JUDGMENT OF THE GENERAL COURT (Ninth Chamber)
15 November 2023 (*)
(State aid – State measure extending gambling licences granted by the Netherlands – Decision finding no State aid – Failure to initiate the formal investigation procedure – Serious difficulties – Procedural rights of interested parties)
In Case T‑167/21,
European Gaming and Betting Association, established in Etterbeek (Belgium), represented by T. De Meese, K. Bourgeois and M. Van Nieuwenborgh, lawyers,
applicant,
v
European Commission, represented by B. Stromsky and J. Carpi Badía, acting as Agents,
defendant,
supported by
Kingdom of the Netherlands, represented by M. Bulterman, J. Langer and C. Schillemans, acting as Agents,
intervener,
THE GENERAL COURT (Ninth Chamber),
composed of L. Truchot, President, H. Kanninen and T. Perišin (Rapporteur), Judges,
Registrar: A. Marghelis, Administrator,
having regard to the written part of the procedure,
further to the hearing on 1 March 2023,
gives the following
Judgment
1 By its action under Article 263 TFEU, the applicant, European Gaming and Betting Association, seeks the annulment of Commission Decision C(2020) 8965 final of 18 December 2020 in Case SA.44830 (2016/FC) – Netherlands – Prolongation of gambling licences in the Netherlands (‘the contested decision’), referred to in the Official Journal of the European Union of 15 January 2021 (OJ 2021 C 17, p. 1).
Background to the dispute
2 The Netherlands legislation on gambling is based on a system of exclusive authorisations, or licences, under which the organisation or promotion of gambling is prohibited unless an administrative authorisation has been issued to that effect.
3 The applicant is a non-profit association whose members are European online gaming and betting operators. On 8 March 2016, it lodged a complaint with the European Commission under Article 24 of Council Regulation (EU) 2015/1589 of 13 July 2015 laying down detailed rules for the application of Article 108 TFEU (OJ 2015 L 248, p. 9), concerning aid that was allegedly unlawful and incompatible with the internal market granted by the Kingdom of the Netherlands to several entities operating lotteries and other betting and gambling activities in that Member State.
4 The complaint concerned, first, a general policy rule adopted by the Netherlands State Secretary for Security and Justice on 7 October 2014 concerning the extension, until 1 January 2017, of the licences issued for sports betting, horse race betting, lottery and casino licences to incumbent licence holders and, second, the decisions adopted by the Nederlandse Kansspelautoriteit (Netherlands Gambling Authority, the Netherlands) on 25 November 2014 implementing that general policy rule by renewing six expiring licences for charity lotteries, sports betting, the instant lottery, the Lotto, and betting on horse races (together, ‘the contested measure’).
5 In its complaint, the applicant alleged, in essence, that, pursuant to the contested measure, the Netherlands authorities had granted State aid to the operators holding those licences. It submitted that that aid had been granted in the form of an extension of the existing licences on an exclusive basis without the Netherlands authorities having requested payment of remuneration at market rate and without them having organised an open, transparent and non-discriminatory procedure for the award of the licences.
6 On 30 March 2016, the Commission forwarded a non-confidential version of the complaint to the Netherlands authorities, which replied by letter of 22 July 2016. Subsequently, the Commission sent a request for information by letter of 16 August 2016 to the Netherlands authorities, which replied by letter of 11 October 2016.
7 The applicant submitted further observations to the Commission on 4 May, 28 June and 17 November 2016.
8 On 30 May 2017, the Commission informed the applicant of the outcome of its preliminary assessment. It took the view that the extension of the licences of the incumbent licence holders on an exclusive basis did not involve the transfer of State resources. Therefore, it considered that the contested measure did not constitute State aid within the meaning of Article 107(1) TFEU. The Commission did, however, expressly set out that that position was not a definitive position of the Commission itself, but only a preliminary view of the services of the Directorate-General for Competition, based on the information available and pending any additional comments that the applicant might wish to make.
9 The applicant replied by letter of 30 June 2017, in which it challenged the Commission’s assessment and provided further information.
10 On 1 September 2017, the Commission sent the Netherlands authorities a request for further information, which was supplied to it on 7 December 2017.
11 On 9 November 2018, the Commission requested information from the Netherlands authorities regarding the ongoing reform of the gambling legislation in the Netherlands.
12 On 19 February 2019, the Netherlands Senate adopted a new law on gambling, which entered into force on 1 April 2021.
13 On 1 March 2019, the Commission invited the applicant to provide its views on the recent developments in the legislation governing the gambling sector in the Netherlands.
14 By letter of 5 April 2019, the applicant submitted its observations on the adoption of the new law on gambling. In that letter, the applicant stated that the adoption of that law had not affected or undone the unlawfulness of the State aid complained of.
15 By letter of 27 June 2019, the Commission informed the applicant of its preliminary conclusion that the extension of the relevant exclusive licences did not confer an advantage on the incumbent operators and that, therefore, the contested measure did not constitute State aid within the meaning of Article 107(1) TFEU.
16 On 22 August 2019, the applicant wrote to the Commission to inform it that it maintained its position that the contested measure constituted State aid.
17 The Commission sent the Netherlands authorities requests for information by letters of 2 December 2019 and 16 June 2020, to which they replied by letters of 7 February and 18 September 2020.
18 The procedure was closed by the adoption of the contested decision.
19 In that decision, the Commission observed that, under Article 1(1)(a) of the wet houdende nadere regelen met betrekking tot kansspelen (Law containing further rules on gambling) of 10 December 1964 (Stb. 1964, No 483), the offering of gambling activities was prohibited in the Netherlands unless a licence had been granted under that law. Under Article 3 of that law, those licences could be granted only if the revenue generated by the gambling activities was paid to organisations acting in the common interest.
20 Moreover, the Commission stated that Article 2(b) of the besluit tot vaststelling van de algemene maatregel van bestuur, bedoeld in artikel 6 van de Wet op de kansspelen (Kansspelenbesluit) (Decree establishing the general administrative measure referred to in Article 6 of the Law on gambling (Gambling Decree)) of 1 December 1997 (Stb. 1997, No 616), provided, inter alia, that gaming operators which had obtained a licence under the Netherlands Law on gambling were required to remit the revenue generated by the sale of participation tickets to the beneficiaries indicated in the licences. That remittance was required to be at least 50% of the nominal value of the participation tickets sold.
21 The Commission considered that, if the Member State granted an exclusive right to an economic operator or extended that right and did not allow that right holder to collect more than the minimum return necessary to cover its operational and capital costs from exercising the right, plus a reasonable profit, that measure did not confer an advantage on the beneficiary. In such circumstances, the beneficiary of the exclusive right could not be considered to have enjoyed a benefit that it could not have obtained under normal market conditions.
22 The Commission found that the licence holders were required to pay all the proceeds of their gambling activities, namely their revenue after deducting the expenditure relating to the prizes awarded and reasonable costs, to bodies that serve the common interest and, therefore, those operators could not make a profit or could only make a profit that was not higher than a reasonable profit. The Commission also took the view that the financial data for licence holders for the period 2015 to 2016, provided by the Netherlands authorities, confirmed that analysis.
23 Consequently, the Commission concluded that the contested measure did not confer an advantage on its recipients and therefore did not constitute State aid within the meaning of Article 107(1) TFEU.
Forms of order sought
24 The applicant claims that the Court should:
– annul the contested decision;
– order the Commission to pay the costs.
25 The Commission, supported by the Kingdom of the Netherlands, contends that the Court should:
– dismiss the action;
– order the applicant to pay the costs.
Law
26 In support of its action, the applicant raises two pleas in law, alleging, first, infringement of its procedural rights by the Commission’s refusal to initiate the formal investigation procedure under Article 108(2) TFEU (‘the formal investigation procedure’) while the preliminary examination for the purposes of Article 108(3) TFEU (‘the preliminary examination’) did not eliminate all doubts as to the existence of aid and, second, manifest error of assessment in that the Commission found that the contested measure did not grant an advantage within the meaning of Article 107(1) TFEU to the licence holders.
27 It is appropriate to begin by examining the first plea in law.
28 By its first plea, the applicant submits that the Commission infringed its procedural rights by not initiating the formal investigation procedure while the preliminary examination did not eliminate all doubts as to the existence of aid. That plea is divided into three parts based on, first, the length and circumstances of the preliminary examination; second, a significant shift in the Commission’s analysis in the course of the preliminary examination and, third, the claim that the Commission was wrong to find, in the contested decision, that no doubts persisted as to whether the contested measure conferred an advantage on licence holders.
The applicable principles
29 According to case-law, the lawfulness of a decision not to raise objections, based on Article 4(3) of Regulation No 2015/1589, depends on whether the assessment of the information and evidence which the Commission had available to it during the preliminary examination procedure should objectively have raised doubts as to the compatibility of an aid measure with the internal market, given that such doubts must lead to the initiation of a formal investigation procedure in which the interested parties referred to in Article 1(h) of that regulation may participate (see, to that effect and by analogy, judgment of 2 September 2021, Commission v Tempus Energy and Tempus Energy Technology, C‑57/19 P, EU:C:2021:663, paragraph 38 and the case-law cited).
30 That obligation is confirmed by Article 4(4) of Regulation 2015/1589, under which the Commission is required to initiate a formal investigation procedure where doubts are raised as to the compatibility with the internal market of the measure in question, without having any discretion in that regard (see, to that effect and by analogy, judgment of 22 December 2008, British Aggregates v Commission, C‑487/06 P, EU:C:2008:757, paragraphs 113 and 185 and the case-law cited; order of 25 June 2019, Fred Olsen v Naviera Armas, C‑319/18 P, not published, EU:C:2019:542, paragraph 30; and judgment of 20 June 2019, a&o hostel and hotel Berlin v Commission, T‑578/17, not published, EU:T:2019:437, paragraph 57).
31 When an applicant seeks the annulment of a decision not to raise objections, that applicant essentially contests the fact that the Commission adopted the decision in relation to the aid at issue without initiating the formal investigation procedure, thereby infringing the applicant’s procedural rights. In order to have its action for annulment upheld, 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 notified should have raised doubts as to the compatibility of that measure with the internal market. The use of such arguments cannot, however, have the consequence of changing the subject matter of the application or of altering the conditions of its admissibility. On the contrary, the existence of doubts concerning that compatibility is precisely the evidence which must be adduced in order to show that the Commission was required to initiate the formal investigation procedure under Article 108(2) TFEU (see judgment of 2 September 2021, Commission v Tempus Energy and Tempus Energy Technology, C‑57/19 P, EU:C:2021:663, paragraph 39 and the case-law cited).
32 Evidence of the existence of doubts as to the compatibility of the aid at issue with the internal market, which requires investigation of both the circumstances in which the decision not to raise objections was adopted and its content, must be adduced by the applicant seeking the annulment of that decision on the basis of a body of consistent evidence (see judgment of 2 September 2021, Commission v Tempus Energy and Tempus Energy Technology, C‑57/19 P, EU:C:2021:663, paragraph 40 and the case-law cited).
33 In particular, 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 in the assessment of the measure at issue, which should have triggered the Commission’s obligation to initiate the formal investigation procedure (see judgment of 2 September 2021, Commission v Tempus Energy and Tempus Energy Technology, C‑57/19 P, EU:C:2021:663, paragraph 41 and the case-law cited).
34 In addition, the lawfulness of a decision not to raise objections at the end of a preliminary examination procedure falls to be assessed by the EU Courts, 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 (see judgment of 2 September 2021, Commission v Tempus Energy and Tempus Energy Technology, C‑57/19 P, EU:C:2021:663, paragraph 42 and the case-law cited).
35 However, the information which ‘could have been available’ to the Commission includes that which seemed relevant to the assessment to be carried out in accordance with the case-law cited in paragraph 29 above and which could have been obtained, upon request by the Commission, during the administrative procedure (see judgment of 2 September 2021, Commission v Tempus Energy and Tempus Energy Technology, C‑57/19 P, EU:C:2021:663, paragraph 43 and the case-law cited).
36 The Commission is required to conduct a diligent and impartial examination of the contested measures, so that it has, 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 available to it (see judgment of 2 September 2021, Commission v Tempus Energy and Tempus Energy Technology, C‑57/19 P, EU:C:2021:663, paragraph 44 and the case-law cited).
37 However, although the Court of Justice has held that, when the existence and legality of State aid is being examined, it may be necessary for the Commission, where appropriate, to go beyond a mere examination of the facts and points of law brought to its notice, it cannot be inferred from that case-law that it is for the Commission, 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 is in the public domain (see judgment of 2 September 2021, Commission v Tempus Energy and Tempus Energy Technology, C‑57/19 P, EU:C:2021:663, paragraph 45 and the case-law cited).
38 It follows that the Court’s review of the lawfulness of a decision not to open the formal investigation procedure on account of the absence of serious difficulties will go beyond simple consideration of whether there has been a manifest error of assessment. A decision adopted by the Commission without initiating the formal investigation procedure may be annulled on account of the failure to initiate the inter partes and detailed investigation required under Article 108(2) TFEU, even if it is not established that the Commission’s assessments as to the substance were wrong in law or in fact (see, to that effect, judgment of 15 October 2020, První novinová společnost v Commission, T‑316/18, not published, EU:T:2020:489, paragraphs 88, 90 and 91 and the case-law cited). The review undertaken by the Court is therefore not limited (see, to that effect, judgment of 20 June 2019, a&o hostel and hotel Berlin v Commission, T‑578/17, not published, EU:T:2019:437, paragraph 66).
39 It is in the light of that case-law and those considerations that it is necessary to examine the applicant’s arguments seeking to establish the existence of doubts which should have led the Commission to initiate the formal investigation procedure.
40 The Court considers it appropriate to begin by examining the third part of the first plea in law.
The third part of the first plea in law, relating to the existence of an advantage conferred on the licence holders
41 By the third part of the first plea, the applicant submits, in essence, that the Commission was wrong to conclude in the contested decision that no doubts persisted with regard to whether the contested measure conferred an advantage on its beneficiaries. That part contains, in essence, two complaints, alleging, first, that an advantage was conferred on the licence holders and, second, that it was not assessed whether the licences at issue conferred an indirect advantage on the bodies to which the holders of those licences had to remit part of their proceeds generated by gambling activities.
42 Regarding the second complaint, the applicant is of the view that the Commission had information and evidence available to it which made it possible to suspect that there was an indirect advantage benefitting the bodies to which the licence holders had to remit part of their proceeds generated by gambling activities. However, by failing to examine this, the applicant claims that the Commission was not able to resolve all doubts regarding the existence of State aid, all the more so because it relied heavily, in the contested decision, on the obligation imposed on the licence holders to remit part of the proceeds of the gambling activities to the charities concerned for its finding that there was no advantage conferred on the licence holders. According to the applicant, the fact that those charities are non-profit organisations does not prevent them from being considered to be indirect recipients of the aid, given that non-profit entities can also offer goods and services on a market and therefore be considered to be undertakings.
43 The Commission challenges that argument on the ground that the bodies in question cannot 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 as referred to in Article 107(1) [TFEU] (OJ 2016 C 262, p. 1). In addition, it argues that the applicant’s line of reasoning in relation to that part of the plea was not raised in its complaint or in its subsequent submissions. In those circumstances, the Commission submits 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.
44 In that regard, it must be noted, as was found, inter alia, in paragraphs 19 and 20 above, that it is 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. In those circumstances, the Commission could not be unaware of the existence of such an obligation in the Netherlands legislation in question.
45 Moreover, in the contested decision, the Commission 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, as is apparent, inter alia, from paragraphs 49 and 54 to 57 of the contested decision. In paragraph 49 of the contested decision, the Commission stated that the granting of special or exclusive rights without adequate remuneration in line with market rates can constitute foregoing State revenues and the conferral of an advantage. In addition, it is apparent from paragraph 54 of the contested decision that, according to the Commission, the fact that the contested measure makes the granting of licences for gambling activities subject to the obligation on those licence holders to remit part of the proceeds of those activities exclusively to bodies that serve the common interest ensures that those licence holders will not collect more than the minimum return necessary to cover their costs, plus a reasonable profit. Therefore, given the obligation on the licence holders to remit part of their proceeds to bodies that serve the common interest, the Commission concluded that the contested measure did not confer an advantage and therefore did not constitute State aid within the meaning of Article 107(1) TFEU (paragraphs 56 and 57 of the contested decision).
46 Accordingly, when the contested decision was adopted, the Commission had information on the contested measure available to it which should have led it to examine whether the Netherlands legislation on gambling was designed in such a way as to channel the proceeds generated by the activity of the licence holders in question towards, primarily, the bodies that serve the common interest designated by those licences.
47 It should be borne in mind that it has previously been held that, when examining a measure, the Commission could have to consider whether an advantage could be regarded as being indirectly granted to operators other than the immediate recipient of the transfer of State resources. In that regard, the EU Courts have also accepted that an advantage granted directly to certain natural or legal persons could constitute an indirect advantage, hence State aid, for other legal persons who were undertakings (see judgment of 13 May 2020, Germanwings v Commission, T‑716/17, EU:T:2020:181, paragraph 75 and the case-law cited).
48 In that connection, it must, moreover, be stated that paragraph 115 of the Commission Notice on the notion of State aid specifies that an indirect advantage can be conferred on undertakings other than those to which State resources have been directly transferred. In addition, paragraph 116 of that notice states that the notion of ‘indirect advantage’ covers the situation in which the measure is designed in such a way as to channel its secondary effects towards identifiable undertakings or groups of undertakings. The Commission should therefore have sought to ascertain whether the contested measure conferred an indirect advantage on bodies that serve the common interest.
49 However, the Court can only observe that, despite the fact that the Commission had been informed of that part of the Netherlands legislation on gambling, the contested decision remained silent in that regard.
50 Moreover, regarding 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 pursue goals directly related to public policy and public morality, it must be emphasised that, in the contested decision, the Commission failed to examine whether the bodies associated with the contested measure were undertakings or pursued public service objectives.
51 As a result, the Court finds that, for the purposes of adopting the contested decision, the Commission did not examine whether the contested measure conferred an indirect advantage on the bodies to which the licence holders had to remit part of their proceeds. So doing, it excluded, without further details, that that issue could give rise to serious difficulties in the classification of the contested measure as State aid which the formal investigation procedure alone could have resolved. Due to the complete absence of appropriate investigation by the Commission at the preliminary examination stage of whether the contested measure conferred an indirect advantage on those bodies, 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 at issue, the fact that this issue was not examined in the contested decision does not make it possible to rule out the existence of serious difficulties in that connection.
52 In those circumstances, the third part of the first plea must be upheld in so far as it relates to the complaint alleging indirect advantages conferred on the bodies to which the licence holders must remit part of their proceeds generated by gambling activities, without it being necessary to examine the other arguments raised by the applicant in the first and second parts.
53 The contested decision must therefore be annulled, without there being any need to examine the second plea.
Costs
54 Under Article 134(1) of the Rules of Procedure of the General Court, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the Commission has been unsuccessful, it must be ordered to bear its own costs and to pay those of the applicant, in accordance with the form of order sought by the latter.
55 Moreover, in accordance with Article 138(1) of the Rules of Procedure, Member States and institutions which have intervened in proceedings are to bear their own costs.
56 The Court therefore rules that the Kingdom of the Netherlands is to bear its own costs.
On those grounds,
THE GENERAL COURT (Ninth Chamber)
hereby:
1. Annuls Commission Decision C(2020) 8965 final of 18 December 2020 in Case SA.44830 (2016/FC) – Netherlands – Prolongation of gambling licenses in the Netherlands;
2. Orders the European Commission to bear its own costs and to pay those incurred by European Gaming and Betting Association;
3. Orders the Kingdom of the Netherlands to bear its own costs.
Delivered in open court in Luxembourg on 15 November 2023.
V. Di Bucci | | M. van der Woude |