that the Commission should, in its analysis of the measure at issue, …, have examined whether that measure conferred an indirect advantage, in the case in question on the bodies to which the licence holders had to remit part of their proceeds, and that the failure to examine that question in the decision at issue did not make it possible to rule out the existence of serious difficulties.”
The CJEU also examined the Dutch complaint that the General Court failed to give reasons in its response to the argument of the Commission that there was no indirect state aid to charities.
“(71) In the first place, first, …, the General Court stated, …, that the Commission maintained that EGBA had not raised that complaint during the administrative procedure. The General Court also stated that, in those circumstances, the Commission had submitted that it did not fall to it, on its own initiative and in the absence of any evidence to that effect, to seek all information which might be connected with the case before it, even where such information was in the public domain.”
“(72) In that regard, the General Court began by recalling, …, the case-law according to which the lawfulness of a decision not to raise objections at the end of a preliminary examination procedure falls to be assessed by the EU judicature, in the light not only of the information available to the Commission at the time when the decision was adopted, but also of the information which could have been available to the Commission.”
“(73) Next, the General Court observed, …, that it was clear from the Netherlands legislation on gambling submitted to the Commission for assessment that part of the proceeds generated by gambling activities had to be remitted, by the licence holders, exclusively to bodies that serve the common interest as designated in the licences. It considered that, in those circumstances, the Commission could not have been unaware of the existence of such an obligation.”
“(74) Last, …, the General Court observed that, …, the Commission had based its analysis that there was no advantage for the licence holders specifically on their obligation to remit part of their proceeds to bodies that serve the common interest.”
“(75) Accordingly, the grounds on which the General Court rejected the Commission’s argument … are clear from the reasons given in the judgment under appeal. It follows that the Kingdom of the Netherlands is not justified in claiming that the General Court failed to fulfil its obligation to state reasons in that regard.”
“(76) Second, the General Court also stated, …, that the Commission disputed EGBA’s complaint alleging indirect State aid to charities on the ground that the bodies in question could not be considered to be undertakings operating at subsequent levels of activity to those of the holders of the gambling licences within the meaning of paragraph 115 of its notice on the notion of State aid.”
“(77) It should be noted that, in addition …, the General Court found, …, that, as regards the Commission’s argument that, by requiring the licence holders to remit part of their proceeds to bodies that serve the common interest, the Netherlands authorities pursued goals directly related to public policy and public morality, the Commission, in the decision at issue, had failed to examine whether the bodies associated with the measure at issue were undertakings or pursued public service objectives.”
“(78) In that regard, it must be held that the General Court intended to point out that the Commission had not examined either the question whether an indirect advantage, as defined in particular in paragraph 115 of the notice on the notion of State aid, could have been granted, or even the question whether the charities concerned were undertakings.”
“(79) The General Court thus rejected implicitly the Commission’s argument in so far as it related to an analysis which the Commission had not carried out in the decision at issue, since, given that the Commission had not examined the question of the existence of an indirect advantage, or whether the charities concerned constituted undertakings, it had not, a fortiori, examined whether they could be regarded as undertakings operating at subsequent levels of activity to those of the holders of the gambling licences, within the meaning of paragraph 115 of the notice on the notion of State aid.”
“(80) It follows that, while it is true that the General Court could have set out more clearly the reason why it rejected the Commission’s argument, it is nevertheless sufficiently apparent from the reasons given in the judgment under appeal that that argument was rejected on account of the lack of examination which, according to the General Court, had vitiated the decision at issue. The Kingdom of the Netherlands is therefore not justified in claiming that the General Court failed to fulfil its obligation to state reasons in that regard.”
The obligation of the Commission to seek all relevant information
The Netherlands disputed the applicability of the principles in the judgment in the landmark Tempus case [C-57/19 P, Commission v Tempus Energy and Tempus Energy Technology] and of Article 4(3) and (4) of Regulation 2015/1589 [the Procedural Regulation], read in conjunction with Article 24 of the same Regulation.
First, the CJEU recalled that “(87) where an applicant seeks annulment of a Commission decision not to initiate the formal investigation procedure referred to in Article 108(2) TFEU, the applicant may rely on any plea capable of showing that the assessment of the information and evidence which the Commission had available to it during the preliminary examination phase of the measure should have raised doubts as to the compatibility of that measure with the internal market.”
“(88) Furthermore, in certain circumstances, it may be necessary, when the existence and lawfulness of State aid is being examined, for the Commission to go beyond a mere examination of the facts and points of law brought to its notice, in particular in a complaint. The Commission is required to conduct the examination procedure of the measures at issue diligently and impartially, so that it has at its disposal, when adopting the final decision establishing the existence and, as the case may be, the incompatibility or unlawfulness of the aid, the most complete and reliable information possible for that purpose. If the examination carried out by the Commission during the preliminary examination procedure is insufficient or incomplete, this constitutes an indication of the existence of serious difficulties”.
“(89) In the present case, …, the measure at issue, which, …, was the subject matter of EGBA’s complaint and which was examined by the Commission, consisted, first, of the extension of licences issued for sports betting, horse race betting, lotteries and casinos to licence holders and, second, of decisions adopted by the Netherlands Gambling Authority pursuant to that rule, which renewed six licences.”
“(90) It must be stated that the argument of the Kingdom of the Netherlands is based on the incorrect premiss that, during that examination, the Commission was required to analyse the Netherlands legislation of which the measure at issue formed part only in so far as that legislation was capable of including State aid granted to the licence holders concerned and in the form of the grant of licences.”
“(91) As the General Court held, …, the examination of any indirect advantage granted to charities is relevant for determining whether State aid, within the meaning of Article 107(1) TFEU, existed. That examination involved an analysis of the Netherlands legislation of which the measure at issue formed part in its entirety, not the examination of another legally distinct framework adopted by the Kingdom of the Netherlands. As the General Court pointed out …, the remittance of part of the proceeds generated by the activity of the licence holders to bodies designated by those licences constituted one of the main features of the legislation at issue on which the Commission based its findings in the decision at issue. It was therefore relevant to examine whether those bodies thereby received State aid.”
“(92) Consequently, in the light, in particular, of the fact thus raised that the Commission itself ruled out the possibility that the measure at issue constituted State aid on the basis of that feature alone and thus of only part of the Netherlands legislation, the General Court did not err in law in holding that, in its analysis of that measure following EGBA’s complaint, the Commission was required to examine whether there was a direct advantage and, as the case may be, an indirect advantage, resulting from that measure.”
“(93) In the light, moreover, of the obligations incumbent on that institution and recalled in paragraph 88 of the present judgment, it is irrelevant that, in its complaint, EGBA claimed more specifically the existence of an advantage to the licence holders and of State aid granted to them by the measure at issue.”
“(95) Consequently, contrary to the argument made by the Kingdom of the Netherlands, the General Court cannot be criticised for having extended the Commission’s obligation to carry out an examination following EGBA’s complaint or for having broadened the subject matter of that complaint and that of the action, or for having extended the conditions of admissibility of the action, in the light of the particular structure of the Netherlands legislation on gambling of which the measure at issue forms part.”
