The Rights of Unsuccessful Bidders in the Auctioning of State Assets

The Rights of Unsuccessful Bidders in the Auctioning of State Assets - StateAidHub blogpost29 stateassets nuerburgring scaled

Competitors of aid recipients may challenge a Commission decision only if State aid causes substantial harm to them. Assets must be sold to the highest bidder who makes a credible offer.


If a public authority sells a state asset at a price below its market rate it grants State aid to the buyer. The market price is the highest price a market operator is willing to pay for that asset [and the lowest price for which a vendor is willing to sell the asset]. Sale via an auction or other competitive procedure is considered to result in the highest possible price and therefore to correspond to the market price.

When a Member State sells an historic racing circuit, such as Nürburgring in Germany, together with hotels and restaurants, the valuation of the asset is not easy. In 2015 the Commission decided, in decision 2016/151, that Nürburgring had received incompatible State aid. It also decided that the sale of Nürburgring to another company, Capricorn, was free of State aid. And, that any recovery of State aid from Nürburgring would not concern Capricorn.

A racing association, Ja zum Nürburgring, and a competitor, NeXovation, lodged appeals against the Commission decision. The cases are, respectively, T-373/15, Ja zum Nürburgring v European Commission[1] and T‑353/15, NeXovation v European Commission[2]. Both applicants requested the partial annulment of Commission decision 2016/151.


Between 2002 and 2012, Nürburgring received subsidies for the construction of a park, hotels and restaurants. In July 2012, Nürburgring was declared insolvent. In April 2011, Ja zum Nürburgring complained to the Commission about the aid granted to Nürburgring. In April 2014, NeXovation complained to the Commission that the sale of Nürburgring had not been open, transparent, non-discriminatory and unconditional and had not achieved a market price for the sale of the Nürburgring assets. It claimed that it had submitted the highest bid.

Because the two cases are very similar, only the judgment concerning the appeal of NeXovation is analysed in this article.

Directly and individually concerned?

In order for a request for annulment of a Commission decision to be admissible, the undertaking that lodges the request must show that it is directly and individually concerned. This requirement is laid down in Article 263 TFEU.

The General Court, first, recalled that “(48) persons other than those to whom a decision is addressed may claim to be individually concerned by that decision only if it affects them by reason of certain attributes which are peculiar to them or by reason of circumstances in which they are differentiated from all other persons and by virtue of these factors distinguishes them individually just as in the case of the person addressed by such a decision”.

“(49) Concerning State aid, in addition to the undertaking in receipt of aid, competing undertakings have been recognised as individually concerned by a Commission decision terminating the formal examination procedure where they have played an active role in that procedure, provided that their position on the market is substantially affected by the aid concerned”.

“(50) The criterion of substantial effect serves to identify competitors that, as a result of aid, are distinguished individually in such a manner that they fulfil the requirements for admissibility as laid down in the judgment of 15 July 1963, Plaumann v Commission (25/62, EU:C:1963:17). Accordingly, competitors that have standing to bring an action are affected by that aid by being differentiated from all other persons and distinguished individually just as in the case of the person to whom the decision under challenge is addressed. Thus, the existence of a substantial effect on the applicant’s position on the market does not depend directly on the amount of the aid at issue, but on the significance of the adverse effect which that aid may have on that position. Such an adverse effect may vary, in respect of aid of a similar amount, in the light of criteria such as the size of the market concerned, the specific nature of the aid, the length of the period for which it was granted, whether the activity affected is the applicant’s main or ancillary activity, and the possibilities which the applicant has to circumvent the negative effects of the aid”. “(51) The mere status of potential competitor is therefore insufficient to confer on an individual the right to bring an action before the EU Courts in order to challenge a decision adopted by the Commission after a formal investigation procedure.”

The Court noted that the applicant played an active role during the formal investigation. However, that was not enough to demonstrate that the aid to Nürburgring was likely to affect substantially its position on the market.

The Court found that the applicant was not present on the market when the aid was granted. “(55) Therefore, it held no position on the relevant markets that was likely to be affected, let alone substantially, by the aid”. “(57) It follows that the applicant has not shown that it is individually concerned by the first contested decision.”

The “first contested decision” was the decision concluding that any incompatible aid would not be recovered from Capricorn because there was no economic continuity between Nürburgring and Capricorn.

The applicant also sought annulment of the “second contested decision” according to which the sale of the Nürburgring assets to Capricorn did not constitute State aid.

The General Court also examined whether the applicant had legal standing, in other words, whether it was directly and individually concerned.

Interested party?

The context for assessing this plea was different from the previous one because the Commission concluded that Capricorn received no State aid without a prior formal investigation. The Court explained that “(64) in the context of the procedure for reviewing State aid, the preliminary examination stage 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, must be distinguished from the investigation under Article 108(2) TFEU, which is designed to enable the Commission to be fully informed of all the facts of the case. It is only in connection with the procedure laid down in the latter provision that the FEU Treaty imposes the procedural guarantee consisting in the obligation, for the Commission, to give the parties concerned notice to submit their comments”.

“(65) Where, without initiating the formal investigation procedure under Article 108(2) TFEU, the Commission finds, by a decision based on Article 108(3) TFEU, that a State measure does not constitute aid incompatible with the internal market, the persons intended to benefit from that procedural guarantee may secure compliance therewith only if they are able to challenge that decision before the EU Courts. For those reasons, the EU Courts declare to be admissible an action for annulment of such a decision brought by a party who is concerned within the meaning of Article 108(2) TFEU where it seeks, by instituting proceedings, to safeguard the procedural rights available to it under the latter provision”.

“(66) Thus, it must be held that any interested party must be regarded as being directly and individually concerned by a decision finding the absence of aid at the conclusion of the preliminary examination phase […], bearing in mind that, where an interested party has lodged a complaint, refusal by the Commission to uphold that complaint must in any event be regarded as a refusal to initiate the procedure laid down in Article 108(2) TFEU”.

“(67) In the present case, the parties agree that the second contested decision is a decision adopted after the preliminary stage of the procedure for reviewing aid under Article 108(3) TFEU, and not after a formal investigation procedure.”

“(68) Under Article 1(h) of Regulation No 659/1999, any Member State and any person, undertaking or association of undertakings whose interests might be affected by the granting of aid are to be regarded as an ‘interested party’. In other words, that term covers an indeterminate group of addressees. That provision does not rule out the possibility that an undertaking which is not a direct competitor of the beneficiary of the aid may be categorised as an ‘interested party’, provided that that undertaking demonstrates that its interests could be adversely affected by the granting of the aid. It is sufficient for that undertaking to show to the requisite legal standard that the aid is likely to have a specific effect on its situation”.

“(69) It follows that, in principle, any undertaking invoking the existence of an actual or potential competitive relationship may be regarded as having the status of interested party for the purposes of Article 108(2) TFEU.”

“(70) In the present case, it must be held that the applicant has proven, by participating actively, up to the final stage, in the tender process and by lodging a complaint in that regard with the Commission, its genuine desire to enter the relevant markets and, therefore, its status of potential competitor of Capricorn, which had allegedly benefited, according to the complaint and in the light of the specific circumstances of the sale of the Nürburgring assets, from State aid, the existence of which the Commission rejected in the second contested decision.”

On the basis of the above reasoning, the General Court concluded that the applicant was an interested party and it had legal standing to challenge the second Commission decision.

Do you know we also publish a journal on State aid?

EStAL banner

The European State Aid Law Quarterly is available online and in print, and our subscribers benefit from a reduced price for our events.


Serious difficulties?

The General Court first explained that the purpose of the preliminary examination of a State aid measure is to enable the Commission to form an initial view as to whether the notified measure contains State aid and whether it is compatible with the internal market.

“(79) Where an applicant seeks the annulment of a decision declaring that the measure at issue is not State aid or of a decision not to raise objections, it essentially contests the fact that the Commission adopted the decision in relation to the aid at issue without initiating the formal investigation procedure, thereby acting in breach of the applicant’s procedural rights. In order to have its application for annulment upheld, the applicant may invoke, […], any plea capable of showing that the assessment of the information and evidence that was available to the Commission during the phase of preliminary examination of the measure at issue should have raised doubts as to its classification of that measure as State aid or its compatibility with the internal market”.

“(80) Proof of the existence of doubts may be furnished by, inter alia, reference to a body of consistent evidence: the question whether or not a doubt exists requires, with regard to a decision finding the measure at issue not to constitute State aid, investigation of both the circumstances in which that decision was adopted, inter alia the duration of the preliminary examination, and its content, comparing the assessments upon which the Commission relied in that decision with the information available to it when it took a view on the classification of the measure in question as State aid”.

“(81) Thus, the Commission is required to initiate the formal investigation procedure if, in the light of the information obtained or available to it during the preliminary examination stage, it still faces serious difficulties in assessing the measure under consideration.”

Duration of the preliminary examination

The applicant claimed that the preliminary examination was too long, that the Commission postponed its decision several times and, therefore, the Commission encountered serious difficulties.

The General Court noted that “(90) where the disputed State measures were not notified by the Member State concerned, the Commission is not required to carry out a preliminary examination of those measures within a specified period. However, the Commission is bound to carry out a diligent examination of a complaint alleging the existence of aid that is incompatible with the internal market”. “(91) In the present case, the applicant’s complaint was brought before the Commission on 10 April 2014. […] The final decision was taken on 1 October 2014, less than six months after receipt of the applicant’s complaint. That lapse of time does not go beyond what was required of an initial examination of the questions relating to the sale of the Nürburgring assets at a price lower than their market price and thus does not show the existence of such serious difficulties in assessing the measure concerned as to justify the initiation of the formal investigation procedure.”

The Court rejected the claim that the procedure was too long.

Faulty tender procedure?

Next, the applicant contended that the tender process had not been open, transparent, non-discriminatory and unconditional.

In this connection, the General Court observed that the Commission had found that the tender was competitive and that Capricorn was the bidder which submitted the highest offer including a proof of its ability to finance the project. It went on to reject the plea of the applicant.

Credible offer?

The applicant claimed that the tender process conferred an advantage to Capricorn because it was not transparent with clear deadlines and because negotiations took place with Capricorn but not the other bidders.

The General Court first recalled the relevant case law. “(114) Where an undertaking that has benefited from aid that is incompatible with the internal market is bought at the market price, that is to say, at the highest price which a private investor acting under normal competitive conditions was ready to pay for that company in the situation it was in, in particular after having enjoyed State aid, the aid element is assessed at the market price and included in the purchase price. In such circumstances, the buyer cannot be regarded as having benefited from an advantage in relation to other market operators”. “(115) If, on the contrary, the assets of State aid beneficiaries are sold at a price lower than the market price, undue advantage could be conferred on the buyer”.

“(116) For the purposes of checking the market price, the form of the transfer of a company, in particular, for example, public tendering, deemed to ensure that a sale takes place under market conditions, may be taken into consideration. It follows that, where an undertaking is sold by way of an open, transparent and unconditional tender procedure, it can be presumed that the market price corresponds to the highest offer, provided that it is established, first, that that offer is binding and credible and, secondly, that the consideration of economic factors other than the price is not justified”.

The use of the word “not” at the end of the sentence can be confusing. Normally, a vendor is allowed to take into account non-price elements such as the ability of tenderers to complete the transaction. Therefore, consideration of non-price factors must be justified for the tender to be valid. I suppose what the General Court means in the last sentence of paragraph 116 is that the vendor is justified to focus on the price alone if non-price factors are irrelevant.

Then the General Court applied the above principles to the case at hand, starting with the claim that the tender process was not transparent. In this respect, it found that the evidence showed that the tender procedure was indeed transparent.

With respect to the claim that the tender process was discriminatory, the General Court found that the evidence indicated that the process was open and non-discriminatory and that the applicant failed to provide any proof to support its contentions.

With respect to the claim that the applicant submitted the highest bid [EUR 110 million v Capricorn’s EUR 77 million], the General Court confirmed that “(136) the applicant is right to assert that its purchase price offer was higher than that of Capricorn.” But the Court went on to caution that “(137) in accordance with the case-law referred to in paragraph 116 above, it cannot be presumed that the market price corresponds to the highest offer submitted in an open, transparent and unconditional tender procedure unless it has been established that that offer is binding and credible.”

The Court proceeded to find that the applicant had not offered any secured financing, nor had it produced any proof of ability to raise the necessary funds. For this reason, the German authorities had, in the absence of proof of financial capacity and solvency, doubts as to its capacity to raise sufficient funds to pay the price that it had offered. By contrast, although Capricorn’s offer was lower, it was more credible. For this reason the Court rejected the applicant’s claim.

The General Court examined a number of other claims all of which were found to be without substance. Consequently, it dismissed the action brought by NeXovation.


Four conclusions may be drawn from this case:

First, a competitor cannot easily challenge a Commission decision because it must first prove that it is substantially harmed by the aid.

Second, a competitor can challenge a Commission decision approving aid without a prior formal investigation if it can show that the Commission should have had serious difficulties about the compatibility of the aid.

Third, no aid is passed on to the buyer of a previously subsidised asset if it pays a market price.

Fourth, the highest bidder is the winner only if its offer is credible.



[1] The full text of the judgment can be accessed at:

[2] The full text of the judgment can be accessed at:



Phedon Nicolaides

Dr. Nicolaides was educated in the United States, the Netherlands and the United Kingdom. He has a PhD in Economics and a PhD in Law. He is professor at the University of Maastricht and the University of Nicosia. He has published extensively on European integration, competition policy and State aid. He is also on the editorial boards of several journals. Dr. Nicolaides has organised seminars and workshops in many different Member States, and has acted as consultant to several public authorities.

Hinterlasse eine Antwort

Zusammenhängende Posts

23. Jan 2024
State Aid Uncovered von Phedon Nicolaides
Public Service Compensation and Indexation of Costs - State Aid Uncovered photos 2

Public Service Compensation and Indexation of Costs

Introduction Member States may impose public service obligations [PSO] on undertakings and compensate them for the extra costs they incur. The public service compensation [PSC] may also include reasonable profit. Naturally, the PSC may not cover costs that are not related to the PSO or the service of general economic interest [SGEI]. So, for multi-service providers, account separation is absolutely […]