Judgments nº T-791/16 of Tribunal General de la Unión Europea, May 22, 2019

• Resolution Date: May 22, 2019
• Issuing Organization: Tribunal General de la Unión Europea
• Decision Number: T-791/16

(State aid - Aid granted by the Spanish authorities to a professional football club - Settlement aimed at compensating for a failure to carry out a land transfer initially agreed between a city council and a football club - Football club overcompensated - Decision declaring the aid incompatible with the internal market - Advantage)

In Case T-791/16,

Real Madrid Club de Fútbol, established in Madrid (Spain), represented by J. Pérez-Bustamante Köster and F. Löwhagen, lawyers,

applicant,

v

European Commission, represented by P.-J. Loewenthal, G. Luengo and P. Němečková, acting as Agents,

defendant,

APPLICATION under Article 263 TFEU seeking the annulment of Commission Decision (EU) 2016/2393 of 4 July 2016 on the State aid SA.33754 (2013/C) (ex 2013/NN) implemented by Spain for Real Madrid CF (OJ 2016 L 358, p. 3),

THE GENERAL COURT (Fourth Chamber),

composed of H. Kanninen (Rapporteur), President, J. Schwarcz and C. Iliopoulos, Judges,

Registrar: I. Dragan, Administrator,

having regard to the written part of the procedure and further to the hearing on 5 September 2018,

gives the following

Judgment

Background to the dispute

1 On 20 December 1991, the Ayuntamiento de Madrid (Madrid City Council, Spain), the Gerencia Municipal de Urbanismo of that city council (City council urban development department) and the applicant, Real Madrid Club de Fútbol, concluded an agreement concerning the renovation of the Santiago Bernabéu stadium in Madrid (‘the 1991 agreement’).

2 On 29 November 1996, the applicant and the Comunidad autonoma de Madrid (the Autonomous Community of Madrid) entered into a land swap agreement (‘the 1996 agreement’).

3 On 29 May 1998, the applicant and Madrid City Council concluded an agreement with the aim of implementing the land swap that was envisaged in the 1996 agreement (‘the 1998 implementation agreement’). The 1998 implementation agreement provided that the applicant was to transfer certain land to that city council and that, as consideration, the city council was to transfer to the applicant land which would match its obligations towards the applicant, that is, the transfer of plots of land worth approximately EUR 13.5 million. It was envisaged that that city council would transfer the plots located in the Julián Camarillo Sur area (plots 33 and 34) and plot B-32 in the Las Tablas area in Madrid (‘plot B-32’). For the purpose of that swap, the technical departments of that city council estimated the value of the latter plot at EUR 595 194.

4 On 29 July 2011, the applicant and Madrid City Council signed an agreement with the aim of settling a legal dispute between them, concerning the 1991 agreement and the land swap which had been the subject of the 1996 agreement and the 1998 implementation agreement (‘the 2011 settlement agreement’). Under that settlement agreement, the parties acknowledged the legal impossibility of transferring plot B-32 as matters stood at the time to the applicant. That city council, taking the view that it was impossible for it to perform its obligations under the 1998 implementation agreement, decided to compensate the applicant by paying it an amount corresponding to the value of that plot in 2011. In a 2011 report, the technical departments of Madrid City Council estimated that value at EUR 22 693 054.44. The parties agreed that the compensation would be paid by replacing the transfer of that plot with the transfer of other plots to the applicant. Those latter plots were identified as an estate of 3 600 m², various pieces of land with a total surface area of 7 966 m² and an area of 3 035 m², the total value of those latter plots being estimated at EUR 19 972 348.96. The parties also agreed to offset their mutual debts. The result was a remaining net claim of EUR 8.04 for Real Madrid against Madrid City Council.

5 Under an urban development agreement concluded in September 2011 between Madrid City Council and the applicant, the applicant undertook to transfer back certain immovable property. In connection with that transaction, that city council and the Autonomous Community of Madrid altered the land use plan of Madrid (‘the PGOU’).

6 Informed in 2011 of the existence of presumed State aid in favour of the applicant, granted in the form of an advantageous transfer of immovable property, the European Commission, on 20 December 2011, asked the Kingdom of Spain to comment on that information. On 23 December 2011 and 20 February 2012, that Member State replied to the request from the Commission. On 2 April 2012, the Commission sent another request, to which that Member State replied on 18 June 2012.

7 By letter of 18 December 2013, the Commission informed the Kingdom of Spain of its decision to initiate the procedure provided for in Article 108(2) TFEU. It reached the preliminary view that the compensation granted to the applicant by Madrid City Council under the 2011 settlement agreement constituted State aid in favour of the applicant for the purposes of Article 107(1) TFEU. It invited the Kingdom of Spain and the interested parties to provide relevant information in order to ascertain whether the transfer of plot B-32 to the applicant was indeed impossible under the 1998 implementation agreement for that city council and to study the possible consequences of that impossibility in the light of Spanish law. It requested further details on the value of the plots of land included in the 2011 settlement agreement and the urban development agreement referred to in paragraph 5 above. On 16 January 2014, the Kingdom of Spain submitted its observations on that decision to initiate the procedure.

8 By Decision (EU) 2016/2393 of 4 July 2016 on the State aid SA.33754 (2013/C) (ex 2013/NN) implemented by Spain for Real Madrid CF (OJ 2016 L 358, p. 3) (‘the contested decision’), the Commission found, under Article 1 of that decision, that the State aid amounting to EUR 18 418 054.44, unlawfully granted on 29 July 2011 by the Kingdom of Spain in breach of Article 108(3) TFEU, in favour of the applicant, was incompatible with the internal market.

9 In the contested decision, the Commission found that a market economy operator in a similar situation to Madrid City Council would not have signed the 2011 settlement agreement. It took the view, in the first place, that considering the legal uncertainties in 2011 surrounding the issue of whether that city council was liable to pay compensation to the applicant on account of not having been able to transfer plot B-32 to the applicant under the 1998 implementation agreement, a market economy operator in the same situation would have sought legal advice before entering into the 2011 settlement agreement, so as to establish the likelihood that it was indeed liable for that failure. The Commission stated that that city council had not sought such legal advice. In the second place, it found that a market economy operator in a similar situation to the city council concerned would not have agreed to pay the applicant compensation of EUR 22 693 054.44 under such an agreement, since that amount far exceeds the maximum extent of its legal liability stemming from the failure to comply with the obligation to transfer that plot.

10 In the contested decision, the Commission examined the valuation of the land made by the technical departments of Madrid City Council, that contained in a 2011 report by the Spanish Ministry of Finance, that of the report communicated by the applicant and commissioned from a property consultancy office (‘the property consultancy’s report’) and that of the report ordered by the Commission from a property valuation office (‘the property valuation office’s report’). It observed, inter alia, that the latter report offered a detailed and thorough comparison and upheld the value of plot B-32 in 2011 as assessed in that report at EUR 4 275 000.

Procedure and forms of order sought

11 By application lodged at the Registry of the General Court on 14 November 2016, the applicant brought the present action claiming that the Court should:

- declare the action admissible;

- annul the contested decision in its entirety;

- order the Commission to pay the costs.

12 In its statement of defence, lodged at the Court Registry on 2 March 2017, the Commission contends that the Court should:

- dismiss the action as unfounded;

- order the applicant to pay the costs.

13 The applicant lodged the reply at the Court Registry on 25 April 2017 and the Commission lodged the rejoinder at the Court Registry on 6 June 2017.

14 Acting on a proposal from the Judge-Rapporteur, the Court decided to open the oral part of the procedure and, by way of measures of organisation of procedure pursuant to Article 89 of the Rules of Procedure of the General Court, put written questions to the parties, requesting them to answer those questions in writing. The parties answered those questions within the prescribed periods.

15 The parties presented oral argument and replied to the Court’s oral questions at the hearing on 5 September 2018.

Law

The requests for the hearing of witnesses and for the communication of documents

16 In the application, the applicant has set out a request seeking that the authors of the property consultancy’s report be heard, relying on Articles 85 and 88 and Article 91(d) of the Rules of Procedure, for the purposes of obtaining the observations of those persons on the method of valuation of plot B-32 used by the Commission and by the errors committed, in the applicant’s view, in the property valuation office’s report. It has also set out a request, relying on Article 89(3) of those rules, for the purposes of obtaining from the Commission the communication of a copy of the contract concluded with that property valuation office.

17 The Commission contends that the hearing requested is unnecessary inasmuch as it stated in detail the reasons for which it rejected the valuation made in the property consultancy’s report, a copy...