The European Commission (Commission) has adopted new rules that exempt public support given to companies by EU Member States, including regional and local authorities, from the requirement of prior notification to, and approval by, the Commission. These new rules, which revise the General Block Exemption Regulation (GBER) significantly extend the scope of support that can be granted by Member States without the Commission’s involvement. Some substantive conditions for exemption will, however, be stricter than before. Public authorities and aid beneficiaries are well advised to take the new opportunities and challenges introduced by the revised GBER into account when designing their aid measures.
The European Commission (Commission), on 18 December 2013, opened three formal State aid investigations into public support measures for major Spanish football clubs. The Commission alleges that the clubs under investigation have benefitted from State aid that cannot be authorised. The clubs, which include Real Madrid and Barcelona, are therefore exposed to the risk of the alleged benefit being recovered. Professional sports clubs in other EU Member States should also be aware that the Commission is starting to enforce the State aid rules in the sport sector.
The European Commission (Commission), on 18 December 2013, opened three formal State aid investigations into the public financing of some of the most well-known Spanish football clubs.
The first investigation concerns possible tax privileges for Real Madrid CF, Barcelona CF, Athletic Club Bilbao and Club Atlético Osasuna. These four clubs are exempted from the general obligation on professional football clubs to convert into sport limited companies. The effect of the exemption is that these clubs enjoy a preferential corporate tax rate of 25 per cent instead of the 30 per cent applicable to sport limited companies.
The second investigation will assess whether or not a land transfer between the City of Madrid and Real Madrid CF involved any State aid in favour of the club. In the third investigation, the Commission will examine the compliance with EU State aid rules of guarantees given by the State-owned Valencia Institute of Finance for loans that were used to finance the three Valencia clubs Valencia CF, Hercules CF and Elche CF, while those clubs were seemingly undergoing financial difficulties.
The Commission is empowered to investigate public support measures going back 10 years under general EU State aid rules. Should the Commission come to the conclusion that the measures in favour of the Spanish football clubs infringe EU State aid rules, it can order Spain to recover the State aid from the clubs and the relevant public support measures could no longer be applied.
Background
Unlike amateur sport, professional sport is an economic activity to which the general EU State aid rules apply. Although the economic nature of professional sport has been recognised in the past, the Commission has only recently picked up on potential EU State aid in the sport sector.
Professional football clubs in other EU Member States should watch the Spanish and Dutch cases with interest as the Commission is starting to enforce the State aid rules in this sector and it is likely that professional football clubs in other Member States will also become subject to an investigation.
Since the underlying legal and economic concepts of the Commission’s probe into the financing of football clubs are not [...]
The European Commission eyes sector inquiries as a new tool in European State aid law. In European antitrust law sector inquiries are already successfully employed to detect cartelist activities. This could allow the European Commission to proactively investigate whole sectors for illegal subsidies and to subsequently open new cases.
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