The European Court has, across the spectrum of EC law, been notoriously miserly in granting third-party complainants legal standing to challenge acts of the EU institutions. The Court's strict approach has also be seen in third party challenges to European Commission decisions in the state aid sector. Broadly, a person who wishes to challenge a Commission state aid decision addressed to another person, will have to demonstrate that the decision is of direct and individual concern to him. Traditionally, this can be demonstrated by satisfying two criteria, namely:

  1. that the complainant has played an active role in the Commission's administrative procedure; and
  2. they have suffered competitive harm/market detriment due to the (potential) granting of State Aid.

However, in Sniace, the European Court of Justice confirmed that participation in the Commission's administrative investigation, while potentially important, is not a necessary condition for a finding that that the applicant is individually concerned. It does however remain the case that a complainant must be able to demonstrate that its position on the market was substantially affected by the (potential) State Aid granted.

Sniace v Commission

In the Sniace case, a Spanish company (Sniace) sought to challenge a Commission decision that indirect guarantees and fixed land prices- provided by the Austrian authorities to support a new factory for the production (by Lenzing) of lyocell- did not constitute state aid for the purposes of the EC Treaty. At first instance, the European Court of First Instance (CFI) held that Sniace did not have "standing" to challenge the Commission's decision as it was not directly and individually concerned by it:

  • It had played only a minor role in the Commission's administrative procedure- it did not make a complaint and submitted only limited comments to the Commission;
  • Its market position was not adversely affected by the decision. On this the CFI noted that it was for Sniace to provide pertinent reasons to show that that the Commission's decision may adversely affect its legitimate interests by seriously jeopardising its position in the market in question. The CFI considered that Sniace had failed to do this, specifically because it itself did not compete in the same product market as lyocell and had failed to provide convincing (empirical) evidence that it has suffered competitive harm.

The ECJ took issue with the CFI's approach to the extent it had appeared to take participation in the Commission's administrative procedure as a necessary condition for standing. This was not necessary, in the ECJ's view, though it confirmed that Sniace was required to demonstrate that its position on the market was substantially affected- on this the ECJ agreed with the conclusions reached by the CFI.

Final thoughts

Notwithstanding, the ECJ's ruling, it undoubtedly would strengthen a third party complainant's possible standing if it plays an active role in the Commission's administrative procedure; in particular, it could operate (perception wise at least) to lower the evidential bar so far as competitive/commercial harm is concerned. In contra-distinction to the Sniace case, and somewhat ironically, Lenzing successfully challenged a Commission decision approving the grant of certain aid measures by the Spanish authorities to Sniace: Lenzing had been the original complainant before the Commission and was able to demonstrate that its market position had been significantly affected by the contested aid.