Another defeat for the European Commission as the General Court annuls its decision on State aid in favour of the Spanish football clubs, Valencia and Elche

April 1, 2020

#sports #competition

Wednesday, 1 April 2020 –  In its judgments of 12 March 2020, the General Court overturned the European Commission’s decision declaring loan guarantees by the State-owned Valencia Institute of Finance (IVF) for loans granted to the Spanish football clubs, Elche and Valencia, as incompatible State aid. According to the General Court, the Commission made a number of manifest errors when assessing the existence of an economic advantage. It is another defeat for the European Commission whose same guarantee decision in relation to a neighbouring football club, Hercules, was annulled almost a year ago.

The European Commission’s decision of 2016

In its decision of 4 July 2016, the European Commission concluded that guarantees given by the State-owned Valencia Institute of Finance (IVF) for loans granted to three Valencian football clubs (Valencia, Hercules and Elche) was incompatible State aid that had to be repaid.

The Commission concluded that the clubs paid no adequate remuneration for the guarantees (which covered 100% of the respective loans’ principal plus interest plus the costs of each guaranteed transaction) and that this situation gave the clubs an economic advantage over other clubs, who have to raise money without state backing.

The Commission ordered the three clubs to pay the state back the advantage they had received (being € 20.4 million for Valencia, € 6.1 million for Hercules, and € 3.7 million for Elche).

All three clubs appealed the Commission’s decision and, after an earlier annulment in favour of Hercules, the General Court has now again decided in favour of the other two clubs by concluding that the European Commission made several manifest errors in its assessment.

Valencia judgment

In its Valencia judgment, the General Court has found first that the Commission wrongly concluded that no comparable benchmark could be found on the market as the club was a firm in difficulty.

Furthermore, the Court criticized the fact that the Commission did not take into account all available evidence for correctly determining whether Valencia could have obtained comparable facilities from a private investor. According to the Court, the Commission’s finding that no market price for a similar non-guaranteed loan existed, as there were only a limited number of observations of similar transactions on the market, was not sufficiently substantiated.

Finally, the Commission also made some manifest errors in its assessment of the value of the counter-guarantees provided by the Fundacion Valencia and thus the calculation of the incompatible aid amount arising from the increase of the guarantee in 2010. The General Court found, on the one hand, that the evidence on which the Commission based its analysis was partly incorrect, and, on the other, that the Commission made a manifest error by not taking into account a number of relevant factors for its analysis, such as the club’s significant own equity and the generation of a profit before taxes in the year before the increase.

Elche judgment

In its Elche judgment, the General Court has concluded first that the Commission should have taken into account the economic and financial situation of the Fundacion Elche, the non-profit association linked to the club to which the guarantee was actually granted and that was accountable to the IVF for the consequences of activating the guarantee.

Furthermore, the General Court has found that the Commission made other manifest errors of assessment by failing to take into account: (i) the existence of a mortgage on a plot of land that the Fundacion Elche had granted to the IVF as a counter-guarantee; and (ii) the football club’s capital increase when assessing the value of the shares, pledged to the IVF as a counter-guarantee.

Finally, the General Court stated, as it did in the Valencia appeal, that the Commission had wrongly concluded that no financial institution would act as a guarantor for such a firm in difficulty and that no comparable benchmark could be found on the market. The Court also criticized again the Commission’s conclusion about the lack of comparable transactions for determining the market price of a similar non-guaranteed loan.


The recent judgments of 12 March 2020 are in line with other recent case law from the EU Courts that have subjected the European Commission’s aid investigations to rigorous scrutiny and imposed a very high burden of proof.

In three other recent cases in 2019, concerning state aid to professional Spanish football clubs, the European Commission’s decision was overturned by the General Court. In each case, the Court accused the Commission of a lack of justification and motivation regarding the existence of an undue economic advantage.

The first one concerned tax privileges in favour of four Spanish football clubs (Real Madrid, FC Barcelona, Athletic Bilbao and Atlético Osasuna). The two other cases related to a land transfer to Real Madrid and the loan guarantees granted to Hercules (noted above).

Once again, the Valencia and Elche judgments demonstrate the specific nature of sport, and certainly football, as set out in Article 165 (1) TFEU. Although sports clubs, as undertakings engaged in economic activities, cannot escape the application of the State aid rules, it is notable that very high requirements are imposed on the Commission when dealing with such cases.

However, it is not only football cases that can be referred to. Also in other recent judgments of the General Court (such as the Starbucks tax ruling judgment of 24 September 2019), we notice a clear trend towards a more demanding approach vis-à-vis the Commission’s assessment of State aid cases and the burden of proof it bears.

The Commission’s decision of 2016 has been annulled but an appeal, limited to points of law only, may be brought before the Court of Justice of the EU against the judgments of the General Court within two months and ten days of notification. The European Commission has done so in the FC Barcelona case and the case is still pending.

For this article, the Atfield team was able to rely on the dedicated assistance of ALTIUS lawyer Hanne BAEYENS ( or +32 (0) 2 426 14 14)