Background to the complaint

1. The complainant is a German association whose members offer accommodation in the lake Constance region in Germany.

2. In January 2017, the complainant filed a State aid complaint with the European Commission. The complaint concerned the granting of a loan by a German district in the lake Constance region to a German limited company for the purpose of introducing a service card for tourists. The members of the limited company are public entities and its aim is to promote tourism in the lake Constance region. It has introduced a service card for tourists, which gives free of charge access to public transport and discounted admission to a number of attractions in the region, and it has also set up an online booking platform for accommodation in the region.

3. In July 2017, the Commission replied to the complainant informing it that it does not qualify as an ‘interested party’ and is thus not entitled to bring an official complaint concerning the allegedly illegal State aid[1]. However, the Commission thanked the complainant for the information it had provided, which the Commission would consider as general market information.

4. The complainant challenged the Commission’s position that it does not qualify as an interested party. It asked the Commission to indicate the specific legal basis for its position and to provide the complainant with information on the available appeal possibilities.  

5. In September, and again in December 2017, the Commission confirmed its position that the complainant does not qualify as an interested party. The Commission stated that it would not pursue the matter brought to its attention by the complainant. The Commission also decided to no longer reply to correspondence from the complainant on the same matter.

6. Dissatisfied with the Commission’s response, the complainant turned to the Ombudsman in January 2018.

The inquiry

7. The Ombudsman opened an inquiry into the complainant’s position that the Commission was wrong to consider that it does not qualify as an interested party in relation to allegedly illegal State aid granted by Germany for services in the tourism industry.

8. As a first step, the Ombudsman asked the Commission to reply to the complainant’s request that it explain the specific legal basis for its position and that it provide information on available appeal possibilities. In the course of the inquiry, the Ombudsman received the Commission’s reply to the complainant’s request for information and, subsequently, the complainant’s comments in response to the Commission's reply.

Arguments presented to the Ombudsman

9. In its complaint to the Commission, the complainant argued that the loan granted by the German district constituted illegal State aid since it had the effect of distorting competition for the loan beneficiary’s competitors, such as itself. The complainant described itself as an association that represents competitors’ interests. In the complainant’s view, it qualifies as an ‘interested party’ under EU law, given that its members provide holiday accommodation to tourists and have, for this purpose, set up their own online booking platform.

10. The Commission argued that the complainant’s members are not in direct competition with the beneficiary of the loan (the allegedly illegal State aid). According to the Commission, the complainant’s members are active on a different market. The beneficiary of the loan is active on the market of promoting tourism in the lake Constance region, whereas the complainant’s members provide accommodation services. Therefore, according to the Commission, the complainant does not meet the requirement of being directly affected by the granting of the allegedly illegal State aid.

11. Regarding the online booking of accommodation, the Commission took the view that the complainant had not demonstrated that it is commercially active in the online booking market, that is, that it operates with the aim of making profits through online booking processes, and that competition from the beneficiary of the allegedly illegal State aid could thus lead to loss in revenue. The Commission also pointed out that the complainant had informed it that the loan beneficiary does not itself provide online booking services (as a commercial activity) but that its platform links to the website of a third party. The Commission also expressed the view that the complainant’s members benefit, or could benefit, from the services offered by the loan beneficiary, among other things by accommodation being booked through its online platform.

12. The complainant disagreed with the Commission’s view that it does not qualify as an interested party under EU State aid rules. It also clarified that its members could not object to their accommodation being offered on the loan beneficiary’s booking platform (due to contractual links between the district/municipality and the loan beneficiary).

The Ombudsman's assessment

13. The applicable EU law defines ‘interested party’ as “any Member State and any person, undertaking or association of undertakings whose interests might be affected by the granting of aid, in particular the beneficiary of the aid, competing undertakings and trade associations”[2]. The implementing rules clarify that an entity can be qualified as an interested party only if its competitive market position (or that of its members) is affected by the allegedly illegal State aid.[3]

14. Established EU case-law confirms that “under Article 1(h) of [Regulation 2015/1589], ‘interested party’ means among others any person, undertaking or association of undertakings whose interests might be affected by the granting of aid, that is to say, in particular competing undertakings of the beneficiary of that aid”[4]. The EU courts have also explained that “[u]ndertakings that receive aid and the local authorities within that State which grant the aid, such as the applicants, are considered, in the same way as competitors of the recipients of the aid, only to be interested parties in this procedure [ ].[5]” [Emphasis added] It is also settled case-law that “the competitor of the recipient of the aid must demonstrate that its competitive position in the market is affected by the grant of the aid[6]”. [Emphasis added]

15. It is thus clear that in order to be considered an ‘interested party’ under EU State aid law, one’s interests must be (potentially) affected by the allegedly unlawful State aid. Entities other than the beneficiary of the aid and the authority that granted the aid must moreover demonstrate that the allegedly illegal State aid affects, or could affect, its competitive position (or that of the persons or entities it represents). The competitive position can be affected only if the beneficiary of the aid and the other entity are active on the same market.

16. In the present case, the complainant did not demonstrate that its members stand in direct competition with the beneficiary of the allegedly illegal State aid. While the loan beneficiary is active on the market of promoting tourism in the lake Constance region, the complainant’s members provide accommodation services. The loan beneficiary and the complainant’s members are thus active on different markets and cannot, therefore, be considered competitors. The fact that the complainant runs an online booking platform for accommodation does not change this conclusion. As the Commission has explained, the running of the platform appears to be purely accessory to the complainant’s activities on the market of accommodation services. It has not demonstrated that it operates the online booking platform with the aim of making profits through the online booking processes (that is, on top of the profits made through renting out accommodation). The complainant can thus not be considered to be active in the online booking market. In fact, neither can the loan beneficiary, as it does not itself provide online booking services (as a commercial activity) but links to the website of a third party for the purposes of booking accommodation online.

17. The complainant did also not demonstrate how its members’ commercial interests could have been affected by the granting of the aid. Rather, it appears that the complainant’s members benefit, or could benefit, from the services offered by the loan beneficiary.

18. The loan beneficiary and the complainant’s members cannot, therefore, be considered competitors, and the complainant does not, for the same reason qualify as an ‘interested party’.

19. However, under the applicable rules, a State aid complaint to the Commission is admissible only if it is submitted by an ‘interested party’[7]. The Commission’s decision to reject the State aid complaint filed by the complainant on the grounds that the complainant does not qualify as ‘interested party’ was therefore reasonable.   

20. It is understood from the complaint to the Ombudsman that the complainant’s members object to the service card for tourists in its current form for a number of reasons. The decision to introduce the card was taken by the local authorities, seemingly without the complainant’s members having had a say. While the complainant seems to question the usefulness of the tourist service card, the filing of a State aid complaint is not, in the circumstances of the case, a suitable means for doing so.  

21. In the course of the Ombudsman’s inquiry, the Commission provided the complainant with the sought information regarding the legal basis for its position and the available appeal possibilities. This aspect of the complaint to the Ombudsman has thus been resolved.

Conclusion

Based on the inquiry, the Ombudsman closes this case with the following finding:

There was no maladministration by the Commission in rejecting the complainant’s State aid complaint.

The complainant and the Commission will be informed of this decision.

 

Tina Nilsson

Head of Inquiries - Unit 4

Strasbourg, 24/09/2018

 

[1] In accordance with Article 24(2) and Article 1(h) of Council Regulation 2015/1589 laying down detailed rules for the application of Article 108 of the Treaty on the Functioning of the European Union, OJ 2015 L 248, p. 9.

[2] Article 1(h) of Regulation 2015/1589.

[3] Article 11a(2) (“Admissibility of complaints”) of and Annex IV to Commission Regulation 794/2004 of 21 April 2004 Implementing Council Regulation 2015/1589 laying down detailed rules for the application of Article 108 of the Treaty on the Functioning of the European Union, OJ 2016 L 327, p. 19.

[4] See Judgments of the Court of Justice of 24 May 2011, Commission v Kronoply GmbH & Co. KG and Kronotex GmbH & Co. KG, C-83/09, ECLI:EU:C:2011:341, paragraph 63, and of 14 November 1984, SA Intermills v Commission, 323/82, ECLI:EU:C:1984:345, paragraph 16.

[5] Judgment of the Court of First Instance of 6 March 2003, Westdeutsche Landesbank Girozentrale v Commission, T-228/99 and T-233/99, ECLI:EU:T:2003:57, paragraph 122.

[6] Judgment of the Court of First Instance of 21 March 2001, Hamburger Hafen- und Lagerhaus AG v Commission, T-69/96, ECLI:EU:T:2001:100, paragraph 41.

[7] Article 24(2) of Regulation 2015/1589 reads: “Any interested party may submit a complaint to inform the Commission of any alleged unlawful aid or any alleged misuse of aid.”